Mar 10, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Illustration: Sarah Grillo/Axios

Bolt, a hardware-focused venture capital firm whose portfolio includes Desktop Metal and SpinLaunch, is at risk of losing its charge.

  • Driving the news: Bolt is locked in bitter litigation with co-founder Ben Einstein, and privately told investors that one of its two remaining general partners, Greg McAdoo, will not participate in future funds.

The big question: Will Bolt invest the remainder of its $80 million third fund, or will it work out a compromise with a minority subset of limited partners who would prefer the investment period to end immediately.

  • Bolt believes it has enough dry powder to make around 10 new investments, and sources say there have been informal talks about limiting the number to around half that.
  • Bolt's fund documents would require 75% of LP interests to vote in favor of ending the investment period. There's no indication that such a super-majority exists.

The tumult goes back to Bolt's controversial decision in early 2019 to fire Einstein, who was in the midst of caring for his wife who had cancer.

What both sides seem to agree on is that Einstein cut way back on work for much of 2018 and the beginning of 2019, as he became his wife's primary caretaker, and that they all agreed on a reduced work schedule and compensation package going forward. Then things get murky.

  • Bolt has told investors that Einstein reneged on the revised compensation package, after it was approved by limited partners, asking for more.
  • A source close to Einstein rejects that version, suggesting that Bolt used Einstein's absence to deny him fund economics.
  • What no one disputes is that Bolt, led at that point by McAdoo and co-founding partner Axel Bichara, fired Einstein. This meant he and his wife lost health care coverage, as she was dealing with Stage 4 cancer, and were required to sign up for COBRA.
  • Bolt and Einstein are in the midst of arbitration, with a hearing scheduled for May 4.

What they're saying: Einstein's attorney sent Axios the following statement...

"Benjamin Einstein was the heart and soul of Bolt. It is sad but not surprising to see Bolt is searching for its compass after ousting the person responsible for creating and leading the fund. We are currently litigating allegations relating to Mr. Einstein's separation from Bolt, including that his former partners acted unlawfully by refusing to pay a penny of the severance."

Bichara didn't return a request for an interview, while Bolt's attorney declined to comment.

McAdoo, who joined Bolt in 2017 after a successful career at Sequoia Capital (he led its original Airbnb investment), emailed the following when asked about his ongoing role:

"I remain a very active General Partner of Bolt and will continue to be involved in all aspects of the firm’s operational and investment activities.  This year and the next will be very busy for everyone at Bolt, including me, and I’m very focused on making new investments, serving on company boards as well as working with our portfolio and everyone at the firm."

The bottom line: At best this reflects the fragility of small partnerships. At worst, it reflects outright heartlessness.

  • We hopefully will get clarity following the arbitration process, although any settlement may come with an NDA attached.
  • As for Bolt, its future is in flux — even if it manages to fully invest its current fund with McAdoo aboard, any future fund would feature a senior team that investors would have to evaluate anew.

Illustration: Aïda Amer/Axios

Twitter yesterday reached a ceasefire with activist investor Elliott Management, which had been requesting the ouster of CEO Jack Dorsey and four new directors.

The big news: Dorsey isn't going anywhere. Including Africa.

  • The agreement includes private equity firm Silver Lake making a $1 billion convertible note investment into Twitter, which also promises to buy back $2 billion of its stock.

Details: Silver Lake's notes convert at $41.50 per share, while Twitter is not under timing obligations on its share buyback. For context, Twitter shares closed trading yesterday at $32.46 per share.

  • Silver Lake and Elliott each receive a seat on Twitter's board. The company also said it will add a third director, but word is that this is an "AI expert" who was in talks with Twitter before Elliott's activism. In other words, Elliott is only really getting one seat.
  • Silver Lake had been mildly kicking the tires on Twitter for years, but the two sides didn't engage in substantive talks until very recently. Sources say that Silver Lake's Egon Durban, who is taking the board seat, called Dorsey on Saturday, Feb. 29 — one day after reports of Elliott's efforts first emerged.

The bottom line: It's tempting to say that Elliott used the "fire Jack" threat as a Trojan horse to get what it really wants (i.e., stock buyback promises and board influence), particularly after previously suggesting that it wanted Randall Stephenson out at AT&T.

  • But people close to the situation argue that Elliott is known to be transparent in its beliefs, and that its opinion changed after talks with both the board and Dorsey himself.

As for Twitter, this has to be viewed as a win. At least for now. Particularly given that it already was privately considering an annual stock buyback program related to employee stock options.


Aon (NYSE: AON) agreed to buy rival insurance broker Willis Towers Watson (Nasdaq: WLTW) for nearly $30 billion in stock.

  • Why it's the BFD: It's the largest merger so far in 2020, and the insurance sector's largest-ever merger. The combined company would become the world's most valuable broker, topping current market leader Marsh & McLennan.
  • Timing: Aon first approached Ireland-based Willis about a merger last spring, but those talks fizzled and Irish regulations prevented the two sides from striking a new deal until this month.
  • The bottom line: "Insurance brokerages help companies buy insurance and advise companies on risk management, but are consolidating at a rapid rate following years of sluggish commercial-insurance pricing growth." — Ben Dummett, WSJ
Venture Capital Deals

Lightbend, a San Francisco-based creator of a reactive architecture platform, raised $25 million. Dell Technologies Capital led, and was joined by return backers Bain Capital Ventures, Blue Cloud Ventures, Greylock Partners, IBM, Intel, Juniper Networks, and Shasta Ventures.

GrainChain, a McAllen, Texas-based agricultural blockchain platform, raised $8.2 million from such backers as Medici Ventures and Eden Block.

QRails, a Denver-based provider of payment processing solutions for card issuers, raised $8 million in Series A funding led by EFM Asset Management.

Loyalty Prime, a Munich-based provider of enterprise loyalty program SaaS, raised €5 million in Series B funding led by Hi Innov.

TFLiving, a Pawleys Island, S.C.-based on-demand provider of amenities to residential and commercial communities, raised $4.8 million in seed funding. Camber Creek led, and was joined by Courtside Ventures.

Sounder, a New York-based podcast management and monetization platform, raised $1.8 million in seed funding. Ulu Ventures led, and was joined by Newark Venture Partners and

😲 Finix, a San Francisco-based payments infrastructure platform, last month announced a $35 million Series B round led by Sequoia Capital. But Sequoia just parted ways with the company, effectively donating its $21 million check, after determining that the deal conflicts with its existing investment in Stripe. This is the sort of thing that usually get figured out before term sheets are sent. TechCrunch’s Connie Loizos has the scoop.

Private Equity Deals

🚑 The Blackstone Group agreed to acquire a majority stake in HealthEdge, a Burlington, Mass.-based provider of core administrative processing systems for health care businesses, for a reported $700 million (including debt). HealthEdge had raised around $67 million in VC funding from firms like Medica and Psilos Group Partners.

The Blackstone Group is in exclusive talks to acquire SOHO China, a Hong Kong-listed office developer that could fetch $4 billion, per Reuters.

Clutch Co, a Washington, D.C.-based B2B ratings and reviews platform for IT, marketing, and biz services providers, raised minority equity funding from Susquehanna Growth Equity.

CPPIB and Montagu Private Equity agreed to buy French high-ed company Galileo Global Education from Providence Equity Partners. Existing Galileo backers Téthys Invest and Bpifrance will retain ownership stakes. No financial terms were disclosed, but an earlier Reuters report suggested a €2.5 billion price tag.

Excellere Partners invested in ParcelShield, a Redmond, Ore.-based provider of predictive parcel tracking and engagement software for health care clients.

Public Offerings

Caixa Seguridade, a Brazilian insurer, has canceled its public offering due to market volatility related to the coronavirus and oil prices, per Reuters.

Liquidity Events

Vista Equity is considering a sale process for Infoblox, a Santa Clara, Calif.-based IT automation and security company it took private in 2016 for $1.6 billion, per PE Hub.

More M&A

Infineon (XTRA: IFX) of Germany received CFIUS approval for its $10.1 billion takeover of Cypress Semiconductor (Nasdaq: CY).

Jingye Group of China completed its previously announced takeover of British Steel.

NetApp (Nasdaq: NTAP) acquired Talon Storage, a Mt. Laurel, N.J.-based provider of software-defined storage solutions.

Novelis received U.S. antitrust approval for its $2.6 billion takeover of Aleris Corp., a Cleveland-based maker of rolled aluminum products, so long as it divests part of its auto supply business. Current Aleris backers include Oaktree Capital Management, Apollo Management and Sankaty Advisors.

🚑 Syneos (Nasdaq: SYNH), a Morrisville, N.C.-based contract research organization for pharma, is seeking a buyer, per Reuters. The company’s current market cap is $6.39 billion.


🚑 Arkin Bio-Ventures, an Israeli VC effort focused on pharma and biotech, raised $140 million for its second fund.

It's Personnel

Luciana Lixandru has left Accel to join Sequoia Capital as its first Europe-based partner.

Kevin McAleenan, former acting director of Homeland Security who previously led the U.S. Customs and Border Protection, joined AE Industrial Partners as an operating partner. He also will join the boards of AEI portfolio companies Gryphon Technologies and American Pacific Corp.

Chris O’Neill joined fintech-focused VC firm Portag3 Ventures as a San Francisco-based partner. The former Google (X) executive most recently was president and CEO of Evernote, and also serves on the board of Gap Inc.

Final Numbers
Data: FactSet; Chart: Axios Visuals
Dan Primack

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