CrunchBase : The 10 Biggest Rounds Of May: AI And Biotech Startups Get Big Bucks

The 10 Biggest Rounds Of May: AI And Biotech Startups Get Big Bucks, Led By Anthropic And ElevateBio

You had to go big in May to get on this list. Each of the 10 biggest rounds last month was well above $100 million, so it seems like investors opened their checkbooks a little more.

Not surprisingly, AI again led the way, but biotech also remained strong in the last full month of spring. Other sectors including cleantech, network software and even crypto (it’s been a while) also had large raises.

1. Anthropic, $450M, artificial intelligence: If Anthropic looks familiar to you on this list, there’s a reason. In February there were reports that Google had invested between $300 million and $400 million into the San Francisco-based startup. That was followed in March by reports that Anthropic was raising another $300 million round at a pre-investment valuation of $4.1 billion. Finally last month, Anthropic — a ChatGPT rival with its AI assistant Claude — announced it had raised $450 million in Series C funding led by Spark Capital with participation from the likes of Google and others. Anthropic itself previously announced a $124 million Series A in 2021 and a $580 million Series B in 2022 — led by none other than disgraced FTX founder Sam Bankman-Fried. Of course, nothing has been hotter than AI this year. The raise was only topped by the $10 billion investment into OpenAI reportedly by Microsoft in January.

2. ElevateBio, $401M, biotech: Biotech had a big May. First up is Massachusetts-based gene therapy startup ElevateBio, which raised a $401 million Series D led by the AyurMaya Capital Management Fund, a VC fund managed by Matrix Capital Management. The startup has multiple platforms for things such as drug development and manufacturing that interconnect with one another, making it an end-to-end biopharma company. The company has multiple drug development pipelines as demand grows for gene therapies that help the immune system fight its way through disease. Founded in 2017, the company has now raised $1.2 billion, per Crunchbase.

3. ReNAgade Therapeutics, $300M, biotech: This brings us to our second big biotech raise. Cambridge, Massachusetts-based ReNAgade Therapeutics locked up a $300 million Series A led by MPM BioImpact and F2 Ventures. That money would be big for any round, but a $300 million Series A in this venture market borders on the amazing (yes, it can be difficult to figure out how long a round took to raise, but still). ReNAgade is developing RNA therapeutics (hence the name) to fight disease. The company already has established a joint venture with Orna Therapeutics. Founded in 2021, this is the company’s first outside funding, per Crunchbase.

4. Gradiant, $225M, cleantech: Gradiant became one of the newest unicorns last month after raising a fresh $225 million in a Series D led by BoltRock Holdings and Centaurus Capital. The water tech startup is now valued at $1 billion. The startup develops technology to reduce water usage and build wastewater treatment systems for companies in the pharmaceutical, semiconductor, food and beverage, and other water-demanding industries. The funding is the largest in the wastewater treatment space, at least since the beginning of 2022. Founded in 2013 at the Massachusetts Institute of Technology, the company has now raised more than $392 million, according to Crunchbase.

5. CoreWeave, $200M, cloud: AI keeps the hits coming. Just more than a month after raising $221 million, New Jersey AI cloud infrastructure startup CoreWeave raised another $200 million from existing investor Magnetar Capital. Unlike some of the generative AI application startups that have received huge funding rounds, CoreWeave provides some of the plumbing necessary for AI to work. The specialized cloud provider — which actually started out as an Ethereum mining operation — offers cloud infrastructure with better processing that will be needed to train large language models for AI. Coreweave, which competes with cloud providers Amazon Web Services, Microsoft and Google, has now raised $576.5 million in total funding, per Crunchbase.

6. Strive Health, $166M, health care: Per Centers for Disease Control and Prevention numbers, 37 million U.S. adults live with kidney disease, but about 9 out of 10 people with kidney disease don’t know they have it. That’s a problem, as early care is pivotal in trying to control the situation. Denver-based Strive Health raised a $166 million Series C led by NEA to help people get that care. The startup offers value-based kidney care, as it partners with healthcare providers. Strive Health uses a unique combination of technology-enabled care interventions and seamless integration with local providers to help patients suffering from chronic kidney disease get care at all stages of the fight. Founded in 2018, the company has now raised $386 million, according to Crunchbase.

7. Lightmatter, $154M, hardware: Along the same lines as CoreWeave, Boston-based Lightmatter also has its hands in AI, but not creating applications. Rather the startup uses light to link computer chips together and to do calculations for deep learning necessary for AI. However, the use of light allows for this to happen faster and more energy-efficiently. Investors see that need apparently, as the Boston-based company locked up a $154 million raise from the likes of GV, the venture capital investment division of Alphabet, and Fidelity Management and Research Co. were among the round’s investors. Founded in 2017, the company has raised $267 million, per Crunchbase.

8. Carmot Therapeutics, $150M, biotech: Berkeley, California-based biotech firm Carmot Therapeutics closed a $150 million Series E led by Deep Track Capital. The startup is developing therapies for metabolic diseases including obesity and diabetes. Carmot has several therapeutics in its pipeline and the new cash infusion to add to its portfolio. Founded in 2008, the company has raised nearly $385 million, per Crunchbase.

9. Restaurant365, $135M, accounting: It’s hard to run a restaurant — as anyone who has watched several reality shows based on doing so knows. Restaurant365 tries to make that a little easier and last month the Irvine, California-based startup added some big-named backers. The company nailed down a $135 million round co-led by KKR and L Catterton. The new round values the company at $1 billion, per its release. Restaurant365 offers enterprise management software for restaurants, helping them take care of accounting, payroll, supply chain and more. The company has surpassed $100 million in revenue and is used in more than 40,000 restaurant locations. Founded in 2011, Restaurant365 has raised over $260 million, per Crunchbase.

10. Tools For Humanity, $115M, crypto: It’s Sam Altman’s world — we’re just living in it. Worldcoin developer Tools For Humanity — co-founded by Altman — raised a $115 million Series C led by Blockchain Capital. The San Francisco-based startup is building tools in support of Worldcoin, an Ethereum-based token currently in beta. Its World ID platform is attempting to create unique digital identities — based on blockchain technology — for people by scanning their eyes with a small orb. The startup has raised many questions surrounding AI, data and privacy. While such an identity platform could be useful as AI makes it more difficult to know who or what one is dealing with over the internet, the scanning of people’s eyes to create a digital identity and how that information could be used raises obvious privacy and data concerns. The company did not reveal a valuation, but an earlier report said it is looking to raise money at a $3 billion valuation.

TechCrunch : Fidelity has cut Reddit valuation by 41% since 2021 investment

Fidelity has cut Reddit valuation by 41% since 2021 investment

Fidelity, the lead investor in Reddit’s most recent funding round in 2021, has slashed the estimated worth of its equity stake in the popular social media platform by 41% since the investment.

Fidelity Blue Chip Growth Fund’s stake in Reddit was valued at $16.6 million as of April 28, according to the fund’s monthly disclosure released over the weekend. That’s down 41.1% cumulatively since August 2021 when the asset manager spent $28.2 million to acquire the Reddit shares, according to disclosures the firm has made in its annual and semi-annual reports.

Reddit was valued at $10 billion when the social media giant attracted funds in August 2021. Fidelity — which has marked down its stakes in many startups including Stripe and Reddit in recent quarters — also slashed the value of its Twitter stake, it disclosed in the filing, valuing Elon Musk’s firm at about $15 billion.

Reddit declined to comment.

This devaluation, part of a broader trend that has hit a variety of growth stage startups across the globe in the past year, raises uncertainties about whether Reddit will maintain its initial intent to reportedly go public at a valuation around $15 billion.

Reddit, which has raised over $1 billion to date, counts Sequoia Capital and Andreessen Horowitz among its backers.

The current wave of valuation cutbacks sheds new light on the impact of deteriorating worldwide economic conditions on fledgling startups. Despite the diminished funding activities for startups globally over the past year, valuations of numerous larger startups have stayed constant.

WSJ : The Surprising New Source of Lithium for Batteries

The Surprising New Source of Lithium for Batteries
Rising demand for the EV battery metal fuels efforts to extract it in areas known for churning out oil and gas

Large troves of lithium will be needed to make the batteries for growing numbers of electric cars on the road. To find new supplies, companies and researchers are turning to an unexpected source: oil-and-gas reservoirs.

These oil-and-gas sites harbor not only hydrocarbons, but also brine that contains metals including sodium, calcium and some lithium. When drillers poke holes into oil-saturated formations, the brine flows back to the surface along with the molecules that end up as fuel, and companies have been prompt to discard the earthy marinade. But now that the EV battery material has become a prized commodity, lithium companies are developing technologies to remove it from this brine—and oil-and-gas companies are also taking a second look.

The process, known as direct lithium extraction, could mark a new era for the industry, researchers and analysts say.

Extraction can be labor-intensive and has yet to be commercialized at scale, but rising demand for lithium is increasing the focus on new methods. “We need to rethink and look at assets that will require modern processes to unlock,” says Robert Mintak, the chief executive of Vancouver-based Standard Lithium.

In Arkansas, now a minor producer of oil and gas, Standard Lithium is running a demonstration plant to extract lithium from oil-field brine. In Canada, the company E3 Lithium is working with an oil-and-gas company to produce the metal from a depleted oil-production field. And in the Permian basin of West Texas and New Mexico, driller Devon Energy is testing techniques with other companies to produce lithium from wastewater it pumps alongside oil and gas.

Demand for lithium batteries is projected to shoot up this decade, with U.S. demand expected to increase by nearly six times by 2030 to reach $52 billion, according to a Boston Consulting Group analysis. Billions of dollars in government subsidies are also bolstering companies’ bets on finding new ways to extract the metal.

Now, most of the world’s lithium supply comes from Australia, Chile and China. They provided about 92% of the 130,000 metric tons of lithium extracted globally last year, according to investment bank Raymond James. Producers crush rocks to extract lithium, or collect it by pumping shallow subterranean brines—which offer much higher concentrations of lithium than oil-field brines—and pouring it into gigantic evaporation ponds. This involves using large amounts of water, and environmental groups say the ponds can contaminate the air and soil.

Tapping the brine in North America’s oil fields with direct lithium extraction is less damaging, companies and researchers say. Because energy companies have drilled millions of oil-and-gas wells and collected subsurface data in the process, lithium prospectors know where to look.

Direct extraction could also speed up lithium production. Concentrating lithium in brine ponds can take up to 18 months and recovers about 50% of the lithium, according to an April report by Goldman Sachs. In direct extraction, brine is sent to a processing unit, where chemicals, a resin or a membrane, among other technologies, are used to capture the lithium ions. The water is then reinjected into the aquifer where it originated. The process takes at most a few days, and recoveries are up to 90%. Analysts say direct-extraction technologies could be applied to lithium-rich shallow brines as well.

The technology presents some challenges. Because each brine is a unique broth of chemicals, collecting lithium through direct extraction will require tailored approaches for each project, says Kevin Murphy, director of metals and mining research at S&P Global Commodity Insights. The lower the concentration of lithium in the brine, the higher the operating costs, as producers need to process more water. The presence of other elements can also interfere with the extraction process, Murphy says.

In Canada’s Alberta province, E3 Lithium aims to coax the metal from the Bashaw district in the depleted Leduc oil field, an area that it estimates contains about 16 million metric tons of lithium—about five times the estimated lithium in Canada’s rock deposits. The company has received Canadian federal grants totaling more than 30 million Canadian dollars (about $22 million). Imperial Oil, an oil producer majority-owned by Exxon Mobil that discovered oil at Leduc, has invested C$6.4 million in E3 Lithium, according to the companies. The partnership grants E3 Lithium access to Imperial Oil’s freehold lands and to its water and reservoir-management savvy.

“We operate like conventional oil,” says E3 Lithium Chief Executive Chris Doornbos.

E3 Lithium, which plans to begin operations at an extraction pilot plant in the third quarter of 2023, hopes to initially produce 20,000 metric tons of lithium hydroxide per year. It aims to pump brine from a depth of 1.5 miles, potentially using existing wells as well as new ones. The liquid will then likely be sent through pipelines to a facility where a sorbent material will capture the lithium and reject impurities to create a concentrated liquid, which then will be further refined into battery-grade material.

The Smackover formation of southern Arkansas is seen as one of the most promising regions in North America to test and deploy the technology. Exxon this year purchased drilling rights to a significant lithium prospect in the region, which it intends to develop, according to people familiar with the matter. The metal’s concentration there can be over 500 milligrams per liter, by some estimates, compared with around 75 milligrams per liter in the Leduc field.

Exxon declined to comment.

Chemical companies in the region have long produced brine from depleted oil fields to collect bromine, another valuable chemical in the saltwater. Now, lithium companies want to get a piece of the action.

Standard Lithium has been operating an industrial-scale plant in the Smackover area since 2020 with German chemical maker Lanxess. Brine, which Lanxess processes to produce bromine, flows into the facility at the rate of about 3,000 gallons a minute. Using the same brine, Standard Lithium expects to produce just under 6,000 metric tons of lithium annually from this plant and targets a production of 50,000 metric tons across the company’s projects in Arkansas, chief executive Mintak says.

Some companies hope the direct-extraction technology will also open the door to producing lithium in the Permian basin of New Mexico and West Texas, the most active oil field in the U.S. Drillers there inject millions of gallons of water down wells to frack shale rock. As this wastewater flows back up along with brine, producers have to dispose of it. The Permian basin produced around 18 million barrels of water a day in 2021, according to investment bank Goldman Sachs. Monetizing the lithium in the saltwater could allow the drillers to offset the cost of having to handle it, executives and analysts say.

Permian producer Devon Energy has invested millions of dollars through venture-capital firms into companies working on alternative energy projects and technologies, including direct lithium extraction, says Trey Lowe, the company’s chief technology officer. Because lithium is so diluted in Permian water, Devon is working with specialized companies to test techniques that concentrate the metal further, and is looking at ways to extract other valuable chemical elements, such as iodine.

Others are more skeptical. Amanda Brock, the chief executive of Aris Water Solutions, a water-management company in the Permian, says that it has looked into producing lithium from wastewater, but that it doesn’t see near-term potential given lithium prices and production costs.

“We would love to find a way to cost-effectively extract the lithium,” she says.

FT : Can Franklin buy its way to survival in the asset management thunderdome?

Can Franklin buy its way to survival in the asset management thunderdome?
We’re going to find out!

Asset management is a funny business. By funny, we mean an unending, bloody, Mad Max-style battle to avoid death irrelevance in an industry where even $1tn of assets is not what it once was (BTW; RIP Tina Turner)

The prevailing view is that to thrive, you either need massive, vast, humongous scale, or a commanding position in a hot niche (above all in private capital). Ideally you want both. Which is why there’s been a spasm of consolidation among asset managers in recent years, and asset management companies snapping up smaller boutique players in areas like private debt or ESG.

But no one has been more aggressive about expanding through serial acquisitions than Franklin Resources, the family-run investment company that not so long ago looked doomed to a lucrative but steady slide into irrelevance: too big to be acquired, too profitable to die, but too feeble to actually bother the industry big beasts.

It’s fair to say Franklin is rolling the dice to avoid that fate. Here’s the latest gambit of Jenny Johnson, the fourth Johnson to run a firm named as a homage to Benjamin Franklin:

Franklin Templeton has agreed to buy rival Putnam Investments for more than $1bn as the California-based asset manager continues its expansion into alternative products and retirement plans.

Franklin will pay Putnam’s owner, Great-West Lifeco, $925mn in cash and shares up front and up to $375mn more over the next seven years if revenue targets are reached. The deal gives the Canadian insurer a 6.2 per cent stake in Franklin.

The Putnam purchase is just the latest in a massive buying spree by Franklin which has boosted its overall assets under management from $717bn five years ago to almost $1.6tn once the most recent deal closes. The deals include:

  • Putnam Investments. 2023. Cost: $925mn. AUM acquired: $136bn.

  • Alcentra. 2022. Cost: $350mn. AUM acquired: $38bn.

  • Lexington Partners. 2021 Cost: $1.75bn. AUM acquired: $34bn.

  • O’Shaughnessy Asset Management. 2021. Terms not disclosed. AUM acquired: $6.4b.

  • Legg Mason. 2020. Cost: $6.5bn, AUM acquired: $803bn.

  • AdvisorEngine. 2020. Terms not disclosed. Advisors with $600bn of assets use its platform.

  • Benefit Street Partners. 2018. Cost: $683mn. AUM acquired: $25bn.

Alphaville suspects Franklin is the fastest-growing asset manager on the planet, and it’s all driven by acquisitions – net investor flows have actually been severely negative for almost a decade.


The core business throws off plenty of cash, so as long as the Johnson family remains committed to running it it makes sense to plough it back into the business, in the form of new projects and acquisitions.

The overall balance of stuff they’re buying also looks decent, even if most of it is hardly prime (Alcentra had been shopped around for ages, and Putnam was originally bought by Great-West for $3.4bn back in 2007). Analysts seem . . . okay with the Putnam deal, which will give Franklin more scale in retirement and insurance. Here’s Jefferies’ Dan Fannon:

Acquisition of Putnam Investments - BEN announced the purchase of Putnam Investments from Great-West Lifeco (TSX: GWO), a subsidiary of Power Corporation Canada (TSX: POW), for $825M in stock at close and an additional $100M in cash to be paid 180 days after closing. The transaction is expected to close in 4Q23. BEN will issue 33.3M shares of stock to fund the deal (based upon 5/30 share price). There is an additional contingent payment of up to $375M payable in cash for years 3-7 following closing that will be tied to growth of the strategic partnership. The maximum consideration payable will be hit if partnership revenue grows +30% of Putnam current annual revenue of approx. $500M. Great-West will remain a long term shareholder with 26.2M shares (4.9% ownership) being subject to a 5-year lock up and another 7.1M shares (1.3% ownership) subject to 180 day lock up. With a modest assumption of deal-related D&A, we estimate the purchase price to be a mid-single-digits EBITDA multiple.

Financial Impact - The deal is expected to add total run-rate adj operating income of approx. $150M after the first year of closing, consistent with a ~30% operating margin and inclusive of approx. $150M of expected cost synergies (25% realized in the first year). The transaction will increase AUM by approx. +$136B as of 4/30 with an average fee rate of 36bps (vs BEN’s F2Q23 fee rate of 39bps) and current annual net fee revenue of ~$500M. There is expected to be $55-75M of non-recurring integration charges. The deal is anticipated to be modestly accretive to adjusted EPS by the end of the first year after closing, any incremental share repurchases beyond those to offset employee stock grants will accelerate this timeline. The transaction will also provide a cash tax benefit with an expected net present value in excess of $100M.

Strategic Partnership with Power and Great-West - Power holds a controlling interest in both Great-West and IGM Financial with a collective AUM/AUA of ~$2.1T. The partnership will have an initial $25B asset allocation from Great West that will be funded within 12 months of closing at a mid teens effective fee rate (2/3rds in core/core plus strategies) with the potential to meaningfully grow over time. The transaction materially increases BEN’s defined contribution AUM by +$90B as well as expands BEN’s insurance AUM to approx. $150B. Power’s asset management, wealth management and insurance channels all represent incremental growth opportunities for BEN’s suite of products and capabilities.

But digesting all this is going to massively tricky. Integrating just Legg Mason would be a herculean task for any investment company (some wags often observe that Franklin still seems to be integrating Templeton, the UK investment group it bought in 1992).

It boggles the mind to think of how they’re going to get a handle on all the businesses, get them growing and nurturing the core Franklin franchise back to health. Investors seem sceptical that this is going to work out well. Here’s $BEN’s share price over the past decade:

However, we’re gluttons for acquisition sprees like this: inevitably, they yield some tasty stories of glorious triumph or (more usually) abject failure. So go Franklin!

>>> Europe : Brokers Upgrades & Downgrades - 2nd of June 2023 V2(+)

>>> Up
* Barrick Gold Raised to Buy at Veritas Investment Research Co
* GCP Infra Raised to Hold at Jefferies
* Macy's Raised to Buy at Gordon Haskett; PT $18
* Mitie Raised to Buy at Numis; PT 110 pence
* SoftBank ADRs Raised to Buy at Jefferies; PT $23.83

>>> Down
* Dollar General PT Cut to $166 from $214 at Truist Secs
* Dollar General Cut to Neutral at Piper Sandler; PT $178
* Honkarakenne Cut to Reduce at Inderes; PT 4 euros
* Majorel Cut to Hold at Berenberg; PT 30 euros
* Premier Miton Group PLC Cut to Add at Peel Hunt; PT 100 pence
* Reabold Cut to Hold at Panmure Gordon; PT 1 penny
* SentinelOne Cut to Neutral at DA Davidson; PT $13.50
* SentinelOne Cut to Hold at Canaccord; PT $14
* Victoria's Secret PT Cut to $21 from $35 at Barclays
* Warner Music Cut to Neutral at Atlantic Equities; PT $26 (+)
* Xcel Energy Cut to Peerperform at Wolfe

>>> Initiation
* ALDMS FP Rated New Buy at Euroland Corporate; PT 2 euros
* Atrato Onsite Energy Rated New Buy at Berenberg; PT 100 pence
* Linde Reinstated Buy at Equita; PT $425

>>> Call
* Citi Strategists Prefer Growth, Defensive Stocks Over Cyclicals (+)
* Danske Bank’s New Strategy Could Drive Re-Rating, Citi Says

>>> TradeGate Pre-Market Indications

DAX:
  • Adidas (ADS TH) +1.4%
    • Watch Adidas, Puma as Lululemon Rallies After Boosting Forecast
  • Zalando (ZAL TH) +1.2%
  • Fresenius SE (FRE TH) +0.9%
  • Porsche Automobil (PAH3 TH) +0.9%
  • Allianz (ALV TH) +0.9%
MDAX:
  • Puma (PUM TH) +2%
    • Watch Adidas, Puma as Lululemon Rallies After Boosting Forecast
  • Thyssenkrupp (TKA TH) +1.7%
  • ProSieben (PSM TH) +1.1%
  • Kion (KGX TH) +0.9%
  • Evonik (EVK TH) +0.9%
  • Aroundtown (AT1 TH) -0.6%
    • Azelis, SFS, NKT, New WH Smith, SSP to Join Stoxx 600
SDAX:
  • Ceconomy (CEC TH) +3.4%
    • Ceconomy Targets More Than €500m Adjusted Ebit by FY2025/26
  • MorphoSys (MOR TH) +1.7%
  • Varta (VAR1 TH) +1.6%
    • German Holdings Round-Up: Vitesco, Varta, TUI
  • DIC Asset (DIC TH) +1.5%
  • Deutsche PBB (PBB TH) +1.2%
  • DWS (DWS TH) +0.9%

>>> Stoxx 600 Pre-Market Indications

  • Puma (PUM TH) +1.6%
    • Watch Adidas, Puma as Lululemon Rallies After Boosting Forecast
  • Signify (G14 TH) +1.6%
  • Adidas (ADS TH) +1.3%
    • Watch Adidas, Puma as Lululemon Rallies After Boosting Forecast
  • Reckitt (3RB TH) +1.3%
  • BAT (BMT TH) +1.2%
  • Vodafone (VODI TH) +1.1%
  • Thyssenkrupp (TKA TH) +1.1%
  • Nibe (NJB TH) +1%
  • Evotec SE (EVT TH) +0.9%
    • EQS-News: Evotec receives grant from Open Philanthropy for discovery of RNA-targeting Henipavirus therapeutics
  • DNB Bank (D1NC TH) +0.9%
  • Aroundtown (AT1 TH) -0.5%
  • Fresenius Medical (FME TH) -0.6%