Plus, Israel insuretech Sproutt declares insolvency
| For May 02, 2024 |  |
| Here’s your daily Startups briefing: - 🤝 Buyout firm Permira is set to acquire a 60% stake in BioCatch
- 🚀 CoreWeave doubled its valuation to $19B at the latest $1.1B funding round
- 👨🏻💻 Freshworks acquired Device42 for $230M to strengthen its IT service management offering
Thank you. Karan
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| 1 | | Global buyout firm Permira is acquiring a majority stake in Israeli fraud detection startup BioCatch. Permira is reportedly paying $750M from its Permira Growth Opportunities II fund for a 60% stake in BioCatch, sources informed Calcalist. The transaction gives BioCatch an implied valuation of $1.3B. More: - Permira will primarily purchase shares from existing investors Bain Capital and Maverick Ventures.
- The PE giant has also approached other shareholders, including Blumberg Capital and OurCrowd.
- Permira's growth fund already owned a stake in BioCatch after investing $40M in 2023 at a $1B valuation.
- The secondary transaction cemented BioCatch's status as a unicorn.
- BioCatch uses behavioral biometrics to detect financial fraud and crime, preventing losses of approximately $3.5B to date for over 190 financial institutions globally.
- In 2023, the startup reported an ARR growth rate of 49% and crossed the $100M ARR milestone.
- It also attained EBITDA profitability.
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| 2 | | AI cloud infrastructure startup CoreWeave bagged $1.1B in fresh funding through a preferred equity round at a $19B post-money valuation. 
What happened: The current valuation is more than double compared to its $7B valuation at a secondary sale last year. Coatue led the round, with additional support from Magnetar Capital, Altimeter Capital, Fidelity Management & Research, and Lykos Global Management. Magnetar, Blackstone, and Carlyle are reportedly also providing a new $7.5B credit facility. CoreWeave plans to use the proceeds of the latest funding to expand into new geographic markets. What the numbers say: In Q1 2024, VC invested $12.2B in AI startups through 1,166 deals, per Crunchbase. The AI sector witnessed a modest 4% uptick in VC funding compared to the $11.7B invested in Q4 2023. Chinese AI startup Moonshot AI bagged over $1B in VC funding in Q1. Other notable rounds to close in the quarter include AI-powered robotics firm Figure's $675M funding round and AI-driven text-to-video converter MiniMax's $600M Series B round. | | | |
| 3 | | Publicly-listed SaaS firm Freshworks is set to acquire IT infrastructure management startup Device42 for $230M, per TechCrunch. President Dennis Woodside was promoted to the CEO role vacated by founder Girish Mathrubootham, who will remain a member of the firm's board. This is Freshworks' first acquisition since going public in 2021 and will strengthen its Freshservice IT service management offering. More: - Device42 helps companies manage IT assets like hardware, software, and network components across mainframes and cloud.
- The startup recently began offering carbon emissions tracking.
- Device42 had raised $38.5M previously from investors like LongRiver Investments and Elm Street Ventures.
- Freshworks' shares fell 25% after the announcement, potentially erasing around $1.4B in market cap.
- The firm's market cap at the close of market trading was about $5.3B.
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| 4 | | Israeli insurtech startup Sproutt has declared insolvency due to its inability to pay a $2.2M debt to Bank Leumi. The insolvency comes less than three years after raising funds at a $200M valuation. More: - Sproutt, which specialized in marketing life insurance policies in the U.S. through its subsidiary Aktibo, incurred losses of $33M due to heavy expenses.
- It owed about $740,000 to suppliers.
- Since its founding in Oct. 2017, the company has raised $38M from investors.
- Insurance firms Harel and Menorah Mivtachim own a 4.5% and 3.5% stake in the company, respectively.
- Founders Yoav Shaham and Itai Brickner each own a 4.2% stake in the company.
- The company attributes its downfall to the heightened interest rates and unsuccessful initiatives.
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| 5 | | Insurance giant Prudential is shutting down tech startup Assurance IQ, citing a strategic decision to focus on its core business and capabilities. Prudential acquired Assurance IQ five years ago for $2.35B. More: - Assurance IQ used technology to match consumers with insurance plans, reaching unicorn status before acquisition.
- The startup touched the $1B valuation without raising any capital from outside investors.
- The shutdown will impact Assurance's current 1,000 employees.
- Per a Washington State Employment Security Department filing seen by GeekWire, the company will lay off 112 workers in Seattle at the start of July.
- Prudential took hefty goodwill impairment charges of over $2B combined from 2021-2023 as Assurance struggled to meet targets.
- In Q1 2024, Prudential reported a net income of $1.1B, down from $1.46B from the same period a year ago.
- The company's market cap has surged by 30% in the last 12 months, currently hovering around the $39B mark.
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| 6 | | RiseUp is laying off 50% of its 100-person workforce, per Calcalist. "Like many startups, RiseUp is required to make adjustments to its workforce in order to ensure its growth and profitability, even in challenging market conditions, including the ongoing war," the Israeli fintech startup said in a statement. More: - Yuval Samet, Iftach Bar, Tamara Harel-Cohen, and Hanan Rubin founded the startup in 2017.
- RiseUp offers a tech solution that helps customers control expenses through a combination of data analysis, predictive AI, community support, and expert consulting.
- In April 2022, RiseUp raised a $30M Series B funding round, bringing its total funding raised to date to $48M.
- Corner Ventures led the Series B round along with Aleph, Sir Ronald Cohen, and Jeff Schwartz.
- The company has collaborations with Israeli banks Bank Discount and Bank Leumi to provide its services.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar | |
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