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Bankruptcy Filings by Startups Surged in 2023
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By Marc Vartabedian, WSJ Pro
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Good day. In the current cash-strapped fundraising environment, more startups are approaching the end of their cash runways, as figures on bankruptcy filings last year underscore.
Bankruptcy filings by private equity- and venture capital-backed companies in the U.S. jumped 174% last year from the prior year to 104, according to analytics firm S&P Global Market Intelligence.
The increase reflected the difficult fundraising environment, said Ernst & Young U.S. venture-capital leader Jeffrey Grabow. Startups raised a huge amount of capital from venture investors in 2021 and the years leading up to it, Grabow said. Since the market soured in 2022, those companies have been conserving cash to stay afloat as raising capital grew difficult, he added.
“But they’re running out of levers to pull,” Grabow said, adding he expects to see more startups throw in the towel this year.
Portfolio companies of private equity and venture firms accounted for more than 16% of all U.S. bankruptcy filings in 2023, their largest share of company bankruptcies going back to at least 2010, according to S&P.
Coworking space operator WeWork’s filing for chapter 11 protection in November marked one of the largest bankruptcies of private equity- or venture-backed businesses in 2023, according to S&P. Meanwhile, the healthcare and consumer sectors accounted for the most bankruptcy filings last year in the private equity and venture industries.
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And now on to the news...
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Sayari Labs Chief Executive Farley Mesko, left, founded the company with Chief Operating Officer Benjamin Power, right. PHOTO: MFIELDS PHOTOGRAPHY
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TPG Acquires Supply-Chain Risk Company Sayari Labs
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Private-equity firm TPG is acquiring venture capital-backed risk management technology company Sayari Labs, which works with clients that include the U.S. Labor Department to help expose risks in supply chains and corporate networks, WSJ reports.
TPG is making the $228 million majority investment through TPG Growth, the firm’s middle-market and growth-equity platform.
Sayari also has contracts with other U.S. government agencies including Customs and Border Protection and the Treasury Department, as well as government agencies in Canada, Australia, the U.K. and European Union. The Washington, D.C.-based company helps these clients support trade enforcement, as well as monitor risks associated with forced labor, military end use restrictions, and other complex investigations.
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$140 Million
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Under the tenure of superintendent Adrienne Harris, the New York State Department of Financial Services has levied more than $140 million in penalties against crypto companies.
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Genesis Global Trading to Pay $8 Million for Compliance Failings
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Crypto brokerage firm Genesis Global Trading has agreed to pay $8 million in a settlement with New York state’s financial regulator over alleged failings in its anti-money-laundering and cybersecurity programs, WSJ reports. Genesis Global Trading, part of the now-bankrupt Genesis Global Holdco LLC, closed its U.S. spot crypto trading operations in September and is in the process of winding down. As part of its settlement with the New York State Department of Financial Services, the trading unit will surrender its BitLicense, which allowed it to operate a crypto business in New York, the regulator said in a statement Friday.
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A Potential Mega-IPO Is in U.S.-China Crosshairs
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The initial public offering of fashion giant Shein could be one of biggest in years—if the company successfully navigates a minefield of U.S.-China tensions, WSJ reports. China-founded Shein, now based in Singapore, has quickly become one of the world’s largest fast-fashion retailers, valued at around $66 billion in its most recent fundraising round last year. Now its IPO depends on its ability to satisfy authorities on both sides of the Pacific.
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Two months after Shein confidentially filed for an IPO, the Securities and Exchange Commission has yet to respond in writing to its filing, according to people familiar with the matter. The delay is highly unusual, capital-market attorneys and bankers say.
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People
Bain Capital Ventures promoted Rak Garg to partner. Prior to joining the firm, he was at Atlassian.
Pasadena, Calif.-based Calibrate Ventures appointed Katie Vasquez to the role of investor. She was previously at MTech Capital.
Singapore-based cross-border payments startup Thunes named Floris de Kort as the company’s new chief executive officer. He was previously CEO of TSG, which merged with Clearent.
Intelecy, an Oslo-based startup using artificial intelligence to help enable more sustainable industrial production, added Camilla Gjetvik as its new chief executive officer. She was previously chief operating officer of Boost AI.
Labster, an edtech platform for virtual labs and interactive science, appointed Shawn Boom as chief executive officer. He was most recently CEO and chairman of Vanco.
Cloud security provider Orca Security appointed Raf Chiodo as chief revenue officer. He most recently led sales for the Americas at Lacework.
Ayar Labs, which develops silicon photonics for chip-to-chip connectivity, named Vladimir Stojanovic to the post of chief technology officer. Prior to co-founding Ayar Labs, he co-founded NanoSemi, which was acquired by MaxLinear.
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Myrobalan Therapeutics, a Medford, Mass.-based startup developing oral therapies aimed at reversing pathologies underlying brain dysfunctions and central nervous system conditions, completed a $24 million Series A round led by Co-win Ventures.
Clinia, a Montréal-based provider of healthcare search technologies, said Telus Ventures is leading the company’s 10 million Canadian dollar Series A round.
Mercor, an AI-powered hiring platform based in San Francisco, picked up a $3.6 million investment led by General Catalyst.
Korr, a New York-based insurtech startup, closed a $3.2 million seed round led by Motive Ventures.
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Walter de Heer, a professor of physics at Georgia Institute of Technology, holds a molecular model of graphene in his lab. PHOTO: GEORGIA INSTITUTE OF TECHNOLOGY
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What is a VC orphan and what to do if you become one? (Sifted)
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Crisis at Carta: How Henry Ward’s dream of a Nasdaq for private startups died (The Information)
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How to pick a name for your AI startup (TechCrunch)
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