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Venture Investors Turn To AI To Find Deals

There are few industries in tech that have not been changed or disrupted by artificial intelligence. Now, some of the people investing in those sectors are using AI to figure out where to put their money next.

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From medicine to retail to the auto industry, there are few industries in tech that have not been changed or disrupted by artificial intelligence.

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Now, some of the people investing in those sectors are using AI to figure out where to put their money next. While that may seem like an obvious use of AI and machine learning, it’s been something most VCs have been slow to adopt.

“VCs love to disrupt other spaces using data and networks—except their own,” said Ilya Kirnos, co-founder, managing director and CTO of San Francisco-based venture firm SignalFire.

Investment firms such as SignalFire and EQT Ventures are not just investing in tech companies, but are in their own way tech companies—housing their own proprietary AI platforms to analyze and vet investment opportunities.

AI directs big money

Alastair Mitchell, partner at EQT Ventures, estimates the firm’s AI platform–called Motherbrain–for sourcing portfolio companies has played a role in about $200 million of the firm’s approximately $900 million total invested since its first fund opened in 2016.

“We placed a big bet on technology to be better investors,” he said.

Motherbrain digests both public data, such as investor and LinkedIn data, app store rankings and funding information, as well as proprietary information to score companies. Mitchell estimates the platform is helping the firm track about 2 million companies.

Stockholm-based EQT Ventures, which describes itself as a hybrid between a startup and a VC firm, plans to use Motherbrain over the next few years to help it find investment opportunities for its second fund, which launched last year. About 75 percent of that $700 million fund is still available for investment, said Mitchell, adding that three of the firm’s top five investments from its 2016 fund were sourced through Motherbrain.

The firm, with investments that include Wolt, Handshake and Netlify, also recently promoted Henrik Landgren, who specifically oversees Motherbrain and previously built Spotify’s global analytics team, to partner.

While EQT Ventures is a separate set of funds from the private-equity firm EQT, Mitchell said the more traditional investment firm also has used Motherbrain to analyse growth fund opportunities; illustrating that the use of AI is moving beyond just venture.

AI not just to invest

However, AI uses for firms stretch beyond just investing. SignalFire looks at four stages of successful investing: sourcing, diligence, placing the investment, and adding value to that company once it is in the portfolio, Kirnos said.

SignalFire, which usually invests in seed or early-growth rounds, uses its AI platform in all four phases.

“It has differentiated us,” said Kirnos, who was a software engineer at Google before co-founding SignalFire.

While SignalFire uses AI to help source and do its diligence before investing in companies, the company also uses its proprietary platform to help its portfolio companies grow by analyzing and researching their markets, recruiting talent and creating business strategies. The firm uses its platform to track more than 2 million data sources and half a trillion data to help tell a company everything from how to differentiate itself to how to price its product.

Kirnos said he also looks at his firm as a tech startup, one that has used AI to now invest in nearly 100 companies, including the likes of Grammarly and Ro, formerly Roman Health.

“We have companies in our portfolio that could be public companies,” he said.

COVID and the digital transformation of investing

Nearly every tech executive and investor talks of how the COVID-19 pandemic has caused a “digital transformation” in all sectors and areas of work.

That may apply to investing too, Kirnos said.

“Companies are remote now with COVID,” he said “The stuff you track is more widely dispersed.”

Kirnos said the days of hiring a graduate from Stanford University to go out to talk to people about the next big thing in tech are at least temporarily paused due to the pandemic.

“You have to use data, you have to use systems,” Kirnos said.

With SignalFire having about $1 billion under management and EQT Ventures investing from its second $700 million fund, other investors may eye the returns on that money to see if AI is something they should not just invest in, but also use.

“No doubt as we are successful, there will be imitation,” Kirnos said.

Illustration: Dom Guzman

Investment firms such as SignalFire and EQT Ventures are not just investing in tech companies, but are in their own way tech companies—housing their own proprietary AI platforms to analyze and vet investment opportunities.

Source: https://news.crunchbase.com/news/venture-investors-ai-deal-sourcing/

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Macrometa Locks Down $20M To Be The Amazon Prime Of Edge Computing

Palo Alto, California-based edge compute company Macrometa closed a $20 million Series A less than eight months after announcing its $7 million seed funding.

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Palo Alto, California-based edge compute company Macrometa closed a $20 million Series A less than eight months after announcing its $7 million seed funding.

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The round was led by Pelion Venture Partners, with participation from existing investors

DNX Ventures, Benhamou Global Ventures (BGV), Partech Partners, Fusion Fund, Sway Ventures and Shasta Ventures. Founded in 2017, the company has raised $29 million to date.

Macrometa allows developers to build and run data-heavy cloud applications using real-time information and analytics at the edge — speeding up the process by bringing it closer. Co-founder and CEO Chetan Venkatesh compared what Macrometa does for developers in edge computing to what Amazon Prime did for the retail space.

“Amazon Prime created local caches of local goods,” he said. “We are doing the same thing for data and applications.”

In edge compute terms, that means getting developers the data they need faster and in real-time.

“We are big data meets fast data,” he added.

Fast growth

The 62-person company began last year with a few hundreds-of-thousands of dollars in revenue, but by the end of the year saw several millions of dollars in sales, Venkatesh said. It was then he started to think about raising a fresh Series A to help scale up the company.

Chris Cooper, general partner of Pelion, already had expressed interest in leading such a series and jumped at the chance to invest in another infrastructure and cloud-related company — having prior investments in companies like Cloudflare, Red Hat and Riverbed.

“To me, this smelled like and sounded like the thing that helped build our firm,” he said.

Venkatesh said the company will use the money to continue to build its solution and go-to-market strategy. The company expects to grow revenue 3x to 4x this year, and add to its customer base that already includes about a half dozen large enterprises, he said.

Using other forecasts as guidelines, Macrometa estimates the market for data services in the cloud to be about $50 billion. However, many solutions, such as those offered by SAP, Oracle, AWS and Google, are cloud-centric, not edge-native, Venkatesh said.

That difference could help the company dominate an edge compute market just coming into focus, he added.

Cooper said there are aspects of Macrometa that remind him of Cloudflare early on.

“We didn’t know what Cloudflare could truly be back then,” he said “But these are companies that change the way we interact with data.”

Illustration: Li-Anne Dias.

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Macrometa allows developers to build and run data-heavy cloud applications using real-time information and analytics at the edge — speeding up the process by bringing it closer. Co-founder and CEO Chetan Venkatesh compared what Macrometa does for developers in edge computing to what Amazon Prime did for the retail space.

Source: https://news.crunchbase.com/news/macrometa-locks-down-20m-to-be-the-amazon-prime-of-edge-computing/

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Inside Didi’s Massive IPO Filing

Backed by investors including SoftBank and Toyota, Didi last raised venture financing with a $500 million round led by SoftBank in May 2020, per Crunchbase.

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Chinese ride-hailing company Didi Chuxing has filed to go public in the United States.

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Didi is more or less the Uber of China. In fact, the company bought Uber’s operations in China back in 2016. And now it’s looking to go public in a deal that could value it at more than $70 billion, according to The Wall Street Journal.

Backed by investors including SoftBank and Toyota, Didi last raised venture financing with a $500 million round led by SoftBank in May 2020, per Crunchbase. It also raised $1.5 billion in debt financing in April 2021.

SoftBank, Uber and Tencent are among the largest shareholders in the company, which is based in Beijing. Uber became a stakeholder in the company after selling its Chinese operations to Didi.

Didi operates in 15 countries and has 493 million annual active users, along with 15 million annual active drivers, according to its F-1. The company reported having 41 million average daily transactions on its platform.

In terms of numbers, the company reported $21.6 billion in revenue last year. Although that figure is down from the nearly $24.2 billion in revenue the company generated in 2019, it’s nothing to scoff at and can likely be attributed to the COVID-19 pandemic. Its losses came out to about $2.1 billion in 2020, up from about $1.25 billion in 2019. The company isn’t profitable, and has had losses every fiscal year since it was founded in 2012.

Didi detailed how the pandemic affected its business, reporting that operations rebounded in the second half of 2020.

“The demand for our mobility offerings, as well as the supply of drivers, decreases drastically under such conditions. Our Core Platform GTV fell by 32.8% in the first quarter of 2020 as compared to the first quarter of 2019, and then by 16.0% in the second quarter of 2020 as compared to the second quarter of 2019,” the company wrote in its filing. “Our businesses resumed growth in the second half of 2020, which moderated the impact on a year-on-year basis.”

Goldman Sachs, Morgan Stanley and J.P. Morgan are among the underwriters for the IPO.

The company applied to list on the New York Stock Exchange under the ticker DIDI.

Illustration: Li-Anne Dias

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Source: https://news.crunchbase.com/news/ride-hailing-giant-didi-chuxing-files-for-us-ipo/

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Card Issuer Marqeta Valued At More Than $17B in Nasdaq Debut

Chief Marketing Officer Vidya Peters tells Crunchbase News that the IPO “has been a wonderful validation of the modern card issuing industry.”

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Shares of Marqeta, an Oakland-based modern card issuing platform, popped on the first day of trading Wednesday, closing at $30.52 per share, up 13 percent from opening price of $27. Marqeta is listed on the Nasdaq Global Select Market under the symbol MQ.

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Marqeta now has a market value of $17.3 billion, according to Yahoo, which is based on 586 million of outstanding shares.

The company filed in May to go public via an initial public offering. Since its inception in 2010 by Jason Gardner, Marqeta has raised a total of $528 million in known venture capital, according to Crunchbase data. Its last disclosed round in May 2020 valued the company at $4.3 billion.

Vidya Peters, chief marketing officer for Marqeta, told Crunchbase News that the IPO “has been a wonderful validation of the modern card issuing industry and what we have done over the last decade.”

She went on to say that there is a “massive $74 trillion market opportunity ahead of us, which provides an endless runway.”

And, as a payments infrastructure company, being publicly traded enables Marqeta to be transparent on its financial health to stakeholders and customers.

“It also provides a massive arsenal to accelerate our product roadmap and fuel our global expansion,” Peters added. “We are already in 36 countries and now we can accelerate even faster.”

To complement prepaid and debit card offerings, in the past year Marqeta added credit, which Peters touted as being the first company to offer all three.

She also believes this is just the start for what Marqeta can enable with innovative offerings, such as open APIs so that developers can build their own card-issuing products.

“Marqeta is just scratching the surface with cards,” Peters added. “Imagine being able to have your check deposited onto your card, buy now, pay later, peer-to-peer payments and even monetize your cryptocurrency. The possibilities are endless, and in our next chapter we are in a position to unlock all of that with our card types.”

Among the S-1 statement disclosures, Marqeta touts customers, such as Affirm, DoorDash, Instacart, Klarna and Square, which it reported was its largest customer, accounting for 70 percent of its net revenue in 2020.

It reported $350 million in fourth-quarter 2020 annualized net revenue, operates in 36 countries, and has issued more than 320 million debit, credit and prepaid cards to date.

The company reported $107.9 million in revenue for the first quarter ended March 30, 2021, more than double from the same three-month period in 2020. It narrowed its net loss to $12.8 million during the quarter from $14.5 million last year.

Prominent backers include 83North II, Coatue, ICONIQ Capital, Granite Ventures and Discover Financial Services, according to its filings. With the exception of Discover, all of the remaining entities led investments into the company, according to Crunchbase data.

Illustration: Li-Anne Dias

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

The company filed in May to go public via an initial public offering. Since its inception in 2010 by Jason Gardner, Marqeta has raised a total of $528 million in known venture capital, according to Crunchbase data. Its last disclosed round in May 2020 valued the company at $4.3 billion.

Source: https://news.crunchbase.com/news/card-issuer-marqeta-begins-trading/

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