Apr 22, 2020

Axios Pro Rata

Top of the Morning

Illustration: Aïda Amer/Axios

The Senate yesterday voted to pump $322 billion into the depleted Paycheck Protection Program, as part of a $484 billion interim coronavirus funding bill that also included new money for hospitals and testing.

  • Big picture: PPP has been criticized for lending to some companies that don't fit the colloquial understanding of "small business," but the extended version doesn't alter the basic applicant requirements. The only real changes, outside of the amount of available dollars, is a new carve-out for small lenders and some help for farmers.

Politics: President Trump and Treasury Secretary Mnuchin yesterday suggested during a press conference that certain larger companies inappropriately received loans, and that they should return the money or else face unspecified consequences.

  • If there was fraud, then let loose the hounds of litigation.
  • But Trump and Mnuchin should re-read the legislation they championed not once but twice, because it's explicitly broad. Applicants needn't prove they'd become insolvent without a PPP loan. Instead, they must certify that they employ fewer than 500 people, suffered economic harm from pandemic-related government actions (i.e., lockdowns, etc.), and that the loan is "necessary to support the ongoing operations."
  • That last part is obviously open to some interpretation, and the word "support" is doing a ton of work, but the goal was to protect jobs without prejudice beyond employer size — not just a Norman Rockwell subset of them.
  • If the White House and Congress had wanted only the most dire cases to qualify, they could have written it differently. They didn't.

Yes, this might appear self-serving. While it's true that I've supported broad applicability of PPP since before it first passed, it's also true that Axios qualified for a loan just shy of $5 million. Company CEO Jim VandeHei explained more about our thinking here.

  • I'm also on the board of a small nonprofit that was unable to get an initial PPP loan, so do empathize with those who got left behind. In our case, we basically picked the wrong bank and, like so many others, didn't have enough visibility into that mistake until the money was gone.
  • There are big questions about how the small lender carve-out will work in practice.
  • Our hope is to get a piece of the new pot, but also know that it is expected to be quickly exhausted. Last night we went through best-case and worst-case scenarios, knowing that the difference is largely outside of our control.

Calendar: The House is expected to vote on the new funding package as soon as Thursday, after which it's expected to be signed into law by President Trump. That could mean new PPP applications begin getting processed on Friday morning.

What to watch: Many believe small banks outperformed in the first round, because they relied on actual bankers whereas big lenders focused more on building scalable tech platforms to process applications. If that software does now work, then some applicants might get shut out again in the opposite direction, given the small lender carve-out.


Illustration: Aïda Amer/Axios

Apollo Global Management and Silver Lake are in "advanced talks" to invest around $1 billion in travel-booking portal Expedia (Nasdaq: EXPE), per the WSJ.

  • Why it's the BFD: Private equity has begun bargain-hunting, and Apollo and Silver Lake have emerged as the most eager coupon-clippers.
  • Details: Expedia closed trading yesterday with a market cap just north of $8 billion, having fallen around 50% this year. The new investors would be expected to receive a board seat.
  • Added intrigue: Silver Lake just invested in Airbnb, which competes with Expedia's HomeAway platform.
  • Bottom line: "Companies of all stripes — but especially in the travel sector — have been drawing down on credit lines and looking for other ways to stockpile cash to withstand potentially months of social-distancing measures. Expedia’s peers, including Sabre and Booking Holdings, have both issued new debt in recent weeks." — Cara Lombardo, WSJ
Pro Rata for Kids

Today's project is for your kids to participate in the Getty Museum Challenge. The idea is to pick a famous work of art and then "recreate it" as best they can (not with paint, but via photograph). Amazing examples here. To make it easier, they can use any picture or drawing from one of their favorite books. It's the effort that counts.

  • Per usual, please email me their creations.

Yesterday I asked your kids to make window rainbows. I posted a few below, and more on Twitter:

Dave's kids in Illinois.
Made by Sloane (age 7) from New Jersey.
A reader from England: "It’s hard to see our windows from the street so the kids took the rainbow to the street."
Venture Capital Deals

Confluent, a Mountain View, Calif.-based data event streaming platform, raised $250 million in Series E funding at a $4.5 billion valuation. Coatue Management led, and was joined by Altimeter Capital, Franklin Templeton, and return backers Index Ventures and Sequoia Capital. http://axios.link/k8NX

ForgeRock, a Norway-based provider of identity management tools for the enterprise, raised $93.5 million in Series E funding. Riverwood Capital and Accenture Ventures co-led, and were joined by return backers Accel, Meritech Capital Partners, Foundation Capital, and KKR. http://axios.link/eTbW

🚑 Nitrome, a San Francisco-based drug startup focused on a class of enzymes to target Parkinson’s disease and other age-related disorders, raised $38 million in Series A funding. Sofinnova Partners and AbbVie Ventures co-led, and were joined by the Dementia Discovery Fund, Mission Bay Capital, and Alexandria Venture Investments. www.nitromebiosciences.com

Guru, a Philadelphia-based provider of collaborative knowledge management software, raised $30 million in Series C funding. Accel led, and was joined by Emergence Capital, Thrive Capital, FirstMark Capital, Slack, and MSD Capital. http://axios.link/VLJR

Vercel, a San Francisco-based front-end development framework, raised $21 million in Series A funding from backers like Accel and CRV. http://axios.link/cMBn

Fishtown Analytics, a Philadelphia-based maker of an open-source data engineering tool, raised $12.9 million in Series A funding led by Andreessen Horowitz. http://axios.link/FTPL

Form, a Canadian maker of smart swim goggles, raised C$12 million in Series A funding. http://axios.link/2aLI

🚑 MigVax, an Israeli vaccine development platform, raised $12 million from OurCrowd. http://axios.link/6ILt

Moshi, a meditation and mindfulness app for kids, raised $12 million in Series B funding. Accel led, and was joined by Latitude Ventures and Triplepoint Capital. http://axios.link/F8iB

Remote, a San Francisco-based HR onboarding platform, raised $11 million in seed funding. Two Sigma Ventures led, and was joined by Index Ventures, General Catalyst, Liquid2, INKEF Ventures, and Remote First Capital. http://axios.link/rxj2

🚑 FoRx Therapeutics, a Swiss cancer drug developer focused on DNA replication stress pathways, raised €10 million in seed funding from M Ventures, Novartis, Moega Funds, and Pfizer. http://axios.link/oquD

🚑 XRHealth, an Israeli VR startup focused on telemedicine, raised $7 million from Bridges Israel, Flint Capital and 20/20 HealthCare Partners. http://axios.link/hmBJ

🚑 EnginZyme, a Stockholm-based cell-free synthetic biology, raised €6.4 million led by Sofinnova Partners. www.enginzyme.com

Epic Games, the Cary, N.C.-based maker of Fortnite, is in talks to raise between $500 million and $1 billion at a valuation north of the $15 billion mark it snared in 2018, per Bloomberg. http://axios.link/QvoL

Private Equity Deals

Apollo Global Management, BGH Capital, and Oaktree Capital Management are among those circling airline Virgin Australia, which yesterday entered voluntary administration, per Reuters. http://axios.link/ayxt

EQT Partners acquired Recover Nordic, a Denmark-based provider of damage control, remediation, and environmental services, from Agilitas. www.recover.no

Merchants Fleet, a Hooksett, N.H.-based fleet management company, secured $50 million from Bain Capital Credit. www.merchantsfleet.com

TapClicks, a predictive marketing analytics company backed by Boathouse Capital, acquired AdStage, a San Francisco-based reporting and automation platform for paid marketers backed by Forté Ventures, HubSpot, and Verizon Ventures. http://axios.link/gJ3J

Public Offerings

Social Capital Hedosophia Holdings III, the third blank-check acquisition company led by Chamath Palihapitiya, raised $720 million in its IPO. The group's initial SPAC acquired Virgin Galactic, while its second remains on file. http://axios.link/hPkm

More M&A

Facebook (Nasdaq: FB) invested $5.7 billion for a 9.99% stake in Indian telecom operator Reliance Jio from Reliance Industries. http://axios.link/6HtY

ONAP, Europe’s fourth-largest gaming company, agreed to buy a 51% stake in the Greek and Cypriot operations of U.K.-based online bookmaker Stoiximan. http://axios.link/gmvc

TapClicks, a predictive marketing analytics company backed by Boathouse Capital, acquired AdStage, a San Francisco-based reporting and automation platform for paid marketers backed by Forté Ventures, HubSpot, and Verizon Ventures. http://axios.link/gJ3J

🎮 ValueAct Capital has amassed a stake worth more than $1.1 billion in Nintendo (Tokyo: 7974), per Reuters. http://axios.link/RZ9a


BoostVC, an tech accelerator led by Adam Draper, raised $40 million for its fourth fund. http://axios.link/jDFm

Mucker Capital, a Santa Monica, Calif.-based early-stage VC firm, is raising $175 million for a new fund, per an SEC filing. www.mucker.com

York Capital Management raised $800 million for its third mid-market special opportunities fund. www.yorkcapital.com

It's Personnel

Pascal Heberling joined BC Partners as a London-based partner. He previously was with the Abu Dhabi Investment Authority. www.bcpartners.com

🚑 Robert Hershberg joined Frazier Healthcare Partners as a venture partner. He previously was a Celgene executive and CEO of Frazier portfolio company VentiRx Pharmaceuticals. www.frazierhealthcare.com

Final Numbers
Table: Axios Visuals

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