Good day. Foreign investment by U.S. venture firms dropped in 2022 and continued declining this year, according to data from analysis firm PitchBook Data. At a time when the U.S. venture market has cooled, investors have less reason to go abroad to seek deals.

U.S. investors participated in venture deals totaling $17 billion abroad in the fourth quarter of 2022, a 70% drop from the $57.6 billion in global deal volume with U.S. participation in the fourth quarter of the prior year, according to PitchBook. Venture markets slowed during this time in the U.S. as well, but the decline in global deals with U.S. participation was more dramatic.

“In a market like this, where it’s really slow already, any extra pressures or risks that come from investing, make it that much more difficult,” said Kyle Stanford, an analyst at PitchBook.

Our article today looks at how some venture investors have shifted their approach to at least one major foreign market.

And now on to the news...

U.S.-China venture capital ties weaken further. China’s booming technology market and a huge consumer base once attracted U.S. venture capital. Regulatory crackdowns in both nations have made investing challenging.

• Amid a general market slowdown, U.S. venture investors participated in 68 deals in China totaling $1 billion so far this year, according to market tracker PitchBook Data. That is on track to be the lowest annual activity since 2014. By deal count, U.S. venture activity in China peaked in 2021, when American investors took part in 572 deals totaling $32.9 billion, according to PitchBook.
   
• Major American venture firm Sequoia Capital said Tuesday that its China arm, launched in 2005, will become a separate entity. Sequoia has faced scrutiny from the U.S. government over investments in China.

The Securities and Exchange Commission on Tuesday sued Coinbase alleging the U.S.’s largest crypto platform violated rules that require it to register as an exchange and be overseen by the federal agency, The Wall Street Journal reports.

• The case is the second in two days against a major crypto exchange, following the regulator’s enforcement action against Binance and its founder Changpeng Zhao on Monday.
   
• The Coinbase lawsuit, filed in Manhattan federal court, is another significant move by the SEC and Chair Gary Gensler to try to regulate the entire crypto industry, including its biggest players.

Major indexes have overcome a series of challenges to power higher this year. But some investors are worried that this performance rests on just a few heavyweight stocks, WSJ reports. The S&P 500 has climbed nearly 12% this year and is poised to enter a new bull market after rising almost 20% from an October trough. Most major indexes in Europe are up more than 10% in 2023.

• But for some investors and analysts, things don’t look so cheery below the surface. Market breadth, which reflects how many stocks participate in a rally, has narrowed, signaling possible trouble ahead.

Funds

European-focused Isomer Capital, based in London, held the first close of its third flagship fund, which has a target of €250 million.

People

Early-stage crypto investor Electric Capital promoted Ken Deeter and Maria Shen to general partners. 

NightDragon, a growth and late-stage investor focusing on the cybersecurity, safety and privacy industries, named Joe Bubniak as vice president of corporate development and partnerships.

Charm Industrial, a San Francisco-based carbon removal technology startup, scored $100 million in Series B funding. General Catalyst led the round, which included participation from Lowercarbon Capital and others. Hemant Taneja, General Catalyst’s chief executive and managing director, will join the company’s board. Charm removes CO₂ permanently from the atmosphere by converting biomass into a stable, carbon-rich liquid, which it then pumps underground.

PayNearMe, a Santa Clara, Calif.-based payments platform, completed a $45 million Series D round from investors including Costanoa Ventures.

Curri, a startup focused on last-mile logistics for construction and industrial supplies, collected $42 million in Series B funding led by Bessemer Venture Partners.

Ecovative Design, a Green Island, N.Y.-based mycelium technology company, raised more than $30 million in Series E funding led by Viking Global Investors, with about half of the money going to its MyForest Foods subsidiary.  The investment will support Ecovative's plans to scale its Forager business, which supplies sustainable textile and foam products, and will also help grow the retail footprint of MyForest Foods’ flagship product, MyBacon.

Oxccu, a U.K.-based climate tech startup, landed $22.7 million in Series A funding led by Clean Energy Ventures. The company’s technology converts carbon dioxide and hydrogen into sustainable aviation fuel.

Hubble Network, a Seattle-based startup creating a global satellite network that any bluetooth enabled device can connect to, closed a $20 million Series A round led by Transpose Platform.

Sourcemap, a New York-based supply chain mapping and monitoring software provider, secured $20 million in Series B financing led by Energize Ventures.

Amogy, a Brooklyn, N.Y.-based ammonia power startup, landed $11 million in Series B2 funding from Marunouchi Climate Tech Growth Fund and others. To date, the company’s scalable ammonia-powered, zero-emissions energy system has been demonstrated successfully in a drone, heavy-duty tractor and semi truck.

Boom, an Austin, Texas-based startup enabling users to improve their credit through rental reporting, was seeded with a $4.5 million seed investment led by Starting Line.

Togai, a startup that helps businesses price their products, raised a $3.1 million seed round led by Together Fund.

• Meta's Instagram connects vast pedophile network
   
• How a chatbot went rogue
   
• A 15-year startup pins hopes on green subsidies
   
• Are company boards prepared to deal with cybersecurity?
   
• Apple takes on Meta in race to make headsets the next big thing
   
• The corporate metaverse was on life support. Apple may or may not change that
   
• A new CEO says employees can’t work remotely after all, and they revolt

• Haiqu raises $4 million in pre-seed funding to boost adoption of near-term quantum computing (Quantum Insider)
   
• Do people actually want to wear a headset all the time? (Wired)

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, Angus Loten and Marc Vartabedian.

Follow us on Twitter: @wsjvc