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Good morning, Term Sheet readers. Finance reporter Anne Sraders here, filling in for Lucinda.
VC fundraising just booked a new record: U.S. VC funds raised a total of $69.1 billion so far in 2020, beating the high set in 2018 of $67.8 billion, according to PitchBook.
And we have Andreessen Horowitz to thank for that. The firm closed two massive funds on Friday: one $1.3 billion fund for early-stage consumer and fintech companies, and another $3.2 billion fund focused on later-stage investments. (Mega funds over $1 billion like a16z’s made up a record 15% of all U.S. VC funds raised this year as of September.)
Part of the funding frenzy owes to the “move from on-premise to cloud, from laptops to mobile—all of these big, big mega trends are now starting to hit their stride,” Bain Capital Ventures partner Enrique Salem tells Term Sheet.
To be sure, venture dollars have long flowed into fintech, consumer tech, and educational technology. But those trends have been “pulled forward” during the pandemic, says Manhattan Venture Partners’ head of research Santosh Rao. (Think SoftBank’s recent investments in edtech companies like Kahoot.) And with lots of IPOs in the pipeline, Rao believes LPs and GPs are eager to recycle that cash into these growing companies.
But fewer funds are also chasing more money. Per PitchBook, while the fundraising totals are getting bigger, the number of funds is getting smaller: So far this year, just 287 funds set the 2020 total, versus 589 funds in 2018. Meanwhile, funding rounds are swelling, even early-stage ones, Bain’s Salem points out.
“The trend is toward mega funds, the huge funds, so the small funds are just kind of getting squeezed out,” Rao says.
And that’s where I wonder: Are VCs going to have to raise bigger and bigger funds to compete? “The huge ones are probably getting better terms,” Rao says. That doesn’t mean small funds are dying off, but with many companies staying private longer, “startups prefer big funds, big VCs, so they have some guarantee of flow,” he says. “It just means it’s very selective.”
As for investor appetite for startups, Salem believes we’re in for another year of healthy VC fundraising in 2021: “There’s more demand than I’ve ever seen.”
SPEAKING OF ANDREESSEN HOROWITZ… Payment processing fintech Stripe, backed by a16z among other big firms, is reportedly in early-stage talks to raise another big round of funding that could boost its valuation to an eye-popping $100 billion, Bloomberg reports (no word on whether a16z is involved). Stripe was most recently valued at $36 billion after an extended Series G round in April, but at $100 billion, it would be the most valuable venture-backed U.S. startup, per CB Insights.
HOUSEKEEPING: Term Sheet is off for Thursday and Friday, and Lucinda will be back on Monday. Until then, have a wonderful Thanksgiving.
- Manbang, a China-based logistics and truck hailing company, raised $1.7 billion from investors including SoftBank, Fidelity, Sequoia Capital China, Hillhouse Capital, Permira, GGV Capital, Lightspeed China Partners, Tencent, YF Capital, and Baillie Gifford. Read more.
- Boulevard, a Los Angeles-based salon and spa management platform, raised $27 million in Series B funding. Index Ventures and Toba Capital co-led the round and were joined by investors including VMG Partners, Bonfire Ventures, Ludlow Ventures and BoxGroup.
- Logz.io, a Boston and Tel Aviv-based cloud DevOps platform, raised $23 million in funding from investors led by Pitango Growth.
- WithMe Health, a San Mateo, Calif.-based company that provides personalized guidance and evaluations of medications, raised $20 million in Series B funding. OMERS Ventures led the round and was joined by investors including Section 32, Shulman Ventures, MTS Ventures and Oak HC/FT.
- Morse Micro, an Australia-based WiFi integrated circuit chip solutions startup, raised $13 million in additional funding for its Series A round totaling $30 million. Investors include Blackbird Ventures, Main Sequence Ventures, Clean Energy Innovation Fund, Skip Capital, and Ray Stata.
- DefenseStorm, an Alpharetta, Ga.-based cybersecurity management platform for community banks and credit unions, raised $12 million in Series B funding. Georgian Partners led the round and was joined by TTV Capital.
- WeGift, a U.K.-based digital rewards platform that helps businesses give gift cards to customers, raised $8 million a Series A extension round. AlbionVC led the round and was joined by investors including Stride.vc, SAP.iO fund and Unilever Ventures. Read more.
- Glue, an Israel-based A.I. platform for small business loyalty programs, raised $8 million in Series A funding from private investors led by Unicorn Technologies.
- Superpeer, a San Francisco-based platform that helps experts share and monetize their advice, raised $8 million from Acrew Capital, Audacious Ventures, Homebrew, Moxxie Ventures, Brianne Kimmel, Scott Belsky and OnDeck. Read more.
- F3, a Latvia-based social media app, raised $3.9 million in seed funding from investors including Russian dating site Mamba and its investor Mail.ru Group, venture firm Adfirst, and angel investors.
- First Reserve agreed to acquire The Goldfield Corporation, a Melbourne, Fla.-based maintenance services provider for utilities and industrials, for $194 million in enterprise value including net debt.
- 1WorldSync, owned by Battery Ventures, acquired CNET Content Solutions, a San Francisco-based software service and analytics provider for e-commerce, from Red Ventures. Financial terms weren’t disclosed.
- Aspen Surgical Products, owned by Audax Private Equity, acquired Protek Medical Products, a Coralville, Iowa-based manufacturer of protective covers for medical equipment used in vascular procedures, ultrasounds, and biopsies. Financial terms weren’t disclosed.
- A group of private investors led by Bain Capital Credit and Pacific Lake Partners invested in OneShield Software, a Marlborough, Mass.-based software provider for P&C insurance companies. Financial terms weren’t disclosed.
- Clearlake Capital Group agreed to acquire Dimora Brands, a Dallas-based designer and manufacturer of hardware for homeowners and builders, from affiliates of The Jordan Company. Financial terms of the transaction weren’t disclosed.
- Zywave, backed by Clearlake Capital Group and Aurora Capital Partners, agreed to acquire Insurance Technologies Corporation, a Carrollton, Texas-based marketing and agency management software services provider for insurance companies, from Accel-KKR. Financial terms weren’t disclosed.
- Highline do Brasil, backed by Digital Colony, agreed to acquire Phoenix Tower do Brasil, a Brasil-based telecommunications infrastructure and cell antenna systems provider, from Blackstone. Financial terms weren’t disclosed.
- Future agreed to acquire the owner of GoCompare, a U.K.-based pricing comparison site, for £594 million ($793 million).
- CoStar Group (NASDAQ: CSGP) agreed to acquire Homesnap, a Bethesda, Md.-based online real estate platform for home listings, for $250 million in cash.
- Lixte Biotechnology Holdings, a Phase 2 biotech developing technology using protein enzyme inhibitors to treat cancer, raised $6 million. Read more.
- JD Health, the health care unit of Chinese e-commerce business JD.com, will reportedly raise up to $3.5 billion in a Hong Kong IPO, outlets including the Financial Times report. Read more.
- Mytheresa Group, a German-based luxury clothing online retailer, confidentiality filed for an IPO. Read more.
- Senior Connect Acquisition I, formed by Richard Burke, the founder and former CEO of UnitedHealth Group, filed to raise up to $300 million. The firm is seeking a target in health and lifestyle sectors catering to seniors. Read more.
- Marlin Technology Corp, formed by Marlin Equity Partners, filed to raise up to $300 million. The firm is seeking a target in the tech sector. Read more.
- Spartan Acquisition II, the second SPAC from Apollo Global Management, raised $300 million. The firm is seeking a target in the North American energy and renewable energy sector. Read more.
- Forest Road Acquisition, formed by Forest Road, raised $261 million by issuing more shares than anticipated. The firm is seeking a target in the technology, media, and telecommunications sectors. Read more.
- Roth CH Acquisition II, the second SPAC from Roth Capital and Craig-Hallum executives, filed to raise up to $100 million. The firm is seeking a target in several industries including business services, healthcare, technology and consumer sectors. Read more.
- Globis Acquisition, formed by Globis Capital Advisors and Chardan Capital Markets, filed to raise up to $100 million. The firm is seeking a target in a variety of global sectors including water, energy, infrastructure, telecommunications, and natural resources. Read more.
BANKRUPTCIES, HANGUPS, AND BREAKUPS
- Northwest Hardwoods, Inc, a Tacoma, Wash.-based lumber company backed by private equity firm Littlejohn, filed for bankruptcy protection.