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Conferences Fill Up, but Deal Making Shows Slowdown
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Good day. The startup conference circuit is back in full swing, even as the economic outlook dims—along with the prospect of finding venture-capital investors.
After being held online over the past two years due to the Covid-19 pandemic, TechCrunch Disrupt this week returned as an in-person, three-day event in San Francisco. Organizers said they had a 13% increase in registered on-site attendees from 2019, the last year the event was held in person. Roughly 10,000 people attended this year, the organizers said, without disclosing the exact number.
The event brings together emerging businesses and venture-capital investors. Most attendees are startup founders who come to pitch their business plans to prospective investors.
Tibor Kadar, chief financial officer of Fractory, a startup that provides a platform for engineers looking to manufacture their products, said he traveled from Estonia to attend TechCrunch Disrupt for a chance to meet investors ahead of a planned Series B fundraising round next year. He has attended other startup conferences across Europe this year, he said.
“I’m very enthusiastic,” Mr. Kadar said. Fractory, which launched in 2018 and has offices in Europe and the U.S., netted about $7.3 million in a Series A funding round last year. But compared with last year’s frothy markets, he said, investors these days are being far more selective.
This year's TechCrunch Disrupt included sessions on the reality of running a business amid a slower economy and a sharp drop-off in investing deals.
Investors today are under no obligation to continue putting money into a startup, Ruth Foxe Blader, a partner at venture-capital firm Anthemis, told startup founders at a presentation on the rising costs of capital. That will be a lesson that is “painful to learn” for many new companies used to the easy-money deals of recent years, she said.
To weather the slump in funding deals, Ms. Foxe Bader encouraged startups to “go out and build relationships with debt providers.”
Annie Case, a partner at Kleiner Perkins, said being a startup founder requires relentless optimism in the face of challenges. Connecting with others is important in every economic environment, she said, adding, “I think events are a welcome breath of fresh air.”
And now on to the news...
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PHOTO: MIKE SEGAR/REUTERS
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Investment interest. Microsoft Corp. is in advanced talks for a new round of funding in OpenAI, The Wall Street Journal reports citing a person familiar with the matter, as the software giant seeks to further incorporate artificial intelligence into its products.
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No deal has been reached between the two sides and the funding amount could vary as negotiations evolve, the person said. The companies have held talks in recent weeks, according to people familiar with the matter.
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Microsoft invested $1 billion in OpenAI in 2019. The new cash could help bankroll the tremendous computing power OpenAI needs to run its various artificial intelligence products on Azure, Microsoft’s cloud computing service.
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6%
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Snap Inc. said it generated $1.13 billion in sales in the most recent quarter, or 6% above the year-earlier figure. That was the slowest rate of growth since going public.
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Corporate Cybersecurity Teams Struggle to Fill Jobs
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An economic downturn and the Covid-19 pandemic are adding new challenges to hiring for crucial cybersecurity roles, exacerbating an already difficult job market, WSJ Pro reports. The cybersecurity talent gap grew by 26.2% over the past year, with around 3.4 million unfilled jobs worldwide, according to a new study from (ISC)2, a nonprofit professional organization that offers cybersecurity certifications. Seventy percent of around 11,000 cybersecurity practitioners and decision makers surveyed by (ISC)2 said their companies don’t have enough cybersecurity staff to be effective. Almost half said their teams didn’t have enough time for proper risk assessment and made oversights in certain
procedures because of staff shortages, according to data released Thursday.
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Last week we asked if venture investors have adjusted their fundraising outlooks for the next year in regards to their ability to raise new funds. Firm fundraising through the third quarter this year topped all of last year’s fundraising.
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Bobby Yazdani, founder and a partner at Cota Capital, said: "We are all reading the tea leaves about the potential for a recession. However, venture investors focused on enterprise technologies and other mission-critical systems and processes, which are largely unaffected by economic downturns, should have little issues raising substantial amounts of new funds in the next year.”
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Kevin Stevens, a partner at Energize Ventures, said that he thinks the next year to two years will be a difficult fundraising environment, but that interest from corporate firms and family offices remains robust. Firms that manage to raise will be rewarded, he added. “Historically, the best vintages of venture capital and private equity all raised at some point during or slightly after a bubble correction. The market patterns of the past few decades lead me to believe that now is the best time for deployment.”
This week’s question: What near-term uses of artificial intelligence will attract the most attention from venture investors?
Please email responses to marc.vartabedian@wsj.com.
—Marc Vartabedian
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Funds
Boston-based Propeller launched its inaugural $100 million fund in partnership with Woods Hole Oceanographic Institution to invest in companies advancing ocean-based science and technology to address the climate crisis.
Workforce and education nonprofit Jobs for the Future launched JFF Ventures, a new impact investing arm that will invest in seed- and early- stage companies with a dedicated focus on developing technologies that create opportunities for economic advancement for workers in low- and middle-wage jobs.
People
Kleiner Perkins said Everett (Ev) Randle has re-joined the firm, this time as partner. He was previously at Founders Fund, Bond Capital and Vista Equity Partners. Mr. Randle originally joined Kleiner Perkins in 2018.
Insurtech company Accelerant said Jay Green will join the company as global chief financial officer. He was previously managing director and head of insurance structured finance within the Investment Banking Division at Goldman Sachs. In January, Accelerant said it raised a $193 million funding round from Eldridge Industries, MS&AD Ventures and Altamont Capital Partners
Stellar, a maintenance marketplace for the single-family rental market, named Renaud Casanova to the post of chief technology officer. He previously led global expansion at Enjoy Technology Inc. Stellar is backed by S3 Ventures and Brick & Mortar Ventures.
Heart valve developer Foldax Inc. appointed Gregory D. Casciaro as chief executive. He previously served as president and CEO at Access Closure, General Surgical Innovations, Orquest, XTNT and Cardiac Dimensions. Salt Lake City-based Foldax is backed by Angel Physicians Fund, Biostar Capital, Caltech, Kairos Ventures, MemorialCare Innovation Fund and Sayan Bioventures.
Exits
AbbVie Inc. agreed to buy U.K.-based DJS Antibodies Ltd., whose lead program is currently in preclinical studies for the treatment of idiopathic pulmonary fibrosis and other fibrotic diseases, for $255 million in cash. DJS's investors include Oxford Science Enterprises, Johnson & Johnson Innovation Ltd., LifeArc, Sedgwick Yard and Amgen Ventures.
Beeline agreed to acquire fellow extended workforce technology company Utmost for an undisclosed amount. Beeline is backed by private-equity firms Stone Point Capital and New Mountain Capital. Utmost counts Mosaic Ventures, Greylock Partners, Workday Ventures, Acadian Ventures and Alumni Ventures Group as investors.
SingleKey, a provider of leasing and risk management tools for homeowners with tenants, purchased Naborly, a rental screening tool for small landlords. Terms weren’t disclosed. SingleKey previously raised funding from investors including Sentiero Ventures. Naborly was backed by First Round Capital, Y Combinator, Susa Ventures, Trinity Ventures, Village Global and Liquid 2 Ventures.
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H2 Green Steel, a Stockholm-based sustainable steelmaking startup, added €70 million in Series B funding to close the round at €260 million. Hitachi Energy, Kobe Steel and Kinnevik provided the new tranche.
SubjectWell, an Austin, Texas-based platform that matches patients with chronic health conditions to new care options, raised $35 million in Series B funding. Asset Management Ventures led the round, which included participation from Bertelsmann Investments, Healthy Ventures, Windham Venture Partners and Geekdom Fund.
Banyan, a Holmdel, N.J.-based fintech startup, secured $43 million in Series A funding, consisting of $28 million in equity and $15 million in debt. Fin Capital and M13 led the round, which included contributions from FIS Impact Ventures, Bridge Bank, Interplay and TTV Capital. Janey Whiteside, formerly executive vice president and chief customer officer at Walmart, joins the Banyan board.
Outsight, a Paris-based developer of lidar-based 3D software, picked up a $22 million investment. Energy Innovation Capital and the Defense Innovation Fund managed by Bpifrance co-led the round, which saw additional contributions from Groupe ADP, BNP Paribas and others.
Sensat, a London-based infrastructure project automation software provider, fetched $20.5 million in Series B funding led by National Grid Partners.
Tellius Inc., a Reston, Va.-based data insights provider, scored a $16 million Series B round. Led by Baird Capital, the investment included participation from Sands Capital Ventures, Grotech Ventures and Veraz Investments.
Limber Health Inc., a musculoskeletal-care startup, closed an oversubscribed $11 million Series A round. Blue Venture Fund led the investment, which included additional support from Glenview Capital. Blue Venture Fund’s Emir Sandhu and Glenview Capital’s Ankit Chadha joined the company’s board.
Keebo, a data learning technology provider, nabbed $10.5 million in Series A funding. Lead investor True Ventures was joined by Neotribe, Pear VC, .406 Ventures and Uncorrelated Ventures in the round.
Chip City Cookies, a New York-based gourmet cookie brand, said Enlightened Hospitality Investments, the growth equity fund associated with Danny Meyer’s Union Square Hospitality Group, invested $10 million in the company.
Velotix, a data security platform, was seeded with a $10 million investment led by Capri Ventures.
Mercury, a Boston-based fan experience provider for student athletes and collegiate sports programs, grabbed $7.5 million in seed funding. Led by Multicoin Capital, the round saw additional support from North Island Ventures, Crosslink Capital and others.
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Years of consistent quarterly profits have given Tesla a war chest rivaling that of some legacy auto makers. PHOTO: CAROLINE BREHMAN/SHUTTERSTOCK
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