Are small funds falling behind?
Necessary Nuggets
Happy Wednesday, and happy election week! If you’re like me and waited 2 hours to vote, I have good news: there are no polls in this newsletter.
If you’re new here, welcome to Necessary Nuggets, your one-stop pre-seed shop. We deliver updates from Necessary Ventures and helpful tidbits on our little corner of the world. Every edition is also on our blog.
Jobortunities 🚨
✨NEW FEATURED ROLE✨
Magrathea: A climate tech startup making waves by making carbon neutral magnesium metal from seawater and brine.
Infinite Machine: Envisioning the future of transportation beyond cars and into the realm of personal electric vehicles. Its first product, P1, is the ultimate tool for city navigation.
Reach out with any questions! All 170 open job postings are listed here.
Market Stirrings 🚩
Here's what the week looked like in pre-seed:
$17.4M
Total Amount Raised
13
Total Funding Rounds
$1.3M
Average Dollars per Round
$6.7M-$13.4M
Estimated Valuation Range
Data aggregated from proprietary research and Crunchbase; valuation estimate based on 10-20% ownership stake.
MATURITY AT A YOUNG STAGE
Companies are reaching fundraising milestones at different ages than they used to. Today, the average seed-stage startup is as old as the average Series A startup 10 years ago, and so on moving up into later stages. Interestingly, pre-seed companies’ age only shifted upwards slightly throughout the years.
The question is what’s the root of the trend, and how will it evolve?
Good Reads 📖
For the rushed reader …
Founded by obstetrician Dr. Brian Levine, Nodal is transforming the surrogacy industry with a marketplace that connects prospective parents with vetted surrogates.
With Stripe’s $1.1 billion acquisition of stablecoin platform Bridge, stablecoins are poised to disrupt the $700 billion global remittance market, enabling faster, cheaper, and more transparent cross-border payments.
According to Crunchbase, just 118 U.S.-based funds under $500 million have raised capital this year, putting it on track to be the lowest number of funds and total capital for small funds in years.
For the less rushed reader …
FOR SURE-ROGATE: Early-stage startup Nodal is the Tinder for baby-making, but with fewer awkward dates and more contracts. Founded by obstetrician Dr. Brian Levine, Nodal is transforming the surrogacy industry with a marketplace that connects prospective parents with vetted surrogates. By streamlining the matching process and cutting out middleman fees, Nodal reduces both wait times (averaging just 45 days, compared to 9-18 months) and costs, saving people up to $180,000. Nodal has already matched 108 parents since its 2022 launch, compared to agencies’ average of 25 per year. With its recent $4M seed extension at a $15 million post-money valuation, Nodal is well-positioned to capture a significant share of an industry that currently meets less than 10% of demand for surrogates. The startup’s already successful platform is Nodal joke for hopeful parents.
COINING A NEW ERA: After years thought of as the weird cousin of crypto, stablecoins are growing up and getting a job. With Stripe’s $1.1 billion acquisition of stablecoin platform Bridge, stablecoins are poised to disrupt the $700 billion global remittance market, enabling faster, cheaper, and more transparent cross-border payments. Leveraging Bridge’s “stablecoin orchestration” tech, Stripe can now smoothly swap digital dollars across currencies, making global transactions as easy as sending an email. But it's not all smooth sailing—regulation jitters are holding fintechs back. The EU, Singapore, Hong Kong, and other jurisdictions have made way with legislation, but fintech operators remain hesitant to fully adopt. With that being said, stablecoins are now worth over $160 billion, and the future of money is starting to look a lot more... stable.
IT’S A MARATHON NOT A RACE?: Fundraising for smaller startup funds is falling short. According to Crunchbase, just 118 U.S.-based funds under $500 million have raised capital this year, putting it on track to be the lowest number of funds and total capital for small funds in years. The slow fundraising is no surprise given market conditions: stagnant tech IPOs, fewer M&A exits, lingering caution until the market cools. Additionally, average round sizes have gotten larger, likely favoring more deep-pocketed funds. While this slowdown is less than ideal for new funds trying to raise money, it’s not all doom and gloom. Smaller funds are active in early-stage investing, and there’s a fresh crop of sector-focused funds in cleantech, cybersecurity, and life sciences. So while 2024 fundraising and snails have a lot in common, there’s still a chance for hidden gems.
Fire Up the Pre-Seeds🔥
It was a big week for pre-seed raises. Sit down and get comfortable for this exciting list:
fintech
Metacommerz - Off the supply chain. Metacommerz raised $1 million in funding at a $6.7 million pre-money valuation. Metacommerz is redefining supply chain financial management with tools that streamline contract management, audit processes, and B2B payments.
healthtech
Persperity Health - A sweat breakthrough. Persperity Health raised $1 million led by Freeflow Ventures. Spun out of Caltech, Persperity Health is developing sweat-sensing technology to transform women’s health with real-time, non-invasive hormonal insights.
SaaS
Revyl - The auto-bug terminator 9000. Revyl raised $1.1 million led by Panache Ventures, with participation from Y Combinator, Feld Ventures, and angel investors from Uber and Facebook. Revyl is developing an AI-driven platform that automatically identifies software bugs.
Casap - Pulling a fast one on fraud. Casap raised $8.5 million in a joint pre-seed and seed round, with the most recent round led by Lightspeed Venture Partners. Casap is creating the first AI-powered solution for banks, credit unions, and fintechs to automate disputes and fraud prevention.
Outro🚪
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Thanks for reading, and see you next week!
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