Mar 22, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

• New job: We've previously noted that J.D. Vance, the author of Hillbilly Elegy and a principal with Peter Thiel's Mithril Capital, is leaving Silicon Valley go return home to Ohio. This morning he announced plans to join Revolution LLC, the Washington, D.C.-based venture firm led by Steve Case and Ted Leonsis. Here's what I learned, after speaking briefly with Vance and Case:

  • The pair initially met via Twitter (although Vance first joked that they met via OK Cupid, which would have made for a much better story).
  • Vance will be based in Columbus, but expects to spend a bunch of time in D.C., as his attorney wife just took a one-year post working for Chief Justice Roberts. He plans to mostly focus on making seed investments in Midwestern startups for Revolution, while also maintaining a part-time role with Mithril.
  • This partnership is born of Case's "Rise of the Rest" initiative, which initially began as a bus tour designed to highlight startup opportunities outside of more traditional tech hotbeds. Case calls this the "third leg" of the Revolution stool, which already includes a VC and growth equity arm. When I asked if this means Revolution plans to raise a seed fund focused on under-served markets, he and Vance both declined comment (read: yes they do).
  • Vance notes that while Ohio cities like Columbus are doing better than rustier belted areas like his hometown of Middleton, he believes there can be a lot of "downstream ripple effects" to having strong urban anchor cities with growing entrepreneurial ecosystems.

• On tap: WeWork has filed documents in Delaware for a sale of around $300 million in Series G stock at a price of $51.81 per share (up slightly from the Series F price of $50.19 per share). This appears to be the round being led by SoftBank, per a recent WSJ story.

Perhaps more interesting is that WeWork is also moving ahead with its plan to raise a property investment fund, per an SEC filing. This would be done quasi-independently from WeWork corporate ― which typically signs long-term leases for the buildings in which it operates ― with the SEC doc listing several real estate-focused managing directors at private equity firm Rhone Group.

• Drive-thru: After Andy Puzder withdrew as President Trump's Labor Sec nominee, we noted how odd it was that CKE Restaurants, the fast-food chain where he served as CEO, wouldn't confirm that he was sticking around. Neither would CKE owner Roark Capital. Now we know why: He's leaving the company.

• Off demand: Yesterday morning I criticized Uber for "keeping its senior execs (including top female leaders) under PR bubble-wrap." A couple hours later, Uber sent out word that it was hosting a media call with three of its senior female leaders. I'll just chalk it up to mediocre minds thinking alike...

Two notes on this:

  1. Uber execs did not disclose the results of their investigation into the sexual harassment and discrimination allegations made by Susan Fowler Rigetti around one month ago, although said they would have conclusions at some point next month. They did intimate, however, that CEO Travis Kalanick's head will not be the one to roll.
  2. Board member Arianna Huffington was among those on the call, but sadly no one asked her about a Bloomberg report that her former AOL colleague/boss Tim Armstrong is among those being considered for the Uber COO role. As one AOL exec from that era writes me: "Arianna probably would let that happen over her dead body." It's also worth noting that Armstrong would be choosing a curious time to leave AOL/Verizon, given that it would coincide with closing the massive Yahoo purchase he spearheaded.

• Event reminder: My Axios colleague Mike Allen will be interviewing Treasury Secretary Steve Mnuchin this Friday morning in Washington, D.C., in an event sponsored by PepsiCo and their Quaker, Tropicana and Naked nutrition brands. Send him any questions at mike@axios.com. I'll be there too, and will have full coverage in Friday's issue of Pro Rata.

The BFD

Boom Supersonic, developer of a new class of supersonic commercial aircraft, has raised $33 million in Series A funding. Backers include Y Combinator Continuity Fund, RRE Ventures, Palm Drive Ventures, Caffeinated Capital and 8VC. As part of the deal, YC president Sam Altman and former Sequoia Capital partner Greg McAdoo have joined Boom's board of directors.

Why it's the BFD: It's been more than a decade since the Concorde was grounded, which was more about post 9/11 economics than supersonic technology. Boom is hoping to significantly decrease the cost-per-flight, in part because of two major development advancements since the time of Concorde:

  1. Even though Boom is already testing in real wind tunnels, it can do a lot of simulation via software.
  2. Companies like Boeing and Airbus have spent billions of dollars helping to develop and gain approvals for carbon fiber, which can help a plane go faster and use less gas.

Proceeds from this financing are expected to get Boom to its first supersonic flight in 2018 (a bit later than originally expected), with later plans to have passengers flying in the 2020's. Interim financing would be aided by a previously-announced $5 billion in pre-orders from companies like Virgin, with expectations that additional airline orders will be disclosed later this year.

Bottom line: There currently is a U.S. ban on supersonic flight over land, which is why Boom's initial plan is to run on existing supersonic corridors like LA-Tokyo and NYC-London. "The aircraft speed limit is one of the worst ideas in aviation policy history," Boom CEO Blake Scholl tells Axos. "Boom is working to overturn this, but not counting on that in our business model."

Venture Capital Deals

• Flipkart, an Indian ecommerce platform, has raised $1 billion in new funding at around a $10 billion valuation (which is actually a significant down round), according to Bloomberg. Participants include eBay, Microsoft and Tencent. http://bloom.bg/2mZvs2t

• Haoeyou, a digital health platform that connects Chinese patients with U.S. doctors, has raised $40 million in Series A funding led by Hakim Unique Internet (Shanghai: 300300). http://bit.ly/2n6OMuB

• Xiaoyu Link, a Chinese provider of online video conferencing solutions, has raised around $18 million in Series B funding. Zhen Fund and Chengzhen Fund co-led the round, and were joined by Sinovation Ventures, Lightspeed China Partners and Chengwei Capital. http://bit.ly/2n6Gpzt

• Geek+, a Beijing-based developer of logistics robots, has raised $14 million in Series A funding. Vertex Venture Holdings led the round, and was joined by Banyan Capital and Volcanic Stone Investment. http://bit.ly/2nmsqYw

• Wujie Space, a Beijing-based co-working space operator, has raised around $14 million in new VC funding. ChinaEquity Group led the round, and was joined by Matrix Partners China. In related news, Wujie Space has acquired local rival Fourwork for an undisclosed amount. http://bit.ly/2nBawBx

• Mythic (f.k.a. Isocline), developer of a "local AI platform," has raised $9 million in Series A funding. DFJ led the round, and was joined by Lux Capital, Data Collective, and AME Cloud Ventures. http://bit.ly/2o397Ay

• Casetext, a San Francisco-based provider of AI-based legal research technology for lawyers, has raised $12 million in Series B funding. Canvas Ventures led the round, and was joined by return backers Union Square Ventures, 8VC and Red Sea Ventures. www.casetext.com

• The New York Shipping Exchange, developer of a digital forward freight contract for global container shipping, has raised $8.5 million in Series A funding. Goldman Sachs and GE Ventures co-led the round, and were joined by groups like Blumberg Capital and Tectonic Capital. http://bit.ly/2mTXGLf

• Mynd, an Oakland-based tech-enabled property management company, has raised $5.1 million in Series A1 funding. Jackson Square Ventures led the round, and was joined by Canaan Partners, Lightspeed Venture Partners and individual angels. www.mynd.co

• RavenPack, a Spain-based provider of big data analytics for financial services, has raised $5 million in VC funding from Draper Esprit. http://bit.ly/2nGLim0

• TextRecruit, a San Jose, Calif.-based text messaging platform for employers, has raised $3 million in Series A funding led by SignalFire. www.textrecruit.com

• Purple Squirrel, a Venice Beach, Calif.-based online marketplace for networking and recruiting, has raised $2.7 million in seed funding. CrossCut Ventures led the round, and was joined by Greycroft Partners, Arena Ventures and 500 Startups. www.purplesquirrel.com

Private Equity Deals

• Avaloq, a Swiss provider of banking software, has raised $300 million in private equity funding from Warburg Pincus. http://reut.rs/2n6Yq0o

• Birch Hill Equity Partners has acquired Cozzini Bros, a Des Plaines, Ill.-based knife sharpening rental and exchange company, from Audax Group. No financial terms were disclosed. www.cozzinibros.com

• The Carlyle Group and TPG Capital have expressed recent interest in acquiring Java House, a Nairobi-based coffee shop chain, according to the FT. A deal could be valued at upwards of $100 million. http://on.ft.com/2mTNx1c

• CSF Corp., a Somerset, N.J.-based toll-free provisioning company owned by Alpine Investors, has acquired Aerialink, a Bettendorf, Iowa-based SaaS provider of mobile messaging and location services. www.csfcorp.com

• Golden Gate Capital has acquired Cole-Parmer, a Vernon Hills, Ill.-based maker of fluid handling and other specialty lab equipment, from GTCR. No financial terms were disclosed. www.coleparmer.com

• KPS Capital Partners has agreed to acquire Winoa, a French manufacturer of steel abrasives. No financial terms were disclosed. Sellers include a special situations affiliate of KKR. www.winoagroup.com

• OutSolve, a a Metairie, La.-based provider of affirmative action planning and compliance services for federal contractors, has acquired New Orleans-based Pinnacle Affirmative Action Services. No financial terms were disclosed. OutSolve is a portfolio company of LNC Partners. www.outsolve.com

• Summit Partners has sponsored a majority recap of Ascentis Corp., a San Mateo, Calif.-based provider of SaaS human capital management and payroll solutions. Sellers include Catalyst Investors. www.ascentis.com

• Valence Surface Technologies, a Gardenia, Calif.-based portfolio company of Trive Capital, has acquired MAPSCO, a Seattle-based provider of metal finishing services to the aerospace and defense industries. No financial terms were disclosed. www.valencesurfacetech.com

Liquidity Events

• Alibaba Group (NYSE: BABA) has acquired Chinese event ticketing platform Damai.cn. No financial terms were disclosed. Damai had raised over $14 million in VC funding from firms like Legend Capital. http://bit.ly/2nJiRnv

• The Blackstone Group is prepping either a sale of IPO of Logicor, its European warehouse property business, according to the WSJ. The business could be valued at more than €10 billion. http://on.wsj.com/2nmvnIy

• Francisco Partners has hired Morgan Stanley to find a buyer for Plex Systems, a Troy, Mich.-based maker of manufacturing facility management software, according to Reuters. The deal could be valued at more than $1 billion (including debt). http://reut.rs/2nJdd4D

• Providence Equity Partners has agreed to sell the Professional Association of Diving Instructors, a Rancho Santa Margarita, Calif.-based scuba certifier, to "a group of wealthy families and endowments for more than $700 million," according to the WSJ. http://on.wsj.com/2nPBAug

More M&A

Panasonic Corp. of Japan has agreed to acquire an additional 20% stake in Spanish auto parts maker Ficosa International for an undisclosed amount, giving it an overall control position of 69%. http://reut.rs/2ncYttb

Fundraising

• Marlin Equity has closed is fifth flagship private equity fund with $2.5 billion in capital commitments. It also has closed its second Heritage fund, focused on lower middle-market companies in North America, at $750 million. www.marlinequity.com

• May River Capital, a Chicago-based private equity firm focused on lower mid-market industrial companies, has closed its debut fund with $165 million in capital commitments. www.mayrivercapital.com

• Octopus Ventures of London has raised £120 million for a fund focused on British AI startups. • http://on.ft.com/2nQQv7z

• Värde Partners, a Minneapolis-based ", has closed its twelfth multicredit fund with $1.74 billion in capital commitments. http://bit.ly/2nRa1R5

It's Personnel

• Pritzker Group Asset Management has promoted Terra Fuller to chief investment officer. She joined the firm in 2014 as director of research. www.pritzkergroup.com

Final Numbers
Dan Primack