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| Here’s your daily Startups briefing: - 🤝 Cybersecurity firm Armis acquired Silk Security for $150M
- 📈 Startup round sizes increased at every stage between seed to Series C in Q1
- 💰 British fintech startup Freetrade reported its first quarterly profit in Q1 2024
Thank you. Karan
p/karan-chafekar | |
| 1 | | Cybersecurity company Armis Security has acquired Israeli startup Silk Security for $150M. With the acquisition, Armis aims to provide a comprehensive solution for addressing the entire lifecycle of cybersecurity threats, ensuring real-time defense and management of the attack. Armis will integrate Silk's platform into its AI-powered vulnerability prioritization and remediation solution, Centrix. More: - Sustainable cyber risk resolution startup Silk Security last raised a $12.5M seed funding round in August 2022, led by Insight Partners and Hetz Ventures, with additional support from CrowdStrike Falcon Fund.
- This is Armis' second acquisition in two months, following the purchase of Cyber Threat Cognitive Intelligence (CTCI) for about $20M in February.
- Insight Partners and Google's investment fund Capital G acquired Armis for $1.1B in Jan. 2020.
- The acquisition price was about a third of Armis' peak valuation of $3.4B when it raised $300M in funding led by One Equity Partners in Nov. 2021.
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| 2 | | In the first quarter of 2024, the median venture round size increased at every stage from seed to Series C, per Carta's latest report. 
What the numbers say: The largest increase was seen at the Series C stage, where the median round size grew to $23M, a 27% increase from Q4 2023. The median Series B round size increased for the fourth straight quarter to $21M, up 11% from the prior quarter. The median Series A round size increased by 9% QoQ to $9.3M, while the median seed deal size surged 17% QoQ to $3.5M. Relevance: This growth in round sizes represents a significant shift in the fundraising market after a two-year slump. Venture deal count on the Carta platform declined by 24% from the previous year and combined venture deal value plummeted by 50%. What happened: Time taken to raise subsequent funding rounds has increased due to fundraising headwinds. The medium time taken by Series A startups to raise subsequent Series B rounds widened to 784 days. | | | |
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| 3 | | The Consumer Financial Protection Bureau (CFPB) has fined BloomTech, a for-profit coding bootcamp startup, and its CEO, Austen Allred, for misleading students about the actual cost of loans, making false claims regarding graduates' hiring rates, and engaging in unlawful lending practices disguised as 'income sharing' agreements with exorbitant fees. CFPB fined BloomTech $164,000, with the company set to contribute $64,000 and Allred paying the remaining $100,000. In addition to the fines, CFPB permanently banned BloomTech from participating in consumer lending activities and its CEO from student lending for a decade. More: - Furthermore, CFPB ordered BloomTech to stop collecting payments on loans, remove finance charges for certain agreements, and allow students to withdraw their funds without penalty.
- BloomTech, which rebranded from Lambda School in 2022, was valued at $150M at its peak.
- The San Francisco, Calif.-based startup is backed by Gigafund, Tandem Fund, Y Combinator, GV, GGV, and Stripe.
- CFPB's investigation revealed that BloomTech's loans carried an annual percentage rate and an average finance charge of around $4,000, which students were not informed about.
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| 4 | | Freetrade reported its first quarterly profit in Q1 2024 after crossing the breakeven point earlier this year. The British fintech startup posted an adjusted EBITDA of £100,000 ($124,863) on revenue of £6.7M ($8.4M) in Q1, per unaudited financial statements seen by CNBC. More: - Freetrade trimmed losses from £28.8M ($35.9M) in 2022 to £8.3M ($10.4M) in 2023.
- During the same period, revenues surged 45% to £21.6M ($26.9M).
- At the company's crowdfunding round in 2023, its valuation slumped by a third from £650M ($811M) to £225M ($280M).
- Freetrade offers a stock trading platform to investors and competes with Robinhood, which recently relaunched its services in the U.K.
- The company has about £1.8B ($2.25B) worth of assets under management and reported a net inflow of £130M ($162M) in the first quarter, thanks to the resurgence of retail investors.
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| 5 | | Startup-focused neobank Mercury launched a consumer banking product, dubbed Mercury Personal, just as other fintechs are moving away from consumer-oriented products and services. The new offering is available at an annual subscription fee of $240. The latest offering includes features like multiple debit cards with custom spending limits, access to up to $5M in FDIC insurance through partner banks, and interest-bearing savings accounts. More: - With the new offering, the firm's high-net-worth individuals will be able to cut angel checks to startups and invest in venture capital as a limited partner instantaneously and for free.
- Mercury's expansion into consumer banking comes at a time when the company has faced federal scrutiny regarding its partnership with Choice Bank, which was accused of opening overseas accounts in legally risky countries using questionable methods.
- Mercury has seen a 60% increase in its customer base and a 90% increase in transaction volume to $95B at the end of Jan. 2024.
- The fintech startup claims to have recorded seven consecutive quarters of cash flow and EBITDA profitability.
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| 6 | | Israeli nanotech startup Gauzy plans to raise $75M through its upcoming IPO listing in the U.S., per filing documents seen by Calcalistech. The company is aiming for a valuation of $400M to $500M, after lowering the target from its initial ambition of $600M. Gauzy, which specializes in smart glass for vehicles and buildings, witnessed a 59% revenue growth, from $49M in 2022 to $78M in 2023. While the company's gross profit doubled from $9.7M to $19.9M in the same period, the company still reported a $32M loss on an operational level. More: - Gauzy roped in Barclays, TD Cowen, and Stifel to underwrite the IPO offering, which is expected to take place in the second quarter of the year.
- Notable clients of the firm include BMW, Hyundai, Mercedes, Texas Instruments, and Airbus.
- The firm urgently needs capital due to long-term commitments of $113M and a cash reserve of just $4.7M at the end of 2023.
- It has also used up $25M from its $60M credit facility, which it secured last November.
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- Coinbase's vice president of international business development, Nana Murugesan, is set to join blockchain startup Matter Labs as its first president. Murugesan is tasked with leading the firm's marketing, legal, and policy operations.
- B2B carbon accounting startup Zevero inked a partnership with climate tech firm LEVELUP. Financial terms of the deal were not disclosed.
- Design firm Zypsy is offering 10 startups brand and product design services worth up to $100,000 in return for 1% equity via a SAFE.
- AI-powered precision agricultural spraying products maker Greeneye Technology bagged $20M in fresh funding led by Deep Insight. Other investors participating in the round include Syngenta Group Ventures, JVP, Orbia Ventures, and Iron Nation.
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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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