Venture Capital Deals Of The Week: Ride-Share Grabs $2B

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by: VCDeals

Welcome to Seeking Alpha’s Venture Capital Deals of the Week. Follow this account and turn on the e-mail alert to receive VCDeals in your inbox on Saturday mornings.

Asia ride sharing: Grab (GRAB) announced it pulled in $2B in new funding including the $1B investment from Toyota (NYSE:TM) that was announced in June. The investor guest list to the party was long but featured Ping An Capital, Lightspeed Venture Partners, and Macquarie Capital. The round, which is still open, values Grab at $11B with $6B in total funding including the likes of SoftBank and Did Chuxing.

Grab eliminated Uber (UBER) from local competition by purchasing Uber’s Southeast Asia business for a 27.5% stake in Grab. Along with ride sharing, Grab has a payment service, food delivery, and a now launching “super app” showing its shift towards an offline-to-online strategy. Indonesia (population over 260M) is a key focus for Grab.

Competition: Uber’s departure leaves Indonesian on-demand service Go-Jek, valued at $5B with over $2B in funding from the likes of KKR, Warburg Pincus, Tencent, and Google.

At-home spin classes: NBCUniversal (NASDAQ:CMCSA) took part in a $550M Series F round in stationary bike maker Peloton. The round brought total funding up to $994.7M and valuation to $4.15B. TCV led the round with participation from Tiger Global, True Ventures, Wellington Management, Fidelity, Kleiner Perkins, Felix Capital, and Winslow Capital. TCV partner Jay Hoag joined the Peloton board.

Peloton’s product line started out with a stationary bike enabled with streaming fitness classes to provide the spin class experience at home. The company plans to launch a connected treadmill this fall and has already introduced a new membership product and several retail locations. Peloton will use the new funding round to fuel expansion into the retail market and international growth.

Peloton says it is on pace to generate over $700M in revenue during this fiscal year, which ends in February, continuing its over 100% Y/Y revenue growth rate. Though the company recently generated EBITDA, CEO John Foley expects Peloton to lose money in the second half due to growth investments.

Competition: NordicTrack and Viatek’s Echelon offer alternative stationary bikes with classes.

Amazon’s (NASDAQ:AMZN) store-brand competitor: SoftBank (OTCPK:SFTBY, OTCPK:SFTBF) Vision Fund led a $240M Series C round in Brandless, a direct-to-consumer company taking on Amazon with low-cost products. The investment values Brandless at a little over $500M. Brandless is SoftBank’s second large e-commerce investment in the U.S. after sports-apparel company Fanatics.

Brandless sells 300 store brand, home-goods products with most priced at $3. Founder Tina Sharkey says she would like to work with other companies in SoftBank’s portfolio and that she and SoftBank are entering a JV in Asia that will be announced later.

CRM software: Alphabet (GOOG, GOOGL) growth equity fund CapitalG joined a $100M Series G funding in customer support software startup Freshworks. Accel and Sequoia Capital co-led and the round pushed Freshworks to a $1.5B valuation, making the company one of less than a dozen India-based unicorns.

Freshworks sells customer support software to a client list with over 150K customers including Hugo Boss and Toshiba. The company had an annual recurring revenue rate of $100M as of June. Freshworks has hired Suresh Seshadri as CFO. Seshadri helped prepare AppDynamics for IPO last year before Cisco Systems swooped in for a $3.7B acquisition. A Freshworks IPO could happen next year or in 2020.

Competition: Salesforce (NYSE:CRM), Zendesk (NYSE:ZEN), and ServiceNow (NYSE:NOW), to name a few.

Air traffic control for autonomous vehicles: Siemens (OTCPK:SIEGY) venture arm Next47 led a $25M Series B funding in RideOS, a startup that wants to become the traffic control center for autonomous vehicles. Sequoia and ST Ventures also participated in the round for the year-old company. Funding now totals $34M. Next47 will join the RideOS board to help the startup approach the European transportation market.

RideOS makes a cloud-based, fleet-management platform that collects mapping, traffic, and detection data to suggest the safest routes for self-driving vehicles in a certain geographical area. It’s basically air traffic control for automated cars or human-driven vehicles.

The company announced a partnership with Ford (NYSE:F) subsidiary Autonomic in June. Last month, RideOS partnered with ST Engineering to accelerate self-driving vehicle deployment in Singapore.

India bus sharing: Amazon India led and Amazon Alexa Fund participated in an $11M Series B round for Indian bus-sharing app Shuttl. Amazon’s focus on India has deepened since its 2016 commitment to invest $5B in the country. Dentsu Ventures, Sequoia Capital, Times Internet, and Lightspeed Ventures also participated.

Shuttl, owned by Super Highway Labs, has a “Chirp” feature that verifies a passenger to the driver by sending a sound between each person’s app, which is faster than tickets or passes. Riders can track the bus location while the tech platform optimizes routes for demand and capacity. The platform includes 800 buses, and the app claims 60K monthly active users and 45K rides per day. Shuttl currently operates in five cities but will use the new funding to expand to two more.

Competition: Uber and Ola compete in the local ride-share space.

Startup acquisition of the week: Cisco Systems (NASDAQ:CSCO) bought Duo Security for $2.35B in cash.

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