Jan 28, 2020

Axios Pro Rata

Top of the Morning

Photo Illustration: Sarah Grillo/Axios. Photo: Robyn Beck/AFP via Getty Images

Bernie Sanders has opened up leads in both Iowa and New Hampshire, according to most recent polls.

  • Private equity might be hyperventilating into a paper bag, but it should be breathing a sigh of relief. At least temporarily.

Buyout firms face an existential threat from either a Sanders or Warren presidency, but much more of a rhetorical threat from Warren's campaign.

  • Sanders wants to largely dismantle modern capitalism, which would include private equity. In short, burn down the house and rebuild from scratch.
  • Warren wants to "fix" modern capitalism, believing private equity is one of its most broken pieces. A remodel with private equity in the driveway dumpster.

If Sanders were to win the nomination, or remain a contender until the final primaries, it's unlikely that he'll mention private equity very often (outside of generalist broadsides against Wall Street and the 1%). Warren, on the other hand, would keep hammering private equity hard, particularly if and when we get the next brand-name bankruptcy or Taylor Swift tweet.

  • Industry-specific rhetoric matters because, no matter the president, it can filter down into legislative perceptions and policies (including at the state and local levels).

Again, my needle-threading argument isn't about the ultimate White House winner. Private equity should fear both Sanders and Warren in the Oval. But if only one of them can remain viable for longer before falling, then buyout barons should hope for the self-described Democratic Socialist.

🚑 Disturbing disruption: Practice Fusion, an electronic health records company that raised over $200 million in VC funding before a fire-sale to Allscripts in early 2018, has settled with the DOJ for taking kickbacks from an opioids manufacturer.

🎧 Pro Rata Podcast focused on contravirus, including the U.S. response, with former "Ebola czar" Ron Klain. Listen here.


Photo by Jo Hale/Getty Images

Servco Pacific acquired a majority stake in Fender Musical Instruments by acquiring shares from co-investment partner TPG Growth.

  • Why it's the BFD: Hendrix played a Fender at Woodstock. Dylan played one in his first-ever electric performance. Gilmour played on one The Wall. Cobain reveled in smashing them on stage.
  • History: Servco first invested in Fender in 1985, buying it from CBS, before selling to a private equity firm in 2001 and then re-investing alongside TPG Growth in 2012.
  • Bottom line: Both Fender and rival Gibson have long histories of private equity ownership, but Fender avoided Gibson's bankruptcy pitfall by focusing more on female buyers (who make up around 50% of its first-time sales) and scaling up an online learning platform (Fender believes that new guitar owners spend four times more on lessons than on equipment).
Venture Capital Deals

ActiveCampaign, a Chicago-based customer experience automation startup, raised $100 million in Series B funding co-led by Susquehanna Growth Equity and return backer Silversmith Capital Partners. http://axios.link/HN8h

🛴 Bird, a Santa Monica, Calif.-based e-scooter rental company, raised $75 million in new Series D funding (round total now $350m) from Target Global, Team Europe, Idinvest Partners, and Signals VC. It also acquired Circ, a German e-scooter rental startup operating in Europe and the Middle East. http://axios.link/8Zqt

Justworks, a New York-based provider of HR management software, raised $50 million in Series E funding. Union Square Ventures and return backer FirstMark Capital co-led, and were joined by Bain Capital Ventures, Index Ventures, Redpoint Ventures, Spark Capital, and Thrive Capital. www.justworks.com

Directly, a San Francisco-based developer of crowdsourced chatbots for customer service, raised $20 million. Samsung led, and was joined by Industry Ventures, AvidBank, and return backers M12, Costanoa Ventures, True Ventures, and Northgate. http://axios.link/I0M1

InterviewBit, an Indian online provider of graduate-level CS programs, raised $20 million in Series A funding. Sequoia India and Tiger Global co-led, and were joined by Global Founders Capital. http://axios.link/Rmi2

Persona, a San Francisco-based identity verification startup, raised $17.5 million in Series A funding co-led by Coatue Management and First Round Capital. http://axios.link/iNrw

SuperAwesome, a London-based developer of “kid-safe” digital marketing tools, raised $17 million led by M12. http://axios.link/EB0w

Wheel, an Austin, Texas-based developer of virtual healthcare infrastructure, raised $13.9 million in Series A funding. CRV led, and was joined by Tusk Venture Partners and Silverton Partners. www.wheel.com

Otter.ai, a Los Altos, Calif.-based transcription app, raised $10 million from NTT Docomo. http://axios.link/utHu

Imagr, a New Zealand-based automated checkout startup, raised US$9.5 million. Toshiba Tec Corp. led, and was joined by Sage Capital and Harald McPike. http://axios.link/1Ls1

Shipamax, a London-based provider of back-office automation to freight forwarders, raised $7 million. Mosaic Ventures led, and was joined by Crane Venture Partners and YC. http://axios.link/NlWC

Teller, a UK-based open banking startup, raised $4 million in seed funding from Lightspeed Venture Partners, Founders Fund, and SciFi. http://axios.link/bqqH

AdmitHub, a Boston-based chatbot for college applicants, raised an $2.5 million in new Series funding from Salesforce Ventures and the Google Assistant Investments (round total $7.5m). www.admithub.com

NexTravel, a San Francisco-based corporate travel booking startup, raised $2.4 million in Series A funding from Pipeline Angels and Quest Ventures.

AmazeVR, a Los Angeles-based VR content production and distribution platform, raised $2.5 million in new Series A funding from Partners Investment and YG Investment. www.amaze.us

Encantos, a Culver City, Calif.-based children's entertainment brand, raised $2 million in seed funding. Kapor Capital led, and was joined by Boston Meridian Partners, Chingona Ventures, Human Ventures, and MathCapital. http://axios.link/qZj6

Private Equity Deals

BC Partners agreed to buy Pasticceria Bindi, an Italian maker of frozen patisserie products, from the founding family. http://axios.link/wPgh

Gryphon Investors acquired a majority stake in PestRoutes, a Mckinney, Texas-based provider of business management software for pest control companies. Existing backer Mainsail Partners will retain a minority stake. www.pestroutes.com

Imprivata, a Lexington, Mass.-based portfolio company of Thoma Bravo, acquired GroundControl Solutions, a New York-based provider of automation software for provisioning shared mobile devices. www.imprivata.com

Incline Equity Partners acquired Foundation Source, a Fairfield, Conn.-based provider of support services to private foundations.

Scale Microgrid Solutions, a Ridgewood, N.J.-based distributed clean energy and microgrid platform, secured up to $300 million in equity commitments from Warburg Pincus. http://axios.link/IY4v

🚑 Sorrento Therapeutics (Nasdaq: SRNE), a San Diego-based oncology drugmaker, said it rejected a private equity takeover that would have valued the company at around $993 million. It didn’t identify the suitor. http://axios.link/UuWd

Public Offerings

🚑 Beam Therapeutics, a Cambridge, Mass.-based developer of genetic medicines via base editing, set IPO terms to 6.3 million shares at $15-$17. It would have a fully-diluted market value of $686 million, were it to price in the middle, and plans to trade on the Nasdaq (BEAM) with JPMorgan as lead underwriter. The pre-revenue company raised $220 million in VC funding from firms like Arch Venture Partners (23% pre-IPO stake, F-Prime Capital (19.4%), Hillhouse Capital (7.4%), Redmile Group, Cormorant Asset Management, GV, Altitude Life Science Ventures, Eight Roads Ventures and Omega Funds. http://axios.link/a5hU

OneWater Marine, a Buford, Ga.-based recreational boat retailer, relaunched its IPO plans by disclosing plans to offer 4.6 million shares at $12-$14. http://axios.link/8ebe

Liquidity Events

Comcast (Nasdaq: CMCSA) acquired Blueface, an Irish unified communications provider that had been owned by a portfolio company of NewSpring Capital and PPM America. http://axios.link/yQl8

K12 (NYSE: LRN) agreed to buy Galvanize, a Denver-based online education company, for $165 million in cash. Galvanize had raised around $130 million from firms like ABS Capital Partners, University Ventures, and Catalyst Investors. http://axios.link/aDBI

More M&A

BorgWarner (NYSE: BWA) agreed to buy British powertrain maker Delphi Technologies (NYSE: DLPH) for $3.3 billion. http://axios.link/TccD

  • Thought bubble from Axios Navigate's Joann Muller: "The combination of technologies gives the companies the flexibility to navigate what could be a difficult industry transition to electric vehicles."

Royal Philips (AM: PHIA) is considering a sale of its kitchen appliances unit, which generates €2.3 billion in annual revenue, per Bloomberg. http://axios.link/2Dps

Sun Life Financial (TSX: SLF) said it would consider buying a private debt lender to middle-markets, per Reuters. http://axios.link/aShE


Ardian raised €3 billion for its fourth private debt fund, which focuses on European mid-market companies. http://axios.link/SmHS

GLS Capital of Chicago raised $345 million for its debut litigation finance fund. http://axios.link/w89d

Merantix, a Berlin-based venture studio for AI startups, raised a €25 million fund from LPs like Trusted Insight, the Robert Wood Johnson Foundation, and the W.K. Kellogg Foundation. http://axios.link/aFu5

Quid has been launched by Troy Capital Partners and Oaktree Capital as a lender to employees of pre-IPO companies. www.getquid.com

It's Personnel

Sarah Hinkfuss left KKR's growth equity group in order to join Bain Capital's new tech opportunities practice as a VP, per her LinkedIn page.

GP Bullhound, a tech advisory and investment bank, promoted Jonathan Cantell to partner. www.gpbullhound.com

Aimée Leifer (founder and CEO of PureSignal) and Dan Murray (president of CreatorIQ) joined Calibrate Ventures as venture partners. www.calibratevc.com

Final Numbers
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Reproduced from Moody's; Chart: Axios Visuals

The quality of North American leveraged loan covenants nearly hit their weakest level on record in Q3 2019, per Moody's. Go deeper here.

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