Good day. It may seem like the worst time to launch a fast-growth tech company. But investors and analysts say market turmoil may actually be helping some young companies land investors.

With many larger startups stuck in a holding pattern—as they wait for more favorable market conditions to go public—some venture firms are turning their attention to seed-stage investments, said Kyle Stanford, senior analyst at market data firm PitchBook Data Inc.

Amid broad declines in VC investing, 2022 is on track to see an all-time high in seed-stage deal count, he said. Already, the firm estimates there were some 1,500 such deals in the first quarter, and has tracked roughly 1,300 second-quarter deals as of mid-June. Last year, seed-stage deal count never rose above about 1,100 per quarter. At the same time, deal value for seed-stage funding is expected to reach the high single-digit billions, up from last year.

“If later-stage deals continue to stall out, you will keep seeing more money going to seed-stage funding,” Mr. Stanford said Tuesday at Collision 2022, a startup and investing conference in Toronto.

By contrast, he said, the growth of unicorn startups—private companies with billion-dollar valuations—is going to be hard to sustain. Pressure at the top end of the market will continue to build and lead to a decrease in deal value in the year ahead, Mr. Stanford said.

Sarah Guo, a board partner at Greylock Ventures, who also attended Tuesday’s event, said one of the attractions for investors of backing seed-stage companies today is that exits will be years away, presumably when the economy is back on track. “You’re not focused on macroeconomic conditions right now,” she said.

Greylock recently created a roughly $500 million seed-stage fund, she said. “It’s a great time to invest in these startups,” she said.

And now on to the news...

Cyber funding cools. Venture capital money has poured into cybersecurity companies in recent years, driven by an increase in hacking and elevated valuations for startups. Now fears of a recession and disruption in the wider technology market are beginning to curb cybersecurity investments, James Rundle and Vipal Monga report for WSJ Pro. Investors say the industry has seen a contraction in late-stage funding, where companies have enjoyed years of rounds in the hundreds of millions of dollars and multibillion-dollar valuations. The speed of the change has surprised even some veteran investors.

• Companies and governments depend on the cybersecurity sector to constantly keep pace with the sophistication of hackers. A weakened cybersecurity industry could open the door to further attacks.
   
• “At the end of the day, just because the markets are down, the bad actors aren’t going away. If nothing else it’s accelerating what they’re doing,” said Mark Hatfield, founder and general partner at cyber-focused VC firm Ten Eleven Ventures.

FalconX, a cryptocurrency trading platform geared toward institutional investors, raised $150 million in a venture financing round, highlighting how some established investment firms remain bullish in the long term on a crypto sector that’s currently in a financial tailspin, WSJ Pro’s Marc Vartabedian reports. The financing was led by Singapore sovereign-wealth fund GIC and B Capital Group and valued FalconX at $8 billion, more than double the valuation it received as part of a capital raise in August of last year when crypto markets were surging. Rashmi Gopinath, a general partner at B Capital, said her firm was being cautious amid the market volatility and was focused on companies with sustainable growth metrics.

Two of Asia’s financial hubs aimed to reinvent the SPAC. So far, it is proving slow going, The Wall Street Journal reports. Exchanges in Hong Kong and Singapore have always said they aim for quality not quantity with their rules for blank-check companies, touting better investor protection than in the U.S. But as the U.S. SPAC business has lost momentum, global banks and international investors have grown more cautious about their involvement in these vehicles.

Join us on July 19 for a members-only virtual event to discuss portfolio management in turbulent markets with industry specialists and journalists from WSJ Pro Private Equity. The event will feature two panel discussions–one on how limited partners are adapting to current market conditions, the other looking at trends in the secondaries market. You can register here.

Funds

Accel closed a $4 billion fund to provide expansion capital to portfolio companies. The firm recently participated in funding rounds for release communications platform Makelog, business verification and risk assessment provider Middesk and mobile ticket marketplace app Gametime.

Cleantech investor Kiko Ventures, a spin-out of investment firm IP Group, launched a £375 million (about $460 million) fund.

LocalGlobe is moving into later-stage investments after raising $500 million to deploy across its existing early-stage funds LocalGlobe and Latitude, along with new funds Solar and Basecamp. The firm has also rebranded as Phoenix Court Group.

People

CH4 Global Inc. named Chris Rose as chief business development officer and Tim Williams as chief operating officer. Mr. Rose joins the company from Procter & Gamble. Mr. Williams was previously at Combe Inc. In October, CH4 Global said it raised a $13 million Series A round led by DCVC and DCVC Bio.

Hi Marley, an intelligent communication platform for the insurance industry, appointed Jonathan Tushman as chief product officer. He was most recently chief executive and co-founder of Quala. Boston-based Hi Marley is backed by investors including Emergence Capital, Underscore VC, True Ventures, Bain Capital Ventures and Brewer Lane Ventures.

Cognata, a developer of testing and evaluation technology for self-driving vehicles, said Gahl Berkooz joined the company as chief data officer and president, Americas. He previously established the ZF Digital Venture Accelerator. Israel-based Cognata is backed by Scale Venture Partners, Emerge, Maniv Mobility and Airbus Ventures.

Exits

Publicly-traded micro-mobility provider Helbiz Inc. agreed to acquire Wheels, a last-mile, shared electric mobility platform, for an undisclosed amount. Wheels is backed by investors including DBL Partners. 

Hearst-owned financial information services provider Fitch Group acquired geopolitical risk analysis company GeoQuant for an undisclosed sum. Fitch Ventures, the equity-investment arm of Fitch Group, previously invested in GeoQuant, along with Aleph.

Platform.sh, a Paris- and San Francisco-based platform for building, running and scaling web applications, raised $140 million in Series D funding. Co-lead investors Digital+ Partners, Morgan Stanley Expansion Capital and Revaia were joined by Benhamou Global Ventures, Eurazeo, Hi Inov and Partech in the round.

Magic Eden, an NFT marketplace, closed a $130 million Series B round, giving the company a valuation of $1.6 billion. Electric Capital and Greylock co-led the funding, which included contributions from Lightspeed Venture Partners, Paradigm and Sequoia Capital.

Omio, a Berlin-based transportation booking provider, picked up an $80 million funding round from investors including Lazard Asset Management, Stack Capital Group, New Enterprise Associates, Temasek and funds managed by Goldman Sachs Asset Management.

Openly Inc., a Boston-based homeowners insurance startup, completed a $75 million Series C round from investors including Advance Venture Partners, Clocktower Ventures, Obvious Ventures, Gradient Ventures, PJC Ventures, Techstars and MTech Capital.

Autobooks Inc., a Detroit-based payment and accounting platform for small businesses, landed $50 million in Series C funding. Led by Macquarie Capital Principal Finance, the round included additional support from Baird Capital, Commerce Ventures, Draper Triangle Ventures, MissionOG and TD Bank. Larry Handen, senior managing director at Macquarie Capital, joined the company’s board.

CloudNC, a London-based developer of software that enables factories to autonomously manufacture precision parts, nabbed $45 million in Series B financing. Lead investor Autodesk was joined by Lockheed Martin, British Patient Capital, Atomico and Episode 1 Ventures in the round.

Instanda, a U.K.-headquartered no-code core insurance platform provider, collected a $45 million funding round. Toscafund led the investment, with support from Dale Ventures.

Wingcopter, a Germany-based delivery drone manufacturer, added $42 million in Series A extension funding from Futury Capital, Xplorer Capital, Itochu, REWE Group, Salvia and XAI technologies.

Cyberint, an Israel-based cyber threat intelligence provider, snagged a $40 million Series C investment. StageOne Ventures led the round, which saw participation from Viola Growth and others.

Huspy, a Dubai-based proptech startup, raised $37 million in Series A funding. Sequoia Capital India led the round, which included contributions from Founders Fund, Fifth Wall, COTU Ventures, Breyer Capital, VentureFriends and others.

&Open, a corporate gifting startup, fetched $26 million in Series A funding. Molten Ventures led the round, which saw participation from First Round Capital, LocalGlobe, Tribal VC and Middlegame Ventures.

• Barack and Michelle Obama strike deal with Amazon’s Audible
   
• Crypto exchange FTX extends $250 million credit line to lender BlockFi
   
• Vegas company promised fast internet. Rural America waits…and waits
   
• DocuSign CEO Dan Springer steps down
   
• HPE tackles cyber skills shortage with hands-on experience

This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Marc Vartabedian.

Follow us on Twitter: @wsjvc, @ychernova, @BrianPGormley, @marcvarta.