Axios Pro Rata

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November 28, 2023

🤖 Axios AI+ Summit begins at 10am ET today, live from Washington, D.C.

  • Guests include former Google CEO Eric Schmidt, Sen. Amy Klobuchar (D-Minn.), Sen. Todd Young (R-Ind.), Homeland Security Secretary Alejandro Mayorkas, SoundExchange CEO Michael Huppe, and Humane Intelligence CEO Rumman Chowdhury.
  • Livestream here.

Top of the Morning

Illustration of a traffic light with three green lights.

Illustration: Aïda Amer/Axios

A key question for U.S. dealmakers in 2024 will be if they continue to prioritize what Americans say about the economy over how they actually behave. Words vs. actions.

The big picture: Investors and bankers like to think of themselves as sober number crunchers, buoyed by just a bit of hunch and pattern recognition. But the truth is that they're heavily influenced by the sentiments of friends and family who populate gloomy polling data (i.e., where animal spirits go to die).

  • A result has been weak deal activity in 2023.
  • VC disbursements into U.S. companies are down 35% year-over-year, through the end of Q3. Private equity value for U.S. deals is off 36% year-over-year, through last Thursday, while overall U.S. M&A volume fell 11%. The 2023 IPO market has been busier than it was in the dregs of 2022, but still just a fraction of 2020 or 2021 activity.

Zoom in: Some of the slowdown can be attributed to dealmakers spending more time with existing portfolio companies, particularly the ones for which they overpaid in the post-pandemic euphoria.

  • Some can also be attributed to private market fundraising concerns, as rising rates led some LPs to reassess their allocation strategies.
  • But, again, fear has played a crucial role. If things are rotten, why bite into new apples?

Reality check: The U.S. economy is objectively strong, with the latest data points being record-breaking Black Friday and Cyber Monday spending (including net-new demand, not just higher prices).

  • Mix in a sizzling GDP report, continued job growth, and a boom month for stocks. Even inflation is cooling a bit, and most Fed watchers expect rate cuts beginning next summer.
  • Sure there are concerns, particularly when it comes to geopolitics, but that's kind of an eternal reality. Perfect being the enemy of the good, etc.

The bottom line: Dealmakers get mulligans for 2023. Come January, however, the pressure begins to rise.

The BFD

Animated illustration of a roomba moving toward a wall that looks like the European Union flag and hitting it three times.

Illustration: Brendan Lynch/Axios

The European Commission yesterday objected to Amazon's (Nasdaq: AMZN) proposed $1.7 billion acquisition of Roomba maker iRobot (Nasdaq: IRBT), saying it could restrict competition in robotic vacuum cleaners.

Why it's the BFD: This is whiplash for iRobot shareholders.

  • Reuters last week reported that the deal would receive unconditional EC support, sending iRobot shares up 39% to an all-time high. But then the EC actually spoke, driving the stock down by 25%.

Details: Amazon can reply to the EC, including via an oral hearing, with the Commission to make a final decision by Feb. 14.

  • U.K. officials signed off over the summer, while the U.S. FTC continues to investigate.

The bottom line: Amazon is one of the world's most acquisitive companies, and hasn't yet had a deal formally blocked by antitrust regulators.

Venture Capital Deals

Alpheya, an Abu Dhabi-based wealth tech startup, raised $300m from BNY Mellon and Lunate. https://axios.link/3sTba14

ZeroAvia, a Hollister, Calif.-based developer of hydrogen planes, raised $116m in Series C funding from UK Infrastructure Bank, Airbus, Barclays and Saudi Arabia's Neom. https://axios.link/3N4wHux

Pika Labs, an SF-based text-to-video platform, raised $55m. Lightspeed Venture Partners led, and was joined by Homebrew, Conviction Capital, SV Angel, Ben's Bites, Adam D'Angelo, Nat Friedman, and Alex Chung. https://axios.link/3SVYhOp

Candex, a New York-based procurement management platform, raised $45m in Series B funding. Goldman Sachs led, and was joined by WiL. https://axios.link/46AEzL6

🌎 One Click LCA, a Helsinki-based decarbonization platform for the construction and manufacturing industries, raised €40m from PSG Equity and InfraVia. https://axios.link/3uul5ui

Second Front Systems, a provider of national security software, raised $40m in Series B funding. NEA led, and was joined by insiders Moore Strategic Ventures and AEI HorizonX. www.secondfront.com

🚑 Cradle, a startup that uses generative AI to design proteins, raised $24m in Series A funding. Index Ventures led, and was joined by Kindred Capital. www.cradle.bio

Advanced Electric Machines, a British electric powertrain developer, raised £23m. Legal & General Capital and Barclays Sustainable Impact Capital co-led, and were joined by Par Equity, Northstar Ventures, the Low Carbon Innovation Fund and Turquoise Capital. https://axios.link/47SWBcA

🚑 Lassie, a Stockholm-based pet health and insurance app, raised €23m in Series B funding. Balderton Capital led, and was joined by insiders Felix Capital, Inventure, Passion Capital and Philian. https://axios.link/3uwi1xL

Scapia, an Indian travel credit card startup, raised $23m in Series A funding. Elevation Capital and 3State Ventures co-led, and were joined by Matrix Partners India and Tanglin Venture Partners. https://axios.link/40THoG7

Hexa, a Paris-based startup studio, raised €20m from local founders and family offices. https://axios.link/47E9vf6

Hololight, an Austrian provider of XR streaming software, raised $12m. Flatz Hoffmann led, and was joined by EnBW New Ventures, Bayern Kapital, and Future Energy Ventures. https://axios.link/411dIGQ

🚑 Local Infusion, a Concord, N.H.-based infusion services provider, raised $10m in Series A funding. Blisce led, and was joined by Meridian Street Capital. https://axios.link/3RhdXdP

Augment, a French online provider of MBA-like programs, raised $6m in seed funding. RTP Global led, and was joined by Motier Ventures, Origins Fund, Kima Ventures, Bpifrance and Financière Saint James. https://axios.link/3Gm3gR4

CoordinateHQ, a Redwood City, Calif.-based project management system for client service organizations, raised $5.5m in seed funding. Initialized led, and was joined by Webb Investment Network. www.coordinatehq.com

🌎 ClimateAlpha, a Singaporean provider of climate volatility software, raised $5m in seed funding led by Jungle Ventures. https://axios.link/3sQMTZq

HumanForest, a British e-bike sharing network, raised a £5m in Series A extension funding from Güil Mobility Ventures, Fen Ventures and Triodos Bank UK. https://axios.link/47yFhKg

Vimcal, a San Diego-based calendar app, raised $4.5m in seed funding from Altos Ventures. https://axios.link/3MYUUCj

Harness Therapeutics, a British biotech focused on neurodegenerative diseases, raised £4m from insiders like Takeda Ventures. www.harnesstx.com

Wind, a Singapore-based smart contract wallet, raised $3.8m in pre-seed funding. Global Founders Capital and Spartan Group co-led, and were joined by Saison Capital, Alumni Ventures and Tiny VC. https://axios.link/4102CSv

Birdseye, a Toronto-based e-commerce AI startup, raised US$3m from Drive Capital. www.birdseyeglobal.com

Inflow, a Vietnamese platform that connects small fashion brands with manufacturers, raised $2m in seed funding from 500 Global, AppWorks, January Capital, Spiral Ventures and Saison Capital. https://axios.link/49TEk0G

Naarea, a French nuclear power startup, is seeking €150m in new VC funding, per Bloomberg. https://axios.link/40ZogXd

Private Equity Deals

Ardian agreed to buy Verne Global, a data center operator in the U.K. and Nordic countries, from Digital i9 Infrastructure for $575m. https://axios.link/47NhmGw

Conductive Containers, a New Hope, Minn.-based portfolio company of Great River Capital Partners, acquired Crestline Plastics, an Albuquerque, N.M.-based maker of thermoformed packaging for optical components. www.corstat.com

EQT agreed to buy a majority stake in HRBrain, a Tokyo-based provider of HR management software that had raised around $15m in VC funding from firms like Eight Roads. https://axios.link/3RiP2q8

E Source, a Boulder, Colo.-based portfolio company of Align Capital Partners, acquired UMS Group, a Parsippany, N.J.-based utility management consultant. www.esource.com

Foxtrot agreed to merge with fellow Chicago-based food retailer Dom's Kitchen & Market. Foxtrot backers include Monogram Capital Partners, D1 Capital Partners, Fifth Wall, Wittington Ventures and Imaginary Ventures, while Dom's investors include Valor Equity Partners and Cleveland Avenue. https://axios.link/4a6qLv4

Lightyear Capital invested in Inszone, a Rancho Cordova, Calif.-based insurance brokerage. www.inszoneinsurance.com

Norwest Equity Partners acquired United Sports Brands, a portfolio of sporting goods and active lifestyle brands like Shock Doctor, from Bregal Partners. www.unitedspb.com

Paceline Equity Partners invested $50m into Kelso Industries, a Phoenix-based provider of HVACR installation and maintenance services. Existing Kelso backers are Oxbow Equity Partners and Peterson Partners. www.kelso-industries.com

RoadSafe Traffic Systems, a Romeoville, Ill.-based portfolio company of Trilantic North America, acquired Dobie Supply, an Austin, Texas-based provider of traffic control devices and roadway signage. www.roadsafetraffic.com

TJC agreed to buy Global Transport Solutions, a Dutch provider of supply chain and forwarding solutions for the maritime industry. www.globaltransportsolutions.com

TJC agreed to acquire the commercial aviation solutions business of L3Harris (NYSE: LHX) for upwards of $800m ($700m upfront). https://axios.link/46CDQcm

🚑 Unlock Health, a Nashville-based portfolio company of Amulet Capital Partners, acquired SPM Group, a network of health and health care agencies, from Corridor Capital. www.unlockhealthnow.com

Public Offerings

Shein, the Chinese fast-fashion group most recently valued by VCs at $66b, reportedly filed confidential paperwork for a U.S. IPO. https://axios.link/3MZErxZ

SPAC Stuff

Veea, a digital transformation company, agreed to go public at an implied $281m enterprise value via Plum Acquisition 1 (Nasdaq: PLMI), a SPAC whose exec chair is former Xerox CEO Ursula Burns. https://axios.link/49UXFhU

Liquidity Events

Berkshire Hathaway sold its 2.5% stake in Indian mobile payments firm Paytm for $164m, taking a more than 35% loss on its investment. https://axios.link/3sRaKbA

Castlelake, a Minneapolis-based private equity firm with $22b in AUM, is exploring a sale, per Bloomberg. https://axios.link/47vfi6v

More M&A

🚑 Aster DM Healthcare, an India-based hospital operator, agreed to sell its Gulf business for $1.01b to Alpha GCC Holdings. https://axios.link/3N59J6F

Elliott Investment Management has amassed more than a $2b stake in Houston-based wireless tower owner Crown Castle (NYSE: CCI). https://axios.link/3RidJ6a

NomuPay, an Irish unified payments firm formed via the 2021 purchase of select WireCard assets, acquired Manchester, U.K.-based payment services provider Total Processing. NomuPay backers include Finch Capital and Outpost Ventures. https://axios.link/3uwFM9d

Fundraising

Norway's $1.5t sovereign wealth fund is again asking the country's finance ministry to add private equity to its investment strategy. https://axios.link/3QVzw2d

NXTP, a VC firm focused on early-stage B2B startups in Latin America, raised $98m for its third fund. https://axios.link/46PFlEt

Pantheon raised $3.25b for its seventh global private equity secondaries fund. www.pantheon.com

🌎 Peak Venture Advisors, an Indian VC firm focused on climate tech startups, is seeking $250m for its debut fund, per Bloomberg. https://axios.link/46zLqo7

Star Mountain Capital of New York raised $1.2b for its fourth direct lending fund (inclusive of $380m of debt facilities). https://axios.link/3Gku7Ni

Tower Arch Capital, a Salt Lake City-based midmarket PE firm, raised $750m for its third fund. www.towerarch.com

True North, an Indian PE firm, raised more than $120m for a private credit fund. https://axios.link/49YSiOI

🌎 Wave Equity Partners of Boston is targeting $400m for its third fund, focused on industrial decarbonization and sustainability startups, per Axios Pro. https://axios.link/49VS7DP

It's Personnel

Jonny Bauer, head of Blackstone's brand strategy group, is spinning out his full team to launch a brand agency that will include former J. Crew president Jenna Lyons as executive creative director. https://axios.link/41erial

Adam Gross (ex-Barclays) and Anne-Marie Peterson (Baird) joined ICG as managing directors in its North American private debt group. www.icgam.com

Growth Warrior Capital hired Rachel Baruch (ex-Anthos Capital) as a principal and promoted Alexa Payton to head of IR. www.growthwarriorcapital.com

Jamal Hammoud joined Churchill Asset Management and Arcmont Asset Management, units of Nuveen Private Capital, as a managing director and senior investment strategist. He previously was with Credit Value Partners. www.nuveen.com

Jeff Shell, former CEO of NBCUniversal, is in talks to join RedBird Capital Partners, per the WSJ. https://axios.link/47UhDrg

Final Numbers: Israel venture capital

Israeli VC breakdown pie chart.
VC investment in Israel-based startups from 10/7/23-11/27/23. Source: PitchBook

Venture capital investment in Israeli startups has slowed significantly in wartime.

  • Only 32 startups have raised rounds between Hamas' terrorist attack on Oct. 7 and yesterday, totaling $543 million, per PitchBook data.
  • That's well below the 85 companies raising $945 million during the same period in 2022, and the 63 companies raising $808 million during the 52 days prior to Oct. 7, 2023.

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