Sep 14, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

Kleiner Perkins, one of the oldest venture capital firms in Silicon Valley, is splitting up.

  • The firm's "digital growth" team, which has made later-stage investments in such companies as Uber and Stripe, will spin out into an independent firm. This includes investment partners Mary Meeker, Mood Rowghani and Noah Knauf, plus HR and team-building pro Juliet de Baubigny.
  • The early-stage team, which has been largely reconstituted over the past 18 months, will continue operating under the Kleiner Perkins brand.

The decision came after more than a month of internal deliberations between the two groups, with an ultimate recognition that many of the original synergies had faded — particularly as growth deals became larger, more data-driven and more international.

  • The specific timing was also driven by fund cycles, as both groups are expected to raise new funds in 2019. Both are currently investing out of 2016-vintage vehicles ($1 billion for growth, $400m for early-stage).
  • As of yesterday, the firm had not yet informed many of its limited partners

"I'm proud of our time at Kleiner Perkins," says Meeker, adding that split should enable greater "agility and focus" for each group.

No word yet on the growth group's new name or office location, except that its existing three funds will maintain the Kleiner Perkins brand and continue to use the Kleiner Perkins back-office (at least until it stands up its own).

Source: Giphy

🎧 Pro Rata Podcast: Our new episode focuses on the financial crisis, as tomorrow marks the 10-year anniversary of Lehman going under. A look at what happened and what changed, with my guest Neil Cavuto of Fox News. Listen here.

On the docket: Former Uber Southeast Asia executive Eric Alexander has sued former Uber communications chief Rachel Whetstone (now at Netflix) for allegedly breaching a two-way non-disparagement agreement.

  • This relates to the 2014 rape of a female Uber passenger in India, and media reports that Alexander obtained the victim's medical records and handled them improperly. In his filing, Alexander claims he received the documents from an Uber-retained India law firm (as part of the overall case file), and at the request of Uber corporate.

There is lots of he-said/she-said stuff in the complaint, but I just want to focus on the core claim and the case's broader implications:

  • The involved reporters (Recode's Kara Swisher and Bloomberg's Eric Newcomer) are covered by a media shield law in California, so neither would be required to divulge their sources.
  • But Rachel Whetstone would have no such protections and, in theory, the judge could allow a plaintiff request for things like phone or email records. Particularly if Alexander persuasively claims that it's the only viable way to discover a core piece of potential evidence.
  • I know it's counter-productive for me to write this as a reporter, but: Sources don't have legal privacy protections. They are almost never sued because it's highly unusual for a "violated" party to know a leaker's identity with any degree of certainty, but it theoretically can happen.
  • And Alexander's decision to only sue Whetstone — after reportedly considering a broader defendant class — likely speaks to his effort to minimize the appearance of a fishing expedition.

That said, even if Alexander can receive Whetstone's records. And even if they show she communicated with the reporters about him (yes, a big "if"), he would still have to prove that her comments were factually untrue.

Whetstone declined comment, and Alexander's attorney didn't get back to me. Uber, which isn't named as a defendant, also declined comment — including on the question of if it did or didn't ask Alexander to obtain the victim file — as did former Uber CEO Travis Kalanick.


Walmart (NYSE: WMT) agreed to buy Cornershop, a grocery delivery company operating in Mexico and Chile, for $225 million.

  • Why it's the BFD: Because this the latest indication that the retail giant believes its global future is digital. Just this year it: Bought India's Flipkart for $16 billion, plugged money into China's Dada-JD Daojia, had its Canadian unit sign a same-day delivery deal with Instacart and began cutting back on physical locations in Brazil and the UK.
  • ROI: Cornershop had raised over $20 million in VC funding from firms like Accel, Endeavor Global, Creandum, ALLVP, MT Network and Jackson Square Ventures.
  • Bottom line: "Picking up Cornershop—which enlists contractors to shop for and deliver orders to customers—gives Walmart an established delivery and distribution network in Latin America. Cornershop also allows shoppers to place bundled orders containing multiple stores’ products, which are delivered all at once." — Angela Shah, Xconomy
Venture Capital Deals

Shift, a San Francisco-based online marketplace for used cars, raised $71 million in Series D equity funding. Lithia Motors led, and was joined by return backers Alliance Ventures, BMW iVentures, DCM, DFJ, G2VP, Goldman Sachs Investment Partners and Highland Capital. Shift also secured $70 million in debt funding.

BreezoMeter, an Israeli provider of hyperlocal air quality and pollen information, raised $7.75 million in Series B funding co-led by Goldacre and Entrée Capital.

Private Equity Deals

AE Industrial Partners bought Gryphon Technologies, a Washington, DC-based defense engineering and technical services firm that will be merged with existing AEI portfolio company CDI Government Services.

Applied-Cleveland, a provider of inspection and integrity management services for energy infrastructure assets, bought the inspection business of STS Consulting Services. Applied-Cleveland is a First Reserve portfolio company.

Arbor Investments agreed to buy the private label pet food business of Mars Petcare US.

Bomgar, a Johns Creek, Ga.-based portfolio company of Francisco Partners, agreed to buy BeyondTrust, a Phoenix-based provider of privilege-centic access management solutions, from Veritas Capital.

Carnegie Learning, a St. Paul, Minn.-based portfolio company of CIP Capital, acquired Mondo Publishing, a New York-based provider of K-5 literacy resources.

Geneva Glen Capital acquired EZ Shipper Racks, a Westlake Village, Calif.-based provider of recoverable shipping racks to the nursery industry, from backers like Search Fund Partners.

GlobalTranz Enterprises, a Scottsdale, Ariz.-based portfolio company of The Jordan Co., agreed to buy AFN Logistics, a Niles, Ill.-based provider of freight brokerage and logistics services. Sellers include Hilltop Opportunity Partners.

MidOcean Partners acquired Questex, a Newton, Mass.-based B2B information services provider, from Shamrock Capital.

Sage Metals, an India-based portfolio company of Delos Capital, acquired Trident Components, a Granbury, Texas-based provider of specialty metal formed products.

Swander Pace Capital acquired Fine Choice Foods, a Vancouver-based provider of fresh and frozen Asian-flavored appetizers to the retail and foodservice markets.

🚑 Varsity Healthcare Partners acquired and merged PEMM and PEPA, both providers of emergency medicine and ER department management services to Louisiana hospitals.

Public Offerings

Navios Maritime Containers, formed by Navios Maritime Holdings (NYSE: NM) to own contracted containerships, postponed a planned $100 million IPO, and instead will pursue a direct listing (it already is traded in Norway).

🚑 Principia Biopharma, a South San Francisco-based oncology drug developer, raised $106 million in its IPO. The company priced 6.3 million shares at $17, versus plans to offer 4.7 million at $15-$17. It will trade on the Nasdaq (PRNB), while BoA Merrill Lynch was lead underwriter. Principia raised over $100 million from Morgenthaler Ventures (16.81% pre-IPO stake), OrbiMed (16.81%), SR One (16.81%), New Leaf Ventures (16.81%), Baker Brothers (12.3%) and Sofinnova Ventures (12.3%).

Qutoutiao, a Chinese mobile content aggregator, raised $84 million in its IPO. The company priced 12 million shares at $7, versus original plans to offer 16 million shares at $7-$9. It has an initial market cap of $2.1 billion, and will trade on the Nasdaq (QTT). Citigroup was lead underwriter and pre-IPO shareholders include Tencent.

Tivit, a Brazilian IT company owned by Apax Partners, hired banks to restart an IPO process it had halted last September, per Reuters.

Liquidity Events

Brentwood Associates hired Lazard and Finance to explore a sale of Sundance Holdings, a Salt Lake City-based retailer founded by actor Robert Redford, per PE News. Sundance reportedly will generate around $25 million in 2018 EBITDA.

Industrial Growth Partners completed its $420 million sale of Grakon, a San Francisco-based maker of lighting systems, to Methode Electronics (NYE: MEI) for $420 million.

Microsoft (Nasdaq: MSFT) acquired Lobe, a drag-and-drop tool for building machine learning models that had been seeded by Lowercase Capital.

MPM Holdings, a Waterford, N.Y.-based specialty chemicals company 40% owned by Apollo Global Management, agreed to be acquired for around $3.1 billion by a South Korean consortium that includes SJL Partners, KCC Corp. and Wonik QnC Corp.

More M&A

Klarna Bank of Sweden agreed to buy the retail finance business of Close Brothers (LSE: CBRO).

Metro (DE: B4B), a German retailer, said it plans to sell its Real hypermarket business, with Reuters reporting on speculation that Amazon could have interest.

Nasdaq agreed to buy Cinnober, a listed Swedish provider of trading technology solutions, for around $190 million.

🚑 Smiths Group (LSE: SMIN) and ICU Medical (Nasdaq: ICUI) have stopped merger talks over price disagreements.

🚑 Takeda Pharma (Tokyo: 4502) received Chinese regulatory approval for its $62 billion purchase of Shire (LSE: SHP), but still awaits word from the EU and Japan.

Trevi (Milan: TFI), a troubled Italian engineering firm, reportedly did not get shareholder approval for a rescue plan put forth by Bain Capital Credit.


Cibolo Energy Management raised $245 million for its debut fund, focused on credit investments in mid-market upstream and midstream companies.

First Reserve, an energy-focused buyout firm, plans to target $3 billion for its fourteenth flagship fund, per Reuters.

Golden Gate Ventures of Singapore raised $100 million for its third fund.

It's Personnel

Goldman Sachs will name John Waldron as its new president and Stephen Scherr as its new CFO, with current CFO Marty Chavez transitioning to the bank's trading division.

Detlev Biniszkiewicz and Scott Chappel, the ex-CEO and co-founder, respectively of Surface Oncology (Nasdaq: SURF), have joined MPM Capital as executive partners.

Final Numbers
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Data: OFX; Chart: Harry Stevens/Axios
Dan Primack

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