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Startups Say Investors Drive Innovation, Not Banks
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Good day. Before Silicon Valley Bank’s sudden collapse on March 10, banks were not top of mind among startup founders and their investors, according to a survey conducted earlier this year by startup accelerator Techstars.
Asked about the top drivers of innovation across the startup ecosystem, roughly a quarter of those surveyed cited capital put up by VC and angel investors, the single biggest response. The community and proximity to other startups was close behind, followed by accelerator programs, and government, corporate and university support, according to the survey.
The survey included more than 1,600 current, former and aspiring startup founders—and just under 100 venture-capital investors. Results were released today.
Founders and investors also pointed to nonprofits groups, recent layoffs flooding the tech space with talent and a dearth of high-paying jobs. Banks offering venture debt, loans or lines of credit didn’t make the list.
Though the survey predates SVB’s downfall, and the subsequent acquisition of much of it by First Citizens Bancshares Inc., Techstars Chief Executive Maëlle Gavet said the views expressed by startups and founders aren’t likely to have changed much, beyond a greater appreciation for cash-flow management risks.
Many of the trends highlighted in the survey were sparked by disruptions caused by the Covid-19 pandemic, such as the shift to remote work and virtual meetings. That might see the end of a longstanding expectation that founders and investors meet face-to-face—preferably on the West Coast, in or around San Francisco, Ms. Gavet said.
Other views could even have been solidified by the crisis, she said. That includes a general consensus that Silicon Valley—the place, not the bank—is losing its luster as a global center of the startup market, survey respondents said. They see tech hubs in places like Tel Aviv, Singapore, New York and London growing in importance over the next five years, while Silicon Valley’s influence wanes.
SVB’s failure was a “stark reminder” that startups shouldn’t put all their eggs in one basket, Ms. Gavet said.
And now on to the news...
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George Petrocheilos, co-founder and a managing partner of Catalio Capital Management.
PHOTO: CATALIO CAPITAL MANAGEMENT.
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Debt deals. Investment firms that lend to healthcare companies are fielding increased interest from entrepreneurs as the banking crisis unfolds, WSJ Pro's Brian Gormley reports.
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Interest in debt was rising before Silicon Valley Bank’s collapse. But uncertainty stemming from banking industry turmoil has sharpened startups’ focus on boosting their balance sheets with less equity financing, which has grown more costly.
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Life sciences firm Catalio Capital Management, which makes venture-capital investments and backs publicly traded companies, in November raised more than $85 million for its first fund targeting debt and structured-equity deals for private companies.
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20
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The number of days that Italy’s data protection authority gave OpenAI to show what steps it is taking to comply with European Union privacy rules or risk fines.
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The Contradictions of Sam Altman, AI Crusader
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Sam Altman, the 37-year-old startup-minting guru at the forefront of the artificial intelligence boom, has long dreamed of a future in which computers could converse and learn like humans. One of his clearest childhood memories is sitting up late in his bedroom in suburban St. Louis, playing with the Macintosh LC II he had gotten for his eighth birthday when he had the sudden realization: “Someday, the computer was going to learn to think,” he said. In recent months, Mr. Altman has done more than anyone else to usher in this future—and commercialize it, The Wall Street Journal reports.
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Private Equity Shies From Backing Banks, Even With Discounts
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During the last major U.S. banking crisis, private-equity firms spent billions buying troubled lenders. Don’t expect them to do the same this time around, investors say, WSJ Pro reports. Instead, private-equity firms are more likely to extend credit to shaky lenders or try to peel off valuable bank assets as turmoil unfolds following the collapse of Silicon Valley Bank. Private equity’s investment thesis “is going to be more about providing liquidity and opportunities in distressed assets” rather than equity investments in banks themselves, said Mike Brown, an alternative-investments analyst at securities research firm Keefe, Bruyette & Woods.
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People
Canada-based ApplyBoard Inc., an online platform for international student recruitment, named David Borecky as chief financial officer and Rajesh Uttamchandani as chief people officer. Mr. Borecky was most recently CFO at Impossible Foods. Mr. Uttamchandani was previously at MaRs Discovery District.
Cybersecurity provider Immersive Labs appointed Eric Johnson to the post of chief revenue officer. He previously held positions at Interos Inc., Marketo, Qlik and Blackberry.
Boston-based cyber insurance provider Corvus Insurance said Prashanth Gangu joined the company as president. He was most recently at SiriusPoint.
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LeapXpert, a New York-based business communication startup, raised $22 million in Series A+ funding. Rockefeller Asset Management through its Technology Ventures Group led the round, with Managing Partner Christopher J. Randazzo joining the company’s board.
Florence, a healthcare enablement software provider, launched from stealth with $20 million in seed financing led by investors including Thrive Capital and GV.
Wellth Inc., a Los Angeles-based digital health startup, landed $20 million in Series B funding led by SignalFire.
env0, a provider of Infrastructure as Code workflow automation and management software, added $18.1 million in Series A funding, bringing the round total to $35.1 million. Venture Guides led the investment.
pH7 Technologies, a Canada-based sustainable metal extraction startup, picked up a $16 million investment co-led by TDK Ventures and Pangaea Ventures. The company developed a metal extraction process that eliminates the need for toxic chemicals and high temperature furnaces.
Watershed Informatics, a Cambridge, Mass.-based provider of insights to biopharmaceutical discovery teams, closed a $14.5 million Series A round. Canvas Ventures led the investment, which included participation from Bessemer Venture Partners and Accomplice. Paul Hsiao, founding partner at Canvas Ventures, joined the board.
Genialis Inc., a precision medicine startup, nabbed $13.4 million in Series A funding co-led by Taiwania Capital and Debiopharm Innovation Fund. Ita Lu of Taiwania and Hamzeh Abdul-Hadi of Debiopharm will join the board.
entrio, an Israeli cloud platform enabling enterprises to manage and monitor their vendor stack, snagged a $7.5 million investment from Communitas Capital Partners and others.
Mantra Health, a New York-based digital mental health provider for colleges and universities, added $5 million to a Series A round led by VMG Partners.
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The new criteria for the electric-vehicle tax credit will take effect on April 18, when a list of models that qualify is issued. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES
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New EV rules mean fewer models eligible for tax credit
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China opens cybersecurity probe of Micron amid competition with U.S. over technology
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Google CFO signals more spending cuts to meet savings targets
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Lyft staff pressed founders for change as Uber pulled ahead
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JD.com’s property and industrial units seek about $1 billion each in Hong Kong IPOs
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Investors unfazed by Q1 crypto funding decline (TechCrunch)
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The layoff contagion is hurting us all (The Information)
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