Axios Pro Rata

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March 24, 2017

Top of the Morning

Greetings from Washington, D.C., where my Axios colleague Mike Allen just finished up an on-stage interview with U.S. Treasury Secretary Steve Mnuchin. Takeaways:

  • Carry: Carried interest tax treatment will be changed in the White House tax plan, at least for "hedge funds" When it comes to other asset classes, including real estate, no promises were made.
  • Mnuchin vs. Trump rhetoric: The Treas Sec declined to commit to the 15% corporate tax rate that Trump preached on the campaign trail. He also talked about 3%-3.5% GDP growth, versus Trump's talk of 4%.
  • Techmeme weeps: Mnuchin breezily dismissed the notion that AI and machine learning will soon replace wide swaths of workers, saying that "it's not even on our radar screen" because it's an issue that is "50 or 100 years" away.
  • Trade: "So long as we can renegotiate deals that are good for us, we won't be protectionist. Otherwise we will."
  • Taxes: Tax reform is "a lot simpler" than healthcare reform. He still plans to get it done by the August recess, and it will be comprehensive (i.e., not breaking it up into more passable pieces). As for going after healthcare, Mnuchin says the past two months of planning were necessary. "We would not have been ready to go a month ago on tax reform and now we are."
  • BAT: Mnuchin punted when asked to make the pro-BAT argument to a Wal-Mart shopper, but did say that he doesn't expect to introduce it "as is."
  • Silicon Valley: "I don't understand these valuations."
  • Movie producer hat: "Hollywood could learn a lot more from D.C. than D.C. could learn from Hollywood."
  • Worries: Mnuchin says that cybersecurity is his biggest in-house focus, and that his meetings with foreign leaders have dealt heavily with issues like money laundering and other illicit activities.
  • Debt limit: "We need to raise the debt limit and that's something we're going to do."
  • Bottom line: "I am a bull. Buy American."

• New fund alert: Plowshares Ventures has launched as an Israel-based, but globally-focused, VC firm focused on the "intersection of the defense and commercial sectors," according to documents distributed to prospective investors. Its three managing partners are Benny Gantz (former chief of staff of the Israeli Defense Forces), Moshe Mor (ex-Greylock) and Moti Shniberg (founder of, sold to Facebook). The group also has several military advisors, including General John Allen.

• The social network: Kia has learned that Wuu, the new social network from Ello co-founder Paul Budnitz, has scored Founders Fund as the lead investor on its seed round. Wuu launched yesterday on iOS, and shares a bunch of quirky DNA with Snapchat and Instagram, but also Ello's avoidance of advertising (read: we don't know how it will make money). More here.

• Gametime: With half of the Sweet 16 already decided, Danny Conway (entrepreneur-in-residence at Andreessen Horowitz) remains in the lead of our March Madness contest.

• Have a great weekend!


Theranos is offering additional shares to certain existing investors in exchange for a promise not to sue the troubled blood-testing company, per the WSJ. The shares would come from company founder and CEO Elizabeth Holmes and, if enough investors accept, would reduce her holdings below the majority threshold.

Why it's the BFD: Because of its infinite sadness. It's a bit reminiscent of what Zenefits did last summer, except that Zenefits had a viable business that was separate of its troubles. In this case, the core is rotten. Need proof, investor Rupert Murdoch apparently traded in his $125 million investment for a single dollar, in order to just book a tax write-off. Also worth noting that early Thernaos investors apparently weren't offered this deal which, in itself, could become litigious.

Bottom line: "At the end of last year, Theranos had $200 million of cash on hand, not including $40 million in debt to Walgreens that is part of the two companies' legal dispute, Theranos told shareholders in a January conference call. One person familiar with the matter said Theranos now has about $150 million or less in cash, excluding the debt." ― WSJ

Venture Capital Deals

• Delhivery, an Indian supply chain logistics company focused on e-commerce, has raised more than $100 million in minority equity funding from The Carlyle Group and return backer Tiger Global.

• Zenreach, a San Francisco-based provider of WiFi hardware to coffee shops and other restaurants, has raised $30 million in Series C funding. Backers include Founders Fund, Maverick Ventures, Bain Capital Ventures, 8VC, First Round Capital, SV Angel, Ashton Kutcher and Kevin Durant.

• Mashape, a San Francisco-based API marketplace for cloud services, has raised $18 million in Series B funding. Andreessen Horowitz led the round, and was joined by return backers CRV and Index Ventures.

• Quantexa Ltd., a UK-based provider of big data analytics for crime within financial services, has raised $3.3 million in VC funding co-led by Albion Ventures and HSBC.

• TVPage, a San Diego-based provider of video commerce software, has raised $3 million in VC funding from backers like Greg Silverman (ex-president of Warner Bros. Pictures).

• SoundCloud, a Berlin-based music sharing platform, has secured $70 million in debt financing from Ares Capital, Kreos Capial and Davidson Technology. The move comes amid reports that SoundCloud has been struggling to raise $100 million in new equity.

Private Equity Deals

• Blackford Capital has invested in Snowwhite, an Addison, Ill.-based provider of furniture design and procurement solutions for the hospitality industry. No financial terms were disclosed.

• The Carlyle Group has acquired the Gabon onshore oil assets of Royal Dutch Shell for $587 million.

• MBK Partners has agreed to acquire Japanese pearl retailer Tasaki & Co. (Tokyo: 7968), in partnership with company management, for around $283 million.

• Orion, a New Jersey-based IT business solutions firm owned by Potomac Equity Partners, has acquired Vernalis, a custom software and IT company with a particular focus on the professional athletics market. No financial terms were disclosed.

• Warburg Pincus is one of several bidders for Singapore warehouse owner Global Logistic Properties, which has a market value of $9.2 billion, and would consider merging it with existing logistics portfolio company E-Shang Redwood, according to Bloomberg.

Public Offerings

• Alteryx Inc., an Irvine, Calif.-based provider of data blending and analytics solutions, raised $126 million in its IPO. The company priced 9 million shares at $14 per share (top of range), and will trade on the NYSE under ticker symbol AYX. Goldman Sachs and J.P. Morgan served as lead underwriters. Alteryx reports a $24 million net loss in 2016 on around $85 million in revenue. Shareholders include Insight Venture Partners (27% pre-IPO stake), Sapphire Ventures (13%), Thomson Reuters (13%), Toba Capital (6%) and Iconiq Capital (5.6%).

• Pret a Manger, a fast food chain owned by private equity firm Bridgepoint, has picked Solebury Capital to advise on a planned U.S. flotation, according to Reuters.

• Valeritas Holdings, a Bridgewater, N.J.-based developer of insulin delivery devices for people with diabetes, raised $53 million in its IPO. The cmpanty priced 5.3 million shares at $10 per share (middle of range), and will trade on the Nasdaq under ticker symbol VLRX. Cowen & Co. and Wedbush PacGrow served as lead underwriters. Capital Royalty held a 72.21% pre-IPO stake in the company, which generated over $14 million in revenue for the first nine months of 2016. Valeritas withdrew a prior IPO filing last March.

• WideOpenWest, the country's sixth-largest cable operator, has filed for a $100 million IPO. UBS and Credit Suisse are serving as underwriters. The company reports $26.3 million of earnings for 2016, compared to net losses in both 2014 and 2015. Its 2016 revenue was around $1.24 billion, up slightly from $1.22 billion the year earlier. Shareholders include Crestview Partners and Avista Capital Partners.

Liquidity Events

• Vista Equity Partners has hired Morgan Stanley to find a buyer for Vivid Seats, a Chicago-based online secondary ticket marketplace that could be valued at around $1.5 billion, according to TechCrunch.

More M&A

• Accenture (NYSE: CAN) has agreed to acquire First Annapolis Consulting, a Linthicum, Md.-based payments consulting and advisory firm. No financial terms were disclosed.


Eaton Park, a $7 billion hedge fund founded in 2005 by former Goldman Sachs trader Eric Minidch, is shutting down and returning money to investors.

GSO Capital, the credit unit of The Blackstone Group, is raising $6.5 billion for a new fund to make emergency loans to distressed companies, according to the WSJ.

• Rethink Education and Southern New Hampshire University have launched a $15 million seed fund focused on education startups.

It's Personnel

• Christophe Evain plans to retire as CEO and chief investment officer of Intermediate Capital Group, effective in July 2017. He will be succeeded by Benoit Durteste, currently head of the firm's European investment practice.

Jonathan Galaviz has stepped down as chief strategist at Global Market Advisors, in order to join the U.S. State Department as a senior advisor.

Final Numbers