Jul 30, 2018

Axios Pro Rata

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

It is no secret that venture capital is homogeneous when it comes to gender and race. But now there's new data on the industry's lack of diversity, including a previously-unstudied metric: Educational background.

It comes via Richard Kerby, one of Silicon Valley's few black VCs, who first analyzed venture's racial breakdown in 2016.

  • He finds that the percentage of white VCs has fallen from 74% to 70%.
  • Asian representation climbed from 23% to 26%.
  • Black representation up slightly from 2% to 3% (black females created the difference, as they were at 0% last time around).
  • Hispanics remain stuck at just 1%.
  • Women still only make up 18% of VC professionals, up from 11%.

Kerby also found that, among his sample of around 1,500 VCs, a whopping 40% went to either Harvard or Stanford. As for why it matters, I'm going to let him take it from here:

The bar to create a more diverse industry is difficult when one looks for folks that most resemble themselves; and while talent is evenly distributed, unfortunately, opportunity is not.
When you couple the lack of gender and racial diversity with the lack of educational institution diversity, you not only end up with teams that look similar, but you also end up with teams that think in a similar fashion. Not only is our industry lacking in gender and racial balance, but we also suffer from a lack of cognitive diversity.
This insularity of the venture ecosystem has ripple effects throughout the tech industry.... If we want to have more successes in the venture and broader tech ecosystems, diversity in all fashions (racial, gender, cognitive) needs to be a part of what drives us forward.

Trend watch: There are a pair of new deals today related to the legalization of U.S. sports betting. First, London-listed GVC Holdings formed a joint venture with MGM Resorts, to create an online betting platform in the U.S. Second, private equity firm Apax Partners agreed to buy sports data company Genius Sports Group from Three Hills Capital Partners.

  • More: Two weeks ago, CPPIB and TCV acquired a 35% stake in Swiss data sports group Sportradar at a valuation of around $2.4 billion. And DraftKings continues to raise new funding to build out its own sports betting biz, following Paddy Power Betfair's purchase of FanDuel.

New firm alert: Kia notes that Patrick Eggen quietly stepped down as head of U.S. investments for Qualcomm Ventures, in order to launch a new firm called Counterpart Ventures. His co-founder is Joe Saijo, former president of Recruit Strategic Partners.

ICYMI: Rep. Jason Smith (R-MO) has proposed a bill that would create a tax break for gym and fitness class costs, but it wouldn't extend to classes streamed via apps or connected hardware (e.g., Peloton, etc.). More here.

Coming attractions: CBS will report earnings after market close this Thursday. One has to think the odds of a Viacom merger have increased substantially since this time last week.

🎙 It's week 2 of the Axios Pro Rata podcast, with a new episode coming just after noon EST. Please subscribe via Apple, Google Play or other platforms.

The BFD
Source: Giphy

Tyson (NYSE: TSN) is in exclusive talks to buy Keystone Foods from Brazil’s Marfrig Global Foods for more than $3 billion, as first reported by Bloomberg.

  • Why it's the BFD: Because McNuggets. Keystone originally developed the boneless wonder in partnership with McDonald's, and now supplies the fast-food giant with around 300 million pounds of poultry per year (plus 150 million lbs of beef and 15m lbs of fish).
  • Bonus read: How an ex-cop rigged the McDonald’s Monopoly game & stole millions, per The Daily Beast.
  • Bottom line: "Keystone had revenue of $2.8 billion last year and has operations in seven U.S. states as well as in South Korea, China, Malaysia, Thailand and Australia. While its American assets account for almost 70 percent of sales, the food-service company has experienced stronger growth from its Asian arm." — Bloomberg
Venture Capital Deals

Improbable, a British gaming technology company backed by SoftBank, raised $50 million in new funding at around a $2 billion valuation, per BusinessInsider. In related news, NetEase (Nasdaq: NTES) acquired some secondary shares. http://axios.link/V7ew

🚑 Igengmei, a Chinese “medical beauty platform,” raised $50 million in Series D-1 funding from Meitu Dianping and DH Fund. http://axios.link/m7zr

Grover, a Berlin-based “pay as you go” subscription service for new consumer technologies, raised €37 million in Series A funding. Circularity Capital led, and was joined by Coparion, Samsung NEXT, Varengold Bank and Commerzbank’s Main Incubator. http://axios.link/v4pj

C88, a Singapore-based operator of financial marketplaces, raised $28 million in Series C funding. Experian led, and was joined by responsibility Investments, DEG, InterVest, FengHe Fund Management, Pelago Capital, Fuchsia VC and return backers Monk’s Hill Ventures, Telstra Ventures, Kickstart Ventures and Kejora Ventures. http://axios.link/mz0m

RaiseMe, a San Francisco-based incentive program for students to earn financial aid, raised $15 million in Series B funding. Teamworthy Ventures led, and was joined by Chan Zuckerberg Initiative, Salesforce Ventures and Strada Education Network. http://axios.link/7JWO

Survata, a San Francisco-based ad measurement firm, raised $14 million in Series B funding. Conductive Ventures led, and was joined by Industry Ventures, Uncork Capital, PivotNorth, Ridge Ventures, Bloomberg Beta and Initialized Capital. www.survata.com

Shuttle, an app for finding bus seats in India, raised $11 million in Series B funding. Amazon India, Amazon Alexa Fund and Dentsu Ventures were joined by Sequoia Capital, Times Internet and Lightspeed Venture Partners. http://axios.link/8bLo

Private Equity Deals

🚑 CDH Investments is part of a $300 million bid for New Zealand honey maker Manuka Health, which is owned by Pacific Equity Partners, per Australian Financial Review. http://axios.link/OCfg

🚑 Halyard Capital agreed to buy a control stake in SRAXmd, a digital advertising group focused on the pharma and healthcare market, from Social Reality (Nasdaq: SRAX) for upwards of $52.5 million. www.srax.com

⛽ KKR has agreed to buy Discovery Midstream, a Dallas-based energy company operating in the DJ Basin, from TPG Growth for around $1.2 billion, via a newly-formed joint venture with Williams (NYSE:WMB). http://axios.link/gWFr

Peninsula Capital has acquired a 33% stake in Italian cosmetics company Kiko. http://axios.link/2sHo

Platinum Equity has acquired a majority stake in Yak Access, a Columbia, Miss.-based maker of hardwood mats, from Jones Cos. and Beasley Forest Products. Financial terms of the transaction were not disclosed. www.yakaccess.com

🚑 TPG has agreed to buy the Asian pathology business of Australian hospital operator Healthscope (ASX: HSO) for A$279 million. TPG once co-owned Healthscope, which recently rejected a pair of takeover offers. http://axios.link/iiIN

Vance Street Capital has recapped Jet Parts Engineering, a Seattle-based designer of OEM-alternative parts and repair services for the commercial aerospace industry.

Warburg Pincus agreed to buy Israeli credit card company Leumi Card from Bank Leumi (TASE: LUMI) and the Azrieli Group for $648 million. http://axios.link/zL7L

Public Offerings

Five companies expect to price IPOs on U.S. exchanges this week: Arlo Technologies, Bionano Genomics, Cushman & Wakefield, Forum Merger II and Sonos. http://axios.link/cllH

Opera, an Oslo-based maker of a web browser and digital content discovery tools, raised $115 million in its IPO. The company priced 9.6 million shares at $12 (high end of range) and closed its first day of trading (Nasdaq: OPRA) at $12.86 per share. The company reports $6.6 million of net income on $39 million in revenue for Q1 2018, while shareholders include China’s Kunlun Tech (48% stake). http://axios.link/ckqI

Liquidity Events

🚑 Johnson & Johnson (NYSE: JNJ) agreed to buy Zarbee’s Naturals, a Draper, Utah-based maker of drug-free children’s cough syrup and other wellness products, from L Catterton and Sorenson Capital. www.zarbees.com

Takeaway.com (Amsterdam: TKWY) agreed to buy Israeli online food ordering company 10bis from TA Associates for €135 million. http://axios.link/fMQe

More M&A

Bosch, a listed German auto parts supplier, has hired Macquarie to find a buyer for its packaging machinery business, which could be valued at between €500-€700 million, per Reuters. http://axios.link/sFZH

Dana (NYSE: DAN) agreed to buy the industrial gears business of Switzerland’s OC Oerlikon (SWX: OERL) for around $603 million in cash. http://axios.link/I21E

🎲 GVC Holdings (LSE: GVC) said it is in advanced talks about a joint venture with MGM Resorts (NYSE: MGM) focused on U.S. sports betting. http://axios.link/1qwe

US Foods (NYSE: USFD) agreed to buy Services Group of America’s food business for $1.8 billion. http://axios.link/7hQi

Fundraising

Actera Group, a Turkish buyout firm, is raising up to $1.3 billion for its third fund, per WSJ. http://axios.link/0SGj

The Carlyle Group raised $18.5 billion for its latest U.S.-focused private equity fund, which is the largest raise in the firm’s 31-year history. http://axios.link/0aYG

It's Personnel

Chris Harper is stepping down as a London-based partner with Baird Capital, after a 27-year run, per PE News. http://axios.link/bYpZ

Final Numbers
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Adapted from Livingston et al., 2018, "Applying Blockchain Technology to Electric Power Systems"; Chart: Axios Visuals
  • Startups raised over $300 million last year to apply blockchain tech to the energy sector, and dealflow has only increased in 2018, according to our latest Expert Voices piece at Axios.com. What happens now?
Dan Primack