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Cybersecurity Investors Adjust Amidst Pandemic; Tech Takes on Covid-19; Startup Funding Drought
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Happy Thursday. Silicon Valley accelerator Y Combinator is jumping in to try to take on the coronavirus pandemic. The firm published a list of about 25 of its startups that are working on Covid-19-related issues and how those companies are seeking help. The companies are working on areas such as improved or faster Covid-19 testing, treatments or vaccines, and technology tools for healthcare providers.
Y Combinator says it has received pledges for a total of $30 million from other investors to invest in Covid-19 related companies―and it is connecting those investors with its companies.
Y Combinator is also seeking to add startups for its next accelerator batch that are working on Covid-19 related tests or diagnostics, treatments and vaccines, equipment for hospitals and monitoring and data infrastructure. It is encouraging startups to apply now in order to get funded immediately.
And now on to the rest of the news...
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Cybersecurity investors are adjusting their strategies amid the coronavirus pandemic. CREDIT: Andrew Caballero Reynolds/Agence France-Presse/Getty Images
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Cyber strategy. Amid falling valuations and opportunity created by the pandemic, strategies for investing in cybersecurity startups are varying widely with approaches ranging from pullbacks to ramped up investing, venture investors say, WSJ Pro's Marc Vartabedian reports.
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A sector that has raised record funding in recent years should brace for a drop in deal activity due to coronavirus-related economic turmoil, according to a report by cybersecurity-focused venture firm DataTribe.
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Still, firms such as ForgePoint Capital Management, which raised a $450 million fund to target cybersecurity in late February, are pouncing on deals with more investor-friendly terms, co-founder Alberto Yepez said. The San Mateo, Calif. firm is closing investments into two cybersecurity startups, according to Mr. Yepez.
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Meanwhile, venture capitalist Ron Gula, president of Maryland-based Gula Tech Adventures, said he and others aren’t taking meetings for new deals and instead considering which of their existing portfolio companies have realistic chances of surviving.
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Clinical trials. ReCode Therapeutics Inc. has raised an $80 million Series A financing designed to enable it to move two respiratory-disease drugs into clinical trials, including a treatment for cystic fibrosis patients who don’t benefit from existing therapies, WSJ Pro's Brian Gormley reports. Cystic fibrosis, a genetic condition that leads to lung infections, occurs because of gene mutations that cause the protein CFTR to be missing or dysfunctional. Drugs from Vertex Pharmaceuticals Inc. help patients with dysfunctional CFTR proteins. Its new drug, Trikafta, for example, is designed to increase the quantity and function of the CFTR protein at the cell surface in certain patients, according to the
company. Some 10% of cystic fibrosis patients don’t make CFTR proteins and therefore can’t be helped by Vertex’s drugs, which rescue the CFTR proteins so they function better, said David Lockhart, chief executive of ReCode, which is based in Menlo Park, Calif., and has operations in Dallas.
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Tech takes on Covid-19. Silicon Valley’s technology whizzes are mobilized to fight the coronavirus, trying to hack everything from disease modeling to elder care and medical-device manufacturing, the Journal reports. Yet it isn’t clear how best to apply the industry’s talents for on-the-fly innovation to a fast-moving pandemic, or whether the U.S.’s wellspring of disruption can make major contributions to solving society’s biggest crisis in decades. Thousands of volunteers from the tech world have begun pitching in on hundreds of hastily assembled projects over the past two weeks, as the virus ravaged Europe and spread in the U.S. Many are concentrated in the San Francisco Bay Area, which locked down
before most of the country, leaving thousands of talented techies with spare time to brainstorm coronavirus-related projects.
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Funding drought. Early-stage funding for startups is drying up as the coronavirus outbreak puts investors on edge, spelling trouble for large corporations looking to snatch up innovative technology and talent, CIO Journal's Angus Loten reports. Capital from seed-stage funding, often the first significant source of cash for new ventures, has declined by about 22% globally since January, according to an analysis this week by CB Insights. The company puts total private-market funding for startups at $67 billion in the first quarter, down from an initial forecast of $77 billion.
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Funds
Mayfield closed on $750 million across two new venture funds, bringing the firm’s current assets under management to over $2.5 billion. The $475 million Mayfield XVI fund will continue the firm’s early-stage focus, while the $275 million Mayfield Select II fund will invest in later-stage rounds of Mayfield breakout portfolio companies. Menlo Park, Calif.-based Mayfield raised $400 million for Mayfield XV and $125 million for Mayfield Select I in 2016.
DBL Partners, a venture-capital firm that focuses on investments with social and environmental benefits, is raising $450 million for its fourth fund, according to a regulatory filing. The San Francisco- and Palo Alto, Calif.-based firm counts shared-bike startup Wheels Labs Inc. and zero-emissions coffee roaster Bellwether Coffee in its portfolio.
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OfferUp Inc., a Bellevue, Wash.-based app for buying and selling locally, collected $120 million in new funding. OLX Group led the round, with participation from Andreessen Horowitz and Warburg Pincus. In addition to the investment, OfferUp and competitor letgo have agreed to combine their U.S. businesses. OLX Group will own 40% of the combined entity. New York-based letgo is backed by investors including 14W, Accel, Insight Venture Partners and New Enterprise Associates.
Kallyope Inc., a New York-based drug developer focused on interaction between the brain and the gut, raised $112 million in Series C funding. New investors including Casdin Capital and Greenspring Associates were joined by existing backers Column Group, Lux Capital, Polaris Partners, Two Sigma Ventures, Illumina Ventures, Bill Gates and others in the round.
Apexigen Inc., a San Carlos, Calif.-based company developing immuno-oncology therapeutics, added $65 million in Series C financing, bringing the round total to $123 million. Decheng Capital and Oceanpine Capital led the new funding.
Espressive Inc., a Santa Clara, Calif.-based developer of a virtual support agent for the workplace, picked up $30 million in Series B funding. Insight Partners led the round, with Managing Director Jeff Horing joining the company’s board. Previous backers General Catalyst and Wing Venture Capital also participated in the round.
Humio, a London-based a log-data management startup, snagged a $20 million Series B round. Dell Technologies Capital led the investment, which included participation from Accel.
Redpin Therapeutics Inc., a New York-based developer of gene therapies to address intractable diseases of the nervous system, nabbed $15.5 million in Series A financing led by 4BIO Capital and Arkin Bio Ventures. New investor Takeda Venture Investments also participated in the round, along with previous backers New York Ventures and Alexandria Venture Investments. Dmitry ‘Dima’ Kuzmin, managing partner at 4BIO, will join the board.
Twaice, a Munich-based battery analytics software startup, raised €11 million ($11.9 million) in Series A funding. Creandum led the investment, with contributions from Cherry Ventures, UVC Partners and Speedinvest.
Revuze, an Israeli customer analysis software developer, fetched $5.1 million in Series A financing. Maverick Ventures Israel led the round, with participation from Prytek.
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Maurizio Cereda, a University of Pennsylvania intensive-care doctor, modeled Sea-Long’s oxygen device. PHOTO: MAURIZIO CEREDA
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We cover venture capital and the global startup ecosystem. WSJ Pro Venture Capital is a premium service of The Wall Street Journal. Share your tips, comments and questions: vcnews@wsj.com
The Team: Tomio Geron, Yuliya Chernova, Brian Gormley and Marc Vartabedian.
Follow us on Twitter: @wsjvc, @tomiogeron, @ychernova, @BrianPGormley, @marcvarta.
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