Mar 4, 2020

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

After Morgan Stanley last month agreed to pay $13 billion for E*Trade, deal-makers began buzzing that Robinhood could be the next discount domino to fall. Particularly on the heels of Charles Schwab agreeing to buy TD Ameritrade for $26 billion.

  • What's new: Robinhood does now have a target on its back, but the archers are more likely to be lawyers than potential acquirers.

ICYMI: Robinhood's no-fee trading platform went dark for all of Monday, thus none of its users were able to profit from the day's record-breaking gains. It also was down for the first couple hours of trading yesterday, before returning online.

  • The San Francisco-based company, most recently valued at $7.6 billion by venture capitalists, initially said that the problem was related to how its systems "communicated" with each other.
  • It then took nearly 24 hours for Robinhood to provide a slightly more detailed explanation about how its DNS system cracked under the weight of record volume and account sign-ups. No apology, nor any pledge to conduct a third-party audit.

If this sounds bad, that's because it is bad. It's also the stuff that class-action dreams are made of. Imagine how much money wasn't made by those who tried to use Robinhood on Monday — or at least how much those users can claim wasn't made.

  • Moreover, this didn't happen in a vacuum. As Axios' Felix Salmon notes, Robinhood in late 2018 announced a checking account that it was soon forced to unannounce it. In 2019, users found a glitch that gave them "infinite leverage," and the company was fined $1.25 million for not giving its users the best prices on stocks.

What they're saying: Some Robinhood investors tell me that this too shall pass, and that the company's clean user interface, cash management function, and loyal millennial user base will see it through the storm.

  • They also note that Robinhood's new account growth actually accelerated after many of its incumbent rivals moved to no-commission trades.

But the reality is that Robinhood's success spurred a high-priced consolidation wave that its recent errors may cause it, and its investors, to miss out on.

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Illustration: Robin Olimb via Getty Images

Element Science, a San Francisco-based developer of wearable cardioverter defibrillators, raised $146 million in Series C funding co-led by Deerfield Healthcare and Qiming Venture Partners US.

  • Why it's the BFD: The U.S. mortality rate from cardiovascular disease has stalled out, after decades of rapid descent. There had been a widespread expectation that cancer would overtake cardio in 2020 as America's top killer, but that's begun to look less likely.
  • Other investors include Cormorant Asset Management, Invus Opportunities, Third Rock Ventures, and GV.
  • The bottom line: Element Sciences' "personal defibrillator is designed to detect and correct life-threatening arrhythmias in patients with an elevated, temporary risk, such as following treatment for heart failure or due to other conditions. The company estimates that more than 500,000 patients in the U.S. fit into this category on an annual basis, while sudden cardiac death kills about 325,000 people per year." — Conor Hale, FierceBiotech
Venture Capital Deals

🚑 Alignment Healthcare, an Orange, Calif.-based Medicare Advantage insurer, raised $135 million from Fidelity, T-Rowe Price, and Durable Capital Partners.

🚑 Akuous, a Boston-based gene therapy startup focused on hearing loss, raised $105 million in Series B funding. Pivotal bioVenture Partners led, and was joined by Cormorant Asset Management, Cowen Healthcare Investments, EcoR1 Capital, Fidelity, Polaris, Pagsgroup, Surveyor Capital, Wu Capital, and return backers 5AM Ventures, NEA, Novartis, Partners Innovation Fund, RA Capital Management, and Sofinnova Investments.

🚑 Amunix Pharmaceuticals, a Mountain View, Calif.-based developer of T-cell engagers for treating solid tumors, raised $73 million in Series A funding. Omega Funds led, and was joined by Longitude Capital, Redmile Group, Polaris Partners, Casdin Capital, Two River, Venrock, Delian Capital, and return backer Frazier Healthcare Partners.

Netlify, a San Francisco-based web development platform, raised $53 million in Series C funding. EQT Ventures led, and was joined by Preston-Werner Ventures and return backers Andreessen Horowitz and Kleiner Perkins.

Five, a British self-driving company that’s pivoting from making its own cars to licensing out its tech, raised $41 million in Series B funding from Trustbridge Partners, Direct Line Group, Sistema VC, and return backers Lakestar, Amadeus Capital Partners, Kindred Capital, and Notion Capital.

Colonies, a French co-living startup, raised €30 million from Idinvest Partners, Global Founders Capital, and La Financière Saint James.

Eden, a San Francisco-based office management services platform, raised $29 million led by JLL Technologies. Part of the proceeds were used to buy Managed by Q from WeWork – well short of the $250 million WeWork paid for Managed by Q early last year.

Talespin, a provider of AR/VR workforce training, raised $15 million in Series B funding. Cornerstone OnDemand led, and was joiner by HTC and return backer Farmers Insurance Exchange.

UnitQ, a San Mateo, Calif.-based quality monitoring platform, raised $11 million in Series A funding. Gradient Ventures led, and was joined by Creandum, XSeed Capital, Bragiel Brothers, and BootstrapLabs.

🚑 Anagram (fka Patch), a Santa Monica, Calif.-based health care billing platform, raised $9.1 million. ManchesterStory led, and was joined by CareCredit, Waterline Ventures, Rogue Venture Partners, Launchpad Digital Health, KEC Ventures and Healthy Ventures.

Mavenoid, a Stockholm-based chatbot for tech-focused product support, raised $8 million in Series A funding. Mosaic Ventures led, and was joined by Creandum and Point Nine Capital.

OpsCompass, a provider of cloud-based governance and compliance software, raised $6.9 million in Series A funding. Elsewhere Partners led, and was joined by Dundee VC, Invest Nebraska, M25, Nelnet, and Nebraska Angels.

Arya, an Indian agri post-harvest services platform, raised $6 million from Omnivore and return backer LGT Lightstone Aspada.

Leap Finance, a financing platform for Indian students studying in the U.S., raised $5.5 million led by Sequoia Capital India.

Powerful Foods, a Miami-based maker of high-protein foods and beverages, raised $5 million from MMG Equity Partners.

David Energy, a Brooklyn-based developer of “energy operating systems” for buildings, raised $1.5 million in seed funding from Box Group, Greycroft. Great Oaks, Oceans, and individuals.

Ant Financial invested an undisclosed amount in Swedish payments unicorn Klarna.

Private Equity Deals

The Blackstone Group acquired NRStor, a Toronto-based developer of battery storage solutions.

Criteria, a West Hollywood-based pre-employment testing platform backed by Sumeru Equity Partners, acquired Revelian, an Australian startup focused on emotional intelligence and game-based assessments.

Navacord, a Toronto-based portfolio company of Madison Dearborn Partners, acquired Canadian insurer Brookfield Insurance Services.

🚑 Vision Innovation Partners, a portfolio company of Centre Partners, acquired Baltimore Eye Physicians, an ophthalmology practice with two locations in Baltimore.

Warburg Pincus committed a line-to-equity to Delta Midstream, a new Houston-based midstream energy company focused on multiple basins. Delta is led by former Noble Midstream execs, including CEO Terry Gerhart.

Public Offerings

Prima Foods, a Brazilian meatpacker owned by the Bautista family, filed for a $220 million local IPO.

Track & Field, a Brazilian sports apparel retailer, filed for a local IPO.

Liquidity Events

The Carlyle Group agreed to sell Japanese bean sprouts manufacturer Meisui Bijin Factory to Japanese rice wholesaler Shinmei Holdings.

More M&A

Dematic of Michigan paid €120 million to acquire DAI, a British provider of logistics automation software.

OLX Brazil, an online real estate marketplace, will pay $642 million to buy rival Grupo ZAP.

Peixe Urbano, a Brazilian e-commerce company controlled by Baidu, is in talks to buy Brazilian e-scooter company Grow Mobility, per Reuters.

Sysco (NYSE: SYY), a U.S. food distributor, approached German wholesaler Metro (DE: B4B) about a possible takeover, per Reuters.

Uber (NYSE: UBER) disclosed in a regulatory filing that the sale of its India food delivery business to local rival Zomato was valued at $206 million.


CN2 Ventures, a Los Angeles-based VC firm led by the founder of cupcake chain Sprinkles, is raising $25 million for its debut fund, per TechCrunch.

🚑 Quadria Capital, a Singapore-based private equity firm focused on health care, raised $595 million for its second fund.

Reverence Capital Partners, a New York-based middle-market buyout firm focused on financial services, raised $1.2 billion for its second fund.

Vertica Capital Partners, a New York-based private equity firm focused on software, raised $205 million for its debut fund.

It's Personnel

• Jay Goffman joined Rothschild & Co. as vice chairman of its North American advisory business. He previously was with law firm Skadden Arps.

• Dan Kim has quietly left private equity firm Bregal Sagemount, where he had been a partner since 2012. No word yet on future plans.

• Peter Michelsen stepped down as Goldman Sachs’ head of Americas activism and shareholder advisory, in order to take on a similar role at Qatalyst Partners, per Bloomberg.

• QIC Global Private Capital of Australia promoted San Francisco-based Matthew Diestel to head of its U.S. business.

Tim Sloan, former Wells Fargo CEO, joined Fortress Investment Group as a Los Angeles-based senior adviser.

• Pete Stevenson and Randal Thompson joined private equity firm Great Hill Partners as executives-in-residence. They previously led Great Hill portfolio companies Latisys (sold to Zayo Group in 2015) and Symmetry (sold to Secure-24 in 2019).

Final Numbers
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Data: FactSet; Chart: Andrew Witherspoon/Axios
  • Why it matters: Private equity is in the midst of a yearslong fundraising bonanza, chiefly because institutional investors have been in search of yield. Coronavirus might curtail some face-to-face meetings, but the macro conditions are only becoming more beneficial for PE.
  • Go deeper: Record-low U.S. Treasury yields are expected to keep falling
Dan Primack

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