???????? Hi friends!
Back in bleary London after a wonderful trip to the Maldives with my better half and quite a lot seems to have been happening in the world of tech and venture.
So here’s this Friday’s Lowdown to give you a taste of what’s caught my eye this last week.
We’re going to look at:
???? WeWork looks like they’re WeDone
???? Carta’s State of Private Markets report for Q3 2023
???? UK hosts AI Safety Summit
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Now let’s get into it.
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The Lowdown
WeWork is WeDone
A couple of days ago news broke that storied scaleup WeWork may be filing for bankruptcy protection as early as next week.
From it’s $47bn valuation some years ago, it’s aborted attempt to IPO (community adjusted EBITDA anyone?), Adam Neumann’s departure, debt restructuring to this latest news, one cannot help but think that WeWork’s journey is one for the text books.
It is also a strong case study in why business models matter and how, if you aren’t a software business, it does not pay to pretend you are one (at least from a valuation perspective).
But whilst WeWork may be in its final death throes, Adam Neumann certainly rose as a phoenix does from the flames, securing $350m in funding from Andreessen Horrowitz last year.
I’ve said it before, and I’ll say it again – don’t be surprised if there are more large scale closures over the coming months. The markets are still unsettled and lots of businesses simply haven’t been able to hit the milestones they needed to in order to survive.
Carta’s State of Private Markets Report Q3 2023
Next week, I’ll be doing a live YouTube interview with Peter Walker, Carta’s Head of Insights – I’ll circulate details as to how to access closer to the time.
We’ll be talking through some of the key findings from their Q3 report on the state of private markets.
Here are some of the key takeaways:
The downturn has continued into Q3 2023 and startups on Carta saw a 38% decrease in capital raised from Q2 to Q3, and the number of venture fundraising rounds fell by 27%.
But despite the downturn, the median pre-money valuation in venture deals increased at nearly every stage, suggesting that founders are retaining more ownership when raising new cash (i.e. less dilution).
Investor-friendly deal terms such as liquidation preferences and cumulative dividends also saw a sharp decline in Q3 and early-stage valuations, particularly at the seed and Series A stages, have risen for the second consecutive quarter.
Startups are having to ensure that they have sufficient fuel in the tank between rounds as it is taking longer to move from one round to another however, deal count and capital raised are expected to increase as more transactions from Q3 are reported.
The number of Series A rounds fell significantly, indicating a gap in the market for startups seeking to raise their next round.
Late-stage venture activity has declined, mirroring a major decrease in the IPO market.
So it would seem that there is relatively mixed news coming out.
On the one hand, the number of deals and dollars invested have decreased, but on the other, Carta is reporting less predatory deal terms.
This suggests that we are indeed seeing (potentially) a reversion to quality as only the strongest of businesses get funded.
Check out the report here and, of course, tune in to hear what Peter has to say next week.
UK Hosts an AI Summit
There has been a lot of talk (especially on Twitter) about whether or not regulation of AI is a good thing.
This week the UK took on the reins by hosting its first AI Safety Summit to start discussing and potentially tackling some of the (perceived or actual) challenges countries, businesses and people are likely to face as AI continues to change the way we live and work.
UK Prime Minister Rishi Sunak emphasised the “responsibility” of world leaders to address the dangers of artificial intelligence.
While acknowledging AI’s potential for “transformative” change, he also pointed out the risks of social harms such as bias and disinformation.
The summit, attended by 28 countries, tech leaders, and academics, resulted in the Bletchley Declaration—a joint statement calling for global cooperation to tackle AI risks.
This declaration, signed by countries including the US and China, as well as the European Union, advocates for AI development that is “human-centric, trustworthy and responsible.”
The summit’s focus is on mitigating AI risks, including privacy breaches and job displacement, while maximising benefits. Sunak highlighted AI’s potential to enhance economies and societies but also cautioned against new dangers it brings.
The UK’s initiative comes alongside significant moves by the US, including Vice-President Kamala Harris’s announcement of the US AI Safety Institute and President Joe Biden’s executive order to ensure America’s leadership in AI.
Despite concerns about the absence of some key leaders and the inclusion of China amid tense relations, the summit has been hailed as a “diplomatic coup” for the UK.
Whatever your feelings on regulation, the fact that this event took place is a strong signal that nation states are both enthusiastic as well as concerned about where AI is heading.
I have no doubt we’ll be seeing more of these events as technology continues to progress.
And finally, back to memes from our favourite meme master…
The tinder bio vs real life
— Dr. Parik Patel, BA, CFA, ACCA Esq. (@ParikPatelCFA)
Oct 30, 2023
????And that’s a wrap for this edition of The Lowdown – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.
???? And if you think someone else might love this, please forward it on to them,
???? Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.
That’s it from me so until next time…
Stay liquid 🙂
Aarish
