Mar 1, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

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Top of the Morning

Music streaming giant Spotify yesterday filed for its highly-anticipated direct listing, which may change how high-profile tech companies go public.

What to know:

  • Expect the actual listing to occur later in March, given that Spotify won't be doing a two-week road-show.
  • It is honoring quiet period protocols.
  • The filing gives numerous warnings about price volatility, particularly given that there aren't lock-ups on any shareholders except for Tencent.
  • Spotify provided a history of secondary share sales, with some extremely wide variance just within the past year. Were it to price the IPO at its 12-month high point, the company's fully-diluted value would be around $28 billion. At the low mark, it would drop below $18 billion.
  • The unprofitable company reports nearly $5 billion in revenue for 2017, compared to $3.6 billion in 2016. It lost around $1.46 billion in 2017, and had $582 million of cash available at year-end. Given that this is a direct listing from existing shareholders, Spotify itself won't generate proceeds for its own coffers.

Crypto crackdowns: The WSJ reports that the SEC "has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies." And CoinDesk notes that "China's police force is reportedly expanding its internet monitoring to include international cryptocurrency activities."

Clarification: Yesterday's NY Times story on Dick's firearms decision said that the company would no longer sell "AR-15-style and other semiautomatic rifles," but that does not appear to be accurate.

  • The AR-15-style rifles — commonly known as "assault weapons" or "modern sporting rifles" — are indeed gone, but both Dick's and its Field & Stream affiliate continue to sell types of semi-automatic rifles that are plenty lethal, but have not been traditionally used in mass shootings.

Wasted space: This past weekend I'm watching the Celtics play the Detroit Pistons, and notice that the Pistons this season placed two large "Platinum Equity" logos on their hardwood. Yes, the Los Angeles-based private equity firm, and its founder Tom Gores, have owned the team since 2011. But it's still a Los Angeles-based private equity firm that doesn't seem to gain any value from having its logo on an NBA court.

Trumpland: Lots of buzz about the revelation that Apollo Global Management and Citigroup gave large commercial real estate loans to Kushner Cos. last year, with a lot of line-connecting to (officially unrelated) meetings between Jared Kushner and top execs from Apollo and Citi.

  • I'm digging deeper into the numbers this morning (most of it was publicly-disclosed), but my gut is that there's a lot less than meets the eye here, The Apollo loan was indeed larger than the average from this particular REIT portfolio, it's nowhere near the firm's largest loans (nor even this portfolio's largest) — and there is some barbell affect that skews the mean. Plus, it was backed by a strong credit.
  • But that doesn't alter the face-palming reality that Kushner is open to such conflict scrutiny because he didn't more fully divest from his former biz life. And Apollo, for its part, also should have rules in place to prevent it from doing business with Kushner or Trump companies while this Administration is in power. At least so long as its execs are going to accept invites to be involved in private policy discussions.
Source: Giphy

DoorDash, a San Francisco-based food delivery company, has raised $535 million in Series D funding at what we've learned is a $1.4 billion post-money valuation. SoftBank led, and was joined by return backers Sequoia Capital, GIC and Wellcome Trust. The entire round is for primary shares, but a source tells Axios that SoftBank plans a secondary tender.

  • Why it's the BFD: SoftBank also is an investor in Uber, which is a DoorDash rival via Uber Eats, and now will have seats on both the companies' boards (albeit with different representatives). One possibility is that this round could presage an eventual acquisition.
  • Bonus: SoftBank last year went deep into discussions with London-based food delivery company Deliveroo, but ultimately didn't invest.
  • Bottom line: DoorDash co-founder and CEO Tony Xu estimates that only 5% of U.S. restaurant take-out is currently done via online-enabled delivery, with the rest still involving phones and customer pick-up. That means there is plenty of green space — not only for DoorDash, but also for UberEats and other rivals like GrubHub and Caviar.
Venture Capital Deals

🚑 Rubius Therapeutics, a Cambridge, Mass.-based developer of "technology to grow, genetically engineer and mature long-circulating red cell therapeutics," has raised $100 million in new VC funding. The company had raised $120 million last summer, with only Flagship Pioneering as its only disclosed investor.

Zomato, an Indian food delivery company, has raised $150 million from Alibaba at a valuation north of $1 billion.

Hi Guides, a Chinese travel tour company, has raised $50 million in Series C funding. Sequoia Capital China led, and was joined by Concord Investments and Matrix Partners China.

🚑 Quentis Therapeutics, a New York-based cancer immunotherapy startup, has raised $48 million in Series A funding. Versant Ventures and Polaris Partners co-led, and were joined by AbbVie Ventures, Taiho Pharmaceutical, Yonghua Capital, Alexandria Venture Investments and an affiliate of Empire State Investments.

Bugcrowd, a San Francisco-based bug bounty platform, has raised $26 million in Series C funding. Triangle Peak Partners led, and was joined by Hostplus, First State Super and return backers Blackbird Ventures, Costanoa Ventures, Industry Ventures, Paladin Capital Group, Rally Ventures, Salesforce Ventures and Stanford, as well as new investors Hostplus and First State Super.

Perfect Day, a Berkeley, Calif.-based animal-free dairy, has raised $24.7 million in new funding. Temasek led, and was joined by Continental Grain, Iconiq Capital, Horizons Ventures, Lion Ventures and Verus International.

Coalition, a San Francisco-based cyber insurance startup, has raised $10 million in Series A funding from Vy Capital, Ribbit Capital, Valor Equity Partners, Sam Altman and Deep Nishar.

TCGplayer, a Syracuse, N.Y.-based online marketplace for collectible items, has raised $10 million from Radian Capital.

Woebot Labs, a San Francisco-based developer of a mental health chatbot, has raised $8 million in Series A funding from NEA and AI Fund.

Virtualitics, a Pasadena, Calif.-based developer of data visualization and analytics tools for AR/VR developers, has raised $7 million in Series B funding. Centricus led, and was joined by return backer The VR Fund.

EdgyBees, a Santa Clara, Calif.-based developer of AR solutions for drones, has raised $5.5 million in seed funding from Motorola Solutions Venture Capital, Verizon Ventures, 8VC, NFX, Aspect Ventures and OurCrowd.

🚑 Eko, a San Francisco-based maker of acoustic cardiac monitoring devices, has raised $5 million in Series A funding. Artis Ventures led, and was joined by Strategic Partners, Dreamlt Ventures, 1812 Ventures and

TigerWit, a developer of mobile trading technologies, has raised $5 million from Susquehanna International Group.

Private Equity Deals

Advent International has agreed to acquire British electronics company Laird (LSE: LRD) at an enterprise value of around 1.2 billion (including debt), or 200 pence per share (73% premium over yesterday’s closing price).

The Carlyle Group has agreed to acquire a majority stake in CFGI, a Boston-based provider of technical accounting and finance advisory services to CFO offices.

CenterOak Partners has sponsored a merger of auto-glass and claims management companies JN Phillips Auto Glass (Woburn, MA) and Techna Glass (Sandy, UT) into a single company called TrueRoad.

Consolidated Aerospace Manufacturing, a Brea, Calif.-based portfolio company of Tinicum, has acquired Moeller Manufacturing & Supply, an Anaheim, Calif.-based maker of commercial aerospace and defense washers and spacers.

🚑 Innovia Medical, a St. Paul, Minn.-based portfolio company of Shore Capital, has acquired Network Medical Products, a UK-based maker of sterile single use products for ENT and ophthalmic procedures.

Public Offerings

Palantir CEO Alex Karp was asked about IPO plans yesterday in a CNBC interview:

"We are making great strides to standardize everything so that if we choose to ever do a public offering we can do it immediately. And so in that context, we’re making a lot of strides. And at the time we chose to show things I think people will be very surprised at, like, the quality of the revenue."
Liquidity Events

Argonaut Private Equity has sold Falcon Flowback Services, an Oklahoma City-based provider of flowback and well testing services, to Oil States International (NYSE: OIS).

More M&A

Dragoneer Investment Group has acquired an additional US$146 million worth of shares in PointClickCare, a Canadian electronic medical records software company, via a secondary offering with existing shareholders. Dragoneer last year led an $85 million primary share deal, alongside JMI Equity.

• Equitable Life, a British mutual insurer with more than £6 billion in AUM, has hired Goldman Sachs to explore a possible sale, per the FT.

• Fosun (HK: 0656) has agreed to acquire majority stake in listed Austrian textiles company Wolford for €33 million.

• Saudi Arabia’s Public Investment Fund has invested over $200 million for a minority stake in U.S. media company Penske Media Corp., per the NY Post.


🚑 Repair Impact Fund has been launched by Novo Holdings as a $165 million VC funding focused on companies that seek to target drug-resistant superbugs.

It's Personnel

Asif Giga has joined Ericsson Ventures as an investment director. He previously was with Experian Ventures.

Lindsey Maule has left her role as head of cryptocurrency research as seed fund Precursor Ventures, in order to work full-time on a crypto hedge fund called Luna Capital.

Rodolfo Rosini, a serial entrepreneur whose past companies included Storybricks, has joined Hong Kong-based AI accelerator as a partner.

Dan Primack