Jul 24, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning
Illustration: Axios / Lazaro Gamio

Two former Uber executives are quietly operating an investor syndicate to invest in startups led by their former colleagues, Axios has learned.

  • It's called Moving Capital, and also invests in two-sided marketplace and transportation startups. Initial portfolio companies include Lime and Cargo.
  • The co-founders are Josh Mohrer (launched and led NYC) and William Barnes (led West Coast ops). Moherer also was briefly a partner at Tusk Ventures, where he led the firm's Series A and Series B investments in Bird.
  • The private syndicate, operated via AngelList, consists of around 100 Uber alums (many of whom have plenty of cash, thanks to the SoftBank tender). Around half of them have been active so far.
  • Don't be surprised if Moving Capital soon evolves from a private AngelList syndicate to a more traditional VC fund structure.

Bottom line: There should be plenty of deal-flow.

Last week I was chatting with some VCs about the relative dearth of Seattle startups, expressing surprise that neither Amazon nor Microsoft have really become founder factories.

A few of them suggested that lots of startups would likely come out of Uber, due to to a highly-entrepreneurial environment (particularly on the ops side). As one of them explained: "No matter what you think about Uber's culture, everyone there will tell you that team leaders were basically running mini-companies, with lots of ability to try new things."

Calendar: Tonight is the moment of truth for Qualcomm's $44 billion efforts to buy Dutch chip-maker NXP Semiconductor, 20 months after the original announcement and 17 tender offer extensions after a revised agreement in February. Per Bloomberg:

Chinese agencies responsible for vetting deals have already signed off, people familiar with the steps have said. The final authorization could be processed and made public at short notice if China’s political leaders decide to release it. NXP gave Qualcomm until 11:59 p.m. on Wednesday, July 25 in New York to get it done. Absent any word from China, Qualcomm doesn’t plan to seek an extension.

Substitution effect: Curt Moldenhauer, PwC's US China Inbound Leader, believes that the burgeoning trade wars could increase the amount of cross-border M&A. He tells me:

  • "Let's assume that a company can no longer easily trade into China or the U.S. but still has a desire to do so for strategic reasons. One option is greenfield investment, like building a plant to skip tariffs, or you can go buy somebody local to do the same thing. These are basically substitution effects for trade."
  • Moldenhauer says he is using "M&A" liberally here, as it could be anything from a complete buyout to a joint venture to strategic transactions that don't involve any equity (such as certain biotech partnerships that might be encouraged by the Chinese government).
  • "The last big trade war began in the 1970s with the Japanese, when both sides were taking a similar amount of political grief over similar things like trade deficits and investments in sensitive industries... as it played out, Japan became one of the biggest investors in the U.S. economy, including through M&A."
  • Moldenhauer stresses that his is a long-term view as, right now, trade uncertainty is depressing both inbound and outbound deal-flow. "I suspect we'll see a bit of a rough third quarter."

Metromile, a San Francisco-based pay-by-mile auto insurance and automated claims processing company, raised $90 million in Series E funding. Tokio Marine and Intact Financial co-led, and were joined by return backers NEA, Index, Future Fund and Section 32.

  • Why it's the BFD: Because while everyone seems focused on an autonomous driving future, there are still plenty of present-day usage trends that require updated solutions.
  • Bottom line: "As baby boomers retire and millennials flock to cities, two insurance giants are making a bet on people driving a lot less." — Julie Verhage, Bloomberg
Venture Capital Deals

Tuya Smart, a Chinese developer of IoT and voice AI platforms , raised $200 million in Series C funding. Future Fund (Australia) led, and was joined by NEA, China Broadband Capital, CICC Global Bridge Capital, Quadrille Capital, and C.M. Capital Advisors. http://axios.link/pl3k

Wayz.ai, a Chinese geolocation and mapping startup, says it raised $80 million in Series A funding from undisclosed investors. The company was founded by Vincent Tao, former CEO of Chinese online television company PPTV. http://axios.link/izBg

🚑 League, a Toronto-based digital employee health benefits platform, raised C$62 million in new funding. TELUS Ventures led, and was joined by Wittington Ventures and return backers OMERS, Infinite Potential Group, RBC Ventures, Real Ventures and BDC Ventures. http://axios.link/EDdW

Divvy, a Lehi, Utah-based corporate spend management platform, raised $35 million in Series B funding led by Insight Venture Partners. http://axios.link/APPF

Rescale, a San Francisco-based startup focused on high-performance computing in the cloud, raised $32 million in Series B funding from backers like Initialized Capital, Keen Venture Partners and SineWave Ventures. http://axios.link/RYVt

Campfire, a Hong Kong-based co-working space operator, raised $18 million in Series A funding from Kwai Jung Group, Fast Global Holdings and Sa Sa. http://axios.link/CV5A

🚑 Click Therapeutics, a New York-based developer of prescription digital therapeutics, raised $17 million in new funding led by Sanofi Ventures. http://axios.link/A9ZY

Brightpearl, a British provider of cloud-based inventory management and ERP software for retailers, raised $15 million in funding. Cipio Partners led, and was joined by return backers Ventures and Notion Capital. www.brightpearl.co.uk

ScaleFactor, an Austin-based provider of accounting and payroll management SaaS, raised $10 million in new funding. Canaan Partners led, and was joined by Citi Ventures and Broadhaven Capital. http://axios.link/z36n

AllCloud, an Israeli cloud consulting company, raised $7 million in funding from backers like Discount Capital and Hallett Capital. http://axios.link/zhvR

Agora Images, a Spanish photo contest app, raised €2 million in second-round funding from backers like Mnext VC, Wildinvest, Soller Invest and Kabche Real Estate. www.agoraimages.com

Private Equity Deals

Baird Capital acquired a majority stake in Collingwood, a UK-based designer and maker of residential, commercial and exterior luminaires.

The Blackstone Group received EU antitrust approval for its $20 billion purchase of a majority stake in Thomson Reuters’ (NYSE: TRI) financial and risk unit. http://axios.link/uVCy

LaSalle Capital has acquired National Gift Card Corp., a Crystal Lake, Ill.-based B2B gift card and prepaid card company. www.ngc-group.com

Town & Country, a Boston-based portfolio company of H.I.G. Capital, has acquired Home Dynamix, a North Arlington, N.J.-based wholesaler of floor rugs, mats and bedding. It also bought Amalgamated Textiles, a Montreal-based supplier of window treatments and hardware.

Public Offerings

🚑 Vaccinex, a Rochester, N.Y-based developer of antibody therapies for cancer and neurological diseases, set IPO terms to 3.3 million shares at $12-$15. It would have a fully-diluted market value of $191 million, were it to price in the middle, and plans to list on the Nasdaq (VCNX) with Oppenheimer & Co. as lead underwriter. www.vaccinex.com

Liquidity Events

ezCater, a Boston-based corporate catering company that recently raised $100 million at a $700 million valuation, has acquired Paris-based corporate catering platform GoCater, which had been seeded by Kima Ventures, Cabiedes & Partners and U-Start. http://axios.link/RN9R

KPS Capital Partners agreed to sell Expera, a Kaukauna, Wisc.-based specialty paper company, to Finland’s Ahlstrom-Munksjo for $615 million. http://axios.link/BkQb

PGT Innovations (NYSE: PGTI) has agreed to buy Western Window Systems, a Phoenix-based window and door maker, from PWP Growth Equity for $360 million in cash. www.westernwindowsystems.com

🚑 Waterland, a Dutch private equity firm, is seeking to sell German post-acute care clinic operator Median Kliniken for upwards of €1 billion, per Reuters. http://axios.link/UMHa

More M&A

⚽ Alisher Usmanov is considering the sale of his 30% stake in English football club Arsenal, per the FT. http://axios.link/bYn1

🚑 Amplifon (Milan: AMPF) agreed to buy Spanish hearing aid retailer Gaes Group for €528 million in cash. http://axios.link/RqNC

Donnelley Financial Solutions (NYSE: DFIN) sold its language solutions business to SDL (LSE: SDL) for $77.5 million in cash.

🍕 Papa John's (Nasdaq: PZZA) has adopted a "poison pill," to help deter founder John Schnatter — who recently resigned as chairman after using racial slurs during a conference call — from acquiring a control position. http://axios.link/nchk

Synovus Financial (NYSE: SNV) has agreed to acquire FCB Financial (NYSE: FCB), owner of Florida Community Bank, for $2.9 billion in stock. www.synovus.com


ICV Partners, a New York-based lower middle-market private equity firm, raised $585 million for its fourth fund. www.icvpartners.com

Luminate Capital Partners is raising up to $425 million for its second software-focused private equity fund, per an SEC filing. www.luminatecapital.com

Mosiac Ventures, a London-based early-stage firm, is raising up to $150 million for its second fund, per an SEC filing. www.mosaicventures.com

Soundcore Capital Partners, a New York-based private equity fund formed by ex-Sun Capital pros, raised $350 million for its first institutional fund. http://axios.link/05iq

Weinberg Capital Partners, a French mid-market private equity firm, raised €295 million for its third fund. http://axios.link/Rskn

It's Personnel

Ed Poletti, former managing director of alternative fund operations at Credit Suisse, joined Gen II Fund Services as a senior advisor. www.gen2fund.com

XL Innovate, an insurtech-focused VC firm in Menlo Park, promoted Chris Downer to principal. www.xlinnovate.com

Final Numbers
Source: S&P Leveraged Commentary & Data

More from S&P:

Roughly 78% of the more than $1 trillion in outstanding U.S. leveraged loans are cov-lite, compared to just 29% in 2007, at the peak of last credit cycle (and just before the financial crisis).
While the data set for recent-vintage cov-lite loans that have entered and emerged from the default/distressed exchange/bankruptcy processes is necessarily thin – leveraged loan default rates have been stubbornly low for much of the current credit cycle – it offers insight into how today’s cov-lite loan binge might impact recoveries.
Dan Primack

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