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This is a weekly newsletter covering the top stories in startups, venture capital, and cutting-edge technologies. The newsletter is organized into three sections: a recap of the biggest stories of the week, a long-form deep dive into a specific topic, and a profile of a lesser-known fund.
🤖 Tech IPO bonanza!
A slew of technology unicorns and decacorns filed their S-1 papers in preparation for IPOs later this year. This comes after a year-long drought of IPOs after mediocre and poor results from high-profile names like Uber and Lyft. Palantir, Asana, Snowflake, Sumo Logic, Unity Software, and JFrog were among the biggest tech IPOs announced this week. Palantir and Asana are planning to utilize the rising trend of direct listing, while Unity and Snowflake are planning to IPO via the traditional route. (Check out this piece that I co-wrote on innovation in investment banking!) The S-1 filings revealed interesting data about some of the privately held tech unicorns - especially Palantir’s revenue, revenue/customer and (large) losses, and Snowflake’s strong revenue growth YoY. BTW, don’t forget - Ant Financial will be going public this Tuesday in Hong Kong and Shanghai with a record-breaking IPO.
💉 Lyra Health raises a *healthy* round of funding
Mental health care benefits provider Lyra Health raised $110 million in Series D funding, giving it a valuation of $1.1 billion. The funding follows a doubling of membership over the last year, with over 800,000 members joining. The California-based company plans to use the funding to invest in tech-enabled mental health treatments, partner with more customers, and expand its provider network. The funding round was led by Addition, with participation from Adams Street Partners, Howard Schultz, Casdin Capital, Glynn Capital, Greylock Partners, IVP, Meritech Capital Partners, Providence Ventures, and Tenaya Capital.
🧬 Freenome researches new cash
Biotech startup Freenome raised an oversubscribed $270 million Series C round of funding this week. The company is developing a proprietary multiomics platform for early cancer detection through blood tests. Freenome will use the funding to accelerate its clinical trial for colorectal cancer screening and lesion detection, and advance development of its portfolio of other tests. The round was led by Bain Capital Life Sciences and Perceptive Advisors, with participation from Fidelity, Janus Henderson, Farallon Capital Management, RA Capital Management, T. Rowe Price Associates, and BrightEdge Ventures.
🎥 Restream records additional funding
Live streaming tool Restream announced a $50 million Series A round this week, in conjunction with the launch of its broadcasting production center. Restream Studios enables customers to broadcast live content from the cloud to viewers across 30 social platforms. The Austin-based company plans to use the funding on hiring, product development, and global expansion. The round was led by Sapphire Ventures and Insight Partners, with participation from Silverton Partners, Anorak Ventures, Liquid 2, Colopl Next, Mana Ventures, and Iskra Ventures.
🖼 MURAL paints a new round of funding
San Francisco-based MURAL closed a $118 million round of funding led by Insight Partners with participation from Tiger Global Management, Slack Fund, and World Innovation Lab. The startup is developing a digital workspace for visual thinking and remote collaboration. MURAL plans to use the funding to expand go-to-market strategy, increase hiring in Americas and Western Europe for product, and expand customer support.
💵 Finix sees a large payment of cash
Payment infrastructure startup Finix raised a $30 million extension to close a $75 million Series B round. The San Francisco-based company develops payment processing infrastructure platforms that allow its customers to bring e-commerce payments in house, rather than pay a middle-man. The funding will be used to increase hiring significantly. The round was led by Lightspeed Venture Partners and American Express Ventures, joining current investors Bain Capital Ventures, Insight Partners, Visa, Sequoia Capital, and Inspired Capital Partners.
I like to profile lesser-known venture funds who are focused on impact investing, run specialized mandates, or have a diverse set of GP’s leading the fund. Let me know if you come across an interesting fund!
This week, I’ll be profiling Village Capital, an early stage accelerator that focuses on supporting impact-driven startups. Since 2009, Village Capital has worked with over 1,100 entrepreneurs in 28 countries. They focus on startups who are building solutions in the areas of sustainability, financial health, and the future of work. The firm is led by Allie Burns, who spent years previously working with tech pioneers Steve and Jean Case at the Case Foundation and at Revolution. Village Capital is a big proponent on making the future of entrepreneurship more inclusive and sustainable, which has shown in their portfolio of investments. 30% of their portfolio is invested in Black or Latinx founders and 46% in female-led founders, with a supermajority of their investments also outside the stereotypical areas of CA, NYC, or MA.
Village Capital takes a very active role in training, mentoring, and advising their founders through the growth of their startup, and helps their startups find excellent investors who are a perfect fit. They mainly focus on investments in the seed-stage and Series A rounds.
Recent investments that excite me include:
Nepris, a cloud-based teaching platform designed to connect educators and industry experts
Bond.AI, a financial intelligence platform designed to help banks understand user behavior
YouVerify, an online screening platform providing identity and background screening for enterprises and startups in Africa
Recent exits include:
Lendflo, an invoice financing platform using machine learning to solve the problem of cash flow built on the Ethereum blockchain
AbleTo, a behavioral health care platform that provides structured therapy programs
Growers, a digital agriculture management platform that allows farmers to simplify decision making and improve farming performance
We’re changing gears this week - we’ll be doing a sector by sector focus of major VC activity in place of the long-term for a couple weeks!
Q2 2020 proved to be only slightly hit by the economic downturn of the COVID-19 pandemic, with deal value decreasing to $6.3 billion from $6.6 billion in Q1 2020. The number of deals dropped a good amount, with 360 deals closing - the lowest since Q2 2017. With deal value staying pretty consistent and # of deals dropping, this is indicative of larger rounds of funding going to more mature firms, with less money to early-stage fintechs.
Major funding rounds, IPOs, and M&A transactions can be seen above.
An excellent market map by Pitchbook highlights the segmentation of the industry. There’s generally eight areas in FinTech - alternative lending, InsurTech, Consumer Finance, WealthTech, Capital Markets, Payments, RegTech, and Digital Assets. In the last few months, payments, capital markets, and InsurTech have seen the most dramatic boosts with online marketplaces being used much more heavily, a dramatic shift of day-traders entering the markets, and increased need for protection against business and personal loss. Alternative lending has been hit critically, with many startups seeing severe shakedowns in their businesses due to extremely low interest rates and low appetites for loan securitization.
The top VC investors in fintech over the last decade include:
|Investor Name||Deal Count|
|New Enterprise Associates||79|
If you have any suggestions, comments, or ideas, please feel free to reach out to me at rohil at upenn dot edu.Written on August 30th, 2020 by Rohil Sheth