Fall is nearly upon us. And for founders, that means venture capital investors are returning from vacations and (thankfully, it looks like finally) the Burning Man festival. But even with VCs back at work, some investors believe founders should buckle up for a rather arduous fall fundraising season.
Raising capital in prior years has been “very much a sprint,” Sarah Kunst, managing director at early-stage firm Cleo Capital, which focuses on pre-seed and seed companies, told me. By contrast, “Right now, we are 1,000% in marathon territory.” She points out that founders need to understand the bar is higher for prospective investments, and it’s a trickier time to fundraise. But, Kunst hopes founders won’t lose faith: “Don’t be discouraged by that. It’s just sort of where we’re at right now.”
Others like Eric Bahn, general partner and cofounder of Hustle Fund, are taking a more upbeat view: The fall is “my favorite time for founders to fundraise,” he says. With VCs now back from vacation, “I think a lot of them are just excited to do some deals.” He says they’ve been advising their portfolio companies to hold off kickstarting the fundraising process until this post-Labor Day window since he believes it’s “going to be strong.” Practically, Bahn says this is the week founders should be thinking about their fall fundraising process and getting things in order; next week, they should aim to get introductions to investors done; and, ideally, have initial meetings finished by the end of September.
Founders should prep a thorough pitch deck, and Kunst points out that VCs will likely be a lot more rigorous this year: She recommends having a whole data room built out, and to “expect that people are going to ask to see your entire deck before taking the meeting,” adding VCs may want to do things like conduct more customer interviews, she points out. Bahn suggests founders write a blurb about their company that can be forwarded along with an introduction to VCs. In all, Bahn says founders should aim to reach out to at least 100 VCs, which could include angel investors if they’re an early-stage company.
Of course, founders’ ability to raise funds this fall depends a lot on the stage of their company, their metrics, and, of course, the sector. (It should come as no surprise that you’ll probably have an easier time if you’re building an artificial intelligence startup.) Companies in the later stages—Series B and above—may struggle securing funds, Bahn notes, as those stages have been especially hard-hit this year. And they were more often saddled with higher valuations during the frenzied days of 2021.
The good news is VCs still have cash to spend, and many of them have been telling me this year that those stand-out companies will be able to snag dollars.
But the upshot? It sounds like “perseverance” should be the watchword for founders this fall.
Arm IPO update: In case you missed it, the U.K. chip designer said in a filing on Tuesday that the firm plans to price shares for its hotly-anticipated IPO between $47 and $51 per share (because it’s a foreign company, Arm will sell American depositary shares, or ADSs). That could value the company at over $52 billion. If the SoftBank-owned firm is able to pull off the upper end of the share price range, it could raise around $4.9 billion for the 95.5 million ADSs it plans to sell. And there are some Big Tech buyers lining up: Companies including Apple, Nvidia, and Samsung are all interested in investing in the IPO. SoftBank will retain about 90% of the company after its expected debut later this month. But, notably, Tuesday’s price range would be lower than previous reports indicated (of up to a $70 billion valuation). “The lowered price range relative to the initial target shows that investors are exercising caution in assigning expectations for A.I. growth,” Brendan Burke, an emerging tech analyst at PitchBook, wrote Tuesday.
Sequoia’s investor concerns: Venture capital firms are no doubt facing more scrutiny from their investors now that the frenzied days of 2021 are well behind us. And storied firm Sequoia Capital is now dealing with questions over some of its moves, including a disastrous bet on disgraced founder Sam Bankman-Fried’s FTX that went to zero in 2022, and the firm’s decision to decouple from its China arm amid political tensions, according to a new Financial Times deep dive. And some of the big changes have apparently sparked concerns for some of the firm’s LPs, the FT reports. You can read their story here.
See you tomorrow,
Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Butternut Box, a London, U.K.-based fresh dog food company, raised £280 million ($351.7 million) in Series E funding from General Atlantic and existing investor L Catterton.
- Ambient Photonics, a Scotts Valley, Calif.-based developer of low-light energy harvesting technology, raised $30 million in Series A2 funding. Fine Structure Ventures led the round and was joined by Helios Climate Ventures, Regeneration.VC, Sustainable Future Ventures, and existing investors I Squared Capital, Ecosystem Integrity Fund, and Cthulhu Ventures.
- Nuventura, a Berlin, Germany-based sustainable switchgear technology firm, raised €25 million ($26.9 million) in Series A funding. Mirova led the round and was joined by Forward.one, EIC Fund, and existing investors.
- Paptic, an Espoo, Finland-based manufacturer of wood-based plastic bags, raised €23 million ($24.7 million) in Series A funding. European Circular Bioeconomy Fund led the round and was joined by Ecolab and Itochu Fibre.
- Harmonya, a New York City-based A.I.-powered software firm that helps companies analyze and classify product data, raised $20 million in Series A funding. Bright Pixel Capital led the round and was joined by Team8, Arc Investors, J Ventures, Silicon Road Ventures, Allen & Company, and others.
- GenTwo, a Zurich, Switzerland-based financial services provider that enables investors to make all of their assets bankable and investable, raised $15 million in Series A funding. Point72 Ventures led the round.
- Lydian, a Cambridge, Mass.-based producer of sustainable, CO2-derived fuels and chemicals, raised $12 million in seed funding. Congruent Ventures and Galvanize Climate Solutions led the round and were joined by Grok Ventures, Voyager Ventures, Union Square Ventures, Overture VC, and Overlap Holdings.
- Atomicwork, a San Francisco-based employee support startup, raised $11 million in seed funding. Blume Ventures and Matrix Partners India led the round and were joined by Storm Ventures, Neon Fund, and others.
- Strise, an Trondheim, Norway-based anti-money laundering intelligence software company, raised $10.8 million in Series A funding. Atomico led the round and was joined by existing investors and angel investors.
- Point.me, a New York City-based airline booking platform, raised $10 million in Series A funding. Thayer Ventures led the round and was joined by PAR Capital Ventures, RiverPark Ventures, and others.
- Jude, a London, U.K.-based health startup for bladder care, raised $4.2 million in seed funding. Eka Ventures and Joyance Partners led the round.
- Enzai, a Belfast, Ireland-based A.I. governance software startup, raised $4 million in seed funding. Cavalry Ventures and Seedcamp led the round and were joined by existing investor Techstart Ventures and others.
- Worldover, a London, U.K.-based platform that helps cosmetic brands comply with regulations, raised £3 million ($3.8 million) in seed funding. Index Ventures and Chalfen Ventures led the round and was joined by Entrepreneur First and Plug and Play Ventures.
- Delphi, a Miami, Fla.-based platform that uses generative A.I. to create digital clones of individuals, has raised $2.7 million in funding. Founders Fund led the round and was joined by Lux Capital, Xfund, MVP Ventures, and SaxeCap.
- pumpspotting, a Kittery, Maine-based breastfeeding support platform, raised $2.2 million in Series Seed II funding. Sincere Corporation and Maine Venture Fund led the round and were joined by Unum Business Ventures and Maine Technology Institute.
- Rig.dev, an Aarhus, Denmark-based open-source application platform for Kubernetes, an open source system that makes managing containerized applications easier, raised $2.2 million in pre-seed funding. ByFounders led the round.
- SimpleClosure, a Santa Monica, Calif.-based company that helps automate the processes for startups when they’re shutting down, raised $1.5 million in pre-seed funding. Michael Vaughan and Jon Pomeranz of Vera Equity and Rex Salisbury of Cambrian Ventures co-led the round and were joined by others.
PRIVATE EQUITY
- CVC agreed to acquire a majority stake in DIF Capital Partners, an Amsterdam, Netherlands-based infrastructure manager. The deal was valued at around $1.08 billion, per the Financial Times.
- Permira agreed to acquire Ergomed, a Guildford, U.K.-based biopharmaceutical services company. The deal was valued at around £703.1 million ($886.4 million), per Reuters.
- Analytical Technologies Group, a portfolio company of Reynolda Equity Partners, acquired Technical Alternatives, an Ann Arbor, Mich.-based laboratory equipment repairs, preventative maintenance, replacement parts, and calibrations provider. Financial terms were not disclosed.
- Dataprise, backed by Trinity Hunt Partners, acquired Cohere Cyber Secure, a New York City-based cybersecurity firm. Financial terms were not disclosed.
- Gemspring Capital Management acquired Midland Industries, a Kansas City, Mo.-based pipe, valve, and fitting products manufacturer. Financial terms were not disclosed.
- Imperial Dade, backed by Advent International, acquired Supreme Paper Supplies, a Pensacola, Fla.-based distributor of janitorial and office supplies. Financial terms were not disclosed.
- Salt Creek Capital recapitalized IT Assist, a Newtown, Penn.-based provider of outsourced technology and IT consulting services. Financial terms were not disclosed.
- Stratus, backed by Godspeed Capital, acquired Synalovski Romanik Saye Architects, a Fort Lauderdale, Fla.-based architectural and interior design firm. Financial terms were not disclosed.
- WHP Global agreed to acquire a majority stake in G-Star Raw, an Amsterdam, Netherlands-based denim wear designer. Financial terms were not disclosed.
EXITS
- First Advantage Corporation acquired Infinite ID, a Hicksville, N.Y.-based digital identity authentication solutions company, from Enlightenment Capital for $42 million.
- Lone Star Funds acquired CentroMotion, a Waukesha, Wisc.,-based designer and supplier of highly engineered systems and solutions for industrial and transportation applications, from One Rock Capital.
- Ontario Teachers’s Pension Plan Board agreed to acquire a majority stake in Seven Investment Management, a London and Edinburg, Scotland.-based wealth manager, from Caledonia Investments. Financial terms were not disclosed.
OTHER
- CoachCare acquired WebCare Health, a Des Moines, Iowa-based patient monitoring system developer. Financial terms were not disclosed.
- Conair acquired The Fulham Group, a Newton, Mass.-based home and outdoor products maker. Financial terms were not disclosed.
PEOPLE
- Jump Capital, a Chicago-based venture capital firm, hired Glenn Borok as vice president. Previously, he was with In-Q-Tel.
Update, Sept. 7, 2023: The online version of this newsletter has been updated to correct the spelling of Michael Vaughan and Jon Pomeranz's names that were incorrectly spelled in a press release.
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