28 April 2023

Cervin Q1 2023 Newsletter

Read our Q1 newsletter for our take on the current market conditions and to learn the latest news about our portfolio companies.

Venture capital activity continues its decline in 2023


Venture capital funding, led by a decline in late stage funding, continued its slowdown that began in 2022. Only 19 late stage mega-rounds occurred in Q1 2023 - compared with 98 in Q1 2022. That is a staggering drop, and not surprisingly, the valuations were affected as well - median pre-money late stage valuations fell by 17% to $54M.


Decline in angel and seed stage financings began later - in 4Q 2022 - and has continued into the first quarter of 2023. Deal value fell to $3.3B - a 53% decline from Q1 2022. As we had predicted, the funding decline has finally found its way to the earliest investing sector in venture capital. The figure below shows the decline.

Screenshot 2023-04-24 at 3.10.30 PM-1


Early stage funding also saw its lowest deal value since Q2 2020 - another trend we had anticipated. Median deal sizes fell to $6.2M, down 30% from 2022 numbers. The number of larger Series A (greater than $25M)  rounds fell to 105 - this number was 157 in Q1 2021 and 238 in Q1 2022!  We expect this decline to continue. The charts below give a good indication of where we stand in early stage VC.

Screenshot 2023-04-24 at 3.12.23 PM


Screenshot 2023-04-24 at 3.12.44 PM

2022 was also the slowest year for public listings since 2016 and this trend has continued in 2023. Until this picks up, it is hard to see venture capital activity increasing substantially.


Finally, no newsletter about Q1 2023 is complete without a mention of the collapse of Silicon Valley Bank. We are happy to report that none of our companies were affected in the end. However, the venture ecosystem needs strong banks that understand our unique needs. We look forward to working with the new banks that undoubtedly will fill the gap.


Portfolio News

Recently, we welcomed FireCompass to our portfolio:


firecompass copy-1


FireCompass, a cyber-security company, raised $7 million in funding to revolutionize Red Teaming and Attack Surface Management. The round was led by Cervin and Athera Venture Partners (previously Inventus Capital) along with existing investor BIF (Bharat Innovation Fund).


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Other Portfolio News:

- Anshu Shrivastava, Founder of ThirdAI was quoted in an article from The Wall Street Journal about the ongoing ChatGPT frenzy driving AI chip industry demand.

- AiFi opened their 100th store. They also partnered with Microsoft and Polish retailer, Żabka Polska, to launch a cloud service called Smart Store Analytics. Part of Microsoft’s Cloud for Retail product suite, it pulls store data from the AiFi platform to deliver insights that let retail managers adjust store layouts and inventory.

- Privacera was named one of the 10 Hot Cloud Computing Startup Companies To Watch In 2023 by CRN and one of America's Best Startup Employers 2023 by Forbes.

- Folloze received top honors in the ABM category from TrustRadius. They were ranked #1 for Best Relationship and Best Value for Price, and #2 for Best Feature Set overall.

- LaunchDarkly was named one of Fast Company's Most Innovative Companies of 2023. They ranked #4 in the Enterprise category.

- Airgap Networks was chosen by 5G Open Innovation Lab to join their Elite Batch 7 Spring Program and help accelerate private 5G adoption.

- Anvilogic was named a three-time gold winner in the 2023 Cybersecurity Excellence Awards. The company’s Forge Team received Cybersecurity Team of the Year alongside the company’s win for Threat, Detection, Intelligence, and Response and Most Innovative Cybersecurity Company.

- Paystand launched a new suite of AR and AP tools designed to help businesses manage their full cycle treasury and to better optimize their cash flow.

- Celona unveiled a suite of indoor and outdoor 5G New Radio (NR) products for both U.S. and global markets.

- ArmorCode crossed a major milestone - processing 1 billion risk findings for their customers.