Feb 3, 2017

Axios Pro Rata

Greetings from my last morning in LA. Remember to email to send me tips, feedback and Super Bowl recipes by hitting reply to these morning missives (or by anomnymously using http://axios.com/tips). Very busy for a Friday, so here we go...

Top of the Morning

• UberX: Yesterday I argued that Uber CEO Travis Kalanick was in a no-win situation vis-a-vis his involvement with the President's Council on Jobs and Competitiveness, which this morning holds its debut confab at the White House. Several hours later Kalanick called Trump, explained his opposition to the recent immigration policies and stepped down from the Council. He also circulated a memo you can read here.

  • The call between Kalanick and Trump did not go well, according to sources on both sides. The view from some in Trump's inner circle, per Axios' Mike Allen: "If you want to cut off your access to the White House, f@#k you."
  • Kalanick's decision may satisfy many of his employees and drivers ― plus Kalanick himself, who has been critical of Trump inside company walls ― but it could come at a real long-term cost to Uber. The company operates in many foreign markets, and there is tangible value in having a sympathetic White House ear when business troubles arise overseas.
  • Kalanick is the only Council member to resign, but he's not the only one absent from today's meeting. Disney boss Bob Iger is instead attending a company board meeting.
  • Today's meeting will be off-the-record, as we mentioned yesterday. However, that could raise accusations that the White House is skirting something called FACA, or the Federal Advisory Committee Act. This is the rule that initially caused Obama's similar CEO council to hold its meetings publicly (it's also the one that got Dick Cheney and his Energy Task Force in trouble). Per Norm Eisen, former Obama ethics czar and chairman of Citizens for Responsibility and Ethics in Washington: "I think the White House is skirting the law. If they're having meetings that are subject to FACA, or even close, they should follow the rules."

• Quotable: "Marc Andreessen used to say that software is eating the world. Now, automation is going to eat the world." ― Mark Cuban, who adds that not even programmers should consider themselves safe from coming labor market shifts.

• M&A: One takeaway from yesterday's panel at Upfront Summit was that "job leveling" (i.e., deciding titles for execs in the acquired company) often is one of the most difficult parts of an acquisition. Not only because of ego, but also because of perks. For example, a former SVP is now just a VP, which means he or she can no longer fly business class to Europe. Apparently this is often the single most problematic "soft" issue, for both large and small deals.

• Another one: Steve Feinberg, co-founder and CEO of Cerberus Capital Management, is in talks to join the Trump Administration in a "senior role," per the WSJ. Two notes: (1) There continues to be no career sector, not even the military, that is better represented in the White House than private equity. Here's the full list. (2) Feinberg's addition would also be a huge win for the gun lobby, as Cerberus continues to own the nation's largest firearms manufacturer in Remington.

• Have a great weekend... Go Pats!


Snapchat yesterday filed its long-awaited IPO documents, saying that it plans to raise $3 billion. No word yet on number of shares of proposed pricing range. Top-line financials are a $514 million net loss on around $404 million in revenue during 2016, compared to a $373 million net loss on $59 million in revenue for 2015. The company began truly trying to monetize within 2015, and it doesn't break out quarterly financials, so it's unclear if prospective investors should view the revenue growth to be apples-to-apples. Much more detail is available here.

• Why it's the BFD: Maybe we don't really need this section today.

• Tidbits: Snap spent nearly $900k last year on personal security for CEO Evan Spiegel. It also saw its lens usage fall through the floor when it began charging, but it rose right back up when the "lens store" was shuttered. Oh, and Instagram is mentioned four times in the S-1.

• Bottom line: This one is going to be divisive, because buying Snap shares at the expected price is a massive leap of faith in both continued user growth and a massively increased ability to monetize those users. In terms of just basic revenue multiples, even very generous ones, it would be almost impossible to justify for investors who go by the book. Ultimately it's probably a referendum on Spiegel, since there are few CEOs who have such a singular grip on a company's overall strategy.

Venture Capital Deals

• PointClickCare, a Canadian electronic medical records software company, has raised $85 million in new equity financing from Dragoneer Investment Group and return backer JMI Equity. The move comes one day after the company pulled an IPO filing. http://bit.ly/2kYBp1A

• MapAnything, a Charlotte-based provider of mapping, geo-analytics and location intelligence solutions, has raised $33.1 million in Series B funding. Columbus Nova led the round, and was joined by ServiceNow Ventures and return backers like Greycroft Partners, Harbert Venture Partners, Salesforce Ventures. http://bit.ly/2klZz2R

• ApcinteX, a UK-based developer of hemophilia treatment, has raised £14 million in Series A funding. Medicxi and Touchstone Innovations Group co-led the round, and were joined by Cambridge Enterprise. http://bit.ly/2l4nweb

• Scytl, a Spain-based developer of electronic voting technologies, has raised €12 million in new VC funding. Return backers include Vulcan Capital, Balderton Capital, Nauta Capital, Spinnaker Invest, Sapphire Ventures, Vy Capital, Industry Ventures and Adams Street Partners. http://bit.ly/2k91Bou

• Disruptor Beam, a Framingham, Mass.-based startup that develops mobile games based on existing entertainment franchises, has raised $8.5 million in new VC funding co-led by Romulus Capital and return backer GrandBanks Capital (which bought out shareholder Midverse Studios). http://tcrn.ch/2jAVkn7

• LogicHub, a Mountain View, Calif.-based cybersecurity intelligence automation platform, has raised $8.4 million in Series A funding co-led by Storm Ventures and Nexus Venture Partners. http://bit.ly/2kwOQVP

• Against Gravity, a maker of social AR apps, has raised $5 million in VC funding. Backers include Sequoia Capital, First Round Capital, Acequia Capital, Vulcan, Maveron, Anorak Ventures, Betaworks and The Venture Reality Fund. http://bit.ly/2jZy5iq

• Wity, a French platform to help startups with accounting, law and strategy, has raised €4.7 million in VC funding from M Capital Partners. http://bit.ly/2kzP126

• Suplari, a stealthy Seattle developer of business optimization software, has raised $3.1 million in VC funding from Madrona Venture Group and Amplify Partners. http://bit.ly/2jB6wzP

• Text IQ, a New York-based developer of legal assistance software, has raised $3 million in new VC funding from Floodgate. http://bit.ly/2k2YnR2

• Xnor.ai, an artificial intelligence startup, has raised $2.6 million in new VC funding from Madrona Venture Group and the Allen Institute for Artificial Intelligence. http://bit.ly/2kZya5R

• Airware, a San Francisco-based enterprise drone maker, has raised an undisclosed amount of strategic funding from Caterpillar. http://tcrn.ch/2k41bQg

• FM:Systems, a Raleigh, N.C.-based provider of workplace management systems and computer-aided facility management software, has raised an undisclosed amount of new funding from Accel-KKR. http://bit.ly/2k3a9L0

Private Equity Deals

• Ampersand Capital Partners has sponsored a majority recap of Corpus Medical, a Campbell, Calif.-based contract development and manufacturing organization focused on interventional medical devices, catheter-based delivery systems and implants. No financial terms were disclosed. www.corpusmed.com

• Astorg has acquired Audiotonix, a UK-based maker of audio mixing consoles, from Electra Private Equity. The deal is valued at around $254 million. http://reut.rs/2l2ERVI

• The Carlyle Group has agreed to acquire Italian luxury lifestyle fashion company Golden Goose Deluxe Brand from Ergon Capital Partners. No financial terms were disclosed for the deal, which is expected to close by the end of March. http://bloom.bg/2l00bKy

• Comvest Partners and Athyrium Capital Management have acquired Interamerican Medical Center Group, a Miami Lakes, Fla.-based managed healthcare services organization. No financial terms were disclosed. www.interamericanmedical.com

• Jamieson Laboratories, a Canadian vitamin-maker owned by CCMP Capital, has acquired Body Plus, a Canadian maker of natural health and sports nutrition supplements. No financial terms were disclosed.

• Providence Equity Partners has acquired a minority equity stake in EZLinks Golf, a Chicago-based developer of golf management technology, for an undisclosed amount. In a related move, EZLinks has acquired Distinct Software Solutions, an Austin, Texas-based marketing tech company focused on golf. http://bit.ly/2jKCTHN

• Specialists On Call, a Reston, Va.-based provider of clinical telemedicine technology and services to acute care hospitals, has acquired Miami, Fla.-based rival NeuroCall for an undisclosed amount. SOC is a portfolio company of Warburg Pincus. http://bit.ly/2jF7ICy

Public Offerings

• Braeburn Pharmaceuticals, a Princeton, N.J.-based CNS drug company owned by Apple Tree Partners, has postponed an IPO that was supposed to price this week. It had planned to offer around 7.7 million shares at between $18 and $21 per share. J.P. Morgan and BofA Merrill Lynch are serving as lead underwriters. http://bit.ly/2l2NH5P

• IC Power, a Peru-based operator of gas and power facilities in South and Central America, has withdrawn IPO registration, just days after setting terms to 29.5 million shares being offered at between $12 and $15 per share. The company is being spun out of Kenon Holdings (NYSE: KEN), and blamed "market conditions" for the move. http://bit.ly/2k3bHoj

• Ramaco Resources, a Lexington, Ky.-based coal mining company, raised $81 million in its IPO. The company priced 6 million shares at $13.50 per share ($12-$15 range), and will trade on the Nasdaq under ticker symbol METC. Credit Suisse was listed as left-lead underwriter.

Liquidity Events

• Fresenius Medical Care of Germany has agreed to acquire a majority stake in Cura Group, an Australian chain of outpatient dialysis treatment centers, from shareholders like Intermediate Capital Group. No financial terms were disclosed. http://reut.rs/2k97IZY

• Hewlett Packard Enterprise (NYSE: HPE) has agreed to acquire Niara, a Sunnyvale, Calif.-based security vendor. No financial terms were disclosed. Niara had raised over $25 million in VC funding from Venrock, NEA and Index Ventures. http://bit.ly/2k3zirp

It's Personnel

• Chris Condelles has joined FS Investments as head of capital markets and investor relations. He previously was with Credit Suisse for 11 years, most recently as head of U.S. credit and financing solutions. www.fsinvestments.com

• Andrew Harrison has joined Silverfleet Capital as head of investor relations. He previously was with Credit Suisse as a member of the firm's private funds group. www.silverfleetcapital.com

• Osage University Partners has promoted John Lee from senior associate to principal. www.osageuniversitypartners.com

• Aamir Virani, co-founder and former COO of Dropcam, has joined Felicis Ventures as a partner. http://bit.ly/2k3aTzO

Final Numbers: Snap stuff