Oct 9, 2020

Axios Pro Rata

Welcome back! Dan is on a tiny plane for an assignment this morning, so I'll be your news captain. As always, do send me your best tips and scoops a kia@axios.com or via Twitter @imkialikethecar. Here we go...

🎧 The New England Journal of Medicine published the first political editorial in its 208-year history, arguing that America's leaders have bungled the response to COVID-19, leading to unnecessary death and economic hardship.

  • Axios Re:Cap goes deeper with Eric Rubin, an immunologist and infectious disease expert who serves as NEJM's editor-in-chief. Listen here.
Top of the Morning

Illustration: Aïda Amer/Axios

Flashy startup acquisitions with big price tags get all the media attention—as do their investors if they’re getting hefty returns from their venture capital gambles.

Yes, but: There’s a quiet world of tiny acquisitions for equally small businesses that rarely show up on the media radars, as entrepreneur and investor Andrew Gazdecki has witnessed with his marketplace MicroAcquire.

"I made it out of a personal pain," Gazdecki told me of his experiences both selling and acquiring companies.

  • The marketplace, which lets companies list themselves for sale without making their name public until they field buyer interest, debuted in January, but activity has notable picked up with the pandemic set in, says Gazdecki.
  • So far, 100 of these micro-startups — mostly in business software along with a couple of e-commerce businesses — have been acquired via the marketplace.
  • 56 of them had less than $100,000 in annualized recurring revenue, and the average multiple per company was 3.241x for top-line ARR.
  • The company has 25,000 buyers signed up and more than 150 startups listed for sale. 95% of startups are in the software-as-a-service category, about half are based abroad, and are usually four to five years old.
  • Nearly all are bootstrapped, and Gazdecki says that companies with VC or other outside financing have a tougher time selling.

Between the lines: "The main purpose that I see is usually an individual or small group looking to take over and run the startup," he says, though in some cases the founders do stick around post-acquisition for quite a while or are effectively acqui-hired.

Most recently, Gazdecki has teamed up with Betalist, a site for finding new startups, and introduced a paid premium tier that lets subscribers get early access to newly listed startups before they hit the main marketplace.

  • "The biggest complaint started to become that buyers would miss deals," says Gazdecki.
  • MicroAcquire isn't entirely unique — others like Flippa and Empire Flippers provide a similar marketplace.

The bottom line: This route is taken by many more companies than those that end up in big headlines.

The BFD

Photo: Sam Yeh/AFP via Getty Images

AMD is in advanced talks to acquire rival chip company Xilinx in a deal that would value the latter at more than $30 billion, according to the Wall Street Journal.

  • Why it's the BFD: This is the latest in a string of notable semiconductor deals, including Nvidia's recent agreement to acquire ARM from SoftBank for $40 billion.
  • Bottom line: "The addition of Xilinx, led by CEO Victor Peng, would put AMD on a more even competitive footing with Intel and give it a bigger position in fast-growing telecommunications and defense markets." — Cara Lombardo, Dana Cimilluca, WSJ.
Venture Capital Deals

GoPuff, a Philadelphia-based delivery startup for convenience store items, has raised $380 million in new funding at a post-money valuation of $3.9 billion led by Accel and D1 Capital Partners, with Luxor Capital and Softbank Vision Fund also participating. http://axios.link/zn5t

Grid AI, a New York-based machine learning startup, has raised $18.6 million in Series A funding led by Index Ventures, with Bain Capital Ventures and Firstminute Capital also participating. http://axios.link/uQ3N

Bloom Credit, a New York-based provider of software for integrating with credit bureaus, has raised $13 million in Series A funding led by Allegis NL, with Resolute Ventures, Slow Ventures, and Commerce Ventures also participating. http://axios.link/rrTr

Lingokids, a Spain-based ed-tech startup, has raised $10 million in Series B funding from Ravensburger. http://axios.link/y5qC

EVRYTHNG, a U.K.-based maker of analytics and management software for connected products, has raised $10 million new funding led by IDC Ventures and chairman Simon Eyers, with Sway Ventures, Generation Ventures, Fernbrook Capital, You & Mr Jones, Bloc Ventures, the UK Future Fund and others also participating. http://axios.link/buLB

Andie Swim, a New York-based swimwear ecommerce startups, has raised $6.5 million in Series A funding from CityRock Venture Partners, Trail Mix Ventures and others. www.andieswim.com

Headroom, a San Francisco-based video conferencing startup, has raised $5 million in seed funding led by Gradient Ventures. http://axios.link/HEHV

Tradeswell, a Baltimore-based maker of e-commerce analytics, has raised $3.3 million in seed funding from SignalFire, Grit Capital Partners and Construct Capital. http://axios.link/puV7

Mira, a New York-based alternative to health insurance, has raised $2.7 million in seed funding from FlyBridge Capital Partners, Newark Venture Partners, Precursor Ventures, Plug and Play, CityLight, and angel James Chung. http://axios.link/BZg7

Earthly Technologies, a Redwood City-based server management software company, has raised $2 million in seed funding led by 468 Capital, with Uncorrelated Ventures, Bessemer Venture Partners, Hack VC and angel investors also participating. www.earthly.dev

Exer Labs, a Denver-based fitness coaching startup, has raised an additional $2 million in seed funding from GGV, Jerry Yang's AME Cloud Ventures, Morado Ventures, Range VC, Shatter fund, Service Provider Capital, MyFitnessPal co-founders Mike and Albert Lee, Signia Venture Partners, and former Zynga COO, David Ko. www.exer.ai

Private Equity Deals

YCharts, a Chicago-based maker of cloud-based investment analytics and communications tools for investors, has completed a growth recapitalization in partnership by LLR Partners. http://axios.link/Sv8o

ICM Partners, backed by Crestview Partners, has acquired Stellar Group, a London-based sports agency, creating ICM Stellar Sports, a division of ICM Partners. http://axios.link/mY4i

Vista Equity Partners has begun exploring a sale of Mediaocean, a New York-based advertising services and software company, that could value the advertising software company at more than $1.4 billion, according to PEHub. http://axios.link/PntZ

Public Offerings

Affirm, a San Francisco-based provider of point-of-sale credit to consumers for online purchases, has confidentially filed to go public. http://axios.link/8u2h

iHuman, a China-based provider of education and entertainment products for children, raised $84 million by offering 7 million ADSs at $12, within the range of $11 to $13. It plans to list on the NYSE under the symbol IH. Credit Suisse, Citi, Tiger Brokers, CMB International Capital and CITIC CLSA acted as joint bookrunners on the deal. http://axios.link/ekmz

Spruce Biosciences, a Daly City, Calif.-based Phase 2 biotech company developing a novel therapy for rare endocrine disorders, raised $90 million by offering 6 million shares at $15, within the range of $14 to $16. The company offered 1 million more shares than anticipated. Spruce Biosciences plans to list on the Nasdaq under the symbol SPRB. Cowen, SVB Leerink, Credit Suisse and RBC Capital Markets acted as joint bookrunners on the deal. http://axios.link/JEtA

Kronos Bio, a San Mateo, Calif.-based Phase 2 biotech company developing kinase inhibitors for leukemia and solid tumors, raised $250 million by offering 13.2 million shares at $19, above the range of $16 to $18. The company originally planned to offer 10.3 million shares at the same range before revising its terms on Thursday. It plans to list on the Nasdaq under the symbol KRON. Goldman Sachs, Jefferies, Cowen and Piper Sandler acted as joint bookrunners on the deal. http://axios.link/JM29

FuboTV, a New York-based sports-focused live TV streaming service, priced 18.3 million shares at $10 Wednesday night, and started trading Thursday on the NYSE under the ticker FUBO. http://axios.link/XbSA

InMed Pharmaceuticals, a Canada-based clinical stage biotech company developing cannabinoid-based products, announced terms for its IPO on Thursday. It plans to raise $10 million by offering 2.4 million shares at $4.13, above the last close of its shares on the OTCQX and the Toronto Stock Exchange. It's also offering warrants to purchase 2.4 million shares of common stock at an assumed exercise price of $4.13. At the proposed price, InMed Pharmaceuticals would command a market value of $32 million. http://axios.link/saF8

Editor's note: The section has been corrected to note that FuboTV priced on Wednesday, beginning to trade the next day.

SPAC Stuff

Forest Road Acquisition, a blank check company formed by Forest Road targeting TMT businesses, filed on Thursday with the SEC to raise up to $250 million in an initial public offering. Notably, the board and advisors include ex-Disney execs Tom Staggs, Disney's former direct-to-consumer chief Kevin Mayer, and former Disney executive VP Salil Mehta, basketball legend Shaquille O'Neal, and Martin Luther King III. http://axios.link/2gCe

Social Capital Hedosophia Holdings VI, the sixth blank check company formed by chairman and CEO Chamath Palihapitiya and president and director Ian Osborne and targeting a tech business, raised $1.0 billion by offering 100 million units at $10. http://axios.link/BRBW

Social Capital Hedosophia Holdings V, the fifth blank check company formed by chairman and CEO Chamath Palihapitiya and president and director Ian Osborne and targeting a tech business, raised $700 million by offering 70 million units at $10. The company offered 5 million more units than anticipated. http://axios.link/IPoe

Social Capital Hedosophia Holdings IV, the fourth blank check company formed by chairman and CEO Chamath Palihapitiya and President and director Ian Osborne and targeting a tech business, raised $400 million by offering 40 million units at $10. The company offered 5 million more units than anticipated. http://axios.link/YCeR

Thayer Ventures Acquisition, a blank check company formed by Thayer Ventures targeting the travel and transportation industries, filed on Thursday to raise up to $175 million in an IPO. http://axios.link/FWFt

Liquidity Events

Euronext has agreed to buy Borsa Italiana from London Stock Exchange for €4.3 billion ($5.1 billion) in cash, the companies said on Friday. http://axios.link/jXy6

Fundraising

Pontifax AgTech, a Santa Monica-based growth capital investor in food and agriculture, has raised $302 million for its second fund. www.pontifaxagtech.com

It's Personnel

Ara Partners has hired Katy Terrell as a vice president and Mary Kathryn Nommensen as an associate, and promoted John Baik to senior associate. www.arapartners.com

Final Numbers

Data: Pitchbook

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