February got colder than January.
In public markets, the disclosed Q4 earnings reports showed macro-economic headwinds, with companies alluding to slower net new customer additions, longer sales cycles and lower net retention rates (due to lower seat counts driven by layoffs, budget tightening or churn, specifically on lower-end SMB customers). These impacted valuations in some cases, but generally didn’t erode the slight uptick seen in January across infra software.
I’ve found this article by Jamin Ball interesting, supporting the thesis that companies with consumption-based business models are being impacted earlier than seat-based ones, though both will feel the same impact. Regardless, the question of ‘what does bottom look like’ still stands.
Timid IPO fillings were registered during the month (BMC, ARM), which may indicate some positive trends for the year ahead in public markets.
On the private funding market, the general sentiment across the investment community is to be comfortable with a reduction in investments, due to expected under-achievement of commercial targets and ambitious valuation expectations from founders. Several top-performing companies have also pushed new fundraising to 2H2023 and are still heads-down on execution.
Most notable fundraising rounds:
Sandbox raised $500m as it spins-off from Alphabet to identify and fortify encryption to be quantum-computer proof
Wiz raised $300m and is now valued at $10b, reinforcing its stance in cloud-security and affirming itself as the fastest growing company ever (!)
Anthropic raised $300m, Character.ai raised $200m and Perplexity raised $15m within LLMs, Typeface raised $65m for enterprise content creation and Magic raised $23m for code generation, as the Generative AI wave is definitely showing (and more expected soon, e.g. Reid Hoffman's Inflection.ai discussing a $675m raise)
Cybersmart raises $15m for an all-in-one cybersecurity and insurance solution targeting SMBs - congrats to the team and the lead investors Oxx!
Moderne raised $15m for code refactoring - congrats to the team and lead investors Intel capital!
Most notable M&A deals:
Sumo Logic to be taken private by Francisco Partners in $1.7b deal, continuing a trend already started in 2022 (e.g. Ping Security and Talend by Thoma Bravo, Qualtrics by Silver Lake)
Continual was acquired by RADCOM - congrats Omer and team!
Let the winds continue to blow ༄.
