The week's developments in investing & technology, explained | 29.02.24

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Get your popcorn ready! This week, the usually buttoned-up world of VC went full-on drama. Sequoia Capital, the legendary VC firm, found itself in a heated dispute with its legacy leadership over the boardroom of Klarna, a major European fintech company. Following this tumultuous clash, we take a look at what lies ahead for the VC giant.

Elsewhere, while Europe's VC market defies global trends — maintaining strong pre-money valuations across all stages despite 2023 corrections — North American VCs found themselves struggling: these firms are facing an uphill battle to establish a foothold in Europe, with established players like Coatue retracting amidst fierce local competition.

Read on to find out more — including why GP’s plan to bump up their fees within the next year and some tips for navigating the data-driven shift In venture capital.

—Charlie and the Research & Intelligence Team

The investment ecosystem

🎭 Sequoia Capital in boardroom turmoil: An attempt to oust former leader Michael Moritz from the Klarna board backfired, revealing internal conflict between past and present leadership. Sequoia partner Matthew Miller — who took Moritz's seat in January — was ousted instead. (This isn’t the only recent board debacle: remember OpenAI’s boardroom saga?) 

Looking ahead, Sequoia has some serious mending to do, both internally and with its investors. This public spectacle underscores a key lesson learned from other recent dramas: maintaining boardroom harmony is crucial, especially during market downturns.

📈 Europe's VC shines amidst global gloom. Despite facing valuation corrections in 2023, Europe's venture market largely held its ground with the median pre-money valuation increasing year-over-year across most stages.

🇪🇺 Europe: A tough nut to crack for US VCs. Several prominent US VC firms, including Coatue and OMERs, have pulled out due to stiff competition from local investors — but with the European tech market brimming with potential, opportunities remain for smart VCs looking to secure lucrative deals.

🤑 GP’s plan to bump up fees, survey finds. About 20% of asset managers surveyed plan to increase fees within the next year, reflecting growing optimism for improved dealmaking and portfolio performance in the coming quarters.

Chart of the week

Founder CEOs are jumping ship at an alarming rate in Europe. New data from Erevena, analysing 300 VC firms, revealed that a staggering 36% of startups saw their founder CEOs resign in 2023.

How AI is transforming investing 

🦾Can AI breathe new life into hardware VC? From Rabbit's AI assistant camera to Humane's innovative AI pin, new ventures are blending AI with physical devices — but the high-risk nature of hardware may still be a tough sell for VCs seeking safer bets.

🕵️‍♂️ Investors now have a powerful new weapon: your data. VC investing is rapidly leaning into analytics and AI, a shift set to revolutionise deal sourcing, evaluation, and management. By 2025, this data-driven approach could influence over 75% of VC deal analyses.

Startups

📱 Going viral on TikTok can be a double-edged sword, as Air Up discovered. A wave of fake Air Up bottles flooded online marketplaces after a viral TikTok trend, costing the company an estimated €10 million in revenue.

🚫 VCs back startups helping other startups shut down. With funding drying up — and failure rate of startups hovering around 90%, investors are now backing companies that specialise in helping other startups shut down.

Jobs

• Chief Investment Officer | Calstrs | California | £322.4–£483.6k

• Senior Director of Investor Relations | Ataia | Berlin, London, New York | £174-221k

• Director, Portfolio Management | CMHC | Ottawa | £122 -152k 

• Budget & Controlling Manager | CEB | Paris | £92.7 to £107.7k

Noteworthy deals

• Medical Microinstruments, an Italy-based company developing robotics technology for soft tissue open surgeries, raised £87m in series C funding led by Fidelity Investments.

  
  

• Unseenlabs, a French-based spacetech startup has raised £73m in series C funding from investors including Supernova Invest, ISALT via its Strategic Transition Fund, and UNEXO.

• Mistral AI, a Paris-based AI startup, announced the launch of its new large language model, Mistral Large, as well as a distribution partnership with Microsoft. As part of the partnership, Microsoft is investing £12.8m in the French startup.

  
  

• Shadowfax, one of the largest logistics and delivery service providers in India, has raised £79m in a series E financing round led by TPG NewQuest.

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