Pacman eating dots
Gif: Namco

Who’s buying whom: The best M&A predictions for 2022

Protocol Pipeline

Hello and welcome back to Pipeline. This week, Andreessen Horowitz raises another $9 billion, Tim Draper still stands by Elizabeth Holmes even if she is guilty of defrauding investors, and why everyone probably needs to chill out on Twitter for a while.

M&A predictions

I don’t think 2021 went as anyone expected. I for sure didn’t expect my daughter to be turning one next week in the middle of yet another COVID-19 surge and having to cancel her birthday party. Anyone else feel like begging for normalcy? That leads me to my resolution for 2022: Learn to accept that this is the new normal and figure out how to maximize my life, even in times of uncertainty.

While it may be hard to predict what’s ahead in 2022, this week I continued the Pipeline tradition of asking venture capitalists what their resolutions are this year and also what M&A deals they see on the horizon.

Perhaps this is the year we’ll see a big gig-economy merger? Can a VC master the self-control needed to not hit the snooze button? Here are six venture capitalists’ resolutions and M&A predictions for 2022.

Talia Goldberg, partner, Bessemer Venture Partners

  • Her New Year’s resolution: "My resolutions are to 1) 10x positive vibes and 2) stop hitting ‘snooze’ in the morning."
  • 2022 acquisition prediction: "Instacart and Gopuff merge to better compete with DoorDash and bring together the benefits of verticalization with better selection — they’ll have warehouses and relationships with local retailers."

Hussein Kanji, partner, Hoxton Ventures

  • His New Year’s resolution: "It's a cliche, but it's diet and exercise. Back to a high-fiber, low-glycemic diet with regular HIIT training, which translates into wind sprints for me, since that's the most bang for the least buck. I'd love to get back to Lagree, but sadly COVID wiped that out in London."
  • 2022 acquisition prediction: "While I think most AI drug discovery companies are more hype than substance, I think 2022 might be the year where someone shows enough promise to be swallowed up by a big pharma company. And as an aside, I'm surprised someone doesn't try to pick off Darktrace (one of our portfolio companies that went public) which trades at such a discount on the London Stock Exchange relative to its cybersecurity peers."

Brian O'Malley, general partner, Forerunner Ventures

  • His New Year’s resolution: "2022 is the year to come back into the light. By light, I mean the natural kind versus the blue-ish glow of a Zoom window. My resolution for this coming year is to get ahead on email — my inbox sits at 3,597 unread — and spend more time with the people who matter most: our team at Forerunner and the founders we back."
  • 2022 acquisition prediction: "I believe 2022 will be the first year we see a large Web3 business purchase a legacy web business. We’re already seeing this in the naming-rights game, with the Staples Center becoming Crypto.com Arena. With the public market limping into the new year while the crypto space continues to see plenty of optimism, valuations could align for this to happen. We saw this in 2000 when AOL purchased Time Warner to leverage their market cap and gain access to a wider audience; Web3 businesses have a similar opportunity as they look to cross over into the mainstream this coming year."

Mo Islam, partner, Threshold Ventures

  • His New Year’s resolution: “Read more fiction, travel internationally again and tweet about diving into the Web3 rabbit hole.”
  • 2022 acquisition prediction: “One of the Big Tech companies buys Roblox to own a piece of the metaverse. The company has plenty of room to grow, but it’s a unique asset with a young demographic that I’m betting one of the trillion-dollar club will want for their own meta play.”

Chris Olsen, partner, Drive Capital

  • His New Year’s resolution: "My New Year's resolution is to take more risks. As Drive scales, it's tempting for the team to play it safe. That's a recipe for disaster. Fortunately, every day we work with founders who set a great example for us to follow."
  • 2022 acquisition prediction: "I'll predict that Olive acquires Epic Systems."

Addie Lerner, founder and managing partner, Avid Ventures

  • Her New Year’s resolution: "Leaving my phone outside my bedroom so it's not the last thing I see before bed nor the first thing I grab when I wake up."
  • 2022 acquisition prediction: "In 2022, more than five fintech acquisitions will top $5 billion, with the potential for an acquisition larger than Square’s $30 billion Afterpay acquisition. As access to private capital continues unfettered, companies are able to stay private longer and raise massive $1 billion+ rounds in Series E/F/Gs. Additionally, the attractive equity value upside of potential acquirers is increasingly making all/partial-stock acquisitions from potential acquirers like Stripe and Square even more enticing, especially at more recent public market fintech 'discounts' given the increased room for upside in the acquirer's stock price."

Overheard

You probably didn’t overhear this, thanks to Marc Andreessen’s liberal use of the blocking tool. The a16z founder has been in a war of words against Jack Dorsey, who decided to pick a fight with VCs and their role in Web3 over the holidays. Now it’s clear that Andreessen’s second love, after the block button, is nonstop tweeting of memes about blocking people (his Twitter feed is now over 35 memes and counting). Open an incognito browser if you must and enjoy one of my favorite memes among them, which is about Dorsey inventing the block button and working at Block.

Tim Draper is still defending Elizabeth Holmes. Even after she was found guilty for defrauding investors, Draper is in her corner. “I still believe in what she was trying to do, and if this scrutiny happened to every entrepreneur as they tried to make this world a better place, we would have no automobile, no smartphone, no antibiotics, and no automation, and our world would be less for it,” he said in a statement.

“I fear billions of people around the globe right now are being exterminated,” Entrata’s founder Dave Bateman told a reporter after he sent an anti-Semitic letter filled with vaccine misinformation to top Utah government and business leaders claiming that the COVID-19 vaccine was part of a sterilization plot by Jewish people. The Silver Lake-backed startup cut all ties with Bateman.

And in more terrible things said: 8VC’s Joe Lonsdale sparked outrage after he tweeted (and since deleted) that “average black culture needs to step up and stop having kids as many kids born out of wedlock.” He tried to recontextualize the tweet to TechCrunch, but many VCs have called on his LPs to speak out.

On a lighter note, there’s a new job requirement to be a COO. A crypto hedge fund is reportedly trying to recruit a COO who loves Burning Man; bonus points if they’ve built a camp.

A MESSAGE FROM SAP

As businesses grow during the pandemic, they also encounter pressing challenges to maintain that success. Among them is the pressure to strengthen their digital backbone, which leads to the question: How can companies find the ideal technology provider suited to their evolving needs?

Learn more

Inside track

Have you heard of “Earthverse” investing? While a lot of the 2022 predictions from emerging managers focused on Web3, TMV’s Soraya Darabi is focused on investing in real-world tech instead. “Yeah, Web3 is cool and all, but do you know what's really cool? Occupying the one planet we were designed to inhabit,” she told Human Ventures’ Heather Hartnett. Relatedly, if you have no idea what the metaverse is, Lerer Hippeau’s Meagan Loyst wrote a long explainer.

People may automatically jump to names like a16z, Coatue and Tiger Global, but there’s plenty of other firms out there that will lead a $30 million follow-on round. Upfront’s Greg Bettinelli has been keeping a database of over 235 firms and decided to share it publicly.

Everyone knows the venture market was on fire in 2021, but Sapphire’s Beezer Clarkson has an insightful thread on what that means for LPs and if we’ll see more “LP indigestion” ahead in 2022.

Alvaro Gutierrez used to work at J.P. Morgan, doing M&A for corporate banks, and then did 12 acquisitions as part of his retail startup Kiwoko. So I’d trust him on three things startup founders should know about M&A.

Need to know

Confirmed: It was a zany year in venture capital. VC investment in the U.S. practically doubled last year after startups raised $329.8 billion in 2021, up from $166.6 billion in 2020, according to PitchBook.

OpenSea’s valuation jumped to $13.3 billion. The $300 million raised is notable because it’s also the first known investment out of Katie Haun’s new fund. Haun may be raising over $900 million for her debut fund, according to a report from the FT.

The tech IPOs to watch in 2022. It’s a wonder there’s any companies left after the SPACcess of 2021, but companies like Reddit, Mobileye and Via are all ready to hit the markets soon. Reddit may go public as soon as March, according to the latest reports.

Adam Neumann’s next act? Unsurprisingly, the WeWork co-founder hasn’t strayed far from real estate, this time amassing an apartment empire.

There’s a new class of Thiel Fellows. This year’s bunch is doing everything from electric aircrafts to nuclear power systems to products made from honeybees.

New fund alerts: A16z refilled its coffers (again) with $9 billion across three funds. It raised a $1.5 billion bio and health-tech focused fund, a $5 billion growth fund and a $2.5 billion venture fund. Khosla Ventures also launched a new $550 million Opportunity Fund. Smash Ventures, which has been relatively quiet, raised $500 million for its latest fund.

This week in Theranos: A verdict! Elizabeth Holmes was found guilty of defrauding investors on four counts, but not guilty of defrauding patients. The jury also couldn’t make up its mind on three counts, leading to a mistrial on those. The most fascinating insight came from interviews with the jurors, who ranked Holmes’ testimony as among the least credible.

On Protocol: The most valuable whiteboard ever might be Miro, which is now valued at $17.5 billion after raising $400 million.

Also on Protocol: Group therapy, but for founders. Why “T-groups” and getting “touchy-feely” is making CEOs stronger leaders.

Your weekend reading: In Las Vegas, food tech companies debated a future full of drone deliveries to your door and any brand, anywhere, as fast as possible. But Eater’s Jaya Saxena wondered whether any of these companies are even solving for the right problem in “Is the ‘Future of Food’ the Future We Want?” At the very least, with CloudKitchens tripling its valuation to $15 billion, it seems like investors are betting on it.

Five questions for … Khosla Ventures’ Samir Kaul

Samir Kaul co-founded Khosla Ventures where he focuses on investments in sectors like sustainability, food and health. Kaul led the firm’s investments in startups like View, Impossible Foods, Guardant Health, Nutanix, Oscar and QuantumScape. He’ll now have more ammo to do so: This week, Khosla announced it raised a new $550 million Opportunity Fund, allowing it to double down on investments in companies like Impossible Foods and Faire.

What is the biggest issue that your partners are thinking/talking about at your Monday partner meeting?

For portfolio companies, the biggest issue we talk about is how we help them get 10x bigger than they are now. For new investments, we look at how we can use our money to retire risks and increase our option value. In other words, by investing early, what cards do we turn so that we have a better idea of how big the opportunity can be?

What was your first job, and what’s a skill you still use from it?

It depends on how far you want to go back, but let’s just say my position as a research assistant at The Institute for Genomic Research. It was kind of like running a business within a nonprofit. I managed a large group of scientists, and I had to get them to be more operational and goal-focused, which is a skill I still use today.

What product are you totally, even irrationally, loyal to?

The Whoop!

What’s a company in your anti-portfolio, and what did you learn from passing on the deal?

Tesla. At the time, we didn’t think that automobiles were a good venture investment. The mistake we made was undervaluing the importance of the entrepreneur. The lesson is that if you have a once-in-a-century founder like Elon Musk, you should invest no matter what they’re doing.

What’s one of your New Year’s resolutions for 2022?

Keep a journal!

Thanks for reading this week’s Protocol Pipeline. Send story tips and newsletter feedback to biz@protocol.com.

Recent Issues