Apr 17, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

Credit Karma says that of the most recent 250,000 people to use its tax prep software, fewer than 100 reported capital gains on cryptocurrency investments. It's possible that the figure will rise by end of day, given that some crypto investors might be so flummoxed that they waited until the last minute, or that the percentage of crypto buyers/sellers has been overstated.

But I'll go with Door #3: Crypto gains are, by design, pretty easy to hide. If those Credit Karma numbers pan out, expect the IRS to up its game.

Past as predicate? During a 2016 round of merger negotiations between CBS and Viacom, CBS CEO Les Moonves asked that he remain chairman of the combined company and that his CBS management team "have complete and irrevocable authority to manage the combined businesses."

  • Source: An excerpt from Ken Auletta's upcoming book, Frenemies: The Epic Disruption of the Ad Business (and Everything Else).
  • Go deeper at Axios: Sara Fischer has more from Auletta's book, and writes that the conditions set by Moonves two years ago could shed some light on his sentiments this time around.

Goalposts on the move: Treasury Sec. Mnuchin told CNBC this morning that "the difference between 2.2 and 3% [GDP growth] will pay for the tax cuts." This differs from his Department's own analysis from last year, which claimed that the tax cuts only would be paid for via economic growth plus "a combination of regulatory reform, infrastructure development, and welfare reform."

  • Tax day: Mnuchin also said that federal tax receipts "as coming in as expected," but declined to share specifics.

Updates: (1) Coinbase yesterday confirmed that it will acquire paid inbox service Earn, and that Earn CEO Balaji Srinivasan will join as CTO. We first reported on the deal earlier this month. (2) Lerer Hippeau has now assumed management of Binary Capital's second fund, per Recode. It had agreed to take over Binary's debut fund in March.

Wall Street: Goldman Sachs reported Q1 earnings that beat analyst estimates. Among the bright spots:

"Net revenues in Underwriting were $1.21 billion, 27% higher than the first quarter of 2017, due to significantly higher net revenues in debt underwriting, reflecting higher net revenues from investment-grade, leveraged finance and asset-backed activity, and higher net revenues in equity underwriting, primarily due to higher net revenues from initial public offerings."

Healthcare is hard: Amazon has abandoned plans to sell pharmaceuticals to hospitals and other large healthcare practices, as first reported by CNBC. Among other things, expect this to hurt PillPack's leverage in its takeover negotiations with Walmart (although it might boost PillPack's valuation prospects were it to remain independent).

The BFD
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Harbor, a San Francisco-based blockchain platform for creating tokenized securities based on real-world assets, raised $25 million in new funding. Founders Fund led, and was joined by Andreessen Horowitz, Pantera Capital, Future Perfect Ventures, 1confirmation, Signia Venture Partners and return backers Craft Ventures, Vy Capital and Valor Equity Partners.

  • Why it's the BFD: Because this could be to blockchain what e-commerce was to the Internet, in terms of a physical application of the digital. The investment also should be a morale boost to "tokenization" advocates, following a messy (and so far unsuccessful) ICO process for The Plaza Hotel in NYC.
  • Bottom line: "The protocol tokenizes real-world assets and uses ethereum smart contracts to ensure that investors can execute trades only if they satisfy pertinent regulations, such as know your customer and anti-money laundering requirements." — Annaliese Milano, CoinDesk
Venture Capital Deals

The Boring Co., which plans to dig tunnels for hyperloop mass transit, has raised nearly $113 million in venture capital funding, per an SEC filing. The company says most of the funding came from founder Elon Musk, while the remainder came from early employees.

QingKe, a Chinese long-term rental apartment company, raised more than $100 million in Series C funding co-led by Morgan Stanley Private Equity Asia and Crescent Point. http://axios.link/eag1

Applitools, a San Mateo, Calif.-based provider of application visual management solutions, raised $31 million in Series C funding. OpenView led, and was joined by return backers Sierra Ventures, Magma Venture Partners, iAngels and La Maison. www.applitools.com

Tempo, a San Francisco-based low-volume electronics manufacturer, raised $20 million in Series B funding. P72 Ventures led, and was joined by return backers Lux Capital, Uncork Capital and AME, and new investors Industry Ventures, Dolby Ventures and Cendana. www.tempoautomation.com

LawGeex, an Israeli provider of business contract review automation software, raised $12 million in new funding. Aleph led, and was joined by return backer Lool Ventures. www.lawgeex.com

Turo, a San Francisco-based P2P car rental marketplace, raised $12 million in new Series D funding from American Express and Sumitomo (round total is now $104m). www.turo.com

Mixcloud, a London-based audio streaming platform for long-form content, raised $11.5 million in funding led by WndrCo. http://axios.link/U39L

Ceterus, a Charleston, S.C.-based accounting software startup, raised $10 million in new funding led by Harbert Growth Partners. http://axios.link/Gr5J

Kolide, a Somerville, Mass.-based infrastructure analytics platform, raised $8 million in new funding led by Matrix Partners. http://axios.link/xQIn

Tentrr, a New York-based online campsite booking platform, raised $8 million in Series A funding. West Venture Partners led, and was joined by Obvious Ventures and return backers including Great Oaks Venture Capital, Halogen Ventures, Rivet Ventures and WorldQuant Ventures. www.tentrr.com

Kdan Mobile, a Taiwan-based maker of cloud software for content creators, raised $5 million in Series A funding from W.I. Harper Group, Darwin Venture Management and Accord Ventures. http://axios.link/yyO7

🚑 Carpe, a Durham, N.C.-based maker of OTC products for excessive hand and foot sweating, raised $2.3 million in seed funding. Carolina Angel Network and Duke Angel Network co-led, and were joined by LaunchCapital, Rubicon Venture Capital, and Triangle Angel Partners. www.carpelotion.com

Private Equity Deals

Bouygues (Paris: EN) is in talks with CVC Capital Partners about a joint bid for the French unit of telecom giant Altice (Amsterdam: ATC), according to Bloomberg. http://axios.link/d6nl

Charlesbank Capital Partners and Partners Group announced an agreement to acquire Hearthside Food Solutions, a Downers Grove, Ill.-based contract manufacturer, from Vestar Capital Partners and Goldman Sachs Merchant Banking. No terms were disclosed, but word is the price-tag is around $2.4 billion.

TA Associates has agreed to acquire Datix, a UK-based provider of patient safety and incident reporting software. www.datix.co.uk

Vantage, a specialty chemicals company owned by H.I.G. Capital, has acquired B&B Tritech, a Hialeah, Fla.-based manufacturer of surface treatment solutions for the defense and commercial aviation markets. www.vantagespecialties.com

Public Offerings

Docusign, a San Francisco-based e-signature platform, set its IPO terms to 21.7 million shares at $24-$26. It would have an initial market cap of around $3.8 billion, were it to price in the middle. The company plans to trade on the Nasdaq under ticker DOCU with Morgan Stanley as lead underwriter, and reports a $115 million net loss on $381 million in revenue for the year ending January 31, 2018. DocuSign has raised over $550 million in VC funding from firms like Sigma Partners (12.9% pre-IPO stake), Ignition Partners (11.7%) and Frazier Technology Ventures (7.2%). www.docusign.com

Goosehead Insurance, a Westlake, Texas-based personal lines insurance agency, set its IPO terms to 8.53 million shares at $14-$16 per share. It plans to trade on the Nasdaq under ticker GSHD, with J.P. Morgan as lead underwriter. The company reports $8.7 million in net income on $42.7 million in revenue for 2017. www.gooseheadinsurance.com

Pluralsight, a Farmington, Utah-based professional learning platform, filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker PS, with Morgan Stanley as lead underwriter. The company reports a $97 million net loss on $168 million in revenue for 2017. Pluralsight has raised over $230 million in VC funding from firms like Insight Venture Partners, Iconiq Capital and Felicis Ventures. http://axios.link/dL7j

Liquidity Events

🚑 Livongo Health, a Mountain View, Calif.-based digital health startup focused on managing chronic conditions like diabetes and hypertension, has acquired Retrofit, a Chicago-based online weight loss platform that has raised $25 million from firms like Cambia Health Solutions, Hyde Park Angel Network and DFJ. Livongo last week raised $110 million in fifth-round funding co-led by return backers General Catalyst and Kinnevik. http://axios.link/3TcE

More M&A

Coinbase has agreed to acquire Cipher, a mobile Ethereum wallet and decentralized browser.

Kam Fung Group of China is in talks to buy a majority stake in Spanish meat producer Incarlopsa at an enterprise value of around €1 billion. http://axios.link/vHmp

Marriott Vacations Worldwide (NYSE: VAC) is in talks to merge with rival vacation timeshare company ILG Inc. (Nasdaq: ILG), according to Reuters. ILG has a market cap just north of $4 billion. http://axios.link/0YJ9

Temasek has agreed to acquire a 3.6% stake in Bayer for around $3.7 billion, in a deal that will help Bayer finance its proposed $62.5 billion takeover of Monsanto (NYSE: MON). http://axios.link/hotu

Temasek has “expressed interest” in buying into Hong Kong Airlines and Hong Kong Express Airways, two Chinese carriers owned by HNA Group, according to Reuters. http://axios.link/PRHx

⛽ Vermilion Energy (NYSE: VET) has agreed to buy Spartan Energy (TSX: SPE), a rival Canadian light oil producer, for US$1.1 billion. http://axios.link/7hDM

Verve, a London-based word-of-mouth marketing startup, has acquired Las Vegas-based student travel company JusCollege for $25 million. Verve has raised over $30 million in VC funding from firms like Kindred Capital, Frontline Ventures and Spring Partners. www.verve.co

Fundraising

⛽ Drillcore Energy Partners is raising $250 million for a debut private equity fund that will focus on U.S. upstream oil and gas sector investments. The New York-based firm is led by Evan Turner, formerly head of energy at StormHarbour Partners. www.drillcorepartners.com

Imaginary Ventures, a new VC firm co-founded by Natalie Massenet (ex-CEO of Net-A-Porter) and Nick Brown (ex-14W), closed its debut fund with $75 million. The investment focus is on the intersection of tech and retail. www.imaginary.co

🚑 New Leaf Ventures is raising up to $275 million for its fourth healthcare-focused fund, per an SEC filing.

Parade Ventures, a pre-seed and seed-stage firm recently formed by Shawn Merani, is raising up to $25 million for its debut fund, per an SEC filing.

It's Personnel

Antares Capital has promoted Timothy Lyne and Vivek Mathew to co-head of sponsor finance and head of asset management and funding, respectively.

Michael Emanuel has joined Stroock as a partner in the law firm’s private funds group. He previously was with Eagle Investment Solutions. www.stroock.com

Benjamin Frost has stepped down as co-head of consumer retail investment banking with Morgan Stanley, and is in talks to join Goldman Sachs, per Reuters. http://axios.link/3KU9

Sandra Goldstein, a New York-based M&A litigator, is leaving Cravath, Swaine & Moore for Kirkland & Ellis, per the WSJ. http://axios.link/4D0Y

Adam Hoffman has joined Macquarie Capital as a New York-based managing director of leveraged finance. He previously led North America loan trading for HSBC.

Myrna Soto has joined Trident Capital Cybersecurity as a partner. She previously was SVP and global chief information security officer for Comcast. www.tridentcybersecurity.com

Final Numbers
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Data: Money.net; Chart: Axios Visuals

Yesterday's Pro Rata newsletter led with an item about how SoftBank was among the interested suitors in newspaper publisher Tronc. But that went out at around 10am. The spike came nearly an hour later, when we posted the news at Axios.com and tweeted about it.

  • Why it matters: This is a reflection of how algorithms rule the trading world.
  • Tens of thousands of Pro Rata readers had already opened the newsletter in the first hour, but the stock surge (which led to Tronc shares being briefly halted) came when there had been fewer than 1,000 views so far on the web post.
  • A well-known journalist at a different outlet shared a similar story with me, related to his newsletter and how "traders" ignored a market-moving scoop until Drudge picked up on it several hours later.
  • The machines may be smart and fast, but they still have an information blind spot when it comes to email.
Dan Primack