Deals

The 11 blockbuster funding rounds of 2013

What else can you do with all that money but bathe in it?

Above: What else can you do with all that money but bathe in it?

Image Credit: Mattysflicks

These 11 tech companies have collectively raised $2.8 billion this year. That’s quite a number.  Five companies raised rounds of $200 million or more in 2013, as compared to the three last year, and six more made the $150 million club.  Rounds of this magnitude generally go to companies that have already proved their idea and market, and now require mountains of money to scale the business, refine the business model, and fuel international growth. A look at largest venture capital investments of the year provides an interesting perspective on the hottest trends happening in the tech world, and the types of companies that present the most promising opportunities for growth. Interestingly, the largest funding round of the year went to an under-the-radar networking solutions provider called Genband. Box, Fab, and Pinterest made this list two years in a row. About half of the biggest deals were for companies based outside of Silicon Valley. For one, this marked its first round of funding, and four raised not one, but two nine-figure rounds this year. Let’s take a look.

1. Genband — $343.5 million

Friso, Texas-based Genband secured $343.5 million. Genband specializes in voice-over-Internet-protocol tech, known as VoIP. It works with telecom providers such as Comcast and Sprint-Nextel to enable VoIP for their customers. The company also makes multimedia application software and various other infrastructure products for telcos. Genband has been around since 1999 and was ranked as the number one venture-backed company in the U.S. by the Wall Street Journal in 2012. One Equity Partners, Sevin Rosen Funds, and Venrock were investors in this sky-high round of funding.  Genband has raised $394 million to date.

2. Über  — $258 million

Rumors of Uber’s funding abounded for months before the deal officially closed. At last the company filed with the SEC in August, published, and then mysteriously deleted a blog post with details about the round.   The facts emerged that Uber raised $258 million and is valued at $3.5 billion. TPG and Google Ventures were involved in the round, and the funding will support expansion into new markets, and to “fight off protectionist, anticompetitive efforts,” meaning regulatory battles. Uber’s app lets people hail cars to their door on-demand. It started out with luxury black cars, but has since added taxis, SUVs, and the lower cost “UberX” option. Uber has experienced phenomenal growth. It is growing at more than 20 percent a month and on track to record $210 million in revenue for 2013 on over $1 billion rides. The company adds close to 80,000 new clients a week and is active in upwards of  60 cities around the world. It has raised $307 million to date.

3. Lazada — $250 million

“Super-incubator” Rocket Internet is known for attracting massive funding rounds for its portfolio companies, but $250 million is big even by its standards. Lazada, Rocket’s Southeast Asian Amazon clone, raked in $250 million in December, closely following its $100 million round from earlier this year. All this money ($436 million in total) is intended to cement Lazada’s position as the dominant online retailer in Southeast Asian. Rocket Internet’s strategy is to create “fast follow” e-commerce companies that take established business models like Amazon and Zappos and plant them in emerging markets, and then funnel millions upon millions of dollars to establishing regional hegemony. Lazada sells electronics, clothes, appliances, books, cosmetics, and more to people in Indonesia, Malaysia, Philippines, Thailand, and Vietnam. It already claims to be Southeast Asia’s largest online shopping mall, and this money is part of an aggressive effort to capture the market before competitors. U.K. grocery chain Tesco led this round, marking its first investment into an entirely online company. Access Industries, Investment AB Kinnevik, and Verlinvest also contributed.

4. Pinterest — $225 million

Pins may be free, but they are worth a lot. Pinterest raised two $200+ million rounds this year: A $200 million round with a $2.5 billion valuation in February; and one in October of $225 million at a $3.8 billion valuation. Pinterest is now one of the behemoths of social media. It has 70 million users and attracts 2.5 billion page views a month. However it only started to monetize on its wild popularity this year with promoted pins. The funding was slated for aggressive international expansion, as well as development of its core services and infrastructure. Fidelity Venture Partners led this Series E round. Existing investors Andreessen Horowitz, Bessemer Venture Partners, FirstMark Capital, and Valiant Capital Partners also participated. Pinterest has raised $565 million to date.

5. Airwatch — $225 million 

Airwatch raised $225 million this year to help IT departments respond to the rising bring-your-own-device (BYOD) movement. IT managers use Airwatch’s software to track and monitor all of a company’s devices at once, saving them time and energy while reducing the risk of security breaches from unsecured devices. Atlantia-based Airwatch operated for ten years without raising outside capital and raised this money to make acquisitions and expand its customer base.  Airwatch is backed by Insight Venture Partners and Accel.

6. Palantir —  $196 million

Shadowy data-mining startup Palantir closed over $196 million in funding in 2013. The startup is notoriously press-shy, as it mines highly sensitive data for pharmaceutical companies and government agencies. Palantir is known for its unrivaled engineering and data science team, which takes “messy swamps” of data and turns it into data visualizations and maps. The company is valued at over $8 billion and the CEO said it is likely to close $1 billion in contracts in 2014. Palantir raised an additional $107 million about two weeks ago in an effort to diversify its customer base and add more private customers, bringing its yearly total to $303 million and its all-time total to $605 million. Investors include the CIA’s venture arm In-Q-Tel and Peter Thiel’s Founders Fund.

7. Fanatics $170 million

Fanatics secured $170 million in financing this year to feed sports fan fervor. The company is an online retailer of official licensed sports merchandise. It powers the e-commerce sites for all major professional sports leagues, major media brands, and over 200 collegiate and professional team properties. If you want to buy an NFL jersey, a MLB baseball cap, a NASCAR collectible car, or a branded basketball bag, Fanatics is the online place to do it. Fanatics sells hundreds of thousands of items, and this funding was raised to grow its inventory, fund overseas expansion, and improve distribution. Singapore-based Temasek Holdings and China-based Alibaba Group contributed to this round. Fanatics raised another large round of $150 million in 2012 from Andreessen Horowitz and Insight Venture Partners. It has raised $320 million in venture capital to date.

8. Fab — $165 million 

Fab was a darling of the e-commerce world once upon a time, but 2013 was a rough year. Yes, it raised an enormous amount of money, but it is also bleeding millions. Fab’s founder Jason Goldberg announced earlier this year that the company decided to pivot away from flash sales and towards its own products, and that it raised $150 million to do it. This fourth round attracted additional investors and ultimately tallied up to $165 million. Along with the change in business model and funding came large scale restructuring — Fab laid off hundreds of employees and lost a number of members from its executive team. The company is still struggling to gain solid footing, which is somewhat unusual for a company backed by $330 million in venture capital. Chinese company Tencent led this round for Fab. Others investors include Atomico, Andreessen Horowitz, Itochu, and Menlo Ventures. Fab’s $117 million funding round from 2012 made the top deals list last year. Fab has pulled in $363 million in funding since 2010.

9. Box — $150 million

Box put a whole lot of money in its box this year. The enterprise cloud storage company closed $150 million in its fifth round of funding this year, and CEO Aaron Levie revealed plans to file for an IPO in 2014. Then, in November, additional SEC paperwork popped up which indicated Box is raising $100 million more. This news came shortly after competitors Dropbox announced its intent to raise $250 million. Box has been one of the most exciting tech companies to watch over the past couple years. The cloud storage market is competitive, but Box is something of a crowd favorite. Colorful CEO aside, Box is a powerful example of a company that forged ahead early on two major tech trends — the enterprise shift to the cloud and the “consumerization of the enterprise.” The $150 million round, raised in January, was slated to fuel Box’s international expansion into Europe, Asia, and Brazil. Box also announced the “Box Partner Network” this year and received a HIPAA compliance certificate so it could tap into the healthcare sector. It has raised a total of $409 million.

10. MongoDB — $150 million 

MongoDB raised $150 million this year with a valuation of $1.2 billion, allegedly the highest startup valuation in New York City. This round was a big step up from the $42 million the startup raised in 2012. MongoDB is the leading NoSQL operational database provider. Developers use its tech to easily enter and retrieve data for applications, and its software serves as the backbone for plenty of cloud services. Legacy tech players like Oracle, IBM, and SAP ruled this market for decades with their relational database technology. However nowadays businesses are increasingly using operational databases because they are more flexible, and MongoDB is a leader among the companies offering new, more agile alternatives. MongoDB has more than 600 customers, including Goldman Sachs and MetLife. The latest round included new investors EMC, Salesforce, T. Rowe Price, and Altimeter, as well as previous investors Intel, Red Hat, New Enterprise Associates, and Sequoia Capital.

11. Pure Storage — $150 million

Like MongoDB, Pure Storage offers a highly lucrative product that is difficult for laypeople to understand — Pure Storage offers all-flash storage arrays to enterprise organizations. The surge in data use from smartphone and tablets has caused a veritable flood of data, that traditional data centers are struggling to accommodate. Flash storage compresses information using solid state disks rather than bulky hard drives and has the potential to process the data faster, more reliably, and with less energy than a hard disk drive   Venture capitalists, as well as corporations like IBM, are bullish about flash storage’s future, and Pure Storage has many rivals — Violin Memory, Nimble Storage, SolidFire, Virident, and Fusion-IO to name a few. Pure Storage raised this hefty round to stay competitive and evangelize the power of flash storage. T.Rowe Price and Tiger Global Management led its funding round, with participation from existing investors Greylock Partners, Index Ventures, Redpoint Ventures, Samsung Ventures, and Sutter Hill Ventures. Pure Storage’s total capital raised is $245 million