- The venture capital landscape for AI startups has become more focused and selective.
- Investors are starting to gain confidence and make choices in picking platforms for their future investments.
- There is a debate between buying or building AI solutions, with some seeing value in large companies building their own AI properties.
- With the proliferation of AI startups, venture capitalists are finding it harder to choose which ones to invest in.
- Startups that can deliver real, measurable impact and have a working product are more likely to attract investors.
Main topic: Founders Factory Africa raises $114 million to scale its model and support African tech startups.
Key points:
1. Founders Factory Africa combines venture studio and VC models to support early-stage founders in Africa.
2. The firm has partnered with corporates and impact investors to run programs in healthtech, fintech, and agritech sectors.
3. The raised capital will be used to hire talent, bolster support structures, and provide follow-on funding to existing startups.
Hint on Elon Musk: This article does not mention Elon Musk.
Main topic: Peak XV Partners considering leading a financing round in Neo Group, an asset management and financial advisory firm.
Key points:
1. Peak XV is finalizing an investment of up to $50 million in Neo Group.
2. Neo Group, founded by Nitin Jain and other financial service executives, manages over $1 billion in assets.
3. India's asset management industry is attracting more players, with Jio Financial Services and BlackRock forming a joint venture.
Hint on Elon Musk: There is no mention of Elon Musk in the given text.
Main topic: Forbes' list of the 25 most likely venture-backed startups in the U.S. to reach a $1 billion valuation.
Key points:
1. The list features startups from various industries, including manufacturing drugs, baby formula, software solutions, financial services, agriculture, and more.
2. The startups on the list have raised significant amounts of equity funding and have estimated revenue projections for 2022.
3. The list includes companies like Apprentice, Bobbie, Capchase, Chapter, Cleo, GlossGenius, Harvey, Hermeus, Hex Technologies, Hightouch, Jellyfish, Kandji, Labelbox, Loop Returns, Lula, Medallion, Merge, Monarch Tractor, Pendulum Therapeutics, Quince, Sardine, SentiLink, Silo Technologies, Vannevar Labs, and Verifiable.
Main topic: The lack of emphasis on technical diligence in venture capital investments.
Key points:
1. Venture capitalists often prioritize financials and potential over technical expertise when evaluating startups.
2. The presence of any technical co-founder is often seen as sufficient, without considering the specific technical oversight and expertise needed for the company's stage.
3. This blind spot for technical skills in the investment process can lead to suboptimal investments and missed opportunities.
Hint on Elon Musk: Elon Musk is a prominent entrepreneur and investor known for his involvement in various technology companies, including Tesla, SpaceX, and Neuralink. He is often praised for his technical expertise and hands-on approach in leading these ventures.
Main topic: The challenges faced by fintech startups in obtaining funding and maintaining valuations in 2023.
Key points:
1. Global fintech funding declined in Q2 2023, with valuations also dropping significantly.
2. Artificial intelligence (AI) is a hot topic in the fintech space, but investors should be cautious and consider the meaningful application of AI in companies.
3. Navigating the venture landscape as a fintech startup requires resilience, perseverance, and a responsible approach to growth.
Hint on Elon Musk: There is no mention of Elon Musk in the given text.
Main topic: The U.S. Small Business Administration plans to invest billions into venture capital funds to support startups in underserved areas and industries crucial to national security.
Key points:
1. The move aims to modernize the U.S. investment landscape and diversify venture capital investment beyond popular sectors.
2. The program will focus on addressing market gaps and investing in perceived riskier territories.
3. The SBA has allocated up to $6.9 billion for fiscal 2024 to provide substantial funding support.
South African early-stage accelerator and investor Founders Factory Africa (FFA) has raised $114 million to scale its model and better support founders in the African tech ecosystem. FFA combines venture studio and VC models to provide investment and hands-on support to early-stage founders. The firm has partnered with companies like Standard Bank, Netcare, and Small Foundation to select and support startups in fintech, health tech, and agtech sectors. The new capital will be used to hire talent, bolster support structures, and build IP to help founders scale their businesses. FFA also aims to address gender imbalances in the VC market and provide catalytic funding that is nondilutive for founders. The firm is sector-agnostic and is interested in investing in sectors like logistics tech, e-commerce, clean tech, enterprise tech, and HR recruitment.
Main topic: Founders Factory Africa raises $114 million to fund African startups and address gender imbalances.
Key points:
1. Founders Factory Africa secures $114 million in funding from Mastercard Foundation and Johnson & Johnson Impact Ventures.
2. The funding will be used to scale the venture studio across the African tech ecosystem, address gender imbalances, and provide non-dilutive capital.
3. Founders Factory Africa's portfolio includes fintech and healthtech companies across 11 African countries.
Main topic: Seedstars' journey to discover and support high-potential startups worldwide, and its investment thesis in emerging markets.
Key points:
1. Seedstars began as a startup pitch competition to identify promising early-stage companies and build tech ecosystems in emerging markets.
2. Seedstars partners with various organizations to build healthy entrepreneurial ecosystems and supports programs in fintech and other sectors.
3. Seedstars International Ventures II invests in startups in pre-seed and seed stages, with a focus on B2B, SaaS, and marketplaces in emerging markets like Latin America. They have raised their second fund with a target of USD $30 million and have invested in companies like Aviva and Jumba.
Main Topic: Dealmaking in the Middle East region
Key Points:
1. Illuminati Capital raised $50 million for its blockchain and Web3-based gaming fund.
2. Saudi Arabia's early-stage VC fund secured a $1.5 million commitment from Jordan's Innovative.
3. Dealmaking in the Middle East region has seen an uptick.
Main topic: Venture firm Andreessen Horowitz co-leads a $200 million investment in Genesis Therapeutics, a biotechnology startup using artificial intelligence for drug discovery.
Key points:
1. Andreessen Horowitz invests $200 million in Genesis Therapeutics.
2. Genesis Therapeutics applies AI to discover medicines against challenging molecular targets.
3. The funding will help Genesis Therapeutics launch its first clinical trials.
Qatar Investment Authority will invest $1 billion for a 1 percent stake in Reliance Retail Ventures, valuing the company at $100 billion. This investment comes after Reliance Retail Ventures raised about $6.4 billion from various investors, including KKR, General Atlantic, and the Saudi Public Investment Fund.
Main topic: Saudi startup FlyAkeed secures $15.2m in a series A funding.
Key points:
1. FlyAkeed, a Saudi travel technology startup, has secured $15.2 million in a series A funding round.
2. The funding was led by Sanabil Investments, a subsidiary of the Public Investment Fund, and saw contributions from Elm Co., Artal Capital, and Al Rajhi Partners.
3. FlyAkeed plans to use the funds to strengthen its presence in Saudi Arabia and the Gulf Cooperation Council countries and develop fintech solutions for travel experiences and cost management.
In July, capital inflows from venture capitalists in the crypto sector decreased by 10.26%, with $700 million raised, as macroeconomic conditions and geopolitical events continued to impact investment decisions, although some notable outliers, such as Polychain Capital and CoinFund, launched new funds totaling millions of dollars, and the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. could bring renewed attention and capital into the industry. Infrastructure and Web3 sectors received the most capital inflows, while overall investor activity in the blockchain industry remained low, suggesting a slow return to a steady upward trend.
Main topic: Increasing Saudi Arabian investment in U.S. startups.
Key points:
1. Saudi Arabia-based firms have been participating in a growing number of funding deals with U.S. startups since 2019, with the number of deals increasing each year.
2. Saudi Arabia-based firms have also been leading or co-leading more funding rounds, indicating a stronger investment presence in the U.S. market.
3. Saudi Arabian investors, including funds such as Saudi Arabia's Public Investment Fund and Sanabil, have been actively investing in U.S. startups, with notable investments in companies like Uber and Lucid Motors.
The lack of funding for emerging managers in venture capital is impacting early-stage funding opportunities, as VC fundraising decreases and the number of new startups declines, but there is a slight thaw in exits via public markets with promising IPOs from companies like Cava.
Venture capital firm Vessel Capital has launched a $55 million fund to invest in Web3 infrastructure and applications, aiming to assist early-stage crypto founders in launching and growing their projects by providing guidance and advice. The fund's resources will be deployed over a five-year period, and the team's experience as startup founders will enable them to better understand entrepreneurs' needs.
AI has garnered immense investment from venture capitalists, with over $40 billion poured into AI startups in the first half of 2023, raising concerns about who will benefit financially from its potential impact.
Startups in the Middle East and North Africa region have attracted significant investor interest, with MENA startups raising over $76 million in August 2023 and accounting for two of the three exits recorded in the region, indicating its growing role in the global startup ecosystem, although the first half of the year saw a decline in capital attracted compared to the previous year. Additionally, PIF's Jada Fund of Funds Co. has committed to Aliph Capital's GCC fund to support SMEs in Saudi Arabia, and UAE fintech MALY has raised $1.6 million in pre-seed funding. Furthermore, Rewaa, an inventory management platform, has raised $27 million in a Series A funding round led by Wa'ed Ventures.
Global venture funding in August 2023 reached $22 billion, a 19% increase from the previous month but a 16% decrease from July 2022, with late-stage funding experiencing a year-over-year increase for the first time in 18 months, according to Crunchbase data. However, early-stage funding nearly halved and seed funding was down by around one-third compared to the previous year, while deal counts in August 2023 were almost half of the previous year. The largest fundings were in transportation, sustainability, and biotechnology, and the hope for the startup funding landscape lies in upcoming IPOs of well-funded venture-backed companies.
Despite a decrease in venture capital investments in June, new crypto projects are still attracting funding, including Orbital's $6.4 million raise for expanding blockchain payment infrastructure, unshETH's $3.3 million seed round for decentralized finance solutions, ZTX's $13 million funding for Web3 infrastructure development, Stroom Network's $3.5 million raise for Bitcoin staking, and Fxhash's $5 million funding for its digital art platform.
Web3 venture capitalists have established a $20 million fund to invest in blockchain gaming and collectibles projects, as well as other Web3 initiatives.
Despite the hype around AI-focused companies, many venture-backed startups in the AI space have experienced financial struggles and failed to maintain high valuations, including examples like Babylon Health, BuzzFeed, Metromile, AppHarvest, Embark Technology, and Berkshire Grey. These cases highlight that an AI focus alone does not guarantee success in the market.
Saudi Aramco's venture capital subsidiary, Wa'ed Venture, co-led a $52 million funding round for Mighty Buildings, a US-based construction technology startup known for its 3D printing technology in creating environmentally friendly and climate-resilient homes, with the funds dedicated to expanding its factory footprint in North America and entering new markets, including Saudi Arabia and the UAE. Additionally, Saudi Arabia's online marketplace Barakah raised $1.5 million in seed funding to expand its surplus food management operations, while Saudi Venture Capital invested $5 million in a fintech fund managed by UAE-based VentureSouq, focusing on early-stage fintech startups. Furthermore, logistics startup Equiptal secured $1 million in pre-seed funding to expand its team and market presence in Saudi Arabia.
China-focused investment firms have struggled to generate returns for their investors, with only four U.S. dollar-denominated venture capital funds established between 2015 and 2020 able to return all the money invested, reflecting a lack of IPOs and the need for alternative exit strategies such as mergers and acquisitions or general partner-led deals.
Israeli cybersecurity startup Legit Security has raised $40 million in a Series B funding round led by US venture capital firm CRV to help businesses protect their AI-based applications from cyberthreats and security breaches. The funds will be used to boost sales, R&D, and address the emerging threat posed by AI and large language models in application development.
Blockchain Capital closes two new funds with $580 million to be invested in crypto gaming and decentralized finance projects, while venture capital firms SkyBridge Capital, Atlas Merchant Capital, and Vector Capital are among the final bidders to acquire SVB Capital, the venture arm of Silicon Valley Bank. Additionally, Nomura launches a new Bitcoin fund, and Citi Token Services provides payments and liquidity through its private blockchain. Hut 8 also receives final approval for its merger with US Bitcoin.
European AI startups, including Mistral, ElevenLabs, and Synthesia, have attracted significant investment from venture capitalists, with investors pouring $51.9 billion into AI startups in 2023, surpassing the $65.5 billion invested in the sector in 2022. Notable investors in the European AI startup scene include Simon Menashy of MMC Ventures, Amelia Armour of Amadeus Capital, Mish Mashkautsan of Phoenix Court, and Remy Minute of Ascension.
Global venture funding in Q3 2023 reached $73 billion, marking a slight increase from the previous quarter but a 15% decline compared to the same period in 2022, with seed and early-stage funding continuing to decline while late-stage funding increased, particularly in strategic sectors such as semiconductors, AI, electric vehicles, and sustainability. The IPO markets also showed signs of easing, with two venture-backed startups going public in September for the first time in 18 months. Additionally, AI companies raised over $10 billion in Q3, and late-stage funding saw growth outside of North America, particularly in Asia and Europe. However, the global funding slowdown persisted, with a 42% decline year over year in the first three quarters of 2023.
Venture capital investor Tim Draper shares his excitement for artificial intelligence and predicts a bright future for Bitcoin, emphasizing its decentralized nature and potential for increased adoption. He also discusses his successful investments, his private university, and his Bitcoin-native digital nation, which aims to improve governance.
Venture capital investor Tim Draper discusses his excitement for artificial intelligence and the potential of Bitcoin reaching $250,000, while also sharing his investments in companies like Otter.ai and Robinhood, as well as his experiment with a Bitcoin-based digital nation called Draper Nation.
UAE-based startup Zest Equity has raised $3.8 million in seed funding to develop tools for facilitating fast and transparent transactions in the private market, aiming to increase liquidity through secondary deals and expand into other emerging markets.
The blockchain gaming industry received $600 million in venture capital investment in Q3 2023, a 38% decrease from Q2, bringing the total funding for the year to $2.3 billion; however, this is only 30% of what was raised in 2022, while the broader gaming industry has been hit hard with over 6,100 job losses.
Venture capital funds are showing reduced interest in crypto, with investments reaching their lowest levels in over a year, but there are still crypto-native investors actively deploying capital and showing faith in the industry. The overall downturn in the market and regulatory uncertainty are contributing factors, pushing investors to conduct thorough due diligence and prioritize projects with tangible credibility and mainstream adoption potential.
While venture funding in Asia declined 8% from Q3 last year, it increased by 8% from the previous quarter, with China and Israel driving the growth despite geopolitical tensions, according to Crunchbase data. Chinese startups raised $14.1 billion in Q3, a 20% increase from Q2, possibly fueled by significant funding rounds for EV and semiconductor companies. Israeli startups also had a strong quarter, raising $1.4 billion, supported by investments in cybersecurity and AI. However, India's venture funding decreased by 34%, and South Korea saw a drastic 40% decline.
