Mar 20, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

DC readers: You're invited to join Axios tomorrow afternoon at Howard University for the fourth leg of our Smarter Faster Revolution tour. Among those on stage will be JPMorgan CEO Jamie Dimon, Revolution CEO Steve Case and comedian Baratunde Thurston. RSVP here.

Top of the Morning
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When the next history of Silicon Valley is written, there will be some pages reserved for what happened yesterday:

Facebook lost over $36 billion in market value, following revelations that 50 million users had their data improperly accessed by a Trump-linked analytics firm.

Forget, for a moment, the specifics of what happened or Facebook's ham-handed response. Instead, focus on the increased calls from D.C. and elsewhere for new user privacy regulations. Not only could the entire social media business model be upended, but there would be massive ripple effects for any other business that now relies on that model for their own marketing and/or distribution efforts. That's a big reason why the Dow fell 1.4% yesterday, even though Facebook isn't actually part of the Dow.

An Uber killed someone. More specifically, one of its self-driving cars struck and killed Elaine Herzberg, a 49 year-old Arizona woman who appears to have been crossing the street while pushing her bicycle.

The company immediately paused all of its on-road self-driving tests, and said that it is cooperating with local authorities.

There is a very real possibility that this incident will slow "in the wild" development of autonomous driving technologies, no matter what both Silicon Valley and Detroit are promising about 2019 and 2020 commercialization. And it didn't help matters when some techies on Twitter reflexively tried to minimize Elaine's death.

Even those who believe that self-driving tech will ultimately save lives are stepping on the brake. Raj Rajkumar, head of Carnegie Mellon University's leading self-driving lab, tells Axios:

"This isn't like a bug with your phone. People can get killed. Companies need to take a deep breath. The technology is not there yet. We need to keep people in the loop."

On the docket: Bumble has replied to Match Group's lawsuit. Not with its own legal filing (at least not yet), but rather with a full-page ad in the NY Times that calls Match Group a "bully" and also said: "We'll never be yours. No matter the price tag, we'll never compromise our values."

Today in Theranos: James Mattis isn't the only former Theranos board member who isn't commenting on those SEC fraud charges. Axios also received radio silence from former board members Bill Frist and David Boies. Also not replying is company investor Tim Draper, who last year argued that Elizabeth Holmes was "the victim of a witch hunt."

Crypto: President Trump yesterday issued an executive order banning Americans from buying a new cryptocurrency issued by the Venezuelan government.

  • Why it matters: Venezuela's coin, called the Petro, is designed to help the struggling country side-step economic sanctions. If deemed successful, it such countries as Iran, Russia and North Korea may follow suit.

Valley view: Kia reports from YC Demo Day that every investor she spoke with had already backed at least one company in the current cohort. That suggests that YC is taking in slightly more mature startups, and also that Demo Day is no longer the "make or break" that it once was.

The BFD
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Bloom Energy, a Sunnyvale, Calif.-based fuel cell company that provides on-site power generation to large facilities, has restarted its IPO process and could list in the second quarter. The WSJ broke the news, and Axios had heard similar.

  • Why it's the BFD: Because Bloom is a survivor, albeit one with nearly $1 billion in venture funding. Most other capital-intensive "cleantech" startups from the early aughts failed, leading VCs to largely abandon the sector (including some of Bloom's own backers, like Kleiner Perkins).
  • Bonus: I'll be very interested to see Bloom's financials. After I reported on them back in 2012, the company stopped providing regular reports to most of its investors.
  • Bottom line: "The company put its IPO plans on hold after a federal subsidy for alternative energy systems was allowed to expire. [Bloom]... received welcome news in February, when President Trump signed a budget deal that restored the tax credit. It can now sell its units for about 40% more per unit than it could last year, as tax credits offset part of the price." — Yuliya Chernova, WSJ
Venture Capital Deals

N26, a German retail bank startup, has raised $160 million in Series C funding co-led by Tencent and Allianz. http://axios.link/fpS8

🚑 Oxford Nanopore Technologies, a UK-based developer of a portable, real-time DNA/RNA sequencer, has raised £100 million in new funding at a £1.5 billion valuation from backers like GIC, China Construction Bank International and Hostplus. http://axios.link/qpPS

Made.com, a London-based online furniture shopping site, has raised $56 million in new funding. An undisclosed investor led, and was joined by return backers investors Partech Ventures, Level Equity and Eight Roads Ventures. http://axios.link/7MLF

Digital Reasoning, a Nashville, Tenn.-based provider of behavioral AI solutions for financial institutions, has raised $30 million in new funding. BNP Paribas led, and was joined by Barclays, Square Capital and return backers Goldman Sachs, Nasdaq, Lemhi Ventures, HCA and the Partnership Fund for New York City. www.digitalreasoning.com

Cheddar, an online video network for business and tech news, has raised $22 million in new funding at a $140 million pre-money valuation. Raine Ventures led, and was joined by Liberty Global, Goldman Sachs, Antenna Group, 7 Global Capital, Dentsu Ventures. and return backers Lightspeed Venture Partners, Comcast Ventures, AT&T, The New York Stock Exchange, Ribbit Capital, Amazon and Altice USA. http://axios.link/S9lX

Spindrift, a Newton, Mass.-based maker of fruit-flavored sparking waters, has raised $20 million in Series B-2 funding. VMG Partners led, and was joined by Prolog Ventures, KarpReilly and RiverPark Ventures. http://axios.link/RRpE

Kahoot, a Norwegian educational gaming company, has raised $17 million in new funding from Datum Invest, Northzone, Creandum and Microsoft Ventures. http://axios.link/YMHr

Blackmore Sensors and Analytics, a Bozeman, Mon.-based developer of frequency-modulated continuous wave lidar for the auto industry, has raised $18 million in Series B funding. BMW i Ventures led, and was joined by Toyota AI Ventures, Millennium Technology Value Partners and Next Frontier Capital. www.blackmoreinc.com

🚑 Neurotrack, a memory loss prevention startup, has raised $13.7 million in Series B funding. Sozo Ventures led, and was joined by Marc Benioff and return backers Khosla Ventures, Founders Fund, Social Capital, AME Cloud Partners and Rethink Impact. www.neurotrack.com

Eden Health, a New York-based “personal health platform for companies,” has raised $4 million in seed funding. Greycroft led, and was joined by Piper Jaffray, Max Ventures and 645 Ventures. www.edenhealth.com

CaliberMind, a Boulder, Colo.-based provider of B2B marketing intelligence software, has raised $3.2 million in seed funding co-led by Newark Venture Partners and Buran VC. www.calibermind.com

ZineOne, a Milpitas, Calif.-based customer engagement hub for banks and retailers, has raised $2.5 million in Series A funding led by Omidyar Network. www.zineone.com

Farmstead, a San Francisco-based startup “that curates and delivers fresh, local foods from farm-to-fridge in 60 minutes,” has raised $2 million in funding co-led by Resolute Ventures and Social Capital. www.farmsteadapp.com

Private Equity Deals

Epiris has completed its previously-announced purchase of Time Inc. UK from Meredith Corp. (NYSE: MDP). www.epiris.co.uk

GAL Manufacturing, a Bronx, N.Y.-based portfolio company of Golden Gate Capital, has acquired the assets of Bore-Max, an El Monte, Calif.-based maker of hydraulic elevator components. www.gal.com

Kainos Capital has acquired Bonewerks Culinarte, a Green Bay, Wis.-based maker of glace and demi-glace sauces. www.bonewerksculinarte.com

🚑 Pharos Capital Group has acquired Horizon Oncology, a Lafayette, Ind.-based oncology practice, as part of a new rollup strategy that Pharos is calling Verdi Oncology. www.horizononcologycenter.com

⛽ TPG Pace Energy (NYSE: TPGE), a TPG-sponsored SPAC led by ex-Occidental Petroleum CEO Steve Chazen, has agreed to acquire EnerVest’s South Texas Division for $2.66 billion. www.enervest.com

⛽ Venado Oil and Gas and KKR have completed their previously-announced $765 million purchase of the operated and non-operated Eagle Ford assets of Cabot Oil & Gas (NYSE: COG). http://axios.link/Jp7U

🚑 Water Street Healthcare Partners and JLL Partners have completed their previously-announced purchase of Dohmen Life Science Services, a Milwaukee-based provider of outsourced services to the pharma and medical device sectors. www.dlss.com

The Weinstein Company has filed for bankruptcy protection, and also said it was ending all non-disclosure agreements to which it was a party. Private equity firm Lantern Partners was named as stalking horse bidder, although there is speculation that there will be other bids for select assets (including, possibly, by one or both of the Weinstein brothers). http://axios.link/aFZT

Public Offerings

Dropbox has oversubscribed interest in its IPO, which is expected to price later this week, per Reuters. http://axios.link/4Tze

🚑 Homology Medicines, a Bedford, Mass.-based gene editing company, set its IPO terms to 6.7 million shares at $14-$16. It would have a fully-diluted market value of around $529, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker FIXX, with BofA Merrill Lynch serving as lead underwriter. Momology has raised around $127 million in VC funding, from firms like 5AM Ventures (24.8% pre-IPO stake), ARCH Venture Partners (22.4%), Deerfield Management (14.7%), Novartis (7.3%), Fidelity, HBM Healthcare Investments, Maverick Ventures, Rock Springs Capital, Vida Ventures, Vivo Capital, Alexandria Venture Investments and 5AM Ventures. http://axios.link/Brxg

IBEX Holdings, a Bermuda-based provider of outsourced customer support services, set its IPO terms to 4 million shares at $14-$16. It would have a fully-diluted market value of around $243, were it to price in the middle. The company plans to trade on the Nasdaq under ticker IBEX, with Baird serving as lead underwriter. IBEX reports a $9 million net loss on $334 million in revenue for the fiscal year ending last June 30.

🚑 Unum Therapeutics, a Cambridge, Mass.-based developer of cancer immunotherapies, set its IPO terms to 5.8 million shares at $12-$14. It would have a fully-diluted market value of around $413, were it to price in the middle. The company plans to trade on the Nasdaq under ticker UNUM, with Morgan Stanley as lead underwriter. Shareholders include Atlas Ventures (13.9% pre-IPO stake), F-Prime Capital Partners (9.9%) and New Leaf Venture Partners (5.3%).

Liquidity Events

Meltwater, a San Francisco-based media intelligence company backed by Altor Equity, has acquired DataSift, a UK-based social media insights platform that had raised over $80 million in VC funding from firms like Insight Venture Partners, Scale Venture Partners, Upfront Ventures, IA Ventures, Northgate Capital, Daher Capital and Cendana Capital. http://axios.link/rffi

More M&A

Amazon has considered buying some shuttering Toys 'R" Us stores (for the real
estate), according to Bloomberg. http://axios.link/K98O

⛽ Glencore (LSE: GLEN) has agreed to acquire the Hail Creek coal mine and Valeria coal project in Australia from Rio Tinto (ASX: RIO) for $1.7 billion. http://axios.link/HeNH

⛽ SandRidge Energy (NYSE: SD) has rejected an all-stock merger offer from smaller rival Midstates Petroleum (NYSE: MPO), which would have valued the combined company at nearly $1 billion. http://axios.link/xXBa

Fundraising

Ampersand Capital Partners has closed its latest middle-market private equity fund with $450 million. www.ampersandcapital.com

Eight Roads Ventures has raised $375 million for its third fund focused on startups in Europe and Israel http://axios.link/AxE9

S Capital, an Israeli VC firm led by former Sequoia Capital partner Haim Sadger, has raised $94 million for its debut fund, per an SEC filing. Sequoia had said in late 2016 that it did not plan to raise another dedicated Israel Israel fund.

It's Personnel

Andy Hurd, most recently CEO of MedeAnalytics, has joined healthcare-focused private equity firm Cressey & Co. as an operating partner. www.cresseyco.com

Evan Moore, former head of product and Opendoor and a co-founder of Doordash, has joined Khosla Ventures as a venture partner, Axios has learned. www.khoslaventures.com

Muzzammil Zaveri (known as "MZ") has joined Gradient Ventures, Google's new A.I.-focused venture capital program, Axios has learned. He previously was with Kleiner Perkins. http://axios.link/4NPL

Final Numbers: VC return on investment

Go deeper at PitchBook:

"The regions that produce the best returns for VC investors are almost all among those that pull in the most venture capital. The exceptions? Miami and Houston are both among the top metro areas in terms of VC invested, but not in terms of return for backers. For Boulder, CO, and Raleigh, NC, the opposite is true."
Dan Primack