Fees and Deals Dry Up

Sequoia Scales Back, Ex-Fund Managers Go Indi, and a Startup's Series A Raise is as smooth as butter.

Author

Adam from VC Brags
January 16, 2023

Welcome Shareholders,

First off, a huge thanks to all of the new shareholders joining us. In the daily edition of the Brags Newsletter, we’ll cover the latest in news and rumors in the venture world, from startup and venture funding to industry coverage and much, much more. So sit back, grab a snack and enjoy.

Venture Today đź‘Ź

  • Venture Firm Sequoia Capital has lowered management fees on two of its newly-launched funds as the firm braces for a slowdown in the investing landscape.

The change in fee structure introduced in December for the Venture’s Crypto and Ecosystem funds essentially mean that limited partners (LPs) are charged management fees based on the capital deployed rather than the traditional model of fees charged for the total capital under management. Sequoia’s crypto fund raised $600 million to invest in tokens and crypto companies, with 10% of the fund being deployed so far.

The ecosystem fund raised $950 million to back funds managed by scouts and those launched by the Sequoia network. The change in fee structure comes after the venture fund has seen a large markdown in investments, driven by a decline in valuation in tech companies and the fallout from its investment in crypto exchange FTX.

Who's Raising?

  • Former fund managers at KKR & Co and British International Investment are looking to raise $250 million to invest in technology startups in India.

The new fund, named Fractal Growth Partners (FGP), will be led by Ajay Cadade, who previously led KKR’s growth tech business in India, and Nikhil Balaraman, who worked as the head of South Asia tech investment at BII. FGP is looking to invest and scale companies that have moved past the seed round, primarily in SaaS and B2B-facing businesses.

FGP is planning to raise between $200 million and $250 million, targeting investments of between $10 and $15 million per target company and closing the investments in five years. Previous prominent deals by the pair of fund managers include investments in financial services firm Avendus Capital, Education focused EuroKids International and online grocery chain Bigbasket.

Startup of the Day

  • San Francisco, California-based payments technology platform raised $21.5 million in a Series A round led by Norwest Venture Partners and with participation from Atomic.

Butter Payments, which offers a payments technology platform that prevents legitimate payments from being wrongly identified as fraudulent or lost, raised the money at a valuation close to $100 million.

The company optimizes each payment for success by carefully selecting the approval timing and presentation method. Butter, which counts the likes of Microsoft, Dropbox, Scribd, Skillshare, and Raydiant as its customers, generated close to $6 million in revenues last year.

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