World Bank launches first bond instrument built on a blockchain with the Australian Bank

The World Bank has launched the first bond on a blockchain with the Commonwealth Bank of Australia.

The A$110 million ($87 million) bond-i (blockchain operated new debt instrument) — so named, I’m assuming, because of Australia’s famed Bondi Beach (bankers have the funnies!) — is the first bond to be created, allocated, transferred and managed using distributed ledger technology.

The investment is one small step for Australian finance and one giant leap for blockchains in the world (or not).

Investors in the blockchain bond include CBA, First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA and Treasury Corporation of Victoria. It’s a smorgasbord of Australian state financial institutions and makes a ton of sense, because the Australian fintech community is one that’s strong, and blockchain is something that these institutions are definitely interested in exploring.

According to a statement from the World Bank, this will be one of many experiments that the global financial organization will make into blockchain research. Last June, the World Bank launched a Blockchain Innovation Lab to play around with the technology.

“We are particularly impressed with the breath [sic] of interest from official institutions, fund managers, government institutions and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets,” said World Bank Treasurer Arunma Oteh.

Australia bans Huawei and ZTE from supplying technology for its 5G network

Australia has blocked Huawei and ZTE from providing equipment for its 5G network, which is set to launch commercially next year. In a tweet, Huawei stated that the Australian government told the company that both it and ZTE are banned from supplying 5G technology to the country, despite Huawei’s assurances that it does not pose a threat to national security.

Earlier today, the Australian government issued new security guidelines for 5G carriers. Although it did not mention Huawei, ZTE or China specifically, it did strongly hint at them by stating “the Government considers that the involvement of vendors who are likely to be subject to extrajudicial directions from foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorized access or interference.”

Concerns that Huawei, ZTE and other Chinese tech companies will be forced to comply with a new law, passed last year, that obligates all Chinese organizations and citizens to provide information to national intelligence agencies when asked have made several countries wary of using their technology. Earlier this month, the United States banned the use of most Huawei and ZTE technology by government agencies and contractors, six years after a Congressional report first cited the two companies as security threats.

In its new security guidelines, the Australian government stated that differences in the way 5G operates compared to previous network generations introduces new risks to national security. In particular, it noted the diminishing distinctions between the core network, where more sensitive functions like access control and data routing occur, and the edge, or radios that connect customer equipment, like laptops and mobile phones, to the core.

“This new architecture provides a way to circumvent traditional security controls by exploiting equipment in the edge of the network – exploitation which may affect overall network integrity and availability, as well as the confidentiality of customer data. A long history of cyber incidents shows cyber actors target Australia and Australians,” the guidelines stated. “Government has found no combination of technical security controls that sufficiently mitigate the risks.”

Last year, Australia introduced the Telecommunications Sector Security Reforms (TSSR), which takes effect next month and directs carriers and telecommunication service providers to protect their networks and infrastructure from national security threats and also notify the government of any proposed changes that may compromise the security of their network. It also gives the government the power to “intervene and issue directions in cases where there are significant national security concerns that cannot be addressed through other means.”

Huawei’s Australian chairman John Lord said in June that the company had received legal advice that its Australian operations are not bound to Chinese laws and he would refuse to hand over any data to the Chinese government in breach of Australian law. Lord also argued that banning Huawei could hurt local businesses and customers by raising prices and limiting access to technology.

TechCrunch has contacted ZTE and Huawei for comment.

Stealthy Singapore VC firm Qualgro is raising a $100M fund

Southeast Asia’s venture capital space is booming right now. Openspace Ventures just announced the close of its newest $135 million fund, Golden Gate Ventures hit the first close on its upcoming $100 million vehicle, and a third Singapore-based fund is also raising big right now: Qualgro.

Unlike others, Qualgro has operated relatively under the radar to date.

That’s been very deliberate, according to managing partner Heang Chhor, who started the firm after leaving McKinsey following a 26-year stint that spanned Europe and Asia. Cambodian by birth, Chhor grew up in France and he rose to become a member of the McKinsey Global Board, whilst also leading the business in Japan.

Prior to McKinsey, Chhor started a number of businesses — of which he says he got a modest exit but plenty of experience — and now he is turning his attention to Southeast Asia, where growing internet access among a cumulative base of 650 million consumers is opening up new opportunities for tech and internet businesses. The region’s digital economy is forecast to pass $200 billion by 2020, up from an estimated $50 billion in 2017, according to a much-cited report from Temasek and Google.

Qualgro — which stands for ‘quality’ and ‘growth,’ in case you wondered — opened its doors in 2015 with a maiden $50 million fund. Alongside Chhor is Jason Edwards, formerly with PE firm Clearwater Capital and Peter Huynh, who joined from the Singtel Innov8 VC arm. To date, Qualgro has made 19 investments, which include IP and data firm Patsnap, e-commerce startup Shopback, and lending platform Funding Societies.

The aim is to super-size that with this new fund, which this week completed a first close of $60 million. The total target is $100 million. Qualgro didn’t comment on the identity of its LPs, but it said the increased capital will see it further its efforts on Series B deals.

The firm has focused on Series A and B deals in Southeast Asia so far with a primary interest in b2b businesses, and those that use data, AI, enterprise and Sass models. Beyond that b2b specialism, the firm looks to distinguish itself by offering international growth opportunities to its portfolio. That’s to say that Chhor uses his networks across the world to help Southeast Asia-based companies expand into new geographical markets — especially on issues like setting up offices and hiring — whilst also tapping his connections within the enterprise and business worlds.

“As a Southeast Asia-based VC, we are looking for talented people that are able to grow their company regionally and potentially become a real global player. It’s a little bit difficult because as a Southeast Asian entrepreneur you need to have certain skills and be on the right business model to access the global world and compete successfully [but] we invest in this type of talent irrespective of their country in Southeast Asia,” Chhor told TechCrunch.

[Left to right] Heang Chhor, Qualgro founder and managing partner, Jason Edwards, co-founder and partner, and Peter Huynh, co-founder and partner

That’s been most visible with its efforts in Australia to date. For example, Qualgro has worked closely with Shopback to expand its service into the country. While Patsnap, too, has leveraged its investor to expand into Europe, where it has a sizeable operation in addition to its Singapore HQ.

But the strategic deals also flow the other way.

Qualgro is looking to back companies that seek the opportunities to move into Southeast Asia. To date that has seen it get active in the Australian market, where it has done more deals that other Southeast Asian VC firm. Those include Data Republic, which has expanded to Singapore with plans to go beyond that, too.

Chhor explained that, beyond its current scope on Southeast Asia and Australia, the firm is open to pursuing deals with companies in markets like Europe and Japan when there are opportunities for Qualgro to come in as a strategic investor help grow businesses and expand networks across Asia.

Indeed, Qualgro’s focus on international is reflected in its team which consists of six people in Singapore with one in Australia and an advisor in Europe.

India’s Uber rival Ola is headed to Europe with ride-hailing launch in the UK

The UK is getting a new alternative to Uber after India-based ride-hailing company Ola announced plans to expand to the country, which will become its first market in Europe.

Ola was founded in 2010 and it covers over 110 cities in India where it offers licensed taxis, private hire cars and rickshaws through a network of over one million drivers. The company has raised around $3 billion from investors that include SoftBank, Chinese duo Tencent and Didi Chuxing and DST Global . It was last valued at $7 billion. Ola ventured overseas for the first time when it launched in Australia earlier this year — it is now in seven cities there — and its move into the UK signals a further expansion into Europe.

Ola’s UK service isn’t live right now, but the company said it will begin offering licensed taxi and private hire bookings initially in South Wales and Greater Manchester “soon.” Ola plans to expand that coverage nationwide before the end of this year. That will eventually mean taking on Uber and potentially Taxify another unicorn startup backed by Didi which is looking to relaunch in the UK — in London and other major cities.

So, why the UK?

Ola CEO and co-founder Bhavish Aggarwal called the country “a fantastic place to do business” and added that he “look[s] forward to providing a responsible, compelling, new service that can help the country meet its ever demanding mobility needs.”

It’s no secret that Uber has struggled in London, where its gung-ho attitude to business — ‘launch first, apologize later’ — has seen it run into issues with regulators. Uber (just about) won a provisional 15-month transport license earlier this year following an appeal against the city’s transportation regulator, Transport for London (TfL) earlier rejected its application.

The’ New Uber’ — under CEO Dara Khosrowshahi — is trying to right the wrongs of the past, but compliance with regulators takes time and requires wholesale changes to business, operations and company culture.

Ola isn’t commenting directly on its rivalry with Uber — we did ask, but got a predictable “no comment” — but the tone of its announcement today shows it is focused on being a more collaborative player than Uber.

Indeed, there’s been much groundwork. Aggarwal met with regulators in London last year and he said in a statement released today that he plans “continued engagement with policymakers and regulators” as the Ola service expands across the UK.

International expansion is very much part of Ola’s ambition to go public, which Aggarwal recently said could happen in the next three to four years. But Ola isn’t alone in looking overseas. Didi, the firm that defeated Uber in China and has backed Ola, Taxify and many others, has also been busy moving into new markets.

Last year, the firm raised $4 billion to double down on technology, AI and go overseas and it has come good on that promise by entering MexicoAustralia and Taiwan. It also landed Brazil through the acquisition of local player and Uber rival 99 and it is preparing to go live in Japan, where it will operate a taxi-booking service through a joint venture with SoftBank.

Kredivo raises $30M to build a digital credit card for Southeast Asia

FinAccel, a Southeast Asia-based startup that offers a digital credit card service in Indonesia, has closed a $30 million Series B round as it begins to consider overseas expansion.

The company launched its ‘Kredivo’ service two years ago to help consumers pay online in Southeast Asia, where credit card penetration is typically low, and it is essentially the combination of a digital credit card and PayPal. The service is available in Indonesia, Southeast Asia’s largest economy, where it uses a customer’s registered phone number — there is no physical credit card — and a dedicated checkout on online retail websites.

For consumers, the service offers a 30-day payback option and then more longer-term options of three, six and 12-month payback windows. The 30-day option is interest-free, but other plans come with a 2.95 percent per month charge on the reducing principle, which effectively makes it 25 percent flat.

FinAccel says it has credit scored close to two million consumers in Indonesia, while on the retail side it has partnered with 200 online sales platforms including large names such as Alibaba’s Lazada, Shopee (which is owned by U.S.-listed Garena), and unicorn Tokopedia, which counts SoftBank and Alibaba among its investors.

This new investment, by the way, is a notable one for Southeast Asia, which has generally been considered to have a gap in Series B funding, so $30 million for a two-year-old business is quite something.

The round itself is led by Australia’s Square Peg Capital — in what is one of its highest-profile overseas deals to date — alongside new investors MDI Ventures, which is affiliated with Telkom Indonesia, and UK-based Atami Capital. Existing investors Jungle Ventures, Openspace Ventures, GMO Venture
Partners, Alpha JWC Ventures and 500 Startups also took part in the round.

FinAccel founders (left to right) Umang Rustagi (COO), Akshay Garg (CEO) and Alie Tan (head of product engineering)

The startup raised a seed round of over $1 million in 2016, before quietly raising a $5 million Series A last year, FinAccel co-founder CEO Akshay Garg revealed in an interview with TechCrunch.

Garg, who founded ad tech firm Komli, said the company is processing “hundreds of millions” in U.S. dollars per year and the immediate plan is to keep growing in Indonesia. Already, however, it is eyeing up potential expansions with its first move overseas is likely to be in Southeast Asia in early 2018, although he declined to provide more details.

“Our goal is to become the preferred digital credit card for millennials in Southeast Asia,” he told TechCrunch. “Those are consumers who are mobile-first and already bankable. The credit gap in this market is huge, there’s no electronic verification and other things that we take for granted in the West just don’t work here.”

FinAccel isn’t going after the unbanked in the region, but it also isn’t going after banks either. Garg said that it is possible that the company might try to work with banks in the future in order to grow its market share and offer new products.

One area it is looking at is financial products — such as loans for personal, educational and emergency purposes — but there could be ways to leverage its online presence and adoption among young people and work with existing financial institutions, which he believes simply aren’t equipped to reach out in the same way.

“We don’t see ourselves disrupting the banks, we are more partners,” he explained. “We could partner on balance sheet and on issuing credit cards to offer more efficient and seamless financial inclusion at best possible rates.”

Note: The headline of this article was changed to reflect that Kredivo is the consumer-facing brand, although FinAccel remains the company name.

Hong Kong co-working startup Campfire pulls in $18M ahead of global expansion

WeWork may be doubling down on Asia, having initially focused its efforts on China, but that isn’t stopping local players from hatching ambitious expansion plans of their own.

One of those eying new markets is Hong Kong-based Campfire, which tries to stand out from the crowd with industry-focused spaces. Today, the startup announced it has raised an $18 million Series A ahead of planned expansions to three overseas countries: Singapore, Australia and the UK. It previously raised $6 million in March 2017.

Two-year-old Campfire’s business right now is in Hong Kong, where it has eight locations which include co-education, co-retail and co-living sites, as well as more standard co-working venues. In the case of its fashion-focused location, that even includes runway, photo studio, fabric facility and 3D printer.

The new capital comes from a trio of real estate firms in Hong Kong, they are Kwai Jung Group, Fast Global Holdings — which is a subsidiary of Rykadan Capital — and Sa Sa. In the latter case, Sa Sa is actually a cosmetics brand that operates across Greater China and parts of Southeast Asia, but the firm owns a significant retail footprint. That includes the building that houses Campfire’s ‘V Point’ space in Causeway Bay, Hong Kong, so the relationship is already well advanced.

A Campfire representative confirmed that the capital is all provided up front and equity-based, in other words it is an investment in the business not specific locations or joint ventures, as is sometimes the case with investment deals in co-working firms.

Going beyond Hong Kong, the group is set to open its first overseas space in London (Shoreditch) with co-working locations in Melbourne, Sydney and Singapore planned thereafter. Further down the line, it is looking to move into “global gateway cities,” with the likes of Tokyo, Osaka, Bangkok and Brisbane among those that are on the list.

Co-working is sufficiently developed worldwide that most countries across Asia have a number of local players who compete with WeWork, the global leader valued at $35 billion, either now or else soon in the future. Some of the more developed of that bunch include Singapore’s JustCoEV Hive in Indonesia and China’s Ucommune. WeWork has actually been busy consolidating its position, having snapped up Spacemob in Southeast Asia and its main rival in China, Naked Hub.

China’s Didi Chuxing is close to launching a taxi-booking service in Japan

Days after raising $500 million via a strategic investment from travel giant Booking Holdings, Chinese ride-hailing giant Didi Chuxing has continued its international push with the launch of a local business in Japan.

Its new Japan-based unit is a joint venture with SoftBank, a longtime Didi investor, which has been in the works since an announcement back in February. Today’s news isn’t that the service is live yet — it isn’t — but rather than the JV has been formally launched.

Didi did say, however, that it plans to launch services for passengers, drivers and taxi operators in Osaka, Kyoto, Fukuoka, Tokyo and other major cities from autumn this year. Didi said that its users in China and Hong Kong will be able to use the soon-to-launch Japan service through their regular Didi app — that’s interesting since a ‘roaming’ strategy involving Lyft and others arranged years ago never came to fruition.

And yes, you did read correctly that taxi operators are part of the target audience. That’s because Japan doesn’t allow unlicensed private cars to operate as taxis.

That’s made the country a real challenge for Uber, which has held talks with taxi operators, and it also explains why one of the leading ride-hailing service in Japan — JapanTaxi — is backed by the taxi industry. JapanTaxi is even owned by an insider, Ichiro Kawanabe, who runs Japan’s largest taxi operator Nihon Kotsu and heads up the country’s taxi federation.

Working with taxi operators means Didi has a fleet management platform, as above, as part of its Japan-based service.

That concession on working with taxis doesn’t necessarily mean that Didi isn’t focused on widening the market by enabling “ride-sharing” with non-taxi drivers in the future.

Reuters reports that SoftBank supremo Masayoshi Son — one half of the Didi Japan joint venture — made some family scathing comments at an annual event.

“Ride-sharing is prohibited by law in Japan. I can’t believe there is still such a stupid country,” Son is said to have remarked.

Didi, of course, is playing things more cautious as it rides into Japan.

The company said that the country, which is the world’s third-largest market based on taxi ride revenue, “holds great potential as a market for online taxi-hailing.”

“There is earnest demand for more convenient urban and regional transportation services, especially in light of the growing population of senior citizens,” Didi added via a statement.

The Japanese expansion is another example of Didi’s push to internationalize its service beyond China in 2018. Last year, it raised $4 billion to double down on technology, AI and move into new markets, and this year it has come good on that promise by entering Mexico, Australia and Taiwan. While over in Brazil, it leaped into the market through the acquisition of local player and Uber rival 99.

The 99 deal was a particularly interesting one since Didi had previously backed the company via an investment. Didi didn’t say much about the mechanics of that strategy, but it has investments in ride-sharing companies worldwide, including Lyft, Grab, Ola, Careem and Taxify, which you’d imagine, like 99, could be converted into full-on acquisitions at some point in moves that would speed up that international expansion.

TechCrunch’s Startup Battlefield is coming soon to Beirut, São Paolo and Lagos

Everyone knows there are thriving startup communities outside of obvious hubs, like San Francisco, Berlin, Bangalore and Beijing, but they don’t always get the support they deserve. Last year, TechCrunch took a major page from its playbook, the Startup Battlefield competition, and staged the event in Nairobi, Kenya to find the best early stage startup in Sub-Saharan Africa, and also to Sydney, Australia, to find the same for Australia and New Zealand. Both were successes, thanks to talented founders and the hard traveling TechCrunch team. And now we’re pleased to announce that we’re stepping up our commitment to emerging ecosystems.

TechCrunch is once again teaming up with Facebook, our partner for last year’s Nairobi event, to bring the Startup Battlefield to three major cities representing regions with vital, emerging startup communities. In Beirut, TechCrunch’s editors will strive to find the best early stage startup in the Middle East and North Africa. In São Paolo, the hunt is for the best in Latin America. And in Lagos, Nigeria, TechCrunch will once again find the top startup in Sub-Saharan Africa.

Early stage startups are welcome to apply. We will choose 15 companies in each region to compete, and we will provide travel support for the finalists to reach the host city. The finalists will also receive intensive coaching from TechCrunch’s editors to hone their pitches to a razor’s edge before they take the stage in front of top venture capitalists from the region and around the world. Winners will receive $25,000 plus a trip for two to the next TechCrunch Disrupt event, where they can exhibit free of charge, and, if qualified, have a chance to be selected to participate in the Startup Battlefield competition associated with that Disrupt. In the world of founders, the Startup Battlefield finalists are an elite; the more than 750 Startup Battlefield alums have raised over $8 billion and produced 100+ exits to date.

What are the dates? They will be finalized shortly but Beirut is on track for early October, São Paolo for early November, and Lagos in early December.  In the meantime, founders eager start an application for one of these Startup Battlefields may do so 
by visiting apply.techcrunch.com . Look for more details next week.

Interested in sponsoring one of the events? Email us at Sponsors@TechCrunch.com

China’s Didi Chuxing continues its international expansion with Australia launch

Didi Chuxing, China’s dominant ride-hailing company, is continuing its international expansion after it announced plans to launch in Australia this month.

The company — which bought Uber’s China business in 2016 — said it will begin serving customers in Melbourne from June 25 following a month-long trial period in Geelong, a neighboring city that’s 75km away. The business will be run by a Didi subsidiary in Australia and it plans to offer “a series of welcome packages to both drivers and riders” — aka discounts and promotions, no doubt. It began signing up drivers on June 1, the company added.

The Australia launch will again put Didi in direct competition with Uber, but that is becoming increasingly common, and also Ola and Didi which both count Didi as an investor — more on that below. This move follows forays into Taiwan, Mexico and Brazil this year as Didi has finally expanded beyond its China-based empire.

Didi raised $4 billion in December to develop AI, general technology and to fund international expansion and it has taken a variety of routes to doing the latter. This Australia launch is organic, with Didi developing its own team, while in Taiwan it has used a franchise model and it went into Brazil via acquisition, snapping up local Uber-rival 99 at a valuation of $1 billion.

It is also set to enter Japan where it has teamed up with investor SoftBank on a joint-venture.

“In 2018, Didi will continue to cultivate markets in Latin America, Australia and Japan. We are confident a combination of world-class transportation AI technology and deep local expertise will bring a better experience to overseas markets,” the company added in a statement.

This international expansion has also brought a new level of confusion since Didi has cultivated relationships with other ride-hailing companies across the world while also expanding its own presence internationally.

The Uber deal brought with it a stock swap — turning Didi and Uber from competitors into stakeholders — and the Chinese company has also backed Grab in Southeast Asia, Lyft in the U.S., Ola in India, Careem in the Middle East and — more recentlyTaxify, which is primarily focused on Europe and Africa.

In the case of Australia, Didi will come up against Uber, Ola — present in Melbourne, Perth and Sydney via an expansion made earlier this year — and Taxify, too. Uber vs Didi is to be expected — that’s a complicated relationship — but in taking on Ola (so soon after it came to Australia), Didi is competing directly with a company that it funded via an investment deal for the first time.

That might be a small insight into Didi’s relationship with Ola. Unlike Grab, which has seen Didi follow-on its investments, the Chinese firm sat out Ola’s most recent fundraising last year despite making an investment in the company back in 2015.

“The ride-hailing industry is still a young business, and the potential for growth is substantial. Competition exists in ride-hailing, like in any flourishing industry. But it leads to better products and services, which ultimately benefits users,” Didi told TechCrunch in a statement when asked about its new rivalry with Ola and Taxify.

That’s a similar sentiment to Taxify: “With a market the size of Australia, we think there is room for multiple players to operate and grow,” a spokesperson told TechCrunch.

Ola declined to comment.

The move into Australia comes at a time when Didi is under intense pressure following the death of a passenger uses its ‘Hitch’ service last month.

The company suspended the Hitch service — which allows groups people who are headed in the same direction together — and removed a number of features while limiting its operations to day-time only. This week, it said it would resume night-time rides but only for drivers picking up passengers of the same sex.

US startups off to a strong M&A run in 2018

With Microsoft’s $7.5 billion acquisition of GitHub this week, we can now decisively declare a trend: 2018 is shaping up as a darn good year for U.S. venture-backed M&A.

So far this year, acquirers have spent just over $20 billion in disclosed-price purchases of U.S. VC-funded companies, according to Crunchbase data. That’s about 80 percent of the 2017 full-year total, which is pretty impressive, considering we’re barely five months into 2018.

If one included unreported purchase prices, the totals would be quite a bit higher. Fewer than 20 percent of acquisitions in our data set came with reported prices.1 Undisclosed prices are mostly for smaller deals, but not always. We put together a list of a dozen undisclosed price M&A transactions this year involving companies snapped up by large-cap acquirers after raising more than $20 million in venture funding.

The big deals

The deals that everyone talks about, however, are the ones with the big and disclosed price tags. And we’ve seen quite a few of those lately.

As we approach the half-year mark, nothing comes close to topping the GitHub deal, which ranks as one of the biggest acquisitions of a private, U.S. venture-backed company ever. The last deal to top it was Facebook’s $19 billion purchase of WhatsApp in 2014, according to Crunchbase.

Of course, GitHub is a unique story with an astounding growth trajectory. Its platform for code development, most popular among programmers, has drawn 28 million users. For context, that’s more than the entire population of Australia.

Still, let’s not forget about the other big deals announced in 2018. We list the top six below:

Flatiron Health, a provider of software used by cancer care providers and researchers, ranks as the second-biggest VC-backed acquisition of 2018. Its purchaser, Roche, was an existing stakeholder who apparently liked what it saw enough to buy up all remaining shares.

Next up is job and employer review site Glassdoor, a company familiar to many of those who’ve looked for a new post or handled hiring in the past decade. The 11-year-old company found a fan in Tokyo-based Recruit Holdings, a provider of recruitment and human resources services that also owns leading job site Indeed.com.

Meanwhile, Impact Biomedicines, a cancer therapy developer that sold to Celgene for $1.1 billion, could end up delivering an even larger exit. The acquisition deal includes potential milestone payments approaching nearly $6 billion.

Deal counts look flat

Not all metrics are trending up, however. While acquirers are doing bigger deals, they don’t appear to be buying a larger number of startups.

Crunchbase shows 216 startups in our data set that sold this year. That’s roughly on par with the pace of dealmaking in the year-ago period, which had 222 M&A exits using similar parameters. (For all of 2017, there were 508 startup acquisitions that met our parameters.2)

Below, we look at M&A counts for the past five calendar years:

Looking at prior years for comparison, the takeaway seems to be that M&A deal counts for 2018 look just fine, but we’re not seeing a big spike.

What’s changed?

The more notable shift from 2017 seems to be buyers’ bigger appetite for unicorn-scale deals. Last year, we saw just one acquisition of a software company for more than a billion dollars — Cisco’s $3.7 billion purchase of AppDynamics — and that was only after the performance management software provider filed to go public. The only other billion-plus deal was PetSmart’s $3.4 billion acquisition of pet food delivery service Chewy, which previously raised early venture funding and later private equity backing.

There are plenty of reasons why acquirers could be spending more freely this year. Some that come to mind: Stock indexes are chugging along, and U.S. legislators have slashed corporate tax rates. U.S. companies with large cash hordes held overseas, like Apple and Microsoft, also received new financial incentives to repatriate that money.

That’s not to say companies are doing acquisitions for these reasons. There’s no obligation to spend repatriated cash in any particular way. Many prefer share buybacks or sitting on piles of money. Nonetheless, the combination of these two things — more money and less uncertainty around tax reform — are certainly not a bad thing for M&A.

High public valuations, particularly for tech, also help. Microsoft shares, for instance, have risen by more than 44 percent in the past year. That means that it took about a third fewer shares to buy GitHub this month than it would have a year ago. (Of course, GitHub’s valuation probably rose as well, but we’ll ignore that for now.)

Paying retail

Overall, this is not looking like an M&A market for bargain hunters.

Large-cap acquirers seem willing to pay retail price for startups they like, given the competitive environment. After all, the IPO window is wide open. Plus, fast-growing unicorns have the option of staying private and raising money from SoftBank or a panoply of other highly capitalized investors.

Meanwhile, acquirers themselves are competing for desirable startups. Microsoft’s winning bid for GitHub reportedly followed overtures by Google, Atlassian and a host of other would-be buyers.

But even in the most buoyant climate, one rule of acquiring remains true: It’s hard to turn down $7.5 billion.

  1. The data set included companies that have raised $1 million or more in venture or seed funding, with their most recent round closing within the past five years.
  2. For the prior year comparisons, including the chart, the data set consisted of companies acquired in a specified year that raised $1 million or more in venture or seed funding, with their most recent round closing no more than five years before the middle of that year.