A fund has fears 😬
Jun 6, 2024
Kaley Ubellacker
Market Stirrings 🚩
Here's what the week looked like in pre-seed:
$16.3M
Total Amount Raised
14
Total Funding Rounds
$1.2M
Average Dollars per Round
$3.9M-$5.8M
Estimated Valuation Range
Data aggregated from proprietary research and Crunchbase; valuation estimate based on 10-20% ownership stake.
Good Reads 📖
For the rushed reader …
A U.S. appeals court in Atlanta suspended Fearless Fund’s grant program for Black-women-owned businesses, ruling in favor of a lawsuit claiming that the program is discriminatory.
WeWork has a new bankruptcy plan that includes fewer locations, fresh capital, and $4 billion in debt wiped.
According to EY’s latest Beyond Borders report, biotech is poised for growth, as the pharma industry hunts for innovation to replace $300 billion worth of products losing exclusivity.
For the less rushed reader …
FUND FEARS: Fearless Fund is facing new fears with a major setback from a U.S. federal court ruling. A U.S. appeals court in Atlanta suspended Fearless Fund’s grant program for Black-women-owned businesses, ruling in favor of a lawsuit claiming that the program is discriminatory. The lawsuit was filed last year by the American Alliance for Equal Rights, a group led by Edward Blum, who also led the case ending affirmative action in college admissions. The National Venture Capital Association filed a brief defending the Fearless Fund’s grant program as an important step toward creating equal opportunity in the industry. A study by Deloitte and Venture Forward showed that in 2022 only 2% of investment professionals in venture were Black women. The final decision could have huge implications for philanthropists, non-profits, and any organization seeking to give to underrepresented businesses. There’s a lot of work to be done to court the court and make grant programs appeal to a broader, more conservative audience.
CALLING ALL HOME DWELLERS: Is there still a “we” that’s co-working? WeWork has a new bankruptcy plan that includes fewer locations, fresh capital, and $4 billion in debt wiped. WeWork’s fate is tied to the mass office exodus, in which workers have fought against working in the office full-time. Nearly 20 percent of office space in the U.S. is vacant – and even 4 years after the pandemic peak in 2020, no one is interested in cleaning the cobwebs. The hope is that WeWork’s post-bankruptcy model will rightsize the company and make it profitable once again. WeWork is gambling that work-from-homers are getting lonely enough to turn co-working spaces’ empty desks into dollars. “Rapunzel, rapunzel, put up your hair and go to the office already,” says an incoming ad from WeWork, probably.
GROWING PHARMS: Biotech companies need more cash to buy-o more time and continue innovation in face of a patent cliff. According to EY’s latest Beyond Borders report, biotech is poised for growth, as the pharma industry hunts for innovation to replace $300 billion worth of products losing exclusivity. Financing is catching up, but accessing capital remains an issue for many biotech companies. EY estimates that almost a third of companies in the sector don’t have enough cash to sustain operations past one year. The good news is pharma has a record $1 trillion to deploy on new biotech innovation deals once the Federal Reserve lowers rates, which is a mid-term possibility. Add the pharma industry to the long list of people begging interest rates to drop.
Fire Up the Pre-Seeds🔥
Highlights from this week’s pre-seed raises:
Climatetech
Plural Energy - Blockchain bites of climate actionThe Problem: The current environment makes fundraising challenging, especially for small-scale renewable projects. The Tech: A blockchain financial platform for the clean energy transition that allows investors direct access to renewable energy investments. Recently Raised: $2.33 million in funding led by Necessary Ventures and Compound.Also Note: The first asset to go live for investment will be a portfolio of solar farms developed by Solaris.
FINtech
Light Frame - New tech for old industriesThe Problem: Current tech for financial services companies is generations behind modern standards.The Tech: A proprietary platform to deliver higher levels of autonomy, capability, intelligence, and ultimately innovation to Private Banks and Wealth Management firms. Recently Raised: $1.7 million in funding co-led by ATX Venture Partners and New Stack Ventures.Also Note: The company was launched by the founding executives of Alpian, Switzerland's first digital private bank.
Outro🚪
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