Axios Pro Rata

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January 24, 2023

Top of the Morning

Elon Musk illustration

Illustration: Lazaro Gamio/Axios

Elon Musk yesterday spent his second day testifying in a San Francisco courtroom, as part of the securities fraud case sparked by his infamous 2018 tweet about having "funding secured" to take the electric automaker private.

Why it matters: This case could cost Musk and Tesla billions of dollars. It also provides a little more insight into how the new Twitter owner views large-scale M&A process differently than ... well, almost everyone else involved with it.

The big picture: As Kia Kokalitcheva wrote on Saturday, this case isn't about if Musk was wrong or reckless in claiming to have "funding secured" from Saudi Arabia. He was, and the jury has been instructed as such.

  • It's about if he knew he was wrong at the time, and if the tweet was material.

Courthouse scene: Musk, clad in a black suit and black tie, has seemed visibly uncomfortable on the stand. That may owe to a recent back injury, but also to a format in which he's literally on the defensive. Musk also has avoided photos of him at the courthouse, apparently by accessing an alternative entrance/exit.

  • Most of Musk's comments have been quiet and without emotion, even when he clearly believes the plaintiff's lawyer is wrong. A far cry from his chief twit persona.

For the defense: This should be a fairlystraightforward case, at least in terms of timelines, but the plaintiff's counsel has made it into a confounding mess. That benefits Musk.

  • I kept zoning out yesterday, and I'm legitimately interested in the subject matter. Hard to imagine that jurors have remained engaged, or can adequately follow the maze of emails and phone calls and boardroom conversations.

For the plaintiff: Musk at one point yesterday admitted that he wanted Tesla shareholders to rely on the "funding secured" tweet, adding: "I expected that there [would] probably be some increase in the stock price — seems likely." That hurts Musk and Tesla.

  • Musk also used an odd justification for his tweet, arguing that he was worried there could be a leak the the Financial Times about his take-private plans, and that such a report could harm Tesla shareholders who didn't read the FT.
  • OK, but what about Tesla shareholders who don't follow Musk on Twitter, or even use Twitter? Tesla still had a comms and IR department in 2018, both of which could have helped him craft and disseminate statement without tripping securities laws.

Notes: Musk claimed that he believed he could have financed the take-private without any Saudi involvement, via a sale of his SpaceX stock. Pretty sure this is the first time he's made that claim.

  • He also reiterated his odd view of due diligence, as evidenced throughout the Twitter saga, in claiming that the Saudis didn't need to do any prior to Musk making a formal takeover offer because Tesla was a public company (i.e., it already had access to all the information it would need).

The bottom line: Musk returns today for what's likely to be his final day of testimony. So far, it's mostly been a consequential bore.

The BFD

Animated illustration of a mattress on fire.

Illustration: Aïda Amer/Axios

Serta Simmons Bedding, the Georgia-based mattress maker owned by Advent International, has filed for Chapter 11 bankruptcy protection.

Why it's the BFD: There's no niche industry that's caused private equity more pain than have mattresses, going all the way back to the infamous "burning bed" deal in the 1980s. Somehow, it doesn't feel like Advent will be the last PE firm that tries (and fails) to find money stuffed inside.

Backstory: Advent bought the company in 2012 via a $3 billion deal, and later added DTC mattress seller Tuft & Needle. It later restructured some of its debt, via a transaction that led to credit lawsuits.

Details: The prepackaged bankruptcy filing includes $125 million of debtor-in-possession financing and another $125 million once it exits Chapter 11.

The bottom line: "Serta's fiscal woes were exacerbated during the pandemic. More recently decades-high inflation has weighed on the mattress retailer, which has a sizeable debt load maturing this year." — Bloomberg

Venture Capital Deals

Pasqal, a Paris-based quantum computing startup, raised $100m in Series B funding. Temasek led, and was joined by the EIC Fund, Wa’ed Ventures, Bpifrance and insiders Quantonation, Defense Innovation Fund, Daphni and Eni Next. https://axios.link/3QZlUTf

CYGNVS, a Los Altos, Calif.-based guided cyber crisis response platform, raised $55m in Series A funding. Andreessen Horowitz led, and was joined by Stone Point Ventures and EOS Venture Partners. www.cygnvs.com

GSS, a British sanctions screening startup, raised $45m in first-round funding from Alix, Cynosure Group and MUFG.

Dayforward, a New York-based life insurance startup, raised $25m. AXA Ventures led, and was joined by insiders Juxtapose, HCSM Ventures and Munich Ventures. www.dayforward.com

Mad Mobile, a Tampa, Fla.-based POS modernization platform for retail and restaurants, raised $20m from Eastward Capital Partners. www.madmobile.com

PayEm, an SF-based spend and procurement management platform, raised $20m in Series A funding and secured a $200m credit line from Viola Credit, Mitsubishi Financial Group, Collaborative Fund, Pitango First, NFX, LocalGlobe and Glilot+. https://axios.link/3H1Lfap

Vartana, an SF-based sales closing and financing platform, raised $12m in Series A funding. Mayfield led, and was joined by Xerox Ventures and insiders Flex Capital and Audacious Ventures. www.vartana.com

🌎 Rumin8, an Australian developer of livestock feed to cut methane emissions, raised $12m new seed funding led by Breakthrough Energy Ventures. www.rumin8.com

• Twinco Capital, a Madrid-based supply chain financing startup, raised $12m in equity and debt funding. Quona Capital led the equity tranche, and was joined by Working Capital, Mundi Ventures and Finch Capital. www.twincocapital.com

Kewazo, a Munich-based construction robotics startup, raised $10m in Series A funding. Fifth Wall led, and was joined by Cybernetix Ventures, Unorthodox Ventures and Nemetschek. https://axios.link/3HtNepi

Calimero Network, a London-based blockchain infrastructure startup, raised $8.5m in seed funding from Khosla Ventures, Lyrik Ventures, Near Foundation, GSR, FJ Labs and Warburg Serres. https://axios.link/3J8YTeD

🚑 Journey Clinical, a New York-based psychedelic medicine infrastructure startup, raised $8.5m in Series A funding, per Axios Pro. USV led, and was joined by AlleyCorp, Fifty Years, Able Partners, Gaingels, Palo Santo, PsyMed Ventures, Coalition Partners, Mystic Ventures, Colibri and Satori Capital. https://axios.link/3XARfOn

🚑 Nourish, an SF-based telehealth platform for nutrition, raised $8m in seed funding. Thrive Capital led, and was joined by Susa Ventures, Operator Partners, Box Group and YC. https://axios.link/3QZjST6

Pilon, a Singapore-based supply chain financing startup, raised $5.2m. Wavemaker Partners led, and was joined by Octava and Polaris Kin. https://axios.link/3JamThs

Skillit, a New York-based marketplace that matches construction contractors and workers, raised $5.1m in seed funding, per Axios Pro. Building Ventures led, and was joined by MetaProp, Holt Ventures, Great North Ventures, 1Sharpe Ventures and Takeoff Capital participated. https://axios.link/3XCPUa6

Traction Complete, a Canadian developer of Salesforce-native revenue operations apps, raised US$5m co-led by Pender Ventures and Thomvest Ventures. www.tractioncomplete.com

Tranch, a London-based BNPL platform for SaaS companies, raised $5m in seed funding. Soma Capital led, and was joined by FoundersX and insiders GFC and YC. The company also secured $95m in debt from Clear Haven Capital Management. https://axios.link/3HprgnA

Slingshot Simulations, a British digital twin and decision intelligence startup, raised £3m in Series A funding from Northern Gritstone, Mercia and the Northern Powerhouse Investment Fund. www.slingshotsimulations.com

Sandbar, a New York-based provider of anti-money laundering, fraud and counterterrorism risk detection software, raised $4.8m in seed funding co-led by Lachy Groom and Abstract Ventures, as first reported by Axios Pro. https://axios.link/3j4N927

Grazzy, an Austin, Texas-based same-day pay app for hospitality workers, raised $4.25m in seed funding from Next Coast Ventures and Tuesday Capital. https://axios.link/3DcCppn

Coverdash, a New York-based commercial insurance startup, raised $2.5m in seed funding. Bling Capital led, and was joined by AXIS Digital Ventures, Tokio Marine Future Fund, Expansion VC and Cameron Ventures. https://axios.link/3XVdTAQ

Peerlist, a professional networking startup, raised $1.1m in seed funding led by HubSpot co-founder Dharmesh Shah. https://axios.link/3j1q5RV

Private Equity Deals

Clarion Capital Partners acquired Vin Di Bona Productions and V10, an unscripted television production house and the producer of “America’s Funniest Home Videos.” www.vindibonaproductions.com

Longshore Capital Partners acquired and merged digital commerce agency Blue Wheel and e-commerce marketplace agency Retail Bloom. www.bluewheelmedia.com

McWin acquired a majority stake in L'Osteria, an Italian restaurant chain based in Germany, for around €400m. https://axios.link/3kyEFk9

Providence Equity Partners acquired a multi-decade lease for nine large billboards in Times Square from Universal Branding Group, and entered into an operating agreement with Outfront Media (NYSE: OUT). www.provequity.com

Ridgemont Equity Partners acquired Worldwide Produce, an LA-based food distributor, from Sole Source Capital (which retains a minority stake). www.produce.com

White Wolf Capital Group acquired Rayne Staffing, a Houston-based engineering and skilled trades technical staffing agency. www.raynestaffing.com

Wynnchurch Capital bought a majority stake in FloWorks, a Pasadena, Texas-based provider of flow control distribution, from Clearlake Capital Group (which retains a minority stake). www.goflowworks.com

Public Offerings

Enlight Renewable Energy, an Israeli renewable energy company listed in Tel Aviv with a $2.2b market cap, filed for a Nasdaq listing that Renaissance Capital estimates could raise $200m.

🚑 New Ruipeng Pet Group, a chain of around 1,900 veterinary hospitals in China, filed for an IPO. It plans to list on the Nasdaq (RPET), and reports a $156m net loss on $607m in revenue for the first nine months of 2022. Backers include Hillhouse Capital (35.8% pre-IPO stake). https://axios.link/3Dd8OMi

SPAC Stuff

Constitution Acquisition, a natural gas value chain SPAC formed by Old Ironsides Energy, withdrew registration for a $200m IPO. https://axios.link/3ZXM4tD

Vikasa SPAC Series I Acquisition Corp., a SPAC led by Energy Metals Fund CEO Ajit Kumar, withdrew registration for a $200m IPO. https://axios.link/3HrONUK

Liquidity Events

🚑 Alpine Investors is seeking a buyer for Lightwave Dental, a Woodbridge, Va.-based dental service organization that generates around $40m in EBITDA, per Axios Pro. https://axios.link/3XNVdTJ

Matador Resources (NYSE: MTDR) agreed to buy Advance Energy Partners, a Houston-based oil and gas E&P, for from EnCap Investments for $1.6b. https://axios.link/3kIdx2s

More M&A

• Arte Moreno no longer is seeking to sell the Los Angeles Angels, the MLB franchise he bought in 2003 from The Walt Disney Co. BFD flashback.

Doodles, a Canadian collectibles NFT platform that’s raised $54m in VC funding, acquired animation studio Golden Wolf. https://axios.link/3J8Xzs5

Elliott Management has built a stake in Japanese conglomerate Dai Nippon Printing (Tokyo: 7912). https://axios.link/3Das6SL

• McKinsey & Co. acquired Iguazio, an Israeli data science startup that had raised over $80m from INCapital Ventures, Samsung SDS, Kensington Capital Partners, Plaza Ventures, and Silverton Capital Ventures. No financial terms were disclosed, but one report pegs the sale price at around $50m. https://axios.link/3R1OfrW

• Qatar Investment Authority upped its stake in Credit Suisse (NYSE: CS) to 6.87% from 5.6%. https://axios.link/3GWOYG8

• Strava, the fitness tracking app valued by VCs in late 2020 at $1.76b, acquired Fatmap, a London-based 3D mapping app that raised around $28m from backers like Strava, InMotion Ventures, 83North, Azimut Libera Impresa, ACF Investors and Tornig. https://axios.link/3WsR5Yc

Fundraising

• Cowboy Ventures raised $140m for its fourth flagship fund, plus $120m for its first opportunities fund. https://axios.link/3XUiWSg

• Thrive Capital, the New York-based VC firm led by Joshua Kushner, sold a passive minority ownership stake to an investor group that includes Henry Kravis, Bob Iger, Jorge Paulo Lemann, Xavier Niel and Mukesh Ambani. https://axios.link/3Ht4bAv

• WestView Capital Partners, a Boston-based growth equity firm, raised $1b for its fifth fund. www.wvcapital.com

It's Personnel

• Charles Asfour joined Comvest Partners as a partner. He previously founded Aves Capital Management and, before that, was with Victory Park Capital. www.comvest.com

• Marc Keirstead joined Sun Capital Partners as CFO, after having been CFO for private equities at Abu Dhabi Investment Authority. Sun also added Adam Massman (ex-Jones Lang LaSalle) as chief human resources officer. www.suncappart.com

Justin MacFarlane rejoined restructuring firm AlixPartners as a partner and managing director focused on retail. He previously was chief strategy, analytics and innovation officer at Macy’s. www.alixpartners.com

Suhail Shaikh joined Investcorp as co-head of private credit. He previously was with Alcentra. www.investcorp.com

Dawn Capital promoted Dan Chaplin to partner and co-head of fintech and digital assets. https://axios.link/3Ws7EmZ

Perella Weinberg Partners promoted Anthony Giuliano and Cory Hill to managing directors. www.pwpartners.com

Final Numbers

Source: Axios Visuals
Source: Axios Visuals

The hottest ticket on Capitol Hill today is for a Senate hearing in which Live Nation president and CFO Joe Berchtold will be grilled on if his company, whose businesses include Ticketmaster, has a monopoly position in the live events ticketing industry.

  • This is born from last year's Taylor Swift concert ticketing fiasco, although Swift herself wasn't asked to testify (thus needn't answer for not enabling a Ticketmaster option to prevent tivcket resale above face value).
  • Live Nation and Ticketmaster merged in 2010, despite some loud industry objections.

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