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Scale Venture Doubles Down on Smart Cloud
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Good day. Scale Venture Partners, a 22-year-old firm focused on cloud startups, recently closed a new $900 million fund, betting on continued growth in the field—but not just for any cloud companies.
Enterprise cloud was already booming when many companies raced to shift their IT systems to the cloud during the pandemic to keep their businesses and remote-work apps humming. But that surge in spending is beginning to ebb, analysts say, and an economic slowdown looms that could blunt sales.
So rather than simple lift-and-shift cloud services, Scale is bullish on startups developing cognitive apps that combine massive amounts of data with machine learning and connectivity to give corporate customers more dynamic and predictive capabilities, said Alex Niehenke, a partner at Scale Venture.
“The next wave of software companies we're currently investing in are able to make intelligent decisions to automate away monotonous parts of your workflow,” he said.
In previous funds, Scale only had a couple of deals with startups building cognitive apps. Today, as companies compile more and more connected and easily accessible data, the firm expects most of its deals to involve cognitive app developers, Mr. Niehenke said.
The economic headwinds facing cloud vendors will make for a more difficult sales environment next year, he said. But many mature cloud startups have been able to execute their plans, extend their runway and cash, and plump their valuations, Mr. Niehenke added.
That’s not just wishful thinking. Scale’s proprietary benchmarking platform, called Scale Studio, contains a dataset of financials and metrics on more than 1,000 private companies across 10,000 fiscal quarters, offering a high degree of precision on cloud-startup performance.
Based in Foster City, Calif., Scale looks for early-stage startups, typically having completed a Series A or B round. Its portfolio of investments includes standout cloud companies like Honeycomb, Observe.ai and Papaya Global.
Companies that offer business tools without substantial advances in technology “are now at most risk from venture freeze,” Mr. Niehenke noted. “The cloud market should fare the best on a relative basis.”
Scale plans to start deploying capital from its latest fund early next year.
And now on to the news...
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Kim Kardashian agreed to settle the SEC claims without admitting or denying wrongdoing. PHOTO: SEAN ZANNI/GETTY IMAGES FOR FENDI
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Kim Kardashian settles with SEC in crypto probe. The reality TV star will pay $1.26 million to settle regulatory allegations that she failed to disclose money she was paid for promoting a cryptocurrency to investors, the Securities and Exchange Commission said, the latest celebrity to face punishment over their crypto dealings, The Wall Street Journal reports. The enforcement action shows how celebrities have benefited from crypto’s rise as an asset class targeted at individual investors—and how regulators want to make examples of famous people who they claim have flouted investor-protection laws to profit.
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$250,000
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The amount Kim Kardashian was paid to hype EMAX cryptocurrency tokens on her Instagram account, according to the SEC.
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Southeast Asia’s Internet Giants Bet on ‘Buy Now, Pay Later’
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Some of Southeast Asia’s largest internet companies are trying to boost their revenue with an old-fashioned business: lending, WSJ reports. Buy now, pay later services have picked up pace in Southeast Asia as a result of the Covid-19 pandemic. Grab Holdings Ltd., Sea Ltd. and GoTo Group are all offering their customers short-term loans to help them pay for a variety of products and services, including taxis, food delivery and beauty products. The most recent rollout of services in the region came in July, when GoTo launched a pay-later service called GoPayLater Cicil—which means “taking installments” in Indonesian.
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General Atlantic Expands Tech-Buyout Strategy
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Growth-equity pioneer General Atlantic aims to expand its technology buyout business, pointing at a long-term opportunity stemming from plunging publicly traded stocks in the sector. To lead the strategy, the firm has hired Jonathan Durham, a technology deal maker with Silver Lake since 2005. Mr. Durham has joined General Atlantic as a managing director and head of technology buyouts. Mr. Durham, joined by Anton Levy, who leads the firm’s sector investment operations as co-president, managing director and chairman of its global technology group, recently discussed their plans with WSJ Pro Private Equity.
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Long-Duration Battery Startup Form Energy Raises $450 Million
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A startup developing iron-air batteries that could store renewable power for several days is raising $450 million from backers including steelmaker ArcelorMittal and TPG Inc., WSJ reports. Form Energy Inc. plans to use the funds to build its first big manufacturing facility and begin selling to customers. The private funding round more than doubles the total equity Form has raised in its five-year history, company officials said. The fundraising adds to a string of clean-energy investments following the Inflation Reduction Act, which cemented tax credits for battery storage and renewables for a decade.
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Funds
83North closed on $400 million for its 11th fund, bringing the firm’s total capital under management to over $2.2 billion. With offices in London and Tel Aviv, 83North recently participated in funding rounds for podcast and audiobook subscription service Podimo and execution management software developer Celonis.
People
Cybersecurity startup Bugcrowd appointed Robert Taccini as chief financial officer. He was previously CFO at WhiteHat Security. San Francisco-based Bugcrowd is backed by Blackbird Ventures, Costanoa Ventures, Industry Ventures, Paladin Capital Group, Rally Ventures, Salesforce Ventures and Triangle Peak Partners.
Exits
Air hygiene technology company AeroClean Technologies Inc. and air purifier maker Molekule Inc. agreed to combine in an all-stock merger. AeroClean stockholders will own 50.5%, and Molekule stockholders will own 49.5%, of the combined company, which will use the name Molekule Inc. and the ticker MKUL on the Nasdaq. Molekule has raised funding from inventors including RPS Ventures, Founders Circle Capital, Foundry Group, Crosslink Capital, Uncork Capital and TransLink Capital.
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Automation Anywhere Inc., a San Jose, Calif.-based robotic process automation provider, scored a $200 million investment from Silicon Valley Bank, SVB Capital and Hercules Capital.
Liquid Death, a Los Angeles-based canned-water brand, raised $70 million in Series D funding at a $700 million valuation. Lead investor Science Ventures was joined by PowerPlant Partners, Convivialité Ventures, Hinge Capital, Access Capital, Live Nation and others in the round.
Loop Global Inc., an El Segundo, Calif.-based electric vehicle charging infrastructure startup, raised $40 million in Series A1 funding co-led by Fifth Wall and Agility Ventures, along with a $20 million financing facility from Keystone National Group.
Immerok, a Berlin-based developer of a serverless Apache Flink cloud platform for real-time stream processing, closed a $17 million seed round led by Cusp Capital Partners, 468 Capital, Cortical Ventures and Essence Venture Capital.
Exponential, a San Francisco-based decentralized finance investing platform, landed $14 million in seed funding. Led by Paradigm, the round included participation from Haun Ventures, FTX Ventures, Solana Ventures, Polygon, Circle Ventures and others.
Polco, a Middleton, Wis.-based community engagement and analytics platform for government leaders, picked up a $14 million investment. Mercury Fund led the round, which included additional support from BAT Ventures and Royal Street Ventures.
Acurable, a London-based maker of wearable medical devices, landed €11 million, equivalent to $10.8 million, in Series A funding from investors including Kibo Ventures, Mundi Ventures and Kindred Capital.
The Lip Bar Inc., a Detroit-based inclusive beauty company, fetched a $6.7 million investment. Pendulum led the round, which saw participation from Fearless Fund and Endeavor Global.
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Tesla’s deliveries in the three-month period ended in September were up roughly 42% from last year’s third quarter. PHOTO: POOL/VIA REUTERS
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Flying car startup Kittyhawk cuts 100 employees (SFGate)
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Green startup SolarCycle aims to recycle solar panels (CNBC)
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