“Our whole team is going through pipeline building—which is funny. Whenever someone says we’re pipeline building, you can tell that deal activity is slow,” Wedler says.

Coming off of two years of piping hot valuations and rapid-fire dealmaking, partners at CapitalG, Google parent Alphabet’s independent growth-stage investing firm, say things have calmed. The firm, whose portfolio has included the likes of Stripe, Duolingo, and Robinhood, aims to invest in established companies on the track to become, ironically, the next Google. Since its inception in 2013, CapitalG has invested $4 billion into its portfolio companies, which include heavy hitters like Databricks, fintech Albert, and Next Insurance. Currently, the firm’s website says CapitalG has $3 billion in assets under management, but a spokeswoman says that number has long been out of date and will be taken down shortly. CapitalG declined to provide a current AUM figure or returns data. 

Courtesy of Anne Sraders

CapitalG has always preferred to operate at a moderate pace, making on average five to seven new investments a year and typically working with founders several months before an initial investment. In late 2020 and 2021, Wedler says companies were closing deals in a matter of weeks, or even two days, even at the growth stage. In the thick of the bull market, the firm had missed out or passed on several deals it had been interested in landing, he says.

Now it’s much easier to get founders to take a call, CapitalG GP Derek Zanutto says. Conversations are getting more creative as companies try to ready themselves and their balance sheet for a possible recession, he says.

Meanwhile, CapitalG is figuring out its new normal more than two years after the beginning of the pandemic. The firm requires proof of vaccination to get into their office in San Francisco’s Ferry Building, and either day-of negative COVID tests or masks indoors. While investment partner Sumi Das says many meetings are still happening over Zoom, the team is doing a lot of in-person meetings. “I do like 90% of my meetings at the Blue Bottle in the Ferry Building,” says Das, though he says they’re not visiting as many companies’ offices because many are still remote or they don’t have as many employees in person. 

General partner Wedler says the firm is “really pushing” to be back in the office at least three days a week, offering incentives like lunch on Mondays to draw in partners (on the menu yesterday was taco bowls with papas con soyrizo or carne asada). He predicts that moving forward, “Late stage and private equity investing is going to 100% be in person. There’s just no question in my mind.” But on this particular Monday afternoon, with the holiday season in full swing and Zanutto preparing to fly off to London, the office was quiet. 

CapitalG took a lot of initial cues from its sole LP, the 165,000-employee tech behemoth Alphabet, in terms of COVID testing requirements or work-from-home policies, and it’s had people like Alphabet’s Chief Health Officer speak to founders. 

Alphabet isn’t immune to the major plunge in tech stocks on the public markets: Its share price is down more than 35% from the beginning of this year, and the company has reportedly told employees it was scaling back on hiring and told senior managers to cut back on corporate travel. When asked whether Alphabet’s allocation to CapitalG had been or would be impacted, investment partner Das would only say that there have been “no material changes.” The CapitalG spokeswoman, Melissa Sobel, chimed in: “In this environment, every company is going to look at things with a slightly different lens, but that doesn’t change your core operations.”

Despite the slowdown in venture more broadly, GP Zanutto says it’s an exciting time. He says he expects his pace of dealmaking, at least, to speed up over the coming years (Zanutto focuses on data, security, and software startups). “This should be a period of time where you can generate a lot of value as an investor if you take a long-term view and lean in when others are on their heels or scared,” he says. That’s because valuations are “somewhere in that 20-40% range” lower in recent months than the peak a year ago for new companies he’s looking at.

This summer, CapitalG portfolio company and payments titan Stripe internally sliced its valuation, per the Wall Street Journal. When asked whether any of the firm’s other portfolio companies were considering doing the same, Das says it’s a conversation happening amongst many later-stage founders.

“I think almost all the later-stage companies that are sort of pre-IPO are thinking about something like that,” Das says. But mid-stage growth companies are not doing that yet, he says.

See you tomorrow,

Anne Sraders and Jessica Mathews
Email: anne.sraders@fortune.com and jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Vic.ai, a New York and Oslo-based autonomy and intelligence platform for accounting and finance, raised $52 million in Series C funding. GGV Capital and ICONIQ Growth co-led the round and were joined by investors including Cowboy Ventures and Costanoa Ventures. 

- Beamery, a London-based recruiting software company, raised $50 million Series D funding led by Teachers’ Ventures Growth. 

- BehaVR, a Nashville-based virtual reality mental and behavioral health company, raised $13 million in Series B funding. Optum Ventures and Oxford Science Enterprises co-led the round and were joined by investors including Confluent Health, Accenture Ventures, Chrysalis Ventures, and Thornton Capital. The company will also merge with OxfordVR.

- api.video, a Bordeaux, France-based video infrastructure provider, raised $12 million in Series A funding. MMC Ventures led the round and was joined by investors including Open Ocean, Blossom Capital, and Financiere Saint James. 

- iNNBeauty Project, a White Plains, N.Y.-based skincare brand, raised $12 million in Series B funding. Alliance Consumer Growth led the round and was joined by investors including Strand Equity and Beechwood Capital.

- Darwin CX, a Bunnell, Fla.-based customer experience platform, raised $10.5 million in Series C funding. First Ascent Ventures and Felicitas Global Partners co-led the round and were joined by investors including Metropolitan Partners Group and Liam Lynch.  

- Cinder, a Washington, D.C.-based trust and safety operations platform, raised $10 million in Series A funding. ​​Accel led the round and was joined by Y Combinator. 

- Forum3, a Seattle-based digital collectibles and strategic advisory company, raised $10 million in seed funding. Decasonic led the round and was joined by investors including Bloccelerate, Liberty City Ventures, Arca, Polygon Ventures, and Valor Siren Ventures.

- Plann.ly, a Phoenix-based workplace well-being platform, raised $1.2 million in funding from VEST Her Ventures. 

PRIVATE EQUITY

- Thoma Bravo agreed to acquire Coupa Software, a San Mateo, Calif.-based business spend management software company. The deal is valued at $8 billion. The Abu Dhabi Investment Authority also acquired a minority stake in the company.

- AGS Automotive Solutions, a 3 Rivers Capital portfolio company, acquired BluDot Manufacturing, a South Bend, Ind.-based brake systems supplier. Financial terms were not disclosed. 

- Kian Capital Partners acquired a majority stake in Sdii Global, a Tampa-based forensic engineering and earth sciences firm. Financial terms were not disclosed.

OTHER

- AutoNation agreed to acquire RepairSmith, a Los Angeles-based mobile car-repair startup, for $190 million. 

PEOPLE

- KPS Capital Partners, a New York-based private equity firm promoted Rahul Sevani to partner.