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Infinity funds Sensible, warns of storms ahead

Illustration of a hundred dollar bill on a fish hook being pulled away from an open hand.

Illustration: Aïda Amer/Axios

Infinity Ventures led Sensible's $12 million Series A funding, Infinity partner Jay Ganatra tells Axios exclusively. But the PayPal alum's forecast for the venture sector is not sunny.

Why it matters: Ganatra says venture activity overall has slowed over the past two to three weeks, and will level out on both price and valuation once it resumes.

State of play: Sensible, a startup that offers weather insurance for outdoor recreation, signed its Series A deal about two months ago, prior to the current lull in activity.

  • Ganatra says the challenges in funding likely started revealing themselves weeks ago, but will only become evident to the broader public soon.

Context: Any whisper of a funding pullback in climate technology can send shivers down any investor's spine.

  • Many are still rehashing the Climate 1.0 bust of the 2000s, which left some venture firms nearly bankrupt.
  • The prior boom and subsequent bust were fundamentally different, Ganatra says, because many companies were building capital-intensive businesses to build new hardware at lower margins.
  • Many current climate startups, including Sensible, are software businesses in entirety with less burn and longer runways.

Yes, but: Ganatra says he is telling his companies to ensure they have runway through at least the end of 2023.

  • He is advising they take on debt via convertible or SAFE notes to extend the runway as much as possible before having to go out and raise outside capital.
  • He is also telling founders to hire more cautiously than they would have four months ago.

The bottom line: "A little more rationality is coming into the market the last few weeks here, and when it returns the volume will be in smaller rounds with lower valuations," Ganatra says.

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