Happy Thursday. The outbreak of the Covid-19 coronavirus started out disrupting things like one-off business trips to Asia, but now is having a bigger impact on startups.

“There are clear signs that [the virus] will affect many startups adversely in 2020," said Bilal Zuberi, a Lux Capital partner. Speaking about hardware startups in particular, he said teams can't travel to their vendors and production in China has been suspended for now. That's delaying development timelines and orders. In some cases, the impact will be felt in three to six months, he said.

For hardware startups, "this is the second whammy in addition to tariff uncertainties," Mr. Zuberi said. The companies were already strained because of China-U.S. trade tensions. 

Another sector favored by venture capitalists that is directly exposed is e-commerce. Many companies source products from China. Many retailers already received inventories for the first quarter, but still, “e-commerce sales will be pressured, given logistical challenges with shipping,” Cowen analysts wrote in a note to clients Wednesday.

Even so, the public market is seemingly moving on, as investors hope that China is starting to get the disease’s spread under control.

And now on to the news...

Flying Surf Air Inc., a startup offering private plane charter flights, has acquired private charter marketplace BlackBird Air Inc., WSJ Pro's Marc Vartabedian reports.

• The purchase will enable Surf Air to expand beyond its fixed schedule model and offer on-demand charters in which customers can be matched with third-party planes and pilots, Surf Air Chief Executive Sudhin Shahani said.
   
• The deal comes as more companies experiment with offering private air travel. The purchase price wasn’t disclosed. Mr. Shahani said it is likely the first of several more acquisitions Surf Air could make in the near future.
   
• The purchase is exit for Blackbird’s investors, including New Enterprise Associates, which led the startup’s $10 million Series A financing round last March that gave Blackbird a roughly $30 million premoney valuation, Mr. Shahani said. Surf Air paid more than that valuation for Blackbird, he added.
   
• Blackbird has raised roughly $15 million since it was founded in 2016 and in addition to NEA, it has raised capital from Lunch Partners, Incite Ventures and angel investors including Wade Davis, Max Schireson and Simon Baker.

Shut down. Startup Essential Products Inc., the smartphone company from the father of Google’s Android mobile software, is shutting down after less than five years in business and raising $330 million in funding, the Journal reports. The startup said Wednesday it will cease operations and no longer provide software updates or customer support for its $499 titanium-encased smartphone, with its 360-degree camera, 128 gigabytes of storage and minimalistic design. The company had been working on a new device under the name Project Gem, but it wasn’t brought to market.

Turning tide? Japanese tech giant SoftBank Group Corp. said profit collapsed in the last three months of 2019, as the company—under pressure from a major activist investor—floated the possibility of paring back its ambitions for a planned sequel to the $100 billion Vision Fund, the Journal reports.

• The company on Wednesday said operating profit fell 99% to ¥2.6 billion ($23.6 million) for the quarter ended Dec. 31 versus the previous year. The sharp drop was largely attributed to continued weakness of the Vision Fund, which was hit by a fall in the share price of Uber, one of its biggest investments.
   
• However, SoftBank said its fortunes had improved since the quarter ended. A rise in Uber’s share price has pushed the Vision Fund back into the black, and a judge this week approved a long-delayed merger between its U.S. mobile carrier Sprint and rival T-Mobile. That decision prompted Sprint’s shares to soar Tuesday in U.S. trading, and pushed up SoftBank’s stock to close 12% higher Wednesday in Tokyo trading.
   
• SoftBank Chief Executive Masayoshi Son said recent events showed the “tide is turning” on the company’s problems.

Takeda Digital Ventures, a new venture arm of Takeda Pharmaceutical Co., is providing an undisclosed amount of growth financing to Seqster PDM Inc., a software-as-a-service startup whose technology is designed to enable individuals to aggregate their electronic-health records data along with data from sources such as genetic testing and wearable devices. San Diego-based Seqster formed in 2016 and previously raised just more than $4 million from individuals, said co-founder and Chief Executive Ardy Arianpour. Seqster’s technology is designed to solve challenges of interoperability by connecting data from various disparate sources. 

Funds

Early-stage data investor ValueStream Ventures has raised just over $25 million toward its $75 million ValueStream Ventures 2020 Fund LP, according to a regulatory filing. Last year, the firm participated in funding rounds for residential real-estate investment platform Entera, data-driven insight provider Aurora Insight Inc. and consumer financial data startup Windfall Data Inc.

People

European life sciences investor Sofinnova Partners appointed Robert Carroll as partner and head of investor relations. Prior to joining the firm, he helped establish and co-lead PricewaterhouseCoopers’ global fundraising advisory platform.

Grotech Ventures promoted Lawson DeVries to managing general partner. Before joining Grotech in 2005, Mr. DeVries held positions at the Buckingham Research Group and with the equity research department at Deutsche Bank.

Cancer drug developer Palleon Pharmaceuticals Inc. promoted Li Peng to chief scientific officer. Prior to joining the Waltham, Mass.-based company, Ms. Peng spent nearly 10 years at Medimmune/AstraZeneca. Palleon is backed by investors including AbbVie Ventures, Pfizer Ventures, SR One, Takeda Ventures and Vertex Ventures HC.

Exits

Stockholm-based payments provider and bank Klarna Holding AB agreed to acquire Italian payment company Moneymour for an undisclosed sum. In August 2019, Klarna raised $460 million in funding at a post-money valuation of $5.5 billion from investors including  Dragoneer Investment Group, Commonwealth Bank of Australia, HMI Capital, Merian Chrysalis Investment Co., Första AP-fonden, IPGL and IVP.

Headspace Inc., a Santa Monica, Calif.-based mindfulness and meditation app, raised $93 million in a Series C equity and debt round. The $53 million equity portion was led by blisce/, with participation from Waverley Capital, Times Bridge, Chernin Group, Spectrum Equity and Advancit Capital. Debt was provided by Pacific Western Bank.

Fenergo, a Dublin-based provider of client lifecycle management to financial institutions, closed an $80 million funding round led by DXC Technology and ABN Amro Ventures.

Nova Credit Inc., a New York- and San Francisco-based cross-border consumer credit reporting startup, secured $50 million in Series B financing. Kleiner Perkins led the round, which included participation from Canapi Ventures, Index Ventures, General Catalyst, Nyca Partners, Sound Ventures and others.

Deep Instinct, a New York-based cybersecurity startup, landed $43 million in Series C financing. Millennium New Horizons led the investment, with participation from Unbound, LG Technology Ventures, Nvidia and others.

CybelAngel, a Paris- and New York-based digital risk management platform, completed a $36 million Series B round led by Prime Ventures and Tempocap. Pieter Welten, partner at Prime Ventures, joined the company’s board.

Ramp, a New York-based corporate credit card startup, launched with $25 million in funding. Keith Rabois of Founders Fund led the investment and joined the board. Other participants in the round included Coatue, BoxGroup, Conversion Capital, Soma Capital and Backend Capital.

UrbanFootprint, a Berkeley, Calif.-based location intelligence and urban planning software developer, raised $11.5 million in Series A funding. Valo Ventures led the round, and was joined by Social Capital and Radicle Impact.

Praetorian, an Austin, Texas-based cybersecurity startup, closed a $10 million Series A round from investors including Bill Wood Ventures and McKinsey & Company.

Model9, a New York- and Tel Aviv-based provider of cloud data management for mainframes, fetched $9 million in Series A funding. Intel Capital led the round, which included contributions from previous backers StageOne, North First Ventures and Glenrock Israel.

Databook, a customer intelligence platform with offices in Palo Alto, Calif. and London, was seeded with a $5 million investment. Threshold Ventures led the round, with Managing Partner Josh Stein joining the board.

Elliptic, a London-based provider of crypto-asset risk management services, added $5 million in Series B funding from Wells Fargo Strategic Capital, bringing the round total to $28 million. In September 2019, the company raised the initial tranche of the round from SBI Holdings, AlbionVC, SignalFire, Octopus Ventures and Santander Innoventures.

Bit Fry Game Studios Inc., a Portsmouth, N.H.-based video game developer, secured a $3.5 million financing round from 1Up Ventures and Bitkraft Esports Ventures.

• As WhatsApp tops two billion users, Iis boss vows to defend encryption.
   

• Facebook suspends accounts in Myanmar, Russia and Iran for misinformation.

• Google appeals against EU antitrust fines.

• Carbon capture wins fans among oil giants.

• The world’s biggest phone show has been canceled due to coronavirus concerns. (Verge)
   

• Apple Pay is on pace to account for 10% of all global card transactions. (Quartz)

• DoNotPay app automatically cancels and sues robocallers. (Vice)

• The high cost of a free coding bootcamp. (Verge)

We cover venture capital and the global startup ecosystem. WSJ Pro Venture Capital is a premium service of The Wall Street Journal. Share your tips, comments and questions: vcnews@wsj.com

The Team: Tomio Geron, Yuliya Chernova, Brian Gormley, Heather Mack, Katie Roof and Marc Vartabedian.

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