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Hello wonderful founders!
Before we dig in, I owe you a warning: the first section is bleak reading. Tldr - VC funding is down and founders looking to raise may find it tougher than expected. But deals are still being done, and in the second section, I’ll be sharing news from startups that announced their raises this week.
If you didn’t get the chance to listen to last week’s podcast, check out the interview with Kashif Zaman, who raised nearly $1m from angel investors.
The State of VC
Juniper Square released their Q3 2023 report and it’s not happy reading, though there are a few areas of promise.
VCs raised $9.4 billion from LPs
That’s 56% less than the previous quarter and the lowest amount raised in nearly a decade.
Smaller and fewer funds
Average fund size went from $161m in Q2 to $84.7m and the number of funds that recorded a successful first close went from 132 to 111 (which to be fair, is still above the ten year average, so it’s not all bad).
Exit value increased
$35b is significantly more than Q2’s dire $6.6b, but the truth is this only looks good because of how bleak the last year has been for exits. In general, fewer companies are exiting (this number has dropped for eight consecutive quarters) and for smaller amounts.
Who will get funded?
The less capital VCs have to deploy, the higher their bar for investing. Founders that may have secured funding at the top of the bull may not even get a meeting during a bear.
The founders that get funded in this environment will be the ones that do more with less.
They won’t wait for funding to build an MVP; they’ll learn to code before work, sweet talk an old colleague into doing it for equity, or work a second job to afford to hire a freelancer.
They won’t wait for funding to find customers; they’ll have a spreadsheet full of names and roles and they’ll have interviewed everyone they can possibly find to understand their problems as deeply as possible.
If you’re waiting for funding to take action, you need to rethink your plan. That money is probably going to someone who found a way to do more with less.
It’s time to get scrappy. What can you do to take action and move forward?
This week in fundraising
It’s not all doom and gloom, though. As I said, deals are still getting done. Here are a few startups who announced their raises this week:
Wraithwatch - AI, Cybersecurity - $8m
This American startup was founded 1 year ago and was funded by Founders Fund, XYZ Capital, and Human Capital.
Coperniq - Energy Management - $4m
This American startup was founded 4 years ago and was funded by Initialized Capital and Y Combinator.
Dreamfarm - Food - $5.4m
This Italian startup was funded by Giampolo Cagnin and Francesco Mutti.
Flitter - Automotive Insurance - $3.8m
This French startup was founded 2 years ago and was funded by Helvetia Venture Fund.
Kento Health - AI, Healthcare - $3m
This Canadian startup was founded 1 year ago and was funded by Boreal Ventures, N49P, Broom Ventures, and Graphite Ventures.
Mogul - Blockchain, PropTech - $3.6m
This American startup was founded 2 years ago and was funded by AY Ventures, Tim Draper & Associates, Draper B1, InterVest, Draper Dragon, and Blizzard Fund.
Upciti - Hardware Sensors - $6m
This French startup was funded by Point Nine, Chalfen Ventures, Demeter, and Innovacom.
I added 30 startups to my funding spreadsheet this week, which now has more than 100 startups that announced their early stage raises in the last two weeks. If you’d like a copy, just follow the steps below to refer a friend to subscribe to this newsletter.
Have a great weekend.
Nelson
