5 Qs WITH A DEALMAKER
Vijay Pande, a general partner at Andreessen Horowitz, leads investments at the cross-section of biology and computer science. Pande sits on the board of many startups including Apeel Sciences, Freenome, and Rigetti Computing. “We’re interested in companies in the healthcare and biology space with software or machine learning at their core, ” he says.
In an interview with Term Sheet, Pande discusses innovations in machine learning, artificial intelligence, and immunotherapy. Below is an excerpt of our conversation:
TERM SHEET: You led Rigetti Computing’s Series A round. The quantum computing company has raised nearly $70 million in venture funding. Why did you decide to invest?
PANDE: Rigetti has a full-stack operation where they create their own chips, they build their own computers, and they write their own software and applications. That full-stack approach will be critically important in this juncture of quantum computing where we are still working to design the first machines. Many companies, like Google and Intel, feel that there is huge opportunity for quantum computing right now to be able to do certain tasks dramatically faster than the way traditional computers could work.
People have been talking about quantum computing for at least 20 years, but I think we’re now seeing a big shift. For the last two decades, we had been trying to work out the fundamental science of quantum computing, and right now, a lot of the scientific advances are done. The next steps are to figure out engineering advances. In other words, we’re asking questions about how we scale up chips, rather than how we build the fundamental devices themselves.
More and more companies are working on building a brain-computer interface, which would allow the mind to connect with artificial intelligence. Facebook is building a BCI that would let people type with their mind, and Elon Musk launched Neuralink to create devices that can be implanted in the brain. What do you think about the future of these innovations?
I think it’s a super exciting area. This is another example where tech is meeting biology in stride. There are so many more advances than our understanding of neuroscience and the brain that happened just in the last five or 10 years. It’s very natural to apply machine learning to this brain-computer interface because the computer will have to understand and decode our thoughts — and that’s something that would be very hard to achieve without machine learning. This is very much the topic of science fiction past, but like any other technology, it will start off simple and evolve from there.
The simple things will have a huge impact on human health. A brain computer interface could dramatically change the lives of quadriplegics and paraplegics, for example. As the technology gathers some scale and as machine learning gets stronger, these innovations will get closer and closer to your science fiction dreams.
The cancer immunotherapy market is projected to reach $111.23 billion by 2021 and there’s been plenty of VC activity there lately. Why are we seeing more of that now?
The oncology area is super interesting to me because many of us have felt that drugs don’t really kill or cure people — your immune system cures you. Even something like an antibiotic, which will kill a bacteria in a Petri dish, is largely administered in doses designed to weaken the bacteria so that your immune system can go after it. The immune system is really key. Machine learning will come into play more and more, and we’re seeing biology companies add a layer of tech that will help them accelerate innovation.
What are some interesting innovations going on in the biotech space that Term Sheet readers should know about?
There are a couple of different spaces that are getting interesting. One is diagnostics. We’re seeing diagnostics companies use AI to create new tests that have much higher accuracy, much lower cost, and typically diagnose things much earlier. In a sense, the genome sequencer is almost like a smartphone. With that one piece of hardware, you can run many different types of tests. That trend is very much blowing up.
What do the next 10 years look like? Will we all have brain implants and be able to edit our genes as we wish?
I think a lot of medicine will become like dentistry. Dentistry is a great example of doing things preventively. When you get an X-ray, for example, maybe you have a cavity and you just treat it. It’s not like you’re waiting until you’re 80 years old to finally see the dentist. I think in 10 years, we’ll have cancer tests such that you take them once or twice a year, find out you have early-stage cancer, take care of it early, and move on. The big trend is that we’ve got all these new data sources and machine learning to take advantage of and the ability do something actionable.
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• Ninebot Inc., a Beijing-based short-distance electric transportation maker, raised the equivalent of $100 million in C-round funding. Investors include SDIC Fund Management Company Ltd. and the China Mobile Fund.
• Klook, a Hong Kong-based travel startup, raised $60 million in Series C funding. Sequoia China led the round, and was joined by investors including Goldman Sachs, Matrix Partners, and OurCrowd.
• GTreasury, a Lake Zurich, Ill.-based provider of treasury management systems, raised $42 million in funding from Mainsail Partners.
• Credit Sesame, a Mountain View, Calif.-based personalized credit service and financial wellness company, raised more than $42 million in equity and venture debt. Investors include Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, and SF Capital.
• HashiCorp, a San Francisco-based cloud infrastructure automation company, raised $40 million in Series C funding. GGV Capital and Redpoint led the round, and were joined by Mayfield and True Ventures.
• Kindred, a Canada-based artificial general intelligence company creating human-like intelligence in machines, raised $28 million in Series B funding. Tencent led the round, and was joined by investors including Eclipse Ventures and First Round Capital.
• ChowNow, a Playa Vista, Calif.-based ordering platform for restaurants, raised $20 million in Series B funding. Catalyst Investors led the round, and was joined by investors including Steadfast Venture Capital.
• Brainly, a New York-based peer-to-peer learning platform for students, raised $14 million in funding. Kulczyk Investments led the round, and was joined by investors including Naspers, General Catalyst, Point Nine Capital, and Runa Capital.
• Deserve, a Menlo Park, Calif.-based company developing ways to build credit for Generation Z, raised $12 million in funding. Accel led the round and was joined by investors including Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group, and GDP Venture.
• Reflektion, a San Mateo, Calif.-based developer of a personalization platform for the retail industry, raised $12 million in funding. Hasso Plattner led the round, and was joined by investors including Battery Ventures and Clear Ventures.
• Echo, a U.K.-based medication management app, raised £7 million ($9.2 million) in Series A funding. White Star Capital led the round, and was joined by investors including MMC Ventures, LocalGlobe, Global Founders Capital, Rocket Internet and Public.io.
• Ursa Space Systems Inc, an Ithaca, N.Y.-based Space 3.0 analytics-as-a-service company, raised $7 million in Series A funding. Paladin Capital Group led the round, and was joined by investors including New Enterprise Associates, RRE Ventures, and S&P Global.
• Umbo Computer Vision, a San Francisco-based artificial intelligence startup and provider of autonomous video security products, raised $6.8 million in Series A funding. CDIB Venture Capital Corp led the round, and was joined by investors including AppWorks Ventures, Mesh Ventures, and Substance Capital.
• JazzHR, a Pittsburgh-based recruiting solutions provider for small and medium-sized businesses, raised $6.6 million in funding. Volition Capital led the round, and was joined by investors including Birchmere Ventures and Rincon Venture Partners.
• Stardog Union, an Arlington, Va.-based provider of enterprise knowledge graph technology, raised $6 million in Series A funding. Grotech Ventures led the round, and was joined by investors including Core Capital and Boulder Ventures.
• Scoutible, a Walnut, Calif.-based video game-based artificial intelligence for hiring, raised $5 million in funding. Investors include Learn Capital, Mark Cuban, Great Oaks, New Enterprise Associates, Stanford StartX Fund, and Mindset Ventures.
• OpenIO, a Paris-based storage and serverless computing company, raised $5 million in funding. Elaia Partners, Partech Ventures, and Nord France Amorçage led the round.
• Current, a New York City-based fintech company that provides digital-first payments services for families with teenage children, raised $5 million in Series A funding. QED Investors led the round, and were joined by investors including Cota Capital and Expa.
• Gro Intelligence, a New York and Nairobi-based agricultural data analytics business, raised Series A-2 funding of an undisclosed amount. TPG Growth led the round, and was joined by investors including Data Collective.
PRIVATE EQUITY DEALS
• Global Infrastructure Partners agreed to buy Equis Energy, an Asia-based independent renewable energy firm, for $3.7 billion with partners including China Investment Corp, according to Reuters. Read more.
• Mainsail Partners invested $36 million in ResMan, a Plano, Texas-based provider of property management software for the multifamily market.
• A team comprising Bain Capital and Clayton Dubilier & Rice and KKR and Apollo are expected to be shortlisted for the second round of an auction for Unilever’s (LSE:ULVR) margarine and spreads business, according to Reuters. Read more.
• Cerberus Capital Management has approached Alitalia, an Italy-based aircraft operator, with an offer that would allow the carrier to remain independent, according to Reuters. Cerberus suggested it would be willing to invest funds worth somewhere in the “low nine-digits”, or between 100 million euros and 400 million euros. Read more.
• Marlin Equity Partners acquired TelStrat, an Allen, Texas-based provider of call recording, quality analytics and workforce management solutions for contact centers. Financial terms weren’t disclosed.
• Magnitude Software will acquire Agility Multichannel, a Chicago-based provider of product information management software. Financial terms weren’t disclosed.
• Haymaker Acquisition, a New York City-based SPAC created to acquire a consumer products facing business, said it raised $300 million by offering 30 million shares at $10 a piece. Steven Heyer has been named CEO and executive chairman. Heyer has previously been a CEO at Starwood Hotels & Resorts Worldwide, and a COO at the Coca-Cola company. Cantor Fitzgerald is underwriter in the deal. The company plans to list as “HAYU” on the Nasdaq.
• Ablynx, a Zwijnaarde, Belgium-based company developing nanobodies to treat diseases, said it plans to raise $200 million in an upsized offering of 11.4 million shares at $17.50 a piece. The company posted revenue of €84.8 million and loss of €1.1 million in 2016. Van Herk Investment (10% pre-offering), Fidelity (9.15%), Perceptive Advisors (4.5%), Gam Holdings (3.92%), and Boehringer Ingelheim International (3.49%) back the company. BofA Merrill Lynch, J.P. Morgan and Jefferies are joint bookrunners in the deal. The company plans to list on the Nasdaq as “ABLX.”
• Curo Group, a Wichita, Kansas-based payday lender, filed to raise $100 million. The company posted revenue of $828.6 million and income of $65.4 million in 2016. Friedman Fleischer & Lowe (34.86% pre-offering) backs the company. Credit Suisse, Jefferies, and Stephens are joint bookrunners in the deal. The company says it plans to list on the NYSE as “CURO.”
• Insurance Income Strategies, a Hamilton, Bermuda-based disaster reinsurer formed earlier this year, filed for an IPO of $58 million. Joseph Gunnar is sole bookrunner in the deal. The company plans to list on the NYSE as “ILS.”
• Energy Hunter Resources, a Texas-based oil and gas company, said it will raise $43 million in a Reg A+ IPO by offering 4.8 million shares between $8 to $10 a piece. Including the company’s planned acquisition of about 9,413 net acres within the San Andres formation company posted revenue of $889,248 in 2016 and loss of $963,715. Stifel, B. Riley & Co. and FBR Capital Markets are underwriters in the deal. Energy Hunter plans to list on the Nasdaq as “EHR.”
• Delphi Automotive acquired Nutonomy, a Cambridge, Mass.-based self-driving car startup, for $400 million and will pay out an additional $50 million in performance based pay-outs. Nutonomy had raised approximately $19.6 million in funding from investors including Signal Ventures, Samsung Ventures, and Highland Capital Partners. Read more at Fortune.
• Smith & Nephew will buy Rotation Medical, a Plymouth, Minn.-based sports injury business, for up to $210 million, according to Reuters. Rotation Medical raised approximately $56 million in venture funding from investors including NEA, Pappas Ventures, and Life Sciences Partners. Read more.
• Apple acquired PowerbyProxi, a New Zealand-based company that designs wireless power products for consumers and industry, according to Reuters. Financial terms weren’t disclosed. PowerbyProxi had raised approximately $9 million in venture funding from investors including Samsung Ventures, Movac, and TE Connectivity. Read more.
FIRMS + FUNDS
• Calera Capital, a San Francisco-based private equity firm, raised $555 million for its fifth fund, Calera Capital Partners V, L.P.
• Kewsong Lee and Glenn Youngkin will become co-chief executives at The Carlyle Group.
• Simon Jennings joined HarbourVest Partners as a managing director.
• Adams Street Partners appointed Alex Kessel as a principal on the co-investments team. Previously, Kessel was at Baird Capital.
• Allie Atwood, David Calder, and Davis Hostetter joined The Halifax Group as vice presidents.