December 20, 2023

🥂 This is the last edition of 2023. Huge thanks to all of you for welcoming me into your inboxes, and we'll talk again on Jan. 2.

Top of the Morning

Illustration: Brendan Lynch/Axios

Last week I asked for one-line 2024 predictions, and you delivered hundreds of them (including a lot that talked your own books... but I forgive you in the spirit of the holidays). Here's a sampling:

📈 Deal activity

"VC investment into startups will fall below the $100b level for the first time since 2017." — Jeff Grabow, US VC leader for Ernst & Young

"We will see far more 'growth buyout' transactions and firms that historically were minority-focused will start to participate in them." — Rajeev Dham, Sapphire Ventures

"Nearly 25% of sponsor portfolio companies have been held for six or more years which, coupled with an expectation for a lower rate environment, has primed the market for heightened activity in 2024." — Jeremy Schein, Corsair Capital

"Down rounds as a percentage of total rounds closed in the mid-stage venture market (Series B/C) will approach 50% by midyear, but the public figures will look better because many of these won't be reported on." — Justin Ernest, Playground Global

"The growth market will finally pick up as we are nearing the 2-year mark of the '22 correction in which companies were advised to extend runway for at least two years." — Aaron Jacobson, NEA

"In terms of the IPO market and access to liquidity reopening, we're still in the fifth inning, with a long, long game left to play." — Larry Aschebrook, G Squared

"Private equity transactions will increase at 25-30% higher volumes than the depressed pace of 2023, thanks to a combination of significant PE dry powder, assets coming to market, stable to declining inflation, and anticipation of interest rate reductions." — Gil Mermelstein, West Monroe

🤖 Artificial Intelligence

"The 'shiny wrappers' over GPT companies will lose their glow as investors lose money having backed undifferentiated AI solutions." — Rudina Seseri, Glasswing Ventures

"AI will eat software, by which I mean that AI will both be used to create software more efficiently and software will have to be designed from an AI native or AI-first perspective to remain competitive." — Peter Berg, M12

📊 Sector specific

"We expect the thawing crypto winter will transition into a crypto spring." — Joe Marenda, Cambridge Associates

"Within climate tech, we predict a market distortion in hydrogen - the incentives and investment activity in hydrogen production not yet matched by demand for hydrogen as a feedstock or primary fuel. — Sierra Peterson, Voyager Ventures

"2024 will go down as the year of fintech M&A as neobanks begin to consolidate, and the year will be reminiscent of pre-pandemic 2019 with fintech deal volumes stabilizing before rising again (the first climb since Q1 2022)." — Nigel Morris, QED Investors

"As traditional social platforms scale back referral traffic, you'll see a fair amount of M&A activity related to media companies with valuable niche audiences." — Mike Donoghue, CEO of Subtext

"2024 will be the year of embedded fintech as entrepreneurs partner with smart community bankers to leverage available data about private companies and the individuals behind them to close the credit gap and satisfy the regulator concerns." — Sarah Biller, Fintech Sandbox

💳 Debt talk

"The broadly syndicated loan market will claw back some of the market share it's lost to private credit, albeit with looser documentation terms than ever seen before in the aggregate." — Nikolaus Caro, Goodwin

🎉 Miscellaneous

"Disney sells an 80% controlling stake of ESPN to a 2007-esque club of mega-cap private equity funds." — Jeff Collins, Cloverlay

"Several multi-strategy funds will raise public strategies to invest in tech companies because their existing LPs will have less budget to do private strategies and they'll claim that some public companies have fallen too far in price." — Ali Hamed, Crossbeam Venture Partners

"We have already begun to see venture firms cutting fund sizes and deferring hiring, and we think this trend will accelerate in 2024 as more funds realize losses from startup shutdowns." — Don Butler, Thomvest Ventures

"Celtics in 6 for the NBA Championship." — Jeff Janer

"2024 is about more nailing it, less scaling it, as efficiency comes first and additional costs come second." — Ryan Hinkle, Insight Partners

The BFD

Illustration: Aïda Amer/Axios

SoftBank sold Open Opportunity Fund, a $100 million venture fund focused on Black and Latino founders, to managing partner Paul Judge and former SoftBank COO Marcelo Claure.

Why it's the BFD: This reflects how SoftBank no longer wants to own investment funds that include outside limited partners, perhaps chastened by its original Vision Fund experience.

  • Judge and Claure wanted to scale OOF beyond what SoftBank was willing to commit as the sole LP, as it was in Fund 1, so they felt that an independent spinout was best.
  • They now plan to target $200 million for a second fund, with SoftBank to participate as an LP. Expect some commitments to come from corporations that launched Black-focused investment initiatives in the aftermath of George Floyd's murder, but which haven't yet figured out how to put the money to work.

The bottom line: "We think about this a bit like sports, in which the athletes are often minorities, but there's very little minority representation at the coaching layer and even less with ownership. Our management company is now 100% owned by minorities, so our structure represents those who we're investing in." — Paul Judge to Axios

Venture Capital Deals

• Lightmatter, a Boston-based photonic computing company, raised $155m in Series C2 funding co-led by GV and Viking Global Investors. https://axios.link/4amq2Gh

🚑 Sudo Biosciences, a Carmel, Ind.-based developer of TYK2 inhibitors, raised $116m in Series B funding. Enavate Sciences and TPG co-led, and were joined by Citadel, Monograph Capital, Eventide Asset Management, and insiders Frazier Life Sciences and Velosity Capital. www.sudobio.com

• Harvey, an SF-based legal AI startup, raised $80m in Series B funding. Elad Gil and Kleiner Perkins co-led, and were joined by the OpenAI Startup Fund and Sequoia Capital. https://axios.link/475Pc8X

• NewLeaf Symbiotics, a St. Louis-based developer of pink-pigmented facultative methylotrophs, raised $45m in Series D funding. Gullspång Re:food led, and was joined by Otter Capital Partners, S2G Ventures, and Leaps by Bayer. www.newleafsym.com

🚑 Atavistik Bio, a Cambridge, Mass.-based developer of precision allosteric therapeutics, raised $40m from insiders The Column Group, Lux Capital, and Nextech Invest. www.atavistikbio.com

• Agtonomy, an SF-based autonomous agriculture software startup, raised $22.5m in Series A funding. Momenta led, and was joined by Doosan Bobcat North America, and Toyota Ventures. https://axios.link/41qrq6F

• ScaleOps, an Israeli cloud resource management startup, raised $21.5m in seed and Series A funding co-led by Lightspeed Venture Partners, NFX, and Gilot Capital Partners. www.scaleops.co

🚑 Knownwell, a Needham, Mass.-based weight management company, raised $20m in Series A funding. A16z led, and was joined by Flybridge LTV Operator Fund, Oxeon, Larry Summers, Brynn Putnam, Lydia Gilbert, and Varsha Rao. https://axios.link/48gT3RW

• Soum, a Saudi re-commerce startup, raised $18m in Series A funding. Jahez Group led, and was joined by Isometry Capital and insiders Khwarizmi Ventures, Alrajhi Partners, and Outliers Venture Capital. https://axios.link/3NzUym2

• Farcana, a Dubai-based gaming studio, raised $10m in seed funding from Animoca Brands and Fenbushi Capital. https://axios.link/4asriHD

• TuMeke, a San Mateo, Calif.-based computer vision platform for assessing injury risk in factories, raised $10m in Series A funding led by Intel Capital. www.tumeke.io

• Strike Graph, a Seattle-based trust operations platform for security and compliance, raised $8.5m. BAMCAP led, and was joined by Madrona, Information Venture Partners, and Rise of the Rest. www.strikegraph.com

• Salt Labs, a New York-based loyalty rewards platform for employees, raised $8m from Third Prime. www.saltlabs.com

🚑 Netris Pharma, a French biotech focused on cancer-resistant molecules, raised €7.5m in new Series A funding from backers like EIC Fund. https://axios.link/3v8nX0j

🚑 Chefaa, an Egyptian pharmacy benefits platform, raised $5.25m co-led by Newtown Partners and Global Brain. https://axios.link/483EGQX

• Hakbah, a Saudi financial savings platform, raised $5.1m in Series A funding. VentureSouq led, and was joined by M-Capital, Bunat Ventures, Global Ventures, and Aditum Investment Management. https://axios.link/4awKu7s

• Friendlier, a Canadian reusable packaging company, raised C$5m in seed funding co-led by Relay Ventures and Garage Capital. https://axios.link/4aopzTV

🚑 Susu, an Ivorian health support startup, raised $4.9m from INCO Ventures, Al Mada Ventures, Janngo Capital, Open CNP, Health54, Launch Africa Ventures, Five35 Ventures, and Plug and Play Ventures. https://axios.link/3NztzXJ

• Claim, a Boston-based rewards app and social network, raised $4m in seed funding led by Sequoia Capital. https://axios.link/3TAzAHw

🚑 Biorithm, a Singaporean developer of an obstetric remote monitoring device, raised $3.5m in Series A funding co-led by Adaptive Capital Partners and Seeds Capital. https://axios.link/3vdf7hI

🚑 Metrion, a British ion channel CRO and drug discovery startup, raised £3.5m. Maven Capital Partners led, and was joined by insider Gresham House Ventures. https://axios.link/4773pT5

🚑 Forte, a Highland, Md.-based workplace well-being startup, raised $3.3m in seed funding, per Axios Pro. Tom Blaisdell led, and was joined by Cubit Capital, Fairbridge Park and Sovereign's Capital. https://axios.link/4aGtawT

• Felix Pago, an SF-based money transfer startup focused on LatAm remittances, raised $2.8m led by Switch Ventures, per Axios Pro. https://axios.link/3ttsKcj

• Crescenta, a Spanish digital fund manager that lets retail investors access private equity, raised €2m in new seed funding co-led by KFund and FJ Labs. https://axios.link/4av9MCU

• Farmstead Manufacturing, a Leeds, Utah-based baked goods maker, raised $1.75m from Advantage Capital.

Private Equity Deals

General Atlantic is in talks to buy Actis, an infrastructure investor with $12.7b in AUM, per the FT. This comes on the heels of General Atlantic filing confidential IPO papers.

• AutoManager, an auto dealership software provider backed by The Beekman Group, acquired AutoAp, a Portland, Ore.-based vehicle recalls-as-a-service company. www.automanager.com

• BWT Logistics, an Atlanta-based B2B warehousing and transport firm owned by Bluejay Capital Partners, acquired International Express Trucking, a North Carolina-focused 3PL firm. www.bwtlogistics.com

• GI Partners agreed to acquire DQE Communications, a Pittsburgh-based fiber provider, from Duquesne Light Holdings. www.dqecom.com

• Hildred Capital Management acquired bankrupt baby brand Hello Bello, which was founded in 2019 by Kristen Bell and Dax Shepard. www.hellobello.com

🚑 Insight Partners invested $92m into Dallas-based Employer Direct Healthcare, via a secondary deal that values that company at $1b. Existing EDHC backers — Serent Capital, Redmile Group and Dundon Capital — maintain their ownership interests. www.edhc.com

• J.C. Flowers invested $125m into CFG Bank, a Baltimore-based lender focused on the health care and multifamily industries. www.cfg.bank

⚡ NeXtWind, a German portfolio company of Sandbrook Capital, acquired 10 wind farms from Qualitas Energy Deutschland. https://axios.link/3v8ZsAf

🚑 Nordic Capital completed its purchase of a majority stake in IntegriChain, a Philadelphia-based drug manufacturer, from Accel-KKR. www.integrichain.com

• Sentinel Capital Partners acquired High Bar Brands, an Owatonna, Minn.-based maker of branded aftermarket products for heavy-duty trucks and trailers. www.minimizer.com

  • Sentinel also recapitalized Online Labels Group, a Sanford, Fla.-based provider of pressure-sensitive labels, shrink sleeves, and flexible packaging solutions. www.onlinelabelsgroup.com

Public Offerings

• Flynas, a Saudi budget airline backed by Alwaleed bin Talal, hired bankers for a Riyadh IPO, per Bloomberg. https://axios.link/4829Kkj

Liquidity Events

• Aon (NYSE: AON) agreed to buy New York-based insurance broker NFP for $13.4b in cash ($7b) and stock from Madison Dearborn Partners and HPS Investment Partners. https://axios.link/3tpgXM8

• Alchemy and Triton are seeking a buyer for London-based telco Lebara, per the FT. https://axios.link/3tfJfZy

• Archer-Daniels-Midland (NYSE: ADM) agreed to buy FDL, a British flavoring and ingredients firm, from Highlander Partners. https://axios.link/3RqUoi9

• Frasers (LSE: FRAS) bought Matches, an online luxury fashion retailer, from Apax Partners for around £52m. https://axios.link/471CV5y

More M&A

• Amazon (Nasdaq: AMZN) is weighing an investment in beleaguered regional sports network Diamond Sports Group. https://axios.link/3NVhZGT

🚑 Jefferson, a Philadelphia-based health system, and Lehigh Valley Health Network, an Allentown, Pa.-based health system, signed a nonbinding letter of intent to merge. https://axios.link/477JZxE

Fundraising

• H.I.G. Capital no longer plans to raise tech-specific funds, per Bloomberg. https://axios.link/3GRoaHR

• Rally Ventures, a Menlo Park, Calif.-based early-stage VC firm, raised $240m for its fifth fund. www.rallyventures.com

• Revo Capital, a Turkish VC firm, is targeting $100m for its third fund. https://axios.link/47WoKA1

• Kimmy Scotti is raising up to $250m for a new VC fund called Neon, per an SEC filing. She previously was a partner with 8VC.

It's Personnel

• Yup Kim is stepping down as head of private equity investments at CalPERS to become CIO of the $37.4b Texas Municipal Retirement System. https://axios.link/3GSDBzA

• Katie McMenamin joined Simpson Thacher & Bartlett as a London-based partner in the law firm's fund formation practice. She previously was with Travers Smith. https://axios.link/3TE3Ukq

• Greycroft promoted Nick Crance to principal. www.greycroft.com

Final Numbers

Data: Yahoo FInance; Chart: Axios Visuals

Bird's gone broke. The e-scooter company this morning filed for Chapter 11 bankruptcy protection, and said it's secured $25 million in DIP financing from MidCap Financial and existing lenders.

  • It also plans to launch an asset sale process and entered into a stalking horse agreement with existing lenders.
  • Bird's Canadian and European operations aren't part of the bankruptcy filing, which was made in Florida.

Bird once was valued at $2.85 billion in a 2020 venture round co-led by Sequoia Capital and Caisse de dépôt et placement du Québec, and went public in late 2021 via SPAC. It was delisted from the NYSE in September.

Thanks to copy editors Mickey Meece and Bryan McBournie for all their help this year, including countless typo saves! Please ask your friends, colleagues, and prognosticators to sign up.