Month: December 2022

It was a funny year in enterprise tech M&A, one in which the majority of activity came from private equity firms: As tech stock values plunged throughout the year, these companies went bargain hunting. They saw companies with lots of upside being vastly undervalued in the brutal market conditions of 2022.

But curiously, the year began with Microsoft announcing it was acquiring Activision Blizzard for a startling $69 billion in January, followed in April by Twitter being sold to Elon Musk for $44 billion. Neither of those deals made this list, however — they aren’t really enterprise companies. But they did show the promise and big money being tossed around this year.

After you discount those transactions, the top two deals still involved companies scooping up desirable properties for big bucks, but much of the top 10 is dominated by those private equity concerns, with Thoma Bravo attached to three of the top 10 and Vista Equity Partners in two. According to Crunchbase, Thoma tallied up six multibillion-dollar deals in 2022 and Vista three. That’s a lot of action for one year.

Consider that Google buying Mandiant for $5.4 billion and Intel nabbing Tower Semiconductor for the same price didn’t even make the list. This year required at least a $6 billion price tag to even make the top 10. That’s up from $5.4 billion last year and $3.5 billion in 2020. This year’s deals totaled $153.9 billion, compared with $121 billion in 2021 and $165 billion in 2020, a year in which a bunch of chip companies changed hands in a period of consolidation for the industry.

We saw a bunch of minor deals — minor in M&A money, that is — as companies scooped up smaller startups. Those deals didn’t make this list but included Celonis buying Process Analytics Factory for $100 million and Snowflake grabbing Streamlit for $800 million. Many other deals were so small that the companies didn’t have to reveal the buying price, like IBM buying Envizi or Zoom acquiring Solvvy.

A couple of large deals died on the vine this year, with Nvidia walking away from its $40 billion offer to buy Arm after it came under intense regulatory scrutiny. In addition, Zendesk scrapped its attempt to buy Momentive, the company behind SurveyMonkey, for $4.1 billion after investors rejected the deal. Eventually, Zendesk would get acquired and make our list.

Several deals in this list are facing intense regulatory scrutiny, including the top two, so it remains to be seen if all of these deals will make it to the finish line or join Nvidia in choosing to avoid the cost of fighting a government entity, whether in the U.S., the U.K. or the EU. That could be the real M&A legacy of 2022, but time will tell.

Without further ado, here are 2022’s top 10 enterprise M&A deals:

10. OpenText acquires Micro Focus for $6B
Not a huge deal in the scheme of things — a legacy software company buys a legacy software company — and truthfully, Micro Focus itself has acquired a bunch of legacy titles over the years, including Borland and Novell. It also partnered with HPE in 2016 in an $8 billion deal. As noted about the deal when it was announced, this was less about building out the catalog with a compatible product than it was simply to get bigger. Still, it was good for No. 10 on this year’s list.

Private equity dominated the top 10 enterprise M&A deals in 2022 by Ron Miller originally published on TechCrunch

Thanks to a months-long shakeout, the crypto market experienced one of the most drastic drawdowns in its history in 2022. But questions are arising about when (if?) major cryptocurrencies will recover.

The global crypto market capitalization, which makes up the total value of all crypto assets (including stablecoins and tokens), has fallen roughly 64% from $2.2 trillion to about $797 billion year to date, according to CoinMarketCap data. The two largest cryptocurrencies by market cap, bitcoin and ether, have fallen 64% and 67%, respectively, during the same time frame.

With a loss of more than half their value, one could argue that these cryptocurrencies can’t recover. But when you zoom out and look at the overall picture, things aren’t that bad for bitcoin and ether, despite what transpired this year.

Let’s look at how significant crypto and global events from this year affected the two biggest cryptocurrencies.

When the Terra/LUNA ecosystem collapsed in early May, within about six weeks, over a billion dollars of the total crypto market cap was wiped out, dropping from about $1.8 trillion to about $820 billion, data shows. Comparing against the largest cryptocurrencies again, bitcoin and ether both fell over 50% in that period.

Just focusing on that event, the decline looks (and, fair enough, was) brutal.

Yet, since that big drop, both bitcoin and ether have held in the same range, even after FTX, one of the largest crypto exchanges, collapsed last month and filed for Chapter 11 bankruptcy.

Will Bitcoin and Ethereum prices stagnate, sink or rebound in 2023? by Jacquelyn Melinek originally published on TechCrunch

Spotify has launched a New Year’s Hub to help its users ring in 2023, the streaming service announced on Thursday. The company says the one-stop destination gives users access to classic party playlists and special takeovers from artists like Charli XCX, Rita Ora, N-Dubz and Céline Dion.

“We’ve got plenty of music to kickstart your celebration, and it’s all in our freshly launched New Year’s Hub,” Spotify wrote in a blog post. “Whether you want a low-key night or a heart-pounding dancefest, we have you set with featured playlists to match the vibe you’re channeling.”

The New Year’s Hub includes many up-beat playlists, including “Party Hits,” “Afro Party Anthems,” “Get Turnt” and more. On the other hand, there are also playlists for people who want to have a low-key New Year’s Eve, with playlists like “Chill Hits,” “Comfort Zone” and “Chillout Lounge.” The New Year’s Hub also includes many DJ mixes from artists like Tiësto, Hannah Laing and Benny Benassi.

The company also announced that starting on January 1, users will find content to help them set their resolutions on the app’s Home page. Although Spotify didn’t provide specifics about what this content will look like, it will likely include things like workout and meditation playlists.

Spotify says its platform always sees some level of anticipation around the new year, and that shows in the playlists users put together. Last year, 82,000 New Year’s Eve playlists were created between Christmas and January 31, with nearly 40,000 created on the night itself. Pop, hip-hop, trap, k-pop and indie pop were the top genres played worldwide. Genres that saw the most significant rises in listeners were cumbia, discofox, volksmusik, schlager and partyschlager.

“Hey Ya!,” “Uptown Funk” and “Mr. Brightside” were all popular among these playlists. Many of the songs that gained more streams were New Year-specific tracks like Mariah Carey‘s rendition of “Auld Lang Syne – The New Year’s Anthem” and ABBA’s “Happy New Year,” which was in the lead with a 2,205% increase in plays.

Spotify wants to help you ring in 2023 with its New Year’s Hub by Aisha Malik originally published on TechCrunch

India said on Thursday that under its ongoing G20 presidency, it will prioritize the development of a framework for global regulation of unbacked crypto assets, stablecoins and decentralized finance and will possibly explore their “prohibition” in a potentially large setback for the nascent industry.

India began its year-long presidency of the Group 20 early this month. The group, which comprises 19 nations across continents and the EU, represents 85% of the world’s GDP. It also invites non-member countries including Singapore and Spain and international organizations such as World Bank and the IMF.

The Reserve Bank of India, the Indian central bank, said in a report today that crypto assets are highly volatile and exhibit high correlations with equities in ways that dispute the industry’s narrative and claims around the virtual digital assets being an alternative source of value due to their supposed inflation hedging benefits.

The Indian central bank warned that policymakers across the globe are concerned that the crypto sector may become more interconnected with mainstream finance and “divert financing away from traditional finance with broader effect on the real economy.”

The Indian central bank is among one of the most vocal critics of the crypto industry. RBI Governor Shaktikanta Das warned last week that private cryptocurrencies will cause the next financial crisis unless its usage is prohibited.

“Change in value in any so-called product is the function of the market. But unlike any other asset or product, our main concern with crypto is that it doesn’t have any underlying whatsoever. I think crypto or private cryptocurrency is a fashionable way of describing what is otherwise a 100% speculative activity,” he said in a conference.

Das said crypto owes its origin to the idea that it bypasses or breaks the existing financial system. “They don’t believe in the central bank, they don’t believe in a regulated financial world. I’m yet to hear a good argument about what public purpose it serves,” he said, adding that he holds the view that crypto should be prohibited.

India is among the nations that has taken a stringent approach with cryptocurrencies. Earlier this year, it began taxing virtual currencies, levying a 30% tax on the gainsand a 1% deduction on each crypto transaction.

The nation’s move, alongside the market downturn, has severely depleted the transactions that local exchanges CoinSwitch Kuber, backed by Sequoia India and Andreessen Horowitz, and CoinDCX, backed by Pantera, process in the nation.

Changpeng “CZ” Zhao, founder and chief executive of the world’s largest crypto exchange Binance, told TechCrunch in a recent interview that the firm doesn’t see India as a “very crypto-friendly environment.” He said the firm is attempting to relay its concerns to the local authority about the local taxation, but asserted that tax policies typically take a long time to change.

“Binance goes to countries where regulations are pro-crypto and pro-business. We don’t go to countries where we won’t have a sustainable business — or any business, regardless of whether or not we go,” he said.

Coinbase, which has backed both CoinDCX and CoinSwitch Kuber, launched its crypto platform in the country earlier this year but quickly rolled back the service amid a regulatory scare. Coinbase co-founder and chief executive Brian Armstrong said in May that the firm disabled Coinbase’s support for local payments infra UPI “because of some informal pressure from the [central bank] Reserve Bank of India.”

With over 600 million connected users, India is the second largest internet market globally. The nation, home to one of the world’s largest startup ecosystem, has attracted over $75 billion investment from the likes of Google, Meta, Sequoia, Lightspeed and Tiger Global in the past decade.

India to explore prohibition of unbacked crypto in its G20 presidency by Manish Singh originally published on TechCrunch

For organizations that do a good chunk of their work through virtual meetings, simply hitting record or taking notes isn’t enough to capture everything that’s said. Some build their own meeting integrations to capture data, but that’s time-intensive and costly. Recall.ai helps with a unified API that currently works with Zoom, Google Meet and Microsoft Team, and can be used to build apps that (among other use cases) automatically fill out CRMs or prompt customer reps during support calls. The San Francisco-based startup announced today it has raised $2.7 million in seed funding.

Participants in the round include Y Combinator, Cathexis Ventures, Pioneer Fund, Rebel Fund, Bungalow Capital, SV Tech Ventures and Starling Ventures. Backing also came from individual investors like Sentry CTO David Cramer, Doppler CEO Brian Vallelunga, Grain CEO Mike Adams, BloomTech CEO Austen Allred and Runway co-founder Siqi Chen.

Recall.ai’s unified API accesses meeting data, including real-time video and audio, who meeting participants are, when they spoke and joined or left the meeting and when screen sharing started and stopped. The company is currently in private beta, and its API is used by about 50 companies in a wide range of industries, including sales, customer support, hiring, user research, translation, education and healthcare.

Before launching Recall.ai, co-founders David Gu and Amanda Zhu worked on a research tool that produced real-time transcription from meeting recordings. Gu told TechCrunch that a lot of his team’s engineering time was spent on building and maintaining meeting integrations, which made them realize that other companies that want to work with meeting data faced the same challenge.

The key problem Recall.ai is solving is accessing raw video and audio data from video conferencing platforms. Gu said it takes about a year for companies to build infrastructure and integrations on their own. But that’s not their only challenge — companies also have to host the infrastructure for processing, which can involve hundreds to thousands of servers. This is labor-intensive, since engineering teams have to monitor and scale everything. Recall.ai’s API not only makes it faster to build meeting integrations, but also means companies can abstract away infrastructure.

A couple examples of how Recall.ai’s customers are using its platform include one that is taking audio streams from Zoom and transcribing it, then translating it to produce real-time translations. Another is using Recall.ai to capture video and audio streams from sales meetings to automatically fill in CRM software.

Recall.ai is currently making revenue and monetizes by charging customers per minute of audio and video processed through its platform. Its plans for expansion include adding more video conferencing and telephony system integrations.

Recall.ai helps companies make the most of virtual meeting data by Catherine Shu originally published on TechCrunch

In 2022, the crypto community rose to new heights — and then it crashed. We noted this as early as June 2022, before the FTX fiasco (which we’re using as the catchall term for the crash, alleged fraud, bankruptcy, congressional hearing, Sam Bankman-Fried‘s arrest in the Bahamas, the call for his extradition, etc.).

However, this isn’t supposed to be an article chronicling FTX’s downfall from the past year — it’s a recap of our 2022 crypto coverage, which could also be seen as a Jacquelyn Melinek highlights reel with a feature from Alex Wilhelm.

Here’s some of our top 2022 crypto coverage:

Terra community passes proposal to revive LUNA cryptocurrency following stablecoin-led implosion

In May, LUNA nosedived, and the market followed suit. Terraform Labs founder Do Kwon shared a plan to revive the Terra Ecosystem, including the formation of a new blockchain. Jacquelyn noted: “The launch of LUNA 2.0 will be a test of whether the community is as strong as it says it is. But many are wary of trusting Kwon and the Terra team again after the LUNA and UST downfall.”

Ethereum drops more than 17% after ‘way overhyped’ Merge

In early to mid-September, whispers of “the Merge” were everywhere we turned an ear. A quick refresher: The Merge was a highly anticipated event where Ethereum shifted from proof-of-work to proof-of-stake. It may have been overhyped.

Blue-chip NFT owners explore alternative uses as sales decline

During the most recent crypto bull market, the NFT subsector also rose to new heights. As NFT sales slowed, blue-chip NFT holders began looking for new ways to profit. For the uninitiated: The term “blue-chip NFTs” derives from “blue-chip stocks,” which often refer to the most valuable companies on the market. In this case, they’re the most desirable or high-value NFTs. What are they worth amid crypto winter?

Terra’s UST crash will make life harder for crypto as regulation looms

In May 2022, Terra UST crashed, which led to a push for crypto regulation. “UST is an algorithmic stablecoin mainly backed by its sister cryptocurrency, LUNA, but was also backed by bitcoin. Founder Do Kwon previously told TechCrunch that plans were in place to back it with other cryptocurrencies over time. It’s unclear if that road map is still in place for UST as it tries to recover from its downfall,” Jacquelyn wrote. To regain the trust of traders and holders, the next move would be regulation … right?

Making sense of OpenSea at a $13B valuation

At the start of 2022, OpenSea raised a $300 million round at a $13.3 billion valuation. Alex did a deep dive to figure out how the new (in January 2022) OpenSea valuation squared up with its revenues. You can follow along with Alex’s collection of data and computations to determine whether the company is underpriced or overpriced.

How TechCrunch+ followed the roller-coaster crypto market in 2022 by Miranda Halpern originally published on TechCrunch

With over $9 billion in assets under management, GGV Capital is one of venture capital’s largest and most prominent players. The 22-year-old firm invests in startups from seed to growth stages across a variety of sectors, including consumer, internet, enterprise/cloud and fintech.

This year was one of the most difficult the startup world has seen in some time, as it forced investors and founders alike to adapt to a drastically different market than they enjoyed in 2021.

To better understand GGV’s position during a challenging venture environment, I sat down with managing partner Hans Tung to get his thoughts on the state of investing today, why he believes that there are “many more large fintechs yet to be built” and that raising a down round “is not the end of the world.”

Principal Robin Li also joined the conversation, sharing why she thinks embedded fintech is going to play a crucial role in financial services in the coming years.

An investor for over two decades, Tung has backed the likes of publicly traded BNPL giant Affirm, real estate fintech Divvy Homes, IDwall, Karat, Rupeek, Mexico’s Stori and Turtlemint. Having seen a few cycles, Tung is perhaps less spooked by the current downturn than some other VCs. Li has led Karat Financial and Novo.

[Editor’s note: This interview has been edited for clarity and brevity.]

How has this year been for you as an active fintech investor?

Tung: We don’t try to time the market. So last year, we didn’t over-invest. There was a lot of internal push away from keeping up pace with others. I think it worked out well since we have plenty of dry powder left and more time to be deliberate this year. We also have time to double down on our existing portfolio as well. That said, we have probably slowed our pace of investing in our global portfolio by about 50% this year versus last year.

Why GGV Capital’s Hans Tung is OK with 2023 being ‘the year of down rounds’ by Mary Ann Azevedo originally published on TechCrunch

For many founders in the startup community, a “founder-friendly” investor is one who stays relatively hands off. They cut the check and then watch the executive team run their business without getting involved in the day-to-day.

In 2021, investors overdid a version of “founder-friendly” capital that boiled down to founders continually raising capital and reaching record valuations, enjoying no inputs from their investors. In turn, companies across the board missed out on the balance brought by investors’ complementary breadth of guidance. Today, it’s clear many companies could have used that guidance, seeing as FTX is only our latest and most high-profile example.

Given new economic headwinds, it’s time for the startup community to redefine what “founder-friendly” capital means and balance both the source and cost of that capital. That means choosing between active and passive partners.

Some founders may be confident in their ability to execute on their vision, but most will benefit from investors who can share scaling best practices they’ve seen across companies and who know how to navigate downturns. Successful companies are created when investors and executives blend their expertise to see around corners, not when one side overpowers the other into silence.

Here are some key considerations for founders seeking a better balance of capital and external expertise for their businesses:

Factor in founder friendliness

The two most important elements that determine your company’s growth needs are your company’s stage and what you’re willing to pay for active investors.

At the earliest stages, when your company is still doing R&D and not yet generating revenue, it’s near-impossible to secure passive capital in the form of revenue-based financing or debt financing vehicles. Instead, you’ll be raising funds on the strength of your idea, total addressable market (TAM) and team’s experience.

If you turn to a more passive equity investor at this stage, you’ll likely miss out on a true champion for your vision who can validate and evangelize your cause to future investors. This approach can limit your company’s growth potential and valuations, so you should always choose an active capital partner at this stage.

When you’ve grown enough to begin scaling, you can choose between expertise and cost. If you want best practices for growing a company through new products or markets, active investors can offer a wider view of the market. This expertise is immensely valuable and founders who need it should be willing to pay for it with equity.

That said, if you’re confident in your ability to scale the company, you can shop around to mix debt and equity investments to minimize dilution while benefiting from some external expertise, if needed.

Established or pre-IPO stage companies are better candidates for passive capital from lenders or hands-off equity investors. At this stage, companies are already generating significant revenue and have a plan to reach profitability, if they haven’t already. Having a proven record of success makes these businesses more attractive targets for institutional investors with less domain expertise but significant funds to deploy in the form of debt or equity.

Redefining ‘founder-friendly’ capital in the post-FTX era by Ram Iyer originally published on TechCrunch