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Question of the Week: Should VCs Be Worried About Inflation?
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By Marc Vartabedian, WSJ Pro
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Good day. Last week, we asked what lessons firms are taking from the string of long-awaited high-profile exits.
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Steve Brotman, founder and managing partner of Alpha Partners, which co-invests with early-stage firms in follow-on rounds, said one lesson is that, in today’s market, firms are encouraged to overpay and compete at blistering deal paces to win. However, for some firms sticking to their fundamentals is what will enable them to survive over the long term. There may be a time when firms regret shifting to this hyper-aggressive strategy, Mr. Brotman said. “The winners might be those that stick to the status quo, rely on their reputational advantages, and just do fewer deals. We tend to favor the firms that stick to their knitting and discipline, because they are the ones who survive over the years."
This week’s question: How worried are venture investors about inflation and possible interest-rate increases? In the current venture market, are higher rates a threat?
Please email responses to marc.vartabedian@wsj.com.
And now on to the news...
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Dogecoin is a cryptocurrency that was set up as a joke and serves no purpose.
PHOTO ILLUSTRATION BY EMIL LENDOF/WSJ; PHOTOS: ISTOCK
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Hunt for next crypto winner. After bitcoin and dogecoin’s rally this year, individual investors are venturing further out into the cryptocurrency universe in search of the next big thing, The Wall Street Journal reports. A more than 12,000% rally this year in dogecoin, a cryptocurrency that was set up as a joke and serves no purpose, sent its price to a record 69 cents per token this week. Bitcoin climbed briefly to over $60,000 apiece last month, more than doubling its price since the end of 2020. That is prompting investors to turn their attention to newer digital assets such as DigiByte, VeChain and SafeMoon in the hunt for cheaper alternatives that could be the next to skyrocket.
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The Athletic Halts Merger Talks With Axios, Eyes New York Times
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Sports-media outlet the Athletic is no longer in merger talks with news publisher Axios, people familiar with the situation said, but the company is continuing to pursue a deal that could expand its subscription-oriented business, WSJ reports. The Athletic views the New York Times Co. as a leading contender for a merger tie-up, the people said. Such a deal would bring the Athletic’s more than one million paying subscribers to the Times, which has seen digital-news subscriptions slow since former President Donald Trump left office.
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The Athletic was valued at $475 million in its last funding round, announced in January 2020, according to PitchBook.
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Companies Get Creative in Hunt for AI Talent
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Surging demand for artificial-intelligence talent is pushing businesses to get more creative in their recruitment efforts, WSJ Pro reports. Companies are sponsoring AI award programs at universities, holding “datathons” and scouting software development contests, among other initiatives, as they compete for data scientists, machine-learning developers and other AI professionals.
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The average base salary for data scientists is $120,000, but some companies are offering $170,000 or more, according to job site Indeed. For machine-learning engineers, the average base salary is about $150,000.
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Funds
Emergence Capital Partners raised two new funds totalling $950 million. Emergence Capital Partners VI LP is a $575 million core fund that will lead investments in early-stage business-to-business technology companies. The firm’s inaugural opportunity fund is a $375 million vehicle that will complement its core funds by making select investments in later-stage companies. Emergence, with offices in San Francisco and San Mateo, Calif., raised $435 million for its fifth core fund in 2018.
Information Venture Partners closed its third fund at $101 million, which is 25% higher than its previous fund, to continue investing in early-stage B2B fintech and enterprise software companies. The Toronto-based firm’s recent investments include Arteria AI, Cinchy, Empyrean Solutions, Jirav and Thoughtexchange.
Moonfire Ventures, which was launched last year by ex-Atomico co-founder Mattias Ljungman, raised a $60 million inaugural fund to make pre-seed and seed investments in European startups. The firm focuses on sectors including healthcare, work and knowledge, gaming and fintech. Recent investments include Humaans, Skunkworks, Awell Health, Mindstone, Business Score, HiPeople, LoveShark and WillaPay.
People
Twistle promoted Matt Revis from chief operating officer to president. Prior to joining the company last year, Mr. Revis served in product leadership and general manager roles at Nuance Communications. Twistle’s investors include Providence Ventures, Health Enterprise Partners and MemorialCare Innovation Fund.
Bugcrowd, which helps companies crowdsource hackers to identify vulnerabilities, added Sammie Walker to the post of chief marketing officer and Nick McKenzie as chief information and security officer. Ms. Walker was previously executive vice president and CMO for Infoblox. Mr. McKenzie previously served as executive general manager - chief security officer at National Australia Bank. San Francisco-based Bugcrowd raised a $30 million Series D round in April 2020 led by Rally Ventures.
Exits
Bitcoin-focused firm Galaxy Digital Holdings Ltd. has agreed to buy BitGo Inc. for $1.2 billion in cash and stock. The combined company will offer an array of products and services, including trading, custody and asset management, investment banking, prime lending, tax services and a mining operation, aimed mainly at institutional investors. Under the terms of the deal, Galaxy is paying $265 million in cash and issuing 33.8 million new shares. San Francisco-based BitGo is backed by Goldman Sachs, Craft Ventures, Digital Currency Group, DRW Venture Capital, Galaxy Digital Ventures, Redpoint Ventures and Valor Equity Partners.
Agriculture products company Valmont Industries Inc. is buying Prospera Technologies Inc., a developer of machine vision technologies to analyze plant development, for about $300 million. Prospera Technologies, which Valmont has had a partnership with since 2019, is backed by investors including Qualcomm Ventures, Cisco Investments and Bessemer Venture Partners.
Call analytics platform CallRail Inc. acquired PhoneWagon, a call tracking software company, for an undisclosed amount. Atlanta-based CallRail raised a $56 million investment from Sageview Capital and Leaders Fund in December 2020. PhoneWagon, based in New York, had secured funding from investors including Birchmere Ventures.
On-demand household goods delivery provider Gopuff acquired Fancy, a Y Combinator-backed last-mile delivery platform, for an undisclosed sum. In March, Philadelphia-based Gopuff scored a $1.15 billion funding round, giving the company a valuation of $8.9 billion. Investors in the round included D1 Capital Partners, Fidelity Management and Research Co., Baillie Gifford, Reinvent Capital, Luxor Capital and SoftBank Vision Fund 1.
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ReCharge, a Santa Monica, Calif.-based provider of subscription management software for ecommerce businesses, scored $277 million in growth capital from Summit Partners, Iconiq Growth and Bain Capital Ventures. Andrew Collins, managing director at Summit Partners, will join the company’s board.
Shift Technology, a Paris-based provider of decision automation and optimization technology for the insurance industry, closed a $220 million Series D round at a valuation of more than $1 billion. Advent International led the investment, which included participation from Avenir Growth Capital, Accel, Bessemer Venture Partners, General Catalyst and Iris Capital.
Einride, a Swedish developer of electric and autonomous freight mobility technology, landed $110 million in Series B funding. New investors Temasek Holdings, Soros Fund Management, Northzone, Maersk Growth and Build Capital were joined by previous backers EQT Ventures, Plum Alley Investments, Norrsken VC, Ericsson and NordicNinja VC in the round.
Dyno Therapeutics Inc., a Cambridge, Mass.-based startup applying artificial intelligence to gene therapy, secured a $100 million Series A round led by Andreessen Horowitz. New investors Casdin Capital, GV, Obvious Ventures and Lux Capital also participated in the funding, along with existing backers Polaris Partners, CRV and KdT Ventures. Jorge Conde, general partner at Andreessen Horowitz, is joining Dyno’s board.
Material Bank, a marketplace for searching and sampling architectural, design and construction materials, picked up $100 million in Series C financing. General Catalyst and Durable Capital Partners co-led the round, with participation from BOND, Lead Edge Capital, Bain Capital Ventures and Raine Ventures.
ŌURA Health, a Finland-based maker of a wearable device providing daily personalized sleep and health insights, landed $100 million in Series C funding. New investors including TCG, Elysian Park Ventures, Temasek Holdings, JAZZ Venture Partners and Bedford Ridge Capital were joined by previous backers Forerunner Ventures, Square, MSD Capital, Lifeline Ventures, Metaplanet Holdings and Next Ventures in the round.
Lightmatter Inc., a Boston-based maker of a light-powered artificial-intelligence chip, snagged an $80 million Series B investment. Viking Global Investors led the round, which included support from GV, Hewlett Packard Enterprise, Lockheed Martin, Matrix Partners, SIP Global Partners, Spark Capital and others. Olivia Nottebohm, former chief operating officer of Dropbox, will join the board.
Florence, an Atlanta-based provider of remote connectivity and electronic document workflow management for clinical trials, completed an $80 million Series C round. Insight Partners led the funding, which included contributions from Fulcrum Equity Partners, Bee Partners and Flashpoint. Insight Partners’ Jon Rosenbaum and Peter Sobiloff will join the board.
Puttshack, a Chicago-based tech-infused mini-golf startup, nabbed a $60 million growth capital investment led by Promethean Investments.
Oculii, a Dayton, Ohio-based provider of advanced AI software for radar perception, fetched a $55 million Series B round. Catapult Ventures and Conductive Ventures co-led the investment, which included additional support from Taiwania Capital, Susquehanna Investment Group, Hella Ventures, R7 Partners, VectoIQ, ACVC Partners, Mesh Ventures and Signature Bank.
TwinStrand Biosciences Inc., a Seattle-based genetic sequencing startup, closed a $50 million Series B round. Lead investor Section 32 was joined by Soleus Capital, Janus Henderson Investors, Madrona Venture Group, Ridgeback Capital and Alexandria Venture Investments in the round. Michael Pellini, partner at Section 32, will join the board.
Huntress, an Ellicott City, Md.-based threat detection startup, collected a $40 million Series B round. JMI Equity led the investment, which included participation from ForgePoint Capital and Gula Tech Adventures.
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PHOTO: TIFFANY HAGLER-GEARD/BLOOMBERG NEWS
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