Funding is down; Stability AI is scaling up
Necessary Nuggets
Happy Wednesday! If you’re new here, welcome to Necessary Nuggets. We deliver exciting updates from Necessary Ventures and some helpful tidbits on the tech world to you bimonthly. Every edition is also on our blog.
Jobortunities 🚨
Taro: Taro increases access to healthcare while reducing costs and physician burnout via direct primary care based health insurance.
| Product Engineer |
Arc Boats: Electrify watercraft. Build the Tesla of boats. Arc’s aim is both sustainability and high performance.
| Test Engineer |
Forage: Create a unified API that helps low-income Americans buy online groceries. It’s Stripe, but for Electronic Benefits Transfer.
| Security Software Engineer |
Reach out with any questions! All 127 open job postings are listed here.
Hot off the Press♨️
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Companies are using Assembly across sales, marketing, project management, account management, customer success, operations, and finance. See talent here that you can hire today. Extending this preferred pricing is one way we're saying thank you for being a part of our community, just be sure to mention Necessary in your onboarding.
Market Stirrings 🚩
Hopefully I’m not the first bearer of bad news, but funding is down bad. Looking at global funding month-over-month gives a clear picture of the decline in funding from 2021 through where we stand now in 2023. For the month of November, funding is down 16% compared to 2022, which was already down about two-thirds compared to 2021. See the graph below from Crunchbase:
What does that mean for pre-seed funding? Pre-seed funding certainly peaked in early 2022, but funding otherwise looks fairly steady, especially when we consider data lags (funding amounts will increase after about a quarter). This is what the data looks like if we pull out our inspector gadget magnifying glass and zoom in on angel-seed stage data*:
*Note: Crunchbase defines Angel-Seed as all funding from the angel, pre-seed, and seed stages in its database.
Good Reads 📖
For the rushed reader …
There are 2 fresh pre-seed funds in town: new Bay-area-based Zelda Ventures and Motivate Ventures II.
Downward financial pressure is causing higher hurdles for Series A funding, and seed-stage investors have to respond if they want their startups to survive.
Stability AI, known for its text-to-image tool Stable Diffusion, released a subscription service for its models and now offers three tiers of membership.
B2U Storage Solutions, a company located in Southern California, is building hybrid storage facilities to prove that retired EV batteries can be used as stationary storage before being recycled.
The US FDA approved the first CRISPR treatment for sickle cell disease.
For the less rushed reader …
EX-SEEDING EXPECTATIONS: Get to the drawing board because it’s raining money for founders looking to pursue their next big, bright idea. There are 2 fresh pre-seed funds in town: new Bay-area-based Zelda Ventures and Motivate Ventures II. Moving on from the Stanford StartX fund and Prime Movers Lab, Suzanne Fletcher launched Zelda Ventures at the end of last year to invest in pre-seed companies and is eager to put capital to work. The fund leans into a basic thesis: invest in the next companies of founders Fletcher has backed before. Zelda entered the Bay area with $33 million in commitments and has invested in 10 companies so far, on the treasure hunt for about 30 more. Based in Chicago, Motivate Ventures is onto its second fund with $81 million in capital to deploy, focused on pre-seed- and seed-staged companies in the B2B software and fintech spaces. Don’t fret; all you seed is an idea!
OLYMPIC HURDLERS: It might be time to start some hip stretches if you’re searching for Series A funding. Downward financial pressure is causing higher hurdles for Series A funding, and seed-stage investors have to respond if they want their startups to survive. Next-round valuations sat at 1.6x in Q2 2023, the lowest value since Q3 2013. Early-stage VC firms like Greylock and Lightspeed are stepping up their game with new company development schemes to pave the way for companies to reach the all-hailed (with possibly even higher standards than fans at the Taylor Swift Eras concert) Series A round.
STABLE SUBSCRIPTIONS: Looking for another subscription to sign up for, forget it exists, and slowly watch the money drain from your account? Stability AI, known for its text-to-image tool Stable Diffusion, released a subscription service for its models and now offers three tiers of membership. Stability AI’s goal with the new business model is to strike a balance between profitability and openness, intending to use the additional funds from memberships to fuel research plans. There’s no denying that subscription models make the world go round, but let’s pray it doesn’t end up like the tragic price hikes from Netflix and HBO Max (I’m still boycotting in pain).
SECOND CHANCES: As it turns out, even renewable energy can use a recharge. B2U Storage Solutions, a company located in Southern California, is building hybrid storage facilities to prove that retired EV batteries can be used as stationary storage before being recycled. This would reduce the need to mine critical minerals and provide a cheaper way to scale the grid. When the wind’s not blowing and the sun’s not shining, stationary storage saves the day, and EV batteries could play a vital role in providing enough of it. However, deployment is currently limited, with only 6% of old EV batteries expected to be used for grid-scale storage by 2027. Guess we might need to head back to nursery school and relearn the 3Rs.
BIOTECH IS GETTING CRISPR: For those who watched Gattaca with their jaws on the floor, the future is here. The US FDA approved the first CRISPR treatment for sickle cell disease. Developed by Vertex and CRISPR Therapeutics, the treatment, called exa-cel, edits a gene involved in creating red cell shape and function and reportedly cures the disease for at least a year. The treatment has experienced groundbreaking results. In ongoing trials, 29 of 30 participants with sickle cell anemia had no pain for 18 months after their exa-cel transfusions. Forget denim; there are new genes in town.
Fire Up the Pre-Seeds🔥
Notable pre-seed raises in …
healthtech
Primary Record - In the family business
The Problem: Families need a Rosetta Stone to dissect their medical information.
The Tech: A simple mobile health app that streamlines the collection, organization, and sharing of personal health data and focuses on families as the end user.
Recently Raised: $1M in funding co-led by Boomerang Ventures and additional undisclosed investors.
Also Note: The app launched this month, and the company has plans to expand its offering to public and private healthcare agencies in the spring.
EDTECH
Mindsmith - Edtech is learning too
The Problem: The elearning tools industry is antiquated in a world where tech is fast advancing.
The Tech: An AI-driven tool that streamlines the process of developing educational content.
Recently Raised: $550k in funding led by Grix Venture Capital.
Also Note: Mindsmith currently has 7,000 users utilizing a free tier offering and ultimately plans to license the tool.
Outro🚪
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Thanks for reading, and see you next week!
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