May 1, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

Welcome to the last Pro Rata before the weekend! I'm here to take you through the news while Dan spends his morning in a different part of his house instead of his office.

🚨 Axios events: Axios' Mike Allen will host a live virtual event Monday at 12:30pm ET on gene therapy and the future of disease treatment, with reporter Bob Herman.

  • They'll chat with Rep. Scott Peters (D-Calif.) and Jane F. Barlow, who is the EVP and CCO of Real Endpoints and senior adviser of the MIT FoCUS Project.
  • Register here
Top of the Morning

Illustration: Sarah Grillo/Axios

And there it was: Yesterday as part of its Q1 2020 earnings, Amazon announced it’s planning to spend the $4 billion it would expect in profit next quarter on worker safety and resources because of the coronavirus pandemic, and the market was not happy.

  • Amazon’s stock price sharply dropped 5% in after-hours trading.

Why it matters: If you’ve been wondering for the last six to eight weeks why some publicly traded companies seem to be resisting strong measures to curb the virus spread, this a big reason.

  • Not to mention that added pay and safety resources on could create an expectation long-term from employees that they’ll provide these as a baseline.
  • Of note: Despite its statements yesterday, Amazon continues to face criticism that it’s not doing enough to protect workers in warehouses and its Whole Foods stores.

The market isn’t a huge fan of companies investing in workers’ well-being when it means smaller margins or profits, delays, or really anything that’s not immediately up and to the right.

Case in point: Last summer, Nintendo delayed the release of the newest installment in its blockbuster game Animal Crossing, and its stock price took a hit.

  • Later that day, Nintendo of America president Doug Bowser explained that it was to avoid employee burnout, which often occurs in video game development as teams near game release deadlines.

Yes, but: Risking employee’s safety and health — in a potentially deadly manner — is not worth trying to protect that stock price.

  • And luckily for Amazon, the company still beat analyst expectations on revenue for the quarter, and its advertising and cloud services divisions also kept growing along with demand on its e-commerce side.

Meanwhile, elsewhere in tech Q1 earnings:

  • Apple: Did well above expectations, though the company warned that iPhone and wearables will do worse in Q2.
  • Facebook: Posted a strong quarter, but warned that the current spike in usage and ad demand will come down.
  • Twitter: Beat analyst expectation and saw its strongest year-over-year user growth ever, but it’s tightening up expenses to weather the current storm.
  • Microsoft: While its PC business took a hit, its cloud software benefitted from the sudden need for tools for remote work, and helped it beat analyst expectations.

What's next: Uber, Lyft, GrubHub and Pinterest, among others, will post earnings next week.


💰 Reassurance: Yesterday, First Round Capital quietly announced what it’s calling the “Second Round Guarantee.”

  • How it works: When it leads a startup’s first round, it commits to exercising its pro rata right in the following round (up to $3 million). The firm had been pretty much doing this for a while, but this is now a formal policy.
  • From FRC’s Josh Kopelman: “When we looked at the early stage market, we realized that while nearly every investor gets a pro-rata right in the subsequent round, not every investor uses it. When things are going well, most investors will (demand to) take their full pro-rata allocation. But during times of uncertainty, we think that might not be the case.”
  • This is also notable because Y Combinator recently decided it will no longer guarantee it will assert its pro rata rights in subsequent priced rounds, largely because its accelerator batches are so large now.

🎧 Podcast: The Paycheck Protection Program has approved loans for millions of small businesses, but has also created a ton of finger-pointing. Dan digs in with Axios' Dion Rabouin. Listen here.


Photo: Stephen Brashear/Getty Images

Boeing raised $25 billion via a seven-part bond offering to offset losses from the coronavirus crisis, it announced on Thursday.

  • Why it’s the BFD: Not only is it unprecedented in scale and size, but the move means Boeing will likely avoid taking government bailout money, something its CEO recently balked at after some officials suggested it should mean the government would take an equity stake in the company.
  • The bottom line: “The huge bond deal is a vote of confidence in Boeing’s staying power, despite the uncertainty caused by the pandemic. Accepting federal aid would have been controversial, as Boeing already faced financial difficulties because of the grounding of its best-selling plane, the 737 Max, prior to the pandemic.”— Joann Muller, Axios
Pro Rata for Kids
Source: Giphy

This weekend's project is for your kids to dress up as their favorite Star Wars characters. Okay, that's fun. But here's the very cool part:

  • We're doing this in partnership with Nasdaq, which is doing a bunch of Star Wars-themed activities around May (the) 4th (be with you).
  • The first 25 photos submitted by Pro Rata readers will appear Monday on Nasdaq's giant digital tower in Times Square. Send them to Dan via email at
  • The deadline is 5pm ET this Sunday night. Can't wait to see what they come up with!
Venture Capital Deals

ASAPP, a New York-based maker of call center software, has raised $185 million in Series B funding from investors, including John Chambers and John Doerr.

Otonomo, an Israel-based automotive data services platform, has raised $46 million in Series C funding from SK Holdings, Avis Budget Group, Alliance Ventures, and Bessemer Venture Partners.

Material Bank, a New York-based architecture and design marketplace, has raised $28 million in Series B funding led by Bain Capital Ventures, with Raine Ventures and Barry Sternlicht also participating.

Flagstone, a London-based fintech company, has raised $15 million in new funding led by OMERS Ventures, with existing investors Kindred Capital and Moneysupermarket Group also participating.

Ontic, an Austin-based maker of security intelligence software, has raised $12 million in Series A funding led by Felicis Ventures, with existing investors like Silverton Partners, Floodgate and Village Global also participating.

Tridge, a South Korea-based food supply marketplace, has raised $11 million in Series B funding from Activant Capital and Forrest Partners., a Denver-based smart home startup, has raised $11 million in Series A funding from unnamed corporate investors.

WindESCo, a Burlington, Mass.-based maker of software for wind farms, has raised $10 million in Series B funding led by WAVE Equity Partners, with an affiliate of Tenaska and others also participating.

Dear Media, a Los Angeles-based podcast network focused on women, has raised $8 million in new funding from Magnet Companies.

Guilded, a San Francisco-based chat service for gaming communities, has raised $7 million in funding led by Matrix Partners, with Initialized Capital, Susa Ventures, and Sterling.VC also participating.

Plantible, a Los Angeles-based egg white substitute company, has raised $4.6 million in seed funding led by Vectr Ventures and Lerer Hippeau.

Private Equity Deals

KPS Capital Partners has agreed to acquire the Lufkin, a rod lift solutions business, from Baker Hughes.

OneSpaWorld, a Bahamas-based provider of health and wellness services for cruise ships and resorts will raise $75 million from private investors, including Steiner Leisure Limited and Neuberger Berman Investment.

⛽️ Macquarie has acquired a majority stake in Multifuels Midstream Group, a Houston-based differentiated power and utility infrastructure company focused on lateral natural gas pipelines and related assets, from Warren Equity and Multifuels L.P.

Public Offerings

Collective Growth Corp, a blank check company led by former Canopy Growth execs targeting the cannabis industry, raised $150 million by offering 15 million units at $10. Each unit consists of one share of common stock and one half of a warrant exercisable at $11.50. At $10, the company commands a market value of $190 million. It plans to list on the Nasdaq under the symbol CGROU. Cantor Fitzgerald acted as a lead manager on the deal.

🚑 Lyra Therapeutics, a Phase 2 biotech company developing an implantable drug-device for chronic rhinosinusitis, raised $56 million by offering 3.5 million shares at $16, the high end of the range of $14 to $16. It plans to list on the Nasdaq under the symbol LYRA. BofA Securities, Jefferies and William Blair acted as lead managers on the deal.

More M&A

🚑 Molina Healthcare has agreed to acquire Magellan Complete Care, Magellan Health’s unit that provides managed-care health plans, for about $820 million.

Maple Media, a Los Angeles-based mobile media and technology company, has acquired Player FM.

Dribbble, a U.S.-based community for designers, has acquired Creative Market. Maple Media, a Los Angeles-based mobile media and technology company, has acquired Player FM.

It's Personnel

Jed Emerson has joined 3x5 Partners, a venture capital firm based in Portland, as an adviser.

Final Numbers
Data: Treasury Department via the Peter G. Peterson Foundation; Chart: Axios Visuals
Dan Primack