Why the Female Founders Fund isn’t betting big on AI

When the Female Founders Fund (FFF), a seed stage venture fund that invests exclusively in female-founded companies, was started in 2014, just 2% of venture capital dollars went towards women-led companies. That number hit a record high last year, with 22.8% of all VC money going to startups with at least one woman cofounder. We sat down with Anu Duggal, a founding partner of FFF at her firm’s annual gathering to learn about the current funding drought, deciding not to invest in AI, and whether things have gotten better for female founders. Read the conversation below or listen to this episode of Most Innovative Companies. READ MORE

Bankrupt hospital chain paid private equity giant $700M dividend despite losses

The country’s largest private, for-profit hospital chain paid out a $790 million dividend — with a big chunk of that money going to its Manhattan-based private equity owner — before it filed for bankruptcy several years later, according to a report.

Steward Health Care System, the Boston-based network of 30 hospitals that operated in rural and low-income areas, made the payout to Cerberus Capital Management in 2016, the same year the chain recorded a net loss of $300 million. READ MORE

Can The Perks Of Early-Stage VC Make A Difference To Founders?

It is widely known that getting the right investors at the right time can be vital to a startup’s success. This truth is always top of mind for founders who are raising venture capital.

While it’s somewhat standard practice to get an idea off the ground with friends and family, then angel investors, things get more complex as startups approach their early stages and begin raising successive rounds. Having investors that provide tangible support beyond money — at just the right points along a startup’s trajectory — can be vital to scaling up past even its expectations. Here’s why. READ MORE

Adam Neumann’s crypto comeback company is reportedly refunding investors

In a development that will surprise few, former WeWork CEO Adam Neumann’s climate/crypto/carbon-credit startup Flowcarbon appears to be in the process of curling up to die, Forbes reported today.

Buyers of the outfit’s “Goddess Nature Token,” pitched as the first step in putting carbon credits on the blockchain, have reportedly been contacted about receiving refunds over the last month, but they must first sign a confidentiality agreement and release of claims against Flowcarbon. The company told Forbes this was “well known” that it has been offering refunds, citing carbon credit market conditions for the operational delay. READ MORE

VC firm ends business grant for Black women after discrimination lawsuit

Fearless Fund, the Atlanta-based venture capital firm started by Black women to invest in women of color, has agreed to end a small business grant contest for Black women, putting an end to a yearlong racial discrimination lawsuit that has roiled the larger philanthropic world.

Fearless and the plaintiffs, the conservative nonprofit American Alliance for Equal Rights, filed a joint motion to dismiss the case with prejudice Wednesday morning, meaning the Alliance cannot sue over the specific grant contest again. READ MORE

VC Funds Warehousing Investments: Traps for the Unwary

One of the challenges facing venture capital firms is how to handle investments in portfolio companies prior to the initial close (“Initial Close”) of a new fund (“New Fund”). Typically, the investment advisor (“VC Advisor”), or a person wholly owned or controlled by the VC Advisor, will make such investment, “warehouse” it, and then transfer such investment to the New Fund promptly after the Initial Close. This strategy has been very effective for many fund managers as it enables them to commence the creation of a diversified portfolio of interesting companies for its future limited partners prior to the time of the Initial Close. While this is an effective strategy for fund raising purposes, VC Advisors should be aware of some of the pitfalls with warehousing investments. READ MORE

The AI craze is distorting the VC market

Big Tech has broken into the private market, leaving venture capital (VC) firms stuck outside.

What does this mean?

Microsoft, Amazon, Alphabet, and Nvidia have enough cash to fill more than a few super-powered data centers – and they’re using it to play VC. In writing checks for private AI startups like OpenAI, Anthropic, Scale AI, and CoreWeave, Big Tech is lining the little guys’ coffers so well that they have no reason to even think about a stock market listing. That’s a problem for the real VCs out there. See, they make “exit money” by cashing out when the startups they’ve invested in go public. Without those listings, VC firms are left holding company stakes instead of cold, hard cash. READ MORE

Why VCs Should Use Net Promoter Scores with Founders

Every business is defined by its customers — but it’s not always obvious who an organization’s customers really are. When it comes to VC firms, investors have historically and unsurprisingly viewed their limited partners (LPs) — the source of VCs’ funding — as their customers.

But in recent years, investors have begun to rethink this traditional mindset. In the early 2000s, some VCs began suggesting that the entrepreneurs in whom they invested were their true customers. Today, this narrative has grown increasingly widespread, with more and more VCs claiming that they view their founders (not their LPs) as the customer. READ MORE

The 12 biggest take-private PE acquisitions so far this year in tech

The private equity realm has been pretty active so far in 2024, serving as a powerful “alternative” source of liquidity for technology startups and scale-ups in search of an exit. Just this month, TechCrunch reported that EQT had picked up a majority stake in cybersecurity firm Acronis at a valuation of around $4 billion, following in the footsteps of another exit, in which EQT snapped up enterprise middleware company WSO2 for $600 million. READ MORE

Top private equity firms put brakes on China dealmaking

Most of the world’s biggest private equity firms, including Blackstone, KKR and Carlyle, have put the brakes on deals in China this year as geopolitical tensions rise and Beijing exerts tighter control over business. Dealmaking in the world’s second-largest economy has slowed significantly, with just five new investments — mostly small — by the 10 largest global buyout firms this year. READ MORE

US maintains robust lead over peers with 2.4% YoY growth in VC funding during January-July 2024, reveals GlobalData

The total venture capital (VC) funding raised by the US-based startups improved by 2.4% year-on-year (YoY) during January-July 2024 despite a 41% decline in VC deal volume. The country continues to lead the global VC landscape with a significant gap over its peers, leading both in deal count and funding value, driven by a surge in ≥ $100m deals, reveals GlobalData, publishers of RBI.

An analysis of GlobalData’s Deals Database revealed that the US saw the announcement of a total of 4,675 VC deals of worth $70.6bn during January-July 2023 compared to 2,759 VC deals of worth $72.3bn during January-July 2024. READ MORE

The VC Guide To AI’s Transformation Of Traditional Business Services

As venture capitalists (VCs), our role extends beyond merely funding startups; we actively help shape the trajectories of emerging technologies and industries. With venture capitalists backing one-fifth of the companies that went public in the U.S. in the 21st century, this impact is profound, even as venture capital represents a modest fraction of the financial markets—less than $1 trillion in active investments compared to over $200 trillion in public and fixed income markets. READ MORE

Who helped Musk acquire Twitter? There’s a Russian connection

The Wall Street Journal has already called Musk’s $44 billion Twitter takeover one of the worst ever for the banks that the billionaire borrowed money from.

Still, Musk also enlisted the aid of multiple investors, who are now all shareholders in X Holdings Corp. Because a federal judge ordered X to unseal the list of the shareholders, we now know who has invested in the social media platform. READ MORE

After Slowing In 2023, US Median Round Size Again Growing

For  a decade, U.S. seed and early-stage round sizes consistently saw an increase until early 2023 when typical round sizes began to come down and the venture market was three quarters into a funding slowdown.

The first half of this year, however, has reversed that trend as the median round size for funding at seed through Series C has picked up again, an analysis of Crunchbase data shows. READ MORE