Dec 11, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Photo by Bryan R. Smith/Getty Images

After Spotify successfully went public in April via a direct listing, we didn't see any copycats. But that might be changing.

Recode's Teddy Schleifer reports that both Airbnb and Slack are seriously weighing the prospect of direct listings, having gone so far as to have reached out to top Spotify executives for insights. We also hear that Pinterest is among several other "unicorns" to have at least kicked the direct listing tires.

Airbnb and Slack make sense in that they each have CEOs who like to buck conventional wisdom but, as Schleifer also points out, each has challenges when it comes to a direct listing:

  • Airbnb makes more sense on paper, but a historical lack of employee liquidity means its cap table needs a serious dust-busting. Don't be surprised to see it do some sort of major secondary financing if it opts for a direct listing — otherwise, it could experience a first-day employee sale stampede that tramples the share price.
  • Slack makes less sense in that the Spotify model was partially predicated on being a household name, consumer-facing product. But Slack's B2B SaaS model should be pretty familiar to public equities analysts and investors, which is important since there wouldn't be an investment bank holding Slack's hand and telling its story.
  • It's also worth remembering that direct listings don't create a balance sheet windfall, and we don't know the cash position of either company.

One big key for Spotify seems to have been its public investors day, which any new issuer is likely to ape. You might also see them take a new outside investment that has a multi-year lockup, as Spotify did with Tencent. That latter move results in new dilution, but also helps provide some shareholder base stability.

  • For context, Spotify's listing reference point was $132 per share. It hit a first-day high of $165.90 before settling down to close at $149.01, and closed trading yesterday at $130.79 per share.

The bottom line: It's still unlikely that either Airbnb or Slack will deviate from market norms but, if anyone's going to do it, they're among a small group that makes sense.

• More IPO talk: Paul Wilkie, who used to help lead global communications for Visa, emails in with a different take on the Uber vs. Lyft IPO talk:

"Reading about Lyft and Uber’s IPO race, I’m reminded of how similar it is to what we saw with Visa and MasterCard. While yes, it might appear that Uber and Lyft are rushing to be first, the reality is they probably aren’t. At Visa, we relished the opportunity of watching and learning from MasterCard’s IPO, which went ahead of ours. The approach: Let the first mover make the mistakes, which we’ll learn from and easily adjust for. It’s the IPO equivalent of drifting. In hindsight, this strategy served Visa well."

Calendar: Shareholders in the VMWare tracking stock (DVMT) today will vote on whether to approve a proposed reverse merger with Dell, which would bring Michael Dell's company back into the public markets.

New fund alert: Calibrate Ventures tells Axios that it has closed its debut fund with $80 million.

  • The Los Angeles-based firm's co-founders are Shea Ventures vets Kevin Dunlap and Jason Schoettler, whose past deals have included Chegg, DollarShaveClub, Ring and SolarCity.
  • Areas of focus include startups that fill labor market gaps (i.e., robotics), ones that help increase human productivity (particularly in the enterprise) and companies that help alleviate the growing trend of attention compression.

📣 Podcast: Our latest episode is about the arrest of Huawei's CFO, and how it could impact trade negotiations and international business. My guest is Bill Bishop, writer of the Sinocism and Axios China newsletters. Listen here.


Photo by Mark Weiss/Getty Images

Plaid, a San Francisco-based app programming platform for banks and other financial services providers, raised $250 million in Series C funding at what Axios has learned is a $2.65 billion valuation. Kleiner Perkins Growth led, and was joined by Andreessen Horowitz, Index Ventures and return backers Goldman Sachs, NEA and Spark Capital.

  • Why it's the BFD: Because it's around a 10x valuation bump from where Plaid last raised in 2016, representing how it has become integral infrastructure for top digital finance companies like Acorns, Coinbase, Robinhood and Venmo.
  • Bottom line: "Plaid is to finance apps what Stripe is to e-commerce." — Kia Kokalitcheva, Axios
Venture Capital Deals

Face++, a Chinese developer of facial recognition technology, is seeking to raise $500 million at a $3.5 billion valuation, per Reuters. Bank of China Group is expected to be lead investor with a $200 million infusion.

Vroom, a New York-based online used car retailer, raised $146 million in Series G funding. AutoNation (NYSE: AN) led, and was joined by T. Rowe Price, L Catterton, General Catalyst Partners and Fraser McCombs Capital.

Fresh Buddy, a Chinese social e-commerce app, raised $100 million in Series B funding. Genesis Capital led, and was joined by SIG China, DCM Ventures and Vision Plus Capital.

WaveOptics, a London-based maker of diffractive waveguides for use in AR wearables, raised $26 million in Series C funding. Octopus Ventures led, and was joined by Goertek, Optimas Capital Partners and return backers IP Group, Robert Bosch Venture Capital and Gobi Partners.

AppOnboard, a Los Angeles-based mobile app demo and analytics platform for developers, raised $15 million in Series B funding. Breakaway Growth Fund led, and was joined by Manta Ray Ventures, Runa Capital, Korea Investment Partners, Mirae Asset Management, MTGx, Troy Capital Partners and 500 Startups.

Jaanuu, an El Segundo, Calif.-based direct-to-consumer medical apparel brand, raised $15 million led by JMK Consumer Growth Partners., a Cambridge, Mass.-based startup that helps companies adopt cloud-native technologies, raised $11 million in Series A funding. Redpoint Ventures led, and was joined by return backer True Ventures.

Sensemetrics, a San Diego-based developer of tools for distributed sensor management, raised around $10 million in seed and Series A funding from X2 I Equity, Mooring Ventures and Three Curve Capital.

🚑 GenEdit, a Berkeley, Callif.-based developer of gene-editing tools, raised $8.5 million in seed funding from Data Collective Bio, SK Holdings, Sequoia Capital and Bow Capital.

Private Equity Deals

Apis Capital Management offered to buy Veritone (Nasdaq: VERI) for $10.26 per share, or nearly $200 million in equity value.

🚑 Cobepa completed a $280 million buyout of BioAgilytix, a Durham, N.C.-based provider of large molecule bioanalytical testing services, from shareholders like Riverside Partners.

CVC Capital Partners launched a takeover offer for Ahlsell, a listed Swedish construction products and tools distributor that it took public just two years ago. CVC still holds a 25% stake in the company, and is offering a 35% share premium that would value Ahlsell at around $2.65 billion.

EQT Partners acquired Cast & Crew, a Burbank, Calif.-based provider of payroll and production management services for the entertainment industry, from Silver Lake.

MSD Partners bought Endries International, a Brillion, Wis.-based distributor of fasteners and Class-C parts for OEMs, from Nautic Partners.

Polaris and Acathia co-led a private equity consortium that paid $288 million to buy the Swedish business of Danica, Danske Bank’s pension unit.

Public Offerings

🚑 Junshi Biosciences, a Chinese antibodies maker backed by such firms as Hillhouse Capital, is seeking to raise up to $414 million in a Hong Kong IPO, per Reuters.

Liquidity Events

🎤 The Riverside Company agreed to sell DPA Microphones, a Danish maker of high-end microphones, to RCF Group.

More M&A

🚑 10x Genomics, a Pleasanton, Calif.-based genomics company whose investors include Fidelity and SoftBank, agreed to buy Spatial Transcriptomics, a Swedish maker of tools for high-throughput mRNA analysis.

ASG Technologies, backed by Elliott Management, has increased its takeover offer for Mitek Systems (Nasdaq: MITK) from $10 per share to $11.50 per share. Mitek is a San Diego-based provider of mobile image capture and identity verification software, and the new bid would value its equity at $437 million.

Experian (LSE: EXPN) agreed to buy South African credit check company Compuscan for around $263 million.

• Ferrero, the Italian maker of Nutella, is among those interested in buying the international business of Campbell Soup Co. (NYSE: CPB), per Reuters.

HNA Group of China is working with Credit Suisse to launch a sale process for tech outsourcing unit Pactera, which it bought for $700 million in 2016 from Blackstone, per Bloomberg.

Starboard Value said that (NYSE: CARS) must improve its performance or consider a sale. Starboard holds a 9.8% disclosed stake in the online auto marketplace, which has a market cap of around $1.64 billion.


CVC Capital Partners is raising its second growth equity fund, per an SEC filing.

The Hardware Club, a Paris-based VC firm focused on hardware startups, raised €50 million for its debut fund. LPs include Isomer Capital, Draper Esprit, Bpifrance, Foxconn and Arkéa.

HubSpot (NYSE: HUBS) is launching a $30 million corporate venture fund.

JMI Equity closed its ninth growth equity fund with $1.2 billion.

Jungle Ventures of Singapore is raising $200 million for its third fund, per an SEC filing.

Sailing Capital, a Chinese private equity firm focused on overseas deals, is targeting $1.5 billion for its second fund, per Bloomberg.

It's Personnel

Eric Feng is leaving Kleiner Perkins, which he joined as a general partner in 2015 after CTO stints at Flipboard and Hulu.

Eimear Palmer is stepping down as head of responsible investing in Europe for The Carlyle Group, in order to become head of responsible investments for Intermediate Capital Group.

Final Numbers
Source: BlackRock Global Investment Outlook. Notes: Global stocks are represented by the MSCI ACWI index. Global bonds are represented by the Bloomberg Barclays Global Aggregate Bond Index. Total returns are shown in U.S. dollars. 2018 returns are through Dec. 6.
Dan Primack