Inside Venture Capital

Hey Insiders, 

Today we are taking a look at the novel options PEs are using to distribute returns to LPs, RingCentral's acquisition of Hopin's key platforms, and Ribbit Capital's $800M fund. We have also rounded up the top global late-stage funding rounds of this week.  

I hope you enjoy today's edition! 

Karan
p/karan-chafekar

Cash paid out to investors from private equity deals fell 67% in Q2 2023 compared to the same period in 2021. Private equity firms are unable to exit their investments and provide returns to investors due to geopolitical uncertainty, fears of recession, and high interest rates. Hence, private equity firms are turning to novel options, such as continuation funds, the sale of portfolio stakes, net asset value loans, and collateralized fund obligations, to return cash to limited partners. 

More:

• Private equity firms are able to extend their ownership into promising portfolio startups by rolling over the stakes into a continuation fund, which gives limited partners the option to either hold on to their investment until the market recovers or cash out by selling it off to other limited partners. 
• A popular option is to liquidate part of the stake in a portfolio company, allowing them to generate some returns for investors. 
• Another option PE firms use is a net asset value loan that lets them borrow capital using portfolio company stakes as collateral. 
• Lastly, PE firms are also bundling the funds into one security called collateralized fund obligations, which helps them use the proceeds from companies to make interest payments to investors. 

Cloud-based video, message, and phone communications company RingCentral acquired virtual events management startup Hopin's event management platform and interactive engagement tools. The financial terms of the deal were not disclosed, but sources told Axios that the price was in the "low hundreds of millions." Hopin also announced the departure of CEO Johnny Bourfarhat. 

More:

• Hopin's new valuation after the sale is around $400M, a fraction of its peak valuation of $7.6B from mid-2021. 
• The firm had raised $1B from investors, including Andreessen Horowitz, Tiger Global, and General Catalyst. 
• Hopin will use the incoming funds to provide partial liquidity to some of its investors. 
  • Investors that participated in Series B and subsequent rounds may be able to recoup half of their investment. 
  • Altimeter Capital Management is one of the investors likely to exit. 
• The startup will now focus on a video streaming product called StreamYard.

Indian edtech startup Byju's tutoring business unit Aakash Educational Services Ltd. will need to restructure its board of directors after it breached covenants on a $250M loan provided by Davidson Kempner Capital Management. Davidson Kempner, which manages over $38B in assets, forced Aakash to include three nominees from parent company Byju's and two independent directors on its board of directors.  The two independent directors will be recommended by Davidson Kempner.

More:

• Davidson Kempner had transferred less than half of the $250M convertible debt since the loan covenants were not met. 
  • The U.S.-based hedge fund was reviewing its lending decision after three board members and an auditor stepped down from parent company Byju's board.
• Byju's founder Byju Raveendran is looking to repay or remediate the covenant breach under the forbearance period. 

Zoom out:

• The parent group Byju's also missed payments on a $1.2B term loan and is now looking to restructure the debt.

Today's Funding: 

DevOps

• Palo Alto, Calif.-based code and pipeline governance startup Endor Labs raised $70M in Series A funding led by Lightspeed Venture Partners, with participation from Coatue, Dell Technologies Capital, Section 32, and others. 

Edtech

• Austria-based edtech startup GoStudent nabbed a $95M strategic funding round from Deutsche Bank, Left Lane Capital, DN Capital, Tencent, Prosus, DST, Coatue, and SoftBank Vision Fund 2. The fresh funding brings its total funds raised to date to $686.3M.  

Fintech

• Pockit, a British fintech startup offering prepaid accounts for underserved communities, secured $10M in growth funding led by Puma Private Equity. The North East Development Capital Fund joined the funding round. 

Healthcare

• Virtual care startup TytoCare bagged $49M in growth funding, bringing its total funding raised to date to $205M. Insight Partners led the round with additional MemorialCare, Healthcare of Ontario Pension Plan, and Clal. 
• Science-driven sleep and audio technology startup Ozlo Sleep emerged from stealth with a $10M Series A funding led by LifeArc Ventures and ARTIS Ventures. 

PropTech

• Los Angeles, Calif.-based proptech startup Luxury Presence secured $19.2M in Series B-1 funding led by Bessemer Venture Partners, with participation from Switch Ventures and others.

Quick Hits:

• The AWS Cookbook - packed with practical insights and hands-on examples - is a must-have for your cloud toolkit.*
• South Korean electronics giant LG Electronics will inject $100M into the NOVA Prime Fund by 2024. Asset management firm Clearbrook LLC will also back the fund, which aims to back sustainable energy, digital health, and AI startups. 
• Early-stage VC firm pi Ventures held the final close of its second fund at $85M. The fund will invest in AI and deep tech startups. 
• Elev8 Venture Partners secured $67M in capital commitments at the first close of its Capital Fund I. 
• Web3 and metaverse-focused venture fund and studio Born Ready launched a $50M fund. The studio was co-founded by Futureverse's co-founders Shara Senderoff and Aaron McDonald. 
• How to score a spoke-tacular deal on your next set of wheels. Upway will deliver a top-notch e-bike right to your door for up to 60% less than retail. Use code INSIDE for $150 off.*

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