Sep 24, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

Happy Tuesday! I'm your cruise captain just for today while Dan is away from his computer. Do send me your best gossip and scoops at kia@axios.com or on Twitter @imkialikethecar. Here we go...

Top of the Morning

Illustration: Aïda Amer/Axios

WeWork's drama is the gift that keeps on giving (at least for now, until another company from that cohort decides it’s time to grab some headlines).

  • Turns out: WeWork's $47 billion valuation, thanks to SoftBank, wasn't even close to what investment banks pitched in hopes of getting the IPO job.
  • "JPMorgan told WeWork executives the company could be worth between $46bn and $63bn in the listing. Goldman pegged the equity at between $61bn and $96bn. Morgan Stanley estimated WeWork's valuation at between $43bn and $104bn in a presentation in 2018, though a pitch for the IPO set it at a more modest $18bn-$52bn," according to the Financial Times. (To quote Dan: "Silicon Valley may run on hubris, but it's underwritten by flattery.")
  • Yes, but: The most recent talks of slashing the valuation down to $20 billion — or even just half of that — wouldn't only be problematic for SoftBank.
  • A number of startups that sold to WeWork and their investors could also lose out. Stock made up significant chunks of what WeWork paid for companies like Managed by Q, Meetup, and Spacious, according to sources. And while some may have been able to partake in the company's 2019 tender offer, some acquisitions happened after, which means these founders and their backers are holding a bunch of WeWork shares, hoping they don't go to zero when all this is over.

Delisted: IEX, a stock exchange that aimed to become an alternative to the NSYE and Nasdaq, said it would exit the listings business after its only listed company, Interactive Brokers Group, chose to go back to the Nasdaq.

  • "Interactive Brokers' chairman and founder Thomas Peterffy said in a statement that the company had reversed course after IEX failed to attract more listings and trading volume," notes the Wall Street Journal. "Compared with Nasdaq, he said, IEX had fewer market-makers--electronic trading firms that quote prices in a company's stock."
  • Why it matters: I'm sure the Long-Term Stock Exchange, brainchild of "Lean Startup" author Eric Ries, has been watching carefully. While an LTSE spokesman was optimistic when I asked about IEX's struggle, I'm sure the company is quietly taking notes as it prepares to debut its exchange (with or without listings) in the coming months.

Kik'ed down: Canadian chat app Kik said it's shutting down its app and laying off dozens of employees in order to focus on fighting with the U.S. Securities and Exchange Commission over whether its cryptocurrency, Kin, is a security. Two takeaways:

  • Whatever value the company saw in its app, which has been around for nine years and at one point had 300 million registered users, is nowhere near enough to want to devote more money to it. Monetizing social media is hard.
  • Fighting the SEC is expensive — very expensive. Kik has already spent $6 million on it, set aside another $5 million, and kicked off a crowdfunding campaign at the beginning of the summer to raise even more (which seems to have amassed just over $1.6 million, likely why Kik has had to radically cut costs.)

🎙Podcast: WeWork's largest investor is pushing to oust its CEO, putting an IPO in further doubt. Dan digs in with WSJ's Maureen Farrell. Listen here.

The BFD

Photo: Wendy Maeda/The Boston Globe via Getty Images

Facebook has agreed to acquire CTRL-Labs, a San Francisco-based startup developing devices that can read brain waves. Facebook reportedly paid between $500 million and $1 billion for the 4-year-old company.

  • Why it's the BFD: Facebook is under intense antitrust scrutiny and facing growing questions about its practices and ethics around user privacy. To say the least, this is a bold move.
  • Bottom line: "Technology like CTRL-labs's may someday be a crucial part of products like augmented reality glasses, where a user might want to control a computer without the need for buttons or a keyboard." — Kurt Wagner, Bloomberg.
Venture Capital Deals

Fundbox, a San Francisco-based B2B payments and credit network, raised $176 million in Series C funding from Allianz X, Healthcare of Ontario Pension Plan, HarbourVest, 9Yards Capital, Hamilton Lane, SEB Private Equity, Cathay Innovation, Synchrony Financial, MUFG Innovation Partners, Recruit Strategic Partners, GMO Internet Group, Arbor Ventures, Khosla Ventures, General Catalyst and Spark Capital Growth. It has also secured a $150 million credit facility. http://axios.link/s1EC

🥗 Sweetgreen, a Culver City, Calif.-based salad restaurant chain, raised $150 million in new funding at a $1.6 billion valuation led by Lone Pine Capital and D1 Capital Partners, with True Ventures also participating. http://axios.link/IJxS

Tipalti, a San Mateo, Calif.-based accounting startup, raised $76 million in Series D funding led by Zeev Ventures, with Group 11, 01 Advisors, Greenspring Associates, and TrueBridge Capital Partners also participating. http://axios.link/ncJr

Unbabel, a Portugal-based language translating startup, raised $60 million in Series C funding led by Point72 Ventures, with Microsoft's M12, Samsung Next, Greycroft, Scale Venture Partners, Notion Capital, Caixa Capital, Faber Ventures, FundersClub, Structure Capital, Indico Capital Partners, and e.ventures also participating. http://axios.link/lEIo

Sentry, a San Francisco-based startup that provides bug-monitoring software for app developers, raised a $40 million Series C led by Accel, with New Enterprise Associates also participating.

Bold Penguin, a Columbus, Ohio-based startup that connects commercial insurance carriers with prospects, raised $32 million in Series B funding from Hudson Structured Capital Management, Lightstone, Guggenheim Insurance, Lockton, and individuals from Stone Point Capital. http://axios.link/pPgu

🚑 Kheiron, a U.K.-based startup applying machine learning to radiology, raised $22 million in Series A funding led by Atomico, with Greycroft, Connect Ventures, Hoxton Ventures, and Exor Seeds also participating. http://axios.link/DVIN

Ometria, a U.K.-based customer marketing startup, raised $21 million in Series B funding led by Octopus Ventures, with Sonae IM, Summit Action, Samos and Adjuvo, and angel investors. http://axios.link/NvIO

Everledger, a U.K.-based blockchain company, raised $20 million in Series A funding from Tencent, Graphene Ventures, Bloomberg Beta, Rakuten, Fidelity and Vickers Venture Partners. http://axios.link/KPHL

Smarter Sorting, an Austin, Texas-based startup that provides chemical-level data about consumer products, raised $17 million in Series A funding led by US Ecology, with RTP Ventures and others also participating. http://axios.link/ylMY

🚑 Vedanta Biosciences, a Cambridge, Mass.-based biotech company, raised $16.6 million in Series C-2 funding from QUAD Investment Management, SV Investment Corp., Shinhan Investment-Private Equity, Shinhan Capital-Yeollim Partners, Partners Investment Co., FC Capital, and SymBiosis. www.vedantabio.com

Immutable, an Australia-based video games developer, raised $15 million in Series A round led by Naspers Ventures, with Galaxy Digital EOS VC Fund and Apex Capital Partners also participating. www.immutable.com

🚗Landline, a Los Angeles-based shuttle service, raised $3.85 million in seed funding led by Upfront Ventures, with Mucker Capital, Matchstick Ventures and WndrCo also participating. http://axios.link/bS5P

Cowbell Cyber, a Pleasanton, Calif.-based cybersecurity startup, raised $3.3 million in seed funding from ManchesterStory Group, Holmes Murphy & Associates, Tri-Valley Ventures and the Global Insurance Accelerator. www.cowbell.insure

iVexSol, a Boston-based biotech company, has secured $2 million in new convertible debt funding led by Casdin Capital and BioLife Solutions. www.ivexsol.com

Private Equity Deals

Maroon Group, backed by CI Capital, has acquired Cambrian Solutions, an Ontario-based distributor of specialty ingredients and chemicals. www.maroongroupllc.com

San Francisco Equity Partners will sell Japonesque, a San Ramon, Calif.-based beauty company, to Topspin Partners. www.japonesque.com

Hector Rail Group, a portfolio company of EQT Infrastructure, has agreed to sell GB Railfreight to Infracapital. www.eqtgroup.com

Vista Equity Partners has acquired AltaReturn, a Miami-based provider of cloud-based tech for private equity firms and family offices. As part of the deal, AltaReturn will merge with Black Mountain to form Allvue Systems. www.allvuesystems.com

Unifrax, backed by Clearlake Capital Group, has agreed to acquire the assets of Shenyang JiuQing Dongxiang Glass Product Co., a Chinese provider of high-performance specialty fibers, from the Li Family. www.unifrax.com

Pacific Current Group has acquired a minority stake in Proterra Investment Partners, a Minneapolis-based private equity firm. www.proterrapartners.com

Mubadala Investment Company has agreed to invest up to $500 million into Cologix, a Denver-based datacenter company. www.cologix.com

Xenon Partners has completed the acquisition of Metricfire, an Ireland-based provider of time series data monitoring. www.metricfire.com

Public Offerings

🍺 AB InBev priced the Hong Kong IPO of its Asia-Pacific unit at HK$27 per share, the bottom of the range, raising about $5 billion. http://axios.link/eIKb

⛽️ Saudi Aramco is unlikely to go forward with its massive IPO this year after attacks this month on its facilities, according to Reuters. http://axios.link/OirF

BRP Group, a Tampa, Fla.-based provider of insurance distribution and risk management services, filed to raise up to $100 million in an IPO. The company booked $102 million in revenue for the 12 months ended June 30. It plans to list on the Nasdaq under the symbol BRP. J.P. Morgan, BofA Merrill Lynch, Jefferies, and Wells Fargo Securities are the joint bookrunners on the deal. http://axios.link/rh2O

BI Acquisition, a Miami-based blank check company led by Bedrock Industries executives targeting the materials sector, withdrew its plans for an IPO. It had filed on Friday to raise $200 million by offering 20 million units at a price of $10. The company was set up in 2019 and had planned to list on the Nasdaq under the symbol BIACU. Deutsche Bank was set to be the sole bookrunner on the deal. http://axios.link/2Nfn

🚑 ADC Therapeutics SA, a Swiss biotech developing antibody therapies for cancers, announced terms for its IPO. It plans to raise $200 million by offering 8.2 million shares at a price range of $23 to $26. Insiders intend to purchase $115 million worth of shares in the offering. At the midpoint of the proposed range, the company would have a market value of $1.8 billion. It booked $3 million in revenue for the 12 months ended June 30, 2019. It plans to list on the NYSE under the symbol ADCT. Morgan Stanley, BofA Merrill Lynch, and Cowen are the joint bookrunners on the deal. It is expected to price during the week of Sept. 30. http://axios.link/ka7m

More M&A

🚗 CPPIB has hired investment bank Citi to explore the sale of its 39% stake in Interparking, a European parking garage operator, according to Reuters. http://axios.link/L1ct

Fundraising

🚑 Enhanced Healthcare Partners, a New York-based private equity firm focused on investing in middle-market healthcare businesses, has closed $300 million for a new fund, with access to $600 million in total equity to invest. www.enhancedhealthcare.com

It's Personnel

Tony Wang has joined 500 Startups as managing partner. Wang was previously chief operating officer at Color Genomics. www.500.co

Adam Reinmann has been appointed chief executive officer of the North American arm of Wender, a French investing firm.

Final Numbers
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Reproduced from Energy Futures Initiative; Chart: Axios Visuals

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Dan Primack