Axios Pro Rata: Crypto corporate VCs

Plus: Carvana gets physical | Friday, February 25, 2022

Open in app View in browser   Presented By EY   Axios Pro Rata By Kia Kokalitcheva ·Feb 25, 2022 Welcome back, readers. It's almost the weekend, which means Dan will be back in your inboxes on Monday (and I'll be in L.A. for the Upfront Summit). 💰Try Axios Pro free for the entire month of March, no credit card required. Sign up by Feb. 28 to secure your invitation to our Pro-exclusive events featuring Jeremy Allair (CEO, Circle), Kristen Green (co-founder, Forerunner), and Julia Cheek (CEO, Everly Health) Sign up here for your one-month preview.     Top of the morning Illustration: Aïda Amer/Axios   Earlier this month, NFT marketplace OpenSea became the latest big crypto company to set up a venture arm. Why it matters: Despite the recent boom in VC money now focused on backing cryptocurrency and web3 companies ($32 billion invested in 2021 alone), these corporate VCs still believe there's something unique they can bring to the table. The big picture: During the crypto boom of 2017-2018, companies like exchanges Binance and Coinbase, digital wallet Blockchain.com, and Ethereum-focused incubator Consensys set up early venture arms. The emergence of even more big companies in the industry has led to a slew of newcomers. FTX, Crypto.com, Circle, Alchemy, to name a few. Between the lines: Pumping capital into startups to help expand their industry is at the core of crypto corporate VCs' raison d'être, above everything else. "We had gone through a lot of hard years where it was difficult as a crypto company to raise money and we wanted to support entrepreneurs," Coinbase Ventures head Shan Aggarwal tells Axios. "It was really a mindset of benevolence." For Alex Atallah, OpenSea co-founder and head of ventures, it's about making sure that the companies most beneficial to the NFT sector are getting funding. OpenSea is able to "spot holes in the market and orient founders towards them," he says. It's not a new playbook: Before the crypto boom, enterprise companies like Salesforce and Slack took a similar approach to spur more startups to build apps on top of their tech. State of play: Some commonalities run through most crypto corporate VCs, like flexibility to invest via equity or tokens, and an embrace of collaborating with peers. "We have funds and individuals that we frequently invest with and we would be happy to give up some ownership in order to bring in a strategic investor in," FTX Ventures head Amy Wu tells Axios. Yes, but: There are also some differences, namely in the specific types of companies they each back. FTX Ventures is also unique among the cohort: it's solely financed by FTX co-founder and CEO Sam Bankman-Fried — not the company itself — and aims first and foremost to generate investment returns, according to Wu. The intrigue: Along with other investors native to the cryptocurrency industry, these corporate VCs are in a position to rethink some of the historical norms. Anonymous startup founders are one phenomenon crypto investors are running into. Nearly every corporate VC told Axios it's open to investing in anonymous founders, though they admitted it hasn't yet become common. Some are even quite experimental — Coinbase Ventures considered purchasing virtual land in certain "metaverse" projects, according to Aggarwal. The bottom line: With so much money eager to get into cryptocurrency and web3 deals, these corporate VCs will have to make their case to entrepreneurs, and adapt to the quickly expanding financing landscape. Keep reading.     Also... Situational awareness: Russia's attack on Ukraine continues to escalate, with thousands fleeing the country. Some notable stories from my Axios colleagues on the conflict and capital (though money is far from the most important thing right now): Unprecedented sanctions are cold comfort to Ukrainians Secrecy undercuts sanctions' impact The Axios Ukraine-Russia crisis dashboard     The BFD Illustration: Aïda Amer/Axios   Carvana, an online used car marketplace, has agreed to buy ADESA's U.S. physical auction business, a wholly owned subsidiary of KAR Global, for $2.2 billion in cash. Why it's the BFD: Carvana's poised to become the seventh largest U.S. online retailer by sales volumes this year, jumping the likes of Costco and Wayfair — and adding physical retail could supercharge it even more. The bottom line: "The additional revenue and physical footprint that Adesa U.S. offers appear to be far too appetizing and too big of an opportunity for Carvana to ignore. And it comes at an opportune time. Carvana sold 113,016 vehicles and generated $3.75 billion in revenue in the fourth quarter, a 57% year-over-year sales growth. But that YoY figure masks a tapering of growth towards the end of 2021." — Kirsten Korosec, TechCrunch     A message from EY PE should focus on recruitment and retention     To calculate time to reach your diversity targets, view the Diversity Integration Model interactive tool created by the Kenan Institute of Private Enterprise, a partner of the Kenan-Flagler Business School at the University of North Carolina. Access the tool and read our latest report.     Venture Capital Deals 🚑 Somatus, a McLean, Va.-based kidney care company, raised $325m in Series E funding led by Wellington Management, with RA Capital Management, GIC, Fidelity Management & Research Company and others also participating. http://axios.link/SoCy • Fabric, a Seattle-based ecommerce API startup, raised $140m in Series C funding at a post-money valuation of $1.5 billion led by SoftBank, with Forerunner Ventures, Glynn Capital, Redpoint Ventures, Norwest Venture Partners and Stripes also participating. http://axios.link/TdjY • Project Canary, a Denver-based emissions data analytics startup, raised $111m in Series B funding led by Insight Partners, with Brookfield Growth, the Canada Pension Plan Investment Board, Carica Sustainable Investments and others also participating. www.projectcanary.com • Niyo, an India-based fintech startup, raised $100m in Series C funding led by Accel and Lightrock India, with Prime Venture Partners, JS Capital and Beams Fintech Fund also participating. http://axios.link/UfUM • AddApptr, a Germany-based mobile ad-tech company, raised $60m in new funding from the Aonic Group. www.addapptr.com • Aligned, a New York-based web3 infrastructure startup, raised $34m in funding from GSR Ventures, Altium Capital Management, Calvary Fund and angels. http://axios.link/a9sB ​​• Canela Media, a New York-based minority-owned digital media technology company, raised $32m in Series A funding led by Acrew Capital and Angeles Investors, with Link Ventures, TEGNA Ventures, Samsung NEXT, BMO Harris Bank, BBG Ventures, Mighty Capital, Reinventure Capital, Portfolia's Rising America Fund, Alumni Ventures and Powerhouse Capital also participating. www.canelamedia.com • Wave Sports + Entertainment, a Los Angeles-based sports and entertainment company, raised $27m in Series B funding led by TZP Group, with Crossbeam Venture Partners, GPS Investment Partners, Verance Capital, Nimble Ventures, and Giannis Antetokounmpo also participating. www.wave.tv ⛽️ Promise, an Oakland, Calif.-based utilities payments startup, raised $25m in Series B funding led by The General Partnership, with Kapor Capital, XYZ Ventures, Bronze Investments, First Round Capital, Y Combinator, Howard Schultz and others also participating. http://axios.link/2e8A • Standard Metrics, a San Francisco-based maker of VC portfolio monitoring tools, raised $23.7m in Series A financing led by 8VC, with Alpha Edison, January Capital, First Trust Capital Partners, Fin VC, Spark Capital, Slack Fund, Socii Capital, Not Boring Capital, and Gaingels. www.standardmetrics.io 🚑 Story Health, a San Jose, Calif.-based specialty home care, raised $22.6m in Series A funding led by Northpond Ventures and B Capital Group, with LRVHealth, Define Ventures and General Catalyst also participating. http://axios.link/QTFj • Scope Security, a New York-based health systems security startup, raised $20m in Series A funding led by Thrive Capital, with SV Angel, Martin Ventures, Sound Ventures, Crossbeam and Free Solo also participating. www.scopesecurity.com • Siteline, a San Francisco-based maker of billing tools for trade contractors, raised $18.4m in seed and Series A led by Menlo Ventures, and Brick & Mortar Ventures and First Round Capital, respectively. http://axios.link/ZFPZ • Okteto, a San Francisco-based maker of Kubernetes dev tools, raised $15m in Series A funding led by Two Sigma Ventures, with Haystack, Root Ventures, Uncorrelated Ventures and angels also participating. http://axios.link/4hJP ​​• NayaPay, a Pakistan-based fintech startup, raised $13m in seed funding led by Zayn Capital, MSA Novo and Graph Ventures. http://axios.link/LUmi • Sweater, a Boulder, Colo.-based startup operating a VC fund for retail investors, raised $12m in seed funding led by Motivate VC and Akuna Capital. http://axios.link/k0d5 • HUBUC, a Spain-based embedded finance startup, raised $10m in funding led by WndrCo and Runa Capital. http://axios.link/0tNC • Tutored by Teachers, a New York-based edtech startup, raised $10m in Series A funding led by GSV Ventures, with TMV and A-Street Ventures also participating. www.tutored.live ⛽️ Nori, a Seattle-based carbon removal marketplace on Ethereum, raised $7m in Series A funding led by M13, with Toyota Ventures and Placeholder also participating. www.nori.com • Good-Loop, a U.K.-based charity startup, raised $6.1m in Series A funding led by Quaestus Capital Management, with Scottish Enterprise, SIS Ventures, First Party Capital and investment raised on the crowdfunding platform Seedrs also participating. www.good-loop.com • Kahilla, a Ketchum, Idaho-based digital learning and development platform for professional women, raised $2m in funding led by Bread and Butter Ventures and Matchstick Ventures. www.kahilla.com • KnownOrigin, a U.K.-based NFT marketplace, raised £3.5m in Series A funding led by GBV and Sanctor Capital. http://axios.link/VkNy • Marvin, an Oakland, Calif.-based user research platform, raised $3.8m in pre-seed funding led by Fuel Capital and Sam Altman. www.heymarvin.com • Skipify, a San Mateo-based instant online checkout startup, raised an undisclosed amount from PayPal Ventures, Synchrony, Amex Ventures and Okta Ventures. www.skipify.com • Ayar Labs, a Santa Clara, Calif.-based chip-to-chip optical connectivity startup, raised an undisclosed amount from Hewlett Packard Pathfinder. 🚙 Yoshi, a Nashville-based last-mile delivery company, raised an undisclosed amount from Bridgestone Americas. www.startyoshi.com     Private Equity Deals • AE Industrial Partners has agreed to acquire a significant stake in Firefly Aerospace, a Cedar Park, Texas-based developer of economical launch vehicles, spacecraft, and in-space services, from Noosphere Venture Partners. http://axios.link/FEFg • Infostretch, backed by Goldman Sachs Asset Management Private Equity and Everstone Group, has agreed to merge with Technosoft (d.b.a. Apexon), both U.S.-based IT services companies with global employees. www.infostretch.com • Cohere Capital invested in Boostability, a Lehi, Utah-based provider of digital marketing technology and services to small and medium-sized businesses. www.boostability.com • North Branch Capital acquired Infinity Exteriors, Overhead Solutions and Premier Roofing & Exteriors, U.S.-based companies providing residential roofing, siding, window and gutter replacements. www.northbranchcap.com 🚑 Revelstoke Capital Partners invested in ClareMedica Health Partners, a Miami Lakes, Fla.-based provider of primary care serving Medicare Advantage members in Florida. www.claremedica.com     SPAC Stuff • GSR II Meteora Acquisition, a blank check company backed by Meteora Capital targeting high-growth businesses, raised $275 million by offering 27.5 million units at $10. http://axios.link/fmbR • Haymaker Acquisition IV, the fourth consumer-focused blank check company led by the former CEO of Starwood Hotels, filed to raise up to $261 million in an IPO. http://axios.link/Haiz     Liquidity Events • Kimberly-Clark has acquired a majority stake in Thinx, a New York-based maker of reusable menstrual underwear. www.shethinx.com     Fundraising • BlackRock and Warner Music have invested $750m into a fund in partnership with Influence Media to purchase music rights catalogs. http://axios.link/LeKu     It's Personnel • Phin Barnes has joined The General Partnership, f.k.a. Sweat Equity Ventures, as part of the VC firm's rebrand. He was previously a partner at First Round Capital. www.thegp.com • Horizon Technology Finance has promoted Todd McDonald and Kevin Walsh to senior managing director. www.horizontechfinance.com • OMERS Private Equity has promoted Andre Alfaro, James Frankish, and Jeff French to managing directors, and Jeff Kahn and Pete McClelland to directors. www.omersprivateequity.com     Final Numbers Data: FactSet; Chart: Axios Visuals     A message from EY Private equity is on the SPAC inside track     In this episode of our EY NextWave Private Equity podcast, Karim Anani and Alex Zuluaga speak to our host, Winna Brown, and explore why SPACs attract PE investors and advise how they should manage SPAC transactions. Listen to our latest podcast here.   🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and neighbors to sign up. 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