Dec 13, 2018

Axios Pro Rata

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Top of the Morning

Illustration: Sarah Grillo/Axios

The FCC yesterday said it will consider reversing a longstanding ban on mergers between the "Big 4" broadcast television networks. It also plans to revisit rules that prevent the same company from owning two TV stations in the same market and ones that limit a company from owning too many local radio stations in the same market.

  • 2018 has been a banner year for media consolidation and, if the FCC gets its way, 2019 could follow suit.
  • It also would be the second round of media deregulation under Trump's FCC, the first of which was reinstatement of the "UHF discount" and the elimination of "cross-ownership" rules on newspaper, radio and TV assets in the same market.
  • Per Axios' Sara Fischer: "The reason they're doing this is the FCC and Trump administration thinks that deregulation is the best way to allow legacy media to better compete with tech giants, rather than adding regulations on tech."
  • The FCC also may soon have another interesting decision to make, as Fox Business reports that Sinclair Communications is "the leading bidder" for a group of 21 regional sports networks that 21st Century Fox is selling as part of its $71 billion takeover by Disney. You may recall that the FCC earlier this year blocked Sinclair's deal to buy 42 local TV stations from Tribune Media, after determining that Sinclair lied to regulators during the review process.

More DC: The U.S. Senate yesterday overwhelmingly approved an $867 billion farm bill that, among other things, legalizes the cultivation of industrial hemp.

  • This would let farmers insure hemp crops, as it would no longer be on a federal list of controlled substances.
  • Expect this to be just the latest booster on the cannabis industry rocket, as cannabidiol — which does not produce a high — is derived from hemp.

All hail breaks loose: Sidecar, a now-defunct ride-hail company, this week sued Uber for alleged anti-competitive practices that "stifled competition in the market for ride-hailing applications" and put the company out of business.

  • Sidecar shut down three years ago, so this lawsuit feels like it's timed to Uber's upcoming IPO — a moment when plaintiffs may have elevated leverage, given that any IPO issuer wants to clear the Risk Factors deck.
  • In other words, don't be surprised if more Uber-related, or even Lyft-related, litigation is filed in the coming months.
  • Plot twist: Sidecar co-founder Jahan Khanna now works at Uber as a head of product for "new modalities," per his LinkedIn profile.

Recommended reading: VC firms weren't the only ones who cleaned up when Moderna went public last week, in the largest development-stage biotech IPO of all-time. So did Timothy Springer, a Harvard professor whose stake surged to $400 million. Bloomberg's Rebecca Spalding has his story.

📣 The latest Pro Rata podcast discusses what it's like to transition from covering startups as a reporter, to leading one as a founder. My guest is Evelyn Rusli, the former TechCrunch/NYT/WSJ scribe who now helps lead VC-backed baby food upstart Yumi. Listen via Apple or via Axios.


Source: Giphy

Farfetch (NYSE: FTCH) acquired Stadium Goods, a New York-based sneaker marketplace, for $250 million in cash and stock.

  • Why it's the BFD: Because it's a reminder that venture capitalists can hit home runs without billion dollar exits. In this case, Stadium Goods raised just a $4.6 million Series A round in early 2017, at what we hear was a pre-money valuation in the $20 million to $30 million range. Backers included Forerunner Ventures, LVMH, Chernin Group and Mark Cuban.
  • Bottom line: “The lines are blurring: it's pretty clear that luxury customers are very very excited about streetwear and sneakers and streetwear guys are very excited about luxury.” — Stadium Goods co-founder Jed Stiller, via GQ
Venture Capital Deals

🚑 Zymergen, an Emeryville, Calif.-based molecular technology company, raised $400 million in Series C funding led by return backer SoftBank Vision Fund. New investors included Goldman Sachs and Hanwha Asset Management.

Minted, a San Francisco-based online platform for independent artists and designers, raised $208 million in Series E funding. Permira led, and was joined by T. Rowe Price.

Grab, the Singapore-based ride-hail and financial services company, raised $150 million in new Series H funding from Yamaha Motors.

🚑 Akero Therapeutics, a Cambridge, Mass.-based developer of a drug to treat non-alcoholic steatohepatitis, raised $70 million in Series B funding led by Janus Henderson Investors.

FinalCAD, a French mobile platform for construction management, raised $40 million in Series C funding. Draper Esprit led, and was joined by Cathay Innovation, Salesforce Ventures, Serena, Aster and CapHorn Invest., a San Francisco-based conversation intelligence platform for sales, raised $33 million in Series B funding. Georgian Partners led, and was joined by Redpoint Ventures and Emergence Capital.

Tigera, a San Francisco-based provider of security and compliance software for Kubernetes platforms, raised $30 million in Series B funding. Insight Venture Partners led, and was joined by Madrona, NEA and Wing VC.

Guru, a Philadelphia-based knowledge management platform, raised $25 million in Series B funding. Thrive Capital led, and was joined by Emergence Capital, FirstMark Capital, Slack Fund and MSD Capital.

Juniper Square, a San Francisco real estate investment management platform, raised $25 million in Series B funding. Ribbit Capital led, and was joined by Felicis Ventures.

🚑 SeLux Diagnostics, a Watertown, Mass.-based phenotyping platform, raised $25 million in Series B funding, per PE Hub. Sands Capital Ventures led, and was joined by RA Capital, Schooner Capital and Northpond Ventures.

Celect, a Boston-based provider of predictive analytics and inventory optimization for retailers, raised $15 million in Series C funding co-led by NGP Capital and return backer Fung Capital. Other insiders included Activant Capital and August Capital.

🚑 Hi Fidelity Genetics, a Durham, N.C.-based computational crop breeding startup, raised $8.5 million in Series A funding co-led by Fall Line Capital and Finistere Ventures.

YayPay, a New York-based provider of automation software for back-office finance operations, raised $8.4 million. Information Venture Partners led, and was joined by Birchmere Ventures, QED, Fifth Third Capital, Gaingels, 500 Fintech Fund and Runway Venture Partners.

🚑 EDGe Surgical, a Chicago-based provider of precision measurement solutions for orthopedic surgery, raised $4 million in Series A funding from undisclosed investors.

Pimcore, an Austrian open-source platform for data and customer experience management, raised $3.5 million in Series A funding led by German Auctus Capital.

Glose, a French collaborative reading app, raised €3 million from OneRagTime, Expon Capital, Kima Ventures and Bpifrance.

NiuID, a San Francisco-based blockchain security and digital identity startup, raised $2.5 million in seed funding at a $20 million pre-money valuation from Jemison Investment Co, 8VC and individual angels.

Private Equity Deals

Cerberus Capital Management agreed to buy Sparton (NYSE: SPA), a Schaumburg, Ill.-based maker of electromechanical devices, for $181 million, or $18.50 per share (41% premium to Tuesday’s closing price).

EMR Capital’s $320 million purchase of the Cerro Colorado copper mine in Chile from BHP Billiton (LSE: BLT) was called off over financing difficulties.

Janus International, a Temple, Ga.-based portfolio company of Clearlake Capital, acquired Nokē, a South Jordan, Utah-based maker of smart lock solutions. Sellers include The Hardware Club.

PAI Partners and Greybull Capital are in talks to buy British outsourcer Amey from Spain’s Ferrovial, per the FT.

🐶 Sentinel Capital Partners bought Pet Supplies Plus, a Livonia, Mich.-based pet supplies retailer with 448 locations, from Irving Place Capital.

ShootProof, an Atlanta-based provider of online gallery software, raised growth equity funding from Providence Strategic Growth.

Silver Lake agreed to buy a majority stake in ServiceMax, a Pleasanton, Calif.-based provider of productivity software for field service technicians, from GE Digital for an undisclosed amount. GE paid $920 million for the business in late 2016.

More M&A

Axel Springer is considering a restructuring that would split off the German publisher’s digital classified business from its content business.

Ball Corp. (NYSE: BLL) agreed to sell its beverage packaging facilities in China to ORG Technology (SZ: 002701) for $225 million.

Elliott Management has amassed €1 billion stake in French drinks group Pernod Ricard (Paris: RI).

Japan Post (Tokyo: 6178) is acquiring between a 7-8% stake in U.S. insurer Aflac (NYSE: AFL) for around $2.6 billion, per the Nikkei daily.

🧀 Mondelez International (Nasdaq: MDLZ) agreed to sell its Kraft-branded, Middle East cheese business to Denmark’s Arla Foods.

Total (Paris: TOTF) agreed to sell a 4% stake in an Australian liquified natural gas project (Ichthys) to Japan’s Inpex (Tokyo: 1605) for $1.6 billion.


Advent International is targeting between $15 billion and $17.5 billion for its ninth flagship fund, with plans to hold a first and final close in Q2 2019, per PE International.

Golding Capital Partners of Germany held a €215 million first close on its third infrastructure fund.

Morgan Stanley raised $1.4 billion for its North Haven Tactical Value Fund, which invests between $50 million and $200 million into private equity or debt deals sourced by its own bankers and wealth managers.

Trepp Smith, a co-founder of Blackstone’s GSO Capital, is planning to launch a firm that would invest in U.S. and European credit, per Bloomberg.

It's Personnel

DCM promoted Kyle Lui (Silicon Valley) and Ray Zhao (Beijing) from principals to partners. The VC firm also is reportedly raising $750 million for its next fund.

🚑 Frank Gentile was named COO for Casma Therapeutics, an autophagy startup formed by Third Rock Ventures earlier this year. Gentile had been a venture partner with Third Rock.

Stephen Gilmore agreed to join the US$27 billion New Zealand Superannuation Fund as chief investment officer. He is former chief investment strategist for Australia’s Future Fund.

Tim Healy joined Twin Brook Capital Partners, the mid-market direct lending unit of Angelo Gordon, as a managing director. He previously was a partner with Linsalata Capital Partners.

🚑 Third Rock Ventures promoted Christoph Lengauer and Jeffrey Tong from venture partners to partners.

Final Numbers: Private market return expectations fall
Source: PitchBook survey of institutional investors, as of December 2018.