Oct 24, 2018

Axios Pro Rata

Pre-dawn greetings from Las Vegas, where later this morning I'll interview Grab Financial chief Reuben Lai and OVO CEO Jason Thompson, on the mainstage of Money 20/20. Here we go...

Top of the Morning
Illustration: Aïda Amer/Axios

I spent the past two days in Columbus, Ohio, speaking to entrepreneurs focused on different aspects of automation.

There's an old line about how manufacturers spend more on automation in economic boomtimes because they can afford to, and also spend more on automation in economic recessions because they have to.

But in Columbus I heard a different twist, most explicitly voiced by Bill Benson, head of R&D at metals manufacturer Worthington Industries, who said that much of his company's recent robotics investment is due to an inability to find enough skilled workers. In other words, it's about replacing jobs, but not necessarily replacing people.

On the docket: Hedge fund manager Keri Findley (ex-Third Point) last week filed a lawsuit against venture firm Core Innovation Capital, accusing it of effectively removing her from a portfolio company board after one of Core's partners (and Findley's former best friend), Kathleen Utecht, had an affair with her husband Peter (soon to be ex-husband).

  • The suit also alleges that CIC developed "an illicit trading model" for cryptocurrencies, related to the firm's investment in Ripple.
  • Findley is seeking both compensatory and punitive damages, related to alleged reputational harm and interference with her contractual relationship with the portfolio company (Mosaic Solar).
  • Core Innovation Capital hasn't replied in court yet, but firm founder Arjan Schutte did tell me on the record that no one at the firm has ever sold XRP, which is part of Findley's claim related to the crypto trading model.

• No Masa: SoftBank CEO Masayoshi Son didn't attend the FII conference in Saudi Arabia, but we've confirmed a Bloomberg report that he did fly to Riyadh to meet with Crown Prince Mohamad bin Salman prior to the event. He apparently wanted to "express his concerns" face-to-face, and was on a plane out of Saudi later the same day.

  • CNBC's Alex Sherman suggests that SoftBank could basically "quarantine" the Saudi money in Vision Fund, particularly if it begins to impact deal activity. It's an interesting idea, although I don't get any sense that it's being seriously considered. And least not yet.
  • We hear that Michael Marks, CEO of SoftBank Vision Fund portfolio company Katerra, still plans to speak at FII. The company hasn't responded to requests for comment.
  • Venture capitalist Jim Breyer, who told me last week he was "doing my best to evaluate the evidence," did appear on stage this morning to discuss emerging markets.
  • Breyer, an early investor and director at Facebook, noted that Silicon Valley companies haven't invested early enough in compliance and transparency, and "are now paying the price," adding that he now advises U.S. and Chinese startups to make such investments early in their lives.

• Public markets: Nasdaq CEO Adena Friedman this morning told CNBC that recent public equities volatility has not negatively impacted IPO plans for companies prepping floats through the end of 2018 or during the first half of 2019.

• Update: Kia reported in May that former Autodesk co-CEO Amar Hanspal had launched a stealthy manufacturing tech startup with around $200 million in funding. Yesterday it came out of stealth:

  • The name is Bright Machines, and it raised $179 million led by Eclipse Ventures. As Kia reported, it spun out of Flex.
  • Eclipse’s Lior Susan explains via blog post that it’s “a software-defined manufacturing company created to solve manufacturing challenges, end to end.”

🎧 Pro Rata Podcast: Our latest episode is about how autocrats have weaponized social media. Listen here.


Source: Giphy

K4Connect a Raleigh, N.C.-based provider of smart home and on-demand app integration for senior-living facilities, raised $12 million in Series B funding led by AXA Venture Partners. Founder and CEO Scott Moody previously founded a company (AuthenTec) that Apple bought to establish its TouchID technology.

  • Why it's the BFD: Because this is one of very few consumer tech startups aimed at America's fastest-growing demographic.
  • Bottom line: "There's a joke that San Francisco is the premiere assisted living community for millennials. You can sit there and have everything brought to you that you ever may need. We integrate technologies that have been targeted toward a younger demographic and make them work for older adults and people living with disabilities." — Scott Moody via CNBC
Venture Capital Deals

• GoEuro, a Berlin-based travel aggregator, raised $150 million from Kinnevik, Temasek and Hillhouse Capital. http://axios.link/oj8N

• Assent Compliance, an Ottawa-based provider of supply chain data management software, raised over US$100 million from Warburg Pincus. http://axios.link/cxxO

🚑 Stoke Therapeutics, a Bedford, Mass.-based developer of antisense oligonucleotide medicines, raised $90 million in Series B funding. RTW Investments led, and was joined by RA Capital Management, Cormorant Asset Management, Perceptive Advisors, Janus Henderson Investors, Redmile Group, Sphera Funds Management, Alexandria Venture Investments and return backer Apple Tree Partners. http://axios.link/610G

• Afiniti, a Washington, D.C.-based AI platform for matching customers with customer service agents, raised $75 million in Series D funding at a $1.6 billion valuation. It also secured $60 million in new debt. Backers include Global Asset Management, The Resource Group, Zeke Capital, Ivan Seidenberg and Fred Ryan. http://axios.link/RCFz

• Knotel, a New York-based flexible office space operator, raised $60 million. Norwest Venture Partners led, and was joined by return backers Newmark Knight Frank and Bloomberg Beta. http://axios.link/PAOj

• Envoy, a San Francisco-based office digitization startup, raised $43 million in Series B funding. Menlo Ventures led, and was joined by return backers Initialized Capital and Andreessen Horowitz. http://axios.link/uOGR

• Resolution Games, a Stockholm-based AR/VR gaming studio, raised $7.5 million in Series B funding at an $87.5 million valuation. MizZaa Ventures led, and was joined by GV, GP Bullhound, Fly Forever, David Helgason, Partech, Bonnier Ventures, Creandum and Sisu Game Ventures. http://axios.link/PsWz

• Ethic, a New York-based “sustainable” asset management platform for wealth advisors and institutional investors, raised $6.8 million from ThirdStream Partners, Nyca Partners, Kapor Capital and the Urban Innovation Fund. www.ethic.investments

• Teamable, a San Francisco-based provider of hiring software that leverages employee social networks, raised $5 million from Foundation Capital and return backers True Ventures and SaaStr Fund. It also purchased Simppler, a Redwood City, Calif.-based recruiting software startup that had raised around $6 million from firms like Norwest Venture Partners and Salesforce Ventures. http://axios.link/biIr

• Futrli, a British maker of business decision-making software, raised £4 million from e.ventures, Notion Capital and FirstMinute Capital. http://axios.link/VVjw

🚑 Raremark, a London-based rare disease data analytics platform, raised $3.9 million co-led by AlbionVC and Ananda Ventures. http://axios.link/3aEu

• Alpaca, a San Mateo, Calif.-based API stock brokerage for developers and bots, raised $3 million in seed funding from backers like Global Brain, Design for Ventures and Archetype. www.alpaca.markets

• Conductor, a Brazilian digital payments processing platform, raised an undisclosed amount of funding from Visa (NYSE: V). http://axios.link/5PEc

Private Equity Deals

Airtel Africa, the African subsidiary of India’s Bharti Airtel, raised $1.25 billion in pre-IPO funding from an investor group that includes Warburg Pincus, Temasek, SoftBank and Singapore Telecom. http://axios.link/P6yl

Bain Capital acquired Dealer Tire, a Cleveland-based provider of replacement tire and parts distribution for auto dealers, from Lindsay Goldberg. http://axios.link/D0s6

🚑 Bain Capital and Pfizer (NYSE: PFE) have formed Cerevel, a new Massachusetts biotech company focused on CNS disorders, with Bain committing $350 million and Pfizer contributing a portfolio of pre-commercial neuroscience assets. http://axios.link/8dJR

• Battery Ventures acquired SigmaTEK Systems, a Cincinnati-based maker of “nesting” products for fabrication and manufacturing companies. www.sigmanest.com

BC Partners, CVC Capital Partners and KKR are among those expressing interest in a buyout of French insurer April SA (Paris: APR), which is controlled by Evolem and has a market cap of around €560 million. http://axios.link/ebsq

🚑 Clearlake Capital invested in OnShift, a Cleveland-based provider of human capital management software to the long-term post-acute care market. www.onshift.com

• Exterior Plus, a Madrid-based portfolio company of H.I.G. Capital, acquired Impactmedia, a Barcelona-based shopping mall advertising company. www.impactmedia.es

• Palm Beach Capital invested in Blue Team, a Delray Beach, Fla.-based provider of disaster restoration and remediation services for the commercial sector. www.blueteamrestoration.com

🥨 Peak Rock Capital acquired Pretzels Inc., a Bluffton, Ind.-based maker of pretzels and other snack products. www.pretzels-inc.com

Public Offerings

• Cloudflare, a San Francisco-based web performance and security platform, hired Goldman Sachs to lead an IPO that could value it at more than $3.5 billion, per Reuters. The company has raised around $180 million, most recently at a $1.8 billion valuation, from firms like Fidelity, CapitalG, Microsoft, Baidu, NEA, Pelion Venture Partners, Venrock, Greenspring Associates, Union Square Ventures and Qualcomm Ventures. http://axios.link/fn5Q

🚑 Orchard Therapeutics, a British gene therapy startup that recently bought a drug portfolio from GlaxoSmithKline, set IPO terms to 13.3 million shares at $14-$16. It would have a fully-diluted market value of $1.4 billion, were it to price in the middle, and plans to trade on the Nasdaq (ORTX) with J.P. Morgan as lead underwriter. Shareholders include F-Prime (29.3% stake), GlaxoSmithKline (17.9%), Deerfield Management (6.7%), RA Capital Management and Venrock.

Liquidity Events

Aqua America (NYSE: WTR) agreed to buy Pittsburgh-based natural gas utility Peoples from SteelRiver Infrastructure Partners for $4.3 billion in cash. http://axios.link/QNRx

• Oracle (Nasdaq: ORCL) agreed to buy DataFox, a San Francisco-based provider of “predictive intelligence as a service” for business data. DataFox raised around $18 million from backers like Green Visor Capital, Goldman Sachs, Slack, GV and Cota Capital. http://axios.link/r4Xn

More M&A

Endeavor Energy Resources, a privately-held Texas oil producer, hired J.P. Morgan and Goldman Sachs to explore a sale that could fetch more than $10 billion, per Reuters. http://axios.link/pATy

• Kraft Heinz (Nasdaq: KHC) agreed to sell a portfolio of Indian products, including kid’s drink Compan, to Zydus Wellness, per Bloomberg. http://axios.link/krnv


• PineBridge Investments raised $880 million for a new private equity secondaries fund, with a focus on U.S. middle-market buyout funds.

• SP Capital, a new unit of SixPoint Partners, raised $200 million for a fund that will help fund spin-out private equity firms. It will be led by SixPoint’s senior principals, plus new managing director Jeff Lavoie (ex-Dyal Capital). www.sixpointpartners.com

• TuanChe, a Beijing-based online automotive marketplace, filed for a $150 million best-efforts IPO. It plans to trade on the Nasdaq (TC) with Maxim Group as lead underwriter, and reports around a $3.2 million net loss on $41 million in revenue for the first half of 2018. Shareholders include Highland Capital Partners.

It's Personnel

Alan Gershenhorn, former chief commercial officer for UPS, joined venture firm 8VC as an advisor. www.8vc.com

Emil Michael, former chief business officer at Uber, is doing advisory work for Coatue Management. He also is advising six startups, but Coatue is his only investment firm advisory relationship.

🚑 J.P. Morgan named Mike Gaito as co-head of healthcare investment banking, after Jeff Stute left for Perella Weinberg Partners. http://axios.link/kMIU

Terry Myerson, former head of Microsoft Windows, joined Madrona Venture Group as a venture partner and The Carlyle Group as an operating exec. http://axios.link/yonV

Final Numbers
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Chart: Economic Policy Institute; Chris Canipe/Axios