Mar 22, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Rebecca Zisser/Axios

Cleantech is still a dirty word among many venture capitalists, who shudder at memories capital-crushing busts from a decade ago. But Axios' Kia Kokalitcheva reports that increased concerns about climate change have caused some revival of investor interest, particularly around the concept of carbon capture.

  • The basic idea is to remove carbon dioxide from the atmosphere.
  • Y Combinator in October asked for program applications from carbon removal startups and non-profits. There were ultimately two such companies in its most recent class, even though neither use the techniques highlighted in the YC request.
  • Canadian startup Carbon Engineering, which hopes to commercialize machines that directly capture carbon dioxide from the atmosphere, raised $68 million earlier this week.
  • One big caveat, raised by Congruent Ventures managing partner Abe Yokell, is that carbon offsetting remains voluntary in the U.S., which raises questions about how successful carbon capture startups can be absent regulatory changes.

👖 Levi Strauss stock soared yesterday on its first day of post-IPO trading, closing 32% higher than its $17 offering price. A few notes from a phone conversation with company president and CEO Chip Bergh:

  • Dual-class share structure: “The company has been around for 166 years and, during that entire time, the family has either owned it or had effective control. There have been moments, for sure, but the family has managed to keep it alive for almost two centuries… The family is also very committed to profits through principles and was worried that giving up control could get Levi’s stuck into a vortex of short-termism… It did come up during the road-show, and I encouraged our prospective shareholders to view the family as long-term vested shareholders.”
  • He doesn't seem worried about Amazon launching a private-label men's denim product (they already have private-label for women's jeans), instead emphasizing the two companies' current symbiotic relationship. "We make good money from each other."
  • Same for rival VF Corp., maker of Wrangler and Lee brands, which plans to soon spin off its jeans business into an independent company. Bergh, who once served on the VF board of directors, cited how Wrangler/Lee is more a wholesale business than is Levi's and is "about half our size."

This is just amazing: An e-commerce site appeared this week, offering to sell "VC starter kits." It quickly went viral among Silicon Valley denizens and is done with such brilliant snark that it's a must-visit for any Pro Rata reader.

  • We've confirmed that VCStarterKit.com was created by Sumukh Sridhara, a product engineer at AngelList. He tells me that he, in turn, was inspired by a Fortune parody of VCs.
  • As of last night there had been tons of visits, including 3,500 who had clicked the purchase button to see if it would actually work (it does).
  • But no one has actually made a purchase yet, even though Sridhara promises to send a donation to All Raise, an organization focused on increasing gender and racial diversity in VC. So come on Pro Rata readers, get your kit. After all, you buy this stuff anyway... (or just donate directly to All Raise).

🏀 March Madness: We've got over 1,300 Pro Rata readers in our contest, but only one has a perfect score after one day of play. It's Drew Coash, an associate account executive at SmartAsset. For the record, I's just behind Drew at #1,095...

The BFD
Source: Giphy

Alight Solutions, a Lincolnshire, Ill.-based benefits administration software company owned by The Blackstone Group, postponed its IPO. The company had sought to sell 32 million shares at $32-$35 per share, and begin trading today on the Nasdaq.

  • Why it's the BFD: Because this could be a big warning to buyout firms about public market distaste for highly-leveraged companies that plan to use almost all of their IPO proceeds to repay debt. Alight's failure comes in the context of IPO over-subscription for both a legacy consumer goods brand (Levi's) and a money-hemorrhaging transportation app (Lyft).
  • Blackstone's comment: Nonexistent, although Bloomberg reports that it doesn't plan to launch a sale process.
  • Bottom line: "Alight... caters to more than 3,000 clients, including 70 Fortune 100 companies. Blackstone-affiliated funds closed the $4.8 billion acquisition of Aon PLC’s benefits and human resources platform in May 2017 and rebranded it into Alight, which launched a month later." — Matthew Guarnaccia, Law360
Venture Capital Deals

UiPath, a New York-based developer of robotic process automation software, is raising over $400 million at a valuation north of $7 billion, per Business Insider. Last fall it closed a $265 million Series C round from firms like IVP, Madrona Venture Group and Meritech Capital. http://axios.link/O2ui

👗Rent the Runway, a New York-based clothing rental company, raised $125 million at a $1 billion valuation co-led by Bain Capital Ventures and Franklin Templeton Investments. http://axios.link/FC6s

Splice, a New York-based digital library of rights-cleared sounds for music creators, raised $57.5 million in Series C funding co-led by return backers Union Square Ventures and True Ventures. Other investors include DFJ Growth, Flybridge, Lerer Hippeau. Liontree and Founders Circle Capital. http://axios.link/rswc

🚑 Imago BioSciences, a San Francisco-based biotech focused on myeloid diseases, raised $40 million in Series B funding. Omega Funds led, and was joined by Highlight Capital and return backers Frazier Healthcare Partners, Amgen Ventures and MRL Ventures Fund. www.imagobio.com

Honeybook, a San Francisco-based client management platform for freelancers and solo entrepreneurs, raised $28 million in Series C funding. Citi Ventures led, and was joined by return backers Norwest Venture Partners and Aleph. http://axios.link/AWbv

Cleo, a San Francisco-based platform for companies to better manage and support employees with children, raised $27.5 million in Series B funding led by NEA. http://axios.link/reAc

Keatz, a Berlin-based cloud kitchen startup, raised €12 million from RTP Global and return backers Project A Ventures, Atlantic Labs, UStart, Kfund and JME Ventures. http://axios.link/x63C

AnyMind, a Singapore-based digital marketing startup, raised $8 million in new Series B funding from Thailand’s VGI Global Media and Japan’s Tokyo Century. http://axios.link/hQ7J

Private Equity Deals

Goody Products, an Atlanta-based portfolio company of ACON Investments, acquired Hauppauge, N.Y.-based hair care products company JD Beauty from Topspin Partners. http://axios.link/U1mg

Hunt Valve, a Salem, Ohio-based portfolio company of May River Capital and Shorehill Capital, acquired MB Valve, a Canadian supplier of severe-duty bronze marine valves. www.huntvalve.com

Inverness Graham Investments acquired Corsica Technologies, a Centreville, Md.-based provider of IT support and managed services. www.corsicatech.com

Public Offerings

Pinterest is expected to file its IPO prospectus as early as today, with plans to list next month.

🚑 Smiths Group (LSE: SMIN) said it plans to float its healthcare business, months after failing to strike a merger agreement for the unit with ICU Medical (Nasdaq: ICUI). http://axios.link/oHaT

🚑 Turning Point Therapeutics, a San Diego-based developer of tyrosine kinase inhibitors for treating lung cancer and solid tumors, filed for a $100 million IPO. It plans to trade on the Nasdaq (TPTX) with Goldman Sachs as lead underwriter. The pre-revenue company raised around $76 million in VC funding from firms like Cormorant Asset Management (13.3% pre-IPO stake), OrviMed (8.2%), S.R. One (8.2%), Foresite Capital (6.3%) and VenBio Partners (6.3%). www.tptherapeutics.com

Uber plans to list its shares on the NYSE when it goes public next month, per Bloomberg. http://axios.link/neMy

Yunji, a Chinese social e-commerce platform, filed for a $200 million IPO. It plans to trade on the Nasdaq (YJ) with Morgan Stanley as lead underwriter. Earlier reports were that the company, which generated an $8 million net loss on $1.9 billion in sales last year, will seek a valuation of between $7 billion and $10 billion. http://axios.link/dRTq

Liquidity Events

Affinity Equity Partners has postponed plans to sell its 35% stake in Velocity, the frequent flyers program for Virgin Australia, per The Australian. http://axios.link/cljx

BlackRock is in talks to buy eFront, a French provider of risk management software for the alternative investments industry, from private equity firm Bridgepoint for more than $1.3 billion, per Bloomberg. http://axios.link/6Hh6

More M&A

Berry Global (NYSE: BERY) said it would not further sweeten its RPC Group (LSE: RPC). http://axios.link/9hYw

FWD Group, backed by Hong Kong billionaire Richard Li, has revived two-year-old talks to acquire the life insurance unit of Thailand’s Siam Commercial Bank. A deal could be worth around $3 billion. http://axios.link/Nj1Y

Paulson & Co. said it will not support Newmont Mining’s (NYSE: NEM) $10 billion takeover for rival gold miner Goldcorp (TSX: G), arguing the price is unjustified. Paulson & Co. holds a 2.7% stake in Newmont. http://axios.link/iU73

Yilport Holding of Turkey is in advanced talks to buy a Long Beach, Calif.-based container terminal being sold by China’s Cosco Shipping for nearly $2 billion, per Bloomberg. Cosco is divesting the terminal as a condition of its 2018 acquisition of Orient Overseas International. http://axios.link/meE5

Fundraising

Asterion Industrial, a new infrastructure private equity firm led by ex-KKR infrastructure boss Jesus Olmos, raised €520 million for its debut fund, per the FT. http://axios.link/zaxB

It's Personnel

Harvey Schwartz, former president and co-COO of Goldman Sachs, has been tapped as the next CEO of Wells Fargo, per the NY Post. http://axios.link/I6Pb

SoftBank Vision Fund promoted Lydia Jett to partner. http://axios.link/UJxS

Final Numbers
Source: PitchBook
Dan Primack