Palantir’s Potential Boost
Anybody who has been dutifully reading their weekly Iron Edge newsletters would certainly be quite familiar with Palantir Technologies by now. Founded in 2003, Palantir is a Silicon Valley data analytics company and an offshoot of PayPal. What they do is absorb copious amounts of targeted data, such as social media activity, airline reservation info, financial transaction records, cell phone usage data, and much, much more, and they use that data to create usable intelligence. The United States government was quick to see abundant value in this, and today American spies and Special Forces use Palantir intel to avoid land mines, track insurgents, and orchestrate complicated military strategies. Palantir even provided the engine behind locating and eliminating Osama bin Laden. Later, government agreements with Palantir extended into non-defense applications in official departments like Health and Human Services, Homeland Security, and the Department of Justice. The company is also free to conduct business with foreign governments as well as with large enterprises within the private sector.
We have told you about how Palantir founder Peter Thiel set himself apart from the rest of the tech startup universe as a roguish independent thinker… even going so far as to publicly show his enthusiastic and decidedly “un- Silicon Valley” support of Donald Trump’s Presidential candidacy in 2016. Since the election, Palantir beat out the titan of defense contractors, Raytheon, in securing the $800 million contract for a comprehensive combat intelligence hardware and software suite. We also highlighted the Opinion piece for the New York Times last month wherein Thiel delivered a blistering criticism of Google’s recent activities in China, namely, their operation of an Artificial Intelligence facility in Beijing.
This is a fascinating company to observe, as its stories are adorned with political and international intrigue. Naturally, they have attracted the attention of protestors who vocally object to their mission. So much about Palantir, its inner workings and its functionality, is shrouded in mystery. Very few people, and almost none outside of the company, fully comprehend how this Big Data process works. Palantir’s secrecy has also been noted by those who are trying to figure out when the company will go public. On that topic, the best approach is to ignore everything you hear, even from the company itself. After all, to refer to a more recognizable name, Mark Zuckerberg famously denied Facebook IPO plans right up until a couple of weeks before that colossal debut. The CEOs of huge private firms have zero obligation to disclose IPO plans. It is their business, so mind your own.
Alas, something different was disclosed earlier this week. Palantir is reportedly seeking to raise between $1 billion and $3 billion in new funding at a valuation of at least $26 billion. If this fresh round succeeds, it would signal a continuation of a years-long trend of big venture capital firms influencing the valuations of Silicon Valley unicorns to an increasingly greater extent. The investment, Palantir’s first round in about four years, would be the result of reported talks with Japan’s SoftBank Group and various sovereign wealth funds. It could take the company’s new valuation as high as $30 billion, up from the $20 billion Palantir was estimated to be worth in 2015. As one of Silicon Valley’s oldest “unicorns”, Palantir’s many private shareholders are holding their collective breath as they await an IPO. For those people this valuation news should come as a pleasant surprise, even if it says nothing about when a public debut will take place.
It is worthwhile to note SoftBank Group’s prominence in this development. Granted, the Tokyo-headquartered multinational conglomerate seems to “get its beak wet” in just about everything, but this particular vote of confidence in Palantir would hold special meaning — and perhaps a dual purpose. Coinciding with the funding news are reports that Palantir is establishing a much stronger Asian foothold, recently opening a Tokyo office and hiring local Japanese engineers. They intend to test their Foundry enterprise software with various companies in the region, focusing on banks and automotive manufacturers, before offering it commercially. As Palantir embarks on the strategically shrewd endeavor of spreading its wings beyond the Western Hemisphere while remaining privately held (for the time being), SoftBank’s potential financing provides a certain synergy. It is an arrangement that offers great benefits to the company, their clients, the late-stage investor, and the private shareholders alike.
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