Jun 29, 2018

Axios Pro Rata

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

"Hpyergrowth" is taking on new meaning in venture capital, as popular startups have begun raising new funding while the ink on their prior funding is barely dry, at significantly increased valuations. For example:

  • Bird yesterday confirmed that it raised $300 million. As we previously reported, the second $150 million tranche doubled the company's valuation to $2 billion in just a few weeks, and only a few months after raising money at a $300 million valuation. Rival Lime is also doing a rocket raise.
  • Lyft raised $600 million at a $15.1 billion after having raised strategic funding at a $11.7 billion valuation in March.
  • Hims doubled its valuation to over $400 million from a round announced in March (but which technically closed last December).

What's happening: Venture capitalists, some of whom have been involved in these deals, cite four factors:

  1. Earlier investor scooped up most of the original, massively oversubscribed round. Company doesn't really need the extra money, so has leverage.
  2. Company legitimately experienced unexpected growth surge.
  3. VCs are desperate to have hot names in their portfolios in order to impress LPs, even if doing so could prompt tough LP questions about how why those VCs missed out on the lower price point.
  4. And, the old standby, too much money chasing too few deals.

Thinking aloud: We had an interesting Axios Expert Voices conversation yesterday in Santa Monica about tech and urban mobility. The big question I was left with: If cities continue to get "smarter" while simultaneously pricing out lower-income people, are we in the midst of creating a new digital divide?

Sidewalk wars: Kia reports that Spin, a San Francisco-based e-scooter and bike share startup, is finishing up a $125 million "security token offering."

  • Security token offerings are similar to initial coin offerings, except that they're explicit securities (i.e., not utilities) and backed by real assets (in this case, Spin itself).
  • This is separate from Layer Protocol (formerly PIN Protocol), the Spin founders’ side project, “a blockchain-based reputation and rewards protocol” they plan to someday integrate with the company’s service eventually.

Calendar: Fox has pushed back the shareholder vote on Disney's takeover offer from July 9 to July 27, which gives Comcast extra time to work out an increased bid.

Today in Abraaj: Sivendran Vettivetpillai, former head of impact investing and a global investment committee member at Abraaj, has sued his former firm for nearly $3 million. No word yet on cause of action, which was filed in Dubai.

The BFD
Photo by Philip Fong/AFP/Getty Images

Xiaomi, a Chinese smartphone maker, raised $4.7 billion in its Hong Kong IPO after pricing shares at the lowest end of its HK$17-HK$22 offering range. This gives it an initial market value of around $54 billion, which is just around half of what it originally sought but still above its most recent private mark of $46 billion.

  • Why it's the BFD: Because Xiaomi was seen as a bellwether for other Chinese tech offerings that are expected in the second half, such as China Tower and Meituan Dianping, and its disappointing performance won't settle nerves that are already frayed from the Hang Seng index falling 6.5% in June.
  • Bottom line: "The company was also planning to raise funds from mainland Chinese investors nearly simultaneously with the Hong Kong IPO. It has since delayed the plan to float so-called Chinese depositary receipts in Shanghai, which reduced its overall fundraising target." — Crystal Tse, Bloomberg
Venture Capital Deals

BrightFarms, an Irvington, N.Y.-based indoor farming company, raised $55 million in new funding. Cox Enterprises led, and was joined by Catalyst Investors, WP Global Partners and NGEN Partners. http://axios.link/hclK

Away, a New York-based “smart luggage” startup, raised $50 million in new funding from return backers Forerunner Ventures, Global Founders Capital and Comcast Ventures. http://axios.link/04J2

JASK, a San Francisco-based autonomous security operations platform, raised $25 million in Series B funding. Kleiner Perkins led, and was joined by Battery Ventures, TenEleven Ventures and Vertical Venture Partners. http://axios.link/Rn8b

Oh BiBi, a French mobile gaming studio, raised $21 million from Atomico and Korelya Capital. http://axios.link/Ky8m

🚑 NBE Therapeutics, a Swiss antibodies developer, raised $20 million from Novo Holdings. http://axios.link/JB44

ApplyBoard, a Canadian application platform for international students, raised C$13 million in Series A funding. Artiman Ventures led, and was joined by return backers 500 Startups and Candou Ventures. www.applyboard.com

Cashify, an Indian marketplace for used smartphones, raised $12 million in Series C funding. CDH Investments and Morningside co-led, and were joined by Aihuishou and return backers Bessemer Venture Partners and Shunwei. http://axios.link/xuqW

🚑 Appello Pharmaceuticals, a Nashville-based developer of a Parkinson’s disease treatment, raised $10.5 million in Series A funding co-led by Deerfield Management and Mountain Group Partners. http://axios.link/ELoy

Cerebri AI, an Austin-based startup that uses machine learning to analyze customer behavior, raised $5 million in Series A funding. Microsoft’s M12 led, and was joined by UT Horizon Fund, WorldQuant Ventures and Leawood Venture Capital. http://axios.link/wCJY

Private Equity Deals

Asia Gourmet Holdings, a portfolio company of Advantage Partners, has acquired the 34 China restaurants of U.S. pizza chain Papa John’s.

Audax has acquired Revolution Dancewear, a Niles, Ill.-based provider of dance recital costumes and other apparel. www.revolutiondance.com

🚑 Bain Capital is in talks to acquire DSP, a Singapore-based pharma joint venture of Dutch Royal DSM and China’s Sinochem Group, according to Bloomberg. http://axios.link/hDOe

🥂 The Carlyle Group has agreed to acquire a majority stake in Spanish sparking wine maker Codorníu, which would be valued at €390 million, per the FT. http://axios.link/oidL

Lone Star agreed to buy the real estate services unit of CaixaBank, plus 80% of the Spanish bank’s real estate assets. http://axios.link/FLkh

Public Offerings

Babytree, a Chinese pregnancy and new parent e-commerce site that recently raised $220 million from Alibaba, has filed for a Hong Kong IPO. http://axios.link/m2sL

MAV Beauty Brands, a Canadian personal care products company backed by TA Associates, raised C$242 million in its Toronto IPO. http://axios.link/CZ6W

Liquidity Events

Advent International agreed to sell Mondo Minerals, a Dutch talcum powder maker, to Elementis (LSE: ELM) for around $600 million. http://axios.link/tW3p

Aquiline Capital Partners and Genstar Capital are considering a sale process for Ascensus, a Dresher, Penn.-based provider of retirement planning and college savings services that could fetch around $2 billion, per Bloomberg. http://axios.link/aOT3

Orix (Tokyo: 8591) has acquired Peak Utility Services, a Meridian, Idaho-based infrastructure maintenance company that had been backed by CIVC Capital Partners. http://axios.link/3Bvs

Tsinghua Unigroup is in talks to acquire French smart-card components maker Linxens, which is owned by CVC Capital Partners and could be worth around $2.5 billion, per Bloomberg. http://axios.link/kHpo

More M&A

🚑 Akebia Therapeutics (Nasdaq: AKBA) has agreed to an all-stock merger with Keryx Biopharmaceuticals (Nasdaq: KERX), creating a kidney-focused drugmaker that would have a pro forma equity value of around $1.3 billion. http://axios.link/NKzq

It's Personnel

Ziad Ojakli is leaving Ford Motor Co to join SoftBank as SVP and global government affairs officer.

Final Numbers
Expand chart
Data: Money.net; Chart: Harry Stevens/Axios

Top pharmacy stocks were hammered yesterday, after Amazon announced plans to purchase online pharmacy startup Pillpack.

  • Six of America's largest pharmacies lost $15.2 billion in market cap, with pure-plays taking the biggest hits.
  • Amazon, on the other hand, gained $19.6 billion in market cap. Not too shabby given that it's paying *only* around $1 billion in cash for Pillpack.
Dan Primack

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