It was only four months ago that Fortune painted a picture of unicorpses littering the tech landscape. “The atmosphere has turned undeniably sour for startups,” Jessica Mathews wrote—a particularly bitter pill to swallow after a period where it seemed like the money tap couldn’t be turned off.
That reckoning certainly reached health. After an extraordinary post-pandemic period of growth, health tech startups took it on the nose—though how bad the bruise was depended heavily on the category. (Biopharma? ‘Tis but a scratch. DTC? Bring in the stretcher.)
The headlines were bleak. (“Gold rush over.” “Resetting expectations.” “Sinking valuations.” “Brutal.”) But talk to investors now, as I did at Fortune‘s Brainstorm Health summit this week in Southern California, and there’s some relief that reality is finally catching up to the hype.
“If you’re an entrepreneur right now, it can feel like fundraising is really, really hard,” said Maveron’s Anarghya Vardhana. But “now is the time to build an incredible company,” she said, because “the resilience, the grittiness, the forced constraints” are allowing for companies to refine their business models, market approaches, and more.
“The bar is higher. What investors are looking for is different than what investors were looking for in the past,” added 7wireVentures’ Alyssa Jaffee. “I have not heard so many conversations about profitability in all my years of being a venture capitalist than I have in the last 18 to 24 months.”
Getting back to business basics and unmet needs? That’s reason to be hopeful—whatever the time horizon.
“There is money to be made and patients to be served,” GV’s Cathy Friedman said. “So I am optimistic.”
P.S. We’ll be discussing this topic and many more at Fortune‘s annual, invite-only Brainstorm Tech summit in July. Want to join us? Register here.
Andrew Nusca
Editorial Director, Brainstorm
Twitter: @editorialiste
Email: andrew.nusca@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
Correction: Tuesday’s newsletter incorrectly said that Databricks Ventures’s first VC fund invested in 23 startups. The correct number of startups that the fund invested in is 25.
VENTURE DEALS
- AltruBio, a San Francisco-based biotechnology company developing novel therapeutics for immunological diseases, raised $225 million in Series B funding. BVF Capital Partners led the round and was joined by RA Capital Management, Cormorant Asset Management, Soleus Capital, and others.
- H, a Paris, France-based developer of generative AI models designed to be capable of reasoning and tasks across a range of different sectors, raised $220 million in seed funding from Accel, UiPath, Bpifrance, Eric Schmidt, Xavier Niel, Amazon, FirstMark, and others.
- Suno, a Cambridge, Mass.-based AI-powered music creation platform, raised $125 million in funding. Lightspeed Venture Partners led the round and was joined by Nat Friedman and Daniel Gross, Matrix, Founder Collective, and others.
- LabGenius, a London, U.K.-based machine learning platform designed for the discovery of new antibodies, raised £35 million ($44.5 million) in Series B funding. M Ventures led the round and was joined by Octopus Ventures, LG Corp, and existing investors Atomico, Kindred Capital, Lux Capital, and Obvious Ventures.
- Zen Educate, a London, U.K.-based platform designed to connect schools with teachers and teacher assistants, raised $37 million in Series B funding. Round2 Capital led the round and was joined by existing investors Adjuvo, Brighteye Ventures, FJ Labs, Ascension Ventures, and angel investors.
- Praktika, a Palo Alto, Calif.-based language learning app with AI avatars, raised $35.5 million in Series A funding. Blossom Capital led the round and was joined by others.
- Coactive AI, a San Jose, Calif.-based developer of AI technology designed to facilitate search of enterprise image, video, and audio data, raised $30 million in Series B funding. Cherryrock Capital and Emerson Collective led the round and was joined by Greycroft, Andreessen Horowitz, Bessemer Venture Partners, and Exceptional Capital.
- WitnessAI, a San Mateo, Calif.-based developer of security and governance tools for enterprise AI, raised $27.5 million in Series A funding from Ballistic Ventures and Google Ventures.
- MAJORITY, a Miami, Fla.-based mobile banking and international services platform for migrants in the U.S., raised $20 million in funding. Victor Jacobsson and Hjalmar Winbladh led the round and were joined by Magnus Nilsson, Jacob de Geer, Valar Ventures, Heartcore Capital, and Avid Ventures.
- XGS Energy, a Palo Alto, Calif.-based developer of geothermal energy harvesting tools, raised $20 million in Series A funding. Valo Ventures and VoLo Earth Ventures led the round and was joined by B Current Impact Investment, MIH Capital, existing investor Thin Line Capital, and others.
- Nory, a Dublin, Ireland-based AI-powered operating system for hospitality businesses, raised $16 million in Series A funding. Accel led the round and was joined by existing investors Cavalry, Playfair, Samaipata, and Triplepoint.
- Footprint, a New York City-based consumer onboarding automation platform, raised $13 million in Series A funding. QED Investors led the round and was joined by Neo, Animal Capital, and existing investors Index Ventures, Lerer Hippeau, Operator Partners, BoxGroup, Palm Tree Capital, and Definition.
- Vaxess Technologies, a Cambridge, Mass.-based developer of patches designed to be able to deliver vaccines and medication, raised $12 million in funding from RA Capital Management, Engine Ventures, GHIC, and Mission Bio Capital.
- UnifyApps, a Gurugram, India and Dubai, U.A.E.-based platform designed to unify SaaS applications and allow companies to create custom applications faster, raised $11 million in seed funding. Elevation Capital led the round and was joined by the company’s founders and angel investors.
- Traction Ag, an Auburn, Ind.-based developer of farm accounting technology, raised $10 million in Series A funding. Cooperative Ventures led the round and was joined by Plymouth Growth and others.
- WeatherXM, an Athens, Greece-based crypto-enabled network of weather stations and provider of weather data, raised $7.7 million in Series A funding. Lightspeed Faction led the round and was joined by Protocol Labs, Borderless Capital, Arca, Alumni Ventures, Placeholder VC, Red Beard Ventures, and others.
- Stack AI, a San Francisco-based platform where companies can build their own AI assistants, raised $3 million in seed funding. Gradient Ventures led the round and was joined by Beat Ventures, True Capital, and angel investors.
PRIVATE EQUITY
- Summit Partners made a $72 million investment in OneStock, a Toulouse, France-based order management platform for retail businesses.
- Nexa Equity made a $31 million investment in Easy Metrics, a Bellevue, Wash.-based labor analytics platform for warehouses and manufacturers.
- Blue Point Capital Partners recapitalized National Safety Apparel, a Cleveland, Ohio-based manufacturer of branded personal protective equipment and safety products for electrical, industrial, and service applications. Financial terms were not disclosed.
- Forward Consumer Partners acquired a 50% stake in Xochitl, an Irving, Texas-based tortilla chip and salsa company. Financial terms were not disclosed.
- KKR acquired a minority stake in Infinx, a Mumbai, India-based provider of revenue cycle management technology for the health care sector. Financial terms were not disclosed.
- Marlin Equity Partners acquired a majority stake in Baxter Planning, an Austin, Texas-based provider of predictive service supply chain solutions. Financial terms were not disclosed.
- Redwood Services acquired a majority stake in Dean’s Home Services, a Maple Grove, Minn.-based provider of HVAC, plumbing, electrical, sewer, and drain services. Financial terms were not disclosed.
EXITS
- Warburg Pincus and Temasek agreed to acquire a majority stake in Specialist Risk Group, a London, U.K.-based specialist insurance intermediary, from HGGC. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
- Carlyle (NASDAQ: CG), a Washington, D.C.-based private equity firm, raised ¥430 billion ($2.8 billion) for its fifth Japanese buyout fund focused on Japanese companies in the technology, media and telecom, consumer, retail, healthcare, and other industries.
- Eir Partners Capital, a Miami, Fla.-based private equity firm, raised $496 million for its second fund focused on health care technology and tech-enabled service companies.
- LeapFrog Investments, a London, U.K.-based impact investor, hired Souleymane Ba as partner and co-head of climate strategy. Formerly, he was with Just Climate.
- Madrona, a Seattle-based venture capital firm, hired Jeff Mills as a partner and head of investor relations in its Palo Alto, Calif. office. Formerly, he was with Gryphon Investors.
- Pritzker Private Capital, a Chicago, Ill. and Los Angeles, Calif.-based private equity firm, promoted Rebecca Converse to partner.
