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Shareholder activists in the U.S. started the first quarter with a roar and ended with a whimper, as campaigns outside the U.S. hit a new record.

Why it matters: The decline in U.S. activist campaigns is a sign of the broader financial market concerns weighing on dealmaking and the economy. 

Yes, but: Global activism saw the most campaigns on record (up 14% to 83), driven by U.S. activists turning to Europe for targets, and a South Korean investor who launched 8 campaigns in the country in Q1 alone. 

Driving the news: Q1 activity in the U.S. dropped 30% to 31 campaigns from the year ago period, Barclays data show, the slowest quarter for activists since the pandemic hit in 2020. 

Last year at this time, 85 board seats were in play at companies trying to fend off activist investor advances. Right now, only 31 seats are in play, and major campaigns waged against Disney and Saleforce early in the year quickly settled. 

One issue hitting activists at the moment is the moribund M&A market. Year after year, around half of activist campaigns aim at pushing a company into a sale or a divestiture. That's hard to do when deal activity is dropping.

"If the M&A tool isn’t available to activists, then that is the headwind," said Jim Rossman, Barclays' global head of shareholder advisory.

Zoom In: U.S. M&A activity plunged last quarter, with deal value down 50% to around $250 billion. 

The low appetite for deals, tight lending markets, and looming inflation worries prompted the normally pugnacious activist hedge funds to step out of the U.S. ring, for now. 

"Even though activists could be emboldened with valuations coming down, the counter pressure of the market uncertaintines and the depression in capital and M&A markets is a bigger counterweight than previously thought," Rossman says.

What we're watching: Whether the activists move overseas is temporary or whether it sticks. 

European campaigns jumped 60% to 24 in Q1, while Asia jumped 75% to 21. 

Status of major U.S. activist campaigns

Data: Axios research; Table: Erin Davis/Axios Visuals

M&A lag hits U.S. shareholder activism

But Europe and Asia saw a surge of campaigns.

an illustration of an executive chair with a megaphone laying on it 

Activist shareholders

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Axios HQ, the communications software company that spun off of Axios last year, has raised $20 million in Series A funding at nearly a $100 million post-money valuation. 

Why it matters: It's rare for media companies to create software startups.

While many media firms license their own proprietary tech, few actually spin out their tech departments into independent companies. 

Axios HQ is leveraging the brand equity and trust built by Axios, which is primarily an email-driven news company, to attract clients that need better email communication tools to reach internal and external stakeholders. 

Catch up quick: Axios HQ was launched in 2021 as a separate tech division within Axios. It split off from Axios in 2022, after Axios Media was acquired by Cox Enterprises for $525 million. 

The company is majority-owned by the Axios founders. Cox Enterprises serves as a minority investor. 

Glade Brook Capital Partners led the Series A round, and was joined by Greycroft. Both were investors in Axios Media.

Axios' co-founder and president Roy Schwartz is the CEO of Axios HQ. Axios co-founder and CEO Jim VandeHei is chairman of the board.

Details: Proceeds will be used to help HQ scale its suite of tools and services that it currently uses to service over 500 enterprise clients, which include brands like  Sweetgreen and Edelman. 

To-date, the company says it has nearly $7 million in annual recurring revenue. 

Between the lines: Axios HQ is leaning heavily into artificial intelligence tools to help its clients write clearer emails. 

The software helps users automatically sharpen their writing with stronger wording suggests. It also offers suggestions for pictures, headlines and summaries that can be used to strengthen their communications, using AI. 

The big picture: More companies are leaning into artificial intelligence to grow public relations and communications tools. 

Some are using AI tools to help companies write press releases. Others are using AI to help communications departments understand which reporters to pitch.   

Axios HQ raises $20 million

It's rare for media companies to create software startups.

Media deals

Media

Elliott Management notified Salesforce within the last few weeks that it is officially running a slate of directors to replace existing board members, according to a person familiar with the matter. 

Why it matters: Elliott's director nominations put added pressure on Salesforce to show that it's committed to a turnaround and pushing forward major changes to improve its performance, or risk a board shakeup.

Details: The size and makeup of Elliott's slate remains unclear. CNBC said that the size likely was two to three director nominees, and that Elliott managing partner Jesse Cohn was one of the candidates.

Zoom in: If Elliott proceeds with a proxy fight and wins board seats, that would be the biggest threat to Salesforce CEO and co-founder Marc Benioff's leadership to date.

Yes, but: Pressure on Benioff and the company could be dramatically reduced if it produces strong earnings today (after the close) and lays out specific, strategic goals that placate Elliott.

Of note: Elliott and Salesforce could reach a legal settlement or some kind of agreement that avoids a proxy fight and still keeps the activist investor engaged with the company in its campaign for changes.

What we're watching: Salesforce's earnings numbers, additional cost cuts and strategic moves, and whether Elliott delivers a statement of support, as it did when it pressured AT&T, or if it remains frustrated, and ramps up a full-on proxy fight.

Elliott and Salesforce did not immediately return requests for comment. 

Elliott director slate adds pressure ahead of Salesforce earnings

The quarterly report may set the stage for war or peace.

Photo illustration of Paul Singer and Marc Benioff. 

Elliott co-founder Paul Singer and Salesforce co-founder and CEO Marc Benioff. Photo illustration: Shoshana Gordon/Axios. Photos: Stefan Wermuth/Bloomberg, Jonathan Moscrop/Getty Image

Salesforce

Why it matters: Multiple companies face serious financial woes. Further missteps across the industry could set it back years. 

Driving the news: Lordstown Motors said Thursday it stopped production and customer delivery to address quality and performance issues.

It also initiated a voluntary recall for its Endurance electric truck to address a specific electrical connection issue that could result in a loss of propulsion while driving. 

The recall affects 19 total vehicles, the company says.

A Lordstown spokesperson declined to comment further on the news, and pointed to the March 6 earnings call for additional details.

Between the lines: Lordstown has delivered just 19 or fewer Endurance vehicles to customers since it began production in September. The company had targeted 50 units for delivery by the end of 2022. 

State of play: Lordstown joins other EV makers like Canoo that have struggled to ramp up production and get vehicles into the hands of customers. The pain is being felt widely. 

EVmo, a company that loans EVs to rideshare drivers, received notice that it defaulted on a $7.5 million loan last week as its board chairman resigned.

Rivian, another public EV maker, recently announced its intent to get into e-bike production as its own EV troubles mounted.

Tesla recently unleashed a torrent of discounts in an effort to spur customer demand.

Yes, but: Legacy OEMs have been largely spared, though Ford recently halted production on its Lightning F-150 electric truck due to a potential battery issue.

Meanwhile, EV demand in China has also slowed, though the country remains the top EV market globally, largely due to its years-long effort to build out lithium production with generous government support.

Tesla's price cuts were partly due to slowing demand in China, the company said.

The bottom line: We wrote about the rocky road ahead for EV makers eight months ago, and the situation has only gone from bad to worse since then.

Megan Hernbroth co-authors the Axios Pro Climate deals newsletter. Sign up to receive the newsletter. 

Struggles mount for electric vehicle industry

Lordstown issues recall on Endurance EV truck.

Illustration of an electric vehicle and a charging station at the edge of a cliff.

Electric vehicles

Data: Lazard; Chart: Axios Visuals. Data is global for companies with a market cap of $500m or above. May include campaigns without a publicly confirmed thesis. 

Companies large and small are on alert for a record wave of attacks this year from activist investors.

By the numbers: 2022 saw a record number of new activist investors, and a record share of activists' activity targeted large companies — including Alphabet, Meta and Salesforce.

Driving the news: Last week, Trian Partners claimed victory over Disney in a proxy fight that showed what lies ahead in 2023. 

Irenic Capital's attack on News Corp last fall captured two key activist trends in a single campaign: Irenic was a first-time activist, and it targeted a large, blue-chip industry name.

Details: Easing volatility and low valuations are keeping activists on center stage. And a drop in M&A volume is among the drivers for big-ticket activist campaigns. 

2022 saw a record number of new activist investors, with 55 first-timers representing 36% of all funds waging campaigns, according to Lazard. The prior record was 48 newcomers for 30% of campaigns in 2018.

The Lazard data also showed that large-cap companies accounted for a record share of activist targets (18%) in 2022.

What they're saying: "The activists' play with large caps is, increasingly, break it up, divest, spin it off," said Evercore Managing Director Zach Oleksiuk. "Activists are pushing for M&A opportunities where a buyer isn't needed." 

Whipsawing markets and tight financing prompted the M&A slowdown, and that meant CEOs were stuck if they wanted to sell or buy a division, or put the whole company on the block. 

"Volatility and valuations have come down, and that's created opportunities" for activists, Oleksiuk said. 

What we're watching: The seemingly ideal conditions for dissident shareholders are not lost on the dozens of funds that launched campaigns for the first time last year. 

These include Mithril Capital's March campaign vs. Adagio Therapeutics, Mill Road's April campaign vs. Big Lots, and Pacific Point's January campaign vs. CH Robinson.

Lazard data show that the number of new, overall campaigns last year (235) rose 36% from 2021, nearly reaching 2018's record of 249. 

"What had always held back the expansion of activism was boards who supported management teams come hell or high water. That's changing," says Jim Rossman, Barclays' global head of shareholder advisory.

The big picture: Another factor fueling activism is the growing support of other shareholders. The negative stigma that used to dog activists is fading, Rossman notes. 

In addition, most companies today have a small number of institutional investors holding a significant amount of stock.

"Activism has evolved from a market chasing trend," Rossman says. "Now you've got activists who are smart, stock-picking value investors who tell management teams that if you don't listen to me, we'll reach out to the concentrated owners of your stock."

Blue-chip companies brace for new assaults by activist investors

Data show surge in first-time funds, jump in bigger targets

Fintech Deals

Stripe CFO Dhivya Suryadevara will step down due to family matters, she announced on LinkedIn Thursday.

Why it matters: The news comes as the payments giant is said to be in talks to raise money at a lower valuation to its last funding round.

Driving the news: "I have made the difficult decision to step away from my role at Stripe, as I will be taking some time off to attend to family matters," she wrote in the post.

Suryadevara says she will be working with Stripe's team through April.

A source with knowledge of the matter confirmed Bloomberg's reporting that Stripe co-founder and president John Collison will lead the company's finance operations until a replacement is found.

Background: Suryadevara joined Stripe in 2020 after leaving her CFO job at General Motors.

Stripe CFO Dhivya Suryadevara to step down

Co-founder John Collison will lead the company's finance operations.

Illustration of the Stripe logo with the S as a dollar sign.

Fintech

Media Deals

Value of select digital media company exits

Data: Axios research; Note: Industry Dive sold a majority stake to Falfurrias Capital Partners in 2019; Table: Axios Visuals

The influx of venture capital and private investments into digital media companies has helped launch a new generation of outlets. It's also led to a succession of quick exits by those investors — some with strong returns, others not so much. 

Why it matters: Media companies with a clear/niche focus are more likely to find strategic partners and generate a strong exit multiple for investors, as opposed to outlets that focus on scale and generalist content. 

Cox Enterprises' acquisition of Axios on Monday for $525 million was in part driven by Axios' clear focus on building a niche audience and its local news build-out. 

Informa's acquisition of Industry Dive last month is meant to support its focus on matching its B2B events business with B2B content.

The New York Times' $550 million purchase of The Athletic, a subscription sports publication, was a perfect fit for its growing subscription bundle. 

The bottom line: The publishing landscape has changed dramatically in the past few years, and no longer favors outlets looking to scale on social media. It favors companies that develop direct relationships with their audiences — as exit multiples reveal. 

Digital media survival guide

A niche audience and clear focus have commanded higher multiples.

Table showing the value of select digital media company exits

Health Tech Deals

Bicycle Health, a start up focused on virtual treatment for opioid addiction, raised a $50 million Series B round, founder and CEO Ankit Gupta tells Axios exclusively, bringing the company's total funding to $83 million. 

Why it matters: New data suggest a 15% rise in opioid overdose deaths during the pandemic, and research shows the drugs meant to treat it aren't reaching those most in need. Enter Boston-based Bicycle Health, whose purely virtual offering affords patients a key benefit that in-person options can't: Anonymity.

"Over and over what comes up [among patients] is the shame — people don't want to talk to their primary care provider, they don't want to talk to their partner," says Gupta.

Context: The vast majority of people with an opioid use disorder are not receiving medication-assisted treatment, which significantly curbs overdose risk.

Details: InterAlpen Partners led the round, and insiders Questa Capital, Frist Cressey Ventures and City Light Capital also participated.

How it works: Bicycle enters into value-based contracts with health plans and offers a $199 per month direct-to-consumer option.

After a free consultation, Bicycle members are matched with a provider who builds a personalized treatment plan and, if appropriate, prescribes medication.

Bicycle also offers online group support and measures patients' progress with assessments including standard depression and anxiety questionnaires.

What they're saying: Because it's entirely digital, Bicycle may help people avoid the stigma linked with getting treated for opioid use disorder, academics and investors tell Axios.

"Virtual treatment affords patients anonymity and can lower cost of treatment," says Shivan Bhavnani, founder of the Global Institute of Mental and Brain Health Investment.

"Telehealth facilitates care for many patients who have difficulty attending in-person appointments due to logistical and psychological barriers," write researchers in a 2021 study in the Harm Reduction Journal.

The other side: There are challenges linked with treating addiction virtually, from reaching people in areas without stable internet to ensuring people are receiving full wraparound care.

"There is skepticism among traditional addiction specialists regarding the long-term efficacy of the fully virtual model," says Bhavnani.

The bottom line: While it remains unclear whether a hybrid or fully-virtual model is best for addiction treatment, one thing is clear: More options are sorely needed.

"We’re building a network effect, a movement," says Gupta.

Virtual addiction startup Bicycle Health rides Series B to $83M

Bicycle's virtual model gives OUD patients anonymity and may lower treatment costs.

Illustrated collage of two hands grasping one another with coins falling in the background. 

Venture capital

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

FTX CEO Sam Bankman-Fried's purchase of a 7.6% stake in Robinhood has sparked a wave of speculation as to what plans "SBF" has for the stock trading company. Axios spoke with him to get a better sense of what he's up to. 

Why it matters: The tussle haired billionaire filed a Schedule 13-D form with the SEC to disclose the $648.3 million purchase. Filing a "D" means he is technically not a passive investor (that's a 13-G) and instead can take an activist position to transform the company by pushing various changes, if he chooses. 

The intrigue: Robinhood has a dual-class share structure that gives CEO Vlad Tenev and co-founder Baiju Bhatt about 63% of the voting power in the company — meaning Bankman-Fried won't be able to take over the business or call for major changes without their green light.

Bankman-Fried's stake gives him 2.8% of the voting power, a Robinhood spokeswoman confirmed.

Yes, but: That doesn't mean Bankman-Fried won't try to change how things are done at the stock-trading company.

"This was something that I saw as an attractive investment, and there are a lot of areas for the company to grow and innovate going forward," Bankman-Fried tells Axios.

Driving the news: The $648 million worth of shares bought by Emergent Fidelity Technologies, an entity that names Bankman-Fried as its sole director, drove up the price of Robinhood’s shares by 23%. 

The filing states that Bankman-Fried views it as an investment and has no current plans to acquire Robinhood.

However, the filing doesn't rule out more aggressive actions in the future. 13D forms are typically filed by activist investors who aim to push for major changes, like the sale of the company, or the divestiture of an asset. 

"We're always open to any conversations," Bankman-Fried says, when asked whether he'd be interested in buying Robinhood in the future. 

Of note: The stake does fit into the FTX CEO's broader vision of taking over all of finance rather than staying in his corner of crypto. Outside of the U.S., FTX offers tokenized securities, and it has taken steps toward offering securities trading in the U.S., too. 

Fun fact: There was some speculation in our newsroom over whether the name of the company, Emergent Fidelity Technology, was a cheeky reference to investment giant Fidelity. 

Bankman-Fried tells Axios that the the name was randomly generated.

This article was first published in Axios Pro Fintech, a daily newsletter on all things dealmaking in the world of financial technology.

What does Sam Bankman-Fried want with Robinhood?

FTX CEO Sam Bankman-Fried's Robinhood stake is not so simple.

Photo illustration: Gabriella Turrisi/Axios. Photo: Lam Yik/Bloomberg via Getty Images

Heard, a startup that handles administrative tasks for behavioral health providers, raised $10 million in Series A funding, the company's co-founders Andrew Riesen and Victoria Li tell Axios exclusively.

Why it matters: As the digital health stage crowds with buzzy provider players, businesses that handle the administrative (less sexy) tasks of virtual care are making their own debut.

The trend is especially apparent in the telemental health sector, where startups are launching with the stated aim of helping therapists maximize their time with patients.

Details: Footwork led Heard's funding round and was joined by Founders Co-Op, Act One Ventures, and individual backers including Akins Van Horne, Cat Lee, Charley Ma, Cindy Bi, D’Arcy Coolican, Matthew Goldman, Nikhil Dixit and Nitya Subramanian.

How it works: Remote first and based in Seattle, Heard courts private practice therapists and handles bookkeeping, payroll and tax services. 

Under the company's subscription model, individual therapists pay $149 a month for the service or $1,341 a year (a 25% discount). Group practices pay $249 a month or $2,241 a year.

Most of its current customers are early-career providers looking to set up private practices, Riesen tells Axios.

Context: Several other such digital health infrastructure startups have also attracted early-stage funding as of late.

Flume Health, a New York-based health plan builder for organizations, raised $30 million in Series A funding in March.

Capable Health, a maker of a plug-and-play platform for virtual care startups, raised $6 million in seed funding earlier this week.

Zus Health, which offers a "Lego kit for health care builders," raised $34 million in Series A funding last summer.

Flashback: The company had a previous life as a therapist matching platform, which Li and Riesen started after meeting at a mental health hackathon event in 2019.

When the pair learned that many therapists who train in specific specialties don't get to fully use those skills when practicing at larger organizations, they decided to pivot their business, and focus on equipping providers to open private practices.

"This issue of therapists being entrepreneurs, it’s a deeply embattled and embedded problem," says Riesen, who struggled personally with anxiety and depression from an early age.

The bottom line: Heard's primary goal is helping therapists spend less time accounting and more time listening, according to Riesen and Mike Smith, general partner and co-founder at Footwork.

"We felt like this was a tool to empower therapists and let them do the things they love most, which is serve clients," says Smith.

Or in other words, "make it a heck of a lot easier for a therapist to be a therapist," Riesen says.

Exclusive: Heard helps therapists listen

Reducing administrative requirements for therapists.

Health tech deals

Specialty pharmacy startup House Rx raised $25 million in Series A funding led by Bessemer Venture Partners, company co-founders Ogi Kavazovic and Tesh Khullar tell Axios.

Why it matters: Specialty medications present a special hassle since insurers dispense the majority of such drugs, often on a delayed basis and without coordination with providers.

These drugs are often expensive and include medications for different types of cancers and other severe conditions.

Insurers and pharmacy benefits managers (PBMs) are mandating that providers complete detailed prior authorizations, a lengthy and mostly manual process.

In surveys, some oncologists have suggested those delays may be tied to poorer health outcomes.

How it works: House Rx partners with specialty clinics to get patients care and medications from the same place.

The company either trains clinics' existing staff to use its tools and software or places pharmacists or pharmacy technicians inside the clinic, where they collaborate with doctors on patient care.

"We were afraid we might be starting a turf war, but it turns out the doctors and the pharmacists love it," says Kavazovic, House Rx's CEO. "It's a complementary skillset."

House Rx also assigns a remote pharmacist to the clinic to verify that prescriptions are being written and sent out appropriately.

Currently focused on Medicare Advantage patients, the company charges a per provider/per month service fee.

Yes but: The company faces fierce competition from controlling incumbent PBMs for whom specialty drugs tend to be highly profitable.

"There is a ton of opportunity here, but it is very challenging for specialty pharmacies to get penetration into these broader PBM networks," says Antonio Ciaccia, a pharmacy sector analyst and the CEO of research firm 46brooklyn.

Khullar, House Rx's president, hopes that as more and more startups begin to challenge those dominant PBMs, House Rx will have more leverage — especially if it can show better patient outcomes.

Details: First Round Capital, Character.vc and 1984.vc joined Bessemer in House Rx's raise, which brings its total financing to $30 million.

What they're saying: Kavazovic, Khullar and industry observers view House Rx's biggest potential advantage as helping to streamline and improve patient care.

"That’s the dream, honestly — getting physicians and pharmacists and nurses working together," says Ciaccia. "When you’re talking about patients with complex diseases on specialty medications, collaboration is essential to make sure they're calibrated on the right treatment path."

Erin Brodwin co-authors the Axios Pro Health Tech deals newsletter. Start your free trial at AxiosPro.com.

Scoop: Specialty pharmacy startup nets $25M

House Rx helps simplify care for patients needing special support.

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