Inside Venture Capital – August 23rd, 2021

Inside Venture Capital - August 23rd, 2021









Coatue Management posted an internal rate of return (IRR) of 47% for its third growth fund. That puts the 2017-closed fund in the top quartile of venture funds raised in the same year. The information comes from a brief intended to attract LPs for its $3.5B fifth growth fund.

More:

  • The aforementioned third fund had investments in both TikTok-owner ByteDance and food-delivery firm DoorDash.

    • It also led Instacart’s $350M round in 2018, which valued the grocery-delivery firm at $4.4B. It is now valued at $39B.

  • The firm’s first two growth funds posted returns that were multiple percentage points below the top quartile of fund performers.

    • Its earlier bets, such as note-taking app Evernote and news aggregator Flipboard, proved unable to provide top-tier VC-level returns. Still, its 2.3x post-fee returns were above the industry median of 2.1x.
    • It began to polish its reputation with a bet on Didi Chuxing that had a net 2.5x return. 

  • It has raised $16B in total capital to date for private investments. That is behind only SoftBank and Insight Partners in terms of pace.
  • Coatue is a New York-based hedge fund, which has recently become one of the top investors in late-stage tech startups. It uses a data-heavy investment strategy.

    • It spends $35M annually on its team of data scientists, and charges a 2% management fee to limited partners, while general partners will get 20% of profits.




















Governments should provide support for their diaspora founders, not just their local ones, write David Teten of Versatile VC and Prabhat Gusain of Caffeinated Capital. The advice applies mostly to countries without strong domestic VC industries. 

More:

  • Diaspora founders are people who grow up in one country but immigrate to another to start a company.
  • Governments tend to invest in local VC funds with the aim of supporting job growth. However, these investments frequently go awry and just end up costing their taxpayers heavy sums.
  • Investing in VC funds supporting founders operating outside the home country has three advantages:

    • Remittances from diaspora founders enrich the home country.
    • Founders with experience abroad can bring home their knowledge, resulting in brain gain.

      • They are able to see opportunities at home that residents will overlook, and often require extra support in the face of local animus. 

    • Foreign firms with diaspora founders will privilege the home country when they expand. That inevitably ends up creating jobs at home.

  • Governments can enable these founders using three strategies:

    • Providing networking, mentoring and training allows founders to contact one another and combine efforts. Such programs also tend to offer market research, business plan advice, matching services with seasoned executives, and assistance to register a business.
    • Investment in the home country in the form of pooled private and public funds, or matching grants. This enables diaspora founders to integrate the home country into their successful efforts abroad.
    • Recruiting new citizens via startup visa programs (such as Canada’s) beefs up the home country’s top international talent.




















Best of Last Week

M&A

  • Adobe will buy video review and collaboration platform Frame.io for $1.275B all-cash. Frame.io had previously raised a total of $90M.
  • GS Retail Co partnered with PE firms Affinity Equity and Permira to buy Delivery Hero-owned, South Korean food delivery app Yogiyo for $685M. Delivery Hero was required to sell Yogiyo, which has a 25% market share in the country, to receive approval for its $4B acquisition of the market leader Woowa.
  • Cisco will buy applications-monitoring startup Epsagon at a reported price of $500M.
  • Medical imaging company Nanox will purchase Zebra Medical Vision, an Israel-based deep-learning medical imaging analytics company, for $200M.
  • Cloud-based bill payment platform Paymentus has agreed to acquire Payveris, a competitor, for $152.2M cash-and-stock.
  • Enterprise fintech platform Brex acquired Weav, a provider of a universal API for commerce platforms, for $50M. The companies have been partners since last summer. 
  • Roblox is acquiring Discord competitor Guilded for undisclosed terms.

IPO

  • Indian travel and transit booking startup Ixigo filed for a $200M domestic IPO.  The company will offer $100M in new shares, with existing investors providing the remaining stake.
  • Chipmaker GlobalFoundries has confidentially filed for a New York IPO at a $25B valuation.

SPAC

  • Aspiration, a digital bank emphasizing sustainability, will merge with SPAC Interprivate III Financial Partners at a $2.3B valuation.

New Funds




















Today’s Funding 💸

Agtech

  • Gross-Wen Technologies (Slater, Iowa), algae-based wastewater treatment platform: $6.5M A from ISA Ventures, Iowa Farm Bureau’s Rural Vitality Fund, participation from Next Level Ventures, Mid-American Angels, Ankeny Angels, Ag Startup Engine, Oman Ventures, 1330 Investments.

Biotech/Health

  • Techcyte (Orem, Utah), digital clinical pathology platform: $21M led by Zoetis, participation from ARUP Laboratories, et al.
  • Speclipse (Seoul, South Korea), lightweight, portable device that detects the biochemical information of skin tissue:…









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Quick Hits

  • Get 50% off 3 months to grow your business with customizable templates, signup tools, real-time reporting, and more.*
  • Investors’ redemption rates (the proportion of those who pull their money from deals) grew to 50% for the majority of SPACs in July 2021. Most SPACs had rates of 0% from Oct. 2020 to March 2021. The shift is indicative of increasing skepticism.
  • UAE-based Mubadala Capital closed its third private equity fund with $1.6B in commitments.
  • The FinTech Collective raised another $250M to invest in fintech and blockchain startups. $200M will be invested in early-stage deals in the traditional fintech space. $50M will be reserved for open-source, composable financial protocols using DeFi tech.
  • Fontinalis Partners closed a $104M third fund to invest in early-stage logistics and mobility startups.
  • Companyon Ventures closed its second fund at $27.5M to invest in post-seed/Pre0A B2B software companies. The firm’s portfolio consists of 14 startups across two funds.
  • Microsoft invested $5M pre-IPO into Indian budget hotel chain Oyo at a $9.6B valuation, just below the implied valuation from its most recent funding round in 2019.
  • 18 of the top 25 fastest-growing public SaaS companies use Outreach. You should too. Schedule a demo today to learn more.*

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Upcoming Events

  • August 24 – Growth Marketing Jam Session with Jenny Bryan and Craig Zingerline (Register Here)
  • August 26 – DAOs: Disrupting with Code (Register Here)
  • August 31 – [Webinar] How to Grow SMS Subscribers Before Black Friday & Cyber Monday (Register Here)*
  • September 2 – A SPACES Conversation with Anand Iyer (Set A Reminder)
  • September 15 – Psychedelic Medicine: Fad or Phenom? (Register Here)
  • September 21 – AMA with Katie Stanton of Moxxie Ventures (Register Here)
  • September 29 – Livestream Shopping: The rise of the next billion-dollar industry (Register Here)
  • October 6 – Design for Startups (Register Here)
  • October 26-27 – Meet our Fund Fall ’21 Cohort (Register Here)

Want to see all of our upcoming events? Visit us at https://inside.com/events

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Inside VC’s writer/curator Stephen currently lives in Berlin and is pursuing a Master’s degree in philosophy. He otherwise spends his time trying his hand at recipes from India and Southeast Asia, escaping it all at the kickboxing gym, and offending aural sensibilities with his band.


















Editor





Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he’s not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford.