Abandon Ship

Citizen's Controversial Fundraising Drives Away Sequoia, Mantle Core Goes Big With $200 Million Web 3 Fund, and a Startup Launches into the Future with Funding.

Author

Adam from VC Brags
February 27, 2023

Welcome Shareholders,   

In this daily edition of the Brags Newsletter, we'll cover the latest fundraising fiasco where Sequoia said goodbye to Citizen due to a controversial "Pay to Play" deal, BitDAO's Mantle Core looking to make a splash with a new Web3 Fund, and a Space Startup taking a giant leap with new funding. 

So sit back, grab a snack, and enjoy!

Venture Today 👏

  • Amid a funding crunch for tech startups, Sequoia Capital has resigned from the board of Citizen, a controversial crime-tracking app, after informing the company that it would not participate in its latest capital-raising effort.

With over 7 million users, New York-based Citizen allows people in US cities to access real-time reports from 911 calls and live-stream crimes through its app and has secured around $133 million from major venture investors like Greycroft, 8VC, and Lux Capital. Sequoia Capital has been among its first and largest backers leading its $12 million series A fundraising soon after the company launched in 2017. Sequoia subsequently appointed partner Mike Vernal to its board, but Vernal resigned earlier this month after the company's management proposed a deal to raise new funds and restructure its debt and equity, which Sequoia declined to participate in.

Citizen offered existing investors a "pay to play" deal, requiring their participation in a new fundraising round or risk having their equity stakes significantly diluted to a tenth of their previous value. As a result of a tech valuation slump in private markets, venture investors are increasingly encountering "cram down" fundraising rounds, in which new investors receive preferential treatment, leading some early-stage investors to abandon companies that were kept afloat during the pandemic boom and saw overinflated valuations due to high investor demand.

Who's Raising?

  • Developed by the BitDAO ecosystem, Mantle Core is an Ethereum layer-2 network that aims to increase developer and DApp adoption through a new $200 million fund.

Under the proposal, the Mantle ecosystem will receive a capital pool of $200 million over the next three years, with BitDAO's treasury contributing $100 million in USDC and another $100 million coming from external matching capital from strategic venture partners.

Dragonfly Capital, Pantera, Folius Ventures, Play Ventures Future Fund, Spartan, Lemniscap, Selini Capital, Cadenza Ventures, and QCP Capital have shown interest in participating, and if approved, the Mantle EcoFund and its venture partners will invest in projects with a 1:1 co-investment ratio, targeting web3 startups raising pre-seed, seed, and series A rounds within a three-year active investment period, with the option for a two-year extension. In the crypto industry, there are various similar initiatives aiming to promote adoption and innovation, with Ethereum scaling solution Polygon launching a $100 million fund in the past year to facilitate decentralized finance access, user onboarding, and accelerate adoption.

Startup of the Day

  • Tokyo, Japan, headquartered Astroscale, which specializes in satellite servicing and promoting long-term sustainability across orbits, has successfully raised over $76 million in Series G funding.

Led by Mitsubishi Electric, Yusaku Maezawa, Mitsubishi UFJ Bank, Mitsubishi Corporation, Development Bank of Japan, and FEL Corporation, the latest funding round raised the company's total amount to over $376 million. With these funds, the company plans to enhance its technology development, expand globally, and increase its capacity to meet growing demand.

Astroscale, which was founded in 2013 and helmed by Founder & CEO Nobu Okada, is dedicated to developing scalable solutions for on-orbit servicing. These solutions encompass a range of services such as life extension, in situ space situational awareness, end-of-life, and active debris removal. By mitigating the hazardous buildup of debris in space, Astroscale aims to create sustainable space systems. Additionally, the company is working closely with both government and commercial stakeholders to define business cases, establish norms and regulations, and incentivize responsible use of space.

Memes and Other Things

How was today's newsletter?

Give us your honest opinion. We really don't mind.