May 31, 2017

Axios Pro Rata

Top of the Morning

• Time management: There was an interesting, and at times heated, social media debate yesterday over the amount of time that many VCs expect tech founders to work on their startups, and if such expectations are reasonable. It was prompted by this Medium post by David Heinemeier Hasson (Basecamp founder, Ruby on Rails creator):

"There's an ingrained mythology around startups that not only celebrates burn-out efforts, but damn well requires it. It's the logical outcome of trying to compress a lifetime's worth of work into the abbreviated timeline of a venture fund... Not only are these sacrifices statistically overwhelmingly likely to be in vain, they're also completely disproportionate. The programmer or designer or writer or even manager that gives up their life for a 80+ hour moonshot will comparably-speaking be compensated in bananas, even if their lottery coupon should line up... Workaholism is a disease. We need treatment and coping advice for those afflicted, not cheerleaders for their misery."

My gut reaction was that David generalizes a bit too much, in terms of both VC demands and founder/employee capacity for ― and time for ― effective labor. Some people work best with nine hours sleep per night, while some get by just fine with six. Some people enthusiastically sacrifice family obligations for work ones, others value their responsibilities differently. Some VCs recognize and readily accommodate such diversity, others want one size to fit all (of their portfolio companies). And being a founder, of course, isn't for everyone ― nor must founders necessarily raise traditional venture capital (particularly if they are willing to more slowly grow the business).

Seems this would be a good topic for our first Pro Rata mailbag, which I swear is coming soon. So shoot me your thoughts via email (just hit reply), and any published replies will only use your first name (no last names or company names).

• It's been a while: In 2009, Greg McAdoo of Sequoia Capital led a $600,000 seed round into Airbnb at an issue price of just two cents per share. Four years later he left Sequoia after a 12-year run, and has since kept a very low profile. Well, until now.

McAdoo has quietly joined Bolt, a hardware-focused VC accelerator and investor that just raised $80 million for its third fund (per an SEC filing). He'll be the Boston-based group's first San Francisco-based partner, and third overall (joining Ben Einstein and Axel Bichara). No comment yet from Bolt or McAdoo.

• Post-Yellen: Mike Allen this morning reports that former Goldman Sachs president and current Trump economic advisor Gary Cohn is in the running for WH Chief of Staff, if the President opts to dump Reince Priebus. But here's the more tantalizing part:

Cohn, who'd love the job as chief, is nonetheless rightly wary of that particular promotion, and instead is keeping his eye on an even grander prize. Friends say that after his current gig, Cohn would love to be named ... chair of the Federal Reserve.

• From the Playground: Android founder Andy Rubin this week unveiled the new smartphone he's been working on, and Ina Fried got details on his investors.

• Perfect pricing: We're hearing a lot of talk about the stock markets being "fully valued" right now, particularly as skepticism continues to build over federal tax reform getting done in 2017. The latest to jump between bulls and bears yesterday were BlackRock's Larry Fink (at a Deutsche Bank conference) and Omega Advisors' Leon Cooperman (on CNBC).


Outcome Health, a Chicago-based company that provides ad-supported patient information content via touchscreens in doctor's offices and waiting rooms, has closed on over $500 million at a $5 billion pre-money valuation. Backers include Goldman Sachs Investment Partners, CapitalG, Leerink Transformation Partners, Pritzker Group Venture Capital and Balyasny Asset Management. The company previously was known as ContextMedia, before purchasing rival AccentHealth last year.

  • Why it's the BFD: For Chicago, this is now the city's most highly-valued tech startup since Groupon's halcyon days. For medical practices, it's an ad-supported way to save costs on patient distraction during lengthy waits or outpatient procedures like chemotherapy or dialysis (plus showing 3D models in exam rooms). For pharma, it's a new frontier in the dodgy practice of in-office promotion.
  • Bottom line: "For drug companies, the value proposition is obvious: reach patients when they are thinking about their health, in the doctor's waiting room or in the exam room itself. Outcome Health claims it has tablets or wall-mounted screens in 40,000 or so doctor's offices, which it says accounts for 20% of U.S. doctor's offices." ― Alex Konrad & Matthew Herper, Forbes
Venture Capital Deals

• GameMine, a subscription service for casual mobile games, has raised $20 million in Series A funding led by Palisades Venture Capital.

🚑 InventisBio, a Shanghai-based developer of cancer and gout therapeutics, has raised $19 million in Series B funding. OrbiMed Asia Partners led the round, and was joined by return backer Lilly Asia Ventures.

• TouchBistro, a Toronto-based provider of iPad point-of-sale solutions for restaurants, has raised C$16.3 million in Series C funding. Napier Park Financial Partners and Recruit Holdings co-led the round, and were joined by BDC IT Venture Fund, Relay Ventures, and Kensington Capital Partners.

🚑 Hyalex Orthopaedics, a Lexington, Mass.-based medical device company that has developed a synthetic polymer that mimics cartilage, has raised $16 million in Series A funding. Canaan Partners led the round, and was joined by Osage University Partners and Johnson & Johnson Innovation.

🚑 Inthera Bioscience, a Swiss developer of treatments for cancers associated with HPV, has raised €9.6 million in Series A funding. Return backer Merck Ventures led the round, and was joined by Aglaia BioMedical Ventures and Novo Seeds.

• Epic, an on-demand digital book library aimed at kids, has raised $8 million in Series C funding. Reach Capital led the round, and was joined by TransLink Capital, Rakuten Ventures, Menlo Ventures, WI Harper, Brighteye Ventures and Innovation Endeavors.

• Magicpin, an India-based provider of location software to aid in retail consumer experience analytics, has raised $7 million in Series B funding from return backers like Lightspeed India Partners and Westbridge.

🚑 Carrum Health, a San Francisco-based bundled payment platform for employers, has raised $6.5 million in seed funding. Wildcat Venture Partners led the round, and was joined by SJF Ventures and SpringRock Ventures.

• Minima Processor, a Finnish developer of microprocessor technologies, has raised €5.5 million in seed funding from VTT Ventures, CFT Nordic Capital and Aalto University.

• Data Inventions, a Fairview, Penn.-based provider of analytics software for traditional machine tools, has raised an undisclosed amount of VC funding from CincyTech and NCT Ventures.

Private Equity Deals

• The Blackstone Group has acquired an undisclosed stake in Entic, a Pembroke Pines, Fla.-based provider of energy consumption and efficiency analytics software.

• Bridgepoint, Charterhouse and CVC Capital Partners have submitted first-round takeover bids for Iberchem, a Spanish fragrance maker being sold by Magnum Capital Industrial Partners, according to Reuters. Investment bank PJT Partners is managing the process, which could value the company at around €400 million.

• General Atlantic has acquired an undisclosed stake in Grupo Axo, a Mexican multi-brand retailer, from sellers like restaurant operator Alsea.

• Gridiron Capital has acquired a controlling stake in Rough Country, a Dyersburg, Tenn.-based provider of off-road aftermarket performance suspension products and accessories, from Audax Private Equity (which will retain a minority stake). No financial terms were disclosed.

• HGGC has agreed to acquire a majority stake in Idera, a Houston-based provider of database management software, at an enterprise value of $1.125 billion (including debt). The seller is TA Associates, which is expected to retain a minority stake.

• KPS Capital Partners has agreed to acquire DexKo Global, a Novi, Mich.-based auto parts maker, from The Sterling Group for an undisclosed amount.

• Logix Communications, a bandwidth infrastructure services provider owned by Astra Capital Management, has agreed to acquire Alpheus Communications, a Houston-based provider of telecom and data center services, from Gores Group. No financial terms were disclosed.

• Market Logic, a German provider of enterprise SaaS marketing information systems, has raised €45 million in equity funding from GENUI, Summit Partners and existing shareholder Sycamore Partners.

• Mediware Information Systems, a Lenexa, Kansas-based portfolio company of TPG Capital, has agreed to acquire Kinnser Software, an Austin, Texas-based provider of software for home health and hospice providers, from Insight Venture Partners. No financial terms were disclosed.

• MyRepublic, a Singapore Internet service provider, is talking with private equity firms about partnering on a bid for local wireless carrier M1 Ltd., according to Bloomberg. M1 has a current market cap of around US$1.5 billion.

• Optimal Blue, a Plano, Texas-based enterprise lending company owned by GTCR, has acquired Comergence Compliance Monitoring, a Mission Viejo, Calif.-based provider of software that lets mortgage investors to perform due diligence and ongoing monitoring of their third party originators. No financial terms were disclosed.

• Seaboard Folding Box Co., a -based portfolio of Charter Oak Equity, has acquired Imperial Packaging, a Pawtucket, R.I.-based maker of packaging products like folding cartons, for an undisclosed amount.

• SoftBank has acquired a "significant minority equity interest" in OSIsoft, a San Leandro, Calif.-based provider of operational intelligence solutions and real-time data analytics for industry. Selling shareholders include Kleiner Perkins, Technology Crossover Ventures and Tola Capital. The deal is not initially being done out of SoftBank's Vision Fund, but a source familiar with the matter says that it likely will be offered to Vision Fund's investment committee.

• Vector Capital has agreed to acquire Sandvine (SVC: SVC), a Canadian maker of network policy control solutions. The deal is valued at around C$483 million, or C$3.80 per share (20% premium to last Friday's closing price).

• Vista Equity has agreed to acquire Lithium Technologies, a San Francisco-based provider of social media management and online community solutions. No financial terms were disclosed. Lithium, which a few years ago purchased Klout, has raised over $200 million in VC funding from firms like Benchmark, NEA, Sapphire Ventures, Emergence Capital Partners, ff Venture Capital, Shasta Ventures, DAG Ventures and Tenaya Capital.

• Vista Equity has agreed to acquire Xactly (NYSE: XTLY), a San Jose, Calif.-based provider of cloud-based incentive solutions, for around $564 million, or $15.65 per share (17% premium to Friday's closing price). Sellers include Rembrandt Venture Partners (8.3% stake), Bay Partners (7.64%), Alloy Ventures (7.46%), Key Venture Partners (7.26%) and T. Rowe Price (6.93%).

Public Offerings

• The Ireland government plans to float around a quarter of Allied Irish Bank, which had been nationalized during the financial crisis. The offering would be on the LSE, and could value the bank at around €13 billion.

Liquidity Events

Berkshire Partners is exploring a sale of Citizens of Humanity, a Huntington Park, Calif.-based maker of denim apparel, according to Dow Jones.

• China Investment Corp. is nearing an agreement to acquire Logicor, a European warehouse property business, from The Blackstone Group for more than €12 billion (including debt), according to the FT.

• Leonard Green & Partners is considering a sale process for USIC, an Indianapolis-based provider of location and maintenance services for underground utility cables, according to Reuters. A deal could value the company at nearly $2 billion, including debt.

More M&A

• American Tower Corp. (NYSE: AMT) is considering takeover offer for listed Spanish telecom tower operator Cellnex Telecom, which currently is valued at around €4.2 billion, according to Bloomberg.

• Dade Paper & Bag of Miami, Fla. has agreed to merge with Jersey City, N.J.-based Imperial Paper Co. in order to form a combined packaging company that would have more than $1 billion in annual revenue. No financial terms were disclosed.

• Davide Campari-Milano (BIT: CPR) has hired Perella Weinberg Partners to explore a sale of its Irish Mist whiskey and Carolans Irish cream brands, according to Bloomberg.

• E.On, the German energy giant, has retained Goldman Sachs to find a buyer for its 46.65% stake in Uniper, a listed power plant and trading unit it spun off last year, according to Reuters. The position is currently valued north of $3 billion.

• Ferrero International, a Luxembourg-based chocolate confectioner, has completed its purchase of Fannie May Confections and Harry London Candles from (Nasdaq: FLWS) for $115 million in cash.

🚑 Mallinckrodt (NYSE: MNK) is consider the sale of its generic drug business, which could be worth upwards of $2 billion, according to Reuters.


• CrossCut, a Los Angeles-based VC firm focused on Southern California startups, is raising up to $125 million for its fourth fund, per an SEC filing.

• EQT Partners has closed a new European mid-market private equity fund with €1.6 billion in capital commitments.

• New Harbour Capital, a lower middle-market private equity firm focused on growth buyouts of founder-owned companies, has closed its second fund with $265 million in capital commitments.

• Quantum Energy Partners has held a $2.6 billion first close for its seventh fund, which is targeting a total of $5.25 billion, according to Dow Jones.

• Salesforce Ventures has launched a new $50 million "Trailblazer Fund," which will focus on cloud consulting startups.

It's Personnel

• Eric Hazard has joined Vested Ventures, the VC fund and startup incubator associated with financial communications firm Vested, as CEO. He previously was a managing director with PR firm Cognito.

• Jang Sae Kim has been named head of global alternatives for South Korea's National Pension Service, following the February resignation of Sang-Hyun Yoo.

Final Numbers