September Sizzles for Startups, IPOs

SPACs Star in IPOs, Tech Offerings Are Hot

2020 is shaping up as one of the biggest years for initial public offerings, sparking recollections of the 1980s and 1990s, 1982 and 1999 in particular.

A big element of this year’s IPO rush is the role of special purpose acquisition companies (SPACs), also known as blank-check companies. These enterprises raise millions of dollars from investors, promising to acquire privately held companies that may have challenges in going public on their own. Such companies could be unattractive to venture capitalists or private equity firms for various reasons. They may be unprofitable, or they’ve run through all of their private funding and have yet to offer a product or a service.

Part of the SPAC renaissance is a trend toward reverse mergers, where IPO candidates go public by merging with a publicly held company or making a deal with a SPAC.

During this IPO frenzy, startup funding is also in high gear. Dizzying valuations for newly public startups have investors beating the bushes for the Next Big Thing.

While some companies have pursued a direct listing as an alternative to the traditional IPO process, others turn to SPACs for quicker funding.

“2020 Is the Year of the SPAC” was the headline on an analysis by Sophia Kunthara of Crunchbase News. She writes, “This has been a record year for SPACs, according to SPAC Insider, with nearly $36.2 billion in SPAC gross proceeds so far. That’s far higher than the $13.6 billion in gross proceeds for SPACs in 2019 or the $10.8 billion in 2018, per SPAC Insider.”

SPACs are generally formed by executives and financiers who specialize in certain areas, such as enterprise software and debt/equity funding. Experienced investment fund managers are deep into the game, using their expertise in identifying promising opportunities.

The New York Times profiled the founders of the Reinvent Technology Partners SPAC, which this month raised $600 million in its IPO. The principals behind the tech-focused SPAC include Reid Hoffman, a co-founder of LinkedIn (acquired by Microsoft for $26.2 billion) and a venture capitalist, along with Zynga founder and chairman Mark Pincus.

Wall Street investment banks aren’t the only firms finding themselves on the sidelines when it comes to raising funds. The traditional venture capitalists and private equity firms are also seeing potential clients getting their money from alternative sources.

In June, Amazon announced the formation of a $2 billion VC fund for climate-friendly technologies. The company’s Climate Pledge Fund this month disclosed the first recipients of investments — CarbonCure Technologies, Pachama, Redwood Materials, and Turntide Technologies. Turntide raised a total of $33 million from Amazon’s Climate Fund, Meson Capital, BMW iVentures, JLL Spark, Wind Ventures, and Future Shape, among other investors. Pachama raised $5 million led by Breakthrough Energy Ventures and joined by the Climate Pledge Fund.

Amazon has also invested in Rivian Technologies, a developer of electric SUVs and pickup trucks. It previously invested a total of $700 million in the startup and added to that an undisclosed investment from the climate fund. It has ordered 100,000 electric delivery vehicles from Rivian.

Microsoft this year established a $1 billion climate innovation fund.

Shopify has also invested in CarbonCure and Pachama.

Stripe, which once was a small startup itself, has gotten into the corporate venture capital game in a big way, taking a leaf from Google and Salesforce, Kate Clark of The Information writes. The privately held company has invested in more than 15 startups since 2017. This month, Stripe led Series A funding of $12 million for PayMongo, an online payment platform based in the Philippines. Also participating were Y Combinator and Global Founders Capital, previous investors in PayMongo.

Initial Public Offerings

There were more than 50 IPOs in September, not including reverse mergers with SPACs. The month ended with two companies going public through direct listings, Asana and Palantir Technologies. The New York Stock Exchange set opening prices for both listings, with Asana going for $21.00 a share and Palantir at $7.25 per share. Both stocks saw enthusiastic responses from investors. Palantir closed its first trading day at $9.50, up 31%, while Asana rose 37% to $28.80.

Snowflake raised $3.36 billion in its IPO.

Unity Software raised $1.3 billion in its IPO.

GoodRx raised $1.3 billion in its IPO.

Amwell Health raised $742 million in its IPO.

SPAC IPOs: Cohn Robbins raised $720 million; Reinvent Technology Partners raised $600 million; TWC Tech Holdings II raised $525 million; Vesper Healthcare Acquisition raised $400 million; CM Life Sciences raised $385 million; Executive Network Partnering Corp. raised $360 million; Starboard Value Acquisition raised $360 million; Ribbit LEAP raised $350 million; Qell Acquisition raised $330 million.

Petz raised $571 million in its IPO.

ChinData Group raised $540 million in its IPO.

JFrog raised $509 million in its IPO.

Sumo Logic raised $325.6 million in its IPO.

StepStone Group raised $315 million in its IPO.

More SPAC IPOs: Broadstone Acquisition raised $300 million; Peridot Acquisition raised $300 million; Prime Impact Acquisition I raised $300 million; Tailwind Acquisition raised $300 million; Tortoise Acquisition II raised $300 million; Vector Acquisition raised $300 million; ACON S2 Acquisition raised $250 million; ArcLight Clean Transition Corp. raised $250 million.

Outset Medical raised $243 million in its IPO.

Corsair Gaming raised $238 million in its IPO.

Bentley Systems raised $236.5 million in its IPO.

Dyne Therapeutics raised $233 million in its IPO.

More SPAC IPOs: Aspirational Consumer Lifestyle Corp. raised $225 million, as did Oaktree Acquisition II and FG New America Acquisition.

PMV Pharmaceuticals raised $212.4 million in its IPO.

Athira Pharma, formerly known as M3 Biotech, raised $204 million in its IPO.

More SPAC IPOs: Climate Change Crisis Real Impact I Acquisition raised $200 million; FinTech Acquisition IV raised $200 million; INSU Acquisition II raised $200 million; NavSight Holdings raised $200 million; Sandbridge Acquisition Corp. raised $200 million; PMV Consumer Acquisition raised $175 million.

Prelude Therapeutics raised $158 million in its IPO.

Compass Pathways raised $128 million in its IPO.

More SPAC IPOs: Software Acquisition Group II raised $150 million; North Mountain Merger raised $115 million; Alpha Healthcare Acquisition raised $100 million; HighCape Capital Acquisition raised $100 million.

Virtru raised $96 million in its IPO.

Graybug Vision raised $90 million in its IPO.

Metacrine raised $85 million in its IPO.

Boqii raised $70 million in its IPO.

Laird Superfood raised $58 million in its IPO.

Reverse Mergers

AppHarvest, which develops large-scale tomato greenhouses, is going public through a reverse merger with publicly held Novus Capital (Nasdaq: NOVSU). The merged company will get $375 million in fresh capital from Fidelity Management & Research, Inclusive Capital, and Novus Capital. AppHarvest previously raised about $160 million in private funding from ValueAct Capital, Revolution Rise of the Rest, and Equilibrium Capital, among other investors. Martha Stewart is a director of AppHarvest.

ChargePoint, a provider of charging stations for electric vehicles, agreed to go public through a reverse merger with publicly held Switchback Energy Acquisition (NYSE: SBE), an energy-focused SPAC. ChargePoint will net proceeds of around $493 million in the transaction, including a $225 million private investment in public equities (PIPE) from Baillie Gifford and funds managed by Neuberger Berman Alternatives Advisors. ChargePoint last month disclosed $127 million in Series H funding by American Electric Power, Chevron Technology Ventures, Clearvision, and Quantum Energy Partners. The company has raised a total of $659.2 million, according to Crunchbase.

Playboy Enterprises is in negotiations for a reverse merger with a SPAC, Reuters reports, citing people familiar with the matter. Rizvi Traverse Management, a private equity firm, bought a 35% equity stake in the company two years ago from the Hefner family.

QuantumScape, a developer of solid-state batteries, is going public through a reverse merger with publicly held Kensington Capital Acquisition (NYSE: KCAC), an automotive-focused SPAC. QuantumScape had raised almost $500 million in venture capital, primarily from Volkswagen.

San Francisco-based Skillz, the provider of a mobile game platform, agreed to go public through a merger with the SPAC that now owns DraftKings (Nasdaq: DKNG). Skillz will get new capital of almost $160 million from Wellington Management, Fidelity, Franklin Templeton, and Neuberger Berman. It had raised $291.6 million in venture capital from Telstra Ventures, Accomplice, and Wildcat Capital Management, among other investors.

Opendoor, a platform for buying and selling homes, is going public through a reverse merger with Social Capital Hedosophia Holdings Corp II, a technology-focused SPAC. The company will get more than $1 billion in fresh capital — $600 million in a PIPE from Chamath Palihapitiya, Access Industries, Lennar, BlackRock, and Healthcare of Ontario Pension Plan. The SPAC will provide $414 million. Opendoor had raised about $2.85 billion in venture capital from Access Industries, Lennar, SoftBank Vision Fund, GV, Khosla Ventures, and GGV Capital.

Mega-Rounds

Nine-figure funding rounds and a few 10-figure rounds abounded during September.

Rolls-Royce Holdings is trying to raise up to £2.5 billion (about $3.2 billion). The company called off talks with sovereign wealth funds in Kuwait and Singapore to raise £500 million (more than $645 million), Sky reports. Rolls-Royce now will try to raise £2 billion (around $2.58 billion) from existing shareholders, it was said.

Alibaba Group Holding is in talks with Grab Holding for an investment of $3 billion, Bloomberg News reports, citing people familiar with the matter. Grab is also said to be pursuing renewed merger negotiations with Gojek, according to the Financial Times.

General Motors is investing $2 billion in Nikola, taking an 11% stake in the electric truck startup. That news was soon followed by reports that the U.S. Department of Justice and the Securities and Exchange Commission are investigating allegations of false statements about Nikola, which went public in June through a reverse merger with VectoIQ Acquisition Corp., a SPAC.

WM Motor, a developer and manufacturer of electric vehicles in China, raised $1.47 billion in Series D funding led by Baidu and Tencent Holdings, among other investors. The EV startup has pulled in $3.1 billion in private funding, per Crunchbase.

Warburg Pincus is committing up to $1 billion to establish MLM II, an information services and software platform.

Silver Lake Partners invested $1 billion for a 1.75% stake in Reliance Retail, the retailing unit of India’s Reliance Industries. KKR is investing $754 million for a 1.28% stake in Reliance Retail.

Klarna of Sweden raised $650 million in new funding led by Silver Lake, giving the company a post-money valuation of $10.65 billion. The provider of an e-commerce payments platform was founded in 2005 and has raised a total of $2.1 billion in private funding.

Another Swedish company, Northvolt, received $600 million in new funding led by Baillie Gifford, Goldman Sachs, and Volkswagen, joined by Baron Capital Group, Bridfield Investments, Norrsken VC, PCS Holding, Cristina Stenbeck, and Daniel Ek. The company develops sustainable lithium-ion batteries for a variety of applications. Established in 2016, Northvolt has raised a total of $2.7 billion.

Minneapolis-based Bright Health raised $500 million in Series E funding from T. Rowe Price Associates, Tiger Global Management, New Enterprise Associates, Bessemer Venture Partners, and Greenspring Associates. The health plan startup was founded in 2016 and has raised a total of $1.6 billion.

Zymergen of Emeryville, Calif., received $300 million in Series D funding led by Baillie Gifford, with participation by Baron Capital Group and Perceptive Advisors. The biotech startup specializes in molecular technology that can be used in multiple applications. Zymergen was established seven years ago and has raised more than $874 million.

Other big rounds: Robinhood, $460 million; Zwift, $400 million; Sprinklr, $350 million; XtalPi, $319 million; Rappi, more than $300 million with a target of almost $350 million; Mirakl, $300 million; Jiangxiaobai, about $300 million; Shenzhen Salubris Pharmaceutical, $260 million; Next Insurance, about $250 million; ClearGen, $250 million; Recursion Pharma, $239 million; Dream11, $225 million; VTEX, $225 million; PropertyGuru, S$300 million (around $219.6 million); dLocal Group, $200 million; Scopely, $200 million; Snyk, $200 million; Airtable, $185 million; AppDirect, $185 million; Auxmoney, €150 million (about $175.7 million); Grand Rounds, $175 million; Infarm, $170 million; Salsify, $155 million; InventisBio, $147 million; Melio, $144 million; Biocytogen, $142 million; Beyond Limits, about $133 million; Neogene Therapeutics, $110 million; Tonal, $110 million; Olive, $106 million; Within3, more than $100 million; Allbirds, $100 million; Biofourmis, $100 million; Palleon Pharmaceuticals, $100 million; Playco, $100 million.

Mergers & Acquisitions

The really big deal of the month was Nvidia agreeing to acquire Arm, the designer of processor cores, semiconductor intellectual property that can be incorporated into microchip designs, for about $40 billion in cash and stock. The SoftBank Group acquired Arm in 2016 for $32 billion, so it may get a very nice return on investment for that purchase.

Getting a lot less attention late in the month was Nippon Telegraph and Telephone announcing a $40 billion buyout of NTT DoCoMo, the company’s wireless telecommunications business.

Among other big deals: Gilead Sciences agreed to acquire Immunomedics for $21 billion; LVMH called off its $16.2 billion agreement to purchase Tiffany & Co.; Intercontinental Exchange completed its $11 billion takeover of Ellie Mae; Illumina agreed to acquire Grail for $8 billion in cash and stock (Grail was spun out of Illumina in 2016); Microsoft agreed to acquire ZeniMax Media for $7.5 billion in cash; Security First filed for Chapter 11 bankruptcy protection and agreed to a $6 billion acquisition by ESW Capital; GIC and Brookfield Infrastructure Partners bought a telecommunications tower company from Reliance Industries for $3.4 billion; E.W. Scripps agreed to acquire ION Media for $2.65 billion, including a $600 million preferred equity investment from Berkshire Hathaway; billionaire Steve Cohen agreed to buy a 95% stake in the New York Mets at an enterprise value of $2.42 billion, marking the biggest purchase in Major League Baseball history; Dell Technologies agreed to sell its RSA cybersecurity business, including the annual RSA Conference, for $2.08 billion to a private equity group with Symphony Technology Group, Ontario Teachers’ Pension Plan Board, and AlpInvest Partners; Simon Property Group and Brookfield Property Partners agreed to acquire most of JC Penney’s stores at a value of about $1.75 billion; MetLife agreed to acquire Versant Health from Centerbridge Partners and FFL Partners for $1.675 billion in cash; Ericsson agreed to acquire Cradlepoint for $1.1 billion; Orix Corp. agreed to purchase a stake of about 20% in Greenko Energy Holdings for $980 million; Ivanti, a portfolio company of Clearlake Capital and TA Associates, is buying MobileIron for $872 million in cash and purchasing Pulse Secure, a mobile security company, for an undisclosed amount; and LG Chem is spinning off its electric vehicle battery business — Tesla reportedly wants to buy an equity stake of up to 10% in the EV battery business.

Automotive/Mobility

Yandex will spin off its self-driving vehicle joint venture with Uber Technologies as a stand-alone unit, Yandex Self Driving Group. The car unit will get $150 million in capital from Yandex, which will hold 73% of the company. Uber will own 19%, with the remainder of equity going to Yandex managers and employees.

San Francisco-based Ouster, a LiDAR sensor device startup, raised $42 million in Series B funding from existing investors Cox Automotive, Fontinalis Partners, and Tao Capital Partners. The startup was established in 2015 and has raised a total of $132 million in private funding.

VanMoof of Amsterdam, the Netherlands, received $40 million in Series B funding from Norwest Venture Partners, Felix Capital, and Balderton Capital. This round came just four months after raising $13.5 million from Balderton Capital and Sinbon Electronics in a previous round. The startup was founded in 2008 and develops electric bicycles for urban environments.

Singapore-based Neuron Mobility raised $12 million in Series A funding led by Square Peg and GSR Ventures. The company, which specializes in electric scooter rentals, was founded four years ago and has attracted $22.2 million in private funding. The startup plans to expand its operations in Australia and New Zealand.

Acerta Analytics of Kitchener, Ontario, Canada, received C$9 million (about $6.76 million) of Series A funding led by OMERS Ventures, joined by M12, StandUp Ventures, Radical Ventures, EDC, and Techstars. The automotive intelligence startup was established in 2017 and has a total of $9 million in private funding.

Cybersecurity

Boston-based Snyk, with offices in London, Tel Aviv, Ottawa, and Santa Clara, Calif., raised $200 million in Series D funding led by Addition, valuing the cybersecurity analysis tools company at more than $2.6 billion. The startup was established in 2015 and has $452 million in total private funding. Snyk just bought DeepCode, a Swiss company specializing in real-time semantic code analysis.

FireMon of Overland Park, Kansas, took on $40 million in debt financing from Silicon Valley Bank. The company, founded in 2004, has an office in Dallas. It has more than 1,700 enterprise customers in almost 70 countries around the world.

EverCompliant, doing business as EverC, a provider of cyberintelligence tools to detect online money laundering, received $35 million in Series B funding led by Red Dot Capital Partners and joined by Maor Investments and existing investors Viola Ventures, Arbor Ventures, and American Express Ventures. The company was established in 2008 and has offices in New York, Shanghai, and Tel Aviv. Its private funding totals $48 million, according to Crunchbase.

Axis Security of San Mateo, Calif., raised $32 million in Series B funding led by Canaan Partners, with participation by existing investors Ten Eleven Ventures and Cyberstarts. The company provides zero-trust access offerings for business applications. Founded in 2018, the startup has a total of $49 million in private funding.

StackRox of Mountain View, Calif., received $26.5 million in Series C funding led by Menlo Ventures and joined by Highland Capital Partners, Hewlett Packard Enterprise, Sequoia Capital, and Redpoint Ventures. The startup offers Kubernates-native container security. It was established in 2014 and has a total of $65.5 million in private funding.

Pcysys of Petah Tiqva, HaMerkaz, Israel, raised $25 million in Series B funding led by Insight Partners, with the participation of existing investors Awz Ventures and The Blackstone Group. It provides an automated penetration testing platform to reduce the risks to corporate cybersecurity. Founded in 2015, the startup has raised a total of $39.5 million in private funding.

San Francisco-based Panther Labs received $15 million in Series A funding led by Lightspeed Venture Partners and joined by S28 Capital, Innovation Endeavors, and Fathom Capital. The enterprise cybersecurity startup offers a platform for detecting threats and providing security insights at cloud scale. Panther Labs was established in 2018 and has raised a total of $20.5 million in private funding.

Seattle-based Cloudentity, formerly known as Syntegrity Networks, raised $13 million in Series A funding led by ForgePoint Capital, joined by WestWave Capital. The startup is a cloud-based provider of identity-aware authorization and application security. It was founded in 2011 and has a total of $15 million in private funding.

London-based Acin received $12 million in Series A funding led by Notion Capital, with participation from Fitch Ventures, Cris Conde, Christopher Carter, and Carlos Gonzales-Cadenas. Strategic investors are expected to provide more funding. Acin was established in 2018 and specializes in risk and control data standards, benchmarking, and controls data analytics. It provides a software-as-a-service platform for enterprises.

New York-based Laika raised $10 million in Series A funding led by Canopi Ventures and joined by existing investors Bain Capital, NYCA Partners, and Third Prime. The startup offers an enterprise-ready compliance platform and information security. The company was founded in 2019 and has a total of $13 million in private funding.

Elevate Security of Berkeley, Calif., received $8.25 million in Series A1 funding led by Foundry Group and joined by Salesforce Ventures and Shasta Ventures, along with existing investors Costanoa Ventures and Defy. Elevate provides a human risk management software platform. The company was established in 2017 and has a total of $18.3 million in private funding.

Sternum of Tel Aviv raised $6.5 million in Series A funding led by Square Peg. Other investors include Merle Hinrich, btov, Eyal Shavit, and Udi Mokady. The company, which offers endpoint security for Internet of Things devices, was founded in 2018.

Semiconductors

Nuvia of Santa Clara, Calif., raised $240 million in Series B funding led by Mithril Capital and joined by Marvell Technology Group, BlackRock, Fidelity, Temasek, Atlantic Bridge, Redline Capital, and existing investors Capricorn Investment Group, Dell Technologies Capital, Mayfield Fund, Nepenthe, and WRVI Capital. The startup is designing Arm-based processors for use in data centers, aiming at energy efficiency and high performance. The company was established in 2019 and has raised a total of $293 million in private funding.

Antaios of Grenoble, France, received $11 million in funding from Innovacom, Sofimac Innovation, Applied Ventures, and Bpifrance. Founded in 2017, the startup is developing spin-orbit torque magnetic random-access memory technology.

Odds and Ends

San Francisco-based Patreon, which provides an online patronage platform for artists, raised $90 million in Series E funding led by NEA and Wellington Management, valuing the company at $1.2 billion. Also participating were Lone Pine Capital, Glade Brook Capital, Thrive Capital, DFJ Growth, and Index Ventures. Founded in 2013, Patreon has more than 200,000 creators, such as performing songwriters and photographers, artists who have received more than $2 billion from patrons. The company has raised a total of $255.9 million in private funding.

Exotec Solutions, which develops e-commerce warehouse robots, received $90 million in Series C funding led by 83North and joined by existing investors Iris Capital and Breega. The company was established in 2015 and has raised a total of $111.2 million in private funding. Pittsburgh-based Seegrid, which develops self-driving vehicles to transport materials in industrial environments, added $27 million to its recent equity funding, bringing the round up to $52 million. G2VP provided the initial investment of $25 million; the company only said the new backers are “leading technology and robotics investors.” Founded in 2003, the company has a total of $136.5 million in private funding, according to Crunchbase.

NotCo raised $85 million in Series C funding led by Future Positive and L Catterton, with participation by Kaszek Ventures, The Craftory, Bezos Expedition, General Catalyst, Endeavor Catalyst, Indie Bio, Humboldt Capital, and Maya Capital. The Chilean startup is a food technology company, providing plant-based meat and dairy alternatives. The Not Company was established in 2015 and has raised a total of $115 million in private funding.

Also providing a meat substitute is Mosa Meat of Maastricht, Limburg, the Netherlands. The Dutch startup received $55 million in Series B funding led by Blue Horizon Ventures and joined by Bell Food Group and M Ventures, among other advisors and investors. The food technology company has 50 employees. Mosa Meat was founded five years ago and has a total of €64.5 million (about $75.64 million) in private funding.

San Francisco-based Volansi raised $50 million in Series B funding led by Icon Ventures and joined by Harpoon Ventures, Merck Global Health Innovation Fund, and existing investors Lightspeed Venture Partners and Y Combinator.

SeeQC of Elmsford, N.Y., received $22.4 million in Series A funding led by EQT Ventures and joined by FAM AB. Also participating are M Ventures, BlueYard Capital, New Lab Ventures, and the Partnership Fund for New York. The quantum computing startup designs its own semiconductors for application-specific quantum computers. The startup was established in 2018 and has a total of $34.2 million in private funding.

Fundraising

A quick compendium of fundraising by private equity and venture capital firms during September: KKR raised more than $11 billion, aiming for $12.5 billion; Australia’s Future Fund sold about A$6 billion (around $4.3 billion) of private equity assets; TCV is raising $3.25 billion; Antares Capital raised $3 billion; China’s Hillhouse Capital Group is raising $3 billion; Ardian raised €2 billion (about $2.33 billion); Advent International raised $2 billion; GGV Capital is raising $2 billion for three funds; Brazil’s Patria raised $2 billion; Bridgepoint Development Capital raised £1.5 billion (about $1.9 billion); Symphony Technology Partners is raising $1.85 billion; GI Partners raised $1.8 billion; Stellex raised $1.78 billion; PAG raised $1.5 billion; H.I.G. Capital raised $1.3 billion; Deutsche Private Equity raised €1 billion (about $1.17 billion); Oakland Black Business Fund is raising $1 billion; Greylock Partners raised $1 billion; Webster Equity Partners is raising $1 billion; Woven Capital raised $800 million from Toyota.