Silicon Valley Funding News - Week of June 14, 2021. Cerebral Raised $127M Series B

Private equity and venture capital managers are compensated in two main ways:annual management fees (taxed as ordinary income) and a 20-30% cut of the profit on deals when realized. Since most investments are held for a long period of time -- they are taxed at the lower capital gains rate of 20%.

In April, the Biden administration proposed increasing this capital gains rate to 39.6%!  Then last week, Sequoia Capital is reportedly considering changing its investment return distribution strategies to avoid the proposed tax increases:

• Certain portfolio companies will be distributed before those companies’ IPO, as opposed to afterward - this could potentially impact the return of the fund (TVPI) as it won't be able to take advantage of the IPO pop. 
• Shares will no longer be distributed directly to GPs, but rather be placed in a SPAC - this will further delay when a GP would get any benefits from their investment and it's unclear how SPAC payout would be taxed. 

The only two certainties in life are death and taxes. I guess it's hard for VCs to escape this one... 

This week a total of 22 startups raised $871.3M in funding, 3 M&As:

• $243.8M goes to 7 Enterprise startups
• $68M goes to 2 FinTech startups
• $100M goes to 1 InsurTech startup
• $39M goes to 1 Retail startup
• $5.3M goes to 1 Construction startup
• $2M goes to 1 Food and Beverage startup
• $243M goes to 5 Healthcare startups
• $163.6M goes to 2 BioTech startups
• $6.6M goes to 2 Other startups