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Well that’s no good.
This morning the Nasdaq is still on the plunge, down more than 1% since open as I write this. Yesterday we saw the index sink to just above 14,124 points at market close. Here’s a look at the index’s performance since the beginning of January:
The public market’s tumble (paired with rising interest rates) has interrupted—or shall I say terminated—the steady stream of IPO filings we experienced in 2021. But what will the lasting influence of this be on venture capital and private equity firms, or to take a step back, will there be one at all?
It’s a question I’ve been posing to investors in interviews the last couple weeks, and one private market investors are asked regularly. It’s not altogether surprising why: Market collapses like the dot com bubble or the 2008 financial crisis cut returns across public and private markets and led to a drop in funding in later-stage rounds. Some firms saw the size of their funds shrink, and were forced to trim budgets as a result. A handful of funds didn’t survive. In Spring 2020, when COVID was forcing schools, businesses, and entire cities to close across the country, some funds laid off staff—including SoftBank.
“February and March of 2020 was a tremendous amount of uncertainty and lack of clarity in terms of how the industry would perform during COVID,” Lydia Jett, managing partner and head of ecommerce and consumer internet at Softbank Investment Advisers, tells me, noting that the layoffs at her firm included “a relatively small number of Vision Fund employees.”
But that market downturn was short-lived, as we all know: 2021 was a record year for the private markets—record deal sizes, record funding, record private equity exits, a record number of IPOs. Firms have been raising billions for their new funds and valuations have soared, with more than 1,000 companies reaching unicorn status just earlier this month.
But some investors are on alert: While it’s unclear the extent of or how long a downturn might last, it’s likely that valuations will experience a correction this year as the stock market slumps.
“Until the market finds its footing, I think that you’ll see investors be more cautious with both the companies that they choose to work with as well as the amount of capital that they’re willing to invest,” says Brian Lee, senior vice president of the intelligence unit at CB Insights.
Todd MacLean, co-founder of growth equity firm Silversmith Capital Partners, tells me he has already noticed a slowdown in speed at which deals are being closed. “Investors and entrepreneurs are taking a little bit more time to think about pricing,” he says.
Terms have been changed and valuations lowered in at least a couple instances, according to reports. The Information reported that Tiger Global and Alkeon allegedly cut valuations in two companies after signing a term sheet—something frowned upon by many investors and entrepreneurs.
“We certainly haven’t done it on my team,” Jett says, when I asked if SoftBank has had to do the same in recent months. “I think it is disruptive to companies once you’ve signed a term sheet. I personally view those term sheets as somewhat sacred.”
At the same time, a correction and a return to more-normal valuations is something many would welcome. “A little bit more rationality” is beneficial for startups, Jett says, in that it will keep their hiring rates and opportunities more stable.
It’s likely we haven’t gotten a good gauge yet on what a more-rational market will look like. Deals are still flowing en masse, and at ever-high valuations. But symptoms of a downturn can take time to show up.
“There is certainly a lag effect sometimes,” MacLean says. “It takes a while for what is obviously going on in the public markets to ripple through.”
That is, if it does at all.
“I don’t think there are many people who are feeling the future is dire,” Jett says.
As a reminder… Please submit deals for the bottom half of this newsletter moving forward to termsheet@fortune.com.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.
Jackson Fordyce helped curate today’s deals section.
VENTURE DEALS
– ElasticRun, a Pune, India-based B2B ecommerce platform for Indian kirana (grocery) shops, raised $330 million in funding led by SoftBank Vision Fund 2 and was joined by investors including Goldman Sachs Asset Management, Chimera, Innoven, and Prosus Ventures.
– CelLink, a San Carlos, Calif.-based automotive electronics technology company, raised $250 million in Series D funding led by Whale Rock Capital and was joined by investors including D1 Capital Partners, T. Rowe Price, Fidelity, Park West, Standard Investments, and Atreides.
– Spotter, a Los Angeles-based financial liquidity services company for YouTube creators, raised $200 million in Series D funding led by SoftBank Vision Fund 2.
– Funding Societies, a Singapore-based digital financing platform, raised $144 million in Series C funding led by SoftBank Vision Fund 2 and was joined by investors including VNG Corporation, Rapyd Ventures, EDBI, Indies Capital, K3 Ventures, and Ascend Vietnam Ventures.
– Walking Fish Therapeutics, a San Francisco-based B cell therapeutics company, raised $73 million in Series A funding. Northpond Ventures and First Spark Ventures co-led the round and were joined by investors including Terra Magnum Capital Partners.
– Equip, a Carlsbad, Calif.-based eating disorder treatment company, raised $58 million in Series B funding led by The Chernin Group and was joined by investors including Tiger Global, General Catalyst, F-Prime Capital, Optum Ventures, and .406 Ventures.
– Instrumental, a Palo Alto, Calif.-based manufacturing optimization company, raised $50 million in Series C funding led by BAM Elevate and was joined by investors including Canaan, Root Ventures and Eclipse Ventures.
– Motorq, a Saratoga, Calif.-based connected car API company, raised $40 million in Series B funding led by Insight Partners and was joined by investors including Story Ventures, FM Capital, Monta Vista Capital, and Avanta Ventures.
– Dutch, a Martinez, Calif.-based licensed veterinarian platform that uses virtual video technology to provide resolution for common issues and treatment plans, raised $20 million in Series A funding led by Forerunner Ventures and Eclipse Ventures.
– Nomad, a Denver-based property management platform, raised $20 million in Series A funding led by Silicon Valley Bank Capital and was joined by investors including Kickstart Fund, Peterson Ventures, and Range Ventures.
– RideCo, a Waterloo, Canada-based on-demand transit technology company, raised $20 million Series A funding led by Eclipse Ventures.
– Cansativa Group, a Mörfelden-Walldorf, Germany-based medicinal cannabis distribution marketplace, raised $15 million in Series B funding led by Casa Verde and was joined by investors including Argonautic Ventures and Alluti.
– DuploCloud, a San Jose, Calif.-based low-code infrastructure automation and compliance company, raised $15 million in Series A funding led by Mayfield and was joined by Monta Vista Capital.
– Goldcast, a Cambridge, Mass.-based B2B virtual services platform to host interactive virtual and hybrid events raised $10 million in funding led by Unusual Ventures and was joined by investors including Hubspot Ventures, Afore Capital, and Underscore VC.
– LaCollection, a Paris-based art NFT platform, raised $10 million in seed funding led by Alven and was joined by investors including Aglaé Ventures, Cygni Capital, Kima Ventures, Artnova, Motier Ventures, and Premier Janvier Capital.
– Nanonets, San Francisco-based AI-based data capturing platform, raised $10 million in Series A funding led by Elevation Capital.
– Tilled, a Boulder, Colo.-based PayFac-as-a-Service platform for software companies, raised $11 million in Series A funding led by G Square and was joined by investors including Peterson Ventures and Abstract Ventures.
– Kiwibot, a Miami-based robotic sidewalk delivery startup, raised $7.5 million in funding. Sodexo, Headline, and House of Lithium co-led the round.
– Appboxo, a Singapore-based open SaaS platform, raised $7 million in Series A funding led by RTP Global and was joined by investors including Antler, 500 Southeast Asia, SciFi VC, and Gradient Ventures.
– Factored Quality, an Austin, Texas-based quality control platform, raised $5.6 million in funding led by Amity Ventures and was joined by investors including Dynamo Ventures, BAM Ventures, Red Antler, and Very Great.
– Cable, a London-based automated financial crime assurance provider, raised $5.3 million in seed funding. CRV and LocalGlobe co-led the round and were joined by Alloy cofounder Laura Spiekerman and ComplyAdvantage founder and CEO Charlie Delingpole.
– Mad Rabbit, a Forest Park, Ga.-based natural tattoo skincare brand, raised $4 million in funding from billionaire Mark Cuban and was joined by investors including Acronym Venture Capital, Revolution’s Rise of the Rest Seed Fund, LB Equity, and Seamless Capital.
– Bardeen, a San Francisco-based application software developer, raised $3.5 million in seed funding from 468 Capital and FirstMark Capital.
PRIVATE EQUITY
– Blackstone Growth led a €500 million ($568.6 million) investment into RELEX Solutions, a Helsinki, Finland-based optimization software platform for retail companies.
– RF Investment Partners invested $20 million in Leadership Circle, a Draper, Utah-based leadership development company.
– Alterna Equity Partners acquired Mod Op, a Miami-based digital marketing and communications platform focused on B2B and B2C end markets. Financial terms were not disclosed.
– Inverness Graham acquired Concord Servicing, a Scottsdale, Ariz.-based specialty loan company for the solar, home efficiency and vacation markets. Financial terms were not disclosed.
– LNK Partners acquired a minority stake in Tommy John, a New York-based comfort-focused lifestyle brand. Financial terms were not disclosed.
– MLM 2, a Warburg Pincus portfolio company, acquired Minesoft, a London-based patent search provider. Financial terms were not disclosed.
– TZP Group led a majority recapitalization of America’s Thrift Stores, an Irondale, Ala.-based second hand retailer and ecommerce operator in the Southeast United States, alongside Nuveen Global Impact Fund. Financial terms were not disclosed.
EXITS
– Blue Owl Capital agreed to acquire Wellfleet Credit Partners, a Cambridge, Mass.-based private merchant banking firm, from Littlejohn & Co. Financial terms were not disclosed.
– Management of Mountain Mike’s Pizza acquired the company, a Newport Beach, Calif.-based pizza restaurant franchisor, from Levine Leichtman Capital Partners. Financial terms were not disclosed.
OTHER
– Akamai agreed to acquire Linode, a Philadelphia-based infrastructure-as-a-service (IaaS) platform provider, for $900 million in cash.
– CCC Intelligent Solutions acquired Safekeep, a New York-based subrogation claims management technology company. Financial terms were not disclosed.
– Conductor acquired ContentKing, an Amsterdam-based SEO auditing and monitoring technology company. Financial terms were not disclosed.
– Havenly acquired The Inside, a New-York based direct-to-consumer home furnishings brand. Financial terms were not disclosed.
– Movable Ink acquired Coherent Path, a Waltham, Mass.-based AI-powered content engine. Financial terms were not disclosed.
– Nintex acquired Kryon, a Tel Aviv-based robotic process automation platform. Financial terms were not disclosed.
– Self Financial agreed to acquire RentTrack, a St. Louis Park, Minn-based credit reporting company, and its consumer arm LevelCredit. Financial terms were not disclosed.
IPOS
– Life Insurance Corp., a state-backed life insurance company in India, now plans to raise up to $8.7 billion in an IPO in the country, per Bloomberg. The offering will be India’s largest IPO.
SPAC
– Circle Internet Financial, a Boston-based digital asset payments and treasury infrastructure company, terminated its agreement to merge with Concord Acquisition Corp. and set new terms for a $9 billion valuation.
FUNDS + FUNDS OF FUNDS
– Thrive Capital, a New York-based venture capital firm, raised $3 billion for two new funds focused on early and late stage investments.
– Forerunner, a San Francisco-based venture capital firm, raised $1 billion for a new fund focused on early stage investments and selective later-stage investments.
– Nuveen, a Chicago-based investment manager, raised $218 million for a new fund focused on climate change and inequality.
– Digital Currency Group, Multicoin Capital, Reciprocal Ventures, gumi Cryptos Capital, NGC Ventures, and HashKey launched a $205 million fund to invest in crypto developers building on The Graph, which an index protocol for building decentralized applications on various blockchains.
– 5th Century Partners, a Chicago-based private equity firm, raised $144 million for a new fund focused on the health care, consumer, and business services industries.
PEOPLE
– BMO Private Equity Trust, the Edinburgh, U.K.-based private equity arm of BMO Global Asset Management, announced that Mark Tennant will retire as Chairman.
– JetBlue Technology Ventures, the San Carlos, Calif.-based corporate venture capital arm of JetBlue Airways, hired Steve Taub as the firm’s new head of investments. Formerly, he was with In-Q-Tel.
– KKR, a New York-based alternative asset manager, hired Neil Chatterjee as an industry advisor to its infrastructure team.
– Mercury Capital Advisors, a New York-based investment advisory firm, hired James Howe and Michael Dunham as partners. Formerly, James was with Stanwich Advisors and Michael was with Pinnacle Trust Partners.
– Oppenheimer & Co., a New York-based investment bank, hired Jason Fenton as Co-Head, Healthcare Equity Capital Markets. Formerly, he was with Cowen and Company.
– Revelstoke Capital Partners, a Denver-based private equity firm, hired Lisa Dombro as operating partner. Formerly, she was with agilon health.
Financial Services
