Matt Barbieri has been helping startups with their accounting and finance for about 20 years, and he says he’s never experienced the uneasiness of 2022.
“With inflation, repricing, difficulty hiring—there’s so many things up in the air…that could further impede the market from transacting,” Barbieri, a CPA and partner who works with somewhere around 125 founders at the consulting firm Wiss, tells me. “There’s just a lot of worry.”
While there may be a lot of hesitancy, all founders are getting the same kind of advice: Cut costs. But that’s easier said than done—where to cut first?
The knee-jerk, immediate reaction is for startups to look into slicing their marketing and development costs, according to Barbieri. “This is truly universal,” he says. After all, it’s easier to cut a line item than to turn to internal headcount. But it doesn’t always pan out that way. It can be really hard to measure the major drivers of sales at an early-stage company, so some founders are stepping back to take a more analytical approach.
Here’s where startup founders say they are cutting costs most, based on a study sponsored by Wiss that polled 125 founders:
Venture-backed startups are also looking to alternative sources of capital to keep the lights on, whether it be from banks, or even family members. Here’s where they are looking for cash:
In general, founders could be better positioned. A majority of them have less than six months of cash on the balance sheet, according to Wiss’ research. And founders should pay heed to recent memory: At the beginning of COVID, many startup lenders abruptly stopped lending to early-stage companies, Barbieri recalls, and companies had to scramble to figure out how to make payroll.
Thus far, there are options. “I’ve seen rounds shrink. I’ve seen term sheets disappear. But I’ve also seen people work it out,” Barbieri says.
See you tomorrow,
Jessica Mathews
Twitter:@jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Morse Micro, a Sydney-based semiconductor development company, raised $140 million in Series B funding. MegaChips Corporation led the round and was joined by investors including Blackbird Ventures, Main Sequence Ventures, Clean Energy Finance Corporation, Skip Capital, Uniseed, SpringCapital, Malcolm and Lucy Turnbull,and others.
- Varjo, a Helsinki-based VR/XR hardware and software provider, raised $40 million in funding. EQT Ventures, Atomico, Volvo Car Tech Fund, Lifeline Ventures, Mirabaud, and Foxconn invested in the round.
- Everphone, a Berlin-based B2B phone-as-a-service company, raised $32.1 million in Series C extension funding led by Cadence Growth Capital.
- ZineOne, a Milpitas, Calif.-based marketing platform, raised $27.4 million in Series C funding. SignalFire, Norwest Venture Partners, and others invested in the round.
- 21.co, a New York and Zurich-based crypto access provider, raised $25 million in funding. Marshall Wace led the round and was joined by investors including Collab+Currency, QuietVentures, ETFS Capital, and Valor Equity Partners.
- Uiflow, a San Francisco-based no-code app building and scaling platform for businesses, raised $15 million in Series A funding. Addition and Transpose Platform led the round and were joined by investors including Together Fund and other angels.
- CertifyOS, a New York-based health care provider intelligence platform, raised $14.5 million in Series A funding. General Catalyst led the round and was joined by investors including Upfront Ventures, Max Ventures, and Arkitekt Ventures.
- Chargezoom, an Irvine, Calif.-based billing and integrated payments platform, raised $10 million in Series A funding. Panoramic Ventures and Softbank Opportunity Fund led the round and were joined by investors including SaaS Venture Capital, Stout Street Capital, and Okapi Venture Capital.
- D’Amelio Brands, the Los Angeles-based business venture of the D’Amelio family, raised $6 million in seed funding. Richard Rosenblatt, entrepreneur and business executive Michael Rubin, developer and e-commerce entrepreneur Elena Silenok, Apple's senior vice president of services Eddy Cue, Lions Gate Entertainment CEO Jon Feltheimer, and other angels invested in the round.
- Zeet, a San Francisco-based DevOps automation platform, raised $4.3 million in seed funding. Sequoia Capital led the round and was joined by Race Capital.
- CEEZER, a Berlin-based B2B carbon credits marketplace, raised €4.2 million ($4.16 million) in funding. Carbon Removal Partners led the round and was joined by investors including Norrsken VC and Picus Capital.
- CorePower Magnetics, a Pittsburgh-based magnetic solutions company for electric vehicles and the grid, raised $2.5 million in pre-seed funding. Volta Energy Technologies led the round and was joined by investors including Evergreen Climate Innovations and Innovation Works.
PRIVATE EQUITY
- Kudu Investment Management acquired a minority stake in Escalate Capital Partners, an Austin-based private credit and equity investor. Financial terms were not disclosed.
- Pfingsten acquired a majority stake in Fowler High Precision, a Canton, Mass.-based metrology equipment provider and repairer. Financial terms were not disclosed.
- Resurgens Technology Partners acquired a majority stake in Knack, a software development platform. Financial terms were not disclosed.
EXITS
- Church & Dwight acquired Hero Cosmetics, a New York-based cosmetics company, from Aria Growth Partners for $630 million.
- Chase Corporation acquired NuCera Solutions, a polymers and polymerization technologies developer and manufacturer in The Woodlands Township in Texas, from an affiliate of funds advised by SK Capital Partners for $250 million.
- Arcline Investment Management acquired Kings III of America, a Coppell, Texas-based elevator and pool emergency monitoring solutions provider, from Rockbridge Growth Equity and Thayer Street Partners.Financial terms were not disclosed.
- EagleTree Capital acquired MacKenzie-Childs, an Aurora, N.Y.-based home decor brand, from Castanea Partners. Financial terms were not disclosed.
OTHER
- Sitio agreed to acquire Brigham Minerals, an Austin-based oil and gas mineral rights acquisition company,in an all-stock merger at about $1.5 billion.
- State Farm agreed to invest $1.2 billion in ADT, a Boca Raton, Fla.-based security systems and services provider.
- Republic acquired Seedrs, a London-based crowdfunding platform, for £86.5 million ($100 million).
- Dropp Group acquired Phly, a New York-based social metaverse platform, for $25 million.
- HARMAN, a wholly-owned subsidiary of Samsung, acquired CAARESYS, a Netanya, Israel-based vehicle passenger monitoring systems developer. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
- Building Ventures, a Boston-based venture capital firm, raised $95 million for a fund focused on seed to Series A construction and real estate tech startups.
- Heavybit, a San Francisco-based investment company, raised $80 million for a fund focused on increasing its check size and portfolio support.
- Apogem Capital, a New York-basedalternatives investment firm, hired David Fann as senior managing director and vice chairman. Formerly, he was with Aksia.
- Building Ventures, a Boston-based venture capital firm, promoted Heather Widman topartner.
- Clayton, Dubilier & Rice, a London and New York-based private equity firm, hired David Winokur as a partner. Formerly, he was with TowerBrook Capital Partners.
- Next Frontier Capital, a Bozeman, Mont.-based venture capital firm, hired Franz Kofler as a senior associate. Formerly, he was with Aumni.
- OMERS Infrastructure, a Toronto-based investment firm, hired Irini Kalamakis as senior managing director and global head of strategic partnerships. Formerly, she was with IFMInvestors.
- Pillar VC, a Boston-based venture capital firm, hired Thomas de Vlaam as principal. Formerly, he was with Flagship.
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