Axios Pro Rata

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November 02, 2023

⚖️ Situational awareness: A verdict could come as early as today in the fraud trial of FTX founder Sam Bankman-Fried.

  • This morning we're expecting the prosecution to rebut the defense's closing, and then the judge will give the jury instructions and send them on their deliberative way. Catch up here.

Top of the Morning

Illustration of a person holding money that is styled like a newspaper

Illustration: Eniola Odetunde/Axios

Long before the establishment of TC-to-VC, whereby TechCrunch reporters join venture capital firms, there was a robust pipeline of business journalists getting hired by hedge funds.

  • In most cases, these reformed wretches produced investment research. Maybe it was written better than what came from some of their new peers, but distribution remained very limited.
  • But now there's a new, VC-backed hedge fund that's promising to hire scores of former reporters, and publish all of their work. Even if that work doesn't result in new investments.

What to know: The upstart is called Hunterbrook, and its existence was first scooped by the FT earlier this week. I've since confirmed details in that story, and learned a few more.

  • The key here is that despite the involvement of media vets, including on the founding team and in its investor ranks, this is not a journalistic endeavor. Specifically, the "researchers" will not be speaking with sources inside of companies for the sake of discovering non-public information and then trading on such knowledge, because that would be a clear violation of securities regulations.
  • Instead, Hunterbrook researchers will need to rely on publicly available information, which likely means the new ranks will be stuffed full of open-source, big data journalists and individuals on the ground in geographies with relatively little traditional media coverage. Not sure if they'll also employ AI, but would be stunned if they didn't.
  • As the FT reported, the firm raised $10 million in seed funding from backers like Laurene Powell Jobs' Emerson Collective, the founders of RA Capital Management (where Hunterbrook CEO Nathaniel Brooks Horwitz once worked), Outside the Box Investments (including former WSJ editor-in-chief Matt Murray, who is advising Hunterbrook), and angels like David Fialkow (General Catalyst) and Marc Lasry (Avenue Capital).
  • It's also seeking up to $100 million for its debut hedge fund.

How it works: Hunterbrook will be take both long and short positions on equities, plus invest in other asset classes like commodities and derivatives.

  • Some investigations will focus on accounting, much as do traditional short-sellers like Hindenburg Research, but also into other areas of malfeasance (environmental, humanitarian, etc.).
  • A story will then be prepared, including fact-checking and legal compliance, before being turned over to a separate investment team to determine if there's a trade to be made before publishing.
  • One reason a story could publish without a trade is that the researcher uncovered non-public information (i.e., acted like a journalist).

Look ahead: It's unclear when the first stories will be published, although they've been working on some for at least the past couple months.

The bottom line: Hunterbrook is betting that media skill sets can help generate outsized returns, even if journalists are forced to leave their primary tool — sourcing — at the door.

The BFD

Illustration of a remote with a money button

Illustration: Aïda Amer/Axios

The Walt Disney Co. (NYSE: DIS) said that it will acquire the 33% stake in streaming service Hulu that's held by NBC Universal, a division of Comcast (Nasdaq: CMCSA), for at least $8.61 billion.

Why it's the BFD: Disney now has full ownership of Hulu, which it originally launched with three other media companies in 2007.

Details: The companies signed a put/call agreement in 2019 that could trigger this deal, valuing Hulu at a minimum of $27.5 billion. Comcast exercised its rights under that deal on Wednesday, thus prompting Disney's announcement.

  • An appraisal of Hulu will be done next year to determine if it's worth more than the $27.5 billion. If so, Disney could pay more.
  • Hulu will remain as a standalone product, although will share a lot of content with Disney+, while Comcast recently pulled much of its content from Hulu and redirected it to Peacock.

The bottom line: "Hulu was for many years the streaming equivalent of Frankenstein's monster, an emerging start-up backed by 21st Century Fox, NBCUniversal, Disney and Time Warner. They hoped that the shared ownership would make Hulu the streaming equivalent of Switzerland, a communal hedge against the rising power of the internet, but it proved to be an impediment." — Brooks Barnes, NY Times

Venture Capital Deals

🌎 Infinitum, an Austin, Texas-based maker of industrial motors, raised $185m in Series E funding. Just Climate led, and was joined by Galvanize Climate Solutions, NGP and insiders Alliance Resource Partners, Rockwell Automation, Riverstone Holdings, Chevron Technology Ventures, Cottonwood Technology Fund and Ajax Strategies. https://axios.link/47bUlNk

Atom Bank, a British digital challenger bank, raised £100m in a down-round from insiders BBVA, Toscafund and Infinity Investment Partners, per the FT. https://axios.link/3u2NXcN

Vespa.ai, a big data serving spinout from Yahoo, a portfolio company of Apollo Global Management, raised $31m in Series A funding from Blossom Capital. https://axios.link/3Spodlk

Matic, a Mountain View, Calif.-based developer of indoor robots for home cleaning, raised $30m co-led by Nat Friedman (GitHub), Daniel Gross (Cue) and John and Patrick Collison (Stripe). www.maticrobots.com

Cowbell, a Palo Alto, Calif.-based provider of cyber insurance for SMEs, raised $25m led by Prosperity7 Ventures. www.cowbell.insure

🚑 Genome Insight, a San Diego-based precision medicine startup focused on cancer and rare diseases, raised $23m in Series B extension funding from Samsung Ventures, Asan Foundation, SCL Group and Ignite Innovation. www.genomeinsight.net

Payroll Integrations, an Encinitas, Calif.-based SaaS for building financial wellness tools, raised $20m led by Arthur Ventures. https://axios.link/47eTCeb

Xage Security, a Palo Alto, Calif.-based provider of network intrusion security software, raised $20m in Series B extension funding from Piva Capital, March Capital, SCF Partners, Overture Climate Fund, Valor Equity Partners, Chevron Technology Ventures and Science Applications International. https://axios.link/3FFhLz5

Kuva Space, a Finnish hyperspectral imagery startup, raised €16.6m in Series A funding. Voima Ventures and Nordic Foodtech VC co-led, and were joined by Earth VC and Springvest. https://axios.link/3FDNYGZ

Govly, a Denver-based startup that helps companies find federal contract opportunities, raised $9.5m in Series A funding led by Insight Partners. https://axios.link/3FJaGNQ

Nu Quantum, a British quantum networking startup, raised £7m from Amadeus Capital Partners, IQ Captial, Expeditions Fund, Ahren Capital, Seraphim Capital, University of Cambridge, Martlet, Presidio Ventures backed by Sumitomo, NSSIF and Deeptech Labs. https://axios.link/3Spmts1

Modulus Labs, a Stanford, Calif.-based developer of "accountable AI with zero-knowledge cryptography," raised $6.3m in seed funding. Variant and 1kx co-led, and were joined by Floodgate, Inflection, Alliance, Bankless, Stanford Blockchain Builders and Global Coin Research. www.moduluslabs.xyz

🌎 Ambercycle, an LA-based recycled polyester startup, raised $5m from the VC arm of Taiwanese conglomerate Far Eastern Group, per Axios Pro. https://axios.link/3SkB883

EarlyBird, a Chicago-based investment gifting app, raised $4.5m in new seed funding from Ideo Ventures, 776 Ventures, Fiat Ventures, RareBreed Ventures, ResilienceVC, Sweater Ventures, Alumni Ventures, Goodwater Capital, Wintrust Bank, Lightspeed Scout Program and Parallel. https://axios.link/46Z2sgv

🚑 Jona, a Stamford, Conn.-based startup that uses AI to analyze gut microbiomes, raised $5m in first-round funding co-led by Breyer Capital and Meridian Street Capital. https://axios.link/3QFpKCp

Treads, a Park City, Utah-based car maintenance subscription service, raised $4.6m in seed funding. Mucker Capital led, and was joined by Kickstart Seed Fund, Peak Ventures, Royal Street Ventures and Convoi Ventures. www.treads.app

Bikmo, a British bicycle insurer, raised £3.4m in a Series A extension led by Puma Private Equity. https://axios.link/45VZsAh

FERO Payment Science, an Amsterdam-based online checkout startup, raised $3m in seed funding from Coatue, Volta Ventures and Antler. https://axios.link/3tZcwaV

Trips, a platform that helps content creators sell stakes in their IP, raised $2.5m in pre-seed funding. Shima Capital led, and was joined by Animal Capital, Blackwood Ventures, Serafund, Calligraphy Digital, and the Avalanche Ecosystem Fund. https://axios.link/47gpLlH

6AM City, a Greenville, S.C.-based local newsletter publisher, is in talks for a minority investment from Tegna, per Axios. https://axios.link/3Qia2eX

🌎 Captura, a Pasadena, Calif.-based developer of ocean-based carbon removal solutions, is raising up to $20m in new funding, per Axios Pro. https://axios.link/3sli5zG

Private Equity Deals

🎲 Affinity Interactive, a Las Vegas-based portfolio company of Z Capital Partners, sold Sparks, Nev.-based Rail City Casino to Truckee Gaming. www.railcity.com

Butterfly Equity invested in Pacifico Aquaculture, a Mexican sustainable aquaculture company. www.pacificoaquaculture.com

Core Industrial Partners invested in Century Box, a Methuen, Mass.-based provider of folding cartons for store-brand food and consumer products. www.centurybox.com

EagleTree Capital acquired MMGY Global, a Kansas City-based travel, tourism and hospitality marketing firm, from Peninsula Capital Partners. www.mmgyglobal.com

EQT has resumed efforts to buy Global Switch, a London-based data center operator owned by Chinese groups, per Bloomberg. A deal could be worth around $6.5b. https://axios.link/3G1pdEV

Greenbelt Capital Partners acquired Rosharon, Texas-based grid infrastructure company Saber Power Services from Oaktree Capital Management. https://axios.link/3tUel8S

MediaRadar, a New York-based portfolio company of Endicott Group and Thompson Street Capital Partners, acquired Vivvix, Kantar Group's North American advertising intelligence business, as first reported by Axios Pro. https://axios.link/45SfU4l

SailPoint Technologies, an identity security company owned by Thoma Bravo and Barton Technology Ventures, acquired Osirium, a British cybersecurity company. www.sailpoint.com

TJC (fka The Jordan Co.) completed its acquisition of a majority stake of DuPont's (NYSE: DD) resins unit, which it's renamed Delrin. The deal valued Delrin at $1.8b. https://axios.link/3FFmEYH

🚑 Wellcove/CHCS, a Pensacola, Fla.-based portfolio company of Teleo Capital, acquired AssuriCare, a Waltham, Mass.-based provider of electronic visit verification and nurse assessment software for insurers. www.assuricare.com

Public Offerings

Hamilton Insurance Group, a Bermuda-based insurer and reinsurer, set IPO terms to 15m shares at $16-$18. It would have a $1.9b fully diluted value, were it to price in the middle, plans to list on the NYSE (HG) and reports $1.2b in revenue for the 12 months ending June 30, 2023. Backers include Blackstone. https://axios.link/46Rxc31

Tiptree (Nasdaq: TIPT) said it plans to spin off specialty insurance unit Fortegra via an IPO. https://axios.link/47g6pgE

Liquidity Events

Ford (NYSE: F) agreed to buy Auto Motive Power, a Santa Fe Springs, Calif.-based provider of EV charging, battery management and power conversion solutions. AMP raised around $26m from firms like Hella Ventures, Helios Climate Ventures, Ecosystem Integrity Fund and Grimley Capital. https://axios.link/3QG6ODp

HubSpot (NYSE: HUBS) agreed to acquire Clearbit, an SF-based provider of business intelligence API tools that had raised around $17m from Bedrock Capital, Updata Partners, Battery Ventures and Cross Creek. https://axios.link/49kKqac

RedBird Capital Partners is considering a sale process for French soccer club Toulouse FC, per Bloomberg. https://axios.link/45W5rVJ

More M&A

Illustration of dollar bills on a roller coaster track.

Illustration: Shoshana Gordon/Axios

Six Flags (NYSE: SIX) is merging with fellow theme park operator Cedar Fair (NYSE: FUN) in a $2b, all-stock deal. https://axios.link/3SoDTVZ

Brookfield Infrastructure Partners agreed to buy most assets of bankrupt U.S. data center operator Cyxtera Technologies for $775m. https://axios.link/3seUzo0

Constellation (Nasdaq: CEG) completed its $1.7b acquisition of a 44% stake in a South Texas nuclear plant from NRG Energy (NYSE: NRG). https://axios.link/3spBn70

🚑 Gentiva, a unit of Kindred Healthcare (NYSE: KND), completed its $710m acquisition of ProMedica's home health, palliative, and hospice business. https://axios.link/3SrUhF1

Meter, an SF-based IT infrastructure startup, acquired Interval, an internal app and tools platform. Meter backers include Sequoia Capital, WndrCo, Lachy Groom and Sam Altman. www.meter.com

SiTime (Nasdaq: SITM) agreed to buy the clock products unit of Aura Semiconductor, and license its click IP, for $148m upfront and up to $120m in earnouts. www.sitime.com

Zurich Insurance Group (Swiss: ZURN) will pay around $487m for a 51% stake in the general insurance arm of India's Kotak Mahindra Bank. https://axios.link/3QexYQw

Fundraising

Bee Partners, an SF-based deep tech VC firm, raised $50m for its fourth fund. https://axios.link/49lFy4r

CIVC Partners of Chicago raised $870m for its seventh fund. www.civc.com

It's Personnel

Chris Inglis (ex-National Cyber Director) and Kiersten Todt (ex-CISA chief of staff) joined Ballistic Ventures as "federal advisors." www.ballisticventures.com

Taylor Oliver joined Cervin Ventures as a principal. He previously was with Plug & Play. www.cervinventures.com

Aly Love Simons left Goodwin to join Debevoise & Plimpton as a partner in the law firm's M&A group. https://axios.link/46RxJlx

Final Numbers

Source: Yahoo Finance; Chart: Axios Visuals
Source: Yahoo Finance; Chart: Axios Visuals

The IPO window appears to have closed just as quickly as it reopened.

  • All four major U.S. IPOs from September and early October are now trading below their offering prices.
  • Health care software provider Waystar just delayed an IPO road show that had been set to launch this week, while private equity firm CVC Capital Partners has postponed its Amsterdam listing.
  • One small bright spot could be Lexeo Therapeutics, a New York-based gene therapy startup focused on genetic cardio and CNS conditions, which is currently on the road with plans to sell 9m shares at $13-$15.

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