April 28, 2020

Top of the Morning

Illustration: Sarah Grillo/Axios

States are facing their biggest fiscal crisis since the Great Depression, with revenues plunging as obligations soar. Senate Majority Leader Mitch McConnell suggested that state bankruptcy filings should be considered as an alternative to further federal bailouts.

Reality check: States cannot currently file for bankruptcy, unlike cities and towns, Felix Salmon and I write this morning.

McConnell said last week he's "in favor of allowing states to use the bankruptcy route," but hasn't proposed legislation to enable it. Yesterday he said he'd also consider additional federal aid to states and cities, but only in exchange for business liability waivers.

  • Bankruptcy is about an inability to repay debts. The states' current predicament is centered on an inability to fund their essential services.
  • Or, put another way, going bankrupt is not the same as going broke.

Read more.


The Paycheck Protection Program relaunched yesterday morning, and was beset by many of the same technical troubles that we saw during the first go-around.

  • SBA argued that its system was simply overwhelmed by the volume, which was around double from the opening hours in Round 1, although it's tough to understand how SBA wasn't better prepared. PPP ran out of funds over a week ago, so obviously there would be a backlog of applications ready to go.
  • As of 3:30pm ET yesterday, SBA said it had processed more than 100,000 loans from over 4,000 lenders.

Treasury Secretary Steve Mnuchin this morning said that the SBA will do a "full review" of any PPP loan exceeding $2 million, adding that he thinks "it was inappropriate for most of these companies to take the loans."

  • Over 20,000 companies received loans north of $2 million in the first phase of PPP (yes, including Axios).
  • Kind of stunning that Mnuchin is casting aspersions on most of them before any review. Particularly given that President Trump signed the refresh bill, which didn't put tighter rules around applicants.

Merger ban: Last Friday we wrote about how Rep. David Cicilline (D-R.I.), who chairs House Judiciary's antitrust subcommittee, proposed a moratorium on all M&A activity outside of situations in which companies are bankrupt or on the brink of insolvency.

  • What's new: Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) this morning signed on, proposing something called the "Pandemic Anti-Monopoly Act."
  • Per NBC News: "Affected firms would include businesses with over $100 million in revenue or financial firms with market capitalization of over $100 million; private equity companies and hedge funds (or entities that are majority-owned by them); businesses that have an exclusive patent on products like personal protective equipment which pertain to the crisis; and other transactions are are already required by law to be reported to the FTC."
  • Per Warren's office, it also would "pause all waiting periods and deadlines imposed on antitrust agencies."


Illustration: Sarah Grillo/Axios

Hightimes Holding Corp., a cannabis-focused media company, agreed to buy 13 California dispensaries from Harvest Health and Recreation (CNSX: HARV) for $80 million in cash and stock.

  • Why it's the BFD: Hightimes claims this will instantly turn it into California's largest branded cannabis retailer.
  • More: California allowed dispensaries to remain open as essential businesses, but none of them are eligible for federal bailout funds like PPP loans. A Hightimes spokesperson tells Axios that deal negotiations began before March, but that "the pandemic has definitely played a role."
  • The bottom line: "The combination of media and retail is part of media's realization that it must develop stronger direct to consumer relationships with users." — Sara Fischer, Axios

Pro Rata for Kids

Today's project is for your kids to create a brand new type of animal. It could be a drawing or a craft. Does it have wings? Claws? Two heads? What does it eat? Where does it live? Please be sure to give it a name.

  • Per usual, please send me pics of what they create.

Yesterday's project was for your kids to create a carnival midway game, and Jack went all out (with some help from mom):

Venture Capital Deals

🚑 SkyCell, a Swiss maker of “smart containers” for temperature-sensitive drugs, raised $62 million. MVM Partners led, and was joined by return backers Swiss Entrepreneurs Fund and BCGE Bank. http://axios.link/qfO8

Oriente, a Hong Kong-based startup focused on digital credit infrastructure tech, raised $50 million in new Series B funding. Local property developer Peter Lee led, and was joined by Wix.com. http://axios.link/S51S

Cheetah, a San Francisco-based platform for contactless pickup and delivery of food and supplies, raised $36 million in Series B funding. Eclipse Ventures led, and was joined by Iconiq Capital, Hanaco Ventures, and Floodgate. www.gocheetah.com

🚑 LifeSprout, a Baltimore-based regenerative medicine startup, raised $28.5 million in Series A funding. Redmile Group led, and was joined by Nexus Management, Emerald Development Managers, and the Abell Foundation. http://axios.link/UqSI

Velo3D, a Campbell, Calif.-based 3D printing startup for metals, raised $28 million in Series D funding. Piva and TNSC were joined by return backers Bessemer Venture Partners, Playground Global, and Khosla Ventures. www.velo3d.com

🚑 AtaCor Medical, a San Clemente, Calif.-based developer of cardiac-pacing therapies, raised $25 million in Series B funding from Hatteras Venture Partners, Catalyst Health Ventures, Longview Ventures, and return backers Broadview Ventures and aMoon Fund. www.atacor.com

EnVerid Systems, a Boston-based developer of HVAC load reduction tech, raised $20 million in Series B funding. Breakthrough Energy Ventures led, and was joined by Ajax Strategies, Building Ventures, and OurCrowd. www.enverid.com

Factorial, a Barcelona-based HR automation platform for SMBs, raised €15 million in Series A funding. CRV led, and was joined by return backers Creandum, Point Nine, and K Fund. http://axios.link/pFYn

🐙 Secret Double Octopus, an Israeli developer of password-less authentication solutions, raised $15 million in Series B funding from backers like Sony Financial Ventures, KDDI, and Global Brain. http://axios.link/cnr1

Qoala, an Indonesian digital insurer for consumer products and services, raised $13.5 million in Series A funding led by Centauri Fund led, and was joined by Sequoia India, Flourish Ventures, Kookmin Bank Investments, Mirae Asset Venture Investment, Mirae Asset Sekuritas and existing investors MassMutual Ventures Southeast Asia, MDI Ventures, SeedPlus and Central Capital Ventura. http://axios.link/tf6e

Amply Power, a Los Angeles-based electric vehicle-charging startup, raised $13.2 million from Soros Fund Management and Siemens. http://axios.link/eIlp

Relish, a Mamaroneck, N.Y.-based app for improving relationships, raised $5 million led by Bessemer Venture Partners. http://axios.link/QSjG

Checkly, a Berlin-based monitoring and testing platform for dev-ops teams, raised $2.25 million in seed funding led by Accel. www.checklyhq.com

Buymie, an Irish grocery delivery startup, raised €2.2 million from Act VC, Sure Valley Ventures, BVP Investments, Enterprise Ireland, and Haatch Ventures. www.buymie.eu

Private Equity Deals

The Blackstone Group warned that it may not win regulatory approval for its proposed €1.36 billion buyout of Dutch lender NIBC Holding (AS: NIBC). http://axios.link/IFlY

🚑 Metlifecare, a listed New Zealand retirement village operator, said it will fight EQT Partners’ efforts to terminate a NZ$1.49 billion takeover of the company. http://axios.link/8WBl

🔥 PSI, a Portland, Ore.-based portfolio company of The Riverside Co., acquired Basic Fire & Safety, a provider of fire extinguisher part sales, inspections and services in Washington State. www.psintegrated.com

TSG, a revenue management company owned by Advent International, acquired TrueCoach, a Boulder, Colo.-based provider of business management software to fitness trainers. www.transactionservices.global

Public Offerings

🚑 Lyra Therapeutics, a Watertown, Mass.-based biotech focused on ear, nose and throat diseases, set IPO terms to 3.5 million shares at $14-$16. It would have a fully diluted market value of $193 million, were it to price in the middle, and plans to trade on the Nasdaq (LYRA) with BofA Securities as lead underwriter. The pre-revenue company raised $150 million in VC funding from Perceptive Advisors (32.4% pre-IPO stake), North Bridge Venture Partner (17.3%), Polaris Partners (16%), RA Capital (9.6%), Intersouth Partners (7.9%), ArrowMark Partners (7.3%), Soleus Capital (5.5%), and Clifton Capital. http://axios.link/mhGL

Social Capital Hedosophia II, a blank check acquisition company led by Chamath Palihapitiya, raised $360 million for its IPO, which is $60 million more than initially planned. This comes one week after Social Capital Hedosophia raised an upsized $720 million for its third blank-check acquisition company. http://axios.link/ZWpq

More M&A

Anbang Insurance Group of China sued South Korea’s Mirae Asset Global Investments for failing to complete a $5.8 billion purchase of 15 luxury hotels in the U.S. Mirae claims that it still plans to complete the deal, but that it’s Anbang that isn’t meeting closing conditions. http://axios.link/qNUw

China Merchants Group, a state-owned conglomerate, is considering taking its Hong Kong-listed ports unit private in what could be a $4 billion deal, per Bloomberg. http://axios.link/mzDv

Saudi Arabia’s Public Investment Fund disclosed a 5.7% stake in concert promoter Live Nation Entertainment (NYSE: LYV). http://axios.link/GVao

Scopely, a mobile game publisher valued at nearly $2 billion by VCs, acquired PierPlay, a Los Angeles-based gaming studio responsible for Scrabble Go. http://axios.link/iaOx


Constitution Capital Partners, a Boston-based direct and secondary private equity and credit firm, raised just over $1 billion for its fifth fund. http://axios.link/jwPq

Jon McNeill, former COO of Lyft, launched a startup studio called DeltaV. http://axios.link/MsKR

Partech, a Paris-based VC firm, raised $100 million for its third seed fund. http://axios.link/pLfG

It's Personnel

Josh Constine is joining VC firm SignalFire as a principal and head of content. He previously was a reporter with TechCrunch. http://axios.link/d0ko

Final Numbers: Dry Powder

Source: Preqin data via EY Private Equity Pulse Report, April 2020.

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