Axios Pro Rata

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March 01, 2024

Top of the Morning

Illustration of the openAI logo as a bomb with a fuse

Illustration: Natalie Peeples/Axios

OpenAI is having a terrible, horrible, no good, very bad week.

  • First, its deep-pocketed partner Microsoft invested in French rival Mistral. It's not quite an affair, but it's also not a building block for solid marriage.
  • Then came a WSJ report that the SEC is investigating whether OpenAI investors were misled during last November's boardroom brouhaha, in which CEO Sam Altman was fired and then rehired. This is on top of an existing FTC investigation into antitrust issues.

But the biggest bomb dropped last night, when Elon Musk sued OpenAI, alleging that the company has violated its founding agreement.

  • Specifically the part whereby OpenAI would be an open-source nonprofit focused on developing AI "for the benefit of humanity."
  • Musk, who claims to have contributed $44 million to OpenAI between 2016 and 2020, alleges breach of contract, breach of fiduciary duty, and unfair business and accounting practices.
  • Here's a quick refresher on OpenAI's odd structure.

If successful, Musk would basically take a Boring-branded flamethrower to the billions of dollars invested in OpenAI. Including money from some of the VC firms that helped fund his Twitter takeover, such as Sequoia Capital and Andreessen Horowitz.

  • And, just to make things a bit more convoluted, many of those same VC firms are expected to have equity in Musk's own, for-profit AI company.

If unsuccessful β€” and Musk's legal track record is decidedly mixed β€” it still could prove to be a costly distraction for OpenAI, hurt its reputation, and leave breadcrumbs for an ambitious state AG to take up the mantle.

The bottom line is that Silicon Valley remains Elon's world, and OpenAI is just living in it.


an illustration of a cart tipping over and dumping out a bunch of red warning signs

Illustration: Tiffany Herring/Axios

Thoma Bravo increased the amount it's paying to acquire Everbridge (Nasdaq: EVBG), a Burlington, Mass.-based provider of critical event management and national public warning software, by 22.4% to $1.8 billion.

Why it's the BFD: Almost every take-private agreement includes a "go-shop" provision, but this is one of the rare times that it mattered.

Details: Thoma Bravo on Feb. 5 announced an agreement to buy Everbridge for $28.60 per share. The deal included a 25-day go-shop period, during which time Everbridge says it received a superior offer. Thoma Bravo then increased its bid to $35 per share, resulting in today's announcement.

The bottom line: Thoma Bravo isn't a total stranger to repriced deals. For example, in 2022 it paid $300 million less for Anaplan than it had originally agreed, due to a disagreement over equity grants.

Venture Capital Deals

πŸš‘ FogPharma, a Cambridge, Mass.-based biotech, raised $145m in Series E funding. Nextech Invest led, and was joined by new investors RA Capital Management, Rock Springs Capital, General Catalyst, Marshall Wace, Samsara Biocapital, Foresite Capital, Symbiosis, Catalio Capital Management, Sixty Degree Capital, and former J&J CEO Alex Gorsky. Insiders also participated.

πŸš‘ ArgΓ‘ Medtech, a developer of ablation tech for cardiac arrhythmias, raised $58.6m in Series B funding. Advent Life Sciences and Earlybird co-led, and were joined by Gilde Healthcare.

⚑ Geopura, a British on-site hydrogen generator developer, raised £56m from the UK Infrastructure Bank, Barclays Sustainable Impact Capital, GM Ventures, Swen Capital Partners, and Siemens Energy Ventures.

β€’ Qapita, a Singaporean equity management startup, raised $17.2m from East Ventures, MassMutual Ventures Southeast Asia, and Cercano Management invested.

β€’ Backpack, a crypto exchange founded by former FTX and Alameda Research employees, raised $17m in Series A funding. Placeholder VC led, and was joined by Hashed, Robot Ventures, Amber Group, Wintermute, and Selini.

β€’ Karma3 Labs, developer of a decentralized reputation protocol, raised $4.5m co-led by Galaxy and IDEO CoLab Ventures.

β€’ Raspberry AI, a New York-based provider of design software for fashion design and merchandising teams, raised $4.5m in seed funding co-led by Greycroft and Khosla Ventures.

β€’ Particle, a newsreader startup, raised $4.4m in seed funding from Kindred Ventures, Adverb Ventures, Ev Williams, and Scott Belsky.

β€’ Campfire, an SF-based provider of accounting software for startups and midsize companies, raised $3.5m in seed funding. Foundation Capital led, and was joined by YC and Twenty Two Ventures.

β€’ Clasp, a New York-based SaaS platform for employee benefits infrastructure, raised $1.5m led by Base10 Partners, per Axios Pro.

Private Equity Deals

β€’ Adena Partners acquired The Courier Guy, a South African provider of last-mile delivery services, alongside co-investors DEG, Proparco, and South Suez.

β€’ Bow River Capital acquired Accelo, a Denver-based provider of professional services automation software.

β€’ Direct Capital acquired Hiway Group, an Australian paving and transportation infrastructure firm, from The Riverside Company.

⚑ Enviria, a German solar roof company, raised over $200m from BlackRock.

πŸš‘ Headlands Research, a clinical trial site network owned by KKR, acquired Pharmasite Research, a clinical trial site focused on mental illness and CNS disorders.

β€’ MNC Capital Partners offered to buy sporting goods and gun retailer Vista Outdoors (NYSE: VSTO) for $2.9b (including assumed debt), or $35 per share, per the WSJ. MNC reportedly is an investment group that includes Mark Gottfredson, a former Vista director and current partner with Bain & Co.

β€’ Summit Partners acquired a majority stake in Insurcomm, a Portland, Maine-based provider of commercial and residential restoration services.

Liquidity Events

β€’ Fenway Partners has paused its efforts to sell Riddell, the Illinois-based maker of NFL football helmets for which it had been seeking around $800m, per Bloomberg.

πŸš‘ Goldman Sachs Asset Management is seeking to sell Omega Healthcare, a Boca Raton, Fla.-based health-care revenue cycle management company that could fetch around $1b, per Buyouts.

β€’ JAB is seeking to sell around 87m shares in Keurig Dr. Pepper (Nasdaq: KDP), via a block sale that could raise upwards of $2.5b, per Bloomberg.

πŸš‘ KKR is seeking to sell Philippines hospital operator Metro Pacific Health, which could fetch at least $3b, per Bloomberg.

β€’ Omers and Harvest Partners are seeking a buyer for Epiq Systems, an Overland Park, Kan.-based legal services firm they took private in 2016, per Bloomberg. It could fetch at least $3b (including debt).

More M&A

β€’ B. Riley (Nasdaq: RILY), an LA-based brokerage firm, launched a strategic review of various business units, which could result in a sale.

β€’ Banco Santander (Madrid: SAN) is in talks to buy around a 33% stake in Spanish venture capital firm Seaya, per Bloomberg.

β€’ Embracer Group, a Swedish gaming firm, plans to sell its Saber Interactive for up to $500m to undisclosed investors, per Bloomberg.

β€’ ITV (LSE: ITV) sold its 50% stake in streaming service BritBox International to joint venture partner BBC Studios for Β£255m.

β€’ Kirkoswald Asset Management, a hedge fund led by Greg Coffey, is in talks to acquire Mark Franklin's Emso Asset Management, per Bloomberg.


πŸš‘ Avista Capital, a New York-based PE firm focused on health care, raised $1.5b for its sixth fund.

β€’ Lord, Abbett & Co. has raised over $1b for a private credit fund, per an SEC filing.

β€’ The Sterling Group, a Houston-based midmarket PE firm, is raising up to $2.75b for its sixth fund, per an SEC filing.

It's Personnel

🌎 Steven Novick joined BlueEarth Capital as a senior adviser. He previously was with Coller Capital and Crescent Capital.

β€’ Pradeep Ramamurthy stepped down as head of IR at Standard Crypto.

β€’ Jay Steinle joined HighPost Capital as a managing director and head of IR. He previously was with Atlantic Street Capital.

β€’ Brevet Capital promoted Mei-Li da Silva Vint to chief commercial officer.

Final Numbers: U.S. IPOs

U.S. IPO volume chart
Source: Renaissance Capital. Data through 3/1/24

The U.S. IPO market isn't strong by historical standards, but does appear poised to top the proceeds raised in either of the past two years.

  • Year-to-date proceeds are up 224% over this same point in 2024, while pricing activity climbed 23.5%, per Renaissance Capital data.
  • The next major issuer is expected to be Reddit, later this month.
  • Global IPO volume is at around $11.5 billion, down 2% year-over-year, according to LSEG.

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