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As 2024 draws to a close, the private equity landscape is showcasing a unique convergence of challenges and opportunities. Schroders Capital's Q4 2024 Private Equity Lens provides a view of the market dynamics, highlighting key trends, performance metrics, and areas of growth potential. 1. A Shift in Fundraising DynamicsPrivate equity fundraising in 2024 has seen a significant correction, with a cautious approach defining the market. While aggregate fundraising levels remain below the peaks of 2021–2022, this slowdown signals reduced competition and more attractive entry valuations. For investors, this environment creates fertile ground for identifying high-potential assets at reasonable prices.<ul><li>Fundraising activity reflects a healthy moderation, positioning the market for steady returns in 2025.</li><li>A recalibration in expectations could foster greater discipline in deal selection and portfolio construction.</li></ul> 2. Steady Deal Activity with an AI-Led UpsurgeDespite global economic headwinds, private equity deal-making has maintained momentum. Notably, the venture capital segment is experiencing a resurgence, driven by high-valuation rounds in artificial intelligence (AI). This trend underscores the sector's capacity for innovation and adaptation in a fast-evolving market.<ul><li>AI-related investments have propelled Series C valuations to approach 2021 highs.</li><li>Small- and mid-cap buyouts are trading at attractive discounts, providing a significant value proposition for investors.</li></ul> 3. Exit Markets StabilizingExit activity has begun to stabilize, particularly in sponsor-to-sponsor deals, even as trade sales struggle to regain momentum. This shift is accompanied by record secondary market activity, as Limited Partners (LPs) seek liquidity amid weaker exit conditions.<ul><li>Stabilization in exit markets provides reassurance for fund managers and investors.</li><li>The secondary market is poised to achieve $140 billion in deal volume by year-end, reflecting its role as a vital liquidity avenue.</li></ul> 4. Buyout Multiples and ValuationsThe recalibration of buyout multiples offers a favorable backdrop for investors. Small- and mid-sized buyouts are priced significantly lower than large-cap counterparts and public equities, creating a compelling case for allocation to this segment.<ul><li>Average entry EV/EBITDA for small- and mid-sized buyouts stands at 7.7x, a notable discount compared to large buyouts at 12.1x.</li></ul> 5. Resilience in Private Equity PerformancePrivate equity funds have demonstrated robust resilience, with buyout and venture capital funds returning to positive performance territory. This stability contrasts sharply with broader economic volatility, reinforcing private equity's appeal as a long-term asset class.<ul><li>Buyout funds have delivered steady, positive returns since 2022.</li><li>Venture capital funds have rebounded from the lows of 2022, driven by sectoral innovation.</li></ul> 6. The Role of Liquidity in a Challenging MarketThe heightened activity in the secondary market underscores the importance of liquidity for LPs navigating a constrained exit environment. With record volumes anticipated in 2024, this segment is expected to remain pivotal in private equity strategies. Preparing for a Promising 2025As private equity activity stabilizes, the industry is primed for growth opportunities in 2025. From recalibrated valuations to AI-driven innovation, the market offers fertile ground for informed investors. By navigating these dynamics strategically, stakeholders can capitalize on the evolving private equity landscape. This article leverages data and insights from Schroders Capital's Q4 2024 report, offering a forward-looking perspective on the trends shaping the private equity sector. For those positioned to act decisively, the next wave of growth is within reach. Download the Report here: <a href="https://www.schroders.com/en/malta/professional/insights/schroders-capital-private-equity-lens-q4-2024" rel="noopener noreferrer" target="_blank">https://www.schroders.com/en/malta/professional/insights/schroders-capital-private-equity-lens-q4-2024/</a>

Unlocking Opportunities in Private Equity: Insights from Schroders Capital Q4 2024 Report

In the rapidly changing world of finance and investing, a striking new trend is redefining traditional valuation models and investment strategies. I call it the "meme premium," a variable that's revolutionizing how we perceive market dynamics in the age of social media virality and cultural trends. Understanding the Meme PremiumI conceptualize the meme premium as the additional value or attention a company, product, or individual receives due to their viral popularity or meme status. This premium manifests in various ways, from inflated stock prices to accelerated product adoption and enhanced brand recognition. It's a testament to the growing influence of internet culture on real-world financial outcomes. The GameStop Saga: Meme Premium in ActionThe clearest example of the meme premium at work is the GameStop (GME) stock frenzy of early 2021. In a matter of days, GME's stock price surged from around $20 to a peak of $483, primarily driven by a coordinated effort from retail investors on the Reddit forum r/WallStreetBets. This unprecedented event not only caught Wall Street off guard but also demonstrated the collective power of internet communities in influencing market dynamics. Since then, other companies like AMC Entertainment, BlackBerry, and Bed Bath &amp; Beyond have experienced similar meme-driven price surges. As of November 2024, Palantir Technologies (PLTR) topped the list of best-performing meme stocks with a one-year return of 180.80%. These events have highlighted the growing influence of retail investors and the power of social media in shaping market trends. Quantifying the Meme PremiumWhile the concept of meme premium is relatively new, its effects are tangible and measurable. For instance, the Destiny Tech100 fund, which offers retail investors access to private tech companies, experienced a staggering 1,961% premium to its net asset value shortly after its debut. Despite having a portfolio worth only $52.6 million, the fund's market capitalization soared to almost $1.1 billion, demonstrating the power of the meme premium in action. The Elon Musk EffectNo discussion of the meme premium would be complete without mentioning Elon Musk, the CEO of Tesla and SpaceX. Musk's social media presence, particularly on X (formerly Twitter), has had a significant impact on Tesla's stock price and various other companies. His tweets have influenced stock prices of companies. Elon Musk's tweets have had a significant impact on stock prices and cryptocurrency markets, often causing dramatic fluctuations. Here are some notable examples: Lockheed Martin and Defense StocksOn November 26, 2024, Elon Musk criticized Lockheed Martin's F-35 fighter jet program on X (formerly Twitter), leading to a 3.8% drop in Lockheed's stock, wiping out nearly $5 billion in market value. His comments also affected other defense stocks like Northrop Grumman and RTX. Etsy SurgeOn January 26, 2021, Musk tweeted about purchasing an item on Etsy for his dog. This simple tweet caused Etsy's stock to surge in early morning trading, demonstrating the market's sensitivity to his social media activity. Dogecoin VolatilityMusk's tweets have frequently influenced the price of Dogecoin. For instance, on May 24, 2021, his tweet encouraging development ideas for Dogecoin led to a nearly 5% spike in its value against Bitcoin. His ongoing support and tweets about Dogecoin have often resulted in significant price movements. These instances highlight the considerable influence Musk wields over financial markets through his social media presence and meme posts and stocks. Implications for Venture Capital and InvestingThe rise of the meme premium poses both opportunities and challenges for venture capitalists and investors: 1. Shifting Valuation Metrics: Traditional valuation methods may need to be reconsidered to account for the potential meme premium a company might command. VCs and investors must now factor in a company's potential for viral popularity alongside traditional financial metrics. 2. Increased Volatility: Meme-driven investments tend to be highly volatile, requiring investors to have a higher risk tolerance and potentially shorter investment horizons. This volatility can lead to both spectacular gains and devastating losses in short periods. 3. New Marketing Strategies: Companies might increasingly focus on building a meme-worthy brand or cultivating a CEO with a strong social media presence to capture the meme premium. This shift could change how startups approach marketing and public relations. 4. Democratization of Investing: The meme stock phenomenon has led to increased retail investor participation, potentially democratizing access to high-growth investment opportunities. Platforms like Newnex, which connect institutional VCs and LPs to syndicate deals, may play a crucial role in bridging the gap between traditional investing and this new paradigm. The Role of Social Media and Retail Investors The meme premium was largely driven by retail investors coordinating through social media platforms. These investors often see themselves as underdogs taking on the financial establishment, using platforms like Reddit to discuss stocks, share research, and coordinate investment strategies. This collective action can lead to significant price movements, challenging the dominance of institutional investors. As meme culture continues to permeate every aspect of our digital lives, its influence on financial markets and venture capital is likely to grow. The meme premium represents a new frontier in valuation and investment strategy, one that blends traditional financial analysis with an understanding of internet culture and social dynamics. While the long-term permeability of meme-driven investments remains to be seen, it's clear that in today's market, the power of memes cannot be ignored. As we move forward, successful investors and venture capitalists will need to navigate this new landscape, balancing fundamental analysis with an appreciation for the cultural forces that are creating and sustaining a meme premium. In this evolving financial ecosystem, recognizing and adapting to the reality of the meme premium, investors are required to update to thrive in this new era of finance, where viral popularity can be just as important as traditional financial metrics. ---Join the Future of Venture Investing with Newnex<a href="https://www.newnex.io/edit/blogs/www.newnex.io" rel="noopener noreferrer" target="_blank">Newnex</a> is redefining venture capital by fostering seamless collaboration between General Partners (GPs), Limited Partners (LPs), and startups. Designed for institutional investors, our platform streamlines syndication and co-investment across both direct and LP deals. With a mission to unite over 5,000 VC and LP firms on a single, unified platform, Newnex enables effortless private deal-making based on reference-only transactions. Join Newnex for free <a href="http://www.newnex.io/" rel="noopener noreferrer" target="_blank">www.newnex.io</a>

The Meme Premium: How Internet Culture is Reshaping Venture Capital and Market Valuations

Venture capital (VC) firms are increasingly turning to secondary markets as a solution to long-standing liquidity challenges, aiming to improve distributions and enhance investor returns. This strategic pivot represents a shift from traditional reliance on IPOs and acquisitions toward private sales of startup shares, which offer greater flexibility in a volatile financial landscape. The Rise of Secondary Markets in Venture CapitalSecondary markets have seen significant growth in their role within venture capital. In 2020, VC transactions accounted for just 5% of the secondary market. By 2024, this share climbed to 14%, signaling an industry-wide shift. Secondary transactions primarily involve selling stakes in growth-stage companies, providing quicker liquidity and diversifying exit strategies. Why Venture Capital Needs Secondary MarketsVenture capital returns have been underperforming in recent years. In Q2 2024, the sector posted a return of -1.55%, lagging behind benchmarks like the S&amp;P 500 and Nasdaq Composite. Historically, VC outperformed the market with a 25-year average annual return of 18.96%, but that margin has shrunk over the past 15-, 10-, 5-, and 3-year periods.This underperformance has intensified pressure from LPs for better liquidity and results. Key metrics like the Distributions to Paid-In Capital (DPI) ratio have declined since 2021, exacerbated by a stagnant IPO market and heightened regulatory scrutiny of mergers and acquisitions. How Secondary Markets Create LiquiditySecondary markets enable venture capital firms to monetize their investments without waiting for public exits. Strategies such as sponsor-to-sponsor transactions, where one VC firm sells stakes to another, help avoid the high-risk “IPO-or-bust” model. This approach offers more control over exit timing and aligns VC practices with private equity-style fund management.Secondary funds often raise billions to acquire stakes in mature, high-growth companies. This portfolio diversification not only addresses liquidity challenges but also delivers stable distributions to LPs. Secondary market investments are proving to be an effective strategy, with many funds achieving strong returns despite a challenging environment. Challenges in the Secondary MarketWhile secondary markets offer significant benefits, they also come with challenges:<ul><li>Valuation Complexity: Accurately pricing startup shares can be difficult due to market volatility and limited financial transparency.</li><li>Discounts on Transactions: Secondary market deals are often executed at a discount, which can impact overall returns.</li></ul>Despite these hurdles, the growing emphasis on liquidity, fund management, and LP distributions is driving innovation in the secondary market space. The Future of Venture Capital: Adapting to ChangeThe adoption of secondary markets signifies a new era for venture capital, marked by active portfolio management and diversified exit strategies. As traditional paths like IPOs become less reliable, secondary transactions provide a viable alternative for maintaining liquidity and maximizing investor returns.By leveraging secondary markets, venture capital firms can stay competitive in an ever-evolving financial landscape. This innovative approach ensures sustained value creation for investors while addressing the liquidity and return challenges of modern VC investing. ---Join the Future of Venture Investing with Newnex<a href="https://www.newnex.io/edit/blogs/www.newnex.io" rel="noopener noreferrer" target="_blank">Newnex</a> is redefining venture capital by fostering seamless collaboration between General Partners (GPs), Limited Partners (LPs), and startups. Designed for institutional investors, our platform streamlines syndication and co-investment across both direct and LP deals. With a mission to unite over 5,000 VC and LP firms on a single, unified platform, Newnex enables effortless private deal-making based on reference-only transactions. Join Newnex for free <a href="http://www.newnex.io/" rel="noopener noreferrer" target="_blank">www.newnex.io</a>

How Venture Capital Firms Are Leveraging Secondary Markets for Liquidity and Higher Returns

In the world of startups, venture capital often seems like the holy grail. However, a growing number of entrepreneurs are choosing a different path: bootstrapping. This approach, which involves building a business without external funding, offers unique advantages and challenges. The Power of Self-Funding Bootstrapping allows entrepreneurs to maintain complete control over their company's direction, culture, and values. This autonomy can be invaluable, especially when the founder's vision doesn't align with typical investor expectations. Many successful companies have bootstrapped their way to significant acquisitions, retaining 100% ownership until the exit. Strategies for Success Focus on Revenue: Successful bootstrapped businesses often generate revenue quickly and solve immediate, painful problems for customers willing to pay. Some platforms build their business models around immediate monetization by taking a small cut of each transaction. Niche Domination: Start by focusing on a specific, underserved segment of your target market. Many successful companies began with a narrow focus before expanding to serve a broader audience. Creative Problem-Solving: Limited resources force bootstrapped startups to find innovative solutions. Some companies have found success by focusing on doing a few things exceptionally well, resulting in products known for their simplicity and ease of use. Building a Strong Team Attracting talent without high salaries can be challenging, but many bootstrapped companies have found success by offering non-monetary benefits. Some startups attract talent by openly sharing the company's revenue, salaries, and equity distribution. Defining Your Own Success Bootstrapping allows entrepreneurs to define success on their own terms. Whether it's building a profitable lifestyle business, creating a company with positive impact, or eventually selling for a significant sum, the bootstrap path offers flexibility and control. In conclusion, while bootstrapping may not be suitable for every business, it offers a viable alternative to the venture capital route, allowing entrepreneurs to build resilient, profitable companies while maintaining their vision and independence.

Bootstrapping: The Path to Business Success Without Venture Capital

Atomico published <a href="https://www.stateofeuropeantech.com/keynote" rel="noopener noreferrer" target="_blank">The State of European Tech 2024</a> report, a comprehensive overview of the European tech ecosystem's growth, challenges, and future prospects over the past decade. Europe's tech ecosystem has experienced remarkable growth over the past decade, according to the State of European Tech 2024 report. Since 2015, the continent's tech talent pool has expanded sevenfold, while total investment volume has increased tenfold, reaching approximately $45 billion in 2024. The number of companies valued at over $1 billion has grown from 72 in early 2015 to 358 in 2024, demonstrating Europe's ability to nurture startups from inception to IPO. The report highlights significant improvements in the entrepreneurial culture. A majority of experienced founders note positive changes in various aspects of the tech landscape, with 79% seeing improvement in access to capital and 77% noting better availability of talent. However, challenges remain. The report identifies a $375 billion growth stage funding gap compared to the US. There's also a concerning trend of European founders considering starting their companies in the US, with 23% indicating they would do so today, although 72% would still choose to stay in Europe. The report outlines six key areas for improvement, including addressing the low 0.007% share of European pension funds invested in European VCs. Initiatives such as the Tibi initiative, WIN-Initiative, and Mansion House Compact are emerging to tackle these challenges. The European tech ecosystem is increasingly focused on solving major global challenges. Notably, 11% of US tech companies have European founders, while only 6% of European tech companies have US founders, indicating a flow of talent from Europe to the US. Looking ahead, the report sets ambitious goals for the next decade, including the creation of over 15 million new tech jobs, the emergence of trillion-dollar companies, and an added ecosystem value exceeding $5 trillion. These projections underscore the potential for continued growth and innovation in European tech, provided the identified challenges are effectively addressed. As the ecosystem matures, the emphasis on sustainable growth, equal access to opportunities, and strategic policy initiatives will be crucial in realizing the full potential of European tech. The next decade promises to be transformative, with the potential to reshape Europe's economic landscape and its role in global innovation. In summary: • Europe's tech talent pool has grown 7x since 2015 • Total investment volume increased 10x in 10 years, reaching ~$45B in 2024 • Number of $1B+ valued companies in Europe grew from 72 in 2015 to 358 in 2024 • 79% of experienced founders see improvement in access to capital • 77% note better availability of talent • $375B growth stage funding gap compared to the US • 23% of European founders would start their company in the US today • 72% of European founders would still choose to stay in Europe • Only 0.007% of European pension funds are invested in European VCs • 11% of US tech companies have European founders, while 6% of European tech companies have US founders • Key initiatives addressing challenges: Tibi initiative, WIN-Initiative, Mansion House Compact • Goals for the next decade:&nbsp;- Creation of 15M+ new tech jobs&nbsp;- Emergence of trillion-dollar companies&nbsp;- Added ecosystem value of $5T+ • Focus on solving major global challenges and creating role models across sectors and countries

The State of European Tech 2024: A Decade of Growth and Future Potential

The European Union’s ambition to lead in green tech and innovation has hit a wall with the troubles facing two of its most prominent startups: Northvolt, the battery manufacturing giant, and Lilium, the electric vertical take-off and landing (eVTOL) pioneer. Both companies have been hailed as symbols of Europe's technological progress, receiving substantial public funding and private investments. Yet, they are now grappling with financial crises that expose the fragile foundation of Europe’s tech ambitions. What Went Wrong at Northvolt?Northvolt, once poised to challenge China's dominance in battery production, has stumbled under the weight of its own aspirations. Despite raising over $15 billion from investors including Volkswagen and JPMorgan, the company is struggling to deliver commercially viable results. Commercial Failures:1. Unrealistic Scaling Goals:&nbsp;&nbsp;&nbsp;Northvolt aimed to rapidly scale up production at its flagship gigafactory in Skellefteå, Sweden. However, the company underestimated the complexities of ramping up manufacturing at scale, leading to production delays and quality issues.&nbsp; 2. Missed Market Expectations:&nbsp;&nbsp;Automotive giants like BMW and Volvo expected high-quality, cost-competitive batteries. Northvolt’s inability to deliver on time forced customers to cancel contracts, such as BMW’s $2 billion order, which significantly impacted the company’s financial stability.a 3. Cost Challenges:&nbsp;&nbsp;&nbsp;Competing with cheaper Asian manufacturers, particularly those in China, proved a daunting challenge. Northvolt's batteries were more expensive to produce due to high labor costs, energy costs in Europe, and inefficiencies in scaling production. 4. Lack of Diversified Revenue Streams:&nbsp;&nbsp;Unlike competitors that serve multiple sectors, Northvolt remained overly reliant on the automotive industry, making it vulnerable to fluctuations in demand or customer pullouts. What Went Wrong at Lilium?Lilium’s ambitious vision of eVTOL air taxis captivated investors and governments alike, but its commercial strategy fell short in several critical areas. The company’s failure to secure funding and its decision to file for insolvency have highlighted deeper issues in its business model. Commercial Failures:1. Unrealistic Product Timelines:&nbsp;&nbsp;Lilium promised to bring its eVTOL aircraft to market quickly, but the complexities of certification and technological hurdles slowed progress. This delay eroded investor confidence and put the company at odds with its funding needs. 2. High Development Costs:The development of eVTOL aircraft is extraordinarily capital-intensive, requiring billions of euros in funding. Despite raising a total of approximately $375 million from eight funding rounds, including significant investments from Tencent, Atomico, and Earlybird, Lilium faced mounting operational and development costs that far outpaced its available resources. 3. Limited Market Demand:&nbsp;&nbsp;The concept of urban air mobility remains speculative. Despite initial hype, practical challenges—such as infrastructure requirements, air traffic control integration, and regulatory hurdles—cast doubt on the market’s near-term viability. This uncertainty discouraged potential customers and investors. 4. Unproven Technology:&nbsp;&nbsp;Lilium’s reliance on a unique ducted fan design for its aircraft raised technical and efficiency questions. Many industry observers were skeptical about whether the technology could meet the range, speed, and payload requirements to make the business commercially viable. Public Funding ReceivedBoth companies were bolstered by substantial public funds intended to drive innovation and sustain Europe’s technological edge: Northvolt:&nbsp;- $1 billion from the European Investment Bank.&nbsp;- €902 million approved by the European Commission for a German battery plant.&nbsp;- SEK 625 million (€55 million) in Swedish government grants.&nbsp;- Investments from Swedish pension funds, totaling SEK 5.8 billion (€513 million). Lilium:&nbsp;- Initially approved for a €220 million funding commitment from the French government, contingent on production facilities in France.&nbsp;- The company’s German funding request for €100 million was ultimately denied. Key Private InvestorsBoth startups attracted significant venture capital investments, often from funds backed by public money:- Northvolt: Backed by Volkswagen, Goldman Sachs, and EIT InnoEnergy, the EU-backed energy innovation fund.- Lilium: Received funding from Atomico, which itself benefits from support by the European Investment Fund (EIF). The Broader European ContextThe struggles of Northvolt and Lilium highlight systemic issues in Europe’s ability to support its tech sector: 1. Funding Gaps: Europe lags significantly behind the U.S. in venture capital funding. In 2023, European startups attracted $45 billion, compared to $120 billion in the U.S. 2. Policy Deficiencies: Unlike the U.S.’s Inflation Reduction Act, which provides robust incentives for clean energy, Europe’s support systems lack clarity and scale. Bureaucratic hurdles and slow approval processes hinder the ability to respond quickly to market needs.﻿The crises at Northvolt and Lilium underscore the need for Europe to rethink its tech funding strategies. While public money has flowed into promising ventures, it has not been matched by sustained private investment or a supportive ecosystem for growth. Both companies' failures point to larger structural issues, including the difficulty of scaling complex technologies, the high costs of operating in Europe, and limited market readiness for futuristic products.

European Tech Dream Stumbles: What Went Wrong with Northvolt and Lilium, Their Public Funding, and the Broader Context

Europe stands at a critical juncture, facing significant challenges to its economic competitiveness and future prosperity. A new report outlines a comprehensive strategy to reignite sustainable growth and innovation across the European Union. We, at Newnex, are summarising the salient points of the report as a quick overview. The EU has long prided itself on combining economic integration with social inclusion and environmental protection. However, persistent slow growth and lagging productivity compared to the United States and China are threatening Europe's ability to maintain its high living standards and ambitious goals. Three key transformations are identified as crucial for Europe's future: 1. Accelerating innovation and finding new growth enginesEurope is being squeezed between weakening foreign demand and rising competition from China, while also falling behind in advanced technologies. Only four of the world's top 50 tech companies are European, and the EU's share of global tech revenues has declined. Urgent action is needed to boost innovation, particularly in breakthrough technologies like artificial intelligence. 2. Reducing energy costs while continuing decarbonizationDespite recent price declines, European companies still face electricity prices 2-3 times higher than in the US, and natural gas prices 4-5 times higher. The transition to clean energy presents both challenges and opportunities for European competitiveness. 3. Increasing security and reducing dependenciesRising geopolitical risks and vulnerabilities in critical supply chains necessitate a more coordinated European approach to economic security and strategic autonomy. The report identifies three main barriers hindering Europe's progress: 1. Lack of focus: Despite articulating common objectives, the EU often fails to set clear priorities or follow through with coordinated policy actions. 2. Inefficient use of common resources: Large collective spending power is diluted across multiple national and EU instruments, reducing impact. 3. Insufficient coordination: The EU's slow and fragmented policymaking process struggles to produce the coordinated, multi-faceted responses needed in today's complex global environment. To address these challenges, the report proposes a new industrial strategy focusing on: 1. Closing the Innovation Gap&nbsp;&nbsp;- Europe must focus on advanced technologies to close its innovation gap with the U.S. and China, particularly in AI and digital technologies.&nbsp;&nbsp;- Encouraging R&amp;D and supporting new tech companies can drive innovation, shifting away from the static industrial structures currently hindering growth.&nbsp;&nbsp;- To attract talent and financing, Europe must streamline regulatory burdens and improve its capital markets. 2. A Joint Decarbonization and Competitiveness Plan&nbsp;&nbsp;- The EU’s high energy costs impact its industries' competitiveness, making a coordinated decarbonization strategy essential.&nbsp;&nbsp;- While Europe leads in clean technologies, competition from countries like China pressures the EU to maintain its edge.&nbsp;&nbsp;- Addressing energy security and promoting clean technology can reduce dependencies on external energy sources and support growth. 3. Enhancing Security and Reducing Dependencies&nbsp;&nbsp;&nbsp;- Europe's dependency on external supplies for critical resources (e.g., rare earths from China) is a vulnerability in a volatile geopolitical climate.&nbsp;&nbsp;- Building a "foreign economic policy" within the EU to secure strategic resources and invest in defense industries is essential for sustainable growth. 4. Overcoming Barriers&nbsp;&nbsp;- Fragmented policies and lack of focus weaken Europe’s competitiveness. Coordinated efforts are needed across innovation, defense, and trade.&nbsp;&nbsp;- Reducing regulatory burdens for SMEs and enabling high-growth companies to scale within Europe will help retain talent and capital. 5. Financing Investments&nbsp;&nbsp;- To fund necessary transitions in technology, energy, and defense, Europe must increase investment rates and mobilize both private and public resources.&nbsp;&nbsp;- Initiatives like the Capital Markets Union can channel household savings into productive investments, providing financial backing for Europe's transformation. 6. Strengthening Governance&nbsp;&nbsp;- Reforms to the EU’s governance model are critical for effective policy coordination. Streamlined decision-making will allow the EU to tackle cross-border challenges more efficiently.&nbsp;&nbsp;- Embracing flexibility in policy implementation and reducing unnecessary regulations can empower industries while maintaining social cohesion. The strategy emphasizes the need for coordinated action across multiple policy areas, from fiscal incentives to trade policies and foreign economic strategies. It also calls for a rigorous application of the subsidiarity principle, reducing regulatory burdens where appropriate. Crucially, the report underscores that raising productivity is fundamental to creating the fiscal space needed for public investment in key European public goods. Some degree of joint funding for breakthrough innovation, defense procurement, and cross-border infrastructure may be necessary to maximize productivity and competitiveness. While acknowledging the difficult timing and potential trade-offs involved, the report argues that procrastination is no longer an option. Europe must move forward with reforms to preserve its welfare, environment, and freedom. With unity and democratic backing, the EU can find the strength to implement the necessary changes and secure a competitive, prosperous future for all Europeans. For Europe to secure its competitive position on the global stage, it must embrace an ambitious strategy rooted in innovation, sustainability, and strategic autonomy. Through focused investments and coordinated policies, Europe can drive productivity and protect its social and economic values amidst the challenges ahead. <a href="https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en?filename=The%20future%20of%20European%20competitiveness%20_%20A%20competitiveness%20strategy%20for%20Europe.pdf" rel="noopener noreferrer" target="_blank">Link to the full report</a>

A Summary of the "The Future of European Competitiveness" report by Mario Draghi

We've all heard the classic advice on founding and scaling a startup: find the right co-founders, raise venture capital, and build key relationships early to ease fundraising, recruitment, and growth. But the truth is that scaling a startup often means confronting the hard realities of life. Not everyone has a co-founder—or a good one. For every productive co-founder relationship, there are plenty that don’t work out. Some co-founders may lack motivation, some may struggle to execute, and others face personal challenges that impact their work. The fact is, startups are built by people, and people are complex. So, instead of viewing scaling purely as a growth exercise, think of it as a process of stakeholder risk mitigation. Anticipate potential risks: the impact of a mismatched co-founder, the fallout from a poor hire, or a venture capitalist's hesitation to invest. Think from their perspectives. Identify what each stakeholder risks in joining your journey, then actively propose strategies to mitigate those risks. Make it easy for them to say "yes" by demonstrating that you've considered and addressed the challenges. In other words, scale by thinking for others. When thinking about risk mitigation in practical terms, especially when scaling a startup, it’s essential to recognize the motivations and risk tolerance of each stakeholder. Here’s how this approach can work across different areas: 1. Hiring: Startups often lack the brand prestige, competitive salaries, and stability of established companies. But by understanding a candidate’s motivations—whether they’re seeking autonomy, creative input, rapid growth, or financial gain—you can tailor a compelling offer that aligns with these drivers. For instance, if they’re motivated by independence, offer a clear pathway to lead initiatives. If it’s monetary, structure a competitive equity package or performance-based incentives. Once you secure the hire, document what persuaded them to join. This ensures you stay aligned with their motivations over time, promoting longevity and satisfaction in the role. 2. Selecting or Compensating for a Co-Founder: Many entrepreneurs partner with friends or acquaintances as co-founders, often due to shared interests or life circumstances. But the reality is that not all co-founders are equally invested in the startup's risks and rewards, and not everyone will handle the journey’s inevitable challenges. If you don’t have a co-founder, it doesn’t mean scaling is off the table; it means building additional layers of support. Start by hiring a strong second-in-command, someone like a “Sheryl Sandberg” to your “Mark Zuckerberg,” who can bring stability and help balance the load. This structure reduces reliance on a single person, making the company more resilient and attractive to investors. 3. Securing Venture Capital: Venture capitalists face a high degree of risk, particularly with team-related uncertainties. Their biggest concern is often not just the product or market risk but the risk within the founding team itself. This is why VCs tend to prefer companies with co-founders, as it provides continuity if something happens to one founder. If you're a solo founder, address this by demonstrating a well-rounded, capable team that can maintain momentum if you’re unavailable. Offer solutions that de-risk their investment: show a reliable operational plan, clarify succession strategies, and present a capable, diversified team. Doing so not only increases your chances of fundraising success but reassures VCs that you’ve anticipated and mitigated key risks, making you a stronger investment choice. <blockquote>Adopting a mindset of risk mitigation —thinking from others’ perspectives and addressing their potential concerns—can take you far in building a successful, resilient company. This approach doesn’t just apply to hiring or securing investment; it’s invaluable for securing clients, expanding into new markets, and ultimately planning for a successful exit.&nbsp;</blockquote> Exit strategy, in particular, deserves a separate conversation. But the essence is this: by creating pathways for various exit opportunities, you increase the company’s value and flexibility. Sometimes, you can position your company as an asset to potential acquirers by showing them that acquiring you will make them stronger than going it alone. When this value is evident, an exit becomes not just possible but almost inevitable. In short, by focusing on risk mitigation and strategically aligning with others’ goals, you can build a foundation for growth, resilience, and the eventual realization of the company’s full potential.

For Resilient Startup Scaling, Embrace Stakeholder Risk Mitigation

Venture capital (VC) is a powerful funding source for startups with high growth potential. As a founder, understanding how VC works and how decisions are made is crucial for navigating the fundraising landscape and scaling your business. How Venture Capital WorksVenture capital firms invest money into promising startups in exchange for equity. These firms raise funds from limited partners (LPs), such as wealthy individuals, pension funds, and institutions. The VC firm then deploys this capital across a portfolio of startups, aiming to generate significant returns. The Investment Process1. Pitch and Due Diligence: Founders present their business to VC firms, often through warm introductions. If interested, the VC conducts thorough due diligence on the startup.2. Term Sheet: Upon deciding to invest, the VC presents a term sheet outlining investment terms, including valuation and equity stake.3. Funding Rounds: Startups typically go through multiple funding rounds (Seed, Series A, B, C, etc.) as they grow, with each round involving larger investments.4. Board Seats: VCs often take board seats to actively guide the company's strategic direction.5. Exit: VCs target a profitable exit, often through acquisition or IPO, ideally within 5 to 10 years. However, many companies take longer to reach this stage, which is accepted (tolerated) as long as the startup maintains strong growth. A clear path to exit is a critical factor in deal assessment, helping VCs gain the confidence needed to invest. What VCs Look For- Large market opportunity- Scalable business model- Strong founding team- Traction and growth metrics- Competitive advantage Pros and Cons for FoundersPros:- Access to significant capital- Expertise and networks- Credibility boostCons:- Dilution of ownership- Pressure to grow rapidly- Loss of some control Stages of VC Funding- Pre-seed: Very early stage, often for product development- Seed: Initial funding to get operations off the ground- Series A, B, C: Progressive rounds for scaling and expansion Venture Capital Decision-Making ProcessThe VC decision-making process is a structured approach that firms use to evaluate potential investments. Understanding this process can help founders better prepare and navigate their fundraising journey. Discovery PhaseIn this initial stage, VCs become aware of potential investment opportunities through various channels:- Warm introductions from trusted sources- Attending startup events and pitch competitions- Inbound applications or cold outreach from founders- Proactive research and tracking of promising startupsVCs often use tools and databases to monitor startups' growth metrics and industry trends. As a founder, making yourself visible in the startup ecosystem and building relationships early can be beneficial. Capture PhaseOnce a startup is on a VC's radar, it enters their tracking system:- The startup's information is added to the VC firm's Customer Relationship Management (CRM) system- Associates or analysts gather initial data about the company- Some firms may begin engaging with the startup by sharing relevant research or insightsFounders should ensure that the information they share is accurate and consistent across various platforms. Shameless Plug for Newnex:Newnex is an all-in-one platform where VCs can efficiently receive deals, engage with founders, and seamlessly refer opportunities to other VCs. By moving beyond traditional, siloed CRM systems, Newnex fosters a truly collaborative and connected experience. Our ambition is to shape the future of institutional investing, empowering VCs, LPs, and founders with a streamlined, future-ready approach to deal-making. Initial ReviewAt this stage, junior members of the VC firm (often associates or analysts) conduct a preliminary assessment:- They review the startup's pitch deck and available information- They may have initial conversations with the founding team- The goal is to determine if the opportunity aligns with the firm's investment thesis and warrants further investigationIt's important for founders to engage professionally with all team members, as these junior staff often play a crucial role in championing deals internally. Deep DiveIf a startup passes the initial review, the VC firm conducts a more thorough analysis:- A partner or senior team member typically leads this phase- They examine the startup's metrics, competitive landscape, and key areas of interest in detail- The team may conduct customer references, market research, and financial analysis- This process often results in an internal investment memo summarizing all findingsFounders should be prepared to provide detailed information and facilitate any due diligence requests during this phase. Investment Committee PresentationThe final decision-making stage involves presenting the investment opportunity to the firm's investment committee:- The lead partner or deal team presents the startup to the committee- They discuss the opportunity, potential risks, and expected returns- The committee may ask for additional information or clarificationThe exact decision-making process varies among firms. Some use a voting system, while others rely on consensus or give certain partners veto power. Decision and Term SheetBased on the investment committee's decision, the VC firm will:- Decline to invest and communicate their reasons to the founder- Express interest in investing and issue a term sheet outlining proposed investment terms- Request additional information or time to make a decisionIf a term sheet is issued, this initiates the negotiation phase, leading to the final investment agreement if both parties reach mutually acceptable terms. Post-Investment InvolvementAfter investing, VCs typically:- Take a board seat or observer rights- Provide ongoing support and guidance to the startup- Monitor the company's progress and help with future fundraising rounds Timeline:The timeline for deal-making can range widely, from as short as 3-4 weeks to over a year. For highly sought-after startup deals, where multiple investors are actively aligning to make it happen, deals might close in as little as four weeks. However, the typical timeline for a solid deal is usually around 4-6 months. For deals that may not be a perfect fit or lack clear growth indicators, the process could extend beyond a year. Founders should begin engaging with potential investors early—well before officially launching their fundraising efforts—to keep them informed and foster interest ahead of the formal process. Understanding these basics and the decision-making process can help founders approach VC funding strategically, aligning it with their startup's growth trajectory and long-term vision. It's important to note that while this outlines a typical process, each VC firm may have its own unique variations and criteria for decision-making. By being well-prepared and informed, founders can increase their chances of securing venture capital funding and building successful partnerships with investors.---<a href="https://newnex.io/praveen" rel="noopener noreferrer" target="_blank">Praveen Paranjothi </a>founded Newnex after&nbsp;investing over $500 million in LP and direct venture capital across top-tier firms such as the European Investment Fund, Siemens Pensions, and serving on 15+ boards across Europe, Israel, the US, and India. His vision: to bring greater efficiency to institutional venture capital investing. If public markets can operate seamlessly, so can private markets—and that’s the mission behind Newnex. We invite startups, VCs, LPs, CVCs, and family offices to join us in shaping the future of institutional investing: <a href="http://www.newnex.io" rel="noopener noreferrer" target="_blank">www.newnex.io</a> Read more about <a href="https://www.newnex.io/blogs/venture-capital/what-is-philanthropic-venture-capital-aka-venture-philanthropy" rel="noopener noreferrer" target="_blank">Venture Philanthropy</a>, maybe that's an interesting instrument for your startup.

Venture Capital: An Essential Guide for Startup Founders Raising from VCs

Philanthropic venture capital is an innovative funding approach that combines principles from traditional venture capital with philanthropic goals. This model aims to support and accelerate the development of solutions to pressing social and medical challenges, particularly in areas where traditional funding sources may be limited or risk-averse. Key Features of Philanthropic Venture Capital 1. Patient Capital: Unlike traditional venture capital, philanthropic VC offers longer investment horizons, often aligning with the extended timelines required for drug development or complex social interventions.2. Focus on Social Impact: While financial returns are considered, the primary goal is to create significant social or medical impact rather than maximizing profits.3. Expertise and Resources: Philanthropic VCs often provide strategic guidance, access to networks, and specialized knowledge in addition to financial support.4. Risk Tolerance: These funds are typically more willing to invest in high-risk, early-stage ventures that have the potential for substantial societal benefits.5. Non-Dilutive Funding: In some cases, philanthropic VC can offer non-dilutive funding, allowing startups to retain more control over their ventures. Advantages of Philanthropic Venture Capital - Bridging Funding Gaps: It addresses critical funding shortages, especially in areas like early-stage drug discovery or social enterprises.- Attracting Additional Investment: The involvement of a philanthropic VC can signal credibility and attract larger investors.- Specialized Knowledge: Many philanthropic VCs focus on specific areas (e.g., multiple myeloma research), providing deep domain expertise.- Long-Term Vision: The extended investment horizons allow for the pursuit of ambitious, transformative projects. Philanthropic venture capital has been successfully applied in various sectors: - Healthcare: The Cystic Fibrosis Foundation's investment in drug development led to breakthrough treatments.- Education: Funds like the NewSchools Venture Fund have supported educational initiatives.- Social Enterprises: Organizations like the Robin Hood Foundation invest in poverty-fighting initiatives. While philanthropic venture capital offers many benefits, it's not without challenges: - Measuring Impact: Defining and quantifying social returns can be complex.- Potential Conflicts: Balancing financial sustainability with social mission can create tensions.- Scalability Concerns: Some critics argue that this model may not be easily scalable to address large-scale social issues. Philanthropic venture capital represents a powerful tool for driving innovation and social change, particularly in areas underserved by traditional funding mechanisms. By combining financial resources with strategic support and a focus on long-term impact, this model has the potential to accelerate the development of critical solutions in healthcare, education, and other vital sectors.

What is Philanthropic Venture Capital aka Venture Philanthropy

At Newnex, we are constantly focused on finding ways to support startups and investors in scaling both businesses and investments successfully. To help with this, we’ve created a comprehensive checklist designed to guide startup founders through the various stages of growth: pre-seed, seed, Series A, and Series B. Each stage comes with its own unique set of priorities, and this checklist offers a clear, structured roadmap to help founders and investors stay focused on the specific goals that matter most at each stage of scaling. It's a practical tool to ensure a single-minded focus on driving growth and achieving sustainable success. Pre-Seed Stage (Idea Validation &amp; Early Traction) 1. Foundational Setup&nbsp;&nbsp;- Establish the core founding team (complementary skills, shared vision).&nbsp;&nbsp;- Validate problem-solution fit with potential customers.&nbsp;&nbsp;- Create a minimum viable product (MVP) to test market demand.&nbsp;&nbsp;- Legal structure: Incorporate the company, set up equity distribution (cap table). 2. Customer Discovery&nbsp;&nbsp;- Identify the target market and early adopters.&nbsp;&nbsp;- Conduct user interviews and surveys to validate the core assumptions.&nbsp;&nbsp;- Define key value proposition and core product features.&nbsp;&nbsp;3. Market Research &amp; Product Testing&nbsp;&nbsp;- Research competitors and market dynamics.&nbsp;&nbsp;- Gather feedback through MVP iterations.&nbsp;&nbsp;- Develop a go-to-market strategy (initial channels, messaging). 4. Financial Planning&nbsp;&nbsp;- Set up basic accounting and financial tracking.&nbsp;&nbsp;- Establish a low burn rate; bootstrap as much as possible.&nbsp;&nbsp;- Secure pre-seed funding through friends, family, and angels. 5. Hiring &amp; Culture&nbsp;&nbsp;- Hire the initial core team (keep it lean).&nbsp;&nbsp;- Set the foundation of your company culture, values, and mission.&nbsp;&nbsp;6. Metrics to Focus On&nbsp;&nbsp;- Customer validation metrics (number of early users, feedback).&nbsp;&nbsp;- Product-market fit signals (high engagement, repeat users).&nbsp;&nbsp;- Basic financial metrics (burn rate, runway). Seed Stage (Product-Market Fit &amp; Early Growth) 1. Product-Market Fit&nbsp;&nbsp;- Continue iterating on the product based on customer feedback.&nbsp;&nbsp;- Refine your value proposition and product to fit the market’s needs.&nbsp;&nbsp;- Increase product adoption and retention with your target users. 2. Revenue &amp; Monetization&nbsp;&nbsp;- Develop early revenue models and pricing strategy.&nbsp;&nbsp;- Test your monetization channels (paid subscriptions, freemium, etc.).&nbsp;&nbsp;- Start tracking your customer acquisition cost (CAC) and lifetime value (LTV). 3. Team Expansion&nbsp;&nbsp;- Begin hiring additional team members (marketing, sales, product, engineering).&nbsp;&nbsp;- Solidify company culture and onboarding processes.&nbsp;&nbsp;- Build a core leadership team to delegate key functions (marketing, product, sales). 4. Marketing &amp; Distribution&nbsp;&nbsp;- Scale go-to-market strategies that are working (ads, SEO, content marketing, partnerships).&nbsp;&nbsp;- Focus on customer acquisition and building brand awareness.&nbsp;&nbsp;- Build out early marketing and sales teams. 5. Investor Relations&nbsp;&nbsp;- Develop and maintain relationships with potential investors for future rounds.&nbsp;&nbsp;- Prepare your pitch and fundraising materials (deck, financials, roadmap).&nbsp;&nbsp;- Raise seed funding, ensuring you have enough runway (12–18 months). 6. Metrics to Focus On&nbsp;&nbsp;- User growth and engagement (acquisition, activation, retention).&nbsp;&nbsp;- Key financial metrics (runway, CAC, LTV).&nbsp;&nbsp;- Product stickiness (user retention, daily/weekly/monthly active users). Series A Stage (Scaling Product &amp; Expanding Market) 1. Scaling Operations&nbsp;&nbsp;- Focus on scaling product development and operational processes.&nbsp;&nbsp;- Invest in backend infrastructure to handle increased customer demand.&nbsp;&nbsp;- Refine and improve the core product based on deeper customer data insights. 2. Customer Acquisition &amp; Growth&nbsp;&nbsp;- Expand your customer acquisition channels (ads, partnerships, outbound sales).&nbsp;&nbsp;- Focus on automating and optimizing the sales process.&nbsp;&nbsp;- Develop sophisticated user onboarding and customer success strategies. 3. Revenue Growth &amp; Unit Economics&nbsp;&nbsp;- Double down on monetization strategies and optimize revenue streams.&nbsp;&nbsp;- Focus on improving unit economics (reduce CAC, improve LTV).&nbsp;&nbsp;- Expand pricing strategies to capture more value from different customer segments. 4. Team &amp; Culture Expansion&nbsp;&nbsp;- Hire for scaling teams: operations, engineering, marketing, customer support.&nbsp;&nbsp;- Develop clear organizational structures and management hierarchies.&nbsp;&nbsp;- Focus on leadership development and building middle management layers. 5. Brand Building &amp; Market Positioning&nbsp;&nbsp;- Invest in brand development (PR, content marketing, social proof).&nbsp;&nbsp;- Build a strong narrative around your brand and mission.&nbsp;&nbsp;- Penetrate new markets or expand offerings to new geographies. 6. Fundraising &amp; Investor Communication&nbsp;&nbsp;- Raise Series A funding (target 18–24 months runway).&nbsp;&nbsp;- Keep communication clear and regular with current and prospective investors.&nbsp;&nbsp;- Align funding with clear scaling goals (new hires, product growth, market expansion). 7. Metrics to Focus On&nbsp;&nbsp;- Revenue growth (MRR, ARR).&nbsp;&nbsp;- Customer acquisition efficiency (CAC payback period).&nbsp;&nbsp;- Churn rate and user retention.&nbsp;&nbsp;- Profitability (gross margins, burn multiple). Series B Stage (Rapid Growth &amp; Market Leadership) 1. Aggressive Scaling&nbsp;&nbsp;- Focus on high growth by scaling product development, customer acquisition, and sales teams.&nbsp;&nbsp;- Build infrastructure for large-scale operations (systems, security, compliance).&nbsp;&nbsp;- Prepare for international expansion or diversification of product offerings. 2. Operational Efficiency&nbsp;&nbsp;- Streamline processes and increase operational efficiency (automation, tooling, data-driven processes).&nbsp;&nbsp;- Build out leadership and management teams to manage growing headcount.&nbsp;&nbsp;- Optimize supply chains, manufacturing (if applicable), and backend scalability. 3. Revenue Expansion&nbsp;&nbsp;- Explore additional revenue streams, upsell/cross-sell opportunities.&nbsp;&nbsp;- Implement advanced sales and marketing strategies (ABM, influencer marketing, partnerships).&nbsp;&nbsp;- Focus on increasing gross margins and scaling customer success. 4. Product Differentiation &amp; Innovation&nbsp;&nbsp;- Invest in research and development to maintain product leadership.&nbsp;&nbsp;- Innovate with new features or complementary products that expand market share.&nbsp;&nbsp;- Expand product-market fit in secondary markets. 5. Fundraising &amp; Financial Strategy&nbsp;&nbsp;- Raise Series B funding (with a focus on fueling rapid growth).&nbsp;&nbsp;- Strengthen financial reporting, forecasting, and compliance (move towards audits, potential exit/IPO preparation).&nbsp;&nbsp;- Build relationships with growth-stage investors. 6. Metrics to Focus On&nbsp;&nbsp;- Revenue growth (high double-digit or triple-digit year-on-year growth).&nbsp;&nbsp;- Profitability and path to breakeven.&nbsp;&nbsp;- Expansion of LTV (new product features, cross-sell/upsell).&nbsp;&nbsp;- Reduction of churn rate.&nbsp;&nbsp;- Team productivity and engagement (scaling culture). Each checklist emphasizes the key focus areas for every stage of funding, helping founders prioritize product-market fit, growth, and operational efficiency as they navigate the startup journey. If you think we've overlooked anything important, we welcome your comment and feedback!

The Startup Scaling Checklist: A Framework for Founders from Founding to Series-B stages

GP-led transactions have emerged as a transformative force in the venture capital and private equity secondary market, offering innovative liquidity solutions for fund managers and investors alike. These transactions, initiated by general partners (GPs), have grown from a niche approach to a mainstream practice, accounting for nearly half of all secondary transactions in recent years. Understanding GP-Led Transactions GP-led transactions typically involve the transfer of assets from an existing fund to a new vehicle managed by the same GP. This process allows GPs to retain control of high-potential assets while offering liquidity options to existing limited partners (LPs). Market Growth and Trends The GP-led segment has experienced remarkable growth, expanding from just $5 billion in volume in 2013 to $48 billion in 2022. This growth has continued, with GP-led deals accounting for approximately half of all secondary deal volume since 2020. The market's transformation suggests further acceleration in the near to medium term, as these transactions have effectively transferred secondary portfolio management responsibility from LPs to GPs. Economics for GPs GP-led transactions offer several economic benefits for general partners: 1. Extended Asset Management: GPs can retain control of high-potential assets beyond the original fund's lifespan, potentially increasing overall returns. 2. Fee Structure Reset: GPs can negotiate new fee structures for the continuation vehicle, often including:&nbsp;&nbsp;- Management fees typically ranging from 0.50% to 1.25%, lower than traditional primary funds.&nbsp;&nbsp;- Tiered carried interest structures, where full carry (usually 20%) is achieved only after certain performance hurdles are met. 3. Carried Interest Crystallization: GPs often roll over 100% of their crystallized carry from the existing fund into the new structure, aligning their interests with new investors. 4. Additional Capital Commitment: GPs frequently make new commitments to the continuation vehicle, typically 3-5% of the purchase price, further demonstrating alignment. 5. Ratchet Mechanisms: Many continuation funds implement ratchet mechanisms with different hurdles before the GP can begin to realize carry, enhancing alignment and potential upside. 6. Market Timing Flexibility: GPs gain the ability to maximize value by choosing the optimal time to exit investments. The Economics for New LPs New LPs investing in GP-led transactions often find attractive opportunities: 1. Access to High-Quality Assets: These deals frequently involve "trophy assets" that GPs want to retain, offering new LPs exposure to premium investments. 2. Potential Pricing Advantage: While pricing varies, new LPs may invest at a slight discount to the fund's fair market value (FMV) or Total Value to Paid-In (TVPI) multiple. This discount, typically ranging from 0-10%, reflects the concentrated nature of the investment and the need to incentivize new capital. 3. Attractive Risk-Reward Profile: New investors benefit from the GP's existing knowledge of the asset, potentially reducing risk while maintaining upside potential. 4. Immediate Exposure: Unlike primary fund investments, GP-led deals offer immediate and concentrated exposure to specific assets or portfolios. 5. Favorable Terms: New LPs often negotiate more investor-friendly terms compared to the original fund, including lower management fees and performance-based carry structures. Some investor-friendly benefits for New LPs include: 1. Lower Management Fees: Management fees in continuation funds are generally lower than in primary funds, typically ranging from 0.50% to 1.25%. 2. Performance-Based Carry Structures: Instead of the standard 20% carry, GP-led transactions often use tiered carry structures where the GP doesn't achieve full carry unless certain performance hurdles are met. 3. GP Commitment: GPs often roll over 100% of their crystallized carry from the existing fund into the new structure and make significant new commitments (typically 3-5% of the purchase price), demonstrating alignment with new investors. 4. Ratchet Mechanisms: Many continuation funds implement ratchet mechanisms with different hurdles before the GP can begin to realize carry, further enhancing alignment. 5. Enhanced Transparency: New LPs gain access to in-depth portfolio information beyond a fund's regular reporting, allowing for deep direct-style diligence of the assets. 6. Immediate Exposure: Unlike primary fund investments, GP-led deals offer immediate and concentrated exposure to specific assets or portfolios. 7. Governance Rights: New lead investors may negotiate for enhanced governance rights or input on key decisions related to the portfolio companies. 8. Deferral Options: In some cases, buyers may negotiate delayed payment methods, typically spreading payments over 6-12 months, which can enhance IRR. 9. Status Quo Option: Some deals offer a status quo option, enabling existing LPs to retain their legacy distribution waterfall without committing to new arrangements. These are some investor-friendly terms that are designed to align interests between the GP and new investors, provide enhanced economics for new LPs, and ensure continued focus on value creation in the underlying assets. Challenges for Existing LPs While GP-led transactions offer benefits, they also present challenges for existing LPs: 1. Liquidity vs. Upside Potential: LPs must decide whether to cash out or roll over their investment. This decision can be complex, potentially constraining their ability to fully realize anticipated returns. 2. Valuation Concerns: Ensuring fair valuation is crucial. LPs may worry about whether the transaction price truly reflects the asset's value. 3. Alignment of Interests: There's a potential conflict of interest as GPs act as both buyers and sellers. LPs must scrutinize the GP's motivations and commitment to the new vehicle. 4. Fee Structure Changes: Rolling over into the new vehicle may involve new fee arrangements, potentially impacting long-term returns. 5. Due Diligence Burden: LPs choosing to roll over may need to conduct additional due diligence on the new vehicle, incurring extra costs and time. 6. Limited Negotiation Power: Individual LPs may have limited ability to influence transaction terms, especially in larger funds. Market Dynamics and Trends 1. Growing Popularity: GP-led transactions have become a key liquidity management tool, driven by innovation and slowdowns in traditional exit routes like IPOs and M&amp;A. 2. Dry Powder Imbalance: The market currently faces a supply-demand disparity, with more GP-led opportunities than available capital, allowing buyers to be highly selective. 3. Focus on Quality: High-quality assets and well-structured deals attract significant attention, while challenging transactions struggle to close. 4. Importance of GP Commitment: Successful deals often involve GPs rolling over 100% of their crystallized carry and making substantial new commitments, typically 3-5% of the purchase price. 5.Regulatory Scrutiny: Increasing transaction volumes have led to calls for greater transparency and potential regulatory oversight, including proposals for fairness opinions and prompt notification of deals. Recent Examples 1. Lexington Capital Partners and Lightspeed Venture Partners: Lexington participated in a multi-asset transaction involving Lightspeed Venture Partners, acquiring stakes in multiple Lightspeed funds. 2. Coller Capital and Abry Partners: In August 2024, Coller Capital led a $1.6 billion GP-led credit transaction with Abry Partners, creating the largest credit continuation vehicle to date. Industry Focus and Preferences Buyers in the GP-led market show a preference for mature business models and industries with limited cyclical exposure. Buyouts compose 86% of GP-led market share, with healthcare, business services, industrials, and tech dominating interest. Capital-intensive industries have generally struggled to gain traction in these transactions. GP-led transactions have revolutionized the private equity secondary market, offering new avenues for liquidity and investment. While they present attractive opportunities for GPs to extend asset management and for new LPs to access high-quality assets, existing LPs face complex decisions that can impact their investment outcomes. As the market evolves, balancing the interests of all parties involved will be crucial for the continued growth and acceptance of these innovative structures. For both new and existing LPs, careful due diligence, a clear understanding of the underlying assets, and a thorough evaluation of the GP's track record and alignment are essential when considering participation in GP-led transactions. As these deals continue to reshape the private equity landscape, they offer both opportunities and challenges that investors must navigate with care and expertise. The future of GP-led transactions looks promising, with continued growth expected as they become an established part of the private equity ecosystem. However, success in this market will depend on maintaining high standards of transparency, alignment, and value creation for all stakeholders involved.

The Rise of GP-Led Transactions: Revolutionizing Private Equity Liquidity

Newnex’s latest edition of Top Tech and Venture Capital News provides a comprehensive overview of significant events in the technology and investment space. <ul><li>Venture Capital has an exit problem <a href="https://techcrunch.com/2024/07/04/spains-exposure-to-climate-change-helps-madrid-based-vc-seaya-close-e300m-climate-tech-fund/" rel="noopener noreferrer" target="_blank">Read more</a></li><li>OpenAI Launches Advanced Voice Mode for ChatGPT: OpenAI has begun rolling out its Advanced Voice Mode, offering hyper-realistic audio responses to a select group of ChatGPT Plus users, with a wider release planned for fall 2024. <a href="https://www.newnex.io/feed/openai-launches-advanced-voice-mode-for-chatgpt-a-new-era-of-hyper-realistic-audio-responses" rel="noopener noreferrer" target="_blank">Read more</a></li><li>Tech Giants Face AI Investment Challenges: Despite stock market penalties, tech companies argue that the risks of underinvesting in AI are greater than overinvesting. <a href="https://www.newnex.io/feed/ai-this-sums-it-up-the-risk-of-underinvesting-is-dramatically-greater-than-the-risk-of-overinvesting" rel="noopener noreferrer" target="_blank">Read more</a></li><li>OpenAI's Valuation Hits $80 Billion: OpenAI has reached an $80 billion valuation following a strategic share sale led by Thrive Capital, reflecting significant interest in AI technologies. <a href="https://www.newnex.io/feed/openai-turns-to-strategic-investments-as-it-reportedly-reaches-80-billion-valuation" rel="noopener noreferrer" target="_blank">Read more</a></li><li>Web3 Startups Secure $1.1 Billion in July: Venture capitalists invested over $1.1 billion across 118 deals in Web3-based startups in July. <a href="https://www.newnex.io/feed/web3-based-startups-raised-more-than-11-billion-from-venture-capitalists-across-118-deals-in-july" rel="noopener noreferrer" target="_blank">Read more</a></li><li>BNP Paribas to Acquire AXA IM: BNP Paribas is set to acquire AXA Investment Managers, including a management buyout of AXA VP. <a href="https://www.newnex.io/feed/bnp-paribas-to-acquire-axa-im-axa-vps-management-buyout" rel="noopener noreferrer" target="_blank">Read more</a></li><li>BendingSpoons Acquires WeTransfer: Italian company BendingSpoons has acquired the file transfer service WeTransfer. <a href="https://www.newnex.io/feed/italys-bendingspoons-acquires-file-transfer-service-wetransfer" rel="noopener noreferrer" target="_blank">Read more</a></li><li>Advancements in Solid-State Battery Technology: New solid-state battery technology promises up to 600 miles on a single charge. <a href="https://www.newnex.io/feed/solid-state-battery-tech-for-600-miles-on-single-charge" rel="noopener noreferrer" target="_blank">Read more</a></li><li>Satellite Milestone: Humanity has launched 10,000 satellites, with Starlink accounting for over 6,500. <a href="https://www.newnex.io/feed/humanity-reached-10k-satellites-of-which-starlink-accounts-for-approximately-two-thirds" rel="noopener noreferrer" target="_blank">Read more</a></li><li>Google Abandons Third-Party Cookie Phase-Out: Google has decided to abandon its plan to phase out third-party cookies in Chrome. <a href="https://www.newnex.io/feed/google-abandons-plan-to-phase-out-third-party-cookies-in-chromegoogle-has-decided-not-to-cancel-and-replace-third-party-cookies-in-its-chrome-browser-" rel="noopener noreferrer" target="_blank">Read more</a></li><li>UK Boosts Quantum Technology Funding: The UK has allocated £100 million to establish five quantum technology hubs across England and Scotland. <a href="https://www.newnex.io/feed/britains-quantum-technology-ambitions-have-received-a-100m-boost-to-establish-five-quantum-technology-hubs-across-england-and-scotland-these-hubs-anno" rel="noopener noreferrer" target="_blank">Read more</a></li><li>India's Private Capital Exits: India saw $25 billion in private capital-backed exits in 2023 and $11.5 billion in the first half of 2024. <a href="https://www.newnex.io/feed/india-saw-25-billion-in-private-capital-backed-exits-in-2023-and-115-billion-in-the-first-half-of-2024-according-to-new-data-from-the-global-private-c" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> Startups fundraising track - we tracked $2.4billion funding rounds between Asia, Israel, Europe and the US. Total $450 million raised by Startups in Asia and Israel:<ul><li>Rapido (India): Ride-hailing startup raised $120 million, entering unicorn club, led by WestBridge.</li><li>Matter Motor (India): EV maker raised $35 million in Series B funding.</li><li>Meragi (India): Wedding services startup raised $9.1 million in Series A led by Accel.</li><li>DeepC (Germany): Radiology AI startup raised €30 million (approximately $33 million).</li><li>Mayhem Studios (India): Mobile gaming studio raised an undisclosed amount from Lumikai.</li><li>DruCare (India): Healthtech startup raised $1.2 million in pre-Series A funding.</li><li>Dezerv (India): Wealthtech startup raised ₹265 crore (approximately $32 million) in Series B funding.</li><li>Immuneel Therapeutics (India): Raised ₹100 crore (around $12 million).</li><li>Timbuckdo (India): On-demand talent platform raised ₹2 crore (approximately $240,000).</li><li>AryaAg (India): Agritech startup raised $29 million.</li><li>Lakera AI (Switzerland): AI safety startup raised $20 million.</li><li>Caldera (Israel): "Rollup-in-a-box" platform raised $15 million from Peter Thiel's venture fund.</li><li>CytoReason (Israel): AI healthcare startup raised $80 million.</li><li>Partior (Singapore): Blockchain settlement startup raised $60 million.</li><li>IVP Semi (India): Chip company raised $5 million.</li></ul> Europe - Total startup funding $387.7 million<ul><li>Flo Health (UK): Women's health app raised over $200 million, achieving unicorn status.</li><li>4D Medicine (UK): Biomaterial startup raised £1.1 million (around $1.4 million).</li><li>Ocula (UK): E-commerce analytics platform raised an undisclosed amount in Series A funding.</li><li>Cognisyc (Romania): Received investment from Early Game Ventures, amount undisclosed.</li><li>Plum (UK): Financial wellness platform raised $10 million.</li><li>Maurten (Sweden): Sports nutrition company raised €20 million (approximately $22 million).</li><li>Kolum (Germany): Raised €21 million (around $23 million) in pre-seed funding.</li><li>LegalFly (Turkey): Legal services AI startup raised $15 million.</li><li>Hero Software (UK): SaaS platform for tradespeople raised $40 million in Series B funding.</li><li>Adam (Czech Republic): Home improvement platform raised €3 million (approximately $3.3 million).</li><li>Soda (Belgium): AI data quality startup raised $14 million.</li><li>Planqc (Germany): Quantum startup raised $54 million.</li><li>Helsing (Germany): Defense startup valued at $5 billion following its latest funding round.</li><li>Switchee (UK): Smart home technology startup raised $5 million.</li></ul> USA startups raised c. $1.6 billion<ul><li>Q Bio (USA): Preventative health scan startup raised an undisclosed amount for new MRI machine development.</li><li>Runway (USA): AI video startup reportedly seeking to raise $450 million.</li><li>Magic (USA): AI coding startup seeking $1.5 billion valuation in new funding round.</li><li>Posh (USA): Event startup raised $22 million.</li><li>Vanta (USA): Internet security startup raised $150 million in Series C funding.</li><li>Monarch Tractor (USA): Autonomous electric tractor company raised $133 million.</li><li>Third Arc (USA): Oncology and immunology startup launched with Series A funding, amount undisclosed.</li><li>Harvey (USA): OpenAI-backed legaltech startup raised $100 million.</li><li>Heeler (USA): Application security company raised $8.5 million.</li><li>Cohere (Canada): AI startup raised $500 million.</li><li>Sentient Labs (USA): AI and crypto startup raised $85 million, led by Peter Thiel.</li><li>Hebbia (USA): AI document search tool raised $130 million.</li></ul> Founders' Speak:An interview with Eleven Labs founder about raising $101 million in 2 years - <a href="https://www.newnex.io/feed/elevenlabs-on-raising-101m-in-two-years" rel="noopener noreferrer" target="_blank">Read more</a> Venture Capital funds launched with $3.6 billion dry-powder <ul><li>Tenzing Fund III has successfully closed with a substantial fund size of £900 million, equivalent to approximately $1.15 billion USD. This fund, based in the UK, focuses on technology investments and marks a significant milestone for Tenzing as it aims to support innovative tech companies. <a href="https://www.insidermedia.com/news/national/tenzing-closes-third-fund-at-900m" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Trill Impact has launched its inaugural venture fund, raising €90 million (around $98 million USD). This fund targets early-stage companies in Europe that are driven by impact, particularly those addressing global challenges aligned with the UN Sustainable Development Goals. <a href="https://impact-investor.com/trill-impact-closes-venture-fund-after-raising-e90m/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Forestay Capital has closed its fifth fund with a total of $220 million, specifically focusing on early-stage technology startups in Israel and Europe <a href="https://www.timesofisrael.com/european-venture-capital-firm-closes-220m-fund-with-focus-on-israeli-startups" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>13books Capital has raised £95 million, which is approximately $121 million USD, to establish a venture capital fund that concentrates on fintech investments. This fund seeks to capitalize on the growing fintech sector. <a href="https://www.cityam.com/13books-capital-raises-121m-for-fintech-venture-capital-fund/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>venBio has raised $528 million for its fourth fund, focusing on investments in life sciences, which aims to support innovative healthcare solutions. <a href="https://www.fiercebiotech.com/biotech/venture-capital-veteran-venbio-raises-528-million-life-sciences-investment" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>ICONIQ Growth has wrapped up its seventh fund with a remarkable size of $5.75 billion, targeting growth investments in technology across a global landscape. <a href="https://www.iconiqcapital.com/growth/insights/iconiq-growth-raises-5-75b-to-support-the-next-generation-of-exceptional-founders" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Index Ventures has successfully raised $2.3 billion, which will be allocated to both venture and growth investments in technology startups globally. <a href="https://techcrunch.com/2024/07/09/index-ventures-raises-23-billion-for-new-venture-and-growth-funds/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Sovereign's Capital has announced its largest fund ever, closing at $400 million, with a focus on early to growth-stage investments in technology and healthcare sectors across the US and Southeast Asia. <a href="https://www.businesswire.com/news/home/20240710348091/en/Sovereign%E2%80%99s-Capital-Closes-its-Largest-Ever-Venture-Capital-Fund" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Industry Ventures has raised $900 million to invest in small early-stage VCs and their breakout startups, emphasizing the importance of nurturing emerging talent in the venture capital landscape. <a href="https://techcrunch.com/2024/07/02/industry-ventures-raises-a-900m-fund-for-investing-in-small-early-stage-vcs-and-their-breakout-startups" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Frumtak Ventures has closed its fourth fund at $87 million, focusing on supporting startups in Iceland. <a href="https://tech.eu/2024/07/10/icelandic-frumtak-ventures-closes-fourth-fund-at-87m/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Alpine Space Ventures has raised €170 million (approximately $185 million USD) to target Series A rounds in the space tech sector. <a href="https://www.eu-startups.com/2024/07/alpine-space-ventures-closes-e170-million-fund-to-target-series-a-space-tech-rounds/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Carbon Equity has launched a new climate tech fund, raising €60 million (around $65 million USD) to invest in sustainable technologies. <a href=" https://impact-investor.com/carbon-equity-raises-e60m-for-new-climate-tech-fund/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>J2 Ventures has secured $150 million to propel technology startups that cater to both civilian and government applications. <a href="https://techcrunch.com/2024/07/04/j2-ventures-focused-on-military-healthcare-grabs-150m-for-its-second-fund/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> <ul><li>Seaya Andromeda has closed a climate tech fund with a total of €300 million (approximately $327 million USD), focusing on investments in environmentally sustainable technologies. <a href="https://techcrunch.com/2024/07/04/spains-exposure-to-climate-change-helps-madrid-based-vc-seaya-close-e300m-climate-tech-fund/" rel="noopener noreferrer" target="_blank">Read more</a></li></ul> Learning: <ul><li>16 Leadership Lessons from Amazon - <a href="https://www.newnex.io/feed/16-leadership-lessons-from-amazon-" rel="noopener noreferrer" target="_blank">Read more</a></li></ul>----<a href="https://newnex.io" rel="noopener noreferrer" target="_blank">Newnex is an exclusive platform</a> designed for institutional investors for private venture capital syndications (GP-GP) and co-investments (GP-LP). Join the exclusive global network of VCs, Family Offices, LPs, and Asset Owners for confidential deal-making.

Newnex Venture Insights - Latest tech and venture capital news

Namma Yatri, the open-source ridesharing app, has reportedly secured $11 million in pre-Series A funding! 💰Google joins as an investor, part of its $10 billion India commitment<ul><li>Round co-led by Blume Ventures and Antler</li><li>Operates on ONDC, India's initiative to democratize e-commerce</li><li>Completed 46 million+ rides across multiple Indian cities</li><li>What sets Namma Yatri apart? 🤔</li><li>No commission fees, unlike Uber and Ola. </li><li>Small monthly fee from driver partners</li></ul>Founded by Magizhan Selvan and Shan M S to address driver frustrations, Namma Yatri is an innovative open-source ride-sharing startup based in Bengaluru, India. Launched in 2022, the app connects customers with auto-rickshaw and cab drivers without charging any commission fees. Instead, it sustains itself through a small monthly fee paid by its driver partners, making it a unique player in the ride-sharing market dominated by Uber and Ola, which charge drivers 25-30% commission per ride.The startup was incubated by Juspay, a SoftBank-backed financial services company, and later spun off into a separate entity called Moving Tech.Namma Yatri operates on the Open Network for Digital Commerce (ONDC), an interoperable platform backed by the Indian government to democratize e-commerce.The app has facilitated over 46 million rides across more than half a dozen Indian cities, including Bengaluru and Hyderabad. Recently, Namma Yatri raised $11 million in a pre-Series A funding round co-led by Blume Ventures and Antler, with participation from Google, which aligns with Google's broader $10 billion investment commitment in India.Moving Tech’s co-founders, Magizhan Selvan and Shan M S, have emphasized empathy and a differentiated approach in their business model, focusing on addressing the frustrations of drivers within the existing ride-sharing ecosystem. The new funding will be used to expand Namma Yatri's engineering and R&amp;D teams and to explore additional transportation options, including buses. Namma Yatri is a testament to the potential of open-source solutions in transforming traditional business models and improving livelihoods in the gig economy.

Google invests in Indian open source Uber competitor - Namma Yatri

OpenAI has launched GPT-4o mini, a cost-efficient small language model designed to enhance accessibility and affordability for various applications.&nbsp; ﻿Key Highlights and Features of GPT-4o Mini 1. Performance<ul><li>GPT-4o mini outperforms GPT-4 in chat preferences, as reflected in the LMSYS leaderboard.</li><li>It achieves an impressive score of 82% on the MMLU benchmark.</li></ul> 2. Cost-Efficiency<ul><li>The model is priced at 15 cents per million input tokens and 60 cents per million output tokens.</li><li>This pricing makes it significantly cheaper than previous models, including being 60% less expensive than GPT-3.5 Turbo.</li></ul> 3. Capabilities<ul><li>GPT-4o mini supports both text and vision in its API.</li><li>It features a large context window of 128K tokens and includes knowledge up to October 2023.</li></ul> 4. Benchmark Performance<ul><li>The model surpasses GPT-3.5 Turbo and other small models on various academic benchmarks, excelling in textual intelligence and multimodal reasoning.</li></ul> 5. Safety Measures<ul><li>Built-in safety features help filter out undesirable content.</li><li>The model uses reinforcement learning with human feedback (RLHF) to align with OpenAI's safety policies.</li></ul> 6. Availability<ul><li>GPT-4o mini is available through the Assistants API, Chat Completions API, and Batch API.</li><li>It is accessible to ChatGPT Free, Plus, and Team users, replacing GPT-3.5.</li></ul> 7. Future Developments<ul><li>OpenAI plans to continue enhancing model capabilities while further reducing costs, aiming for seamless integration of AI into applications and websites.</li></ul> This launch marks a significant advancement in making powerful AI models more accessible and affordable for developers and users. Read more: <a href="https://openai.com/index/gpt-4o-mini-advancing-cost-efficient-intelligence" rel="noopener noreferrer" target="_blank">https://openai.com/index/gpt-4o-mini-advancing-cost-efficient-intelligence/</a>

GPT-4o mini launched, cheaper access for startups and small businesses

Pension funds, the silent guardians of people's retirements, manage a staggering $76 trillion globally, with a whopping $4.6 trillion entrusted to them in the UK alone. How these vast sums are invested impacts the comfort and security of retirees. In this context, we drive into two key questions that shape pension investment strategies:<ol><li>Should pension funds prioritize local economic growth, or focus solely on maximizing returns?</li><li>And how do alternative investments like private equity stack up against traditional investment options?</li></ol> Balancing Returns and Local ImpactLet's start with the basics. The fiduciary duty of a pension fund is to generate the best possible returns to ensure retirees can maintain a comfortable standard of living after they stop working. Governments may advocate for investing in local economies, citing tax breaks offered to pension funds. However, when it comes to investment decisions, maximizing returns for pensioners must be the top priority. Without delving into the politics of it, local investments are attractive if they deliver strong growth potential. There are arguments put-forward by entrepreneurs that pension funds must invest locally, <a href="https://www.theguardian.com/business/article/2024/jul/12/british-chipmaker-graphcore-bought-by-japans-softbank" rel="noopener noreferrer" target="_blank">most recently by the founder of Graphcore</a>. This distills down to: Should the responsibility of driving economic growth fall on the shoulders of pensioners through their investments, or should retirees simply benefit from the economic growth generated by the broader economy? Exploring Alternatives UK FTSE 100 has historically delivered around 7% nominal returns compared that of 16.5% 5-year annualized returns of S&amp;P 500. UK Equities barely keeps pace with inflation, essentially eroding the purchasing power of retirees' savings. Pension funds are said to have averaged under<a href="https://getpenfold.com/news/pension-interest-rates" rel="noopener noreferrer" target="_blank"> 7%</a>. Alternative investments such as private equity (PE) has traditionally been generating<a href="https://www.klarphos.com/news-insights/a-simple-case-for-alternative-investments-to-enhance-portfolio-returns#:~:text=The%20study%20found%20that%20private,funds%20had%20an%20approximate%20historical" rel="noopener noreferrer" target="_blank"> 15-24% annualized returns</a> historically. Added to that the tailwind behind alternative investing makes it almost mandatory to have strong alternatives exposure. A breakdown of key advantages to add alternatives exposure:<ul><li>Diversification: Traditional equity markets are consolidating, meaning there are fewer publicly traded companies to invest in (listed equities have come down from 8000 in 1990s to less than 3700 today). Alternatives offer diversification, spreading risk and providing access to value creation in the private sector. Companies are staying private for longer periods, and a lot of the value creation is happening in private markets.</li></ul> <ul><li>Riding the Digital Wave: Many industries are undergoing a digital transformation, and a significant portion of the value generated from this shift resides in private markets. By incorporating alternatives, pension funds can gain exposure to these high-growth areas.</li></ul> <ul><li>Non-Correlation: Studies suggest that alternative asset classes have a low correlation with traditional investments.. This means that when traditional markets experience a downturn, alternatives may hold steady, further enhancing the overall resilience of a pension fund's portfolio. There is an alternative argument however that the private markets simply delay downsizing their valuations. But what matters ultimately is the returns upon exit, something to watch out for.</li></ul> Learning from the Pack:North American pension funds have been at the forefront of incorporating alternatives into their investment strategies. European funds are slowly opening up and developing expertise in selecting skilled fund managers and accessing the most promising markets for alternative investments. While maximizing returns remains paramount, strategically incorporating alternatives offers pension funds a powerful tool to fulfill their core mission: securing a comfortable future for retirees. However, navigating the alternatives industry is no easy task. There is much work to be done both from pensions funds and the alternatives industry overall. Alternative industry is famously complex, lacks transparency, has high fees, boasts of limited liquidity, and is ridden with regulatory restrictions. In addition, market timing is crucial as performance can vary significantly with economic conditions. By carefully selecting managers and diversifying with alternatives, pension funds can unlock higher returns, achieve better portfolio balance, and tap into the growth potential of the private sector. This, in turn, can translate to a better financial future for generations of retirees. References:<a href="https://www.theguardian.com/business/article/2024/jul/12/british-chipmaker-graphcore-bought-by-japans-softbank" rel="noopener noreferrer" target="_blank">Talent drain in the UK if pension funds don't invest locally</a><a href="https://getpenfold.com/news/pension-interest-rates" rel="noopener noreferrer" target="_blank">How pension interest rates work?</a><a href="https://www.klarphos.com/news-insights/a-simple-case-for-alternative-investments-to-enhance-portfolio-returns#:~:text=The%20study%20found%20that%20private,funds%20had%20an%20approximate%20historical" rel="noopener noreferrer" target="_blank">An aerial view of major alternative asset classes</a><a href="https://ifs.org.uk/publications/challenges-uk-pension-system-case-pensions-review" rel="noopener noreferrer" target="_blank">The case for UK pensions review</a><a href="https://ifs.org.uk/publications/challenges-uk-pension-system-case-pensions-review" rel="noopener noreferrer" target="_blank">Should pension funds invest in UK growth?</a><a href="https://www.hamiltonlane.com/en-us/insight/staying-private-longer#:~:text=There%20is%20growing%20evidence%20that,the%20sphere%20of%20public%20markets." rel="noopener noreferrer" target="_blank">Staying private longer leads to opportunity</a><a href="https://www.hamiltonlane.com/en-us/insight/staying-private-longer#:~:text=There%20is%20growing%20evidence%20that,the%20sphere%20of%20public%20markets." rel="noopener noreferrer" target="_blank">2024 pension updates from UK Spring budget</a>

Should pension funds invest in PE/VC?

At Newnex, we have compiled a list of essential startup events to help you plan effectively: February<ul><li><a href="https://www.4yfn.com/" rel="noopener noreferrer" target="_blank">4YFN - MWC</a>: Barcelona, Spain (26-29 Feb)</li></ul> March<ul><li><a href="https://hello-tomorrow.org/global-summit/" rel="noopener noreferrer" target="_blank">Hello Tomorrow Global Summit</a>: Paris, France (21-22 Mar)</li></ul> May<ul><li><a href="https://www.eu-startups.com/eu-startups-summit-2024/" rel="noopener noreferrer" target="_blank">EU Startup Summit</a>: Malta (9-10 May)</li><li><a href="https://tech.eu/event/2024/summit-london/" rel="noopener noreferrer" target="_blank">Tech EU Summit</a>: London, UK (16-17 May)</li><li><a href="https://www.gitex-europe.com/" rel="noopener noreferrer" target="_blank">GITEX Europe</a>: Berlin, Germany (21-23 May)</li><li><a href="https://latitude59.ee/" rel="noopener noreferrer" target="_blank">Latitude 59</a>: Tallinn, Estonia (22-24 May)</li><li><a href="https://vivatechnology.com/" rel="noopener noreferrer" target="_blank">Viva Tech</a>: Paris, France (23-24 May)</li></ul> June<ul><li><a href="https://viennaup.com/" rel="noopener noreferrer" target="_blank">Vienna Startup Festival</a>: Vienna, Austria (3-9 Jun)</li><li><a href="https://www.southsummit.io/" rel="noopener noreferrer" target="_blank">South Summit</a>: Madrid, Spain (5-7 Jun)</li><li><a href="https://londontechweek.com/" rel="noopener noreferrer" target="_blank">London Tech Week</a>: London, UK (10-14 Jun)</li><li><a href="https://thenextweb.com/conference" rel="noopener noreferrer" target="_blank">TNW Conference</a>: Amsterdam, Netherlands (20-21 Jun)</li></ul> September<ul><li><a href="https://techbbq.dk/" rel="noopener noreferrer" target="_blank">TECHBBQ</a>: Copenhagen, Denmark (11-12 Sep)</li></ul> November<ul><li><a href="https://websummit.com/" rel="noopener noreferrer" target="_blank">Web Summit:</a> Lisbon, Portugal (11-14 Nov)</li><li><a href="https://slush.org/" rel="noopener noreferrer" target="_blank">Slush</a>: Helsinki, Finland (20-21 Nov)</li></ul> Contact: <a href="mailto:events@newnex.io" rel="noopener noreferrer" target="_blank">events@newnex.io</a> to be included in the list.

Startup Events to attend in Europe, Asia and the US in 2024

The European Union's Artificial Intelligence Act (AI Act) is a comprehensive regulation designed to ensure the ethical and safe development and use of AI technologies across the EU. The AI Act is now published by the EU. Here is a summary of its key points and practical information: Objectives and Scope<ol><li>Ensuring Trustworthy AI: The primary goal of the AI Act is to foster the development and use of AI systems that are safe, transparent, and respectful of fundamental rights. It aims to create a regulatory framework that balances innovation with the protection of public interests and fundamental rights.</li><li>Risk-Based Approach: The AI Act categorizes AI systems into different risk levels:</li></ol><ul><li class="ql-indent-1">Unacceptable Risk: Practices that pose a clear threat to safety, livelihoods, and rights are banned. These include social scoring by governments and certain uses of real-time biometric identification.</li><li class="ql-indent-1">High Risk: AI systems that significantly impact people's lives (e.g., those used in critical infrastructure, employment, and law enforcement) are subject to strict requirements. These include robust risk management systems, high-quality data sets, and detailed documentation.</li><li class="ql-indent-1">Limited and Minimal Risk: These AI systems have fewer requirements but must still adhere to transparency obligations, such as informing users they are interacting with AI.</li></ul> <ol><li>Conformity Assessments: High-risk AI systems must undergo rigorous conformity assessments before being marketed. This ensures they meet the necessary standards for safety and performance.</li><li>National Authorities and European Artificial Intelligence Board: Each EU member state will appoint national authorities to oversee the implementation and enforcement of the AI Act. The European Artificial Intelligence Board will coordinate these efforts to ensure consistency across the EU.</li></ol>Supporting Innovation<ol><li>Regulatory Sandboxes: To encourage innovation, the AI Act includes provisions for regulatory sandboxes, allowing developers to test AI systems in a controlled environment under regulatory supervision.</li><li>Support for SMEs: Recognizing the challenges faced by small and medium-sized enterprises (SMEs), the AI Act provides measures to support their compliance, such as reduced fees for conformity assessments.</li></ol> Fundamental Rights and Ethical Considerations<ol><li>Protection of Fundamental Rights: The AI Act is designed to safeguard fundamental rights, including privacy, non-discrimination, and the right to a fair trial. It ensures that AI systems are developed and used in ways that do not infringe on these rights.</li><li>Ethical AI Development: The Act promotes the development of AI technologies that contribute positively to society and the environment. It encourages the use of AI to enhance human well-being and societal good.</li></ol> Practical Implications<ol><li>Compliance Costs: For businesses and public authorities developing or using high-risk AI systems, compliance costs are estimated between €6,000 and €7,000 per system, with additional annual costs for human oversight ranging from €5,000 to €8,000. Verification costs could add another €3,000 to €7,500.</li><li>Transparency and Accountability: AI systems interacting with humans, such as chatbots, must clearly inform users they are interacting with AI. Systems generating deep fakes must disclose their artificial nature.</li></ol> Legal Basis and Harmonization<ol><li>Legal Framework: The AI Act is based on Article 114 of the Treaty on the Functioning of the European Union (TFEU), ensuring the establishment and functioning of the internal market by harmonizing rules for AI systems.</li><li>Avoiding Fragmentation: By setting harmonized rules, the AI Act aims to prevent the fragmentation of the internal market, ensuring legal certainty and a level playing field for AI developers and users across the EU.</li></ol> The AI Act sets a global standard for AI governance, promoting innovation while safeguarding ethical standards and public trust. It ensures that AI technologies are developed and used in ways that are safe, transparent, and respectful of fundamental rights, fostering a trustworthy AI ecosystem within the EU. Visit the official document on <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:L_202401689" rel="noopener noreferrer" target="_blank">EUR-Lex</a><a href="https://www.deloitte.com/lu/en/Industries/investment-management/perspectives/eu-ai-act-is-finally-here-requirements-overview.html" rel="noopener noreferrer" target="_blank">Deloitte summary</a> #ArtificialIntelligence #EU #AI #Regulation

EU's AI Act Explained 

Newnex tracks European startup funding in the past month. We tracked $2 billion of capital raise, however the interesting bit, $1.5 billion taken-up by the top-5 startups including Mistral AI ($660m), Black Semiconductor ($279 million including $248 million grants), Volocopter ($220 million), H ($220 million) and CLoover ($125 million). AI Startups: 1. H (France): Raised $220M seed round to build foundational models, competing with Mistral AI and OpenAI.&nbsp;&nbsp;- Investors: Accel (lead), Amazon, UiPath, Eurazeo, Elaia Partners, BpiFrance, Aglaé Ventures, Eric Schmidt, Xavier Niel, FirstMark, Creandum. 2. Mistral AI (France): Raised €600M at €5.8B valuation.&nbsp;&nbsp;- Investors: General Catalyst (lead), Lightspeed, Andreessen Horowitz, Bpifrance, BNP Paribas. 3. Cube AI (France): Raised $2.5M in pre-seed funding to automate back-office tasks in logistics.&nbsp;&nbsp;- Investors: VentureFriends (lead), Eric Schmidt, Xavier Niel, K5 Global, Rodolphe Saadé, Olivier Pomel, Florian Douetteau. 4. Human Native AI (UK): Raised £2.8M seed funding for legal and ethical data for training large language models.&nbsp;&nbsp;- Investors: LocalGlobe (lead), Mercuri. 5. Omi (France): Raised €13M in Series A funding for AI-powered visual generation.&nbsp;&nbsp;- Investors: Dawn Capital (lead). 6. Zeliq (France): Raised €9.2M seed round for AI sales solutions.&nbsp;&nbsp;- Investors: Exor Ventures (lead), Resonance VC. 7. Plancraft (Germany): Raised €12M Series A funding for AI-based video creation solutions.&nbsp;&nbsp;- Investors: Creandum (lead). 8. mika (Germany): Raised €800K in pre-seed funding for generative AI for automated accounting.&nbsp;&nbsp;- Investors: Samen Slimmer (lead). 9. StoryBox (Germany): Raised €5.5M in Series A funding for AI-based video creation.&nbsp;&nbsp;- Investors: Wille Finance (lead), BayBG, High-Tech Gründerfonds (HTGF), CK Ventures, G8 Way Ventures. 10. NcodiN (France): Raised €3.5M for optical interposer technology.&nbsp;&nbsp;- Investors: Elaia, Earlybird Venture Capital, OVNI Capital. 11. Iris.ai (France): Raised €7.64M to enhance its AI engine for scientific research.&nbsp;&nbsp;- Investors: Silverline Capital (lead), European Innovation Council (EIC) Accelerator Fund. Cybersecurity: 1. <a href="https://www.onsecurity.io/" rel="noopener noreferrer" target="_blank">OnSecurity</a> (UK): Raised £5.5M to develop software for testing vulnerable computer systems.&nbsp;&nbsp;- Investors: Gresham House Ventures (lead). Health and Wellness: 1. Voda (UK): Raised £270K pre-seed funding for LGBTQIA+ mental health services.&nbsp;&nbsp;- Investors: Freiraum Ventures (lead), Lightbulb Trust, ULTRA VC. 2. Amber Therapeutics (UK): Raised $100M (£78M) in Series A funding for medical technology.&nbsp;&nbsp;- Investors: New Enterprise Associates (lead), F-Prime Capital, Lightstone Ventures, Intuitive Ventures, Oxford Science Enterprises, 8VC. 3. Natural Cycles (Sweden): Raised $55M in Series C funding for the first contraceptive app.&nbsp;&nbsp;- Investors: Lauxera Capital Partners (lead), Point72 Private Investments, J.P. Morgan (debt facility). 4. CARÁ Health (Estonia): Raised €620K early seed funding for maternity health and wellness.&nbsp;&nbsp;- Investors: Tera Ventures (lead), Startup Istanbul founder Burak Büyükdemir via StartupIst Ventures. Tech &amp; SaaS: 1. Ittybit (UK): Raised £1.5M for software simplifying large file uploads.&nbsp;&nbsp;- Investors: Mercuri (lead), Sure Valley Ventures, Oxford Capital, Baltic Ventures. 2. Slip (UK): Raised €2.9M seed funding for software solutions.&nbsp;&nbsp;- Investors: Adjuvo (lead), Haatch Ventures, Unbundled VC, Side by Side Partnership, angels Dan Elton, Julian Burnett. 3. StructureFlow (UK): Raised £4.7M Series A funding for visual modeling of corporate data.&nbsp;&nbsp;- Investors: Not specified. 4. Swiipr (UK): Raised £6M (€7M) in Series A funding for travel paytech.&nbsp;&nbsp;- Investors: Octopus Ventures (lead), TX Ventures, Solano Partners. 5. Vizcab (France): Extended Series A funding to €9M for LCA software for construction.&nbsp;&nbsp;- Investors: KOMPAS VC (lead), Global Brain, Brick and Mortar Ventures. 6. Zefi.ai (Italy): Raised €1.6M in pre-seed funding for AI analyzing company interactions.&nbsp;&nbsp;- Investors: 360 Capital (lead), 14Peaks Capital, B-Heroes, BIT, Secways, Aticco Ventures, Growth Engine, Vento, Exor Ventures, Halo. 7. Banktrack (Spain): Raised €2M seed round for treasury management software.&nbsp;&nbsp;- Investors: Kfund, 4 Founders Capital, LifeX, ENISA. 8. Resilience (France): Raised $25M for patient remote monitoring.&nbsp;&nbsp;- Investors: Picus Capital (lead), Red River West, existing investors. 9. Faircado (Germany): Raised €3M pre-seed funding for AI-powered second-hand shopping.&nbsp;&nbsp;- Investors: World Fund (lead), Accel, General Catalyst, Lightspeed Venture Partners, NEA, Northzone. 10. Restate (Germany): Raised $7M seed funding for distributed applications.&nbsp;&nbsp;- Investors: Not specified. 11. Claimlane (Denmark): Raised €1.8M seed funding for returns and claims management.&nbsp;&nbsp;- Investors: Vendep Capital. 12. Rows (Germany): Raised €8M for cloud platform-based spreadsheet app.&nbsp;&nbsp;- Investors: Indico Capital Partners (lead), Cherry Ventures, Accel, Lakestar, Armilar Venture Partners. Energy &amp; Mobility: 1. Fuuse (UK): Raised £8.7M for EV charge point management.&nbsp;&nbsp;- Investors: YFM Equity Partners (lead), Par Equity, angel investors. 2. Gireve (France): Raised €20M for European EV charging expansion.&nbsp;&nbsp;- Investors: Partech. 3. Qargo (Belgium): Raised £11M ($14M) Series A for digitizing and decarbonizing trucking.&nbsp;&nbsp;- Investors: Balderton Capital. 4. Volocopter (Germany): Raised €200M Series D for air taxi certification.&nbsp;&nbsp;- Investors: Avala Capital, Atlantia, Continental, NTT, Tokyo Century. 5. Cloover (Germany): Raised $114M seed funding for renewable energy platform.&nbsp;&nbsp;- Investors: Lowercarbon Capital (lead), 9900 Capital, QED. 6. Delta Green (Czech Republic): Raised €2.2M for grid balancing with renewables.&nbsp;&nbsp;- Investors: Tilia Impact Ventures (lead), Credo Ventures, Purple Ventures. Quantum Computing &amp; Advanced Tech: 1. C12 (France): Raised €18M ($19.4M) for quantum computing.&nbsp;&nbsp;- Investors: Varsity Capital, EIC Fund, Verve Ventures, 360 Capital, Bpifrance’s Digital Venture fund, BNP Paribas Développement. 2. Q*Bird (Netherlands): Raised €2.5M for quantum security technology.&nbsp;&nbsp;- Investors: QDNL Participations, Cottonwood Technology Fund, InnovationQuarter. 3. Black Semiconductor (Germany): Raised €254M for graphene-based chip technology.&nbsp;&nbsp;- Investors: Porsche Ventures, Project A Ventures, Scania Growth, Capnamic, TechVision Fonds, German Ministry of Economic Affairs, North Rhine-Westphalia. 4. NcodiN (France): Raised €3.5M for optical interposer technology.&nbsp;&nbsp;- Investors: Elaia, Earlybird Venture Capital, OVNI Capital. 5. Neural Concept (Switzerland): Raised $27M Series B to apply AI for design optimization.&nbsp;&nbsp;- Investors: Forestay Capital (lead), D.E. Shaw group, Alven, Constantia New Business, HTGF, Aster Group. Others: 1. Uprent (Netherlands): Raised €200K pre-seed funding to transform the rental search process with AI.&nbsp;&nbsp;- Investors: Not specified. 2. THIS (UK): Raised £20M Series C for plant-based meat alternatives.&nbsp;&nbsp;- Investors: Planet First Partners. 3. Qargo (Belgium): Raised £11M ($14M) Series A for digitizing and decarbonizing trucking.&nbsp;&nbsp;- Investors: Balderton Capital. 4. Rohlik (Czech Republic): Raised €100M ($118M) for online grocery delivery expansion.&nbsp;&nbsp;- Investors: Index Ventures (lead). 5. Karri (Estonia): Raised £775K pre-seed funding for smart walkie-talkies for kids.&nbsp;&nbsp;- Investors: 468 Capital.---Connect with the global VCs and LPs and privately syndicate and co-invest in venture capital at scale <a href="http://www.newnex.io" rel="noopener noreferrer" target="_blank">www.newnex.io</a>

European Startups Raise $2 Billion, with Top 5 Securing $1.5 Billion

Newnex Venture Insights: Trends, Fundings & Investments

Newnex Venture Insights' roundup of venture capital trends delving into the latest disruptive technologies, investments, and thought-provoking discussions shaping the entrepreneurial landscape. Top Stories <a href="https://www.newnex.io/feed/520" rel="noopener noreferrer" target="_blank">AI Revolution Unveiled</a>: Discover how ChatGPT 4o is reshaping the AI landscape and challenging industry giants. <a href="https://www.newnex.io/feed/519" rel="noopener noreferrer" target="_blank">Navigating Uncertainty</a>: Gain insights from Bain &amp; Company's India Venture Capital Report 2024, illuminating strategies amidst market turbulence. <a href="https://www.newnex.io/feed/512" rel="noopener noreferrer" target="_blank">The 'Eat What You Kill' Debate</a>: Join Wall Street's discourse on financial incentives and their implications for market dynamics. Featured Stories <a href="https://www.bloomberg.com/graphics/2023-wall-street-speeds-california-groundwater-depletion/?srnd=homepage-uk" rel="noopener noreferrer" target="_blank">Wall Street's Water Crisis</a>: Investigate the role of financial investors in California's water sustainability, probing the impact on farmland and groundwater reserves. <a href="https://www.newnex.io/feed/506" rel="noopener noreferrer" target="_blank">PremjiInvest's Tech Odyssey</a>: Discover how PremjiInvest is bolstering AI investments and harnessing technological advancements for future growth. <a href="https://www.newnex.io/feed/500" rel="noopener noreferrer" target="_blank">Climate Warriors:</a> Journey with Startup Vaulted Deep securing a $58.3 million deal to combat climate change through underground waste sequestration. Spotlight on Ethics and Innovation <a href="https://www.newnex.io/feed/499" rel="noopener noreferrer" target="_blank">AI Avatars and Ethical Quandaries</a>: Explore the ethical implications raised by Reid Hoffman's AI avatar experiment, sparking crucial conversations about technology and humanity. <a href="https://www.newnex.io/feed/497" rel="noopener noreferrer" target="_blank">Navigating AI Regulation</a>: Gain insights from business leaders and experts as they navigate the complex terrain of AI regulation. Europe's $2.98 billion startup funding Glaut: An Italian startup scaling qualitative research secured $1.4million funding. Investors included Italian Founders Fund, Brainstorm Ventures, Alecla7, Ithaca, BHeroes, Club degli Investitori, Eden Ventures, Delirus Capital, David Clarke, and Pietro Cesati. Carbonfact: A French startup specializing in carbon footprint measurement tools secured $15 million in funding for further development. Investors included Alven, Headline, and Y Combinator. CroBio: An agtech startup based in Cheshire, aiming to revolutionize agriculture through advanced microbial solutions. Investors in its seed round included The Grantham Foundation for the Protection of the Environment, SOSV, Ponderosa Ventures, and Catapult Ventures Group. Vivalyx: A biotech company focused on developing a preservation liquid for organ viability in transplantation raised €5.4 million in seed funding. Investors included Luc Starmans, Bernhard Kugel, Arve Capital, Ashok Rao, and numerous distinguished angel investors. Nusku: A climate technology company headquartered in Bristol secured £1 million in funding for its sustainability efforts, backed by the UK government. Urban Jungle: An insurtech startup raised £11.2 million to revolutionize insurance services with its innovative solutions. Investors included Intact Ventures, Ingka Investments, Mundi Ventures, Eka Ventures, Sony Innovation Fund, and Rob Devey. Birdwingo: A fintech firm based in Prague secured €1.2 million in funding for its financial services platform. Investors included Bienville Capital, company founders, and bank executives. Tuza: A payment processing startup for SMBs, formerly known as Statement, raised £4 million in seed funding. Investors included Connect Ventures, Northzone, Triple Point, and Entrepreneur First. SumUp: A London-based fintech company secured €1.5 billion for its payment solutions from private credit lenders. Investors included Goldman Sachs, AllianceBernstein, Apollo Global Management, Arini, Deutsche Bank AG, Fortress Investment Group, SilverRock Financial Services, Vista Credit Partners, BlackRock, Crestline Investors, Liquidity Capital, Oaktree Capital Management, Sentinel Dome, and Temasek. Made With Intent: A Manchester-based company enhancing e-commerce experiences secured £1.5 million for its personalized shopping platform, with investors including Mercuri, Portfolio Ventures, and Haatch. Ikerian AG: A Swiss developer of healthcare workflow solutions raised $6.18 million in Series A extension funding. Investors included Topcon Healthcare, Inc., Zürcher Kantonalbank, btov Industrial Technologies, Verve Ventures, and private investors. VoltR: A French startup specializing in the second life of lithium batteries secured €4 million in funding from investors including C4 Ventures, Exergon, Pays de la Loire Participations, Anjou Amorçage, and the Chamber of Commerce and Industry. Wayve: A UK-based startup pioneering self-learning approaches for autonomous driving secured $1.05 billion in Series C funding. Investors included SoftBank Group, Nvidia, Microsoft, and Yann LeCun. Stonal: A real estate data management platform secured a strategic investment of up to €100 million from Aareon. CoreWeave: A cloud infrastructure firm for AI secured $1.1 billion in Series C funding from investors including Coatue, Magnetar, Altimeter Capital, Fidelity Management &amp; Research Company, and Lykos Global Management. Futura: An AI education company based in Milan raised €14 million in Series A funding for its educational platform, with investors including Eurazeo, United Ventures, and Axon Partners Group. SLAM Orthopedic: A Dutch startup focused on advanced sensor systems for surgical applications raised €2 million in seed funding from investors including Rising Star Venture Partners, individual investors, and Zeeuws Participatiefonds. everyone energy: A Berlin-based greentech startup secured a seven-figure seed financing round for undisclosed purposes, with investment from High-Tech Gründerfonds and neoteq ventures. Eleos: An insurtech startup secured €3.75 million in a Seed round for its insurance management solutions, with investment from Fuel Ventures and Indico Capital. Insempra: A German biotech firm secured $20 million in Series A financing for its innovative solutions, with investment from EQT Ventures, BlueYard Capital, Possible Ventures, Henkel dx Ventures, Bayern Kapital, and Alante Capital. Cetasol: A Swedish company specializing in maritime sustainability secured €2 million in seed funding from investors including Sarsia, ShipsFocus, and Impact X Capital. Phished: A cybersecurity startup headquartered in Belgium received an additional €7.5 million via a convertible bond from Flemish investment fund Welvaartsfonds. mimic: A Swiss startup challenging US firms in robotics secured a pre-seed round of €2.3 million from investors including Founderful, another.vc, Tiny.vc, and specialized angel investors. Kubos Semiconductor: A UK-based semiconductor firm secured $2 million in funding for its semiconductor solutions from investors including Martin Lamb, Drew Nelson, Geoff Haynes, Development Bank of Wales, FOV Ventures, and S4C Digital Media Limited. Magic Lane: A mapping and location platform secured €3 million for navigation purposes from investor No Such Ventures. 2i: An Edinburgh-based company specializing in testing and quality assurance secured eight-figure funding from Rockpool Investments. Sesame: A Valencia-based startup secured €23 million in fresh funding for its human resources management solutions, with investment from GP Bullhound funds and PSG. Nivoda: A London-based online jewelry marketplace secured $30 million in its Series B funding round from investors including Avenir Growth Capital, Headline, Abstract Ventures, and Canaan Ventures. India's $449 million startup funding Niqo Robotics: Agritech robotics firm Niqo Robotics, previously known as TartanSense, has raised $9 million in a new funding round. Brida Innovation Ventures led the round, with existing investor Omnivore Partners also participating in the funding. Charge Zone: The electric vehicle (EV) charging network Charge Zone has secured a $19 million commitment from British International Investment (BII), the UK’s development finance institution (DFI) and impact investor. DaMENSCH: D2C men’s lifestyle brand DaMENSCH has secured $2.5 million in its extended Series B round from existing investors. Notably, Matrix Partners, Saama Capital, Whiteboard Capital, and A91 Emerging Fund continued their participation in the round. TalkEsport: Mumbai-based esports media platform TalkEsport has recently concluded its pre-Series A funding round, securing $1 million from Saswat Ventures. Dexif: fintech startup, has recently secured $4 million in seed funding, with RTP Global leading the investment round. GO DESi: a startup in the packaged foods sector headquartered in Bengaluru, revealed that it secured $4.9 million in equity investment from Aavishkaar Capital. Poshn: a full-stack foodtech supply chain startup, has announced raising $4 million in equity and $2 million in debt in its pre-Series A funding round. The investment was led by existing investors Prime Venture Partners and Zephyr Peacock India. Knit: SaaS (Software-as-a-Service) startup Knit has announced securing funding of USD 1 million from Endiya Partners, Axilor Ventures, and angel investors. Other investors include JITO Incubation and Innovation Foundation (JIIF), We Founder Circle, Prataap Snacks, Apricot Foods, Workie, and IVY League Ventures. Superplum: Agritech startup Superplum has successfully raised $15 million in its Series A financing round, led by Erik Ragatz, former partner and current senior advisor of private equity firm Hellman &amp; Friedman. Ragatz joins a group of Superplum’s current investors, including Mark Siegel, Dan Rose, Steve Jurvetson, Rick Kimball, Binny Bansal, and Kabir Misra. BharatRohan: a startup specializing in drone-based hyperspectral remote sensing, has secured $2.3 million in funding from investors including Villgro Innovation Foundation, Caspian, RevX, Venture Garage, and other ultra-high-net-worth individuals. Parseable: a cloud-native log analytics platform, has successfully raised $2.75 million in a seed funding round. The round was led by Surge, the venture capital firm Peak XV's scale-up program for early-stage startups, with participation from Amsterdam-based venture capital fund NP-Hard Ventures. Atlan: Data and AI governance company Atlan has secured $105 million in its Series C funding round. The round was led by GIC, Singapore’s sovereign wealth fund, and Meritech Capital. Additionally, existing investors Salesforce Ventures and Peak XV Partners participated in the round. Treacle: a cybersecurity startup, has secured ₹4 crore in a pre-seed round led by Inflection Point Ventures. The company plans to utilize the funds for enhancing technical and business developments, marketing and office expenses, partnerships, and expansion in the Indian market. Meesho: Social commerce platform Meesho has raised $275 million in funding as part of an ongoing round. The investment comes from existing investors such as SoftBank, Prosus, Elevation Capital, and Peak XV Partners. Plotline: headquartered in San Francisco and Bengaluru, is instrumental in facilitating consumer app companies to swiftly and seamlessly customize their applications. Recently, the company secured $2.6 million in funding from Elevation Capital.----- <a href="https://newnex.io/" rel="noopener noreferrer" target="_blank">Newnex - the Global VC Co-Investor Platform</a> - join the global institutional VCs worldwide and co-invest in current and future rounds privately. Free and invite-only.

Newnex's roundup of venture capital and growth-equity insights, fundraisings and investments.

Mastering liquidation preference is crucial for entrepreneurs seeking investment. It safeguards investors' interests, ensuring a fair return in a sale or liquidation. Yet, understanding the nuances between participating and non-participating preferred stock is pivotal, as each carries distinct implications for investor compensation. While a company may boast a unicorn valuation and headline-grabbing exit figures, the reality can be starkly different. In some cases, even with a sale price of $2 billion, founders and early investors may walk away with zero returns. Let's understand how that could be possible. Founder Shares vs. Preference Shares: Founder Shares:Founder shares, usually common shares, are positioned at the bottom of the priority list in terms of receiving proceeds. In a liquidation event, common shareholders are entitled to the remaining proceeds after all preference shareholders have been compensated. Preference Shares:Preference shares are held by investors, typically from the latest funding round, and have the top priority in receiving proceeds. For instance, if the last funding round was Series E, Series E investors are first in line to receive their proceeds upon a company's liquidation. Liquidation Preference: Understanding liquidation preference is crucial for investors and entrepreneurs as it determines: - Whether they will recoup their initial investment.- Whether they stand to make a profit on their investment. Liquidation preference outlines the order in which shareholders are paid out during a company's liquidation, ensuring that preference shareholders are compensated before common shareholders. Non-Participating Preferred Shares: With non-participating preferred shares, investors have the option to choose between receiving either their liquidation preference amount or their share of the remaining proceeds, whichever is greater, but not both. If the liquidation proceeds are sufficient to cover the investors' liquidation preference, they will opt to take that amount and forego any further participation in the distribution of remaining proceeds. However, if the liquidation proceeds exceed the liquidation preference, investors may convert their preferred shares into common shares and receive their proportionate share of the remaining proceeds alongside common shareholders. Example: Let's say Investor A invested $1 million and owns 40% of the company with a 1x non-participating liquidation preference. If the company is sold for $5 million, Investor A can choose to either: - Take their $1 million back (their liquidation preference), leaving $4 million to be distributed among other stakeholders.- Opt to convert their preferred shares to common shares and receive their proportional share (40%) of the remaining proceeds alongside common shareholders. Participating Preferred Stock: Participating preferred stock entitles investors to both their liquidation preference and their share of the remaining proceeds, even if that results in receiving more than the liquidation preference amount. This feature allows investors to potentially achieve a higher return on their investment, particularly if the company is sold at a valuation significantly above the initial investment amount. Example: Now, consider the same scenario with Investor B, who invested $1 million and owns 40% of the same company but with a 1x participating liquidation preference. If the company is sold for $5 million: - Investor B first receives their $1 million liquidation preference.- Then, they further participate in the distribution of the remaining proceeds alongside common shareholders, based on their ownership percentage. IPO Exit: Understanding the Dynamics An Initial Public Offering (IPO) represents a significant liquidity event for a company, but it differs substantially from other forms of liquidation events, such as a company sale. The key distinction lies in the treatment of shareholdings and the timing of liquidity for investors. Conversion to Common Shares:Before a company goes public and its shares are listed on the stock market, all existing share classes, including preference shares held by investors, are typically converted into common shares. This conversion equalizes the footing between founders and investors, as all shareholders hold common shares. Lock-Up Period:However, one critical aspect of IPOs is the lock-up period. After the IPO, shareholders, including founders and pre-IPO investors, are typically subject to a lock-up period, usually lasting around six months. During this time, they are prohibited from selling their shares in the public markets. Importance of Post-Lock-Up Price:As a result, the immediate "pop" in share price on the first day of trading following the IPO matters less to founders and pre-IPO investors. What becomes more significant is the price of the stock once the lock-up period expires. After the six-month lock-up period, shareholders are free to sell their shares in the public markets, and the stock's performance during this period becomes crucial. Understanding the nuances of liquidation preference, including the distinction between participating and non-participating preferred stock, is essential for all parties involved in venture capital transactions. It shapes the distribution of proceeds in a liquidation event and influences the dynamics of investor-founder relationships. By comprehensively grasping these concepts, stakeholders can navigate venture capital deals with clarity and confidence.

Mastering Liquidation Preference: Key Considerations for Entrepreneurs and Investors

European and Indian Startups Fundraising News

European Startups funded recently - Newnex Fortnight

12 March 2024 We are delighted to bring the Newnex Fortnight India fundraising tracker for the thriving Indian venture capital ecosystem, produced in partnership with the <a href="https://www.startupeuropeindia.net/" rel="noopener noreferrer" target="_blank" style="color: windowtext;">Startup Europe India Network</a>. In the past two weeks, Newnex Co-Investor Network has counted a total of over $340+ million in fundraising and deal-making activities in India. <a href="https://mokobara.com/" rel="noopener noreferrer" target="_blank">Mokobara</a>, the direct-to-consumer (D2C) luggage brand, has secured $12 million in its Series B funding round. Peak XV Partners, formerly known as Sequoia Capital India, led the funding, with participation from existing investors Sauce VC and Saama Capital.&nbsp;<a href="https://shadowfax.in/" rel="noopener noreferrer" target="_blank">Shadowfax</a>, a leading logistics service provider catering to hyper-local and on-demand delivery businesses in India, has successfully raised $100 million in a recent funding round. TPG NewQuest took the lead in Shadowfax's Series E financing round, incorporating some secondary transactions. Notable existing supporters such as Flipkart, Mirae Asset Venture Investments, IFC, Nokia Growth Partners, Qualcomm, Eight Roads Ventures, and Trifecta Capital also joined in the latest funding initiative.&nbsp;<a href="https://www.mswipe.com/" rel="noopener noreferrer" target="_blank">Mswipe Technologies</a> has concluded a $20 million growth equity round, with Alpha Wave Global leading the investment and the involvement of existing investors. Having recently obtained a payment aggregator (PA) license from the Reserve Bank of India (RBI), the digital payments company has amassed over $125 million in funding from prominent investors like Matrix Partners, B Capital, DSG Consumer Partners, Epiq Capital, UC-RNT, and Ola. The newly secured funds will play a crucial role in Mswipe's plans to enhance its merchant payment network, as well as bolster product development and technological infrastructure.&nbsp;<a href="https://digantara.co.in/" rel="noopener noreferrer" target="_blank">Digantara</a>, a startup in the space technology sector, has secured $1.88 million in additional funding as part of an extended Series A round. The funding was led by Naman Finance And Investment Private Limited (NFAI), with participation from SIDBI Venture Capital.&nbsp;<a href="https://intrcity.com/" rel="noopener noreferrer" target="_blank">IntrCity</a>, the mobility platform that operates SmartBus and RailYatri, has secured an additional around $4.5 million in its Series C funding round. Mirabilis Investment Trust led this investment round, and it included contributions from existing investors such as Nandan Nilekani's family trust, Omidyar Network India, and Ujamaa Ventures based in the United States. The funds raised will be utilized by IntrCity to improve its product offerings, expand user acquisition efforts, and further develop services along its hub routes to cater to its expanding travellers base.&nbsp;<a href="https://zvolv.com/" rel="noopener noreferrer" target="_blank">Zvolv</a>, a prominent global hyper-automation company operating in India, the US, MEA, Australia, and New Zealand, has successfully raised ₹16 crore in funding. The funding round was led by Silverneedle Ventures, with participation from existing investors including JSW Ventures and others. Zvolv intends to utilize the newly acquired funds to expand and reinforce its extensive LCNC (Low Code No Code) Hyper-automation capabilities. The focus will involve integrating a trust-based generative AI layer into the next generation of enterprise AI applications.&nbsp;<a href="https://www.credable.in/get-in-touch" rel="noopener noreferrer" target="_blank">CredAble</a>, a fintech startup, has secured $10 million in a recent funding round from Equentia Natural Resources, based in Singapore.&nbsp;<a href="https://ei.study/" rel="noopener noreferrer" target="_blank">Educational Initiatives (Ei)</a>, an education software company, has successfully raised approximately $20 million in a secondary funding round from the HCL Group. Additionally, as part of the transaction, the IT company will acquire a minority stake in the Bengaluru-based Educational Initiatives from the private equity firm Gaja Capital.&nbsp;<a href="https://exlyapp.com/" rel="noopener noreferrer" target="_blank">Exly</a>, formerly known as MyScoot and a provider of business tools, has secured $6.2 million in a new funding round led by Chiratae Ventures. The round also saw participation from existing investors Mayfield India and Venture Highway. Exly's suite of offerings encompasses course builders, appointment schedulers, a marketing suite, as well as customer relationship management (CRM) and lead capturing conversion tools tailored for creators and solo-entrepreneurs.&nbsp;<a href="https://cardiotrack.io/" rel="noopener noreferrer" target="_blank">Cardiotrack</a>, a company specializing in data-centric healthcare screening technology and services delivered through health and life insurance providers, has successfully raised $2 million in a pre-series-A funding round. The funding was led by Girish Narasimhan and co-investor Y S Shashidhar. Notably, Cardiotrack had previously secured an angel investment of $1.6 million from a group of Ultra High Net Worth Individuals (UHNIs).&nbsp;AI startup <a href="https://dubpro.ai/" rel="noopener noreferrer" target="_blank">Dubpro.ai</a> has secured $500,000 in its seed funding round, with Venture Catalysts leading the investment. Other participants in the round include Anicut Capital, 9Unicorns, JJFO, and FirstCheque.&nbsp;<a href="https://www.zactortech.com/" rel="noopener noreferrer" target="_blank">Zactor Tech</a>, a brand specializing in financial wellness and literacy, has successfully raised an undisclosed amount in its pre-seed funding round. The funding, co-led by High-Net-Worth Individuals (HNIs), places the company's valuation at $3 million. The raised funds are earmarked for product development, user acquisition, and initiatives related to financial literacy.&nbsp;Proptech firm <a href="https://www.bandhoo.com/" rel="noopener noreferrer" target="_blank">Bandhoo</a> has secured $0.9 million in a pre-Series A funding round led by Venture Catalysts. The funding round also saw participation from Neeraj Aggarwal, Manish Gupta, S Srinivasan, Amit Khera, and Abhishek Kumar. Notably, Bandhoo had previously raised $1.5 million in its seed round in June 2021, with contributions from Unitus, InfoEdge Ventures, and Bharat Innovation Fund. Generative AI startup <a href="https://ema.co/" rel="noopener noreferrer" target="_blank">Ema</a> has successfully raised $25 million in its inaugural funding round. The round was led by Accel, Section 32, and Prosus Ventures. Additional participants include Wipro Ventures, Venture Highway, AME Cloud Ventures, Frontier Ventures, Maum Group, and Firebolt Ventures. Noteworthy high-profile angels who joined the round comprise Meta COO Sheryl Sandberg, Yahoo co-founder Jerry Yang, and Snowflake chief executive Sridhar Ramaswamy.&nbsp;Identity verification startup <a href="https://idfy.com/" rel="noopener noreferrer" target="_blank">IDfy</a> has secured $27 million in a combination of primary and secondary fundraising. Elev8, KB Investment, and Tenacity Ventures are among the contributors to this funding round.&nbsp;<a href="https://louisa.ai/" rel="noopener noreferrer" target="_blank">Louisa AI</a>, an AI-powered platform, has raised $5 million in seed funding to further develop its technology focused on systematizing "serendipity" in professional settings. Born from a concept at Goldman Sachs in 2018, Louisa AI utilizes network effects to facilitate business connections for sales and deal-making. The seed funding round garnered support from various investors, including Oxford University’s investment arms, early-stage venture capitalists such as Palm Drive VC, Evolution VC, Nucleus VC, Gaingels, and former Goldman Sachs partners, colleagues, clients, friends, and family offices.&nbsp;Social media startup <a href="https://join.hunch.in/43MnmhO" rel="noopener noreferrer" target="_blank">Hunch</a> has successfully raised $23 million in a Series A funding round. The round was led by Alpha Wave and Hashed Emergent, based in South Korea.&nbsp;Edtech start-up <a href="https://www.mycaptain.in/" rel="noopener noreferrer" target="_blank">MyCaptain</a> has secured ₹14 crore in funding from investors including Inflection Point Ventures, MyNavi, Piper Serica, Super Capital, and Ankur Capital. The company aims to expand its hybrid programs into various cities, establishing over four regional sales centres. Additionally, MyCaptain is planning to introduce new programs with a target of reaching a portfolio milestone of approximately 50 beginner courses and five placement readiness programs.&nbsp;Contract manufacturing startup <a href="http://www.zetwerk.com/" rel="noopener noreferrer" target="_blank">Zetwerk</a> has secured $20 million in fresh investments from venture debt and private equity firm Wheelhouse Venture Capital. Notably, Rakesh Gangwal, the co-founder of Indigo Airlines, made the investment through the venture firm, Zetwerk.&nbsp;<a href="https://www.theayurvedaexperience.com/" rel="noopener noreferrer" target="_blank">The Ayurveda Experience (TAE)</a>, a direct-to-consumer company specializing in Ayurvedic beauty and health products, has raised $27 million in a funding round led by Singapore-based venture investment firm Jungle Ventures. The round also witnessed the participation of investors such as SIDBI Ventures, Anicut Capital, and Sharrp Ventures (a part of the Mariwala Family Office associated with consumer goods major Marico). In this funding, approximately $15 million was allocated as primary funding for the company, while the remaining funds were directed towards secondary share sales by existing shareholders.&nbsp;Direct-to-consumer (D2C) skincare firm <a href="https://foxtale.in/" rel="noopener noreferrer" target="_blank">Foxtale</a> Consumer has secured approximately $14 million in fresh equity funding. The funding round was led by Singapore-based Panthera Growth Partners, with participation from the company's existing investors, Matrix Partners India, and Kae Capital.&nbsp;<a href="https://www.planetspark.in/" rel="noopener noreferrer" target="_blank">PlanetSpark</a>, an edtech platform based in Gurugram, has secured $17 million in an extended Series B funding round led by Prime Venture Partners through Seabright. Other participants in the round include InnoVen Capital, Alteria Capital, myPat, GGT3 Ventures, Ashish Gupta, and IAN Investors. The company's co-founders, Maneesh Dhooper and Kunal Malik, also made investments.&nbsp; <a href="https://abcoffee.in/" rel="noopener noreferrer" target="_blank">abCoffee</a>, a speciality coffee company with tech-enabled grab-and-go services, has successfully raised $3.4 million in its Series A funding round. Nexus Venture Partners led the investment, with additional participation from Tanglin Venture Partners, the company's existing investor. This funding follows a $2 million seed funding round secured in September of the previous year, with contributions from Tanglin, 100X VC, Panthera Peak, OTP Venture Partners, and various angel investors.&nbsp;<a href="http://www.bummer.in/" rel="noopener noreferrer" target="_blank">Bummer</a>, a direct-to-consumer apparel company, has secured Rs 9.25 crore in a funding round, with leading participation from Gruhas' Collective Consumer Fund, backed by Nikhil Kamath. Fluid Ventures, a D2C-focused venture firm and an existing investor in Bummer, also took part in this funding round. The investment, made through fresh shares, will be entirely allocated to the company's growth and development.&nbsp;---&nbsp;<a href="https://www.newnex.io/discussions" rel="noopener noreferrer" target="_blank">Join Newnex - the global LP, VC and startup co-investor Network and Platform. </a>Bring together co-investors at scale.&nbsp;The future is digital: go beyond your immediate network and get your investments and fundraisings closed rapidly.&nbsp;&nbsp;<a href="https://www.startupeuropeindia.net/" rel="noopener noreferrer" target="_blank">Join Startup Europe India Network:</a> Are you a startup, investor, corporate, expert active in Europe and India Tech or Climate? Join Startup Europe India Network to connect, engage and collaborate&nbsp;with the fast-growing Indian ecosystem&nbsp;<a href="http://www.startupeuropeindia.net/" rel="noopener noreferrer" target="_blank">www.startupeuropeindia.net</a>