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Why Facebook just made one of its biggest acquisitions yet

December 1, 2020, 3:09 PM UTC

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It might be facing scrutiny from antitrust regulators—but Facebook has just made one of its largest bets yet.

On Monday, the social media giant announced plans to acquire Kustomer, a customer management platform. While Facebook was mum on the financial terms of the transaction, sources at multiple publications peg the price at around $1 billion—below the acquisitions of Whatsapp for $19 billion and Oculus VR for $2 billion in 2014, but in the range of the famed acquisition of Instagram for $1 billion in 2012.

So why is Facebook making the acquisition? Facebook has been growing its base of e-commerce tools in a bid to increase its business users. In May, Facebook rolled out Facebook Shops, which allow businesses to create online stores via Facebook or Instagram. Whatsapp recently made it possible for businesses to chat directly with customers through the app. The pandemic seems to have only accelerated the focus on the sector.

“Increasingly, texts and messages have become just as important as that phone call—and businesses need to adapt,” Facebook’s Vice President of Ads and Business Products Dan Levy and Whatsapp COO Matt Idema wrote in a post on the Kustomer acquisition. “Messaging provides a better overall customer experience and drives sales for businesses.”

Companies that focus specifically on customer communication—like Twilio—have lately seen demand for both their services and stock soar.

That said, while Facebook may be best known for its social media platform rather than customer support business, the Kustomer acquisition will undoubtedly add to the antitrust grilling it is currently undergoing. Federal and state antitrust authorities are expected to file new lawsuits against Facebook or Google by the end of January, according to the Wall Street Journal

But Facebook will still argue that Kustomer is not a core part of its business and is not a social networking app. As a Facebook spokesperson told the New York Times: “We will continue to demonstrate to regulators that competition in the technology sector is vibrant.”

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

VENTURE DEALS

- Scale AI, a San Francisco-based A.I. training startup, raised $155 million in funding. Tiger Global led the round valuing it at over $3.5 billion.

- FLEXE, a Seattle-based on-demand warehousing and fulfillment company, raised $70 million in Series C funding. Investors included Activate Capital, Tiger Global, Madrona Ventures, Redpoint Ventures, Prologis Ventures, and T. Rowe Price Associates.

- Spotlight Therapeutics, a San Francisco-based company developing non-viral gene editing therapeutics for direct in vivo editing of target genes, raised a total $30 million. GV led the Series A.

- Ankorstore, a Paris-based marketplace for specialist brands and neighbourhood retailers, raised €25 million ($30 million) in Series A funding. Index Ventures led the round and was joined by investors including GFC, Alven and Aglaé. 

- Ekimetrics, a Paris-based data science company, raised €24 million ($28.7 million) in funding. Tikehau Capital and Bpifrance are the investors.

- Proscia, a Philadelphia-based provider of computational pathology software, raised $23 million in Series B funding. Scale Venture Partners led the round and was joined by investors including Hitachi Ventures.

- Infogrid, a London-based startup adding IoT devices to existing buildings, raised $15.5 million in Series A funding. Northzone led the round and was joined by investors including JLL Spark, Concrete VC, The Venture Collective, and Jigsaw VC. Read more.

- Databand, a New York and Tel Aviv-based maker of data health monitoring software, raised $14.5 million in Series A funding. Accel led the round and was joined by investors including Blumberg Capital, Lerer Hippeau, Ubiquity Ventures, Differential Ventures, F2 Venture Capital, and Bessemer Venture Partners

- Totum Labs, a San Diego, Calif.-based satellite tracking company, raised $13 million in Series A funding. Heroic Ventures and Space Capital led the round and were joined by Qualcomm Co-founder Dr. Andrew Viterbi and  Qamcom.

- iVexSol, a Worcester, Mass.-based maker of products for gene therapy programs, raised $13 million in Series A funding. Investors in the company have included Casdin Capital and BioLife Solutions.

- 
vivenu, a German-based maker of a ticketing platform, raised €12.6 million ($15.1 million) in Series A funding. Balderton Capital led the round and was joined by investors including Redalpine.

- Deduce, a New York-based provider of cybersecurity, raised $7.3 million in seed funding. True Ventures led the round and was joined by investors including Ridge Ventures. 

- Sanity Group, a Berlin-based provider of a CBD brand, raised $4.8 million from celebrity investors including musician Will.i.am, actress Alyssa Milano, German soccer player Mario Goetze and model Stefanie Giesinger along with Bitburger Ventures

- Fakespot, a New York-based maker of a way to check for scams on Amazon, Walmart and Shopify sites, raised $4 million in Series A funding. Bullpen Capital led the round and was joined by investors including Graph Ventures, Ty Shay, 500 Startups, and Faith Capital Holdings.

- Reposite, a New York-based maker of software for travel agents and advisors, raised $2.5 million in funding. Liberty City Ventures led the round.

- Contingent, a London-based supplier risk and resilience company, raised $2.3 million in seed funding. Connect Ventures led the round.

- SuperNormal, a maker of an A.I. platform for business video recordings, raised $2 million in seed funding. EQT Ventures led the round.

- Phood Solutions, a New York-based food supply chain company, raised $2 million in seed funding. New Stack Ventures led the round alongside Story Ventures.

PRIVATE EQUITY

- Francisco Partners agreed to acquire CDK Global’s (Nasdaq:CDK) International business segment, a provider of automotive retail software solutions in EMEA and Asia, for $1.5 billion. Financial terms weren't disclosed.

- Vista Equity Partners acquired Gainsight, a San Francisco-based provider of customer support software, for about $1.1 billion. 

- AEA Investors made a majority investment in Process Sensing Technologies, a Boston, Mass.-based maker of monitoring equipment. Battery Ventures will maintain a minority stake in the business. Financial terms weren't disclosed.

- ASGARD Partners & Co agreed to acquire a controlling stake in Angstrom Technology, a Grand Rapids, Mich.-based provider of cleanrooms. Financial terms weren't disclosed.

- Alliance Holdings, backed by Align Capital Partners, acquired Almega Environmental, a Cypress, Calif.-based provider of ambient air testing, on-site analysis and EPA compliance to the manufacturing, metals and renewable energy industries. Financial terms weren't disclosed.

- CarepathRx, backed by Nautic Partners, acquired UPMC's Chartwell subsidiary, which includes specialty pharmacy and home infusion services.  UPMC will become a strategic investor in CarepathRx.  Financial terms weren't disclosed.

- Entrepreneurial Equity Partners invested in Salm Partners, a Denmark, Wis.-based manufacturer of fully cooked sausages. Financial terms weren't disclosed.

- Select Rehabilitation, backed by Flexpoint Ford, acquired RehabCare, a Louisville, Ky.-based provider of rehab services, from Kindred Healthcare. Financial terms weren't disclosed.

- SFERRA Fine Linens, owned by Highlander Partners, acquired Pratesi, an Italian-based maker of luxury linens. Financial terms weren't disclosed.

- Core Specialty Insurance Holdings recapped StarStone U.S. Holdings, an insurance provider. SkyKnight Capital, Dragoneer Investment Group, and Aquiline Capital Partners led the recap. Financial terms weren't disclosed.

- Paceline Equity Partner will acquire the assets of Quick Fitting, a Providence, R.I.-based supplier of fitting devices such as pulling and connecting copper, stainless steel, PEX, and CPVC piping in plumbing. Financial terms weren't disclosed.

EXITS

- MidOcean Partners acquired FullSpeed Automotive, a Greenwood Village, Co.-based provider of car services including oil changes, tire sales and rotations, brake services, and car washes, from CenterOak Partners.

- Zimmer Biomet (NYSE: ZBH) acquired A&E Medical Corporation, a provider of musculoskeletal care, from Vance Street Capital, for $250 million. 

OTHER

- GlobalWafers says it is in talks to acquire Siltronic AG, a German silicon wafer manufacturer for about €3.8 billion ($4.5 billion). Read more.

- PPG (NYSE:PPG) agreed to acquire Ennis-Flint, a Greensboro, N.C.-based manufacturer of coatings and pavement marking products for about $1.2 billion.

- SoftBank invested about $690 million in Sinch, a Sweden-based cloud communications platform. 

- Blackstone (NYSE: BX) agreed to acquire DCI, a San Francisco-based quantitative credit investing firm with $7.5 billion in assets under management. Financial terms weren't disclosed.

- ServiceNow (NYSE: NOW) agreed to acquire Element AI, a provider of A.I. Financial terms weren't disclosed.

- Seismic acquired Grapevine6, a Toronto-based social and digital sales engagement platform. Financial terms weren't disclosed.

IPO

- Doordash, a San Francisco, Calif.-based food delivery company, plans to raise $2.6 billion in an offering of 33 million shares priced between $75 to $85, potentially valuing the firm close to $31 billion. The SoftBank Vision Fund and Sequoia Capital back the firm. Read more.

- C3.ai, a Redwood City, Calif.-based company developing ways to deploy AI applications, plans to raise $504 million in an offering of 15.5 million shares priced between $31 to $34. Existing investor BlackRock and new investor Capital Research Global Investors plan to buy 20% of the shares in the IPO while Koch Industries and Microsoft plan to buy $150 million worth of shares in a private placement. TPG and Baker Hughes back the firm. Read more.

- Seer, a Redwood City, Calif.-based maker of analysis tests for biomedical research, says it plans to raise $150 million in an offering of 8.8 million shares priced between $16 to $18. Investors Fidelity, SoftBank, T. Rowe Price, and aMoon Fund will also acquire $135 million in shares via private placement. Read more.

- Sigilon Therapeutics, a Cambridge, Mass.-based biotech developing therapeutics for chronic diseases, plans to raise $101 million in an offering of 5.6 million shares priced between $17 to $19. Flagship Pioneering and Eli Lilly back the firm. Read more.

- Kinnate Biopharma, a San Diego, Calif.-based oncology biotech, plans to raise $170 million in an offering of 10 million shares priced between $16 to $18. Its backers include Foresite Capital, OrbiMed, and RA Capital Management. Read more.

- Silverback Therapeutics, a Seattle-based company developing therapies for solid tumors, says it plans to raise $125 million in an offering of 7 million shares priced between $17 to $19. Orbimed and U.S. Venture Partners back the firm. Read more.

- PubMatic, a Redwood City, Calif.-based adtech company, says it plans to raise $100 million in an offering of 5.9 million shares (55% sold by existing shareholders) priced between $16 to $18. Read more.

SPAC

- Klaus Kleinfeld, the former CEO of Arconic, plans to raise funds via a SPAC, according to Bloomberg citing sources. Read more.

- ScION Tech Growth I, formed by ION Investment Group seeking a technology company, filed to raise up to $500 million. Read more.

- Corner Growth Acquisition, founded by Corner Ventures seeking a tech target, plans to raise $300 million. Read more.

- MedTech Acquisition, which is seeking a medical tech target, filed to raise $200 million. Read more.

F+FS

- An investor group led by Neuberger Berman’s Dyal Capital Partners and Wafra is in talks to acquire a minority stake in venture firm New Enterprise Associates, per Bloomberg citing sources. Read more.

PEOPLE

- Josh Elman says he will join Apple and work on the company’s App Store.

- Vista Equity Partners co-founder and president Brian Sheth resigned.

- Greenbriar Equity Group, a New York-based private equity firm, promoted Matthew Burke to managing director.