PreIPO INTELLI™ Weekly Insights | Series 39
Friday, June 30th, 2023 | Volume 1 Series 39 | Exciting resurgence in Tech M&A, the end of IRL, and noteworthy funding updates.
Welcome to another edition of the INTELLI™ Newsletter, where we bring you the latest news and updates. Sit back, relax, and let us provide you with the highlights and insights you need. In this weeks newsletter we talk about the big week for tech M&A, the ending of IRL, and some recent funding we were tracking.
Tech Merger and Acquisition activities are experiencing a resurgence 💥
Image Credits: Yevhen Lahunov / Getty Images
The tech M&A landscape has been relatively quiet throughout the year, with only a handful of significant enterprise deals taking place. The reasons behind this period of inactivity remain uncertain, whether it be due to a lack of available cash, higher interest rates, or buyer caution in an unpredictable market. However, a noticeable shift occurred this week, as if the floodgates of M&A activity suddenly opened, bringing some much-anticipated movement to the scene.
The question now arises as to whether this surge in M&A activity is merely a momentary burst of enthusiasm or the start of a long-awaited and sustained wave of acquisitions. Only time will reveal the answer. Nevertheless, this week has already witnessed several notable deals. IBM kicked off the week by acquiring Apptio for a staggering $4.6 billion, marking the largest deal of the week thus far. Shortly after, Databricks announced its acquisition of MosaicML for $1.3 billion, Thomson Reuters purchased Casetext for $650 million, and ThoughtSpot secured BI platform Mode Analytics for $200 million.
The condensed timeframe in which these deals occurred demonstrates a significant level of activity, with a total transaction value of $7.75 billion changing hands. One major driver behind this surge is the growing enthusiasm for artificial intelligence (AI) and data-driven solutions to fuel machine learning models. Companies are actively seeking strategic acquisitions to bolster their internal AI capabilities or augment their existing product offerings. Notably, three out of the four deals that took place on Monday were centered around AI or data, emphasizing the increasing importance of these properties in the upcoming months.
Databricks' substantial $1.3 billion acquisition of Mosaic further highlights the upward trajectory of valuations in this space. Similar startups in the AI and data field could soon receive attractive offers that they simply cannot refuse, as established companies aim to strengthen their technological stacks and gain a competitive edge. As a result, it is anticipated that valuations will continue to rise, signaling a potential shift towards an active and dynamic M&A landscape in the near future.
🦄 Unicorn social app IRL to shut down after admitting 95% of its users were fake
Image Credits: Bryce Durbin/TechCrunch
IRL, a social app targeting Gen Z as an alternative to organizing events, has ironically announced its closure after an internal investigation by the board of directors revealed that 95% of its reported 20 million users were either automated or bots, as reported by The Information. Despite raising over $200 million in venture capital, including a significant Series C round led by SoftBank, the company faced internal challenges that eventually became apparent.
The unexpected layoffs of approximately 25% of its workforce, or around 25 employees, surprised many, considering IRL had experienced substantial growth in team size prior to that. In a memo to employees, former CEO and founder Abraham Shafi urged them to adapt and be disciplined, drawing comparisons to WhatsApp's success with a small team. He also assured employees that the company had sufficient funds to sustain operations until 2024, with reports suggesting a cash reserve of over $100 million at the time.
However, doubts began to emerge among employees regarding Shafi's claim of 20 million monthly active users, coinciding with an investigation by the Securities and Exchange Commission (SEC) into potential securities law violations by IRL. As a result, the board of directors suspended Shafi in April and appointed an acting CEO, ultimately leading to the decision to shut down the app.
Recent Funding Recap 🔎
B Garage - $20 Million Series A
San Jose-based startup B Garage has secured $20 million in a Series A funding round, led by new investor LB Investment, with participation from Ignite Innovation Fund, Krossroad Partners, and existing backer SoftBank Ventures Asia. The latest funding brings the total raised by B Garage to $30 million and will support the development and commercialization of its autonomous drones and software for warehouse inventory tracking. Founded in 2017 by Aiden Kim, the company aims to address labor shortages in industries such as logistics and agriculture by leveraging AI and autonomous technology. B Garage plans to deploy its drones to more than 10 Kenco warehouses across the US by the end of 2023 and is also collaborating with Incheon Port Authority in South Korea. The startup differentiates itself from competitors with features like multi-aisle autonomy, no additional infrastructure requirements, mapping-free operation, and automatic battery swapping. B Garage intends to expand its technology to other sectors beyond logistics, including defense and security, and also plans to introduce ground robots for inventory management.
Infection - $1.3 Billion
Inflection AI, an AI startup focused on creating "personal AI for everyone," has raised $1.3 billion in a funding round led by Microsoft, Reid Hoffman, Bill Gates, Eric Schmidt, and new investor Nvidia. This brings the total funds raised by Inflection to $1.525 billion and values the company at $4 billion. The capital will be used to support the development of Inflection's first product, an AI-powered assistant called Pi. Inflection aims to revolutionize personal AI and sees this funding as a significant turning point. The company recently unveiled Pi, which offers knowledge and support based on individual interests and needs. Inflection-1, the AI model powering Pi, has demonstrated competitive performance on various benchmarks but falls behind in coding tasks compared to OpenAI's GPT-3.5 and GPT-4. Inflection is partnering with Nvidia and CoreWeave to build a large-scale AI training cluster. Despite the challenging economic environment, generative AI startups continue to attract substantial investments, with around $1.7 billion generated in Q1 2023 and over $10.68 billion worth of announced deals yet to be completed.
Runway - $141 Million Series C
Generative AI startup Runway has announced a $141 million extension to its Series C funding round, with participation from Google, Nvidia, Salesforce, and other investors. This funding follows closely after Inflection AI's $1.3 billion investment. The additional capital will be used to scale Runway's in-house research efforts and expand its team. Founded in 2018 by Cris Valenzuela, Alejandro Matamala, and Anastasis Germanidis, Runway initially focused on AI tools for moviemakers, cinematographers, and photographers but gradually shifted towards generative AI, particularly in the video domain. Its flagship product, Gen-2, generates videos from text prompts or existing images. Runway aims to push the boundaries of creativity and plans to reimagine content creation by reducing costs and time factors. The Series C extension values Runway at $1.5 billion, bringing its total raised funds to $237 million, positioning it as a well-funded player in the generative AI space alongside other startups like Cohere, Character.ai, and Stability AI.
Cyware - $30 Million Series C
Cyware, a startup focused on modernizing security operations for enterprises, has announced the successful completion of a Series C funding round, raising $30 million. The funding was led by Ten Eleven Ventures, with participation from Advent International, Zscaler, Emerald Development Managers, Prelude, and Great Road Holdings. This brings Cyware's total funding to $73 million. Co-founded in 2016 by Anuj Goel and Akshat Jain, Cyware aims to integrate threat intelligence, vulnerability data, and incident information through prebuilt workflows. The platform provides no-code and low-code capabilities, allowing security teams to automate threat-combating applications and collaborate in real-time, enabling them to respond quickly to suspicious attacks. Cyware also hosts a network that connects enterprise security teams with each other and with third-party threat data providers, facilitating the exchange of valuable threat intelligence.
Quandri - $8.5 Million Series A
Quandri, a startup based in Vancouver, Canada, is taking a unique approach to robotic process automation (RPA) by developing digital workers tailored for the insurance industry. The company has announced the successful completion of an $8.5 million Series A funding round, led by FUSE and with participation from Defined Capital, Aviso Ventures, Rebellion Ventures, N49P, and Good News Ventures. With this funding, Quandri has raised a total of $10 million.
Co-founded by Jackson (CEO) and Jamieson Fregeau (President), the company aims to provide a bot-as-a-service model, pre-building automation bots for its customers rather than requiring them to build their own. Quandri focuses on a specific niche, recognizing the need for automation in the insurance space where brokers and agencies often perform repetitive manual tasks and data remains isolated in silos.
Quandri currently offers three pre-built robots: Renewal Reviewer for policy comparisons, a tool for accurate file naming, and Download Director for matching policies, eDocs, claims, and commission verification. While the company is presently focused on the insurance industry, specifically North American brokerages, there is potential to expand its technology to other verticals in the future.
Customers have praised Quandri's bots for streamlining their agency operations and eliminating the need for additional employees to handle tedious paperwork. Angela Trimble, President of Trustpoint Services, described the bots as a game changer for their agency.
As always, stay tuned for more updates and insights from the team at INTELLI™.