Jun 19, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Trumpland: The White House is referring to this as "Tech Week," with meetings scheduled for today and Thursday that will include at least a few venture capitalists. But figuring out the exact attendees has been challenging, as many VC firms are wary about even being seen in the same room as Donald Trump.

  • Monday: Today's meeting was organized by the Office of American Innovation led by Jared Kushner (who is then bailing on "Tech Week" for the Middle East), and will focus on modernizing government. Attending VCs include Peter Thiel (no surprise) and John Doerr (yes, a surprise). Also there will be top tech execs like Tim Cook, Satya Nadella and grocery store magnate Jeff Bezos.
  • Thursday: But most of the VC firm invites were for Thursday's meeting, a series of working groups focused on such things as drones, self-driving cars and IoT. And it's here that things get dicey, particularly because it will include a roundtable with Trump that is sure to double as a photo op. John Doerr, for example, isn't attending, nor is anyone from his firm, Kleiner Perkins. In fact, so far we've been unable to find a single VC firm that will confirm its attendance. Plenty have said they won't be there, either by choice or by lack of invite ― General Catalyst, 8VC, Social Capital, TPG, General Atlantic, Union Square Ventures, Battery Ventures and First Round Capital.
  • Profiles in no comments: Then there are those playing coy. Accel, NEA and Sequoia Capital all received invitations, but are not yet saying if any partners will attend. Andreessen Horowitz and Revolution both declined repeated requests for comment, which is notable given their typical loquaciousness.
  • Learn more: David McCabe has a full breakdown of the meeting plans.

• AWF: On Friday we mentioned that the Amazon/Whole Foods deal should worry Instacart, which last year signed a five-year agreement that made Instacart the exclusive delivery service for Whole Foods' perishable items. But Axios has since learned that Whole Foods does not have a contractual "out," as the agreement includes neither a Whole Foods change of control provision nor the option for Whole Foods to pay some sort of termination fee. So let me recalibrate Instacart's future fortunes:

  • Bull case: Instacart's has spent the past few years warning grocers that Amazon is coming for them, and it's hard to imagine there are any more non-believers after Friday. That should help it sign up more new chains ― it recently expanded its reach into Publix, Wegmans and Ahold ― thus making Whole Foods less important to its own top line (where it currently represents just under 10% of all Instacart revenue). Plus, it could use its Whole Foods contract to delay Amazon's own delivery expansion plans.
  • Bear case: Amazon doesn't mind playing the long game. Remember, this is the same company that bought into something called HomeGrocer.com back in 1999. It's also possible that Amazon could pursue an efficient breach of contract with Instacart, whereby it determines that the legal damages will be less than the eventual gains of delivering Whole Foods groceries on its own.
The BFD

Casper, a New York-based direct-to-consumer mattress maker and retailer, has raised $170 million in Series C funding. Target Corp. (NYSE: TGT) led the round, after reportedly having been in earlier talks to acquire Casper outright. Other investors include Tresalia Capital, Lerer Hippeau Ventures, Norwest Venture Partners, Institutional Venture Partners, NEA, Irving Capital and individual angels like 50 Cent, Kevin Spacey, Carmelo Anthony and Andre Iguodala.

  • Why it's the BFD: Because it's the latest example of the rapidly converging e-commerce and physical retail worlds, following last Friday's Amazon/Whole Foods and Walmart/Bonobos deals. For Casper, it's about gaining consumer visibility. For Target, it's about better understanding direct-to-consumer selling via digital.
  • Top-line: Casper reports more than $200 million in revenue for 2016, compared to around $100 million for 2015.
  • Remember: Casper may sell via online channels, but it's still much more of a retail company than a tech company.
  • Bottom line: "The reality that we face is that a vast majority of people don't know that we exist." ― Casper CEO Philip Krim to the NY Times.
Venture Capital Deals

• ClassPass, a New York-based subscription service for fitness classes, has raised $70 million in Series C funding. Temasek led the round, and was joined by return backers GV, General Catalyst, Acequia Ventures, CRV, M13 and Thrive Capital. http://tcrn.ch/2rpgVPa

• Samba TV, a San Francisco-based TV audience data and analytics company, has raised $30 million in Series B funding. Union Grove Venture Partners led the round, and was joined by Disney, Interpublic Group, MDC Ventures, Time Warner, A+E Networks, TGM, Draper Associates and Ambition VC. www.samba.tv

• Augury, a New York-based industrial IoT startup focused on mechanical diagnostics, has raised $17 million in Series B funding. Eclipse Ventures and Munich Re/HSB Ventures co-led the round, and were joined by Sound Ventures, First Round Capital, Lerer Hippeau Ventures and Pritzker Group Venture Capital. www.augury.com

🚑 Mindstrong Health, a Palo Alto, Calif.-based startup focused on the diagnosis and treatment of neuropsychiatric disorders, has raised $14 million in Series A funding. Foresite Capital and Arch Venture Partners co-led the round, and were joined by Optum Ventures, Berggruen Holdings and the One Mind Brain Health Impact Fund. www.mindstronghealth.com

• Atrium LTS, a legal tech startup founded by serial entrepreneur Justin Kan (Justin.tv, Twitch), has raised $10.5 million in first-round funding. General Catalyst led the round, and was joined by dozens of other firms and individuals. http://tcrn.ch/2rAIFj9

• Common Networks, a San Francisco-based Internet service provider startup, has raised $7 million from Eclipse Ventures and Lux Capital. http://bit.ly/2rkuYWh

• Goodera (f.k.a. NextGen), an India-based platform that connects companies with nonprofits, has raised $5.5 million in Series A funding from Nexus Venture Partners, Omidyar Networks and Varsha Rao (ex-Airbnb). http://bit.ly/2sMMM02

• Fairy, a San Francisco-based home-cleaning startup, has raised $4.1 million in seed funding from CrunchFund and individual angels like Naval Ravikant and Gil Penchina. http://tcrn.ch/2sf0XbA

🚑 FraudScope, an Atlanta-based SaaS platform aimed at reducing healthcare billing fraud, has raised $1.5 million in seed funding from Spider Capital, GRA Venture Fund, TechSquare Labs and Mosley Ventures. http://bit.ly/2rGjTml

Private Equity Deals

• Apollo Global Management and Ontario Teachers' Pension Plan have agreed to acquire CareerBuilder, a Chicago-based provider of human capital solutions, from TEGNA (NYSE: TGNA) for around $250 million in cash. http://reut.rs/2qVbVEf

• The Blackstone Group and Celenese Corp. (NYSE: CE) have agreed to merge with their cellulose acetate tow groups (used in cigarette filters) into a single company. Celanese will receive $1.6 billion in cash via the transaction. http://reut.rs/2sNFR6P

• CCMP Capital Advisors, MSD Partners and Alberta Investment Management Corp. have agreed to acquire Hayward Industries, an Elizabeth, N.J.-based manufacturer of residential and commercial pool equipment. No financial terms were disclosed. www.haywardindustries.com

⛽ Chrysaor, a North Sea-focused oil company backed by EIG Partners, has received European Commission approval to acquire a large portion of Royal Dutch Shell's North Sea oil and gas assets for $4.7 billion. http://reut.rs/2tihDPu

• Eurazeo and Goldman Sachs Merchant Banking have completed their previously-announced $680 million acquisition of Dominion Web Solutions, a Norfolk, Va.-based platform of branded marketplaces and digital marketing solutions for the powersport, RV, commercial truck and equipment industries. http://bit.ly/2q8j2Hc

⛽ First Reserve has agreed to acquire the pipeline integrity maintenance platform of EMS USA. No financial terms were disclosed. www.emsusainc.com

• GP Investimentos and Cambuhy Investimentos are both circling Brazil-listed sportswear and shoemaker Alpargatas, which currently is held by the billionaire Batista family, according to Reuters. http://reut.rs/2rMx7cJ

• Hero K12, a Miami Lakes, Fla.-based provider of student behavior management applications, has raised over $150 million in equity funding from BV Investment Partners. www.herok12.com

• Hopu Investment Management and Hillhouse Capital have added Chinese homebuilder China Vanke to their bid for Global Logistic Properties, a Singapore-listed logistics facilities company with a market cap of around $10 billion, according to Reuters. http://reut.rs/2shI5Kz

🚑 Main Capital has acquired a majority stake in Verklizan, a Dutch provider of a connected healthcare platform for social alarms are remote care. No financial terms were disclosed. www.verklizan.com

• Marlin Equity Partners has completed its $6.50 per share take-private acquisition of Tangoe, a Parsippany, N.J.-based provider of tech lifecycle management solutions that will be combined with existing Marlin portfolio company Asentinel. www.tangoe.com

Public Offerings

• Altice USA leads this week's expected IPO pricings, which also should include three REITs and three blank-check companies. http://bit.ly/2rMt9Aw

• Blue Apron, a New York-based meal kit subscription service, has set its IPO terms to 30 million shares being offered at between $15 and $17 per share. It would have a fully-diluted valuation of around $3.58 billion, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol APRN, with Goldman Sachs listed as left lead underwriter. Blue Apron reports a $55 million net loss on $795 million in revenue for 2016, compared to a $47 million net loss on $341 million in revenue for 2015. Shareholders include Bessemer Venture Partners (23.8% pre-IPO stake), First Round Capital (10.5%), Stripes Group (6.5%) and Fidelity Investments (6.2%).

• Delivery Hero, a European meal delivery company, has set its Frankfurt IPO terms to up to 39 million shares being offered at between 22 and 25.50 per share, with 15 million shares coming from existing investors like Rocket Internet. http://reut.rs/2rMD0GI

Liquidity Events

• BrideClick has acquired the assets of Mode Media, a California-based online media company that shut down last year after raising over $200 million in VC funding. http://tcrn.ch/2sqNopt

• Quadrant Private Equity is in advanced talks to sell Zip Industries, an Australian maker of instant hot water systems and filtered taps that could be worth upwards of A$120 million, according to The Australian. http://bit.ly/2rHn6lI

More M&A

• China Eastern Air Holdings has agreed to sell a 45% stake in its freight unit to Legend Holdings (25%), Global Logistic Properties (10%), Deppon (5%) and Greenland Financial (5%). No financial terms were disclosed. China Eastern will retain another 45%, while the remaining 10% stays with company employees. http://reut.rs/2rvusVn

⛽ EQT Corp. (NYSE: EQT) has agreed to acquire Rice Energy (NYSE: RICE), a Canonsburg, Penn.-based oil and gas company, for $6.7 billion in cash and stock. http://reut.rs/2tjMAmg

• Europcar (Paris: EUCAR) has agreed to acquire Spain-based budget car rental company Goldcar at an enterprise value of €550 million. http://reut.rs/2sGSBLX

• Fortress Investment and Elliott Management have ended talks to acquire upwards of $29 billion worth of bad debt from troubled Italian lender Monte dei Paschi di Siena, according to Reuters. http://reut.rs/2sNWj7a

• Mubadala Development Co., an Abu Dhabi sovereign wealth fund, is in talks to acquire a 50% stake in Viceroy Hotel Group, per the FT. http://on.ft.com/2sh7La9

🚑 PerkinElmer (NYSE: PKI) has agreed to acquire Germany's Euroimmun Medical Laboratory Diagnostics for around $1.3 billion in cash. http://reut.rs/2rv0mBf

🚑 Stryker Corp. (NYSE: SYK) has agreed to acquire Novadaq Technologies (Nasdaq: NVDQ), a Canadian maker of fluorescence imaging products for use by surgeons, for $701 million in cash, or $11.75 per share. http://on.mktw.net/2tk7FNI

Fundraising

• Alpine Investors, a San Francisco-based private equity firm focused on the lower middle markets, has closed its sixth fund with $532 million in capital commitments. http://bit.ly/2rI2mKx

• Aspect Ventures is raising upwards of $175 million for its second fund, according to regulatory filings. www.aspectventures.com

• HC Private Investments has launched as a Chicago-based private equity firm focused on lower middle-market manufacturing companies, according to Buyouts newsletter. The firm is co-founded by John Kelly (ex-Tokarz Group) and Matt Moran (ex-Wind Point Partners). http://bit.ly/2tk0zIQ

• Permira is planning to raise both a new Asia-focused fund and a new growth equity funding, according to Dow Jones. http://bit.ly/2tjgc3l

It's Personnel

• Jerry Albright will serve as interim chief investment officer for the Texas Teachers' Retirement System, where he has been deputy CIO, following the departure of Britt Harris for UTIMCO.

• Joe Tucci, former chairman and CEO of EMC, has been named a special advisor to Israel and Europe-focused VC firm 83North. www.83north.com

Dan Primack