Financial News You Need To Know Now

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There is always a lot going on in the world of investing. Here is the Frugal Finance news that you need to know now:

How do early-stage VC deals drive inordinately high returns? Investors are consistently allocating larger amounts of capital to startups that go on to exit successfully—a trend especially distinct with later-stage financing. Our latest analyst note is the third in our series breaking down venture returns by round. In this new installment, we've refined our approach to enable richer analysis of the flow of capital. Key takeaways include: The data suggests a clear relationship between capital raised and the success or failure of a company. The earliest stages, especially Series A, show asymmetrically high returns compared with later-stage deals. The attractive VC fund returns of the past few years have accelerated the increase in capital allocated to venture investing.

U.S. VC valuations reach unprecedented levels Record levels of dry powder and a fierce influx of nontraditional investors into the venture ecosystem have buoyed VC-backed company valuations to record heights in the second quarter of this year. Our US VC Valuations Report examines how startup valuations across the venture lifecycle and sectors have changed in 2021. Key takeaways include: Early-stage pre-money valuations notched records in Q2, with a median and average of $50 million and $105.4 million, respectively. At the late stage, the median and average valuations hit $160 million and $882.4 million, respectively, representing a sharp increase from values recorded in previous years. The value growth is partly driven by investor willingness to write increasingly larger checks to pre-IPO companies. Exit valuations grew at a decade-record rate, with median acquisition and public listings step-ups of 2.2x and 1.7x, respectively, from their last private market values.

VC fund returns for last year reached an astonishing 30.4%, much higher than their three-year mark and almost double the 2020 full-year returns for any other private strategy. PE and funds of funds also posted strong numbers, as covered in our Global Fund Performance Report. The story wasn't as rosy, however, for strategies like private debt, real estate and real assets.

We are visualizing a standout year for female founders. In the first half of 2021, female-founded startups in the US raised $25 billion in venture funding, more than in any full year on record. But a deeper look at the data highlights stubborn realities for female founders. Data journalist Jordan Rubio teamed up with James Thorne and Priyamvada Mathur to create this visual analysis, which illuminates some surprising trends.

Emerging ESG standards has put powerful pressure on private equity to adapt. ESG standards have been defined by an alphabet soup of industry groups. As limited PE partners increasingly prioritize sustainable investing, fund managers are finding that simply having an ESG policy isn't enough. Andrew Woodman examines the push to set global standards—and the challenge of quantifying ethical investing.

Ansarada has partnered with Mergermarket to analyze the impact of digital technology across every stage of the deal lifecycle—from deal strategy, marketing and preparation to due diligence, negotiation, closing and post-deal integration. After interviewing more than 100 global dealmakers, Ansarada has broken down the current trends across end-to-end M&A dealmaking practices in its report, 21 trends the modern dealmaker needs to know. A must-read for anyone wanting to improve and streamline their deal processes through innovation and automation.

Venture Global: Join the revolution VCs and PEs have never been busier, and with Venture Global, the world has never been smaller. Ensure you have an edge in dealmaking and investment decisions with a solution that enables you to hire anyone, anywhere. Elements Global Services is leading the revolution in human resources infrastructure, and the Venture Global program simplifies your global expansion. It delivers speed-to-market in more than 135 countries via its cloud-based technology to guarantee your global growth fully complies with local laws and payroll needs.

Early investors in the SPAC boom may be sitting on high returns, but late arrivals are not faring as well. Investors are facing a backlash as some question the efficacy of sustainable investing and whether it is only slowing down real change. Many tobacco companies are trying to rebrand for a smoke-free future, but can the public trust them? And are smokeless options like nicotine gum or lozenges safe long-term?

ProbablyMonsters recently hauled in a $200 million video game developer. ProbablyMonsters has raised a $200 million Series A led by LKCM Headwater Investments. Founded in 2016, the Bellevue, Washington based company plans to use the funding in part to support its goal of ensuring long-lasting, sustainable careers for those in game development. View round View similar company Carbon Robotics banks $27 million Carbon Robotics has raised a $27 million Series B led by Anthos Capital. The Seattle-based company is the developer of an autonomous robot designed to help farmers eradicate weeds and unwanted plants through thermal energy. Carbon Robotics was valued at $29 million in 2019, according to recent financial data. Additional Investors: Bolt Innovation Group, Fuse, Ignition Partners, Liquid 2 Ventures, Voyager Capital View round View similar company Plantible cooks up $21.5 million in new funding Plantible has raised a $21.5 million in Series A funding.

A guide to understanding the decentralized future of finance "What is DeFi?" It's one of the most common questions in fintech this year. And our new research has all of the information you need to get started. DeFi, short for decentralized finance, uses blockchain technology to execute financial services without an intermediary—and the space has exploded over the past 12 months. Click to see this and many other diagrams in our DeFi Primer One common metric used to measure the growth of this space is total value locked (TVL), which measures the amount of crypto committed to DeFi smart contracts for conducting financial services. Over the last year, TVL has grown from $2 billion to $108 billion and peaked at over $150 billion in May. Investors are also extremely bullish, pouring in around $2 billion into DeFi protocols during the first half of 2021. Still, DeFi is nascent, and the high frequency of hacks and scams makes this space seem like the Wild West. Many of the protocols are still too complicated for use by everyday consumers, and it's also likely that new regulations will reign in some of the DeFi activities. DeFi is an esoteric market loaded with jargon and technical complexity, but we sought to simplify the space in our latest research, which includes: a market map of the DeFi ecosystem, covering segments such as yield farming, DEXs, and derivatives. a breakdown of DeFi blockchain platforms, types of projects, key risks, and our market outlook. data on record-breaking VC investment in decentralized finance, and other metrics we track like TVL and gas fees.

Greater China VC activity soars, but uncertainty looms This past week, we initiated research coverage of the Chinese private markets with the launch of our inaugural Greater China Venture Report. This report encompasses China, Hong Kong, Macau, and Taiwan, and it's available in both English and simplified Chinese. Capital availability and VC investment within Greater China have drastically increased since 2015, as disruptive startups aim to take advantage of building new businesses for a region served by the world's most populous country and second-largest economy. Likewise, institutional capital has followed as investors continue to raise new VC funds to satiate the region's entrepreneurial appetite. For many foreign VCs, investing in Chinese startups represents both a paradigm shift from Western companies, given the sheer operational scale and speed of the region's innovation economy, as well as an opportunity to invest in first-in-class startups in a rapidly growing market. Some highlights from the report: After a pandemic-mired 2020, the region's VC investment reached $56 billion in H1 across 2,366 deals—both on pace for YoY growth. Nondomestic investors participated in nearly 25% of deals Many investors are attracted by the region's rapidly expanding middle class, accelerated mobile adoption, multinational corporation penetration, and high-tech initiatives from economic development councils. VC exits have soared in recent years. H1 notched $137.5 billion in exit value across 99 exits, with annual exit value on pace to shatter records fueled by 19 billion-dollar-plus public offerings. 

Recent scrutiny and new legislation from Chinese regulators could dampen some of the fervor going forward. Strong investing momentum has been met with strict regulations in recent months surrounding overseas listings and education & tutoring companies. Time will tell what impact recent changes will have; for now, the current environment is generating sufficient deal making and exit activity to continue powering Greater China's venture industry.

We're running out of superlatives to describe the European VC market. Through H1, valuations reached record highs at each quarter and across all financing stages, according to our latest European VC Valuations Report: The increased presence of nontraditional investors continues to drive this unprecedented pricing environment. The aggregate value and quantity of European unicorns is skyrocketing to new heights. Across all quartiles, exit valuations are also pacing well above last year's figures. How high have the numbers gotten? How sustainable is this financial frenzy?

Deal-level performance on a capital-weighted basis Does raising more capital make the average startup more successful? Are venture investors getting better at identifying "winners" earlier? When a VC-backed company exits, how much bigger are Series A returns compared to Series B through F? These are the types of questions raised in our latest research into deal-level performance—a dataset we continue to develop in our ongoing coverage. What the new data shows: Across all stages, but especially the late stage, companies that raised larger amounts of capital had higher rates of successful exits. Series B returns were closer to Series C+ figures than Series A returns.

Extreme weather events are drastically impacting growers and leading to ripple effects throughout the global food system. Perhaps it's no wonder, then, that VCs are continuing to pour money into ag-tech, particularly companies producing agriculture biochemicals that mitigate environmental harms and build resiliency in crops, according to our new client-only research: Insect farming is also booming, as the industry's reduced costs and environmental impact make it attractive to both companies and consumers. Investment into predictive weather analytics tools has already eclipsed 2020's total by 70%, as startups leverage satellite mapping, AI, and machine learning technologies. Agriculture drones are gaining use in imagery analytics and tasks like seeding and spraying.

Mental health apps. Gut health. Sleep tech. There are several consumer-focused opportunities emerging in the world of healthtech, and Q2 marked another huge quarter for capital invested ($3.5 billion), according to our latest client-only research: Ten mega-deals in Q2 accounted for ~60% of that deal value and they've driven this year's median deal valuation to twice that of 2020. Roughly $1.7 billion in exit value across 10 transactions has exit activity on pace for new annual records in both value and count. VCs have been increasingly targeting the tech that helps improve sleep quality, as a growing amount of people track their sleep habits.

AI & machine learning analyst Brendan Burke weighs in on Databricks' $1.6 billion funding round at a $38 billion valuation: "Databricks' 1.3x valuation step-up in seven months is justified by 41.1% ARR growth in 2021 to $600 million as of August 31. "The company is achieving rapid growth at scale and has continued to develop new open-source projects, recently announcing Delta Sharing: a data collaboration protocol in partnership with Microsoft Azure, Google, and Amazon Web Services, along with other leading database vendors. "This Series H is led by Morgan Stanley's Counterpoint Global mutual fund, demonstrating the appeal of the company to crossover investors. "Databricks' management claims that the round does not push back its public listing timeline and the company may consider a direct listing or IPO."

Our insights and data featured in the press: Public investor enthusiasm for electric vehicles is high. That's one key reason why Rivian's IPO is worth watching. Greater China VC has had a rollercoaster year, but consumer businesses still have some important tailwinds. What returns are reasonable to expect from investing in pro sports teams? How does that compare to other options? Index Ventures is funding startups faster than ever with no signs of slowing.

The prolific pandemic puppy boom fetches deals in Silicon Valley. The pandemic drove a banner year for pet adoptions, and the funding has followed, with pet-related startups snatching up more than $1.1 billion in venture capital so far in 2021. But don't call it a blip, writes James Thorne. Investors see a bright future for startups focused on our profitable pets.

How solo VCs are changing the venture investing game. A new breed of venture capitalist has emerged in the past several years: the solo VC. These investors do far more than angel and seed deals, writes Marina Temkin. They raise nine-figure funds, invest across stages, and even lead rounds—and they do it with a speed that traditional firms may find hard to match.

Wall Street wins signal the start of a synthetic biology revolution. After a decade of innovation, synthetic biology companies are notching big breakthroughs. James Thorne and Marina Temkin spoke with VCs about the promising future they foresee—and why one investor believes these developments represent "the most important technological revolution of our time."

Hackers, remote workers spur record PE deals in cybersecurity. Private equity buyouts are booming in cybersecurity as the already fast-growing industry responds to a surge in remote work, coupled with increasingly sophisticated cyberattacks. Ryan Prete breaks down the data behind the record-setting spike in cybersec breaches.

Investors are raising climate tech funds at a torrid pace. Midway through 2021, investors had closed as many climate-focused funds as they'd raised in the previous five years combined, a frenzy that underscores tech's crucial role in tackling climate change. Priyamvada Mathur explores this new wave of deal-making amid trends including the push for net-zero emissions and the staggering rise in extreme weather disasters.

Typically opaque PE pursues retail investors despite pushback. It's been more than a year since federal officials announced policies meant to crack open private equity funds to retail investors for the first time. Along the way, dueling views on the potential risks and returns have sparked fierce debate over whether the asset class has delivered on its promises. Adam Lewis covers the clashing views and shares a breakdown of PE fund returns by strategy. 

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