Axios Pro Rata

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February 05, 2020

Top of the Morning

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Illustration: Sarah Grillo/Axios

Bernie Sanders still may eke out a win in Iowa, and is the consensus front-runner in New Hampshire. But most venture capitalists investing in America's health care industry — the primary target of Bernie's ire — have shoved their heads so deep in the sand that they've found water.

Why it matters: At some point, it could become a failure of fiduciary duty.

Health care accounts for over 20% of all U.S. venture activity.

  • A majority of that is in biotech/pharma, which last year saw 866 deals raise around $16.6 billion.
  • Investors view many of those deals as binary: Either the drug doesn't work, resulting in a total write-off, or it does work and the financial sky's the limit. Strike out or grand slam.
  • Sanders pledges to limit the upside, either by limiting drug prices under the current system or (if he gets Medicare-for-all) by establishing a single, centralized buyer.

Few health care VCs I speak with are working on a Plan B in the event of their risk/reward models being made obsolete, nor are they hearing such concerns at the portfolio company level. Three main reasons:

  1. They don't believe Sanders will win. One investor told me he's "not electable." When I asked if he felt Trump or Obama were "electable" early in the campaign, he took a very long pause. Another said that contingencies will begin if Sanders gets the nomination.
  2. Even if he does win, they don't believe Sanders will get Medicare-for-all. This is the "Senate firewall" theory, and will probably prove correct. But it ignores that a Sanders victory likely comes with electoral coattails down-ballot, and the typical rule that new presidents get at least some version of their flagship policy. In this case, that could be drug price caps, which already has bipartisan support.
  3. If Sanders wins and implements his full plan, then it's such a revolutionary shift that there's not much health care VCs can do to counter it. As a Boston biotech investor told me, it's kind of like worrying about the size of your fund if the dollar begins hyper-inflating. Why bother? At that point, the whole thing is chaos.

Health care VCs also argue that industry concerns about a President Sanders will first be reflected in public market valuations, with private market valuations to follow. And one mentioned that there could be fewer deals in areas like ultra-rare disease drugs, which come with ultra-high prices, because of fears that Sanders could call them out by name.

Bottom line: For now, health care venture's strategy is see no Bernie, hear no Bernie. We'll see how long that's viable.


Illustration: Aïda Amer/Axios

PT Softex, an Indonesian sanitary product maker backed by CVC Capital Partners, may postpone its local IPO because of coronavirus concerns, per Bloomberg. This comes just weeks after Atotech, a German chemicals group owned by The Carlyle Group, delayed its U.S. IPO for similar reasons.

  • Why it's the BFD: The fear and supply chain challenges are real, as are the difficulties in setting up travel and meetings with prospective Chinese investors. PT Softex, which seeks to raise upwards of $400 million, also has the added challenge of a soft Jakarta stock market.
  • Bottom line: "Softex, which was set up in 1976, sells its products in more than 35 countries, including developing economies where clean feminine-hygiene products are often considered luxury." — Bloomberg

Venture Capital Deals

🚑 Alto, a San Francisco-based digital pharmacy, raised $250 million in Series D funding. SoftBank Vision Fund 2 led, and was joined by return backers GreenOaks Capital, Jackson Square Ventures, Olive Tree Capital, and Zola Global.

🚑 Outset Medical, a San Jose, Calif.-based developer of an all-in-one dialysis device, raised $125 million in Series E funding. D1 Capital Partners led, and was joined by Fidelity, Partner Fund Management, T. Rowe. Price, and Perceptive Advisors.

🚑 Verana Health, a San Francisco-based clinical database, raised $100 million in new funding. GV led, and was joined by Bain Capital Ventures, Casdin Capital, and Define Ventures. Verana also acquired most assets of Knoxville-based data architecture company PYA Analytics.

Deliverr, a San Francisco-based delivery fulfilment startup, raised $40 million in Series C funding. Activant Capital led, and was joined by 8VC, GLP, and Flexport CEO Ryan Peterson.

The Zebra, an Austin, Texas-based auto insurance marketplace, raised $38.5 million in Series C funding. Accel led, and was joined by Floodgate, Weatherford Capital, and return backers Ballast Point Ventures and Silverton Partners.

MayaData, a Palo Alto-based container attached storage provider for Kubernetes, raised $26 million from AME Cloud Ventures, DataCore Software, and Insight Partners.

Homie, a Salt Lake City-based real estate startup for first-time homebuyers, raised $23 million in Series B funding from undisclosed backers.

FloLive, a London-based provider of IoT connectivity management solutions, raised $21.5 million. 83North led, and was joined by Dell Technologies Capital, Saban Ventures, and Qualcomm Ventures.

🚑 MaaT Pharma, a French biotech startup focused on “restoring patient-microbiome symbiosis,” raised €18 million in Series B funding from SymBiosis, Seventure Partners, Crédit Mutuel Innovation, and Biocodex.

🚑 Naari Pharma, an Indian women’s health startup focused on hormones, raised around $17.5 million from Ascent Capital.

🚑 Ambyint, a developer of well production and artificial lift optimization software, raised $15 million in Series B funding. Cottonwood Venture Partners led, and was joined by Mercury Fund.

ClearMetal, a San Francisco-based continuous delivery experience platform, raised $15 million in new funding led by Eclipse Ventures.

Global Savings Group, a German provider of commerce content solutions, raised $13 million from return backers Rocket Internet, Holtzbrinck Ventures, DTCP, and RTP Global.

Suzy, a New York-based consumer insights platform, raised $12 million in Series C funding. Bertelsmann Digital Media Investments led, and was joined by Foundry Group, Triangle Peak Partners, and return backers 35 Ventures and Tribeca Venture Partners.

Stori, a Mexico-based digital bank, raised $10 million in Series A2 funding. Bertelsmann Investments and Source Code Capital co-led, and were joined by return backer Vision Plus Capital.

Kaskada, a Seattle-based startup focused on automating feature engineering, raised $8 million in Series A funding from Voyager Capital, NextGen Venture Partners, Founders’ Co-op, and Walnut Street Capital Fund.

Kasisto, a New York-based digital experience platform for financial services, raised $7 million from Napier Park Financial Partners.

Casted, an Indianapolis-based podcasting platform for B2B brands, raised $2.5 million in seed funding from High Alpha Capital and Elevate Ventures.

Retina, a Los Angeles-based provider of customer analytics, raised $2.5 million led by existing backer Crosscut Ventures.

Private Equity Deals

Industrial Opportunity Partners acquired Competition Cams, a Memphis-based maker camshaft and valvetrain-related components for the automotive aftermarket.

🚑 Kriya Capital acquired Medstat Accounts Receivables Management, a Mesa, Ariz.-based provider of revenue cycle services for medical professionals.

Pelican Products, a Torrance, Calif.-based portfolio company of Behrman Capital, acquired NanoCool, an Albuquerque-based manufacturer of temperature-controlled packaging solutions.

Public Offerings

🚑 Acelity, a San Antonio-based wound care products company, formally withdrew its IPO registration. Last year it was acquired for $6.7 billion by 3M (NYSE: MMM).

👻 Casper Sleep, a New York-based mattress maker, cut its IPO price range from $17-$19 to $12-$13. It now would have an initial market cap just south of $500 million, were it to price in the middle of its range.

Central Group, Thailand’s largest retailer, raised around $2.6 billion in an IPO that priced near the top of its indicative range.

InterPrivate Acquisition, a blank-check acquisition platform led by the founder and CEO of private investment firm InterPrivate, raised $210 million in its IPO. It will trade on the NYSE (IPV.U), while EarlyBirdCapital served as lead manager.

Liquidity Events

Apollo Global Management sold a minority stake in ecoATM, a San Diego-based operator of self-serve kiosks for buying back used electronics, to Cowen’s sustainable investment unit for $200 million.

Warburg Pincus is considering a sale for Charlotte-based HVAC company Service Logic, which could fetch more than $1.5 billion, per Bloomberg.

More M&A

Aon (LSE: AON) acquired Cytelligence, a Canadian cybersecurity advisory.

🚑 Bergman Clinics, a Dutch chain of medical clinics, is seeking a buyer, per Bloomberg. The deal could entice private equity, and be valued at upwards of €1 billion.

Intercontinental Exchange (NYSE: ICE) approached eBay (Nasdaq: EBAY) about a potential takeover, per Reuters. Talks do not appear to be active.

L’Oreal (Paris: OREP) is in exclusive talks to sell its Roger & Gallet perfume and soap brand to French investment group Impala.

Qatar Airways said it’s talks to buy a 49% stake in African carrier RwandAir, and may double its 10% stake in LATAM Airlines Group.

Siemens (DE: SIEG) will pay €1.1 billion for Iberdrola’s (Milan: IBE) 8.1% stake in the Siemens Gamesa renewable energy joint venture.

🎧 Spotify (NYSE: SPOT) agreed to buy The Ringer, a sports and culture website and podcast network founded by Bill Simmons.

Textron (NYSE: TXT), the maker of Cessna jets, is in talks to buy Bombardier’s (TSX: BBD) business jet business, per the WSJ.


Ecosystem Investment Partners, a Baltimore-based private equity firm focused on “large-scale ecological restoration,” raised $455 million for its fourth fund. Monument Group served as placement agent.

Fortissimo Capital, an Israeli VC and private equity firm, raised $650 million for its fifth fund.

Generate Capital, a San Francisco-based private equity firm focused on sustainable energy projects and tech, raised more than $1 billion for its latest fund.

TLcom, an Africa-focused VC firm, raised $71 million for its latest fund.

It's Personnel

Michael Ronen is stepping down as U.S.-based managing partner at SoftBank Vision Fund, which he joined in 2017 from Goldman Sachs, per the FT.

Rob Salvagno joined KKR as co-head of its tech growth equity business. He previously led Cisco Investments.

Jim Lott joined middle-market private equity firm Peak Rock Capital as a managing director focused on portfolio consulting. He previously was chief information officer at GTCR.

🚑 Tanya Hayes joined Frazier Healthcare Partners as an HR-focused executive partner. She previously led her own talent consulting firm and served as interim chief people officer for Frazier portfolio company Matrix Medical.

Rohan Narayan joined middle-market private equity firm One Rock Capital Partners as a partner. He previously was with Lindsay Goldberg.

Christopher Parisi (ex-FPG Advisory) and Michael Gordon (ex-KPMG) joined the M&A group of investment bank Carl Marks as a managing director and VP, respectively.

Pritzker Private Capital hired Eric Kieras (ex-JZ Partners) as a principal on the services investing team, Megan Slentz (ex-Waud Capital) as head of partner relations and marketing, and Carter Cast (ex-CEO of as a senior advisor. It also promoted Michael Nelson to head of manufactured products and services and David Gau as head of operations.

Yellow Wood Partners promoted CFO Tracy Pizzi to partner.

Final Numbers: U.S. consumer sentiment on coronavirus

Source: Morning Consult poll conducted 1/27-1/30 and 1/31-2/2, each with samples of 2,202 U.S. adults and margins of error of +/- 2%.

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