February 27, 2022: Macro Volatility; a New Canadian Unicorn

Public markets remain extremely volatile, as demonstrated by the 7%+ intra-day swing in the NASDAQ Composite on Thursday, February 24th. Against, this backdrop, Waterloo based eSentire will be valued at US$1.1 billion following $325 million deal. In addition, we counted ~$100 million of additional VC backed deals in Canada last week. Traction Guest, which was one of the first four companies to receive an investment from Salesforce’s $100 million Canadian-focused fund, will be acquired by Salesforce. Terms were not disclosed. Twitter Inc. said Wednesday it is offering US$1 billion of high-yield 8-year bonds in a private placement. Carvana, the online used car marketplace, has agreed to buy Kar Global’s Adesa U.S. auction subsidiary for $2.2 billion in cash. SoFi Technologies Inc. is buying banking-software maker Technisys SA for about US$1.1 billion, the latest in a string of deals designed to transform the lender into a one-stop financial shop. The SEC is investigating whether Tesla stock trades made by Elon Musk and his brother violated insider-trading rules, WSJ report says. Apple reportedly completed production tests for its AR/VR headset. Meta Platforms has broken up a group of more than 300 employees working on operating systems for its virtual and augmented reality devices, according to three people with knowledge of the situation. Meta Platforms is testing ad-revenue sharing on Facebook Reels with all creators in the U.S., Canada and Mexico. It will expand the test to more countries in the coming weeks. Alibaba reported its slowest-ever revenue growth for the quarter through December, as its core commerce business in China grew only 7% amid an economic slowdown.

eSentire to be valued at US$1.1 billion following $325 million deal.

A new US$325 million financing deal close to closing will soon give cybersecurity company eSentire a US$1.1 billion valuation. The Waterloo-based tech company officially announced. According to a spokesperson for eSentire, the deal is in the final stages of legal and is expected to close the first week of March. The investment comes via a major purchase of eSentire shares by Georgian and Caisse de dépot et placement du Québec (CDPQ). The deal was first reported by Bloomberg and The Globe and Mail, which stated that the pair of investors bought the majority of the $414 million stake from Warburg Pincus, a long-time investor in eSentire. https://bit.ly/3hhewBK

Avanti Software secures $25 million to fully embrace cloud-only payroll and HR tech.

Calgary-based payroll and human resources (HR) company Avanti Software has raised $25 million in growth funding to embrace the cloud. Avanti’s raise comes about five and a half years after current co-CEO Amin Lalani acquired the established Alberta tech company from its retiring founders. Since then, Lalani and co-CEO David Owen Cord have charted a “new strategic course” for Avanti that involves transforming the 42-year-old company into a cloud-only business. https://bit.ly/3snDvcV

RouteThis secures $25 million to take the headache out of home internet.

Everyone has experienced it – you’re in the middle of a Zoom meeting and all of a sudden you start having internet connectivity issues. Now it’s up to you to figure out what is wrong with your internet before your next meeting. If turning the modem on and off doesn’t work that means it’s time to get in touch with your internet provider – which can be an arduous task. One Kitchener-based startup is on a mission to take the headache out of home internet. RouteThis touts itself as the leading provider of in-home WiFi connectivity support solutions for internet service providers (ISPs) and smart home brands. To help make it easier for ISPs and people at home to solve WiFi issues, RouteThis has secured $25 million in an all-equity Series A round. https://bit.ly/3Hnf03H

Aviron scores $23.6 million Series A round to make rowing fun.

Aviron, which has rode the same pandemic-driven rise in demand for at-home fitness solutions as Peloton, has secured $23.6 million in Series A financing to fuel the growth of its connected rowing product. The Toronto-based fitness tech startup combines gaming with high-intensity interval training, describing its offering as a “gaming-led, smart rowing machine.” Aviron’s rowing machine is built on a gaming engine designed by former Unity developers. https://bit.ly/3Ih0wDL

Operto Raises $15.3 million to help hosts manage short-term rentals, hotels.

Vancouver-based hospitality software startup Operto Guest Technologies has secured $15.3 million in Series A funding to fuel its geographic expansion plans and shift into serving hotels. Founded in 2016, Operto provides property automation and IoT operating system software for the hotel, multi-family, vacation and short-term rental industries designed to manage the post-booking guest experience. To date, Operto has focused most of its efforts on serving smaller players in North America’s short-term rental market, like Airbnb hosts. But amid a rebound in travel and a rise in demand for tech from players in the accommodation space, the startup sees a chance to bring its guest experience automation tech to hotels and expand into Europe, Australia, and Asia. https://bit.ly/3M0aEmG

Busbud closes $14 million, acquires Recorrido to fuel Latin American expansion.

Montréal-based travel tech startup Busbud sees room to grow south of the equator. The Canadian firm has secured $14 million in equity funding led by Wind Ventures, the corporate venture capital arm of Chilean energy firm COPEC, and acquired Chile-based intercity bus marketplace Recorrido to support its Latin American expansion plans. Like most travel companies, Busbud’s bus travel booking business was hit hard by the pandemic, forcing the startup to adapt its approach. After experiencing some recent growth following a rebound in travel demand and its expansion beyond just selling bus tickets, Busbud sees reason for optimism and space to grow its footprint in Central and South America. https://bit.ly/3JXKcIi

Salesforce to acquire Traction on Demand.

Traction on Demand announced on February 25 that it has signed a definitive agreement to be acquired by Salesforce. “We anticipate the transaction will close in the first quarter of Salesforce’s fiscal year 2023, ending April 30, 2022, subject to customary closing conditions,” a Salesforce spokesperson told BetaKit. Terms of the deal were not disclosed. With more than 14 years of experience building solutions on the Salesforce Platform, Traction on Demand is a dedicated Salesforce consulting and application development firm delivering cross-platform strategies and solutions. In addition to headquarters in Canada, Traction on Demand has a presence in Australia, New Zealand, India, and the United States. Founded in 2007, Traction on Demand employs over 1,200 people. The startup announced its acquisition of fellow Salesforce consulting partner New Zealand-based Trineo in September 2021. In 2018, Traction Guest became one of the first four companies to receive an investment from Salesforce’s $100 million Canadian-focused fund. Last year, Salesforce also purchased Toronto SaaS startup LevelJump.io. https://bit.ly/3plAl7j

Klarna to open offices in Toronto, Vancouver, Québec as company expands service to Canada.

Payments and shopping service platform Klarna is entering the Canadian market with plans to establish a physical presence across the country. The Sweden-founded company has opened a product development and tech hub in Toronto, marking its first in North America. Klarna plans to bolster the tech hub by hiring more than 500 engineers by 2025, and opening offices in Vancouver and Québec. Klarna’s other offices are located in Stockholm, London, New York, Berlin, and more. Launched in 2005, Klarna’s platform allows users to pay for products across four interest-free installments, bi-weekly from the time of purchase. Its “Pay in 4” service can be used online, in-store, and through the Klarna app while checking out with Klarna’s integrated retail partners. https://bit.ly/3JSD9AP

Twitter to offer US$1 billion in high-yield 8-year bonds.

Twitter Inc. said Wednesday it is offering US$1 billion of high-yield 8-year bonds in a private placement. Proceeds will be used for general corporate purposes, including capex, investments, to repay debt, to buy back its stock, working capital and for potential acquisitions. https://bit.ly/3M4y8XG

Hong Kong considers easing listing rules for big tech firms.

Hong Kong is considering easing listing requirements to allow more large advanced technology companies to go public in the city’s stock exchange, Bloomberg reported. The discussions about possible changes come as Hong Kong is struggling to maintain its status as one of the top global ventures for initial public offerings. Hong Kong IPOs last year raised US$43 billion, behind New York and Shanghai, according to Bloomberg. Hong Kong’s financial secretary Paul Chan said in a speech Wednesday that the stock exchange is mulling potential changes to meet the fundraising needs of “large-scale advanced technology enterprises,” Bloomberg said. As China has tightened its restrictions on U.S. listings of Chinese companies, many Chinese tech companies looking to go public outside mainland China are turning to Hong Kong. But Hong Kong’s stringent listing rules require that IPO candidates meet its standards based on financial performances and other criteria. https://bit.ly/3vo1udW

Cryptocurrency fundraising is a criminal offence in China under new legal interpretation from Supreme Court.

Cryptocurrency fundraising is now a criminal offence in China, the country’s top court said in a new interpretation of national law. Penalties for such fundraising depend in part on the value of the amount raised, according to the interpretation by the Supreme People’s Court published on Thursday. Fundraising that exceeds 100,000 yuan (US$15,800) is categorised as a “large amount”. If it involves an “extremely huge” amount of 50 million yuan, a loss of at least 25 million yuan or involves 5,000 people, which is deemed “extremely serious”, it could result in more than 10 years in prison. Fundraising by any other name is not off the hook, either. Online lending and financial leases considered to be fundraising could be charged with the illegal absorption of public savings, the court said. https://bit.ly/3pjotCM

Carvana acquires Adesa US auction business for US$2.2 billion to jump-start used car sales.

Carvana, the online used car marketplace, has agreed to buy Kar Global’s Adesa U.S. auction subsidiary for $2.2 billion in cash, an acquisition aimed at adding another revenue stream as well as a network of physical sites that could help bolster operations. The acquisition announcement, which was made alongside a fourth-quarter earnings report, marks a transition for the pure online business into a more traditional physical car dealer. https://tcrn.ch/3hjauZq

SoFi to buy banking-infrastructure firm Technisys for about US$1.1 billion.

SoFi Technologies Inc. is buying banking-software maker Technisys SA for about US$1.1 billion, the latest in a string of deals designed to transform the lender into a one-stop financial shop. The all-stock deal is equivalent to roughly 10% of SoFi’s market value. The deal gives SoFi control of its own core-banking platform, the back-end technology that banks use to power mobile-banking apps, open accounts and keep track of customer deposits. https://on.wsj.com/3Hm0hpR

The SEC is investigating whether Tesla stock trades made by Elon Musk and his brother violated insider-trading rules, WSJ report says.

Elon Musk’s rivalry with the Securities and Exchange Commission is only likely to grow after a report from The Wall Street Journal revealed that the agency is investigating stock sales made by Musk and his brother. The SEC is looking into whether Tesla stock sales made by Musk and his brother, Kimbal Musk, violated insider trading rules, according to the report, citing people familiar with the matter. The investigation started last year after Kimbal unloaded US$108 million worth of Tesla stock just one day before Elon asked his Twitter followers if he should sell 10% of his Tesla stake to pay taxes, WSJ said. https://bit.ly/3t9vkzV

Amazon’s Astro home robot remains elusive six months after debut.

Last September, Amazon.com Inc. debuted a household robot named Astro that was supposed to usher in—or at least point to—a Jetsons-like future. https://bloom.bg/3hi839v

Apple headset remains likely to adopt micro OLED as Samsung develops ‘hologram’ competitor.

While we wait for Apple’s rumored headset with mixed reality capabilities to be unveiled this year, it seems like Samsung is taking another approach for a future product betting on holograms instead. https://bit.ly/3IshkHZ

Apple reportedly completes production tests for AR/VR headset.

Citing information from the headset’s component suppliers, the device has reportedly completed second-phase engineering validation tests (EVT 2) to ensure that prototype units meet Apple’s design goals and specifications. DigiTimes added that the headset is expected to debut by the end of 2022. While Apple’s headset was widely believed to be scheduled to launch this year, a recent report from Bloomberg’s Mark Gurman cast doubt on the chances of the device emerging this year due to development problems. Nevertheless, Apple’s headset project is said to be “approaching liftoff,” with the device mirroring the development timeline of the Apple Watch in the period before its launch. Apple’s work on the headset’s operating system, realityOS, has been rumored since 2017, but the existence of the operating system was recently confirmed when references to it were found in App Store upload logs and Apple open source code. DigiTimes’ latest report is yet another sign that Apple’s headset is ebbing closer to mass production, even if the timeframe for the device’s announcement now seems to be vaguely situated somewhere in 2022 or 2023. https://bit.ly/3vmxGOP

Apple 5G modem talks underway ahead of expected 2023 production.

We’ve known for several years that an in-house Apple 5G modem design was in the works, to enable the Cupertino company to finally ditch Qualcomm as a supplier. A fresh report today says that Apple is in talks with a potential company to assist with this work. Apple is expected to switch to its own modem design from 2023, though this likely won’t entirely end the company’s relationship with Qualcomm. https://bit.ly/3Kcmk4b

Meta Platforms dissolves team developing new AR and VR operating system.

Meta Platforms has broken up a group of more than 300 employees working on operating systems for its virtual and augmented reality devices, according to three people with knowledge of the situation. In the process, the company dispersed the team that had been working on a new OS from scratch, code-named  XROS, to power the company’s VR headsets and upcoming AR glasses. The reorganization marks another nail in the coffin for the four-year project after Meta halted its development late last year. The move also suggests Meta is trying to limit some costs and move faster as it charts a risky and expensive course toward a digital future it calls the metaverse while its Facebook-based advertising business struggles. https://bit.ly/3sli9wG

Meta announces plans to build an AI-powered ‘universal speech translator’.

Meta, the owner of Facebook, Instagram, and WhatsApp, has announced an ambitious new AI research project to create translation software that works for “everyone in the world.” The project was announced as part of an event focusing on the broad range of benefits Meta believes AI can offer the company’s metaverse plans. “The ability to communicate with anyone in any language — that’s a superpower people have dreamed of forever, and AI is going to deliver that within our lifetimes,” said Meta CEO Mark Zuckerberg in an online presentation. The company says that although commonly spoken languages like English, Mandarin, and Spanish are well catered to by current translation tools, roughly 20 percent of the world’s population do not speak languages covered by these systems. Often, these under-served languages do not have easily accessible corpuses of written text that are needed to train AI systems or sometimes have no standardized writing system at all. https://bit.ly/3BTzd01

Moderna announces 3 new mRNA vaccine targets including herpes and cancer.

Building on the momentum of its extraordinarily successful mRNA COVID-19 vaccine, biotechnology company Moderna has announced three new mRNA development targets. The company is now setting its vaccine sights on the herpes simplex virus, the varicella-zoster virus, and a novel cancer vaccine. In early 2020, as the novel coronavirus SARS-CoV-2 swiftly spread across the world triggering a global pandemic, mRNA vaccine researchers kicked into gear. Decades of work had luckily positioned this new technology as ready for a move into the big time and by the end of the year mRNA COVID-19 vaccines were demonstrating extraordinary safety and efficacy. The acceleration of mRNA vaccines from experimental technology to the arms of billions of people paved the way for new research avenues. So while it is clear the technology can make for a safe and effective COVID-19 vaccine, what else can it do? Moderna, one of the biotech companies leading the mRNA pack, has just announced a trio of new developmental targets. These three new mRNA vaccine targets sit alongside the company’s previously announced focuses on HIV, influenza, cytomegalovirus (CMV), and the Epstein-Barr virus (EBV). https://bit.ly/3JVM5p2

Facebook launches ad-revenue sharing on short-form reels.

Meta Platforms is testing ad-revenue sharing on Facebook Reels with all creators in the U.S., Canada and Mexico. It will expand the test to more countries in the coming weeks. Creators on Facebook can earn money from two new types of ads: banner ads on the bottom of the short-form video and sticker ads, a static image that can be placed by a creator anywhere on the Reel. Influencers will keep 55% of the ad revenue, while Facebook takes the remaining 45%. However, creators using Instagram Reels will not be able to earn money in the same way. Facebook Reels is also expanding to more than 150 countries. The company also added more tools to Reels, such as making them up to one-minute long and the ability to create a short-form video from a disappearing Story. It’s also working on video clipping tools so creators can edit live or longer content into short-form videos to entice more creators to try out Reels. https://bit.ly/3hjndLE

Twitch streaming returns to Xbox nearly two years after Mixer’s demise.

Streamers dedicated to the Xbox system can rejoice: the company says Twitch integration is returning to the Xbox Dashboard. This isn’t a new feature, technically, because the consoles used to offer direct access to the streaming platform. However, Xbox removed the feature several years ago, leaving its console owners to use more complicated methods for streaming their gaming sessions. Xbox says it teamed up with Twitch to bring back the feature based on feedback from players. https://bit.ly/3tdVhi1

Apple a ‘front-runner’ for US$2 billion deal for NFL Sunday Ticket rights.

Apple is once again said to be in talks with the NFL about acquiring the streaming rights for Sunday Ticket games. According to a new report from Sports Business Journal this week, Amazon and Apple are the “front-runners” to acquire the rights to NFL Sunday Ticket starting in 2023. NFL Sunday Ticket, for those unfamiliar, is an out-of-market sports package that broadcasts NFL regular season games every week. The package is currently sold by DirecTV with packages ranging from US$290 to US$400 per season. The report indicates that negations are still ongoing and could change. Apple and Amazon are said to be “front-runners,” but Disney is also involved. The report indicates, however, that Disney’s offer for the package is “well below the amount Apple and Amazon have discussed.” As it stands today, DirecTV currently has the rights to the out-of-market NFL Sunday package, but it is not expected to renew its agreement when it expires after the 2023 season. DirecTV pays around US$1.5 billion per year as part of this deal, but this report suggests a deal between Apple or Amazon and the NFL could be worth more than US$2 billion per year. Additionally, DirecTV is said to be negotiating a separate deal with the NFL that would give it a commercial license for selling Sunday Ticket to restaurants, bars, and other such venues. https://bit.ly/3plwOpI

Samsung shipped ‘100 million’ phones with flawed encryption.

Academics at Tel Aviv University in Israel have found that recent Android-based Samsung phones shipped with design flaws that allow the extraction of secret cryptographic keys. https://bit.ly/3skvBke

Alibaba reports slowest-ever growth amid China’s economic slowdown.

Alibaba reported its slowest-ever revenue growth for the quarter through December, as its core commerce business in China grew only 7% amid an economic slowdown. Net profit fell 74%, in part because the company wrote down the value of its struggling online entertainment division. The weak results highlight the challenges facing China’s biggest e-commerce giant. Beijing’s harsh regulatory crackdown on internet companies, China’s weakening consumption and intensifying competition in the e-commerce sector have already caused Alibaba’s stock price to fall more than 50% over the past 12 months. During a conference call with analysts after Alibaba reported the results, Chief Executive Daniel Zhang said it was still unclear when and how quickly macroeconomic conditions could recover. Economic stimulus policies would be a positive development, he said. Alibaba’s total revenue in the quarter rose 10% to about $38 billion, below analysts’ expectations. Revenue from cloud computing services, a key driver of the company’s long-term growth, rose 20%—slower than the previous quarter’s 33% year-on-year increase. https://bit.ly/3HoglY8

Crypto exchange FTX is launching a gaming unit to drive token adoption.

Crypto exchange FTX is launching a new team focused on driving cryptocurrency and non-fungible token (or NFT) adoption in the gaming world, according to a Bloomberg report. The initial offering from the new gaming unit will reportedly be a “crypto as a service” platform through which game publishers can launch tokens and provide support for in-game NFTs. “We are launching FTX Gaming because we see games as an exciting use case for crypto,” an FTX spokesperson told Bloomberg via email. “There are 2 billion+ gamers in the world who have played with and collected digital items, and can now also own them.” https://bit.ly/3pD8uQv

​​​​Axie Infinity breaks US$4 billion in NFT sales as the crypto-gaming metaverse draws in the crowds.

Axie Infinity NFTs have hit US$4 billion in all-time sales, according to data from Cryptoslam, as play-to-earn crypto games continue to grow in popularity. The trading of NFTs between players on the blockchain-based video game topped US$2.5 million in the past 24 hours alone, the data showed Tuesday. https://bit.ly/3IgXwqZ

OpenSea confirms hackers made US$1.7 million on NFTs stolen in a phishing attack last weekend.

Leading NFT marketplace OpenSea has confirmed an estimated US$1.7 million worth of tokens were stolen in a hack at the weekend. In the attack, which took place between 5 p.m. and 8 p.m. ET on Saturday, the thieves tricked OpenSea users into part-signing smart contracts to allow the trades. They then completed the contract process to transfer the NFTs, or non-fungible tokens, to their own address. The hackers likely used ” phishing” — in which an official communication is faked to look like the real thing — to fool NFT owners into signing, OpenSea believes. https://bit.ly/33PLkyq

Chipmakers see limited impact for now, as Russia invades Ukraine.

Ukraine supplies more than 90% of U.S. semiconductor-grade neon, critical for lasers used in chipmaking. The gas, a biproduct of Russian steel manufacturing, is purified in Ukraine, market research firm Techcet says. Russia is the source of 35% of the palladium used in the United States. The metal is used in sensors and memory, among other applications. “The chipmakers are not feeling any direct impact, but the companies that supply them with materials for semiconductor fabrication buy gases, including neon and palladium, from Russia and Ukraine,” said a Japanese chip industry source who spoke on condition of anonymity. “The availability of those materials is already tight, so any further pressure on supplies could push up prices. That in turn could knock on to higher chip prices.” https://reut.rs/36Ag6MI