January 12, 2023

🚨 Breaking: The Consumer Price Index declined 0.1% in December, driven down by gasoline and used car prices. Core CPI, which excludes fuel and food costs, rose by 0.3%. Go deeper.

  • Also, Sam Bankman-Fried this morning published his version of what happened with FTX and Alameda Research, plus those Robinhood shares. This comes shortly after the company said it's recovered around $5 billion of liquid assets.

Top of the Morning

Illustration: Aïda Amer/Axios

President Biden is refining plans to restrict outbound investment in Chinese companies, Axios' Hans Nichols scoops.

Why it matters: This would launch a new front in the simmering trade war between the world's two largest economies.

What to know: Biden's plan is basically an expanded version of the "reverse CFIUS" floated as part of last year's CHIPS Act, but which didn't become law.

  • It would come via executive order, and is driven by national security concerns.
  • Neither the timing nor exact language have been finalized, but Hans has learned that it will focus on areas like AI, quantum computing and semiconductors. Biotech and batteries would be among the excluded categories.
  • National Security Adviser Jake Sullivan met with key Cabinet secretaries in mid-December on how to improve the draft, and Treasury Secretary Janet Yellen subsequently asked for more time to work through potential implications, and other Treasury officials have been soliciting feedback from various stakeholders (including allies).
  • Don't expect the EO to be unveiled before Secretary of State Antony Blinken visits Beijing next month.

What they're saying: An administration official tells Hans that the goal is to have "modernized, effective inbound and outbound" regulations. The official added: "We'll be clear, there's plenty of other ways for you to make money than investing in things that enable China's military capability."

The bottom line: Cross-border investment is about to get a lot more complicated.

The BFD

Illustration: Annelise Capossela/Axios

JPMorgan Chase has sued the founder of Frank, a student financial aid platform that it purchased in 2021 for $175 million, claiming that she falsified the company's number of users.

Why it's the BFD: JPM's complaint is explosive, arguing that Charlie Javice conjured over 90% of the 4.25 million students she claimed had opened Frank accounts. Specifically, the bank alleges that Javice hired a data science professor at an NYC college to fabricate users, and then purchased a list of real students from a marketing firm.

By the numbers: JPM says that Javice and Olivier Amar, Frank's chief growth officer and the only other listed defendant, received around $26 million in sale proceeds.

What they're saying: Alex Spiro, the former Elon Musk attorney who's representing Javice, tells the WSJ that the lawsuits is "nothing but a cover" for a "bad faith" termination for which Javice previously had sued JPM.

The bottom line: Not mentioned in the lawsuit is Frank's board of directors, which included Apollo Global Management CEO Marc Rowan (who led a $10 million Series A investment into the startup).

Venture Capital Deals

Kakao Entertainment, the entertainment unit of South Korean tech giant Kakao, raised $966m from sovereign wealth funds like Saudi PIF and Singapore’s PWARP Investment. https://axios.link/3W1NqjL

OutSystems, a Boston-based provider of low-code app development tools, last fall raised around $228m from KKR at around a $4.3b valuation, which is 55% lower than the valuation it secured in February 2021 in a round co-led by Abdiel Capital and Tiger Global, per Forbes. https://axios.link/3J0detZ

🌎 Xpansiv, an SF-based market infrastructure platform for global carbon and environmental commodities, raised $125m from backers like Bank of America and Goldman Sachs. It also acquired Evolution Markets, a provider of transaction and advisory services for the carbon and energy transition markets. www.xpansiv.com

No Meat Factory, a Canadian alt protein maker, raised US$42m in Series B funding. Tenglemann Growth Partners led, and was joined by insider Emil Capital Partners https://axios.link/3CHJCx8

Butter, an SF-based accidental payments mitigation startup, raised $22m in Series A funding. Norwest Venture Partners led, and was joined by Atomic, Transpose Platform and Spring Tide Capital. https://axios.link/3k9naqy

🚑 Oula, a New York-based maternity care startup, raised $19m in Series A funding, per Axios Pro. 8VC led, and was joined by Metrodora, the Female Founders Fund, Collaborative Fund and Alumni Ventures. https://axios.link/3Xu7DA1

Mondu, a German B2B payments startup, raised $13m in Series A extension funding. Valar Ventures led, and was joined by FinTech Collective. www.mondu.ai

40Seas, an Israeli cross-border trade financing company, raised $11m in equity and secured a $100m credit facility. Team8 led, and was joined by ZIM Integrated Shipping Services. https://axios.link/3XmZOvP

🚑 Digitail, a veterinary practice management SaaS, raised $11m in Series A funding. Atomico led and was joined by Gradient, by Founders and Partech. https://axios.link/3Xo4pxN

Coho AI, an Israeli revenue optimization startup for B2B SaaS companies, raised $8.5m in seed funding from Eight Roads and TechAviv. https://axios.link/3QBmzdf

Canary, a fintech startup that helps employers set up emergency relief funds for workers, raised $2.9m in seed funding led by Capital One Ventures, per Axios Pro. https://axios.link/3ZxCflI

🚑 Microsoft invested an undisclosed amount into a Paige, a New York-based clinical AI digital pathology startup. www.paige.ai

Proven Optics, a Columbus, Ohio-based financial management software company, secured strategic funding from ServiceNow. www.provenoptics.com

Private Equity Deals

APCT, a Santa Clara, Calif.-based portfolio company of Industrial Growth Partners, agreed to buy Advanced Circuits, an Aurora, Colo.-based maker of printed circuit boards. www.4pcb.com

Apollo Global Management and Platinum Equity are among those kicking tires on Univar Solutions (NYSE: UNVR), a Downers Grove, Ill.-based chemicals distributor with a $5.3b market cap, per Bloomberg. https://axios.link/3Qyo8sm

Argosy Private Equity acquired Unisorb, a Michigan Center, Mich.-based provider of parts for machinery installation systems. www.unisorb.com

🚑 Avel eCare, a Sioux Falls, S.D.-based portfolio company of Aquiline Capital Partners, acquired NightWatch, a Beckley, W.Va.-based provider of remote pharmacy services. www.avelecare.com

Buildout, a Chicago-based portfolio company of The Riverside Company, acquired Oval Room, a provider of visual media solutions to the commercial real estate market. www.buildout.com

Compass Equity Group invested in MPC, a Cranston, R.I.-based developer of polymer-based products focused on thermoset polyurethane elastomers. www.mearthane.com

Deloitte UK agreed to sell its pensions business to Isio, the KPMG spinoff backed by Exponent Private Equity. https://axios.link/3CISQJQ

Garnett Station Partners acquired Flagstop Car Wash, a Richmond, Va.-based express car wash chain. www.flagstopcarwash.com

KKR is investing an additional $1.15b into commercial aviation finance group Altavair, via its infrastructure and credit funds. https://axios.link/3QBbBEs

One Equity Partners acquired a control stake in Mythics, a Virginia Beach, Va.-based IT services firm focused on the public sector. www.mythics.com

🚑 Pinnacle Clinical Research, a San Antonio, Texas-based portfolio company of LongueVue Capital, acquired South Texas Research Institute, a clinical research site known for its work on nonalcoholic steatohepatitis (NASH). https://axios.link/3ZniQ74

Thoma Bravo and Sunstone Partners completed their $1.3b acquisition of UserTesting (NYSE: USER), an SF-based user experience testing platform. https://axios.link/3XgRE8i

Public Offerings

Agora Digital, a Charleston, S.C.-based bitcoin miner, withdrew registration for a $50m IPO. It had planned to list on the Nasdaq. https://axios.link/3kcj7tk

SPAC Stuff

Sports & Health Tech Acquisition, a sports and health SPAC whose board includes Tiger Woods and Caroline Wozniacki, withdrew registration for a $150m IPO. https://axios.link/3H0jUqz

Liquidity Events

Apollo Future Mobility (HK: 0860) agreed to buy Chinese electric vehicle maker WM Motor for $2.02b. That’s less than the $2.75b WM had raised in venture funding from firms like Baidu, Sequoia Capital China, Tencent, SAIC Capital China, Hongta Venture, Susquehanna Asia Investments, Grand Flight, Far East Horizon and Cedarlake Capital. https://axios.link/3XmpEQC

DataStax, a Santa Clara, Calif,-based data management platform valued last year by VCs at $1.7b, acquired Kaskada, a Seattle-based startup focused on automating feature engineering. Kaskada raised around $8m from Voyager Capital, NextGen Venture Partners, Founders' Co-op and Walnut Street Capital Fund. www.datastax.com

Procter & Gamble (NYSE: PG) agreed to buy Mielle Organics, a Merrillville, Ind.-based maker of Black hair care products. Sellers include Berkshire Partners. https://axios.link/3CId9Hb

More M&A

Ryan Reynolds Smile GIF - Find & Share on GIPHY
Source: Giphy

T-Mobile US (Nasdaq: TMUS) is considering a takeover of Mint Mobile, the Fountain Valley, Calif.-based budget wireless provider owned by actor Ryan Reynolds, per Bloomberg. https://axios.link/3IHULSI

Subway, the privately held sandwich store chain, is considering a sale process that could fetch mord than $10b, per the WSJ. https://axios.link/3W3FyOU

Alibaba Group (NYSE: BABA) sold a 3.1% stake in Indian digital payments firm Paytm via a block sale, valued at $125m, per Reuters. https://axios.link/3vVprs7

DER Touristik, a German tour operator, is in advanced talks to acquire rival FTI from listed retail group REWE, per Handelsblatt. https://axios.link/3XrHhOU

ExxonMobil (NYSE: ZOM) agreed to sell its 66% stake in Bangkok-based Esso Thailand for around $603m to Bangchak Corp. (BK: BCP). https://axios.link/3w2csEI

Franchise Group (Nasdaq: FRG), whose brands include Vitamin Shoppe and Sylvan Learning, is considering a take-private management buyout, per the WSJ. https://axios.link/3k6SSVi

GoLogiq (OTC:GOLQ) agreed to acquire Nest Egg Investments, a Philadelphia-based financial planning fintech, for $30m in stock. https://axios.link/3X8oQ23

Telkom, a listed South African telco, ended talks to acquire local data network provider Rain. https://axios.link/3CGwEQh

Voyager Digital, a bankrupt crypto lender, received initial court approval to move forward with its proposed sale to Binance.US. https://axios.link/3GC9H1M

Fundraising

Social Capital, the VC firm led by Chamath Palihapitiya, has narrowed the scope of its new fundraise, per a letter sent on Tuesday to prospective investors.

  • The new plan is to size Fund V at around $1 billion with a focus on early-stage deals, versus prior plans to raise significantly more and to also back growth-stage companies and special opportunities.
  • Palihapitiya will commit nearly 20% of the total, likely including contributions of shares in companies backed by Fund IV (in which Palihapitiya was the sole LP).
  • Fund terms are a 2% management fee (1.75% for first close, scheduled for March) and a 30% carry.

Cake Ventures, a pre-seed and seed-stage firm led by Monique Woodward, raised $17m for its debut fund. https://axios.link/3H026vF

Dyal Capital, a unit of Blue Owl Capital, raised $12.9b for its fifth GP solutions fund. www.blueowl.com

Goldman Sachs raised $11.7b for its eighth mezzanine debt fund, which expands to $15.2b inclusive "inclusive of expected long-term asset financing." www.gs.com

Iceberg Capital and Venom Foundation, a blockchain backed by Abu Dhabi Global Market, launched a $1b venture fund. https://axios.link/3X2XXN7

Menlo Ventures is raising three new funds, including its 16th flagship, an incubation fund and its first dedicated life sciences fund. https://axios.link/3kdrcON

It's Personnel

David Anderson, former head of private markets at Texas Treasury Safekeeping Trust Co., joined Ridge Ventures as a partner. www.ridge.vc

John Panebianco, a former alt asset investor with New Jersey Division of Investment, joined the MetLife as an associate director of private equity. https://axios.link/3QBlK49

Dan Teodosiu, former CTO of Onfido, joined Balderton Capital as executive-in-residence. www.balderton.com

ABS Capital promoted Jennifer Krusius to partner. www.abscapital.com

Eureka Equity Partners promoted Tassie Oswald to partner, Dan Black to principal and Ellie Butler to controller. www.eurekaequity.com

Final Numbers

U.S. VC investment in Greater China chart
Source: PitchBook. Data through Dec. 31, 2022.

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