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| Hey Insiders, Today we are bringing you an analysis of why startup failures are on the rise and why a federal judge dismissed a lawsuit against a DeFi startup. We have also rounded up the top funding rounds of this week.
Scroll down for some quick hits, and let us know what other content you'd like to see in future issues. Karan
p/karan-chafekar | |
| 1 | | Crunchbase data shows that 72 startups have shut down so far this year. The startup failure rate is increasing, with IVP's general partner Tom Loverro predicting many more on the horizon. Recent startups that failed include biotech startup Goldfinch Bio, wine startup Underground Cellar, fintech firm Plastiq, and pizza maker Zune. More: - Startups running low on cash reserves will have to resort to cram-down rounds or acquisitions at heavily discounted valuations to avoid failures.
- The lack of VC funding in 2023 is the prime reason behind many failures, as several startups still have high cash burn rates causing them to exhaust their capital reserves quickly.
- Plastiq and Zune had raised $140M and $500M from VCs before they shut down, respectively.
- Loverro is advising portfolio startups to "surgically pare down expenses" to avoid failure.
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VCs deployed $580M in North American startups between pre-seed and Series A stages this week from 29 May to 2 June, per Crunchbase data. Funding deployed this week was up 52% from last week. Biotech startups raked in 38% of the funding this week. Healthcare, AI, and finance startups nabbed 15%, 11%, and 4.5% of the financing, respectively. Here are the 10 largest rounds announced this week: - AI
- Mountain View, Calif.-based AI efficiency startup Granica raised $45M in Series A funding from New Enterprise Associates, Bain Capital Ventures, and others.
- Biotechnology
- Palo Alto, Calif.-based biotech startup Bitterroot Bio emerged from stealth with a $145M Series A funding backed by ARCH Venture Partners, GV, and others.
- San Diego-based gene therapy startup Kate Therapeutics emerged from stealth with a $51M Series A round co-led by Westlake Village BioPartners and Versant Ventures.
- Autoimmune and inflammatory diseases treatment biotech startup Mozart Therapeutics raised $25M in Series A extension funding from Pfizer Ventures, AbbVie Ventures, ARCH Venture Partners, Sofinnova Partners, and others.
- Health Care
- Andreessen Horowitz led a $33M seed and Series A funding into New York-based virtual medical practice startup Pomelo Care.
- Healthcare contracting and administrative partner startup Yuvo nabbed $20.2M in Series A funding led by Mastry Ventures.
- Healthtech startup RxLightning closed its Series A round with $17.5M in fresh capital. LRV Health led the funding round with participation from McKesson Ventures, Hearst Ventures, and others.
- Data
- Portland, Ore.-based cloud data startup Hydrolix secured $20M in Series A funding led by Nava Ventures.
- Finance
- Cross-border payments platform Keeta raised $17M in seed funding at a $75M valuation. Former Google CEO Eric Schmidt led the funding.
- Life sciences
- New York-based nutrapharma and digital wellness life sciences company Mend raised a $15M Series A round led by S2G Ventures.
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| 3 | | A federal court judge dismissed a lawsuit against the decentralized finance protocol platform PoolTogether. The lawsuit by Joseph Kent alleged the startup broke New York gambling laws by evading regulators and scamming customers. More: - Judge Frederic Block said that despite having concerns about the startup, "a federal court is not an appropriate way to address them."
- The judge said Kent is free to pursue the case in state court.
- The startup's supporters say the NFTs now have utility.
- PoolTogether raised 769 ETH, which was then equivalent to $1.4M, through the sale of PoolyNFTs to fund its lawsuit defense.
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| 4 | | Payrails, a Berlin-based startup working on an operating system for business payments, raised a $14.4M Seed round. This follows a $6.4M round in 2022. More: - The company develops API for money routing and consolidated money movements, in addition to analytics.
- "We've grown and now have large enterprises using the product so the fundraising is a decision to help us accelerate our product roadmap," said the startup's CEO and co-founder, Orkhan Abdullayev.
- The round was led by EQT Ventures, with participation from HV Capital, General Catalyst, and Andreessen Horowitz, which led the pre-seed round.
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| 5 | | Sales software startup Highspot is laying off employees for the second time this year, reducing its workforce strength by 15%, affecting 140 employees. Earlier this February, the Seattle-based startup laid off 10% of its workforce. CEO Robert Wahbe said, "Today's changes position us to invest in growth areas such as product and engineering, including generative AI — and build a profitable company that delights our customers worldwide." More: - Wahbe added that the firm is well capitalized, last raising a $250M funding at a $3.5B valuation in 2022.
- To date, the firm has secured $650M from investors, including B Capital Group, ICONIQ Growth, Madrona Venture Group, Salesforce Ventures, and Tiger Global Management.
- With the changes, Wahbe expects the company to be cash positive by next year, buoyed by the fact that "sales enablement budgets are predicted to increase by at least 50% in the next two years," per Wahbe.
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| 6 | | About Energy, a London-based battery developer, raised a £1.5M ($1.88M) Seed round. The startup plans to use the funds to scale its lab and develop Voltt, its proprietary software. More: - The software would have a library of commercially available battery cells and their details, with the capacity for modeling, for the purposes of decision-making for battery design.
- The round included participation from Plug and Play Ventures, Theodo CTO Fabrice Bernhard, and OakNorth Bank CEO Rishi Khosla, among others.
- The startup was spun out of the University of Birmingham and Imperial College London by Gavin White and Kieran O'Regan in 2021.
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| 7 | | Quick Hits: - One of the 'The 7 Best Startups You Can Buy on StartEngine Right Now,' according to InvestorPlace, is open for investment again — join their funding round before it closes.*
- Biotech startup Quell Therapeutics is partnering with AstraZeneca to develop cell-based treatments for autoimmune diseases. Quell will receive an upfront cash payment of $85M, with the scope to increase payments up to $2B, contingent upon hitting certain milestones.
- Israeli VC firm 91 Ventures raised a $15M fund to invest in pre-seed and seed-stage startups in the region. The firm intends to write individual checks of $500,000 to $1M.
- British cultivated meat startup Uncommon, formerly known as Higher Steaks, nabbed $30M in Series A funding led by Balderton Capital and Lowercarbon Capital.
- Brazilian e-commerce facilitator nocnoc raised $14M in Series A funding led by PayPal Ventures. Mouro Capital, Quona Capital, Caravela Capital, Broadhaven, and Ignia backed the funding round.
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Term of the Day Amalgamation: Amalgamation is the process of combining two or more companies into one entity to improve business strategies or goals. Question of the Week Have you ever had to compromise your values for your career? Join the conversation |
INSIDE STARTUPS LEADERBOARD (7 DAYS) |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.
Nicolas is a Sr. Analyst at Inside, covering startups and transportation trends. He is an avid map maker and data nerd. Nicolas has worked in the shared-scooter space, as well as advised e-bike and moped start-ups. | | This newsletter was edited by Vibha Chapparike | |
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