There's a New Unicorn in Town
Eight Companies Raised Over $344M Last Week
The Data is Out
In last week’s post, I covered what we might expect from Q2 VC financing data from the opposing perspectives of Pitchbook analysts and USV’s Fred Wilson. Fred followed up and noted that the Q2 numbers showed a Not so Hyperactive quarter from what he had anticipated. A quick summary of some new data from the latest Venture Monitor Report:
There was a -23% YoY decline in total VC deal count for the quarter. However, the bulk of the decline can be attributed to the beginning months of the pandemic, followed by a strong finish. Meanwhile, total deal value remained relatively flat thanks to massive later-stage megadeals.
Seed deals saw the most defined slowdown in terms of deal count. The divergence between angel and seed deals also appears to be widening. Instead of running in tandem, angel deal count remained flat while seed deals dropped. Worth noting that the average deal size for both groups still increased YoY.
First financings dropped in H1 as investors focused on prioritizing capital for distressed portfolio companies as follow-on. We might expect this to impact the total deal count for early-stage numbers over the next few quarters. Less first financings now = Less second financings later?
Stuff I’m Reading:
VCs Pushed to Take Historically Black Colleges as LPs — The Information
SPAC Attack: Everything a Founder/Investor Should Know — Luttig
VC Financing Deals:
Thrasio 📪
Medfield-based Thrasio just raised $260M in Series C funding from Advent International, giving them a billion-dollar valuation at just two years old! Apparently this classifies them as the quickest profitable startup to reach unicorn status. I last wrote about them in April when they raised $110M at a $780M valuation. They’ve now raised a total of over $520M.
Buying up Firms in Amazon’s $200B+ Third Party Market
Thrasio is essentially a private equity firm exclusively made for purchasing Amazon FBA businesses. Similar to the model of companies like Tiny Capital, they aim to provide liquidity to founders of businesses/brands that likely won’t achieve “venture scale” but are still valuable and profitable. By internally managing pricing, ad-spend, marketing, and other parts of these brands in aggregate, they can gain an edge in terms of efficiency and profitability.
They’re only buying businesses with strong revenue growth and defensibility from day one. If the same internal team and software tools can manage more and more brands with each acquisition, the economics could get very powerful. They’ve now acquired close to 60 Amazon FBA businesses, which is a 40% increase since their Series B in April.
Why Some Are Weary of the Model
Isn’t this pretty much just a PE rollup with the word “tech-enabled” tossed into its description? Why should Thrasio be valued differently than a PE firm that does the same thing? Especially when the businesses being acquired aren’t high-margin software companies— They’re the kind of products you get Instagram ads for.
Is there a possibility that Amazon tweaks its model overnight and crushes the business? We already know Amazon scooped up data from its own sellers to launch competing products.
How does one Amazon FBA acquirer compete against another? Kind of similar to the argument in the VC world. Capital is a commodity, is speed what wins deals? Thrasio says they can close these all-cash acquisitions in 45 days or less.
Speaking of Competitors
I have my eyes on Perch (previously known as Whele)— a smaller competitor with less than $10M raised that’s also headquartered in the Boston area. The two seem to be raising in sync, with Perch raising $8M back in April . They’re backed by Spark Capital’s Alex Finkelstein and Tectonic Ventures. Perch even lets sellers keep some equity and share upside if the company continues to take off post-acquisition.
Is anyone well-versed in this space? I’m definitely not. Curious if you have any thoughts! Hit me up.
Macro 📷
Macro, a two-year-old company that provides an analytical overlay to Zoom meetings, just raised $4.3M from investors including FirstMark, General Catalyst, and Underscore VC. It does things like show “airtime” during a Zoom call so you can see who’s been talking the most/least. An elegant solution to showing people they talk too much. I’ve also been following Boston-based Riff Analytics, a similar competitor backed by LearnLanch that aims to pull similar behavioral insights from video calls. More from TechCrunch.
Activ Surgical 🤖
Following an $11M Series A that I covered in November of last year, Activ Surgical just raised $15M led by ARTIS Ventures. Other participating investors included DNS Capital (who led the Series A), LRVHealth, GreatPoint Ventures, Tao Capital, and Rising Tide VC. The four-year-old company is developing a platform called ActiveEdge™ for both collaborative and fully autonomous surgical procedures. In 2016, they performed the world’s first autonomous suturing procedure on a live pig and are now working to commercialize the process. Their goal is to use AI to supplement surgeons to cut down on the number of preventable surgical errors that happen each year.
A+ web design work too!
Mori (Cambridge Crops) 🌿
Mori, previously known as Cambridge Crops, has officially closed it’s $12M Series A. Rumour has it, all of the money went towards acquiring a sweet four-letter domain name (kidding). The deal was led by Acre Venture Partners, with participation from Prelude Ventures, The Grantham Foundation, ACCELR8, The Engine, Refractor Capital, Closed Loop Partners, Blindspot Ventures, and the Fink Family Foundation. They’re developing a silk-based protective skin to wrap around food to keep it fresh for longer. More from Crunchbase , AgFunder, and Yahoo.
ReSupply 🎁
Resupply, a startup making charitable giving easier, is raising $3M per a Form D. It helps non-profits find locals looking to give away unwanted goods to pick them up and sell them. The non-profits can then sell the goods for income.
Cohere Health 🏥
Cohere Health, a Boston-based HealthTech company, just emerged from stealth with $10M in Series A funding led by Flare Capital, with participation from Define Ventures and an unnamed strategic investor. Their platform aims to improve the prior authorization process of the patient care journey to reduce costs, administrative burden, and patient experience.
DeepBench 🧠
Four-year-old expert network platform DeepBench received a strategic investment from VisasQ. The company’s search platform helps businesses find domain experts for advisory services using proprietary software. More from BostInno.
Nasuni 💾
Nasuni, the developer of a cloud-based file storage solution, just raised $40M in equity and debt. They make it easy for enterprises to store, consolidate, and share unstructured data in the cloud.
TileDB 💽
Cambridge-based database management company TileDB just raised a $15M Series A led by Two Bear Capital. Other investors included Uncorrelated Ventures, Nexus Venture Partners, Intel Capital, and Big Pi Ventures. They specialize in using a “Universal Data Engine” to help organizations in fields like genomics and LiDAR simplify data engineering and deployment so they can focus on analysis.
Thanks for reading!
That’s all from me until next week — If you’d like to connect with me, you can find me on Linkedin and Twitter or check out my website at nickstu.art.
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