Sep 19, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

"Funding secured" may become the two costliest words ever tweeted.

  • Tesla has lost over $10 billion in market cap since Elon Musk's infamous — and false — claim, related to his efforts to take the company private.
  • Both Musk and Tesla are now under criminal investigation by the Department of Justice, in addition to a continuing investigation by the SEC.
  • The real fear now, for Tesla, its shareholders and its fanboys is that the government could find some sort of accounting or management problems that have nothing to do with the take-private fiasco.
  • Go deeper: Being Elon Musk

Sidewalk wars: VC backers of unicorn e-scooter companies like Bird and Lime aren't too worried about regulatory crackdowns in cities like San Francisco, Kia reports.

  • They believe many of the limits are temporary, as local officials study the overnight transportation phenomenon. Moreover, smart regulation could prevent the supply/demand imbalances that caused so many problems for Chinese bike-rental startups.
  • Their companies continue to expand globally, and there's a case that regional ubiquity could suffice.
  • Kia and I will chat scooters on today's Pro Rata podcast, which posts around noon EST. Subscribe via Apple, Google Play or other podcast platforms.

Newsstand: Yesterday we noted that motivation guru Tony Robbins is reportedly part of a buyer group for magazine titles Fortune, Money and Sports Illustrated. A few readers pointed out that Robbins is tight with Salesforce CEO Marc Benioff, who just agreed to buy Time for $190 million. In fact, Fortune detailed their relationship in 2014.

Tech protectionism arrives in Europe, according to Reuters:

The German government is taking steps to counter a surge in Chinese bids for stakes in German technology companies, including the creation of a billion-euro fund that could rescue such firms in financial trouble.

Even bedfellows: Bain Capital is working with Elliott Management on a joint takeover offer for health-tech company AthenaHealth, which has pushed back its bid deadline by a few weeks, per Bloomberg.

  • AthenaHealth shares fell on the news, because it suggests that Elliott is backtracking on the $160 per share approach it made alone back in May.
  • That offer came after Athenahealth founder and CEO Jonathan Bush resigned, due to revelations that he had once assaulted his ex-wife.
  • Bush believes that Elliott was behind the information becoming public, and he's not alone. Elliott has denied any involvement.
  • This wouldn't be the first time that Bain has worked with Elliott after a bruising activist campaign, having previously led a buyout of BMC Software.
  • Private equity firms once feared the reputational risk of working with controversial activists. But that ship appears to have sailed.
Source: Giphy

Zekelman Industries, a Chicago-based maker of steels pipes and tubes, canceled an IPO that had been set to raise upwards of $793 million.

  • Why it's the BFD: Because this would have been one of the largest industrial IPOs in years.
  • Bottom line: CEO Barry Zekelman blamed soft investor sentiment, saying the market wanted to undervalue his company. Left unsaid was how unease over steel tariffs might have played into that sentiment. Zekelman sources much of its steel domestically, but even those input prices have been rising.
Venture Capital Deals

WayRay, a Zurich-based developer of holographic AR hardware, raised $80 million in Series C funding. Porsche led, and was joined by Hyundai and return backers like Alibaba and China Merchants Capital.

Livspace, an Indian e-commerce company in the home interiors and renovation sector, raised $70 million in Series C funding. TPG and Goldman Sachs co-led, and were joined by return backers Jungle Ventures, Bessemer Venture Partners and Helion Ventures.

Bread, a New York-based provider of customized financing solutions for brands, raised $60 million. Kinnevik led, and was joined by return backers Bessemer Venture Partners, Menlo Ventures, RRE Ventures, Colle Capital Partners, and Cue Ball.

🚑 Ooda Health, a San Francisco-based healthcare payments startup that pledges to cut administrative waste, raised $40.5 million in new funding co-led by Oak HC/FT and DFJ.

🚑 Immune-Onc, a Palo Alto, Calif.-based cancer immunotherapy company, raised $33 million in Series B funding from Northern Light VC, Vivo Capital and the Stanford-StartX Fund.

Singular, a San Francisco-based unified marketing data intelligence platform, raised $30 million in Series B funding. Norwest Venture Partners led, and was joined by General Catalyst, Method Capital, Telstra Ventures, Translink Capital and Thomvest.

Scratch, a San Francisco-based loan serving platform, raised $17 million. Index Ventures led, and was joined by Ribbit Capital, Founders Fund, Nyca Partners and CFSI JPMorgan Chase., a Russian online platform for finding home repair professionals, raised $17 million led by Russian telecom company PJSC MTS.

Illumix, a Menlo Park-based mobile AR gaming studio, raised $8.6 million in seed funding. Maveron and Lightspeed Venture Partners co-led, and were joined by Radar Partners, Unusual Ventures and 451 Media.

Allplants, a British deliverer of plant-based meals, raised £7.5 million in Series A in Series A funding. Octopus Ventures led, and was joined by Felix Capital and Otiva.

Domicile, a Seattle-based business hospitality startup, raised $5 million from Crosscut Ventures and Madrona Venture Group.

Saykara, a Seattle-based virtual assistant for physicians, raised $5 million. SpringRock Ventures led, and was joined by NY-Presbyterian Hospital, Elevate Innovation Partners and Madrona Venture Group.

⛽ Kayrros, a Paris-based data analytics sector for the energy sector, raised €21 million in Series B funding. Cathay Innovation led, and was joined by Index Ventures, AtlasInvest, Primwest and Korelya Capital.

DataGrail, a San Mateo, Calif.-based personal data privacy startup, raised $4 million in Series A funding led by Cloud Apps Capital Partners.

• Sigstr, an Indianapolis-based SaaS platform for employee email signature marketing, raised $4 million led by Edison Partners.

Private Equity Deals

Accel-KKR invested in TEAM Software, an Omaha-based provider of cloud software for contractors in the janitorial and security industries.

⛽ Argo Infrastructure Partners agreed to buy Hudson Transmission Partners, a 660 MW electric transmission line running under the Hudson River, from Ares Management and Starwood Energy Group.

Center Rock Capital Partners acquired two companies in separate transactions: LINC Systems, a Westfield, Ind.-based distributor of fastener, packaging and MRO tools, and American Piping Products, a St Louis-based distributor of steel pipe, fittings and valves.

Certify, a Portland, Maine-based portfolio company of K1 Capital, acquired Captio, a Spanish provider of expense management software. Captio had raised VC funding from Sabadell VC, Venturecap, Bankinter, Telegraph Hill Capital and Kibo Ventures.

⛽ Drillinginfo, an Austin, Texas-based portfolio company of Genstar Capital, acquired Oildex, a Denver-based provider of financial automation software to the North American oil and gas sector, from Accel-KKR.

Endeavor, the Hollywood talent agency backed by Silver Lake, is in talks to buy UK-based TV production company Endemol Shine from 21st Century Fox and Apollo Global Management, according to The Daily Telegraph. The deal could be worth around £2 billion.

Five G Capital Partners invested in Perennial Companies, a provider of commercial landscape design and exterior property maintenance services in the Midwest.

Linde (DE: LING) and Praxair (NYSE: PX), which continue to await U.S. regulatory approval for their $79 billion merger, are in talks to divest around $200 million in assets to a consortium that includes CVC Capital Partners and Messer Group, per Reuters.

Long Ridge Equity Partners acquired a majority strake in ProcessUnity, a Concord, Mass.-based provider of risk management SaaS.

TPG has agreed to buy Pan Asia Majestic Eagle, the third-largest mobile tower owner in Myanmar, and merge it with existing portfolio company (and #1 operator) Apollo Towers Myanmar, per Nikkei.

Public Offerings

🚑 Entasis Therapeutics, a Waltham, Mass.-based developer of anti-infective products, set IPO terms to 4.4 million shares at $16-$18. It would have a fully-diluted market value of around $225 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq (ETTX) with Credit Suisse as lead underwriter, and raised around $82 million, and lists such shareholders as AstraZeneca (21.6% pre-IPO stake), Clarus Ventures (14.7%), Novo (13.7%), Frazier Life Sciences (12.2%), Pivotal BioVenture Partners (10.9%), Sofinnova Ventures (10.9%), TPG Biotech (10.9%) and Eventide Funds (6.1%).

Tencent has confidentially filed for a U.S. IPO of its music streaming service, but has halved the float's target from $4 billion to $2 billion, according to Reuters.

Liquidity Events

⛽ Riverstone Holdings is seeking a buyer for Abaco Energy Technologies, a Houston-based oilfield services company that could fetch $900 million, per Bloomberg.

More M&A

Bank of America (NYSE: BAC) agreed to sell a business that manages around $20 billion of alternative investment feeder funds to iCapital Network.

Coca-Cola (NYSE: KO) acquired Organic & Raw Trading Co., an Australian maker of kombucha tea under the Mojo brand.

🚑 GlaxoSmithKline (LSE: GSK) received bids for its India-focused health nutrition business Horlicks from Nestle, Unilever and Coca-Cola, per Reuters.

Thor Industries (NYER: THO), maker of Airstreams, agreed to buy German motorhome maker Hymer for €2.1 billion.


Amplify Partners raised $200 million for its third early-stage VC fund.

Hillhouse Capital, a Chinese VC and private equity firm, raised $10.6 billion for its fourth fund.

It's Personnel

Steve Bierschenk joined Paine Schwartz, a private equity firm focused on “sustainable food chain investing,” as a managing director. He previously was a global strategy lead at Monsanto.

Caroline Chayot joined venture firm Atomico as a partner focused on portfolio company hiring. She previously led EMEA HR for Twitter.

Ken Park has left Oaktree Capital to join H.I.G. Capital as a Hong Kong-based principal focused on fundraising and investor relations.

Karen Simeone joined HarbourVest Partners as a Boston-based managing director in the firm’s credit group. She previously was with TCW Direct Lending.

Final Numbers: Cannabis startup funding
Source: Pitchbook; VC deals keyword search for companies with "cannabis" in their business descriptions.
  • Publicly-traded medical marijuana company Tilray saw its shares soar yesterday on news that the U.S. DEA will allow import of a product from Canada, for use in a clinical trial for a neurological condition called essential tremor.
  • It put Tilray's market cap at nearly $14.5 billion. Shareholders include Founders Fund.
  • Tilray CEO Brendan Kennedy was on yesterday's Pro Rata podcast, discussing the surprise news and broader cannabis market trends. Listen here.
Dan Primack