Sep 16, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🌎 You're invited to an Axios live event tomorrow at 12:30pm ET, focused on the clean energy market's growth. Guests are Washington Gov. Jay Inslee and Amazon head of worldwide sustainability Kara Hurst. Register here.

Top of the Morning

Illustration: Aïda Amer/Axios

President Trump hasn't yet blessed ByteDance's proposed savior plan for TikTok, featuring Oracle as a "trusted technology partner."

State of play: This deal is not fait accompli, despite some media reports yesterday that there would be an announcement before the Clippers were sent packing. But the odds remain in its favor, so let's take a look at what might happen next...

1. CFIUS would grant an extension.

  • Trump's 45-day "deal or ban" executive order was soon followed by a 90-day requirement that ByteDance divest what now is effectively TikTok. This Oracle deal is easier to execute than an acquisition would have been, but it's still highly unlikely that all of it could be completed by mid-October.

2. TikTok would drop its lawsuit against Trump's EO.

  • It's unclear if this is part of ByteDance's formal submission to CFIUS, but doing so would be a reasonable quid pro quo.

3. TikTok would hire a CEO.

  • The U.S. business is currently being led by Vanessa Pappas, a YouTube vet who was general manager before Kevin Mayer's surprise resignation.
  • She may be in the mix, but don't be surprised to see TikTok's new board scour the C-suite at companies like Amazon, Netflix, and Disney (which was Mayer's former home). Or maybe even from Walmart, which is expected to invest in the new entity.

4. "TikTok Inc." would try to consolidate.

  • TikTok is a global app, but all that's being proposed here is a tech cleave of its U.S. business. From a practical perspective, that could make it difficult for a Los Angeles user to view content created by a London user, and vice versa.
  • Given that other Western governments have expressed discomfort with ByteDance, don't be surprised if other geographies eventually get folded into the Oracle agreement (yes, the finances could get sticky).

The bottom line: White House approval would be the beginning, not the end, of what needs to be done to create the new TikTok.

Go deeper: "Axios Re:Cap" podcast takes a look at how the TikTok saga is playing inside of China, with CNBC Beijing bureau chief Eunice Yoon. Listen via Apple, Spotify, or Axios.

The BFD

Illustration: Annelise Capossela/Axios

Zwift, a Long Beach, Calif.-based indoor cycling and running platform, raised $450 million led by KKR at a valuation north of $1 billion.

  • Why it's the BFD: Because it puts a punctuation mark on what has been a huge week for the connected fitness space. First, Peloton reported blowout numbers and new hardware. Then, Apple announced its own fitness content subscription product tied to watches, followed by in-person spin class company Flywheel filing for bankruptcy protection.
  • Other investors included Permira, Specialized Bicycle, and return backers True Ventures, Highland Europe, Novator, and Causeway Media. http://axios.link/Y2sB
  • Bottom line: "Zwift uses what it calls an 'immersive and seamless' experience that motivates users with fitness games and events like a virtual Tour de France. That means bringing the outdoor experience of running or cycling indoors, just as Peloton does. But the company goes further by immersing users in 3D computer-generated worlds." — Dean Takahashi, GamesBeat
Venture Capital Deals

AppDirect, a San Francisco-based subscription commerce platform, raised $185 million from Caisse de dépôt et placement du Québec and return backers like, JPMorgan, Inovia Capital, and Mithril Capital. http://axios.link/MR2F

Acko, an Indian digital insurer, raised $60 million in Series D funding. Munich Re Ventures led, and was joined by return backers Amazon, RPS Ventures and Intact Ventures. http://axios.link/S104

Volansi, a San Francisco-based developer of long-range delivery drones, raised $50 million in Series B funding. Icon Ventures led, and was joined by Harpoon Ventures, Merck Global Health Innovation Fund, and return backers Lightspeed Venture Partners and YC. http://axios.link/wBpG

Alloy, a New York-based identity operating system for financial services, raised $40 million in Series B funding. Canapi Ventures led, and was joined by Felicis Ventures, Avid Ventures, and return backers Bessemer Venture Partners, Primary Venture Partners, and Eniac Ventures. http://axios.link/jD0g

VanMoof, a Dutch e-bike startup, raised $40 million in Series B funding from Norwest Venture Partners, Felix Capital, ad Balderton Capital. http://axios.link/ca5k

Veem, a San Francisco-based business payments network, raised $31 million led by Truist Ventures. www.veem.com

Brightseed, a San Francisco-based developer of phytonutrient discovery tech, raised $27 million led by Lewis & Clark AgriFood. http://axios.link/akqu

Bulletproof360, a Seattle-based maker of performance nutrition products, raised $13 million from Beliv, Rocana Ventures and return backers CAVU Venture Partners and Trinity Ventures. http://axios.link/rQTW

ManiMe, a Santa Monica, California-based startup that sells stick-on gel nails, has raised $6 million in Series A funding co-led by Canaan Partners and Trinity Ventures. http://axios.link/plaa

First AML, an anti-money laundering startup, raised $5.4 million in Series A funding led by Bedrock Capital. http://axios.link/IoGl

Incentify, a Los Angeles-based provider of enterprise tax credits and incentives software, raised $4.25 million led by Ryan LLC. www.getincentify.com

Gravity Sketch, a London-based product design and collaboration platform that leverages VR, raised $3.7 million in seed funding. Kindred Capital led, and was joined by Point Nine Capital and Forward Partners. http://axios.link/gMIO

🚑 Yapi, a Los Angeles-based provider of patient communications software for dental practices, raised an undisclosed amount of growth equity funding from M33 Growth. www.yapiapp.com

Private Equity Deals

The Blackstone Group and Partners Group are the remaining bidders for a control stake in Piramal Enterprises’ glass unit, which could fetch more than $1 billion, per Bloomberg. http://axios.link/oUWo

The Carlyle Group agreed to buy a majority stake in Victory Innovations, a Minneapolis-based maker of high-tech electrostatic sprayers used to disinfect offices, airplanes and schools. www.victorycomplete.com

🚑 Corza Health, a San Francisco-based portfolio company of GTCR, agreed to buy surgical patch product TachoSil from Takeda Pharma (NYSE: TAK) for €350 million. www.corzahealth.com

GI Partners agreed to buy Sectigo, a Roseland, N.J.-based provider of automated digital identity management and web security solutions. www.sectigo.com

National Fire & Safety, a Denver-based portfolio company of Highview Capital, acquired Element Fire Protection, a provider of fire safety and inspection services in the Phoenix area. www.natfiresafety.com

TPG is in advanced talks to acquire a portfolio of eight student housing properties from Preferred Apartment Communities (NYSE: APTS) at a value of around $480 million, per Bloomberg. http://axios.link/9N6a

TPG is in exclusive talks to buy Australian bootmaker R.M. Williams from LVMH (Paris: MC) for more than A$250 million, per the Australian Financial Review. http://axios.link/6Vn5

Warburg Pincus committed up to $1 billion in equity funding to launch MLM II, a new information services and software platform led by Mason Slaine (ex-CEO of Information Holdings and Thomson Financial), Jay Nadler (ex-CEO of Clarivate Analytics), and Karl Jaeger (CFO of Artivest). www.warburgpincus.com

Public Offerings
Source: Giphy

Snowflake, a San Mateo, Calif.-based cloud data warehousing company, raised $3.4 billion in what is the largest software IPO of all time. It priced 28 million shares at $120 (above upwardly revised range), for a fully diluted market value of $42.4 billion. It had raised around $1.4 billion in VC funding from firms like Sutter Hill Ventures (20.3% pre-IPO stake), Altimeter (14.8%), Iconiq (13.8%), Redpoint Ventures (9%), Sequoia Capital (8.4%), and Dragoneer. http://axios.link/EhyH

Bentley Systems, an Exton, Penn.-based provider of construction and infrastructure project software, set IPO terms to 10.8 million shares at $17-$19. It would have a fully diluted market value of $4.9 billion, were it to price in the middle, and plans to trade on the Nasdaq (BSY) with Goldman Sachs as lead underwriter. Bentley reports $69 million of net income on $679 million in revenue for the first half of 2020, while shareholders include Siemens. http://axios.link/D7Ux

Hensoldt, a German defense industry supplier owned by KKR, said it plans to raise at least €400 million in its upcoming Frankfurt IPO. It would be the largest German IPO so far in 2020. http://axios.link/MYt0

JFrog, an Israeli software management company, raised $509 million in its IPO. The company priced 11.6 million shares at $44 (above upwardly revised range), for a a fully diluted market value of $4.5 billion, and will list on the Nasdaq (FROG) with Morgan Stanley as lead underwriter. It raised around $228 million in VC funding from firms like Gemini Israel Ventures (15.8% pre-IPO stake), Scale Venture Partners (10.8%), Sapphire Ventures (9.9%), Insight Partners (9.8%), Dell (9.3%), and Qumra Capital (5.2%). http://axios.link/MJyc

🚑 Metacrine, a San Diego-based biotech focused on NASH, raised $85 million in its IPO. The pre-revenue company priced 6.5 million shares at $13 (middle of range), for a fully diluted market value of $364 million, and will list on the Nasdaq (MTCR) with Jefferies as lead underwriter. It raised over $130 million from VenBio (14.6% pre-IPO stake), Arch Venture Partners (14%), Polaris Partners (13.7%), NEA (11.8%), and Alexandria Venture Investments (6.5%). http://axios.link/RA4A

Saudi Telecom plans to spin off its Internet unit via a late 2021 IPO, per Bloomberg. It could be valued at around $2.7 billion. http://axios.link/1Nvc

StepStone Group, a New York-based private markets investment and advisory firm, raised $315 million in its IPO. The company priced 17.5 million shares at $18 (above range), will trade on the Nasdaq (STEP), and reports $145 million of net income on $447 million for the 12 months ending March 31, 2020. http://axios.link/pb70

SPAC Stuff

Distoken Acquisition, an Asia tech-focused SPAC, filed for a $40 million IPO. It’s led by Jian Zhang, managing partner of Yunnan Xiaosen VC and CEO of a Chinese blockchain startup. http://axios.link/c4yL

🚑 Edoc Acquisition Corp., a health care-focused SPAC led by Kevin Chen (Horizon Financial), filed for a $100 million IPO. http://axios.link/WFdd

Harvester Holdings, a SPAC led by Jarden Corp. founder Martin Franklin, is raising $750 million in what would be London’s first blank-check IPO of 2020. http://axios.link/LKtW

ION Acquisition 1, an Israel-based SPAC led by Jonathan Kolber (ION Asset Management) and Gilad Shany (Magma Venture Partners), filed for a $200 million IPO. http://axios.link/juxj

Social Capital Hedosophia plans to raise $500 million for its third tech-focused SPAC, per Bloomberg. Its first two efforts have targeted space tourism company Virgin Galactic and online real estate platform Opendoor. http://axios.link/bjTx

Vy Global Growth, a tech-focused SPAC formed by Vy Capital, filed for a $500 million IPO. http://axios.link/oERl

Liquidity Events

Pure Storage (NYSE: PSTG) agreed to buy Portworx, a Los Altos, Calif.-based Kubernetes storage and data management company, for $370 million in cash. Portworx had raised $55 million from Sapphire Ventures, Mubadala, GE Ventures, NetApp, Cisco Investments, HP, A&E Investments, and Mayfield. www.portworx.com

More M&A

Bankia and Caixabank, both Spanish lenders, agreed in principle to a merger, per Reuters. http://axios.link/TokR

CB Insights, a New York-based market research firm, acquired Blockdata, a Dutch data analytics firm tracking the global blockchain market. www.cbinsights.com

The Mather Group, a Chicago-based wealth manager, acquired PartnersInWealth, a Houston-based fiduciary firm with $350 million in AUM. www.themathergroup.com

Suez (Paris: SEVI) entered exclusive talks to sell its recycling operations in four countries — the Netherlands, Luxembourg, Germany and Poland — to a subsidiary of German retailer Schwarz Group for $1.3 billion. http://axios.link/mF69

Uber (NYSE: UBER) agreed to sell its European freight business to Berlin-based logistics startup Sennder, a Berlin-based logistics startup that’s raised around $100 million in VC funding. Bloomberg reports the deal value at “less than €900 million.” http://axios.link/k1Ve

Fundraising

Black Unicorn Factory, a Los Angeles-based startup accelerator for Black-founded startups, raised $225 million, per an SEC filing. www.black-unicorn-factory.com

🚑 Crista Galli Ventures launched as a European health care VC, with Danish family office IPQ Capital as its sole LP. http://axios.link/3GNz

Greylock raised $1 billion for its sixteenth flagship VC fund. http://axios.link/wlDz

KKR raised over $11 billion in a first close for its fourth Asia-focused fund, which is targeting a total of $12.5 billion. http://axios.link/cTpq

Mantis, an early stage VC firm founded by music group The Chainsmokers, raised $35 million for its debut fund. http://axios.link/y3Xc

It's Personnel

Apollo Global Management named co-heads of its new impact investing business: Marc Becker, a senior partner with Apollo, and Joanna Reiss, who joined from Cornell Capital. It will be chaired by Lisa Hall, a former fellow at Georgetown University’s Beeck Center for Social Impact & Innovation. http://axios.link/RgRZ

Brooke Jones left Carnegie Corp. to become the first chief investment officer for women’s college Bryn Mawr, which has an $888 million endowment. http://axios.link/iQ1Y

Final Numbers
Adapted from Pwc; Chart: Naema Ahmed/Axios
Dan Primack

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and one-day boycotters to sign up.