Axios Pro Rata

We're less than one week away from the election, and hopefully less than one month away from knowing who won the election. In the interim, private equity investors are beginning to contemplate life under a President Biden.

The big picture: Biden would be worse for private equity than President Trump, at least from a structural tax perspective.

• Biden has pledged to raise taxes on successful private equity investors, primarily by eliminating the beneficial tax treatment of capital gains for those making over $1 million per year. Moreover, the top ordinary income tax rate would rise from 37% to 39.6%, which is a far climb from the current capital gains mark of 20% for high earners.
• Biden also has pledged to increase corporate taxes, including a new minimum tax on book income. Not only would this impact portfolio companies, but also those listed buyout firms that recently converted from partnerships to C-corps.
• In short, the rich would pay more. And private equity investors are rich.

What Biden hasn't discussed, though, is touching the deductibility of interest on corporate debt. This is the real meat of the private equity business model, whereas carried interest taxation is the dessert.

• President Obama proposed to reduce this deductibility in an ill-fated 2012 corporate tax reform plan, which also would have cut the then-corporate tax rate from 35% to 28% (Biden now proposes raising it from 21% to 28%).
• But interest deductibility isn't in Biden's plans. At least not yet.
• Former Obama administration economist Jason Furman recently wrote in the WSJ: "A President Biden would likely refine his proposals in office. I would like to see him do more to encourage investment by expanding and extending business expensing and further limiting the deductibility of interest."

The private equity argument for Biden is twofold:

1. He'd do a significantly better job on COVID-19, creating a rising tide that lifts all boats.
2. He'd have a more orderly trade strategy. Even if many of his policies align with Trump, particularly on China, his tactics would be different and (theoretically) more productive.

Money game: Private equity investors have made more direct contributions to Democratic candidates and causes in 2020 than to Republican candidates and causes, by a 59%–41% margin, although more of their soft money donations have gone to GOP-supportive PACs.

• Don't read too much into individual contributions when it comes to business priorities, particularly since most PE pros live in "blue" geographies and have a demonstrated ability to separate their personal and professional politics.

The bottom line: Private equity usually manages to overcome the politics of the moment, but a second Trump term is its easiest path to future success.

Honor, a San Francisco-based provider of tech-enabled senior care services, raised $140 million in Series D funding co-led by Baillie Gifford and T. Rowe Price.

• Why it's the BFD: The pandemic has heightened the importance of home care for seniors, as many have sought to avoid nursing homes or other forms on inpatient services.

• Other investors included Rock Springs, and return backers Andreessen Horowitz, Prosus Ventures, 8VC, and Thrive Capital.
• Backstory: Honor got a term sheet last November from SoftBank, which offered to lead a $140 million investment. But SoftBank bailed one month later, which forced Honor to scramble. It raised a few million dollars from existing equity backers, plus an undisclosed amount of debt.
• The bottom line: This is the second company in two days to tell me that it expects its pandemic-related spend to pay dividends long after there's a COVID-19 vaccine. CEO Seth Sternberg says that many of the pandemic-related products that Honor spun up, such as caregiver health screening tech, have helped increase 2020 margins and are expected to be used indefinitely, since no early vaccine is expected to be 100% effective.

• Scopely, a Los Angeles-based mobile games company, raised $340 million in Series E funding from Wellington Management, NewView Capital, TSG Consumer Partners, CPP Investments, BlackRock, D1, Battery Ventures, Eldridge, Declaration Partners, and Moore Strategic Ventures. Additional investors include Greycroft, Baillie Gifford, Sands Capital, Revolution Growth, and Highland Capital Partners. http://axios.link/IsxY

• Applied Intuition, a Sunnyvale, Calif.-based simulation platform for autonomous systems development, raised $125 million in Series C funding from Lux Capital, Andreessen Horowitz, and General Catalyst. http://axios.link/bJVD

• Ordermark, a Los Angeles-based cloud kitchen company, raised $120 million from SoftBank. http://axios.link/q4iN

• Outrider, a Golden, Colo.-based developer of warehouse yard robots, raised $65 million in Series B funding. Koch Disruptive Technologies led, and was joined by Evolv Ventures, Henry Crown & Co. and return backers NEA, 8VC, and Prologis Ventures. http://axios.link/uWyx

• Streetbees, a London-based provider of consumer-generated info for brands, raised £30 million in Series B funding. Lakestar led, and was joined by Latitude, Atomico, GMG Ventures and Octopus Ventures. http://axios.link/zsNP

• Bluefin, an Atlanta-based provider of payment and data security services, raised $25 million. Macquarie led, and was joined by Napier Park Global and Camden Partners. www.bluefin.com

• Odaseva, a San Francisco-based enterprise cloud trust platform, raised $25 million in Series B funding. Eight Roads Ventures led, and was joined by F-Prime Capital and return backers Partech, Salesforce Ventures, and Serena. www.odaseva.com

• Kandji, a San Diego-based Apple enterprise management solution, raised $21 million in Series A funding. Greycroft led, and was joined by Okta Ventures, B Capital Group, and First Round Capital. http://axios.link/Nl1j

• Lunchbox, a platform that lets restaurants build ordering experiences, raised $20 million in Series A funding at a $100 million valuation. Coatue led, and was joined by 645 Ventures and Primary Ventures. http://axios.link/GAhd

🚑 Sidekick Health, a Swedish digital therapeutics company focused on chronic and lifestyle disease management, raised $20 million in Series A funding. Wellington Partners led, and was joined by Asabys Partners, Novator, and Frumtak Ventures. http://axios.link/XENv

• Forethought, a San Francisco-based AI and machine learning platform for customer support teams, raised $17 million in Series B funding from NEA, Sound Ventures, Neo, Geodesic Capital, Operator Collective, and K9 Ventures. http://axios.link/0B6N

• StrongDM, a Burlingame, Calif.-based database access control platform, raised $17 million in Series A funding led by Sequoia Capital. http://axios.link/ggmS

• The Wanderlust Group, a Newport, R.I.-based dock and mooring reservation platform, raised $14.2 million in Series B funding from Avenir Growth, Allen & Co., and Grassy Creek. www.dockwa.com

• Skan, a San Jose, Calif.-based business process automation startup, raised $14 million in Series A funding. Cathay Innovation led, and was joined by Citi Ventures, and return backers Zetta Ventures, Bloomberg Beta, Plug and Play Ventures, and Firebolt Ventures. http://axios.link/kir3

• Panoply, a San Francisco and Israel-based cloud data platform, raised $10 million from Ibex Investors and C5 Capital. www.panoply.io

• Boom, a Milan-based commercial photography booking and management platform, raised $7 million in Series A funding led by United Ventures. http://axios.link/d3cG

• Canvass Analytics, a Toronto-based provider of industrial AI solutions, raised US$6.5 million in Series A funding. Yamaha Motor Ventures led, and was joined by Real Ventures, BDC, EDC, and Viaduct Ventures. www.canvass.io

🚑 Nice Healthcare, a Minneapolis-based provider of in-home and virtual primary care services, raised $5 million in seed funding. Indie.vc led, and was joined by Conductive Ventures and Waterline Ventures. http://axios.link/kARa

• Stairwell, a San Francisco-based cybersecurity startup led by ex-Googler Mike Wiacek, raised $4.5 million in seed funding. Accel led, and was joined by Sequoia Capital, Gradient Ventures, and Allen & Co. www.stairwell.com

• Lightyear, a New York-based network infrastructure procurement digitization startup, raised $3.7 million in seed funding. Amplo led, and was joined by Susa Ventures, Ludlow Ventures, Mark Cuban, David Adelman, and Operator Partners. http://axios.link/KRxM

• Obsess, a New York-based developer of virtual stores and showrooms for brands, raised $3.4 million in seed funding from Venture Reality Fund, WXR Fund, and Jump Capital. http://axios.link/mkus

• Moxie, a streaming fitness marketplace led by Jason Goldberg (founder of both Fab and Jobster), raised $2.1 million in seed funding from individuals like Howard Morgan, Geoff Prentice, and Allen Morgan. http://axios.link/Ctsg

• Edlyft, a San Francisco-based engineering ed-tech platform, raised $1.4 million in seed funding from backers like YC, Kleiner Perkins, Village Global, Kapor Capital, Backstage Capital, and January Ventures. www.edlyft.com

• Advent International is in talks to buy Nielsen’s (NYSE: NLSN) Global Connect Unit, which tracks consumer goods sales, for $2.9 billion, per the FT. http://axios.link/QXqy

• The Carlyle Group agreed to buy a majority stake in London-based funds network Calastone. Existing backers, including Accel and Octopus Ventures, will retain a minority stakes. http://axios.link/yUNc

• DoubleVerify, a a New York-based digital media engagement analytics company controlled by Providence Equity Partners, raised $350 million in minority equity funding. Tiger Global led, and was joined by Fidelity, BlackRock and Neuberger Berman. http://axios.link/XSDt

• GreyLion Capital and Stone Point Capital invested in Hyphen Solutions, an Addison, Texas-based provider of residential construction management software.
www.hyphensolutions.com

• GTCR agreed to buy a majority stake in Consumer Cellular, a Portland, Ore.-based wireless company focused on older users, at a reported valuation of around $2 billion. http://axios.link/7NOQ

• Lexitas, a Houston-based portfolio company of Apax Partners, agreed to buy RASi, an Austin, Texas-based provider of outsourced registered agent and other corporate compliance services. www.lexitaslegal.com

• Providence Strategic Growth acquired a majority stake in Signaturit, a Barcelona-based provider of electronic signature and document management software. www.signaturit.com/en

🥩 Quirch Foods, a Coral Gables, Fla.-based portfolio company of Palladium Equity Partners, acquired Colorado Boxed Beef from Altamont Capital Partners. www.coloradoboxedbeef.com

• Rock Mountain Capital acquired a minority equity stake in GeoLinks, a Camarillo, Calif.-based CLEC. www.geolinks.com

• Airbnb said it plans to list its shares on the Nasdaq, but didn't provide additional information on its upcoming IPO. Expectations are that this could be the largest Nasdaq float since Facebook. http://axios.link/UeiV

• Root, a Columbus, Ohio-based auto insurer, raised $724 million in its IPO. The company priced 24.2 million shares at $27 (above range), for an initial market cap of $6.7 billion. Dragoneer and Silver Lake each also agreed to buy $250 million worth of shares in concurrent placements. It had raised around $520 million in VC funding from firms like Drive Capital (26.6% pre-IPO stake), Ribbit Capital (16.5%), Tiger Global (10.3%), SVB (7.9%), and Redpoint Ventures (7.4%). http://axios.link/AcNJ

• Meat-Tech 3D, an Israel-listed developer of 3D-printed meat, said it filed confidential U.S. IPO documents. http://axios.link/6FDN

• MediaAlpha, a Los Angeles-based provider of customer acquisition services for insurers, raised $176 million in its IPO. It priced at $17 per share (midpoint of range), for a fully diluted market value of $1.1 billion. Backers include White Mountains Insurance Group and Insignia Capital Group. http://axios.link/UspU

• NeoGames, a Luxembourg-based lottery services provider backed by William Hill, filed for a $90 million IPO. It plans to list on the Nasdaq (NGMS) with Stifel as lead underwriter, and reports $4 million of net income on $35 million in revenue for the first nine months of 2020. http://axios.link/AqiO

• Ajax 1, a SPAC formed by hedge fund managers Dan Och and Glenn Fuhrman, raised $750 million in its IPO. http://axios.link/f3bC

• Atlas Crest Investment, a SPAC formed by Moelis & Co., raised $500 million in its IPO. http://axios.link/br7i

• Mallard Acquisition, an industrials-focused SPAC formed by Mallard Capital, raised $110 million in its IPO. http://axios.link/SXzt

• Omnichannel Acquisition, a retail-focused SPAC led by RSE Ventures CEO Matt Higgins, filed for a $350 million IPO. http://axios.link/vMK7

• Bonus: I asked Honor's CEO if his company had been approached by any SPACs. He laughed, before saying Honor had spoken with one and been approached by at least two others, but that it isn't yet ready to go public.

• Callaway Golf (NYSE: ELY) acquired the 86% stake it didn’t already own in Topgolf International, a Dallas-based operator of driving range centers, at around a $2 billion valuation. Topgolf reportedly had been in talks to go public via a Michael Klein-led SPAC, and had received funding from Callaway, Providence Equity Partners, Dundon Capital, WestRiver Group, and Fidelity. http://axios.link/31So

• Asean Industrial Growth Fund is seeking a buyer for Jaya Grocer, a Malaysian high-end grocer that could fetch more than $200 million, per Bloomberg. http://axios.link/wd70

• Visa (NYSE: V) is facing a U.S. antitrust investigation into its $5.3 billion all-cash deal for Plaid, a San Francisco-based fintech that had raised over $300 million in VC funding. http://axios.link/EG0m

• Donerail Group, an activist investment firm, amassed just under a 5% stake in Mastercraft Boat Holdings (Nasdaq: MCFT) and is pushing it to explore a sale, per Reuters. http://axios.link/VZVY

🚑 Exact Sciences (Nasdaq: EXAS) agreed to buy Cambridge, Mass.-based cancer-screening company Thrive Earlier Detection in upwards of $2.15 billion in cash and stock ($1.7b upfront). Thrive raised over $360 million in VC funding from firms like Third Rock Ventures, Section 32, and Casdin Capital. http://axios.link/PHfI

• Builders VC of San Francisco is raising $250 million for its second fund, per an SEC filing. www.builders.vc

• Camber Creek, a Washington, D.C.-based VC firm focused on real estate tech, raised $155 million for its third fund. www.cambercreek.com

• Ryder System (NYSE: R) launched a $50 million corporate VC fund focused on the logistics and transportation markets. www.ryder.com/ryderventures

🚑 TVM Capital Life Science, a Montreal and Munich-based VC firm, raised US$478 million for second fund. www.tvm-lifescience.com

• The Blackstone Group this morning topped quarterly earnings estimates, driven by its tech private equity investments. Ares Management this morning also beat expectations.
• Coming attractions: Apollo reports earnings tomorrow morning, and it's expected that CEO Leon Black will in some way address his Epstein situation.
• Carlyle also reports tomorrow, while KKR reports on Friday.