Dec 10, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Sarah Grillo/Axios

Venture capital and private equity are integral parts of America's economy, but neither has really been around for very long.

  • It's something I've been reminded of over the past month, as several of the industries' founding fathers have passed.

Bill Macaulay in 1983 co-founded First Reserve, which would become the first global private equity firm focused exclusively on energy. Until 2017 he'd lead First Reserve, which has raised over $35 billion for its funds.

  • Macaulay died last week at the age of 74. He leaves behind wife Linda and daughters Elizabeth and Anne.

Frank Caufield and Brook Byers in 1977 teamed up with Eugene Kleiner and Tom Perkins to expand Kleiner Perkins into the legendary VC firm Kleiner Perkins Caufield & Byers. His deals would include AOL and Caremark, and he'd serve as president of the National Venture Capital Association.

  • Caufield passed away shortly before Thanksgiving at the age of 80. He's survived by son Frank (founder of Darwin Ventures) and daughter Kirsten.

Pete Musser in 1953 founded what would become Safeguard Scientifics, an investment group that evolved its focus from industrials to Internet tech. It's one of those firms that would be much-better known if it wasn't based in the Philly suburbs, but its history included selling Ralph Roberts the first of the cable TV systems that would become Comcast, backing Novell, and seeding Internet Capital Group to dotcom-era prominence. It also was one of the original startup "incubators."

  • Mussser died in late November at the age of 90.

Don Valentine, the founder of Sequoia Capital and an early investor in companies like Apple and Cisco, passed away in late October.

Plenty of veteran firm founders remain not only alive, but very much healthy and in charge. But the truth is that we're rapidly losing institutional, foundational knowledge. History passing before our eyes.

Also...

🐶 Woof: SoftBank Vision Fund is bailing on Wag, the dog-walking and dog-sitting company in which it invested $300 million in early 2018.

  • SVF will sell its shares back to the company for an undisclosed amount, and give up its board seat.
  • This is just the latest black eye for SVF, but isn't quite as dark when viewed in the context of traditional VC portfolio management.
    • The Wag investment represents 0.3% of SVF's committed capital.
    • Were we talking about a $100 million venture fund, it would be the equivalent of bailing on a $300,000 investment (which happens all the time).
    • I know, SVF is anything but "traditional" and arguably is as much a private equity fund as a venture fund, but basic portfolio management rules can still apply.

VC scoop: Alex Clayton is joining Meritech Capital Partners as a managing director. He's spent the past four years with Spark Capital, where his deals included JFrog and Justworks.

🎧 Pro Rata Podcast digs into Uber's recent safety report, which included the disclosure of more than 3,000 sexual assaults in its U.S. ride-hail business last year. Listen here.

The BFD
Source: Giphy

NortonLifeLock (Nasdaq: NLOK), a consumer cybersecurity software maker, has received takeover interest from rival McAfee, per the WSJ. The private equity pairing of Advent International and Permira also may bid.

  • Why it's the BFD: Because any deal would involve big dollars —NortonLifeLock's market cap is nearly $16 billion — and a complex backstory.
  • Complex backstory: NortonLifeLock is the consumer business of what was known as Symantec, before it recently sold its enterprise business to Broadcom.
    • Activist investor Starboard Value has a 7% stake in NortonLifeLock and a board seat.
    • Advent and Permira originally offered to buy Symantec in its entirety and then do the enterprise sale to Broadcom, but were denied.
    • Both the PE firms and Broadcom also once flirted with acquiring the entire Symantec business.
    • Then there's McAfee, whose owners are TPG Capital, Thoma Bravo, and Intel. It's toyed with going public, but also could do a similar consumer/enterprise split, with the consumer piece boosted by NortonLifeLock.
  • Bottom line: "Symantec had spent about $7 billion in recent years on two high-profile acquisitions, cloud-security company Blue Coat, and LifeLock, that were met with initial enthusiasm from investors. But those deals did little to jump-start growth, prompting Starboard—and now potential buyers—to get involved." — WSJ
Venture Capital Deals

🚑 Inscripta, a Boulder, Colo.-based developer of genome-engineering devices, raised $125 million in Series D funding led by return backer Paladin Capital Group led http://axios.link/2BLM

🚑 Imperative Care, a Campbell, Calif.-based developer of neurovascular devices for treating ischemic and hemorrhagic strokes, held an $85 million first close on its Series C funding. Ally Bridge Group and Bain Capital Life Sciences co-led, and were joined by return backers Ascension Ventures, Delos Capital, Rock Springs Capital, 3H Health Investment, and Incept LLC. www.imperativecare.com

🚑 Zentalis Pharma, a cancer drug startup led by former venture capitalist Anthony Sun (ex-Aisling Capital), raised $85 million in Series C funding from Matrix Capital, Viking Global Investors, Redmile Group, Farallon Capital, Perceptive Advisors, Surveyor Capital, and Eventide Asset Management. http://axios.link/0t8v

Passport, a Charlotte-based mobility management platform, raised $65 million in Series D funding from Rho Capital Partners, H.I.G. Growth Partners, and ThornTree Capital Partners. www.passportinc.com

Zeus Living, a San Francisco-based corporate housing startup, raised $55 million in Series B funding from Airbnb, Comcast, CEAS Investments, TI Platform Management, and return backers Alumni Ventures Group, Initialized Capital, NFX, and Spike Ventures. http://axios.link/U1XP

Arcadia, a Washington, D.C.-based digital utility platform for consumers, raised $30 million in Series C funding. G2VP led, and was joined by Macquarie Capital, Macquarie Commodities and Global Markets, and return backers Mitsui USA, Seek Ventures, Energy Impact Partners, Box Group, and ValueAct Capital. www.arcadiapower.com

Imply, a Burlingame, Calif.-based provider of real-time analytics, raised $30 million. Andreessen Horowitz led, and was joined by Geodesic Capital and Khosla Ventures. www.imply.io

FoodMaven, a Colorado Springs-based food-sourcing startup, raised $15.3 million in Series B funding led by return backer Tao Capital Partners. http://axios.link/EdzJ

Current Health, a Scotland-based remote health monitoring platform, raised $11.5 million in Series A funding. MMC Ventures and Legal & General co-led, and were joined by Par Equity and Scottish Enterprise. http://axios.link/loyM

FintechOS, a London-based developer of personalized, automated fintech solutions, raised £10.7 million in Series A funding. Earlybird and OTB Ventures co-led, and were joined by Launchhub and Gapminder Ventures. http://axios.link/XvX0

FlexPay, a Montreal-based startup that helps merchants recover lost revenue for canceled transactions, raised C$6 million. Impression Ventures led, and was joined by BMO Capital Partners and Anges Québec. http://axios.link/0UoM

Code Dx, a Northpoint, N.Y.-based application security management startup, raised $2 million in seed funding from DataTribe. http://axios.link/AfH9

Private Equity Deals

Gravity, a Midland, Texas-based portfolio company of Clearlake Capital Group, acquired On Point Oilfield Holdings, an Austin, Texas-based oilfield waste and saltwater disposal company. www.onpointoilfield.com

Harvest Partners acquired Lazer Spot, an Alpharetta, Ga.-based provider of outsourced rail yard management services, from Greenbriar Equity Group. www.lazerspot.com

👶 Marquee Brands, a portfolio company of Neuberger Berman, agreed to buy the IP, e-commerce business, and other assets of bankrupt retailer Destination Maternity. http://axios.link/zh9Y

Public Offerings

Bill.com, a Palo Alto-based provider of payment processing software for SMEs, increased its IPO price range from $16-$18 to $19-$21. It still plans to offer 8.8 million shares, and would have a $1.39 billion market cap, were it to price in the middle of its revised range. Bill.com plans to trade on the NYSE (BILL) with Goldman Sachs as lead underwriter, and reports a $7 million net loss on $108 million in revenue for the year ending June 30, 2019. It raised $320 million in VC funding from DCM, August Capita, Ossa Investments, Emergence Capital, Financial Partners, Scale Venture Partners, and Icon Ventures. http://axios.link/ZPe5

Loha, a Chinese organic food distributor, filed for a $38 million U.S. IPO with Maxim Group as sole underwriter. It reports $2.6 million of net income on $46 million in revenue for the six months ending March 31, 2019. http://axios.link/ZHRg

Liquidity Events

Macquarie Group and Skansa are seeking a buyer for the Elizabeth River Tunnels, a Virginia toll road that could fetch more than $2 billion, per Bloomberg. http://axios.link/eAqc

🚑 Vivo Capital is seeking a buyer for Surgical Specialties, a Westwood, Mass.-based medical device maker that could fetch over $500 million, per Bloomberg. http://axios.link/rog9

More M&A

Cboe Global Markets (Zurich: CBOE) agreed to acquire the stake it didn’t already hold in stock trades clearing house EuroCCP. http://axios.link/APVm

Just Eat (LSE: JE) rejected an increased, £5.1 billion takeover offer from Prosus (AS: PRX), saying it still prefers a lower, all-stock merger bid by Takeaway (AS: TKWY). http://axios.link/LeDO

Partners Group agreed to sell Merkur, an offshore wind farm in the German North Sea, to Dutch pension APG and Britain’s Renewables Infrastructure Group (LSE: TRIG). http://axios.link/uvBE

Safilo (Milan: SFLG) agreed to buy a 70% stake in Blenders Eyewear, a San Diego-based sunglasses maker. http://axios.link/degX

Sanoma, a listed Finnish media company, agreed to sell its Dutch business to DPG Media for around €460 million. http://axios.link/EIwm

Fundraising

Apax Partners is raising $10.5 billion for its tenth flagship fund, with an $11 billion hard cap, per public pension documents. www.apax.com

Centana Growth Partners, a growth equity firm focused on financial services, raised $375 million for its second fund. http://axios.link/eJeQ

Clearlake Capital is raising $5 billion for its sixth flagship fund, per public pension documents. www.clearlake.com

Insight Partners is raising $7.25 billion for its eleventh flagship fund, with an $8 billion hard cap, per public pension documents. www.insightpartners.com

LNC Partners, a Reston, Va.-based private equity firm, raised its second SBIC fund with $300 million in total commitments (including leverage). www.lnc-partners.com

May River Capital, a Chicago-based private equity firm, raised $300 million for its second fund. http://axios.link/EOFv

Parthenon Capital raised more than $2 billion for its sixth private equity fund. http://axios.link/u1I2

🚑 Peregrine Ventures, an Israeli VC firm focused on med-tech, raised $115 million for its fourth fund. http://axios.link/FOep

SignalFire raised $300 million for its second growth-stage venture fund and $200 million for its third seed fund. http://axios.link/59Fl

Spring Lane Capital, a Boston and Quebec-based private equity firm focused on sustainability projects in the energy, food, water and waste industries, raised US$157 million for its debut fund. www.springlanecapital.com

It's Personnel

Jambu Palaniappan, former head of Uber Eats in Europe and the MENA region, joined Omers Ventures. http://axios.link/6cE4

Final Numbers
Expand chart
Reproduced from Brookings and ITIF analysis of Emsi data; Chart: Axios Visuals
Dan Primack

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