The number of deals completed by the top 50 VC firms fell to 1,647 so far in 2020. That is down from 1,937 in 2019 and 2,218 in 2018 but still ahead of Micro VC’s and PE’s figures, which came in at 800 and 957, respectively.

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• The decline in the VC deal count constitutes a 15% reduction in the YTD, which decreases to between 3% and 5% when reporting delays are taken into account.
• Some firms increased their numbers. Those with a 40% YoY to date include Upfront Ventures, Foundation Capital, Data Collective, General Catalyst, and Greylock.
• The top 50 Micro VC firms have reduced funding by 29% in the YTD, but reporting delays bring that figure down to 10%.
• The top 50 PE firms only saw a 4% reduction, which actually changes to a 5% increase with reporting delays. This is in stark contrast to the deep pullback in PE deals in the 2008 crisis, which did not completely lift until 2012.

Mark Cuban has dedicated another $2M to his program to teach AI programming skills to children in low-income communities. Cuban founded the Foundation AI Bootcamps program in 2019 with the goal of teaching 1,000 children by 2023.

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• The program began with 40 high school students in Dallas, where Cuban lives. It will expand to 150 students by the end of this year in cities including Detroit and Omaha.
• The courses are currently being taught by experts from corporations that seek to use AI for their operations, such as McDonald’s and Walmart. 
• The Trump administration is completing new regulations to increase funding for AI by 30% in the 2021 non-defense budget.
• On Twitter: Check out what the program has to say here.
  

Analyses Made Easy

Pitchbook’s The Biotech Company Lifecycle*

*All graphs and figures are taken directly from the report itself.

The long-term gains offered by a successful biotech company, compared with the relative predictability of its funding needs, make it a prime opportunity for venture funding. This is despite the fact that a lean startup method is rarely applicable to their growth patterns. Still, investors tend to see a liquidity event before drugs even hit the market. Even if biotech companies tend to need more funding at the beginning for lab equipment, etc., they are often rewarded by a de facto first-player-advantage, which is then protected by legal frameworks in ways that startups are not.

As with startups, biotech companies have high failure rates: 90% of clinical programs fail to receive FDA approval, while 92% of biotech companies are unprofitable at any given time. This puts them squarely in the domain of high-risk venture capital, which plays out when contrasting VC participation in biotech deals with other investors' activity (see graph). VCs are involved with 65%-70% of biotech funding deals. 

That has increased across all subsets of biotech companies. The two largest areas for investment are oncology and neurodegenerative/musculoskeletal diseases, into which VC pumped $7.2B and $1.5B, respectively, so far in 2020 (see graph). VC investment in new vaccines, driven by research into COVID-19, has reached a new high of $1B so far this year and shows the greatest increase YoY.

Meanwhile, valuations are equally strong: pre-money valuations for early-stage and late-stage biotech companies come in at a median of $30M and $125M, respectively, so far in 2020 (see graph). That constitutes a particularly big jump for late-stage companies, which had a median pre-money valuation of $72.5M in 2019. Angel/seed-stage companies also saw median valuation growth from $8M to $10M between 2019 and 2020. This reflects strong step-up multiples from the angel/seed-stage to series A, which have stayed above 2x for the last seven years. 

The median time from founding to first VC funding for biotech companies in 2020 is 1.5 years. Excluding companies co-tagged as biotech, tech companies need two years to get to their first funding. That biotech companies need less time than other tech companies has remained stable for five years (see graph). The median and average time between financing rounds for biotech startups in 2020 came in 3.2 and 4.3 years, respectively. That compares favorably with the duration for tech startups at 1.3 and 1.7 years, respectively, which indicates that these companies come back for more funding more frequently. 

Finally, the healthy IPO market for biotech companies makes them prime candidates for successful offerings. Biotech startups’ median and average time from founding to IPO in 2020 is 5.8 and 6.6 years, respectively. Tech startups require a median of 9.9 and an average of 11.3 years (see graph). The median time to IPO for biotech companies has declined notably from 8.7 years in 2016 to 4.8 years in 2019, constituting a -18.2% YoY drop. IPOs tend to act as a financing event for biotech companies, rather than an exit for early investors, as companies are better able to gauge whether they will need the funding at all using reliable success/failure models for their drugs.

Did you enjoy reading this Analyses Made Easy feature? Usually, these pieces are reserved for premium subscribers only. Previous editions have focused on Crunchbase's North American Q3'20 Funding Report, Pitchbook Data, CB Insights' State of VC reports, a16z analyses, and more. To get access to them all, upgrade to Inside VC Premium for either $10/month or $100 billed annually! For a limited time, we are offering a 14-day free trial of premium! Click here to sign up!

Quick Hits

• The New York Times dug into the ongoing battle at many top startups around the decision to allow politics in the workplace. The debate was sparked by Coinbase CEO Brian Armstrong’s blog post effectively forbidding employees from discussing politics.
• YC stands to win big from an Airbnb IPO thanks to its $20K lead investment in the company as it graduated from its program. The home-sharing platform is aiming to raise $3B at a $30B valuation, despite recent cuts and a decline in consumer travel.
• Precursor Ventures, a seed and early-stage firm, promoted Sydney Thomas to Principal. Thomas, who was the company’s first hire, will now be in a position to increase the representation of Black women in the firm’s portfolio.
• Your office ghost missed you while you’ve been working remotely. Introduce them to the world of remote work with these resources.*

*This is a sponsored post.

Today's Funding 💰

Adtech/Martech

• Vibenomics (Indianapolis, IN), background-music playlists for advertisers: $6.5M A led by BIP Capital, Elevate Ventures.

Aerospace

• Hermeus (Atlanta, GA), Mach 5 aircraft: $16M Seed led by Canaan Partners, participation from Khosla Ventures, Bling Capital, Rise of the Rest Seed Fund.
• Slingshot Aerospace (Austin/El Segundo), satellite data utilization platform: $8M A led by ATX Venture Partners, participation from Rise of the Rest Seed Fund, Techstars, Okapi Venture Capital.

Agtech

• Arable Cultivates (San Francisco, CA), crop development observation platform: $20M B led by Prelude Ventures, participation by M20, Nassau Street Ventures, Tridon, S2G Ventures, Middleland Capital, Chasefield.

AR/VR

• PORTL Hologram (US), hologram-based communication platform: $3M from Tim Draper, Doug Barry, Joe Lewis.

Biotech/Health

• Gracell Biotechnologies (Shanghai, China), cell therapies to treat cancer: $100M C from Wellington Management Company, OrbiMed, Morningside Ventures, Vivo Capital.
• Q32 Bio (Cambridge, MA), treatments for autoimmune and inflammatory diseases: $60M B led by OrbiMed Advisors, Acorn Bioventures.
• LightDeck Diagnostics (Boulder, CO), high-speed COVID-19 test: $11M B from Incubic, Entrada, Boulder Ventures, et al.
• Curve Health (New York, NY), connected senior care: $6M Seed led by Lightspeed Venture Partners, participation from Vituity, Westway Capital, Correlation Ventures, Kapor Capital, Rosecliff Venture Partners, The Fund, et al.
• Advanced Chemotherapy (Raleigh, NC), clinical-stage drug delivery: $5.5M A led by Khosla Ventures.
• Nutrium (Braga, Portugal), dietitian/patient connection app: $4.9M (€4.25M) led by Indico Capital Partners, participation from Social Innovation Fund.

Consumer

• GetYourGuide (Berlin, Germany), walking tour platform: $133M (€114M) convertible note led by Searchlight Capital, participation from SoftBank Vision Fund, KKR, Battery Ventures, Highland Europe, Spark Capital, Lakestar, Heartcore Capital, NGP Capital, et al.
• Hip eCommerce (Austin, TX), collectibles-specific marketplaces: $5.325M A led by Next Coast Ventures.

DevOps

• Raycast (London, UK), developer productivity tool: $2.7M Seed led by Accel, with participation from YC, Chapter One, Charlie Cheever, Calvin French-Owen, Manik Gupta.

Edtech

• Teachmint (India), online teaching platform: $3.5M Seed led by Lightspeed India, participation from Better Capital, Titan Capital.

Energy

• Voltus (San Francisco, CA), distributed energy resources: $25M B led by NGP Energy Technology Partners, participation from Prelude Ventures, Ajax Strategies.

Enterprise

• Transcend (New York, NY), business optimization plat for financial firms: $10M A led by Nyca Partners.
• AppFollow (Helsinki, Finland), app management startup: $5M A led by Nauta Capital, participation from Vendep Capital, RTP Global.
• Skael (San Francisco, CA), automation platform for creating and deploying digital employees: $4.1M Seed from Bonfire Ventures, Daher Capital, Backend Capital, RIDE Ventures, StratMinds VC, Buffalo Ventures, et al.

Fintech

• Tomo (Stamford, CT), digital mortgage and transaction platform: $40M Seed led by Ribbit Capital, NFX, Zigg Capital, participation from Alex Sacerdote, Kurt Mobley & Eli Weinberg, Spencer Rascoff, Ted Ackerley.
• Jiko (Berkeley, CA), consumer financial products: $40M A led by Upfront Ventures, Wafra Inc, participation from Radicle Impact, NYCA Partners, Red River West, et al.
• Funding U (Atlanta, GA), loans for underrepresented college students: $14M Debt/Equity from Deciens Capital, Valor Ventures, MacKenzie Scott, Next Act Fund, The JumpFund.
• Wise (San Mateo, CA), platform to offer customers bank accounts: $12M A led by e.ventures, participation from Grishin Robotics, Base10 Partners, Techstars.

Foodtech

• Benson Hill (St. Louis, MO), soybean varieties: $150M D led by Wheatsheaf Group, GV, participation from Argonautic Ventures, Caisse de dépôt et placement du Québec, Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, et al.

Insurtech

• Goodcover (San Francisco, CA), insurance broker that pays back unused premiums: $7.5M A led by Goodwater Capital, participation from Fuel Capital, Broadhaven Ventures, Global Founders Capital, Liquid 2, TransRe.
• Assurely (New York, NY), MGA for embedded insurance: $3.7M A led by ATX Ventures.

Logistics

• WareIQ (Bengaluru, India), digital warehouse logistics platform: $1.65M Seed from YC, FundersClub, Pioneer Fund, Soma Capital, Emles Venture Advisors, et al.

Proptech

• Atmos (San Francisco, CA), digital house design platform: $4M from Evan Moore, David Gerster, Scott Stowell, Adam Nash, Josh Richards.
• Stay Open (Los Angeles, CA), platform to turn unused commercials into pod hotels: $2M Seed from undisclosed sources.

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