Jul 25, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

🎙 Please keep that feedback coming on the Pro Rata podcasts. Episode #2 is up, focused on the exaggerated death of local news, with #3 coming in a couple hours. Subscribe and listen via Apple or other platforms.

Top of the Morning
Source: Giphy

Fuel cell maker Bloom Energy last night priced its IPO, raising $270 million by selling shares at the top of its $13-$15 price range. That gives it an initial market cap of nearly $1.6 billion, compared to around a $3 billion private market valuation back in 2014.

But the big story here isn't the value haircut, or even that Bloom keeps hemorrhaging cash more than five years after its CFO told me (and prospective investors) that the company was on the verge of profitability.

Instead, it's that Bloom managed to go public without answering questions about share payouts in 2014 to a pair of placement agents who, after raising big money for Bloom, settled with the SEC in 2012 over misleading investors on some of those deals. And there have been several new developments since we last discussed. Per WSJ's Yuliya Chernova:

[The placement agents] Mr. Badger and Mr. Daubenspeck had threatened to sue Bloom Energy in 2013, claiming that the company misled them and caused them to get sanctioned by the SEC, according to people familiar with the dispute.
Bloom Energy denied those allegations, the people said, but settled with Mr. Badger and Mr. Daubenspeck. The company recorded $16.7 million in charges to settle the dispute... [which] covered Bloom granting the men the post-IPO shares, as well as hundreds of thousands of preferred shares and warrants, and a $5 million low-interest loan, according to a 2015 Bloom Energy financial statement reviewed by the Journal.

Then Bloom disclosed last Friday that the pair is "seeking to compel arbitration and alleging a breach of a confidential agreement" related to the settlement. And Badger reiterated that position to me yesterday via brief phone call, saying only that he would gladly waive the confidentiality agreement were Bloom to agree.

Why it matters: Bloom will neither agree to waive the confidentiality agreement — nor even get on the phone to discuss these issues — raising an obvious question… What’s it hiding? And who bought into this IPO (at the price range top!) with even the vague possibility of skeletons in Bloom’s closet?

To be clear, Bloom denies any wrongdoing. And it's Badger and Daubenspeck who were nailed by the SEC, not Bloom. But something just feels very, very off here...

The BFD
Source: Giphy

Guild Education, a Denver-based education benefits platform for Fortune 1000 companies, raised $40 million in Series C funding led by Felicis Ventures.

  • Why it's the BFD: Because while many startups are effectively designed to displace workers (via automation, etc.), this one is seeking to help over 60 million front-line employees get the degrees and credentials needed for better-paying jobs. Guild also recognizes that traditional data sets for higher-ed fail to include factors like which schools are best for working adults, those caring for families, etc. Oh, and it's the largest investment in Felicis' 12-year history.
  • Other investors: Salesforce Ventures, Workday Ventures, Rethink Impact & Education, SVB and return backers Bessemer Venture Partners, Redpoint Ventures, Harrison Metal and Cowboy Ventures.
  • Bottom line: "There's a lot of friction for front-line workers trying to go to college, in terms of for-profit predatory schools and all the complicated paperwork. [Guild CEO Rachel Carlson] solved that by working with a set of nonprofit higher-ed institutions, and having a mission of helping these students actually graduate, by creating a process that includes coaching and advising." — Wes Chan, managing director with Felicis
Venture Capital Deals

🚑 23andMe, a Mountain View-based maker of genetics testing kits for consumers, raised $300 million in strategic funding from GlaxoSmithKline. http://axios.link/OEjf

🚑 Alector, a South San Francisco-based immuno-neurology company, raised $133 million in Series E funding from Deerfield Management, AbbVie Ventures, Federated Kaufmann Fund, Section 32, Euclidean Capital, Foresite Capital, Lilly Asia Ventures, New Leaf Venture Partners, Perceptive Advisors, Casdin Capital, Polaris Partners, OrbiMed, MRL Ventures, GV, Dementia Discovery Fund, Mission Bay Capital and Amgen Ventures. www.alector.com

Prescient, a Durham, N.C-based BIM design and building technology platform, raised $50 million in Series E funding at a $700 million post-money valuation, led by Eldridge Industries. http://axios.link/SPWZ

GlobalWebIndex, a 9 year-old provider of consumer insight data, raised $40 million from Stipes Group in its first-ever round of VC funding. http://axios.link/hdsr

FinAccel, a Singapore-based digital credit card startup, raised $30 million in Series B funding. Square Peg Capital led, and was joined by MDI Ventures, Atami Capital. Existing investors Jungle Ventures, Openspace Ventures, GMO Venture Partners, Alpha JWC Ventures and 500 Startups. http://axios.link/oTCJ

Skillshare, a New York-based provider of online classes, raised $20 million in new equity funding led by return backer Union Square Ventures. The company also secured $8 million in debt funding. http://axios.link/ktZk

RFPIO, a Beaverton, Ore.-based provider of RFP response software, raised $25 million from K1 Investment Management. http://axios.link/tChq

TradeGecko, a Singapore-based SaaS inventory and order management platform for small-medium businesses, raised $10 million in Series B funding. Aura Group led, and was joined by Perle Ventures and 33 Capital. www.tradegecko.com

Zorroa, a Berkeley, Calif.-based visual search and analysis platform, raised $7 million led by Gradient Ventures. www.zorroa.com

Outlier, a business data intelligence startup, raised $6.2 million in Series A funding. Ridge Ventures led, and was joined by 11.2 Capital, First Round Capital, Homebrew, Susa Ventures and SV Angel. http://axios.link/9D5s

BinaryVR, a Burlingame, Calif.-based VR technology startup based on computer vision face-tracking, raised $4.5 million in Series A funding from Atinum Investment, KT Investment, Pearl Abyss and Kakao Ventures. http://axios.link/fgPx

Knock Knock, a San Francisco-based maker of chat-native games, raised $2 million in new funding. Raine Ventures led, and was joined by London Venture Partners, Ludlow Ventures and Gregory Milken. http://axios.link/l11r

Apptiv, a New York-based digital fitness content company, raised an undisclosed amount of strategic funding from Bose Ventures. www.aaptiv.com

🚑 Ciitizen, a patient data platform founded by former Apple health director Anil Sethi, raised seed funding from Andreessen Horowitz. www.ciitizen.com

VSiN, a Las Vegas-based provider of sports betting information content, raised an undisclosed amount of funding from SeventySix Capital. www.vsin.com

Lantern, a San Francisco-based mental health app that had raised over $20 million from firms like UPMC, Uncork Capital and Mayfield, is shutting down “after a couple of acquisition deals fell through,” per TechCrunch. http://axios.link/1wA9

Private Equity Deals

Bain Capital and Vista Equity Partners are merging three portfolio companies to form a single government services software firm: Superion (Vista acquired last year), TriTech Software (Bain bought in May) and a unit of Vista-backed Aptean. http://axios.link/9l6e

🚑 Lightyear Capital and Oak HC/FT have acquired Therapy Brands, a Birmingham, Ala.-based provider of behavioral health software, from Providence Equity Partners. www.therapybrands.com

Storage Battery Systems, a portfolio company of High Road Capital Partners, has acquired Nolan Power Group, a Mandeville, La.-based provider of stationary power management solutions. www.nolanpower.com

⛽ Ouro Preto Óleo e Gás, a Brazilian energy company owned by EIG Global Energy Partners, has entered exclusive talks to buy two shallow water mature oilfields from state-owned Petrobras. The losing bidder was Trident Energy, backed by Warburg Pincus. http://axios.link/pDvd

Partners Group agreed to buy Information Resources Inc., a Chicago-based data analytics company, from New Mountain Capital. No financial terms were disclosed, but Reuters puts the price north of $2 billion (including debt). http://axios.link/Ogmu

Searchlight Capital is among several private equity firms interested in acquiring a control stake in Bezeq Israel Telecom, per Globes. http://axios.link/Pwmk

Public Offerings

🚑 Aquestive Therapeutics, a Warren, N.J.-based developer of therapies for CNS disorders, raised central nervous system therapies maker, raised $68 million in its IPO. The company priced 4.5 million shares at $15 (within range), and will trade on the Nasdaq (AQST). BMO Capital Markets was lead underwriter. http://axios.link/licy

⛽ Sibur, a Russian petrochemical company, is prepping an IPO that could raise upwards of $3 billion, per Reuters. http://axios.link/KU4w

Liquidity Events

• Grubhub (NYSE: GRUB) has agreed to buy LevelUp, a Boston-based mobile diner engagement and payment solutions platform, for $390 million in cash. LevelUp had raised around $100 million from firms like Highland Capital Partners, GV and T-Venture.

🚑 Nabriva Therapeutics (Nasdaq: NBRV) agreed to buy Zavante Therapeutics, a San Diego-based developer of therapies to multi-drug resistant bacteria, for upwards of $124 million in stock ($27m upfront) . Zavante had raised around $20 million from firms like Frazier Healthcare Partners, Longitude Capital and Aisling Capital. http://axios.link/jMzw

Sterling Partners has sold The National Research Center for College & University Admissions, a matching service for high school students and colleges, to ACT Inc. www.nrccua.com

Tsinghua Unigroup, a Chinese chipmaker, has agreed to buy French smart card components maker Linxens for around €2.2 billion from CVC Capital Partners, per Reuters. http://axios.link/EbUx

More M&A

🚑 Biogen (Nasdaq: BIIB) acquired two early-stage drug candidates for neuromuscular diseases from Thousand Oaks, Calif.-based AliveGen, for a $27.5 million upfront payment and upwards of $535 million in milestone payments. http://axios.link/y1dg

President Trump tweeted Tuesday that it was "sad and unfair that the FCC wouldn't approve the Sinclair Broadcast merger with Tribune." http://axios.link/YUel

Fundraising

Credit Suisse Asset Management raised $261 million for its second NEXT Investors fund, which provides growth equity to fin-tech companies. www.credit-suisse.com

CVC Capital Partners is premarketing a fifth Asia buyout fund that will have a $4 billion target, per the FT. http://axios.link/fL5x

Graphite Capital, a London-based mid-market private equity firm, raised around £470 million for its ninth fund. www.graphitecapital.com

Rocket Internet, a Berlin-based investment firm, is seeking to raise upwards of $2 billion for a new venture capital fund, per Bloomberg. http://axios.link/fn63

⛽ Tailwater Capital, an energy-focused private equity firm based in Dallas, raised $1 billion for its third fund. http://axios.link/q0xn

It's Personnel

Alexander Addario joined Silicon Valley Bank as director of fin-tech. He previously was an SVP with Square 1 Bank. www.svb.com

Brian Nobis has joined the State of Wisconsin Investment Board as a senior investment officer for private equity. He previously was with Liberty Mutual and, before that, the Illinois Teachers’ Retirement System.

Final Numbers
Source: Morningstar/PitchBook report. Data: TLC, NYC Open Data, Statista, UC Davis Institute of Transportation Studies, IBIS, Citi Bike, Morningstar estimates

More from Morningstar/PitchBook report:

"We value Uber's total addressable market, which includes the aggregate of the global taxi, rideshare, and food delivery industries along with the U.S. markets for freight brokerage and the share we believe rideshare companies can take from global public transport and U.S. bikeshare, at $630 billion by 2022, representing a 26% five-year compound annual growth rate."
Dan Primack