Aug 14, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Illustration: Aïda Amer/Axios

The Big Tech antitrust throwdown of 2020 continued yesterday when Fortnite maker Epic Games sued Apple (and Google) over how they manage their mobile app stores, objecting, for instance, to the 30% cut the company takes from in-app payments.

Why it matters: Apple’s control over iOS app distribution has been a thorny issue, so any changes would have ramifications for the business models of startups and indie app developers.

  • 30% is not an insignificant portion of revenue to pay in rent. For some companies, it can be bearable, but it can be crippling for others. (Though some companies get to pay less!)
  • And even more extreme: Apple can also shut out apps from the store.
  • (While Epic is also suing Google with similar allegations, its Google Play Store is not the only Android app store, so Apple has a unique power over apps for its operating system.)

For new companies, the so-called “platform risk” of being at the mercy of Apple App Store's rules and power is an existential one.

  • Entrepreneurs and investors absolutely consider whether a company’s product and business can withstand barriers from any given platform.
  • Not to mention the heightened risk if their product is directly competitive with one offered by Apple (or any other platform). Just ask Spotify

The bottom line: It’s very possible Apple and Epic Games will come to some sort of compromise soon.

  • But if this makes it to a trial and an ultimate verdict, it could have an impact on the future of apps and Big Tech.

Go deeper:

Also...

Uber is pushing back on a popular argument that California’s new labor law does not take away work flexibility if it’s forced to reclassify them as employees. Per a new blog post shared first with Axios:

Businesses simply won’t survive if they have zero control over what their hourly employees, whether full- or part-time, actually do ...
Uber’s incentive as an employer, then, would be to limit the number of employed drivers, hiring fewer drivers to each do more trips, and requiring them to do a certain number of trips (but likely preventing them from working overtime) ...
If platform companies were required to only offer employment, it’s not logical to assume we wouldn’t set up the exact same structures as companies that depend on an hourly workforce.
— Alison Stein, economist, Uber

🎧 The U.S. for months has faced a national reckoning over simultaneous crises that Black Americans in particular are facing, including structural racism and health disparities in COVID-19 outcomes. "Axios Re:Cap" discusses the situation with Shelly Bell, entrepreneur and founder of Black Girl Ventures. Listen here.

The BFD

Illustration: Sarah Grillo/Axios

Impossible Foods, a Silicon Valley company known for its plant-based meat alternatives, has raised $200 million in Series G funding led by Coatue, with XN, Mirae Asset Global Investments and Temasek also participating. Prime Unicorn Index estimates the new valuation at about $4 billion.

  • Why it’s the BFD: The funding comes just months after the company raised $500 million in March.
  • The bottom line: "In June, Impossible started selling its burgers online in the United States through its website after beef prices shot up as the COVID-19 pandemic forced several meat plants to close. ‘Our growth in retail has certainly been a big part of the story. ... For us, throughout this current (pandemic) period, we’ve just tried to adjust the way the meat eater is increasingly purchasing the product,’ Chief Financial Officer David Lee said in an interview.”Nivedita Balu, Reuters.
Venture Capital Deals

Fanatics, a Conshohocken, Penn.-based sports retailer, has raised $350 million in Series E funding at a post-money valuation of $6.2 billion led by Fidelity and Thrive Capital, with Franklin Templeton Investments and Neuberger Berman Group also participating, per the WSJ. http://axios.link/N2t1

PayActiv, a San Jose-based provider of tools earned wage and personal finance management, has raised $100 million in Series C funding led by Eldridge, with Generation Partners and Ziegler Link-Age also participating. http://axios.link/CoK7

🚑 Mission Bio, a San Francisco-based maker of cancer therapeutics development tech, has raised a $70 million in Series C funding led by Novo Growth, with Soleus Capital, Mayfield, Cota and Agilent also participating. http://axios.link/iozA

🚑 THREAD, a Tustin, Calif.-based provider of decentralized clinical research, has raised $50 million from Water Street Healthcare Partners and JLL Partners. http://axios.link/TZfJ

🚑 Thirty Madison, a NYC-based digital health company, has raised $47 million in Series B funding led by Polaris Partners, with Johnson & Johnson Innovation, Maveron, and Northzone also participating. http://axios.link/Y8bn

Kin Insurance, a Chicago-based insurance company, has raised $35 million in Series B funding led by Commerce Ventures, with Hudson Structured Capital Management, Flourish Ventures, QED, Alpha Edison, Allegis NL Capital, Avanta Ventures, August Capital, and the University of Chicago also participating. http://axios.link/Khjy

🚑 MOBILion Systems, a Chadds Ford, Penn.-based drug development company, has raised $35 million in Series B funding led by aMoon, with Agilent Technologies, IP Group, Hostplus, and Cultivation Capital also participating. www.mobilionsystems.com

Hiretual, a Mountain View, Calif.-based recruiting software developer, has raised $13 million in Series B funding led by Oceanpine Capital. http://axios.link/cGTR

🚑 Cecelia Health, a NYC-based maker of management tools for diabetes and other chronic diseases, has raised $13 million in Series B funding led by Rittenhouse Ventures and Endo Investors, with Boston Millennia Partners, SustainVC, G100 Capital, and others also participating. www.ceceliahealth.com

Torre, a San Francisco-based professional network for remote job seekers and recruiters, has raised $5 million in seed funding from Mike Shoemaker, Diego Piacentini, Rodrigo Schmidt, and MatterScale Ventures. www.torre.co

Mighty, a Salt Lake City-based remote-work tools startup, has raised $4.3 million in seed funding from Slack Fund, GSV Ventures, Origin Ventures, Album VC, Acadian Ventures, and Village Global. www.mightylabs.com

Allbirds, a San Francisco-based casual shoe company, is in talks to raise new funding from Franklin Templeton at above its last valuation of $1.4 billion, per Bloomberg. http://axios.link/Cz0C

General Atlantic has acquired a 21% stake in Gymshark, a U.K.-based fitness apparel company, valuing the company at more than £1 billion ($1.3 billion). http://axios.link/389L

Private Equity Deals

Advent International has agreed to to acquire a 30% stake in Aareon AG, a subsidiary of Germany-based Aareal Bank Group. www.aareon.com

🚑 Capsa Healthcare, backed by Levine Leichtman Capital Partners, has acquired NewRobo Development B.V. and subsidiaries, a Netherlands-based maker of pharmacy automation solutions technology. http://axios.link/6FUr

Palladin Consumer Retail Partners has invested in Decowraps, a Miami-based provider of flower industry supplies. http://axios.link/dgaW

Public Offerings

🚑 Nano-X Imaging, an Israel-based company developing affordable medical imaging systems, announced terms for its IPO. It plans to raise $100 million by offering 5.9 million shares at a price range of $16 to $18. Insiders and other investors intend to purchase $80 million worth of IPO shares. At the midpoint of the proposed range, Nano-X Imaging would command a fully diluted market value of $793 million. It plans to list on the Nasdaq under the symbol NNOX. Cantor Fitzgerald, Oppenheimer & Co., Berenberg and CIBC are the joint bookrunners on the deal. http://axios.link/j7TY

🚑 CureVac, a German Phase 1 biotech company developing an mRNA vaccine for SARS-CoV-2, raised $213 million by offering 13.3 million shares at $16, the high end of the range of $14 to $16. The company raised an additional $118 million in a concurrent private placement to insider Dietmar Hopp. It plans to list on the Nasdaq under the symbol CVAC. BofA Securities, Jefferies, Credit Suisse, Berenberg and Kempen acted as lead managers on the deal. http://axios.link/6UQh

Duck Creek Technologies, a Boston-based software company, raised $405 million by offering 15 million shares at $27, above the revised range of $23 to $25. The company had originally filed to offer 15 million shares at a range of $19 to $21. Insiders Dragoneer Investment Group, Neuberger Berman, and Insight Partners indicated an interest in purchasing up to $100 million of the IPO. It plans to list on the Nasdaq under the symbol DCT. Goldman Sachs, JPMorgan, BofA Securities, Barclays and RBC Capital Markets acted as lead managers on the deal. http://axios.link/LEY4

SPAC Stuff

Lionheart Acquisition II, a blank check company formed by Lionheart Capital targeting a real estate technology company, raised $200 million by offering 20 million units at $10. http://axios.link/YYiF

Dragoneer Growth Opportunities, a blank check company formed by Dragoneer Investment Group, raised $600 million by offering 60 million units at $10. http://axios.link/JbB8

dMY Technology Group II, the second blank check company formed by Niccolo de Masi and Harry You targeting an app business, raised $240 million by offering 24 million units at $10. http://axios.link/ER9l

Broadstone Acquisition, a blank check company formed by Sun Capital Partners targeting a stressed business in the U.K. and Europe, filed on Thursday with the SEC to raise up to $300 million in an initial public offering. http://axios.link/wnmO

Liquidity Events

Thomson Reuters has acquired CaseLines, a London-based court document and evidence management platform service. http://axios.link/NQKc

Cadence Design Systems has acquired inspectAR, a Canada-based maker of AR tools for chips. http://axios.link/Hunj

Fat Brands is acquiring burger chain Johnny Rockets Group for $25 million. http://axios.link/flmt

Fundraising

Watertower Ventures has raised $50 million for its second seed-stage fund focused on tech startups. www.watertowerventures.com

Two Sigma is raising a $750 million fund for its newly established unit focused on private social impact investments focused on the workforce. www.twosigmaimpact.com

It's Personnel

Lauren Weston has joined Thomvest Ventures as an associate. She was previously at Morgan Stanley, where she covered residential and commercial real estate companies. www.thomvest.com

Warren Valdmanis has joined Two Sigma’s new impact fund as senior investment partner. He was previously at Bain Capital. www.twosigmaimpact.com

Final Numbers
Data: Company filings; Chart: Naema Ahmed/Axios
Dan Primack

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