Feb 12, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

🥓 Hey D.C. readers: You're invited tomorrow to an Axios breakfast event at 8 a.m. about innovation in America's cities. Guests include Sen. John Thune (R-SD), Rep. Yvette Clarke (D-NY), CTA CEO Gary Shapiro and Chattanooga Mayor Andy Berke. RSVP here.

Top of the Morning
Source: Giphy

Congress reportedly has a bipartisan deal to avoid another government shutdown, which would let companies like Uber and Lyft continue their IPO backs-and-forths with the SEC.

  • Big caveat: No tweets of approval (yet) from President Trump.

Upvote: Reddit yesterday confirmed that it raised $300 million in new funding at a $3 billion valuation, with around half of it coming from lead investor Tencent. Some notes:

  • Reddit generated over $100 million in revenue last year, and plans to double revenue in 2019.
  • Reddit is not having serious internal discussions about building a censored version for China, where it's currently blocked. There's been some speculation to that effect based on the Tencent investment but, as one source told me, "Reddit not being in China is probably a bigger issue for Tencent than for Reddit."
  • Reddit's new valuation sets a pretty high valuation bar to clear for M&A, reflecting on how the eventual intention is to go public. The comp, it would argue, is Twitter.
    • Bonus: Reddit co-founder Alexis Ohanian, now a managing partner of VC firm Initialized Capital, will be the guest on this afternoon's Pro Rata Podcast.

Credit uncrunched: The U.S. junk bond market is back, after a late 2018 freeze that was raising serious concerns in private equity-land about being able to finance new transactions.

  • SIFMA reports that there was $20.4 billion of new issuance in January, which puts it nearly on pace with last September. There was only $14.2 billion issued in all of Q4 2018.
  • The January figure is still soft year-over-year, however, down nearly 18%.

Tabloid talk: On Friday we noted that the parent company of the National Enquirer is owned by a New Jersey private investment firm called Chatham Asset Management.

  • Today we'll note that one of the largest investors in Chatham is the California Public Employees' Retirement System, while other backers include public pensions in New Jersey and Texas. An Ohio pension also used to back Chatham, but claims to have divested in 2017 (it hasn't yet responded to a request for documentation backing that up).
  • Also, and this is just odd, Chatham was once represented in a legal matter by Hollywood lawyer Marty Singer. That's the same Marty Singer now representing Jeff Bezos in his fight against Chatham's most notorious portfolio company.

🎧 Pro Rata Podcast: Our new episode digs into the political battle over Sprint and T-Mobile's proposed mega-merger. Listen here.

The BFD

Illustration: Sarah Grillo/Axios

Amazon (Nasdaq: AMZN) has agreed to buy Eero, a San Francisco-based provider of mesh WiFi devices for the home.

  • Why it's the BFD: Because it means Amazon burrows itself deeper inside your home, and will gain data that could help determine its future acquisitions in the IoT and residential security spaces.
  • Details: No financial terms were disclosed, and so far no one will give them up (Amazon is very good at scaring venture capitalists). That said, don't expect too much of an upfront number (i.e., this isn't Ring Redux).
  • Funding history: Eero had raised nearly $150 million in VC funding, including a Series D "down round" in late 2017. Investors included First Round Capital, Homebrew, Initialized Capital, Menlo Ventures, Shasta Ventures, Qualcomm, Index Ventures, Kindling Capital, Redpoint Ventures, Playground Global and Grishin Robotics.
  • Bottom line: "With Eero, Amazon gains control of one of the thornier issues plaguing the smart home — good Wi-Fi coverage — while also gaining the ability to see what devices I actually have on my network." — Stacey Higginbotham
VC Deals

DoorDash, the San Francisco-based on-demand food delivery service, is raising around $500 million at a valuation north of $6 billion, per the WSJ. Temasek reportedly is leading the round, which I hear has been ongoing for at least a month with several other lead term sheets submitted. http://axios.link/sm2G

Zilingo, a Singapore-based online fashion marketplace, raised $226 million in Series D funding from EDBI and return backers Temsek, Sequoia India, Burda and Sofina. http://axios.link/SyU0

Jobvite, a San Mateo, Calif.-based job recruitment platform, raised over $200 million in new funding from K1 Investment Management. It also acquired three smaller companies: Talemetry (Canada, recruitment marketing), RolePoint (SF, employee referrals) and Canvas (chatbot). http://axios.link/VBTs

🚑 Nuvaira, a Minneapolis-based medical device maker focused on pulmonary disease, raised $79 million. USVP led, and was joined by Endeavour Vision, Qiming Venture Partners, Lightstone Ventures and the Richard King Mellon Foundation. Return backers include Advanced Technology Ventures, Morgenthaler Ventures, Split Rock Partners, Versant Ventures, Vertex Venture and Windham Venture Partners. http://axios.link/6ioK

Virtuo, a London-based car rental startup, raised £17.3 million from Iris Capital, Balderton Capital and Raise Ventures. http://axios.link/7u5p

Dandelion Energy, a home geothermal energy startup, raised $16 million in Series A funding. GV and Comcast Ventures co-led, and were joined by Lennar Corp. and return backers NEA, Collaborative Fund, Ground Up and Zhenfund. http://axios.link/VLuQ

Axonius, a New York-based cybersecurity asset management startup, raised $13 million in Series A funding. Bessemer Venture Partners led, and was joined by return backers YL Ventures, Vertex, WTI and Emerge. www.axonius.com

BeliMobilGue, an Indonesian used car sales platform, raised $10 million from backers like Frontier Car Group and Tunas Toyota. http://axios.link/eK0r

C2A Security, an Israeli developer of cybersecurity solutions for in-vehicle attacks, raised $6.5 million in Series A funding co-led by Maniv Mobility and ICV. http://axios.link/xGgO

🚑 Culture Biosciences, a South San Francisco-based digital biomanufacturing platform, raised $5.5 million. Section 32 led, and was joined by Refactor Capital and Verily. www.culturebiosciences.com

Evisort, a contract management startup, raised $4.5 million in seed funding co-led by Village Global and Amity Ventures. www.evisort.com

Private Equity Deals

Bertram Capital bought Perennials & Sutherland, a Dallas-based maker of acrylic performance fabric and rugs, from Acacia Partners. www.perennialsandsutherland.com

Energizer Holdings (NYSE: ENR) and Duracell International (owned by Berkshire Hathaway) each may bid for a control stake in Eveready Industries India, per the Economic Times. Also expect offers from private equity firms The Blackstone Group, KKR and Kedaara. http://axios.link/ZcLd

H.I.G. Capital invested in Digital Ware, a Bogota-based provider of ERP, HCM, BPM and hospital information software. www.digitalware.com.co

Insight Equity bought Eddy Foods, a Yoakum, Texas-based processor of smoked, cooked and fresh meats, from Mason Wells. www.eddypacking.com

Thoma Bravo agreed to buy mortgage software company Ellie Mae (NYSE: ELLI) for $3.7 billion, or $99 per share (21% premium to yesterday's closing price). http://axios.link/JuTY

🚑 Veritas Capital and Elliott Management completed their $5.7 billion take-private buyout of healthcare software company Athenahealth. http://axios.link/NhQN

Liquidity Events

🚑 EQT Partners is planning to sell between a 20% and 25% stake in European veterinary services company IVC at a valuation north of €1.5 billion, per Reuters. http://axios.link/aTua

FLIR Systems (Nasdaq: FLIR) agreed to buy Endeavor Robotics, a provider of ground-based robotic systems to the U.S. military and other clients, from Arlington Capital Partners for $385 million. http://axios.link/gKvw

Grief (NYSE: GEF) acquired Caraustar Industries, an Austell, Ga.-based maker of paperboards, from H.I.G. Capital for $1.8 billion. http://axios.link/AUqz

SteelRiver Infrastructure Partners is seeking a buyer for Patriot Rail Co., a Jacksonville, Fla.-based rail operator that could fetch over $600 million, per Bloomberg. http://axios.link/cSvy

More M&A

KDDI (Tokyo: 9433) agreed to invest around $800 million for a minority stake in online securities company Kabu.com (Tokyo: 8703). http://axios.link/rVBZ

Fundraising

Equity Venture Partners of Australia raised A$35 million for its second fund. http://axios.link/zA33

InReach Ventures, a London-based VC firm that relies heavily on software for deal discovery and decision-making, raised €53 million for its debut fund. http://axios.link/Epa1

It's Personnel

Bao Dinh joined Idinvest Partners as an investment director. He previously was director of EMEA at HotelTonight. www.idinvest.com

Julie Hanna, a special advisor to Google (X) and executive chair of Kiva, has joined Obvious Ventures as a venture partner.

Dave MacDonald, former CEO of Softchoice, joined Leaders Fund as a venture partner.

Ashish Saboo joined growth equity firm General Atlantic as a managing director and head of a new Jakarta office. He previously led biz dev for CT CORPORA. www.generalatlantic.com

🚑 David Schenkein, former CEO of Agios Pharma (Nasdaq: AGIO), is joining GV as co-head of its life sciences investment group. http://axios.link/D8JT

Final Numbers
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Data: News reports; Chart: Harry Stevens/Axios

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Dan Primack