2018 was a year of excess. 2019 was a year of reality checks. And 2020 is the year of sustainable growth?
According to Silicon Valley Bank’s State of the Markets report, the markets are still flush with corporate cash and record dry powder. SVB anticipates M&A activity to remain strong in 2020. Already, more and more companies are seeking out acquisition opportunities. Below are several predictions from SVB’s report for the year ahead:
— M&A heats up even more: Large tech companies will wake up to the realization that one of the best ways to grow the top line, acquire new technologies, and stave off competition is M&A. In the last three months, we’ve seen two massive acquisitions. The first was PayPal’s purchase of Honey, a deal-finding browser add-on and mobile app, for $4 billion. The second happened just this month with Visa’s purchase of Plaid, a fintech company that connects users’ bank accounts to apps and services, for an eye-popping $5.3 billion.
— The bull market continues: Slowing macroeconomic conditions and the trade war weren’t enough to stop tech in 2019. It saw its best full-year performance of the decade — returning 48% compared with 29% in the broader market. This trend is projected to continue into 2020 as companies still have plenty of cash to deploy.
— Bigger isn’t always better: In 2019, we learned that valuation isn’t everything. Many companies painfully realized that sustainable growth and profitability are perhaps more important than growth at all costs. Some of 2019’s most anticipated unicorn IPOs experienced a harsh reality check in the public markets. SVB predicts that late-stage valuation sizes will start to decline as investors take longer to perform their due diligence. This is a big departure from previous years, and it’s the trend that could define the entire decade.
LOCKDOWN MODE: The new coronavirus has now infected more than 7,700 people globally. Plenty of companies across the world are concerned. Multinationals are responding by placing restrictions and outright bans on employee travel to China, indefinitely closing offices in the country, and telling employees to work from home. Read more.
HOW CONFIDENT ARE YOU? Term Sheet has teamed up with Semaphore for its 12th annual confidence survey of private equity and venture capital professionals. In the past, hundreds of you have chimed in with your confidence levels for the year ahead. I encourage you all to take the survey here. The results will be published here early next month. Please take the time to fill it out!
- Moda Operandi, a New York-based fashion discovery platform, raised $100 million in equity and debt funding. New Enterprise Associates, Inc. and the Apax Digital Fund co-ledc the round, and was joined by investors including the Santo Domingo Family, Comerica Bank and TriplePoint Capital.
- Attentive, a personalized mobile messaging SaaS platform for brands, raised $70 million in Series C funding. Sequoia and IVP co-led the round, and were joined by investors including Eniac Ventures and NextView Ventures.
- SimScale, a Germany-based provider of a SaaS application for engineering simulation, today raised €27 million ($29.8 million) in Series C funding. Insight Partners led the round, and was joined by investors including Earlybird, Union Square Ventures, June Fund, Vito Ventures, Bayern Kapital, and High-Tech Gründerfonds.
- Powell Software, a digital workplace and intranet SaaS software provider, raised $16 million in funding. Level Equity and Cap Horn co-led the round.
- SOCi, a San Diego-based social and reputation management platform for multi-location businesses, raised $15 million in Series C funding. Investors include Vertical Venture Partners, Grayhawk Capital, Ankona Capital, and Blossom Street Ventures.
- Spatial, a New York-based holographic collaboration platform that turns any room into a 3D workspace, raised $14 million in Series A funding. Investors include White Star Capital, iNovia and Kakao Ventures.
- AppHarvest, a Lexington, Ky.-based agtech company, raised $11 million in funding. Investors include Steve Case, J.D. Vance, Jeff Ubben and Blake Griffin.
- Neighbor.com, a self-storage marketplace, raised $10 million in Series A funding. Andreessen Horowitz led the round.
- CloudTrucks, a San Francisco-based virtual trucking carrier, raised $6.1 million in funding. Craft Ventures led the round, and was joined by investors including Khosla Ventures, Kindred Ventures and Abstract Ventures.
- Stoplight, an Austin-based enterprise API design management company, raised $6 million in Series A funding. Next Coast Ventures and Bill Wood Ventures co-led the round.
HEALTH & LIFE SCIENCES DEALS
- Mammoth Biosciences, a San Francisco-based CRISPR-based disease detection platform, raised $45 million in Series B funding. Decheng Capital led the round, and was joined by investors including Mayfield, NFX, Verily, Brook Byers, Plum Alley, Pacific 8, and aMoon.
PRIVATE EQUITY DEALS
- Fitness Holdings North America, Seacoast Capital, and E2 Venture Partners recapitalized Crunch Fitness, a New York-based chain of fitness clubs. Financial terms weren't disclosed.
- Reynolds Consumer Products, the maker of Reynolds aluminum foil and Hefty trash bags, raised $1.2 billion in an IPO of 47.2 million shares priced at $26. The firm posted revenue of $3 billion in 2018 and net income of $337 million. Rank Group backs the firm. It plans to list on the Nasdaq as “REYN.” Read more.
- 1Life Healthcare, a San Francisco-based chain of primary-care clinics known as One Medical, raised $245 million in an IPO of 17.5 million shares priced at $14, the low end of its range. The firm posted revenue of $212.7 million in 2018 and losses of $45.5 million. The Carlyle Group (26.8%), Benchmark (13%), and Oak Investment Partners (11.4%) back the firm. It plans to list on the Nasdaq as “ONEM.” Read more.
- Arcutis Biotherapeutics, a Westlake Village, Calif.-based biotech focused on skin diseases, raised $159 million in an IPO of 9.4 million shares priced at $17, the high end of its range. The firm posted losses of $19.3 million in 2018. Bain Capital (13.5%), Frazier Life Sciences (36.9%), and OrbiMed (15.1%) back the firm. It plans to list on the Nasdaq as “ARQT.” Read more.
- Black Diamond Therapeutics, a Cambridge, Mass.-based biotech developing small molecule, tumor-agnostic therapies, raised $201 million in an offering 10.6 million shares priced at $19. The firm has yet to post a revenue and posted losses of $8.9 million in 2018. Versant Ventures (42%), New Enterprise Associates (11.2%), and RA Capital Management (6.7%) back the firm. It plans to list on the Nasdaq as “BDTX.” Read more.
- Professional Holding Corp., a Coral Gables, Fla.-based bank, plans to raise $62 million in an IPO of 3.1 million shares priced at a range between $19 to $21. The firm posted total interest income of $28.2 million and net income of $6.8 million in 2018. BayBoston Capital, EJF Capital, and Emerald Advisers back the firm. It plans to list on the Nasdaq as “PFHD.” Read more.