May 1, 2019

Axios Pro Rata

Dan Primack

Greetings from Terminal 3 at LAX, where soon I'll be hopping a plane back to Boston. It was great meeting so many readers and listeners over the past few days. Remember that you can always drop me news and views through email ( or my anonymous tip box ( Here we go...

Top of the Morning

Illustration: Rebecca Zisser/Axios

The only thing bigger than recent deals is the amount of money eager to get into future deals.

That was my top takeaway after dozens of meetings and a handful of sessions at the Milken Global Conference in Los Angeles.

  • This applies not only to "unicorn" growth equity and IPOs, but also to more traditional buyouts and M&A.

It's being driven by a capital-refreshment cycle.

  • For private markets, that means limited partners are (finally) getting large distributions, and then plugging them back into funds that then rush to (begrudgingly) invest at today's higher prices.
  • For IPOs, there has been some punditry on how all of these new mega-offerings will drain some legacy company shareholder bases. No one I spoke with about it at Milken agrees, instead arguing that there is plenty of capital waiting on the sidelines.
  • For M&A, it's about massive stacks of company-held stock that have been amassed through buybacks. Plus huge cash-piles and several healthy sectors — particularly healthcare and energy E&P — that remain ripe for large-scale consolidation.

Yes, a certain amount of FOMO is also at play.

Lots of investors believed in 2016 (or in 2017 or 2018) that markets were peaking, so they no longer trust their bearish instincts. Instead, it's all systems go for 2019.

Andreessen Horowitz has closed on two new funds, Axios has learned.

  • Last year we previewed the venture giant's new capital strategy, which was moving away from the multi-stage, multi-sector flagship vehicles for which it was known.
  • The new vehicles are a $750 million early-stage effort and a $2 billion later-stage fund that will be led by recent hire David George.
  • Andreessen Horowitz continues to invest out of dedicated bio and crypto funds, both of which are eventually expected to raise new successors.
  • For the sake of symmetry, this puts the firm's total fundraising haul at nearly $10 billion, just as it hits its 10th anniversary.

🎧 Pro Rata Podcast discusses the crowded 2020 Democratic primary field and if it's still "the economy, stupid." My guest is Axios' Alexi McCammond. Listen here.

Source: Giphy

McGraw-Hill Education agreed to merge with Cengage Learning in an all-stock deal that will create an educational publisher that would be valued at around $5 billion.

  • Why it's the BFD: This would create the country's second-largest college textbook publisher, behind Pearson, with the combined company likely to adapt Cengage's Netflix-like subscription model to improve affordability.
  • Investors: McGraw-Hill Education is majority-owned by Apollo Global Management, while Cengage is owned by Apax Partners. The deal is being designed as a 50/50 merger of equals, and will require regulatory approval.
  • Bottom line: "The deal comes as textbook publishers are adjusting to a changing educational landscape in which low-cost alternatives are often available online. About half of both companies’ sales still come from traditional print textbooks, while the rest is from digital books and class materials such as online homework assignments, and combining could help them make much-needed cost reductions." — Cara Lombardo, WSJ
Venture Capital Deals

SoftBank confirmed that it will invest $1 billion in Bogota-based delivery app Rappi, split between SoftBank Vision Fund and the SoftBank Innovation Fund (once formally established).

Glovo, a Barcelona-based on-demand delivery company, raised €150 million in Series D funding. Lakestar led, and was joined by Idinvest Partners, Korelya Capital and Drake Enterprises.

BlackBuck, an Indian trucking logistics startup, raised $150 million in Seres D funding. Goldman Sachs and Accel co-led, and were joined by Wellington Management, Sequoia Capital, B Capital, LightStreet and return backers Sands Capital and IFC.

Technisys, a Miami, Fla.-based provider of digital banking software, raised $50 million in Series C funding led by Riverwood Capital.

Zenoti, an enterprise cloud platform for the beauty and wellness industry, raised $50 million in Series C funding. Tiger Global led, and was joined by Norwest Venture Partners and Accel.

Spot.IM, a New York-based commenting platform for online publishers, raised $25 million in Series D funding led by return backer Insight Partners.

DivvyCloud, an Arlington, Va.-based provider of security and compliance automation for public cloud and container infrastructure, raised $20 million. Providence Strategic Growth led, and was joined by return backers Mission OG and RTP Ventures.

🚑 Forefront Telecare, a Novato, Calif.-based provider of telehealth solutions for seniors in rural communities, raised $15 million. Spring Lake Equity Partners and the Ziegler Link-Age Fund co-led, and were joined by Tech Council Ventures and Boston Millennia Partners.

🚑 Biolux Research, a Vancouver-based maker of an orthodontic device, raised US$14 million in Series A funding. Venrock led, and was joined by Correlation Ventures.

Allganize, an Oakland-based provider of natural-language learning and conversational AI solutions for the enterprise, raised $3.4 million in Series A funding led by SparkLabs Ventures.

Cushion, a San Francisco-based app for negotiating bank and credit card fees, raised $2.8 million in seed funding from Afore Capital, 9Yards Capital, Flourish, Green Cow VC and Vestigo Ventures.

🚑 Canopy Biosciences, a St. Louis-based developer of biotech research tools, raised an undisclosed amount of funding from Ampersand Capital Partners. It also acquired Zellkraftwerk, a German multiplex cytometry company.

Private Equity Deals

Arbor Investments acquired Darifair Foods, a Jacksonville, Fla.-based provider of dairy products for national chain restaurants and industrial food manufacturers.

KKR and GIC agreed to acquire a 57% stake in Indian power company IndiaGrid for around $400 million, per Reuters.

NextGen Growth Partners acquired and merged auto dealer marketing companies Dealer 121 (Roseville, Minn.) and Jacobs Marketing Group (Long Island).

Onex Partners committed to invest C$1.8 billion in Convex, a new specialty property and casualty insurance and reinsurance company.

Thoma Bravo agreed to buy Autodata, a Canada-based provider of software and marketing solutions to the auto industry, from KKR portfolio company Internet Brands. No financial terms were disclosed, but Bloomberg reports around a $1 billion price-tag.

Liquidity Events

🧀 Altice USA agreed to buy streaming news network Cheddar for $200 million. Cheddar had raised around $54 million in VC funding, most recently at a $160 million post-money valuation, from firms like Altice USA, AT&T, Lightspeed Venture Partners, Goldman Sachs, Ribbit Capital, Dentsu, Liberty Global, NYSE, Amazon, Comcast Ventures and 7 Global Capital.

More M&A

Admiral Group (LSE: ADM), Mapfre (BME: MAP) and Oakley Capital are partnering to buy Spanish digital broker Acierto.

Equipsuper and Catholic Super, both Australian pensions funds, plans to merge by the end of 2020. The combined group would have around A$25 billion in AUM.

Imperial Brands (LSE: IMB) is seeking a buyer for its premium cigar unit, as the British tobacco group transitions more toward vaping.

OYO, an Indian budget hotel startup backed by such firms as SoftBank and Airbnb, acquired @Lesisure Group from Axel Springer (DB: SPR) for €370 million.


Jungle Ventures of Singapore held a $175 million first close on its third fund, which is targeting a total of $220 million.

Math Venture Partners of Chicago raised $46 million for its second fund.

Union Square Ventures raised $200 million for its new early-stage flagship fund and $250 million for its latest opportunity fund. The New York-based firm also hired Gillian Munson (ex-CFO of XO Media) as a partner and promoted Nick Grossman to partner.

It's Personnel

Karl Alomar, former COO at DigitalOcean, joined venture firm M13 as a managing partner.

Priya Saiprasad joined VC firm Mayfield as a partner. She previously was a principal with M12.

Final Numbers: Andreessen Horowitz deal pace
Source: PitchBook
Dan Primack