Mar 15, 2019

Axios Pro Rata

Top of the Morning

Source: Giphy

Brian Acton is a co-founder of WhatsApp, the popular messaging service that was acquired by Facebook in 2014 for around $19 billion. It still stands as the largest sale ever of a VC-backed tech startup, but Acton remains rueful of his role.

During an appearance Wednesday at Stanford, he reportedly said:

“You go back to this Silicon Valley culture and people say, 'Well, could you have not sold?’ and the answer is no... I had 50 employees, and I had to think about them and the money they would make from this sale. I had to think about our investors and I had to think about my minority stake. I didn’t have the full clout to say no if I wanted to."

Acton is correct about the "full clout" issue, as a source tells me that he alone could not have blocked the transaction. In essence, his fellow co-founder and WhatsApp CEO Jan Koum controlled the vote.

  • But that doesn't mean he couldn't have worked harder to kill the deal, perhaps by refusing to join Facebook (he quit in 2017) and convincing other key employees to do the same.
  • To be clear, I'm not blaming Acton or saying he made the wrong decision. Instead, I'm simply saying he did have a choice.
  • If you don't want to take it from me, take it from what he told Forbes last fall:
"At the end of the day, I sold my company. I sold my users' privacy to a larger benefit. I made a choice and a compromise. I live with that every day."

Bill McGlashan is out at TPG, where he had led its growth equity and social impact investing units, just days after being charged for felony fraud in the college admissions bribery scheme.

  • McGlashan says he formally quit (just minutes) before the firm informed him of his termination, and has distributed an email chain to support that timeline.
  • The timeline may affect the financial settlement but, in the big picture, it's irrelevant. He was done at TPG the moment his name appeared on the criminal complaint. Remember, TPG's limited partners include university endowments.
  • TPG also is allowing LPs to pull commitments to the second Rise Fund, which so far has held a first close on over $1 billion. Given its quick move with McGlashan, and TPG's decision to replace him with firm co-founder Jim Coulter, don't expect too many refund requests (if any).
  • In his resignation letter, McGlashan wrote: "My primary concern at this point is for my family. I will also be focused on addressing the allegations that have been presented, and there are aspects of the story that have yet to emerge that I wish I could share."

Happy trails: Lee Fixel is leaving Tiger Global, where he led successful investments in such "unicorn" companies as Facebook, Flipkart, LinkedIn and Spotify. The resignation takes effect at the end of June.

  • Why it matters: Fixel has been at the forefront of a revolution in growth equity investing, helping to create an environment where popular tech startups are able to remain private longer.
  • Per an email sent yesterday to Tiger Global investors: "Lee expects to actively invest his own capital and may start an investment firm in the future."
  • Read the full letter.

New firm alert: 55 Catalyst Capital has launched to invest in decentralized tech startups. It's led by Jeff Schumacher, founder of BCG Digital Ventures, who discussed blockchain tech during a panel discussion I moderated at last summer's Milken Global Conference (video here).

  • 55 Catalyst Capital's other partners are Juan Bruce (ex-CEO of Epoxy) and Jason Nolte (ex-GM Ventures). An SEC filing for its debut fund does not list a target amount.

🎧 Pro Rata Podcast: Our latest episode focuses on the FAA's decision to ground all Boeing 737 MAX aircraft, following Sunday's fatal crash in Ethiopia, and why it took the U.S. so much longer than other countries. My guest is pilot and aviation journalist Jeff Wise. Listen here.


Source: Giphy

The Blackstone Group agreed to buy Ayumi Pharmaceutical, a Japanese maker of anti-rheumatism drugs, from Unison Capital for a reported $1 billion.

  • Why it's the BFD: Because it's Blackstone's first-ever buyout in Japan, and comes as many other U.S. and European private equity firms are seeking deals in a country they had spent over a decade ignoring.
  • Bottom line: "We are seeing much more deal flow in Japan. It is the third largest economy in the world, but private-equity penetration there is much lower." — Kewsong Lee, co-CEO of The Carlyle Group, speaking last month at the SuperReturn event in Berlin
Venture Capital Deals

🚑 Surrozen, a San Francisco-based biotech focused on liver disease, raised $50 million in Series B funding from Horizons Ventures, Hartford HealthCare Endowment, NS Investment and The Column Group.

LaunchDarkly, an Oakland-based feature management platform, raised $44 million in Series C funding. Bessemer Venture Partners led, and was joined by return backers Redpoint Ventures, Vertex Ventures, DFJ and Uncork Capital.

🚑 eHealth Technologies, a West Henrietta, N.Y.-based provider of medical record retrieval services, raised $41 million from Aldrich Capital Partners.

Igneous, a Seattle-based provider of unstructured data management-as-a-service, raised $25 million in Series C funding. WestRiver Group led, and was joined by return backers Madrona Venture Group, NEA, Vulcan Capital and Redpoint Ventures.

ArangoDB, a San Francisco-based NoSQL database management startup, raised $10 million in Series A funding. Bow Capital led, and was joined by return backer Target Partners.

🚑 Physera, a Minneapolis-based telehealth platform for musculoskeletal care, raised $8 million in Series A funding led by BlueCross BlueShield Venture Partners.

🐕 Fi, a New York-based maker of smart collars for dogs, raised $7 million in Series A funding. RRE Ventures led, and was joined by return backers Lerer Hippeau and Freestyle.

UPshow, a screen-based consumer engagement platform, raised $6 million in Series A funding co-led by TDF Ventures and Jump Capital.

Royole, a Chinese maker of flexible displays, is seeking to raise around $1 billion at an $8 billion valuation, ahead of an IPO, per Bloomberg.

Private Equity Deals

Littlejohn Capital acquired Western Industries Plastic Products, a Winfield, Kansas-based maker of large blow-molded products, from Speyside Equity.

Public Offerings

🚑 Genfit, a French biotech focused on liver disease, set its U.S. IPO terms to 5 million shares at $26.33 (the most recent trading price on Euronext Paris). It would have a fully-diluted U.S. market value of $955 million, and plans to trade on the Nasdaq (GNFT).

Preferred Sands, a Radnor, Penn.-based provider of sand-based proppant solutions to the oil and gas industry, withdrew an IPO filing from August 2017 No explanation was given. The KKR-owned company had planned to trade on the NYSE with Credit Suisse, KKR and Morgan Stanley as underwriters.

Uber plans to file its S-1 in early April and launch its IPO road-show later that month, according to Reuters. The WSJ adds that it will seek an initial market cap of around $120 billion.

More M&A

Itochu Corp. (Tokyo: 8001) said it’s acquired a 40% stake in Japanese sportswear maker Descente (Tokyo: 8114), in preparation of a hostile takeover bid.


Accel has raised $2.5 billion for its latest series of VC funds, including $525 million for its 14th flagship early-stage fund.

It's Personnel

🚑 John Chopack rejoined HealthpointCapital as a managing director. He co-founded the firm in 2002, before leaving in 2016 to form a firm called Inspiros Ventures.