Aug 30, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Lazaro Gamio, Axios

Google Ventures is one of the most active and powerful venture capital firms in Silicon Valley, leveraging both its track record (Uber, Slack, Stripe, etc.) and its tech parent pedigree. But it also has a significant #MeToo problem that's been hiding in plain sight for years.

  • This is not about allegations against any GV team member. To my knowledge, there are none.
  • But group CEO and managing partner David Krane reports directly to David Drummond, chief legal officer and head of corporate development for parent company Alphabet. And there are not only public allegations of inappropriate workplace relationships against Drummond, but he's acknowledged fathering a child with a subordinate named Jennifer Blakely who later was forced out of Google's legal department.
    • Drummond also once repped GV on the board of Uber, by far GV's most lucrative investment, has been referred to as GV's chairman, and has at times had de facto veto power over deals (per multiple sources).

Problematic stories about Drummond have swirled for years, but first made print in late 2017 in The Information. Then, last October they reappeared in a NY Times story that mostly focused on how Google paid off Android founder Andy Rubin over a sexual harassment claim (i.e., Drummond caught a bit of a PR break).

Earlier this week Jennifer Blakely published a Medium post that not only detailed her volatile relationship with Drummond, but also alleged that he had affairs with at least two other Alphabet/Google employees.

  • Drummond, in a public reply, denies having "started a relationship with anyone else who was working at Google or Alphabet."
  • Multiple sources tell me Drummond never faced any demotion, suspension or other discipline related to his relationship with Blakely.
  • Alphabet is declining to comment on the new allegations, or even if it plans to open an investigation.
    • It's also unclear who would launch such an investigation, given that Larry Page and Sergey Brin are widely viewed to have mostly checked out, and since Drummond himself remains head of legal compliance.

The bottom line: GV basically inherited David Drummond, but it's time for GV's general partners to agitate for an investigation and to have Drummond at least temporarily removed from their organizational structure. How can GV plausibly insist its founders deal properly with their own workplace equality issues if it can't get its own house in order? GV didn't create the problem, but it should help solve it.

Also...
Source: Giphy

New firm alert: Four co-founders of consumer product "unicorns" are forming a venture capital fund, Axios has learned.

  • The quartet is Neil Blumenthal (Warby Parker), Dave Gilboa (Warby Parker), Jeff Raider (Harry's), and Joey Zwillinger (Allbirds). Each has significant angel investing experience.
  • They plan to raise outside capital for a debut fund, although no word yet on a size target. There also isn't a firm name yet.
  • They also will hire a team, as each of the four plans to maintain their day-job.

Update: Former private equity investor Tarang "Taz" Katira has been sentenced to 22 months in a West London prison, related to an assault conviction.

  • Katira had been a principal with Hamilton Lane, focused on EMEA fund investments. The firm put him on leave last November when the charges were first filed, and then fired him in June after he chose to plead guilty.

Another update: Yesterday's BFD was about how clothing rental startup Le Tote agreed to buy the operations of department store Lord & Taylor for $100 million. Kia subsequently spoke with Le Tote CEO Rakesh Tondon, who says his company is still in the process of securing funds to finance the deal.

  • Tondon says the financing is nearly done, and will likely come via a mix of new growth equity and debt.
  • Also worth noting that seller Hudson's Bay Co. will receive a 25% equity stake in Le Tote and two board seats.

🎧 Pro Rata Podcast digs into Uber, where the stock seems to have stalled out. My guest is NY Times reporter Mike Isaac, whose book on the company comes out next week. Listen here.

The BFD
Source: Giphy

Walt Disney Co. (NYSE: DIS) confirmed its sale of a 80% equity stake in the YES Network for $3.47 billion to a consortium led by the New York Yankees.

  • Why it's the BFD: It reflects how regional sports networks have become difficult to value in the age of cord-cutting. Disney had originally sought around $20 billion for YES and 21 other RSNs acquired in its deal for 21st Century Fox but, in the end, only netted $13 billion (including a previously-announced sale to Sinclair).
  • Other investors include Sinclair Broadcasting, Amazon, RedBird Capital, The Blackstone Group, and Mubadala Capital. The Yankees, which already held the other 20% equity slice, will retain editorial control.
  • Bottom line: "In almost every year since its 2002 launch, YES has reigned as the most-watched RSN." — Dade Hayes, Deadline
Venture Capital Deals

Mews, a Prague-based hotel experience management platform, raised $33 million in Series B funding led by Battery Ventures. http://axios.link/OAwF

🚑 EBR Systems a Sunnyvale, Calif.-based developer of a cardiac pacing system for treating heart failure, raised $30 million. Brandon Capital Partners and M.H. Carnegie & Co. co-led, and were joined by return backers Split Rock Partners, Ascension Ventures, and Emergent Medical Partners. http://axios.link/J628

Hound Labs, an Oakland-based maker of a dual marijuana and alcohol breathalyzer, raised $30 million in Series D funding. Intrinsic Capital Partners led, and was joined by Icon Ventures and Benchmark. http://axios.link/R4Vy

SWISSto12, a Swiss provider of telecom components to the satellite and aerospace markets, raised $18.5 million in Series B funding. Swisscanto Invest led, and was joined by Swisscom Ventures and return backers Constantia New Business. www.SWISSto12.ch

Homee, a Tampa, Fla.-based home services platform, raised $15 million in Series B funding. Forte Ventures led, and was joined by Liberty Mutual Strategic Ventures, Active Capital Partners, Florida Funders, Deepwork Capital, and Engage. http://axios.link/Xvm3

Urbvan, a Mexican provider of luxury transportation shuttles, raised $9 million from Kaszek Ventures, Angel Ventures, and seed backer Mountain Nazca. http://axios.link/Uron

Alto, a Nashville-based platform that lets individual investors add alternative assets to their IRAs, raised $5.4 million in seed funding co-led by Jefferson River Capital and Moment Ventures. www.altoira.com

Ready, a New York-based casual e-sports tournament platform, raised $5 million. Bitkraft Esports Ventures led, and was joined by Comcast Ventures and Eldridge Industries. http://axios.link/dUMM

Knock Knock, a San Francisco-based mobile game publisher, raised $4 million in Series A funding. March Capital Partners led, and was joined by Raine Ventures, London Venture Partners, and Ludlow Ventures. http://axios.link/T9gb

Private Equity Deals

Aurelius agreed to buy MPRO and YouBuild, both Belgian building materials merchant groups, from Grafton Group (LSE: GFTU). www.aureliusinvest.com

Smartbear, a Somerville, Mass.-based portfolio company of Francisco Partners, acquired Bitbar, a Finland-based mobile app test automation platform. http://axios.link/WdKq

Public Offerings

Blued, a Chinese gay-dating app, is prepping a U.S. IPO that could raise around $200 million at a $1 billion valuation, per Bloomberg. Shareholders include CDH Investments and UG Capital Partners. http://axios.link/M4Fq

🚑 Viela Bio, a Gaithersburg, Md.-based inflammation and autoimmune biotech, filed for a $150 million IPO. It plans to trade on the Nasdaq (VIE) with Goldman Sachs as lead underwriter. The company spun out of AstraZeneca (LSE: AZN) in 2017 and raised $250 million in Series A funding from 6 Dimensions Capital, Boyu Capital, Hillhouse Capital, Temasek, and Sirona Capital.

More M&A

BASF (DB: BAS) agreed to sell its pigments business for 985 million to Japanese chemical company DIC Corp. (Tokyo: 4631). http://axios.link/xsKc

BNP Paribas (Paris: BNPP) plans to make a bid for Deutsche Bank’s (DE: DBK) equity derivatives book, per Reuters. http://axios.link/9w4F

Brazil’s government will add public TV and radio network EBC to a list of state-owned companies to be privatized, per Reuters. http://axios.link/BBmj

CNH Industrial (NYSE: CNHI) is considering a spinoff of commercial truck unit Iveco, which generated around $100 million in 2018 EBITDA, per Reuters. http://axios.link/vuzU

Hilton Grand Vacations (NYSE: HGV) is exploring strategic options, including a possible sale, following private equity takeover interest, per Reuters. The Orlando-based timeshare operator has a market cap of around $2.77 billion. http://axios.link/2ShS

Fundraising

Half Court Ventures, a Massachusetts-based early-stage VC firm, is raising $10 million for its second fund, per an SEC filing. www.halfcourt.vc

It's Personnel

Shriram Bhashyam, co-founder of EquityZen, joined Citi Ventures as an entrepreneur-in-residence, per his LinkedIn page.

Grant Allen and Varun Jain were named general partners of SE Ventures, a new $565 million Silicon Valley venture fund backed by Schneider Electric. Allen previously led ABB Ventures, while Jain led early-stage investing for Qualcomm Ventures.

Final Numbers
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Reproduced from US-China Business Council Member Survey, 2019; Chart: Axios Visuals
Dan Primack

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