Credit Suisse also played an active role in startup financing

When it came to startup funding, Credit Suisse was no Silicon Valley Bank.

That said, the troubled Swiss banking behemoth, which was just acquired by rival UBS,  was no slouch in the venture investment and debt arena either.

Credit Suisse participated in at least seven venture or debt financing rounds for startups in the past year, including six that it led. Four of the financings were for U.S. companies, while three were for European startups. Some of the Credit Suisse-led financings were pretty large ones, for companies including:

·      Curve, a London-based credit card and digital wallet platform offering cash and crypto rewards, closed on $1 billion in loans in December with a facility provided by Credit Suisse.

·      Sunbit, a Los Angeles-based buy now, pay later provider focused on unexpected everyday expenses like health care and repair bills, announced in December it had closed a $250 million revolving debt facility with an affiliate of Credit Suisse.

·      Wayflyer, a Dublin- and Atlanta-based provider of funding and marketing analytics for e-commerce companies, picked up $253 million in debt financing from Credit Suisse in September.

·      Wander, an Austin-based provider of short-term luxury rentals, secured a $100 million credit facility with Credit Suisse in November.

Over the past six years, Credit Suisse led over $3.4 billion worth of debt financings for at least 17 companies that have raised venture or seed funding, according to Crunchbase data. Fintech appears to be the biggest area of focus, with the majority of debt-funded companies coming from that industry, including well-known names like corporate card platform Brex and business lender Kabbage.

To a lesser extent, Credit Suisse was also a participant in equity funding rounds. Most recently, for instance, the bank took part alongside a long list of investors in a $24 million Series B round for Brooklyn-based energy technology startup BlocPower.

Beyond investments, Credit Suisse also has a history offering services, support and sponsored events for startups, with a particular interest in Swiss entrepreneurship. It offers startups tailored packages of banking services alongside potential access to its Credit Suisse investors’ platform to connect to capital providers.

Getting To Series A Has Gotten Harder

For seed-funded startups, the odds of graduating to a Series A round have never been particularly favorable. But as venture funding contracts, the chances have gotten even slimmer. That’s the broad finding from our latest perusal of U.S. Series A funding, which shows that investment is on track to hit the lowest quarterly total in over two years.

Things have been heading lower for a while now. Per Crunchbase data, Series A investment has fallen for five consecutive quarters, since peaking in late 2021. For perspective, we chart out funding totals and round counts for the past nine quarters below:
Biotech dominates for big rounds

Even though funding is down, there’s still an enormous chunk of change going into Series A. So far this year, investors have poured close to $4.5 billion into the deals at this stage nationwide.

They’re writing some big checks as well. At least five startups secured Series A investments of $100 million and up, and about 35 rounds exceeded $30 million.

As usual, life sciences companies captured most of the largest rounds in recent months. Top fundraisers include:

·      Paradigm, a New York-based startup developing technology aimed at simplifying clinical trials for doctors, researchers and pharmaceutical companies, raised a $203 million Series A round led by Arch Venture Partners and General Catalyst.

·      Cargo Therapeutics, a San Mateo, California-based biotech working on a next generation of chimeric antigen receptor T-cell therapies for cancer, raised $200 million in a March Series A round led by Third Rock Ventures and RTW.

·      Rapport Therapeutics, a Boston-based developer of precision neuromedicines, raised $100 million in a March Series A, also led by Third Rock Ventures.

It’s common to see biotechs top the Series A ranking, which is a function of the fact that they’re expensive to scale. Biotechs also often tap public markets for capital in lieu of late-stage rounds, so early stage is a venture investor’s best chance to get in while a company is still private.

What we’re not seeing

While biotech is alive and well at Series A, the same can’t be said for other sectors that were hot several quarters ago.

Fintech and Web3 have been particularly out of favor at Series A, which is a finding we also noted for Series B. It’s an especially striking shift for fintech, which was the leading sector for venture investment in 2022 across stages.

So far this year, there have been just 30 disclosed-size Series A rounds totaling $598 million across all financial services categories, which includes such areas as cryptocurrency, consumer lending and digital banking. In the same period last year, $2.15 billion went to financial services.

Oddly, even funding to AI categories — one of 2023’s buzziest sectors — was down at Series A. Per Crunchbase data, $371 million in Series A funding went to companies applying or developing AI technology so far this year, down from $1.08 billion in the same period last year.

Not everything is down

While fewer seed-funded companies are closing Series A rounds, the good news is that for those who do, the typical check size is bigger.

So far this year, the median size of a Series A round was $12 million, per Crunchbase data, compared to $7.5 million in the same period last year. That’s not entirely a bullish signal — while rounds are sizable, there are fewer of them. Still, it’s something.

It also looks like the decline in peak to trough investment totals for Series A is less pronounced than for Series B. That said, Series A quarterly investment is still down about two-thirds from the highs hit in late 2021.

Will we reverse course and see things pick up again? That’s certainly the hope, and venture investors still have plenty of dry powder to make that happen. Even so, there’s little expectation we’ll be retracing previous highs anytime soon.