Time for a flashback. Nine years ago, Term Sheet alums Dan Primack and Erin Griffith wrote a cover story for Fortune on these burgeoning, mystical companies called unicorns.
At the time, there were 80 of those companies. Yes, 80. Want to know how many there are now? More than 1,200 (depending on who you ask, of course).
As I wrote about for Fortune’s latest cover story, the last (almost) decade has been remarkable for startups. Low interest rates made the venture sector more enticing to investors as venture returns exceeded those of the public markets. The success of startup IPOs drew hedge funds and mutual funds into the equation (more capital—yay!). And then there was the pandemic-induced tech boom in 2020 and the extraordinary $2 trillion stimulus. That created the nonsensical frenzy that was 2020 and 2021, where you didn’t even need to have revenue to go public at more than a billion-dollar valuation.
Flash forward to today and you have a) the Federal Reserve gradually raising its baseline interest rate more than tenfold, b) a steep correction in the public markets, with software, internet, and fintech stocks taking a nosedive, and c) war in Eastern Europe and, more recently, the Middle East plus heightened tensions between the U.S. and China.
All of this has caused the atmosphere to turn undeniably sour for startups. Whereas two years ago founders were elbowing investors out of their oversubscribed funding rounds; now some are struggling to raise at all, and are facing the harsh reality that their businesses are worth much less than they thought. The IPO market has dried up relative to 2021, and M&A deals have become harder to secure and close—keeping investors from being rewarded for their bets. After more than a decade of an overabundance of capital, cash has suddenly become scarce.
A handful of these unicorn darlings have already shut down and called it quits. But most of the pullback has been quietly playing out behind the scenes. Until now.
You can read my cover story for Fortune here, to find out how we got here and who has the best odds for survival.
Is it too late to make the case for blockchain? Chris Dixon doesn’t think so. My colleague Leo Schwartz interviewed the “philosopher king of crypto” about the new book he began writing around the time FTX collapsed. “I was like, ‘fuck, this is depressing,’ and then I felt sorry for myself,” a16z’s Dixon told Schwartz over breakfast. The book, which Schwartz describes as a combination of the bible and a self-help book for blockchain believers, will be released later this month. You can read Schwartz’s story here, and, if you are so inclined, you can read the profile I wrote two years ago about Dixon here.
Until Monday,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Bastille, a Santa Cruz, Calif. and San Francisco-based provider of wireless threat intelligence technology to prevent corporate and nation-state espionage, raised $44 million in Series C funding. Goldman Sachs led the round and was joined by Bessemer Venture Partners.
- AVLA, a Hamilton, Bermuda-based insurance group, raised $25 million in funding from Creation Investments Capital Management, DEG Invest, and Altra Investments.
- Axiom, a New York City-based on-chain data provider for smart contract developers, raised $20 million in funding. Paradigm and Standard Crypto led the round and was joined by Robot Ventures, Ethereal Ventures, and others.
- Isaac Health, a New York City-based virtual brain health and memory clinic platform, raised $5.7 million in seed funding. Meridian Street Capital and B Capital led the round and was joined by Primetime Partners, Co-Found Partners, VU Venture Partners, and AirAngels.
- Being Health, a New York City-based mental health care provider, raised $5.4 million in funding from 18 Park and HDS Capital.
- Boomerang, a Miami, Fla.-based lost and found platform, raised $4.9 million in seed funding. LightShed Ventures led the round and was joined by GGV, GoldHouse, Harlo Capital, Dream Ventures, Lake Nona Fund, SeventySix Capital, and others.
- TextQL, a San Francisco-based AI-powered data discovery and analytics platform, raised $4.1 million in pre-seed and seed funding. Neo and DCM led the round and were joined by Unshackled Ventures, Worklife Ventures, PageOne Ventures, FirstHand Ventures, Indicator Fund, and angel investors.
- Krepling, a Chattanooga, Tenn.-based provider of tools and services to e-commerce businesses, raised $3.3 million in seed funding from LAUNCH, Brickyard, Front Porch Ventures, 11 Tribes Ventures, Colabora Ventures, and Broadshade Investments.
- Cargado, a Chicago, Ill.-based developer of U.S.-Mexico cross border logistics software, raised $3 million in pre-seed funding. Ironspring Ventures and was joined by Zenda Capital, Wischoff Ventures, Proeza Ventures, Sahil Bloom, and others.
- ViralMoment, a Menlo Park, Calif.-based AI model that analyzes viral trends in short-form social media videos, raised $2.5 million in seed funding. Supernode Global led the round and was joined by Crush Ventures, Duo Partners, Carnegie Mellon University, and Techstars.
PRIVATE EQUITY
- Suave Brands Company, a portfolio company of Yellow Wood Partners, agreed to acquire the ChapStick brand from Haleon (LSE / NYSE: HLN), a Surrey, U.K.-based consumer health company, for a deal valued at $510 million.
- Arlington Capital Partners, a Washington, D.C.-based private investment firm, acquired Metal Trades, a Yonges Island, S.C.-based provider of large-scale metal fabrication and ship repair services to the Navy, Army, and commercial customers, and Merrill Technologies Group, a Saginaw, Mich.-based manufacturer of large metal parts and structures, and merged them with existing portfolio company Pegasus Steel to form Keel Holdings.
- Case Facilities Management Solutions, backed by The Halifax Group, merged with Landscape Effects Property Management, a Belle River, Ontario-based provider of landscaping, snow and ice, and other exterior services. Financial terms were not disclosed.
- LMC Landscape Partners, a portfolio company of Trivest Partners, acquired Cutters Edge Total Landscape Solutions, a Davie, Fla.-based commercial landscaping company. Financial terms were not disclosed.
- Wealth Partners Capital Group and HGGC acquired a minority stake in True North Advisors, a Dallas, Texas-based investment adviser. Financial terms were not disclosed.
EXITS
- Roper Technologies acquired Procare, a Denver, Colo.-based provider of integrated child care center management software and payments processing, from Warburg Pincus for $1.86 billion.
IPOS
- CG Oncology, an Irvine, Calif.-based biotech company developing therapies for bladder cancer, raised $380 million in an offering of 20 million shares priced at $19. ORI Capital, Decheng GP, Longitude Venture Partners, Kissei Pharmaceutical, Foresite Capital, TCG, and Ally Bridge Group back the company.
FUNDS + FUNDS OF FUNDS
- Arlington Capital Partners, a Washington D.C.-based investment firm, raised $3.8 billion in its sixth fund focused on companies in the aerospace and defense, government services and technology, and healthcare sectors.
- Innovations Endeavors, a Palo Alto, Calif.-based venture capital firm, raised $630 million for its fifth fund focused on companies in intelligent software, computing infrastructure, climate, and other industries.
PEOPLE
- Broad Sky Partners, a New York City-based private equity firm, hired RJ David as managing director. Formerly, he was with The Carlyle Group.
- Prosperity7 Ventures, a Dhahran, Saudi Arabia-based venture capital firm, hired Asif Giga as an investment director. Previously, he was with ClearSky.
- Siris, a New York City and West Palm Beach, Fla.-based private equity firm, promoted Stephen Catera to partner.
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