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ET CETERA

Age of Dissonance: The age of unicorns, while glorious, is over. So far this year, fewer startups have hit the prized billion-dollar valuation than did any in a single quarter last year. Profitability and sustainable growth have come into vogue, and it almost feels gauche for startups to aspire to unicorn status. Rather, executives brag about “clean terms”—meaning favorable liquidation preferences on their term sheets—and reasonable valuations.

But we’re not in the Age of Workhorses yet. Bill Gurley, the prominent venture capitalist at Benchmark, is still issuing sky-is-falling bubble warnings. He’s not a lone Chicken Little. Fellow investors echo his sentiments behind the scenes.

The difference now is that Gurley and his peers are done warning about out-of-control spending at overcapitalized startups. The savviest startups spent 2016 cutting their burn rates, scaling back overly ambitious growth plans, and bragging about being on track for “profitability in 2018.” The not-so-savvy ones, well, they’re dead or coasting on fumes.

Instead, VCs are fretting over increased competition. Low interest rates and public market jitters have lured too many new sources of capital to the closed-off world of startup investing. For the past few years hedge funds and mutual funds have flooded the market with showy $100 million checks. But those unsophisticated investors, known behind closed doors as the “dumb money,” retreated this year. They felt burned by bad early-stage bets or tired of waiting for the “pre-IPO” companies they backed (ahem, Uber) to get on with the IPO already. We’re not likely to see a giant hedge fund do another early-stage deal, such as Tiger Global Management’s $15 million Series B investment in Kitchensurfing in 2014. The on-demand chef service collapsed this spring.

The mutual fund retreat hasn’t stopped new sources of venture money from emerging. Sovereign wealth funds, multi-corporate venture funds, ambitious pension funds, and Fortune 500 companies with billions in cash on their balance sheets are now dabbling in startup investing. SoftBank and Saudi Arabia’s sovereign wealth fund recently announced a $100 billion tech fund, for example. Traditional VCs are raising increasingly bigger pools of capital to keep up.

But the new dumb money isn’t quite as dumb as the VCs would like us to think, nor is it as fickle as its mutual fund predecessors. With fewer new unicorns and a focus on profitability, it has become easier to tell which companies have a working business model and which ones are doomed for the dead pool. That means the competition to invest in Silicon Valley’s small handful of winners is even stiffer.

Investment bankers say their phones are ringing more than ever with new money looking to back startups. Demand is soaring as unicorns become as rare as they were before this so-called bubble. Until the sluggish IPO market makes a comeback, stiff competition will be the norm.

No guts, no glory.

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…AND ELSEWHERE

Silicon Valley leaders are in mourning. (Except for Peter Thiel.) Plus: Drone unrest at Alphabet.

VENTURE DEALS

• Hired, a San Francisco-based career marketplace, raised an additional $30 million in Series C funding, bringing the round’s total to $70 million. Investors include The Glenmede Trust and the Ontario Pension Fund.

• Square Yards, an Indian real estate consulting company, raised $12 million in funding from Reliance Group, according to the Economic Times. Read more.

• Indeni, a crowd-sourced and machine learning networking company in Palo Alto, Calif., raised $10 million in funding. Investors include Sequoia Capital, iAngels, and CIRtech.

• Joy, a Seattle digital planner for brides, raised $4.5 million in seed capital, according to TechCrunch. Sierra Ventures and Matrix Partners led the round, with participation from Fuel Capital, Liquid 2 Ventures and angel investors including Zynga founder Mark Pincus. Read more.

• BioConsortia, a Davis, Calif. provider of microbial solutions to increase crop yield, raised $8 million in funding from Khosla Ventures and Otter Capital.

• Castle, a San Francisco company that provides account takeover protection, raised $2 million in seed financing. First Round Capital led the round and was joined by F-Prime Capital and FundersClub.

• Wurk, a Denver startup that helps cannabis businesses comply with regulators, raised $1 million in seed funding, according to TechCrunch. Investors include Arcview Group, CanopyBoulder, and Poseidon Asset Management. Read more.

• RetireUp, a Chicago-area provider of software for retirement income planning, received funding from Annexus Ventures. No financial terms were disclosed, but the investment values the company at eight figures.

PRIVATE EQUITY DEALS

• Brazilian billionaire financier Jorge Paulo Lemann’s 3G Capital is raising between $8 billion and $10 billion so it can buy a global consumer goods firm (Mondelez International or General Mills appear to be likely targets), according to a report. Tennis player Roger Federer and supermodel Gisele Bündchen are among the investors. Read more at Fortune.

• United Internet AG, a German Internet services company, agreed to sell a 33% stake in its web-hosting business unit Warburg Pincus for €450 million euros ($497 million), according to Reuters. The deal, which values the business at €2.55 billion ($2.9 billion), including €1.2 billion ($1.3 billion) of debt, means the company will delay an initial public offering for at least a year. Read more.

• Topspin Partners and Motivity Capital Partners have invested in Palmetto Moon, a speciality retailer. Financial terms were not disclosed.

• Investcorp agreed to invest $20 million in Calligo Limited, a Channel Islands provider of enterprise cloud solutions.

• Caltius Mezzanine closed a mezzanine debt and minority equity investment in Walker Edison, a furniture manufacturer in Salt Lake City. Financial terms were not disclosed.

IPOS

• Canada Goose, a Toronto-based retailer of luxury winter apparel, is preparing to go public at a valuation of about $2 billion, according to Bloomberg. Per the report, the company has chosen Credit Suisse Group AG, Canadian Imperial Bank of Commerce, and Goldman Sachs Group to lead an offering that could happen as soon as 2017. Canada Goose is backed by Bain Capital. Read more.

EXITS

• Inbound Retargeting Technologies, a Vancouver-based ad technology company, has acquired Primeloop, a Las Vegas-based link retargeting startup. Primeloop has raised $500,000 in seed funding from 500 Startups and angel investors including Tony Hsieh.

FIRMS + FUNDS

• ParkerGale Capital, a Chicago-based private equity firm, closed its first fund with $240 million in capital commitments.

• Southern Cross raised $516 million in capital commitments for Southern Cross Latin America Private Equity Fund V, its fifth fund.

NEW JOBS

• Mason Duke has joined Bernhard Capital Partners as a vice president. He previously worked at The Parthenon Group and Code Hennessy & Simmons.

• Michael Nugent has joined Vestigo Ventures as managing director. He was previously the co-founder and chief executive of Bison, a Boston-based provider of venture capital and private equity fundraising data.