Feb 4, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

📺 Video has been posted of my Upfront Summit interview of Founders Fund partner Keith Rabois. Watch it here.

Top of the Morning

Illustration: Aïda Amer/Axios

Razor-maker Harry's last May agreed to be acquired for $1.37 billion by Schick parent Edgewell and, for the next six months, there were few concerns at either company. But then, shortly before Christmas, everything changed.

  • "[Regulators] started asking different sorts of questions, and you could see where they were heading," says a source familiar with the situation.
  • On January 16, Harry's co-CEO Jeff Raider posted a pro-merger argument via Medium, which suggests he felt the writing was on the wall.
  • Yesterday the Federal Trade Commission said it will sue to block the deal, believing that it would further strengthen a duopoly between Edgewell and market leader Procter & Gamble.
    • The FTC argues that the direct-to-consumer business of Harry's and rival Dollar Shave Club did little to lower industry prices or spur innovation, but rather that those things happened in 2016 when Harry's entered physical retail.
    • Read the FTC's full administrative complaint.

Sources say that Edgewell and Harry's haven't yet decided on next steps, but expectations are that they'll fight this in court. And, if so, expect them to be emboldened by the FTC's recent failure to block a merger of hydrogen peroxide companies, with a judge ruling that the agency's argument amounted to an "oversimplification."

  • The FTC's new complaint mostly ignores the impact of Dollar Shave Club, which was purchased for $1 billion in 2016 by Unilever — suggesting that its business model was already viewed as appealing before either it or Harry's moved big into physical retail.
  • Plus, it's odd to argue duopoly when a company with such major resources as Unilever is now involved. Let alone the recent, U.S. entry of South Korea's Dorco, which also supplies razors to Dollar Shave, or the continuing presence of Bic (which is working on a connected razor product, which speaks to the innovation angle).
  • And don't forget about Billie, the women's-focused brand that P&G recently agreed to buy (possibly to take it off the antitrust chess board, or perhaps as a strategic replay of the mid-1980's soda wars).

The bottom line: One possibility is that the FTC is missing the boat on direct-to-consumer. Another is that this is actually its way to test the limits of omni-channel retail, maybe as a precursor to future actions against giants like Amazon. But no matter the backstory, this one will come down to the numbers — particularly pricing — and each side thinks they have the data to prove their case.

Source: Giphy

Asana, a workplace productivity software company led by Facebook co-founder Dustin Moskovitz, has filed confidentially for a direct listing.

  • Why it's the BFD: This seeks to challenge conventional wisdom around direct listings, particularly that issuers must be large, "household" names (e.g., Spotify, Slack, Airbnb).
  • ROI: San Francisco-based Asana has raised over $200 million in VC funding, most recently at a $1.5 billion post-money valuation, from firms like Benchmark, Generation Investment Management, 8VC, Founders Fund, Lead Edge Capital, and World Innovation Lab.
  • Bottom line: "Slack... and other messaging and chat apps have transformed how coworkers communicate with each other... The rise of cloud-based services... have transformed how people in organizations manage and ultimately collaborate on files... The third area that has been less covered is work management: as people continue to multitask on multiple projects – partly spurred by the rise in the other two collaboration categories – they need a platform that helps keep them organised and on top of all that work. This is where Asana sits." — Ingrid Lunden, TechCrunch
Venture Capital Deals

🚑 Hinge Health, a San Francisco-based provider of musculoskeletal pain solutions, raised $90 million in Series C funding. Bessemer Venture Partners led, and was joined by Lead Edge Capital and return backers Insight Partners, Atomico, 11.2 Capital, Quadrille Capital, and Heuristic Capital. http://axios.link/AdOx

Top Hat, a Toronto-based maker of software for higher-ed teachers, raised US$55 million in Series D funding. Georgian Partners and Inovia Capital co-led, and were joined by return backers USV, Emergence Capital, and Leaders Fund. http://axios.link/RS6t

Sendoso, a San Francisco-based sending platform for e-gifts and customer engagement, raised $40 million in Series B funding. Oak HC/FT led, and was joined by was joined by Felicis Ventures, Prologis, and return backers Craft Ventures, Signia Venture Partners, Storm Ventures, Struck Capital, and Stage 2 Capital. www.sendoso.com

Dixa, a Denmark-based customer engagement platform, raised $36 million in Series B funding. Notion Capital led, and was joined by return backers Project A Ventures and Seed Capital. http://axios.link/zE7t

Finix, a San Francisco-based payments infrastructure platform, raised $35 million in Series B funding. Sequoia Capital led, and was joined by Activant Capital, Inspired Capital, Acrew Capital, and Bain Capital Ventures. http://axios.link/EhfW

Automox, a Boulder, Colo.-based cyber hygiene platform, raised $30 million in Series B funding. Koch Disruptive Technologies led, and was joined by CRV and CrowdStrike. www.automox.com

The Bouqs Co., a Venice Beach, Calif.-based online flower retailer, raised $30 million in Series D funding. Yamasa led, and was joined by Pontifax AgTech and return backers Partech Partners, Azure Capital Partners, and Next Equity. http://axios.link/6oU7

Cresta, a San Francisco-based AI platform for customer service, raised $21 million from backers like Andreessen Horowitz and Greylock. http://axios.link/N5Ro

Emerge, a Phoenix-based digital freight marketplace, raised $20 million in Series A funding. NewRoad Capital Partners led, and was joined by Greycroft and 9Yards. www.emergetms.com

OpenLegacy, a Princeton, N.J.-based enterprise API integration platform, raised $20 million from SBI Holdings. http://axios.link/VU9f

🚑 Inato, a Paris-based platform that helps drug companies increase the pool of clinical trial patients, raised $14 million in Series A funding. Obvious Ventures and Cathay Innovation co-led, and were joined by return backers Serena and Fly Ventures. www.inato.com

🚑 Lightship, a Los Angeles-based direct-to-patient clinical research startup, raised $20 million in Series B funding. McKesson Ventures and Define Ventures co-led, and were joined by Khosla Ventures, Brook Byers, and Marc Benioff. http://axios.link/DN2M

🍅 AppHarvest, a Morehead, Ky.-based developer of large-scale tomato greenhouses, raised $11 million from ValueAct Capital, Equilibrium, Rise of the Rest, and Blake Griffin Enterprises. http://axios.link/7yLB

Solaborate, a Fontana, Calif.-based smart TV hub, raised $10 million in Series A funding from EPOS and Demant Group. http://axios.link/oFc8

Convelio, a Paris-based digital freight forwarder specializing in fine-art shipping, raised €9 million in Series A funding. Acton Capital led, and was joined by Global Founders Capital. www.convelio.com

Scaled Robotics, a Barcelona-based construction robotics startup, raised €2 million in seed funding co-led by Norwegian Construct Venture and PropTech Fund Surplus. http://axios.link/NRRx

Private Equity Deals

Black Dragon Capital agreed to buy Grass Valley, a provider of broadcast equipment and solutions, from Belden (NYSE: BDC). www.grassvalley.com

🥩 Bloomin' Brands (Nasdaq: BLMN) picked final bidders for the Brazilian operations of its Outback Steakhouse chain, which could fetch around $470 million, per Valor Economico. They are: Advent International, Vinci Partners, and fast-food chain Maduro. http://axios.link/8jWA

Cascade Windows, a Spokane, Wash.-based portfolio company of CenterOak Partners, acquired Amerimax, a Loveland, Colo.-based maker of vinyl windows and doors, from OmniMax International. www.cascadewindows.com

Cerberus Capital Management and SSG Capital Management each are seeking to acquire troubled Indian shadow bank Altico Capital India. http://axios.link/UmSI

Clearlake Capital Group agreed to buy ISX, a Canadian provider of auto coating solutions and vehicle upfit services, from Olympus Partners. www.ixscoatings.com

EQT Partners invested in Rimes Technology, a New York-based provider of financial data management and regulatory software. http://axios.link/JmH9

Freeman Spogli acquired Galco, a Madison Heights, Mich.-based industrial electronic components distributor, from AEA Investors. www.galco.com

FTV Capital invested in Centaur Fund Services, an Ireland-based provider of fund administration and regulatory services for the alt investment market. www.centaurfs.com

Hepaco, a Charlotte-based portfolio company of Gryphon Investors, acquired Evergreen AES, a Shelbyville, Ky.-based provider of remediation, emergency response and environmental services. www.hepaco.com

GWS Tools, a Tavares, Fla.-based portfolio company of L Squared, acquired both Intrepid Tool Industries (Surprise, Ariz.) and North American Tool Corp. (South Beloit, Ill.). www.gwstoolgroup.com

Koch Equity Development acquired the 30% stake it didn't already own in enterprise cloud software company Infor from Golden Gate Capital. A source tells Axios the deal was done at an enterprise value of around $13 billion.

🚑 Smiths Group (LSE: SMIN) has picked final bidders for its medical equipment unit, which could fetch around $3 billion, per Bloomberg. Remaining suitors include Cinven, GTCR, Platinum Equity, and ICU Medical (Nasdaq: ICUI). http://axios.link/PMbN

Washington Equity Partners acquired a majority stake in Tube Bending, an Apple Valley, Calif.-based manufacturer and fabricator of tubing and tubing assemblies. www.tubebendinginc.com

Public Offerings

🚑 DXN, a Malaysian health supplements company backed by KV Asia Capital, is talking with banks about a 2020 IPO that could seek to raise upwards of $300 million, per Bloomberg. http://axios.link/lMEl

Liquidity Events

🚑 Catalent (NYSE: CTLT) acquired MaSTherCell Global, a Belgian cell and gene therapy contract research manufacturing group, for $315 million in cash. Sellers include Great Point Partners, SFPI-FPIM, and Orgenesis (Nasdaq: ORGS). http://axios.link/KeL6

HP Enterprise (NYSE: HPE) acquired Scytale, a San Francisco-based cloud-native security startup that had raised $8 million from Bessemer Venture Partners, Work-Bench, Bain Capital Ventures, and TechOperator. http://axios.link/slPY

Indigo Partners cut its stake in Budapest-based budget airline Wizz Air (LSE: WIZZ) from 20.6% to 3.4%, to comply with EU ownership rules. http://axios.link/xTCD

Relx (LSE: REL) agreed to buy Emailage, a Chandler, Ariz.-based provider of fraud prevention and identity verification SaaS, for around $480 million. Emailage had raised around $55 million from firms like Felicis Ventures, Bonfire Ventures, Anthos Capital, Radian Capital, Wipro Ventures, Mucker Capital, and Tallwave Capital. http://axios.link/GoO2

More M&A

Atos (Paris: ATO) plans to sell a 13.1% stake in French payments giant Worldline (Paris: WLN) via a private placement, while retaining a 3.8% position. http://axios.link/ZmrT

Nasdaq (Nasdaq: NDAQ) acquired OneReport, a Brattleboro, Vt.-based provider of corporate ESG data reporting services. http://axios.link/PEiZ

Neuberger Berman acquired Almanac Realty Investors, a New York-based investor in public and private tech companies with around $4 billion in AUM. http://axios.link/ngGR

Ubisoft (Paris: UBI) agreed to buy German mobile game developer Kolibri Games. http://axios.link/jLx8


8VC is raising $640 million for its third fund, per an SEC filing. http://axios.link/c8uB

🚑 Andreessen Horowitz raised $750 million for its third bio-focused fund. http://axios.link/01YW

ArcLight Capital raised $3.4 billion for its seventh energy infrastructure fund. http://axios.link/b2qT

Industry Ventures raised $125 million for it first hybrid fund-of-funds focused on tech buyouts. http://axios.link/Czov

U.S. Venture Partners raised $340 million for its twelfth early-stage VC fund. http://axios.link/6UFh

It's Personnel

Jake Kaldenbaugh joined Accenture’s corporate VC group as a San Francisco-based managing director, per his LinkedIn page. He’s a former tech M&A banker with GrowthPoint Technology Partners. www.accenture.com

Final Numbers: Direct listings aftermarket
Expand chart
Data: Money.net; Chart: Axios Visuals
Dan Primack

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