Feb 21, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

We made it to Friday — which means the weekend is almost here. But first, some news ... (And my never-ending reminder to send me your gossip, tips, and scoops at kia@axios.com or on Twitter @imkialikethecar even after Dan returns on Monday! 😏)

Top of the Morning

Illustration: Lazaro Gamio/Axios

While many tech companies are still apprehensive about going public and all the scrutiny that comes with that, ex-Glu Mobile CEO Niccolo de Masi just listed a special purpose acquisition corporation (SPAC) on the New York Stock Exchange, raising $200 million.

What’s next: De Masi, along with co-sponsor and former EMC executive Harry You, wants to create the next great mobile app-focused public company via this vehicle, he tells Axios. Think of it as Match Group, but for a different app category.

The big picture: “Game companies are often pioneers in various models,” says de Masi, a seasoned executive best known for heading Glu Mobile, the company behind Kim Kardashian’s mobile game, Kim Kardashian: Hollywood.

  • “Every other app category is probably three to five years, or maybe seven years behind on monetization and distribution sophistication.”

The duo is targeting companies that are either entirely based on a mobile app or mainly driven by one, and worth roughly $1 billion.

  • “I think the ideal business for us has nine figures of revenue, is breaking even or is profitable, and is looking to take growth to the next level,” de Masi says.
  • From there, the plan is to build out the company with additional apps and acquisitions.

Between the lines: A number of tech “unicorn” companies have struggled in the face of unforgiving public investors. But, de Masi argues that going public gives companies a lot of advantages.

"It’s very difficult to get private mergers done because no one knows what your stock is worth. It’s really hard to take a lot of risk on businesses on this stage without the 10 years of public earnings."
"I've always found the public markets to be really receptive to growth stage companies. ... I think the first people who IPO in these [mobile app] categories have a tremendous advantage of over their competitors. They can be in pole position to be the acquirers."
— Niccolo de Masi

Plus, he points to a number of recent high-profile SPAC deals, like Social Capital Hedosophia’s acquisition of Virgin Galactic and Diamond Eagle’s purchase of Draft Kings, as proof the industry is embracing the model.

The bottom line: Don't be surprised if more of these continue to crop up.

Also...

Scoop: Lyft has acquired Halocars, a small startup that lets ride-hailing drivers earn money via ad displays mounted atop their cars. Lyft confirmed the deal but declined to share any details.

  • Why it matters: Ride-hailing companies are increasingly eyeing additional ways to generate revenue, and Lyft rival Uber has been quietly testing a partnership with New York-based Cargo that gives it a cut of the advertising revenue, as I previously reported. (In fact, Cargo recently shut down its signature snack boxes business to focus on its nascent cartop ad displays.)
  • Halocars is still small, operating in a couple of U.S. cities, so Lyft appears to be largely focused on acquiring the team, which is likely joining its media division.

Woman on board: California passed a law in 2018 requiring all public company boards to have at least one woman. It appears the law is working at getting many of them to join boards, not just the same few, my colleague Courtenay Brown reports.

🎧 Podcast: The Wall Street Journal reported that Mike Bloomberg’s campaign is hiring people to post from their personal social-media accounts and send texts in support of Bloomberg to their contacts. Naomi is joined by Axios media reporter Sara Fischer to discuss these social media strategies and how platforms are responding. Listen here.

The BFD

Illustration: Rebecca Zisser/Axios

T-Mobile and Sprint announced a revised merger agreement that will see SoftBank getting a smaller share of the combined company, while most shareholders will receive the previously agreed upon exchange rate. The companies said they hope to get the deal as early as April 1.

  • Why it's the BFD: The amended deal reflects the decline in Sprint's business, while leaving most shareholders' stake intact and removing another hurdle to the deal's closure.
  • The bottom line: "The new deal comes after a judge rejected a challenge from a number of states that had sought to block the deal on antitrust grounds." —Ina Fried, Axios.
Venture Capital Deals

DigitalOcean, a New York-based cloud infrastructure company, has raised $100 million in debt from a group of investors. http://axios.link/Qt6e

Tier, a Berlin-based scooter company, has raised $40 million in additional Series B funding from RTP Global, Novator, and an unnamed U.S. debt fund. http://axios.link/RHRP

🚑 Q Bio, a San Carlos, Calif.-based quantitative, clinically-relevant assessment of personal human health, has raised $40 million in Series B funding led by Andreessen Horowitz. http://axios.link/xrYl

Volocopter, a Germany-based company that’s developing autonomous electric takeoff and landing (eVTOL) aircraft for commercial air taxi services, has raised €37 million ($40 million) in additional Series C funding from DB Schenker, Mitsui Sumitomo Insurance Group, TransLink Capital, Lukasz Gadowski, and Btov. http://axios.link/lI5W

At-Bay, a Mountain View, Calif.-based cybersecurity insurance startup, has raised $34 million in Series B funding led by Acrew Capital and Munich Re Ventures, with Khosla Ventures, Lightspeed Venture Partners, and Shlomo Kramer also participating.

Feather, a New York -based furniture rental service, has raised $30 million in Series B funding led by Cobalt Capital, with Spark Capital, Kleiner Perkins, Bain Capital Ventures, Y Combinator, SV Angel, PJC, Fuel Capital, and Wildcat Capital Management also participating. http://axios.link/8ASU

Leanplum, a San Francisco-based provider of customer engagement software tools, has raised a $27 million in additional Series D funding from Norwest Venture Partners, Shasta Ventures, Kleiner Perkins, Canaan, and Launchub.. http://axios.link/K70o

HungryPanda, a London-based food delivery service for Chinese communities, has raised $20 million in funding led by 83North and Felix Capital. http://axios.link/xPbZ

⛽️ Lilac Solutions, an Oakland, Calif.-based lithium mining technology company, has raised $20 million in Series A funding led by Breakthrough Energy Ventures with The Engine, Lowercarbon Capital, and The Grantham Foundation also participating. www.lilacsolutions.com

Teikametrics, a Boston-based startup that offers tools to brands and sellers on Amazon and Walmart, has raised $15 million in funding led by Jump Capital, with Granite Point Capital, Jerry Hausman, and Ed Baker also participating. www.teikametrics.com

DSP Concepts, a Santa Clara, Calif.-based voice recognition company, has raised $14.5 million in Series B funding led by Taiwania Capital, with BMW i Ventures, Sony Innovation Fund by IGV, MediaTek Ventures, Porsche Ventures and the ARM IoT Fund also participating. www.dspconcepts.com

Brace, a Los Angeles-based digital mortgage-servicing platform, has raised an additional $10 million in Series A funding led by Point72 Ventures, with Crosslink Capital and other existing investors also participating. www.brace.ai

Shogun, a San Mateo, Calif.-based drag and drop page builder for e-commerce websites, has raised $10 million in Series A funding led by Initialized Capital, with VMG Partners and Y Combinator also participating. http://axios.link/IaSB

Liquid Death, a Santa Monica, Calif.-based canned water company, has raised $9 million in Series A funding led by Velvet Sea Ventures, confirming a July Axios scoop. TechCrunch has more here.

🚑 Memed, a Brazil-based digital medical prescriptions company, has raised $4.5 million in Series B funding led by DNA Capital, with Redpoint eventures also participating. www.memed.com.br

Private Equity Deals

Ultimate Software and Kronos, both backed by Hellman & Friedman and Blackstone Group, are merging in a $22 billion, all-stock deal that creates a big new player in workplace-software products. http://axios.link/lAuK

Battery Ventures has agreed to acquire GRAS Sound & Vibration, a Denmark-based manufacturer of acoustic-measurement microphones. www.gras.dk

Battery Ventures has invested in Tech Soft 3D, a Bend, Oregon-based provider of software-development toolkits for companies that develop software for manufacturing and architecture, engineering and construction. www.techsoft3d.com

Credit Suisse’s NEXT Investors has acquired the NorthPoint product suite and technology consulting practice from ACA Compliance Group. http://axios.link/zTx9

Starlight Investments and KingSett Capital have agreed to acquire Northview Apartment REIT, a Canada-based real estate company, for $4.8-billion in an all-cash deal. http://axios.link/DKVq

Editor's note: The Ultimate Software-Kronos acquisition has been corrected to show it's $22 billion (not million).

Public Offerings

dMY Technology Group, a blank check company targeting a consumer internet or mobile app business, raised $200 million by offering 20 million units at $10. Each unit consists of one share of common stock and one-half of one warrant exercisable at $11.50. It plans to list on the NYSE under the symbol DMYT.U. Goldman Sachs and UBS Investment Bank are the joint bookrunners on the deal.

Uniasselvi, a Brazilian education company, has reportedly hired Goldman Sachs & Co, Morgan Stanley and Bank of America for a U.S. IPO at a valuation above $1 billion, according to Reuters. http://axios.link/tXxG

More M&A

HP said on Thursday it would implement a poison pill plan, as Xerox continues its efforts to acquire the company. The stockholder rights plan has a one-year expiration period and aims to stop investors from amassing more than 20% stake in the company. http://axios.link/Btl8

Fundraising

M33 Growth, a Boston-based venture and growth stage investment firm, has raised $260 million for its second fund. www.m33growth.com

It's Personnel

The Mississippi Public Employees’ Retirement System (PERS) has selected Robert Clark as its new chief investment officer. He was previously at Southeastern Trust Company. http://axios.link/lfMt

Final Numbers
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Source: FactSet; Chart: Axios Visuals
Dan Primack