Good day. Public listings of venture-backed companies like
GitLab Inc., which priced at a market capitalization of $11 billion
and saw its shares pop 35% on the first day of trading last week,
are drawing more capital into the private market. GitLab's previous
financing round valued the company at $2.75 billion.
The flood of capital to private markets increases competition
for venture deals, boosting valuations, increasing paper returns
for many funds and allowing them to raise even more money, which
they funnel into larger deals at higher valuations. And on and
How long will this continue?
"We are monitoring the risks," said Cameron Joyce, vice
president of research insights at Preqin Ltd. "There doesn't appear
to be any immediate catalyst that would undermine that virtuous
cycle," he said, adding that the riskier venture capital
investments make sense in an environment where 10-year bond yields
are staying low.
But the expansion of venture capital is causing problems for
startups already, such as in the competition for talent and the
need to keep up revenue growth to meet investor expectations.
"That's how these cycles work," said Atul Rustgi, partner at
Accolade Partners, a fund of funds manager. "You start seeing
returns, people rush to it and returns come down," he said, adding
"It's kind of like a vicious cycle -- it's all feeding on itself
and amplifying on itself."
We explore the contradictions in the current market in today's
And now on to the news...
Dizzying climb. Venture capital funds are reaping the rewards of
a booming market as returns continue to improve. But the dizzying
climb in startup valuations has some worried that the market
euphoria is turning irrational.
"It's going too well. I'm not actually that smart. It can't
continue like this," said Matt Harris, a partner at Bain Capital
Ventures. Over the past 12 months, five of his portfolio companies
either went public or have been preparing to list. Others raised
private capital at higher valuations. Mr. Harris said he has been
surprised both by the traction companies are getting and how well
they are being received in public and private markets.
Liquidity and valuations jumped sharply this year for
venture-backed companies after picking up pace in the second half
of 2020. The value of U.S.-based venture-backed companies that went
public or were acquired this year through the third quarter totaled
$582.5 billion, up from $289 billion in 2020 and surpassing half a
trillion dollars for the first time ever, according to the latest
PitchBook-NVCA Venture Monitor report.
Numerous startups once backed by venture capital have been
trading at market capitalizations of double-digit billions of
dollars on public markets, including trading app Robinhood Markets
Bitcoin hit $60,000 Friday for the first time since April, as
traders anticipate U.S. regulators will approve the first
exchange-traded fund to track the cryptocurrency. (WSJ)
Walmart, With Eyes on Amazon, Tries to Build a Fintech
Walmart Inc. is building a new weapon in its war with Amazon.com
Inc.: a fintech startup, The Wall Street Journal reports. The
retail giant is helping launch a new company, helmed by two former
Goldman Sachs Group Inc. executives, that aims to provide financial
services for its millions of customers and workers. The firm is a
joint venture with Ribbit Capital, known for investing in Robinhood
Markets Inc. and other digital financial businesses. Options under
consideration include building a user base around mobile payments,
as well as potentially buying a startup that offers consumer bank
accounts through a mobile app, known as a neobank, according to
people familiar with the situation.
Kargo Acquires E-Commerce Ad-Tech Firm for $64 Million
Advertising-technology company Kargo Global Inc. has acquired
StitcherAds, an ad-tech firm focused on driving e-commerce sales,
for $64 million, Kargo said, WSJ reports. Kargo's technology helps
marketers buy ads that target certain types of consumers on the
websites of hundreds of publishers, including on mobile and desktop
devices. A growth area for the company has been in special ad
formats meant to help retailers boost e-commerce, but Kargo's
offering wasn't available on large social media platforms, said
Harry Kargman, the company's chief executive and founder.
StitcherAds brings that capability, delivering paid ads for
retailers and other brands across platforms including Facebook,
Instagram, Snapchat and TikTok, he said.
Why Ford Picked Tennessee for Its New Electric-Vehicle Plant
Tennessee is emerging as a leader in a national scramble to
develop electric-vehicle and battery production, as states compete
to woo multibillion-dollar investments from auto companies pivoting
away from the combustion engine, WSJ reports. Ford Motor Co. and
South Korean battery maker SK Innovation recently said they plan to
develop a large complex to make electric vehicles and batteries in
West Tennessee. That follows similar investments made by General
Motors Co. and Volkswagen AG to add electric-vehicle production at
their Tennessee assembly plants.
Newark Venture Partners raised $85 million for its second fund,
nearly doubling the amount collected for its first vehicle. The new
fund will continue investing in seed-stage business-to-business
software companies nationwide, providing checks up to $3 million.
So far, Newark Venture Partners Fund II LP has invested in Pair
Team, Optimal Dynamics, Clockwork Logistics, Podsights, BackboneAI,
Gearflow, Wax Insurance and Meet Cute.
Angular Ventures closed its second fund with $80 million in
commitments and named David Peterson as general partner. The new
fund will write checks between $250,000 to $3 million for
early-stage enterprise and deep-tech companies across Europe and
Israel. Mr. Peterson joins the firm from Airtable. Angular Ventures
closed its first fund in 2019 with $41 million.
Lunar Ventures closed a EUR40 million ($46 million) inaugural
fund to invest in European early-stage deep-tech startups. To date,
the Berlin-based fund has backed 12 startups including Deepset,
Molecule, Zama and Mobius Labs.
Accolade Partners, a technology- and healthcare-focused venture
capital and growth equity fund of funds investor, hired Marcos
Veremis as partner to focus on the firm's blockchain efforts. Mr.
Veremis was previously at Evanston Capital Management and Cambridge
Window-cleaning robot maker Skyline Robotics named Michael Brown
as chief executive and chairman of the board, and Ross Blum as
chief operating officer. The company has secured $6 million in
funding to date from investors including Karcher New Ventures,
Gefen Capital and ICONYC.
Climate Intelligence platform Cervest appointed Karan Chopra as
chief operating officer and opened its first U.S. office in San
Francisco. Mr. Chopra was most recently co-founder and COO of
Opportunity@Work. In May, London-based Cervest said it raised $30
million in Series A funding from Draper Esprit, Astanor Ventures,
Lowercarbon Capital and Future Positive Capital.
Sales engagement platform Outreach acquired Canopy.io, a revenue
intelligence software company, for an undisclosed sum. In June,
Seattle-based Outreach said it raised $200 million in funding from
investors including Premji Invest, Tiger Global Management, Sequoia
Capital Global Equities, Salesforce Ventures, Mayfield, DFJ Growth
and Trinity Ventures.
Tala, a Santa Monica, Calif.-based consumer finance app serving
Kenya, the Philippines, Mexico and India, scored $145 million in
Series E funding. Upstart led the round, which included additional
support from Stellar Development Foundation, Kindred Ventures, the
J. Safra Group, IVP, Revolution, Lowercase Capital and PayPal
Ventures. Upstart co-founder Paul Gu and Stellar Development
Foundation Chief Executive Denelle Dixon joined Tala's board.
AutoGrid Systems Inc., a Redwood City, Calif.-based provider of
artificial intelligence-powered optimization and controls for the
energy industry, picked up an $85 million Series D2 investment. SE
Ventures led the round, which included support from Moore Strategic
Ventures, National Grid Partners, Shell Ventures, Total Carbon
Neutrality Ventures, GS Futures, SolarEdge Technologies and
Bionexo, a São Paulo-based cloud software and data analytics
provider that connects healthcare suppliers and providers, secured
a 450 million Brazilian real (about $80 million) growth investment
from Bain Capital Tech Opportunities.
Culture Biosciences, a South San Francisco, Calif.-based digital
biomanufacturing startup, secured $80 million in Series B
financing. Lead investor Northpond Ventures was joined by Synthesis
Capital, Cultivian Sandbox Ventures, The Production Board, Craft
Ventures, E14 Fund, BoxGroup, Verily Life Sciences and Section 32
in the round. Andrew Lee of Northpond Ventures will join the
Lively Inc., a San Francisco-based health savings account
provider, landed $80 million in Series C funding. B Capital Group
led the investment, which included contributions from Telstra
Ventures and Costanoa Ventures.
Zone & Co, a billing automation platform, completed a $76
million growth equity investment from Insight Partners.
Aware, a Columbus, Ohio-based collaboration data governance
startup, fetched $60 million in Series C funding. The growth equity
business within Goldman Sachs Asset Management led the investment,
which included support from Spring Mountain Capital, Blue Heron
Capital, Allos Ventures, Rev1 Ventures, Draper Triangle Ventures,
JumpStart, Ohio Innovation Fund and JobsOhio.
Clarifai Inc., a New York-based AI platform for unstructured
image, video, text and audio data, closed a $60 million Series C
round led by New Enterprise Associates. New investors CPP
Investments, NextEquity Partners, SineWave Ventures and Trousdale
Capital also participated in the funding, along with existing
backers Menlo Ventures, Union Square Ventures, Lux Capital, LDV
Capital, Corazon Capital and NYU Innovation Venture Fund. Andrew
Schoen, partner at NEA, will join Clarifai's board.
Spot AI Inc., a Burlingame, Calif.-based video intelligence
provider for businesses, launched with $22 million in Series A
funding. Redpoint Ventures led the round, which included
participation from Bessemer Venture Partners.
StudySmarter, a Munich-based edtech startup, added $16 million
in Series A funding from Goodwater Capital, bringing the round
total to $31 million. Owl Ventures, Left Lane Capital and Dieter
von Holtzbrinck Ventures provided the initial $15 million tranche
earlier this year.
Pagos, a startup whose technology provides payments data and
insights to businesses, snagged $10 million in seed funding led by
Underscore VC and Point72 Ventures.
Continuum, a Salt Lake City-based on-demand talent marketplace,
was seeded with a $2.9 million investment. Uncork Capital led the
round, which saw participation from Day One Ventures and
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(END) Dow Jones Newswires
October 18, 2021 09:11 ET (13:11 GMT)
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