If you, like me, scan the deals section of this newsletter, you may have noticed a trend in recent weeks: There seem to be a lot of $100 million-plus deals hitting the newswires. In an environment where the private markets have become much chillier, especially amid the Silicon Valley Bank mayhem, while funding for late-stage startups in particular cooled off since last year, I wondered what’s driving this apparent uptick.
Since the start of February, Term Sheet’s Jackson Fordyce has spied over 25 $100 million-plus funding announcements (to be clear, these funds may have been raised weeks or months ago): Jobber, an operations management software provider for home service businesses, raised $100 million from investors including General Atlantic in early February; energy storage company Our Next Energy raised $300 million from Fifth Wall and others also in early February; cloud security platform Wiz raised $300 million from VCs including Lightspeed Venture Partners several weeks ago; and Chroma Medicine, a genomic medicine company, raised a $135 million round led by Google’s GV. In early March, mysterious A.I. hardware platform Humane raised $100 million from investors including Kindred Ventures and Tiger Global. Last week, Gravie, an employer health benefits company, raised $179 million led by General Atlantic; and Adept, a research and product A.I. lab, raised $350 million co-led by General Catalyst and Spark Capital. You get the picture. And though certainly not the norm, some top companies are reportedly in the process of raising massive fundings, like Chinese fast fashion titan Shein, reportedly raising $2 billion this month, while payments darling Stripe just raised $6.5 billion. And, of course, let’s not forget about the host of buzzy A.I. startups, like Character.AI and Anthropic, raising major cash.
Those big funding announcements come on the back of a big plunge in late-stage we saw late last year: In the fourth quarter, funding for late-stage and growth companies fell to around $40 billion, 64% below 2021 levels, per Crunchbase data.
But according to Sebastian Duesterhoeft, a new growth partner at Lightspeed Venture Partners, “I think the late stage will still take time” to come back. “On the ground, it definitely doesn't feel like a flood of late-stage fundings at the moment and we don't see a real inflection in our pipelines either yet,” he added. On the bright side, some VCs believe the collapse of startups’ favorite bank SVB will prove more of a short-term disruptor to the pace of funding.
Duesterhoeft makes a good point: Many of these fundings are in particular areas, including biotech and energy, while several have growth equity leads (as in, not traditional VC). Plus, it can take some time for deals to be announced, completed, and actually closed, so it’s possible some of these funds were raised a while back.
Duesterhoeft just joined Lightspeed Venture Partners this year, but he helped lead investments in big enterprise companies like Snowflake and Databricks for years at mega tech investor Coatue Management. He said he was “actually surprised” when I asked him about $100 million-plus rounds picking up, but noted that “the few examples that I can think of where big rounds" are getting done, including Lightspeed’s recent investment in cloud security platform Wiz, are for “types of companies that are very unique” in terms of how fast “they've gotten to a certain stage from a size perspective,” he says, and are in categories where they could become huge companies. In other words, those “exceptional” companies, he adds.
He argues top companies have certain characteristics—like “how big the markets are that they’re going after” and their ability to “keep adding on product over time” to take a bigger slice of the market and stand out amongst competitors.
Meanwhile, another growth VC I spoke with told me they felt there was “good momentum in the later stage market pre-SVB [collapse], especially for companies that were doing [Series] B rounds and C rounds,” and that while they think the collapse of SVB has created a “pause,” they hope the market will get back on that “trajectory” in the coming weeks and that we’ll start to see a “more vibrant growth market in the second half of the year.”
Duesterhoeft thinks that for those companies that are able to raise at attractive prices right now, it sends a “very, very meaningful signal to the broader ecosystem.” He also notes there may be some who want to acquire smaller companies or accelerate their product roadmaps.
Lightspeed’s Duesterhoeft, for one, doesn’t believe there’s going to be a notable pickup in late-stage fundings broadly until towards the end of this year, but what he is noticing is a “significant pickup” in interacting with companies so far this year.
Other VCs have been seeing that, too. Bain Capital Ventures growth partner Merritt Hummer told me in late February that “even in the last few weeks, there’s been a step change.” (The firm recently raised a hefty $1.9 billion in two funds to invest across stages, including growth.)
Now we’ll have to wait and see if all that chatter turns into cold, hard cash.
See you tomorrow,
Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Jackson Fordyce contributed to reporting and curated the deals section of today’s newsletter.
