Warren Buffett’s Berkshire Hathaway buys up Snowflake ahead of its IPO
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Berkshire Hathaway is not known for its tech-investing chops, with Warren Buffett famously missing out on the sector’s enormous rally of recent decades and only investing in Apple and Amazon in 2016 and 2019 respectively—long after the duo had become established players.
Now, amid cries that tech companies are overvalued, in part due to a work-from-home rally, Berkshire Hathaway is not shying away.
The investing giant is leaping into one of the hottest initial public offerings of a tech company this year. Snowflake, a cloud database software provider, revealed on Tuesday that Berkshire Hathaway plans to buy some $250 million worth of shares at its IPO price and another 4 million shares from an existing investor also at the same price. At the midpoint of the estimated range at which Snowflake could debut, $80 apiece, Berkshire Hathaway would be buying a $570 million stake in the company that could be valued at over $22 billion.
While Buffett is better known for less exciting and more reliable bets on the likes of Geico and Coca-Cola, Berkshire Hathaway has been slowly digging into the tech space. At Berkshire’s 2018 annual shareholder meeting, Buffett declared that the largest companies by market cap were ones without net tangible assets, adding that he had made a mistake by not acquiring shares of Alphabet, Google’s parent company, earlier on.
For a sign of what Berkshire Hathaway may become then, look to Buffett’s younger lieutenants, who he has often leaned on to make the calls in tech. In 2018, Berkshire invested in two payments companies abroad, plowing $600 million altogether into Brazil’s StoneCo and India’s Paytm in deals that were largely attributed to Todd Combs, one of Berkshire’s portfolio managers. Similarly with Berkshire’s bet on Amazon, Buffett noted that “one of the fellows in the office that manage money” acquired some shares of e-commerce company, likely referring to Combs or Ted Weschler, another portfolio manager.
While they may not be helmed by Buffett, the bets still have features of the Oracle’s own investing style: StoneCo, Paytm, and Amazon are all leaders in their spaces, creating a moat against competitors.
Though unclear who led the latest deal, when it comes to Snowflake—well, a business with recurring revenue is just about as steady as it goes in tech.
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- Snyk, a Boston-based developer-based security company, raised $200 million. Addition led the round. The raise pushes Snyk’s valuation to more than $2.6 billion.
- NotCo, a Latin American food-tech company, raised $85 million in Series C funding. Future Positive and L Catterton co-led the round.
- Truepill, a San Mateo, Calif.-based API-connected healthcare infrastructure company, raised $75 million in Series C funding. Oak HC/FT led the round and was joined by investors including Optum Ventures, TI Platform Management, Sound Ventures and YCombinator.
- Ouster, a San Francisco, Calif.-based provider of digital lidar sensors, raised $42 million in Series B funding. Investors included Cox Automotive, Fontinalis Partners and Tao Capital Partners. Read more.
- Inversago Pharma, a Montreal-based biopharmaceutical company focused on metabolic conditions, raised $35m (€32 million) in Series B funding. Forbion led the round and was joined by investors including Fonds de solidarité FTQ, Genesys, JDRF T1D Fund, Amorchem, Anges Québec Capital, and adMare BioInnovations.
- Pcysys, an Israel-based cybersecurity firm, raised $25 million in Series B funding round. Insight Partners led the round and was joined by investors including Awz Ventures and The Blackstone Group.
- Hasura, a San Francisco-based data access infrastructure company, raised $25 million in Series B funding. Lightspeed Venture Partners led the round and was joined by investors including Vertex Ventures US, Nexus Venture Partners, Strive VC, and SAP.iO Fund.
- Deel, a San Francisco-based payroll and compliance platform for international teams, raised $30 million in Series B funding. Spark Capital led the round and was joined by investors including Andreessen Horowitz.
- LightForce Orthodontics, a Cambridge, Mass.-based maker of a 3D-printed bracket system, raised $14 million of Series B funding. Tyche Partners led the round and was joined by investors including Matrix Partners and AM Ventures.
- Panther Labs, a San Francisco-based cybersecurity startup, raised $15 million in Series A funding. Lightspeed Venture Partners led the round and was joined by investors including S28 Capital, Innovation Endeavors, and Fathom Capital.
- Bruush Oral Care, a Canadian e-commerce oral care company, raised $6.5 million in Series A funding.
- BoostUp.ai, Santa Clara, Calif.-based sales and customer acquisition platform, raised $6.3 million in Series A funding. Canaan Partners led the round and was joined by investors including Emergent Ventures, BGV, MFV Partners, and Correlation Ventures.
- Salaryo, a New York-based fintech platform for U.S. freelancers and startups, raised $5.8 million in funding. Investors included Variant Investments, KEN Investments, Techstars Ventures and Michael Ullmann’s investment group.
- Behold, a Los Angeles-based platform connecting women personalized styles, raised $5 million in funding. Investors included Upfront Ventures, Greycroft, Troy Capital Partners, and TenOneTen Ventures as well as Zillow co-founder Spencer Rascoff.
- Partake Brewing, a Canadian craft non-alcoholic beer brand, raised $4 million in funding. CircleUp Growth Partners led the round and was joined by investors including Export Development Canada, Natural Products Canada, McLean & Associates, and Barrel Ventures.
- PopSQL, a San Francisco-based maker of an SQL editor for teams, raised $3.4 million in seed funding. Gradient Ventures led the round and was joined by investors including Y Combinator, and FundersClub.
- Swyg, a Dublin-based platform that seeks to use peer-to-peer interviewers and A.I. to reduce bias in recruitment, raised $1.2 million in pre-seed funding. Frontline Ventures led the round.
- Proov, a Boulder-based at-home hormone testing kit company, raised an undisclosed amount of funding. Lightship Capital and Texas HALO Fund invested.
- Trint, an AI speech-to-text platform for transcription and content production, raised an undisclosed amount of funding from The New York Times Company.
- Hellman & Friedman invested $200 million at a $2.7 billion valuation in Sprinklr, a New York-based provider of enterprise software for customer experience management. It also raised $150 million in convertible securities from Sixth Street.
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- Chongqing Jiangxiaobai Liquor, a Chinese distiller aimed at younger generations, raised $300 million. China Renaissance Holdings led the round and was joined by investors including Baillie Gifford and China Merchants Bank International Capital. Read more.
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- Stone Point Capital became the lead investor in Bullhorn, a Boston-based cloud computing company. Financial terms weren't disclosed.
- Ardian acquired a minority stake in Wintics, a Paris-based company using deep learning algorithms to gather data from fixed cameras installed on roads and buildings. Financial terms weren't disclosed.
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BREAKUPS AND BANKRUPTCIES
- KAR Auction Services will acquire BacklotCars, a Kansas City-based automotive platform, for $425 million. BacklotCars investors included Stripes, Origin Ventures, and Pritzker Group Venture Capital.
- North American Bancard acquired SALIDO, a New York-based hospitality technology provider. Salido has been backed by investors including Alumni Venture Partners and Great Oak Ventures. Financial terms weren't disclosed.
- Advantage Solutions, an Austin-based sales and marketing firm backed by CVC Capital and Leonard Green & Partners, withdrew plans for an IPO and plans to go public via merger with Conyers Park II Acquisition, a SPAC formed by Centerview Capital. The deal will give Advantage an enterprise value of about $5.2 billion.
- American Well, a Boston-based telehealth company, plans to raise $525 million in an offering of 35 million shares priced between $14 to $16. Allianz Strategic Investments and Teva Pharmaceuticals back the firm. Google also invested $100 million. It plans to list on the NYSE as “AMWL.” Read more.
- JFrog, an Israel-based seller of software tools for app development, plans to raise $405 million in an offering 11.6 million shares (31% insider) priced between $33 to $37. The firm posted revenue of $104.7 million and losses of $5.4 million in 2019. Gemini Israel Ventures, Scale Venture Partners, and Sapphire Ventures back the firm. It plans to list on the Nasdaq as “FROG.” Read more.
- Chindata Group Holdings, a Beijing-based data center operator, filed to raise $100 million. Bain Capital backs the firm. It posted revenue of $120.7 million 2019 and a loss of $24 million. It plans to list on the Nasdaq as “CD.” Read more.
- Yalla Group, a Dubai-based provider of a voice-centric social networking platform focused on the Middle East and North Africa, plans to raise $100 million in an IPO. It posted revenue of $63.5 million and income of $28.9 million. SIG backs the firm. It plans to list on the NYSE as “YALA.” Read more.
- Sumo Logic, a Redwood City, Calif.-based provider of cloud log management solutions, plans to raise $281 million in an offering of 14.8 million shares priced between $17 to $21. Insider Tiger Global Management plans to acquire 10% of the shares. It posted revenue of $155.1 million in the year ending Jan. 2020 and a loss of $92.1 million. The company plans to list on the Nasdaq as “SUMO.” Read more.
- iHuman, a Beijing-based education provider, plans to raise $100 million. It posted revenue of $31 million in 2019 and a loss of $39.1 million. It plans to list on the NYSE as “IH.” Read more.
- Recharge Acquisition, a Sarasota, Fla.-based blank check company, filed to raise up to $200 million. The firm was formed by former Marathon Petroleum and MTC Technologies executives. Read more.
- Jim Murren, the former CEO of MGM, is considering raising over $300 million via a blank check company along with Morgan Stanley veterans Edward King and Daniel Fetters. Read more.
- Vector Acquisition, a San Francisco-based blank check company formed to acquire a tech, plans to raise $300 million. Vector Capital formed the firm. Read more.
- IG Acquisition, a New York-based blank check company targeting the leisure industry, filed on to raise $300 million. Read more.
- FinTech Acquisition IV, a blank check company formed to acquire a fintech business, filed for a $200 million IPO. Management of the Bancorp created the firm. Read more.
- Stellex Capital Management, a middle-market private equity firm, closed Stellex Capital Partners II with $1.8 billion.
- Dawn Capital, a London-based enterprise tech-focused venture shop, raised $400 million.
- DNX Ventures, an early-stage VC firm focusing on B2B startups in the U.S. and Japan, raised a new $315 million fund.