Jan 31, 2019

Axios Pro Rata

Day 2 greetings from the Upfront Summit in Malibu. Please tell your friends and colleagues to http://GetProRata.axios.com. Okay, here we go...

Top of the Morning

Source: Giphy

Pax Labs, the cannabis vaporizer company that spun out Juul in 2017, is raising a small amount of new funding at a valuation of between $500 million and $600 million, Axios' Kia Kokalitcheva reports.

  • It's unclear if this is a new series of stock, or an extension of Pax's insider round from last October.
  • Several of the investors are expected to be new, including a number of professional athletes. That last part could prove tricky, given the marijuana usage rules of most U.S. professional sports leagues.
  • The company, which didn't respond to a request for comment, also is telling prospective investors that it plans to raise a $100 million round later this year at a valuation north of $1 billion.

Ride-hail: As Uber continues to drive toward an IPO, it's worth noting that it still has not received U.S. regulatory approval — via CFIUS — for its late 2017 investment from SoftBank Vision Fund.

  • Yes, the transaction is closed. But SoftBank has not yet seated the two directors it received per terms of the investment.
  • This could lead to some complicated language about governance and voting rights if Uber's S-1 comes out before Treasury makes its decision.

• 500 days of VC: Today at the Upfront Summit I'll be interviewing actor Joseph Gordon-Levitt. Not because he recently played Edward Snowden in a film — or Robin, for that matter — but because he's CEO of a startup called HitRecord that today will announce $6.4 million in Series A funding.

  • The company has actually been around since 2010, but this is its first round of outside funding.
  • It's basically an online artist collaboration platform, whereby users contribute/edit/etc. on projects that range from songs to video games to short films. If the project ends up being sold (or was originally contracted, like was recently done with a Ubisoft game), then the creators get pro-rated payments based on their contributions (which can range from a dollar to over $1,000).
  • Gordon-Levitt, who serves as CEO of the 24-person team, says the funding should help HitRecord expand into "a platform." In pragmatic terms, that means it won't be coming up with all the project ideas, instead allowing proposals to be fed directly into the system by others.
  • Javelin Venture Partners led the round, and was joined by Crosslink Capital and Advancit Capital. Gordon-Levitt explains that he intentionally sought money from Silicon Valley tech investors instead of from Hollywood entertainment investors, because he knows the part of the business he doesn't know.

Crypto no: One big takeaway from the Upfront Summit is the deafening silence on discussions about cryptocurrency and blockchain investment, both from the stage and in the networking tent. One year ago, it was a dominant topic of conversation.

🎧 Pro Rata Podcast: Our latest episode dives into the escalating crisis in Venezuela. How we got here, and what might happen next. Listen here.


Source: Giphy

Berry Global (NYSE: BERY) is considering a cash takeover offer for UK-based plastic packaging company RPC Group (LSE: RPC), which last week agreed to be bought for £3.3 billion by Apollo Global Management after months of negotiations, per Reuters.

  • Why it's the BFD: Because Indiana-based Berry is biting the hand that used to feed, as it was owned by Apollo between 2006 and its 2012 IPO.
  • Bottom line: "A listed player could pay in a mixture of equity and cash, meaning a higher offer may not require substantially more debt than the Apollo deal,” — Nicholas Hyett, an analyst at Hargreaves Lansdown, to Reuters.
Venture Capital Deals

Grab, a Southeast Asia-focused ride-hail and financial services group, raised $200 million from Thai retail conglomerate Central Group. http://axios.link/via6

Hims, a San Francisco-based direct-to-consumer brand for men's health, is raising around $100 million at a $1 billion valuation, as first reported by Recode. We hear the deal is a couple of weeks away from being finalized, with the lead investor based in Los Angeles.

MycoTechnology, an Aurora, Colo.-based startup that converts agricultural material into functional ingredients, raised $30 million in Series C funding from S2G Ventures, Middleland MT Holdings, ADM Capital, TML-Invest, Tysons Ventures, Bunge Ventures, Continental Grain Co., Kellogg's and DNS-Hiitake. http://axios.link/T7z3

Augury, a New York-based machine health startup, raised $25 million in Series C funding. Insight Venture Partners led, and was joined by Eclipse Ventures, Munich Re/HSB Ventures, Pritzker Group Venture Capital and Lerer Hippeau. www.augury.com

Fortanix, a Mountain View, Calif.-based provider of runtime encryption solutions, raised $23 million in Series B funding. Intel Capital led, and was joined by return backers Foundation Capital and Neotribe. www.fortanix.com

Aporeto, a San Jose, Calif.-based developer of identity-based security solutions, raised $20 million in Series B funding. Comcast Ventures led, and was joined by National Grid, Telia Ventures and return backers Wing VC and Norwest Venture Partners. www.aporeto.com

Stateless, a Boulder, Colo.-based network connectivity startup, raised $11.3 million in Series A funding. Drive Capital led, and was joined by return backer Speedinvest. www.bestateless.com

🚑 Dadi, a New York-based men’s fertility startup focused on sperm storage, raised $2 million in seed funding from Third Kind Ventures and Firstminute Capital. www.dadikit.com

Private Equity Deals

Blackstone Infrastructure Partners agreed to buy a majority stake in midstream energy company Tallgrass Energy (NYSE: TGE) for around $3.3 billion in cash, with GIC taking a minority stake. http://axios.link/O5rZ

BV Investments Partners acquired a majority stake in RKD Group, a Richardson, Texas-based provider of omnichannel fundraising and marketing services to the nonprofit sector. www.rkdgroup.com

Colony Hardware, an Orange, Conn.-based portfolio company of Audax Private Equity, acquired Electrical Fasteners, a provider of tools, fasteners, and equipment to commercial contractors in the Chicago area. www.colonyhardware.com

🚑 eMDs, an Austin, Texas-based portfolio company of Marlin Equity Partners, acquired Aprima, a Richardson, Texas-based provider of EHR, practice management and revenue cycle management software to ambulatory care organizations. www.emds.com

Excellere Partners invested in Concord Technologies, a Seattle-based provider of interoperability and automation solutions for industries like healthcare. www.concord.net

OpenGate Capital agreed to buy Sargent and Greenleaf, a Nicholasville, Ky.-based maker of electric and mechanical locks, from Stanley Black & Decker (NYSE: SWK). http://axios.link/nLMx

Public Offerings

🚂 Virgin Trains USA, owner and operator of passenger rail in Florida, set its IPO terms to 28.3 million shares at $17-$19. It plans to trade on the Nasdaq (VTUS) with Barclays as lead underwriter. Shareholders include Virgin Group and Fortress Investment Group. http://axios.link/zVCQ

Liquidity Events

CACI International (NYSE: CACI) agreed to buy LGS Innovations, a Herndon, Va.-based provider of C4ISR and cybersecurity products to the U.S. defense and intelligence communities, from Madison Dearborn Partners and CoVant for $750 million. http://axios.link/Sp5T

More M&A

Asahi and Valcambi each submitted bids for Republic Metals, a bankrupt Miami-based gold refiner, per Reuters.

Chevron (NYSE: CVX) agreed to buy a refinery in Pasadena, Texas for $350 million from Brazil’s Petrobras. http://axios.link/ibnA

Coca-Cola (NYSE: KO) agreed to buy the stake in Nigerian juice maker CHI that it doesn’t already hold. http://axios.link/DwF9

Costa Rican regulators have formally rejected Wal-Mart de Mexico’s plans to buy local supermarket chain Grupo Empresarial de Supermercados. http://axios.link/KUPV

Hyundai Heavy Industries agreed to buy rival South Korean shipbuilder Daewoo for $1.98 billion in stock. The combined company would be the world’s latest shipbuilder, with over 20% of the market. http://axios.link/j6WO

WPP (LSE: WPP) agreed to sell its 49% stake in Richard Attias & Associates, the event organizer that oversaw Saudi Arabia’s Future Investment Initiative conference, to founder Richard Attias. http://axios.link/yTEs


Arboretum Ventures of Michigan is raising $250 million for its fifth fund, per an SEC filing. www.arboretumvc.com

The Carlyle Group raised €1.35 billion for its fourth lower mid-market tech fund. www.carlyle.com

Madrona Venture Group is raising $100 million for a new opportunities fund focused on existing portfolio companies, per an LP source. www.madrona.com

OrbiMed is raising up to $1.2 billion for its third royalties and credit opportunity fund, per an SEC filing. www.orbimed.com

🚑 Qiming Venture Partners is raising $250 million for its second U.S. healthcare fund, per an SEC filing. www.qimingvc.com

TCV raised $3 billion for its tenth fund. http://axios.link/HqYN

It's Personnel

Relay Ventures, a Canadian VC firm, promoted Jake Cassaday to partner. www.relay.vc

Final Numbers
The "term sheet" for SAP's $8 billion purchase of Qualtrics, as shared yesterday by Qualtrics CEO Ryan Smith at the Upfront Summit. Source: @teddyschleifer