CP VENTURES — DIGEST — Jan 2021

Investing Globally In Early Stage Breakthrough Technology Companies

We hope you and your families, friends and colleagues are safe and healthy.

We have been busy on many fronts with a lot of investment activity and portfolio news.

During the turbulent year that was 2020, our startups in Fund 1 have seen unprecedented growth and record returns.

We have made our first 12 investments in Fund 2, which is open again for a brief window to new investors. Check out our investor enquiries page if you would like to learn more.

Exciting news

Metigy closes $20m raise

Our largest investment portfolio company closed a pre-IPO cap raise more than double over-subscribed. We were Metigy’s first external investor. A nice 10x uplift for our investors in 18 months.

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Kami hits 22m users

Kami ARR grew 1,000% over the past 12 months and is adding 1m new users every week or two. Every month the paper they save being printed would reach higher than the International Space Station if stacked together, and saves 240,000 trees from being cut down.

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Welcome new investment companies:

  • Quantum Brilliance — Room temperature quantum microprocessors powered by diamond that don’t require cryogenic cooling or vacuum systems.
  • Gully Network — Gully Network has built a tech-enabled and asset-light modern retail network logistics solution for mid-sized retail stores for India. Our first Indian investment. If you’re wondering why India, check out here and here.
  • Volopay — Volopay combines approvals, corporate cards, bill payments, expense reimbursements and accounting automation into one single platform.
  • Hypotenuse — Hypotenuse have built machine learning models that can take product images and any accompanying metadata from any e-commerce catalogue.

Notable recent & upcoming CP Ventures funding rounds:

  • Metigy — The number one AI powered marketing decision support platform for SME marketers. Closed $20m pre-IPO raise.
  • MGA Thermal — Developed a new type of scalable low cost thermal energy storage technology for renewable energy that’s more reliable and economical than previously possible. Closed seed round and awarded matching Accelerating Commercialisation grant.
  • 3DEN — provides the technology & branding for a new type of innner city space servicing some of the largest property landlords in the US. Closed a seed+ round.
  • Cruz Foam — The first company in the world to transform chitin, a biopolymer found in shrimp shells, into environmentally friendly foams. Breaks down harmlessly in 4 month vs. 500 years.
  • Nutromics — Developing the world’s first continuous realtime molecular monitor via Smart Patch. A world with zero preventable deaths due to delayed patient data to clinicians. Raising.
  • Spiral Genetics — The most powerful data analysis software for comparing whole human genome populations. Raising.
  • Phoria — World leading immersive tech studio that specialises in cutting-edge Virtual Reality, Augmented Reality and Mixed Reality.

Market Tech Reports:

  • Major trends in VC. Summary of QUARTZ article covering major VC trends over the past decade. Are there really that many new VC firms?
  • Crunchbase reported that Q3 was a boom for tech, trade sales and IPO. However, a real dichotomy between early stage and late stage with the former continuing to decline and the later reaching new highs.
  • The Crossroads 2020 Report is essential reading for anyone active in the Australian ecosystem. Brilliant analysis. It confirms the dichotomy of growth in late stage and early stage.
  • Ark’s Big Ideas Report 2021 is out and always fascinating reading on where the future disruptive areas are likely to be.
  • The Venture Capital Dashboard FY 2019/20 from the Department of Industry, Science, Energy and Resources shows continued growth in Australian early stage capital, but a pretty conservative median investment amount of $190K into startups.

4th Industrial Revolution sector trends:

All our investments focus on the 4th Industrial Revolution (4IR), known as the connected or intelligent age. We are focused on the technologies & companies helping to drive this quantum shift (no pun intended!). There are 15 major 4IR sectors:

Space Technologies

  • Space Capital reports a total of $12.1B invested in space companies in Q1 & Q2 2020, with $303M of that being allocated to early-stage investments.
  • Large players like SpaceX’s Starlink project are working to create a global satellite Internet with more than 42,000 low-orbit satellites. Others like OneWeb, Telesat and Amazon are also investing billions in networks of thousands of internet connectivity satellites, creating an orbital infrastructure that will serve as a foundation for the next century of space-based technologies.. Apple is also reportedly chasing the dream of space connectivity.
  • The trends of increasing power and miniaturisation of transistors, batteries and solar panels, telecommunications, and general technology advances are making space available to private companies. Venture capitalists have also been throwing huge sums at small satellite companies with big dreams. Planet, Hawkeye360, Spire, Capella Space, BlackSky and Swarm are just some of the firms who have raised cash, launched satellites, and are planning big.
  • Governments have also accelerated their space efforts with the US establishing the U.S. Space Force , and NASA received a 2024 deadline for returning Americans to the moon.

AR, VR. MR (XR)

  • Extended reality (XR) is an emerging term for all immersive technologies, including augmented reality (AR), virtual reality (VR), and mixed reality (MR).
  • According to Kenneth Research’s Extended Reality (XR) Market 2025 the Global Extended Reality Market was valued at USD 27 Billion in 2018 and is expected to reach USD 393 Billion by 2025, with a CAGR of 69.4% over the 2019–2025 period.
  • While the gaming and entertainment space has been the main attraction for XR, according to the VRX Industry Insight Report 2019–2020 the future drivers are more around the education sector, followed by the AEC (Architecture/Engineering/Construction), healthcare, manufacturing and automotive.

3D Printing

  • The 3D printing market was valued at USD$13.7 billion in 2019 and is expected to reach a value of USD 63.46 billion by 2025, a CAGR of 29.48%.
  • 3D printing currently accounts for only 0.1% of global industrial production, 2020 État des lieux du marché de l’impression 3D en France, highlighting its “immense potential” in the years to come.
  • According to the 3D HUBS’ 3D printing trends 2020 report the forecast growth rate for 3D printing is 24% per annum over the next 5 years.
  • The 3D Printing Market is segmented by Printer Type ( Desktop, Industry-grade), by Technology (Stereo Lithography, Fused Deposition Modelling, Selective Laser Sintering, Electron Beam Melting, Digital Light Processing), Material Type (Metal, Plastic, Ceramics), End-user Industry (Automotive, Aerospace, and Defence, Healthcare, Construction and Architecture, Energy, Food), and Geography.

Advanced Materials

  • The future is built with advanced materials. It is the advanced materials industry that is often the enabling technology that allows other industries to turn their ideas and innovations into sophisticated products such as touchscreens, rechargeable batteries, LEDs, lightweight materials used to build drones, and so on.
  • A good introductory YouTube video into advanced materials.
  • For example advanced materials such as graphene can be very light and 200 times stronger than steel. Emerging battery and biotechnologies offer new ways to generate, store and consume renewable energy such as MGA Thermal.

Energy Capture, Storage & Transmission

  • Few areas are getting more attention or urgency than climate change and the move to renewables . The move by governments, concerned individuals and businesses to make the use of renewable resources a priority, and move away from the reliance on carbon based fossil fuel energy, for a more sustainable future is a massive trend.
  • Onshore wind and solar are now significantly cheaper sources of energy than coal and gas, and on par when partial battery is added to offset evening loads. If renewable prices continue to fall at 20% for onshore wind and solar (as they have for the past 10 years) then wind and solar will be 60% cheaper than coal and gas in 5 years.
  • Gates, Bezos-backed fund offers $1bn to clean energy start-ups.
  • Check out Biden’s Day 1 Climate Actions. President-elect Joe Biden’s agenda has big ambitions to combat climate change, including $400 billion to invest in clean energy technology for the next 10 years. Pitchbook
  • Global venture capital and private equity investments in clean energy exceeded $10 billion in 2019 but is expected to grow significantly more in the coming decades according to GreenBiz.

New Computational Technologies

  • Quantum tech is moving out of the lab and more into commercial applications. Advances in quantum computers and quantum cryptography will begin to stack up as more companies take notice of quantum tech’s potential.
  • Quantum power and unique algorithms are set to provide new applications, new industries, and new markets in areas such as energy, health and security that are not possible via standard computers.
  • Aside from the large sums being spent by the major tech companies like Google, Intel, Microsoft, IBM, Honeywell, Amazon, Alibaba, Baidu, etc, VCs have been actively investing in the space since 2012, and their interest rose sharply doubling in 2020. Medium While still a small sector, it is set to grow quickly.

IOT

  • IoT refers to the billions of physical devices around the world that are now connected to the internet, all collecting and sharing data. Super cheap chips and wireless networks means almost anything can be connected such as wearables, pills, lights, up to drones, autonomous cars & trucks and IOT will be the core of smart cities.
  • Tech analyst company IDC predicts that in total there will be 41.6 billion connected IoT devices by 2025. While Gartner estimates that in 2020 business and consumer spending on IoT hardware will hit nearly $3tn.

Artificial Intelligence

  • The global artificial intelligence market size was valued at USD 39.9 billion in 2019 and is expected to to reach USD 733.7 billion by 2027, a CAGR of 42.2%.
  • Artificial intelligence (AI) describes computers that can “think” like humans — recognising complex patterns, processing information, drawing conclusions, and make recommendations.

Robotics

  • The artificial intelligence (AI) robots market was valued at USD 2.84 Billion in 2017 and is expected to reach USD 12.36 Billion by 2023, a CAGR of 28.78%.
  • Arguably no other sector of the forth industrial revolution concerns people more than robots and AI, as it represents the ability to displace humans on a mass scale.
  • Robotics can automate business operations, boost efficiency, quality & repeatability, free up humans for higher level tasks and because of that replace or augment humans.
  • International Labour Organisation estimates that as many as 137 million jobs across Cambodia, Indonesia, the Philippines, Thailand and Vietnam are at risk of replacement by robots in the next decade or two. This represents approximately 56% of the total workforce of these countries.
  • Robotics have been around for a long time but AI has allowed machines to learn, make decisions and automate tasks.

Neurotechnology

  • NeuroTech is the whole scope of technologies, directly or indirectly related to the brain and various aspects of consciousness, thought, and higher-order activities in the brain.
  • A quick YouTube description from Quantumrun and article on NeuroTech landscape.
  • The neurotechnology market covers a wide array of areas, but is generally divided into four segments: neuroprosthetics, neuromodulation, neurorehabilitation, and neurosensing.
  • The global Neurotechnology market is valued at USD 9 billion in 2018 and is expected to cross USD 19 billion by the end of 2026, growing at a CAGR of 15%. Annual growth of investment in NeuroTechnology is 30% per annum.

Geo Engineering

  • Also called Climate Tech, refers to large-scale, deliberate interventions in the earth’s natural systems in order to, for example, shift rainfall patterns, create artificial sunshine, or alter biospheres.
  • Elon Musk to offer $100M prize for ‘best’ carbon capture tech
  • A PWC report found that in 2019, total venture funding for climate tech companies increased to $16.1b, a more than 3750% increase since 2013.
  • A new report from the UN concludes that it will take $90 trillion in public and private capital to tackle the worst effects of climate change by 2030. An incredible number.

Biotechnology

  • Biotechnology harnesses cellular and biomolecular processes to develop new technologies and products for a range of uses, including developing new pharmaceuticals and materials, more efficient industrial manufacturing processes, and cleaner, more efficient energy sources.
  • The global biotechnology market is expected to grow from USD 448 billion in 2019 and to reach USD 833 billion by 2027, a CAGR of 7.02%.

Blockchain

  • Blockchain is a secure, decentralised, and transparent way of recording and sharing data, with no need to rely on third-party intermediaries. The digital currency Bitcoin is the best known blockchain application.
  • However, the technology can be used in other ways, including making supply chains traceable, securing sensitive medical data anonymously, and combating fraud.
  • The global blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 40 billion by 2025, an impressive CAGR of 67.3%.

Drones & Autonomous vehicles

  • Drones, also known as unmanned aerial systems (UASs) and unmanned aerial vehicles (UAVs), are poised to become ubiquitous in coming decades. Goldman Sachs thinks it’s already a $100 billion market across military, consumer and commercial/civil.
  • Autonomous vehicles will massively disrupt transportation around the globe by significantly decreasing transportation costs by removing human labour, reducing accidents, and improving traffic flows.
  • A report published by Allied Market Research estimated the global autonomous vehicle market to be valued at $54.23 billion in 2019, and projected to reach $556.67 billion by 2026, a CAGR of 39.47%.

Other non-funding portfolio updates and press:

  • Volopay featured on TechCrunch and growing at 70% month on month in terms of total funds flowing through its platform since July. Recently launching into Australia! Link
  • Kami featured in NZ Herald’s New Zealand startup companies to watch in 2021. Link
  • Metigy is highlighted by Regal Funds Management’s Jessica Farr-Jones as one pre-IPO company they’re particularly excited about. Link
  • Phoria partners with Netflix and Google on new AR nature series. Phoria have also partnered with Oculus and WWF to launch Ecosphere. They also recently won the prestigious Webby Awards for best use of AR. Link Link & Link
  • Nutromics has recorded several patents and made massive progress on the development of the world’s first medical Smart Patch. It’s a trillion dollar sector. It is currently raising at 5x where we invested 12 months ago. Link
  • MGA Thermal’s announcement that they have successfully developed a viable thermal energy block that is 10% of the cost of a lithium battery for the same energy output gained over 250m views and international interest. Link

Managing Partner CP Ventures. Co-founder OpenMarkets Group.

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