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VC Daily : Question: In Fintech, How Much Is Too Much for Investors?

10/01/2021 | 10:10am EST

Good day. Last week, we asked if measures aimed at lowering prescription-drug prices that lawmakers are considering are warranted. They include enabling Medicare to negotiate with drugmakers for lower costs. Lowering prescription-drug costs is part of Democrats' plan to lower federal healthcare expenses and offset spending on other healthcare programs, The Wall Street Journal has reported.

The Center for American Progress, a center-left think tank, is a strong supporter of a House drug-pricing proposal, H.R. 3, a spokesman said. The bill, which enables the federal government to negotiate drug prices, would save patients thousands of dollars on high-priced specialty drugs, according to an analysis by the group.

Brad Margus, chief executive of drug-discovery company Cerevance, said that lowering drug prices will especially hurt companies working on the hardest-to-crack diseases, where even though a drug that works would have a huge market, it's nearly impossible to persuade investors to support new approaches. "The price controls now being pushed threaten to remove the chance for my investors to get those returns," he said.

John Stanford, executive director of the life-sciences venture advocacy group Incubate, said he doesn't think the proposals would help patients afford their medicines. Instead, they're focused on raising revenue for the government and some Democrats want the biopharmaceutical industry to subsidize other policy priorities, like the child tax credit, affordable housing, and climate change, Mr. Stanford said.

This week's question: At what point does the deluge of financial-technology deals saturate that part of the market and turn potential investors away?

Please email responses to marc.vartabedian@wsj.com.

Top News

Deal rejected. Zoom Video Communications Inc.'s nearly $15 billion bid to acquire contact-center company Five9 Inc. was shot down Thursday, dashing a major expansion plan for a video-conferencing powerhouse that has battled scrutiny over its perceived ties to China, The Wall Street Journal reports. Five9 issued a news release saying that the deal failed to gain enough votes from its shareholders and that the merger plan had been "terminated by mutual agreement" between the two companies.

The rejected bid comes after proxy advisory firm Institutional Shareholder Services recommended Five9 shareholders vote against the acquisition, highlighting concerns about Zoom's slowing growth as many people go back to more in-person meetings. Glass, Lewis & Co., another proxy advisory firm, also advised Five9 shareholders to vote against the deal over similar concerns.

The deal also drew scrutiny from U.S. regulators over national security concerns. The Journal reported last week that a Justice Department-led committee was investigating the planned merger over Zoom's ties with China.

$350 Million

Series A funding raised by Fanatics Trading Cards, a trading-card venture launched by Fanatics Inc., valuing the firm at $10.4 billion. (WSJ)

Crypto Firms Beef Up Compliance Hiring Amid Regulatory Scrutiny

Cryptocurrency companies are ramping up hiring in their compliance departments as they come under increasing regulatory scrutiny in the U.S. and world-wide, WSJ's Mengqi Sun reports. Hamlyn Williams Inc., a global recruiter that focuses on regulated industries, said it has conducted 18 chief-compliance-officer searches for financial technology and cryptocurrency businesses in 2021, up from seven searches for all of 2020. The regulatory pressures are mounting for businesses that create, host and trade digital currencies. Securities and Exchange Commission Chairman Gary Gensler said this month that he doesn't see much long-term viability for cryptocurrencies, underscoring the importance he places on protecting investors and bringing the market under regulatory oversight.

Related: Bitcoin Stalls as U.S., China Go After Cryptocurrencies

Antitrust Regulators Fix Their Sights on Private Equity

New federal antitrust enforcers want to toughen up regulation of the private-equity industry, putting a spotlight on ways that buyout firms might be warping competition, WSJ Pro's Chris Cumming reports. While private equity wasn't a priority for the agencies charged with antitrust enforcement -- the Federal Trade Commission and the Justice Department -- in the Trump administration, under President Biden agency leaders say change is coming.

Stripe Finance Chief Helps Steer Payment Processor's Growth

A year into her role as finance chief of Stripe Inc., Dhivya Suryadevara is working to build out the payment processor's finance team, strengthen its reporting capabilities and invest in its business, leaning on some of the insights she gained during her years at General Motors Co. Ms. Suryadevara joined the San Francisco-based financial-technology firm last October, after more than 15 years at GM, including two as its chief financial officer, Nina Trentmann reports.

Industry News

Funds

Diversity-focused Acrew Capital raised about $380 million for an early-stage fund and $300 million for a late-stage fund, bringing the firm's assets under management to nearly $1 billion.

San Francisco-based Ripple, a provider of enterprise blockchain and crypto services, raised a $250 million Creator Fund to support creators building non-fungible token and other tokenization projects on the XRP Ledger.

Benhamou Global Ventures, which invests in Enterprise 4.0 companies globally, closed its fourth fund at $110 million, or 60% larger than its third fund. The firm has offices in Tel Aviv, Paris, Mumbai and Palo Alto, Calif.

San Francisco-based Counterpart Ventures closed its second fund with just over $110 million in commitments. With a focus on B2B software-as-a-service, marketplace and mobility, the firm's recent investments include Cloudbeds, Intricately, Prismo Systems, VComply and Glidian.

People

G2 Venture Partners, which supports companies digitizing traditional industries, hired Neel Mehta and Charlie Klene as investors at the firm. Mr. Mehta was previously at Zoox. Before joining G2, Mr. Klene was at Salesforce.

Cloudentity Inc., a provider of application security and authorization services, appointed Jason Needham as chief executive. He was most recently senior director of multicloud security at VMware. Seattle-based Cloudentity is backed by ForgePoint Capital and WestWave Capital.

Dialpad Inc., a provider of AI-powered communication and collaboration for business, named Mike Kourey as chief financial officer. He was most recently CFO at Okta. San Francisco-based Dialpad is backed by investors including SoftBank Corp., Omers Growth Equity, Andreessen Horowitz, GV and Iconiq Capital.

Flowhub, a cannabis retail point-of-sale platform for dispensaries, appointed Leandre Johns as chief operating officer. He was previously at Uber. Denver-based Flowhub is backed by investors including Evolv Ventures and Headline.

Exits

Cambridge, Mass.-based Akamai Technologies Inc. will bolster its Zero Trust security portfolio with an agreement to buy Guardicore, a provider of micro-segmentation technology that blocks the spread of malware within an enterprise, for about $600 million. Guardicore, of Tel Aviv, is backed by investors including Qumra Capital, Partech, ClalTech, Battery Ventures, 83North, TPG Growth and Greenfield Partners.

ScienceLogic, an IT-operations-management provider, acquired network-configuration and change-management company Restorepoint for an undisclosed amount. Reston, Va.-based ScienceLogic earlier this year raised a $105 million Series E round from Silver Lake Waterman, Goldman Sachs, Intel Capital and NewView Capital.

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New Money

Andela, a New York-based startup that connects companies with vetted, remote engineers in emerging markets, raised $200 million in Series E funding, valuing the company at $1.5 billion. Softbank Vision Fund 2 led the round, which saw participation from investors including Generation Investment Management, Chan Zuckerberg Initiative and Spark Capital. Lydia Jett, founding partner at SoftBank Investment Advisers, will join the company's board.

Ola Electric, an India-based electric-vehicle manufacturer, secured more than $200 million in a new funding round led by Falcon Edge Capital, SoftBank and others at a valuation of $3 billion. The company is also backed by investors including Matrix Partners India and Tiger Global Management.

AlphaSense Inc., a New York-based developer of advanced search tools for parsing financial data, landed a $180 million Series C round. Viking Global Investors and the growth-equity business within Goldman Sachs Asset Management led the investment, which included participation from others, including existing investors. AlphaSense's Series B investors included Innovation Endeavors, Euclidean Capital, Soros Fund Management and Tribeca Venture Partners.

TrialSpark, a New York-based startup whose technology accelerates the clinical-trial process, raised $156 million in Series C funding. Sam Altman and Lachy Groom led the round, which included contributions from Sequoia Capital, Thrive Capital, Casdin Capital, Section 32, Spark Capital, Felicis Ventures, Sound Ventures and others.

Built Technologies Inc., a Nashville, Tenn.-based construction-finance platform, fetched a $125 million Series D round at a $1.5 billion valuation. TCV led the investment, which included support from Brookfield Technology Partners, 9Yards Capital and others.

ContractPodAi, a London-based contract lifecycle management software provider, grabbed a $115 million Series C investment led by SoftBank Vision Fund 2. Ayush Jain of SoftBank Investment Advisers will join the company's board.

Totango, a Redwood City, Calif.-based provider of an all-in-one customer operating system, scored a $100 million Series D round. Great Hill Partners led the funding, which included participation from Benhamou Global Ventures, Pitango and Canvas Ventures.

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10-01-21 1009ET

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