Sapphire Ventures: Summer Spotlight

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The first half of 2024 has seen diverse market dynamics.?

Public markets have remained strong, with the S&P 500 and Nasdaq hitting record highs, fueled by mega-cap tech stocks like NVIDIA. However, the private markets presented a more complex picture. Venture capital investments rebounded to $86B in Q2, marking a return to pre-pandemic levels and ending nine consecutive quarterly declines. Yet, mixed funding dynamics prevented a YoY gain for the first half of 2024, with a spike in May offset by a drop in June. Through it all, AI continued to dominate, securing five of the top 10 funding deals in Q2.

M&A global volumes saw a moderate YoY increase, but remain below long-term averages. And despite Big Tech M&A rumors (e.g., Google/HubSpot, Google/Wiz), high regulatory scrutiny hampers deal finalizations. PE sponsors maintained strong buyout activity in Q2, while the IPO backlog continues to grow, buoyed by OneStream's successful July IPO.

Our mid-year review of The State of the SaaS Capital Markets?suggest that conditions aren’t likely to brighten overnight. We expect VC dealmaking to remain suppressed while flat and down rounds increase–a trend already evident as flat and down rounds rose to 41% in Q2 from 34% of all Series B+ enterprise software financings in Q1. We predict the real action likely won’t pick up until 2025 or even later as companies navigate election season. As for the public markets, that’s anyone’s guess.?

At Sapphire Ventures, we remain cautiously optimistic and are prepared to navigate whatever the rest of 2024 will bring.

— Rajeev Dham, Partner at Sapphire Ventures

Latest Investments

In the News

Our Partners weighed in on current market dynamics and trends across enterprise tech.

Jai Das, President, Partner & Co-Founder at Sapphire Ventures

• WSJ Pro | How Are Investors Judging Defense Tech and What Might They Do to Spur Growth in Those Startups?
• Fortune | Tech Brainstorm – "We're Not Here to Time the Market"
• The Information | With IPOs Off Limits, Software Investors Pin Hopes on PE Buyouts

Casber Wang, Partner at Sapphire Ventures

• PitchBook | Cybersecurity Investors Bullish on Deal Revival After Wiz, CrowdStrike News
• Reuters | AI Deals Lift US Venture Capital Funding to Highest Level in Two Years, Data Shows
• VentureBeat?| AI Stack Attack: Navigating the Generative Tech Maze?

Featured Resources

The State of the SaaS Capital Markets: 2024 Mid-Year Review

A mid-year check-in on the key trends and investment activity shaping the SaaS industry and how we’re tracking toward our 2024 predictions for the SaaS markets.?

Selling Smarter: How Sales AI is Reinventing GTM

Four ways AI is transforming the sales function and the emerging Sales AI landscape, featuring some of the hottest companies in the space today.

By Demi Obayomi, Aditya Reddy, Sarah Chen & Rajeev Dham

Building the Future: A Deep Dive into the Generative AI App Infrastructure Stack

How generative AI models are revolutionizing application development and the infrastructure stack.

By Anders Ranum, Casber Wang, Kevin Burke & David Carter

B2B SaaS Rising 100: The Software Savvy Startups Scaling Fast in 2024

Sponsored by Sapphire Ventures and now in its third year, Sifted’s B2B SaaS Rising 100 features software-savvy startups scaling fast across Europe and Israel.

Event Highlights

Cerebral Valley AI Summit in New York

Sapphire partnered with Newcomer to kick off the Cerebral Valley AI Summit in New York with a Steering Committee dinner, co-hosted with the conference organizers and Latham & Watkins, bringing together founders shaping the future of AI applications and infrastructure, investors backing this innovation, and reporters covering the industry. The summit’s key takeaway was loud and clear: Now is the time to build AI applications. Don’t wait for foundation models to get smarter—start now.

Sapphire's 3rd Annual Hypergrowth Engineering Summit

Last month we welcomed 200+ engineering executives and featured over a dozen speakers from companies such as Replit, The New York Times and NVIDIA in San Francisco for our 3rd annual Hypergrowth Engineering Summit. With a focus on building and deploying with AI, we explored topics such as strategies for adopting LLMs into your product, the AI-powered developer and principles for scaling large engineering teams–among other critical topics for today’s technical leaders. Stay tuned for our recap blog and on-demand videos coming soon!

“Featured Investments” refers to portfolio companies in which Sapphire’s Growth Strategies invested into during Q2 2024.

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Disclaimer: This newsletter is intended for discussion purposes only. Nothing presented herein is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures, LLC (“Sapphire”). Sapphire does not solicit or make its services available to the public. Various pieces of Information provided reflect Sapphires’ views as of June 30, 2024. Such views are subject to change without notice. Companies mentioned in this article are a representative sample of portfolio companies in which Sapphire has invested in which the author believes such companies fit the objective criteria stated in commentary, which do not reflect all investments made by Sapphire. A complete alphabetical list of Sapphire’s investments made by its direct growth and sports investing strategies is available?here. No assumptions should be made that investments listed above were or will be profitable. Due to various risks and uncertainties, actual events, results or the actual experience may differ materially from those reflected or contemplated in these statements. Nothing contained in this newsletter may be relied upon as a guarantee or assurance as to the future success of any particular company. Past performance is not indicative of future results.