Aug 16, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

🎧 Please be sure to check out yesterday's Axios Pro Rata podcast, where we ask if Trump's Space Force will fly. Listen via Apple, Spotify or other platforms.

Top of the Morning

Illustration: Greg Ruben/Axios

Reinvigorated corporate governance could be key to bringing the "blue wave" to shore this November.

At least that's what seems to be the thinking of Sen. Elizabeth Warren (D-MA), who just unveiled a new plan that would, among other things, let large company employees elect around 40% of that company's board of directors.

  • It's called the Accountable Capitalism Act. Here's the bill text.
  • It focuses on companies with at least $1 billion in revenue, and would require them to obtain a federal charter via a proposed U.S. Commerce Department office, obligating them to consider the interests of all corporate stakeholders (i.e., shareholders, employees, community). One immediate consequence could be reduction in successful shareholder lawsuits on fiduciary grounds.
  • It would prevent officers or directors from selling stock within five years of receipt or within three years of a company stock buyback.
  • It would prevent companies from making political candidate expenditures without approval of 75% of directors or shareholders.

No, this isn't going to become law, particularly with the current Congress. And the proposed "corporate charter" requirements are way too vague to be practically applied.

But, politically speaking, it could be the sort of pro-worker, economic populism that Democrats successfully adopt to contrast themselves with Trump, without veering to the anti-capitalist left. A pitch that emphasizes how much of the 2017 tax cuts were used by corporations for stock buybacks rather than for substantially increased wages.

It's also something that I could see some big companies supporting (at least publicly), given that it's not a tax and could further inoculate themselves from the socialist specter.

Bottom line: Warren's proposal is DOA as legislation, but it could be the beginning of a very loud conversation.

Today in Tesla

Illustration: Sarah Grillo/Axios

Goldman Sachs yesterday confirmed that it's working with Elon Musk as a financial advisor, but declined to say exactly when it was retained. Expect that to be among the questions asked of Tesla and Musk by the SEC, which reportedly has issued subpoenas. Illustration: Sarah Grillo/Axios

  • Tesla stock hit an all-time high of $379.56 in the hours after Musk's initial tweet about taking the company private at $420 per share, but yesterday closed down at $338.69.
  • Former SEC enforcement attorney John Reed Stark believes that the SEC has a high hill to prove market manipulation, because such charges typically require the actor to both make ironclad false statements and attempt to profit from those statements. He adds that it's not technically a two-pronged test, so much as " indicators which shed light on the suspect’s actual intent."
The BFD
Source: Giphy

Best Buy (NYSE: BBY) agreed to buy GreatCall, a San Diego-based provider of Jitterbug smartphones and other health and emergency response electronics for seniors, from buyout firm GTCR for $800 million in cash.

  • Why it's the BFD: Because it's the dog days of summer and I felt we all needed a Wham gif? Not good enough? Okay, how about because America's aging demography — and corresponding care spend — is pushing tech companies to develop products for seniors, whereas they've traditionally focused more on younger, earlier adopters.
  • Bonus: GTCR acquired the company just 14 months ago and wasn't looking to sell, but managing director Dave Donnini tells me that Best Buy reached out and was "very persistent."
  • Bottom line: "The GreatCall devices will be part of Best Buy’s new Assured Living unit, which sells networked products like smart doorbells and bed sensors in 21 markets to remotely monitor the health and safety of aging Americans." — Matthew Boyle, Bloomberg
Venture Capital Deals

Deposit Solutions, a German open banking platform, raised $100 million at a $500 million post-money valuation. Vitruvian Partners led, and was joined by Kinnevik and return backers like e.ventures. http://axios.link/0XaV

Progressa, a Canadian consumer loan platform, raised C$84 million in Series B funding. Gravitas Securities and Canaccord Genuity co-led, and were joined by Eight Capital and Paradigm Capital. http://axios.link/8G2N

Sila Nano, an Alameda, Calif.-based developer of new materials for batteries, raised $70 million in Series D funding. Sutter Hill Ventures led, and was joined by Next47, Amperex Technology and return backers like Bessemer Venture Partners. www.silanano.com

Sendo, a Vietnamese online selling platform, raised $51 million in Series B funding. SBI Group led, and was joined by SoftBank Ventures Korea, Daiwa PI Partners and SKS Ventures. http://axios.link/Bjr3

Thunder Stone Technology, a Chinese maker of karaoke systems, raised $29 million in Series B funding. China Minsheng Investment Group led, and was joined by Morningside Venture Capital. http://axios.link/nomo

⛽ Arcadia Power, a Washington, D.C.-based provider of renewable energy to residential customers raised $25 million. G2VP led, and was joined by ValueAct Spring Fund, McKnight Foundation, Energy Impact Partners, Cendana Capital, Wonder Ventures and BoxGroup. http://axios.link/jksR

RevJet, a San Carlos, Calif.-based ”ad experience platform,” raised $21 million in Series A funding led by Nautic Partners. http://axios.link/Zry4

Clobotics, a Shanghai-based developer of computer vision solutions for the wind power and retail industries, raised $11 million in Series A funding from Nantian Infotech VC, Wangsu Co. and return backers KTB Network, GGV Capital and Capital Development Investment Fund Management. www.clobotics.com

🚑 Blueberry Therapeutics, a British developer of nanomedicines for treating skin and nail infections, raised £10 million in Series B funding from China Medical Venture Investment and A&B. http://axios.link/f0ia

Backbone PLM, a Boulder, Colo.-based product development platform, raised $8 million in Series A funding. Signal Peak Ventures led, and was joined by Grotech Ventures, Spider Capital, Novel TMT Ventures, Beanstalk Ventures, Brainchild Holdings and Peterson Ventures. http://axios.link/mu9Y

Vogo, an Indian scooter sharing startup, raised around $7 million in Series A funding co-led by ANI Technologies, per LiveMint. http://axios.link/7xEx

BabelBark, a Newton, Mass.-based developer of veterinary practice software, raised $4.5 million in Series A funding from undisclosed backers. www.babelbark.com

Private Equity Deals

IFS Group, a Birmingham, Mich.-based portfolio company of The Riverside Company, acquired SET Industrial Services, a provider of industrial cleaning and on-site facility services in the Midwest. www.enviroset.com

🚑 Medlogix, a Hamilton, N.J.-based portfolio company of Excellere Partners, has acquired Integrity (Minneapolis) and MEG (Southfield, Mich.), two providers of medical examinations, medical record reviews and peer reviews. www.medlogix.com

Mill Point Capital acquired the insurance unit of Stamford, Conn.-based Affinion Group. www.affinion.com

Providence Strategic Growth acquired and merged two companies: ExakTime, a Calabasas, Calif.-based provider of time and attendance software for the construction and field services markets, and BirdDogHR, a Des Moines, Iowa-based provider of talent management software for skilled trade industries like construction. www.acoro.com

Public Offerings

🚑 111, a Chinese online pharmacy, filed for a $200 million IPO. It plans to trade on the NYSE (YI) with J.P. Morgan as lead underwriter. http://axios.link/5Seg

Babytree Group, a Chinese online parenting community, is prepping a $1 billion Hong Kong IPO for October, per Reuters. Shareholders include Alibaba and Fosun International. http://axios.link/jCJv

Liquidity Events

Lagardere (Paris: LAGA) agreed to buy Hojeij Branded Foods, an Atlanta-based provider of airport restaurants, for $330 million from Morgan Stanley Private Equity and Constitution Capital Partner. http://axios.link/tdQG

More M&A

🚑 CareTech (LSE: CTH) agreed to buy Cambian Group (LSE: CMBN), a British provider of special ed and behavioral health services for children, for upwards of £372 million. http://axios.link/LOlR

Starboard Value, an activist investor, has taken a 5.8% stake in Symantec (Nasdaq: SYMC) and nominated five directors to the company’s board. http://axios.link/ByVN

Fundraising

Matrix Partners raised $300 million for its third India-focused VC fund, per an SEC filing. www.matrixpartners.com

Pantera Capital, a venture firm focused on the blockchain and crypto-asset sectors, is seeking upwards of $175 million for its third fund, per TechCrunch. http://axios.link/SD29

Ridgemont Equity Partners raised $1.25 billion for its third fund, which could raise upwards of $1.5 billion, per an SEC filing. www.ridgemontep.com

It's Personnel

🚑 Steven Kafka, former president and COO of Foundation Medicine, joined Third Rock Ventures as a venture partner. http://axios.link/csP3

Final Numbers
Source: PitchBook, data through August 1, 2018

Erin Griffith recently wrote in the NY Times about how $100 million+ venture rounds have become common, which won't come as a surprise to Pro Rata readers. But there were some very notable quotes from Benchmark's Bill Gurley, who just two years ago was all RIP Good Times 2.0, predicting unicorn casualties:

“If your competitor is going to raise $150 million and you want to be conservative and only raise $20 million, you’re going to get run over... You have to adjust to the reality and play the game on the field."

In other words, what died was active fear of a correction. Not unicorns.

Dan Primack

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