Good morning! Below, is our monthly look back at the biggest events in the VC world this past month.
The Wrap
As Fortune’s Anne Sraders reported for Term Sheet, we may be seeing record temps this month, but nothing thus far this summer has been hot when it comes to fundraising. She spoke with PitchBook senior venture analyst Kyle Stanford who called the dealmaking environment “pretty precarious.” As Sraders writes:
VC-backed companies in the U.S. raised $39.8 billion in the second quarter, a 48% drop year over year and a 13% decrease from last quarter, according to new PitchBook data. Deal count, meanwhile, continued to slump, down about 14% from Q1 at 3,011 deals. PitchBook’s estimated deal count for the second quarter puts that number a bit higher, at 4,088, which shows a plateau forming over recent quarters. (The estimate is due to a lag in reporting and finding deals, PitchBook says.) “It has stabilized from the deal count perspective,” notes Stanford, and it’s “still above pre-2021 figures.”
If there was one bright spot in June it was definitely the IPO of CAVA, the popular Mediterranean fast-casual chain. CAVA shares closed up 99% in the first day of trading on June 15, a rare highlight in an IPO market that has been largely dormant. One unlikely winner from the blockbuster debut? Former CEO of Panera and current Cava board chair Ron Shaich who boasts an 11% stake in the company, according to Cava’s securities filings. As Fortune’s Lucy Brewster reported:
His 11.6 million shares are roughly worth a staggering $535.7 million [when shares were trading] at $46 per share. [Shares closed around $44.] Cava CEO Brett Schulman told Fortune…that Shaich’s expertise has proved invaluable to the company. “Ron is kind of guiding us up Mount Everest as we climb the mountain,” said Schulman.
Now, as the company’s quiet period expires, investors will get a first look at what sell-side analysts think of the stock’s prospects going forward. Never one to mince words, David Trainor of New Constructs calls the stock “terribly overpriced.”
Big Number
It may seem as if A.I. has entered its peak hype era, but interestingly the number of A.I. deals is down from past years. In a recent Crunchbase report, A.I. investments accounted for 18% of global VC funding, representing $25 billion. But, according to PitchBook data, A.I. and machine learning deal count in H1 is down 28% since last year.
Noteworthy deals in June:
The new second biggest generative A.I. deal of 2023
Stealing the spotlight for the second biggest generative A.I. deal of 2023 is Inflection AI, unseating Anthropic. The Palo Alto-based personal A.I. company raised $1.3 billion from investors such as Bill Gates, Eric Schmidt, and NVIDIA. The company is led by Mustafa Suleyman, a venture partner at Greylock Partners and cofounder of DeepMind, which was acquired by Google in 2014.
New unicorn on the block
The newest member of the unicorn club isn’t another A.I. company. Oddly, it’s a mineral exploration company. KoBold Metals, based in Berkeley, Calif., raised $195 million in its latest Series B-prime round led by T. Rowe Price and was joined by a16z, Breakthrough Energy Ventures, and others.
No product, no problem
Mistral AI, the Parisian generative A.I. startup that raised $113 million in seed funding shocked the tech world by notching the largest European seed round ever—with no product yet.
Check out Term Sheet’s top 5 stories in June:
1. Anne Sraders made sense of Sequoia Capital’s big breakup with China.
2. Jessica Mathews and Anne Sraders gauged CAVA’s ability to open up the IPO market.
3. Andreessen Horowitz is expanding outside the U.S. for the first time with a crypto office in London, and Leo Schwartz had the story.
4. Term Sheet guest writer James Currier asked the question on every VC’s mind: Will A.I. replace venture capitalists?
5. Jessica Mathews dug into Truth Social’s latest hurdle to going public: An insider trading scandal.
In case you missed it:
Joe Lonsdale, the Palantir cofounder who now runs the venture capital firm 8VC, proposed to Austin’s mayor in 2021 that Lonsdale and some of his friends privately fund the construction of an underground tunnel system, utilizing Elon Musk's The Boring Company, as Term Sheet’s Jessica Mathews reports. You can read the full story here.
Until next month,
The Term Sheet team
Submit a deal for the Term Sheet newsletter here.
