Good morning, Term Sheet readers.
While we’re all obsessing over Bitcoin’s price fluctuations, blockchain technology keeps advancing in its shadows. At least that’s what the CEO of newly-launched cryptocurrency venture Bakkt thinks.
On Monday, Bakkt, which was launched by the owner of the New York Stock Exchange, announced the acquisition of assets owned by Rosenthal Collins Group, a century-old futures commissions merchant. As an FCM, Rosenthal Collins specializes in managing commodities accounts for investors and institutions by moving money, handling collateral, and steering trades through bank-owned clearinghouses with minimal risk of default.
In an exclusive interview with Bakkt CEO Kelly Loeffler, my colleague Shawn Tully explains that Bakkt will use its expertise to focus on streamlining payments between customers and merchants. “It’s not so institutions can trade,” says Loeffler. “The acquisition will aid our consumer business as we build Bakkt.”
The consumer business she’s talking about is the very essence of Bakkt’s mission — to transform the retail payments system where merchants pay steep fees for every dollar you and I pay at the checkout counter.
“At first, it will be available for use in apps,” says Loeffler, noting that Bakkt is partnering with Starbucks to build the template. “Think about today’s Starbucks app. You can pre-fund a prepaid or stored value card with a digital app. The first use case is to pre-fund the cards, with Bitcoin. The goal is to give consumers the choice between purchasing with digital or fiat currency.”
Bakkt has deep ties to Wall Street's institutional investing titans and it's pitching itself as the venture with an inside track at bringing Bitcoin mutual funds and ETFs to America's 401(k)s. Two weeks ago, it raised a whopping $182.5 million in venture funding from investors including Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, M12, Pantera Capital, PayU, and Protocol Ventures.
However, Bakkt recently announced that it would delay the launch of its institutional trading platform until January 24. The timing of the launch is based on regulatory review, and the government is now partially shut down, including the regulatory agencies. “The government shutdown is delaying the process,” Loeffler says.
…SPEAKING OF CRYPTO: Fortune’s Ledger team shared their 2019 predictions for the very unpredictable world of crypto. (I’m certainly not brave enough to do that, so bless their hearts.)
Below is a condensed version of their five predictions. For a more comprehensive list, read the full post here.
• Tether loses traction. For years questions have swirled about the solvency of Tether, historically one of the most popular stablecoin projects. Expect rival stablecoins from the likes of Circle, Coinbase, Gemini, and others to eat away at the monopoly Tether once enjoyed.
• Facebook mints WhatsApp coin. Facebook has been interested in payments at least since it poached David Marcus from PayPal in 2014. Recent chatter suggests it is gearing up to release a WhatsApp-based remittances product in India.
• Regulators slap a big kahuna. The SEC will take swings at bigger targets this year. Perhaps it will deem XRP, the world’s second-most valuable cryptocurrency by market capitalization, to be an unregistered security, in which case it will surely whack Ripple, the coin’s purveyor, with fines.
• Bitcoin ETF wins approval. As the industry matures, conditions are ripening for a Bitcoin-based exchange traded fund, or ETF. Cooler heads are prevailing among retail investors, post-bubble. Bakkt is preparing for the debut of a physically settled Bitcoin futures market, improving liquidity.
• The hangover will last. Cryptocurrency prices will not reclaim their 2017 highs anytime soon. Global geopolitical tensions, volatile equity markets, and talk of a looming economic recession dampen the investment prospects for such a risky asset class, at least in the near-term.
AND ONE MORE THING: Imagine this: You’re one of the richest people in the world with a net worth of more than $70 billion. In the course of three years, 98% of your wealth evaporates (!) Do you throw in the towel or double down on the thing you were already doing when everything went to hell?
If you’re me, you wipe your face, throw in the towel, stop investing, and consider a new career as a dolphin trainer. Of course, if you’re Masayoshi Son, you dive deeper and double down with unparalleled conviction.
“Most human beings who’ve had the kinds of experiences he’s had become tentative,” Michael Ronen, who has worked with Son for 20 years, told Fast Company. “You’ve never seen someone so fearless.”
If you haven’t yet read this profile on SoftBank’s Masayoshi Son, I highly recommend you do.
• Knock, a home-selling startup, raised $400 million in Series B equity and debt financing. Foundry Group led the round, and was joined by investors including RRE Ventures, Corazon Capital, WTI, and FJ Labs, and Company Ventures.
• Rubrik, a Palo Alto, Calif.-based developer of a converged data and management system, raised $261 million in Series E funding at a $3.3 billion valuation. Investors include Bain Capital Ventures, Lightspeed Venture Partners, Greylock Partners, Khosla Ventures, and IVP.
• PQ Bypass, a Sunnyvale, Calif.-based medical device startup, raised $60 million in funding. Deerfield Management led the round, and was joined by investors including Seroba Life Sciences and MedTech Venture Partners.
• AnyVision, an Israel-based AI-based face, body and object recognition company, raised a total of $43 million in Series A funding. Investors include Lightspeed Venture Partners and Qualcomm Ventures.
• The Farmer’s Dog, a direct-to-consumer pet food company, raised $39 million in Series B funding. Insight Venture Partners led the round, and was joined by investors including Shasta Ventures and Forerunner Ventures.
• CareerArc, a Burbank, Calif.-based HR tech company, raised $30 million in funding. PeakEquity Partners led the round.
• Bringg, an Israel-based delivery logistics platform for enterprises, raised $25 million in Series C funding. Investors include Next47, Salesforce Ventures, Aleph VC, OG Ventures, Cambridge Capital, Coca-Cola, Ituran and Pereg Ventures.
• Quinyx, a Sweden-based cloud provider of workforce management solutions, raised $25 million in funding. Investors include Alfvén & Didrikson, Battery Ventures and Zobito.
• Sonrai Security, a cloud data control company, raised $18.5 million in Series A funding. Polaris Partners and TenEleven Ventures co-led the round, and were joined by investors including New Brunswick Innovation Foundation.
• Driivz LTD, a California and Israel-based provider of smart electric vehicle charging management solutions, raised $12 million in funding. Investors include Centrica plc, Ombu Group and Inven Capital.
• AVORA, a London-based enterprise analytics platform powered by native machine learning technology, raised $6.5 million (£5.1 million) in Series A funding. Albion VC and Crane co-led the round.
• Pensa Systems, an Austin, Texas-based developer of autonomous perception systems, raised $5 million in funding. Signia Venture Partners led the round, and was joined by investors including Commerce Ventures, ZX Ventures, ATX Seed Ventures, Capital Factory, and Revtech Ventures.
• alwaysAI, a provider of a platform that helps develop and deploy deep learning CV applications on embedded devices, raised $4 million in in Series A funding. BRV led the round.
• Reggora, an Allston, Mass.-based appraisal platform serving both appraisers and mortgage lenders, raised $3 million in seed funding. Spark Capital led the round, and was joined by investors including Boston Seed Capital.
• Fortify, a Boston-based additive manufacturing startup, raised $2.5 million in seed funding. Investors include Neotribe Ventures, Prelude Ventures, Mainspring Capital, Ocean Azul Partners, and McCune Capital.
• Syncurity, a Maryland-based cybersecurity firm, raised $2 million in seed funding. Investors include Maryland Technology Development Corporation and Kluz Ventures.
• Airdoc, a China-based medical care solutions provider that uses artificial intelligence, raised funding of an undisclosed amount. CITIC and Ping An led the round.
PRIVATE EQUITY DEALS
• Salt Creek Capital acquired Beauchamp Lawn & Snow Service Inc, a Brighton, Mich.-based provider of commercial grounds maintenance services and residential landscaping services. Financial terms weren't disclosed.
• TA Associates made an investment in LIST S.p.A, a developer of software solutions for the financial industry. Financial terms weren't disclosed.
• Vora Ventures acquired Hinge, a Cincinnati-based digital commerce company. Financial terms weren't disclosed.
• New Fortress Energy, a New York-based integrated gas-to-power company, said it plans to raise $400 million in an offering of 22.2 million shares priced between $17 to $19. Fortress Investment Group backs the firm. It plans to list on the Nasdaq as “NFE.” Morgan Stanley, Barclays, Citi, and Credit Suisse are underwriters. Read more.
• HomeToGo acquired Tripping.com, a U.S.-based vacation rental meta-search site. Financial terms weren't disclosed. Tripping.com had raised approximately $52 million in venture funding from investors including Princeville Global, Steadfast Venture Capital, and Recruit Co.
FIRMS + FUNDS
• Eclipse Ventures, a Palo Alto, Calif.-based venture capital firm, raised $500 million for its third venture capital fund.
• Tritium Partners, an Austin, Texas-based private equity firm, raised $465 million for its second buyout fund.
• Maverick Ventures, a San Francisco-based investment firm, formed a $382 million early-stage evergreen fund.
• Cresta Energy Capital, a Dallas-based private equity firm, raised $163 million for its debut fund, according to an SEC filing.
• Michael Yang joined OMERS Ventures as managing partner. Previously, Yang was at Comcast Ventures.
• Battery Ventures promoted Logan Bartlett, Sanjiv Kalevar, and Shiran Shalev to principal. It also promoted Justin Rosner to vice president.
• Grotech Ventures promoted Julia Taxin to partner.
• Kainos Capital promoted Jay Desai to partner.
• RiverPark Ventures promoted Spencer Krug to principal.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.