01 November 2023

Cervin Q3 2023 Newsletter

Read our Q3 newsletter for our take on the current market conditions and to learn the latest news about our portfolio companies.

Investing in the future of enterprise software, entrepreneurs

In September, we announced the close of $162 million in fresh capital for us to invest in early-stage enterprise software, data + AI, cybersecurity, infrastructure and DevOps startups. 


Since we started investing ten years ago, we have believed our team’s experience as operators and entrepreneurs gave us a unique platform to help companies navigate their journey. We are now doubling down on this approach with the introduction of Cervin’s portfolio services team led by Silicon Valley veteran Scott Brown. Scott most recently led marketing at Hum Capital and Sapphire Ventures. This team will be expanding our capabilities in helping our portfolio companies with their go-to-market efforts, business development, and industry research. We have also expanded our investment team with the addition of Taylor Oliver as a Principal. Prior to joining Cervin, Taylor helped launch two separate first time funds, Plug & Play Supply Chain and Tenacity Venture Capital. His investing activity will be focused on the application layer, particularly in the areas of commerce, fintech, and supply chain. Both Scott and Taylor will be based with the rest of the investing team in Palo Alto.


We are thrilled to have raised this new capital and for the opportunity to continue to work with amazing enterprise software entrepreneurs.

State of the Venture Capital Market


Q3 was an important quarter for venture capital. After several quarters of inactivity, Instacart and Klaviyo went public. About a month later, Instacart was trading at a 16% discount to the IPO price and Klaviyo was treading water.  Both companies trade at about a $7B valuation.


As anticipated, the US venture deal value and count continued to fall.  Deal value and deal counts for 2023 are expected to be the lowest since 2019. Deal value for the first three quarters is around $126B and is expected to end the year at $150-160B including Amazon’s $4B investment in Anthropic. See the figure below (Source: Pitchbook).



Globally, 2023 is likely  to be lower than 2019 in terms of deal value and count (around $300B in value and 30K deals), rendering the COVID years of 2020-2022 a massive bubble from which the air has now been let out. See the CBInsights graph below.



Pre-seed and seed deals saw a similar  trend and are the lowest since the pandemic. $3.2B was invested which was similar to 2018 numbers. Median deal sizes remained constant with pre-seed deals at $0.5M and seed deals around $5M. See the graphs below from Pitchbook.


Screenshot 2023-10-18 at 4.28.35 PM


Early stage deals are on pace for a 6 year low. Moreover, out of the entire venture capital deployed in 2023, only 24.7% went to early-stage startups - lower than the previous decade's average of 29.9%. However, early-stage deal size continues to remain above pre pandemic levels and valuations are holding steady at pandemic levels. The industry is being far more selective with only the best companies getting funded and AI companies are commanding high valuations. See figures below from Pitchbook.



We expect the environment to remain similar in 2024 with a likely uptick in 2025. The macro environment will continue to be a major factor in allocations to VC asset class and distributions through IPOs and M&A.


Portfolio News

We welcomed the following new companies to our portfolio in Q3. 


Conveyor Logo on Light (Color RGB)@2x


Conveyor is an experience-first compliance startup. Conveyor’s first product is the most accurate, Chat GPT-powered customer trust portal that automates the entire customer security review, from document sharing to security questionnaire automation. The company recently announced a $12.5 million Series A. The round was led by Cervin with participation from Maverick Ventures, and prominent security and SaaS angel investors.


causely logo


Causely is bridging observability with automated orchestration for self-managed, resilient applications at scale. Founded by a team of repeat entrepreneurs, Ellen Rubin and Shmuel Kliger, Causely aims to harness a Causal AI algorithmic approach to fully automate IT and DevOps processes, reducing operations overhead and time to resolution. Cervin joined 645 Ventures and Amity Ventures to extend a previously announced $8.8M seed round.     


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Brinker helps high profile individuals, organizations, and businesses fight online harassment and misinformation by using AI-powered legal action, media publication, and social flagging.



We are pleased to share that the hard work of founders and their teams of our existing portfolio companies is widely recognized by the market, as their companies have successfully raised follow on rounds.



Catch+Release, the content licensing marketplace for brands and creators, recently announced $8.8M in funding. The round saw continued investment from Accel, Cervin and Stagwell, as well as new investors HarbourVest Partners in addition to successful technology founder, Nick Mehta, and professional basketball player and entrepreneur Kevin Durant. The new round of funding will allow Catch+Release to accelerate its product features, enhance the user experience, and fuel the growth of its creator community.

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Other Portfolio News:

-  AiFi, Paystand, and WEVO were recognized on Inc. Magazine's 5000 Fastest Growing Private Companies in America list for 2023.

- Paystand was selected as a finalist for Excellence in Decentralized Finance by Finovate Awards 2023.

- LaunchDarkly was featured on the 2023 Cloud 100 list alongside the top 100 biggest private cloud companies in the world.

- Folloze won the MarTech Breakthrough Award for the best campaign landing page platform. They were recognized for their innovative digital experience platform that helps B2B marketing and sales teams build rich, customized experiences in less than 30 minutes.

- Stack Moxie was a finalist in INBOUND's Million Dollar Pitch Competition, sharing how they are bringing observability to Marketing and Revenue Ops teams and changing the way they manage their revenue infrastructure.

- Arkestro was listed as a Sample Vendor in the 2023 Gartner® Hype Cycle™ for procurement and sourcing solutions.

- ThirdAI announced BOLT2.5B, the world's first CPU-only pre-trained 2.5-billion parameter Generative Large Language Model (LLM), setting a groundbreaking standard with no GPU involvement.

- Celona announced the commercial availability of the industry’s first end-to-end turnkey neutral host solution that operates over CBRS band. This will allow enterprises to improve the customer experience by extending public cellular coverage within environments with poor cellular reception.

- WEVO introduced the world's first fully AI-powered UX analysis tool: WEVO Pulse