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An unknown in Google and Facebook’s numbers

April 29, 2020, 2:20 PM UTC

Not even the tech giants with massive cash piles are immune from the coronavirus.

An early sign: Google’s parent company, Alphabet, suffered a “significant and sudden slowdown in ad revenue” during the first quarter of the year, said Sundar Pichai, even while total revenue for the period rose 13% to $42.2 billion.

Indeed advertising revenue in offerings like Google search are tracking 10% down year over year, as major advertisers, such as those in travel and entertainment, are taking a direct hit from the global lockdown.

Another question for giant ad businesses like Google’s: What percent of their clients are startups? Profitless and money-guzzling companies seeking to upend traditional retailers and banks have spent billions on advertising in a bid to scale up fast. Mattress seller Casper, for example, spent roughly a third of its 2019 net revenue on sales and marketing.

A JPMorgan note from earlier this year suggests that percentage is no negligible amount. Demand for cloud services and digital advertising in the past couple years has reportedly amounted to about 10% of Google, Facebook, and Amazon’s revenues. And that’s not even counting the broader universe of small-and-medium-sized businesses—which Google clearly cares about.

Now, as venture capital funding is expected to contract, portfolio companies are expected to suddenly go from blitzscaling to cost-cutting. Startup risk is real even beyond the ad business—and could especially hurt businesses that have built themselves on other young companies. It’s a risk venture capitalists are watching.

“We are evaluating what kinds of risks are associated with a company when it comes to their end customer [which may be suffering from the coronavirus],” says Floodgate Partner Ann Miura-Ko. “We have to think through if the majority of the clients are travel companies, or, say, what percentage are startup companies.”

Facebook, another ad-based business, is expected to report earnings today. 

The coronavirus only hit the Western world in the latter half of the quarter. Analysts think the worst is yet to come.

The KKK pastof a SoftBank-backed startup founder: Sometimes things slip through even the tightest background checks. A past tie with the KKK is only now beginning to resurface, three decades later, for Damien Patton, founder of SoftBank-backed surveillance startup Banjo. In 1990, Patton was involved with the Dixie Knights of the Ku Klux Klan and had been a part of a shooting of a synagogue, according to a grand jury testimony reviewed by OneZero. But thanks to a typo by an FBI agent, Patton was re-christened as “Damion” in filings around the incident—covering his past as Banjo raised $220 million over the past decade, per the story.

In response to the story, Patton said he is now trying to make amends “for this shameful period in my life.”  

Since the story surfaced, however, the Utah attorney general’s office and the University of Utah have said they will suspend their contracts with Banjo.

Tune in: Don’t miss Fortune executive editor Adam Lashinsky’s Zoom chat with longtime tech analyst Gene Munster about how he sees the investing environment playing out. Watch the conversation and join the Q&A Wednesday, April 29, at 10:00 Pacific/1:00 Eastern. Register here for free. Or, watch the live stream without registration here.

VENTURE DEALS

- Stash, a New York-based banking and investing services, raised $112 million in Series F funding. LendingTree led the round, and was joined by investors including T. Rowe Price Associates, as well as Breyer Capital, Goodwater Capital, Greenspring Associates, and Union Square Ventures.

- Mojo Vision, a Saratoga, Calif.-based company developing AR contact lenses, raised over $51 million in a Series B-1 funding. New Enterprise Associates led the round, and was joined by investors including Gradient Ventures, Khosla Ventures, Liberty Global, Struck Capital, Dolby Family Ventures, Motorola Solutions Venture Capital, Fusion Fund, Intellectus Partners, KDDI Open Innovation Fund, Numbase Group, InFocus Capital Partners, and others.

- Niche, a Pittsburgh, Pa.-based school search platform, raised $35 million in Series C funding. Radian Capital led the round, and was joined by investors including Salesforce Ventures, and existing investors Allen & Company and Tim Armstrong

- Catalyst, a NYC-based SaaS platform for customer retention, raised $25 million in Series B funding. Spark Capital led the round, and was joined by existing investor Accel.

- Amply Power, a Los Angeles-based electric charging startup, raised $13.2 million in funding. Soros Fund Management and Siemens are among the investors. Read more.

- Tecton.ai, A San Francisco-based data platform for machine learning, raised $25 million in seed and Series A funding. Andreessen Horowitz and Sequoia co-led the deal. 

- Deliverect, a Belgian-based online food delivery management software maker, raised $18 million in Series B funding. OMERS Ventures led the round, and was joined by investors including existing investors Newion and Smartfin.

- Topia, a San Francisco-based platform to deploy, manage, and engage employees, raised $15 million in Series D funding. NewView Capital, Notion Capital, and Workday Ventures were the investors.

- Vutiliti, a Salt Lake City-based smart utility monitoring company, raised $11.8 million in Series A funding. Constellation Technology Ventures and Cycle Capital Management led the round, and were joined by investors including Chevron Technology Ventures, University Venture Fund, and the Kickstart Seed Fund.

- HeartVista, a Los Altos, Calif.-based maker of AI-assisted MRI solutions, raised $8.7 million in Series A funding. Khosla Ventures, Jeff Rothschild, Leslie Ventures, Open Field Capital, and more led the round.

- Covered by SAGE, a New York-based tech-enabled property and casualty insurance brokerage, raised  $6 million in seed funding. NFX led the round, and was joined by investors including Tectonic Capital and Treasury.

- AppGyver, a Helsinki, Finland-based app development platform with visual programming tools, has raised €2 million ($2.2 million) in funding. Karma Ventures and OpenOcean were the investors.

- Bonsai, an online platform virtually pairing students and young professionals with mentors in professional fields, raised  $1.5 million in pre-seed funding from a network of angels. Read more.

- Newsbytes, a Gurugram, India-based AI-driven digital news startup, raised $1.5 million in Series A funding.  North Base Media led the round. JITO Angels and existing investor, Powerhouse Ventures also participated. Read more.

- Premama Wellness, a Providence, R.I.-based producer of postnatal care supplements. Financial terms were not disclosed. District Ventures Capital was the investor.

PRIVATE EQUITY

- Orion Innovation, backed by One Equity Partners, acquired Tekmark, a Edison, N.J.-based outsourced technology and telecom services firm. Financial terms weren't disclosed.

OTHERS

- Blackstone says its proposed 1.36 billion euro ($1.47 billion) takeover of NIBC Holding NV, a Dutch bank, may not win regulatory approval.

- NIO Inc., a Chinese electric vehicle maker, raised 7 billion yuan ($1 billion). The Hefei municipal government led the funding. Hefei Construction Investment Holding, CMG-SDIC Capital Management, and Anhui High and New Technology Industrial Investment are also investors. Read more.

- UnitedHealth Group’s Optum is in advanced talks to acquire AbleTo, a New York-based telehealth services company, for about $470 million. Read more.

- A former Anbang Insurance Group unit is suing Mirae Asset Global Investments for missing a deadline to acquire 15 U.S. hotels from Anbang for $5.8 billion. Read more.

- Cresco Labs canceled plans to acquire Tryke Cos., a cannabis cultivator and processor with facilities in Nevada and Arizona, for $282.5 million.  Read more.

IPOs

- Jaws Acquisition, a Miami Beach, Fla.-based blank check company founded by Starwood Capital founder Barry Sternlicht and Brown University endowment CEO Joseph Dowling  filed to raise $400 million. The company plans to acquire a business outside of real estate, lodging, as well as oil and gas and energy infrastructure. Read more.

- Lyra Therapeutics, a Watertown, Mass.-based biotech developing drug and delivery solutions for ear, nose, and throat diseases, plans to raise $53 million in an offering on 3.5 million shares priced between $14 to $16. It has yet to post a revenue and posted losses of $16.3 million in 2019. Perceptive Advisors (32.4% pre-offering) and North Bridge Venture Partners (17.3%) back the firm. It plans to list on the Nasdaq as “LYRA.” Read more.

EXITS

- Blackstone acquired a 10% stake in Melco Resorts & Entertainment, a Macau casino operator, for about A$551.6 million ($359.04 million), which represents a discount of 5.2% to the stock's last closing price. Read more.

F+FS

- FIS (NYSE: FIS) launched FIS Ventures, which plans to invest $150 million in fintech startups over the next three years.

- Manna Tree Partners raised $141.5 million for its first fund Manna Tree Partners Fund I focused on wellbeing.

PEOPLE

- Bain Capital Ventures added Clelia Warburg Peters as a Venture Partner, focused on proptech. 

- Expa hired David Clark as a Partner.