Google Inks $1 Billion Deal With CME

CME Gives Google Footing in Financial Services

In what may prove to be a game changer for Google (GOOGL) in the cloud market, the company inked a $1 billion deal with the futures exchange behemoth CME (CME). In addition to Google making a $1 billion equity investment, CME is moving its main trading system to Google Cloud. Down the road, Google Cloud will power trillions of dollars of trades for CME on a daily basis.

Cloud providers including Google, Amazon (AMZN), and Microsoft (MSFT) have been competing to win over financial services customers. This is a market which has resisted handing over data to tech companies for a long time. Now that financial institutions are becoming more open to working with tech giants, there is the potential for very lucrative deals.

A Milestone for Google

CME is the world’s biggest exchange operator, sporting a market cap of more than $79 billion. Google is currently in fourth place in the cloud market, with Amazon in the lead, followed by Microsoft and Alibaba (BABA). Google’s global market share is a mere 6.1% compared to Amazon’s more than 40%.

Google said the $1 billion equity investment in CME underscores its commitment to overhauling the financial system, not only one company’s infrastructure. CME will begin migrating to Google’s cloud next year, starting with the company’s data and clearing services. Eventually CME will move all of its markets onto Google’s cloud.

Rivals Circle

Migrating trading systems to the cloud does pose challenges, but that has not stopped exchanges from gearing up to make the move. Nasdaq already said in 2020 it would move to the cloud in the coming decade, but it has yet to select a cloud provider. Singapore Exchange and Amazon Web Services completed a test project late last year while Aquis Exchange, a European market operator, is already using AWS technology.

Google is a tiny player in the cloud market at the moment, but it has plans to grow its presence significantly. Landing a deal with CME, the world’s most valuable exchange operator, is a big step in that direction.

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Etsy Is Poised to Shine This Holiday Season

Supply-Chain Woes Could Benefit Etsy

With supply-chain delays threatening the holiday season, retailers, apparel companies, and toy makers could take a hit in the coming months as a result. But Etsy (ETSY), an online marketplace for crafts, gifts, and other items, could benefit. With record numbers of items expected to be out-of-stock this holiday season, consumers are looking for alternative ways to shop.

This trend was already evident in Etsy’s third-quarter results. The company had $3.1 billion in gross merchandise sales, which is up nearly 18% from last year, blowing past Wall Street’s forecast. Net income in the quarter also topped Wall Street views despite the expenses associated with Etsy’s acquisitions of Depop and Elo7, which closed during the quarter. Etsy is projecting revenue to increase 10% year-over-year in the current fourth quarter, which is slightly lower than Wall Street’s forecast.

Is Etsy Being Too Conservative?

While Etsy’s predictions for the holiday quarter are conservative by some Wall Street standards, the online marketplace operator does face tough comparisons with 2020. Last year, revenue nearly doubled compared to 2019 as more buyers and sellers discovered Etsy, many for the first time, during lockdowns.

Etsy is also watching closely to see if strong sales in October mean that consumers began shopping for the holidays earlier than previously. Etsy is incorporating that into its revenue forecast for the fourth quarter, but it is likely that a sizable number of consumers will still wait until closer to the holidays to begin shopping despite warnings of shipping delays.

Alternative Gifts Gain Popularity

Also working in Etsy’s favor is an increasing number of consumers who are interested in buying alternative holiday gifts this year. Instead of scouring the internet and overpaying for new items, 43% of consumers who responded to a recent survey said they would be willing to purchase unique gifts from websites like Etsy and secondhand marketplaces. Consumer confidence is also holding up despite rising inflation and an end to stimulus benefits, which is a positive sign for the holiday shopping season overall.

The nation’s retailers may be bracing for less joy this holiday season thanks to supply-chain snarls and inventory shortages. But for Etsy and the other marketplace operators, it could be a very happy holiday season.

Fundings Friday: Nuro, Fountain, and Kitman Labs

Self-Driving Delivery Vehicle Startup Raises $600 Million

Nuro, the self-driving delivery vehicle startup, raised $600 million in a Series D round of venture funding. The fundraising, which was led by Tiger Global Management and included participation from Alphabet’s (GOOGL) Google and Toyota Motors (TM), gives Nuro a valuation of $8.6 billion. Prior to the capital raise, Nuro was valued at around $5 billion.

Nuro is among a handful of self-driving startups to amass a huge amount of money to develop their technology and bring it to the marketplace. Waymo, the self-driving unit of Alphabet, raised $2.5 billion this past summer. Nuro said proceeds will go to support the development and testing on Nuro’s self-driving delivery vehicles in communities across the country.

Startup Helping Businesses Find Workers Raises $85 Million

Fountain, a startup which helps businesses hire hourly workers, raised $85 million in venture funding. The Series C round was led by SoftBank (SFTBY) and included participation from B Capital Group and Mirae Asset Venture Investment. The fundraising comes at a time when Fountain’s business is booming. So far in 2021, revenue is up 220% year-over-year. The company now counts Chipotle (CMG) and Just Eat Takeaway (GRUB) among its over 250 customers.

With the Series C round complete, Fountain has raised a total of $119 million. The company plans to use the money to invest in its hiring platform, boost its sales and engineering teams, and expand its presence in EMEA and APAC regions.

Sports Data Startup Raises $52 Million

Kitman Labs, a startup which helps sports organizations use and analyze data, raised $52 million in venture funding. The fundraising round was led by Guggenheim Investments, bringing the total amount the startup raised to $82 million.

Kitman is trying to capitalize on the huge amount of data being collected by sports leagues and teams from wearable tracking systems which players wear. According to Kitman, this year alone, 2.5 million data points per athlete will be collected. In 2025 the startup expects that to reach 230 million data points per player. The startup plans to use the fresh capital to develop its platform further, grow its global team, and continue to churn out research to help the sports industry better understand how to leverage data.