Apr 5, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

As the self-driving car wars play out in both courtrooms and roadways, Kia uncovered an SEC filing showing that Aurora Innovation ― the stealth startup led by Chris Urmson, former CTO of Alphabet's self-driving car project ― has raised just over $3 million in VC funding. Some notes:

  • No investors are disclosed for the $3.1 million round, but board members include Ian Smith of Allen & Co.
  • Employees include engineering vets of Google, Uber, Tesla and Nvidia. But don't search for them on LinkedIn by using "Aurora Innovation" (save for Urmson and a couple others). Instead, their preferred LinkedIn moniker is "Stealthy McStartup."
  • Per Kia: About a month before Alphabet's self-driving car unit sued Uber, alleging trade secret theft and breach of non-poaching agreement, Tesla Motors filed an eerily similar lawsuit against Aurora and senior exec Sterling Anderson. In the complaint, Tesla says that former employee Anderson downloaded and kept proprietary company files to his personal computer, attempted to poach Tesla employees (only two accepted), and even worked on Aurora with Urmson while still employed by Tesla.

• Nuclear protection(ism): Last week we discussed how Westinghouse Electric, the U.S. nuclear power subsidiary of Japan's Toshiba Corp., filed for Chapter 11 bankruptcy protection. Now comes a Bloomberg report that the Trump Administration is very concerned about Westinghouse being acquired by a Chinese company, and that "U.S. officials are trying to find an American or allied buyer for the company instead."

• Walled off: A bill was recently introduced in the California State Assembly that would effectively require state pension funds like CalPERS and CalSTERS to divest from companies involved in the construction or maintenance of Trump's border wall. The pension systems haven't yet taken a formal position, but CalPERS communications boss Brad Pacheco twice tweeted out a link to a Pensions & Investments editorial that savaged the bill.

• It's a spectacle: The lawsuit brought against Snap by former employee (and current venture capitalist) Anthony Pompliano took a new turn yesterday, with "Pomp" seeking to unseal the redacted parts of his initial complaint. If the court agrees in an April 17 hearing, expect all sorts of detailed allegations that Snap manipulated its user metrics. Snap wants to keep the full complaint sealed, and calls the claims "scurrilous."

• Yakety yak: There were several reports yesterday on the fate of Yik Yak, the flailing social messaging app that had been valued at around $400 million in 2014 by VC firms like Sequoia Capital and DCM. First by Fortune, and then by The Verge ― the latter of which mentioned that payments company Square was among the potential suitors. Three notes:

  • As both stories said, this would be an acqui-hire of what likely amounts to just a small number of engineers. Nobody, including Square, has any interest in the actual Yik Yak IP.
  • Sequoia partner Roelof Botha is on the board of Square, but the immateriality of this deal (were it to happen) makes it unlikely that it would rise to the level of a board vote. Also worth noting that Yik Yak is a reminder that even the best VCs can blow a deal in the exact same space as their greatest win, since Sequoia's partner here was WhatsApp lead Jim Goetz.
  • The real appeal of Yik Yak for potential acqui-hirers may be getting to hire an Atlanta-based team (read: cheaper than a San Francisco-based team with the same skill set).

• Deal drop: PitchBook and the NVCA today released Q1 deal data, showing that VC disbursed $16.5 billion to 1,808 U.S.-based companies between January and March. That represents declines of 12% and 25%, respectively. Extrapolated out, 2017 would host the lowest annual VC volume since 2013.

• Quotables:

  • Blackstone CEO Steve Schwarzman to President Trump, at the end of yesterday's CEO Summit: "You are doing profound things."
  • Blackstone president Tony James, to a private equity conference: "I think [tax reform] will be much more modest than what you read about in the Ryan plan."
  • GOP source, after I texted about White House floating a VAT and carbon tax: "Lolz"
The BFD: It's Not Easy

Staples (Nasdaq: SPLS) is exploring a sale to private equity, according to the WSJ. This comes after U.S. regulators effectively blocked theoffice retailer from acquiring rival Office Depot.

  • Why it's the BFD: For all of its problems, Staples remains a $6 billion company and the go-to physical source for office supplies.
  • Skeptical: This is hardly the first time that Staples has been talked about as a private equity target. In fact, yours truly first reported on such informal conversations back in 2012. But many of the reasons why that process was never consummated have only been exacerbated over time, including competition from Amazon and declining revenue. Plus, private equity isn't exactly known to be clamoring right now for big box retailers. In other words, this reads a bit like Staples (now under a new CEO) seeking a buyer via the press. On the other hand, perhaps Mitt Romney is super bored and wants to relive some past glories...
  • Bottom line: "After the [Office Depot] deal collapsed, Staples said it would cut costs and redouble efforts to win more business from midsize companies. But the turnaround strategy, dubbed Staples 20/20, hasn't yielded significant gains yet." ― WSJ
Venture Capital Deals

• Snowflake Computing, a San Mateo, Calif.-based data warehouse-as-a-service company, has raised $100 million in Series D funding. ICONIQ Capital led the round, and was joined by Madrona Venture Group and return backers Altimeter Capital, Redpoint Ventures, Sutter Hill Ventures and Wing Ventures. http://tcrn.ch/2p0IXid

• Cohesity, a Santa Clara, Calif.-based hyperconverged secondary storage company, has raised $90 million in Series C funding at a reported valuation of more than $500 million. GV and Sequoia Capital co-led the round, and were joined by Cisco Investments, HP Enterprise, Accel, Artis Ventures, Battery Ventures, Danhua Capital, Foundation Capital, Qualcomm Ventures, Trinity Ventures and Wing Venture Capital. https://bloom.bg/2nYAPB8

• Wecash, a Beijing-based provider of credit assessment analytics, reportedly has raised $80 million in Series C funding. Backers include China Merchants VC Management, Forebright Capital, SIG, Dongfang Hongdao Capital and Lingfeng Capital. http://bit.ly/2nXhXkv

• AdAsia, a Singapore-based online advertising startup, has raised $12 million in Series A funding from Jafco. http://tcrn.ch/2o7VbIv

• Sentien Biotechnologies, a Cambridge, Mass.-based cell therapy startup, has raised $12 million in Series A funding. BIVF USA and BioInnovation Capital co-led the round, and were joined by Chiesi Ventures, MBL Venture Capital and Mass Medical Angels. www.sentienbiotech.com

• PhenixP2P, a Chicago-based real-time video streaming startup, has raised $5.5 million in Series A funding led by KB Partners. http://bit.ly/2nDE2m6

• Vimcar, a Berlin-based car fleet management solution for SMEs, has raised $5.5 million in Series A funding co-led by UnternehmerTUM and Coparion. http://tcrn.ch/2nYj4Ca

• Wellthie, a New York-based healthcare insurance navigation startup, has raised $5 million in Series A funding. IA Capital Group led the round, and was joined by Aflac Corporate Ventures. http://bit.ly/2o9zxUl

• Critical Informatics, a Seattle-based provider of managed cyber-security solutions, has raised $3.25 million in Series A funding led by East Seattle Partners. www.criticalinformatics.com

• CheckRecipient, a London-based AI startup focused on preventing misaddressed emails from being sent, has raised $2.7 million in Series A funding. Accel and LocalGlobe co-led the round, and were joined by Winton Ventures, Amadeus Capital Partners and Crane. http://bit.ly/2nJwy1O

• PlutoAI, maker of an analytics dashboard for water treatment plants, has raised $2.1 million in VC funding from Fall Line Capital, Refactor Capital, Unshackled Ventures and Comet Labs. http://tcrn.ch/2oF2g1n

• Grokstyle, a computer vision startup focused on home décor, has raised $2 million in VC funding from backers like Canaan Partners, Amino Capital and Neuron.VC. http://tcrn.ch/2nARrvc

• Groundspeed Analytics, an Ann Arbor, Mich.-based provider of commercial insurance data automation solutions, has raised $2 million in Series A funding. ManchesterStory led the round, and was joined by Michigan Angel Fund and Tappan Hill Ventures. www.groundspeed.com

• Street Contxt, a Toronto-based online knowledge platform for institutional finance, has raised an undisclosed amount of new funding from Joe Lonsdale, Point72 Vetures, Palm Drive Capital and Portag3 Ventures. The company has raised a total of US$15 million. www.streetcontxt.com

Private Equity Deals

• Audax has acquired Fastener Distribution Holdings, a Marina del Rey, Calif.-based distributor of aerospace fasteners and other c-class components, from Housatonic Partners. No financial terms were disclosed. www.aircraftfast.com

• Concardis, a German payment processor owned by Advent International and Bain Capital, has acquired RatePay from Otto Group for an undisclosed amount. RatePay is a German provide of invoice payment and direct debit processing solutions. http://on.wsj.com/2naAvjW

• Greenbriar Equity Group has acquired Whitcraft, an Eastford, Conn.-based aerospace component manufacturer, from Linsalata Capital Partners. No financial terms were disclosed. www.whitcraftgroup.com

• Impact Group, a Boise, Idaho-based sales and marketing agency focused on the consumer packaged goods market, has acquired Westmont, Ill.-based Signature Specialty Sales & Marketing for an undisclosed amount. Impact Group is a portfolio company of CI Capital Partners.

• Kar Nut Products Co., a Madison Heights, Mich.-based maker of branded trail mix, has secured an undisclosed amount of private equity funding from Palladium Equity Partners. www.karsnuts.com

• New Water Capital Partners has acquired Custom Made Meals, a Denver-based maker of oven-ready entrees and appetizers sold in retail groceries. No financial terms were disclosed. http://bit.ly/2namGBW

• OMERS Private Equity has agreed to acquire Inmar, a Winston-Salem, N.C.-based provider of commerce software for the promotional, healthcare and supply chain markets, from ABRY Partners. No financial terms were disclosed. http://bit.ly/2oBiknP

• Public Pension Capital has acquired Viteos Fund Services, a Somerset, N.J.-based provider of processing and post-trade operations for the investment management industry. FiveW Capital participated as an equity co-investor, and Monroe Capital arranged $50 million in leveraged financing. Sellers include Credit Suisse. http://bit.ly/2nWX6Oa

• The Wicks Group of Cos has acquired EZShield, a Palo Alto, Calif.-based provider of identity protection solutions, from EdgeStone Capital Partners. No financial terms were disclosed. www.ezshield.com

Public Offerings

• KKR Real Estate Finance Trust, a commercial mortgage REIT managed by KKR & Co., has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol KREF, with Wells Fargo listed as left lead underwriter. http://bit.ly/2p0uH96

• Okta, a San Francisco-based provider of identity access management solutions, has increased its proposed IPO price range from $13-$15 to $15-$17 per share. It still plans to offer 11 million shares. The company is expected to price its IPO on Thursday night, and has raised around $230 million in VC funding from firms like Sequoia Capital (21.2% pre-IPO stake), Andreessen Horowitz (19.6%), Greylock (16.9%), Khosla Ventures (8.1%) and Floodgate. www.okta.com

Liquidity Events

• The Blackstone Group has hired UBS, J.P. Morgan and Jones Lang LaSalle to find a buyer for a A$3.5 billion shopping mall portfolio in Australia, according to Reuters. http://reut.rs/2o2OcjR

More M&A

• Amazon (Nasdaq: AMZN) has entered into a commercial deal with hydrogen fuel cell maker Plug Power (Nasdaq: PLUG), which could result in the e-commerce giant acquiring up to a 23% equity stake. As part of the arrangement, Amazon must spent at least $600 million over the life of the contract for the warrants to fully vest. http://reut.rs/2nJAD6r

• ChemChina received EU antitrust approval for its proposed $43 billion takeover of Swiss pesticide and seed company Syngenta (Swiss: SYN). http://reut.rs/2o928cr

• ExxonMobil (NYSE: XOM) said that it is in talks to acquire Jurong Aromatics Corp., a bankrupt refining-petrochemical facility in Singapore. http://reut.rs/2o2oGeH

• JAB Holdings, owner of Caribou Coffee and Peet's Coffee & Tea, has agreed to acquire Panera Bread Co. (Nasdaq: PNRA) for around $7.5 billion, including debt. The $315 per share deal represents a 20.3% premium to Panera's closing price before initial media reports of a potential deal. http://reut.rs/2nW2q4d

• New Jersey Resources (NYSE: NJR) is in talks to merge with South Jersey Industries (NYSE: SJI), according to the WSJ. The New Jersey natural utilities have market cap of $3.4 billion and $2.8 billion, respectively. http://on.wsj.com/2nG2OTt

Fundraising

• 83North, a VC firm focused on Israeli and European startups, has closed its fourth fund with $250 million in capital commitments. http://tcrn.ch/2nalajp

• Cendana Capital has quietly closed on five funds totaling $260 million in capital commitments. Three of them are funds-of-funds focused on the seed-stage market, including the firm's third flagship fund ($80m) and a $60 million managed account for UTIMCO. The other two are direct investment funds.

• Dyal Capital Partners has acquired a minority management stake in Sound Point Capital, a New York-based liquid and illiquid credit alternatives firm with $11.5 billion in AUM. No financial terms were disclosed, except that Dyal also will make in investment in a Sound Point CLO Fund launched in June 2015. http://bit.ly/2nakbQq

• Forward Partners, a London-based seed-stage VC firm, has closed on its second fund with £60 million in capital commitments. http://tcrn.ch/2nW8rOq

• Resolute Ventures has closed its third pre-seed and seed-stage VC fund with $65 million in capital commitments. http://tcrn.ch/2n7fC9c

• Summit Partners has closed its ninth flagship private equity fund with $3.3 billion in capital commitments, and its fourth VC fund with $730 million. www.summitpartners.com

It's Personnel

• Karl Eidem has joined European mid-market private equity firm Silverfleet Capital to co-lead its Nordic business. He previously was a director with Swedish pension fund AP6. www.silverfleetcapital.com

• Fred Destin is stepping down as a London-based partner with Accel in order to launch his own firm. Belgium-born Destin has been with Accel for more than two years after returning to Europe from Boston's VC scene, having worked on deals like Deliveroo, Carwow and Pillpack (where he'll continue to serve on the board). http://tcrn.ch/2nX06tV

• Chris Hayes has joined The Institutional Limited Partners Association (ILPA) as a Washington, D.C.-based director of industry affairs. He previously was general counsel to the SBIA. www.ilpa.org

Final Numbers
Dan Primack