April 04, 2017

Axios and NBC News tomorrow morning are co-hosting a live event in Washington, D.C. to discuss healthcare reform, moderated by Jim VandeHei and Chuck Todd. Our guests will be House Majority Leader Kevin McCarthy (R-CA), Cleveland Clinic CEO Toby Cosgrove and former HHS Secretary Kathleen Sebelius. Pro Rata readers can RSVP by going here.

Top of the Morning

Yesterday I spent some time with Marty Chavez, the Goldman Sachs vet/incoming CFO and serial tech entrepreneur, who was speaking at Harvard's JFK School of Government. A few takeaways:

  • Chavez is a technologist more than a financier, and acknowledges that many of the current job descriptions at Goldman Sachs won't exist in a decade from now. For example, he notes that the firm had around 600 equity exchange floor traders in 2000, and that the number is now down to 2 (or actually 1.5, as one of those folks also does something else). In short, that 1.5 is tasked with making sure the computers stay on or, if things go south in a hurry, turning them off.
  • Despite his belief in increased automation, Chavez isn't too concerned about future employment levels at Goldman, arguing that the firm has plenty of opportunity to expand into other business lines. The key for workers, which he says applies outside of Wall Street, is to not fight against automation for the explicit sake of "same job" protection, because clingy manual input will always lose in the end.
  • While in grad school at Stanford, Chavez shared an office with future Netflix co-founder and CEO Reed Hastings (they both received identical offer letters from Goldman, which came after a headhunter was asked to compile Stanford computer science PhD with entrepreneurial experience). While an undergrad at Harvard, his roommate one year was Conan O'Brien (who in 1982 and 1983 would watch Late Night w/ David Letterman, and announce to the room that someday he'd be behind that desk).
  • Lesson from mom: At 10 years-old, Chavez went to a private school in New Mexico where he was the only Hispanic kid. He complained to his mother, who told him unsympathetically: "You'll have to work twice as hard to get half as much. So get busy."

• Bake-off: Panera Bread (Nasdaq: PNRA) shares jumped yesterday on a Bloomberg report that the St. Louis-based fast-casual chain had received takeover interest, thus raising its market cap to nearly $6.5 billion and its enterprise value to around $6.8 billion. If it were to be purchased at around those prices, that would make it the largest U.S. restaurant acquisition in history, according to S&P Global Market Intelligence (and second-largest North American deal, behind Tim Horton's).

• Q1 Deal Data, from Thomson Reuters:

  • Global M&A hit $778 billion. That's up 12% over Q1 2016, but down 39% from Q4 2016. The number of deals Q1-Q1 fell by 9%.
  • U.S. M&A climbed 5.3% to $271.6 billion.
  • Global I-banking fees hit $24 billion, the strongest Q1 since 2007.
  • Global private equity volume was up Q1-Q1 17 by 64% to $127.6 billion, but that total is lower than the first quarters from both 2014 and 2015, and also below Q2-Q4 2016.

• Disclosures: The White House on Friday night (kinda sorta) released financial disclosures for many of its top staffers, including for chief economic advisor (and ex-Goldman prez) Gary Cohn. What's of mild interest in this one is that you can see the underlying fund assets in certain GS fund-of-funds, showing that Cohn holds indirect stakes in funds managed by such firms as Accel, Benchmark, Insight Venture Partners and SoftBank Capital. He also has exposure to an Andreessen Horowitz fund, and co-working "unicorn" WeWork.

• Women in VC: Some of you asked for the permalink to yesterday's item on the percentage of women decision-makers in venture capital. Here it is: http://bit.ly/2nYnjO0. Also, I'll have more discussion of the topic tomorrow, so keep those emails coming.

• Gametime: Mike Widmann, a principal with Silver Lake, bested more than 800 other Pro Rata readers to win our March Madness Extravaganza. Congrats to Mike, who will get to write part of an upcoming Pro Rata issue, plus receive some fashionable Axios swag. For the record, yours truly came in tied at #455.


Amino, a San Francisco-based provider of healthcare transparency solutions to employers, doctors and hospitals, has raised $25 million in Series C funding. Highland Capital Management led the round, and was joined by Accel, Aspect Ventures, CRV, Northwestern Mutual Future Ventures and Pilot Wall Group.

Why it's the BFD: Anything involving healthcare payments ― including healthcare pricing information ― is in serious flux right now, with Obamacare alive, then dead, then alive and now maybe dead again. The key here is that startups like Amino are hoping to be ACA-agnostic, thus following the once-followed VC mantra of not taking on regulatory risk.

Bottom line: "There's a clear appetite for price and network transparency in healthcare, especially as high deductibles aren't going away. But there's a limit to shopping in healthcare, as many studies have shown. If your appendix explodes or you have a heart attack, you won't have time to rush to a transparency website to find the best deal or the quality ratings of a surgeon. Other transparency companies, like Castlight Health, also have struggled to catch on." ― Bob Herman

Venture Capital Deals

• Qumulo, a Seattle-based provider of scale-out storage solutions, has raised $30 million in Series C funding. Northern Light Venture Capital led the round, and was joined by Kleiner Perkins, Top Tier Capital Partners and Tyche Partners. www.qumulo.com

• Bizzabo, an Israel and New York-based provider of event marketing solutions, has raised $6.5 million in Series A funding led by Zvi Limon (Magma Venture Capital). http://tcrn.ch/2o5tkIX

• LeafLink, a B2B cannabis e-commerce platform operating in Colorado and Washington, has raised $3 million in seed funding. Lerer Hippeau Ventures led the round, and was joined by backers like Casa Verde Capital, Phyto Partners and Wisdom VC. http://bit.ly/2o5bNAE

• Purely Elizabeth, a Boulder, Colo.-based maker of granola and other cereals, has raised $3 million in first-round funding from 301 Inc. (the VC unit of General Mills). http://strib.mn/2oxoapM

Private Equity Deals

• Accella Polyurethane Systems, a portfolio company of Arsenal Capital Partners, has completed its previously-announced purchase of certain spray polyurethane foam manufacturing assets (based in Spring, Texas) of Germany's Covestro LLC for an undisclosed amount. www.accellacorp.com

• Beringer Capital has acquired Blue Acorn, a Charleston, S.C.-based digital commerce agency, for an undisclosed amount. http://bit.ly/2o533dZ

• BlackRock, Elliott Management and Pimco are among a group of 14 asset managers that are seeking an injunction to stop Lone Star Funds from purchasing NovoBanco, the bailed-out "good bank" of collapsed Banco Espírito Santo, from the Portugal government. http://on.ft.com/2o52uAQ

• Caribbean Restaurant, the exclusive Burger King franchisee in Puerto Rico, has signed an agreement to become the "master franchisee" in Mexico of Firehouse Subs. No financial terms were disclosed. CRI is a portfolio company of Castle Harlan.

• CCMP Capital Advisors has agreed to acquire a control interest in Truck Hero, an Ann Arbor, Mich.-based provider of aftermarket accessories for pickup trucks and Jeeps. Current majority holder TA Associates will retain a minority stake. No financial terms were disclosed. http://bit.ly/2oUrWGh

• J.C. Flowers has agreed to acquire Island Finance, a consumer lender in Puerto Rico with around $400 million in assets, from Santander Financial Services. http://bit.ly/2nEMrGU

• I and love and you, a Boulder, Colo.-based maker of premium pet foods, has raised an undisclosed amount of growth equity funding from L Catterton. Existing company shareholders include Winona Capital Management. www.iandloveandyou.com

• L Catterton Asia has acquired MAAJI, a Colombian beachwear brand that will be merged with existing portfolio company Seafolly (Australia). http://bit.ly/2nSY3Hr

• Multiples, an Indian private equity firm, has acquired a control stake in PeopleStrong, an India-based provider of HR software. No financial terms were disclosed. Sellers include Lumis Partners and HDFC Holdings. http://bit.ly/2n6OA1Z

• One Equity Partners has acquired a 49% equity stake in USCO, an Italy-based provider of aftermarket and OEM parts to the global earthmoving machinery industry. No financial terms were disclosed. http://bit.ly/2nXnWrd

• TA Associates has acquired a minority equity stake in Babilou, a French network of corporate daycare centers. No financial terms were disclosed. www.ta.com

• TPG Capital has completed its previously-announced purchase of a 51% stake in the McAfee cybersecurity software business of Intel Corp. (Nasdaq: INTC) for $3.1 billion ($2 billion of which will be new debt). The deal values McAfee at around $4.2 billion, compared to the $7.7 billion Intel paid to acquire the business back in 2010. http://tcrn.ch/2nVA9fY

Public Offerings

Tocagen, a San Diego-based developer of cancer-selective gene therapy products, has set its IPO terms to 7.3 million shares being offered at between $10 and $12 per share. It would have a fully-diluted market value of $189 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol TOCA, with Leerink Partners listed as left lead underwriter. http://bit.ly/2o5fkPL

• Verona Pharma, a London-based developer of therapeutics for treating respiratory diseases, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol VRNA, with Jefferies and Stifel serving as lead underwriters. Shareholders in the pre-revenue company include Novo AS (15.5% pre-IPO stake), Vivo Capital (15.4%), OrbiMed (12.3%), NEA (11.7%), Abingworth (9.3%), Arix Bioscience (7.5%), Aviva PLC (6.4%), Biodiscovery (5.9%), Tekla Capital (5.9%) and Aisling Capital (4%). http://bit.ly/2nzJOWa

• Warrior Met Coal, a Brookwood, Ala.-based metallurgical coal producer and exporter, has set its IPO terms to 16.7 million shares being offered at between $17 and $19 per share. It would have an initial market cap of around $963 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol HCC,with Credit Suisse listed as left lead underwriter. It reports a $65 million net loss in 2016 on $369 million in revenue. Shareholders include funds managed by Apollo Global Management, GSO and KKR.

• Zymeworks Inc., a Vancouver-based developer of bi-specific antibodies and antibody drug conjugates for the treatment of cancer, autoimmune and inflammatory diseases, has filed for a $75 million IPO. It plans to trade on both the NYSE and TSX under ticker symbol ZYME, with Citigroup listed as left lead underwriter. Shareholders include Eli Lilly (17.5% pre-IPO stake), CTI Life Sciences (14.6%), Celgene (6.1%), BDC Capital, Lumira Capital, Perceptive Advisors, Teralys Capital, Northleaf Venture Catalyst Fund, Brace Pharma Capital, Merlin Nexus and the Fonds de solidarite FTQ. www.zymeworks.com

Liquidity Events

• Petco, the pet retailing giant owned by CVC Capital Partners, has acquired PetCoach, a Wayne, Penn.-based maker of a veterinary app. No financial terms were disclosed. PetCoach had raised seed funding from Comcast Ventures, Maveron and DreamIt Ventures. http://bit.ly/2o587is

More M&A

• ABB (Swiss: ABBN) has acquired Bernecker & Rainer, an Australian industrial automation company. No financial terms were disclosed, but Reuters reports that the deal was worth nearly $2 billion.. http://reut.rs/2o57ple

• Frutarom Industries, an Israeli flavoring and ingredients company, has acquired France's Rene Laurent for around $21 million. http://bit.ly/2nXvp9G

• Tiger Global Management has amassed a 12.5% stake in Apollo Global Management (NYSE: APO), per SEC filings.

• Toshiba Corp. (Tokyo: 6502) has agreed to acquire Engie SA's (Paris: ENGIE) 40% stake in British nuclear power JV NuGen for around $138.5 million. http://reut.rs/2nzyY2h

• WalkMe, a San Francisco-based guidance engagement platform for the enterprise market, has acquired visual analytics startup Jaco for an undisclosed amount. WalkMe has raised $92 million in VC funding from firms like Insight Venture Partners, Greenspring Associates, Scale Venture Partners, Giza Venture Capital and Gemini Israel Ventures. http://bit.ly/2nXokG0


• Bayou City, a Houston-based private equity firm focused on the E&P sector, has closed its second fund with $310 million in capital commitments. www.bayoucityenergy.co

• John Cumbers, founder of synthetic biology platform SynBioBeta, has partnered with Data Collective to oversee a new fund for pre-seed and seed-state biotech startups. http://tcrn.ch/2nyD4ro

• Edge Natural Resources, a Dallas-based private equity firm focused on upstream and oilfield service transactions, has closed its fund with $650 million in capital commitments. www.edgenr.com

• Golding Capital Partners of Germany has held a €331 million first close on its debut private debt fund, which is targeting a total of €600 million. www.goldingcapital.com

• Growth Catalyst Partners has launched as a new Chicago-based private equity firm focused on the marketing, media and business services sectors. It's led by Jim TenBroek (ex-Wind Point Partners) and Scott Peters (ex-JEGI). www.growthcatalystpartners.com

Shore Capital Partners, a Chicago-based private equity firm focused on the healthcare sector, has closed its second fund with $190 million in capital commitments. www.shorecp.com

It's Personnel

• Kevin Rose, the co-founder of Digg and a former general partner with GV, has joined True Ventures as a venture partner. He most recently had been serving as CEO of Hodinkee, a site for wristwatch enthusiasts. http://tcrn.ch/2n5aAdk

• Andrew Woolford has agreed to join Cerberus Business Finance, the direct lending affiliate of Cerberus Capital Management, as a New York-based managing director and head of capital markets, effective next month. He previously was with Jefferies as head of leveraged loan sales. www.cerberus.com

Final Numbers: One month of SNAP