🐋 DeepSeeking - Asymmetrix Newsletter #52
DeepSeek's Sputnik moment indicates that AI will provide the infrastructure for a future Data & Analytics giant
A momentous moment for the markets meant we had no choice but to talk about DeepSeek in our main piece this newsletter.
In other news, Reuters broke one of the worst kept secrets in Data & Analytics, leaking the likely sale by Five Arrows and Insight Partners of their stakes in EUR3bn Kpler. And Veradigm pulled the sale of the business after receiving no final round bids.
There were a plethora of funding rounds, including a $22m Series C for weather intelligence provider Meteomatics and $5.5m in Seed funding for our friends at Sightline Climate.
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🐋 Chasing the White Whale
It’s a week now since DeepSeek sent markets into turmoil in what Marc Andreessen called “AI’s Sputnik moment”. Stocks are trading at or near where they were before $600bn was wiped off the value of Nvidia.
Panic - what panic? Nothing to see here!
The markets appear to have concluded that this was just a blip in the inexorable march of AI and Big Tech.
But it definitely happened. And Andreesen was right. This was an inflection point that signified something. But what?
We wanted to pause at this moment and reflect on our conclusions from the DeepSeek panic and explore the read across for Data & Analytics.
There will be more market shocks in the coming years as both AI leaps forward and rapid catch-ups by competitors are announced.
Investing in those companies who have spent the most money to create the best LLMs will not necessarily guarantee the best long-term returns for investors. Research can be reverse-engineered or imitated quickly and cheaply.
The window in which having the most advanced model can be monetized is likely to be brief.
Although there will be a premium for using the most advanced models, each slightly older “good enough” model will rapidly become cheaper to use.
The creators of AI models are akin to the telecoms companies of the 1990s, creating infrastructure for others to build on, and ultimately selling access at low margins, as their product is commoditised.
There is an opportunity for Data & Analytics companies to be the Googles and the Facebooks who sit on top of that infrastructure and make the real money.
All of this begs the question - who will be those future Googles and Facebooks?
The trouble is that if you had asked that same question in 1997 you would not have answered Google or Facebook!
There is a goldrush of launches and investment rounds of AI-driven vertically-focused Data & Analytics companies going on right now. See Paxton below in this week’s newsletter - another Legal AI solution in the market which already contains $1bn EV Harvey. And we are of course waiting for financial data player AlphaSense’s IPO.
But will these be the companies that ultimately dominate the market and become trillion dollar businesses? History suggests that this is unlikely. It feels like we are not quite there yet. AI still has a few iterations to go for hallucination rates to be low enough to produce highest quality data capable of replacing the highest levels of knowledge worker tasks.
We await the next leap forward with keen anticipation, harpoon in hand.
M&A and Fundraising
Deal chatter
🛢️ Kpler's minority owners consider stake sale
Kpler is a Brussels, Belgium-based provider of data and analytics for global trade, backed by Five Arrows and Insight Partners.
According to Reuters, Five Arrows and Insight Partners are considering selling their minority stakes.
Kpler is seeking a valuation of more than EUR3bn, based on estimated annual recurring revenue of more than EUR200m for 2025.
Kpler received formal pitches from investment banks in the last week for a financial adviser role.
Asymmetrix Sector: Energy & Commodities.
⚕️ Veradigm concludes exploration of strategic alternatives and announces operational review
Veradigm, formerly known as Allscripts, is a Chicago, Illinois, US-based provider of EHR software and real-world evidence, listed on NASDAQ.
According to a Veradigm press release, after engaging with over 30 parties, the Board has unanimously decided to end the strategic review.
“Following the May 2024 public announcement of the process, the Company entered into confidentiality agreements with more than 30 parties and engaged with a wide range of potential counterparties, including potential strategic partners and financial sponsors. Five bidders submitted preliminary, non-binding indications of interest. However, the Company did not receive any final proposals.”
Veradigm shares fell 40% following the conclusion of the strategic review.
Veradigm’s market cap sits at c.$587m.
Veradigm was advised by JP Morgan.
Asymmetrix Sector: Healthcare.
🧬 23andMe Special Committee announces exploration of strategic alternatives
23andMe is a NASDAQ-listed, Sunnyvale, California, USA-based human genetics company.
The Special Committee of the Board of Directors of 23andMe Holding Co. announced that it has undertaken a process to explore strategic alternatives, including, among other alternatives, a possible sale of the company, business combination, sale of all or part of the Company’s assets, licensing of assets, restructuring, or other strategic action.
23andMe’s market cap is c.USD90.5m.
23andMe has engaged Moelis & Company as its financial advisor.
Asymmetrix Sector: Genomics.
Announced M&A
⚖️ Mediahuis to acquire DGN Groep
Mediahuis, a private, Antwerp, Belgium-based publisher, announced the acquisition of DGN Groep, a private Amsterdam, Netherlands-based comparison website provider.
Financial terms were not disclosed
Asymmetrix Sector: Price Comparison.
Later-Stage / Growth funding
🪪 ID.me
McLean, VA, USA-based digital identity wallet.
Closed a $275m credit facility provided by Ares Management funds. Ares also plans to make a substantial equity investment in ID.me.
Asymmetrix Sector: Identity.
🌤️ Meteomatics
St. Gallen, St. Gallen, Switzerland-based weather intelligence and technology company.
Raised $22m in Series C funding led by Armira Growth. Klima, the Alantra Energy Transition fund, and Fortyone also participated in the round.
Asymmetrix Sector: Weather.
⚖️ Paxton
Bend, Oregon, USA-based legal workflow AI platform.
Raised $22m in Series A funding led by Unusual Ventures, alongside Kyber Knight, 25Madison, and Wisconsin Valley Ventures.
Asymmetrix Sector: Legal.
🏘️ Landeed
Hyderabad, Telangana, India-based property title search engine platform.
Raised $5m in funding led by 10x Founders Fund, and including, Paradigm Shift and Pioneer Fund.
Asymmetrix Sector: Real Estate.
Bozeman, Montana, USA-based intelligence standard for global enterprise supply chain risk management.
Raised $8m in Series A funding led by Silicon Road VC and Bread & Butter Ventures, with participation from Acronym, Techstars, and a100x.
Asymmetrix Sector: Supply Chain.
Early-Stage
🌍 OCELL
Munich, Bavaria, Germany-based forest analytics provider.
Raised EUR10m in Series A funding led by Capnamic, with additional funding from Bayern Kapital, plus existing investors AENU and Summiteer.
Asymmetrix Sector: Environment.
London, UK-based climate economy market intelligence platform.
Raised $5.5m in seed funding co-led by The Westly Group and Molten Ventures.
Asymmetrix Sector: Cleantech.
Madrid, Spain-based live music events data platform.
Raised EUR876k in funding led by Archipelago Next, with additional investment from Startup Wise Guys and WA4STEAM.
Asymmetrix Sector: Music.
📧 If we have missed your deal, or you would like to talk, please email us at a.boden@asymmetrix.info.