Jun 26, 2017

Axios Pro Rata

Monday greetings from the home office. Before getting to it, I wanted to let you know that Axios tomorrow will launch a newsletter on media trends, written by Sara Fischer – who came to us after serving in both editorial and operational roles at places like The Washington Post and CNN. Please sign up here: http://link.axios.com/join/mediatrends-signup.

Bros Behaving Badly

On Friday we discussed allegations that venture capitalist Justin Caldbeck had sexually harassed female founders. A lot has happened since then.

What we reported over the weekend:

  • Caldbeck on Friday afternoon announced he was taking an indefinite leave of absence and seeking counseling. He also issued a lengthy apology.
  • Axios learned that Caldbeck's firm, Binary Capital, had been slated to close on up to $75 million in new fund capital on Friday, timed to the addition of Matt Mazzeo (Lowercase Capital) as its third partner. Binary postponed the close, per an note sent to LPs.
  • Matt Mazzeo last night quit Binary.
  • Caldbeck officially left the firm just a short while later, per an email sent to LPs. Remaining partner Jonathan Teo said that a law firm had been retained "to conduct an independent internal investigation of this matter."

What we're reporting new this morning:

  • Havenly and Dia & Co., two Binary Capital portfolio companies led by female founders, have requested that Binary Capital terminate their board relationships, effective immediately.
  • Caldbeck was a "key man" on both Binary funds, and limited partners have not yet made a final determination as to if they want to trigger this out, execute a no-fault termination clause or allow Jonathan Teo to carry on as sole managing partner. Conversations are expected to continue today.
  • Teo wrote in his LP letter that he "trusted my partner and it is clear that I shouldn't have." LPs should dig in on this, because there is no doubt that Teo at least knew there was talk of sexual harassment allegations surrounding Caldbeck. This comes from three places: (1) Sources who have spoken to Teo, including at a wedding this past weekend; (2) a text message from last fall that Axios has obtained; and (3) The fact that Caldbeck sent a note to all portfolio companies in May, telling them that The Information was working on a story "alleging untrue things about my personal conduct." Did Teo simply fail in due diligence, or did he not really care to conduct any?

Takata, the Japanese auto parts maker whose defective air-bags (and related cover-up) led to more than a dozen deaths and 70 million recalls, has filed for bankruptcy protection. It plans to sell its operational assets for around $1.6 billion to Michigan-based Key Safety Systems, which is owned by China's Ningbo Joyson Electronic. Not included are Takata's nitrate airbag inflator operations, which will eventually be wound down.

  • Why it's the BFD: This is believed to be the largest-ever bankruptcy of a Japanese manufacturer, and is the result of around 16 months of negotiations. Along the way there had been takeover interest that involved both KKR and Bain Capital, but Key Safety was the final suitor standing.
  • What to watch: How bankruptcy courts in both the U.S. and Japan deal with creditors and remaining liability claims, particularly from automakers like Honda and Toyota that have been shouldering recall costs.
  • Bottom line: "Global transport authorities have ordered about 100 million inflators to be recalled, as the ammonium nitrate compound used to inflate has been found to become volatile with age and prolonged exposure to heat, causing the devices to explode. Industry sources have said that recall costs could climb to about $10 billion." – Reuters

Ex-Uber CEO Travis Kalanick and J.P. Morgan CEO Jamie Dimon spotted lunching yesterday in D.C.

Venture Capital Deals

β€’ Houzz, a Palo Alto, Calif.-based home design platform, confirmed the close of $400 million in Series E funding (reportedly at a $4 billion valuation). Iconiq Capital led the round, and was joined by Wellington Management and return backers GGV Capital, Sequoia Capital and Zeev Ventures. http://tcrn.ch/2s8IdNY

β€’ SparkCognition, an Austin, Texas-based provider of cognitive security analytics solutions, has raised $32.5 million in Series B funding. Verizon Ventures led the round, and was joined by Boeing HorizonX. http://bit.ly/2rT70Bt

πŸš‘ Provention Bio, a Lebanon, N.J.-based developer of therapeutics for preventing immune-mediated diseases, has raised $28.4 million in Series A funding from backers like Johnson & Johnson Innovation. www.proventionbio.com

β€’ Satellogic, a San Francisco-based provider of high-res earth satellite solutions, has raised $27 million in Series B funding. Tencent led the round, and was joined by such groups as Pitanga and CrunchFund. http://tcrn.ch/2rZ3GJr

β€’ Dook Book, a Shanghai-based book publisher that also has digital media and film operations, has raised $18 million in Series A funding. Legend Capital led the round, and was joined by Zhihe Capital and Neixiang Fund. http://bit.ly/2rT6fbI

πŸš‘ Vineti, a San Francisco-based provider of cell and gene therapy software, has raised $13.75 million in Series A funding from GE Ventures, Mayo Clinic Ventures, DFJ and LifeForce Capital. http://bit.ly/2sWvoGc

β€’ Yoyo Wallet, a London-based mobile payment and customer loyalty platform, has raised Β£12 million in Series B funding. Metro Group led the round, and was joined by Woodford Investment Management and Touchstone Innovations. http://tcrn.ch/2tb5a2N

β€’ Datometry, a San Francisco-based enterprise data management platform, has raised $10 million in Series A funding. Redline Capital led the round, and was joined by Dell Technologies Capital and Acorn Pacific Ventures. www.datometry.com

πŸš‘ Alphea.Bio, a Belgium-based developer of sustainable agricultural products to increase crop yield and protect plants against specific fungal diseases, has raised €9.1 million in Series A funding (including €1.3m non-dilutive). V-Bio Ventures led the round, and was joined by PMV, Agri Investment Fund, Vives Louvain Technology Fund, Qbic II, Gemma Frisius Fund KU Leuven, Group De Ceuster and VIB. www.alphea.bio

β€’ TechSee, an Israel-based provider of visual support technologies for smart homes, has raised $7.5 million in Series A funding. Planven Investments led the round, and was joined by Innogy, Comdata Group and return backer OurCrowd. www.techsee.me

β€’ Hosco, a Swiss online hospitality network, has raised over $7 million in Series A funding from undisclosed investors. www.hosco.com

πŸš‘ Eloxx Pharmaceuticals, an Israeli developer of therapeutics to great genetic diseases, has raised $6 million in new Series C funding from Korea Investment Partners, DSC Investments and Sevion Therapeutics. The round total is now $30 million. www.eloxxpharma.com

β€’ BlockFraud, a Los Angeles-based provider of mobile billing anti-fraud technology, has raised $5 million in Series A funding led by Palisades Venture Capital. www.blockfraud.com

β€’ Tizeti, a high-speed wireless networking company focused on Nigeria, has raised $2.1 million in new VC funding. Backers include Western Technology Investment, Social Capital, Vy Capital, Picus Capital, Ace & Co., Lynett Capital Partners, Zeno Ventures and individual angels. http://tcrn.ch/2sSmQxA

β€’ Clobotics, a Shanghai-based developer of machine vision solutions for drones, has raised an undisclosed amount of Series A funding led by GGV Capital. http://bit.ly/2t9tguw

Private Equity Deals

πŸš‘ EQT Partners has agreed to acquire a 20% stake in German artificial limb-maker Otto Bock HealthCare at an enterprise value of €3.15 billion, beating out a rival bid from CVC Capital Partners. http://reut.rs/2u7CMvf

πŸš‘ AGIC Capital of China has agreed to acquire Ritedose, a Columbia, S.C.-based provider of pharma contract manufacturing services, from Olympus Partners. Chinese pharma company Humanwell Healthcare is participating as a minority buyer on the deal, which reportedly is valued at between $600 million and $800 million (including debt). http://on.wsj.com/2u7dk9e

β€’ Towerbrook Captial Partners, Torreal and PenΓ­nsula have agreed to acquire a majority stake in Spanish aerospace company Aernnova Aerospace for €900 million, according to Dow Jones. Sellers include Swiss buyout firm Springwater Capital. http://bit.ly/2tbIqQ5

Public Offerings

β€’ Ten companies are planning to price IPOs on U.S. exchanges this week, which could raise around a combined $1.5 billion (per Renaissance Capital). Expected issuers include: Blue Apron, Avenue Therapeutics, Esquire Financial, Mersana Therapeutics, TPG Pace Holdings, Byline Bancorp, Aileron Therapeutics, Dova Pharmaceuticals, Akcea Theraeutics and Tintri. http://bit.ly/2rSUsdp

β€’ Best, a Chinese logistics company backed by Alibaba Group, has filed for a $750 million IPO. It plans to list in the U.S., with Citigroup listed as left-lead underwriter. Alibaba holds a 23.4% pre-IPO stake, while IDG-Accel China has a 6.2% position. http://reut.rs/2u85QTk

β€’ Calyxt, a New Brighton, Minn.-based Cellectis (Paris: ALCLS) spinout focused on developing gene-edited crop traits, has filed for a $50 million IPO. Credit Suisse and Jefferies as serving as co-lead underwriters for the company, which reports a $12 million net loss on less than $1 million in revenue for 2016. http://bit.ly/2tbZfuh

β€’ Libstar, a South African maker of personal and household products, is prepping an IPO that could value the company north of $1 billion, according to Bloomberg. Abraaj Group acquired a majority stake in Libstar three years ago, and has hired J.P. Morgan and Standard Bank to manage the listing. https://bloom.bg/2sdcaaI

πŸš‘ PetIQ, an Eagle, Idaho-based maker of prescription pet medications, OTC flea/tick preventatives and related products, has filed for an $85 million IPO. It plans to trade on the Nasdaq under ticker symbol PETQ, with Jefferies and William Blair serving as co-lead underwriters. The company reports $4 million of net income on around $200 million of revenue for 2016. Shareholders include Eos Partners. www.petiq.com

β€’ ShawKwei & Partners has sold Yongle Tape Co., a Chinese manufacturer of specialty tapes and related products for industrial applications, to Avery Dennison (NYSE: AVY) for an undisclosed amount. www.averydennison.com

β€’ YogaWorks, a Culver City, Calif.-based yoga studio operator owned by Great Hill Partners, has filed for a $74.75 million IPO. It plans to trade on the Nasdaq under ticker symbol YOGA, with Cowen listed as left lead underwriter. The company reports a $9.5 million net loss on around $55 million in revenue for 2016. www.yogaworks.com

Liquidity Events

πŸš‘ Catalyst Private Equity has hired Wells Fargo to find a buyer for Therapure Biopharma, a Canadian developer of blood and plasma-related therapeutics that could be worth more than C$400 million, according to Bloomberg. An IPO also remains possible. https://bloom.bg/2tc85se

πŸš‘ Flexpoint Ford has hired Moelis & Co. to find a buyer for Summit Behavioral Healthcare, a Franklin, Tenn.-based provider of addiction treatment services, according to Dow Jones. SBH is projected to generate around $24 million in 2017 EBITDA. http://on.wsj.com/2tLIVhx

β€’ L1 Retail, an investment fund owned by Russian billionaire Mikhail Friedman, has agreed to acquire UK-based health food retailer Holland & Barrett from Nature's Bounty (owned by The Carlyle Group) for Β£1.8 billion. Carlyle had been seeking to sell all of Nature's Bounty but, for now, is settling for a partial exit. http://on.ft.com/2u7AQ5Y

β€’ Lindsay Goldberg has agreed to sell Bluegrass Materials, a Jacksonville, Fla.-based based manufacturer of aggregates and concrete blocks, to Martin Marietta Materials (NYSE: MLM) for $1.625 billion in cash. http://reut.rs/2taxems

Bad Deals

β€’ Pearl Automation, maker of a wireless rear-view mirror camera for cars, that had raised $50 million in VC funding, has shut down, Axios has learned. Backers included Accel, Shasta Ventures, Venrock and Wellcome Trust. http://bit.ly/2sdswjX


β€’ Arizona State University has picked BlackRock to manage its $600 million endowment, succeeding Perella Weinberg Partners. https://bloom.bg/2rZLwHo

β€’ Australis Partners has raised $379 million for its debut private equity fund, which will make control investments in Mexico, Colombia, Peru and Chile. http://bit.ly/2td2KBg

It's Personnel

β€’ Swati Mylavarapu has stepped down as a partner with Kleiner Perkins Caufield & Byers, in order to become a managing partner of Incite Ventures, per her LinkedIn profile.

β€’ James Paterson has joined PNC Business Credit as SVP of business development, after having previously served in a business development role at CIT Group. www.pnc.com

β€’ Alex Popov has joined The Carlyle Group as a managing directors and head of the firm's credit opportunities business within its global credit platform. He previously was a managing director with HPS Investment Partners. www.carlyle.com

β€’ Wendy Tan White has stepped down as a general partner with Entrepreneur First to join BGF Ventures. http://tcrn.ch/2sSf7ji