Axios Pro Rata
August 05, 2020
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Top of the Morning
Washington D.C. remains deadlocked on the next stimulus package, days after extended unemployment benefits ended and days before PPP is set to expire.
- One unresolved issue that hasn't gotten enough attention is a proposed expansion of the employee retention credit, which could have a significant impact for companies that have experienced severe revenue declines.
The backstory: CARES Act established the initial version, a refundable payroll tax credit that could cover up to $5,000 per employee, for businesses that had suffered at least 50% revenue loss.
- Caveat #1: If a company received a PPP loan, it wasn't eligible.
- Caveat #2: If a company had more than 100 employees who remained working full time, including remotely, it wasn't eligible.
- Caveat conclusion: For most companies, this credit wasn't too valuable.
What's new: Both new stimulus plans — HEROES Act (D), HEALS Act (R) — are much more generous.
- HEROES increases the credit to up to $36k per employee (or up to 80% of wages paid per retained employee), with sliding-scale revenue eligibility for companies with revenue drop of between 10% and 50%. It increases the limit on working employees to 1,500.
- HEALS increases the credit to up to $30k per employee (or up to 65% of wages paid per retained employee), with the revenue decline threshold cut to 25%. It increases the limit on working employees to 500.
- Neither proposal restricts companies that received PPP loans, although they're silent on companies that participate in a possible PPP extension.
Bottom line: Yes, there are still partisan differences. But both sides are moving in the same direction on this, which suggests more flexibility than on thornier issues like school funding and liability protections.
- Apple denied our report that it's interested in buying TikTok.
- Trump reiterated that Microsoft is not the only interested suitor.
- Facebook launched its answer product to TikTok, called Reels.
- Triller, which recently sued TikTok for patent infringement, quietly closed a financing round and now is targeting $250 million at a valuation north of $1 billion (first reported by TechCrunch, confirmed by Axios). No word on investors.
One more complication: Any would-be TikTok buyer is arguably negotiating with four entities. ByteDance, of course. The U.S. and Chinese governments too. And then, possibly, a different looking U.S. government under a President Biden, particularly when it comes to antitrust enforcement.
Teladoc (NYSE: TDOC), one of the country's largest telemedicine providers, agreed to buy Livongo (Nasdaq: LVGO), a digital health company focused on managing chronic conditions like diabetes and hypertension, for $18.5 billion in cash and stock.
- Why it's the BFD: This reflects the sea change in both patient and health insurer attitudes toward virtual health, which likely will outlast the pandemic. It also comes just days after President Trump signed an executive order to expand telehealth services to Americans living in rural areas.
- Pricing: The deal values Livongo shares at around a 10% premium to yesterday's closing price.
- ROI: Livongo's largest outside shareholders are venture capital firms General Catalyst (18.87% of outstanding shares), Kinnevik (12.94%), Dragoneer (4.68%), and Sapphire Ventures (4.26%).
- The bottom line: "Teladoc said late last month that its total visits tripled in the recently completed second quarter to 2.8 million, and revenue grew 85%. The company also said it expects gains to spill over into 2021, when it projects revenue growth of between 30% and 40%." — Tom Murphy, AP
Venture Capital Deals
⚡ ChargePoint, a Campbell, Calif.-based provider of electric car-charging stations, raised $127 million in Series H funding from American Electric Power, Chevron Technology Ventures, Clearvision, and Quantum Energy Partners. http://axios.link/GREJ
🚑 Taysha Gene Therapies, a Dallas-based gene therapy startup focused on monogenic CNS diseases, raised $95 million in Series B funding. Fidelity led, and was joined by BlackRock, GV, Invus, Casdin Capital, Franklin Templeton, Octagon Capital, Perceptive Advisors, Sands Capital, ArrowMark Partners, Venrock, and return backers PBM Capital and Nolan Capital. http://tayshagtx.com
• Rigetti Computing, a Berkeley, Calif.-based developer of quantum computing for AI and computational chemistry, announced $79 million in Series C funding led by Bessemer Venture Partners. Axios first reported on the round in March. http://axios.link/hOR4
🚑 Sight Diagnostics, an Israeli developer of blood analyzers, raised $71 million in Series D funding from Koch Disruptive Technologies, Longliv Ventures and OurCrowd. http://axios.link/rh5f
• Radish, a South Korean serialized fiction app, raised $63.2 million in Series A funding co-led by SoftBank Ventures Asia and Kakao Page. http://axios.link/Mhhd
• CloudPay, a U.K.-based payroll provider, raised $35 million. Runway Growth Capital led, and was joined by Rho Ventures and Pinnacle Investment Partners. http://axios.link/QSkr
• Syntiant, an Irvine, Calif.-based AI chipmaker focused on voice, raised $35 million in Series C funding. M12 and Applied Ventures co-led, and were joined by Atlantic Bridge Capital, Alpha Edison, and Miramar Digital Ventures. http://axios.link/1qqb
• Springboard, a San Francisco-based online reskilling and upskilling training platform, raised $31 million in Series B funding. Telstra Ventures led, and was joined by Vulcan Capital, SJF Ventures and return backers Costanoa Ventures, Pearson Ventures, Reach Capital, IFC, 500 Startups, Blue Fog Capital, and Learn Capital. http://axios.link/0SRE
🚑 GentiBio, an synthetic immunology startup, raised $20 million in seed funding co-led by OrbiMed, Novartis Venture Fund, and RA Capital Management. http://axios.link/pVzf
• Censys, an Ann Arbor, Mich.-based search engine for finding Internet devices, raised $15 million. GV and Decibel co-led, and were joined by Greylock. http://axios.link/w1Wp
• Qualified, a website user visibility platform, raised $12 million in Series A funding. Norwest Venture Partners led, and was joined by Redpoint Ventures and Salesforce Ventures. http://axios.link/RaM5
🐱 Smalls, a cat food startup, raised $9 million in Series A funding. Left Lane Capital led, and was joined by Founder Collective and Companion Fund. http://axios.link/fOT5
• Breezeway, a Boston-based provider of cleaning and maintenance services to rental property owners, raised $8 million in Series A funding. Schooner Capital led, and was joined by Tamarisc Ventures, Krillion Ventures, and Launch Capital. http://axios.link/ju1w
• Kompany, a reg-tech platform for anti-money laundering and business know-your-customer, raised nearly €6 million. Fairway Global Investment led, and was joined by Global Brain. www.kompany.com
• Truera, a Redwood City, Calif.-based model intelligence platform, raised $5.1 million. Greylock led, and was joined by Wing VC, Conversion Capital, and Aaref Hilaly. http://axios.link/4mPk
• PICadvanced, a Portugal-based developer of optics and photonics solutions for telecom apps, raised $4.5 million in Series A funding led by Verizon Ventures. www.picadvanced.com
• Cashdrop, a Chicago-based contactless commerce platform for small biz owners, raised $2.7 million in seed funding. Harlem Capital led, and was joined by Founder Collective, Long Journey Ventures, and M25. http://axios.link/8y9s
• Minnow, a Seattle-based contactless food delivery and pickup solution, raised $2.2 million in seed funding. Elevate Capital led, and was joined by Portland Seed Fund and Lincoln Property Co. http://axios.link/CRvQ
Private Equity Deals
• The Blackstone Group agreed to buy genealogy platform Ancestry for $4.7 billion from Silver Lake, Spectrum Equity, Permira, and GIC (which will retain a small stake). http://axios.link/OP7d
• ASG, a Walnut Creek, Calif.-based portfolio company of Alpine Investors, acquired ExtendedReach, a Littleton, Colo.-based provider of case management software for child and family social service agencies. www.alpinesg.com
• Brookfield Asset Management and the Canada Pension Plan Investment
Board are considering a joint bid for InfraCo, the fiber unit of Brazilian telco Oi
SA, per Bloomberg. http://axios.link/eULV
• Diligent, a New York-based corporate governance software firm, raised around $500 million at a valuation north of $4 billion, per the WSJ. Clearlake Capital Group led, and was joined by The Blackstone Group and some LPs of Insight Partners. http://axios.link/tCzJ
• TSG Consumer Partners invested in American Technologies, a family-owned provider of restoration, environmental remediation, and reconstruction services. www.atirestoration.com
• Correction: Turnspire's deal to buy STEMCO Air Springs from EnPro Industries is worth $32 million plus a $7.5 million promissory note. Yesterday's issue included an incorrect price.
• BigCommerce, an Austin, Texas-based outsourced builder of e-commerce sites, raised $216 million in its IPO. The company priced 9 million shares at $24 (above upwardly revised range), for an initial market cap of $1.58 billion. It will list on the Nasdaq (BICG) and had raised $228 million in VC funding from firms like General Catalyst (17.4% pre-IPO stake), Revolution Growth (12%), GGV Capital (5.2%), WestRiver Group (5.2%), and SVB (5%). New investor Tiger Global had said it would buy up to 20% of the IPO. http://axios.link/vU6V
• Rackspace, a San Antonio-based managed cloud solutions company owned by Apollo Global Management, raised $704 million in its IPO. The company priced 33.5 million shares at $21 (low end of range), for an initial market cap of $4.18 billion. It will list on the Nasdaq (RXT), used Goldman Sachs as lead underwriter, and reports a $48 million net loss on $653 million in revenue for Q1 2020. http://axios.link/bClm
🚑 Alpha Healthcare Acquisition, a health care-focused SPAC led by Rajiv Shukla, filed for a $100 million IPO. http://axios.link/06v2
• BowX Acquisition, a TMT-focused SPAC led by Vivek Ranadive, raised $420 million in an upsized IPO. http://axios.link/Ulq7
• Colonnade Acquisition, a SPAC led by real estate execs Joseph Sambuco and Remy Trafelet, filed for a $200 million IPO. http://axios.link/GaeC
• FAST Acquisition, a restaurant/hospitality-focused SPAC led by the founders of Ruby Tuesday and Toro, filed for a $200 million IPO. http://axios.link/sd1b
• TWC Tech Holdings II, a tech-focused SPAC led by private equity investor Adam Clammer, filed for a $525 million IPO. http://axios.link/Tt1U
• Welsh, Carson, Anderson & Stowe is seeking a buyer for Clearwater Analytics, a Boise, Idaho-based investment management software firm that could fetch around $2 billion, per Reuters. http://axios.link/wdJA
• Sampo, a listed Finnish insurer, and South Africa’s Rand Merchant Investment agreed to buy British general insurer Hastings Group (LSE: HTSG) for £1.66 billion in cash. http://axios.link/uUXT
• Castlelake is raising $750 million for a “top-off” vehicle for its fifth flagship private credit fund, per public pension documents. http://axios.link/ljc4
🚑 Jeffrey Kindler, former Pfizer CEO and current Centrexion Therapeutics CEO, joined The Blackstone Group as a senior advisor. www.blackstone.com
• David Payne left OMERS Private Equity, where he was a managing director who oversaw Asia-Pacific investing, per Buyouts. No word on his future plans. http://axios.link/WF25
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