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Mega-deals are on pace to set a new record high in 2019.
Deal value is set to surpass $100 billion for the second year in a row, according to a new PitchBook-NVCA report. A total of 185 mega-deals (defined as $100 million or more) have been closed so far this year, which is nearing 2018’s full-year total. Total venture capital investment has reached $96.7 billion through the first three quarters.
You should keep in mind that it’s no small feat to surpass 2018’s insanity. I called 2018 “the year of the mega-round” because it felt like there was a company raising a mega-round every other day. Last July set an all-time record for the number of $100 million+ venture deals struck in a single month. And then remember December 18, 2008, when five companies raised $100M+ rounds in a single day?
The mentality at that time: capital can act as a differentiator. Armed with a war chest of funding, startups could attract more talent, acquire smaller players, market aggressively, capture customers, and blow past their rivals. With so much money out there, if you didn’t take it, your competitor certainly would.
So naturally, in 2019, Term Sheet readers and venture investors were expecting to see a cooling of the markets. One reader wrote: “The relative youth of the tech sector has been an essential part of its decades-long dominance. But in 2019, it is possible that many burgeoning entrepreneurs, investors, and employees in the tech sector will see for the first time what life is like through a recession.”
Yeah, that didn’t happen. Sorry to burst your bubble (pun intended).
Instead, new unicorn companies are being minted nearly every day (see deal section below) and valuations continue to skyrocket. Nineteen companies reached unicorn status in the third quarter of 2019, following 20 in the previous quarter, according to a report from KPMG. Even though there have been whispers of a looming recession, there’s no question that capital is still abundant. The money is flowin’ and the champagne is poppin’.
I interviewed Romulus Capital founder Krishna Gupta several years ago, and he told me we’re living in an insatiable time (it’s gotten even more insatiable since then).
Gupta launched his firm in 2008, when venture capital looked very, very different. The talent was more clustered and the valuations were more realistic. He used the following example: In 2008, founders went out to raise $2 million and ended up raising only $500,000. Today, they go out to raise $2 million, and it’s not uncommon for them to end up with $5 million.
“The most important thing for founders to know,” he said, “is that this won’t last forever.”
… Well, unless SoftBank raises a second Vision Fund.
- RigUp Inc, an Austin, Texas-based operator of a marketplace for contract workers in the energy sector, raised $300 million in Series D funding at a $1.9 billion valuation. Andreessen Horowitz led the round, and was joined by investors including Founders Fund, Bedrock Capital, Quantum Energy Partners, Baillie Gifford and Brookfield Growth Partners.
- Clari, a Mountain View, California-based revenue management system developer, raised $60 million in Series D funding. Sapphire Ventures led the round, and was joined by investors including Madrona Venture Group, Sequoia Capital, Bain Capital Ventures and Tenaya Capital.
- Swift Health Systems, a maker of orthodontic braces, raised $45 million in Series C funding. Vivo Capital, Novo Holdings and venBio Partners led the round.
- Exploding Kittens, a Los Angeles-based tabletop game company, raised $30 million in funding, from TCG Capital Management.
- Revel, a Brooklyn-based electric vehicle startup, raised $27.6 million in Series A funding. Ibex Investors led the round, and was joined by investors including Toyota AI Ventures, Blue Collective, Launch Capital and Maniv Mobility.
- Parsley Health, a New York-based provider of holistic personalized medicine designed to reverse chronic illness and optimize health, raised $26 million Series B funding. White Star Capital led the round, and was joined by investors including FirstMark Capital, Amplo, Alpha Edison, Arkitekt Ventures, Trail Mix Ventures, and Galaxy Digital.
- Nerd Street Gamers, a Philadelphia-based e-sports infrastructure company that builds the facilities that house leagues, training camps, and tournaments, raised $12 million in Series A funding. Five Below, Inc. (NASDAQ:FIVE) led the round, and was joined by existing investors Comcast, SeventySix Capital, Elevate Capital, and George Miller.
- Umbo Computer Vision, a Taiwan-based artificial intelligence company, raised $8 million in funding. Translink Capital and Susquehanna International Group led this round.
- Papa, a Miami-based platform that connects college students to senior citizens for companionship and assistance, raised $10 million in a Series A funding. Canaan led the round, and was joined by investors including Pivotal Ventures, Initialized Capital, Y Combinator, and Sound Ventures.
- Emplify, a Fishers, Indiana-based mobile-first employee engagement platform, raised $15 million funding round led by Edison Partners. Prior investors, including Allos Ventures, Cultivation Capital, Mark Hill, Bob Davoli from Gutbrain Ventures and 4G Ventures managing director Bill Godfrey, participated in the round. Emplify said it hired George Tate as SVP of Sales.
- BrainCheck, a Houston-based cognitive healthcare platform built for physicians, raised $8 million in Series A funding. Investors include S3 Ventures and Tensility Venture Partners.
- Razberi Technologies, a Carrollton, Texas-based provider of simple, secure video surveillance and IoT solutions, raised $5.8 million in funding. LiveOak Venture Partners led the round.
- Sentio, a San Francisco-based company developing biomarkers and digital therapeutics for mental health, raised $4.5 million in seed funding. Felicis Ventures led the round, and was joined by investors including Anthemis, Exponential Ventures, and SOSV.
PRIVATE EQUITY DEALS
- Goodhart Partners LLP acquired a minority stake in Albright Capital Management, a Washington D.C.-based private equity firm. Financial terms weren't disclosed.
- Marlin Equity Partners invested in SmartSearch Ltd, a U.K.-based provider of automated regulatory software focused on anti-money laundering and know your customer compliance solutions. Financial terms weren't disclosed.
- MEDNAX Inc agreed to sell MedData, a provider of technology-enabled management services for hospitals, health systems and healthcare providers, to Frazier Healthcare Partners. Financial terms weren't disclosed.
- Topgolf International Inc, a Dallas, Texas-based golfing center operator, is in talks with investment banks about hiring underwriters for an initial public offering, according to Reuters. Read more.
- Voyager Capital, a Seattle-based venture capital firm, raised $100 million for its fifth fund.
- U.S. Venture Partners promoted Dafina Toncheva to general partner.
- Craig Kahler joined ORIX Capital Partners as a managing director.
- Melanie Strong joined NEXT VENTŪRES as a managing partner.
- Sarah McBride joined Shrug Capital as a partner.
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