Apr 7, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• VC vs. PE: The big story in Illinois politics yesterday was that hotel scion J.B. Pritzker is running for the Democratic Party nomination to unseat Gov. Bruce Rauner. Or, to put it in Pro Rata terms: A venture capitalist is running against a private equity pro. Let's all consider this a referendum on the two asset classes.

  • Backgrounder: Pritzker has spent the past two decades leading Pritzker Group Venture Capital, whose deals have included Casper, Honest Co., Fleetmatics, Playdom and Pindrop Security. He also would later co-found a middle-market private equity firm. Word is that he'll step down as managing partner of both groups, although no official statement yet on that matter. Rauner, for the uninitiated, was a top partner with buyout firm GTCR before entering politics earlier this decade.
  • Odds: Pritzker faces a crowded Democratic field before getting to Rauner, although his wealth, Democratic Party bonafides and the strength of the Pritzker name in Illinois make him appear to be the early front-runner. Then again, Jeb Bush was once a front-runner for similar reasons.
  • Rhetoric: Less than 24 hours in, and Pritkzer already has called Rauner a "failure," and Rauner has called Pritzker a "lapdog."

• Identity trade: Okta priced its IPO last night at the top of its upwardly-revised range, and this morning will begin trading on the Nasdaq. Co-founder and CEO Todd McKinnon tells me that the company has "been ready for a while to go public, in terms of growth and scale, but we waited a bit longer because last year people were looking at companies with high growth but high cash burn differently than they are today."

McKinnon adds that while the cloud-based enterprise identity software maker ended up pricing well above the $1.2 billion of its last private financing round, it was fortunate to not have complicated structure on any of its venture rounds. "It gave us some flexibility on pricing that other companies don't have."

• Drivers dumped: Lyft was in the news yesterday for raising $500 million in new funding and for one its executives getting nominated by President Trump for a top Transportation Dept job. But arguably a more interesting ride-hail story is that more than 8,000 Lyft and Uber drivers in Massachusetts were effectively fired after failing the state's new background checks. More here.

• Galaxy games: Sphero has secured $24 million of a new $43 million VC funding round, per an SEC filing. The maker of smartphone-controlled gaming devices is best known for being the company behind BB8 of Star Wars fame.

• Status quo: Cerberus Capital Management yesterday closed its sixth flagship buyout fund at $4 billion, and a firm spokesman says that fund docs did not include any changes to the status of firm founder and CEO Steve Feinberg (in terms of keyman agreements, etc.). As you may recall, there had been speculation about Feinberg joining the White House in some capacity, with Trump at one point floating him to oversee a review of the nation's intelligence agencies.

• More PE/DC: Mike Allen reports this morning that Trump is considering a major shakeup that could include Chief of Staff Reince Priebus getting the boot, with possible replacements including current Blackstone Group senior advisor Wayne Berman.

• Thinking aloud: A longtime VC maxim has been that private markets follow public markets, in terms of both transaction value and volume. But we just saw a very sluggish Q1 for venture next to a rocketship Q1 for public equities. Maybe it's just a one-off, but worth keeping an eye on. Perhaps they've been decoupled or, more intriguingly, what if the relationship has reversed itself?

• Have a great weekend!


Toutiao, a Chinese personalized news recommendation app, reportedly raised around $1 billion in Series D funding at an $11 billion valuation from firms like Sequoia Capital China and CCB International.

  • Why it's the BFD: Because 2017 is quickly becoming the year of Chinese tech unicorns. It's not that they didn't exist previously (and, technically, this particular round appears to have closed at the end of 2016), but it feels like we're witnessing a stampede.
  • Bottom line: "Besides developing better ways of determining what posts to recommend to users, [Toutiao] has created an artificial reporter, called Xiaoming, that's capable of generating short news reports on European soccer games. It is also working on ways to identify users that might be able to answer specific questions, with a view to offering a service similar to Yahoo Answer or Quora." ― MIT Technology Review
Venture Capital Deals

• Lyft has raised at least $500 million in new venture capital funding at around a $7.5 billion post-money valuation. http://bit.ly/2ogu5PL

• Souche.com, a Chinese online used car buying and selling platform, has raised $180 million in Series D funding. Warburg Pincus led the round, and was joined by ClearVue Partners, Morningside Venture Capital, CreditEase New Financial Industrial Fund and Haitong International Securities Group. http://bit.ly/2oMcEXG

• Otonomo, an Israel-based data exchange platform and marketplace for the auto industry, has raised $25 million in Series B funding. Delphi Automotive led the round, and was joined by return backers Bessemer Venture Partners, StageOne Ventures and Maniv Mobility. http://for.tn/2nRS04O

• Vera Whole Health, a Seattle-based provider of employer-funded onsite primary care, has raised $24 million in Series D funding. Leerink Transformation Partners led the round, and was joined by Archimedes Health Investors. http://bit.ly/2p34O8G

• Mic, a New York-based digital media site focused on millennials, has raised $21 million in Series C funding. Return backer Lightspeed Venture Partners led the round, and was joined by Time Warner Investments, kyu Collective, You & Mr. Jones and return backer Advancit Capital. http://on.wsj.com/2p8NIX6

• Crunchbase, the startup funding database that spun out of TechCrunch, has raised $18 million in Series B funding. Mayfield led the round, and was joined by return backers AOL and Emergence Capital Partners. http://tcrn.ch/2oHklhP

• Flow, a Hoboken, N.J.-based provider of cross-border ecommerce solutions, has raised $16 million in Series A funding. Bain Capital Ventures led the round, and was joined by Fung Capital and Forerunner Ventures. http://bit.ly/2p8C4va

• Drchrono, a Mountain View, Calif.-based provider of iPad-based healthcare platform that includes EHR and medical billing, has raised $12 million in Series A funding from Maxfield Capital, FundersClub and Eric Dunn (Quicken CEO). http://tcrn.ch/2nhbDaq

• Konux, a Munich-based industrial IoT startup, has raised $9 million in new Series A funding (bringing the round total to $16m). NEA was joined by MIG, Upbeat Ventures and individual backers like Andy Bechtolsheim. www.konux.com

• SOCI, a San Diego-based SaaS startup focused on large-scale social media management, has raised $8.5 million in Series A funding co-led by Vertical Venture Partners and Grayhawk Capital. http://bit.ly/2oIc9OU

• Intelivideo, a Denver-based video-on-demand platform, said that it has raised $5.6 million in VC funding from undisclosed return backers.

Remesh, a New York-based market research startup, has raised $2.25 million in seed funding led by LionBird Ventures. www.remesh.ai

• MAMA+, a Beijing-based online parenting platform, has raised an undisclosed amount of VC funding from firms like GSR Ventures, Lightspeed Venture Partners and Steamboat Ventures. http://bit.ly/2ogkiZK

• Yumi, an organic baby food startup whose co-founders include former WSJ reporter Evelyn Rusli, has raised "several million dollars" in seed funding from individuals like Ali Partovi, Matt Mullenweg and Philip Krim. http://for.tn/2o7s8V7

Private Equity Deals

• ChartCo, a London-based portfolio company of Equistone Partners Europe, has acquired Docmap, an Oslo-based provider of digital document management solutions while at sea. No financial terms were disclosed. www.chartco.com

• Clayton Dubilier & Rice is in talks to buy the digital equipment unit of Carestream Health, a portfolio company of Onex Corp., according to Bloomberg. The deal could be worth around $1 billion. https://bloom.bg/2p1ZiDx

• Graycliff Partners has sponsored a recapitalization of Oberfields, a Columbus, Ohio-based maker of concrete masonry and hardscape products that had been owned by The Anderson Group. No financial terms were disclosed. www.oberfields.com

• GTCR is in exclusive talks to acquire jobs site CareerBuilder for more than $1 billion, according to Reuters. Sellers would include Tegna, Tribune Media and The McClatchy Co. http://reut.rs/2ogk7Oo

• Harvest Partners has sponsored a recapitalization of PRO Unlimited, a Boca Raton, Fla.-based provider of workforce management software. Existing PRO shareholder Investcorp will re-invest for a minority equity stake. www.prounlimited.com

• R2Net (dba JamesAllen.com), a Frederick, Md.-based online retailer of engagement rings and loose diamonds, has raised $140 million in growth equity funding from Francisco Partners. http://nyp.st/2nQzxWd

• Resource Label Group, a Franklin, Tenn.-based portfolio company of First Atlantic Capital, has acquired Gintzler, a Buffalo, N.Y.-based provider of labeling and packaging identification solutions. No financial terms were disclosed. www.resourcelabel.com

• Russian Direct Investment Fund led a consortium that acquired a 25% stake in the St. Petersburg airport from VTB for €250 million. http://on.ft.com/2oQzhYp

• Sphera Solutions, a Chicago-based portfolio company of Genstar Capital, has acquired Rivo Software, a UK-based provider of cloud-based environmental, health, safety and risk management software. No financial terms were disclosed. Sellers include Kennet Partners and Eight Roads Ventures Europe. www.rivosoftware.com

• Sunrise Strategic Partners has acquired a minority equity stake in Vital Farms, an Austin, Texas-based provider of pasture-raised eggs. http://bit.ly/2o9DJDb

• Swander Pace Capital has acquired Passport Food Group, a -based maker of internationally-flavored foods to foodservice and retail channels, from Wedbush Capital Partners. No financial terms were disclosed. http://bit.ly/2nl6m1i

Public Offerings

• Elevate Credit, a Fort Worth, Texas-based provider of online credit solutions to non-prime consumers, raised just over $80 million in its IPO, by pricing 12.4 million shares being offered at $6.50 per share. It closed its first day of trading (NYSE: ELVT) up at $7.76 per share. The cmpany reports a $22 million net loss on $580 million in revenue for 2016. Shareholders include Sequoia Capital (27.2% pre-IPO stake) and Technology Crossover Ventures (22.2%). www.elevate.com

• Galenica Sante, a Swiss pharmacy retailer, raised around $1.9 billion in the year's largest European IPO. http://reut.rs/2oM8hMo

• Okta, a San Francisco-based provider of identity access management solutions, raised $187 million in its IPO. The company priced 11 million shares at $17 per share (top of upwardly-revised range), for a fully-diluted market value of nearly $2.4 billion. The company will trade on the Nasdaq under ticker symbol OKTA, while Goldman Sachs was listed as left lead underwriter. Okta had raised around $230 million in VC funding from firms like Sequoia Capital (21.2% pre-IPO stake), Andreessen Horowitz (19.6%), Greylock (16.9%), Khosla Ventures (8.1%) and Floodgate. www.okta.com

Spotify reportedly is considering a direct listing of stock that would effectively let the company list without engaging in an IPO process. http://tcrn.ch/2ofVxgB

Liquidity Events

• Ardian and Credit Agricole have hired Morgan Stanley and Rothschild to find a buyer for French parking lot operator Indigo, which could be valued at around €4 billion, according to Bloomberg. https://bloom.bg/2nI4cV4

• Tennant Co. (NYSE: TNC) has acquired IP Cleaning, an Italy-based maker of professional cleaning equipment, from private equity firm Ambienta for $353 million. http://bit.ly/2o52GhC

More M&A

• Creat Group of China has agreed to acquire Biotest, a listed German maker of blood plasma products, for €1.3 billion. http://reut.rs/2nl1ppy

• General Electric (NYSE: GE) may launch a sale process for its consumer lighting unit (i.e., lightbulbs), per the WSJ. http://on.wsj.com/2p1R1z5

• Volkswagen has invested $180 million into an auto-focused AI joint venture with Chinese startup Mobvoi. http://tcrn.ch/2oNi0iH


• Cerberus Capital Management has closed its sixth flagship buyout fund with $4 billion in capital commitments. www.cerberus.com

• Felix Capital, a London-based VC firm, has raised $55 million for its second fund, per an SEC filing. www.felixcap.com

• The Engine, an MIT-affiliated "hard tech" accelerator, has raised over $150 million for its debut VC fund. http://bit.ly/2nSixyR

It's Personnel

Roger Chen has joined Silverton Partners as a principal. He previously was with Genacast Ventures. www.silvertonpartners.com

• Yoshiaki Fujimori, former CEO of GE Japan, has joined CVC Capital Partners as the London-based buyout firm's first-ever Japan advisor. www.cvc.com

• Roland Lescure is stepping down as chief investment officer of the Caisse de dépôt et placement du Québec, a C$271 billion public pension system, in order to pursue elective office in his native France. Deputy CIO Jude Perez will serve as interim CIO as a search is launched for Lescure's permanent successor. http://bit.ly/2nKRzsj

• Chris Miller has joined Abraaj Group as an investor relations pro, according to Private Equity International. He previously was a director with placement agency MVision. www.abraaj.com

Final Numbers
Dan Primack