Jul 20, 2018

Axios Pro Rata

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Top of the Morning

Source: Giphy

IWG, the London-listed owner of outsourced office company Regus, is said to be in the final stages of its sale process, with Starwood Capital Group and TDR Capital believed to be among the finalists.

  • But Axios hears from an industry source that rival WeWork is gearing up to "aggressively market" to Regus clients post-acquisition, which is something that it hasn't generally done to date. Particularly if the winner is Starwood, which has deep real estate sector experience.
  • IWG has a current enterprise value of nearly Β£3 billion, whereas WeWork was most recently valued at around $20 billion by private market investors like SoftBank.
  • Despite the valuation differential, Regus remains a thorn in WeWork's side. Particularly as the latter preps for an IPO, and Regus represents an alternative for public equities investors who believe WeWork is overpriced and over-leveraged.
  • Speaking of which, someone recently mentioned to me that WeWork expects to be both loved and hated, once it hits the public markets next year. More specifically, that it could become the second-most shorted stock, trailing only Tesla.

β€’ Trade wars: It's only getting more fraught, with President Trump today threatening to put tariffs on virtually all Chinese imports. He's also itching to expand the trade dispute into a currency dispute, tweeting this morning that both China and the EU are currency manipulators (note: they aren't, per Trump's own Treasury Dept). Oh, and he's also broken the decades-old practice of White Houses not criticizing U.S. Federal Reserve monetary policy.

  • Axios goes deeper on the trade war escalation, including an admission by Larry Kudlow that the U.S. and China haven't held any trade negotiations at all this month.
  • Thought bubble: Congressional Republicans remain largely silent on this breach of conservative orthodoxy, apparently because it hasn't yet had a tangible impact on most of their constituents. But this may be politically short-sighted. A lot of these tariffs are aimed at products within supply chains, which means that price increases take longer to hit consumers. If that occurs in, say, September or October, it may be too late for the GOP to reverse course before the midterms.

β€’ It gets stranger: Fuel cell company Bloom Energy executed a 2-for-3 reverse stock split after filing for its IPO, applying only to Class B shares, according to a footnote in a subsequent disclosure.

  • A spokeswoman declined comment. Also, Bloom still hasn't explained why it granted Class B shares to a pair of placement agents who defrauded some early Bloom investors. To be a fly on the road-show wall...

πŸš‘ Recommended reading: Safety concerns are rising over gene-editing tool CRISPR, Axios' Eileen O'Reilly reports.

  • Such worries are not, however, seeming to have an impact yet on funding prospects for CRISPR-based startups, based on conversations with life sciences VCs.

β€’ Quiz time: Lots of buzz at the Fortune Brainstorm Tech conference about who will buy the venerable financial mag from Meredith Corp., with most of it focused on a particular Silicon Valley mogul. Name that mogul!

β€’ Sequoia Capital's Alfred Lin yesterday said that his firm often seeks startups that solve for one of the 7 Deadly Sins, in the context of Sequoia's investment in meal delivery startup DoorDash (sloth and gluttony).

  • Lin later noted to me offstage that most social media companies solve for pride.
  • DoorDash, which earlier this year raised $535 million in a SoftBank-led round, yesterday named Uber finance chief Prabir Adarkar as its new CFO.

Source: Giphy

SenseTime, a Beijing-based developer of facial recognition technologies, is in talks to raise around $1 billion from SoftBank Vision Fund, per Bloomberg. It's already the world's most valuable AI startup, having raised money earlier this year at a $4.5 billion valuation.

  • Why it's the BFD: Because this money would help further shift the balance of power from privacy to security, with all of the trade-offs that entails.
  • Also: AnyVision, an Israeli developer of body and facial recognition technologies, just raised $28 million in Series A funding led by Bosch.
  • Bottom line: "[SenseTime] is developing a service code-named 'Viper' to parse data from thousands of live camera feeds -- a platform it expects will prove invaluable in mass surveillance." β€” Selina Wang & Lulu Yilun Chen, Bloomberg
Venture Capital Deals

β€’ Even.com, an Oakland-based mobile budgeting app, raised $40 million in Series B funding. Khosla Ventures led, and was joined by Valar Ventures, Allen & Co., Harrison Metal, SV Angel and SVB. http://axios.link/AZDh

β€’ Galvanize, a Denver-based coding bootcamp operator, raised $32 million in Series C funding. Catalyst Investors led, and was joined by New Markets Venture Partners and return backers ABS Capital Partners, University Ventures and the Colorado Impact Fund. Galvanize also acquired San Francisco-based Hack Reactor. http://axios.link/fK4C

πŸš‘ IFM Tre, an inflammation-focused subsidiary of Bristol-Myers Squibb-owned IFM Therapeutics, raised $31 million in Series A funding from Atlas Venture, Abingworth, Bristol-Myers and IFM management. http://axios.link/ORal

β€’ Orbex, a British developer of orbital micro-launch vehicles, raised Β£30 million from firms like Sunstone Technology Ventures and High-Tech Grunderfonds. http://axios.link/pK4n

β€’ Embark Trucks, a San Mateo, Calif.-based autonomous trucking startup, raised $30 million in Series B funding. Sequoia Capital led, and was joined by return backers Data Collective, YCombinator, SV Angel and AME Cloud. http://axios.link/eEjG

β€’ Reali, a San Carlos, Calif.-based β€œflat-fee” real estate transaction platform, raised $20 million in Series B funding. Zeev Ventures led, and was joined by Signia Venture Partners. http://axios.link/uqNl

β€’ Giant Oak, an Arlington, Va.-based provider of data analytics software, raised $10 million from Edison Partners. www.giantoak.com

β€’ Points, a Singapore-based blockchain data collaboration protocol for credit scoring, raised $8 million from DHVC, Cherubic Ventures, Ce Yuan, Ontology Foundation, Nest.Bio Ventures, and Zhong Cheng Xin Credit Technology. http://axios.link/tMHk

β€’ Ursa Space Systems, an Ithaca, N.Y.-based provider of geospatial intelligence solutions, raised $5.7 million. RRE Ventures led, and was joined by S&P Global and Paladin Capital Group. www.ursaspace.com

β€’ Swivel, an Austin, Texas-based platform for customized plug-and-play workspaces, raised $4.75 million in seed funding led by First Round Capital. http://axios.link/pNyE

πŸš‘ Lifebit, a London-based DNA analytics startup, raised Β£2.25 million in seed funding co-led by Pentech and Connect Ventures. http://axios.link/i5KF

πŸš‘ Kite Pharma, a subsidiary of Gilead Sciences (Nasdaq: GILD), has acquired an equity stake in gamma delta T-cell receptor startup Gadeta. Kite also gets an option to buy the Dutch startup, which previously raised €7 million from Baxalta Ventures and Medicxi Ventures http://axios.link/Pqpo

Private Equity Deals

β€’ Eckhart, Lansing, Mich.-based portfolio company of LFM Capital, has acquired Eagle Engineering, an Eldridge, Iowa -based tool manufacturer. www.eckhartusa.com

πŸš‘ Genstar Capital has acquired CRF Health, a Plymouth Meeting, Penn.-based provider of eCOA and eConsent solutions for the life sciences market, from Vitruvian Partners. CRF will be merged with existing Genstar portfolio company Bracket. http://axios.link/YKaA

β€’ Mayfair Equity Partners has acquired Pixmodo, a Los Angeles-based visual effects company used by such programs as HBO’s Game of Thrones, at a $65 million enterprise value. http://axios.link/pICP

β€’ Onex has agreed to buy KidsFoundation, a Dutch childcare center operator, from H.I.G. Capital.

β€’ Riskonnect, a Kennesaw, Ga.-based portfolio company of Thoma Bravo, has agreed to acquire Marsh ClearSight, a Chicago-based provider of risk, safety and claims software, from Marsh LLC. www.marshclearsight.com

πŸš‘ Smile Brands, an Irvine, Calif.-based dental support organization owned by Gryphon Investors, has acquired Las Vegas-based P3 Dental Group. www.smilebrands.com

β€’ Southfield Capital has acquired Match Marketing Group, an Ontario, Canada-based omnichannel marketing services firm, from Beringer Capital. http://axios.link/2qeQ

More M&A

β€’ Airbus (Paris: AIR) is again seeking to sell PFW Aerospace, a troubled German maker of precision tubes and components, per Reuters. http://axios.link/a6uj

β€’ Farfetch, a London-based e-commerce marketplace for independent boutiques, has agreed to buy CuriosityChina, a Chinese social marketing company for the retail sector. Farfetch has raised over $700 million in VC funding and reportedly has hired IPO bankers. http://axios.link/dYPB

🍩 Krispy Kreme has acquired a majority stake in late-night bakery chain Insomnia Cookies.

β€’ State Street (NYSE: STT) has agreed to buy investment management solutions company Charles River Development for $2.6 billion in cash. http://axios.link/vhoD

β€’ Telia (Stockholm: TELIA) has agreed to buy Swedish television company Bonnier Broadcasting for around $1 billion. http://axios.link/74lJ

πŸš‘ Vical (Nasdaq: VICL), a San Diego-based biotech whose market cap has shrunk to just $29 million, has hired MTS Health Partners to explore strategic options. http://axios.link/Ch9T


β€’ Aterian Investment Partners closed its third mid-market private equity fund with $350 million. www.aterianpartners.com

β€’ Sun Capital Partners is raising up to $2.2 billion for it seventh flagship buyout fund, per an SEC filing. www.suncappart.com

β€’ Valor Equity Partners of Chicago raised $1.05 billion for its fourth private equity fund. www.valorep.com

It's Personnel

πŸš‘ Darren Campili has joined Barclays as a vice chairman, focused on European healthcare investment banking. He previously was with Deutsche Bank. http://axios.link/R3qS

β€’ Brandon Deer has stepped down as a VP with OpenView Venture Partners, in order to join startup UiPath as senior directors of ops and strategy. www.uipath.com

πŸš‘ Barbara Wachsman has joined Frazier Healthcare Partners as a senior advisor. She previously was Walt Disney Co.’s director of strategy and engagement for enterprise benefits. www.frazierhealthcare.com

Final Numbers
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Data: Box Office Mojo; Chart: Andrew Witherspoon/Axios