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After Narrowing, Bid-Ask Spread Widens Again
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By Marc Vartabedian, WSJ Pro
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Good day. The effects of Silicon Valley Bank’s collapse in March continue to ripple through the venture and startup ecosystem.
Take the bid-ask spread on the secondary market, or the gap between what buyers are willing to pay and what startup shareholders want.
After narrowing from last summer through the end of the year, the average bid-ask spread on the secondary market is now widening again, according to data from financial technology company Zanbato Inc. The Mountain View, Calif.-based company tracks the metric in secondary transactions on its trading platform, which can offer insights on the broader market.
The average bid-ask spread rose from 7% in January 2022 to peaks of 21% in August and October of last year. Zanbato Chief Growth Officer Akrati Johari attributed the increase to sellers refusing to lower prices amid macro uncertainties. Sellers then got more realistic, Ms. Johari said, and the spread narrowed to 13%
But over the last several months, the spread has climbed to 20%, nearly back to its previous high, according to the most recent Zanbato data. Ms. Johari attributes the rebound in part to uncertainties caused by the banking crisis and how it has rocked the venture and startup ecosystem.
“Certainly, the uncertainty from SVB and the broader banking crises has impacted bid-ask spreads,” Ms. Johari said.
Whether buyers can work out deals with sellers with high pricing expectations remains to be seen and could indicate where the fundraising market is headed.
And now on to the news...
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CoreWeave co-founder and CEO Michael Intrator. Photo: CoreWeave
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AI deal. CoreWeave Inc., a six-year-old startup that provides specialized cloud infrastructure for generative artificial intelligence, ChatGPT-like language models and other computing-heavy applications, has joined a group of technology startups bucking a monthslong slump in venture-capital investing, WSJ Pro’s Angus Loten reports.
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CoreWeave on Thursday said it raised $221 million in a Series B funding round, the kind of outsize round commonplace during the recent boom but rare in today’s sagging market.
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By providing the underlying computing power to run an ever-expanding range of energy-hungry AI applications, CoreWeave is filling a need that legacy cloud providers are struggling to meet, with demand unlikely to ebb any time soon, analysts say.
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$17 Billion
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Credit Suisse Group AG bondholders have launched a legal challenge in Switzerland against regulators’ decision to write down this amount in securities as part of UBS Group AG’s rescue of the troubled bank last month.
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Old-School Rules Apply to New-School DeFi Exchanges
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Backers of so-called decentralized finance say their peer-to-peer cryptocurrency platforms eliminate both human intermediaries and the need for government oversight. Regulators’ response: Not so fast. Decentralized finance, or DeFi, platforms should already be following rules for stock exchanges, the Securities and Exchange Commission said last week in a 166-page supplement to an earlier rule proposal, WSJ reports. DeFi platforms use algorithms known as smart contracts to match buyers and sellers of crypto tokens. Users typically store their funds in crypto wallets that they control—known as self-custody—rather than leaving them with a centralized exchange such as Coinbase Global Inc.
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General Atlantic Exits Cancer-Care Investment
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Private-equity firm General Atlantic is cashing out its investment in cancer-care specialist OneOncology through a deal that values the business at $2.1 billion, the latest in a string of lucrative healthcare deals, WSJ Pro reports. General Atlantic, a New York-based growth investor, became the majority owner of the newly formed company in 2018 with a $200 million investment. Buyout firm TPG Inc. and healthcare company AmerisourceBergen Corp. agreed to buy OneOncology, with AmerisourceBergen obtaining a roughly 35% stake for $685 million. TPG would hold the majority stake. AmerisourceBergen, which is rebranding as Cencora to reflect its expansion
beyond drug distribution, has an option to buy out TPG down the line.
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Tech Billionaires Bet on Fusion as Holy Grail for Business
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Sam Altman became a tech sensation this year as the CEO of OpenAI, the artificial-intelligence startup that seems pulled from science fiction. But Mr. Altman, who has been among Silicon Valley’s most prominent investors for more than a decade, has placed one of the biggest bets of his career on a company that might be even more futuristic: a nuclear-fusion startup called Helion Energy Inc. He is one of a number of tech founders and billionaires who hope to harness the process that powers the sun and stars to deliver almost limitless energy, WSJ reports. Jeff Bezos, Peter Thiel, Bill Gates and Marc
Benioff are among those betting that the decadeslong goal of building fusion reactors is now within years of being reality.
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WSJ Pro Private Equity is launching our latest annual survey of secondary market buyers. Now in its ninth year, our annual report on secondary buyers dives deep into a range of issues that shape secondary transactions, including pricing, deal structures, use of leverage and so much more. If you are a secondary investor you can access the survey at this link.
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Funds
Financial services-focused Vesey Ventures closed its debut fund with $78 million in commitments. Based in the U.S. and Israel, the firm was founded by three former managing directors at AMEX Ventures.
People
Life sciences investor Sofinnova Partners said Mary McCarthy has joined the Sofinnova Industrial Biotech Strategy team as partner, where she will focus on early-stage companies developing biotech-enabled sustainable technology in agriculture, food, chemicals and materials. She was previously a partner at Brightlands Venture Partners.
Digital solar energy platform Zolar appointed Jamie Heywood as chief executive, succeeding co-founder Alex Melzer. Mr. Heywood joins the Berlin-based company from Uber.
Intellimize, which helps SaaS and e-commerce businesses personalize website experiences for marketing campaigns, promoted Tracy Sestili to chief marketing officer. Prior to joining the company, she was at Fountain, SparkPost, CA Technologies, Cisco and TiVo.
Abata Therapeutics, a Watertown, Mass.-based developer of medicines for patients with severe autoimmune and inflammatory diseases, appointed Leonard “Lenny” Dragone to the post of chief medical officer. He was most recently CMO at Sonoma Biotherapeutics.
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Cortica, an autism-care provider, landed a $75 million investment from Deerfield Management and others. The company also acquired Springtide Child Development and the Melmed Center.
Ditto, a San Francisco-based distributed data platform that enables apps to synchronize data in real-time with or without internet connectivity, closed a $45 million Series A round led by Acrew Capital.
Mooncard, a France-based corporate expense management provider, picked up a €37 million investment from Portage Ventures and others.
Avalor, an Israeli startup that helps companies make sense of security data, completed a $25 million Series A round. TCV led the investment, with Partner Morgan Gerlak joining the company’s board.
Ariceum Therapeutics, a Berlin-based startup developing radiopharmaceutical products for the diagnosis and treatment of certain hard-to-treat cancers, added €22.8 million in Series A funding co-led by Andera Partners and Earlybird Venture Capital.
Sonet.io Inc., a San Jose, Calif.-based startup helping to fix remote work challenges for distributed workforces, emerged from stealth with $6 million in seed funding co-led by The Hive and WestWave Capital.
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Lyft decided not to diversify outside transportation during the pandemic.
Photo: Al Seib/Los Angeles Times/Getty Images
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The impending fight for private equity buyout lending (The Information)
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