The week's developments in investing & technology, explained | 01.02.24

If you’re enjoying this briefing, sign up here — and share it with a friend. Reading time: ~5 minutes

Not only did startups face a severe IPO drought in 2023, but the few that did manage to go public saw their valuations plummet to record lows upon arrival — hardly a red carpet rollout. Despite the slowdown in later-stage M&A activity, seed funding appeared to defy the downturn, likely buoyed by hungry VC’s looking for early-stage ventures.

Elsewhere, January brought slight early-stage funding upticks across Europe, with German and UK startups securing over half of all fresh pre-seed and seed financing, US House panel accused major VC firms of funnelling billions into Chinese military-linked firms and concerns grow over Silicon Valley tech giant’s centralisation on AI technology.

Read on to find out more — including how the investment craze is also generating some investor “hallucinations” and a public investment push to stop centralised AI development.

—Charlie and the Research & Intelligence Team

The investment ecosystem

💵 VC valuations have dipped to multi-year lows, amidst a challenging year for IPOs and M&A activities. But a high influx of small funds chasing new ventures and high-growth startups means pre-seed and seed deals could be soon bucking the trend.

💰 January saw a slight uptick in funding for European pre-seed and seed-stage startups — totalling £357m across 265 deals — despite a 38% year-on-year drop in early-stage deals. Startups in Germany and the UK led the charge, securing over half of the total investment in the region.

📉 US House panel accused venture capital firms — including Sequoia Capital and Qualcomm Ventures — of investing over $3bn in Chinese companies supporting military efforts and human rights abuses. These investments undermined US national security, the congressional report said.

Chart of the week

VC investments have steadily risen over the past decade, but this surge in capital allocation hasn't exactly translated to female founders. In 2023, companies founded solely by women garnered just 1.8% of the total money invested in VC-backed startups in Europe.

How AI is transforming investing 

📉Is AI too important to be monopolised? It's no secret that AI development is being centralised by big tech companies in Silicon Valley — but public investments on both sides of the Atlantic could be poised to change this narrative.

OpenAI seeks a staggering $7tn for an AI chip project. The company’s rush towards AI chip development and heightened market optimism is echoing the rapid boom and bust of telecoms during the dotcom bubble era. Are investors poised to repeat the same mistakes?

🤖 ChatGPT creator OpenAI is reportedly on track to hit over $2bn in annual revenue, fueled by surging demand for its large language models. The San Francisco-based start-up has joined Google and Meta as one of the fastest-growing tech companies in history.

Startups

💸 Only 7% of founders present a compelling GTM strategy in their pitch decks, a critical oversight when fundraising hinges on customer acquisition plans. A well-crafted GTM slide can help convince investors of a startup’s market readiness and strategic direction.

Are early-stage ventures being spared from the funding drought?  The seed funding landscape has shifted dramatically from the pandemic's high valuation peak. Now, investors are seeking low-risk, market fit startups — but despite tighter financial conditions, most experts agree this is still an opportune moment for early-stage startups to secure funding.

Jobs

• Director of FP&A | Altus Partners | London | £140-160k

• Investment Associate | TwentyAI | London | £100-120k

• Equity Research Analyst | CMF | New York | £100-110k

• Business Development Manager | PandaScore | Remote UK | £50-70k

Noteworthy deals

• Bold, a Colombian Fintech company building a low-cost electronic payments infrastructure, raised $50m in Series C funding in a round led by General Atlantic.

  
  

• Antithesis, a startup building an automated testing platform for various software products, has raised $47m in a seed funding round from Amplify Partners, Tamarack Global, First In Ventures and angel investors. 

  
  

• London-based Screendragon, a startup providing management cloud software services, has raised $27m in funding from Kennet Partners and Federated Hermes Private Equity.

  
  

• Roam, a Kenya-based startup working to scale EV production, has raised $24m in a Series A round led by Equator, an Africa-focused climate tech VC fund.

✍️ Enjoying this newsletter?  Subscribe to our free weekly briefings on Preparing for AI, Cinema & AI, The Race to Net Zero, AI & DeepTech and The Future of Work.

You can relive CogX Festival 2023 on our YouTube Channel now. Make sure you join us in person next year — get your super early bird tickets for CogX Festival 2024 now!

Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.