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Austin Weekly Deal Highlights - Feb 28, 2021

In the midst of a global pandemic, insurrection to kick off the year, and hell freezing over in Texas last week, forgive me but I may be damaged goods at this point. I say that because I’m both parts shocked and highly skeptical that we had a pretty normal week, free of any major (new) catastrophes. But shoot, let’s roll with it! Austin, Texas, what a solid week of funding news, healthy M&A activity, big company hires – all with no major dark clouds in sight. On the funding news, major announcements this week from Episode Six, Katana Graph, InterPlay Learning, Sunroom Rentals, and you know I have to shoutout FloorFound on their funding round, congrats to founder Chris Richter! Let’s keep the good times rolling (please)!

Austin Financing Activity

  • Episode Six, an account and payment systems platform, raised $30M in capital from HSBC, Mastercard, SBI Investment, and Anthos Capital. They have raised $40M to date.

  • KatanaGraph, a firm which uses graph computing as AI to analyze unstructured data, announced a $28.5M Series A round led by Intel Capital. Dell Technologies Capital, Nepenthe Capital, and Redline Capital also participated.

  • Sunroom Rentals, a local real estate tech which allows potential renters to take virtual or self-guided tours to create a “touchless renting” experience, raised $11M in Series A funding led by Gigafund. Nextgen Venture Partners and Calpoly Ventures also participated. The founders of Sunroom, Ben Doherty and Zachary Maurais, previously founded Favor.

  • FloorFound, a logistics firm that specializes in assisting customers manage returns and re-sale of oversized e-commerce purchases, raised $4M led by LiveOak Venture Partners, with participation from investors including Flybridge Capital, Next Coast Ventures, 8VC, and Schematic Ventures.

  • Quantum Loophole, a gigawatt-scale data center innovation firm, raised $13M in seed funding with the investors undisclosed. The firm pledges its first project is “well underway” with more details to come in Q3.

  • CoSell, a SaaS platform for B2B companies to find customer overlaps with partners to facilitate warms introductions, raised $2M in seed funding led by Pivot North with participation from SaaStr Fund.

  • Flueid, a platform which focuses on streamlining the mortgage process, announced a Series A of an undisclosed amount, led by Aquiline Technology Growth with Commerce Ventures participating.

  • Handsome App, a networking application designed for beauty professionals, raised $1.5M of angel funding from undisclosed investors

Austin M&A Activity

  • SparkCognition, an industrial AI platform, is expanding to the fintech space by acquiring AIM2, a firm which applies AI to financial markets, from hedge fund Brevan Howard and global investment bank Nomura. Financial terms were not disclosed. SparkCognition has raised approx. $160M to date.

  • Digital Turbine (NASDAQ: APPS), mobile app development and advertising firm, will acquire AdColony, a mobile advertising platform with 1.5B monthly global users, from Otello Corp. ASA. (FRA: OS3) for $375M. Digital Turbine has a market cap of approx. $7.4B.

  • Planview Inc., the Austin-based work and portfolio management company that recently changed hands for $1.6 billion, just completed two previously announced acquisitions. It announced Feb. 23 that it completed its purchases of Seattle-based Changepoint Corp. and Clarizen Inc., which is based in San Mateo, California, and Tel Aviv, Israel. Both make project portfolio management software. Terms of the deals were not disclosed.

  • Rethink CRM, a cloud-based real estate CRM software provider, was acquired by BuildOut, via its financial sponsors Saratoga Investment, Susquehanna Growth Equity and The Riverside Company, for an undisclosed amount.

  • Phlur, a provider of unisex fragrances, was acquired by The Center for an undisclosed amount. Phlur had raised approx. $20M from investors including Next Coast Ventures and Symrise.

Other Texas Deal Activity

  • Apex Clearing Holdings LLC, a Dallas-based investment and fintech firm and notable key actor in the GameStop sage, and Northern Star Investment Corp. II (NYSE: NSTB), a publicly traded SPAC, announced a merger expected to provide up to $850M of gross cash proceeds at closing. This merger will give Apex an enterprise value of $4.7B, after reporting operating revenues of approximately $236M in 2020 with an EBITDA of $86M.

  • Alkami, a Plano-based digital banking platform, announced they have selected Goldman Sachs Group to lead its IPO preparations after raising $140M in funding last September in a round led by D1 Capital Partners. Alkami hopes to receive a valuation of $3B when it IPOs later this year.

  • Chevron’s Houston-based venture arm launches $300M fund focusing on low-carbon tech

  • RocketCyber, a Dallas-based managed SOC platform, was acquired by Kaseya, a Miami-based IT management and security company valued by VCs at $2 billion.

  • Houston-based HP is acquiring Kingston Technology’s peripheral unit, HyperX, for $425 million.

  • Dallas-based AT&T (NYSE: T) agreed to spin out three of its video services, including satellite TV brand DirecTV, into a new standalone company in which TPG Capital will hold a 30% stake. The spinout will be valued at $16.25 billion, or around one-third what AT&T paid to buy DirecTV in 2014.

  • Sustainable Opportunities Acquisition (NYSE: SOAC), a Dallas-based SPAC, is reportedly closing in on a deal to acquire DeepGreen Metals, a Vancouver-based metal manufacturer for the EV battery industry, which would create a combined valuation of $2.8B.

  • Immersion Systems, a Fort Worth-based cryptocurrency mining farm cooling system manufacturer, raised $33M through debt and equity.

  • ARKH, a Dallas-based augmented reality platform, raised $3.7M in first round funding at a $40M valuation.

Austin People

  • Bypass, a point-of-sale and commerce company that was acquired by Fiserv in March of 2020, is promoting Geoff Johnson to run the business. Brandon Lloyd, the founder and CEO, will take over Fiserv’s Integrated Payments business. Both Fiserv businesses will be headquartered in Austin, with plans to grow the team by 200 people.

Austin News

  • After blackouts, economic development experts still bullish on Austin but all eyes on state’s response. Blame is placed on Texas’s deregulated electricity market, which was supposed to provide reliable power at a lower price. For two decades, Texas customers have paid more, $28 billion more, for electricity than state residents who are served by traditional utilities, a Wall Street Journal analysis has found. As part of the fallout, five of Texas’s ERCOT board members resign.

  • New guide gives good shot at finding COVID-19 vaccination in Austin

  • Austin semiconductor plants remained shut down through last weekend causing millions in losses, into Monday and Tuesday, causing concerns over Tesla, Samsung, and other large corporations’ future investment in Austin facilities with a vulnerable state electric grid.

  • Austin-area home sales spike nearly 24% in January

  • Tesla (NASDAQ: TSLA) is seeking a foreign trade zone designation. Pending approval from Del Valle ISD and the US Department of Commerce Foreign-Trade Zones Board, this would add to the $60M in tax breaks and rebates Tesla will receive over the next year from Travis County and Del Valle ISD.

  • Dell sees record full-year revenue as remote work continues. Meanwhile, Michael Dell forms new ‘blank check’ SPAC, seeks $575M IPO

  • SolarWinds grapples with fallout from breach

  • Austin-based Outdoor Voices chairwoman Ashley Merrill lays out her thoughts on the female founder narrative and how she turned around the athleisure brand after its valuation dropped 64%

  • Austin is back! ACL says in-person music festival this fall

Thank you! Mason Rathe, an early stage investor with LiveOak Venture Partners Additional research and newsletter support provided by William Scheffrahn.

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