PitchBook and the National Venture Capital Association (NVCA) released startling data on Thursday (Jan. 10) about the growth of venture capital (VC): Investors deployed almost $131 billion in 2018 across nearly 9,000 deals, with record-breaking investment rounds and new highs in startup valuations grabbing the attention of the VC community.
The total value of venture capital investments in 2018 exceeded the previous record seen in the Dot-Com Boom, according to CNBC reports. The data also led to speculation and concerns about a bubble.
“If we see investors switch sentiment from ‘greed’ to ‘fear,’ many growth stories priced for future perfection may continue to rely on private capital to avoid pricing in that environment,” said Greg Becker, CEO of Silicon Valley Bank, in the report.
Uncertainties over the U.S. and global economies, a rocky stock market, and a government shutdown stalling IPOs have all heightened fears about the startup investment market, too.
Regardless, B2B startups remain a popular target for venture capitalists and other investors, with this week funneling more than $2.39 billion to companies servicing fellow businesses. The biggest winner, of course, was WeWork, thanks to yet another multibillion-dollar investment from SoftBank. However, U.S. B2B startups won big, too, with multiple nine-digit rounds on the board this week.
The WeWork investment saga continues from SoftBank, a major investor in the workspace sharing company. Reports in The New York Times this week noted that SoftBank added another $2 billion in funding for the company. While impressive, the figure is only a fraction of the $16 billion SoftBank was reportedly considering. Reports pointed to increased criticism of Saudi Arabia, where SoftBank’s Vision Fund is based, with the killing of journalist Jamal Khashoggi as a possible reason why SoftBank decided to go with a smaller investment. The funding comes directly from the company itself, and not from its Vision Fund, reports noted. In all, SoftBank has provided $10.5 billion for WeWork, which is now valued at $47 billion.
The $4 million Series A funding round for U.S.-based LendingFront shows continued support for FinTech’s role in enhancing more traditional financial services. The company provides a white-label small business (SMB) lending software solution for third parties to integrate into their own platforms, from traditional banks and financial institutions (FIs) to alternative lending platforms, with integrated originating, underwriting and customer service functionality. Information Venture Partners led the investment, reports this week said, while Newark Venture Partners, Revel Partners, Contour Venture Partners and existing backers Struck Capital, ValueStream Ventures and Las Olas VC also participated. LendingFront said it will deploy the investment to broaden its reach to more banks and FIs, with the firm’s CEO and Co-founder Jorge Sun noting that traditional banks continue to face pressure to compete, and evolve their digital services for small business clients.
Tax season is upon us in the U.S., and small businesses are facing uncertainties with revised tax rules. One B2B software company, TaxJar, just secured $60 million in growth equity capital from Insight Venture Partners as it positions itself to help businesses automate sales tax calculations. This week, reports in Venture Beat said the investment followed a high-profile Supreme Court ruling, South Dakota v. Wayfair, Inc. — which raised new questions and concerns about online businesses’ ability to collect state sales tax. The ruling opened the doors for major changes in how eCommerce companies comply with tax law, reports noted. TaxJar streamlines sales tax calculations across all sales channels for a business, with features to help companies file their taxes across various states. With the new funding, TaxJar said it is launching a new offering to customize tax services for larger corporate clients.
The $15 million Series B funding round for GAN Integrity, which provides compliance solutions for global companies, was announced this week to help the firm focus on its own international expansion. The company secured the funding from Aquiline Technology Growth, a fund managed by private equity firm Aquiline Capital Partners. Edison Partners and existing backers also participated in the growth financing, reports said. The firm provides businesses with a cloud-based compliance solution to interconnect all compliance and regulatory efforts across borders. GAN Integrity recently released GAN Connect, a platform designed to help businesses remain compliant while mitigating against compliance risk.
With its focus on data and analytics within the cannabis industry, Headset secured $12.1 million in funding, led by Poseidon Asset Management and AFI Capital Partners, while Canopy Rivers also participated, a press release said this week. Headset said it will use the Series A funding to further develop its products and expand into international markets, as well as more states in the U.S. With plans to also invest in strategic alliances, Headset noted it will begin to target other industries, including the consumer packaged goods, beverage and alcohol, and financial services spaces. The firm provides business customers with analytics solutions to obtain actionable insights about their operations.
K1 Investment Management is fueling growth for enterprise workflow software solutions provider Onit, which announced $200 million from the private equity firm this week. Onit provides contract management, business process automation, enterprise legal management and other services for its business clients, and said in an announcement that it will use the investment to focus on process automation technology within its platform. The funding will also be used for go-to market strategies, the press release said, and will toward continued product development.
Operating in the enterprise security space, OneLogin announced a $100 million Series D funding round in support of its solution that enables businesses to manage access and security of business systems. The investment round, led by Greenspring Associates and Silver Lake Waterman, with participation from existing backers, will go toward expanding OneLogin’s workforce, as well as product adoption acceleration. The company said in its announcement that it also plans to use the backing to expand beyond the U.S., with particular focus on Europe and the Asia-Pacific regions.