The U.S. venture capital world is blistering hot. Why it won’t cool down just yet
Good morning, Term Sheet readers. Finance reporter Anne Sraders here again, filling in for Lucinda.
If one thing’s for sure, it’s been a record-breaking year in the venture capital space—whether you’re talking fundraising or mega deals. Look no further than the U.S. venture scene, which so far this year has posted a historic first half.
A couple stats to refresh: U.S. VC investments hit a record high of $123.2 billion across 3,100 deals in the first half of 2021, per a Refinitiv Deals Intelligence report out Monday (see Refinitiv’s chart below). Funding rounds swelled in the first half, with the average round size hitting $40 million “for the first time in history,” per the report; while fundraising also notched historic records, with 472 funds raising $64.2 billion in the first half.
I don’t know about you, but continually seeing all these record numbers has me wondering: Aren’t things due to cool off?
Well, not anytime soon, if you ask industry veterans like Jeff Grabow, U.S. Venture Capital lead at Ernst and Young. In the home stretch of the year, “I struggle to see what slows things down in the near term,” Grabow tells me.
Anecdotally, he says the pace of deals is aggressive: “We’re hearing from growth VCs that [deals] that used to close in a month are now closing in a week. I’ve heard that a couple times.”
And based on the VC activity and mega fundings we’ve seen lately (think EV startup Rivian’s $2.5 billion late July round), it’s looking like it’ll end up being a hot VC summer. “Looking at what I’ve seen in July, it doesn’t appear to have slowed,” and “we’ve seen some pretty robust deals early in August,” Grabow notes. “Just talking to people, I don’t think we’re gonna see … a normal summer shutdown, or like a break—I think people are very focused on getting deals done, and taking advantage of what the perceived opportunities are, so they’re working hard through the summer.”
So far this summer, global VC investment in July kept up June’s record pace, per Crunchbase data in a report last week, while the number of new unicorns also continued to grow at a rapid clip. VC firms, chock full of cash, aren’t resting on their laurels because they’ve “never had more investable themes when you think about areas of convergence where technology is being applied,” Grabow argues, while at the same time there’s a “huge population” of companies that are ripe for scaling up.
There’s enough “momentum” right now and “number of companies in the pipeline,” adds Grabow, for this to continue “for 12, 18 months.”
Of course that’s a bullish prediction, and it’s too soon to tell whether the third quarter will prove as historic as its predecessors. But even if the VC space does begin to cool off along with the weather, 2021 is still bound to end up a banner year.
SoftBank’s big Turkey bet: Turkey’s top e-commerce platform Trendyol, backed by Alibaba, just raised a whopping $1.5 billion in funding from heavy-hitters including General Atlantic and SoftBank. The deal is notable for a couple reasons: It marks SoftBank’s first bet in Turkey, while the raise also helped mint Trendyol, now valued at $16.5 billion, as Turkey’s first decacorn—a.k.a. a startup worth over $10 billion.
Speaking of big deals…Elon Musk’s SpaceX did a rare thing last month and struck a deal to acquire IoT satellite startup Swarm, a filing showed last week. The terms of the deal weren’t disclosed, but the startup, founded in 2016, has raised $27.5 million from investors, which include Chamath Palihapitiya’s Social Capital, at a $85 million valuation, per PitchBook data.
Jessica Mathews compiled the IPO and SPAC sections of this newsletter.
- Trendyol, a Turkey-based e-commerce platform, raised $1.5 billion in funding. General Atlantic, SoftBank Vision Fund 2, Princeville Capital and sovereign wealth funds ADQ (UAE) and Qatar Investment Authority co-led the round.
- Fanatics, a Jacksonville, Fla.-based online sports merchandise retailer, raised $325 million in funding from investors including Shawn “Jay-Z” Carter, Roc Nation, Major League Baseball, SoftBank and Silver Lake, multiple outlets reported.
- Reify Health, a Boston-based provider of software for optimizing clinical trials, raised $220 million in Series C funding. Coatue Management led the round and was joined by investors including ICONIQ Growth, Adams Street Partners, Sierra Ventures and Battery Ventures.
- 80 Acres Farms, a Hamilton, Ohio-based vertical farming company focused on eco-friendly farming and pesticide-free produce, raised $160 million in Series B funding. General Atlantic led the round and was joined by investors including Siemens Financial Services, Blue Earth (formerly PG Impact Investments), Barclays and Taurus.
- Tulip Interfaces, a Somerville, Mass.-based company that helps frontline operations and workers improve productivity, raised $100 million in Series C funding. Insight Partners led the round and was joined by investors including Pitango Growth, TIME Ventures, DMG MORI, NEA, and Vertex Ventures US.
- FreshBooks, a Canada-based cloud accounting software startup, raised $80.8 million in Series E funding and $50 million in debt financing. Accomplice led the round and was joined by investors including J.P. Morgan, Gaingels, BMO, Manulife and Barclays.
- Hologram, a Chicago-based cellular connectivity platform for companies to manage their IoT devices, raised $65 million in Series B funding. Tiger Global led the round and was joined by investors including Bullpen Capital, NextView Ventures, and Mucker Capital.
- Butternut Box, a U.K.-based fresh dog food delivery startup, raised £40 million ($55 million) in funding. L Catterton’s european fund led the round and was joined by investors including White Star Capital, Five Seasons Ventures and Passion Capital.
- Pave, a San Francisco-based compensation platform for companies to manage wages, raised $46 million in Series B funding. YC Continuity led the round and was joined by investors including Andreessen Horowitz and Bessemer Venture Partners.
- Kroo, a London-based consumer banking startup focused on social spending, raised £17.7 million ($24.5 million) in Series A funding led by entrepreneur and Karlani Capital founder Rudy Karsan.
- WorkMotion, a Berlin-based HR platform to help manage employees abroad, raised $24 million in Series A funding from investors including Activant Capital and Xange.
- FireHydrant, a New York-based incident response and management platform, raised $23 million in Series B funding. Harmony Partners led the round and was joined by investors including Salesforce Ventures, Menlo Ventures and Work-Bench.
- Canopy, a loan management platform for fintechs, raised $15 million in Series A funding. Canaan Partners led the round and was joined by investors including Homebrew, Foundation, BoxGroup, and Commerce.
– WoodSpoon, a New York City-based delivery service for home chefs to connect with customers, raised $14 million in Series A funding. Restaurant Brands International led the round and was joined by investors including World Trade Ventures and individual investors.
- Breeze, an Omaha, Neb.-based insurtech startup, raised $10 million in Series A funding. Link Ventures led the round and was joined by investors including Northwestern Mutual Future Ventures, Silicon Valley Bank, M25, Fiat Ventures, and Invest Nebraska.
- Vesttoo, a Tel Aviv-based alternative reinsurance and risk management platform, raised $6 million in a Series A funding. Hanaco Ventures led the round.
- CommandBar, a San Francisco-based web tool to make commands and searches in software easier, raised $4.8 million in seed funding. Thrive Capital led the round and was joined by investors including Y Combinator, BoxGroup and several angel investors.
- Neuron7.ai, a San Jose, Calif.-based startup that provides that helps enterprise companies diagnose service issues and use data, raised $4.2 million in seed funding from investors including Nexus Venture Partners and Battery Ventures.
- Equifax agreed to acquire Appriss Insights, a Louisville, Ky.-based risk and criminal justice intelligence provider and business unit of Appriss, from Appriss, which is backed by Clearlake Capital Group and Insight Partners, for $1.8 billion in cash.
- A Sun Capital Partners affiliate will acquire Select Interior Concepts, an Atlanta-based interior building products distributor for commercial and residential builders, for $411 million in cash.
- A Peak Rock Capital affiliate acquired Amtech Software, a Fort Washington, Pa.-based manufacturing tech and enterprise resource planning software provider. Financial terms weren’t disclosed.
- Topspin Consumer Partners invested in SportPet, a Waukesha, Wis.-based firm that makes and markets private label pet products. Financial terms weren’t disclosed.
- Deutsche Post reportedly entered discussions with Cobepa about acquiring Hillebrand, a Germany-based alcohol logistics company, Bloomberg reported citing sources. A deal could value Hillebrand at roughly €1.5 billion ($1.8 billion), per Bloomberg.
- SpaceX will acquire Swarm Technologies, a Palo Alto-based IoT satellite startup backed by investors including Social Capital and Craft Ventures. Financial terms weren’t disclosed.
- FSN Capital acquired a majority stake in Adragos, a Germany-based pharmaceuticals contract developer and manufacturer owned by Prange Group, which will remain invested. Financial terms weren’t disclosed.
- Palladium Equity Partners acquired Health Connect America, a Franklin, Tenn.-based behavioral and mental health services provider, from Harren Equity Partners. Financial terms weren’t disclosed.
- Canadian Pacific Railway upped its bid to takeover Kansas City Southern, a Kansas-based freight railroad, to $27.3 billion. Kansas City Southern currently has a pending deal with Canadian National Railway.
- DraftKings (NASDAQ: DKNG) agreed to acquire Golden Nugget Online Gaming (NASDAQ: GNOG), a Houston-based online gambling company, for roughly $1.6 billion in stock.
- Ritchie Bros (NYSE: RBA) will acquire Euro Auctions, a Northern Ireland-based heavy plant and machinery auction house, for an enterprise value of £775 million (roughly $1.1 billion).
- Nanox (NASDAQ: NNOX) agreed to acquire Zebra Medical Vision, an Israel-based medical imaging analytics company that uses AI. The deal is valued at up to $200 million.
- Passport acquired Access Worldwide, an Atlanta-based international mailing and shipping company. Financial terms weren’t disclosed.
- Ciner Group is reportedly considering the sale of a stake in We Soda, a U.K.-based producer of soda ash, Bloomberg reported citing sources.
- Turo Inc., a San Francisco-based car sharing marketplace, confidentially filed for an initial public offering, per Reuters. German auto company Daimler AG and GV back the firm.
- Eliem Therapeutics, a Redmond, Wash.-based nervous system biotech company, raised $80 million in an offering of 6.4 million shares priced at $12.50 per share—it had previously planned to offer 6 million shares. The company reported a net loss and comprehensive loss of $20.7 million in 2020 and has yet to post revenue. RA Capital and research charity LifeArc back the firm.
- Meihua International Medical Technologies Co., a holding company for several Chinese medical technology or manufacturing companies, filed for an initial public offering in the U.S. The company posted total revenue of $89 million in 2020 and net income of $19 million.
- Nubank, a Brazilian digital bank, has hired investment bankers for an initial public offering in the U.S., according to Reuters. Berkshire Hathaway backs the firm.
- Sands Capital, an Arlington, Va.-based public and private equity investor, raised $560 million for its Sands Capital Life Sciences Pulse Fund II.
Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.