INTELLI™ Weekly Insights
Friday October 21, 2022 | Volume 1 Series 17 | Q3 statistics that will blow you away regarding recent fundings, deals, transactions, & more.
🕑 Good evening! Hoping all of us had an awesome, productive week, and are looking forward to a relaxing weekend. More Quarter 3 recap from INTELLI™ today that will keep you in the loop…or even ahead of the loop. Normally we ask if you’re getting that extra espresso, but at this hour, we feel an espresso martini is better suited to the timing of this newsletter. As you wind down from the day, the team at INTELLI™ is ready to share a fresh round of updates for you to wrap up this week.
We’ll keep today’s Insights fairly short since we’re giving you our INTELLI™ Analyst review on Epic Games, as well as our top list of featured financing signals. In the coming weeks and months, as we formally launch INTELLI™, we’ll actually be giving you full-blown datasets and the ability to click on a company or industry and get an enhanced report tailored for you.
💸💸💸 The $290 Billion Venture Capital Reserve (in the United States alone 🤯)
🔮 Will 2023 Be a Record-setting Year for VC Investments?
VCs have a record amount of money to invest.
Jon Sakoda, the founder of early-stage VC firm Decibel Partners, analyzed nearly a decade of venture fundraising and investment activity. He found that VCs in the United States have roughly $290 billion at their disposal.
To put things in perspective, that is more than the GDP of the following countries in 2021, according to data from the World Bank (Qatar: $179 Billion, Hungary: $182 Billion, Greece: $216 Billion, Portugal: $249 Billion, Romania: $284 Billion
During this summer, there was a slowdown in deal pace given the inflation issues and geopolitical turmoil. But, it is just a matter of time before the floodgates open.
Will this happen during the last few months of the year? 2023? 2024? Let us know your predictions. 💬
🤝 Here are some of the top equity-financing deals that were executed during Q3 of 2022 across the various technology sub-industries:
💵 Payments: Top Equity Deals in Q3'22
Klarna (Sweden) | $800M Private Equity | 20.7% of Total Funding | Sequoia Capital, BESTSELLER, Commonwealth Bank of Australia, Silver Lake, CPP Investments
DANA (Indonesia) | $555M Series A | 14.4% of Total Funding | Lazada, Sinar Mas Indonesia
Toss (South Korea) | $371M Series G | 9.6% of Total Funding | Altos Ventures, DAOL Investment, Goodwater Capital, Greyhound Capital, Korea Development Bank
Guesty (Israel) | $170M Series E | 4.4% of Total Funding | Apax Digital, MSD Partners, Sixth Street Growth, Flashpoint Venture Capital, Viola Growth
Tamara (Saudi Arabia) | $100M Series B | 2.6% of Total Funding | Checkout.com, Coatue Management, Endeavor, Sanabil Investments, Shorooq Partners
🏧 Banking: Top Equity Deals in Q3'22
Strike (United States) | $80M Series A | 6.8% of Total Funding | Ten31, University of Wyoming, Washington University in St. Louis
Wealthfront (United States) | $70M Convertible Note | 5.9% of Total Funding | UBS
Solid (United States) | $63M Series B | 5.4% of Total Funding | FTV Capital, Headline
AccessFintech (Israel) | $60M Series C | 5.1% of Total Funding | WestCap Group, Citigroup, Dawn Capital, Goldman Sachs, J.P. Morgan Chase & Co.
Alloy (United States) | $52M Series C | 4.4% of Total Funding | Avenir Growth Capital, Lightspeed Venture Partners, Bessemer Venture Partners, Avid Ventures, Canapi Ventures
📈 Digital Lending: Top Equity Deals in Q3'22
Klarna ( Sweden) | $800M Private Equity | 37.9% of Total Funding | Sequoia Capital, BESTSELLER, Commonwealth Bank of Australia, Silver Lake, CPP Investments
EarlySalary (India) | $110M Series D | 5.2% of Total Funding | Norwest Venture Partners, The Rise Fund, HDFC, Piramal Capital
Tamara (Saudi Arabia) | $100M Series B | 4.7% of Total Funding | Checkout.com, Coatue Management, Endeavor, Sanabil Investments, Shorooq Partners
OneCard (India) | $100M Series D | 4.7% of Total Funding | Temasek, Hummingbird Ventures, Ocean View Investments, QED Investors, Sequoia Capital India
DD360 (Mexico) | $91M Undisclosed | 4.3% of Total Funding | Creation Investments Capital Management
🔎 Advertisements and the Power it Holds!
“On a long enough timeline all companies sell ads” - Ancient VC Proverb
Advertising is often a last resort. Big tech companies like Apple and Netflix ads have been purposely avoided for decades. But now with growth slipping and the pressure on from Wallstreet, the pivot to ads is finally here.
Growth is slowing and stock prices are tumbling. So companies are turning to an ancillary revenue stream, one they can flip on almost instantly and start generating heaps of cash: Ads
Want to know how these companies utilize their ads? Click here.
🔗 Supply Chain Funding Isn’t Really Slowing
So far this year, investors have put over $7 billion in seed through growth-stage rounds globally for supply chain-focused startups.
For instance, the sector’s largest funding recipient by a long shot is supply chain software provider Flexport, which raised $935 million in a February Series E co-led by Andreessen Horowitz and MSD Partners.
Early-stage supply chain startups are seeing action too. Roughly a third of global supply chain-related funding this year has gone to pre-seed through Series B rounds.
💰 INTELLI™ Featured Investments
Thermo Fisher Scientific, a provider of laboratory information management and scientific data systems raised 110B JPY from a Post-IPO Debt round.
BWX Technologies Inc. (BWXT), a supplier of nuclear components and fuel to the U.S. government raised $250M from a Post-IPO Debt round led by Wells Fargo & Company.
BYJU'S, an educational technology company that develops personalized learning programs for K-12 students raised $250M from a Funding Round from Qatar Investment Authority.
Fulcrum, a SaaS platform for manufacturers raised $19M in a Series A round led by Bessemer Venture Partners.
🤝 Recent Acquisitions
Fori Automation, an industrial automation company has a pending acquisition by Lincoln Electric, a manufacturer of welding products, arc welding equipment, and welding consumables. for $427M.
Avito, a classified advertisements platform, was acquired by Kismet Capital Group (KCG) which is a private investment firm that focuses on creating a leading SPAC platform for 151B RUB.
INTELLI™ Insights Report & Analysis: EPIC Games
(Est. ~$31.5B valuation)
Company Overview:
EPIC Games is a large video game distributors & retailer company operating the e-commerce site epicgames.com. Epic Games sells its products and services in the video game distributors & industry. Epic Games offers discount codes and coupons to its customers occasionally. Epic Games is an American video game development company best known for its successful Gears of War series of games, as well as its Unreal Engine technology. Its subsidiaries are Chair Entertainment; People Can Fly, and Titan Studios. Epic Games was founded in 1991 and is based in Cary, North Carolina.
Core Services / Offerings
Video Games
Game Engine Technology
Founding Year
1991
Website
www.epicgames.com
Employees
~4,240
Base Office
620 Crossroads Blvd., Cary, NC 27518, USA
Key Leader Information
Timothy Sweeney (CEO)
INTELLI™ Analyst Review:
Why this Company matters right now:
In April of 2022, Sony and KIRKBI (the family-owned holding and investment company behind The LEGO Group) invested $2BN USD ($1BN USD each) in Epic Games. The funding will be used to assist Epic Games in its recent partnership with the LEGO Group to create a child-friendly metaverse.
The $2BN USD funding results in a $31.5 BN USD post-money valuation for Epic Games and is quite remarkable considering the ongoing venture winter. The company’s Metaverse incursion will generate several challenges and increase competition.
Problems with this company:
The metaverse creation and development is the ambition of two industry giants: Apple and Meta. Meta aims to employ 10,000 people to build its own virtual reality system. Meta has already invested 10 BN USD including the Oculus acquisition that really ramped up its metaverse plans. On the other hand, Apple is expected to announce its augmented reality headset by the end of 2022.
The intensity of competition between different stakeholders may increase pressure on Epic Games. The company has ongoing anti-trust litigation against Apple and Google for pulling out Fortnite from their app stores as Epic Games allowed for client direct payment in an in-game currency. Epic Games lost the lawsuit against Apple and is under appeal.
Potential solutions this company could take:
Epic Games can gain scale by conducting strategic partnerships (such as the 2BN USD investment from Sony and LEGO) that will provide funding and synergies. In addition to that, Epic Games may start an aggressive acquisition and product development strategy that takes into account its main competitors accelerated pace.
Epic Games' litigation against Apple and Google for their allegedly dominant position on app stores may be made redundant in a new metaverse. Users may acquire apps through this new interface eliminating the need for app stores, thus creating a new marketplace that allows developers to reach users directly.
Key things "coming up" / that might come up in this company's near future:
Apple is expected to announce its first augmented reality headset during the second half of 2022. Meta is also planning to release their AR headset, codenamed Cambria. This is a key strategic step on the metaverse development path taken by one of the key competitors. Epic Games will need to react properly to this potential new way of gaming that may leave traditional gaming behind.
On October 21 of 2022, the hearing for Epic Games’ appeal against Apple in the anti-trust ongoing litigation will take place. Each party will have 20 minutes to expose their case, and other stakeholders such as 34 states and the Department of Justice (DOJ) will be able to express their point of view.
*Predictions that we have on this company's next moves:
Epic Games is likely to continue its litigation and feuds with Apple and Google, giving them the chance to have a closer view and become a potential ally of Meta. In July of 2022, Mark Zuckerberg (Meta CEO) said that Apple and Meta are in a “deep philosophical competition” to build the Metaverse. Epic Games is likely to share views with Meta as this company is also suffering from Apple’s IOS (app store) elevated fees.
Epic Games is sitting on 2 BN USD and will need to incur on key strategic acquisitions to demonstrate its metaverse strategic approach. In case the company is planning to generate a full in-house development, it will probably make an important product announcement by the end of this year. This is particularly important to show it is not left behind by Apple and Meta.
Opportunities the company has:
Epic Games is on the table with the large players; in June of 2022 Epic Games joined Meta, Microsoft, and others in founding the metaverse open standards group. Its target is to foster open, interoperable standards for augmented and virtual reality, geospatial, and 3D tech. This open environment promoted by Meta will be a great opportunity for companies that integrate with it.
The metaverse is a result of the pandemic acceleration of pre-existing trends of digitalization, blockchain, artificial intelligence, and virtual reality that characterized the fourth industrial revolution. There is a great market appetite for this development, and Epic Games will likely obtain further funding in case it is required.
Things that pose a risk to this company:
The disruptiveness level of this new technology poses questions that do not have a concrete solution. For instance, the NFT treatment: Minecraft decided to ban NFTs while Epic Games will allow for them. How will the Fortnite metaverse integrate with other metaverses developed by Meta & others; Epic Games states that Fortnite is a self-contained metaverse already.
The increase in interest rates is likely to hamper Epic Games’ funding capabilities when compared to periods of relatively lower interest rates. In new cutting-edge technology, the investment required is of key relevance and great magnitude. Therefore, problems securing funds can deeply affect Epic Games’ technological development speed and capacity.
What the "haters" would say about this company:
Epic Games will probably be outmatched by industry giants such as Meta and Apple. The company had the reckless idea to start fierce anti-trust litigation against one of the key metaverse stakeholders while trying to develop a metaverse strategy. Apple’s augmented reality headset may end the reign of games such as Fortnite putting serious doubts on Epic Games’ value.
Epic Games has not yet used its $2BN USD funding to acquire any company. Its last acquisition was done in March of 2022, one month before its Sony & LEGO funding. The acquisition was in line with its Apple & Google anti-trust litigation and added Spotify to the list by acquiring a company that charged lower commissions on artists. Being overconfident on its 2 BN USD funding and opening multiple fronts may be a reckless and risky approach at this stage.
Key takeaways / Hot takes:
The metaverse combines and fosters a series of cutting-edge technologies such as virtual reality, augmented reality, artificial intelligence, data science, NFTs, and blockchain (among others). Tech giants such as Apple and Meta (Facebook) are heavily investing in this endeavor. The Sony, LEGO, and Epic Games partnership is heading this way as well.
How the company uses these fresh funds (2BN USD) for its strategic purpose (Metaverse) while being synergic with its own pre-existing capabilities and coping with the latest technological developments and increasing competition represents an enormous challenge.
For more information, trends, and sentiments on EPIC Games and its availability, subscribe to INTELLI™ Pro.
Stay tuned for next week’s round of news, updates, and statistics brought to you by INTELLI™