Mar 27, 2020

Axios Pro Rata

Situational awareness: There's growing private equity chatter that the "affiliation" rules discussed yesterday could be watered down via Treasury and SBA guidance, after the stimulus bill is passed by the House and signed by President Trump.

  • This would be welcome news to the scores of financial sponsor-backed companies with fewer than 500 employees that are prevented from accessing the bill's small business loans.
  • But, but, but... Remain skeptical. Industry lobbyists managed to strike a requirement for startup founders to personally guarantee their business' loans and get SBIC-backed ownership exempted. If the White House really wanted the affiliate rule weakened, it could have already fought for it.
Top of the Morning

Illustration: Sarah Grillo/Axios

Tomorrow morning we'll hold our next Peloton ride for Pro Rata readers, and it will be a fundraiser to benefit The Food Bank for New York City.

  • Why it matters: People are hungry and we can help. For every single person who rides, more than $50 will be donated.

How it works: For those with Peloton bikes, please clip in just before 11am ET / 8am PT tomorrow (Saturday) morning. Find the 45-minute pop ride led by Alex Toussant from February 12 (yes, the day the Dow had its highest-ever close).

How your ride turns into cash: Bullish's Mike Duda and I decided to do this yesterday, agreeing to donate $5 per rider. I then emailed a handful of venture capitalists, asking if they'd consider matching. We've got eight positive replies so far, which is an awesome multiplier effect (I'll list everyone on Monday).

  • PLUS: Chris and Crystal Sacca offered to match up to $50,000. And if we don't get anywhere close, they're going to donate $50,000 anyway! The only condition is that I embarrass myself by posting a post-ride photo of myself sweating and in bike shorts. Seems more than fair, so expect that amusement tomorrow on my Twitter.

I know most of you don't have these bikes, so advance apologies for being exclusionary. But lots of you do have them, and many people are struggling to feed themselves and their families as their jobs evaporate without warning, so please join us tomorrow morning as we socially distance together for a very good cause.

(Back to our regularly-scheduled Top of the Morning content on Monday)


Illustration: Aïda Amer/Axios

SutroVax, a Foster City, Calif.-based developer of a pneumonia vaccine, raised $110 million in Series D funding co-led by RA Capital Management and Janus Henderson Investors.

  • Why it's the BFD: Its lead candidate is a more-encompassing alternative to Pfizer's Prevnar 13, a $6 billion per-year vaccine that reportedly is seeing a prescription bump from those worried about the coronavirus. Prevnar won't prevent someone from being infected, but some believe that it could help ward off subsequent pneumonia.
  • Return backers include TPG Growth, Abingworth, Longitude Capital, Frazier Health Care Partners, Pivotal bioVenture Partners, Medixci, CTI Life Sciences, Roche Venture Fund, and Foresite Capital.
  • Bottom line: "Sutro had figured out a way to design and manufacture proteins without using living cells, as biologists have for decades. They used to build antibody-drug conjugates and recently brought multiple into the clinic. They realized, though, that it could also be important for building vaccines, a field whose potential had long been limited by how precisely you could design a protein." Jason Mast, Endpoints News
Pro Rata for Kids

Today's project: Ask your kids to make their school classroom. This could be out of blocks or Legos or paper or whatever. The walls, the tables, the kids, the teacher, the pet hamster (hey, who's feeding it?), etc.

  • Below are a few of my favorite submissions from yesterday, when I asked kids to draw what their parents do for work:
Venture Capital Deals

MiningLamp Technology, a Beijing-based big data analytics company known as “China’s Palantir,” raised $300 million co-led by Temasek and Tencent.

Pyramid Analytics, an enterprise business intelligence platform, raised $25 million in Series C funding. Jerusalem Venture Partners led, and was joined by return backers Sequoia Capital, Viola Growth, and Maor Investments.

DataGuard, a German provider of privacy and compliance software, raised $20 million from London-based One Peak.

🚑 Avail Medsystems, a Palo Alto-based startup that helps digitize a surgeon’s physical presence in the operating room, raised $25 million from Lux Capital, Coatue, Sonder Capital, Playground Global, Baidu Ventures, and Refactor Capital.

Yaguara, a Denver-based provider of e-commerce customer experience analytics, raised $7.2 million in seed funding. Foundation Capital led, and was joined by Gradient Ventures, Rainfall Ventures, and Zelkova.

🚑, a Portland, Ore.-based provider of telehealth automation solutions, raised $8 million in Series C funding co-led by B Capital Group and Seven Peaks Ventures.

Sepio Systems, a Rockville, Md.-based provider of rogue device mitigation solutions, raised $4 million co-led by Munich Re Ventures and Hanaco Ventures.

Kaizo, a Dutch provider of software for customer service support teams, raised $3 million in seed funding co-led by Gradient Ventures and Partech.

🚑 ShiraTronics, a Brooklyn Park, Minn.-based medical device startup focused on migraine headaches, raised $3 million in new Series A funding (round total $6m) from Breakout Ventures.

🚑 One Three Biotech, a New York-based drug discovery platform for rare diseases, raised $2.5 million in seed funding co-led by Primary Venture Partners and Meridian Street Capital.

Private Equity Deals

Cirque du Soleil, the Montreal-based circus company acquired by TPG in 2015, is considering a bankruptcy filing, per Reuters. It already has laid off most of its staff after coronavirus required it to cancel its shows.

Genstar Capital invested $100 million to form Obsidian Insurance Holdings, a new fronting insurance holding company.

Public Offerings

🚑 WeDoctor, a Chinese mobile medical scheduling and information company backed by Tenent, picked JPMorgan, Credit Suisse and CMB International to lead a Hong Kong IPO that could raise upwards of $1 billion, per Bloomberg.

Liquidity Events

Thomson Reuters (NYSE: TRI) bought Pondera Solutions, a Folsom, Calif.-based provider of software for detecting fraud, waste, and abuse in government programs, from Serent Capital.

More M&A

Advance Publications, the owner of Conde Nast, agreed to buy the Ironman triathlon business from China’s Wanda Sports for $730 million.

Air Liquide’s (Paris: AI) €1 billion auction for its Schülke unit, whose products include hand sanitizing liquids and hospital disinfectants, was slowed yesterday after JPMorgan reduced the amount of leverage available to bidders, per Bloomberg.

🚑 Pfizer (NYSE: PFE) is delaying the merger of its off-patent drugs unit with Mylan (Nasdaq: MYL) until the second half of 2020.


Tailwater Capital, a Dallas-based energy private equity firm, raised $1.1 billion for its fourth fund.

It's Personnel

Severin White joined Colony Capital (NYSE: CLNY) as managing director and head of public investor relations. He previously was with advisory firm Niagara Share LLC.

Final Numbers
Data: FDIC; Chart: Axios Visuals

Markets would have collapsed over the past couple of weeks if it weren't for the Fed's "whatever it takes" attitude, Axios' Felix Salmon writes.

  • The Fed's muscle memory from 2008-09 kicked in, and almost every financial crisis program was resuscitated. (Similarly, one big reason for the success of Hong Kong and Singapore in navigating this crisis is that their own memories of SARS and H1N1 kicked in very quickly.)
  • Banks didn't need to be rescued this time around because after the financial crisis they were forced to take on much more capital. America's banks now have more than $1.7 trillion of "tier 1" capital — basically the amount of losses that they can easily absorb without going insolvent.
  • The banks' strength has made them an important part of the government's rescue package. They are being asked to lend trillions of dollars of bailout money to small- and medium-size businesses across the country, with the loans guaranteed by the government.

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