Ironically, we can’t even define “AI” as a sector per se since almost every startup looking for some coin or decent press suddenly identifies as an “AI-centered-something-or-other.”

But for the purists, the numbers don’t lie — or in the very least they tell a clearer story than the prevalent “AI will save the world” narrative.

In fact, early this week investors poured $700 million into two AI startups — Builder.ai and Anthropic — and followed up mid-week with another $105 million to AI marketing platform Insider. It seems we’ve reached another level of the AI craze that has dominated the private markets since late last year.

Overall, $20 billion has been raised by startups using “AI” in 2023. (Fun fact: $20 billion could pay the salaries of 307,266 teachers for one year.) But let’s definitely keep making those AI-generated selfies.

So much buzz

Are startups worried about the downturn? We guess it depends on who writes their checks. 

In fact, Bessemer Venture Partners, one of the oldest and more established venture firms in the U.S., earlier this year said it is earmarking $1 billion of its most recent fund solely for investments in artificial intelligence.

And that’s just one firm.

This week we published an interview with Bessemer partner Sameer Dholakia, who aptly said of the AI movement: “Literally trillions of dollars of value gets created when you have these massive tectonic shifts.” 

And what about AI IPOs?

But it’s not all unicorns and rainbows for AI. Just because funding to the sector is hot, that doesn’t mean the appetite on the public markets is at the same level.

If we look at public markets (and we did) it’s clear that an AI focus hasn’t been a recipe for stock market gains. This is evident looking at recent performance of the most highly valued AI-oriented companies to go public in the quarters leading up to the market peak.

Back to the future

Let’s circle back to those trillions that Bessemer’s Dholakia was talking about. While we aren’t seeing the fruit of those hefty AI investments just yet, the promise (or at least the hope) among investors and the journalists that cover them is that these startups will deliver sooner rather than later.

According to Dholakia, the “adoption curve on this one will be mind-blowingly fast.” 

Related Crunchbase Pro query

• Rounds Raised By Startups Using AI In 2023

Related reading:

• More Big Money For AI: Insider Raises $105M
• AI Craze Hits New Level As Anthropic Locks Up $450M, Builder.ai Closes $250M RoundA 
• Bessemer Partner On What’s Driving The Firm’s Billion-Dollar Bet On AI
• Recently Public AI-Focused Startups Are Not Hot
• The Writers’ Strike Is Trying To Keep AI From Taking Over Hollywood. Is It Too Late?

Illustration: Dom Guzman

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Kenvue’s shares traded at $26.90 each when the market closed on Thursday, a 22% jump from the company’s original asking price of $22, which was in the high end of the range. When it debuted, shares were trading at $25.60.

The company sold 172.8 million shares — an increase from the 151 million it planned on selling. Kenvue raised $3.8 billion from the offering and its valuation jumped from $48 billion at the start of trading to $50 billion when the market closed.

Back in 2021, Johnson & Johnson announced it would split its pharmaceutical brand from its consumer health division, marking one of the biggest changes to its 100-year history. Kenvue, the consumer health arm that owns a slew of household names like Tylenol, Band-Aid and Neutrogena, announced last week it would brave the icy public markets and go public. 

Johnson & Johnson is still a majority shareholder in Kenvue, representing a 90.9% stake in the company and owning 1.7 billion shares of common stock.

Sign of a bustling public market ahead?

Kenvue’s blockbuster debut may be a sign that the public markets are thawing. There was an unprecedented number of startups that went public in 2021, but the market chilled considerably in 2022. 

Last year, Getty Images raised $1.9 billion when it debuted back in July, while marketing platform System1 raised $518 million a few months earlier in January. They were part of a mere 91 startups that went public in 2022, per Crunchbase data. By comparison, over 400 startups debuted on the stock market in 2021 and 190 debuted in 2020.

In 2022, several companies scrapped or paused their IPO plans as the economic health of the U.S. became more uncertain, but it’s clear many are waiting for the right time to go public. Both fast-fashion retailer Shein and fintech platform Stripe are reportedly in talks to explore IPO options no later than 2024.  

Startups, after raising huge rounds at high valuations in 2021, are looking for ways to extend their runways. And the banking crisis that killed Silicon Valley Bank and rippled out is only causing more uncertainty for risky startups that don’t often meet banks’ loan requirements. 

Related Crunchbase Pro query:

• 2022 U.S. IPOs

Illustration: Dom Guzman

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Stripe has been arguably one of the most anticipated IPOs of 2023, making several end-of-the-year lists (including ours). It was also one of the highest-valued decacorns in 2022. And yet, when the company was valued at $95 billion in 2021, Stripe co-founder John Collison said there were no immediate plans to take the company public. 

But it looks like his tune has changed. The company is looking to solve the issue of 10-year stock units awarded to veteran employees that are expected to expire at the end of this year. It’s an issue several companies Stripe’s size will face as the IPO market all but closed up in 2022. 

One way for Stripe to resolve the issue is to take the decacorn public. Founded in 2010, the company has raised around $2.2 billion since then — most recently a $600 million Series H in 2021. It has dual headquarters, in San Francisco and in Dublin, Ireland.

Looking at the secondary market 

The other option Stripe may be considering is allowing stockholders to sell shares on the secondary markets. 

As an employee retention tool, it’s unclear what the best picture is for Stripe, which has operated privately for 13 years. According to data from secondary markets platform Forge Global, almost half of the investor activity on its platform in 2020 was around companies that were 10 years or older. In Q4 of last year, that interest nosedived to 8% — the lowest recorded on Forge. 

That’s pretty surprising, considering that the majority of tech company activity on the secondary markets are centered around established, pre-IPO dinosaurs such as Stripe. But given the state of overhyped valuations and the frosty market, perhaps investors are hesitant to buy shares.

Further reading

• Stripe Reportedly Lowers Internal Valuation
• When there Are No IPOs, All Eyes Are On The Secondary Markets
• Unicorn Valuations Are On The Chopping Block

Illustration: Dom Guzman

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Will 2023 be the comeback year for IPOs? What will it take for the public market to thaw? Here are the Crunchbase News staff’s top picks for the companies we think could go public next year. 

And if some of these sound familiar, it’s because they are: In our 2022 edition of this list, we predicted many of these might go public this year. Little did we know that the IPO markets would stall. So here we are again, offering up some thoughts on who might make public debuts, if and when IPOs start happening again.

Enterprise tech and cybersecurity

Arctic Wolf: It wasn’t that long ago when Eden Prairie, Minnesota-based Arctic Wolf seemed IPO bound. The company raised $150 million in a Series F in July 2021, taking its valuation from $1.3 billion to $4.3 billion. At that time, then-CEO Brian NeSmith said an IPO was likely the next logical move. Then the market changed drastically, and in October the managed security provider raised $401 million in convertible notes led by existing investor Owl Rock. Convertible notes work like a short-term loan, but these notes are repaid to the investor at a later point in equity — i.e. after an IPO — typically at a discount. The managed security space can support large players and Arctic Wolf has grown large since being founded in 2012. Perhaps those notes turn to equity in 2023.

Databricks: Everyone has been on Databricks for a while. As recently as February, CEO Ali Ghodsi talked about going public, but offered no timeline. The market has only grown colder for IPOs since then, but this is a company that ended 2021 with more than $800 million in annual recurring revenue. It’s big and growing. It also hit a post-money valuation of $38 billion after raising a $1.6 billion Series H led by Morgan Stanley’s Counterpoint Global in August 2021. And that big Series H came just seven months after the company raised $1 billion at a $28 billion valuation. That valuation may be what is keeping the San Francisco-based company from going public. Nevertheless, Databricks — which creates tools and products to help companies view both structured and unstructured data in a single location — could look to 2023 to finally offer employees and investors the liquidity they’ve waited for.

Flexport: The supply chain is still top of mind, so maybe some company will ride that to the public market. San Francisco-based Flexport, which was on our IPO list last year, locked up a $935 million Series E in February led by Andreessen Horowitz and MSD Partners at an $8 billion valuation. The global freight forwarder and logistics platform moved nearly $19 billion in merchandise across 112 countries in 2021, even as global supply chains suffered from multiple disruptions. In total, the startup has already raised more than $2 billion, according to Crunchbase data. Despite a down VC market this year, logistic and supply chain startups still were able to raise cash from private investors. Maybe they can do the same with public ones?

— Chris Metinko

Fintech and banking

Stripe: The most obvious and one of the most successful fintech startups to add to this list is online payments company Stripe, which is co-headquartered in London and Dublin. It is the fifth most valued startup on the The Crunchbase Unicorn Board, and was most recently valued in a 2021 financing at $95 billion. Founded by brothers Patrick Collison, its CEO, and John Collison, its president, Stripe is now 12 years old and has raised more than $2 billion in funding. The company processed $640 billion in payments in 2021 up 60% from the prior year. It was said to have $12 billion in revenue in 2021 according to Forbes. As a result of the market correction, the company lowered its internal valuation in 2022 to $74 billion. The company filed its intention to go public in July 2021 but has not yet set a date. It cut around 1,100 jobs, or 14% of its workforce, earlier this year.

Revolut: London-based Revolut is the second most valuable European fintech, valued at $33 billion as of July 2021. The company is 7 years old and has raised $1.7 billion in funding. Founded by Nikolay Storonsky and Vlad Yatsenko, Revolut took off as it made transferring money in different currencies easy for those who work or travel in multiple countries. Revolut has not initiated layoffs in 2022 — in fact, it has kept hiring. The company announced revenueof 261 million pounds in 2020 but has not posted revenue for 2021. Revolut has 25 million retail customers and applied for a banking license in the U.K. in 2021. 

Plaid: San Francisco-based Plaid connects user bank accounts to fintech apps. The company was founded nine years ago by Zachary Perret, its CEO, and William Hockey, a board member. It was last valued in Series D funding in August 2021 at $13.4 billion and has raised $734 million over time. Plaid’s revenue in 2020 was said to be around $170 million in an article by Forbes. Visa planned to purchase the company in 2020 for $5 billion, which was halted by regulators the following year. In December 2022, Plaid laid off 20% of its staff, or around 260 employees, as Peret said that slower than expected growth after the pandemic meant that Plaid’s “pace of cost growth outstripped our pace of revenue growth.” On the other hand, Peret also said that the number of customers Plaid serves has grown 50% in the past year. 

— Gené Teare

Consumer platforms and services

Instacart: Instacart is kind of the startup equivalent of the “always a bridesmaid never a bride” cliche. It’s always high on lists of likely public market entrants, but has never actually consummated an IPO. Well, we think 2023 will be the year. (Yes, we said that last year too, but cut us some slack.) An offering started looking even more likely after the company confirmed in May that it filed a confidential draft registration with U.S. securities regulators, with a debut currently expected to come next year. The filing followed a steep write-down, as Instacart cut its valuation in March from $39 billion to $24 billion.

Guild Education: Denver-based Guild was also on our list last year, but all told, it still looks like a strong IPO candidate. The Denver-based company, which offers a platform for extending employer-covered education and upskilling to workers, has raised over $640 million to date, including $265 million in a June Series F round. It’s particularly noteworthy that the company secured a big round in a period in which overall edtech funding has been declining, indicating investors see a lot to like in the business model.

Faire: If you’ve been around long enough and raised enough money, inevitably investors will be looking for a return. This notion applies quite succinctly to Faire, an online marketplace for independent retailers and brands that has raised $1.7 billion since 2017, per Crunchbase data. The company’s business model could also see some favorable headwinds as consumers return to local stores, which stock from its suppliers, after a pandemic-driven shift to predominantly online shopping.

TripActions: TripActions is another heavily funded company that’s often bandied about as a likely IPO candidate. The 7-year-old, Palo Alto-headquartered company provides corporate cards and expense management tools, with a focus on business travel. Startup investors certainly seem to like the brand. The company pulled in $300 million in an October Series G round at a post-money valuation of $9.2 million. TripActions also is already making progress on the IPO path — it filed confidential paperwork for an offering with the SEC, per a September report.

— Joanna Glasner

Life sciences, agtech and foodtech

Lyra Health: We’re still waiting for Lyra — or maybe Headspace Health or some other teletherapy company — to go public. A first-mover teletherapy startup that took the direct-to-employer route in 2016, Lyra Health has worked with companies including Palantir, Zoom and Amgen to provide teletherapy long before insurance companies at-large embraced the practice. At the beginning of this year the startup raised $235 million in Series G funding, upping its valuation to $5.58 billion. Lyra held back during the 2021 IPO mad rush its competitor Talkspace participated in, but it’s more than ready for the public markets.

Plenty: We consider vertical farming and urban farming a solid bet next year. Thin-margin grocery stores are being hit hard by logistics and supply issues, so the idea of a produce farm located close to consumers seems pretty ideal. Vertical farming startup Plenty rang in 2022 with $400 million in Series E funding, almost half of all the funding the company has raised since it got started in 2014. Plenty began building out a vertical farming “campus” in Virginia, where it would grow strawberries for the large farming conglomerate Driscoll’s. There aren’t that many agriculture startups that went public — AeroFarms almost made the leap via SPAC in 2021 until funding closed up — but Plenty seems ripe to go public.

Tempus: Armed with $1.3 billion in funding over nine funding rounds, precision medicine startup Tempus is easily one of the most intriguing companies to come out of the pandemic. Its technology platform is different from most biotech upstarts that focus on developing molecules. Tempus scooped up two clinical trial-related startups and has its hand in multiple parts of the drug-making lifespan — something we don’t see outside of giant pharma companies such as Amgen or Merck. Tempus raised $275 million in debt financing in October for its ability to leverage AI in drug discovery and genomic sequencing. 

— Keerthi Vedantam

Outside the box

Canva: Design-software maker Canva has reeled in more than $572 million in funding and a $40 billion valuation from venture investors. The Australia-based company is known for its design software for nondesigners, but new tools rolled out this year show its ambitions are even bigger. It recently launched an AI writing tool that promises to help automate marketing copywriting, around the same time that OpenAI’s ChatGPT tool set the tech world abuzz. Investors seem to be increasingly drawn to technology that automates even the most creative of fields, and Canva is at the head of the pack in that group. At least one of Canva’s biggest investors is feeling more bullish on the company again: Franklin Templeton increased the value of its stake in Canva last month, after the design softwaremaker was previously hit by a series of writedowns.

ICON: We thought it’d be fun to include a name that doesn’t generally grace the likely IPO lists, and that’s where ICON comes in. The Austin-based construction technology company, known for its iconic 3D-printed homes, has raised more than $450 million in venture funding in the past five years. It’s the kind of branded, consumer-facing technology company that might benefit from the higher public profile that comes with a listing on a major exchange.

 — Marlize van Romburgh and Joanna Glasner

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As we’ve documented several times over the past few quarters, venture-backed companies that went public via SPAC deals have mostly posted exceedingly poor returns. As we revisit a previously curated list of truly terrible SPAC performers, it’s clear they’re closing out the year at a particularly low point.

How bad? Out of a selected set of 50 completed SPAC deals, at least 24 were trading below $1 per share 1. Because most blank-check companies initially price at $10 per share, that means they’re down 90% or more to date.

Here’s a list2 of the 24 sub-$1 names from our sample:

No sector has been spared, as one can see from the broad array of industries represented among these beaten-down stocks. It includes autonomous driving (Embark, AEye), electric vehicles (Faraday Future, Lightning eMotors, Xos), telehealth (Babylon, Talkspace), and real estate (Offerpad, Doma), among others.

What’s also noteworthy is that the vast majority are trading at a lower point than they were a couple quarters ago. So no, things aren’t looking up yet.

And that’s not the worst

And trading below $1 isn’t necessarily the worst fate for a troubled SPAC. A few others have either declared bankruptcy or sold to acquirers for an even smaller pittance of their former price. 

One of the higher-profile casualties was Enjoy Technology, a mobile retail company founded by former Apple store executive Ron Johnson, which filed for Chapter 11 bankruptcy protection in June. The company had previously raised more than $230 million in known venture funding from backers including Kleiner Perkins, Oak Investment Partners and L Catterton, and another $250 million from SPAC investors.

In the biotech space, meanwhile, Clarus Therapeutics, a developer of androgen-based medicines that went public in September 2021, is also winding down. The company announced in September that it has filed for Chapter 11 and is selling its sole commercial asset, a therapeutic for testosterone deficiency.

Metromile, the pay-per-mile car insurance provider, also took a hit. The one-time unicorn sold to fellow insurtech Lemonade at a valuation representing a roughly 95% cut from Metromile’s peak public share price.

Rounding out the list, Carlotz, a used car marketplace, sold this month to Shift Technologies, a used auto e-commerce platform trading for 23 cents a share, in a deal that appears to be valued at roughly $20 million. Carlotz previously raised over $160 million in venture and SPAC-related financing.

Any success stories out there?

No company on our sample list of 50 currently has shares trading above the $10 break-even threshold for SPAC deals. The top performer — consumer health platform Hims & Hers — was recently trading at a little over $7.

Meanwhile, there are 15 companies with shares between $1 and $2, listed below:

The remaining companies on our list are trading between $2 and $7. 

This story isn’t over

For anyone who binge-watches drama shows, the SPAC plotline is looking sort of familiar. We’re at that point where the protagonist is looking outmatched and on the cusp of defeat. 

If this was Hollywood, of course, the protagonist would suddenly summon the strength for a big comeback, overcome foes and declare victory. But we’re in the real world, where this kind of underdog story only occasionally plays out. 

At any rate, this does look like the back-against-the-wall moment for many SPACs. It’d be nice if 2023 could bring us some of those much-awaited dramatic turnarounds.

Further Reading

Some Beaten-Down SPACs Recover Amid Tech Rally

Illustration: Dom Guzman

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Sadly, the same does not hold true for those who put capital into newly public real estate startups. There, the reverse applies, with shares of many housing-focused companies hitting new lows this month after an already rocky year.

Overall, venture-backed U.S. real estate-focused companies that went public in the past two years are down an average of 85% from their offering price, according to a Crunchbase analysis. None are above their offering prices.

Some of the worst performers are down 90% or more. This includes i-buying platforms Opendoor and Offerpad, as well as Doma, a homeowners insurance upstart. 

For a broader sense of how venture-backed real estate companies have performed on public markets, we assembled a chart of seven below that debuted in the past couple years:

Altogether, it’s a pretty staggering decline. A total of more than $42 billion in post-debut market capitalization has been wiped out as of early this week.

To put that in perspective, $42 billion is well above the combined market caps of the second- and third-largest U.S. homebuilders. (Those companies, Lennar and Pulte Group, have a combined market cap of around $31 billion.)

It’s the kind of decline that usually has some pretty obvious causes. In the case of newly public real estate players, we can point to four:

1. Valuations were too high at first: Markets were bubblier when companies on our list debuted, with valuations more reflective of sunny futuristic presumptions than present fundamentals.

Take Opendoor. When it debuted on Nasdaq in December 2020, after completing a SPAC merger, it commanded an initial valuation around $18 billion.

That’s an ambitious value given that for the three calendar quarters prior to its offering, the company had $2.3 billion in revenue, and a net loss of nearly $200 million. Even for a SaaS company that’s a lofty valuation based on the earnings. But Opendoor’s business—buying and selling properties—has much lower gross margins than software.

Or consider Compass, the fast-growing real estate brokerage. The company, also a comparatively low-margin business, posted a $270 million loss for the year preceding its 2021 IPO. Nonetheless, it managed a post-debut valuation around $8 billion.

2. Companies underperformed expectations: Many companies on the list also haven’t met investors’ performance expectations.

Compass, for example, posted a larger net loss than analysts expected in three of the past four calendar quarters. It’s also been making cuts, including most recently reportedly laying off roughly 50% of its 1,500-person tech team.

WeWork has also underperformed. In its last quarter, the workspace provider missed analysts’ projected earnings estimates by a wide margin, pushing shares lower.

Opendoor, meanwhile, is facing all kinds of troubles. The company paid $62 million this summer to settle an FTC charge that it pitched potential home sellers “using misleading and deceptive information.” The company also faces multiple shareholder class action lawsuits with allegations including that its algorithm has failed to adjust to changing market conditions.

3. Investor preferences changed: A year ago, money-losing growth companies were in. Now, they’re out, with public investors preferring profits, dividends and old-fashioned value stocks. That leaves our crop of unprofitable, newly public real estate companies largely out of favor.

4. Real estate markets shifted: Then of course, U.S. real estate markets are shifting rapidly. Today, the average interest rate on a 30-year mortgage is hovering around 7%. That means buyers can no longer afford to finance homes at last year’s prices, when rates were half that. Inventory is sitting. Prices are deflating. And demand for new mortgages has cratered.

While such changing conditions aren’t necessarily catastrophic for newly public players in the real estate space, they will require some adjustment, and, in some cases lowered expectations.

Where does that leave startups?

Even as public valuations have tanked, venture investors continue to fund real estate-focused startups at a good clip.

So far this year, investors have put around $4.6 billion into seed through growth-stage rounds for U.S. startups tied to real estate, per Crunchbase data. That puts 2022 on track to come in lower than last year, when $7.95 billion went to the space. But considering that venture funding is down sharply across most sectors year over year, it’s not a bad showing and indicates a sturdy level of investor confidence.

The totals include some very large rounds. The biggest financing went to Veev, a construction technology company focused on the homebuilding sector. It raised $400 million in a February Series D led by Bond. After that came Flow, the Adam Neuman-founded home rental upstart that snagged $350 million from Andreessen Horowitz in August.

Another big round went to Roofstock, an online platform for investing in rental homes, which pulled in $240 million in a March Series E. And Knock, a home financing startup aimed at making it easier for people to buy a new home before selling their old one, nabbed $220 million in a June financing.

The overall picture: While public investors might not find much to like among recently public real estate companies, private markets still see a lot of upside in the space. We’ll be keeping watch to see if their enthusiasm persists.

Illustration: Dom Guzman

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That was the broad finding from our latest tally of Crunchbase data for U.S. and Canadian venture funding. It shows the pullback that commenced earlier this year has intensified in recent months, as tech valuations in public and private markets contract and the IPO window remains largely shuttered.

Overall, investors put $39.7 billion to work in seed- through growth-stage deals in Q3, down 53% year over year and down 37% from Q2. The year-over-year decline was most pronounced at late stage, which was down 63% in the just-ended quarter.

For perspective, we lay out North American funding totals, color-coded by stage, for the past 11 quarters:

The latest numbers appear less alarming when looking across a two-year time horizon, rather than solely comparing to 2021’s record-breaking tallies. By historical standards, funding totals are still pretty high. Early- and seed-stage dealmaking, for instance, is actually above 2020 levels.

Below, we look at the latest quarterly numbers in more detail, focusing on investment by stage as well as major exits.

Late-stage and tech growth contract sharply

We’ll start with late stage, which saw the sharpest slowdown.

Altogether, late-stage venture and technology growth funding totaled $19.4 billion in Q3. That’s a drop of nearly two-thirds from the $53 billion invested in the year-ago quarter. Funding is also down about 45% from Q2. 

Deal counts also fell, albeit not as precipitously. For perspective, we look at round counts and investment totals for the past five quarters below:

Public markets may be driving much of the pullback in late-stage private markets. With tech and biotech shares down sharply on major exchanges, investors are rethinking valuations. Additionally, with few IPOs happening, pre-IPO rounds aren’t getting done either.

Meanwhile, many late-stage startups, still flush with cash from the 2021 funding spree, may be putting off new raises until signs of market recovery emerge.

Even as late stage contracted, we did see some big rounds. The largest late-stage funding recipients for Q3 include digital manufacturing startup VulcanForms ($355 million Series C), small business policy provider Pie Insurance ($315 million Series D), and urban greenhouse company Gotham Greens ($310 million Series E).

Early stage is down, but less so

Investors also tapped the brakes on early-stage dealmaking. For Q3, they put $17 billion into 879 known funding rounds. In dollar terms, that represents a 40% drop from the year-ago total and a 28% drop from Q2.

For context, we look at early-stage investment and round counts for the past five quarters below:

Early stage is showing a less dramatic decline than late stage in part because companies are further from exit. Apparently, there’s more confidence that market conditions will improve as these startups mature.

By far the largest early-stage deal of the quarter was a $1 billion Series A for TeraWatt Infrastructure, which provides charging stations for electric fleets. Next up was a $350 Series A for Areteia Therapeutics, a spinoff working on asthma treatments, followed by a $300 million Series B for Mysten Labs, a developer of Web3 infrastructure.

Seed slows some

The funding slowdown was much less pronounced at seed stage.

Overall, investors put $3.3 billion into seed-stage deals in Q3. That’s down 18% from Q2 and 6% from the year-ago quarter, which is markedly less than what we saw at later stages.

Seed stage’s comparatively strong showing indicates that investors are more confident about the long-term outlook than the short-term one. Also, while odds of failure are higher for newly minted startups, valuations are lower, which helps mitigate the risk.

Some of the Q3 rounds were unusually large by seed standards. For instance VeeFriends, an NFT project around intellectual property, snagged $50 million in a July financing. And Rippl Care, a mental health startup focused on seniors, landed a $32 million seed round in September.

Still, those were the outliers. The median disclosed seed or pre-seed round for Q3 was around $2 million, and only 25 deals were for $15 million or higher.

Exits

As Q3 was winding to a close, it was looking like a pretty sluggish exit environment, with a mostly shuttered IPO window and not a ton of big M&A action.

But then, in mid-September, Adobe shattered that narrative, announcing an agreement to buy digital design collaboration unicorn Figma for $20 billion in stock and cash, in what’s been called the largest acquisition of a private, venture-backed company to date.

So yes, it might still look like lean times for most exit-hungry investors. But clearly, it’s still an environment where big deals can get done. Below, we look at what transpired in Q3 for both public offerings and M&A exits.

M&A

We’ll start with M&A, which, as previously mentioned, was largely dominated by the ginormous Figma acquisition. That deal was several multiples larger than every other disclosed acquisition combined.

Still, while no one else was spending like Adobe, there were some interesting and good-sized M&A deals over the course of the quarter. We list the top seven below:

Public offerings

The third quarter was not a great time for tech and biotech public offerings, given that both sectors have been taking a beating on major exchanges. Unprofitable companies—a category that includes most-recently public venture-backed deals—were particularly out of fashion.

Even in this suboptimal environment, however, several funded companies did make it to market, either through previously announced SPAC transactions or traditional IPOs. We list nine public market debuts below:

The largest debut was Rubicon, a Lexington, Kentucky-based online marketplace for waste and recycling, which wrapped up a SPAC merger in August and debuted at a $1.7 billion valuation. Shares have fallen sharply since the debut.

Next up was D-Wave, a quantum computing company that completed its SPAC merger in August in a deal that valued the company around $1.6 billion. Shares are well below their peak but are holding at better-than-average for a SPAC deal.

Down from a very high peak

So as we bid adieu to Q3, what should one make of these mostly downwardly trending numbers?

One of the key things to keep in mind is that we are scaling down from extremely tall heights, as 2021 surpassed prior funding records by a long shot. So, while an over 50% year-over-year funding decline may make for an alarming headline, we’re still close to where we were a couple years ago. And at the time, that was considered a pretty good period for startup funding.

Of course, late stage is faring worse than early stage and seed. Given the large sums of dry powder still in the coffers of venture investors, however, it’s likely they’ll begin spending more profusely once more consensus emerges around valuations and exit conditions improve.

For now, however, the numbers are indeed down. No up cycle lasts forever.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 3, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

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To get a sense how becoming an early unicorn correlates with future success, we took a sampling of companies that passed the $1 billion value mark less than two years after founding. We then categorized them based on their ability to sustain high valuations and market growth.

Below, we look at the cohort across three categories: fast faders, public market flops, and those for whom the verdict still awaits.

Fast Faders

First off, it’s obvious that many startups that were quick to join the unicorn herd also flamed out rather rapidly.

The poster child for this phenomenon is probably Clubhouse, the audio-based social networking platform that became a thing in early 2021 for the pandemic work-from-home crowd. As Clubhouse’s invite-only downloads soared, so did its cache among investors. The app, launched in 2020, landed a Series B in April 2021 at a reported $4 billion valuation. 

Things have largely gone downhill since. While Clubhouse is still around, it’s not a buzzy property anymore. The app ranks No. 67 in the U.S. for the social category on the Google Play Store, per AppBrain. Meanwhile, looking to narrow its focus, Clubhouse reportedly carried out layoffs in June. 

The instant grocery delivery services Gorillas and Jokr were also quick to soar and then falter. 

Berlin-based Gorillas, founded in 2020, raised nearly $1.3 billion in 2021 at a reported post-money valuation around $3 billion. More recently, the company’s trajectory has been marked by layoffs, exodus from multiple markets, and focusing on cutting cash burn.

Meanwhile, fast delivery provider Jokr, founded in 2021, raised $430 million last year and logged one of the swiftest paths to unicorn status of any startup. It slowed fast too. This summer, the company announced it was shuttering New York and Boston operations as it focuses on Latin America. 

Public markets won’t support these numbers

Sometimes, venture investors give companies much higher valuations than public markets will support.

This was the case for Bird, the e-scooter rental platform that soared to unicorn-hood in autumn 2017, just a few months after its launch. In the following years, its branded scooters became omnipresent on the streets of major cities.

Then, in May 2021, Bird announced it would go public through a SPAC merger at an expected initial valuation around $2.3 billion. It worked out badly. Bird plummeted immediately upon completing its merger in November. So far this year, the price has fallen further, with shares recently going for 36 cents each.

Desktop Metal, the 3D printing company that had an unusually rapid ascent to a billion-plus valuation, has also struggled on the public markets. While the stock was trending up for a few months following its NYSE debut in December 2020, it’s since sharply reversed. Today, Desktop Metal’s market cap is around $800 million. That’s not a pittance, but certainly well below its valuation as a private company.

Newer fast unicorn outlook seems iffy

Last year set the all-time record for startup investment, and many members of the fast unicorn club minted billion-plus valuations just a few months or quarters ago. Thus, it’s speculative to assess whether those values will hold up in the near or long term. 

So far, it looks iffy for several.

For one, some of those were pandemic-driven market trends which are showing signs of receding. For instance Hopin, a platform for managing virtual, hybrid and live events that was founded in 2019, pulled in $1 billion in 2020 and 2021, hitting a peak valuation of $7.75 billion. 

A year later, Hopin is cutting back. The London-headquartered company laid off 29% of its staff in July, after cutting 12% a few months earlier. The company has also been re-positioning its offering for broader appeal in a world where live events are back in vogue.

Thrasio, an aggregator of online brands selling on Amazon, was also quick to hit a high valuation. Founded in 2018, the Massachusetts company raised $2.2 billion in equity funding and $1.2 billion in debt by late 2021 to fuel its ultra-fast growth.

Then its fortunes turned. By May 2022, Thrasio was carrying out layoffs, and plans for a public offering at a potential $10 billion valuation have been thrust aside as U.S. e-commerce growth subsides.

Yuga Labs, known for its Bored Ape Yacht Club NFTs, is also facing a much-changed environment, but nonetheless seems to be holding up OK. The Miami-headquartered company, founded in 2021, raised $450 million in March at a reported $4 billion valuation. Shortly afterward, prices for its signature imagery hit their peak. But although they’ve fallen, even the cheapest was still recently selling for around $110,000.

Then there’s Pacaso, a two-year-old, San Francisco-headquartered service for buying stakes in second homes that hit unicorn status just five months after launch. Since then, U.S. real estate markets have been shifting fast in the face of sharply rising mortgage rates. However, it’s probably too early at present to conjecture about how Pacaco’s business model will fare. 

Two other quickly minted recent unicorns–Tel Aviv-based cybersecurity startup Wiz and Miami-headquartered crypto payments and NFT upstart MoonPay–fall in a similar bucket. It’ll take time to vet how they’re managing to grow in these leaner times.

Is there a lesson here?

Are there lessons to be learned from the early unicorn crowd? An obvious one is that generating buzz and high valuations at an early stage isn’t a reliable indicator of future success. Another is that when you’re betting on a trend, make sure it looks like a lasting one (and not, say, a pandemic-driven temporary adaptation).

Still, there is some truth to the notion that transformative companies and founders can be recognized early. When four-year-old Apple went public in 1980, for instance, it was already a profitable company with a hit product. Google, founded in 1998, took just a couple years to dominate the search engine space.

So, yeah, it’s probably realistic to expect some of these fast unicorns to soar to amazing heights. Many, however, will fall to Earth.

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The news was first reported by Business Insider. The company is aiming for a $12 billion valuation in Q2 of next year, according to the report. The report also said Goldman Sachs has been hired to handle the listing.

The business travel startup last raised $275 million in a Series F round led by Greenoaks Capital last October at a $7.25 billion valuation. In May, Bloomberg reported the company was in negotiations to raise funding at a $9 billion valuation.

The news comes as the IPO market is going through its slowest period in years. Many tech startups have shied away from going public as many of its already-listed brethren have seen their shares take significant haircuts since the beginning of the year.

Few big tech startups have looked to unplug the IPO pipeline. One exception is Instacart, which in May made news when the grocery delivery service said it had filed paperwork for a public listing.

Long road

Founded in 2015, TripActions has raised $1.5 billion. While the company now boasts a healthy valuation, times have not always been good for the startup.

TripActions looked like it would become one of the first casualties of COVID-19 when the pandemic took hold in March 2020. With all travel stopped, the company saw its revenue drop to $0. CEO and co-founder Ariel Cohen openly talked about the problems, including laying off 300 people.

However, in June 2020, the company was able to secure $125 million in debt and doubled down on its newly launched expense reporting platform—a platform that became popular as many were working from home and had new expenses.

By early 2021, the company was able to raise a $155 million Series E.

Big-named investors in TripActions include Andreessen Horowitz, Lightspeed Venture Partners, Akkadian Ventures, Zeev Ventures and Elad Gil.

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This year has been the opposite of last year’s when it comes to the number of companies going public. But as the IPO summer drought drags on, we looked at some of the bountiful seasons for companies going public and more specifically those companies that made the most of their moment in the spotlight. 

Ringing that bell

Nasdaq Senior Vice President and Chief Commercial Officer Jeff Thomas spends his days helping companies go public.

He’s also had a front row seat to witness how the exchange has evolved the signature moment of an IPO—ringing the opening bell.

The bell-ringing ceremony is always a hot topic when Nasdaq works with a company for an IPO, Thomas said. It’s often the CEO or a co-founder who rings the bell, but not always.

Nasdaq tries to make the ceremony as inclusive as possible and include as many people as they can on the stage to make the moment not about one person, but the team that got the company there, Thomas said.

But the COVID-19 pandemic threw a wrench in how the exchange celebrated IPOs. Since then, there have been virtual bell-ringing ceremonies, IPOs on site at a company’s headquarters, and even a bell-ringing ceremony in the metaverse. 

Here is a countdown to my top favorites of recent years.

#5 Square

When Square (NYSE:SQ) went public in 2015, it actually held its IPO outside the New York Stock Exchange. CEO Jack Dorsey’s mother, Marcia, had the honor of ringing the opening bell by making a purchase from Square’s first vendor, Lilybelle Flowers owner Cheri Mims. While this IPO happened several years ago, it’s a favorite because Dorsey’s mom is a mom and that’s cute.

#4 Uber

Uber (NYSE:UBER) faced a dilemma when it went public in 2019. CEO Travis Kalanick, the face of the company for so long, had been ousted two years before the company went public. Former Expedia CEO Dara Khosrowshahi eventually took over, and there were questions swirling over whether Kalanick would have a role in the IPO or stand on the balcony with other executives. He hadn’t exactly left the company on friendly terms.

The company went another direction instead. Uber’s first intern, Austin Geidt, ended up ringing the bell for the IPO. Geidt started as an intern for Uber in 2010 and worked her way up the ranks, so it seemed fitting for her to have the honor, and it’s why it’s a favorite.

#3 Sportradar

When Sportradar (NASDAQ: SRAD) went public in 2021, its IPO was star-studded. Included in the New York opening bell ceremony was basketball superstar Michael Jordan—an investor in Sportradar. Nasdaq’s Thomas pointed out that it wasn’t the first time a celebrity’s been involved in an opening ceremony. Jessica Alba, for example, was on hand during The Honest Company’s IPO that same year.

#2 Journey

This isn’t an IPO, but I included it on this list because it’s one of the more memorable opening bell ceremonies. The executive team at Journey rang the opening bell at the Nasdaq, but in the metaverse. 

“It was important to us to be the first exchange to open markets in the metaverse,” Thomas said. “We always want to think of our exchange as the home for innovative technology.”

Thomas anticipated it wouldn’t be the last time the Nasdaq opens by ringing the bell in the metaverse as more companies pivot toward that frontier. The exchange tries to incorporate its companies’ technology when it can, such as when it had Sonos create a new sound for its bell during the company’s IPO.

#1 Airbnb

Airbnb’s IPO in December 2020 is definitely a standout. One of the most anticipated IPOs of 2020, Airbnb (NASDAQ: ABNB) spent 12 years as a private company. 

Nasdaq originally suggested hosts in every single timezone in the world ring a bell leading up to the IPO, Thomas said. The very first Airbnb guests would ring the final doorbell at the apartment on Rausch Street in San Francisco, the original Airbnb where the company’s co-founders once lived. The co-founders would open the door to greet their first guests who they hosted more than a decade ago. 

But then the second wave of COVID-19 hit, and those plans were scrapped. Instead, Nasdaq worked with Airbnb to develop a video of hosts around the world ringing bells, until the first Airbnb guest, Amol, rang the doorbell of the original apartment on Rausch Street. 

“It wasn’t about them, it  was about the hosts,” Thomas said. “It was about being inclusive, global. Of course, of all the unique places you can stay, but bringing it back to where it started.”

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