Despite continued talking about one possible recessionslumped tech stocks and a slowdown in the world of startup investment, the financing business was buzzing positively last week. After a slowdown last spring, venture outfits announced a staggering $8 billion in new capital commitments in just five days.
Consider the following: NEA revealed that it has closed its two newest funds at a cost of $6.2 billion; Cowboy Ventures announced two funds totaling $260 million; and FJ Labs also announced two funds totaling $260 million. Then there’s Sapphire Sport (it closed a second fund of $181 million), Volition Capital (so it announced $675 million for his fifth fund), Kearny Jackson ($14 million) and Dimension ($350 million). Even non-American outfits got in on the act, including Highland Europe, which announced a new one €1 billion fund, and a Japanese chemical giant unveiling a $100 million fund.
So what exactly is going on? Are we through this recession yet? While impossible to know, the flurry of activity is probably down to a few unsurprising things instead.
For starters, many “new” funds actually closed last year, but for one reason or another went unannounced. Defy.vcFor example, a startup venture outfit in Woodside, California, said it is now investing from a $300 million third fund (compared to a $151 million debut fund and $262 million second fund it closed in 2019).
Defy closed the fund in the middle of last year but said nothing until now because it actively invested its previous fund until a few months ago, said co-founder Neil Sequeira. At the time, he said, the moment didn’t seem right.
“It was an interesting time in the Nasdaq and [regarding] global geopolitical issues,” he said, referring to the confluence of events that made 2022 a year many would rather forget, from the Russian invasion of Ukraine and disrupted supply chains to rising inflation around the world.