April’19 Startup Funding: Corporate Gushers

It was another rich month for startups, large and small. In April’s top 11 funding rounds, five were investments by big corporations or corporate venture capital funds—an investor consortium led by the SoftBank Vision Fund, PayPal, Ford Motor, NTT DoCoMo, and HAPSMobile, a joint venture of SoftBank Group and AeroVironment. Those 11 investments totaled $3.74 billion.

Intel Capital was also active leading up to April, investing $117 million in 14 startups.

The biggest investment of the month was $1 billion going to the Advanced Technologies Group of Uber Technologies, which is developing and testing autonomous vehicle technology, and valuing the group at $7.25 billion. The SoftBank Vision Fund contributed $333 million to that amount, with the remainder split between Toyota Motor and Denso, a Japanese supplier of automotive parts. Uber, which is in registration for an initial public offering in the U.S., itself received a fresh investment of $500 million from PayPal, which will be a pal by paying the IPO price for Uber’s shares.

The largest investment of venture capital was a Series D funding round of $568 million for UiPath, the New York-based vendor of robotic process automation software, which last year raised $265 million in Series C funding. Coatue Management led the new round and was joined by Dragoneer Investment Group, Wellington Management, Sands Capital, T. Rowe Price, and return backers Accel, CapitalG, Sequoia Capital, Institutional Venture Partners, and Madrona Venture Group. UiPath now has a post-money valuation of $7 billion.

Ford plans to invest $500 million in Rivian Automotive, pending regulatory approval. The electric vehicle startup received $700 million from Amazon in February and has raised more than $1.4 billion in total private funding.

Magic Leap, the developer of wearable hardware for augmented reality, is a veteran at raising money. It has received $2.6 billion in just over five years, including $280 million from NTT DoCoMo in April. AT&T is selling the company’s “spatial computing” headsets in the U.S., and DoCoMo could do the same for the startup in Japan.

San Francisco-based Segment, which provides customer data infrastructure, raised $175 million in Series D funding co-led by Accel, GV, and new investor Meritech Capital, with participation by Thrive Capital, Y Combinator Continuity, eVentures, and Sapphire Ventures (another new investor). The latest round values Segment at $1.5 billion. The startup has received a total of $283.7 million in private funding, according to Crunchbase.

Raising $170 million in Series E funding was Sila Nanotechnologies, a developer of next-generation battery materials. Daimler led the round and was joined by return backers Bessemer Venture Partners, Chengwei Capital, Matrix Partners, Siemens Next47, and Sutter Hill Ventures. The startup, established in 2011 and having raised $275 million in total private funding, is now worth $1 billion (earning “unicorn” status) and named Jeff Immelt, the former CEO of General Electric, as an independent director on its board.

SambaNova Systems of Palo Alto, Calif., received $150 million in Series B funding led by Intel Capital, with participation by existing investors GV, Walden International, Atlantic Bridge Investors, and Redline Capital. SambaNova is working on “software-defined hardware,” leading to a systems platform running artificial intelligence applications. The startup has raised a total of $206 million in venture funding.

Just behind SambaNova is San Francisco-based KeepTruckin, which raised $149 million in Series D funding led by Greenoaks Capital and supported by return backers GV, IVP, Index Ventures, and Scale Venture Partners. Founded in 2013, the startup is now valued at $1.25 billion. KeepTruckin helps trucking companies keep tabs on their fleets and provides electronic logs for their drivers. The startup has raised a total of $227.3 million in private funding.

HAPSMobile is investing $125 million in Loon, a Google spinout developing balloons that can provide wireless connections to the Internet. HAPSMobile has developed a solar-powered drone that can deliver 5G connectivity. The deal between the companies includes an option for Loon to make a reciprocal $125 million investment in HAPSMobile.

Getting $125 million in Series D funding is Boston-based Starry, which offers wireless broadband access to the Internet. The startup previously raised more than $160 million in private funding, including a $100 million Series C round last summer. FirstMark Capital and IAC are investors in the company, which could have a post-money valuation of $870 million if the latest round is fully funded, PitchBook reports.

Moving down the investment scale, Intel Capital and other investors put $38 million into proteanTecs, which is using AI and machine learning technology to optimize and monitor the reliability of microchips. Intel Capital and National Grid co-led an investment of $15 million in Phoenix-based Pixieom, which is behind a software-defined edge computing platform.

Intel Capital reports it invested $120 million in Israeli startups last year. Over the years, the venture arm of Intel has invested $435 million in 90 Israeli companies, one-third of which have had successful exits in the form of mergers and acquisitions.

Cybersecurity
Investors remain fascinated by cybersecurity startups. CB Insights reports there were 434 financing deals for cybersecurity startups around the world in 2014, with $3.17 billion invested. Last year saw 601 deals worth a total of $6.98 billion. That money figure was lower than 2017’s $8 billion, spread over 596 deals, CB Insights says. Last year set a record for first-time investors in cybersecurity, the market research firm notes, taking in venture capital firms, corporations, corporate venture capital funds, and other investors, totaling 592 investments in cybersecurity. 2018 was also a record year for corporations acquiring a cybersecurity company for the first time, with a total of 81 purchases, compared with 55 in 2014.

There are eight “unicorns” in the cybersecurity industry at present, according to CB Insights. They are Tanium, Illumio, Lookout, Cloudflare, CrowdStrike, and Netskope, along with China’s 4Paradigm and Tongdun Technology.

Symphony Technology Group, a private equity firm in Palo Alto, Calif., bought a 70% equity stake in San Jose, Calif.-based RedSeal, which offers a cyber risk modeling platform for hybrid cloud environments and security risk management software. The purchase price for the stake wasn’t disclosed, but it is reported to be $60 million or more. RedSeal previously raised $142 million, according to the company, although Crunchbase puts that total at $135.7 million.

Palo Alto, Calif.-based Armis raised $65 million in Series C funding led by Sequoia Capital, joined by IVP and Intermountain Ventures. Bain Capital Ventures, Red Dot Capital Partners, and Tenaya Capital are return investors. The startup specializes in Internet of Things device security and has raised a total of $112 million in private funding.

Aqua Security of Israel received $62 million in Series C funding led by IVP, with participation by M12 (Microsoft’s venture fund), Lightspeed Venture Partners, TLV Partners, and Shlomo Kramer. Aqua provides security for virtual containers. The company has more than $100 million in total private funding.

San Francisco-based Onfido raised $50 million in Series C2 funding led by SBI Group (formerly SoftBank Investment) and Salesforce Ventures, joined by SoftBank Group, M12, FinVC, and other investors. The startup uses AI, computer vision, and other technologies for identity verification. Founded in London, England, in 2012, Onfido has raised a total of $110.3 million, per Crunchbase.

VDOO Connected Trust of Tel Aviv, Israel, received $32 million in Series B funding led by WRVI Capital and GGV Capital. Also participating were NTT DOCOMO Ventures, MS&AD Ventures, Avigdor Willenz, 83North, Dell Technologies Capital, and David Strohm. VDOO provides security automation for embedded devices, fixing vulnerabilities in IoT devices.

Waltham, Mass.-based Digital Guardian raised $30 million in additional financing led by LLR Partners, a private equity firm and an existing investor. The startup provides a data protection platform meant to stop data theft by insiders and external attackers. The platform is said to extend over corporate networks, cloud applications, and endpoints. It is supplemented by the DG Cloud, a big data security analytics backend.

Deepwatch of St. Petersburg, Fla., received $23 million in Series A funding led by ABS Capital Partners. It provides managed security services through a cloud platform. Deepwatch partners with a number of software vendors, including Carbon Black, CrowdStrike, Demisto Enterprise, Okta, Splunk, and Tenable.

Fig. 1: Biggest tech investments in April.

Spokane, Wash.-based RiskLens raised $20.55 million in Series B funding led by Paladin Capital Group, joined by F-Prime Capital (FMR’s venture arm) and MassMutual Ventures, and with participation by Dell Technologies Capital and Osage Venture Partners. RiskLens provides cyber risk quantification and cyber risk management software.

Alsid of France received €13 million (about $14.6 million) in Series A funding led by Idinvest Partners, joined by existing investors 360 Capital and Axeleo Capital. The startup protects the Microsoft Active Directory for its customers. It has raised a total of €14.5 million ($16.26 million) in private funding.

Another French company, Sqreen, raised $14 million in Series A funding led by Greylock Partners, with participation by Y Combinator, Alven Capital, and Point Nine Capital. The startup has more than $18 million in total private funding. Founded in 2015, Sqreen offers an application security management platform.

New York-based Kangaroo is in the smart home security business. It received $10.26 million in Series A financing led by Greycroft, joined by Lerer Hippeau and angel investors. Established in February of last year, the startup has raised $14.6 million in private funding.

Automotive/Mobility
In addition to the big investments in Uber’s Advanced Technologies Group, Rivian Automotive, and KeepTruckin, investors looked to other startups for opportunities.

China’s Pony.ai is getting a $50 million investment from Beijing Kunlun Wanwei, a game publisher, which will get a 3% stake in the self-driving car and truck technology firm. Pony.ai has raised a total of $264 million since early 2018.

San Francisco-based Shift Technologies, which runs an online used-car marketplace, raised $40 million from unidentified existing investors. Its shareholders include DCM Ventures, Goldman Sachs, BMW i Ventures, Alliance Ventures, Threshold Ventures (formerly DFJ), Lithia Motors, and Highland Capital Partners. Shift last year raised more than $140 million, about $70 million in debt and $71 million in equity. The company has a total of more than $300 million in debt and equity financing.

BacklotCars of Kansas City received $25 million in Series B funding led by Stripes Group, joined by Origin Ventures, Pritzker Group Venture Capital, Rise of the Rest Seed Fund, Royal Street Ventures, KCRise Fund, and Chaifetz Group.  The company is an online wholesale automotive marketplace.

Madrid-based Movo, a micromobility startup that provides electric scooters and electric mopeds for rental, got €20 million (about $22.4 million) in Series A funding led by Mutua Madrileña, an insurance firm, and Seaya Ventures.

Wheely, a luxury ride-hailing service, raised $15 million in Series B funding led by Concentric, with the participation of Oleg Tscheltzoff, Misha Sokolov, and other investors. It currently serves London, England, along with Moscow and St. Petersburg in Russia, with plans to launch in Paris, France, this summer. Its total private funding is $28 million.

Phantom Auto, a developer of remote driving software, received $13.5 million in Series A funding led by Bessemer Venture Partners. The startup was founded in 2017 and has raised about $19 million in private funding.

Miscellaneous
HZO of Raleigh, N.C., raised $40 million in new venture funding from undisclosed investors. It also received $30 million in new credit facilities from Cathay Bank. The company makes nanocoatings for electronics.

San Jose, Calif.- based MemVerge came out of stealth mode with $24.5 million in Series A funding from Gaorong Capital, Jerusalem Venture Partners, LDV Partners, Lightspeed Venture Partners, and Northern Light Venture Capital. The startup develops software for memory-converged infrastructure using Intel’s Optane memory technology in data centers.

Zapata Computing of Cambridge, Mass., received $21 million in Series A funding co-led by Comcast Ventures and Prelude Ventures, joined by return backers Pitango Ventures, BASF Venture Capital, Robert Bosch Venture Capital, Pillar VC, and The Engine. The startup is developing quantum computing technology.

Santa Clara, Calif.-based Ampere Computing raised an undisclosed amount of new funding led by The Carlyle Group, with participation by existing investors. Arm is a new investor in the startup, which is developing hyperscale cloud and edge computing technology with its 64-bit Arm server processor architecture.

Conclusion
More big investments are on the way. The SoftBank Innovation Fund and the SoftBank Vision Fund together just made a $1 billion investment in Colombia’s Rappi, a delivery service for the Latin America market. SpaceX is raising up to $510 million in new funding, according to a Delaware stock authorization filing. CHJ Automotive, a Chinese manufacturer of electric vehicles, retained Goldman Sachs to raise $300 million to $500 million, Reuters reports. Drone manufacturer eHang wants to get about $200 million in growth equity funding, rather than pursuing an IPO in the U.S. Riskified, an Israeli provider of anti-fraud software for online purchases, is negotiating for $200 million in new funding, after previously raising more than $60 million from Pitango VC, Genesis Partners, Qyumra Capital, Kreos Capital, and Entrée Capital.

Entrepreneurs with big dreams are likely to find financial support from private equity firms, venture capital companies, and other private investors.

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