No, startups shouldn’t always take the highest valuation, seed VCs say

One of the lessons that the wild Silicon Valley venture funding environment of the past few years has clearly taught is this: Bigger valuations are not always better.

“I think we’ve all kind of seen the negative impact of having a valuation too high from the last, call it, three years,” Elizabeth Yin, co-founder of Hustle Fund said onstage at TechCrunch Disrupt last week. When a VC bull market hits and startups are able to easily raise a lot of money before they have real, provable businesses, they’ve set themselves up for difficult times. READ MORE

How Startups Can Help Their Staff Outperform

What’s the difference between success and failure for the founders of early-stage businesses? The founder of unicorn fintech company Revolut believes one vital ingredient often gets overlooked: too often, warns Nik Storonsky, companies in scale-up mode struggle with a process that gets the best possible performance out of their growing workforces. His new book therefore seeks to deal with exactly that challenge.

The Revolut CEO is also a co-founder of venture capital investor QuantumLight, with whom he has teamed up to publish Driving High Performance: A Founder's Guide to Cultivating Top Talent at Scale. The idea, Storonsky explains was to publish a playbook for the firms in which QuantumLight invests – as well as for other scale-ups wondering how to build and maintain high-performance teams. READ MORE

Legal attacks are slowing SEC rulemaking in crucial election year

Rulemaking at the U.S. Securities and Exchange Commission, which hit a record pace early in President Joe Biden's administration, has slowed significantly as the agency navigates a hostile new legal climate.

Adverse court decisions over the past two years have blocked the SEC from overseeing the $27 trillion private funds industry; criticized its economic justification for new share buyback disclosures; and curtailed its powers to punish bad actors. READ MORE

Investor Spotlight: Tim Hoerr, Serra Ventures

Tim Hoerr is a good-natured man from farm country, and grew up in a family-run garden centre/landscape nursery business. He has a practical bent, with about 15 years in venture investing and about 40 years in business in general. He was also board member of a business accelerator program for more than a decade at the major American university, Baylor.

At the start of our conversation, Tim told us that for 2024, Serra Ventures invested exclusively in ag and food tech. He said that Serra's definition of “ag tech” was broad, and included parts of the ag tech supply chain. "If there's a company solving a big problem anywhere along the supply chain," Tim said, "we're going to take a look." READ MORE

The US Presidential Election Will Affect Venture Investing. How Much Is The Question

Just like most of America, those in the venture and startup realm will watch the returns of the U.S. presidential election pour in next week with a keen eye on who wins — and what it could mean for big issues in the industry such as M&A, taxes and even crypto.

While the next American president will not solely decide those issues, who is elected likely will have a large say in regulations and tax changes that could have significance on industries ranging from AI to biopharma and from the biggest of Big Tech to a pre-seed startup. READ MORE

CEO of top 'non-woke' job board reacts to 'the worst' report he's 'ever' seen: 'Red flag' for 2025

A massive jobs miss doesn’t paint a positive picture for the backbone of America’s economy, according to the CEO of the top "non-woke" job board.

"Is that wrong?" RedBalloon’s Andrew Crapuchettes said in reaction to the Labor Department's October jobs report, which revealed only 12,000 positions were added to the economy, well under economists' expectations of 113,000. READ MORE

How Partnering With Private Equity Helped One Company Transform Care

When Dr. Khan Nedd, founder of Infusion Associates, met representatives of Boyne Capital in 2018, he already knew he had tapped into a tremendous opportunity. The infusion treatment center’s first location in Grand Rapids, Michigan, was growing fast, and Nedd was focused on finding a partner to help take its services to more communities. It was a critical inflection point for the business. READ MORE

New funding rounds confirm that money attracts money

Money attracts money, as the saying goes. This week seemed to confirm it, with a couple startups announcing new rounds of funding only months after their previous ones, and familiar names launching new ventures. READ MORE

Europe’s Unfair Advantages

In the eyes of many, Europe lacks the entrepreneurial spirit and innovation drive that has come to define Silicon Valley and the broader US start-up ecosystem. The common narrative suggests that European founders are less driven, that venture capital in Europe lags far behind, and that the continent’s fragmented markets and complicated regulatory environments stifle creativity and innovation. Add to this the economic downturns of recent years, and you would be forgiven for assuming Europe is a less-than-favourable environment for start-ups and venture capital.

But that view ignores a deeper truth. While Europe may indeed have some hurdles to overcome, it also possesses several unique advantages that make it a formidable region for entrepreneurial and venture capital success. As Jyri Engeström, a Finnish venture capitalist with more than a decade of experience from Silicon Valley and now a partner at Lifeline Ventures in Helsinki, puts it, Europe has some "unfair advantages." It’s time we take a closer look at these advantages that could foster a rethink of the European start-up narrative. READ MORE

VC megadeals are booming — and AI is surprisingly not the top category

Ask any VC if we’re still in a venture capital bear market and that investor will almost certainly tell you no, that funding is still flowing for good companies.

That might sound like spin, because anecdotes abound about how rough it still is for those raising now. And for good reason. Down rounds — that is, raising at a lower valuation than a previous round, which founders want to avoid unless they have no choice — were still at near record highs through the first half of 2024, according to Aumni’s Venture Beacon report. Around 39% of late-stage deals were a down round, according to Aumni’s report. That covers Series B and beyond, with the biggest percentage of down rounds at Series C and beyond. READ MORE

4 Areas Where Seed Funding Is Strong

In the not-that-distant future, robots and AI assistants will be taking on a much larger share of our work. Humans will consume growing quantities of increasingly elaborate digital content. And we’ll find more creative ways to store the carbon generated by all our activity. READ MORE

Does US Startup Funding Rise In Post-Election Years?

U.S. startup investors don’t base funding decisions on who is in the Oval Office. But even so, election year uncertainties do appear to impact investment tallies.

That was the broad finding from a Crunchbase survey of U.S. startup funding for the past six presidential election cycles. Data showed that total investment across stages rose moderately to sharply in four post-election years. READ MORE

The Power of Bootstrapping — How to Build a Thriving Business Without Venture Capital

After recent conversations with Y Combinator alumni and other promising entrepreneurs, I hear many of them have no plans to raise venture capital — ever. While raising funds is often crucial, bootstrapping is an approach every entrepreneur should consider.

Contrary to the "move fast and break things" mantra that echoes through Silicon Valley, bootstrapping often means adopting a steady and deliberate approach. This allows for a deeper understanding of your market and more meaningful connections with early customers. READ MORE

Private equity management fees fall to lowest level since records began

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Management fees on private equity buyout funds have fallen to their lowest levels since records began in 2005 as fund managers fight to attract investors in a tough fundraising environment. According to industry specialist Preqin, the average management fee for buyout funds that closed this year or were still raising money in June was 1.74 per cent of investors’ committed capital. The previous low was 1.85 per cent in 2023. READ MORE

FoodTech: The Next Frontier for Venture Capital

The world of FoodTech is rapidly evolving, capturing the attention of venture capitalists eager to invest in the future of food. As technology transforms how we grow, process, and consume food, understanding the landscape of FoodTech investments becomes crucial. This article explores the journey of FoodTech in the venture capital space, highlighting key trends, challenges, and success stories that are shaping this exciting frontier. READ MORE

Venture capital is going to war over the election. Here's the data to prove it.

America is bitterly divided over politics, and the tech industry — once portrayed as a liberal bastion — is no different. Among the sector's investor class, these disputes typically play out behind closed doors, with checkbooks rather than angry social media posts.

This election cycle, investors at the top venture capital firms have plowed tens of millions of dollars into the election, both backing their favored political candidates and just cannily promoting commercial interests. READ MORE

Private Equity M&A Moves Will Face Sharper Focus From Regulators

US antitrust regulators are directing their gaze on the role of private capital in mergers and acquisitions as they scrutinize the strategies of an industry involved in an increasing share of deals.

The Federal Trade Commission and Justice Department’s Oct. 10 updates to a merger notification program will require disclosures that the regulators say will shed more light on private equity firms and minority investors. READ MORE

Secondary sales of private equity stakes set for record levels amid cash crunch

Private equity investors are selling second-hand stakes in ageing funds at a blistering pace this year, as pensions and endowments find ways to get out of unlisted investments amid a slump in deal activity that has curtailed cash payouts. So-called secondary deals, in which investors in private equity funds sell their stakes to new investors for cash, or a PE firm arranges the sale of a company stake to a new fund, are forecast to smash all-time records, according to investors and advisers who spoke to the Financial Times. READ MORE

Private equity skirts losses to the economy’s cost

Private equity firms made poor bets in the decade leading up to the 2022-2023 Federal Reserve tightening cycle. So why do creditors seem so eager to let the Masters of the Universe off the hook? A Moody’s research report showed last week that PE-backed companies have defaulted at a 15 per cent rate in the past two years. That is twice the proportion of companies that are not owned by a financial sponsor firm. The differential should not be surprising given the elevated leverage in PE transactions. But “default” increasingly does not mean “bankruptcy”. Rather the rating agency contends that so-called “distressed exchanges” counts — where lenders or bondholders swap into new paper at a discount to 100 cents on the dollar — are a blight. READ MORE

These 10 Charts Show Startup Funding Downturn Continues Despite AI’s Ascent

Despite a strong pull from the AI sector, venture investment in the third quarter of 2024 wasn’t able to overcome its now more than two-year-long slump.

That’s the broad takeaway from our third-quarter venture funding numbers. In every major startup region in the world — North America, Europe and Asia — startup investment fell in Q3, Crunchbase data shows. The only region we track that saw a modest uptick was Latin America, but even there, it’s hard to ignore just how far venture funding has fallen since its 2021 highs. READ MORE