Jul 20, 2017

Axios Pro Rata

Top of the Morning

Bored boards: Hampton Creek, the meatless food startup that has raised more than $220 million in VC funding, made news earlier this week by basically losing its entire board (save for founder and CEO Josh Tetrick). Some notes:

  • Top-line: This is what happens when a CEO has super-voting rights and no longer really listens to his board. In fact, it's unclear why companies with such structure even have boards of directors, rather than boards of advisors. The late Bill Campbell said that the only real job of a board is to hire and fire a CEO, so boards like Hampton Creek don't really have a core function. Nonetheless, Tetrick does plan to reconstitute it with new people.
  • It wasn't always this way: Tetrick didn't get super-voting rights until its most recent financing round, which valued the company at around $800 million post-money.
  • Notable: My initial reaction was that this was the board using its only actual means of protest, which is to quit (something that some argued earlier this year was what Uber's board should have done). But if this is a protest, it's pretty deeply undercut by a statement that the ex-directors "continue to fully support Hampton Creek and its CEO Josh in their exciting and important mission to change the food industry for the better of all people. We will advise Josh and the team on strategies across all areas of its business moving forward."
  • Disclaimer: Hampton Creek is best known for its egg-less mayo. I hate mayo (including that fancier-sounding aioli — you're not fooling anyone). So I'm not as reflexively supportive of the company's mission.
  • Timing: The departures didn't all come at once. Horizons Ventures rep Bart Swanson left months ago. Another board member was asked by Tetrick to resign in June after a reported corporate coup that resulted in the firings of three executives.
  • Investor rep: Among the three others was Khosla Ventures partner Samir Kaul, who was the board's only remaining investor rep. Khosla Ventures still has its seat, although no word on if it plans to name a new representative.

• SoFi VC: Kia Kokalitcheva reports that online personal finance company SoFi, which is viewed as a 2018 IPO candidate, is working to launch a strategic venture capital group. One big difference between this and most other corporate VC efforts, however, is that SoFi plans to solicit outside LP commitments (while the company itself would contribute a cornerstone commitment and serve as general partner).

Coming attractions: Reuters reported yesterday that Global Blue, a Switzerland-based tax-free shopping network, is talking to bankers about a possible 2018 IPO. Sources close to the situation tell me that this is legit, with plans to float in the first half (no decisions yet on where, although Europe seems likely). But they also insist that there is no interest in running a parallel sale process, despite Reuters suggests that groups like Warburg Pincus and HNA could have takeover interest. They add that bankers are pitching a valuation close to €4 billion. Reuters uses a fiscal 2015 EBITDA of €115 million, but expect that number to be closer to €160 million if/when books eventually go out. Shareholders include Silver Lake and Partners Group.

• Schwarzmania: Blackstone Group this morning fell into the maddening Wall Street boomerang of growing earnings but missing analyst estimates. Economic net income in Q2 2017 was 36% higher than during the year-earlier period, which works out to 59 cents per share (below the Thomson Reuters estimate of 62 cents per share).

  • Headline: Real estate investments soared, credit investments sagged.
  • ROI: Blackstone has now been public for just over a decade. Investors who bought at the IPO price and reinvested their dividends into BX stock would be up 106%, per a firm statement.
  • Infrastructure: Blackstone expects to hold a first close on its massive infrastructure fund in Q1 2018.
  • Future leaders: Blackstone has no plans to follow KKR's recent lead in publicly announcing a succession plan. Firm president Tony James says: "We have succession plans for every critical seat, going out years, and are comfortable that we have the best succession planning in the industry. In private equity, for example, we're on our fourth or fifth leader and have never missed a beat. I don't know what you gain by pre-announcing things."

LP Land: CalPERS said this week that it is considering making direct private equity investments. If it follows through, CalPERS would be the first major U.S. pension to follow big Canadian pensions into this space. What remains unclear, however, if CalPERS is willing to stomach the compensation required to properly staff up such an effort.


Plenty, a South San Francisco-based indoor vertical farming startup, has raised $200 million in Series B funding at what Axios has learned is a pre-money valuation north of $300 million. SoftBank Vision Fund led the round, and was joined by Eric Schmidt's Innovation Endeavors, Jeff Bezos' Bezos Expeditions, Kirenaga Partners, DCM, Data Collective and Finistere Ventures.

  • Why it's the BFD: This is basically a shock-and-awe sort of transaction, aimed squarely at rival vertical farming upstarts like Bowery and Freight Farms. A source says that the deal includes pre-commitments for a subsequent round on top of the $200 million — both from participants and some who couldn't get Series B allocations — which would include hundreds of millions of "non-dilutive global expansion capital."
  • Bottom line: "[SoftBank's Masa] Son is particularly interested in how Plenty can help nations grow sufficient food to support the population. His Vision Fund backers include sovereign wealth funds from the Middle East, where drought, population growth and a lack of arable land are fueling concerns about food shortages and political instability." — Selina Wang, Bloomberg
Venture Capital Deals

• Nauto, a Palo Alto, Calif.-based developer of autonomous vehicle technologies, has raised $159 million in Series B funding. SoftBank Group and Greylock Partners co-led the round, and were joined by BMW iVentures, General Motors Ventures, Toyota AI Ventures, Allianz Group, and return backers Playground Global and Draper Nexus. http://bit.ly/2tpzOXi

• Particle, a San Francisco-based provider of enterprise IoT solutions, has raised $20 million in Series B funding. Spark Capital led the round, and was joined by Qualcomm Ventures and return backers like Rincon Venture Partners and OATV. www.particle.io

• Xiaomai, a Beijing-based automated convenience store startup, has raised $18.5 million in Series A funding. Aplus Capital led the round, and was joined by Chenshan Capital. http://bit.ly/2udLPhk

• Karmic, a San Francisco-based expense management platform, has raised $17.2 million in Series B funding. Backers include Alsop Louie Partners, Arbor Ventures, Greycroft, Marketplace Funds and Startup Capital Ventures. www.karmiclabs.com

🚑 Symbow Medical, a Beijing-based developer of surgical navigation devices, has raised $17 million in Series A funding. Huayi Capital led the round, and was joined by National Emerging Industry Guidance Fund, Shandong Buchang Pharmaceuticals Co. and Sangel Capital. http://bit.ly/2ttdUlV

• Insight Engines, a San Francisco-based developer of intelligent search assistants, has raised $15.8 million in Series A funding. August Capital led the round, and was joined by Splunk, Real Ventures and Data Collective. www.insightengines.io

• Xingtang miniKTV, an operator of self-serve karaoke boxes in China, has raised $15 million in VC funding from DCM, GSR Ventures, Matrix Partners China and Vertex Ventures. http://bit.ly/2udFH8v

• StackRox, a Mountain View, Calif.-based cybersecurity startup focused on software containers, has raised $14 million in Series A funding led by Sequoia Capital. http://reut.rs/2vlsadQ

• Molekule, a San Francisco-based developer of an indoor air purifier, has raised $10.1 million in Series A funding. Crosslink Capital led the round, and was joined by SoftTech VC, Translink Capital and Foxconn. http://on.inc.com/2uJvRNn

• LiveStories, a Seattle-based civic data structuring and visualization startup, has raised $10 million in Series A funding. Ignition Partners led the round, and was joined by True Ventures and Founders Co-Op. http://tcrn.ch/2uCU2Mw

• Integrate, a Scottsdale, Ariz.-based provider of marketing software, has raised $8 million in new VC funding. Iron Gate Capital was joined by return backers Foundry Group, Comcast Ventures and Liberty Global. http://tcrn.ch/2tqkMAx

• Clara Labs, a San Francisco-based provider of software that automates meeting scheduling, has raised $7 million in Series A funding. Basis Set Ventures led the round, and was joined by Slack Fund and return backers Sequoia Capital and First Round Capital. http://tcrn.ch/2u8mXpy

• Cubyn, a French on-demand B2B logistics startup, has raised $7 million in Series A funding. DN Capital led the round, and was joined by BNP Paribas Developpement and return backers Partech Ventures and 360 Capital Partners. www.cubyn.com

• Plexchat, a Redwood City, Calif.-based communication platform for mobile gamers, has raised $7 million in seed funding. Raine Ventures led the round, and was joined by First Round Capital, Dream Incubator, Lumia Capital, Macro Ventures, Singularity Ventures and Hany Nada. www.plexchat.com

• Ada Support, a Toronto-based automated chat platform for customer relations, has raised $2.5 million in first-round funding. Bessemer Venture Partners led the round, and was joined by Version One Ventures. www.ada.support

Private Equity Deals

• Abacus Group, a New York-based provider of managed IT solutions and infrastructure to the financial services industry, has raised an undisclosed amount of growth equity funding from WestView Capital Partners. www.abacusgroupllc.com

• Arsenal Capital Partners has acquired the Maryland Heights, Mo.-based designed structures and solutions business of PolyOne (NYSE: POL), which will be renamed Spartech. The deal is valued at $115 million. http://bit.ly/2tt4rLm

• Apax Partners, BC Partners and Hellman & Friedman are prepping final-round bids for Shop Direct, a British retailer that could be worth upwards of £3 billion, per Reuters. UBS is managing the process, which was initiated by company owners David and Frederick Barclay. http://reut.rs/2uM70s2

Black Bay Energy Capital has sponsored a majority recap of ADS Services, a provider of provider of pressure control equipment and services in the Permian Basin. No financial terms were disclosed. www.blackbayenergy.com

• Lincoln Hill Holdings has acquired the assets of Fibre-Tec Partitions, a Chicago-based fabricator of fiber and corrugated box partitions and pads. No financial terms were disclosed. http://bit.ly/2udTmwg

• Littlejohn & Co. has agreed to acquire Cornerstone Chemical Co., a Waggaman, La.-based manufacturer of intermediate chemicals for industrial and consumer applications, from H.I.G. Capital. No financial terms were disclosed. www.cornerstonechemco.com

• OMERS has held talks about selling Toronto-based land registry business Teranet for upwards of C$3 billion, with both The Carlyle Group and KKR among the interested suitors, according to Reuters. http://reut.rs/2ubOPJm

• Ontario Teachers' Pension Plan has acquired Mémora Inversiones Funerarias, an Iberian funeral services company, from 3i Group for £117 million. http://bit.ly/2ubN0fx

• Principle Capital, a Shanghai-based private equity firm, has agreed to buy the printed circuit board business of Israel's Camtek (Nasdaq: CAMT0 for $35 million (including $32m upfront in cash). www.camtek.com

🚑 Silver Oak Services Partners has sponsored a recapitalization of Redwood Dental, a provider of provider of general and specialty dentistry in the Detroit area. No financial terms were disclosed. www.silveroaksp.com

Public Offerings

⛽ Abu Dhabi National Oil Co. (Adnoc) has picked bankers for a planned IPO of its retail unit, which could raise between $1.5 billion and $2 billion, per Reuters. http://reut.rs/2uFC0sT

• Calyxt, a New Brighton, Minn.-based Cellectis (Paris: ALCLS) spinout focused on developing gene-edited crop traits, raised $56 million in its IPO. The company priced 7 million shares at $8 per share, compared to earlier plans to sell 6.06 million shares at between $15 and $18 per share. It will trade on the Nasdaq under ticker symbol CLXT, while Credit Suisse and Jefferies served as co-lead underwriters. The company reports a $12 million net loss on less than $1 million in revenue for 2016. www.calyxt.com

• Federal Street Acquisition, a healthcare-focused SPAC backed by Thomas H. Lee Partners, raised $400 million in its IPO. The company priced 40 million shares at $10 per share, and will trade on the Nasdaq under ticker symbol FSACU. Citigroup and BofA Merrill Lynch served as lead underwriters.

Liquidity Events

• Clairvest has agreed to sell CRS Contractors Rental Supply, a Canadian provider of construction rental equipment to a North American unit of Britain's Ashtead Group. The deal is valued at around US$218 million. www.contractorsrentalsupply.ca

• The Carlyle Group has hired Goldman Sachs and JPMorgan to manage a sale of German nursing home operator Alloheim, which could be valued at upwards of €1 billion, per Reuters. http://reut.rs/2ti0ghv

• Nordic Capital has sold Bambora, a Swedish e-payments company, to Ingenico Group (Paris: ING) for €1.5 billion. http://on.ft.com/2gMWwT9

• Providence Equity Partners and Haim Saban have held talks about selling broadcaster Univision, including with John Malone's Liberty Media, according to the WSJ. http://on.wsj.com/2gLyVlL

More M&A

🚑 Cardinal Health (NYSE: CAH) is seeking a buyer for its China business, according to Reuters. It could garner around $1.5 billion. http://reut.rs/2tsUo8Y

⛽ Hydro One (TSX: H) has agreed to buy Avista Corp. (NYSE: AVA), a Spokane, Wash.-based electric and natural gas utility, for US$5.3 billion in cash. http://on.wsj.com/2uFvZg6


• Fireman Capital Partners, a Waltham, Mass.-based private equity firm focused on the consumer sector, has closed its third fund with $200 million in capital commitments, per an SEC filing. www.firemancapital.com

• Novacap, a Canadian private equity firm focused on TMT, has closed its fifth fund with $840 million in capital commitments. www.novacap.ca

⛽ Pearl Energy Investments of Dallas has closed its second fund with $600 million in capital commitments. www.pearl-energy.com

It's Personnel

• Ken Gonzalez has joined Trident Capital Cybersecurity as a managing director. He previously was SVP of corporate development and global alliances with FireEye (Nasdaq: FEYE). www.tridentcybersecurity.com

• Paul Jun is stepping down as VP of finance and strategy at Dropbox, in order to attend HBS in the fall, Axios has learned. He is splitting his time this summer between Dropbox and Index Ventures, and will be succeeded as VP of finance by Lev Finkelstein.