Hello and welcome to the inaugural edition of InfraRead – my newsletter highlighting key news from infrastructure software deal activity as it breaks. I will include commentary when appropriate. Feel free to subscribe for timely updates.
- Developer focused application security platform Snyk announced its pick-up of ReviewPad. Portugal based ReviewPad had raised a €1.5 pre-seed in April of this year. The company provides a tool to automate and secure pull requests for developers.
- PE-backed email security provider Proofpoint announced its intent to acquire Tessian. UK-based Tessian was founded in 2013 and has raised $132 million over ten rounds. Its latest funding was a ~$72mm Series C in March – August 2021 valuing the company then at $500mm. Tessian leverages machine learning to flag phishing attempts and potential data exfiltration. They claimed 350+ customers following their last round of founding.
- Google plans to announce an additional $2bn in OpenAI rival Anthropic with an tier of $500mm followed by an additional $1.5bn over time. The announcement follows Amazon’s commitment from just a few weeks ago to invest $4bn in the company as the tech giants ramp up their AI-platform proxy war. Google had already invested $550mm in Anthropic earlier this year. This latest announcement brings the total capital committed to Anthropic to $7bn in just the last twelve months.
- Kubernetes management platform Chkk announced a seed round of $5.2mm led by Sequoia Capital. Chkk’s platform provides deep visibility into Kubernetes infrastructure, identify and prioritize availability risks, track artifacts and helps implement error free and smooth upgrades. Founders Awais Nemat, Fawad Khaliq and Ali Khayyam previously helped run the AWS Elastic Kubernetes Service.
In other news, BCG thinks M&A is Looking Up after Bottoming Out. Key points from the report –
- Through the end of August 2023, year-to-date, companies had announced approximately 21,500 deals, with a total value of $1.18 trillion. Deal volume fell by 14% compared with the same period in 2022, and deal value plummeted by a staggering 41%.
- Dealmakers are returning to the negotiating table but continue to grapple with uncertainty in a challenging environment characterized by persistently above-average inflation, higher interest rates, heightened market volatility, fears of recession, and geopolitical tensions.
- Drivers of deal activity: abundant dry powder, converging valuation expectations, evolving regulations and policies, and efforts to strengthen supply chain resilience
- Beyond near-term concerns and pursuits, two prominent factors—ESG and digitization—will continue to promote dealmaking across most sectors in the medium and longer term.
- In an environment in which the higher cost of capital and more conservative valuations make capital scarcer, we anticipate an uptick in transformational corporate deals. These deals will focus on reshaping the corporate portfolio or on making acquisitions that support or enter higher-growth sectors.
For Technology M&A in general, and Infrastructure Software in particular, I think a convergence in valuation expectations is perhaps the most important point. As mid-to-late stage companies evaluate their options, the combination of expensive capital, rough macro environment and geopolitical uncertainty is going to spur a lot more M&A in the coming months.
If you are looking for advice on how to navigate the current market, please feel free to reach out.