Budgets Archives

Markross121_ June 17, 2019 No Comments

Why AI is making tech giants like Google and Amazon even harder to beat

Taking on big tech.

The issue is becoming so popular it’s bringing together political adversaries like Donald Trump and Nancy Pelosi. Even Elizabeth Warren and Ted Cruz. Last week, the House Judiciary Committee announced it would be launching a bipartisan antitrust investigation into companies like Google, Facebook and Amazon.

Each of those tech giants has become enormously powerful, particularly as it relates to gathering personal data and influencing behavior. Increasingly, that control is being driven by AI & machine learning technologies—e.g., Google’s Assistant and YouTube algorithms; Facebook’s content flagging, filtering and moderation; and Amazon’s Alexa, purchasing recommendations and AWS tools.

It’s clear that AI is no longer a nascent prototype tech of the future. It’s being industrialized and commercialized at a massive scale, impacting billions of people at the behest of the world’s biggest companies.

“Essentially as AI/ML technology becomes more readily available, these huge firms are positioned to dominate and potentially be extremely hard to compete with—especially within certain core competencies,”. “It’s a look at what’s to come and how central AI/ML is going to be for essentially all internet users and enterprises alike.”

The tech giants have all made it clear that implementing AI/ML throughout their business and product offerings and by running open source frameworks—like TensorFlow and PyTorch—thathelp build an ecosystem of development around their platforms, creating a moat of sorts and attracting AI/ML talent.

Venture capital investors, however, are still making plenty of bets on smaller players trying to compete in the space, perhaps by carving out tangential or niche areas where the giants aren’t as firmly developed. According to PitchBook data, deal flow into US-based AI/ML startups has increased unabated for about a decade.

Premier Foods chairman to step down

Mr Kipling maker Premier Foods has revealed that its chairman is set to retire from his role this summer less than two years after taking on the job.

Keith Hamill, who was appointed chair of the firm in August 2017, has told the board of his decision to retire later this year at the group’s annual general meeting (AGM) in July.

The departure comes six months after the firm was rocked by the exit of its chief executive Gavin Darby, who stepped down in the wake of pressure from an activist investor.

A full recruitment process for a permanent chairman is underway, led by Richard Hodgson, who has been appointed senior independent director today.

Pam Powell has also been made chair of the remuneration committee this morning. Both have been non-executive directors for several years.

The board of the St Albans-based business has faced sharp criticism from activist fund Oasis Management in recent years over its falling share price, which had plunged from 46p to 30p between July 2018 and January 2019.

The share price has since recovered some its losses, climbing to 36p, but the group is still facing pressure as it continues its hunt for a new chief executive.

Flybe boss announces resignation, boosting male domination of aviation

The airline, which competes for passengers with Europe’s two budget giants, easyJet and Ryanair, is shrinking its fleet and network in an attempt to restore profitability.

On a day when Flybe cancelled dozens of flights due to strikes in Amsterdam, the chief executive of the troubled airline announced she would stand down on 15 July.

Christine Ourmieres-Widener’s departure is expected to coincide with Connect Airways – a consortium of Virgin Atlantic, Stobart Air and a US investor – taking control of the Exeter-based regional airline.

She has been chief executive of the Exeter-based airline for two years.

Ms Ourmieres-Widener told staff in an internal email: “Together, we have been able to secure the jobs of our loyal Flybe employees with the sale to Connect Airways and provide our customers and the UK with the vital transport and travel infrastructure they rely on, while preparing Flybe for a bright future under its new ownership.”

In the official public announcement shortly afterwards, Flybe director Jonathan Peachey praised “her tireless efforts to safeguard the future for the customers and communities who rely on Flybe, as well as the company’s employees, its pension-fund members and its creditors”.

In a challenging environment which has seen several airlines collapse, Ms Ourmieres-Widener presided over a spell of heavy losses.

Sports Illustrated becomes latest legacy magazine gobbled up by PE

It’s become a familiar story for the media industry. A legacy publication struggles because of declining print advertising revenue. Digital advertising revenue fails to offset the losses. A private investor emerges to try to save the business.

The latest example came with a twist Tuesday when Authentic Brands Group agreed to buy the intellectual property of Sports Illustrated from media conglomerate Meredith for $110 million. As part of the unique partnership agreement, Meredith will continue to operate SI’s editorial arm for at least the next two years under the same schedule, while maintaining editorial independence under the direction of publisher Danny Lee and editor-in-chief Chris Stone. The iconic sports publication’s future after that is unclear.

In the meantime, ABG will try to drive revenue by using SI’s brands, which include the company’s namesake, Sports Illustrated Kids, Sportsperson of the Year, SI TV and the company’s iconic swimsuit edition. The company also purchased the rights to more than 2 million images from SI’s photography archives, which it reportedly hopes to monetize.

“We are now perfectly positioned, with the support and resources of ABG, to thrive in many other spaces: events and conferences, licensing, gambling and gaming, IP development, especially in video and TV, to name a few, all while continuing to benefit from Meredith’s industry-leading track record in operating media companies,” Stone said in a press release.

Launched in 2010 with a $250 million investment from Leonard Green & Partners, Knight’s Bridge Capital and founder Jamie Salter, ABG specializes in managing retail, entertainment and sports brands. And its list of clientele is fairly diverse, with the brands of Shaquille O’Neal, Muhammad Ali and Marilyn Monroe among its holdings.

But it remains to be seen if ABG can recharge SI, which has struggled along with the rest of the magazine industry to adapt to the digital landscape. Once heralded for employing a range of legendary sports writers such as Frank Deford and Rick Reilly, the company has seen its market share dwindle from a range of digital online competitors, including the The Ringer, Barstool Sports and The Athletic, which was valued at around $200 million in its latest funding round.

Meredith acquired SI in early 2018 as part of its roughly $1.8 billion deal for Time Inc., with Koch Equity Development contributing $650 million to the purchase. In the ensuing 18 months, the business has unloaded the company’s assets in pursuit of paying down $1 billion worth of debt. It sold Time magazine to Salesforce founder Marc Benioff and wife Lynne Benioff for around $190 million and Fortune magazine to Thai entrepreneur Chatchaval Jiaravanon for $150 million. It’s also shopping FanSided, an SI-affiliated blog network that focuses on sports and pop culture, for a reported $30 million, along with ad platform business Viant.

On a broader scale, the shifting media landscape hasn’t kept investors from dabbling in the US publishing industry, though deal count dropped about 5% in 2018, per Pitchbook data. And 2019 is off to a fairly benign start, with just six completed PE-backed acquisitions to date. The most notable came in January when Penske Media, a New York-based digital media company backed by the Saudi Arabia Public Investment Fund, bought the remaining 49% stake it didn’t already own in Rolling Stone magazine.

Sensible Fiat Chrysler-Renault merger could be undone by politics

Frosty relations between France’s Macron and Italy’s Salvini could scupper talks over £29bn merger.

That there is an economic case for the proposed €32.6bn (£29bn) merger between Fiat Chrysler and Renault goes without saying. A link between the two companies to form the world’s third-biggest carmaker after Volkswagen and Toyota has always made a lot of sense. If the deal is scuppered, it won’t be due to a lack of business logic; it will be because politics gets in the way.

There are two big arguments in favour of the deal. The first is there is a global glut of automotive capacity that is already forcing companies to cut production, close plants and lay off workers.

The second is the age of the internal combustion engine is drawing to a close. Technological change has meant progress being made towards autonomous, self-driving cars, while the need to combat the climate emergency has forced car companies to think about a new generation of electric-powered vehicles.

These changes – the biggest in the industry for 125 years – leave companies in a bind: they either have to come up with the massive investment required to deliver the cars of the future against new rivals such as Google’s Waymo, or become museum pieces. The tie-up between the Italian-American Fiat Chrysler and the French-Japanese alliance of Renault, Nissan and Mitsubishi is primarily about generating economies of scale in order to save €5bn a year that would be available for R&D and product development.

This is a hefty sum to make from efficiency savings and there has to be a suspicion that the merged company would also look to take costs out of the business by getting rid of excess capacity. The French government, which has a 15% stake in Renault, is certainly alive to this possibility, which is why Bruno Le Maire, the finance minister, is seeking explicit guarantees there will be no job losses.

That’s one potential political complication. Another is that Matteo Salvini, Italy’s deputy prime minister and the leader of the far-right League, has expressed a desire to take a stake in the new company. This would be no problem were relations good between Paris and Rome, but they are not. There is absolutely no love lost between Salvini and the French president, Emmanuel Macron. That, coupled with the fact car companies tend to be national virility symbols, suggests the negotiations will not be trouble free.

Pret a Manger in talks to gobble up Eat to fuel expansion

Pret a Manger is in talks to buy its rival sandwich chain Eat as part of plans to expand its specialist vegetarian operation.

The London-based coffee shop firm is understood to be in line to buy the majority of Eat’s 94 stores to step up expansion of Veggie Pret.

The majority of Eat’s outlets are in London but it also has sites in key towns and cities around the UK, including Birmingham and Manchester, as well as airport stores in Bristol, Edinburgh and Heathrow.

Pret has four vegetarian outlets, three in London and one in Manchester. It is keen to expand the operation due to rising demand for plant-based meals, according to the London Evening Standard, which first reported the deal.

Pret said: “We never comment on rumour or speculation.”

Peter Backman, an independent restaurant consultant, said the deal suggested Pret believed it could tempt different customers with Veggie Pret enabling it to expand even in London where it already has a lot of outlets. He said buying Eat stores would give it room to experiment while reducing competition.

Pret is keen to capitalise on the growing vegan and vegetarian market which has prompted the likes of Waitrose to introduce specialist aisles and big chains such as Marks & Spencer, Tesco and Sainsbury’s to push vegan ranges.

According to Waitrose, a third of UK consumers say they have deliberately reduced the amount of meat they eat or removed it from their diet entirely. One in eight Britons are now vegetarian or vegan, and a further 21% say they are flexitarian – where a largely vegetable-based diet is supplemented occasionally with meat.

The possible Eat deal also flags potential consolidation in the takeaway food market where growth is slowing and competition fierce as supermarkets and coffee shops vie with the likes of Pret, Itsu, Wasabi and Leon.

The proposed deal comes after Eat was put up for sale by its private equity owners Horizon Capital in February. It made a £17.3m loss in the 12 months to June 2018 and a £18.9m loss the previous year.

Overall sales slipped more than 4% to £94.9m as cafes and restaurants faced heavy competition. A slowdown in spending has also led consumers to remain cautious amid Brexit uncertainty.

Deutsche Bank and Commerzbank abandon merger talks

Deutsche Bank and Commerzbank have abandoned merger talks, saying the deal would have been too risky.

Both banks said the deal would not have generated “sufficient benefits” to offset the costs of the deal.

The German banks only entered formal merger talks last month.

The German government had been supporting the tie-up, with reports saying Finance Minister Olaf Sholz wanted a national champion in the banking industry.

The government still owns a 15.5% stake in Commerzbank, acquired after the bank was bailed out following the financial crisis.

The deal was seen as a way of reviving the fortunes of both banks.

Deutsche Bank shares fell 1.5% to €7.48 each, while Commerzbank shares dropped 2.5% to €7.60.

Combined, the banks would have controlled one fifth of Germany’s High Street banking business with €1.8 trillion ($2tn; £1.6tn) of assets, such as loans and investments.

Cruise hits $19B valuation as corporate VCs rev up self-driving buzz

Autonomous car company Cruise announced Tuesday that it has secured a $1.15 billion equity investment from a group of investors including its parent company, GM, as well as T. Rowe Price, Honda and SoftBank’s Vision Fund. The deal brings Cruise’s valuation to $19 billion.

The Bay Area business plans to launch a commercial robotaxi service by the end of this year, and to hit that milestone, it is looking to double in size by hiring about 1,000 employees during the year, according to Reuters. “Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” Cruise CEO Dan Ammann said in a statement.

The company revealed that it has secured capital commitments of $7.25 billion in the past year. That includes $2.25 billion from SoftBank’s Vision Fund last year, with the fund planning to contribute $900 million in the first tranche and another $1.35 billion when Cruise’s autonomous vehicles are ready for commercial use. Honda also contributed, announcing a $2.75 billion investment in October. The Japanese automaker planned to make a direct equity investment of $750 million at the time and the remaining $2 billion coming over 12 years.

There was an explosion in corporate VC activity overall in 2018, and the trend continues this year. During 1Q, “autonomous driving companies raised $2.3 billion in deals including CVC investors with technology parent companies, such as Amazon and Intel Capital, as well as CVCs with automotive parent companies, such as Toyota AI Ventures and BMW i Ventures,” according to the latest PitchBook-NVCA Venture Monitor report. The autonomous-driving industry is expected to attract CVC investment in coming quarters due to high demand from automotive original equipment manufacturers for technology partnerships and additional investment opportunities in self-driving businesses.

Last year saw record-breaking traditional and corporate VC investments in companies developing autonomous cars in the US, as the total capital investment peaked at $3.8 billion across 68 deals. The second quarter of 2019 is well underway and autonomous businesses have secured $1.8 billion across 13 deals in the US.

Zipline is raising up to $120M to deliver medical supplies via drone

Drone-delivery startup Zipline is seeking to raise up to $120 million in Series D funding, PitchBook has learned. The funding could value the company at up to $1.34 billion, per a PitchBook estimate, up from the $620 million valuation it reached fourteen months ago.

Final terms and details of the financing have not been announced and are subject to change. When contacted, the company denied the report.

Founded in 2014, Zipline is a Bay Area-based business that operates small robotic airplanes to deliver blood and urgent medicines to clinics in Rwanda and Ghana, with plans to expand the deliveries to serve 1% of the global population by the end of this year.

Excluding the upcoming round, the company has brought in over $110 million in prior backing from a list of investors that includes GV, Andreessen Horowitz and Sequoia. Here’s a recap of Zipline’s previous funding rounds:

October 2012: $6.6 million Series A at a $20 million valuation
July 2014: $4.2 million Series A1 at a $35 million valuation
July 2015: $7.5 million Series A2 at a $75 million valuation
November 2016: $25 million Series B at a $200 million valuation
March 2018: $70 million Series C at a $620 million

Markross121_ May 9, 2019 No Comments

9 big things: Unicorn stocks are spiking after IPOs

Like so many of the VC-backed unicorns going public these days, vegan protein specialist Beyond Meat has never made a profit.

But the past two days were highly, insanely, ludicrously profitable for the company’s backers, as stock in Beyond Meat shot up nearly 200% from its IPO price and investors swarmed in pursuit of a piece of that sweet, sweet meatless meat. That sort of spike is rare. But it also aligns with the post-IPO performance of the rest of 2019’s unicorn herd.

So far this year, when unicorns go public, they tend to get more valuable—and that’s one of nine things you need to know from the past week:

1. To infinity for Beyond

The first hints that something might be brewing emerged earlier in the week, when Beyond Meat elevated its original IPO price range. The company priced at $25 per share, at the top of its revised range. And then everything went crazy: Stock in Beyond Meat (NASDAQ: BYND) opened Thursday trading at $46 per share, closed at $65.75, and then inched up even higher on Friday, finishing the week at $66.79. That equates to a market cap of $3.8 billion, compared to a $1.5 billion IPO valuation and a $1.35 billion figure with its last round of VC.
There’s probably nobody happier about it all than the folks at Kleiner Perkins: The firm owned a 15.9% pre-IPO stake in Beyond Meat, holding shares now worth well over $500 million.

Recent weeks, of course, have been peppered with unicorn IPOs. For the most part, once these companies have gone public, they’ve been out of mind; the main exception might be Lyft, whose slipping stock price has caused cries of concern about Uber’s eventual fate. But for the rest of the cohort, the move to the public markets has been accompanied with steadily rising stock prices.

IT software provider PagerDuty went public on April 11 with an IPO price of $24 per share, valuing the company at $1.8 billion. Its stock shot up nearly 60% on its first day of trading, closing at $38.25 per share, and has continued to tick up in the weeks since. Shares in the company closed Friday at $46.52 per piece, for a market cap of $3.4 billion, compared to $1.3 billion with its last VC round.

Social media unicorn Pinterest debuted a week later, pricing its IPO at $19 per share—above its expected range—to establish a $10 billion valuation, notably less than its prior $12.3 billion VC-backed valuation. But Pinterest stock closed its first day trading up at $24.40 per share, and it closed Friday at $28.36, for a market cap of about $15 billion.

The prime example of the trend might be Zoom, which joined Pinterest in going public on April 18. After pricing above its anticipated range at $36 per share, the company’s stock zoomed (sorry) to $62 by the end of its first day, representing a valuation increase from $9.2 billion to nearly $16 billion in mere hours. Zoom’s stock closed Friday at $79.18, valuing the workplace video company at almost $20 billion.

The performance of these stocks and the rest of the unicorns on their way to the public markets will of course be worth monitoring in the weeks, months and years to come. The early results, though, must have some of the longtime investors in those unicorns asking: What took you so long?

2. A new Vision

There could be an unusual new entrant in the sprint to the public markets: SoftBank’s Vision Fund. The Japanese investor might conduct an IPO for the $100 billion vehicle sometime this year, per The Wall Street Journal, among additional plans to raise an equally enormous follow-up fund; the hope of chief executive Masayoshi Son is reportedly to turn the vehicle into a tech-focused (and unprofitable) analog to Berkshire Hathaway. One of SoftBank’s major portfolio companies could also soon go public, as WeWork announced this week that it confidentially filed for an IPO back in December.

3. Making it easy

That’s the goal of UiPath, a startup focused on automating workplace functions that raised $568 million this week at a $7.1 billion valuation, a huge step-up from a $3 billion valuation just six months ago. Making cross-border payments easy is what helped London’s Checkout.com bring in an enormous Series A this week, collecting $230 million at a reported $2 billion valuation. Other kinds of payments are the domain of Divvy, which banked $200 million at an $800 million valuation this week: The company makes software designed to replace expense reports.

4. Fight club

The Professional Fighters League pinned down a $30 million Series C this week to fund its unique mixed martial arts competition, with Elysian Park Ventures and Swan Ventures among the backers. And while Sumo Logic doesn’t have anything to do with actual sumo wrestling, PitchBook learned that the data analytics company is raising new cash at what would be a unicorn valuation.

08:00 – 18:00

+ 44 800 044 8128

Head Office,