The capital is flowing in North Texas, with Founder and CEO of Grapevine’s Sera Systems saying it only took about two months to raise an $11.7 million combined seed and Series A round.
Last month, at least nine local startups and tech companies raised new funds totaling more than $183.5 million. The largest of those rounds went to Dallas- and California-based biotech firm ReCode Therapeutics’ Series B round, followed by recent transplant BackBox’s $32 million Series A round.
M&A activity was down in the North Texas ecosystems. While August saw 16 such deals and September saw 17, in October, NTX Inno and the Dallas Business Journal tracked only four M&A deals. In addition, Dallas blank check company Spring Valley Acquisition Corp.’s planned merger with New Jersey agtech company AeroFarms fell through due to lack of funding.
However, the slowdown didn’t stop Arbe Robotics, whose U.S. headquarters is in Plano, from merging with Houston SPAC Tech Acquisitions Inc. Also, in October, Solo Brands and P10 went public, raising a combined $459 million, while two other local firms filed to do the same.
To help you keep track of what’s going on around DFW, NTX Inno put together a roundup of October’s financial activity.
Pro tip: You can check out daily updates on funding, M&A and VC activity in our daily newsletter, The Beat.
Funding Rounds
McKinney-based ShearShare, a marketplace for barbers and salon stylists to rent chairs in an existing space, was one of seven startups to take home a $500,000 prize from New York accelerator 43North’s pitch competition. The new funding brings ShearShare’s total to around $4 million, following a $2.3 million seed round and $300,000 investment from the Google for Startups Black Founders Fund. Founded in 2017, ShearShare has grown its headcount to around 20 people.
Sera Systems, a business software solution firm focused on the home services industry, reported raising more than $11.7 million, in what Stevens calls a combined seed and Series A round, led by local infrastructure giant Southland Holdings.
A handful of student entrepreneurs have taken their first step on their journey through Southern Methodist University’s revamped business accelerator program. On Oct. 22, 15 startups took to the pitch competition stage, in front of leaders in the innovation space, for a shot at cash and in-kind prizes. The startups were also vying for a chance to be accelerated into the program’s top tier and a chance at $50,000. Check them out here. Prize amounts include cash and in-kind prizes.
BackBox, which assists with network management and other services, is shifting its global headquarters to Dallas from Tel Aviv. The move comes as it announced it closed a Series A round of funding of $32 million. It was led by Elsewhere Partners, which has offices in Austin. BackBox is getting new leadership as well. Andrew Kahl, Elsewhere Partners operating adviser, was named the new CEO. The two locations will collaborate, Kahl said.
A little more than a year and a half after raising an $80M round, ReCode Therapeutics is at it again. The Dallas- and Melo Park, Calif.-based biopharmaceutical company announced closing its $80 million Series B round co-led by Pfizer’s venture capital arm and California biotech investor EcoR1 Capital. ReCode said the new funding will be used to drive human clinical studies for its primary ciliary dyskinesia (PCD) and cystic fibrosis therapies via its lipid nanoparticle platform (LNP) that are expected to begin next year. In addition, the company will expand its treatment pipeline, while developing the platform for organ-specific delivery.
Southlake biotech firm OncoNano Medicine closed its $68.4 million Series B funding round. The company capped off the fundraising effort by converting $18.4 million in grant funding from the Cancer Prevention and Research Institute of Texas into an equity investment. CPRIT awarded the company the grant funding in 2019 and 2020. The funding, which brings OncoNano’s total to around $120 million, will support the company’s Phase III clinical trials for pegsitacianine, a imaging agent for tumor surgery, as well as boost the development of its therapeutics program. OncoNano said it expects human trials to begin in the second half of next year.
Dallas Innovates reports two local entrepreneurs took home funding at the Veteran Women’s Enterprise Center’s 4BUSINESSRECOVER pitch competition. Taking the $20,000 first place prize and the $3,000 Audience Choice Award was Garland-based MilkSpace, a provider of mobile breastfeeding spaces. That follows MilkSpace winning $2,500 at Impact Ventures’ showcase pitch competition in July. Also, landing prize money at the VWEC event was Grand Prairie’s Mama Moore’s Gourmet Popcorn, along with Georgia-based bar and grill concept Semper Fi Bar and Grille.
The United Way of Metropolitan Dallas says its goal is to drive social change. And when it comes to issues related to health care, the organization says it sees technology making the biggest impact. Ten entrepreneurial and institutional ventures took the pitch competition stage at the local nonprofit's newly created Health Innovation Technology Challenge. A collective $1 million in prize funding was up for grabs to help the winners launch their solutions in the region. In the entrepreneurial venture track, the local company taking home a $200,000 prize was Dallas' Greenlight Credentials, an educational record-securing and -sharing platform that won for its software suite VitalSign6, which helps measure and treat mental illness in students.
After relocating from California to Dallas last December, Roots Food Group, a health product and medically customized meal kit distribution startup, landed Phoenix Suns player Chis Paul as an investor. Paul joins fellow NBA player Kevin Love as a backer of the company. Terms of the deal weren’t disclosed. However, The Dallas Morning News reports the investment are part of a larger fundraising effort. The report also notes that Roots is eyeing strategic acquisitions to expand its lineup of products.
Local biotech startup Allied Bioscience reported raising $2.75 million in funding from 20 investors out of a $3.5 million offering, per an SEC filing. As of May, when the company announced an early-stage investment in its Series C round from Kansas PE firm Capital 7, Allied had raised a total of $80 million since launching in 2005. At the time, the novel antimicrobial coating-focused company said it was looking to more than double its 50-person team.
Dallas-based Rs2 Ventures, a fintech firm focused on acquiring card payment solutions under the name BankWORKS, reported raising nearly $11.9 million from 19 investors for a venture capital fund titled Rs2 Ventures LP – SP Series A. According to its website, Rs2 was started as a core banking software provider in 1988, expanding into the U.S. in 2018. In a June shareholder presentation, Rs2 reported revenue of €26.8 million, or about $31.1 million.
Southlake-based medical device company Heart Test Lab, which does business as HeartSciences, reported raising $640,000 in debt funding from 14 investors. According to Crunchbase, the company has raised about $29.3 million since it was founded in 2008. Heart Test’s technology uses algorithms to detect cardiac conditions missed by traditional ECG devices. Its device, called MyoVista Wavelet ECG, has not been cleared by the FDA.
A technology company in Plano is bolstering its future with fresh funding from a firm with a presence on both coasts. AmplifAI, which produces software to help optimize call centers, announced an $18.5 million round closing. The new investment included $12 million of equity funding and $6 million in venture debt. It has overall funding of about $22 million, according to a spokesperson. The funding was led by Greycroft, which has offices in New York and Los Angeles.
Intending to launch its mobile platform early next year, Dallas fintech Otto raised a $4.5 million seed round led by Uncommon Capital, TechCrunch reports. Local investor Mark Cuban, Pelion Venture Partners, 1930 Capital, Bloom VP, Spacecadet Ventures and others joined the round. Founded by George Utkov, Jordan Miller and Daniel Ashy, Otto lets users leverage the equity in their vehicles to access credit. However, unlike traditional title loan lenders, Otto has no overdraft charges to help those financially in need.
Local biotech firm Allied Bioscience, which focuses on novel antimicrobial coatings designed to reduce infection and illness across public spaces, reported raising $600,000 in debt, equity and other options from six investors, per an SEC filing. In May, Allied announced raising an undisclosed amount from Kansas PE firm Capital7 with eyes on international expansion. Earlier this year, Allied moved into new offices in Plano. At the time, a company spokesperson said the company was planning to double its 50-person team.
LaunchBio got fresh funding for its local program. The company is a national life sciences nonprofit network that’s locally partnered with BioLabs, Lyda Hill Philanthropies and J. Small Investments on its biotech accelerator. Via the U.S. Economic Development Administration’s Build to Scale program and local matching donations, the organization has received $2.1 million in funding for its local program. The money will help LaunchBio expand its offerings and hire an internship and apprenticeship coordinator. Locally, LaunchBio is located at the Dallas Biotech+ hub at Pegasus Park, which also includes Taysha Gene Therapies and the UT Southwestern Medical Center as tenants.
Local entrepreneurial support organization The DEC Network has landed a $1 million grant from the U.S. Small Business Administration’s Community Navigator Pilot Program, which is aimed at reducing historical barriers for underrepresented founders. That amount of money represents nearly a year’s worth of operating budget. Locally, THE DEC will be working with the Veteran Women’s Enterprise Center, LiftFund, Dallas College, BCL of Texas and WiNGS to provide resources to entrepreneurs.
M&As
Fort Worth’s ECI Software Solutions, a business management solutions company, acquired U.K.-based Merchant Systems Group Limited, the maker of product data management solution eCommerceSense. The terms of the deal were not disclosed. The company will be incorporated into ECI's LBM and hardline group. ECI has 1,700 employees globally, with about 200 in DFW. Last year, the company saw nearly $303 million in revenue. The move follows ECI’s acquisition of Pennsylvania enterprise resource planning software firm Deacom.
Chicago PE firm GTCR acquired Lexipol, a Frisco-based software provider for public safety organizations and municipal governments, from The Riverside Company. The terms of the deal, which is expected to close this quarter, were not disclosed. Riverside has been growing Lexipol with add-on acquisitions since 2019. Lexipol was founded in 2003 and serves more than 8,000 agencies.
Systeem Medical Information Systems, a Plano-based IT solutions provider for the health care industry, was acquired by Salt Lake City’s Medsphere Systems Corporation for an undisclosed amount. According to Crunchbase, the move marks MedSphere’s seventh acquisition since launching in 2002.
Dairy.com, a Frisco-based technology and service provider to the (you guessed it) dairy industry, announced acquiring India’s last-mile dairy supply chain SaaS startup Mr.Milkman. Terms of the deal were not disclosed. The move marks Dairy.com’s expansion into the Indian market. According to a release, Mr.Milkman is used by more than 60 dairy brands in the country. In addition to the U.S., and now India, Dairy.com also has operations in Europe and has around 150 employees.
Investor Activity
The Jones family of Dallas Cowboys fame was one of a handful of investors in the VC firm Drive by DraftKings’ first fund. The firm, backed by Boston-based online sports-betting operator DraftKings Inc. is looking to invest $60 million in sports tech and entertainment companies. Other notable investors in the fund, which was raised in six months and oversubscribed by 20%, include The Kraft Group. The firm's current portfolio includes Boston-based fitness wristband maker Whoop Inc., which hit a $1 billion valuation last year and is also backed by SoftBank Vision Fund 2.
Fort Worth’s Harvest Returns, a crowdfunding agricultural investment platform, reported raising $855,000 in equity on a more than $1.5 million offering from 30 investors for a fund titled Harvest Invest-032 LLC. Since launching in 2016, Harvest has raised more than $17 million for early-stage businesses focused on agriculture technology and innovative practices.
High Circle Ventures, a Southlake-based alternative investment firm, is raising two new funds. Per SEC filings, the firm has raised $870,000 from 53 investors for its fund titled HCV 002 LLC and raised nearly $5.5 million from 92 investors for its HCV 003 LLC fund. Founded by Hemanth Golla, who also serves as a senior director and head of partner strategy and alliances at Plano’s NTT Data, High Circle has invested in big names like Klarna, Robinhood and SpaceX.
Hunt Technology Ventures, the Dallas-based investment arm of Hunt family, was one of a number of investors on an $80 million Series B round for biotech startup ReCode Therapeutics. Pfizer’s venture unit and EcoR1 Capital co-led the round. The funding will help ReCode build out a pilot manufacturing plant for its messenger RNA therapies.
With regulators still barred institutional capital from investing in the legal cannabis industry, Entourage Effect Capital sees the space ripe with opportunity. Anticipating legalization in the next three to seven years, the Dallas-based private equity firm is in the process of raising its third and largest fund, eyeing an initial target of $150M. Entourage's first fund, launched in 2014, raised around $25 million and was focused largely on seed-stage and early-capital investments since Hawkins said the industry was still in its fledgling stages at the time. Its oversubscribed second fund closed in 2019, raising about $60 million, focusing on Series A investments between $3 million to $5 million. Hawkins said the third fund would focus more on growth-stage equity investments between $10 million to $20 million.
Lufkin-based Harvest Farmacy, a maker of elderberry cider, announced raising a seed round via Fort Worth-based crowdfunding agricultural innovation investment platform Harvest Returns. Terms of the deal were not disclosed. Harvest Farmacey, started in 2018 by TCU grads Todd and Grace Vranac, said it plans to use the funding to expand production and market share. The company’s products are currently sold in a number of specialty health food retailers across Texas. The funding adds to the more than $17 million that’s been raised on Harvest Returns’ platform, since it launched in 2016.
Fort Worth’s biotech-focused venture capital firm Bios Partners is raising a new VC fund titled BIOS SIRPant Co-Invest I QP, LP. According to an SEC filing, Bios aims to raise $10 million in equity and pooled investment interests for the fund. It also lists Fort Worth family office Steelhead Capital Management and CAVU Ventures, founded by "Shark Tank" investor Rohan Oza, as general partners of the fund. So far, no money has been reported raised. Based on Bios’ previous activity in the early-stage biotech space, with investments in local startups like Lantern Pharma and Actuate Therapeutics, the new fund is likely tied to Pennsylvania-based startup SIRPant Immunotherapeutics, which focuses on using adoptive cell therapy to treat cancer cells. In July, SIRPant, led by CEO Robert Towarnicki, reported raising $6.2 million in equity out of a more than $25 million offering.
Speaking of investor activity, Fort Worth- and San Francisco-based investment giant TPG was one of many investors on a $208 million financing round for New York fintech company Trumid. Point Break Capital Management led the round. According to Crunchbase, that brings Trumid's total to more than $660 million. The company said the money would help it build out its credit trading platform and expand into new asset classes and geographies.
There’s a new investor on the scene. Based in Dallas and New York, Braemont Capital says it focuses on “relationship-driven” investments. Launched by Robert Covington, a former partner at private investment firm RedBird Capital Partners, Braemont will target B2B and B2C markets with control or minority equity investments between $25 million and $200 million. Based on SEC filings, Braemont launched a fund in August, but didn’t report raising any funding.
Fort Worth biotech investor BioAxess Investments raised $90,000 in equity, and pooled investment fund interests from four investors for a new fund called BioAxess Investments LLC Series D. The firm was co-founded by Hugo Del Pozzo, managing director of local PE firm Bravo Equity Partners, and co-founder of restaurant chain Chicken Salad Chick and wine brand Bodegas Pinea del Duero.
A new venture fund is targeting “gritty” and diverse Texas entrepreneurs. New York City-based The Fund, founded by Techstars Managing Director Jenny Fielding, created a Texas branch with a pre-seed fund. It’s planning to write checks of $50,000 to $100,000, which it will deploy mostly over the next 18 to 24 months. While not limited to startups, The Fund's managers have interests in SaaS, CPG, future of work and health technologies. The Fund is active in other locations, like Los Angeles and London. In Texas, it's aiming to raise between $2 million and $3 million.
Gauge Capital, a Southlake private equity firm with a track record of startup investments, announced that it had received a "strategic investment" from RidgeLake Partners, a partnership between Ottawa Avenue Private Capital and New York Life Investments Alternatives-affiliate PA Capital. The terms of the deal were not disclosed. According to a statement, there are no planned changes to Gauge's investment process or management, but the investment is expected to support the firm’s future growth and investment activities. RidgeLake focuses on minority equity stake deals with mid-market firms. The Gauge has been quite active recently. In September, it sold the teacher certification platform Teachers of Tomorrow to TPG. In August, it invested in Atlanta emergency tech company CENTEGIX. And in July, it invested cybersecurity company NINJIO.
Fort Worth agriculture crowdfunding investment platform Harvest Returns is raising two new funds. Based on SEC filings, the firm has raised $585,000 from 29 investors on a $1.06 million offering for its Harvest Invest-029 LLC fund. In a separate filing, it reported raising $815,000 in equity from 30 investors on a $2.08 million offering for its Harvest Invest-030 LLC fund. Since launching in 2016, Harvest has raised more than $17 million for early-stage businesses.
Dallas financing firm Cypress Growth Capital made the first investment from its recently-closed $50M fourth fund, Dallas Innovates reports. The firm was recently a part of a $2.8 million non-dilutive growth funding deal for Dallas-based Vision2 Systems, a digital connection platform for churches to connect with their congregations. The company, launched in 2012 by Co-founders Carl Tierney and Paul Baldwin, plans to use the funds to increase market awareness and sales. According to Crunchbase, this is Vision2’s first round of outside funding.
IPOs & SPAC Activity
Solo Brands, the Southlake-based holding company of Solo Stove and other outdoor lifestyle brands, hit the NYSE under the ticker DTC. The company raised $219 million with a valuation of $2.14 billion.
After announcing plans to go public on the NYSE late last month, Dallas private investment solutions provider P10 raised $240 million in its public offering. According to Axios, P10 has $5 million of net income on $67 million in revenue for the first half of 2021. It trades under the ticker PX.
A Dallas SPAC’s planned merger with a vertical farming firm failed to take root. Spring Valley Acquisition Corp. was planning to combine with New Jersey-based agtech company AeroFarms at the end of last month, but mutually agreed to terminate the deal after the blank check company didn’t have the minimum cash required for the deal. AeroFarms was valued at $850 million. The combined entity would have had a value of about $1.2 billion. Spring Valley said it still intends to combine with another business in the energy and sustainability space before the dissolution deadline of May 27, unless extended. It held its $230 million IPO last fall and in May reported having $347 million in cash.
After forming out of the combination of two biotech companies, which valued it at around $1.35 billion earlier this year, a Dallas-based vaccine maker is looking to go public. Vaxxinity, a synthetic peptide vaccine platform, filed to hit the Nasdaq under the ticker symbol VAXX. The company is seeking a listing size of $100 million, though that number is likely used as a placeholder. Pricing terms were not disclosed. The company currently has six therapies in its pipeline.
Israeli radar technology company Arbe Robotics, whose U.S. HQ is in Plano, is merging with Houston SPAC Tech Acquisitions Inc. (Nasdaq: ITAC). The combined company will retain the Arbe Robotics name and will become publicly traded on the Nasdaq today. Arbe's ordinary shares and warrants will trade on the Nasdaq under the ticker symbols "ARBE" and "ARBEW", respectively. Arbe will receive approximately $118 million in gross proceeds through the merger, including $100 million generated from a private placement of Arbe's ordinary shares. Arbe develops 4D imaging radar technology for autonomous vehicle vision and sensing. According to the Houston Business Journal, the company is eyeing an expansion in North Texas, though it didn’t specify details.
A little more than a year ago, BlackBoxStocks CEO Gust Kepler told NTX Inno the company’s growth amid the pandemic was propelling on a path toward the Nasdaq. Now, the company is making its play. The Dallas-based stock analytics and social media SaaS platform filed to go public on the market, seeking to raise $20 million and looking to trade under the ticker BLBX. Pricing terms were not disclosed. BlackBoxStocks currently trades on the OTC Pink market under the same ticker symbol. Check out a Q&A with Kepler here.
