Axios Pro Rata

A green watering can with a dollar sign painted on it.

August 11, 2021

We're halfway to the weekend — let's do this.

  • As usual, send me your thoughts and scoops 🍦 by hitting reply to this email at [email protected] or on Twitter at @imkialikethecar.
  • 🚨 We're launching our latest Get Smart video short course on going public and SPACs. Sign up here and get it on Aug. 16. (Bonus: You get to experience my voiceover skills!)

Top of the Morning

Illustration of a pattern of buckets of money with a giant hand picking up one bucket.

Illustration: Aïda Amer/Axios

While Softbank's first Vision Fund was all about "picking winners" in a sector and arming them with a lot of capital to fend off their rivals, the Japanese giant's second Vision Fund has a different strategy: backing as many worthy startups as possible, as early as possible.

Why it matters: Diversified portfolios have been a fixture of seed investing for a while, but with the entrance of investors like Tiger Global into the startup scene, it’s a strategy no longer confined to the earliest stages of venture.

By the numbers: Last quarter SoftBank's Vision Fund 2 invested in 47 startups ($14.2 billion including follow-on capital from VF 1), and has already backed another 27 since July 1.

  • "You'll see more diversification — [SoftBank's Vision Fund 2] is coming in at earlier stages. ... The idea is to be earlier in the cap table and be able to participate in the next round," one person familiar with the Vision Fund's thinking told Axios.
  • Meanwhile, Tiger Global has already been pre-marketing its upcoming $10 billion growth equity fund to back more internet startups while deploying its recently closed $6.7 billion fund at a furious pace.

Between the lines: Startups, especially at the mid-to-late stages, are the new stock market in some ways.

  • With companies staying private longer, crossover funds have been dipping into backing pre-IPO companies for years now to capture gains from the growth that used to happen post-IPO — but this trend has significantly accelerated.
  • And there's a startup market for investors to index. The pandemic forced a lot of activities and industries to move online, boosting the explosion of Internet-enabled startups that was already happening. (Both SoftBank and Tiger Global have touted to investors their success in seeing and backing a large chunk of the world's digital startups.)
  • And of course, there's optionality: Get on the cap table early enough, and be able to participate in subsequent rounds if the startup turns out to be a gem — or write off the smaller initial investment if it's a dud.

The bottom line: Historically, nine out of 10 startups fail, but that's not deterring investors like SoftBank and Tiger from writing a lot of checks.

The BFD

Illustration of an open briefcase with an upwards trending line popping out. 

Illustration: Aïda Amer/Axios

Gusto, a San Francisco-based payroll and HR software company, raised $175 million at a $9.5 billion valuation led by T. Rowe Price.

  • Why it's the BFD: There is no better sign of a labor market roaring back than demand for payroll software.
  • The bottom line: "Part of Gusto's success will rely on its ability to maintain its swim lane of catering to small and medium businesses, says Scott Berg, an analyst at Needham & Co. The market for small and medium businesses is enormous, with more than 30 million in the U.S. Shopify built an almost $200 billion company providing these businesses with the tools to launch online businesses. Still, the HR and payroll software space is saturated with other public companies like Paychex and ADP, and Gusto's growth will require a gradual climb, Berg adds." — David Jeans, Forbes.

Venture Capital Deals

OwnBackup, an Englewood Cliffs, N.J.-based data backup provider for companies in the Salesforce ecosystem, raised a $240 million Series E co-led by Alkeon Capital and B Capital Group, with BlackRock Private Equity Partners, Tiger Global participating, Insight Partners, Salesforce Ventures, Sapphire Ventures and Vertex Ventures also participating. http://axios.link/9KiS

🚑 Reify Health, a Boston-based clinical trials software company, raised $220 million in Series C funding at a $2.2 billion valuation led by Coatue Management, with ICONIQ Growth, Adams Street Partners, Sierra Ventures and Battery Ventures also participating. http://axios.link/WRWs

FalconX, a San Francisco-based digital assets and cryptocurrency financial services startup, raised $210 million in Series C funding at a $3.75 billion valuation led by Altimeter Capital, Sapphire Ventures, B Capital Group and Tiger Global Management, with Mirae Asset and Amex Ventures also participating. http://axios.link/W17E

LaunchDarkly, an Oakland-based maker of software development tools, raised $200 million in Series D funding led by Lead Edge Capital, with Top Tier Capital Partners, Insight Venture Partners, Bessemer Venture Partners, Redpoint, Threshold, Uncork Capital and Bloomberg Beta also participating. http://axios.link/mxwJ

Helium, a San Francisco-based decentralized 5G wireless network, raised $111 million in funding led by Andreessen Horowitz, with Ribbit Capital, 10T Holdings, Alameda Research and Multicoin Capital also participating. http://axios.link/8mBK

Tulip Interfaces, a Boston-based provider of software tools for frontline workers, raised $100 million in Series C funding led by Insight Partners, with Pitango Growth, TIME Ventures, DMG MORI, NEA and Vertex Ventures US also participating. http://axios.link/adtq

Jerry, a Palo Alto-based car ownership app, raised $75 million in a Series C round led by Goodwater Capital, with Bow Capital, Kamerra, Highland Capital Partners and Park West Asset Management also participating. http://axios.link/flsY

🚑 Mahana Therapeutics, a San Francisco-based digital therapeutics startup, raised $61 million in Series B funding led by JAZZ Venture Partners and Gurnet Point Capital, with Main Street Advisors, KKCG and Lux Capital also participating. www.mahanatx.com

Deepbrain AI, a South Korean AI company, raised $44 million in Series B funding led by Korea Development Bank and VC IMM. www.deepbrainai.io

Saturn, a NYC-based social platform, raised more than $44 million in funding from General Catalyst, Insight Partners, and Coatue, Bezos Expeditions, Marc Benioff, Dara Khosrowshahi, Dick Costolo and Adam Bain’s 01 Advisors and others. http://axios.link/gumI

AviaGames, a Mountain View, Calif.-based mobile, skill-based gaming company, raised $40 million in funding from ACME Capital, Washington Harbour Partners, Powerhouse Capital, Makers Fund and Galaxy Digital also participating. http://axios.link/vgRs

🚙 HopSkipDrive, a Los Angeles-based children’s transportation company, raised $25 million in Series C funding from Energy Impact Partners, Keyframe Capital, FirstMark Capital and 1776 Ventures. http://axios.link/PhH1

Product School, a San Francisco-based product management training platform, raised $25 million from Leeds Illuminate. http://axios.link/uKEo

FireHydrant, a New York-based enterprise crisis startup, raised a $23 million Series B led by Harmony Partners, with Salesforce Ventures, Menlo Ventures and Work-Bench also participating. http://axios.link/Mf1f

XpertSea, a Canadian seafood farming and trading startup, raised $20 million in Series B funding led by QED Investors and Atlantico, with Investissement Quebec, Obvious Ventures, Aqua-Spark, Future Shape, Real Ventures and edō Capital also participating. www.xpertsea.com

🚑 Breeze, an Omaha, Neb.-based disability insurance startup, raised $10 million in Series A funding led by Link Ventures, with Northwestern Mutual Future Ventures, Silicon Valley Bank, M25, Fiat Ventures and Invest Nebraska also participating. http://axios.link/v8TM

Tessian, a San Francisco-based cybersecurity startup, raised $9 million in Series C extension funding from Okta Ventures, Citi Ventures and Sozo Ventures. http://axios.link/WCpS

A Kids Company About, a Portland-based children's media company, raised $7 million in Series A funding led by Pendulum Opportunities, with Backstage Capital, Emerson Collective and others also participating. http://axios.link/kcqp

Felt, a Oakland-based collaborative mapping software company, has raised $4.5 million in funding led by Bain Capital Ventures, with Designer Fund, Allison Pickens, Akshay Kothari and others also participating. http://axios.link/NRJn

Neuron7.ai, a San Jose-based cloud service intelligence company, has raised $4.2 million in seed funding from Nexus Venture Partners and Battery Ventures. http://axios.link/CPZQ

Surfside, a New York-based maker of cannabis marketing tools, raised $4 million in Seed funding led by Casa Verde. http://axios.link/XUUr

Upscribe, a Los Angeles-based subscription software provider, raised $4 million in a seed round led by Uncork Capital, with Leaders Fund, The House Fund, Fahd Ananta, and Laura Behrens Wu also participating. http://axios.link/2T2p

🚑 Spora Health, a San Francisco-based telemedicine startup focused on primary care for people of color, raised $3 million in a seed funding led by M13, Refactor Capital and MaC Venture Capital, with Human Ventures, Headwater Ventures, Techstars and Alicia Jackson also participating. http://axios.link/JZRt

🚑 Elektra Health, a New York-based women's health tech startup focused on menopause, raised $3.75 million in seed funding led by Seven Seven Six and Flare Capital Partners, with City Light Capital, January Ventures, Human Ventures, The Fund, Community Fund and angel investors also participating. http://axios.link/y8kG

Omnibiz, a Lagos-based B2B e-commerce startup, raised $3 million in seed funing led by V&R Africa, Timon Capital and Tangerine Insurance, with Lofty Inc., Musha Ventures, Sunu Capital, Launch Africa and Rising Tide Africa also participating. http://axios.link/2At9

Private Equity Deals

Service Champions Group, backed by Odyssey Investment Partners, acquired SWAN Heating & Air Conditioning, a Loveland, Colo.-based HVAC and plumbing services company. www.servicechampions.com

Right Time Group of Companies, backed by Gryphon Investors, acquired Anchor Home Comfort, an Canadian provider of residential HVAC, air quality and hot water services. www.right-time.ca

Public Offerings

ROX Financial LP, a REIT containing a single Amazon logistics center in Oakley, California, has withdrawn its IPO plans after NorthPoint Development, the current owner of the logistics center, agreed to purchase an aggregate $7 million worth of shares in concurrent private placements. http://axios.link/cItV

SPAC Stuff

Decarbonization Plus Acquisition IV, a SPAC targeting decarbonization businesses, has raised $275 million. http://axios.link/yIS7

World Quantum Growth Acquisition, a blank check company led by the former LSEG CEO targeting the financials sectors in the U.S. and EMEA, raised $200 million by offering 20 million units at $10. http://axios.link/NgSA

10X Capital Venture Acquisition II, the second blank check company formed by 10X Capital targeting a tech-enabled business, raised $200 million by offering 20 million units at $10. http://axios.link/2hAr

TPB Acquisition I, a blank check company formed by venture foundry The Production Board targeting sustainable businesses in food and bio, raised $175 million by offering 17.5 million units at $10, 2.5 million fewer units than anticipated. http://axios.link/1aMP

Chardan NexTech Acquisition 2, a blank check company formed by Chardan targeting disruptive technologies, raised $110 million by offering 11 million units at $10, 1 million more units than anticipated. http://axios.link/8pij

PONO Capital, a blank check company targeting businesses driving growth through technology, raised $100 million by offering 10 million units at $10. http://axios.link/zdu0

More M&A

Unity has reached an agreement to acquire Parsec, a New York-based remote desktop tool for developers and creatives, for $320 million in cash. http://axios.link/YIU0

TechnoPro has agreed to buy Robosoft Technologies, an India-based software services developer for $108 million. http://axios.link/0X60

Ninatic has acquired Scaniverse, an iPhone/iPad app for scanning objects and environments in high-resolution 3D. http://axios.link/7UJd

Arcline Investment Management portfolio company Integrated Polymer Solutions Inc. has acquired Seal Science, an Irvine, Calif.-based designer and manufacturer of elastomeric aerospace, naval, medical and industrial sealing solutions. www.sealscience.com

NortonLifeLock agreed to acquire and combine with Avast in a cash-and-stock deal that will be worth between $8.1 billion and $8.6 billion. http://axios.link/BRot

Shutterfly, a Redwood City, Calif.-based digital retailer and manufacturing platform for personalized products, agreed to acquire Spoonflower for about $225 million. http://axios.link/TdsV

Gemini acquired Guesser, a real-time predictions market platform. http://axios.link/MKgE

AT&T’s WarnerMedia is in talks to sell TMZ to Fox, according to The Information. http://axios.link/fCHx

Fundraising

A consortium led by BlackRock invested in assets managed by Mubadala and in a private equity fund. The consortium also committed $400 million to Mubadala Capital's third private equity fund. http://axios.link/29BY

It's Personnel

Arboretum Ventures has promoted Dan Kidle to managing partner. www.arboretumvc.com

AIG has hired Drew Schechtman as vice president and head of ESG strategy. He was previously at Voya Financial as vice president of ESG. www.aig.com

Latham & Watkins has hired Javad Mostofizadeh as a partner in the corporate department and member of the investment funds and private equity practices in Silicon Valley. He was previously at Gunderson Dettmer. www.lw.com

Final Numbers

Number of M&A deals with <span style="color: #00ab58;">men</span> or <span style="color: #835bff;">women</span> serving as lead counsel
Data: Afra Afsharipour, Women and M&A; Chart: Will Chase/Axios
  • Read my colleague Felix Salmon's dive into the lack of women in some of the most prestigious M&A jobs.

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and payroll accountants to sign up.