Oct 7, 2021

Axios Pro Rata

Top of the Morning

Illustration: Megan Robinson/Axios

Ozy Media might have a securities fraud situation that has nothing to do with its infamous conference call.

Driving the news: Axios has learned that Ozy this year solicited prospective investors by saying Google Ventures had agreed to lead a new funding round, but three sources close to GV say that no such offer was made.

  • One source says that while GV and Ozy had exploratory conversations in the past, there were none in 2021.
  • GV declined comment, citing pending litigation.

We've previously questioned details of this "Series D" funding round, which Ozy CEO Carlos Watson is said to have told some employees had been completed. There are no relevant filings with the SEC, nor was there a press release or other public announcement.

What we know:

  • On Monday, a multi-family office for athletes and entertainers said in a lawsuit that Ozy and co-founder Samir Rao told it that "Alphabet or one of its Google affiliates" had agreed to lead the Series D with around a $30 million investment. It invested $250,000 in the round, following up on an existing $2 million investment, and now wants all of that money back.
  • On Tuesday, Watson told "The Breakfast Club" radio program that Google had made a written offer to invest $25 million.
  • An AngelList syndicate in June began soliciting over $100,000 in co-investment for the Series D round. Axios has obtained offering documents and other confidential communications saying that Google Ventures was leading at a $450 million pre-money valuation.
  • One of the syndicate documents included this remarkable footnote about Ozy: "The company could lose a ton of customers if sensitive data is lost or if something goes wrong in a high-profile manner."
  • The syndicate was fully subscribed in late June but kept the money in escrow as it waited on closing documents from Ozy that never came. Days after the scandal broke in late September, the syndicate emailed investors to say: "Due to recent developments surrounding the company and the composition of the round, we are unable to proceed with our investment into OZY Media. Your funds will be returned to your Angellist account promptly."
  • When I asked one of the syndicate organizers who had told him Google Ventures was leading the round, he replied: "Ozy, of course." He added that the syndicate's conversations were with Samir Rao, not with Carlos Watson.

Caveat: It is possible that GV did make the offer, and its lack of comment is more about embarrassment than litigation. But that would also have to mean that Ozy chose not to take a much-needed investment from a blue-chip investor.

For the record: Carlos Watson did not respond to Axios' requests for comment. His crisis PR rep, who had joined just days ago, is no longer working with Ozy. Former Ozy chairman Marc Lasry also declined comment, via a spokesman. Paul Weiss, the law firm hired by Ozy's board last week to launch an independent investigation, never launched the investigation and is no longer involved.

The bottom line: "Fake it 'til you make it" can work when it comes to social media marketing, but not when soliciting investment.

The BFD

Illustration: Shoshana Gordon/Axios

Zum Services, a Redwood City, Calif.-based student transportation startup, raised $130 million at an $800 million pre-money valuation led by SoftBank.

  • Why it's the BFD: School bus transportation has become a nationwide problem, due to driver shortages, with some states even calling in the National Guard to help. It's also a massive expense for school districts, second only to salaries. Zum is seeking to help in both areas, by reducing inefficiencies that can result in half-empty busses taking roundabout routes.
  • Others investors include Sequoia Capital and BMW iVentures.
  • The bottom line: "Zum uses software it has developed to help schools share infrastructure with other nearby districts, deploy appropriately sized vehicles, create efficient routes and adapt to families’ changing transportation needs. In addition to the technology, Zum provides several sizes of vehicles, from buses to vans and cars, and is moving toward having an all-electric fleet." β€” Cromwell Schubarth, SV Business Journal
Venture Capital Deals

πŸš‘ Neumora Therapeutics, a Watertown, Mass.-based developer of precision medicines for brain diseases, raised $500 million in Series A funding. Arch Venture Partners led, and was joined by Amgen ($100M), Alexandria Venture Investments, Altitude Life Science Ventures, Catalio Capital Management, F-Prime Capital, Invus, Logos Capital, Mubadala, Newpath Partners, Polaris Partners, re.Mind Capital, SoftBank, Surveyor Capital and Waycross Ventures. http://axios.link/0UTk

β€’ Rebel Foods, an Indian dark kitchen network, raised $175 million in Series funding at a $1.4 billion valuation. Qatar Investment Authority led, and was joined by insiders Coatue and Evolvence. http://axios.link/audX

β€’ Solo.io, a Cambridge, Mass.-based service mesh startup, raised $135 million in Series C funding at a $1 billion valuation. Altimeter Capital led, and was joined by insiders Redpoint Ventures and True Ventures. http://axios.link/K5kA

β€’ Honor, an S.F.-based senior care network, raised $70 million in Series E funding led by insider Baillie Gifford at a valuation north of $1.25 billion. It also secured $300 million in debt funding. http://axios.link/4p8b

β€’ Getsafe, a German consumer insurance startup, raised $63 million in new Series B funding (round total now $93m) from Earlybird, Abacon Capital and insiders CommerzVentures and Swiss Re. http://axios.link/Woyi

β€’ Kentik, an SF-based network observability startup, raised $40 million in Series C funding. Third Point Ventures led, and was joined by Golub Capital, Gaingels, Delta-v Capital and insiders August Capital, Tahoma Ventures, DCVC, Engineering Capital and Vistara Growth. www.kentik.com

πŸš‘ Lightship, an El Segundo, Calif.-based provider of virtual clinical trial software, raised $40 million. Define Ventures and Brook Byers co-led, and were joined by Khosla Ventures, McKesson Ventures and Time Ventures. http://axios.link/40cV

πŸš‘ Slope, an S.F.-based provider of in-person clinical trial software, raised $20 million in Series A funding led by NEA. http://axios.link/0tBS

β€’ Cord, a London-based API for real-time collaboration, raised $17.5 million in Series A funding. Index Ventures led, and was joined by insiders NFX and Stride. http://axios.link/nW3j

🐝 BeeHero, a Fresno, Calif.-based apiculture startup, raised $15 million in Series A funding from ADM Capital, Rabo Food & Agri Innovation Fund, iAngels, FirstTime, J-Ventures, UpWest, Entrée Capital, Good Company, the Arison Group and Gaingels. http://axios.link/LELW

β€’ Copper Banking, a Seattle-based digital bank for teens, raised $13.3 million in seed funding. PSL Ventures led, and was joined by Clocktower Ventures, Index Ventures Scout Fund, Launchpad Capital, Financial Venture Studio, Maven Ventures, Fiat Ventures and Arnold Ventures. http://axios.link/iCTy

β€’ CH4 Global, a Henderson, Nev.-based startup that uses seaweed to reduce methane emissions, raised $13 million led by DCVC. www.ch4global.com

β€’ Toch.ai, an Indian video meta-tagging startup, raised $11.8 million in Series A funding from backers like Moneta Ventures, Baring PE, Ventureast, Huashan Capital, 9 Unicorns, Anthill Ventures, Cathexis Ventures, SOSV, Artesian and Innoven Capital. www.toch.ai

β€’ CostCertified, a Canadian provider of real-time residential construction estimates, raised US$8.5 million led by FUSE. http://axios.link/vlKw

β€’ Matter, a new reading app, raised $7 million in Series A funding led by GV. http://axios.link/DMs0

β€’ Medley, a New York-based platform for personal and professional growth, raised $3.7 million. Andreessen Horowitz led, and was joined by AglaΓ© Ventures and Foundation Capital. www.withmedley.com

πŸš‘ MindLabs, a London-based live mental health platform, raised $3.5 million in seed funding. PROFounders Capital led, and was joined by Slack Fund, Passion Capital and Seedcamp. http://axios.link/4wJ7

β€’ Senso, a home financing startup, raised $3 million from Mendoza Ventures and Breakaway Growth. www.senso.ai

β€’ Better Brand, a food-tech startup focused on carbs, raised $2.5 million led by Seven Seven Six. www.eatbetter.com

Private Equity Deals

β€’ Arlington Capital Partners agreed to buy Systems Planning & Analysis, an Alexandria, Va.-based government advisory, from CM Equity Partners, and merge it with existing Arlington portfolio company MCR. www.spa.com

β€’ The Blackstone Group agreed to buy a majority stake in VFS Global, a Zurich and Dubai-based provider of visa outsourcing services, from EQT for a little over $2 billion. http://axios.link/QxcC

β€’ RLJ Equity bought The Ogle School, a Dallas-based beauty school, from NCK Capital and Greyrock Capital Group. www.ogleschool.edu

πŸš‘ Wellbeam Consumer Health, an SF-based portfolio company of American Pacific Group, acquired TruSkin, a maker of plant-based skincare products. www.wellbeam.com

Public Offerings

β€’ Advanced Personnel Management, an Australian recruiter backed by Madison Dearborn Partners, plans to raise around A$1 billion in an IPO next month, per Reuters. http://axios.link/LxAy

β€’ iFIT Health & Fitness, a Logan, Utah-based connected fitness company whose brands include NordicTrack, postponed an IPO that was expected to raise around $600 million at a $6.4 billion fully diluted value, citing market conditions. It reported a $517 million net loss on $1.7 billion in revenue for the first half of 2021, and shareholders like Pamplona Capital Management and L Catterton. http://axios.link/OlMd

β€’ Life Time Group, a Chanhassen, Minn.-based fitness center chain backed by TPG and Leonard Green & Partners, raised $702 million in its IPO. It priced at the low end of its $18–$21 range, for an initial $3.6 billion market value, and will list on the NYSE (LTH). http://axios.link/tIMG

πŸš‘ Theseus Pharma, a Cambridge, Mass.-based developer of pan-variant kinase inhibitors for solid tumors, raised $160 million in its IPO. It priced at the high end of its $14-$16 range, for a $574 million market value, and will list on the Nasdaq (THRY). The company raised over $120 million from firms like OrbiMed (58.9% pre-IPO stake) and Foresite Capital (11.1%). http://axios.link/9X7f

SPAC Stuff

⭐ Starry, a Boston-based wireless broadband company, agreed to go public at an implied $1.7 billion valuation via FirstMark Horizon Acquisition Corp. (NYSE: FMAC). It had raised around $290 million from FirstMark Capital, KKR, Soros Fund Management, Third Kind VC, Tiger Global and IAC.

β€’ Iconic Sports Acquisition, a SPAC led by the co-founders of sports advisory Tifosy Capital, filed for a $250 million IPO. http://axios.link/lSkA

β€’ Innovative International Acquisition, a SPAC led by Mohan Ananda (founding CEO of Stamps.com), filed for a $200 million IPO. http://axios.link/pSqi

β€’ OmniLit Acquisition, an advanced manufacturing SPAC, filed for a $125 million IPO. http://axios.link/IOrv

Liquidity Events

⚑ BP (LSE: BP) agreed to buy Blueprint Power, a New York-based startup focused on lowering the carbon footprint of commercial real estate. Blueprint had raised around $11 million from firms like Congruent Ventures. http://axios.link/SgZC

⚑ Eneos Holdings (Tokyo: 5020), Japan's largest oil refiner, agreed to buy Japan Renewable Energy for around $1.8 billion from Goldman Sachs and GIC. http://axios.link/cl0H

β€’ Webrazzi, a Turkish tech media site, acquired Tech.eu, whose backers included 500 Startups. http://axios.link/tbIL

More M&A

β€’ Dotdash, a unit of Barry Diller's IAC (Nasdaq: IAC), agreed to buy magazine publisher Meredith (NYSE: MDP) for around $2.7 billion in cash. The deal doesn't include Meredith's local TV unit, which it previously agreed to sell to Gray Television (NYSE: GTN) for $2.7 billion. http://axios.link/lHfh

β€’ Emerson Electric (NYSE: EMR) is in talks to merge its software assets with Aspen Technology (Nasdaq: AZPN), per Bloomberg. http://axios.link/1JVK

β€’ Honour Lane Shipping, a Hong Kong-based freight forwarder, hired BDA Partners to find a buyer for around $500 million, per Bloomberg. http://axios.link/slun

β€’ Twitter (NYSE: TWTR) agreed to sell MoPub, an S.F.-based monetization platform for mobile app publishers, to AppLovin (Nasdaq: APP) for $1.05 billion in cash. http://axios.link/jOUg

Fundraising

β€’ Churchill Asset Management raised a total of $1.5 billion for a midmarket secondaries fund and a co-investment fund. www.churchillam.com

β€’ Everberg Capital, a private credit firm led by Scott Siegel (ex-PineBridge Investments), is targeting $350 million for its second fund, per Buyouts. http://axios.link/KZoK

β€’ Francisco Partners is premarketing its seventh flagship tech PE fund with a $10 billion target, per WSJ. http://axios.link/ks2E

β€’ Google formed a $50 million fund to invest in African startups. http://axios.link/mC7F

πŸš‘ RA Capital Management raised $880 million for third fund focused on private biotech companies. www.racap.com

It's Personnel

β€’ Canvas Ventures promoted Grace Isford to principal. www.canvas.vc

β€’ Sweta Chanda joined Monroe Capital as a managing director and head of business strategy. She previously was with New York Life Investment Management. www.monroecap.com

β€’ Shernaz Daver joined Khosla Ventures as a senior operating partner and CMO. She previously spent a decade with GV as an executive advisor. www.khoslaventures.com

β€’ Evan Spiegel, CEO of Snap, joined KKR's board of directors. Seriously. www.kkr.com

Final Numbers
Source: Study from by Bain & Co., the Stanford Latino Entrepreneurship Initiative and the Latino Donor Collaborative

Less than 1% of funds from the top 25 VC and PE firms wind up in the hands of Latino-owned businesses, per a new Bain & Co. study. Go deeper.

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