Baidu (NASDAQ:BIDU) Ventures joined the $37M Series B for AI-powered drug delivery startup Insilico. Qiming Venture Partners led the round.
Welcome to Seeking Alpha’s Venture Capital Deals of the Week. Follow this account and turn on the e-mail alert to receive VCDeals in your inbox on Friday afternoons.
SoftBank (OTCPK:SFTBF,OTCPK:SFTBY) led the $250M Series D for Brazilian rental property marketplace QuintoAndar, pushing the company into unicorn territory. The startup’s marketplace lets users search, book, and advertise rental properties in the region. There’s also a credit analysis system that eliminates the need for co-signers, deposits, or rental insurance. The company projects over 2M visits scheduled in 2019 and 4,500 contracts signed per month. The funding will help expand into additional Brazilian cities, hire talent, and build out broker partners.
GV (GOOG,GOOGL) joined the $70M round for British cybersecurity company Snyk. Accel led and Boldstart Ventures also joined in. Snyk’s system detects security breaches and code license violations and corrects the problem. The protection is built from a data pool of vulnerabilities and covers the full cycle from code to the launched application. The company plans to use the money for hiring and marketing its products.
HPE (NYSE:HPE) joined the $51M Series F for Shape Security, a bot and online fraud mitigation startup that had a $1B pre-money valuation. C5 Capital led with assistance from the likes of Kleiner Perkins and Norwest Venture Partners. Shape uses AI to detect bots and quickly shuts down the attempted logins. The startup says it now protects against 2B fraudulent logins each day. The funds will fuel international expansion and product development. Shape is now gearing up to go public.
Baidu (NASDAQ:BIDU) Ventures joined the $37M Series B for AI-powered drug delivery startup Insilico. Qiming Venture Partners led the round. Insilico recently had work published in Nature Biotechnology that showed how machine learning networks could take years off traditional timelines for drug development. The money will help commercialize the technology and build out the senior management team.
Autonomous ride-hail company Voyage raised $31M in a round led by Franklin Templeton, which was joined by Khosla Ventures,Chevron Technology Ventures, and Jaguar Land Rover’s VC arm. Voyage differs from competitors like Waymo and Uber (NYSE:UBER) with its focus on retirement communities and is already in operation in The Villages, the retirement city with over 115K residents. The capital will help get the self-driving tech ready for commercialization, grow its team and G2 car fleet, and introduce the G3 vehicle.
Airbnb (AIRB) led the $20M Series B for media and experience company Atlas Obscura. A+E Networks and New Atlantic Ventures also participated. Atlas will use the money to expand its trips and local experience offerings. As part of the investment, Airbnb will include Atlas Obscura booking through its platform.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
The We Company (formerly known as “WeWork”) might cancel its planned IPO. One of the parties urging for a cancellation is SoftBank Group Corp., …
SoftBank Group Corp. (OTCPK:SFTBF;OTCPK:SFTBY) and its Vision Fund face the risk of paper gains turning to paper losses following the loss in valuation of recently listed portfolio companies and potentially upcoming decreases in valuation of yet private ones.
I already alluded to that risk some months ago, after Uber Technologies Inc.’s (UBER) rather disappointing post IPO performance. Uber shares continued trading downwards since resulting in SoftBank being in the loss zone on its investment in the company.
Now SoftBank is reportedly urging The We Company (formerly known as “WeWork”) to postpone its IPO -which was initially scheduled for as early as this year – in order to prevent its valuation from declining.
Paper Gains Might Turn Into Losses Quickly
SoftBank reported impressive profits from the Vision Fund. The fund accounted for profits of ¥397.6 billion, nearly 60 percent of the company’s total operating income of ¥688.8 billion, in the quarter ended June 30th. This does, however, unrealized valuation gains of ¥408.5 billion. And unfortunately such gains may turn into losses fairly quickly if valuations decline.
The We Company could become the source of such decline in the nearer future. The latest funding round valued the company at $47 billion. However the funding was led by SoftBank meaning the sky-high valuation is in no small part the result of SoftBank’s own investment. In other words: the company itself decided at which level to value the asset which it already owned a good portion of thus in essence creating its own profit out of the air. Yet said profit exists only on paper until the moment when someone else is willing to pay that very same price. As it turns out the public market is not. Thus SoftBank’s eagerness to cancel the listing for the time being.
Now if The We Company cancels its IPO a new problem would immediately arise. Without the proceedings it would need to turn to other sources for further funding. After all the business is still far away from profitability. There are hence but two ways to obtain the necessary capital. Either the company has to borrow money – which would of course put considerable pressure on the balance sheet. The alternative would be another private funding round. But it might turn out to be a rather difficult endeavor to come up with investors willing to provide the necessary amount at a valuation that the public market evidently considers heavily overvalued. So at the end of the day SoftBank would probably be forced to provide the funding itself if it seeks to uphold the valuation level.
And the We Company is not the only such problem. While the investment in Slack Technologies Inc. (WORK) still accounts for considerable gains, the stock has fallen further and further since its listing. And of course Uber as of the time of writing trades at a price at which SoftBank is already several hundred millions underwater on its investment. Since those companies are public by now, SoftBank is unable to simply establish a valuation it deems appropriate through an investment round. Theoretically it could purchase stocks on the open market until such price level would be reached. Yet this would face some obstacles in reality. Suffice it here to say, that such measures are highly unlikely.
Neither should go unnoticed that besides the high profile names that are already public or at are or were at one point in the process of going public, the Vision Fund portfolio contains a host of other private companies. Since most of the companies do not report their financials, it cannot be ruled out that there might be imminent decreases in valuation in other cases as well once a listing happens.
For all the reasons pointed out above the Vision Funds – paper – profits might before long give way to sizable losses.
Vision Fund II Might Come Into Jeopardy
The Vision Fund and its brethren both existing and planned are the centerpiece of SoftBank’s long term strategy. Therefore trouble for the Vision Fund equals trouble for the mother company.
Doubts about the funds ability to achieve expected returns could negatively affect the inception of the planned even larger (about $108 billion in volume compared with the first fund’s less than $100 billion) Vision Fund II. And of course a profitable Vision Fund would certainly help to come up with the $38 billion that SoftBank plans to contribute itself.
It appears questionable to me whether investors would be willing to provide a combined $70 billion for a second fund if the first fails to meet expectations. Among the potential investors are Apple Inc. (AAPL), Microsoft Corp. (MSFT), several Japanese banks and insurance companies National Investment Corporation of National Bank of Kazakhstan, Foxconn Technology Group, Standard Chartered (OTCPK:SCBFF), and yet unnamed Taiwanese “major participants” according to SoftBank. Reportedly, Emirati sovereign wealth fund Mubadala which has already been a contributor to the first fund is considering an investment as well. Some of those institutions might reconsider their commitment if the first Vision Fund underperforms.
The deterioration of the valuations of high priced yet unprofitable unicorn companies seriously endangers the performance of SoftBank Group Corp.’s Vision Fund. It might potentially have a negative effect on investors willingness (and SoftBank’s ability) to contribute to a similar but even larger Vision Fund II. This might be devastating for SoftBank which is in the process of transforming itself into an investment company.
A listing of the first Vision Fund – if indeed it ever has been entertained in a serious fashion – would probably be off the table as well. Instead, rather than unlocking value through a separate listing, the company might be forced to contribute further funds in order to preserve valuations of private portfolio company.
All in all, my formerly neutral outlook for SoftBank turns more negative given the recent developments regarding “unicorn” valuations and the negative consequences that may very well arise for the company.
Disclosure:I am/we are long AAPL.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Disclaimer: All research contained in this article was done with utmost care. However, I cannot guarantee accuracy. Every reader is advised to conduct his or her own due diligence and research.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
On Thursday (12 September), Santa Clara enterprise security firm ShapeSecurity announced that it had raised $51m in a recent Series F funding …
After a $51m funding round, Shape Security said that an IPO is in the pipeline for the company.
On Thursday (12 September), Santa Clara enterprise security firm Shape Security announced that it had raised $51m in a recent Series F funding round.
The round was led by C5 Capital, with additional participation from returning investors Kleiner Perkins, HPE Growth, Norwest Ventures Partners, Focus Ventures, JetBlue Technology Ventures, Top Tier Capital Partners and Epic Ventures.
To date, Shape Security has raised a total of $183m. In a statement regarding the recent funding round, the company also revealed that it has reached a valuation of $1bn.
The anti-fraud company, which was founded in 2011, is headquartered in California, with offices in London and Sydney.
Shape Security is used to defend some of the world’s largest enterprises from fraud in online applications, including more than half of all online banking in North America. The company also serves global brands across telecomms, e-commerce, government, travel and hospitality, insurance and healthcare, claiming that it “protects more accounts from fraud than all other providers in the space combined”.
According to a number of reports, Shape’s founders have said they are planning an IPO now that the company has achieved unicorn status. Despite saying that “preparation for an IPO is part of our plan”, the company did not give a timeframe for launching a public offering.
Co-founder and CEO of Shape Security, Derek Smith, said: “This investment will help us scale our international operations and fuel our AI development.
“Our new and returning investors, coupled with our continued track record of growth, underscore our vision to protect all enterprises from fraudulent internet transactions.”
C5 Capital’s involvement will help the company accelerate growth across Europe and the Middle East. The funding will also support Shape’s continued growth in North America.
André Pienaar, managing partner at C5 Capital, said: “Shape’s growth and product innovation is unlike anything we’ve seen in enterprise security. Shape already protects internet users at scale by detecting and blocking up to 2bn fraudulent transactions daily. This new injection of capital will further the company’s global market penetration.”
These include sovereign wealth funds, hedge funds, PE firms and family offices, according to data sourced from venture capital firm Sequoia Capital …
September 13, 2019 2 min read
Opinions expressed by Entrepreneur contributors are their own.
You’re reading Entrepreneur India, an international franchise of Entrepreneur Media.
With the number of start-ups ballooning in India requiring higher dose of capital infusion, new categories of investors are coming to the fore.
These include sovereign wealth funds, hedge funds, PE firms and family offices, according to data sourced from venture capital firm Sequoia Capital and cited by The Economic Times in a report. Some of the investors include Facebook, Ikea and Qatar Investment Authority, among others.
The Non-Traditional Route
The non-traditional investors have cracked several funding deals in India. For instance, Facebook invested in social commerce start-up Meesho, Ikea invested in home design start-up Livspace and Qatar Investment Authority pumped US$150 million in edtech unicorn Byju’s.
Apart from big companies and giants, many companies started off as non-traditional investors and took their game seriously, thereafter. SoftBank being a classic example of the same. It started off as telecom firm and went to establish the Vision Fund, becoming the biggest investor in the world.
Despite the number of start-ups going up in the country, a recent report by TiE and Zinnov recommended an urgent need to significantly increase the seed and early stage funding, which has tapered since 2017. But, the need for funding at these stages is increasing given that companies are preferring to remain private. Only a handful of companies such as Druva, Mobikwik and Freshworks have shown the intent to go public.
The Big Gaps
India is undervalued, underpenetrated and underbanked. With no dearth of a pool of talent and skill, it is lagging behind US and China despite having a solid and robust start-up ecosystem. There are gaps in the funding stages as well. According to a report by accelerator and VC, 9Unicorns, India gets 20x less funsing than US in Series A. in 2018, India had only US$ 4.1 billion pumped in Series A deals whereas US had a staggering US$84.1 billion pumped.
Additionally, Indian start-ups absorb US$12 billion-US$14 billion ever year as compared with China which has receives almost double the amount in the very first half of the year at US$23.2 billion, leaving the Indian market underpenetrated.
With over 17000 start-ups in India, the demand for capital infusion is bound to rise and here comes the role of non-traditional investors.
The Forbes Cloud 100, produced by Forbes in partnership with BessemerVenture Partners and Salesforce Ventures, showcases private cloud …
SEATTLE, Sept. 12, 2019 /PRNewswire/ — Outreach, the leading sales engagement platform, has been named to the 2019 Forbes Cloud 100 – recognized as one of the top private cloud companies in the world. The Forbes Cloud 100, produced by Forbes in partnership with Bessemer Venture Partners and Salesforce Ventures, showcases private cloud companies that stand out for their growth, sales, valuation, and culture. This year’s ranking marks the company’s third appearance on the coveted list.
Outreach has experienced incredible growth and a rapid trajectory. The company achieved “unicorn” status, achieving a valuation of over $1B in April 2019 – which Forbes predicted when it called out the company as one of its “Next Billion Dollar Startups” in 2017. Outreach has been doubling revenue every year for the past three years and now has more than 3,500 customers, from fast-growing startups to Fortune 500 enterprise companies.
“While growth is clearly exciting and an important milestone, what is truly rewarding for me – and our employees – is how Outreach is fundamentally changing the way companies, and their sales teams, engage with current and potential customers,” said Manny Medina, CEO of Outreach. “By applying machine learning and AI, we are able to offer real-time insights, resulting in dramatic increases in sales productivity with more deals closed and happier, engaged customers. We are grateful to Forbes and its partners for recognizing our market leadership as we continue to deliver the innovation and results our customers have come to expect from Outreach.”
As part of the rigorous selection process for the Forbes 2019 Cloud 100, Bessemer Venture Partners received submissions from hundreds of cloud startups. The judging panel, made up of public cloud company CEOs, reviewed the data to select, score, and rank the top 100 private cloud companies from all over the world. The evaluation process involved ranking companies across four factors: market leadership (35%), estimated valuation (30%), operating metrics (20%), and people & culture (15%).
“The private cloud ecosystem has matured, making the competition to land one of the coveted spots on the Cloud 100 list steeper than ever,” said Byron Deeter, a top cloud investor, and partner at Bessemer Venture Partners. “In fact, the average valuation of a company on our inaugural list just four years ago was $1 billion, while this year’s list spiked to $1.7 billion. Our 2019 Cloud 100 includes over 60 private cloud unicorns. Congratulations to these cloud leaders!”
“The growth we are seeing is not limited to the Bay Area, as we are seeing more $1B+ cloud companies spring up throughout the U.S. and globally,” said Matt Garratt, Managing Partner, Salesforce Ventures. “We are excited to be partnering with Bessemer Venture Partners and Forbes for the fourth year to recognize the next generation companies who will land on the Cloud 100 list—those who are not just predicting what’s coming but working to create the future.”
“For four years now, we have ranked the best and brightest emerging companies in the cloud sector,” said Alex Konrad, Forbes editor of The Cloud 100. “With so many businesses growing fast in the cloud, from cybersecurity and marketing to data analytics and storage, it’s harder than ever to make the Cloud 100 list. Congratulations to each of the 2019 Cloud 100 honorees and the 20 Rising Stars honorees poised to join their ranks!”
The 2019 Forbes Cloud 100 is published online at www.forbes.com/cloud100 and will appear in the September 2019 issue of Forbes magazine.
Outreach, the leading sales engagement platform, dramatically increases sales reps’ effectiveness using advanced machine learning and artificial intelligence capabilities to automate and prioritize customer touchpoints. Outreach has 3,500 customers such as Adobe, DocuSign, and Tableau, who’ve seen significant increases in sales pipeline, velocity, and efficiency. Outreach is a privately held company based in Seattle, Washington. To learn more, please visit www.outreach.io.