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Israeli tech companies are struggling to raise funds, thanks to concerns over the country's judiciary overhaul and the global economic downturn. The tech sector in the country was hit harder in Q1 2023 than almost any other country in the world. More: - In Q1 2023, Israeli tech companies raised $1.7B, a 70% drop YoY and the lowest quarterly fundraising level in four years.
- Globally, funds saw a 13% decrease across the tech sector in Q1, according to the analytics firm CB Insights.
- Some are saying investor confidence is low because of the turmoil sparked by Prime Minister Benjamin Netanyahu's plan to overhaul the country's judicial system.
- Other investors have pulled back investments due to high inflation rates, a trend seen all over the world.
Zoom Out:
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What the numbers say: The number of venture-backed startups acquiring other startups dipped to 82 in Q1 2023, down from 137 such transactions completed in Q1 2022. Deals completed have dropped consistently every quarter since Q1 2023, with values stabilizing around the 90 mark in each quarter in the second half of 2022. 
Relevance: The downward trend can also be seen in global M&A deals involving VC-backed startups. In Q1 2023, M&A deals involving cybersecurity and fintech startups declined 57% YoY and 37% YoY. What happened: The trend contradicts initial expectations about an uptick in M&A activity due to the shortage of venture capital. M&A activity has remained subdued as founders are unwilling to accept lower valuations. However, that may change in the latter half of this year as startups run out of cash, forcing some to resort to M&A due to a lack of venture capital. Whit Bouck, a partner at Insight Partner, said, "I think it's likely the market at large will see an increase in M&A activity."
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Poparazzi, the photo-sharing app that saw high popularity in 2021, is shutting down. The company announced that users have until June 30, 2023, to download their content. More: - Just last year, the founders announced that the app had been downloaded over five million times. They also confirmed they had raised $15M in Series A funding.
- The company had previously received $2M in seed funding.
- The app generated a lot of hype after being released in 2021, hitting the top spot on the Apple App Store charts.
- The app's experience was geared toward a more candid feed rather than polished photos from Instagram. You could tag friends in a picture, but you couldn't post a photo of yourself.
- Only 2,000-3,000 monthly users are active, despite more than six million downloads all time.
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The board of directors of messaging app startup IRL appointed Scott Kauffman as an acting CEO, taking up the post vacated by Abraham Shafi. Per The Information, the board suspended Shafi after a report emerged highlighting a pattern of misconduct. News of Shafi's departure from the role weeks after a former IRL employee, Nicholas Grant, accused the company of using bots to inflate user numbers. More: - In the unfair dismissal complaint, Grant alleged that the company fired him two months after he alerted IRL's executives about the presence of a high percentage of bots.
- IRL informed investors last year that its app had 20 million monthly active users. However, Sensor Tower estimates the number of actual users to be between one million to two million.
- At its most recent funding round in 2021, IRL was valued at $1.2B.
- To date, the firm has raised $200M from investors, including SoftBank Vision Fund and Founders Fund.
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 A message from IMPACT It's time to take your influencer marketing and transform it into an influencer partnership program. What's it take to do that? Going beyond recruitment and onboarding to full life cycle influencer relationship management. Find out about what it takes to manage influencers throughout the Discover, Recruit, Onboard, Engage, and Optimize stages in this handy infographic. View Here
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Factorial Capital, created by early-stage investor Matthew Hartman, is partnering with Clément Delangue, co-founder and CEO of the AI platform Hugging Face, to boost investments in open-source AI companies. Factorial Capital, the new venture firm, will partner with angel operators and give checks — on average of $100,000 — to companies focused on AI. More: - Delangue, the initial partner of Factorial Capital, and Hartman have already backed two startups: flower.dev, which builds privacy-friendly systems for AI training, and Nomic AI's GPT4All, which is an open-source chatbot library.
- Factorial has already raised $10M for its debut fund.
- The partners will manage their own portfolios and split the economics with Factorial.
- Hartman and Delangue have known each other for nearly seven years, as Hartman's previous company, Betaworks Ventures, was the first investor in Hugging Face.
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Speech analysis startup Yoodli unveiled a new AI-powered tool that helps users simulate job interviews. The tool can simulate mock interviews, evaluate speech patterns, ask follow-up questions, and offer feedback. More: - Yoodli's platform leverages generative AI tools to come up with follow-up questions.
- Additionally, the speech coach analyzes the user's responses to offer context feedback and guidance.
- Yoodli will roll out the platform through its partnership with Toastmasters, which has over 300,000 members.
- Students at the University of Washington Foster School of Business are currently testing Yoodli's platform to practice for job interviews.
- Yoodli has raised $7M in funding to date from Madrona Venture Group, Cercano Capital, A12, and others since its establishment in 2021.
Zoom out: - Yoodli's platform faces competition from similar speech coach platform offerings developed by Read AI and Orai.
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Last week, we asked our startups community, "What does your startup need help with most?" Here are some highlighted responses we received: - Jake DiBattista (p/jake591049), CEO at Youni, answered, "Funding and user traction are always the toughest parts when you're first getting started for me."
- Kendall Egan (p/kendall-egan), Co-Founder at Boxx LLC, answered, "We need to grow brand awareness about Boxx Backyard Studios and expand our reach to our regional area (Northeast Corridor from Philadelphia to Boston). I am thinking hyper-local advertorials because they are nice links that live on "forever" and we can also boost them through paid social. I am open to more ideas!"
- Stewart Townsend (p/StewartTownsend), CMO at Podcast Hawk, answered, "Scaling the business as we move from B2C to the B2B model and reaching out to Podcast Booking agencies, the challenge is building the list and messaging whilst maintaining the B2C sales model, I need to be cloned and look at more automation models to take away some of the day to day task time so that can be re invested into the sales focus. Like any bootstrapped startup its the balance of increasing revenue to then get to point to hire people/contractors to take over roles rather than being the master of none."
Join the conversations at Inside.com, and we may shout out your name and business or contact you for more! ⭐️
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Quick Hits: - The company behind these surgical robots is planning to list on Nasdaq. Last day to fund your investment is on 5/10.*
- Vera Equity received $20M in capital commitments towards its debut fund to back early-stage fintech startups.
- Israeli AI startup Alison secured $5.1M in pre-seed funding from Andreessen Horowitz, Crescendo Venture Partners, and yellowHEAD.
- Stakeholder engagement platform Fresh Equities raised $4M led by Sydney VC EVP. The firm rebranded as InvestorHub.
- Health data analytics startup Healthmetryx joined the Rev Startups Accelerator program.
- Indian Enforcement Directorate is investigating a potential violation of the Foreign Exchange Management Act at edtech startup Byju's and conducted a weekend raid to seize documents and digital data.
- Demo Divvy, get an Ember heated mug. Hot coffee and quick and easy expense management — get both when you demo Divvy.*
*This is sponsored content.
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 |  | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.
Christopher Hachey is an editor based in the New York City area. Reach out to him at chris@inside.com | | | | Editor | Vibha Chapparike is a Freelance Writer & Editor at Inside.com. With her post-graduation in Management and Finance completed, Vibha is expanding her knowledge in venture capital, business, startups, and technology. She has had a career in public relations and communications. An ardent reader and writer currently residing in Singapore, you can follow Vibha on Twitter @VChapparike. | |
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