Good day. Venture-capital firms, sitting on a mountain of raised capital, are trying to gauge when is the right time to reopen the funding spigot. Investment firm Union Square Advisors recently published a report that offers its two cents on the matter and where some opportunities exist in the meantime.

Union Square said it anticipates a recovery in deal-making activity sometime this year because there’s simply too much capital in firms’ reservoirs and on corporate balance sheets for it to sit idle for too long. 

“The Fed remains a bit of a wild card,” the report said, adding that the venture industry needs to undergo a “valuation reset” before it gets back to normal levels of deploying capital. “It likely will take much of 2023 for this reset and reignition to complete, as companies finally acknowledge and accept the new valuation reality,” according to the report.

Still, there are bright spots to invest in despite the lackluster market, Union Square said. Startups offering risk-management solutions is one. The volatile business climate of the past several years is demonstrating the importance of services that can help companies gain visibility into third-party risks, such as in the supply chain.

“Given the disruptive events of the past two years, executives are well aware that global supply chains remain brittle and vulnerable,” the report said. “They need a deeper understanding of where their goods and raw materials are being sourced, and upon whom they and their vendors are dependent.”

And now on to the news...

IPO prep. Databricks Inc. is assembling the internal software tools needed for a future initial public offering, including financial-reporting applications designed to handle the additional regulatory compliance required of publicly traded companies, according to the multibillion-dollar startup’s chief information officer, WSJ Pro's Angus Loten reports.

• “We are working on what would be the back-office systems,” said Naveen Zutshi, who leads the data management and analytics company’s information-technology team. “We have to make sure those are ready,” he said.
   
• Databricks’ rapid growth set it among a handful of late-stage startups that appeared to be on track for blockbuster IPOs last year, before market conditions deteriorated. Others include Instacart, which in October pulled back from plans to launch an IPO in 2022, citing tumultuous markets.

The late-night bankruptcy filing of Genesis Global Capital LLC last week marked the end of an era for crypto lenders that tried to bring the centuries-old business model of banking to the digital-currency space, The Wall Street Journal reports. Many of the biggest names in crypto lending have failed in the past half-year, highlighting the shaky foundations, risky practices and lack of regulation in the sector. Now, millions of depositors who parked savings with such lenders are in limbo as they hope to get back some portion of their money in slow-moving bankruptcy proceedings.

Earlier this month, Boston-based Battery Ventures announced investments in European fleet management software providers Vimcar GmbH, based in Berlin, and Avrios International AG in Zurich with plans to combine them and build a larger pan-European company. In that effort, the venture-capital and private-equity firm is already tracking more than 100 companies in the fleet-management sector and has engaged in talks with dozens of them, according to General Partner Morad Elhafed and Partner Zak Ewen. WSJ Pro Private Equity’s Maria Armental spoke to the two men about the latest deal and the opportunities they see for software investors in Europe.

KKR & Co. has limited how much money investors can withdraw from its private real-estate fund, joining fellow asset managers Blackstone Inc. and Starwood Capital Group Management in seeking to curb redemptions, WSJ Pro reports. New York-based KKR fulfilled just $79 million out of $128 million of withdrawal requests, or 62%, from its $1.6 billion KKR Real Estate Select Trust Inc., or KREST, for the redemption period ended Jan. 13, the firm said Wednesday in a Securities and Exchange Commission filing. KKR said the quarterly redemption requests equaled 8.1% of the fund’s net asset value, while the fund—which isn’t publicly traded and invests in real estate and debt backed by real estate—limits withdrawals to 5% per quarter.

Corrections & Amplifications: Point72 Ventures participated in Vannevar Labs’ Series B funding round. An item in Wednesday’s newsletter didn’t include the firm’s full name.

The storage of hard copies of documents at the homes of President Biden and former President Trump points to risks for companies of sensitive papers being at employees’ houses. Here's a guide on how executives can handle such risks in an era of flexible work arrangements.  

This research paper from WSJ Pro Cybersecurity Research, a premium service, is being made available for free to this newsletter's readers.

People

Legal software provider Everlaw appointed Scott Allen to the post of chief financial officer. He was most recently CFO at Airship. Oakland, Calif.-based Everlaw is backed by Andreessen Horowitz, CapitalG, HIG Growth Partners, K9 Ventures, Menlo Ventures and TPG Growth.

Gene therapy startup Capsida Biotherapeutics Inc. named Julie Hakim as chief financial officer. She was previously CFO at Sequoia Vaccines. Thousand Oaks, Calif.-based Capsida counts Versant Ventures and Westlake Village BioPartners as backers.

Cancer treatment startup Tallac Therapeutics Inc. appointed Kevin N. Heller as chief medical officer. He was previously at Jasper Therapeutics. Burlingame, Calif.-based Tallac Therapeutics is backed by investors including venBio Partners, Morningside, Lightstone Ventures, Matrix Partners China and MRL Ventures Fund.

Exits

Digital commerce fraud management provider Forter acquired bot detection company Immue for an undisclosed amount. Forter has raised more than $500 million from investors including Tiger Global Management, Sequoia Capital, Bessemer Venture Partners, Scale Venture Partners, March Capital and Salesforce Ventures.

Password management startup Bitwarden acquired passwordless authentication provider Passwordless.dev for an undisclosed sum. Last year, Santa Barbara, Calif.-based Bitwarden raised $100 million from PSG with Battery Ventures.

SetPoint Medical, a Valencia, Calif.-based company focused on treating chronic autoimmune diseases, raised $80 million in preferred stock financing along with a senior secured term loan facility of up to $65 million. Norwest Venture Partners and Viking Global Investors led the $80 million investment, which saw participation from Gilmartin Capital, New Enterprise Associates, Action Potential Venture Capital, Boston Scientific, Topspin Fund, Euclidean Capital, Morgenthaler Ventures and others. Runway Growth Capital provided the loan facility. Zack Scott, general partner at Norwest, joined SetPoint Medical’s board.

ADARx Pharmaceuticals Inc., a San Diego-based startup developing RNA-targeting therapeutics, closed on $46 million in Series B1 funding. Ascenta Capital led the round, which included additional support from OrbiMed Advisors, SR One Capital Management, Lilly Asia Ventures and Sirona Capital. Lorence Kim of Ascenta Capital joined the board.

Link, a San Francisco-based open-banking powered payment platform, snagged $20 million in Series A funding led by Valar Ventures.

nsKnox, a provider of business-to-business payment security and compliance technology, picked up a $17 million investment from Link Ventures, Harel Insurance & Finance, M12, Viola Ventures and others.

Chord, a New York-based commerce platform, nabbed $15 million in Series A extension funding. Co-lead investors Bright Pixel Capital and Eclipse Ventures were joined by GC1 Ventures, TechNexus Venture Collaborative, Anti Fund, Imaginary Ventures, Foundation Capital and White Star Capital in the round.

Ulvetanna Inc., a zero-knowledge proof acceleration platform, raised $15 million in seed funding. Bain Capital Crypto and Paradigm co-led the round, which included support from Jump Crypto.

Copilot, a portal that streamlines messaging, payments, file-sharing, help centers and custom app access for service businesses, landed a $10 million Series A round from investors including YC Continuity and Lachy Groom.

Skillit Inc., a New York-based recruiting platform for skilled, full-time construction labor, was seeded with a $5.1 million investment. Led by Building Ventures, the round included participation from MetaProp, HOLT Ventures, Great North Ventures, 1Sharpe Ventures and Takeoff Capital.

Architect Financial Technologies Inc., a Chicago-based developer of trading infrastructure for digital asset markets, completed a $5 million funding round from investors including Circle Ventures, Coinbase Ventures, SV Angel, Third Kind Venture Capital, Motivate Venture Capital and others.

SphereOne, a crypto payment platform, was seeded with a $2.5 million investment. Distributed Global led the round, which included contributions from Newark Venture Partners, Zero Knowledge and others.

• Elliott Management takes big stake in Salesforce
   
• Tech layoffs unwind recent head-count growth, torpedo long-shot projects
   
• How Apple has so far avoided layoffs: lean hiring, no free lunches
   
• Elon Musk sold Tesla shares before company acknowledged weakness
   
• Longer battery life, better screens: the near future of display tech

• Citizen Marc: Why the Andreessen Horowitz founder can’t stop chasing dreams of a new media (The Information)
   
• Google slashes most jobs at Area 120 incubator as part of cuts (Bloomberg)

This newsletter was compiled by Marc Vartabedian 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, Angus Loten,and Marc Vartabedian.

Follow us on Twitter: @wsjvc