January 15, 2023: Another Welcome Week, After Brutal 2022

Last week, major indexes closed near session highs: Dow Jones was up 2%, S&P 500 rose 2.7%, and Nasdaq composite gained 4.8%. Canadian tech M&A will likely remain a theme, as we pointed out last week, as Nuvei entered a $1.7 billion deal to acquire US payments tech firm Paya. TMX Group has taken a 21% stake in data analytics company VettaFi for US$175 million as it looks to expand its information services unit. BMO Global Asset Management has teamed up with Georgian to launch a fund that allows Canadian accredited investors to invest in a US$1 billion fund Georgian is in the process of raising. Sophic Client Kraken Robotics expects to report $40 million in 2022 revenue, up 56% year-over-year. Sophic Client UGE International announced Q4 2022 project backlog (stages 3.1-5) increased over 13% quarter-over-quarter and now totals 260MW, surpassing the Company’s 2022 backlog goal of 250MW. Sophic Client LuckBox CEO Thomas Rosander provides corporate update, as the company went from a virtual ‘standing start’ in Q3 2022 to over $3 million in Global Betting Handle by the end of Q4, as over two million bets were accepted and placed on the platform. In the USA, Microsoft is reportedly in talks to pump in US$10 billion into OpenAI — the owner of ChatGPT — valuing the company at US$29 billion. Stripe’s internal valuation gets cut to US$63 billion, down 40% from its peak. Vista Equity Partners to acquire insurance software company Duck Creek for US$2.6 billion. Coinbase lays off a fifth of staff as crypto downturn continues. Tesla drops prices as much as 20% in US and Europe. China’s government takes stake in Alibaba’s domestic unit. China to allow Didi apps back online, in latest sign of regulatory thaw. the US needs to quadruple its charging infrastructure by 2025, and grow it more than eight times by 2030, given the influx of electric cars.

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) expects to report $40 million in 2022 revenue, up 56% year-over-year.

Sophic Capital client, Kraken Robotics Inc., announces a financial update for the year ended December 31, 2022. While audited results will not be released until April, non-audited preliminary results show that we have met the mid-point of our $38 million to $42 million revenue guidance for 2022. This represents more than 50% top line growth year over year. We also expect to be within the range of EBITDA guidance, previously announced at $5 to $7 million. http://bit.ly/3QKZRiX

Sophic Client UGE International (UGE-TSXV, UGEIF-OTC) announces Q4 2022 milestones and business updates, surpasses 2022 backlog goal.

Sophic Capital client, UGE International ltd., a leader in the commercial and community solar sector, announces milestones and business updates for the fourth quarter ending December 31, 2022. In the fourth quarter, UGE’s project backlog (stages 3.1-5) increased over 13% quarter-over-quarter and now totals 260MW, surpassing the Company’s 2022 backlog goal of 250MW by a healthy margin. The Company has continued to update its financial assumptions based on the Q3 2022 passage of the Inflation Reduction Act (IRA), with all evidence indicating a meaningful increase in the value of the Company’s backlog. To match the significant growth in business during the year, UGE added 36 new team members in 2022, increasing the size of the company by 37%. As announced in its November 28, 2022 press release, the Company closed its largest private placement of green bonds, and the Round VI Retail Bond is now available. https://yhoo.it/3CIK7HC

Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) CEO Thomas Rosander provides corporate update.

“We ended 2022 in a record-breaking month, with December’s results delivering on our 2022 promises and showing our 2023 potential. We always maintained we wouldn’t go to market until our product and platform were ready, and in August last year, thanks to a huge effort from the whole team, we reached that point; this enabled us to launch our player acquisition in earnest in October. We went from a virtual ‘standing start’ in Q3 2022 to over $3 million in Global Betting Handle by the end of Q4. Not only is this encouraging, and a promising glimpse of our future growth potential, we also did all this despite turbulent market conditions and headwinds – further proof that this industry, and our approach, are capable of growth regardless of macroeconomic volatility, recession fears, global crises, and other negative headlines. In the last three months, over two million bets were accepted and placed on the Luckbox platform and our casino portfolio grew to over 900 games. We also partnered with some of the biggest talent across the esports ecosystem, including Thunder Awaken; they made history for the South America region in DOTA 2’s most prolific tournament ‘The International’ and took our brand to Singapore where more than 1.7 million people watched the games. Regarding our 2022 Key Performance Indicators (“KPIs”), our monthly revenue has grown 120% and our Total Player Deposits grew by a huge 420% since we first shared them in August. Since then, we have also disclosed even more KPIs with you such as our Global Betting Handle, First Time Depositors (“FTDs”) and Real Money Players (“RMPs). Moving forward we will continue to report these important operating statistics to help measure our progress.” https://tinyurl.com/475rsntn

Nuvei enters $1.7 billion deal to acquire US payments tech firm Paya.

Montréal-based FinTech startup Nuvei has entered a deal to acquire Paya Holdings, an American payments platform provider, for $1.7 billion (US$1.3 billion). On Monday, Nuvei announced its intent to purchase Paya for US$9.75 per share as the former looks to expand in the US and enter new verticals. Nuvei said it expects to finance the acquisition with a combination of cash on hand, and an existing as well as a new US$600 million credit facility. Nuvei went public on the Toronto Stock Exchange in September 2020 with a US$700 million IPO. As did most of Canada’s largest tech firms, Nuvei has seen its share price decline over the past year, by about 55 percent, as the sector contracts amid the downturn. Nuvei is trading at US$35 at press time; in contrast, its stock was priced at around US$84 in January 2022. Paya, which trades on the Nasdaq, saw its share price climb by about 24 percent following the news of Nuvei’s intent to acquire the company. http://bit.ly/3CKRONk

Descartes Systems Group acquires shipment management SaaS provider Supply Vision for $16 million.

Waterloo-based SaaS company Descartes Systems Group has completed its acquisition of Supply Vision in a deal valued at $16 million (US$12 million). Descartes announced its purchase of Supply Vision last week as the former looks to expand its offerings for logistics service providers (LSPs) through an active acquisition strategy. Descartes’ stock price has climbed 2.8 percent in the past year, currently trading at $94. Descartes also completed a string of acquisitions in 2022, including NetCHB (US$38.7 million), Foxtrot (US$4.2 million), and XPS Technologies (US$61.1 million). Going against the trend of declining valuation among Canadian tech companies, Descartes’ stock price has climbed 2.8 percent in the past year, currently trading at $94 at the time of publication. It was trading at $91 in January 2022. http://bit.ly/3QCAhww

Radical Ventures raising new US$550 million fund as AI sector heats up.

Toronto-based Radical Ventures has launched another fund dedicated to AI companies. The early-stage, AI-focused VC firm is working to raise a new US$550 million fund. Radical partner Aaron Brindle told BetaKit that a “significant majority” of the fund is already closed, but did not share a specific dollar amount. VC interest in the sector has also picked up: ChatGPT creator OpenAI is reportedly in talks to raise funds at a US$29 billion valuation. Founded in 2017 and led by Jacobs—co-founder of AI research hub Vector Institute and now-TD Bank-owned startup Layer 6—Radical invests primarily in companies that leverage AI. The new fund marks Radical’s fourth to date, following a small seed fund, a US$325 million first institutional fund, a US$100 million Opportunity Fund for follow-on investments. In 2021, nearly US$70 billion in VC funding went to AI startups globally, and in recent years, AI startup financing has accounted for as much as 10 percent of all global venture dollars invested. http://bit.ly/3X8IUBg

BMO, Georgian partner on access fund as venture firm secures nearly half of second alignment fund.

BMO Global Asset Management has teamed up with Georgian to launch a fund that allows Canadian accredited investors to invest in a US$1 billion fund Georgian is in the process of raising. The BMO Georgian Alignment II Access Fund LP was announced Friday, with the financial organization stating that it gives investors exposure to Georgian’s “curated set of privately-held North American software companies.” SEC filings show that Georgian has secured US$466 million of its target to date. Georgian closed its first Alignment fund in early 2021 at US$1.02 billion. According to BMO’s website about the Access Fund, Georgian aims to invest in between six to eight companies “exclusively curated” from the earlier stage funds that the venture firm manages. This follows the doubling-down trend of Georgian’s first Alignment fund, which was meant to invest in four of its existing portfolio companies. https://tinyurl.com/yyu54p95

Exchange operator TMX invests US$175 million in data analytics firm VettaFi.

TMX Group Ltd, owner of the Toronto Stock Exchange, said on Monday it had taken a 21% stake in U.S. data analytics company VettaFi Holdings LLC for US$175 million as it looks to expand its information services unit. As part of the deal with New York City-based VettaFi, which provides a database of exchange-traded funds (ETFs), analytics and indices, the exchange operator’s analytics business, TMX Datalinx, will offer index and ETF services. Exchange operators globally have been trying to diversify their business models and bring in additional sources of revenue which are less sensitive to rapid shifts in market conditions. In 2020, New York Stock Exchange-operator Intercontinental Exchange Inc agreed to buy mortgage software firm Ellie Mae. The same year, Nasdaq Inc also acquired fraud detection firm Verafin. https://tinyurl.com/567r8njb

Nanoprecise closes $13.4 million Series B round for its manufacturing monitoring software.

Edmonton-based AI startup Nanoprecise Sci Corp has secured $13.4 million (US$10 million) in Series B funding as it looks to bolster its solutions for manufacturing processes. Nanoprecise’s round was led by Export Development Canada (EDC), with participation from several players in the manufacturing and industrial technology space, including Honeywell Ventures, NSK Ltd., and EC Mergers & Acquisitions. Nanoprecise noted all of the organizations that contributed in the funding are new investors. Nanoprecise has previously secured about $16.4 million in total funding. That includes $1.75 million in seed funding, a $175,000 grant from the Government of Alberta in 2018, and a $750,000 pre-seed round in 2018. In 2021, Nanoprecise announced it secured a round of funding led by Sensata Technologies, which Crunchbase reported the round raised $4 million and was classified as Series A. http://bit.ly/3GEd2O6

ReelData raises $10.6 million using AI to monitor fish populations.

Halifax-based AI startup ReelData, which develops software for monitoring and managing land-based fish farms, has raised $10.6 million (US$8 million) in a Series A funding round. The funding was led by Buoyant Ventures, a Chicago-based venture capital firm that invests in digital solutions to climate risk. It also saw participation from other investors that focus on agriculture, which are S2G Ventures and The Nest Family Office. Crunchbase data denotes that ReelData has raised $10.8 million in funding to date. This includes S2G’s initial $2.5 million seed investment into ReelData in 2021, made through the VC firm’s Ocean and Seafood Fund. In that same year, ReelData also took part in Techstars’ Montréal AI accelerator. http://bit.ly/3Xr88uz

Microsoft is reportedly in talks to pump in US$10 billion into OpenAI — the owner of ChatGPT — valuing the company at US$29 billion.

Tech giant Microsoft is in talks to invest about US$10 billion into OpenAI, the owner of the popular ChatGPT chatbot. The investment would value OpenAI at about US$29 billion. It’s now valued at about US$20 billion. The deal was targeted to close by the end of 2022, but it isn’t clear if it has been finalized yet. The Wall Street Journal reported last Thursday that OpenAI was in talks to sell existing shares of the company in a tender offer that would value the firm at US$29 billion. Venture capital firms including Thrive Capital and Founders Funds were in talks to invest at least US$300 million in the share sales, according to the Journal. As part of the current deal Microsoft is negotiating, it’s proposing to get 75% of OpenAI’s profits until it gets it recovers its investment, after which Microsoft’s aims to get 49% stake in the company, per the media outlet. Other investors are expected to own another 49% of the company, while OpenAI’s nonprofit parent would hold the remaining stake. This would not be the first time Microsoft’s looking at an investment into OpenAI. The tech titan has already invested US$1 billion into OpenAI in 2019. http://bit.ly/3CNrq5r

Stripe’s internal valuation gets cut to US$63 billion.

Stripe, a richly valued payments startup, has cut its internal valuation yet again, according to sources familiar with the manner. It is now valued, internally, at US$63 billion. The cut puts Stripe’s internal per-share price at US$24.71, down 40% since peaking. The 11% cut comes after an internal valuation cut that occurred six months ago, which valued the company at US$74 billion. The valuation change was not triggered by a new funding round, but instead a new 409A price change; 409A valuations are set by third parties, which means that they are not tied to what a venture backer or other investor thinks. It’s an IRS-regulated process that measures the value of common stock against public market comps to help set a fair market value. Companies are supposed to do a 409A at least every 12 months or when a material event might lower its valuation. In November 2022, the fintech laid off 14% of its workforce, impacting around 1,120 of the fintech giant’s 8,000 workers. Back in August, TechCrunch learned that Stripe laid off employees behind TaxJar, a tax compliance startup it acquired last year. http://bit.ly/3CMtXwM

Vista Equity Partners to acquire insurance software company Duck Creek for US$2.6 billion.

Private equity giant Vista Equity Partners has announced plans to take Duck Creek Technologies private in a US$2.6 billion deal. Boston-based Duck Creek, a SaaS-based software provider for the property and casualty (P&C) insurance sector, went public back in 2020, initially hitting a market cap of around US$5 billion. After peaking at around US$7 billion in early 2021, Duck Creek’s fortunes have fallen somewhat, with its valuation plummeting to below $2 billion over the past year, with a closing price of around US$13 per share as of Friday. Vista’s US$19 per-share offer represents a 46% premium on Duck Creek’s most recent market closing price, and a US64% premium on its VWAP over the previous 30 days, equating to US$2.6 billion, which Vista said it will pay in an all-cash transaction. It’s worth noting that Vista has been at the center of some of the biggest enterprise deals over the past year, including Citrix, which Vista partnered with Evergreen/Elliott on to acquire for US$16.5 billion. Vista also snapped up automated tax compliance company Avalara for US$8.4 billion, while it sold disaster recovery company Datto for US$6.2 billion. http://bit.ly/3XaPqaU

Google, Nvidia express concerns to FTC about Microsoft’s Activision deal.

Alphabet Inc.’s Google and Nvidia Corp. have expressed concerns to the Federal Trade Commission about Microsoft Corp.’s acquisition of Activision Blizzard Inc., adding fuel to the government’s case against the US$69 billion deal, according to people familiar with the matter. The companies joined Sony Group Corp. in raising issues with the transaction, which the FTC sued to block in December. The commission has argued that the deal would hinder competition in the video-game industry and has scheduled an in-house trial for August. Either company could be called to testify as part of the FTC trial. http://bit.ly/3ZtapHz

Ubisoft shares plunge after forecast cut.

Shares in Ubisoft fell by as much as a fifth on Thursday after the French games company slashed its forecasts and said that sales over the crucial holiday season had been “markedly and surprisingly slower than expected”. Paris-based Ubisoft, best known for its Assassin’s Creed and Just Dance franchises, expects net bookings to drop 10% in the financial year that ends in March from 12 months earlier. The group had previously forecast a 10 per cent rise. Its shares opened as much as 20% lower in early trading in Paris on Thursday, the first day of trading since the statement was published after markets closed, touching their lowest level for almost seven years. After paring losses later in the day, Ubisoft’s stock closed 14% lower at €20.52. Ubisoft sliced more than €100 milliom from its third-quarter net bookings target, now set at about €725 million. Operating losses in the current financial year will be around €500 million, compared with its previous expectation of profits of €400 million. Hinting at job cuts, the company said it planned to reduce operating costs by €200 million over the next two years. http://bit.ly/3H4xfho

Coinbase lays off a fifth of staff as crypto downturn continues.

Cryptocurrency exchange Coinbase is the latest tech company to announce mass layoffs. In an email to staff on Tuesday, CEO Brain Armstrong said the company would be letting 950 employees go as it attempts to “weather downturns in the crypto market.” This is Coinbase’s second major round of job cuts after laying off 18 percent of its staff (1,100 employees) last June. It cut a further 60 jobs in November. Coinbase’s layoffs come amidst a broader downturn in the crypto market. The value of Bitcoin has plummeted in recent months, and is down around 58 percent over the past year according to CNBC. Coinbase’s shares have trended in a similar direction since going public in April 2021. Its stock is trading at under US$40, down from a high of over US$340 in 2021. http://bit.ly/3Xra2eL

Tesla drops prices as much as 20% in US and Europe.

Tesla drastically lowered the price of its electric vehicles in the U.S. and Europe in a bid to beef up sales after missing its vehicle delivery targets in the fourth quarter. The price of a long-range Model Y, one of its larger cars, dropped nearly 20% to $52,990 on Thursday evening, according to the company’s website. It also lowered the prices on the Model 3, Model S and Model X. The price change means the long-range Model Y is eligible for a $7,500 federal tax incentive that it was previously excluded from because of its price, though the performance Model Y is still too expensive to qualify for the tax incentive. Last week, the company lowered prices in China reportedly provoking protests from customers who bought their Tesla before prices dropped as much as 14%. https://tinyurl.com/yvunkdxe

China’s government takes stake in Alibaba’s domestic unit.

China’s government has recently taken a stake in one of Alibaba’s domestic units, according to the country’s corporate records. The move resembles Beijing’s previous acquisitions of stakes in other major Chinese internet companies including TikTok owner ByteDance, social media firm Weibo and video app Kuaishou. Those stakes are part of Beijing’s efforts to tighten its control over the country’s online content platforms. Alibaba, China’s biggest e-commerce company, also operates a major online video site called Youku. According to Chinese corporate record website QiChaCha, an investment firm controlled by the Cyberspace Administration of China, the country’s top internet regulator, acquired a 1% stake in an Alibaba entity called Guangzhou Lujiao Information Technology on Jan. 10. The Alibaba unit also appointed a new board director whose name is the same as an official at the internet regulator. The Financial Times first reported the Chinese government’s investment in the Alibaba unit. The FT also reported that the government is also planning to make a similar investment in Tencent. The investment in the Alibaba unit likely is the latest example of an arrangement known as “special management shares,” where the Chinese government takes a 1% stake in an internet company’s domestic unit and gains a board seat. The Information first reported in 2021 that the Chinese internet regulator had made such arrangements with ByteDance and Weibo. The China-based ByteDance unit added a new board director, Wu Shugang, who was appointed by the government, The Information reported. According to the FT, Wu, the government-appointed board director for the ByteDance unit, has a say over the unit’s business strategy and investment plans. In the case of Weibo, the government has veto rights over certain matters related to content decision and future financing, The Information reported in 2021. https://tinyurl.com/4bnnhxku

Apple developing in-house Bluetooth and Wi-Fi chip; could switch to custom 5G modem by 2024.

Apple has been working on developing its own modem for several years, looking to reduce its reliance on Qualcomm. A new report from Bloomberg says that this switchover could begin as soon as 2024, while also adding that Apple is developing its own WiFi and Bluetooth chip as well. This would allow it to also ditch Broadcom in addition to Qualcomm. Apple and Qualcomm were engaged in a nasty legal battle over licensing, patent, and royalty disagreements related to modem chips. While the lawsuits were settled at the last minute, Apple has made it clear that its focus is on developing its own modem technology for future iPhone and iPad devices. To boost these efforts, Apple completed an acquisition of Intel’s modem business in 2019. This gave the company access to engineering talent and a wide collection of standard-essential patents related to cellular technology. Apple will still have to license some patents from Qualcomm and Ericsson, though, even when it switches to in-house modems. http://bit.ly/3iAdRzq

China to allow Didi apps back online, in latest sign of regulatory thaw.

Chinese authorities are set to allow Didi Global’s ride-hailing and other apps back on domestic app stores as soon as next week, five sources told Reuters, in yet another signal that their two-year regulatory crackdown on the technology sector is ending. Didi has been awaiting authorities’ approval to resume new user registrations and downloads of its 25 banned apps in China as a key step to resume normal business since its regulatory troubles started in mid-2021. A lifting of the ban on Didi apps would come as Chinese policymakers seek to restore private sector confidence and count on the technology industry to help spur economic activity that has been ravaged by the COVID-19 pandemic. https://tinyurl.com/3kkzjdhh

Buy with Prime, which brings Prime to third-party sites, officially launches in US on Jan. 31.

Amazon announced this morning it’s expanding its Buy with Prime service to U.S.-based merchants by the end of the month. The service, which allows third-party merchants to offer Prime benefits like free shipping and returns on their own apps, was initially only available to those merchants who were already using Fulfillment by Amazon (FBA) to handle their shipping and logistics. The service was first introduced in spring 2022, with FBA merchants and other select merchants on an invite-only basis. With Buy with Prime, consumers get fast, free delivery, similar to Amazon.com’s Prime service, plus seamless checkout and easier returns, allowing merchants to establish their own direct relationships with customers, Amazon says. Since its April debut, Amazon claims the offering has increased shopper conversion by an average of 25%. https://tinyurl.com/2zrwxw6s

SEC sues Genesis, Gemini over earn accounts.

The Securities and Exchange Commission charged crypto exchange Gemini and crypto lender Genesis with offering and selling unregistered securities through the Gemini Earn program, the agency announced Thursday. The Earn product allowed Gemini customers to deposit crypto which was lent to Genesis, which in turn lent the assets out to trading firms to return up to 8% for Gemini customers. More than 340,000 Earn customers have been unable to withdraw roughly US$900 million since Genesis halted withdrawals on Nov. 16. The complaint alleged Genesis loaned $575 million, which included assets from Earn investors, to its parent company Digital Currency Group, which it used the funds to make investments and buy back company stock. Gemini CEO Tyler Winklevoss tweeted that it was “disappointing” that the SEC filed the lawsuit and that Gemini has been in contact with the SEC about Earn for more than 17 months. https://tinyurl.com/28s9k76f

8x more electric vehicle charging stations needed by 2030 in the US.

The US doesn’t have nearly enough plugs to accommodate the coming influx of electric cars. Charging infrastructure has been growing quickly over the past several years, but not fast enough now that the country has reached what some called a crucial tipping point in EV adoption, with 5% of new car sales electric last year. Specifically, the US needs to quadruple its charging infrastructure by 2025, and grow it more than eight times by 2030. There are currently about 126,500 Level 2 charging stations (which take about five hours to fully recharge an EV) and 20,431 Level 3 (about 15-20 minutes to charge an EV to 80% battery) charging stations in the US. There are also about 16,822 Tesla Superchargers and Tesla destination chargers. Assuming there could be as many as 7.8 million EVs on the roads in 2025, that will require 700,000 Level 2 and 70,000 Level 3 chargers deployed. Looking to 2030, with as many as 28.3 million EVs expected on US roads, 2.13 million Level 2 and 172,000 Level 3 public chargers will be required, in addition to the home charging setups drivers might install. The charging industry has been getting tons of interest as a result, and could be a more than US$207.5 billion market by 2030. The Biden Administration is targeting a national network of 500,000 public charging stations by 2030 and has slated US$7.5 billion toward charging build-out. http://bit.ly/3CNsk1P

US solar manufacturing gets boost with US$2.5 billion Georgia deal.

The Inflation Reduction Act has clearly kickstarted investment in U.S. clean energy manufacturing. Last year, automakers and battery manufacturers announced that they’d spend tens of billions of dollars to ramp up EV production in the U.S. Now it’s solar’s turn. Korean solar manufacturer Hanwha Qcells announced that it’ll spend US$2.5 billion to build a new plant in Georgia and expand an existing one. The new plant will crank out 3.3 gigawatts of solar panels annually. That’s enough to supply nearly a fifth of current U.S. demand. Expansion at the other plant will add another 2 gigawatts of capacity. When completed, Qcells’ Georgia facilities will employ 2,500 people and will be capable of making 8.4 gigawatts of solar panels, cementing the Peach State’s status as a leader in solar manufacturing. Qcells’ new campus won’t just be a final assembly plant, either. It will handle just about everything, from turning polysilicon into ingots, slicing ingots into wafters, turning wafers into cells and packing cells into panels. It’s a level of vertical integration that is seldom seen in the U.S. http://bit.ly/3QEwNts