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Fintech’s Strong Run Continues
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By David Carnevali, WSJ Pro
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Good day. Activity surrounding fintech startups showed no signs of abating as the second half of the year got under way.
Financing-round announcements kept coming at a fast pace in July, including an $800 million fundraise by U.K.-based digital bank Revolut Ltd., while SoftBank-backed M1 Holdings Inc. became a unicorn—a startup worth $1 billion or more—with new funding.
The action followed a record-breaking first half of the year in which the sector hauled in $58.7 billion, according to CB Insights.
“It’s almost like petrol is being poured on the fire,” said QED Investors managing partner Nigel Morris. He predicted activity will be sustained in coming months, bolstered by so-called super fintechs, which are large incumbents that buy smaller players to attack new verticals, and by traditional banks that need to play catch-up.
While many investors are enjoying gains in their portfolios, high valuations have made it challenging to find attractive opportunities. “I am a bit schizophrenic because on the one hand, the valuations go up in my existing back book…and on the other hand…the business at the margin is more complicated,” said Mr. Morris, who saw four of his fintech companies rise to unicorn status in the second quarter alone.
And now on to the news...
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Zed Run runs a virtual platform that allows users to buy, sell, breed and race digital horses in a videogame-style setting. PHOTO: VIRTUALLY HUMAN STUDIO
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NFT gaming deal. Virtually Human Studio, the startup behind digital horse racing service Zed Run, has raised $20 million in financing, highlighting investors’ appetite for companies exploring the intersection of entertainment, gaming and the so-called nonfungible token sector, WSJ Pro’s Marc Vartabedian reports.
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Media and technology-focused investment firm TCG Capital Management led the Series A funding round, with Andreessen Horowitz and Red Beard Ventures also participating.
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Launched in 2019, Zed Run enables users to buy, sell and breed virtual horses and race them in a videogame-style setting against other horses. The horses are purchased with digital currency and act as NFTs, which are essentially digital collectibles that hold value.
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Nasdaq to Spin Out Market for Pre-IPO Shares in Deal With Banks
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Nasdaq Inc. is teaming up with a group of banks including Goldman Sachs Group Inc. and Morgan Stanley to spin out its marketplace for shares of private companies, The Wall Street Journal reports. The deal could help drive more transactions to Nasdaq Private Market, the New York-based exchange operator’s trading platform for shares of companies that haven’t yet had an initial public offering. Trading in pre-IPO shares has heated up in recent years as startups have waited longer to go public. Employees of such companies often seek to cash out of their shares, while investors may want to get in on a fast-growing technology startup.
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Crypto Exchange FTX Valued at $18 Billion in Funding Round
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Cryptocurrency exchange FTX has raised money at an $18 billion valuation, a deal that shows investors’ enthusiasm for digital currencies even after a crash that erased half of bitcoin’s value over the past three months, WSJ reports. FTX raised $900 million in a new funding round that closed Tuesday. Participants in the round included Japanese technology investor SoftBank Group Corp., Silicon Valley venture-capital firm Sequoia Capital and Third Point, the hedge fund led by billionaire Daniel Loeb, FTX said in a statement. The transaction vaulted FTX into the ranks of the world’s highest-valued crypto companies. It also provided a measure of mainstream
acceptance for FTX, which bars Americans from trading on its main marketplace to avoid running afoul of U.S. regulators. FTX’s main office is in Hong Kong and its parent company, FTX Trading Ltd., is domiciled in Antigua and Barbuda.
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Baby-Food Maker Little Spoon Raises $44 Million
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Little Spoon Inc., a direct-to-consumer baby-food company targeting millennial parents, raised $44 million in a venture-capital funding round. The so-called Series-B financing round values the company at roughly $200 million, the Journal reports, citing people familiar with the matter. It was led by Valor Equity Partners. Little Spoon ships organic purées, toddler meals and vitamins to customers, bypassing grocery stores and other distribution outlets. Last year, Little Spoon launched Plates, its meals for toddlers and bigger children. The company also offers a virtual community that provides caregivers with a platform to connect and interact.
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Since 2015, WSJ Pro and The Private Equity Analyst have published our annual Women to Watch list in recognition of the outstanding achievements of female dealmakers, fundraising professionals and limited partners across the private-equity and venture capital industries. We are accepting nominations for this year’s list until August 13, 2021. We will announce this year’s list in early October.
Submit your nomination here.
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Funds
Capstar Ventures, an Austin, Texas-based woman-led early-stage venture-capital firm focused on consumer startups, raised a $41.3 million inaugural fund.
People
GV named Crystal Huang and Sangeen Zeb as investing partners. Ms. Huang was previously a principal at New Enterprise Associates and GGV Capital. Ms. Huang will be investing in enterprise software, infrastructure and fintech at GV, according to her LinkedIn profile. Mr. Zeb was previously a partner at Founders Circle Capital, according to his LinkedIn profile.
Melissa Wasser joined Andreesssen Horowitz as partner in its Fintech Capital Network, which is an operating team serving to connect fintech founders with investors, lenders, and bankers. Ms. Wasser was previously managing director at investment bank FT Partners and before then a banker at Goldman Sachs.
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New York-based game-publishing company Tilting Point has raised $235 million in the company’s first equity financing. General Atlantic led the investment. The company, founded in 2012, plans to accelerate acquisitions. It recently bought mobile games and assets from Playtech plc, for example.
SmartRecruiters Inc., a San Francisco-based hiring services startup, raised a $110 million Series E round led by Silver Lake Waterman with participation from Insight Partners and Mayfield Fund. The deal valued SmartRecruiters at $1.5 billion.
Titan, a New York-based investment management platform, closed a $58 million Series B round. Andreessen Horowitz led the funding, which included participation from General Catalyst, BoxGroup, Sound Ventures and others. Anish Acharya from a16z will join the company’s board.
Toronto-based real-estate brokerage Properly raised $35 million in Series B financing led by Bain Capital Ventures. Participating strategic investors in the round include Intact Ventures, the venture arm of Canadian property and casualty insurance Intact Insurance, and FCT Insurance Company Ltd., a provider in real estate technology and title insurance.
Los Angeles-based online-tutoring startup Numerade raised $26 million in Series A funding at a valuation of $100 million. The round was led by IDG Capital, with participation by existing investors General Catalyst, Mucker Capital and Kapor Capital, and strategic investors including Alumni Ventures Group, Interplay Ventures and Toy Ventures. Numerade offers online lessons focused on science, technology, engineering, and math. It says it’s planning “to eliminate the need for private tutors.”
Paro, a Chicago-based startup that matches companies with freelance finance workers, raised a $25 million Series B round. Madrona Venture Group led the investment, with Managing Director Hope Cochran joining the board. Existing backers Revolution Ventures, Sierra Ventures and KGC Capital also contributed to the round.
Miles, a Redwood City, Calif.-based travel rewards platform, fetched $12.5 million in Series A funding. Scrum Ventures led the round, which included support from TransLink Capital and Japan Airlines (as JAL Innovation Fund), TechNexus Venture Collaborative, Synapse Partners, JetBlue Technology Ventures, Liil Ventures, Porsche Ventures, Sony Innovation Fund and others.
Lucata, a New York City-based AI graph analytics startup raised $11.9 million in Series B funding from investors including Notre Dame, Middleburg Capital Development, Hunt Holdings, Maulick Capital and Varian Capital.
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Apple is looking at several possible locations to lease a large entertainment production campus in Los Angeles. PHOTO: APU GOMES/AGENCE FRANCE-PRESSE/GETTY IMAGES
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