Jan 22, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

Zynga founder Mark Pincus is raising up to $700 million for a new investment fund that will focus on publicly-traded tech companies in need of strategic restructuring, Axios has learned.

  • It's called Reinvent Capital, and Pincus is being joined by veteran hedge fund manager Michael Thompson (ex-BHR Capital).
  • Also involved as a senior advisor is Reid Hoffman, although this is not expected to affect his full-time job as a general partner with VC firm Greylock. Expect him to only spend around one day per month on Reinvent business, with Pincus and Thompson making all of the investment decisions.
  • Pincus, Thompson and Hoffman each are committing $33 million toward the $700 million target. Hoffman's investment (and any subsequent returns) is coming via his family foundation.
  • The strategy is to invest in between seven and fifteen Internet, software and media companies that Reinvent believes it can help steer in a smarter direction. This is mostly expected to mean working with company founders, as Pincus is part of the founder-friendly club that doesn't believe in becoming adversarial.
  • It appears to be company size agnostic, willing to work with small, medium and large-cap companies.

The big question, of course, is if investors will decide that Pincus is qualified to lead such a strategy.

His argument will be that he built Zynga into a social gaming powerhouse with over $1 billion in annual revenue, and that he later returned to help right a ship that had been severely maimed by Facebook. And he'll have numbers to back that up, as Zynga is now profitable and four straight years of increased revenue (expected to be around $900m for 2018). Plus, the stock is up over 50% from when he returned as CEO.

The counterargument, of course, will be that Pincus was in charge when Zynga became over-reliant on Facebook in the first place, and that the stock bump still only brings the company to $4.26 per share — versus an IPO price of $10 per share.

Pincus declined comment, due to SEC restrictions.

More fundraising: Andreessen Horowitz is in market with a pair of new funds, per LP sources.

  • The first is a $750 million-targeted early-stage vehicle, which we previewed last year.
  • The other is a growth-stage fund that will primarily support investments out of the firm's early-stage, bio and crypto funds. Its target is $1.5 billion, but word is that it could top out at $2 billion.

🎧 Pro Rata podcast: We'll focus today's episode on the point -- or perhaps pointlessness -- of Davos, with the episode expected to hit just before noon EST. In the meantime, we've put all the prior podcasts in one easy-to-browse stream. Take a look.

The BFD

Photo by Omar Marques/SOPA Images/LightRocket via Getty Images

Elliott Management is urging eBay (Nasdaq: EBAY) to restructure itself, including by possibly separating both StubHub and Classifieds from its core Marketplace platform. Elliott currently has around a 4% stake in eBay.

  • Why it's the BFD: Because what Elliott wants, Elliott often gets. Particularly when its target is in the tech sector. That's why eBay shares are up over 8% in early Tuesday trades.
  • Caveat: Again, emphasis on tech sector. Just before hitting send this morning, Elliott target Arconic announced it's no longer for sale. Expectations had been that Apollo Global Management was just days away from making a $10 billion offer with Elliott as a co-investor.
  • Bottom line: "Despite its remarkable history as one of the world's largest e-commerce platforms, eBay as a public-company investment has underperformed both its peers and the market for a prolonged period of time." — Elliott letter to eBay
Venture Capital Deals

🚑 The Pill Club, a San Francisco-based online birth control prescription and delivery service, raised $51 million in Series B funding. VMG led, and was joined by GV, ACME Capital and return backers Base10 and Shasta Ventures. www.thepillclub.com

Dosh, a card-linked offer platform based in Austin, Texas, raised $40 million in Series B funding ($20m equity, $20m debt). Goodwater Capital and Western Technology Investment co-led, and were joined by PayPal, BAM Capital and Anthem Venture Partners. www.dosh.cash

Beeswax, a New York-based “bidder-as-a-service” platform, raised $15 million in Series B funding from RRE Ventures, The Foundry Group, Amasia and You & Mr Jones. www.beeswax.com

🚑 Kaia Health, a German maker of a digital health app for treating back pain, raised $10 million led by Balderton Capital. http://axios.link/IWAX

TaxScouts, a British tax prep startup, raised £1.2 million in seed funding led by SpeedInvest. http://axios.link/y1xe

Private Equity Deals

🚑 Advent International and Cinven are teaming on an offer for Nestle’s (SWX: NESN) skin health unit, which could be valued at around $7 billion, per Reuters. Other PE firms also are expected to bid. http://axios.link/wcKO

Fortress Investment Group agreed to sell 26 hypermarkets and supermarkets from Casino (Paris: CASP) for upwards of €542 million (including €392m upfront). http://axios.link/L2Zk

The Greek government shortlisted two suitors for a 50.1% stake in Hellenic Petroleum, which could fetch over €1 billion per the FT. One bid came from The Carlyle Group and Glencore, while the other from Vitol and Sonatrach. http://axios.link/cZed

Gryphon Investors acquired RoC Skincare, an anti-aging skincare brand, from Johnson & Johnson (NYSE: JNJ).

Perforce Software, a Minneapolis-based portfolio company of Clearlake Capital Group, agreed to buy Rogue Wave, a Louisville, Colo.-based provider of cross-platform software developer tools and embedded components. www.perforce.com

San Francisco Equity Partners acquired a majority stake in Jane Iredale, a Great Barrington, Mass.-based makeup and skincare company. www.janeiredale.com

Public Offerings
Source: Giphy

🚑 Avedro, a Waltham, Mass.-based maker of ophthalmic devices for treating corneal ectatic disorders, filed for an $86 million IPO. It plans to trade on the Nasdaq (AVDR) with BofA Merrill Lynch as lead underwriter. The company reports a $19 million net loss on $19 million in revenue for the first nine months of 2018, and has raised over $225 million from firms like OrbiMed (35.7% pre-IPO stake), InterWest Partners (22.7%), HealthQuest Partners (10.7%) and De Novo Ventures (5.9%). www.avedro.com

TheRealReal, a San Francisco-based luxury consignment startup, is talking to bankers about a possible 2019 IPO, per Reuters. The company has raised over $280 million in VC funding from firms like PWP Growth Equity, Sandbridge Capital and Great Hill Partners. http://axios.link/QKuK

More M&A

Autogrill (Milan: AGL) offered to buy the railway, motorway and airport catering business of Elior (Paris: ELIOR), per Reuters. Private equity firms, including KKR and Lone Star Funds, also are considering bids. http://axios.link/TZM8

• Bridgestone (Tokyo: 5108) agreed to buy the fleet management unit of TomTom (Amsterdam: TOM2) for €910 million. http://axios.link/3aNN

• Elliott Management is pushing Telecom Italia (Milan: TLIT) to spin off its fixed-line network. http://axios.link/YxJj

🐄 Groupe Lactalis, the French dairy giant, agreed to buy India’s Prabhat Dairy for around $238 million. http://axios.link/mAPf

• Knotel, a New York-based flexible office space operator, acquired Deskeo, a Paris-based office space rental company. Knotel has raised nearly $100 million from firms like Norwest Venture Partners and Bloomberg Beta. http://axios.link/WqEL

• The London Stock Exchange (LSE: LSE) is considering a takeover offer for the Oslo bourse, which already has a $729 million bid from Euronext (Paris: ENX), per Reuters. http://axios.link/JJAI

• Tilray (Nasdaq: TLRY) agreed to buy Canadian cannabis producer Natura for up to C$70 million.

Fundraising

• Axa Venture Partners, the early-stage VC unit of insurer Axa, announced a €130 million second fund. http://axios.link/YUB5

NGP Energy Capital Management raised just over $4 billion for its twelfth private equity fund focused on the oil and gas market, per the WSJ. http://axios.link/OQGI

It's Personnel

Jeff Fluhr, co-founder and former CEO of StubHub, joined Craft Ventures as a general partner. www.craftventures.com

Final Numbers: European VC activity
Source: PitchBook
Dan Primack