Nov 14, 2017

Axios Pro Rata

Dan Primack

Greetings from San Francisco, where this afternoon I'll interview Goldman Sachs' Internet banking chief, Kim Posnett, at the Virtuous Circle Summit. Then it's a red-eye back to Boston, so please preemptively forgive any typos and/or general incoherence in tomorrow's edition. Here we go...

Top of the Morning

Steve Jurvetson yesterday stepped down as a partner with venture capital firm DFJ, over apparent allegations of sexual misconduct. He is the highest profile – and most successful – venture capitalist to leave his job for such reasons, and also will go on leave as a board member with SpaceX and Tesla Motors.

Here's what we've learned so far:

  • Jurvetson's name was bandied about this past summer in the aftermath of the Justin Caldbeck situation, with some reporters calling DFJ to inquire. DFJ had not received any internal or external complaints at the time, but hired an outside attorney to investigate. The attorney interviewed DFJ staffers and was given full access to firm emails.
  • Last month a former girlfriend of Jurvetson's (yes, he was married) hinted at misconduct via a Facebook post, but declined to elaborate when contacted by reporters (same went for her attorney, except for confirming that her allegations were personal in nature, not professional). As of the middle of last week, she also had declined to be interviewed by the DFJ investigator.
  • Through the end of last week, Jurvetson still was a fully-functioning partner at DFJ. Other partners were still unaware of any allegations beyond the aforementioned Facebook post.
  • But Jurvetson had been made aware that some other allegations were soon to become public (it's unclear how, although my assumption is via a media report that has still yet to materialize). A mutual decision was made over the weekend for him to leave DFJ, with limited partners informed on Monday morning.
  • Jurvetson statement: "I am leaving DFJ to focus on personal matters, including taking legal action against those whose false statements have defamed me."
  • It makes sense that Jurvetson and DFJ wouldn't want such legal battles to occur while he remains a partner, but it is worth emphasizing that Jurvetson quit to fight defamation that doesn't appear to have actually occurred yet.
  • DFJ's statement: "As of today and by mutual agreement, Steve Jurvetson will be leaving DFJ. DFJ's culture has been, and will continue to be, built on the values of respect and integrity in all of our interactions. We are focused on the success of our portfolio companies, as well as the long-term vision for the firm and will continue to operate with the highest professional standards."
  • DFJ's annual meeting of limited partners takes place today. Investors I spoke with expressed support for the remaining team, but there clearly is concern as Jurvetson was considered a forward-thinking superstar investor. Also, because this all came down so quickly, DFJ has not yet worked out what it plans to do with all of Jurvetson's board seats.

• Not next up: Apollo Global Management yesterday promoted Scott Kleinman and James Zelter to the new position of co-presidents. A source close to the firm insists that this is about improving operations rather than succession planning, pointing out that Apollo's founding team is young by industry standards.

• Sigh: Rep. Diane Black (R-TN), chair of the House Budget Committee, this morning was asked on CNBC why the House and Senate tax bills didn't make more substantive changes to how carried interest is treated. Her reply was about how Congress wouldn't want to punish auto dealers, who pay interest on inventory that they carry. Seriously. And she gets a vote.

• New fund alert: Bedrock Capital, a new VC firm led by Geoff Lewis (ex-Founders Fund) and Eric Stromberg (ex-Google), has raised over $118 million for its debut fund, per an SEC filing. Word is that a subsequent close is coming – despite the fund's initial $100 million target – and that the plan is to lead Series A and Series B rounds with a highly-concentrated portfolio strategy.

The BFD

Roark Capital Group has made an unsolicited offer to buy Minneapolis-based restaurant chain Buffalo Wild Wings (Nasdaq: BWLD) for around $2.3 billion, or over $150 per share. This comes after the company lost a proxy battle with activist investor Mercato Capital Management over the summer, which resulted longtime CEO Sally Smith announcing her retirement.

  • Why it's the BFD: Because Roark is widely credited with reviving Arby's, a restaurant brand that had been left for dead. Now it's trying to preempt Buffalo Wild Wings from heading down a similar path of irrelevance.
  • Price context: Buffalo Wild Wings shares closed trading yesterday at $117.25, but jumped over 27% in aftermarket trading. Its all-time high was $201.14 in Sept. 2015, and one year ago was trading at over $160 per share. One big problem over the past year was an increase in chicken wing prices, which the company has tried to mitigate by emphasizing boneless wings.
  • Are boneless wings actually chicken wings? No.
Venture Capital Deals

🚑 Collective Medical, a Salt Lake City-based network for healthcare collaboration, has raised $47.5 million in Series A funding. Kleiner Perkins led, and was joined by Bessemer Venture Partners, Maverick Ventures, Kaiser Permanente Ventures, Providence Ventures, Peterson Ventures and Epic Ventures. www.collectivemedical.com

🚑 Syapse, a San Francisco-based personalized oncology company, has raised $30 million in Series D funding. Amgen Ventures, Medidata Solutions, Merck Global Health Innovation Fund and Roche Venture Fund were joined by return backers Ascension Ventures, GE Ventures, Intermountain Healthcare Innovation Fund, Safeguard Scientifics and Social Capital. http://axios.link/dvJR

• ThreatQuotient, a Reston, Va.-based cyberthreat intelligence platform, has raised $30 million in Series C funding. Adams Street Partners led, and was joined by Cisco Investments, NTT DoCoMo Ventures, SVB and return backer NEA. http://axios.link/thQW

🚑 LeanTaaS, a Santa Clara, Calif.-based healthcare operations platform, has raised $26 million in Series B funding led by Insight Venture Partners. www.leantaas.com

• LightStep, a San Francisco-based application performance management startup, has raised $20 million in Series B funding. Sequoia Capital led, and was joined by return backers Redpoint Ventures, Cowboy Ventures and Harrison Metal. http://axios.link/yole

• Quantum Circuits, a New Haven, Conn.-based developer of quantum computers, has raised $18 million in Series A funding co-led by Canaan Partners and Sequoia Capital. http://axios.link/zoRn

• Bossa Nova, a San Francisco-based developer of autonomous service robots for the retail market, has raised $17.5 million in Series B funding. Paxion led, and was joined by Intel Capital, WRV Capital, Lucas Venture Group and Cota Capital. www.bossanova.com

• Airside Mobile, an Arlington, Va.-based mobile passport app, has raised $6 million in Series A funding. Blazar Ventures and Grotech Ventures co-led, and were joined by Bain Capital Ventures and 8VC. http://axios.link/TAU8

• Lofelt, a Berlin-based developer of haptic technologies, has raised $5.4 million in Series A funding. Wolfman.One led, and was joined by Q Venture Partners, Coparion and return backer Horizons Ventures. http://axios.link/emHi

• GreenRush, online marketplace for purchasing cannabis, has raised $3.6 million in Series A funding from individuals like James Weil (JMM Industries) and Chris Burggraeve (ex-Anheuser-Busch InBev). http://axios.link/e9ks

🚑 Genialis, a Houston-based provider of gene sequencing data solutions, has raised $2.3 million in seed funding co-led by Redalpine Venture Capital and First Star Venture Capital. www.genialis.com

Private Equity Deals

• The Blackstone Group has agreed to acquire a majority stake in Cloverleaf Cold Storage, a Sioux City, Iowa-based cold storage warehousing and food logistics company that had been owned by the Feiges and Kaplan families. www.cloverleaf.com

• Pet Circle, an Australian pet food and supplies e-commerce company, has raised an undisclosed amount of growth equity funding led by Francisco Partners. www.petcircle.com.au

• Qualcomm (Nasdaq: QCOM) formally rejected an unsolicited $103 billion takeover offer from rival chipmaker Broadcom (Nasdaq: AVGO), which was backed by private equity firm Silver Lake. Broadcom says it remains committed to getting a deal done. http://axios.link/pj0P

• Rosewood Private Investments has acquired a majority stake in ProTec Laboratory, a Quitman, Texas-based provider of contract manufacturing services to consumer brands in the dietary supplement, sports nutrition and pet care industries. www.proteclab.com

• TPG Growth has acquired a majority stake in Mendocino Farms, a Los Angeles-based sandwich and salad chain. Existing shareholders include Whole Foods. http://axios.link/cBFl

• Värde Partners has acquired CreditShop, an Austin, Texas-based provider of loans to those with bad credit. http://axios.link/sPrY

• Vestar Capital Partners has agreed to buy Nonni's Foods, a Tulsa, Okla.-based biscotti-maker, from Wind Point Partners. www.nonnis.com

Public Offerings

• AXA Equitable Holdings, the financial services unit of France's AXA SA, has filed for a $100 million IPO. That's a placeholder figure, with Renaissance Capital estimating that the actual raise could be upwards of $3 billion. http://axios.link/T3yZ

• CATL, a Chinese battery maker, is prepping a Shenzhen IPO that could raise around $2 billion at a $20 billion valuation. http://axios.link/4G6u

🚑 Denali Therapeutics, a South San Francisco-based biotech focused on neurodegenerative diseases, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker DNLI, with Goldman Sachs serving as lead manager. The pre-revenue company has raised around in VC funding, from the Alaska Permanent Fund (28.1% pre-IPO stake), Arch Venture Partners (15.3%), Flagship Ventures (12.3%), F-Prime Capital Partners (6.8%) and Fidelity Biosciences (5.8%). http://axios.link/DeAb

• LexinFintech Holdings, a Chinese online consumer lender, has filed for a $500 million IPO. It plans to trade on the Nasdaq under ticker LX, with Goldman Sachs (Asia) serving as lead manager. Shareholders include Matrix Partners China and JD.com. http://axios.link/1Lwi

🚑 Odonate Therapeutics, a San Diego-based developer of chemotherapy drugs, has filed for a $172.5 million IPO. It plans to trade on the Nasdaq under ticker ODT, with Goldman Sachs and Jefferies serving as lead managers. Shareholders in the pre-revenue company include Janus Capital (4.3% pre-IPO stake), Arcus Ventures (1.5%) and Samsara BioCapital (1.3%). www.ordonate.com

• TFI, a Turkish company that is Burger King's largest franchisee outside the U.S., has filed for a $400 million IPO. It plans to trade on the Nasdaq under ticker QSRG, with Morgan Stanley serving as lead underwriter. http://axios.link/W4rz

More M&A

• Amazon (Nasdaq: AMZN) has agreed to sell its Chinese web services business to longtime partner Beijing Sinnet Technology for up to $300 million. http://axios.link/XzPt

• American Tower (NYSE: AMT) has agreed to acquire 20,000 mobile telecom towers in India from Idea Cellular and Vodafone India for $1.2 billion. http://axios.link/rgc3

• Flagstar Bancorp (NYSE: FBC) has agreed to acquire eight Desert Community Bank branches in San Bernadino County, Calif. That have around $600 million in deposits and $70 million in loans. http://axios.link/y6Oq

• Liu Zhongtian, founder of a Hong Kong-listed aluminium products maker, has called off his investment firm's planned $2.33 billion acquisition of Cleveland-based Aleris Corp., after failing to win U.S. regulatory approval. Aleris is owned by Oaktree Capital and Apollo Global Management, via debt restructurings related to its 2009 bankruptcy (through which prior equity owner TPG exited). http://axios.link/O2di

Fundraising

• GI Partners has closed its fifth private equity fund with $2.7 billion in capital commitments. www.gipartners.com

• Kennedy Lewis Capital Partners is raising up to $500 million for its debut credit opportunities fund, per an SEC filing. The New York-based firm is led by Darren Richman (ex-GSO) and David Chene (ex-CarVal Investors).

• One Way Ventures, a Boston-based VC firm focused on immigrant tech founders, is raising up to $50 million for its debut fund, per an SEC filing. The firm is led by ex-TechStars Boston directors Semyon Dukach and Eveline Buchatskiy.

It's Personnel

• John Mannes is the latest person to ride the TechCrunch-to-VC highway, having joined the investment team of Basis Set Ventures.

• Roland Wee has joined crowdfunding platform OurCrowd as a managing director of Asia operations. He previously was CEO of HSBC Securities Singapore. www.ourcrowd.com

Final Numbers
  • More: Year-to-date global real estate M&A has hit an all-time record, boosted by Brookfield Asset Management's bid for the 65% stake it doesn't already hold in Chicago-based shopping mall operator GGP.
Dan Primack