Sep 25, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

Situational awareness: Adam Neumann isn't the only CEO without a job this morning. Kevin Burns is out as CEO of Juul, and Devin Wenig just stepped down as CEO of eBay.

Top of the Morning

Illustration: Sarah Grillo/Axios

When someone makes the inevitable WeWork movie, consider it a remake of the end of Quentin Tarantino's 1992 film Reservoir Dogs.

  • Almost all of the major characters die. The exception is Mr. Pink, who seems to escape, but then we hear police sirens and his fate is left ambiguous.

Chief among those left on the floor is founder and CEO Adam Neumann, who yesterday was fired in a boardroom coup that he enabled by recently changing governance terms. He remains non-executive chairman, but is no longer an employee and didn't attend a company all-hands meeting yesterday.

Adam's wife Rebekah, who had been WeWork's chief brand officer and head of its WeGro education unit, is also out.

Then there are WeWork's investors, who have seen the value of their shares plummet over the past month. Even if lead backers SoftBank and Benchmark believed Neumann was a cancer that needed to be removed, their surgery was stunningly sloppy, thus exacerbating the damage and hurting their own reputations in the process.

  • And, for SoftBank, there will be even more scrutiny on its strategy of pushing growth at all costs — with Neumann, that was like sending a kid into a doughnut store with a credit card.

J.P. Morgan may still have WeWork as a client, but its reputation took a major hit. The bank played multiple sides here — IPO underwriter, lender to the company, lender to Neumann, investor, debt syndicate arranger — and kept trying to sell Neumann to prospective investors until the bitter end. It has a lot riding on tonight's Peloton IPO.

WeWork employees are apoplectic. Not because Neumann has a vocal booster club like Travis Kalanick after his ouster, but because they had been told to expect a liquidity event. Even if they blame Neumann, it doesn't change the lack of change in their bank accounts. Particularly for those who might have expiring options.

WeWork itself is Mr. Pink, the one who maybe survived.

  • The company promoted president/COO Artie Minson and vice chairman Sebastian Gunningham to co-CEO roles. There are no current plans to launch an outside CEO search.
  • Minson is a "make the trains run on time" sort of guy, coming from another company (Time Warner Cable) that required lots of upfront infrastructure spend and long-tail payback.
  • Gunningham is the "high growth" guy, having previously spent a decade at Amazon (most recently leading its marketplace unit).
  • Yesterday they told employees that very difficult decisions will need to be made (i.e., layoffs and unit closures) and acknowledged that WeWork will require some sort of capital infusion (it has $2b of cash on hand and is owed another $1.5b next year from SoftBank).
  • An IPO remains possible, but highly unlikely. As an inside source said to me today: "The markets might just need a break from WeWork for a while."

The bottom line is that almost everyone lost here. But WeWork isn't vaporware. It has a real product with lots of customers and revenue. A sequel remains possible.

Source: Giphy

Vox Media agreed to buy New York Media, publisher of New York Magazine and several related online media sites, the family trust of deceased investment banker Bruce Wasserstein. No pricing details were disclosed for the all-stock deal.

  • Why it's the BFD: Because digital media startups were founded to disrupt legacy print publications but, much like in retail, sentiment has shifted toward having the best of both worlds.
  • Bottom line: "The merger is being celebrated as smart, not desperate, which is notable for digital media. Vox gets the prestige and authority of the New York Magazine brand, which will bolster a studios business where Vox has been placing most of its bets. New York Media gets financial stability, following reports that it was losing money." — Sara Fischer, Axios
Venture Capital Deals

🚑 Amphivena Therapeutics, a South San Francisco-based developer of T-cell engager therapeutics for cancer, raised $62 million in Series C funding. NanoDimension and Qiming Venture Partners co-led, and were joined by Clough Capital, Aju IB, Korys Merieux, Kaitai Capital, Industrial Investors, Nawton Ltd.,MPM Capital, Tekla Capital Management, and Franklin Berger.

Manticore Games, a San Mateo, Calif.-based multiplayer game creation platform, raised $30 million in Series B funding from Benchmark, Correlation Ventures, BITKRAFT Esports Ventures, M Ventures, Arrive, Sapphire Sport, Tuesday Capital, and SV Angel.

• Duda, a Palo Alto, Calif.-based website-building platform for developers, raised $25 million from Susquehanna Growth Equity.

Deliverr, a San Francisco-based provider of retail fulfillment solutions, raised $23 million in Series B funding. GLP led, and was joined by 8VC.

🚑 Eko, developer of an electronic stethoscope, raised $20 million in Series B funding. Artis Ventures led, and was joined by DigiTx Partners, NTT VC, 3M Ventures, Mayo Clinic, Seraph Group, and XTX Ventures.

• Kreditech, a German provider of point-of-sale financing for near-prime borrowers, raised €20 million. Runa Capital led, and was joined by return backers HPE Growth and Amadeus Capital Partners.

Fidel, a UK-based platform for building functionality on top of card payment networks, raised $18 million in Series A funding. Nyca Partners and QED Investors co-led, and were joined by Citi Ventures, Commerce VC, Elefund, Horizons Ventures, RBC, and 500 Startups.

Kapwing, a San Francisco-based online image and video editing platform, raised $11 million in Series A funding led by CRV.

• ZenBusiness, an Austin, Texas-based software platform for launching new businesses, raised $10 million in Series A funding led by seed backer Greycroft. Other investors include Lerer Hippeau, Rise of the Rest, Rosecliff Venture Partners, Interlock Partners, and Recruit Strategic Partners.

Shopmonkey, a San Jose, Calif.-based provider of auto repair shop management software, raised $10 million in Series A funding. Index Ventures led, and was joined by and 12BF.

Tacalyx, a Berlin-based developer of anti-TACA cancer therapies, raised €7 million in seed funding co-led by Boehringer Ingelheim Venture Fund and Kurma Partners.

Passbase, a San Francisco-based “full-stack identity engine,” raised $3.6 million in seed funding co-led by Cowboy Ventures and Eniac Ventures.

PayMongo, a Manilla-based startup that helps small merchants set up online payments, raised $2.7 million in seed funding from Founders Fund, Stripe, YC, Global Founders Capital, and Soma Capital.

Private Equity Deals

🚑 Baring Private Equity Asia is in exclusive talks to buy Lumenis, a medical laser unit of XIO Group that could fetch more than $1 billion, per Bloomberg.

🚑 CVC Capital Partners acquired a 50% stake in DFE Pharma from New Zealand dairy Fonterra (NZ: FSF) for NZ$537 million.

🚑 Golden Gate Capital agreed to buy Invo, a Jamison, Penn.-based behavioral health services company, from The Jordan Co. and Wicks Group of Cos.

🚑 KKR is seeking a buyer for British forensic sciences company LGC, with banks lining up around £1.4 billion in financing, per Reuters. Expected bidders include Advent International, Bain Capital, Blackstone Group, Carlyle Group, Cinven, EQT and Hellman & Friedman.

Montagu Private Equity agreed to buy Jane’s, an aerospace and defense information business, from IHS Markit (NYSE: INFO) for $470 million.

Verafin, a Canadian provider of financial crime management software, completed a C$515 million equity and debt recap. Equity came from Spectrum Equity, Information Venture Partners, Northleaf Capital Partners, BDC Capital, and Teralys Capital, while debt came from Wells Fargo Capital Finance and Scotiabank.

• Vista Equity Partners agreed to buy a majority stake in Acquia, a Boston-based digital experience and web content management software company, for nearly $1 billion (including assumed debt). Vista says some existing Acquia shareholders will retain a stake, although it doesn’t identify them. Backers have included Amazon, NEA, Sigma Prime Ventures, and Centerview Capital.

Public Offerings

Bereket, a Turkish power grid operator, picked JPMorgan and Citigroup to advise on an IPO for its renewable power unit, per Bloomberg.

🚑 BioNTech, a German immunotherapies company that raised around $700 million in VC funding, set IPO terms to 13.2 million shares at $18-$20. It would have a fully-diluted market cap of $4.5 billion, were it to price in the middle, and plans to trade on the Nasdaq (BNTX) with J.P. Morgan as lead underwriter. The company reports a €91 million net loss on €52 million in revenue for the first half of 2019. Backers include Fidelity, Redmile Group, Sanofi, Pfizer, Janus Henderson Group and Invus Group.

🚲 Peloton, the connected fitness company that plans to price its IPO tonight, disclosed that existing shareholder Technology Crossover Ventures plans to buy up to $100 million worth of shares in the IPO (it previously said it would buy $50m). The company still plans to sell 40 million shares at $26-$29, with the middle price giving it around a $9 billion market cap.

Liquidity Events

BlaBlaCar, a French carpooling company that has raised over $100 million from firms like Insight Venture Partners, agreed to buy Busfor, a bus ticketing platform in Russia and Ukraine.

KKR hired Credit Suisse to find a buyer for Austria-based European Locomotive Leasing, per Reuters.

More M&A

Amazon (Nasdaq: AMZN) acquired INTL, a startup maker of software for cross-border shipment costs and customers clearance.

Final Numbers
Expand chart
Data: The Commonwealth Fund; Chart: Axios Visuals
  • Democrats haven't been asked many "economy" questions during televised debates, but one could argue that the continual healthcare conversation has been a kitchen table stand-in.
  • Axios' Caitlin Owens goes deeper on what proposed ACA changes could mean for employees, particularly low-wage workers.
Dan Primack

🙏 Thanks for reading Axios Pro Rata. Please ask your friends, colleagues, and ousted CEOs to sign up here.