Enterprise Weekly #437: The Valuation Dichotomy, Arthur & Dialpad Updates, & More
According to PitchBook's Q2 2023 US VC Valuations Report, after climbing for nearly every quarter since Q2 2020, the median pre-money valuation of Seed-stage deals declined 16.7% QoQ to $10M.
This is the final shoe we’ve been waiting to drop, as Series A’s and above saw 2021’s historic valuations begin to decline in Q2 2022, with Series B+ falling off a cliff at the same time.
The dichotomy at play is that during the reset of 2022, Seed was perceived as a safe haven for many multi-stage funds licking their wounds after over-deploying capital in 2021. They often deployed smaller checks from their larger funds, but at amounts and prices that kept Seed valuations too high for startups to sustainably hit ARR milestones ahead of a Series A raise. Additionally, 2021 saw the rise of micro-VCs pouring more capital into Seed than ever, which led to an even further supply and demand mismatch, and an overfunding of Seed companies.
Work-Bench has been beating the same drum for over a year — warning founders of the long-term risks of raising at too high a valuation (despite how shiny it may look) and not to set too high-implied expectations ahead of your Series A raise.
All in all, we believe this correction is beneficial to the VC ecosystem and will lead to more sustainably built startups and growth trajectories. But the growing pains are never fun.
As a heads up, Enterprise Weekly will be taking the next two weeks off to celebrate Summer 🏖️ Enjoy your time and see you in the Fall!
📚 From our portfolio:
TechCrunch: Arthur Releases Open Source Tool to Help Companies Find the Best LLM for a Job
VentureBeat: Dialpad Launches Generative AI Trained on 5 Years of Proprietary Conversational Data
📚 Read more news:
Insider: The Tech Job Recession Is Over
The Information: Databricks, After $380M Loss, in Talks to Raise More Cash
WSJ: Startups Are Dying, and Venture Investors Aren’t Saving Them
📚 Read more (th)reads:
Company: ApertureData
Role: Product Marketing
Technology: Visual Data Management & Analytics
Funding: $3M from Root Ventures, Work-Bench, 2048 VC, Graph Ventures, Alumni Ventures Group, Magic Fund
🌟Company of the Week🌟
Grit raises $7M led by Founders Fund and Abstract Ventures
Data / AI / Machine Learning • Seed • New York, NY
Founder: Morgante Pell (CEO)
Configu raises $3M led by Cardumen Capital
Infrastructure / Dev Tools • Pre-Seed • Tel Aviv, Israel
Marqo raises $4.4M led by Blackbird Ventures
Data / AI / Machine Learning • Seed • San Francisco, CA
Highlight raises $8M led by Afore Capital and Craft Ventures
Infrastructure / Dev Tools • Seed • San Francisco, CA
Apica raises $10M led by Industrifonden, SEB Foundation and Oxx
Data / AI / Machine Learning • Venture • Stockholm, Sweden
Caden raises $15M led by Nava Ventures
Data / AI / Machine Learning • Series A • New York, NY
Voiceflow raises $15M led by OpenView
Data / AI / Machine Learning • Venture • San Francisco, CA
DynamoFL raises $15.1M led by Canapi Ventures and Nexus Venture Partners
Data / AI / Machine Learning • Series A • San Francisco, CA
Phasecraft raises $16.6M led by Playground Capital
Infrastructure / Dev Tools • Series A • London, UK
Highlight raises $18M led by Acre Venture Partners and HearstLab
Future of Work • Series A • New York, NY
Tracer raises $18.1M led by NewRoad Capital Partners, Progress Ventures and BDMI
Data / AI / Machine Learning • Series A • New York, NY
ProjectDiscovery raises $25M led by CRV
Risk / Security • Series A • San Francisco, CA
Anthropic raises $100M led by SK Telecom
Data / AI / Machine Learning • Venture • San Francisco, CA
Descript acquires SquadCast for an Undisclosed Amount
Productivity / Collaboration • Acquisition • San Francisco, CA
OpenAI acquires Global Illumination for an Undisclosed Amount
Data / AI / Machine Learning • Acquisition • New York, NY