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Why is Microsoft looking to acquire Discord?

March 23, 2021, 3:02 PM UTC

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Microsoft is clearly willing to spend billions to make acquisitions as its stock soars amid the pandemic.

In September, the tech giant announced plans to acquire gamemaker ZeniMax Media for $7.5 billion. And before that, it sought to strike a deal with short-form video app Tiktok.

Now, the company worth $1.8 trillion in public markets is reportedly in talks to acquire Discord for $10 billion, per VentureBeat and Bloomberg.

Granted, there’s no guarantee that Discord, which was last valued at $7 billion, will sell itself. And with an IPO market that seems raring to go, negotiations will likely be hard-fought in an acquisition deal. 

But the fact that Microsoft is looking into a company like Discord is signal enough of the tech giant’s strategy. 

A: It’s not shying away from a multi-billion acquisition in the social media space. Its past concentration on enterprise and business clientele allowed it to largely avoid the consumer-focused antitrust criticisms lobbed against the likes of Facebook

B: Microsoft has weighty ambitions in the gaming space, with its Xbox business surpassing $5 billion for the first time in the last three quarters of 2020—and don’t forget its recent acquisition of ZeniMax. This is a big glowing clue for its interest in Discord, which is known for its community of gamers.

Microsoft’s recent dealmaking attempts (and successes) reveal more explanations for its interest. Much of the company’s M&A strategy has involved businesses with online communities, such as Github, which operates as a kind of developer network and which Microsoft acquired for $7.5 billion. Reports say Microsoft has talked about a potential deal with social media company Pinterest as well.

And according to the Financial Times, acquiring such businesses likely leads to migrating them onto Microsoft’s cloud platform, Azure. Discord currently operates on Google’s cloud infrastructure. New acquisitions mean more data for “customers of Microsoft’s marketing services, while also acting as raw material for training the company’s AI systems,” per FT. All this sounds more than appealing for Microsoft.

RIBBIT CAPITAL’S NEW PARTNER: Payments startup Stripe has become well-known for its investments in recent years, outbidding at times even traditional VC firms. Now the investor who led the company’s M&A and Investing practice is leaving to join fintech-focused venture capital fund Ribbit Capital.

“I’ve known (and occasionally co-invested with) Ribbit for years, and have always been struck by their clear thinking and long-term approach,” wrote Jordan Angelos in a tweet Tuesday.

Under Angelos, Stripe acquired Nigeria-based payments company Paystack for $200 million and also made bets on companies including Carta competitor Pulley and online checkout startup Fast. His departure comes shortly after Stripe announced that it had raised $600 million at a $95 billion valuation, much of which will fund its expansion in Europe.

MORE DISPO DRAMA: Yesterday, I wrote about Spark Capital’s decision to give up its board seat and profits associated with its investment in disposable camera app company Dispo. On Monday, two other investors in the company followed Spark’s lead: Seven Seven Six and Unshackled Ventures both said they would donate profits from the investments. Read more.

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

VENTURE DEALS

- Plaid, a San Francisco-based financial technology startup, is raising roughly $600 million in a round that could value it between $10 billion to $15 billion, per the Information. Altimeter Capital is leading the deal. Read more.

- Ro, a New York-based healthcare tech company, raised $500 million in Series D funding. Investors included General Catalyst, FirstMark Capital, and TQ Ventures, as well as  SignalFire, Torch, BoxGroup, Altimeter, Baupost, Dragoneer, Shawspring, Radcliff, and 776.  

- Dataminr, a New York-based information discovery platform, raised $475 million valuing it at $4.1 billion. Investors include Eldridge, Valor Equity Partners, MSD Capital, Reinvent Capital, ArrowMark Partners, IVP, Eden Global, and investment funds managed by Morgan Stanley Tactical Value.

- Loft, a Brazil-based real estate platform, raised $425 million in Series D funding. D1 Capital led the round and was joined by investors including Advent, Altimeter, CPPIB, DST, GIC, Silver Lake Waterman, Soros, Tarsadia, and Tiger Global.

- Komodo Health, a New York City- and San Francisco-based health tech company, raised $220 million in Series E funding. Tiger Global Management and was joined by investors including Casdin Capital, ICONIQ Growth, Andreessen Horowitz, and SVB Capital.

- Orca Security, a Los Angeles-based cybersecurity company, raised $210 million in Series C funding, valuing it at $1.2 billion. CapitalG led the round and was joined by investors including Redpoint Ventures.

- Newlink Group, a Beijing-based gas station and charging pile search platform, raised $200 million. Bain Capital led the round and was joined by investors including Joy Capital.

- Evidation Health, a San Mateo, Calif.-based digital health company, raised $153 million in Series E funding. OMERS Growth Equity and Kaiser Permanente Group Trust led the round and were joined by McKesson Ventures and B Capital Group.

- Jumio, a Palo Alto, Calif.-based identity verification company, raised $150 million from Great Hill Partners.

- Aiven, a Helsinki-based software company focused on open source technologies and cloud infrastructure, raised $100 million in Series C funding, valuing it at over $800 million. Atomico led the round and was joined by investors including Salesforce Ventures and World Innovation Lab.

- Wiz, a Tel Aviv-based cybersecurity company, raised $130 million for a valuation of $1.7 billion. Advent Venture Partners led the round and was joined by investors including Cyberstarts, Index Ventures, Insight Partners, and Sequoia Capital. Read more.

- Veev, a San Mateo, Calif.-based homebuilding startup, raised $100 million in funding. Investors included More Investment House, Migdal Insurance Company, Psagot Investment House, and Shavit Capital.

- ID.me a McLean, Va.-based digital identity network, raised $100 million in Series C funding. Viking Global Investors led the round and was joined by investors including Counterpoint Global, PSP Growth, Lead Edge Capital, CapitalG, WndrCo, Willoughby Capital, BoxGroup, and Moonshots Capital. 

- Duckbill, a Shanghai, China-based container trucking platform, raised $50 million in funding. Temasek led the round and was joined by investors including Pavilion, Future Capital, Discovery Fund, Shunwei Capital, Furong Capital, and Zip Capital.

- XyloCor Therapeutics, a Malvern, Pa.-based clinical-stage biopharmaceutical company focused on coronary artery disease, raised $22.6 million. Fountain Healthcare Partners led the round and was joined by investors including Longwood Fund and Lumira Ventures

- DexCare, Seattle-based digital health company, raised $20 million. Define Ventures led the round and was joined by investors including Frist Cressey Ventures, Kaiser Permanente Ventures, SpringRock Ventures, and Providence Ventures. 

- Pluang, an Indonesia-based fintech, raised $20 million in pre-Series B funding. Openspace Ventures led the round and was joined by investors including Go Ventures. Read more.

- Fortem Technologies, a Pleasant Grove, Ut.-based company for detecting and defeating drones, raised $15 million. Toshiba Infrastructure Systems & Solutions was the investor.

- Connected2Fiber, a Boston-based cloud and communications company,  raised $12 million in Series B funding. Harbert Growth Partners led the round and was joined by investors including Ascent Venture Partners, Nauta Capital, and Osage Venture Partners

- TryNow, a San Francisco-based provider of tech for online retail, raised $12 million in Series A funding. Investors included Shine Capital, Craft Ventures, SciFi VC, Third Kind, as well as Zachary Perret and William Hockey (Plaid co-founders). Read more.

- Teamflow, a San Francisco-based virtual office platform provider, raised $11 million in Series A funding. Battery Ventures led the round.

- Counterpart, a Los Angeles-based insurtech using technology and data to transform the $10bn management liability insurance market, has raised $10m in funding led by Valor Equity Partners

- Trace, a San Francisco-based workflow and analytics company, raised $8.3 million. Investors included Greylock, Uncork Capital, Redpoint Ventures, Nyca Partners, and FOG Ventures

- Haystack, a Los Angeles-based platform for unifying communications, raised $8.2 million in seed funding. Investors included Coatue Management, Greycroft, BoxGroup, and Day One Ventures.

- MyCarrier, a Scottsdale, Ari.-based transportation management platform, raised $8 million in Series A funding. Greycroft and Lerer Hippeau led the round.

- Sellforte, a Helsinki-based marketing optimization platform, raised €4 million in funding. Sonae IM led the round and was joined by investors including Bonnier Ventures and Icebreaker.vc.

- Airly, a New York-based company focused on air quality detection, raised $3.3 million. firstminute capital led the round.

- Chums, a Beverly Hills, Calif.-based social shopping service, raised $3.5 million. Investors include Ludlow, Shrug, Contrary Capital, and Fuel Capital. Read more.

- Surround Insurance, a Cambridge, Mass.-based insurtech company, raised $2.6 million in seed funding. Investors included Sure Ventures, Cameron Ventures, Newark Venture Partners, and Plug & Play Ventures.

PRIVATE EQUITY

- Liquid Environmental Solutions, a portfolio company of Audax Private Equity, acquired Ciro’s Sewer Cleaning, a Cleveland-based commercial, residential, and municipal plumbing, grease trap, sewer, and other environmental services provider.  Financial terms weren't disclosed.

- Tech Data, backed by Apollo, will merge with SYNNEX (NYSE: SNX), a Fremont, Calif.-based distribution, systems design, and integration services company, for about $7.2 billion. Financial terms weren't disclosed.

- Appriss, backed by Insight Partners, acquired PatientPing, a Boston-based healthcare tech company, for $500 million. Read more.

- Accelmed Partners led a $40 million investment in MedMinder Systems, a Needham, Mass.-based pharmacy and medication adherence solution focused on elderly and polypharmacy patients. Financial terms weren't disclosed.

- Blackstone and Atairos made a minority investment in GeoComply Solutions, a Canada-based geolocation data and risk analysis company. Financial terms weren't disclosed.

- RLG Capital and Trinity Private Equity Group invested additional capital in eLearning Brothers, an American Fork, Ut.-based learning tech company. Financial terms weren't disclosed.

- Fingerpaint, backed by Knox Lane, invested in Leaderboard Branding, a Charlotte, N.C.-based marketing company. Financial terms weren't disclosed.

- Omega Healthcare, backed by Goldman Sachs Merchant and Everstone Group, invested in himagine Solutions, a St. Louis, Mo.-based provider of medical coding and registry services. Financial terms weren't disclosed.

- ProAmpac, backed by investors including Ardian, acquired IG Industries and Brayford Plastics, U.K.-based providers of packaging products. Financial terms weren't disclosed.

EXITS

- Ametek agreed to acquire Abaco Systems, a Huntsvilles, Ala.-based maker of computers systems, from Veritas Capital for nearly $1.4 billion.

- Insightful Science agreed to acquire Dotmatics, a U.K.-based data company. Bloomberg reports that the deal is worth as much as 500 million pounds ($690 million). Scottish Equity Partners backs Dotmatics. Read more.

- Mondelez International acquired a majority interest in Grenade, a sports nutrition brand, from Lion Capital. Financial terms weren't disclosed.

- OneTrust, backed by investors including TCV, Insight Partners, and Coatue, agreed to acquire Convercent, a Denver-based provider of ethics and compliance cloud software. Investors including Sapphire Ventures, Tola Capital, and Azure Capital Partners backed Convercent. Financial terms weren't disclosed.

- Thoma Bravo agreed to acquire Calabrio, a Minneapolis-based customer experience intelligence company, from KKR. Financial terms weren't disclosed.

OTHER

- Box (NYSE: BOX), a Redwood City, Calif.-based file sharing company, is exploring a potential sale, per Bloomberg. Read more.

- ByteDance agreed to acquire Moonton Technology, a Shanghai-based gaming studio, for about $4 billion, per Bloomberg. Read more.

- ST Engineering offered to acquire Cubic Corp. (NYSE: CUB), a San Diego-based transportation and defense company, for about $2.4 billion. Veritas Capital and Elliott Management previously offered to acquire Cubic for $2.2 billion. Read more.

- Hopin acquired video hosting provider Streamable and video technology company Jamm. Financial terms weren't disclosed.

- Peloton Interactive (Nasdaq: PTON) acquired Aiqudo, Atlas Wearables, and Otari, companies in the voice control, wearables, and interactive mat spaces. Read more.

IPO

- Bilibili (Nasdaq: BILI), a China-based video streaming company, is set to raise HK$20 billion ($2.6 billion) from a second listing in Hong Kong, per Bloomberg. Read more.

- AppLovin, a Palo Alto, Calif.-based game making startup, says it plans to raise $1 billion, though the figure is likely a placeholder. KKR backs the firm. Read more.

- Coursera, a Mountainview, Calif.-based edtech company, now plans to raise $495 million through an offering of 15.7 million shares (7% insider sode) priced between $30 to $33. NEA and G Squared back the firm. Read more.

- ACV Auctions, a Buffalo, N.Y.-based auto marketplace, plans to raise $364.1 million in an IPO of some 16.6 million shares priced between $20 to $22 apiece. Tribeca Venture Partners and Bessemer Venture Partners back the firm. Read more.

- Karooooo (Cartrack), a South African provider of vehicle fleet management software, plans to raise $190 million in an offering of 4 million shares (38% insider sold) priced at $47.52, its price in Johannesburg. Gobi Capital backs the firm. Read more.

- Recursion Pharmaceuticals, a Salt Lake City, Ut.-based drug discovery biotech, filed to raise $100 million. Investors include Lux Capital and Data Collective (DCVC). Read more.

SPAC

- WeWork, the New York-based co-working company, lost $3.2 billion last year, it revealed in pitch decks as it seeks to go public via merger with a SPAC, per Reuters. WeWork is seeking a valuation of about $9 billion including debt. Read more.

- NextGen Acquisition II, a SPAC led by Virgin Galactic Director George Mattson focused on the industrial, technology, and healthcare sectors, raised $350 million, lower than the $400 million it previously sought.

- Lazard Healthcare Acquisition I and Lazard Fintech Acquisition I, two SPACs from Lazard, are aiming to raise $250 million each.

- Jeneration Acquisition, a SPAC formed by Generation Group seeking targets in Asia, filed to raise $300 million.

- Supernova Partners Acquisition III, a SPAC co-created by a Zillow co-founder, raised $250 million.

F+FS

- Vetamer Capital Management, a San Francisco-based crossover investment focused on financials and technology, launched with $350 million under management.

- Bedrock, a New York-based venture capital firm, raised $350 million for its third fund.

- Data Point Capital, a Boston-based venture capital firm, raised over $100 million for Data Point Capital III.

- Aldea Ventures, a Spain-based venture firm, raised €60 million of a planned €100 million in the first close of its first close of its Pan-European fund. Read more.

The Laerdal Million Lives Fund, a San Francisco-based firm focused on healthcare, launched a $100 million venture capital fund.

- KdT Ventures, an Austin-based early-stage firm, raised $50 million for its most recent fund.

PEOPLE

- Bowery Capital, a New York-based early-stage venture firm, named Loren Straub as a general partner.

PEOPLE

- Calibrate Ventures, a Pasadena, Calif.-based venture firm, named Paolo Pirjanian, CEO and co-founder of Embodied, as a venture partner.

- Apollo Global Management, a New York-based investment firm, revealed that Leon Black stepped down as CEO four months ahead of schedule and will no longer retain a role as chairman.