Silicon Valley Funding News - Week of July 31, 2023. M&A is Still Down, but Slowly Warming Up

Happy Monday!

Here are a few great reads, watch, etc for this week:

• 📈  M&A is Still Down, but Slowly Warming Up - In the US, there were 471 M&A deals involving venture-backed startups announced in the first half of the year, compared with 785 deals over the same period a year ago. There is a tug-of-war between near-record dry powder, pushing acquirers to spend, and tight credit conditions holding them back. This has resulted in the stalemate we are now seeing consisting of high-frequency dealmaking at smaller sizes and lower aggregate deal values. Purchase price multiples are in full correction mode. We are now down roughly 20% from the 2021 peak (-24% based on revenue multiples, -16% using EBITDA multiples). Goldman Sachs, the world's largest M&A advisor, recently reported an increase in its investment banking backlog for the first time in more than a year. 
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• 🇮🇱 Prime Minister Benjamin Netanyahu chills Israel's Startup Community On Monday, Israel's Knesset (parliament) passed the first phase of a controversial bill spearheaded by Prime Minister Benjamin Netanyahu's coalition that will significantly limit the Supreme Court's ability to review government decisions. It introduces a lot of uncertainty for the startup community. Israeli startups raised $3.7 billion in the first half of this year. But that was a 31% drop from the second half of 2022, and an 68% decrease from the first half of 2022, according to data from the Start-Up Nation Policy Institute. 
• 👀 Sam Altman Collected 2 Million Users Eyeballs - Co-founded by Sam Altman, Worldcoin aims to provide its users with a verified digital identity, plus a cryptocurrency token - named Worldcoin (WLD)— plus a crypto wallet app. Worldcoin’s platform verifies a user’s identity by scanning their irises to create personal, secure identification codes. The codes are saved on a decentralized blockchain, and the company claims they cannot be duplicated or spoofed to create false identities or engage in fraud. The company says that it signed up more than 2 million users in the beta testing stage. It now plans to roll out scanning operations in dozens of cities in 20 countries worldwide. Read more
• ✖️ Why does Elon Musk want X to emulate WeChat?- I spoke to the BBC this week about why Elon wants to copy WeChat so much. There is a major difference between China and the West and that is the widespread adoption of digital payment technology. WeChat payments are accepted everywhere in China as most merchants do not accept cash or credit cards. This difference may be an obstacle to Mr Musk’s ambitious as it will take the Western world longer to implement a truly cashless or credit card free society. There is a reason why Meta's Whatsapp launched their payment pilot in India, not America. Read more
• 💰 Microsoft's venture capital arm, M12, has been offloading its portfolio - M12 told Business Insider they sold less than 10 of the firm's more than 100 portfolio companies as secondaries in its fiscal year 2023, which ended June 30. Some other M12 sold one large position this month at a 50% discount. Regardless, venture firm selling secondary is getting more popular as a way of getting realized return. Read more

This week a total of 11 startups raised $396.3M in funding, 3 M&As:

• $25M goes to 2 Enterprise startups
• $17.3M goes to 2 FinTech startups
• $10M goes to 1 HRTech startup
• $7M goes to 1 Crypto/Web3 startup
• $75M goes to 1 Healthcare startup
• $232M goes to 3 BioTech startups
• $30M goes to 1 Robotics startup