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Why Facebook Just a Bought a Brain Control Startup: Term Sheet

September 24, 2019, 1:33 PM UTC

You might remember brain computing company CTRL-labs from my previous interviews with Lux Capital’s Josh Wolfe when I called the startup “freaking crazy.” 

CTRL-labs is developing a non-invasive neural interface. What does “a non-invasive neural interface” do exactly? It’s building a device capable of translating electrical muscle impulses into digital signals (see it in action here).

When I spoke with CTRL-labs founder Thomas Reardon in August, he said he was in the midst of raising a fresh round of capital. “We’ve had some important technical breakthroughs in the last six months that have put us in a position to raise more substantially,” he said. One of those breakthroughs, Reardon added, is the ability to non-invasively observe the human motor nervous system at the level of an individual neuron.

Well, it looks like CTRL-labs won’t be raising another round after all. Facebook has swooped in and agreed to acquire the startup for somewhere between $500 million and $1 billion, according to CNBC. CTRL-labs had raised more than $67 million in venture funding from investors including Lux Capital, GV, Spark Capital, Breyer Capital, and Matrix Partners.

Facebook Vice President of AR/VR Andrew “Boz” Bosworth said in a Facebook post: “Here’s how it’ll work: You have neurons in your spinal cord that send electrical signals to your hand muscles telling them to move in specific ways such as to click a mouse or press a button. The wristband will decode those signals and translate them into a digital signal your device can understand, empowering you with control over your digital life. It captures your intention so you can share a photo with a friend using an imperceptible movement or just by, well, intending to.”

It can change the way we connect, he added. I’m fascinated by this, but at the same time, I’m thinking, “Mmm I’m not so sure I’m giving Facebook access to my brain in such a literal way.” 

Lux’s Wolfe described a world in which people will tap their fingers together to turn on Spotify and swipe to the left in the air to change the next song. Yesterday, he tweeted and said, “A Spotify integration would make me very happy.” “Josh is just relentless,” Reardon told me in August. “I can’t tell you how many times he’s had to remind me just how big this company could be.”

It could become pretty big under the Facebook umbrella. Facebook has been working on a brain-computer interface since at least 2017 when it revealed that it had a team of 60 engineers working on technology that would let you type with your mind without invasive implants. In July, we learned that the company’s Facebook Reality Labs division has been working with researchers from the University of California, San Francisco who are encouraged that the findings of their research could help develop a communication device for patients who can no longer speak after severe brain injuries.

NOT JUST WEWORK: It’s not just WeWork. Several other investments made by Japanese giant SoftBank in the private realm have experienced a rocky start as public companies in the past year. Silicon Valley giants Uber and Slack are down between 24% to 30% since their initial public offerings earlier this year, while a telecom provider servicing Africa, Bharti Airtel Africa, is down roughly 25%, underperforming major indices during the same time frame, based on data from PitchBook. While Uber and Slack are considered investments from SoftBank’s Vision Fund, Airtel Africa sources from the overarching group. Read more.

CRYPTO DEAL: Elementus, a startup focused on spotting illicit transactions made with cryptocurrency, today announced raising $3.5 million, partly from a fund linked to Fidelity Investments. The round was led by Morgan Creek Digital, a venture fund focused on blockchain technology, including cryptocurrency and related tools. Also joining the round was Avon Ventures, a venture capital subsidiary of Devonshire Investors, the private equity arm of Fidelity Investments’ parent company. Fidelity has become one of the first mainstream Wall Street brokerage and investing firms to offer cryptocurrency services. Read more.

MPW INTERNATIONAL: Meet Fortune’s Most Powerful Women International. The ranking celebrates female business leaders who are based outside the U.S. The women who captured slots on this year’s list hail from 19 countries and every continent but Antarctica. Browse here.

VENTURE DEALS

- Palantir Technologies, a Palo Alto, Calif.-based data company, is seeking to raise funding from private investors that values the company at $26 billion, according to The Financial Times.

- Fundbox, a San Francisco-based lender and payments processor for small businesses, raised $176 million in Series C funding. Investors include Allianz, General Catalyst and Spark Capital Growth. 

- Tipalti, a San Mateo, Calif.-based payables automation solution, raised $76 million in funding. Zeev Ventures led the round, and was joined by investors including Group 11, 01 Advisors, and Greenspring Associates.

- Unbabel, a Mountain View, Calif.-based AI+human translation platform, raised $60 million in Series C funding. Point72 Ventures led the round, and was joined by investors including e.ventures, Greycroft, Indico Capital Partners, Scale Venture Partners, Notion Capital, M12, Samsung NEXT, Caixa Capital, Faber Ventures, FundersClub, and Structure Capital.

- Channel VAS, a Dubai-based fintech provider of mobile financial and airtime credit services, raised $54 million in funding, from Development Partners International.

- Fivetran, an Oakland, Calif.-based developer of an automated data integration technology, raised $44 million in Series B funding. Andreessen Horowitz led the round, and was joined by investors including Matrix Partners and CEAS Investments. 

- CrossBorder Solutions, a Tarrytown, N.Y.-based developer of technology-driven tax solutions, raised $40 million in Series B funding. Insight Partners led the round.

- Manticore Games, a Hillsborough, Calif.-based developer of video computer games, raised $30 million in a Series B funding. Investors include Benchmark Capital, Correlation Ventures, BITKRAFT Esports Ventures, M Ventures, Tuesday Capital, SV Angel, Arrive (a Roc Nation company) and Sapphire Sport.

- DustPhotonics, an Israel and California-based provider of optical modules, raised $25 million in funding. Intel Capital led the round, and was joined by investors including WRVI Capital.

- Everledger, a U.K.-based company that creates a secure and permanent digital record of an asset’s origin, raised $20 million in Series A funding. Investors include Tencent Holdings Ltd, Graphene Ventures, Bloomberg Beta, Rakuten, Fidelity and Vickers Venture Partners.

- Workspot, a Cupertino, Calif.-based provider of an enterprise-ready cloud desktop solution, raised $19 million in funding. The investors were not named.

- Immutable, a company that builds video games with player-owned assets, raised $15 million in Series A funding. Naspers Ventures led the round, and was joined by investors including Galaxy Digital EOS VC Fund and Apex Capital Partners.

- Securitize, a San Francisco-based solution for issuing and managing compliant digital securities on the blockchain, raised $14 million in funding. Investors include Santander InnoVentures, MUFG Innovation Partners, and Nomura Holdings.

- Drum, an Atlanta-based on-demand network sales force platform, raised nearly $11 million in seed funding. Investors include Propel Venture Partners, Felicis Ventures, BlueRun Ventures, American Express Ventures, GroTech Ventures, Wildcat Venture Partners, BoxGroup and SV Angel.

- Splio, a France-based customer experience management company, raised €10 million ($11 million) in funding. Ring Capital led the round, and was joined by investors including Swen Capital Partners, BPI France and Amundi PEF.  

- Julo, an Indonesia-based lender, raised $10 million in funding. Quona Capital led the round, and was joined by investors including Skystar, East Ventures, Provident, Gobi Partners and Convergence.

- KannaSwiss, a Switzerland-based provider of European CBD products, raised $5.5 million in funding, from Altitude Investment Management.

- Cycode, a solution for source code control, detection and response, raised $4.6 million in seed  funding. YL Ventures led the round.

- Cowbell Cyber, a Pleasanton, Calif.-based startup focused on AI-powered cyber insurance for small to mid-sized enterprises, raised $3.3 million in seed funding. Investors include ManchesterStory Group, Holmes Murphy & Associates, Tri-Valley Ventures and the Global Insurance Accelerator. 

- Koyfin, a New York-based data visualization investment research platform, raised $3 million in funding. Investors include Craft Ventures, Atreides Management, Valor Equity Partners, and Social Leverage.

- Lumasol, a Los Angeles-based health technology company, raised $3 million in seed funding. Investors include Pathfinder at Founders Fund and Greycroft Ventures.

- ODAIA, a Canada-based AI SaaS startup, raised $1.6 million in funding. Panache Ventures and StandUp Ventures led the round, and was joined by investors including BDC Capital’s Women in Technology Venture Fund, Inovia Capital and MaRS IAF

- YUR, a San Francisco-based virtual reality fitness company and community, raised $1.1 million in funding. The Venture Reality Fund and BoostVC led the round.

HEALTH & LIFE SCIENCES DEALS

- Curamir Therapeutics, a Woburn, Mass.-based biotech firm, raised $10 million in Series A funding, from Delos Capital.

- A-Alpha Bio, a Seattle-based biotechnology startup that helps pharmaceutical companies characterize protein interactions for accelerated drug development, raised $2.8 million in funding. OS Fund led the round, and was joined by investors including AME Cloud Ventures, Boom Capital, Madrona Venture Group, Sahsen Ventures, and Washington Research Foundation

PRIVATE EQUITY DEALS

- Brightstar Capital Partners acquired Capstone Nutrition, an Ogden, Utah-based developer and manufacturer of high-quality nutrition products. Financial terms weren't disclosed. 

- Maroon Group LLC acquired Cambrian Solutions, a Canada-based distributor of specialty ingredients and chemicals. Financial terms weren't disclosed. 

- Xenon Partners acquired Metricfire, an Ireland-based provider in time series data monitoring. Financial terms weren't disclosed. 

- Unifrax, which is backed by Clearlake Capital Group, agreed to acquire the assets of Shenyang JiuQing Dongxiang Glass Product Co. Ltd, a China-based provider of high-performance specialty fibers in China. 

- Pacific Current Group Limited acquired a minority stake in Proterra Investment Partners, a Minneapolis-based private equity firm specializing in natural resources investing. No financial terms were disclosed.

- DexKo Global, which is backed by KPS Capital Partners LP, acquired Safim, an Italy-based maker of highly engineered hydraulic braking system components. Financial terms weren't disclosed. 

- Mubadala Investment Company agreed to invest up to $500 million in Cologix, a Denver, Colo.-based provider of connected ecosystems that enable customers to power their digital transformations. Financial terms weren't disclosed. 

- Carlyle Group is weighing a sale of Golden Goose, an Italy-based luxury sneaker brand for a deal of more than 1 billion euros ($1.1 billion), according to Bloomberg

OTHER DEALS

- Fitbit (NYSE:FIT), a wearable device maker, is weighing a sale and is in talks with an investment bank, according to Reuters.

IPOs

- EQT, the Swedish private equity firm, rose 25% in trading giving the company a market capitalization of over 7 billion euros ($7.7 billion) Read more.

- ADC Therapeutics SA, a Switzerland-based biotech focused on antibody therapies for cancer, plans to raise $200 million in an IPO of 8.2 million shares priced between $23 to $26 apiece. It posted revenue of $1.1 million and losses of $123.1 million in 2018. Auven Therapeutics and AstraZeneca back the firm. It plans to list on the NYSE as “ADCT.” Read more.

- Viela Bio, a Gaithersburg, M.D.-based biotech developing therapies for autoimmune diseases, plans to raise $150 million in an initial public offering of 7.5 million shares priced between $19 to $21. It has yet to post a revenue and posted a loss of $19 million in 2018. AstraZeneca (38.4% pre-offering), Boundless Meadow (18.4%) and 6 Dimensions Capital (8.7%) back the firm. It plans to list on the Nasdaq as “VIE.” Read more.

- Frequency Therapeutics, a Woburn, Mass.-based firm focused on degenerative diseases, plans to raise $101 million in an IPO of 6.7 million shares priced at $14 to $16 apiece. It has yet to post a revenue, and posted losses of $19.2 million in 2018. Perceptive Advisors and Taiwania Capital back the firm. It plans to list on the Nasdaq as “FREQ.” Read more.

- Aprea Therapeutics, a Boston-based firm focused on cancer therapies,plans to raise $75 million in an IPO of 5 million shares priced between $14 to $16. It has yet to post a revenue, and posted losses of $15.5 million in 2018. Karolinska Development, Versant Venture Management, and 5am Ventures back the firm. It plans to list on the Nasdaq as “APRE.” Read more.

EXITS

- Topspin Partners acquired Japonesque, a San Ramon, Calif.-based provider of beauty products to mass, specialty and online retailers, from San Francisco Equity Partners. Financial terms weren't disclosed. 

- Hector Rail Group, a portfolio company of EQT Infrastructure, agreed to sell GB Railfreight, a London-based rail freight operator, to Infracapital. Financial terms weren't disclosed. 

FIRMS + FUNDS

- Longitude Venture Partners, a California-based venture firm, is seeking to raise $550 million for its fourth fund, according to an SEC filing

PEOPLE

- 500 Startups appointed Tony Wang as managing partner.

- LLR Partners named Geoff Baird as senior managing director. 

- Argand Partners promoted Ryan Beres to senior associate. 

- Santé Ventures appointed Eric Epstein as senior associate on its investment team.

- Chris Yin joined Scale Venture Partners as a principal.