Axios Pro Rata

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May 11, 2022

🚨 Situational awareness: The Consumer Price Index rose 0.3% in April and was up 8.3% from a year earlier. That's hotter than economist estimates, but below March marks. Go deeper.

Top of the Morning

Illustration of a knife-like downward trend line slashing through a grid
Illustration: Sarah Grillo/Axios

"Look out below" is the new mantra for tech valuations. So let's peek at how that's playing in the Pro Rata universe, as investors try to determine the sharpness of those falling knives:

Private equity: This is widely being viewed as a buying opportunity, with PE pros kicking tires on tech companies they previously viewed as overvalued. No one is calling a bottom, but PE doesn't need to buy there. It just needs a defensible price. Particularly at diversified firms that have largely avoided large tech deals over the past year or two.

  • The caveat is that most prospective sellers haven't yet accepted lower valuations as the new normal. As one software-focused investor told me: "For a lot of companies it's going to take another month or two of seasoning before they get serious about doing deals."

Late-stage VC: Everyone's talking a good game about price discipline, but we're still seeing plenty of massive up-rounds. See today's news about employee onboarding company Rippling raising at $11.25 billion, versus $6.5 billion last fall. Or the unreported raise by remote hiring firm Deel at a $12 billion valuation, per multiple sources, compared to its $5.5 billion mark in October.

  • In short, it's not about rounds getting done at lower prices. It's about rounds getting done or not. Plenty of companies are finding themselves in that latter bucket, but stalled fundraises don't get press releases.

Early-stage VC: This is where investors want to play in this sort of market, given the relatively low valuations and long runways. Sources say that there's starting to be a bit of price pullback, more at Series A than at seed, so as not to hamstring startups when it comes time to raise a Series B.

  • Yes, it's a self-serving argument that gives VC funds greater ownership stakes. That doesn't make it wrong.

Crypto: Web3 startups seemed immune as of just a few weeks back. But there's only so long that investors can ignore the crypto correction (e.g., Bitcoin down 48% year-to-date).

  • Maybe most worrisome is the stock slump for Coinbase, which many VCs use as a proxy for crypto company cohort health.
  • Yesterday's earnings report caused Coinbase shares to open this morning down around 25%, for an all-time low. Plus, the company felt compelled to detail what would happen to user assets if the company were to go bankrupt.

Everyone seems to agree that a lot of the drop is tied to the Fed rate hikes, similar to what happened in 2000. The disagreement is if a recession is around the corner, as followed in 2001. And, if so, how severe it might be.

The bottom line: Private equity and venture capital are long-term asset classes. Investment decisions, however, must be made in the present tense.

The BFD

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Source: Giphy

Banijay, the production house behind such television shows as "Black Mirror" and "Keeping up with the Kardashians," agreed to go public at an implied €7.2b enterprise valuation via Pegasus Entrepreneurs, an Amsterdam-listed SPAC formed by Tikehau Capital and Bernard Arnault.

Why it's the BFD: This would be Europe's largest-ever SPAC merger, for one of reality television's most prolific producers.

Details: The deal, whose equity value is around €4.1b, also includes online sports gambling group Betclic, with the resulting public company to be called FL Entertainment.

  • It also comes more than two years after Banijay added significant debt via the €2 billion purchase of Dutch TV production firm Endemol Shine from Apollo Global Management.

The bottom line: "Both the content production and sports betting are globalizing businesses where scale is important and the listing will allow us to grow further and consider more acquisitions." — Banijay's Stéphane Courbit to the FT

Venture Capital Deals

• Rippling, an SF-based employee onboarding management platform, raised $250m at an $11.25b valuation. Bedrock and Kleiner Perkins co-led, and were joined by insiders YC and Sequoia Capital. Also, Bedrock took a bit of a victory lap at Pro Rata's expense.

• Habi, a Colombian residential real estate marketplace, raised $200m in Series C funding. Homebrew and SoftBank co-led, and were joined by Banco Mercantil del Norte, Grupo Financiero Banorte, Tiger Global, Inspired Capital, Clocktower Technology Ventures, Endeavor Catalyst and Henry Kravis. http://axios.link/707H

• Material Bank, a New York-based architectural design marketplace, raised $175m in Series D funding. Brookfield Growth led, and was joined by Fifth Wall, SoftBank and RXR. http://axios.link/0v8t

🌎 Carbon Clean, a London-based carbon capture startup for heavy industry, raised $150m in Series C funding. Chevron led, and was joined by AXA Investment Managers, Samsung Ventures, Saudi Aramco Energy Ventures, TC Energy and insiders CEMEX Ventures, Marubeni Corp. and WAVE Equity Partners. http://axios.link/NDwj

• Chainalysis, a New York-based blockchain analysis company, raised $170m in Series F funding at an $8.6b valuation led by GIC, per The Information. http://axios.link/7zJy

Talos, a New York-based crypto trading infrastructure startup, raised $105m in Series B funding. General Atlantic led, and was joined by Citigroup, Wells Fargo Strategic Capital, BNY Mellon, DRW, SCB 10x, Stripes, Voyager, Andreessen Horowitz, PayPal Ventures, Castle Island Ventures and Fidelity. http://axios.link/t9br

SirionLabs, a Seattle-based contract lifecycle management startup, raised $85m in Series D funding. Partners Group led, and was joined by insiders Avatar Capital, Sequoia Capital and Tiger Global. http://axios.link/UKbY

Supabase, a Singapore-based open source alternative to Firebase, raised $80m in Series B funding. Felicis Ventures led, and was joined by Coatue and Lightspeed Venture Partners. http://axios.link/uCGz

Mothership, an Austin-based same-day short-haul freight tech startup, raised $76m from Benchmark, WestCap and Bow Capital. www.mothership.com

Observe, a San Mateo, Calif.-based SaaS observability platform, raised $70m in Series A-2 funding from Sutter Hill Ventures, Capital One Ventures and Madrona Venture Group. http://axios.link/bQ3Q

• Certn, a Canadian provider of background screening solutions, raised US$50m in Series B funding. B Capital led, and was joined by BMO, Tribe, Inovia Capital, Telstra Ventures, Scribble Ventures, Moxxie Ventures and Gaingels. http://axios.link/PelS

• ProteanTecs, an Israeli chip analytics platform, raised $45m led by Addition. http://axios.link/CTQL

🚑 Osmind, an SF-based mental health research startup, raised $40m in Series B funding. DFJ Growth led, and was joined by Susa Ventures, Lachy Groom and insiders General Catalyst, Future Ventures, Tiger Global and Pear VC. www.osmind.org

WizeHire, a Houston-based hiring platform, raised $30m in Series B funding. Tiger Global led, and was joined by insiders Amplo and Mercury. www.wizehire.com

Casa, a Charleston, S.C.-based bitcoin storage startup, raised a $21m. Acrew Capital led, and was joined by Positive Sum Ventures, Avon Ventures, Stillmark, Tioga Capital, Castle Island Ventures, Lerer Hippeau Ventures, Naval Ravikant and Scott Belsky. http://axios.link/JRgp

🚑 Turquoise Health, a San Diego-based health care price transparency startup, raised $20m in Series A funding, per Axios Pro. Andreessen Horowitz led, and was joined by Tiger Global and insiders Bessemer Venture Partners and Box Group. http://axios.link/l9Id

Ness, maker of a fintech app that rewards users for healthy behavior, raised $15.5m in seed funding, as first reported by Axios Pro. Will Ventures led, and was joined by Core Innovation Capital, Accomplice, Digitalis, GFC, Portage, Refactor Capital, Atypical and RiverPark Venture. http://axios.link/KBbi

OtterTune, a Pittsburgh-based database optimization startup, raised $12m in Series A funding. Intel Capital and Raise Capital co-led, and were joined by Accel. http://axios.link/MQKH

• GetHenry, a German provider of e-bikes to couriers, raised €10m in seed funding (plus €6.5m in debt), LocalGlobe led, and was joined by Visionaries Club, Founder Collective, EnBW New Ventures, GreenPoint Partners, SpeedUp Ventures and Third Sphere. http://axios.link/FCgK

Greater Good Health, a Manhattan Beach, Calif.-based value-based care providers centered around nurse practitioner, raised $10m in Series A funding. LRVHealth led, and was joined by Martin Ventures and Health Velocity Capital. www.greatergoodhealth.com

• Mylerz, an Egyptian e-commerce fulfillment startup, raised $9.6m led by Lorax Capital Partners. http://axios.link/s3VL

• Faye, an Israeli travel insurance startup, raised $8m in seed funding. Viola Ventures and F2 VC co-led, and were joined by Portage Ventures, GFC and ex-NBA player Omri Casspi. http://axios.link/I4y2

Meld, a fintech dev-ops startup, raised an $8m in seed funding led by Coatue. http://axios.link/3DVG

Paper, a crypto-focused payments processor, raised $7.3m in seed funding. Electric Capital and Initialized Capital co-led, and were joined by Polygon, FalconX, Long Journey Ventures, ThirdWeb and Night Capital. http://axios.link/lSfe

Graft, an SF-based AI platform, raised $4.5m. GV led, and was joined by NEA, Essence VC, Formulate Ventures and SV Angel. www.graft.com

Boomerang, a Miami-based lost and found tech platform, raised $2.8m in seed funding from GGV Capital, Relay Ventures, Animal Capital, Unanimous Capital, MVC, BevPac, 305 Ventures, Kalyon Ventures, Gaingels and Flamingo Capital. www.thanksboomerang.com

• Identitypass, a Lagos-based identity verification API, raised $2.8m in seed funding from YC, Soma Capital, True Capital Fund and Sherwani Capital. http://axios.link/K5oJ

Dirt, an entertainment and culture newsletter, raised $1.2m in seed funding led by Collab+Currency, per Axios. http://axios.link/902Z

Private Equity Deals

• American Industrial Partners is considering a buyout offer for Ontex Group, a Brussels-listed maker of personal hygiene products that has a €513m market cap, per Bloomberg. http://axios.link/3loc

• Blackstone reportedly will invest $380m for a slight majority stake in Geosyntec Consultants, a Boca Raton, Fla.-based engineering and consulting firm focused on waterways, coastlines, dams and power grids. http://axios.link/em7K

🚑 Dr. Agarwal's Health Care, an eye care hospital network in India, raised around $136m from TPG Growth and Temasek. http://axios.link/Arfv

• F2i and DWS agreed to buy Althea, an Italian provider of tech management services to the European health care market, from Permira for more than €1b. http://axios.link/BibZ

🚑 HCAP Partners invested in FleetNurse, a San Diego-based nurse staffing technology company. www.fleetnurse.com

🚑 Kinderhook Industries partnered ex-NaviHealth executive Benson Sloan to launch a primary care platform focused on expanding access to care in rural markets. http://axios.link/2Ndf

• Nautic Partners recapitalized ITS, a Ft. Washington, Pa.-based managed IT services provider. www.itsolutions-inc.com

• Partners Group agreed to buy a portfolio of more than 2,000 U.S. rental homes from Fortress Investment Group, per Bloomberg. http://axios.link/AISI

Public Offerings

• CVC Capital Partners has delayed its IPO, which had been expected in the first half of 2022. The London-based buyout firm now plans to list in the fall or 2023. http://axios.link/Qtn7

• Hanover Bancorp, a community bank in New York and New Jersey, raised $27m in a downsized IPO. It will list on the Nasdaq (HNVR). http://axios.link/o55T

SPAC Stuff

🚑 ProSomnus, a Pleasanton, Calif.-based maker of medical devices for sleep apnea, agreed to go public at an implied $168m valuation via Lakeshore Acquisition I Corp. (Nasdaq: LAAA), a SPAC formed by former execs of Shanghai Renaissance Investment Management. www.prosomnus.com

Monterey Capital Acquisition, a clean energy transition SPAC, raised $80m in a downsized IPO. http://axios.link/DoCE

Liquidity Events

🚑 Questa Capital Management is seeking a buyer for Medrio, an SF-based provider of e-clinical software that could fetch more than $600m, per Axios Pro. http://axios.link/ZpV3

Schneider Electric (Paris: SU) agreed to buy Autogrid, a Redwood City, Calif.-based provider of software for managing distributed energy assets, per Axios Pro. Autogrid has raised over $160m from firms like SE, Microsoft, National Grid, Shell and TotalEnergies. http://axios.link/QlEG

• Soylent, the LA-based maker of plant-based protein drinks and other meal replacement products, is seeking a buyer, per Bloomberg. The company raised over $70m in VC funding, most recently at a $430m valuation in 2017, from firms like GV, Tao Capital Partners, Lerer Hippeau Ventures and Andreessen Horowitz. http://axios.link/xwfi

More M&A

AMC Entertainment (NYSE: AMC) said it plans acquire or invest in more companies that are outside of its core theater business. http://axios.link/fGpv

Duke Realty (NYSE: DRE) said its board doesn’t support a proposed $24b, all-stock takeover offer from Prologis (NYSE: PLD), but added that it’s open to continued conversations.

Kohl's (NYSE: KSS) shareholders voted to re-elect all 13 of the department store's nominees, beating out activist investor Macellum's slate. http://axios.link/pONP

Fremantle, the European production giant, acquired a majority stake in Element Pictures, the Irish production company behind “Normal People.” http://axios.link/7WG5

Fundraising

BlackRock secured more than $800m for a $1b-targeted fund that will invest in businesses owned, led by or serving people of color in the U.S. www.blackrock.com

Bull City Venture Partners of Durham, N.C., raised $53m for its fourth fund. www.bcvp.com

Educapital, a French edtech VC firm, secured €100m for a second fund that could raise a total of €150m. http://axios.link/pcJ1

Fasanara, a London-based asset management firm, launched a $350m web3 and fintech VC fund. www.fasanara.com

Monroe Capital raised $286m for an opportunistic private credit fund ($500m of investible capital, including targeted leverage). www.monroecap.com

NextGen Growth Partners of Chicago raised more than $100m for its second fund. www.nextgengp.com

Republic Capital, the venture capital arm of private investing platform Republic, is in talks to raise $700m for a pair of crypto-heavy funds, per Axios Pro. http://axios.link/f9I2

TotalEnergies is shuttering its climate-tech investment arm (TotalEnergies Ventures), and replacing it with an accelerator, per Axios Pro. http://axios.link/p8BI

It's Personnel

Madison Dearborn Partners promoted Tim Sullivan and Tom Souleles to co-presidents. www.mdcp.com

• Hadi Tabbaa joined B Capital as global head of IR. He previously was with Coatue. www.bcapgroup.com

YL Ventures promoted Sharon Seemann and Michael Cortez to partners. www.ylventures.com

Final Numbers

Data: Yahoo Finance; Chart: Axios Visuals

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