Forage into the Future #5
On: BigTech's domination of AI over VCs, China's $10B Web3 fund, Raytheon + DARPA's Wireless Energy Project, TSMC's trillion transistor chip, AI stethoscopes, and the world's largest solar project.
Hi folks! Happy New Year to all my subscribers (and thank you for your continued support!)
In this edition of the Forage Into The Future newsletter, you can find updates on 🦄Venture Capital & Private Equity, 💻AI, ♻️Energy, 🚀Space and 🧬Genomics & Biotechnology.
🦄Venture Capital & Private Equity
Pitchbook’s Biopharma Q3 2023 Report is out. Some interesting insights from the sector on the overall deal-making volume and trends in Biopharma [The TLDR being that there seems to be a recalibration in the market towards pre-pandemic volumes]:
Despite a year-over-year downward trend in dealmaking, projections suggest a modest rise in deal values, potentially exceeding $24 billion across approximately 840 transactions by the end of the year.
On the exit activity front, the number of acquisitions plummeted from the 2021 high of 200 deals totaling $86.4 billion to the low of 77 deals totaling $23.4 billion in 2022. Currently, 2023 is projected to have around 84 deals totaling $17.9 billion.
The greatest loss for exits was in the IPO market, with a 71% drop in deal count from 154 to 45, while acquisitions experienced a 28% decrease from 45 to 32 during the 2021-to-2022 market shift. The exit split by the end of 2023 does not differ greatly from 2022, with projections of 55 IPOs and 29 acquisitions
BigTech is dominating VC in the AI sector: AI startups have raised $27B so far this year, per Pitchbook data seen by FT. Two-thirds (~66%) of the total funding was provided by big tech companies, including Microsoft, Google, and Amazon. A part of this reason could be that startups prefer getting investment from BigTech as many of them also come with computing power deals that help them reduce their AI model building and training costs significantly.
In the private markets, turns out that leveraged loans are now harder and more expensive for companies to utilize. As a result of the tighter lending environment, the average price paid for large acquisitions (those exceeding $2.5 billion) has dropped dramatically, according to analysis of PE Buyout deals. The median enterprise value-over-revenue multiple for such deals fell by 60% compared to 2022, from 4.8x to 3.2x. Despite the overall decline in multiples, the stricter lending conditions also created opportunities for some buyers to find attractive targets at lower prices.
Carta recently shared some insights on the trends for startups fundraising for their Series A. Some insights off the bat from a bare perusal of the data shared by Carta:
Renewables is the top industry in terms of median cash raised, with a median of $14.2 million.
Proptech is the second-highest industry in terms of median cash raised, with a median of $14.0 million.
The median pre-money valuation for Series A startups in 2023 is $10 million. This is down from $12 million in 2022, which suggests that investor valuations are becoming more cautious.
The number of Series A funding rounds in 2023 is down about 50% from 2022. Despite the decline in funding, there are still a number of industries that are attracting significant investment (see below).
A Tale of a Tiger & a Dragon (India x China):
VCs invested $1.5B in Indian startups in the last month of the year, surpassing 2023’s previous peak of $1.4B set in January. However, the overall trajectory of VC funding remains at a seven-year low with $8.8B in VC funding this year.
A significant surge in December is attributed to investments like Walmart's $600M in Flipkart and M&G Prudential's $340M in Udaan. Lenskart also raised $450M through secondary share sales from ChrysCapital and Abu Dhabi Investment Authority.
Exit opportunities for investors in Indian startups were limited, leading to a rise in prominence of secondary share sales in 2023, which is expected to continue into the next year.
In stark contrast, for China, over three years until June 30, 2023, U.S. public pensions invested more than $68B in Chinese private companies and investment funds, including venture capital and private equity funds.
At least one public pension fund in 42 states supported PE and VC funds in China and Hong Kong, while 17 states invested over 2% of their assets in Chinese private entities.
The Biden administration had previously imposed restrictions on U.S. investment in Chinese tech companies amid escalating tensions. However, some in the government are advocating for more stringent measures, pointing out the perceived inconsistency that China’s economic system has with the WTO framework.
FirstCry's IPO Saga: FirstCry, a baby products e-commerce startup, aims to raise $218M through its upcoming IPO, significantly lower than the initially intended $700M, targeting a valuation of $4B, marked down from the earlier $6B valuation it was pegged at.
Notable investors in FirstCry include SoftBank, NewQuest, and TPG, expecting a substantial return from the IPO listing. The proceeds from the IPO are earmarked for various initiatives like establishing new stores and warehouses, expanding sales and marketing efforts, both domestically and internationally, reducing technology costs, and facilitating potential acquisitions.
The platform lists products from over 6,800 brands. While the total income doubled from $302M to $688.4M in the fiscal year ending March 2023, losses surged from $9.4M to $58.3M during the same period.
China is set to make waves in Web3:
GBA Capital's chairman, Haolong Li, announced plans for global tours in various regions like Japan, Singapore, Dubai, Silicon Valley, and Europe, aimed at promoting meta-assets and fostering international cooperation.
Established by the China Europe International Financial Group, GBA Capital focuses on investing in digital economy ventures. Their subsidiary, Zhongrong Capital, secured angel funding to support Web3 project incubation and industrial services within the AI sector earlier this year.
💻 Artificial Intelligence
Chip war heats up: TSMC eyes a trillion transistors by 2030, Intel throws shade at 2nm: Get ready for a silicon showdown, folks. TSMC (Taiwan Semiconductor Manufacturing Company), the chipmaking kingpin, just unveiled its roadmap for the next decade, and it's a doozy. They're aiming to cram a mind-boggling one trillion transistors onto a single chip package by 2030, stacking layers like a futuristic skyscraper.
But how? TSMC's got a few tricks up their sleeve. They're betting big on chiplet designs, where instead of carving everything from one giant silicon wafer, they'll mix and match smaller, specialized chips like Lego blocks. This lets them squeeze in more transistors without pushing the limits of physics (and their wallets).
Meanwhile, Intel's not sitting idle. They're touting their own 2nm process, arriving a year earlier than TSMC's, and boasting a fancy new backside power delivery system for extra oomph. But TSMC's CEO isn't impressed, claiming their 3nm chips already match Intel's 18nm in terms of performance. It's a battle of tech titans, and the prize is your next smartphone, laptop, or maybe even that AI assistant that folds your laundry.
So, what does this mean for you, the average tech enthusiast? Well, more transistors translate to faster, more efficient chips, which means everything from smoother gaming to mind-blowing AI applications. But there's a catch: as we shrink these transistors, physics starts throwing tantrums. (Quantum tunneling, anyone?) It's a delicate dance between power and practicality, and it'll be fascinating to see who wins this silicon waltz.
There are some serious hurdles to overcome. Shrinking transistors comes with its own set of physical limitations, like quantum tunneling (electrons just leaking out!) and heat dissipation (these things get hot, fast!). And then there's the cost – building these chipmaking marvels ain't cheap.
Microsoft’s Vision of AI-Powered Laptops: Microsoft’s future Surface Pro 10 and Surface Laptop 6, slated for a 2024 debut, will be fortified with advanced AI capabilities and neural processing units (NPU).
These devices, running on either Intel's Meteor Lake processors or Qualcomm's Snapdragon X chips, house NPUs tailored for accelerating AI applications. Expect these AI-enhanced devices to be harmoniously synced with Windows' "Hudson Valley" release.
Baidu’s ‘Ernie Bot' has a surging popularity: Baidu's Ernie Bot has crossed a monumental milestone, claiming a user base of over 100 million, securing its place as China's leading AI chatbot.
Launched earlier this year based on Baidu's internally developed language model, Ernie 4.0, this AI marvel touts capabilities akin to OpenAI's GPT-4.
Its multifaceted prowess spans text, image, and video generation, though predominantly operating in Mandarin Chinese with English language handling gradually advancing.
AI Stethoscopes? In the UK, over 200 general practitioners are piloting Eko's cutting-edge AI stethoscope.
This groundbreaking device, the first sanctioned for primary care prescription without initial specialist review, adeptly identifies heart ailments like heart failure, atrial fibrillation, and valvular heart disease.
Eko's AI acts as an aid, flagging potential cardiac issues for further testing. The implementation of such AI-driven tools could significantly alleviate the strain on healthcare systems facing substantial non-emergency appointment backlogs.
Debating AI's Role in Hiring & Increasing Bias: A recent survey highlighted a significant concern: roughly 34% perceive AI hiring tools to exhibit more biases than human recruiters.
The skepticism intensifies among U.S. job seekers, with about 49% expressing doubts regarding AI tools' impartiality.
Although 39% of job seekers admit to using AI tools for job applications, this usage doesn't necessarily signify trust in their fairness. Industry voices advocate for transparent, unbiased AI tools to revolutionize the recruitment landscape.
Adani Group and UAE's AI Collaboration: The partnership between Adani Group and UAE's International Holding Co. births Sirius Digitech International Ltd., a venture focused on deploying advanced AI and blockchain technologies.
Nestled in Abu Dhabi, this alliance aims to harness the potential of AI and blockchain for industrial applications.
This strategic move aligns with India's burgeoning AI sector, set to make substantial contributions to the nation's GDP in the coming decade.
AI's Funding Frenzy: The AI funding ecosystem is ablaze with activity:
Moreover, BotBuilt's $12.4M seed funding underscores the rising prominence of robotics in homebuilding.
Intriguing AI Insights and Developments: Beyond these pivotal snippets, intriguing developments abound: AI chatbots generating prompts for other bots, Google Assistant utilizing AI for text summarization, and even speculation surrounding AI-generated content in Kanye West's recent apology. The spectrum of AI's capabilities and applications continues to astound!
♻️Energy
Raytheon’s Wireless Energy Project Takes Flight with DARPA: This isn't just science fiction anymore – Raytheon is teaming up with DARPA to create a groundbreaking system for wirelessly transmitting electricity.
Think of it as a "wireless internet for energy." Under the two-year contract called the Persistent Optical Wireless Energy Relay (‘POWER’) program, Raytheon will create an airborne relay design to enable "webs" capable of harvesting, transmitting and redirecting optical beams. These "webs" will transmit energy from ground sources to high altitude for the precision, long-range operation of unmanned systems, sensors and effectors. Harvesting energy will ultimately reduce the military's dependence on fuel as well as its delivery and storage.
Some core challenges remain, such as: (1) Converting energy to lasers and back again can be energy-intensive, so maximizing efficiency will be crucial; (2) High-powered lasers require careful control and safety measures to ensure they don't pose a risk to people or wildlife; and (3) New regulations and standards may be needed to govern the use of this technology.
So a dose of reality: flying power stations delivering energy across the globe are still a long way off, but this project paves the way for a future where energy can be harnessed through unprecedented means & delivered to remote areas.
The world’s largest solar project just broke ground in Philippines! Terra Solar, owned by SP New Energy Corporation (SPNEC) subsidiary Terra Solar Philippines, Inc. is set to be the world’s largest solar project once completed. Spread over 3,500 hectares of land, it has 3,400 megawatts of solar panels (which makes it larger than India's Bhadla and China's Golmud solar farms) with 4,000 megawatt hour (MWh) of battery storage.
With an estimated cost of around 200 billion Philippine Pesos (~US$3.6 billion), it is capable of generating up to 5 billion kilowatt-hour (kWh) yearly (5% of Philippine grid volume, 12% of demand).
The first phase is expected to be delivered by Q1 2026, with the completion hinting at possibly exceeding capacity of all existing grid-connected solar projects in Philippines combined (over 1.5 GW)
Committed funding totals P15.9 billion investment by MGen Renewable Energy, Inc. (MGreen) in SPNEC on Dec. 27, 2023.
India & Russia also inked an agreement for future units of the Kudankulam Nuclear Power Project in the southern state of Tamil Nadu.
🤖 Robotics
Scientists from Lancaster University, Beijing Institute of Technology and North China University of Technology are focusing on regulating the stiffness of snake-inspired robots, exploring bio-inspired systems for versatile problem-solving, from navigating complex environments to team-based missions, tapping into the potential of mimicking animals' body structures and movements.
Their flexible bodies and sliding motions provide access to confined areas such as pipes and mines, environments challenging for conventional systems, showcasing unique advantages.
Despite potential benefits, widespread deployment of snake robots faces obstacles, particularly in effectively modulating their stiffness for precise motions and target positioning.
This new design strategy was made for regulating the stiffness of a 20-degree-of-freedom (DoF) snake-like robotic arm. The team introduced a novel macro-micro structure improving positional accuracy in navigating confined spaces, supported by a comprehensive stiffness regulation strategy and a kinetostatic model estimating errors. Some promising outcomes on precision modulation and experimental validation with minimal errors.
This research could significantly influence the development of highly precise snake-inspired robots, vital for complex and confined environment missions like search and rescue, underground monitoring, and various advanced real-world applications.
🧬Genomics & Biotechnology
The biggest news for Pharma for Dec 2023 was Bristol Myers Squibb (BMS) acquiring Karuna Therapeutics for $14B. Karuna’s KarXT, a potential first-in-class antipsychotic for adult schizophrenia with $6B-$7B peak sales potential.
Deal value: $14B cash, 53.4% premium over Karuna's closing price.
Rationale: Bolster BMS' neuroscience portfolio, address patent cliff (4 of 6 blockbusters losing exclusivity by 2027).
KarXT pipeline: Adjunctive schizophrenia therapy, Alzheimer's psychosis, bipolar I disorder, agitation.
Timeline: FDA decision on KarXT expected September 2024, deal close in 1H 2024.
Analyst projections: $6B+ peak sales for KarXT (Mizuho), $7B peak sales (William Blair).
Market reaction: Karuna +47%, PureTech Health +33%, BMS +2%.
2nd largest M&A deal of 2023: Follows Pfizer's $43B Seagen acquisition.
BMS had also previously acquired Mirati Therapeutics for $5.8B in October 2023.
mRNA Technology in Cancer Vaccines: Leveraging mRNA principles from COVID-19 vaccines, researchers explore cancer vaccines triggering immune responses against cancer cells, offering a promising avenue in cancer treatment after years of limited progress.
Breakthrough Trials in the UK with BioNTech: UK's Cancer Vaccine Launch Pad partnered with BioNTech for mRNA cancer vaccine trials, aiming to deliver personalized therapies to 10,000 UK patients by 2030, commencing trials for colorectal and head & neck cancers.
Some highlights from PharmaTech (Pharmaceutical Technology for the year 2023):
FDA granted breakthrough status to Moderna and MSD's mRNA-4157 vaccine for high-risk melanoma, showing a 44% reduced risk of cancer recurrence or death in Phase IIb trials.
Transgene's viral vector-based vaccine, TG4050, displayed immune response in patients prompting plans for a Phase II trial in 2024, utilizing the modified vaccinia virus ankara (MVA) platform.
Positive Phase IIa results of plasmid-DNA-based VB10.16 vaccine in partnership with Roche's PD-L1 inhibitor Tecentriq, highlighting 16.9 months median overall survival, with plans for larger trials in 2024.
Tedopi, a DNA-based vaccine for advanced NSCLC, showed improved survival and quality of life in Phase III trials, holding approval for compassionate use in select countries while being tested for other cancers.
Moderna's $1.8 billion partnership with Immatics to develop mRNA-enabled T cell engaging receptor (TCER) molecules for cancer treatment, focusing on personalized therapies for advanced solid tumors and CLL.
The Firsts:
Clinical Approvals in UK + US: Like outlined in a previous edition of the newsletter, CRISPR's first therapy for sickle cell anemia and beta-thalassemia got the green light in the UK, with the US and Europe soon to follow.
While its initial triumph lies in blood disorders, CRISPR is pushing boundaries. From teaming up with CAR-T cell therapy to fight cancer to tackling chronic diseases like cystic fibrosis and high cholesterol, it's got its hands full (and our genomes in its crosshairs).
Not Just Snipping:
Turns out, AI (beyond increasing corporate profits?) can be gene editors' best friends. AI is helping optimize CRISPR, predict off-target effects, and even discover new variants, expanding the gene-editing toolbox.
One may recollect that CRISPR started as a bacterial defense system. Now, scientists are finding similar mechanisms in other forms of life, like fungi and animals, opening up whole new avenues for exploration.
The Future for CRISPR:
It's safe to say that CRISPR has gone from a scientific curiosity to a game-changer in just a few years. And with its ever-expanding toolkit and ambitious goals, the future of medicine (and maybe even ourselves) looks a little brighter, thanks to the power of a little gene editing.
Concentra Biosciences’ Acquisition of Theseus Pharmaceuticals: Concentra Biosciences, under Tang Capital ownership, successfully acquired Theseus Pharmaceuticals.
The deal amounted to $4.05 per share of Theseus, with additional benefits for shareholders based on contingent value rights.
Theseus was considering offers from Concentra Biosciences, as well as VC firms Foresite and Orbimed. Ultimately, Theseus chose Concentra's offer over the competing bids after a comprehensive review by its Board.
Tang Capital’s Strategy? Concentra Biosciences, acting on behalf of Tang Capital, has pursued various acquisition bids in the biotech industry in 2023. Not all attempts were successful, with Atea Pharmaceuticals, Rain Oncology, and LianBio rejecting acquisition offers.
Theseus' acquisition adds to the ongoing trend of consolidation and strategic maneuvers within the biotech sector, showcasing competitive dynamics and the pursuit of strategic advantages.
Sudo Biosciences Secures $116M, Led by Patient Square Capital and TPG, to Advance Neurodegenerative and Dermatologic Programs: Sudo Biosciences, in a funding round co-led by Enavate Sciences (Patient Square Capital) and TPG (Life Sciences Innovations and The Rise Fund), has successfully raised $116 million in Series B. The funding, featuring participation from new investor Sanofi Ventures and others, will propel the biotech's investigational precision tyrosine kinase 2 (TYK2) inhibitors into clinical trials.
New investors include Sanofi Ventures, Citadel’s Surveyor Capital, Monograph Capital, and Eventide Asset Management.
Previous investors include Frazier Life Sciences and Velosity Capital.
This Series B round follows a $37 million series A raised in September 2022.
Their focus areas are around TYK2 Inhibitors for Multiple Sclerosis (“MS”) and Psoriasis and Dermatologic Diseases (“PDD'“):
Potential first-in-class brain-penetrant program.
Addresses challenges in the competitive MS drug landscape, such as recent setbacks for investigational MS drugs, including Merck KGaA's ‘evobrutinib’ and Genentech's ‘fenebrutinib’. Sudo believes TYK2 targeting offers an alternative approach with potential therapeutic benefits.
PDD: Second TYK2 inhibitor designed for topical application. Aims to address dermatologic conditions, including psoriasis. Potential first-in-class program for topical TYK2 inhibition.
🚀 Space
The US Military's X-37B space plane, resembling a miniaturized space shuttle, has embarked on another secretive mission - its seventh - expected to last years. It was launched onboard SpaceX’s Falcon Heavy rocket.
The plane carries undisclosed experiments, hinting at potential new technologies or military applications being tested in space. A NASA experiment studying radiation effects on materials onboard indicates a potential focus on long-term space travel considerations.
The X-37B boasts an autonomous landing system, showcasing advanced unmanned spaceflight capabilities. The US Space Force's commitment to space exploration and technological advancement is evident in the X-37B program's continued development and deployment.
Operating at altitudes between 150-500 miles, the X-37B's capabilities hint at potential for reconnaissance, satellite servicing, or other strategic space applications.
Not that it’s even surprising anymore given SpaceX’s dominance over the commercial launch vehicle services market (and what some would argue its growing monopoly!), but SpaceX recently set the record for 96 successful launches in 2023.
With a 20-mile range, the current model might be more suitable for specific applications like short commutes in remote areas or tourist transport in scenic locations, not regular commuting for distances exceeding 10 miles. The economic viability compared to taxis for longer journeys is questionable, especially with the added complexity and potential high cost of pilotless operation.
Many people, understandably, express concerns about safety and trust issues with pilotless flight, especially considering the potential for malfunctions or hacking. Other concerns include noise disturbance, especially in urban areas, and the obtainment of necessary permits; along with adapting existing aviation infrastructure & regulations for pilotless eVTOLs.
JWST’s eagle eye has seemingly pierced the dusty veil of the Triangulum Galaxy, revealing a nursery brimming with 800 baby stars – the most distant ever seen! Just like in our Milky Way, these stellar infants reside in giant molecular clouds, swaddled in dust and hidden from visible light. But Webb's infrared vision cuts through the murk, unveiling a star-forming spectacle similar to what we see at home. This discovery confirms that the process of stellar birth, that cosmic waltz of gas and gravity, plays out across galaxies.
Japan's moon mission has cleared a major hurdle, as its "Moon Sniper" probe, after experiencing some launch delays, successfully entered lunar orbit on Monday. This positions it for a potential landing on January 20th, which would make Japan the fifth nation to achieve this feat.
ISRO recently launched the PSLV C-58 mission on the 1st of January 2024, commemorating the beginning of the new year with its workhorse being deployed again, carrying XPoSat. XPoSat (X-ray Polarimeter Satellite) is India's first dedicated polarimetry mission. With further plans to set up a space station in the near future, India’s space ambitions seem to be on a strong upward trajectory.
Li-Fi, a communication technology using visible light for data transmission, is expected to surpass Wi-Fi's speed by more than 100 times. Li-Fi offers high bandwidth, enabling the simultaneous transmission of large amounts of data, with added security by transmitting data only in illuminated areas.
Lockheed Martin’s SR-72, dubbed the “Son of Blackbird”, is scheduled for a launch in 2025 based on reports. It's considered the successor to the SR-71 Blackbird (as the name would indicate), expected to reach speeds exceeding 4,000 mph and surpass its predecessor as the fastest aircraft ever built.
Primarily designed for unmanned intelligence, surveillance, and reconnaissance (ISR) missions, its unmanned and potentially reusable design give additional strategic vectors to the USAF post the project completion.
Similar in size to its predecessor (SR-71) at over 100 feet long, aiming for a 2030 service entry, it is possible that the SR-72 will also support Lockheed Martin's High-Speed Strike Weapon (HSSW) by firing hypersonic weapons at unprecedented speeds.
Faces challenges in engine technology, requiring a combined cycle system to achieve hypersonic speeds while enabling takeoff and landing.
Under development by Lockheed Martin's Advanced Development Programs (Skunk Works), It also promises to cut down the potential flight time from the US to Europe to just 1.5 hours.
However, the funding for the demonstrator and engine have not yet been secured. It would seem though that it should not be a challenge given the rapid leaps that China has made with respect to hypersonic programs and the US’ bid to catch up in that domain.