Sep 10, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

🎧 Pro Rata Podcast digs into the MIT Media Lab scandal, including the involvement of Bill Gates and Leon Black. Listen here.

Top of the Morning

Illustration: Sarah Grillo / Axios

Conventional wisdom is that companies should try to avoid going public into a presidential election, but those rules may not apply in 2020.

  • President Trump has introduced the markets to an era of perpetual uncertainty, through impromptu tweets and seesaw policy statements.

"Uncertainty" has always been a corporate buzzword for risk aversion, since nothing is every really certain. However, companies generally know what policies a White House plans to pursue, and the proposed path from A to Z. That's not true of Trump.

  • Stock markets haven't been particularly volatile under Trump, at least judging by the historical VIX.
  • His tweets can nonetheless churn markets, as Uber learned when it priced its IPO into an unexpected trade war escalation.
  • J.P. Morgan recently introduced a "Volfefe Index" that shows how Trump's tweets have a statistically significant impact on bond yields.

Lots of big-name startups plan to go public before year-end, including CloudFlare, DataDog, Peloton, SmileDirectCub, and WeWork (yes, still). But that still leaves more than 150 privately-held "unicorns" that could brave 2020, including Airbnb, Didi Chuxing, Grab, and Stripe.

The bottom line in that bankers are still urging IPO candidates to price this year, as we can see by the upcoming glut of expected offerings. But it's not the same imperative as in election cycles past, which means that the 2019 parade should extend well into 2020.

The BFD
Source: Giphy

Shopify (NYSE: SHOP) agreed to buy 6 River Systems, a Waltham, Mass.-based provider of warehouse fulfillment robotics, for $450 million in cash and stock (60/40 split).

  • Why it's the BFD: Because Shopify not only gets robots, but also roboticists who helped develop the Kiva robots used in Amazon warehouses.
  • ROI: 6 River Systems had raised $47 million in VC funding, most recently at a $150 million valuation, from Norwest Venture Partners, Eclipse Ventures, Menlo Ventures, and iRobot Ventures.
  • Bottom line: "The core product from 6 River Systems is its collaborative mobile robot called Chuck, which speeds up warehouse operations by helping on-site workers pick, sort, pack and replenish inventory. The system is operating in more than 20 warehouse facilities in the U.S., Canada and Europe, for customers including Lockheed Martin, CSAT Solutions, ACT Fulfillment, DHL, XPO Logistics, and Office Depot." — Natalie Gagliordi, ZDNet
Venture Capital Deals

Root Insurance, a Columbus, Ohio-based auto insurance startup, announced that it has raised $350 million at a $3.5 billion pre-money valuation co-led by Coatue Management and DST. We previously reported on the round in August.

QuintoAndar, a Brazilian rental property marketplace, raised $250 million in Series D funding led by SoftBank. http://axios.link/TxMp

Snyk, a London-based provider of cybersecurity analysis tools, raised $70 million. Accel led, and was joined by return backers GV and Boldstart Ventures. http://axios.link/J9a9

IceKredit, a credit risk and credit management platform with offices in China and Los Angeles, raised $47 million in new funding co-led by Guohe Capital and Yunqi Partners. http://axios.link/m3MT

Nextdoor, a San Francisco-based social network for neighborhoods, raised $47 million in new funding from Bond. www.nextdoor.com

Glance, an InMobi subsidiary that shows media content on smartphone lock screens, raised $45 million from Mithril Capital. http://axios.link/7bk9

ProGlove, an industrial wearables startup with offices in Germany and Chicago, raised $40 million from Summit Partners. http://axios.link/qwNc

🚑 SGI-DNA, a San Diego-based synthetic genomics and DNA storage startup, raised $25 million in Series A funding. Northpond Ventures led, and was joined by Oxford Finance and BroadOak Capital Partners. http://axios.link/BuOw

🚑 Keranova, a French developer of surgical ophthalmology tools, raised €24 million from Financière Arbevel, Tourrette Investissement and return backers Mérieux Equity Partners and Supernova Invest. http://axios.link/QUwp

Syte, an Israeli visual search engine for e-commerce, raised $21.5 million in Series B funding. Viola Ventures led, and was joined by Storm Ventures, Commerce Ventures and Axess Ventures. http://axios.link/HSJU

Yasa, a UK-based maker of electric motors and controllers, raised £18 million from Oxford Science Innovations, Inovia Capital and return backers Parkwalk Advisors and Universal Partners. http://axios.link/QJ2T

Q-CTRL, an Australian quantum computing control startup, raised A$15 million. Square Peg Capital led, and was joined by Sierra Ventures and return backers Sequoia Capital, Main Sequence Ventures, and Horizons Ventures. http://axios.link/aSeN

Drivetime, a San Francisco-based developer of interactive voice games for drivers, raised $11 million in Series A funding led by Makers Fund. http://axios.link/Lo0k

PrimaryBid, a UK-based new share platform for investors, raised £7 million co-led by Pentech and Outward VC. http://axios.link/AfLb

🚑 Brave Care, an operator of pediatric urgent care clinics, raised $5.2 million in seed funding from Sesame Street, Greycroft, Refactor, Fifty Years, Indicator Ventures, and Founder’s Co-op. http://axios.link/YYMe

Adarga, a UK-based AI services startup, raised £5 million in Series A funding led by Allectus Capital. http://axios.link/fMPN

Kovrr, an Israel-based predictive cyber-risk modeling startup, raised $5.5 million co-led by StageOne Ventures and Mundi Ventures. www.kovrr.com

Zestful, a Denver-based provider of employee perk programs, raised $5 million in seed funding. Thrive Capital led, and was joined by Box Group, YC, Matchstick Ventures, Third Kind Capital, and Shrug Capital. www.zestful.com

🚑 Fitplan, a Los Angeles-based personal training app, raised $4.5 million from Corazon Capital, Alex Rodriguez, and Mark Mastrov. http://axios.link/mBer

ClearAccessIP, a Palo Alto-based IP management startup, raised $3.7 million in seed equity and debt funding from backers like Alpana Ventures, Plug & Play Ventures, Founder’s X, and Bill Tai. www.clearaccessip.com

Pento, a Danish payroll SaaS startup, raised $2.8 million in seed funding co-led by Point Nine Capital and Seedcamp. http://axios.link/C0z5

Private Equity Deals

Advent International agreed to acquire a majority stake in DFM Foods, a listed Indian maker of packaged snacks, for around $119 million. http://axios.link/wTjV

Atlantic Street Capital acquired a majority stake in All Star Auto Lights, an Orlando, Fla.-based distributor of alternative automotive lighting parts. www.allstarautolights.com

Cerberus Capital Management agreed to acquire Axsesstoday (ASX: AXL), a provider of equipment finance solutions to Australian SMEs.

Huron Capital acquired Prime Woodcraft, a Schaumburg, Ill.-based maker of wooden pallets, and merged it with existing portfolio company Northwest Pallet Holdings. www.primewoodcraft.com

L Square Capital Partners invested $60 million to form Raptor Scientific, an acquisition platform for the aerospace/defense-focused testing and measurement marker. www.raptor-scientific.com

Mill Point Capital acquired the services unit of Canadian remote database company The Pythian Group. www.pythian.com

Opus Agency, a Beaverton, Ore.-based portfolio company of Growth Catalyst Partners, acquired Tencue Productions, a Berkeley, Calif.-based creative and communications agency. www.opusagency.com

Providence Strategic Growth invested in MAPAL Software, a Spanish provider of management and business analytics software for the restaurant and retail sectors. www.mapalsoftware.com

Turning Rock Partners invested $40 million in 365 Data Centers, a Norwalk, Conn.-based provider of hybrid data center services. www.365datacenters.com

Public Offerings

🚑 10x Genomics, a Pleasanton, Calif.-based genomics company, increased its IPO price range from $31-$35 to $36-$38. It still plans to offer 9 million shares, but its market cap now would be $3.4 billion were it to price in the middle. Shareholders include Foresite Capital (18.1% pre-IPO stake), Venrock (16.3%), Paladin Capital (11.5%), Fidelity (11.3%), Meritech Capital Partners, and SoftBank. http://axios.link/XE6t

🚑 BioNTech, a German immunotherapies company that raised around $700 million in VC funding, filed for a $100 million IPO. It plans to trade on the Nasdaq (BNTX) with J.P. Morgan as lead underwriter, and reports a €91 million net loss on €52 million in revenue for the first half of 2019. Backers include Fidelity, Redmile Group, Sanofi, Pfizer, Janus Henderson Group and Invus Group. http://axios.link/YJtP

🚑 Exagen, a Vista, Calif.-based maker of diagnostic blood tests for lupus and rheumatoid arthritis, set IPO terms to 3.3 million shares at $14-$16. It would have a fully-diluted market value of $190 million, were it to price in the middle, and plans to trade on the Nasdaq (XGN) with Cowen and Cantor Fitzgerald as lead underwriters. Exagen reports a $5.5 million net loss on $20 million in revenue for the first half of 2019, while shareholders include Sun Mountain Capital Partners (31.5% pre-IPO stake), Tullis-Dickerson (25.4%), and HIG Capital (16.1%). http://axios.link/F0e6

Ping Identity, a Denver-based identity management software company owned by Vista Equity Partners, set IPO terms to 12.5 million shares at $14-$16. It would have a fully-diluted market value of $1.2 billion, were it to price in the middle, and plans to trade on the Nasdaq (PING) with Goldman Sachs as lead underwriter. The company reports a $3 million loss on $113 million in revenue for the first half of 2019. http://axios.link/tCWV

WeWork is being pressured by shareholder SoftBank to delay its IPO into 2020, per the FT, which adds that SoftBank is particularly concerned that a cut-rate WeWork IPO could make it harder to raise Vision Fund 2 (something we posited last Friday). All indications are that WeWork still plans to move forward with the IPO, unless SoftBank opens up its checkbook wide.

Liquidity Events

🍔 McDonald’s (NYSE: MCD) agreed to buy Apprente, a Palo Alto-based provider of automated conversational tools. No financial terms were disclosed. Apprente raised $4.75 million seed funding from AME Cloud Ventures, Greylock Partners via Discovery Fund, Morado Ventures, Pathbreaker Ventures and StageOne Ventures. www.apprente.com

Sentinel Capital Partners agreed to sell The Luminaires Group, a Montreal-based maker of architectural lighting fixtures, to Acuity Brands (NYSE: AYI). www.theluminairesgroup.com

Southern Capital Group of Singapore is seeking a buyer for Canadian International School, which could fetch over $500 million, per Bloomberg. http://axios.link/3eGb

More M&A

Anthem Sports & Entertainment, the Canadian owner of sports-focused channels like Fight Network, acquired a majority stake in Dallas-based HDNet from Mark Cuban. http://axios.link/S855

Fred’s (Nasdaq: FRED), a Memphis-based discount retailer, filed for Chapter 11 bankruptcy protection. http://axios.link/QCR2

Northland Power (TSX: NPI) agreed to buy most of Colombian utility EBSA for C$1.05 billion. http://axios.link/EYNX

Paulson & Co. called on Callon Petroleum (NYSE: CPE) to drop its proposed $3.2 billion acquisition of Carrizo Oil & Gas (Nasdaq: CRZO) and sell itself instead. Paulson holds a 9.5% stake in Callon. http://axios.link/BH7r

Repsol (BME: REP) of Spain is in advanced talks to buy around $1 billion worth of deep-water assets in the U.S. Gulf of Mexico from Exxon Mobil (NYSE: XOM), per Reuters. http://axios.link/ulJX

Sage Group (LSE: SGE) said it is considering a sale process for its payment processing unit. http://axios.link/LQNN

Fundraising

Black Dragon Capital, a Florida-based VC and private equity firm, secured $34 million of a $125 million-targeted fund, per an SEC filing. www.blackdragoncap.com

McRock Capital, a Toronto-based IoT VC firm, held a C$80 million first close on its C$100 million second fund. LPs include Cisco, Shell, BDC Capital, Export Development Canada, Alberta Enterprise Corp., and HarbourVest. www.mcrockcapital.com

It's Personnel

Adrienne Dale joined MidOcean Partners as a portfolio management for CLO strategies. She previously was with Credit Suisse Asset Management. www.midoceanpartners.com

Lazard named Cyrus Kapadia as CEO of its UK investment banking group, and former group CEO William Rucker as chairman. www.lazard.com

Umi Mehta joined Morgan Stanley as a managing director of global Internet investment banking, per Bloomberg. He previously was with BAML. http://axios.link/YcgF

Sean Ozbolt joined The Riverside Company as managing partner. He previously was a partner with Aurora Capital Group. www.riversidecompany.com

Alison Ryu joined Able Partners, an early-stage VC firm focused on “positive living” brands, as a managing director. She previously was a managing director with CircleUp Growth Partners. www.ablepartners.nyc

🚑 Paul Taheri, CEO of Yale Medicine, joined Welsh, Carson, Anderson & Stowe as an operating partner. www.wcas.com

Jump Capital, a Chicago-based VC firm, promoted Yelena Shkolnik to principal. www.jumpcap.com

Final Numbers: Undergrad startup factories
Expand chart
Source: PitchBook 2019 University rankings. Data through June 30, 2018.
Dan Primack

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