Top 4 Curated Venture Capital Weekly Update for 26APR2023

🗒️ How VC Funding Is Shifting From Crypto to AI

247WallSt: Artificial Intelligence (AI) has become this year’s favorite buzzword, particularly after the successful launch of OpenAI’s ChatGPT. Now, investors are pouring tens of billions of dollars into startups specializing in generative AI — and new reports suggest that some of that funding comes at the expense of crypto companies.

AI Investment Surges to Record High Levels
The launch of ChatGPT, an artificial intelligence chatbot developed by OpenAI, in November last year led to the start of an AI gold rush, particularly after it became the fastest-growing app in history. Several other tech giants, including Google and Alibaba, have raced to release their versions.

The rapid advancement of AI technologies captured the attention of VC firms globally. Investors from Shanghai to Silicon Valley started pouring tens of billions of dollars into AI startups in a bid to become involved in this booming market.

In the first quarter of this year, the industry raised approximately $18 billion in funding. Among the leaders are noted companies such as OpenAI, SnaboxAQ, Alternyx, Adept AI, and Anthropic, according to data accumulated by MPost.

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🗒️ Twitter Backed Minority-Led VC Firms But Has Now Dropped Its Support Team, Leaving Fund Managers Scrambling

Yahoo News: Elon Musk’s acquisition of Twitter has been a rollercoaster experience.

The purchase of the social media giant came with significant changes including massive layoffs and payments for the once-coveted blue check.

Not to mention, AfroTech reported that one of the significant shifts with Musk as CEO was the closing of Twitter’s Africa office. The Ghana office had only 20 employees but was closed just days after officially opening.

Surprising moves like the layoffs and added restrictions have been back to back as Musk navigates his power leading the company. A recent development in the shake-up is the dissolution of its corporate development team that supported minority-owned venture capital firms.

According to Forbes, Twitter could be backing out of its promise of millions to venture capital firms and small businesses.

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🗒️ Report: Startups Contend With ‘Bloodbath’ As Funding Dries Up

PYMNTS: The world’s tech startups could be facing a cruel summer as the funding crunch persists.

As Bloomberg News reported Monday (April 24), experts believe these companies will increasingly begin to run out of money as the market downturn persists, with some venture-backed firms forced to raise funds at lower valuations.

“We haven’t had a compression in values like this in more than 20 years,” Cameron Lester, global co-head of technology media and telecom investment banking at financial services firm Jefferies, told Bloomberg. “It’s an absolute bloodbath.”

According to the report, citing data from Pitchbook, more than 400 companies haven’t raised new money since 2021, while 94% of tech unicorns — startups valued at $1 billion or greater — are unprofitable.

“Some of these companies remind me of Scottish nobility that haven’t raised money in seven generations,” said Mathias Schilling, co-founder of venture firm Headline. “They sit and drink champagne while it rains through the roof.”

The report also cites research from Preqin that notes that down rounds approached five-year highs in the latter half of 2022. Pitchbook also says around 7.5% of U.S. venture funding rounds were down rounds, a figure it projects will increase.

Some companies have already raised funds under those circumstances, such as payments processor Stripe, which last month raised $6.5 billion in a round that valued the firm at $50 billion, down from the $95 billion it reached in 2021.

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🗒️ The VC Funding Gap: Goldman Sachs And Now Are Investing Billions To Help Black Women Founders Overcome Investment Disparities

Essence: As children, we were told never to get into cars with strangers. So who would have guessed we’d be texting complete randoms to pick us up? Before Uber, it would’ve been unthinkable.

The most groundbreaking business ventures are solutions to problems we may not know we have. But imagination alone isn’t enough. Capital is required to turn ideas into things. Seed funding, the most common means of early-stage financing, can be a vital component to getting startups off the ground. But, unfortunately, for most Black-owned startups, venture capital investments are hard to come by.

It’s a reality Mia Cooley knows well. A self-identified queer Black woman and mom, Mia recognized a problem in her community and developed a solution as an app. She validated market demand and followed all the fundamental startup rules to proven viability. Still, when it came time to pitch her xHood app in the Seed Funding game, she discovered that covering all bases wasn’t enough. “My experience building a product that prioritizes the experiences of the most marginalized community, Black Queer birthing people and family builders, has been plagued with having to ask that the people with the capital step outside of their own truths and lived experiences. I find myself having to prove myself as a founder, my ability to lead teams as a woman, and the market I’m serving as ‘venture scale’ – most of the time, this is coded language for worthy,” Cooley shared.

It’s a common problem for Black-owned startups. According to 2022 Crunchbase data, Black founders got just a 1% cut of the $241 billion Venture Capital pie; Black women took a third of that single percentage. So when Black queer women like Cooley reached for their slice, there was nary a crumb left to be had. Startups need funding to exist and thrive, and if Black male founders are malnourished in the investment space, their female counterparts are starved. But where there’s a will, there’s a workaround, and eventually, Mia found a way.

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