Axios Pro Rata

December 02, 2024
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Top of the Morning
ServiceTitan is expected to be one of the very few "unicorns" to go public in 2024, with its IPO roadshow likely to launch within the next week.
- One reason is that ServiceTitan should go public. The tradesperson SaaS company was founded in 2007 and generated $614 million in revenue during its most recent fiscal year (31% YoY growth). Still no profits, but that's not been a traditional impediment for tech IPOs.
- Perhaps the bigger reason is that ServiceTitan needs to go public, due to an onerous antidilution term tucked into its Series H fundraising round led by TPG.
Zoom in: The term in question is a ratchet, which effectively would make TPG and other Series H invstors whole were ServiceTitan to go public below the Series H share price.
- This was common in ZIRP-era growth rounds, as startups were eager to maintain their inflated valuations (or at least most of them, since ServiceTitan was actually valued higher in its Series F and Series G rounds).
- This ratchet, however, compounds at 11% per year if ServiceTitan didn't go public within 18 months (i.e., May 2024).
To sum up: The lower the IPO price, the more shares go to Series H investors (and away from other existing shareholders). The longer ServiceTitan waits to go public, the wider that delta grows.
- It is, as venture capitalist Bill Gurley recently noted in a podcast, a massive misalignment of interests. Meritech Capital also published a smart breakdown of the math.
The big picture: Right now, the dilution impact is fairly minimal. But given the ratchet's compounding nature, that could change in a hurry were ServiceTitan to stay private longer.
What to watch: How many other compounding ratchet time bombs are out there in unicorn-land, and if that is what finally unclogs the IPO pipeline.
The BFD
Elon Musk on Friday filed for a preliminary injunction to stop OpenAI from transitioning into a for-profit entity, arguing that OpenAI might otherwise "lack sufficient funds" were the court to eventually rule in Musk's favor.
Why it's the BFD: OpenAI told investors in its recent $6.6 billion funding round that they could get their money back, upon request, if the structural switch isn't completed within two years.
Zoom in: Plaintiffs include Musk and xAI, while defendants include OpenAI, Sam Altman, Reid Hoffman, and Microsoft.
- In a statement, OpenAI called Musk's effort "utterly without merit."
Elsewhere: Fidelity's mutual funds marked up the value of their xAI shares by around 70% in October, which may have contributed to their 32% markup of X Holdings (fka Twitter) shares.
The bottom line: One of Musk's arguments is that OpenAI violated antitrust law by asking its investors to abstain from backing competitors, including xAI. If a court agrees, that could upend an unwritten rule of venture capital.
Venture Capital Deals
⢠Public, a New York-based investing platform, raised $105m in Series D-2 funding led by insider Accel. It also secured $30m in debt. axios.link/3CRgC9b
⢠Upwind, a cloud security startup, raised $100m in Series A funding. Craft Ventures led, and was joined by TCV, Alta Park Capital and insiders Greylock, Cyberstarts, Leaders Fund, Cerca, and Sheva. axios.link/4ggOzP9
⢠9fin, a London-based analytics platform for debt capital markets, raised $50m in Series B funding. Highland Europe led, and was joined by insiders Spark Capital, Redalpine, Seedcamp, 500 Startups, and Ilavska Vuillermoz Capital. axios.link/3VdoQib
⢠S.MPLE, a sales app for real estate brokers, raised $45m from Camber Creek and Left Lane Capital. axios.link/3Zv8cNE
š Predium, a German provider of ESG management solutions for real estate and finance, raised ā¬13m in Series A funding. Norrsken VC led, and was joined by insiders UVC Partners, b2venture, and Mutschler Ventures. axios.link/4geVUys
⢠Coding Giants, a Polish teacher of coding skills for kids and teens, raised ā¬8.5m led by True Global Ventures. axios.link/49jvoBG
⢠AnyKrowd, a Belgian provider of live event crowd management tech, raised ā¬4m in Series A funding led by Finance&invest Brussels. axios.link/4fXbaR6
š Darwin, a French provider of nature data analysis startup, raised ā¬1.5m led by AstĆ©rion. axios.link/3ZdrS7q
⢠Margarita Finance, a Solana-based platform for structured investment products, raised $1m in pre-seed funding from backers like Tomahawk VC and Outrun Ventures. margarita.finance
Private Equity Deals
⢠ABC Technologies, a Canadian portfolio company of Apollo Global Management and Oaktree Capital Management, agreed to buy British auto components supplier TI Fluid (LSE: TIFS) for £1.04b. axios.link/4ggs0tX
š Aster DM Healthcare, a listed Indian hospital operator, agreed to merge with Blackstone-backed Quality Care India. Aster will hold around a 57% stake in the combined entity. axios.link/49irCsg
š Astorg completed its take-private buyout of HamiltonĀ Thorne, and also bought the reproductive health business of Cook Medical. axios.link/3CNb4fV
š Avenue Sports FundĀ invested in Unrivaled, the new 3-on-3 women's basketball league. axios.link/3D3lisB
š CVC Capital PartnersĀ completed its $925m purchase ofĀ Therakos, a developer of extracorporeal photopheresis delivery systems for immunomodulatory therapies, from Ireland'sĀ Mallinckrodt.Ā mallinckrodt.com
ā” EQT and GIC agreed to buy a majority stake in British smart metering company Calisen for around ā¬4b from BlackRock, Goldman Sachs, and Mubadala. axios.link/4eU93Ml
⢠ESR Group (HK: 1821), a real estate fund manager, is in advanced talks to be taken private for over $7b, per Reuters. The buying group includes Starwood Capital Group, Warburg Pincus, Sixth Street, SSW Partners and Qatar Investment Authority. axios.link/3ZcOuFi
⢠Fortress Investment Group acquired Gyptech, a Canadian provider of gypsum wallboard and asphalt-shingle manufacturing equipment and services. gyptech.com
⢠FountainVest Partners and Unison Capital acquired Japanese jeweler Tasaki & Co. from MBK Partners for around $660m, per Bloomberg. axios.link/3OC1JKJ
⢠I Squared Capital made a takeover offer for Hong Kong broadband provider HKBN (HK: 1310), which is slightly above an earlier offer from China Mobile, per Bloomberg. axios.link/4eS0GkB
⢠Macquarie Asset Management offered to buy U.K. waste management company Renewi (LSE: RWI) for £701m. axios.link/4g3ZNXe
⢠Pacific Equity Partners agreed to buy the Australian business of Singapore Post, a listed postal and e-commerce logistics provider, for over US$650m. axios.link/3CPZL6W
⢠Qatar Investment Authority agreed to buy around a 30% stake in the Audi Formula One racing team. axios.link/416IQXM
⢠Telefónica (Madrid: TEF) said the sale of its Peru fiber optic network to KKR and Chile's Entel, first announced in July 2023, has collapsed. axios.link/49eUDFi
š· TPG is in advanced talks to buy a control stake in Vietnamese floricultural business Hasfarm at around a $500m valuation from backers like Lombard Investments, per Bloomberg. axios.link/3ZdXGZV
⢠Valsoft, a Montreal-based acquisition platform backed by Coatue Management and Viking Global Investors, bought Pinpoint Global, a U.K. provider of compliance management software for the financial services and health markets. valsoftcorp.com
Public Offerings
No companies are expected to price IPOs this week on U.S. exchanges.
š Alwatania, a Saudi poultry producer, hired BSF Capital to explore a sale that could fetch over $530m, per Bloomberg. axios.link/41fcIkS
⢠FineToday, a Japanese personal care products maker that's owned by CVC Capital Partners, postponed its Tokyo IPO due to "market conditions." axios.link/4geCkCx
⢠Nice One Beauty, a Saudi online cosmetics retailer, plans to raise up to $332m in a Riyadh IPO this year. axios.link/4gacFLh
Liquidity Events
⢠EQT sold British parcel delivery marketplace Parcel2Go to an undisclosed investor group. parcel2go.com
⢠Great Hill Partners sold Mission Cloud Services, a Beverly Hills, Calif.-based provider of cloud managed services and consulting, to CDW (Nasdaq: CDW). missioncloud.com
⢠ICAMAP and Ivanhoe Cambridge are in talks to sell U.K. budget travel company EasyHotel, which could fetch more than £400m, per Bloomberg. axios.link/3CUIysS
More M&A
⢠Direct Line Insurance Group (LSE: DLG) rejected a £3.28b takeover offer from Aviva (LSE: AV). axios.link/41bNtQ8
ā” GeoparkĀ (NYSE: GPRK) agreed to buy oil and gas production assets in Colombia from RepsolĀ (Madrid: REP) for $530m. axios.link/3CRpDiR
⢠Heidelberg Materials of Germany agreed to buy Virginia-based cement producer Giant Cement for around $600m. axios.link/4f1DjEZ
⢠Holcim, the listed Swiss cement giant, agreed to sell its Nigerian business to China's Huaxin Cement Co. for $1b. axios.link/3CU3NuT
⢠Ipsos (Paris: ISOS) is considering a takeover offer for Kantar's TV ratings data, per Reuters. axios.link/41cq4y9
⢠Middleby (Nasdaq: MIDD) acquired Gorreri, an Italian maker of baking equipment. axios.link/4eUAxSc
⢠Nebius Group (Nasdaq: NBIS), a Dutch AI infrastructure company, secured a $700m private placement from an investor group that includes VC firm Accel, Nvidia, and Orbis Investments. axios.link/49fCqHE
⢠Northern Star Resources (ASX: NST) agreed to buy rival Australian gold producer De Grey Mining (AXX: DEG) for around A$5b. axios.link/49flBg4
⢠Supreme (LSE: SUP) bought U.K. tea brand Typhoo Tea out of bankruptcy for £10.2m. axios.link/41dsxZb
Fundraising
⢠Outliers VC is raising up to $60m for its second fund, per an SEC filing. outliers.vc
⢠Swish Ventures, led by former NBA player Omri Casspi, raised $60m for a new seed fund. axios.link/3OxmRBT
It's Personnel
⢠Otto Donner joined Nuveen Private Capital as head of Nordics biz dev. He previously was with M&G Investments. axios.link/41kzF5U
⢠Piyush Gupta launched Kenro Capital, a growth secondaries firm focused on Southeast Asia. He previously was head of strategic development at Peak XV (fka Sequoia India). axios.link/3ZxbUGE
⢠Sriram Krishnan is stepping down as a partner with a16z after three years. He previously was in senior product positions at Twitter and Snap. axios.link/49eonSG
Final Numbers: U.S. IPO proceeds

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