May 20, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🚑 Pro Rata Podcast digs into the reopening of America's health care sector, many parts of which have been put on life support during the pandemic. Listen via Apple or via Axios.

Top of the Morning

Illustration: Aïda Amer/Axios

Walmart yesterday announced plans to shutter its Jet.com e-commerce brand, less than four years after buying it for $3.3 billion.

  • Under the hood: Appearances can be deceiving. Not only was this deal not a failure for Walmart, but it arguably was the retail industry's most successful acquisition ever of a tech company.

History: Jet.com was still pretty embryonic when Walmart agreed to buy it in August 2016.

  • The company had only been founded two years earlier, and publicly launched just one year earlier, with an ambitious goal to take on Amazon.
  • It was something of a revenge play by founder and CEO Marc Lore, after Amazon used anti-competitive practices to force an acquisition of Lore's prior startup (Lore, for the record, publicly disputes the spite narrative ⁠— but Tom Brady is more believable when he wishes the Patriots the best of luck).
  • As I wrote at the time for Fortune: "Jet will use a membership-based, real-time trading platform to provide deeper discounts than are currently available online, and steer users toward a 'smart cart' experience rather than impulse buys."

Fast forward: Jet's underlying thesis never really panned out, and after being acquired it transitioned more into focusing on urban millennials that Walmart otherwise struggled to reach.

  • But the deal wasn't really about Jet.com as a product or a technology. It was about Lore, who was put in charge of Walmart's entire e-commerce business, and his team.
  • In short, this was a gussied-up acqui-hire.
  • Walmart's e-commerce sales skyrocketed since the deal, including a 37% bump in 2019. And that's all before the pandemic forced changes to consumer behavior, which began to be reflected in a 74% surge for Walmart e-commerce in Q1 2020.

The bottom line: Lore hasn't gotten close to defeating Amazon, but he's helped transform Walmart into one of its largest and most viable rivals. That's a pretty strong return on investment, even if Jet.com is grounded.

The BFD

Illustration: Sarah Grillo/Axios

Luckin Coffee (Nasdaq: LK), the Chinese coffee shop chain that recently fired its CEO and COO for falsifying sales data, yesterday received a delisting notice from Nasdaq. One source says that Luckin didn't sufficiently answer questions Nasdaq had asked.

  • Why it's the BFD: This comes against the backdrop of Nasdaq tightening its listing standards for closely held companies and those that aren't sufficiently transparent about their accounting. It didn't explicitly cite Chinese issuers like Luckin, but its targets were clear.
  • What's next: Luckin will appeal Nasdaq's decision, and gets to keep trading on the exchange until its challenge is adjudicated.
  • The bottom line: It's been just one year since Luckin went public at nearly a $3 billion valuation, later rising to a whopping $13 billion, as investors clamored for a piece of China's homegrown rival to Starbucks. This morning's opening market cap was less than $700 million.
Pro Rata for Kids

Today's project is for your kids to make animal face toast. All you need is a slice of bread, some sort of spread (peanut butter, cream cheese, etc.), and a lot of creativity. Examples here.

  • Please be sure to email pics of what they make.

Yesterday's project was to make paper bag monsters:

Mollie and Nola made “Fearless Panda and Fearless Turtle."
Venture Capital Deals

🚑 Atea Pharma, a Boston-based biotech focused on viral infections like COVID-19, raised $215 million in Series D funding. Bain Capital Life Sciences led, and was joined by RA Capital Management, Perceptive Advisors, Rock Springs Capital, Adage Capital Management, T. Rowe Price, Redmile Group, Omega Funds, and return backers Morningside Ventures, Cormorant Asset Management, Ally Bridge Group, and Sectoral Asset Management. www.ateapharma.com

Contentsquare, a digital experience analytics platform, raised $190 million in Series D funding. BlackRock led, and was joined by Bpifrance, Eurazeo Growth, Canaan, GPE Hermes, Highland Europe, H14, and KKR. http://axios.link/LPi6

🚑 Rapid Micro Biosystems, a Lowell, Mass.-based developer of microbial detection tech for biopharma manufacturing, raised $120 million. Ally Bridge led, and was joined by Endeavour Vision, Bain Capital Life Sciences, and Longitude Capital. www.rapidbiomicro.com

MasterClass, a San Francisco-based online course company, raised $100 million at an $800 million valuation. Fidelity led, and was joined by 01 Advisors, Owl Ventures, and return backers Atomico, IVP, NEA, and NextEquity Partners. http://axios.link/jCqE

BetterCloud, a New York-based operations management platform, raised $75 million in Series F funding. Warburg Pincus led, and was joined by Bain Capital Ventures, Accel, Greycroft Partners, Flybridge Capital Partners, New Amsterdam Growth Capital, and e.ventures. http://axios.link/ASLW

Khatabook, an Indian provider of business transaction recording and management software, raised $60 million in Series B funding. B Capital Group led, and was joined by Sequoia Capital India, partners of DST Global, Tencent, GGV Capital, RTP Global, Hummingbird Ventures, Falcon Edge Capital, Rocketship.vc, and Unilever Ventures. http://axios.link/9apW

Truework, a San Francisco-based consumer identity platform, raised $30 million in Series B funding. Activant Capital led, and was joined by return backers Sequoia Capital and Khosla Ventures. www.truework.com

PresenceLearning, a New York-based provider of live online special education services for K-12 schools, raised $27 million in Series D funding. Bain Capital Double Impact led, and was joined by Catalyst Investors, New Markets Venture Partners, and Catamount Ventures. http://axios.link/VXEn

Sound Agriculture, an Emeryville, Calif.-based developer of plant breeding solutions, raised $22 million in Series C funding. S2G Ventures led, and was joined by Cultivian Sandbox, Fall Line Capital, Cavallo Ventures and Syngenta Ventures. http://axios.link/Pi1i

Confluera, a Palo Alto-based automated cyberattack response startup, raised $20 million in Series B funding. Icon Ventures led, and was joined by Lightspeed Venture Partners, John W. Thompson, and Lane Bess. http://axios.link/x51g

Bevy, a Palo Alto-based provider of customer marketing SaaS for brands, raised $15 million in Series B funding. Accel led, and was joined by Upfront Ventures and Ryan Smith. http://axios.link/XAFU

🚑 ChromaCode, a Carlsbad, Calif.-based molecular testing startup, raised $10 million in Series C funding from Adjuvant Capital. http://axios.link/gHTE

🚑 Big Sky Health, a Montana-based developer of health and wellness apps, raised $8 million in Series A funding. Greycroft led, and was joined by True Ventures and Trinity Ventures. http://axios.link/ELU6

FireHydrant, a New York-based provider of cloud systems management tools and frameworks, raised $8 million in Series A funding. Menlo Ventures led, and was joined by Work-Bench. www.firehydrant.io

Apollo Agriculture, a Kenyan developer of crop yield enhancement software, raised $6 million in Series A funding led by Anthemis. http://axios.link/3F8E

Command E, a San Francisco-based unified desktop search tool , raised $4.3 million in seed funding from Bain Capital Ventures, Craft Ventures, Amplify Partners, Abstract Ventures, and Upside Partnership. http://axios.link/bikH

Brytlyt, a London-based provider of data analytics and visualization software, raised $4 million in Series A funding from Amadeus Capital Partners and Finch Capital. http://axios.link/YwYb

🚑 Tava Health, a Salt Lake City-based mental telehealth platform for employers, raised $3 million in seed funding led by Peterson Ventures. http://axios.link/ZPeN

Tonal, a San Francisco-based connected fitness company, is seeking to raise at least $250 million in new funding, per Bloomberg. Existing backers include L Catterton, Mayfield, and Sapphire Ventures. http://axios.link/4AzY

Private Equity Deals

Apollo Global Management agreed to lead a $1.75 billion convertible stock investment in Albertsons Cos, the Cerberus-owned grocery store chain that has been preparing to go public, for a 17.5% ownership stake. http://axios.link/ubky

HitecVision renegotiated its planned acquisition of Total (Paris: FP) UK North Sea non-core assets, first announced last July.

TA Associates and MCI EuroVentures acquired Klik, an online insurance brokerage in the Czech Republic and Slovakia, from Benson Oak Capital. www.ta.com

🚑 TA Associates is in advanced talks to pay upwards of $500 million for a 20% stake in Piramal Pharma, an Indian pharma unit of Piramal Enterprises, per Bloomberg. KKR also had been competing for the deal. http://axios.link/bzKg

Liquidity Events

Guild Education, a Denver-based education benefits platform valued by VCs at $1 billion, paid $80 million to acquire Entangled, a San Francisco-based ed-tech studio that had raised approximately $25 million in VC funding from firms like Rethink Education Management and TDM Growth Partners. http://axios.link/urvB

Microsoft (Nasdaq: MSFT) acquired Softomotive, a software robotic automation platform that had raised around $25 million from firms like Grafton Capital. http://axios.link/qkO6

Standard Cognition, a San Francisco-based autonomous checkout startup, acquired Italian rival Checkout Technologies. Standard Cognition has raised nearly $100 million in VC funding, while Checkout was seeded by firms like Plug and Play Tech Center and B-Engine. http://axios.link/osnF

Fundraising

Benchmark raised $425 million for its tenth venture capital fund, and first without Bill Gurley listed as a general partner, per an SEC filing. www.benchmark.com

Goldman Sachs Asset Management raised $2.75 billion for its second real estate secondaries fund. www.gs.com

Monarch Alternative Capital, a New York-based distressed debt investment firm, raised $455 million for its fifth fund, per an SEC filing. www,monarchlp.com

It's Personnel

Hami Ebrahimi stepped down as a managing director of operations for OMERS Private Equity, in order to join Hellman & Friedman portfolio company Caliber Collision Centers, per Buyouts. http://axios.link/mzPm

Final Numbers
Source: Edison Trends

Why it matters: April data suggests that Uber+Grubhub would put it dead even with DoorDash, in terms of market share.

  • Postmates continues to be a distant fourth, with multiple sources saying it's seeking to raise around $100 million in new private-market funding.
  • Be sure to check out this afternoon's Pro Rata Podcast, which will discuss the prospect of food delivery consolidation with Sen. Amy Klobuchar.
Dan Primack

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Editor’s note: The VC Deals section was corrected to show that it was the partners of DST Global (not DST Global itself) that invested in Khatabook.