It’s Rough Out There...

In 2023, the startup and venture capital sector faces significant challenges following a prosperous 2021 and a mixed 2022. Key setbacks, such as the unexpected collapse of Silicon Valley Bank and disappointing IPO performances from major players like Instacart and Klaviyo, have created a somber atmosphere in the tech industry.

The PitchBook Q3 Venture Monitor indicates a gloomy scenario, with exits in the third quarter hitting the lowest levels since 2013. New funds are also experiencing a downturn, with a 56% drop in average fund size compared to the robust period of Q2 2022. Startup funding has reached only $126 billion year-to-date, a substantial decrease from the prosperous days of 2021.

The startup landscape is marked by closures, including notable casualties like Convoy, Zume Pizza, Olive AI, and even WeWork, which filed for bankruptcy, incurring a $14B cost for SoftBank. Anticipation of a "startup extinction season" looms, with expectations of a challenging period for the 50,000 VC-backed startups. 2023 is projected to be the second-worst year in a decade for exits, and prospects for the IPO and merger market are dim, heightening concerns for an even more daunting 2024.

Startup failure rates are on the rise, with 543 startups shutting down in 2023 compared to 467 in all of 2022. Half of the closed companies had not raised venture capital, relying on bootstrapping or other sources. Among those tapping VCs, 90% were Seed or Series A stage companies. Carta data reveals that 87 startups raising at least $10 million closed down, nearly double the total in 2022.

In this dynamic tech landscape, resilience is crucial. As startups optimize for stability and cash flow, the industry's ability to weather the storm will be a testament to its resilience. From the lens of Silicon Valley, those who are able to weather these challenging times will pave the way for a new wave of innovation, especially in the age of AI. 

Bill Barry // Founder // IgniteGTM

In Other News.. 

….Have you kept up with the OpenAI storyline? It’s an interesting soap opera except that it could potentially lead to our Oppenheimer moment. Read about it at Ben Parr’s Newsletter: OpenAI Drama: What Happened, What is Q* and What's Next 

Frozen Meals

This past week has been one of the slowest of the investment season due to the short holiday week. Expect to see a surge in deals over the next week as deals put on pause are reheated like Thanksgiving leftovers.

Early Stage

• Saga.xyz raised $5M in seed funding. Their protocol transforms a single tenant VM into a dedicated blockchain, simplifying blockchain deployment.

• ImpactAlpha secured $3.3M in seed funding. They deliver the latest in impact investing directly to your inbox.

Growth Stage

• LucidLink raised $75M in Series C, totaling $114.6M in funding. Their SaaS connects creative teams, backed by Brighton Park Capital, Headline, Adobe Ventures, and Baseline Ventures.

• Alto Neuroscience closed a $45M Series C, totaling $145M. Led by InVivium Capital, they specialize in precision psychiatry.

• Supira Medical raised $40M in Series D, reaching $121M in total capital. They focus on developing next-generation medical solutions.

Fundraising

• Riverwood Capital: A Menlo Park-based firm, raised $1.8 billion for its fourth fund. They invest in high-growth technology companies, offering capital and scaling expertise.

While there were fewer deals in terms of volume we can see some trends continuing. The health sector is witnessing significant activity, particularly in mental health and medical technology. This trend underscores a shift towards leveraging technology for advanced, personalized healthcare.

Additionally, the significant capital raised by equity firms, such as Riverwood Capital's $1.8 billion for its fourth fund, points to a robust market for private equity in technology, with firms actively seeking high-growth potential companies.

Congratulations to HIA Technologies!   Through the Ignite partnership,  HIA secured $250K of their seed round from a Chicago-based family office. We anticipate that this marks the beginning of several funding successes as we head into Q1.

If you're interested in learning more about HIA, please don't hesitate to reach out to us at [email protected].

From Around The Valley..

Upcoming Events

• Nov30: Investor Showcase by Angel Launch (Palo Alto)

• Dec1: Startup World Cup (San Francisco)

• Dec4: AI & Tech Summit event by Angel Launch (Palo Alto)

• Dec4: Unicorn Battle Silicon Valley (Palo Alto)

• Dec5-7: Winter Summit by Plug and Play (Sunnyvale)

• Dec7: H7 Healthcare Investment Forum & Demo Day (Palo Alto)

Interested in collaborating or presenting at the next Ignite event? Reach out us: Get on our events list!

Thanks for letting us Ignite your Morning ☕️

We'd love to hear your feedback on our inaugural newsletter! Ensuring its usefulness for our growing community is our top priority, and we're dedicated to enhancing its value and relevance with each edition.

Wishing you safe travels from the weekend to your holiday plans!

Logan Lemery
Head of Content // Team Ignite