Axios Pro Rata

The Biden administration earlier this week paused the Paycheck Protection Program for businesses with more than 20 employees, in an effort to get more loans to very small businesses.

Why it matters: PPP implementation has taken lots of arrows since its initial launch last April, but this move seems to be getting broad-based applause. Even if no one really knows if it will achieve its objective.

Backdrop: PPP was reauthorized late last year with another $284 billion, but several big rules changed. The most significant was that applicants for second-draw loans must be able to demonstrate at least a 25% revenue loss in 2020, either for the entire year or for a single quarter (compared to the same quarter in 2019).

• The U.S. Small Business Administration reports that over $140 billion of PPP 2 has been disbursed to over 1.9 million businesses. Since last April, there have been more than 7 million PPP loans, totaling $663 billion.

The problem: When PPP originally rolled out, many larger businesses got loans before smaller businesses — namely because they had deeper relationships with lenders and more access to lawyers and accountants.

• And when the original pool was quickly depleted, some small business owners either didn't realize it was later refreshed or still didn't know how to apply.

What's happening now: A White House official explains that the two-week moratorium on larger applicants is to enable the more than 5,000 lenders to get the word out that there's still over $100 billion remaining in PPP loans. Plus, lenders will have more time to work with small businesses that might have poorly organized records.

• Bill Briggs, who served as the SBA's deputy associate administrator in the Trump administration, tells me that "it's important that small businesses are reminded that PPP still exists."
• He adds that lenders must overcome levels of institutional distrust among some potential applicants — including religious nonprofits — and that key to the changes is that it gives both lenders and the SBA some timing slack so that they can both operationally catch up.

The bottom line: We should get a sense on how many Main Street jobs were supported by this extra effort at some point next month, or if it was already a lost cause.

AT&T (NYSE: T) agreed to spin out three of its video services, including satellite TV brand DirecTV, into a new standalone company in which TPG Capital will hold a 30% stake.

• Why it's the BFD: This sets the stage for merger talks between DirecTV and Dish Networks, although it's unclear if the satellite TV businesses can make up their cord-cut losses in volume.

• Details: The spinout will be valued at $16.25 billion, or around one-third what AT&T paid to buy DirecTV in 2014. TPG will pay $1.8 billion for its 30% stake, receiving preferred equity with a 10% coupon, with the remainder consisting of $5.8 billion in new bank debt and $200 million of rolled-over debt. Both AT&T and TPG get two board seats, with CEO Bill Morrow getting the fifth.
• The bottom line: "AT&T has been selling smaller assets for months in an effort to offload debt from its $85 billion acquisition of Time Warner in 2018." — Sara Fischer, Axios

• Newsela, a textbook replacement SaaS for K-12, raised $100 million in Series D funding at a $1 billion valuation. Franklin Templeton led, and was joined by insiders TCV, Kleiner Perkins, Reach Capital and Owl Ventures. http://axios.link/Opxr

• Terminus, an Atlanta-based B2B marketing platform, raised $90 million in Series C funding. Great Hill Partners led, and was joined by Atlanta Ventures, Edison Partners and Hallet Capital. http://axios.link/M8ip

• Anchorage, a San Francisco-based provider of digital asset services, raised $80 million in Series C funding. GIC led, and was joined by Andreessen Horowitz, Blockchain Capital, Lux and Indico. http://axios.link/KOgu

• Stori, a Mexican credit card startup, raised $32.5 million in Series B funding. Lightspeed Venture Partners led, and was joined by insiders Vision Plus Capital, BAI Capital and Source Code Capital. http://axios.link/eZH9

• Fi, a Brooklyn-based maker of smart dog dollars (even for dumb dogs), raised $30 million in Series B funding. Longview Asset Management led, and was joined by Advance Venture Partners and insiders RRE Ventures, Lerer Hippeau and Freestyle Ventures. http://axios.link/WgMJ

• HYAS, a Canadian cyberattack interception startup, raised US$16 million. S3 Ventures led, and was joined by Uncorrelated Ventures, Tightline Holdings, Cyber Mentor Fund, Dcode Capital and insiders M12, Startup Capital Ventures and 205 Capital. http://axios.link/EOAl

• Memmo.me, a Swedish platform for personalized celebrity videos (i.e., European Cameo), raised $10 million in Series A funding led by Left Lane Capital. http://axios.link/GaEn

• Stoke Space, a Reston, Va.-based maker of space vehicle components, raised $9.1 million in seed funding. NFX and MaC VC co-led, and were joined by YC, Seven Seven Six and Liquid2 Ventures. http://axios.link/l9ll

• Raena, a Singapore-based beauty social commerce startup raised $9 million in Series A funding. Alpha Wave Incubation and Alpha JWC Ventures co-led, and were joined by AC Ventures, Beenext, Beenos and Strive. http://axios.link/hQr8

• Levitate, a Raleigh, N.C.-based “keep-in-touch marketing platform,” raised $8 million in Series B funding from insiders like Tippet Venture Partners and Bull City Venture Partners. http://axios.link/rOqL

• DataJoy, a startup that helps SaaS companies track biz metrics, raised $6 million in seed funding. Foundation Capital led, and was joined by Quarry VC, Partech Partners, IGSB, Bow Capital and SVB. http://axios.link/qqXj

Coming attractions:

• Stripe, the online payments infrastructure giant, is raising new funding at a valuation north of $100 billion, per Barron’s.
• Kraken, a San Francisco-based cryptocurrency exchange, is raising new funding at a valuation north of $10 billion, per Bloomberg.

• Cision, a Chicago-based portfolio company of Platinum Equity, agreed to buy Brandwatch, a British social media listening platform, for $450 million. Brandwatch had raised around $67 million from firms like Highland Europe, Partech, Sageview Capital, Golden Seeds and Nauta Capital. http://axios.link/2d9m

• L Catterton agreed to to buy German sandal maker Birkenstock. No financial terms were disclosed, but earlier reports put the competitive process at upwards of €4 billion. http://axios.link/NbDG

• Ontario Teachers’ Pension Plan Board agreed to buy a majority stake in Logoplaste, a Portuguese plastic packaging maker, from The Carlyle Group. http://axios.link/9hqQ

☕ Rhone Capital agreed to make a minority investment in Italy’s Illycaffe, a family-owned coffee company that hadn’t before accepted outside investment in its 88-year history. http://axios.link/5b4X

• TPG agreed to buy a majority stake in NewQuest, a Hong Kong-based private equity secondaries firm focused on the Asia-Pacific region. http://axios.link/IgX8

• DigitalOcean, a New York-based cloud hosting and app management platform, filed for a $100 million IPO. It plans to list on the NYSE (DOCN) and reports a $44 million net loss on $318 million in revenue for 2020. DigitalOcean raised over $500 million from such firms as Access Holdings (26.6% pre-IPO stake), Andreessen Horowitz (17.5%) and IA Ventures (16.6%). http://axios.link/N6MS

• Manbang, a Chinese truck-hail company, filed confidential IPO papers with the SEC, per Bloomberg. It recently raised $1.7 billion from SoftBank, Sequoia Capital China, Permira, Fidelity, GGV Capital, Hillhouse Capital, Lightspeed China Partners, Tencent and YF Capital. http://axios.link/PBHE

• MatHem, a Swedish online grocer owned by Verdane Capital Advisors, is exploring an IPO, per Bloomberg. http://axios.link/CGDh

• UCO, a Chinese beauty products e-commerce platform owned by Citic Capital Partners, is considering a $300 million Hong Kong IPO, per Bloomberg. http://axios.link/6LXq

• AF Acquisition, a consumer SPAC formed by AF Ventures, Scharf Bros and Mistral Equity Partners, filed for a $200 million IPO. http://axios.link/xh7O

• African Gold Acquisition, a gold mining SPAC, raised $360 million in its upsized IPO. http://axios.link/c6qb

• Barry Sternlicht filed for his fifth and sixth SPACs, each targeting $250 million via IPO. http://axios.link/eLAH

• Austerlitz Acquisition II, a new SPAC from Bill Foley, raised $1.2 billion in an upsized IPO. http://axios.link/0gih

• Freedom Acquisition I, a financial services SPAC led by ex-Credit Suisse CEO Tidjane Thiam, raised $300 million in an upsized IPO. http://axios.link/reEu

• Fusion Acquisition II, a financial services-focused SPAC, raised $435 million in an upsized IPO. http://axios.link/W1XG

🚑 Ibere Pharmaceuticals, a life sciences SPAC formed by PIPV Capital, raised $120 million in an upsized IPO. http://axios.link/fNWi

• Kensington Capital Acquisition II, an auto industry-focused SPAC, raised $200 million in its IPO. http://axios.link/KX4m

• Leo Holdings III, a consumer SPAC formed by Lion Capital, raised $240 million in an upsized IPO.

🚑 Orion Biotech Opportunities, a biotech SPAC formed by MSD Partners and Panacea Venture, filed for a $200 million IPO. http://axios.link/rLw2

• SilverBox Engaged Merger Corp., a SPAC formed by SilverBox Capital and Engaged Capital, raised $300 million in its IPO. http://axios.link/0w6s

• Twelve Seas Investment II, a SPAC focused on global companies based outside the U.S., raised $300 million in an upsized IPO. http://axios.link/URjX

• Warrior Technologies Acquisition, a environmental services SPAC, raised $240 million in an upsized IPO. http://axios.link/LKD5

• Velocity Merger, a fintech SPAC formed by Tarsadia, filed for a $250 million IPO. http://axios.link/40Ub

🚑 Cigna (NYSE: CI) agreed to buy MDLive, a Miramar, Fla.-based virtual care delivery platform that had raised over $200 million from firms like Cigna, Health Velocity Capital, Heritage Group, Novo Holdings and Sixth Street Partners. http://axios.link/Rf4v

• Citibank and Davidson Kempner Capital Management completed their £5 billion purchase of mortgage lenders Bradford & Bingley and NRAM (f.k.a. Northern Rock) from the British government. http://axios.link/Imk6

⛽ Exelon (Nasdaq: EXC) said it will split its regulated and unregulated electric and gas utility businesses into two publicly traded companies. http://axios.link/iVV9

• GIC agreed to buy a 9% stake in Indonesian digital bank Jago for around US$221 million. http://axios.link/4ZfI

🚑 Merck (NYSE: MRK) agreed to buy Watertown, Mass.-based immune modulator developer Pandion Therapeutics (Nasdaq: PAND) for $1.85 billion, or $60 per share (134% premium to Wednesday’s close). http://axios.link/LvPF

• Suez (Paris: SEV) rejected a $13.7 billion takeover from rival water and waste management firm Veolia (Paris: VIE), although Suez is expected to continue pursuing the tie-up. http://axios.link/Ss3v

• Bessemer Venture Partners raised nearly $2.5 billion for its eleventh flagship fund and $825 million for its second growth-stage fund. It also hired former Amazon exec Jeff Blackburn as a partner, and promoted Mary D’Onofrio, Mike Droesch, Tess Hatch and Andrew Hedin to partner. http://axios.link/96ov

• Core Industrial Partners of Chicago raised $465 million for its second fund. www.coreipfund.com

🚑 Foresite Capital, a health care VC firm, raised $969 million for its fifth flagship fund. http://axios.link/emZB

• Trestle Partners of New York raised $30 million for its debut VC fund focused on SaaS startups. www.trestlelp.com

• The Carlyle Group hired Roger Cozzi from Alliance Bernstein to lead a new real estate credit business, per a memo obtained by Axios. http://axios.link/JNNn

The federal minimum wage battle heated up yesterday, or maybe simmered down, as the Senate parliamentarian ruled that a $15/hour provision cannot be included in the broader $1.9 trillion COVID relief package, per reconciliation rules.

• House Democrats opted to keep the provision in their bill, ahead of today's vote.
• Senate Democrats could still include $15/hour if they could get a total of 60 votes in favor, but that's as likely as Dogecoin becoming America's fiat currency. There are some alternative GOP proposals, including by Sens. Romney and Hawley, although they've yet to get traction.

Go deeper: What's really going on in labor markets