Sep 11, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Khosla Ventures late last month sued the former CEO of a failed portfolio company, accusing him of fraud and extortion. But it's not really about recovering the $60 million that the venture firm invested, since that money is long gone. Instead, it's about getting back at what Khosla believes is a duplicitous executive by exposing his alleged misdeeds.

The defendant: Dinesh Ramanathan, a onetime Cypress Semiconductor executive who in 2012 was named president and CEO of a Khosla-backed startup called Avogy that developed power systems for mobile devices. Avogy had been spun out of another Khosla portfolio company, and would raise more than $60 million in equity and debt funding from the VC firm. By late 2016, however, Avogy was failing and entered into a wind-down process that would involve the sale of its assets. Ramanathan became Avogy's sole board member during the auction process and also formed a new company that ultimately purchased Avogy's intellectual property for $200,000.

The conflict: Khosla makes two primary allegations.

  1. Ramanathan had a slightly better offer for the Avogy IP than his own bid but instead engaged in self-dealing.
  2. Ramanathan only really wanted to IP "to essentially extort a seven-figure cash payment" from another Khosla portfolio company. Axios has learned this other company is Soraa— the one that Avogy had been spun out of, which had cross-licensing deals with Avogy. The basic claim would be that Ramanathan threatened to interfere with a lucrative business opportunity for Soraa, by telling a third party that the license was in dispute. It's also worth noting that Soraa sued Ramanathan earlier this year, although the former Avogy CEO has not yet responded to the complaint.

Ramanathan denies the charges, via his attorney. Read more here, including the full complaint.

Today in SoftBank: Zoox, the secretive Silicon Valley startup that is trying to build a completely self-driving car, has held preliminary discussions about a new funding round that could value the company at between $3 billion and $4 billion, per multiple sources. Kia has more.

• P.T. BarnumCoin: It seems that Paris Hilton/G Chahal coin offering is oversubscribed, at least if you believe Chahal's Twitter account (from which I'm technically blocked).

• From seed to pump: Bloomberg goes inside the downfall of Juicero, which had raised over $130 million in venture funding before shutting earlier this month:

"Months before the end, a few of Juicero's investors had lost faith in the [product], touted by founder Doug Evans as a powerful machine capable of squeezing bagged chunks of fruits and vegetables into fresh juice. In April, Bloomberg reported that at least two of Juicero's backers were surprised to discover that the startup's proprietary bags didn't require Evans's press but could yield almost a full glass of juice when squeezed by hand. The news hit the company hard. A funding negotiation worth about $55 million fell apart... Over the summer, the board had discussed a generous injection of capital from existing investors. But it was too late."

• Irma energy view: Per Axios' Ben Geman, Goldman Sachs has a research note out this morning arguing that while Irma shouldn't have too much impact on oil processing and production, given the relative absence of petroleum infrastructure in its path.


Pilgrim's Pride (Nasdaq: PPC) has agreed to acquire British poultry producer Moy Park from Brazil's JBS SA (which also is Pilgrim Pride's majority shareholder) for around $1.3 billion.

  • Why it's the BFD: Not too long ago, JBS was known in M&A circles as an active acquirer. But it seems those purchases were partially enabled by a massive graft scheme that ultimately ensnared both members of the family that controls JBS and Brazilian politicians. Now JBS is shedding assets to pay related penalties, having previously agreed to sell dairy Vigot Alimentos to Mexico's Grupo Lala. The big question now is if this Moy Park sale is just a precursor to JBS selling off a more robust Pilgrim's Pride (in which Cargill had previously expressed interest in buying).
  • Bottom line: "Moy Park supplies 25 percent of chicken consumed in western Europe, according to its website. It is one of Britain's top 10 food companies, with 13 processing and manufacturing units in Northern Ireland, England, France, the Netherlands and Ireland." — Reuters
Venture Capital Deals

• ManoMano, a France-based online marketplace for DIY and gardening products, has raised €60 million in Series C funding. General Atlantic led the round, and was joined by return backers Piton Capital, Partech Ventures and Bpifrance.

🚑 Replimune, a British oncolytic immunotherapy startup, has raised $55 million in Series B funding. Foresite Capital led the round, and was joined by Bain Capital Life Sciences, Redmile Group, Cormorant Asset Management, Leerink Partners and return backers Atlas Venture, Forbion Capital Partners and Omega Funds.

• Typeform, a Barcelona-based conversational data collection platform, has raised $35 million in Series B funding. General Atlantic led the round, and was joined by return backers Index Ventures, Point Nine, and Connect Ventures.

🚑 Talkspace, a New York-based online therapy company, has raised $31 million in new Series C funding. Qumra Capital led the round, and was joined by return backers Norwest Venture Partners, Spark Capital, SoftBank, Compound Ventures and FirstTime.

• Airburg, a Chinese maker of air purifiers, has raised "tens of millions" of U.S. dollars in new VC funding from Lightspeed China Partners and Zhen Fund.

• Petal, a New York-based provider of a credit card for little or no credit history, has raised $3.6 million in seed funding from Brooklyn Bridge Ventures, Afore Capital, Rosecliff Ventures, Guild Capital, Great Oaks Venture Capital, Story Ventures and Silicon Badia.

• Finaeo, a Toronto-based CRM platform for financial advisors, has raised C$2.25 million in seed funding. Impression Ventures led the round, and was joined by 500 Startups, Robo Ventures and iGan Partners.

Private Equity Deals

• Bullhorn, a Boston-based recruitment software company owned by Vista Equity Partners, has acquired Connexys, a Dutch provider of recruitment SaaS, from Main Capital Partners. No financial terms were disclosed.

• Red Ventures has acquired Allconnect, an Atlanta-based marketplace that connects homeowners with utility and energy companies. No financial terms were disclosed. Sellers include Maveron and Covestco.

Public Offerings

⛽ BP Midstream Partners, a Houston-based midstream energy asset developer and operator being spun out of BP Pipelines (North America), has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol BPMP, with Citigroup listed as left lead underwriter.

Garuda Maintenance Facility AeroAsia, an aircraft maintenance and repair unit of Indonesian carrier PT Garuda Indonesia, is seeking to raise upwards of $422 million in an IPO.

•, an Indian online matchmaker whose backers include Bessemer Venture Partners, has launched an IPO that could raise upwards of $78 million.

• Switch Inc., a Las Vegas-based provider of colocation and cloud services for large enterprises, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol SWCH, with Goldman Sachs listed as left lead underwriter. The company repots $35 million of net income on $181 million in revenue for the first half of 2017. Shareholders include Intel Capital.

Liquidity Events

• Edizione Holding, an investment vehicle of Italy's Benetton family, is prepping a bid for Italian packaging company Guala Closures that could be valued north of $1.2 billion, according to Reuters. Selling would include Apriori Capital Partners, with Barclays and Credit Suisse managing the sell-side process.

• Gateway Casinos & Entertainment, a Canadian gambling company backed by Catalyst Capital Group, has hired banks to advise on a possible sale or IPO, according to Bloomberg. A deal could value the company at around C$2.5 billion.

More M&A

• Cargill has agreed to sell its U.S. metals business to Japan's Metal One Corp. for an undisclosed amount.

• CBS Corp. (NYSE: CBS) disclosed that it will pay at least US$162 million to buy Australian broadcaster Ten Network Holdings (ASX: TEN), per public documents. CBS had beaten out fellow Ten Network creditor News Corp. (Nasdaq: NWSA) for the deal.

• IndusInd Bank of India has entered exclusive talks to acquire local microlender Bharat Financial Inclusion.

It's Personnel

• Henri de Castries, former chairman and CEO of AXA Group, has joined General Atlantic as chairman of Europe and as a special advisor.

• Aaron Fu has joined Ghana's MEST Incubator as managing director. He previously was managing partner of a VC firm called Nest.

• Chang Sun has joined TPG as managing partner of China operations. He previously was founder and managing partner of impact investing firm Black Soil Group.


Please take a moment to remember the thousands of innocents murdered 16 years ago this morning. Among them were David Retik and Chris Mello of Boston-based investment firm Alta Communications, who both were on Flight 11. The foundation established in their names has since awarded nearly $2 million in grants to over 40 nonprofit organizations, and provided dozens of scholarships.

Dan Primack