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July 08, 2019

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Top of the Morning

A group of quarters showing thee ‘heads’ side and on showing the ‘tails’ side.

Credit: Lazaro Gamio/Axios

Massachusetts lawmakers are considering a proposal that would extend anti-discrimination laws to venture capital investment decisions.

  • The goal is to increase the pitiful percentage of VC dollars disbursed to women and minority-led startups, which often are hampered by systemic "pattern matching" and "old boy networks" within the white male-dominated industry.
  • Laws against discriminating on the basis of gender or race already are on the Massachusetts books when it comes to employment, including within VC firms, but not when it comes to investments.
  • Yes, this is exactly as thorny as it sounds, perhaps proving that the road to headaches are paved with good intentions. In short: How would founders prove they didn't get an investment because of gender or racial discrimination, save for some sort of smoking gun? So many VC deals are more about gut feeling than anything else, with investors turning down the vast majority of opportunities.
  • Perhaps plaintiffs could make their case via statistical percentages, aided by discovery, but it's hard to imagine a startup founder wanting to spend her valuable time, resources, and reputation on such an endeavor.
    • It also could raise the legal liabilities for Massachusetts VC firms, thus making LPs less likely to fund the local ecosystem.
    • A local VC trade group also argues that the law could make VC firms less likely to take meetings with female and minority founders, for fear of being sued if they don't do the deal. But that seems fairly remote ⁠— again because it's not likely in a founder's interest to sue, save for explicit cause, and because not taking the meeting could open up the same potential liability

The proposal also would extend anti-sexual harassment rules to investor-founder interactions, which is a much more sensible policy and one that was recently applied in California.

  • Send me your thoughts on this. We (hopefully) can all agree on the problem. Am I off-base in not considering this to be the best solution?

Canary watch: VC investment in Chinese companies cratered in the second quarter, with Preqin reporting that the year-over-year value fell by 77% and that the number of deals was halved.

New fund alert: 3L Capital tells Axios that it's raised $217 million for its debut fund, which will make growth equity investments in consumer and enterprise tech companies.

  • The co-founders are Shawn Colo (co-founder & ex-CEO of Demand Media), Dave Leyrer (founder of hedge funds Nexus Group and Boulevard Capital Management), and Kerry Kellogg (co-founder of RSE Ventures).
  • 3L's sweet spot are Series B/C opportunities that are too big for traditional VCs (and too small for traditional growth funds), or where those VCs need an outside lead to price rounds done by their "opportunity funds."
  • It launched around 18 months ago, and used a warehousing facility to already invest around $100 million into companies like TheRealReal, Smile Direct Club, goPuff, SnackNation and ChowNow. The idea was to prove out an early track record, and that the trio could work well together. All of those deals have been rolled into the fund.

🎧 Pro Rata Podcast focuses on why big business is jumping into a Supreme Court case over LGBTQ rights. My guest is Jon Winkereid, co-CEO of private equity giant TPG. Listen here.

  • We also did an episode on Nike's "Betsy Ross flag" controversy, including my chat with an Arizona Republic reporter on how the blow-back has imperiled a planned manufacturing plant near Phoenix. Listen here.


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WeWork is seeking to secure a credit line of between $3 billion and $4 billion, which could eventually expand to $10 billion, as first reported by the WSJ and confirmed by Axios.

  • Why it's the BFD: This reflects WeWork's belief that public market investors want to see safe passage to profitability.
  • Details: Talks are furthest along with Goldman Sachs and J.P. Morgan, but no final agreement is yet in place. If successful, the deal would effectively cancel WeWork's outstanding bonds (sold last spring). A company spokesman declined comment.
  • Bottom line: We often see companies go public in order to reduce their debt, but this may be the first time we've seen a company add debt to go public.

Venture Capital Deals

Soldo, a UK-based provider of multi-user spending accounts for businesses, raised $61 million in Series B equity and debt funding. Battery Ventures and Dawn Capital co-led the equity tranche, and were joined by Accel and Connect Ventures. SVB provided the debt.

🛴 Wind Mobility, a Berlin-based e-scooter startup, raised $50 million in Series A funding from return backers Source Code Capital and HV Holtzbrinck Ventures.

🛴 Dott, a European e-scooter startup, raised €30 million in Series A funding from EQT Ventures, Naspers Ventures, Axel Springer, Felix Capital, FJ Labs and U-Start Club.

Unifly, a Belgian provider of unmanned traffic management for drones, raised €17 million in Series B funding from Deutsche Flugsicherung, SFPI-FPIM, Terra Drone, QBIC and PMV.

Kyash, a Tokyo-based fintech startup that seeks to eventually become Japan’s first challenger bank, raised around $14 million in Series B funding co-led by Goodwater Capital and Mitsubishi UFJ Capital.

ShopShops, a platform that connects brick and mortar stores in the U.S. with consumers in China, raised $14 million in Series A funding, per an SEC filing. Backers include Union Square Ventures, Forerunner Ventures and TCG Capital.

The Nue Co., a New York-based nutritional supplements startup, raised $9 million in Series A funding. Waldencast led, and was joined by Unilever Ventures, Redo Ventures and Columbia Care.

🚑 Itch, a London-based pet wellness startup whose first product is a flea-care subscription service, raised £5 million from Seedcamp, Nigel Wray and YYX Ventures.

DigitalBridge, a UK-based home renovation software startup, raised £3 million led by Malven Capital Partners.

Private Equity Deals

Bregal Sagemount invested in Buyers Edge Platform, a Waltham, Mass.-based provider of procurement software, group purchasing, and data analytics to the food service industry. The deal also included debt from Goldman Sachs and AB Private Credit Investors.

CVC Capital Partners is in talks to buy the packaging tech unit of Germany’s Robert Bosch for upwards of €850 million, per the WSJ.

SoftBank Vision Fund received CFIUS approval for its $2.25 billion investment in GM-backed self-driving tech company Cruise.

Weber Automotive, a German maker of engine blocks and cylinder heads, filed for insolvency after a capital strategy disagreement between majority owner Ardian and the company’s family shareholders.

Public Offerings

Only two IPOs expected to price in the U.S. this week, both from blank check acquisition companies.

Dynatrace, a Waltham, Mass.-based application monitor software maker owned by Thoma Bravo, filed for a $300 million IPO. It plans to trade on the NYSE (DT) with Goldman Sachs as lead underwriter, and reports a $116 million net loss on $431 million in revenue for the year ending 3/31/19.

🚑 Fulcrum Therapeutics, a Cambridge, Mass.-based developer of rare disease therapies based on gene regulation, set IPO terms to 4.5 million shares at $16-$18. The pre-revenue company would have an initial market cap of $397 million, were it to price in the middle, and plans to trade on the Nasdaq (FULC) with Morgan Stanley as lead underwriter. It has raised around $140 million from Third Rock Ventures (43.2% pre-IPO stake), GlaxoSmithKline (9.5%) and Foresite Capital (8%).

Medallia, a San Francisco-based customer experience feedback platform, set IPO terms to 14.5 million shares at $16-$18. It would have an initial market cap of $2.07 billion, were it to price in the middle, and plans to trade on the NYSE (MDLA) with BAML as lead underwriter. The company reports a $2.6 million net loss on $94 million in revenue for Q1 2019, and raised over $330 million from firms like Sequoia Capital (40.7% pre-IPO stake).

🚑 Mirum Pharma, a Foster City, Calif.-based developer of treatments for cholestatic liver diseases, set IPO terms to 5 million shares at $14-$16. The pre-revenue company would have an initial market cap of $345 million, were it to price in the middle, and plans to trade on the Nasdaq (MIRM) with Citigroup as lead underwriter. It raised $120 million from NEA (20.8% pre-IPO stake), Deerfield Management (17.3%), Frazier Life Sciences (17.3%), Novo (10.4%), Shire (10.3%) and RiverVest (9%).

🚑 Phreesia, a New York-based provider of patient-intake software, set IPO terms to 7.81 million shares at $15-$17. It would have an initial market cap of $563 million, were it to price in the middle, and plans to trade on the NYSE (PHR) with JPMorgan as lead underwriter. The company reports a $7 million net loss on $28 million in revenue for Q1 2019, and raised around $119 million in VC funding from LLR Equity (23.85% pre-IPO stake), HLM Venture Partners (17.33%), Polaris Partners (14.52%), Ascension Ventures (10.77%), Echo Health Venture (9.01%), Blue Cross Blue Shield Venture Partners (7.8%) and VantagePoint Venture Partners (7.08%).

🚑 RAPT Therapeutics (f.k.a. FLX Bio), a South San Francisco-based biotech startup focused on cancer and inflammatory diseases filed for an $86 million IPO. It plans to list on the Nasdaq (RAPT) with BAML as lead underwriter. The pre-revenue company raised $176 million in VC funding from firms like The Column Group (34.7% pre-IPO stake), Kleiner Perkins (20%), Topspin Ventures (12.2%) and UC Regents (7.6%).

Sundial Growers, a Canadian cannabis producer startup, filed for a US$100 million IPO. It plans to trade on the Nasdaq (SNDLL) with Cowen as lead underwriter, and reports C$1.5 million in revenue for Q1 2019.

More M&A

Nexon Co. (Tokyo: 3659) founder Jungju Kim no longer plans to sell a majority stake in the South Korean gaming company, which could have been valued at around $16 billion. Interested suitors included Tencent and MBK Partners.


42Cap, a German seed-stage VC firm, raised €50 million for its second fund. LPs include EIF, KfW Capital and Isomer Capital.

Next Ventures, a VC firm co-founded by Lance Armstrong and Lionel Conacher (ex-Altamont Capital), has secured $25 million for its $75 million-targeted debut fund, per an SEC filing.

It's Personnel

Vittorio Colao, former CEO of Vodafone, joined General Atlantic as a special advisor.

Julius Baer Group named Philipp Rickenbacher as CEO, succeeding Bernhard Hodler.

Final Numbers

Data:; Chart: Axios Visuals
Data:; Chart: Axios Visuals

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