VENTURE CAPITAL MARKET OVERVIEW, ISSUE 54 (SEPTEMBER 7 – 13)

This is the week of venture behemoths: M&A deals are made by IBM and Airbnb, investment rounds are about billions and hundreds of millions, new members of Unicorns Club are presented, Chinese venture capital market got a new player.

M&A. IBM Buys StrongLoop To Widen Its Cloud Platform

IBM has made another acquisition to expand its business in cloud services — specifically in the area of enterprise app development. It has acquired StrongLoop, a startup based in San Mateo that builds application development software for enterprises using the open source JavaScript programming language Node.js. This in turn enables enterprises to build mobile and cloud-based apps equipped with APIs to integrate with each other and handle high volumes of data between mobile, web and Internet-of-Things apps.

Terms of the deal were not disclosed. StrongLoop had raised $9 million in funding from Shasta and Ignition Partners, including an $8 million round in 2013.

IBM says it will be integrating StrongLoop’s Node.js features into its wider software portfolio to sit alongside MobileFirst and WebSphere. The main benefit of adding a Node.js development framework is to address a demand from enterprises who are interested in building apps with APIs that can handle large amounts of data and also connect on the back-end with other enterprise applications. It should also help IBM compete better with the likes of Amazon, which has been offering a Node.js development platform since 2013.

M&A. Airbnb Acquires Multi-City Trip Planning Service Vamo

Airbnb is acquiring Vamo, a service that helps in the process of booking trips with stops in multiple cities, and shutting the product down.

Airbnb might not use Vamo, but the company’s appetite for a team like Vamo CEO Ari Steinberg’s makes sense. Airbnb isn’t just about booking a residence — there’s a whole additional layer of experiences that sit on top of that, like communication between hosts and guests. And of course, for a team like Steinberg’s, the attraction of a company like Airbnb is the opportunity to work in the same field at a much larger scale and with more resources.

Vamo had raised $1.6 million in venture financing. At a high level, Steinberg said, the goal was to make it easier to plan more complex vacations, like those involving multiple cities. To plan that kind of a vacation, you have to book multiple things like the various transit between cities and figure out the best hotels. That gets complicated — and usually ends up with dozens of browser tabs open and getting lost in all of the available options.

Steinberg said he and his team will be working on the traveling guest experience, helping them plan the trips and make that experience easier.

Airbnb said it hosted more than 17 million guests over the summer. To continue growing and hitting milestones like that, Airbnb has to attract the best talent — whether that’s by bringing it on board naturally or acquiring companies with teams like Steinberg’s. The terms of this deal were not disclosed.

M&A. Inrix Buys ParkMe To Add Smart Parking Services

Inrix, a startup out of Washington that provides real-time traffic and other data to car companies like BMW and Tesla, Samsung and Google, and 400 other enterprises, has made an acquisition to expand the offer. It has bought ParkMe, a startup out of Santa Monica that offers “smart parking” services to users, including finding and reserving parking spaces and paying for them by mobile.

The terms of the deal are not being disclosed, but Steve Banfield, Inrix’s chief product and marketing officer, tells that it is a cash and share deal, where both co-founders Sam Friedman and Alex Israel are joining Inrix to continue developing the product.

The move comes at a key time in digital mapping, with Nokia recently selling off its Here mapping business to a car consortium for $3.07 billion, amid interest from a number of tech companies looking to raise their game in location services to build out their presence on smartphones, in cars and over other connected devices.

Some have even floated the idea that Inrix, which has raised over $100 million from investors like Kleiner Perkins and Intel Capital, might be the next big takeover target in the mapping world.

STARTUP. Uber Has Raised $1.2B More In China

Uber — the app-based, on-demand transportation service — has been on a fundraising tear as it expands globally in the face of major competition. China is the company’s latest battleground. Uber confirmed that it has raised a further $1.2 billion in funding, led by search giant Baidu, in order to continue expanding Uber China, and the round is not yet closed.

The news appears to have been timed to coincide with another big piece of funding in the Chinese transportation wars: Uber’s biggest competitor in the country, Didi Kuaidi, also confirmed that it has raised an extra $3 billion.

As background, Baidu was already an investor in Uber, confirming in December 2014 that it had a strategic stake in the company. Baidu’s role in this latest $1.2 billion investment is in addition to its earlier stake. As with the previous funding, Baidu and Uber are not disclosing the exact amount. This latest round brings the total valuation of Uber China to over $8 billion. It’s not clear what size the round will be when closed: further investment and investors are still “in progress”.

What’s also interesting about this funding is that it’s an expansion of a very regional model for Uber, which is developing Uber China as its own standalone entity, giving investors a way of putting money into the company’s expansion in one specific area.

STARTUP. Smile Telecoms Raises $365M To Cover African Countries

Smile Telecoms plans to grow its broadband network in Africa after raising $365 million in debt and equity financing. The Mauritius-based company, which already operates LTE networks in Nigeria, Tanzania, and Uganda, says it will launch in the Democratic Republic of Congo early next year.

Smile Telecoms’ new funding will help it build its infrastructure and compete against rivals such as MTN, Airtel, Telefonica, and Orange. Its existing LTE networks will expand to match the coverage of Smile Telecoms’ 3G networks by the end of this year.

The company has now raised $600 million since it was founded in 2007. Its latest round is composed of $50 million in equity from the Public Investment Corporation, which invests on behalf of the South African Government Employees Pension Fund, and $315 million in debt financing led by the African Export-Import Bank, with participation from the Development Bank of Southern Africa, Diamond Bank PLC, Ecobank Nigeria, the PIC, the Industrial Development Corporation of South Africa Limited and Standard Chartered Bank.

Smile Telecoms says it has more than 300 million potential customers in Nigeria, Tanzania, Uganda, and the DR Congo. Internet penetration in all four of Smile’s markets is still low (Nigeria has the highest rate at 38 percent, followed by Uganda at 23 percent, Tanzania at 14 percent, and DR Congo at 6.5 percent), so increasing the availability of speedy mobile connections can help more people go online, especially when combined with increased smartphone ownership.

STARTUP. BlaBlaCar’s $160 Million Round Values Startup At $1.2 Billion

A little more than a year after announcing a $100 million mega-round, multiple sources inform that long-distance ride-sharing platform BlaBlaCar is in the process of raising another round with Insight Venture Partners. Media have learned that the French startup is raising $160 million at a post-money valuation of $1.2 billion.

Insight Venture Partners is leading the round with a significant syndicate of business angels. This Series D round values the company above $1 billion for the first time. A source said that the deal has already closed.

Existing investors include Index Ventures, Accel Partners, ISAI and Lead Edge Capital. It seems like they are not involved in this new round.

BlaBlaCar is a marketplace where you can find a driver who is driving from one city to another and book a seat in advance. It connects people with empty seats with riders. Drivers can make a bit of money while riders can travel for cheap.

STARTUP. Okta Joins Unicorns And Looks Towards IPO

Okta, the cloud identity management company, announced a $75 million round. Okta was valued at $1.2 billion in this deal, meaning it has entered the hallowed halls of the Unicorn club. CEO Todd McKinnon told that actual price is a tad below that reported figure at $1.175 billion.

While being a Unicorn isn’t what it once was, it still is meaningful and a big step for Okta, which has been trying to move beyond pure identity management into areas like security, mobile device management and two-factor identification.

Existing investors Andreessen Horowitz, Greylock Partners and Sequoia Capital led the round. Khosla Ventures, Altimeter, Glynn Capital and other unnamed investors also participated. Last investment brings the total raised since the company launched in 2009 to $230 million.

Okta scored an identical $75 million round last June. At the time McKinnon told he was looking at IPOing in the “next couple of years.” Now he is more specific saying it would likely be in the next 12-18 months, depending on market conditions.

Okta reports it has over 600 employees and 2500 customers and just last week it opened a new datacenter in the EU to comply with EU data privacy laws.

STARTUP. Secondhand Clothing Marketplace thredUP Raises $81M

Sometimes ordering secondhand clothing online is a little sketchy. Is this shirt going to smell awful? Will there be inexplicable stains? ThredUP, a marketplace for used apparel, is hoping to offer consumers a more premium experience by individually vetting each item of used clothing sold through its site.

The San Francisco-based company just raised an $81M Series E round led by Goldman Sachs Investment Partners. ThredUP has raised over $125M to date.

Right now the service focuses exclusively on women’s and children’s clothing, and has managed to process a whopping 11 million items to date. How does it sort through so many items? Well, they have an army of employees helping them in their two East and West coast facilities, each with over 125,000 square feet of space.

James Reinhart, CEO and co-founder of thredUP, told that the company intends to use this new funding to continue to expand its operations to meet customer demand.

Reinhart believes that the company has an opportunity to give consumers a more trusted marketplace to shop for used clothing.

STARTUP. Social Marketer Unified Raises $30M

Unified is announcing that it has raised $30 million in Series B funding, plus a $10 million credit facility from Silicon Valley Bank.

That sounds like a nice chunk of change, but equally noteworthy is the fact that the equity funding was led by iHeartMedia. The two companies previously announced a strategic partnership to develop custom products for advertisers, as well as an investment of undisclosed size.

The new money will allow Unified to continue developing its product and find new markets. Calvin Lui, Unified’s president and chief strategy officer, emphasized that that doesn’t just mean geographic expansion but also adding new products.

It’s been more than three years since Unified announced raising a $14 million Series A. Asked why the company waited so long to raise more money, Lui said that the team knows how to “deploy capital very efficiently.”

Unified customers include Tesla, 22Squared, Lenovo and Toyota. Other investors in the Series B include Advance Publications, Upfront Ventures and Foundry Group. Over the past couple of years, Unified also acquired analytics companies Awe.sm and PageLever.

INVESTMENT. Gobi Partners Launches $94M Fund For Early-Stage Startups In China

China’s economic slowdown is causing concern all over the world, but that doesn’t mean tech innovation in the country will grind to a halt. Gobi Partners believes companies still have room to grow even as the economy drags. The venture capital firm, which is headquartered in Shanghai, just announced a new $94 million fund dedicated to providing fledgling startups in China with early-stage funding.

Called Gobi Yingzhi II, the fund’s investors include CreditEase Wealth Management, Fivestar Holdings, and Luolai Home Textile. The firm plans to make about 45 investments, including seed, pre-A, and Series A rounds, led by partners Don Jiang, Ken Xu, and Michael Zhu, with an average deal size of $1.6 million each.

Gobi’s current portfolio includes popular photo app Camera360, online travel agency Tuniu, and Madhouse, one of China’s leading digital advertising agencies.

Xu says that Gobi Yingzhi II (named after the first Gobi Yingzhi fund, which was launched in 2012) will look at a wide range of sectors. On the enterprise side, it plans to target software, cloud computing, financial tech companies, and telematics companies. On the consumer side, the focus is on smart hardware, O2O services, and online travel booking.