October 31, 2023

Top of the Morning

Photo illustration: Shoshana Gordon/Axios. Photo: Angus Mordant/Bloomberg via Getty Images

Sam Bankman-Fried wants the jury in his fraud trial to know one thing about his time as CEO of crypto exchange FTX: He was very, very bad at his job.

The big picture: SBF's defense strategy has centered on ignorance, except for times when he's been allowed to claim that he relied on the advice of counsel.

  • But it's not going well. Partially because SBF keeps trying to sound like the smartest guy in the room, and partially because he seems to believe the entire proceeding is beneath him.
  • At one point yesterday, SBF's defense attorney objected to a prosecutor's question, but SBF answered before the judge could rule. At another point, he adopted a mocking, infomercial-like tone when asked to read some FTX marketing copy.

Behind the scenes: Crystal Kim, co-author of the Axios Crypto newsletter, was at the courthouse yesterday, so I asked her for some thoughts:

  • "Going into the trial I felt that the biggest risk to Sam would be Sam running his mouth, and I've been pretty money on that point. Over and over again the prosecutor and judge had to stop Sam and ask him to just answer the question that was asked."
  • "I think Sam has hurt himself badly on the stand, but the jury doesn't really react to things. ... One juror everyone is watching extremely closely is this Stanford MBA who worked at Salomon Brothers, who might be best equipped to follow the money and maybe even give Sam the benefit of the doubt, but he has health issues so is constantly wearing a COVID mask. ... It's also important to understand that the jury skews much older and poorer than Sam and the other FTX witnesses."
  • "Something [the prosecutor] keeps circling is Sam's insistence that he didn't know that the 'allow_negative' code let Alameda [withdraw money despite not having any of its own], which seems bizarrely untrue given what other witnesses have testified to. But it's hard to prove what was or wasn't in his mind, so we're still waiting to see if he breaks under questioning on that."
  • "Sam doesn't seem sorrowful. I'd love to know if he was ever reprimanded by his parents and what that would have even looked like."

Look ahead: SBF was on the stand all of yesterday, with the prosecution expected to wrap up its cross-examination today. The jury is expected to receive the case by Friday, although it could stretch into Monday.

  • A reminder that even if he's found not guilty of defrauding FTX investors or customers, he still could get significant jail time if convicted of wire fraud.

The BFD

Illustration: Maura Losch/Axios

Treasury Wine Estates, a listed Australian wine producer whose brands include Penfolds, agreed to buy Paso Robles, Calif.-based Daou Vineyards for upwards of $1 billion (including $900 million upfront).

Why it's the BFD: This reflects Treasury's belief that U.S. wine consumers are moving upmarket, where producer margins are higher, and away from discount bottles.

  • It's also a doubling-down on a country in which Treasury has underperformed, including after its 2021 acquisition of Napa Valley's Frank Family Vineyards for $315 million.

The bottom line: "This looks like a sensible de-risking in the context of a world where Australian wine exports live and die at the whim of the Chinese government. The Chinese market might soon reopen for Penfolds, but it makes sense to own producers who are much less exposed to it." — Felix Salmon, Axios

Venture Capital Deals

QI Tech, a Brazilian banking-as-a-service startup, raised $200m in Series B funding. General Atlantic led, and was joined by insider Across Capital. https://axios.link/3FEuqlF

Shield AI, a San Diego-based developer of drone tech for the military, raised $200m at a $2.7b valuation. Thomas Tull's USIT and Riot Ventures co-led, and were joined by ARK Invest, Disruptive and Snowpoint. https://axios.link/46PPnG9

CMBlu, a German developer of solid-flow batteries, raised €100m from technology and construction firm Strabag. https://axios.link/3sbBzqu

🚑 SkyCell, a Swiss developer of medicine and vaccine transportation containers, raised $57m at a $600m valuation led by Catalyst. https://axios.link/46Vckbg

MangoBoost, a Bellevue, Wash.-based developer of energy efficiency software for data centers, raised $55m in Series A funding. MM Investment and Shinhan Venture Investment co-led, and were joined by Korea Development Bank, KB Investment, IM Capital, and Premier Partners. https://axios.link/3s4WJqr

Fibracast, a Canadian developer of membranes for water and wastewater treatment, raised C$44.6m in Series A funding. Cycle Capital led, and was joined by Export Development Canada. www.fibracast.com

Samara, a maker of tiny homes, raised $41m. Thrive Capital led, and was joined by 8VC, General Catalyst, New Legacy, Ron Conway's SV Angel, and Airbnb. https://axios.link/47csrAC

🚑 Imagine Pharma, a Pittsburgh-based developer of oral erythropoietin and GLP-1 receptor agonists, raised $32.5m in Series A funding led by IP Investors. www.imaginepharma.com

Funnel Leasing, a Tampa, Fla.-based provider of renter management software, raised $32m in Series B2 funding led by RET Ventures. www.funnelleasing.com

🚑 Neuros Medical, an Aliso Viejo, Calif.-based medical device company focused on chronic post-amputation pain, raised $25m from Trinity Capital, per Axios Pro. https://axios.link/3Qjt98v

Railsr, a British embedded finance startup, raised $24m from insiders D Squared Capital and Moneta VC, six months after becoming insolvent. https://axios.link/45QadE4

Wirepas, a Finnish IoT network, raised $22m. Highland Europe led, and was joined by Amalfi, IQT and insiders ETF Partners, KPN Ventures and Vito Ventures. https://axios.link/461N9CE

Triplebar, an Emeryville, Calif.-based developer of protein cultivation tech, raised $20m in Series A funding led by Synthesis Capital. https://axios.link/3tT6ybl

Charlie, an LA-based banking startup for people aged 62 and over, raised $16m in Series A funding (plus $7m in debt). TTV Capital led, and was joined by FPV and Better Tomorrow Ventures. www.charlie.com

Guidde, a Belmont, Calif.-based software documentation automation startup, raised $11.6m in Series A funding. Norwest Venture Partners led, and was joined by Entree Capital, Honeystone Ventures, Crescendo Ventures and Tiferes Ventures. https://axios.link/45VCFVl

Cambrium, a German startup focused on designer proteins, raised €11m. Essential Capital led, and was joined by SNR, Valor Equity Partners and HOF Capital. https://axios.link/3FDoY2n

🚑 Yuzu Health, a Pittsburgh-based health care OS, raised $5m in seed funding. Lachy Groom led, and was joined by Neo, Day One Ventures, Altman Capital, WndrCo and Browder Capital. www.yuzu.health

Circu Li-ion, a Luxembourg-based battery recycling startup, raised €4.5m led by BonVenture. https://axios.link/3QCmfg5

🚑 Almouneer, an Egyptian platform for treating diabetes and obesity, raised $3.6m in seed funding. Global Ventures led, and was joined by Proparco, Digital Africa and Wrightwood Investments. https://axios.link/3Mjz7VW

Montinutra, a Finnish startup converting forest industry waste into biochemicals, raised €2m led by Metsä Spring. https://axios.link/3tURCJV

Bitstamp, a London-based crypto exchange, is seeking to raise $50 million, per Axios Pro. https://axios.link/3MmSw8j

Private Equity Deals

Blackstone and Vista Equity Partners agreed to buy Energy Exemplar, an Australian provider of energy market software, from The Riverside Co. https://axios.link/479Thtk

Carlyle launched Farmfront Group, a global platform of irrigation providers. It will include portfolio companies Ocmis Group, Irrimec, Otech, and RKD. www.carlyle.com

Cloyes, a Fort Smith, Ark.-based portfolio company of MidOcean Partners, acquired Rotomaster, a Mesa, Ariz.-based maker of turbochargers. www.cloyes.com

KKR completed its $1.62b takeover of book publisher Simon & Schuster from Paramount (Nasdaq: PARA). https://axios.link/47fzuZF

Madison Dearborn Partners acquired Shaw Development, a Bonita Springs, Fla.-based maker of sensors and fluid management systems for diesel exhaust fluid applications, from Monomoy Capital Partners. www.shawdev.com

Percheron Capital acquired SafeBasements, a Paynesville, Minn.-based provider of foundation repair and basement waterproofing services. www.safebasements.com

🚑 TT Capital Partners acquired a majority stake in Lakeway, Texas-based behavioral health EHR company Cantata Health Solutions. www.cantanahealth.com

Liquidity Events

🚑 American Securities agreed to sell Paragon Medical, an Indiana-based maker of medical components and instruments, to AMETEK (NYSE: AME) for around $1.9b in cash. https://axios.link/46PIxAD

Palo Alto Networks (Nasdaq: PANW) agreed to acquire Dig, an Israeli cloud data security startup that had raised around $45m from firms like SignalFire, Samsung, Felicis and Okta Ventures. TechCrunch reports a sale price of around $400m. https://axios.link/47dlv6A

J.C. Flowers agreed to sell Romania's First Bank to Italy's Intesa Sanpaolo (Milan: ISP) for around €130m, per Bloomberg. https://axios.link/3FEuKkn

More M&A

BuzzFeed (Nasdaq: BZFD) is in talks to sell Complex Media to NTWRK, a livestream shopping platform backed by Goldman Sachs and Kering, per AdWeek. https://axios.link/45N3F9b

Creative Planning, an Overland Park, Kan.-based RIA backed by General Atlantic, acquired Mesirow's corporate retirement advisory services team. www.creativeplanning.com

The Futurum Group acquired Business Podcast Network, per Axios Pro. https://axios.link/3QDBp4L

Origin Energy (ASX: ORG)'s top shareholder, pension fund AustralianSuper, is opposing the power producer's agreement to be acquired by Brookfield for A$15.35b. https://axios.link/40hSa8E

Reality Income (NYSE: O), a San Diego-based REIT focused on convenience stores and other retail properties, agreed to buy Dallas-based Spirit Realty Capital (NYSE: SRC) for $5.3b in stock. https://axios.link/3tUewRD

Unita Capital, a wholly owned subsidiary of Thailand's K-Bank, agreed to acquire a 97% stake in the parent firm of local crypto exchange Satang for around $103m. https://axios.link/3QdlU21

Western Digital (Nasdaq: WDC) plans to split into two publicly-traded companies, one focused on data storage products and the other on hard drives, following the collapse multiyear merger talks with Japanese flash memory chipmaker Kioxia, owned by Bain Capital. https://axios.link/47dyNQC

🚑 Zynex (Nasdaq: ZYXI), an Englewood, Colo.-based medical device maker with a $290m market cap, hired Cantor Fitzgerald to explore strategic alternatives that could include a sale, per Bloomberg. https://axios.link/47fed1V

Fundraising

Flashpoint, a London-based investment firm, is targeting $150m for a fund focused on direct secondaries in European growth-stage companies. www.flashpointvc.com

It's Personnel

Tricia Han, former CEO of MyFitnessPal and Daily Burn, joined RRE Ventures as an entrepreneur-in-residence. www.rre.com

David Kase is joining Wells Fargo as a managing director of TMT banking, per Bloomberg. He previously was with Barclays. https://axios.link/40gj68M

Värde Partners named Brad Bauer as co-CEO, alongside Ilfryn Carstairs. www.varde.com

Final Numbers

Chart of Chinese debt capital markets.
Source: LSEG Deals Intelligence

China's corporate debt market is growing for the fifth consecutive year, in terms of both proceeds and number of issues, despite growing concern about corporate defaults in China's real estate industry.

🎃 Thanks for reading Axios Pro Rata, and to copy editors Mickey Meece and Bryan McBournie! Please ask your ghouls, goblins and ghosts to sign up.