Yearly Archives: 2020

News: Heading into 2021: Venture fundraising, liquidity and the everything bubble

• December 23, 2020
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So, onto 2021 we go. Let’s see if the bulls are right again.

The last 12 months have provided us with shocking lows and surprising highs. In startup land, great expectations in January and February were followed by dashed hopes in March.

Those woes were followed by April despair, surprised optimism from May through June, and, finally, a straight shot all the way to the moon through December.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

It’s been a lot. But it’s all behind us. We don’t need to spend more time thinking about 2020 for now. We need to look ahead.

This morning, I’ve compiled notes on what’s coming. We have notes from GGV’s Hans Tung on the 2021 IPO market, Sapphires’s Beezer Clarkson on what fundraising will look like for VCs next year, and a prediction from the PitchBook analyst crew that caught my eye.

This is the last Exchange column for 2020. Thanks for reading so I could keep having fun every day at my job. Now, to work!

2021

We’ll start with the 2021 IPO market, only because so many of you cared so very much about it this year.

Hans Tung, an investor at GGV and recent Extra Crunch Live guest, is an investor with an international perspective and a good read on global startup liquidity. So, when I got on the phone with him last week to catch up, I wanted to know his read on the 2021 IPO market.

Given that we’ve seen a number of blockbuster IPOs this year, I was expecting him to forecast an active start to the year. Correct.

But Tung added that while Q1 could be very busy, Q2 could present a lull. Why? Tung expects IPOs that failed to finish the job in Q4 2020 to slip into the first quarter of next year. That explains why the first quarter is busy. But why the slowdown in the following three months?

News: Voyager Space Holdings to acquire majority stake in commercial space leader Nanoracks

• December 23, 2020
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Voyager Space Holdings continues to build up its portfolio of strategic space service offerings with the acquisition of a majority stake in X.O. Markets, the parent company of Nanoracks. Nanoracks has provided commercial space services for years now, and most recently provided the Bishop Airlock that was installed on the International Space Station. Bishop is

Voyager Space Holdings continues to build up its portfolio of strategic space service offerings with the acquisition of a majority stake in X.O. Markets, the parent company of Nanoracks. Nanoracks has provided commercial space services for years now, and most recently provided the Bishop Airlock that was installed on the International Space Station. Bishop is the first dedicated commercial permanent airlock on the ISS, and will provide a major increase in capabilities in terms of providing access to the orbital platform for private small satellites and research.

This is Voyager’s third major acquisition this year, after it picked up a majority stake in The Launch Company, a launch support company that provides services and hardware to facilitate launches, and that works with companies including Relativity, Firefly Aerospace and Virgin Orbit. Voyager also picked up Pioneer Astronautics (an R&D company that works on propulsion, fuels, rapid prototyping and much more) in 2020, as well as Altius Space Machines in 2019. Altius is a startup that works on technology for on-orbit satellite servicing.

Nanoracks is probably its highest-profile acquisition, since the company has been involved in over 1,000 ISS projects, spanning on-station research and small satellite launch from the platform, as well as other orbital and deep space missions. Nanoracks created a commercial space testing platform outside o the ISS, and will be demonstrating a technology on a SpaceX mission next year that could eventually be used to convert spent upper stages from launch vehicles into orbital commercial mini space stations.

Voyager Space Holdings continues its strategic acquisition of new space companies, building out a portfolio that can offer clients significantly more ‘full-service’ solutions than any of these individual companies taken together. Commercial details of these arrangements aren’t shared, but they increasingly represent one path to exit for smaller companies addressing elements of the larger commercial space sector in fairly specialized ways.

News: Nikola’s stock crashes after announcing cancelation of contract with Republic Services for 2,500 garbage trucks

• December 23, 2020
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The undoing of Nikola continues. Today, the company announced the termination of its contract with Republic Services for 2,500 garbage trucks. Announced back in August, the deal had Nikola building garbage trucks in 2023 with on-road testing scheduled for 2024. This is the latest deal to unravel for Nikola as it tries to patch up

The undoing of Nikola continues. Today, the company announced the termination of its contract with Republic Services for 2,500 garbage trucks. Announced back in August, the deal had Nikola building garbage trucks in 2023 with on-road testing scheduled for 2024. This is the latest deal to unravel for Nikola as it tries to patch up following devastating reports.

According to Nikola, the separation of the two companies was mutual though it’s hard to picture Nikola’s SEC troubles didn’t weigh heavily upon Republic Services.

“This was the right decision for both companies given the resources and investments required,” said Nikola CEO Mark Russell said in a released statement. “We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers. Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them.”

News of this deal is sending Nikola’s stock down 10% in pre-market trading. If this level holds upon the stock market’s open, Nikola will be trading at its lowest levels following it’s monumental rise over the summer months.

The deal with Republic Services was originally a victory banner for the once-high flying electric vehicle startup. Signaled as mainstream acceptance of the company, Republic Services’ contract came before a mega $2 billion investment from General Motors. That deal is also cancelled following several key revelations about the company that lead to an SEC investigation and the company’s chairman stepping down.

In a statement, Nikola says deliveries will begin of Nikola Tre battery-electric semi-trucks in the US in 2021 and the company expects to break ground on its first commercial hydrogen station in 2021, too. And then in 2023, the company expects to produce its fuel-cell-electric semi-trucks at Nikola’s Coolidge, Arizona facility.

News: Looking ahead after 2020’s epic M&A spree

• December 23, 2020
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When we examine any year in enterprise M&A, it’s tempting to highlight the biggest, gaudiest deals — and there were plenty of those in 2020. I’ve written about 34 acquisitions so far this year. Of those, 15 were worth $1 billion or more, 12 were small enough to not require that the companies disclose the

When we examine any year in enterprise M&A, it’s tempting to highlight the biggest, gaudiest deals — and there were plenty of those in 2020. I’ve written about 34 acquisitions so far this year. Of those, 15 were worth $1 billion or more, 12 were small enough to not require that the companies disclose the price and the remainder fell somewhere in between.

Four deals involving chip companies coming together totaled over $100 billion on their own. While nobody does eye-popping M&A quite like the chip industry, other sectors also offered their own eyebrow-raising deals, led by Salesforce buying Slack earlier this month for $27.7 billion.

Yet in spite of the drama of these larger numbers, the most interesting targets to me were the pandemic-driven smaller deals that started popping up in May. Those small acquisitions are the ones that are so insignificant that the company doesn’t have to share the purchase price publicly. They usually involve early-stage companies being absorbed by cash-rich concerns looking for some combination of missing technology or engineering talent in a particular area like security or artificial intelligence.

It was certainly an active year in M&A, and we still might not have seen the last of it. Let’s have a look at why those minor deals were so interesting and how they compared with larger ones, while looking ahead to what 2021 M&A might look like.

Early-stage blues

It’s always hard to know exactly why an early-stage startup would give up its independence by selling to a larger entity, but we can certainly speculate on some of the reasons why this year’s rapid-fire dealing started in May. While we can never know for certain why these companies decided to exit via acquisition, we know that in April, the pandemic hit full force in the United States and the economy began to shut down.

Some startups were particularly vulnerable, especially companies low on cash in the April timeframe. Obviously companies fail when they run out of funding, and we started seeing early-stage startups being scooped up the following month.

We don’t know for sure of course if there is a direct correlation between April’s economic woes and the flurry of deals that started in May, but we can reasonably speculate that there was. For some percentage of them, I’m guessing it was a fire sale or at least a deal made under less than ideal terms. For others, maybe they simply didn’t have the wherewithal to keep going under such adverse economic conditions or the partnerships were just too good to pass up.

It’s worth noting that I didn’t cover any deals in April. But, beginning on May 7, Zoom bought Keybase for its encryption expertise; five days later Atlassian bought Halp for Slack integration; and the day after that VMware bought cloud native security startup Octarine — and we were off and running. Granted the big companies benefited from making these acquisitions, but the timing stood out.

News: Yayzy app automatically calculates the environmental impact of your spending

• December 23, 2020
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Ahead of the turning of the New Year, many people are wishing they could do something about the environment. Now, a UK startup hopes to make our environmental impact more personal. Yayzy has now launched an iOS app (but Android is coming) which literally links to your bank account to work out the environmental impact

Ahead of the turning of the New Year, many people are wishing they could do something about the environment. Now, a UK startup hopes to make our environmental impact more personal.

Yayzy has now launched an iOS app (but Android is coming) which literally links to your bank account to work out the environmental impact of what you buy. It uses payment data via Open Banking standards to automatically calculate the carbon footprint of each purchase a user makes, giving them a picture of their total monthly carbon emissions. This makes the carbon footprint calculated more accurate and bespoke to the individual, allowing them to immediately connect their spending to its impact on the planet.

Yayzy has secured £900,000 in backing from Antler Venture Capital, Seedrs (a crowdfunding round) and the CoreAngels Impact Fund. As the user sees what the carbon footprint is of their purchase, they can choose to offset it right then and there on the app via the carbon offsetter Ecosphere Plus. In the app, users can also find tips to reduce their carbon footprint, eco-friendly retailers near them or insights into lifestyle choices that have the highest environmental impact.

Their competitors are people like CoGo, a real-time Carbon Footprint tracker, and and Doconomy and the soon to launch Tred.

But Yayzy is taking a different approach. It brings together all of a user’s spending and shows them item by item as they spend, what the carbon footprint of that spend is. So far – it claims – its competitors don’t do that.

Yaysy app

This can be done ad hoc, item by item, or by signing up to a monthly subscription to either carbon offsetting projects or the user’s own unique climate portfolio. This portfolio would bundle multiple projects together for a more ‘holistic’ impact. Yayzy says all of these projects have been carefully selected based on strict criteria, and also advance the UN Sustainable development goals.

For its underlying carbon data, Yayzy is using Vital Metrics https://www.vitalmetricsgroup.com/
as used by Google, Microsoft and both the UK and US governments, among others.

Mankaran Ahluwalia, cofounder and CEO of Yayzy said in a statement: “While emissions have gradually risen as lockdown eases, YAYZY wants to put us all in the driver’s seat to control our own environmental impact… It is clear from a plethora of surveys that the majority of people want to address climate change before it is too late, but that a huge intention/action gap blocks much of it. Our solution with Yayzy is to make environmental impact ‘up close and personal’ and the action to tackle it super easy, all via your phone.”

Ahluwalia, was as a technology analyst with Infosys and built a lending platform for alternate credit. Cofounder Cristian Dan, CTO, previously built a discounts platform and cofounder Pedro Cabrero, CFO was in equity sales and trading for UBS and Citigroup, and co-founded the a leading online pharmacy in Mexico.

News: TikTok parent ByteDance hiring for AI drug discovery team

• December 23, 2020
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ByteDance, TikTok’s Chinese parent company, is entering the health industry as it seeks to diversify a business dependent on advertising and livestreaming sales. The company, which prides itself on content algorithms, has started seeking talent in AI drug discovery across Mountain View, Shanghai and Beijing, its recruiting page shows. “We are looking for candidates to

ByteDance, TikTok’s Chinese parent company, is entering the health industry as it seeks to diversify a business dependent on advertising and livestreaming sales. The company, which prides itself on content algorithms, has started seeking talent in AI drug discovery across Mountain View, Shanghai and Beijing, its recruiting page shows.

“We are looking for candidates to join our team and conduct cutting-edge research in drug discovery and manufacturing powered by AI algorithms,” one of the job postings said.

The drug discovery team, which is looking to fill at least five roles including interns, falls under the ByteDance AI Lab. The AI-focused research and development arm was first established in 2016 to serve ByteDance’s content services like TikTok’s Chinese version Douyin, but it’s unsurprising to see the lab extending its reach to pharmaceuticals, which can similarly benefit from the machine learning technologies that power short video feeds.

“Given the number of research fields in AI, the applications of these new technologies can be found across every segment of our product portfolio,” said a description on the ByteDance AI Lab website.

All five drug discovery research positions require a PhD degree in relevant disciplines, such as computer science, mathematics, computational biology and computational chemistry. Candidates will be working on drug development such as design, identification and simulation, according to the postings.

ByteDance cannot be immediately reached for comment.

Other Chinese tech behemoths have made similar moves into the health space. Tencent’s own AI-powered drug team, also under the firm’s AI Lab, has been actively publishing findings since at least August 2019. Baidu planned to raise $2 billion for a new biotech startup focusing on drug discovery and AI-powered diagnosis, Reuters reported in September. Huawei has also made endeavors in drug discovery as well as medical imaging through its cloud computing unit.

News: Telegram to begin monetizing the app as it approaches 500 million users

• December 23, 2020
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Instant messaging app Telegram is approaching 500 million users and plans to start generating revenue starting next year to keep the business operational, its founder Pavel Durov said on Wednesday. Durov said he has personally bankrolled the seven-year-old business so far, but as the startup scales he is looking for ways to monetize the instant

Instant messaging app Telegram is approaching 500 million users and plans to start generating revenue starting next year to keep the business operational, its founder Pavel Durov said on Wednesday.

Durov said he has personally bankrolled the seven-year-old business so far, but as the startup scales he is looking for ways to monetize the instant messaging service.

The service, which topped 400 million active users in April this year, will introduce its own ad platform for public one-to-many channels — “one that is user-friendly, respects privacy and allows us to cover the costs of server and traffic,” he wrote on his Telegram channel.

“Telegram has a social networking dimension. Our massive public one-to-many channels can have millions of subscribers each and are more like Twitter feeds. In many markets the owners of such channels display ads to earn money, sometimes using third-party ad platforms. The ads they post look like regular messages, and are often intrusive. We will fix this by introducing our own Ad Platform for public one-to-many channels – one that is user-friendly, respects privacy and allows us to cover the costs of servers and traffic,” he wrote. 

All existing features will remain free, Durov said, adding that Telegram is committed to not introduce ads in private one-to-one chats or group chats because they are a “bad idea.”

“We are not going to sell the company like the founders of Whatsapp. The world needs Telegram to stay independent as a place where users are respected and high-quality service is ensured,” he wrote on his Telegram channel. “Telegram will begin to generate revenue, starting next year. We will do it in accordance with our values and the pledges we have made over the last 7 years. Thanks to our current scale, we will be able to do it in a non-intrusive way. Most users will hardly notice any change.”

More to follow…

News: AI-driven energy startup Octopus hits $2Bn mark after $200M investment from Tokyo Gas

• December 23, 2020
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You’ve heard of challenger banks? Now meet the challenger energy suppliers. The UK’s Octopus Energy has attained a $2.06 billion valuation (£1.5 billion) after attracting a $200 million (£150 million) investment from Tokyo Gas for a 9.7% stake, in order to launch a joint venture. Octopus will own 30% of the venture, with Tokyo Gas

You’ve heard of challenger banks? Now meet the challenger energy suppliers. The UK’s Octopus Energy has attained a $2.06 billion valuation (£1.5 billion) after attracting a $200 million (£150 million) investment from Tokyo Gas for a 9.7% stake, in order to launch a joint venture. Octopus will own 30% of the venture, with Tokyo Gas owning the majority. After five years of operation, Octopus is now close to the valuation of British Gas owner Centrica.

Octopus will now launch as a brand in Japan with its trademark 100% renewable electricity operation which uses an innovative AI and data-based platform to balance loads around the grid. Its Kraken software is also licensed to Origin Energy, nPower and E.On, Good Energy and Hanwha Corporation, among others, reaching 17 million energy accounts worldwide.

“This joint venture will bring our exciting approach to renewable energy and technology to the world’s largest competitive energy market, and the investment will turbocharge our mission to revolutionize energy globally,” said chief executive Greg Jackson in a statement.

Australia’s Origin Energy is also set to take a stake in Octopus for 50 million dollars (£37 million) following a larger investment in April when Origin bought a 20% stake.

Octopus says it is aiming for 100 million customers around the world by 2027, and recently launched in the US, Australia, Germany and New Zealand.

In the UK, Octopus has a 5% share of the energy supply market and counts 1.8 million households in its retail portfolio, according to the company.

Tokyo Gas president Takashi Uchida said: “Through this partnership, we will contribute to the achievement of a better lifestyle for customers by realizing value creation and delivery tailored to every one of them.”

Japanese renewables lag the UK by 50% (renewables in Japan in 2019 accounted for 18.9% of electricity vs 37.9% in the UK) so the potential for growth is significant. Japanese Prime Minister Yoshihide Suga has set a target of reaching net-zero by 2050.

In the UK Octopus has also launched Electric Juice, an electric vehicle roaming network, and partnered with Tesla to launch Tesla Power.

News: On-demand logistics company Lalamove gets $515 million Series E

• December 23, 2020
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Lalamove will extend its network to cover more small Chinese cities after raising $515 million in Series E funding, the on-demand logistics company announced on its site. The round was led by Sequoia Capital China, with participation from Hillhouse Capital and Shunwei Capital. All three are returning investors. According to Crunchbase data, this brings Lalamove’s

Lalamove will extend its network to cover more small Chinese cities after raising $515 million in Series E funding, the on-demand logistics company announced on its site. The round was led by Sequoia Capital China, with participation from Hillhouse Capital and Shunwei Capital. All three are returning investors.

According to Crunchbase data, this brings Lalamove’s total raised so far to about $976.5 million. The company’s last funding announcement was in February 2019, when it hit unicorn status with a Series D of $300 million.

Bloomberg reported last week that Lalamove was seeking at least $500 million in new funding at $8 billion valuation, or four times what it raised at least year.

Founded in 2013 for on-demand deliveries within the same city, Lalamove has since grown its business to include freight services, enterprise logistics, moving and vehicle rental. In addition to 352 cities in mainland China, Lalamove also operates in Hong Kong (where it launched), Taiwan, Vietnam, Indonesia, Malaysia, Singapore, the Philippines and Thailand. The company entered the United States for the first time in October, and currently claims about 480,000 monthly active drivers and 7.2 million monthly active users.

Part of its Series D had been earmarked to expand into India, but Lalamove was among 43 apps that were banned by the government, citing cybersecurity concerns.

In its announcement, Lalamove CEO Shing Chow said its Series E will be used to enter more fourth- and fifth-tier Chinese cities, adding “we believe the mobile internet’s transformation of China’s logistics industry is far from over.”

Other companies that have recently raised significant funding rounds for their logistics operations in China include Manbang and YTO.

Lalamove’s (known in Chinese as Huolala) Series E announcement said the company experienced a 93% drop in shipment volume at the beginning of the year, due to the COVID-19 pandemic, but has experienced a strong rebound, with order volume up 82% year-over-year even before Double 11.

News: Chinese autonomous driving startup WeRide bags $200M in funding

• December 23, 2020
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WeRide, one of China’s most-funded startups developing autonomous driving capabilities, said on Wednesday that it has raised a $200 million strategic round from Chinese bus maker Yutong. Mega investments aren’t uncommon at companies like WeRide developing the next-generation level 4 driving standard, which denotes that the car can handle the majority of driving situations independently without

WeRide, one of China’s most-funded startups developing autonomous driving capabilities, said on Wednesday that it has raised a $200 million strategic round from Chinese bus maker Yutong.

Mega investments aren’t uncommon at companies like WeRide developing the next-generation level 4 driving standard, which denotes that the car can handle the majority of driving situations independently without human intervention.

WeRide did not disclose its valuation for this round, which is the first tranche of its Series B round, a company spokesperson told TechCrunch.

The new funding will see WeRide joining hands with Yutong, a 57-year-old company, to make autonomous driving minibusses and city buses as well as work on R&D, vehicle platforms and mobility services together. The partners have already jointly developed a front-loaded driverless minibus for mass-production. The model, which comes without a steering wheel, accelerator or brakes, is designed for operating in urban open roads, said WeRide

Alliance Ventures, the strategic venture capital arm of Renault-Nissan-Mitsubishi, became WeRide’s strategic investor in 2018 following the completion of the startup’s Series A round, which was partially funded by the Chinese facial recognition giant SenseTime.

Autonomous driving startups in China are racing to showcase their progress, in part to attract funding for their cash-bleeding businesses. Alibaba-backed AutoX, for instance, began deploying driverless cars on the roads in Shenzhen in a bold move. WeRide and its rivals are testing various levels of autonomous driving vehicles in both the United States and major Chinese cities where local policies are supporting the futurist transportation tech.

“Capital’s attitude is shifting and increasingly bullish about autonomous driving and its commercial future following the COVID-19 pandemic [in China]. Many investments are happening in this space because investors don’t want to miss out on any potential leaders in autonomous driving,” the WeRide spokesperson said. “Our Series B round has attracted a lot of interest.”

WeRide’s competitors include Pony.ai in its backyard Guangzhou, AutoX and Deeproute.ai in Shenzhen, Momenta in Suzhou, Baidu in Beijing, to name a few.