FT : EU to hit Apple with first ever fine in €500mn penalty over music streaming

EU to hit Apple with first ever fine in €500mn penalty over music streaming
Move is culmination of long-running European Commission antitrust probe after a complaint by Spotify

Brussels is to impose its first ever fine on tech giant Apple for allegedly breaking EU law over access to its music streaming services, according to five people with direct knowledge of the long-running investigation.

The fine, which is in the region of €500mn and is expected to be announced early next month, is the culmination of a European Commission antitrust probe into whether Apple has used its own platform to favour its services over those of competitors.

The probe is investigating whether Apple blocked apps from informing iPhone users of cheaper alternatives to access music subscriptions outside the App Store. It was launched after music-streaming app Spotify made a formal complaint to regulators in 2019.

The Commission will say Apple’s actions are illegal and go against the bloc’s rules that enforce competition in the single market, the people familiar with the case told the Financial Times. It will ban Apple’s practice of blocking music services from letting users outside its App Store switch to cheaper alternatives.

Brussels will accuse Apple of abusing its powerful position and imposing anti-competitive trading practices on rivals, the people said, adding that the EU would say the tech giant’s terms were “unfair trading conditions”.

It is one of the most significant financial penalties levied by the EU on big tech companies. A series of fines against Google levied over several years and amounting to about €8bn are being contested in court.

Apple has never previously been fined for antitrust infringements by Brussels, but the company was hit in 2020 with a €1.1bn fine in France for alleged anti-competitive behaviour. The penalty was revised down to €372mn after an appeal.

The EU’s action against Apple will reignite the war between Brussels and Big Tech at a time when companies are being forced to show how they are complying with landmark new rules aimed at opening competition and allowing small tech rivals to thrive.

Companies that are defined as gatekeepers, including Apple, Amazon and Google, need to fully comply with these rules under the Digital Markets Act by early next month.

The act requires these tech giants to comply with more stringent rules and will force them to allow rivals to share information about their services. 

There are concerns that the rules are not enabling competition as fast as some had hoped, although Brussels has insisted that changes require time.

Brussels formally charged Apple in the anti-competitive probe in 2021. The commission narrowed the scope of the investigation last year and abandoned a charge of pushing developers to use its own in-app payment system.

Apple last month announced changes to its iOS mobile software, App Store and Safari browser in efforts to appease Brussels after long resisting such steps. But Spotify said at the time that Apple’s compliance was a “complete and total farce”.

Apple responded by saying that “the changes we’re sharing for apps in the European Union give developers choice — with new options to distribute iOS apps and process payments”.

In a separate antitrust case, Brussels is consulting with Apple’s rivals over the tech giant’s concessions to appease worries that it is blocking financial groups from its Apple Pay mobile system.

The timing of the Commission’s announcement has not yet been fixed but it will not change the direction of the antitrust investigation, the people with knowledge of the situation said.

Apple, which can appeal to the EU courts, declined to comment on the forthcoming ruling but pointed to a statement a year ago when it said it was “pleased” the Commission had narrowed the charges and said it would address concerns while promoting competition.

It added: “The App Store has helped Spotify become the top music streaming service across Europe and we hope the European Commission will end its pursuit of a complaint that has no merit.”

The Commission — the executive body of the EU — declined to comment.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: On November 5, US voters will face the same choice for president as in 2020

Cover:
-On November 5, US voters will face the same choice for president as in 2020: Joe Biden or Donald Trump. The electoral outcome will likely remain a close call until the final ballots are counted. However, there are important differences this time around, for better and worse. The US economy is booming in ways unimaginable back when the nation voted in 2020, and the nation's debt load is also booming. The US owes its creditors a record $34T, and the net cost of interest on that debt now stands at $650B. Biden and Trump are vying to lead the country in profoundly different directions, which means a new spin on familiar questions about America's indebtedness and sharply divergent views on taxation, regulation, and the role of the state.

Interview:
-This week, Barron’s has interviewed Daleep Singh. The Biden administration has rehired Daleep Singh, former deputy national security adviser for international economics and global chief economist of PGIM Fixed Income, who was confirmed to be resigning from his government role. Singh was involved in the response to Russia's invasion of Ukraine in 2022 and helped design the price cap for Russian oil by the Group of Seven countries, including the U.S. He also has a background in private markets. Singh recently spoke to Barron's about the intersection of geopolitics and markets.

Tech Trader:
-Wall Street has been accused of miscalculating the value of public companies, as seen in recent tech earnings reports. The sum-of-the-parts strategy, which suggests that a company's assets are worth more than its current value, has not always been effective. For instance, in a July 2022 cover story about Amazon.com, the author argued that the stock could double or triple based on a sum-of-the-parts analysis. However, Amazon's recent 40% rally was largely due to the emergence of artificial intelligence, cost-cutting in logistics, a growing ad business, and a rebound in e-commerce. Similarly, SoftBank Group, a Japanese tech holding company, was undervalued by up to 50% based on its underlying assets. Despite the initial success, SoftBank's stock has since fallen 16%. Today, SoftBank's biggest asset is its 90% stake in Arm Holdings, a chip design firm worth $116B. The sum-of-the-parts math remains compelling, but caution should be exercised.

The Trader:
-Investors are increasingly realizing that macro conditions don't warrant rate cuts soon, and if recent job-creation trends continue, there might only be two or three cuts in total this year. Deutsche Bank's chief US economist, Matthew Luzzetti, suggests that investors might even consider the possibility that there will be no cuts in 2024. He offers three conditions for this to happen: the Fed's estimate of the neutral rate needs to be adjusted higher to about 3.5%, unemployment needs to remain below 4% while other economic data remain solid, and inflation must remain sticky. The second and third conditions merely require January trends to continue, with the first a matter of debate. However, the market might be able to withstand a handful of fewer rate cuts if a strong economy and robust labor market are good for corporate revenue and earnings.
-The S&P 500 index has seen a 28% return over the past year, outperforming the Stoxx Europe 600, Canadian S&P/TSX Composite, UKX, and China's Shanghai Composite. Tokyo's Nikkei 225 has topped the S&P 500, but it is still 2% below its all-time high set 34 years ago. This outperformance has led experts to argue that the end of American exceptionalism is near. The S&P 500 currently trades for 21 times expected earnings in 2024, compared to 20 times for the Nikkei, 13 for the Stoxx 600, and 11 for the FTSE 100. However, international stocks are not as cheap as they appear. The gap in valuations and recent returns is due to the composition of the indexes and the type of companies traded on each exchange. The Nikkei has 28% of its market value in tech, which has outperformed, resulting in higher valuations.

Features:
-General Motors has nearly doubled the network of roads open to its Super Cruise hands-free driving technology to 750,000 miles, making it the largest network in North America. Super Cruise can perform many driving tasks and requires human supervision 100% of the time, just like other auto makers' systems. Tesla drivers may be confused by the largest comment, as their driver assistance tech, Enhanced AutoPilot and Full Self-Driving, works anywhere but requires drivers to touch the steering wheel to show the system they're paying attention. Both systems enforce safety and require drivers to pay attention and not game the systems. Tesla doesn't limit its driver assistance to a set number of roads, but its systems will tell a driver to take over if it can't see road lines or bad weather. Tesla's aggressive approach to self-driving technology deployment is one reason its technology is more heavily scrutinized than other auto makers.
-Eli Lilly, a drugmaker, has seen a 140% increase in its stock price over the past 12 months, prompting Morgan Stanley analyst Terence Flynn to question if the stock could reach a market value of $1T. Flynn raised his price target to $950, implying a 25% increase from the stock's closing price. Lilly is on track to close with a market capitalization of $749.2B, making it the eighth-highest valued stock in the S&P 500. The stock is on track for a record high, with shares rising 4.1% to $788.58. To reach $1T, the stock would need to reach $1,053.40.

Europe:
-Germany's economic prospects are reminiscent of the term "PIIGS" used during the euro zone crisis to describe struggling Southern European countries. The country's current economic situation raises the question of expanding the acronym to include Germany and spell "PIIGGS" from now on. Europe's economic taskmaster has proven incapable of urgent structural reforms for over a decade. Germany's structural reform needs focus on allowing the private sector to succeed, as its "social market economy" relies on its private sector's output. Simplifying regulatory burdens and digitizing public sector planning processes are essential for achieving goals like housing stock building and decarbonizing energy infrastructure. The German government should encourage technological solutions to core problems rather than prescribing specific paths. The country's rise in the Green Party has led to technological skepticism, which does not align with the country's success in world markets.

Emerging Markets:
-no update this week

Commodities:
-The Producer Price Index (PPI) has revealed a 0.8% rise in services excluding trade and transportation, the second largest monthly rise in over 14 years. This is not a good look for an economy already grappling with sticky services inflation. The PPI raises the risk that even the January PCE will come in hot, potentially causing the hearty inflation results to spill over into February. The real test will be whether the hearty inflation results spill over into February, as many firms are seizing on the calendar turn to hike prices.

Streetwise:
-Nvidia, the third-largest company in the S&P 500, has surpassed Amazon.com and Alphabet to become the third-largest company in the market, behind Apple and Microsoft. This has given it a significant pull on index fund returns, with its $1.8T market value being more than 4% of the S&P 500. Nvidia's rise is a key reason why the index has returned 22% over the past year. However, the same bull who compares Nvidia to Apple also warns that Nvidia will have to "thread the needle" when it reports its fourth-quarter financial results. This is concerning, as the best-case scenario involves twisting, a bit of saliva, and hopefully no blood. Ben Reitzes, head of technology coverage at Melius Research, believes that Nvidia's stock will have to "thread the needle" when it reports its fourth-quarter financial results.

>>> Weekend Papers Summary

Weekend Papers Summary

FINANCIAL TIMES
-Democratic allies have backed Joe Biden, despite a special counsel report describing him as a "well-meaning, elderly man with a poor memory." Lawmakers believe Biden is the best candidate to lead the Democrats into November's election, despite concerns about his mental acuity and whether he should step aside. Pennsylvania senator John Fetterman argues that the choice between order, truth, and virtue is a core national choice.
-Bit Brother, a Chinese tea retailer with a market value of less than $2M, has seen an average of 572M shares traded daily in the US stock market over the past two months. This is more than Tesla, the largest corporate American company, and is part of a trading boom in "penny stocks," which accounted for nearly 20% of overall stock market volumes in December and January.
-The European Commission granted farmers temporary exemptions from rules for nature conservation and partially reversed a 2021 decision to allow free agricultural imports from Ukraine. Under pressure from EU leaders and conservative political groups, President Ursula von der Leyen dumped parts of her Green Deal climate law, scrapping a proposal to halve pesticide use and cutting a target for reducing agricultural emissions from its 2040 climate plan.
-The EU has agreed to a delayed fiscal rule reform, allowing annual targets for cutting public debt and limits for public spending. This compromise allows countries to reduce excess debt at a slower pace over four to seven years, and allows for a more gradual tightening of the public purse. The deal follows the suspension of the Stability and Growth Pact.
-The Carlyle Group is demanding early repayment of a £125M loan made to London's Heathrow Airport in 2021, despite multiple attempts to resolve the conflict with the airport's London-listed owner, Esken. Esken chair David Shearer believes Carlyle's motives are to acquire the potentially valuable airport at a knockdown price, as the airport's real value is expected to increase in the coming years.
-Elon Musk has moved his brain-implant company Neuralink from Delaware to Nevada, a move that deepened a rift with Delaware, where a judge voided his $56B pay package from Tesla. The move follows a judge's decision to void Musk's unprecedented pay package. Musk has advised against incorporating in Delaware and recommends Nevada or Texas for shareholders to decide matters.
-Israeli Prime Minister Benjamin Netanyahu has ordered the military to create a "combined plan" to expand its Gaza offensive into Rafah and evacuate its civilian population, despite US and UN pleas not to mount a major offensive. Rafah is home to over 1 million people, forced from their homes by Israel's offensive. The US and UN have both deemed a military operation in Rafah a disaster.

THE NEW YORK TIMES
-Moody's has downgraded Israel's creditworthiness from A1 to A2, citing the prolonged war with Hamas and its impact on the country's finances. The rating, one of three major rating agencies, lowered Israel's rating from D or C to AAA or Aaa for the most pristine borrowers. The agency cited the negative outlook for Israel due to social, political, and economic risks from the conflict with Hamas. Both S&P and Fitch began reassessing Israel's credit rating in November but have not taken any action.
-Jon Finer, a Biden aide, acknowledged the administration's mistakes in its response to the Gaza war, stating he had no confidence in Israel's willingness to take meaningful steps towards Palestinian statehood. Finer's remarks came after months of public and private admonitions from the Biden administration for Israel to take a more surgical approach. He pledged that the administration would do better and expressed regret for the "missteps" made in the initial response to the Hamas attack.
-The $95B emergency national security package for Ukraine and Israel is back on track in the Senate, but Republican senators are slowing progress on proposed revisions, particularly concerning border security. They have voted to kill a bipartisan deal to crack down on immigration, allowing the aid to move forward without immigration restrictions. The demands are seen as an exercise in political face-saving, as Republicans previously stated they would never approve funds to help Ukraine fight off a Russian invasion.
-In a two-hour interview with former Fox News host Tucker Carlson, Russian President Vladimir V. Putin repeatedly mentioned that Russia wants to negotiate a peace deal in Ukraine, albeit on Kremlin's terms. This message seemed aimed at the American right and Republicans in Congress, but the day after the interview, it seemed lost in the muddle. Experts and some of Putin's allies were also puzzled over why he gave short shrift to his main ideological commonality with Carlson's followers: opposition to L.G.B.T.Q. rights and other liberal social causes.
-White House officials have criticized a special counsel's report on President Biden's handling of classified material, claiming it was politically motivated. Vice President Kamala Harris criticized the report as a political attack, while White House Counsel's Office spokesperson Ian Sams called it "inappropriate" and "troubling." The report, released on Thursday, found no criminal charges warranted, but the report's description of Biden as elderly and forgetful led to further criticism. The statement comes as the White House seeks to discredit the report.
-A lawyer for former President Donald Trump's co-defendants in the Georgia election case has suggested that the two prosecutors leading the case had lied about the start of their romantic relationship. The defense lawyer, Ashleigh Merchant, is seeking a witness to testify that the relationship between district attorney Fani T. Willis and special prosecutor Nathan J. Wade began before Willis hired Wade. This contradicts Wade's affidavit, which states that his relationship with Willis began in 2022 after his hiring. Terrence Bradley, a former lawyer, is identified as the witness.
-Finland's presidential election is in its second and final round, marking the first since joining the North Atlantic Treaty Organization in 2017. The election is crucial for Finland's foreign policy and commander in chief, as it faces challenges on its 830-mile border with Russia, the longest with any NATO country.
-President Biden and German Chancellor Olaf Scholz met at the Oval Office to pressure Congress to pass billions more in aid for Ukraine, as legislative dysfunction and opposition among some Republicans have left the critical package in limbo. Scholz hoped Congress would follow their lead and make a decision on providing necessary support, while Biden criticized the congressional gridlock as "close to criminal neglect." The joint pressure amounted to another maneuver in the high-stakes battle over funding for Ukraine as it fights off Russia's invasion.
-Israeli Prime Minister Benjamin Netanyahu has ordered the military to create a "combined plan" to expand its Gaza offensive into Rafah and evacuate its civilian population, despite US and UN pleas not to mount a major offensive. Rafah is home to over 1 million people, forced from their homes by Israel's offensive. The US and UN have both deemed a military operation in Rafah a disaster.

THE NEW YORK POST
-A 15-year-old Venezuelan migrant, Jesus Alejandro Rivas-Figueroa, was arrested by the US Marshals Joint Regional Fugitive Task Force and the NYPD after a robbery in Times Square. Rivas-Figueroa was found in Yonkers, wearing a dark T-shirt, jeans, and a gold necklace. The suspect was taken into custody at a relative's home, where he was found crying and committing adult acts. NYPD spokesman Carlos Nieves said Rivas-Figueroa was brought out in handcuffs crying.
-New York Attorney General Letitia James has expanded her lawsuit against Digital Currency Group and other cryptocurrency defendants, claiming they caused over $1B of losses by misleading investors about the Gemini Earn program. James claims that the scam also ensnared investors who sent money directly to Genesis and were falsely assured their money was safe. She is seeking over $3B of restitution for over 230,000 investors she believes were defrauded.

FT : Activist defends fintech Temenos after Hindenburg Research report

Activist defends fintech Temenos after Hindenburg Research report
Petrus Advisers disputes short seller’s report after Swiss group’s shares plunge

Shares in Temenos plunged almost a third this week, wiping nearly SFr3bn ($3.4bn) from its market value, as two prominent activist investors clashed over allegations of “major accounting irregularities” at the Swiss fintech.

Prominent US short seller Hindenburg Research accused Temenos of “manipulating” its earnings in a report published on Thursday, triggering the biggest share price drop in the Geneva-based company’s history.

Petrus Advisers — one of Temenos’ biggest shareholders — on Friday responded by accusing Hindenburg of sloppy research, while using the controversy to double down on its own call for a management change.

Tememos shares dropped 28 per cent on Thursday and closed down a further 4 per cent on Friday, valuing the company at just over SFr4.5bn.

At its peak valuation in 2019, the company, which provides software to financial services companies and claims 41 of the world’s top 50 banks as clients, had a market capitalisation of more than SFr13bn.

Temenos, which will hold an annual investor day on Tuesday, disputed Hindenburg’s allegations. “The [Hindenburg] report contains factual inaccuracies and analytical errors, together with false and misleading allegations, which are intended to adversely impact the company’s share price,” Temenos said on Friday. 

Hindenburg said it had conducted a four-month investigation into Temenos and spoken with 25 former employees, including senior executives.

Its probe “uncovered hallmarks of manipulated earnings and major accounting irregularities”, Hindenburg said. “This includes evidence of round-tripped revenue, sham partnerships, rampant pulling forward of contract renewals, backdated contracts, excessive capitalisation of seemingly non-existent R&D investments, and other classic accounting red flags,” it added.

Hindenburg is betting against Temenos shares, meaning it has already profited from the plunge in the stock.

Less than 24 hours after Hindenburg’s report was published, Petrus questioned the sourcing of the allegations.

“Most of the points alleged by Hindenburg are based on hearsay talk from former disgruntled Temenos executives,” Petrus said in an open letter to Temenos chair Thibault de Tersant. “Since 2022, we have been speaking to many of them (many of whom clearly are on a revenge mission), plus numerous Temenos customers, partners and industry experts,” it added.

Petrus said its own activist campaign had reaped rewards and the company was addressing problems. But it added that chief executive Andreas Andreades was nevertheless still failing to do enough and blamed him for many of the company’s past problems.

Andreades has been serving as interim CEO since the departure of Max Chuard in January last year, who Petrus had also lobbied the board to remove. Petrus owns about 3 per cent of Temenos’ shares.

“We take these allegations [from Hindenburg] seriously,” said Cengiz Sen, an analyst at Swiss bank Julius Baer, which is also a client of the company.

FT : Diego Della Valle cements French connection with planned Tod’s delisting

Diego Della Valle cements French connection with planned Tod’s delisting
Head of Italian luxury shoe and bagmaker teams up with LVMH-backed private equity firm L Catterton

Early last year Diego Della Valle, one of the giants of Italian business, had an important topic to discuss with his family at his 17th century estate: their vision for the future of Tod’s, the luxury shoe and bagmaker founded by his grandfather more than a century ago.

After an attempt to take the group private had failed, he and his younger brother Andrea wanted to talk to their children at the villa in Italy’s hilly Marche region about their commitment to managing the business famous for its leather bags and suede loafers.

Over several Sunday lunches they were reassured by the responses of Diego’s eldest son Filippo, 26, who works in Tod’s marketing department, and Andrea’s son Leonardo, 24, who works at Schiaparelli, one of its other brands. Eventually they also decided they needed a partner to help revitalise the group’s performance, according to an insider.

That partner has now arrived in the form of LVMH-backed private equity firm L Catterton and a deal that will bring down the curtain on Tod’s more than two decades as a public company on the Milan stock exchange.

Under the proposal, announced last weekend, the Della Valle family will retain their majority but reduce their stake from 64 to 54 per cent, while L Catterton will take a 36 per cent stake in Tod’s and LVMH will retain its 10 per cent holding. The deal values Tod’s at about €2bn including debt.

At its heart is Diego Della Valle, one of the most flamboyant and outspoken personalities in Italian business and chief executive and chair of the family business since 2000.

Formerly an investor in NTV, Italy’s private railway operator, other past investments span the sports, banking, media and design industries.

Known for his staple silk cravats and forthright manner, he is proud of being Italian and has not held back from openly criticising other Italian family-owned businesses for moving their headquarters abroad and cutting local jobs. Tod’s headquarters remain in the small town of Casette D’Ete and it was the first Italian luxury group to go public in its native country, with Gucci having chosen New York for its IPO.

Della Valle is confident, however, that Connecticut-based L Catterton will boost Tod’s desirability and allow it to focus on investments in marketing and R&D, he told the Financial Times.

“This deal will help the group develop through investments and face new challenges,” Della Valle said in a statement after the delisting plans were announced. “I think this is the best choice strategically.”

Although sales at Tod’s, whose brands include shoe label Roger Vivier and clothing and accessories labels Schiaparelli, Fay and Hogan, increased 11.9 per cent last year to €1.13bn, its share price has remained stubbornly low. At around €43 per share, the stock is about 9 per cent below its IPO price in 2000.

Analysts have argued that improvements in Tod’s product offering and earnings have not been reflected in the share price and that it is complicated for small luxury groups to execute turnarounds as listed companies.

L Catterton — established in 1989 but launched in its current form in 2016 through a partnership between a private equity firm, French luxury group LVMH, and founder Bernard Arnault’s family investment vehicle — has restructuring experience and specialises in consumer brands.

The group has a record of profitable exits — such as 2023’s $8.6bn listing of German sandal maker Birkenstock — and Tod’s has a good potential to turn into another success story, say analysts.

Della Valle and Arnault have been friends for more than two decades and the deal with Tod’s deepens the already strong links between the two at a time when LVMH ’s sales and share price are storming ahead. LVMH has been a long-term investor in Tod’s, first taking a stake in 2000, while Della Valle has sat on the board of the world’s biggest luxury group since 2002. The Italian was a guest at the wedding of Alexandre Arnault in Venice in 2021 while the LVMH boss has vacationed at Della Valle’s summer home on the island of Capri.

The deal with L Catterton has revived speculation among industry insiders and analysts that LVMH could eventually buy Tod’s, adding to its stable of clothing and apparel brands which also include Christian Dior and Céline.

“It could be seen as an hors d’oeuvre to a future sale to the French at a higher price than what they would have obtained now,” said one analyst who asked not to be named.

But Della Valle, who has always refused to relinquish control, pushed back against the suggestion. “I’m used to this kind of speculation . . . but it makes no sense as we could have sold the group directly to LVMH if that’s what we wanted,” he said.

Paris-based conglomerate Kering owns brands including Gucci, Loro Piana and Bottega Veneta while LVMH bought Bulgari in 2011. The issue of succession has been a recurring theme within Italian family-controlled luxury businesses.

One senior Italian luxury executive suggested it would be disappointing if “Della Valle of all people” ultimately ended up selling to the French — nodding to the 1 per cent of Tod’s profits he donates annually to local Marche communities and his appearances on Italian television touting the benefits of giving back to workers and disadvantaged groups — although they added that smaller luxury groups “struggle” in an industry dominated by conglomerates.

Unlike in 2022, when the Della Valle family attempted a delisting by offering minority shareholders €40 a share but failed to reach the 90 per cent threshold required, the current attempt is expected to go through.

If the parties involved in the deal cannot reach the 90 per cent ownership threshold needed to delist the company, L Catterton has said it will take the group private by merging it into the vehicle it used to launch the offer, which does not require an ownership threshold but must be put to a shareholder vote.  

This would probably pass as the Della Valles and LVMH’s combined 64 per cent stake would be enough to satisfy the requirement in Italian law that at least 50 per cent of the share capital be represented at such a vote, and receive at least two-thirds backing of this.

Bernstein analyst Luca Solca said that for the time being the partnership with L Catterton would “allow [Tod’s] to reap many of the benefits that being part of a conglomerate like LVMH could offer, but without giving up the opportunity to create value independently.”

Della Valle added: “Our new partners will benefit us . . . it lightens my responsibilities toward my family, workers, our whole group which is indeed an Italian group.”

CrunchBase : The Week’s 10 Biggest Funding Rounds: Lambda Leads Massive Week For

The Week’s 10 Biggest Funding Rounds: Lambda Leads Massive Week For Megadeals

Check the calendar — is it 2021 again? Sure seemed that way this week, as there were 10 rounds of $100 million or more raised by U.S.-based startups. That may not have happened since the early part of 2022 — if then. Not just that, but three rounds were for a quarter-billion dollars or more. Not exactly sure what was in the water this week, but AI and biotech led the way as happens often.

1. Lambda, $320M, artificial intelligence: In a big week, this was the biggest round. Lambda hit unicorn status after a $320 million Series C at a $1.5 billion valuation. The company offers cloud computing services and hardware for training artificial intelligence software. The startup is a provider of Nvidia’s latest GPUs, which are highly sought after by AI developers. The round was led by Thomas Tull’s US Innovative Technology Fund. The San Jose, California-based startup’s customer list includes Microsoft and Amazon. The round marks the largest by an AI startup this year, per Crunchbase data. In general, the sector seems to be picking up after a slow start to the year with AI startups now raking in more than $3 billion for the current calendar year.

2. Freenome, $254M, biotech: This is just the first of many big biotech raises this week. Blood-test developer Freenome raised a $254 million round led by drugmaker Roche. The South San Francisco-based startup is developing tests that can potentially detect multiple early-stage cancers — currently focused on colorectal and lung cancers. Founded in 2014, the company has raised $1.4 billion, per Crunchbase.

3. Cinq Music, $250M, music: It’s weird to say a $250 million funding round may have slipped through the cracks, but this one may have. Los Angeles-based Cinq Music, an independent record label and subsidiary of GoDigital Media Group, locked up $250 million in funding to acquire music rights. The company plans to use the cash to grow its diverse catalog, including in the genres of reggaeton, Música Mexicana, Afrobeat and country. Cinq has previously raised $160 million since 2017, per the company.

4. (tied) BioAge Labs, $170M, biotech: You didn’t think we were done with biotech for the week did you? This week continued with multiple big rounds for the industry. BioAge Labs, a Richmond, California-based firm taking on obesity and metabolic diseases, raised a $170 million Series D led by Sofinnova Investments. The company will use the cash infusion to help advance the Phase 2 clinical development of its weight-loss drug Azelaprag. The oral drug has been shown to decrease body mass but not make the patient lose muscle. Founded in 2015, the company has raised nearly $294 million, per Crunchbase.

4. (tied) Lilac Solutions, $170M, advanced materials: This round is interesting for a couple reasons. First, while a lot of companies from San Francisco and Silicon Valley make this list, we don’t get a lot from the East Bay of the Bay Area. However, Lilac Solutions — which raised $145 million this week — is based in Oakland, California. Another interesting thing is just what the company does. Lilac is one of a growing handful of startups specializing in lithium extraction technology. Of course, efficient, low-cost and environmentally friendly lithium extraction is needed for the exploding EV market. That’s likely why while the round was led by Mercuria, Lowercarbon Capital and Breakthrough Energy Ventures, it also featured BMW i Ventures and Mitsubishi Corp. With the close of the Series C, Lilac says it has now raised $315 million since being founded in 2016.

6. Latigo Biotherapeutics, $135M, biotech: Thousand Oaks, California-based Latigo Biotherapeutics locked up a $135 million Series A financing co-led by Westlake Village BioPartners, 5AM Ventures and Foresite Capital. Founded in 2018, Latigo is a clinical-stage biotechnology startup developing nonopioid pain medicines. The company has raised $150 million, per Crunchbase.

7. ProfoundBio, $112M, biotech: Seattle-based ProfoundBio, a clinical-stage biotechnology company developing antibody-drug conjugate therapeutics for patients with cancer, raised a $112 million Series B led by Ally Bridge Group. Founded in 2018, the company has raised $247 million, per Crunchbase.

8. Sierra, $110M, artificial intelligence: San Francisco-based Sierra, a conversational AI company, raised $110 million led by Sequoia Capital and Benchmark at a reported valuation of nearly $1 billion. This is the company’s first announced fundraise.

9. Bugcrowd, $102M, cybersecurity: Hackers-for-hire platform Bugcrowd locked up $102 million in fresh funding led by General Catalyst. The San Francisco-based platform allows companies of all sorts to hire freelance hackers and coders for “bug bounty” programs, helping those companies find problems in software code. The company plans to use the new cash to accelerate growth across the globe — including in the U.S. — and leverage opportunities for strategic M&A. Founded in 2012, the company has raised more than $180 million, per Crunchbase.

10. Alys Pharmaceuticals, $100M, biotech: Investment firm Medicxi merged six of its dermatology-focused portfolio companies to launch Alys Pharmaceuticals this week with $100 million in funding. The immunodermatology-focused startup is based in both Boston and Geneva, Switzerland. Alys will concentrate on dermatological advancements, including programs focused on mastocytosis, cutaneous T-cell lymphoma, and prevention of skin side effects of oncology therapies.


Big global deals
While it was hard to keep up with all the big deals in the U.S., things were quiet elsewhere. In fact there was just one raise of $100 million outside the country.
  • Netherlands-based Omnetic, a web-based services provider, raised a round worth approximately $108 million.