Jan 17, 2018

Axios Pro Rata

Top of the Morning
Photo illustration: Axios Visuals

This is the first month in more than 25 years that John Chambers isn't heading into work at Cisco. Instead, the tech giant's former CEO and executive chairman is refashioning himself as fulltime a venture capitalist.

Chambers just launched JC2 Ventures, which he says is as much about CEO mentoring as it is about investment. The self-funded firm, which also includes son John (ex-marketing exec at Houzz, Netflix & Walmart), already has backed such companies as Airware, Aspire Food Group and Sprinklr.

Some quotes from Chambers, per a conversation yesterday:

  • “This is the next chapter in my career… It makes me tremendously excited. And I’m also more relaxed because I can sleep through the night without getting a text about a customer problem or personnel problem or something else at Cisco.”
  • “I don’t think large global companies will add headcount over the next decade, so the question for all countries has to be about how to kickstart the startup engine. Governments need to champion startups as the future, like we’ve seen in France and India… We [in the U.S.] shouldn’t feel any entitlement.”
  • “It’s interesting to watch and work with CEOs. With very few exceptions, an engineering lead as CEO doesn’t understand sales or go-to-market. Same thing when you have a business leader; he doesn’t know how to judge incoming engineers. And most of them don’t initially understand how important culture is.”
  • “I think there are going to be many creative ways of raising funding, and ICOs speak to how the NASDAQ and NYSE will have to evolve.”

Gift receipt: Silver Lake yesterday agreed to lead a $3.5 billion take-private acquisition of gift card "mall" operator Blackhawk Network.

  • We've learned that this wasn't Silver Lake's first takeover attempt for the onetime Safeway subsidiary. Here's the backstory.
  • Blackhawk puts year-to-date U.S. tech M&A at nearly $9.5 billion for 96 transactions, per S&P Global Market Intelligence. That's the strongest start to a year since 2008 in terms of dollars, but its weakest since 2009 in terms of number of deals.

LP land: Harvard University's endowment does not plan to name a new head of private equity investing, despite Rich Hall's pending return to Texas.

  • Harvard Management Co. has instead restructured in a way that eschews asset class bosses, in favor of a group of managing directors who share responsibility for the entire portfolio. HMC managing directors with private equity experience include both John Shue and Mindy Barber.

DC-to-SV deal scoop: The Messina Group, the political consultancy led by former Obama campaign manager Jim Messina, has acquired Greenbrier, a Silicon Valley crisis communications and PR firm led by former Uber and Clinton comms pros Matt McKenna and Lane Kasselman.

Tax talk: The House GOP's proposed continuing resolution to prevent government shutdown on Friday includes a two-year delay on the medical device excise tax that went back into effect on January 1.

VCtv: Years ago I filmed a cameo in a music video produced by venture capital firm Foundry Group. And, yes, it was as sublimely silly as that prior sentence suggests — but received hundreds of thousands of views before Foundry accidentally erased the counter (which apparently is an unrecoverable blunder).

Foundry, whose partner Jason Mendelson has a full music studio in his basement, came out with a successor video three years later (I wasn't invited back) and now is out with its latest (wow, I really must have blown my big break). It's about "bored meetings," and you can view it here.


Source: Giphy

Celgene (Nasdaq: CELG) is in talks to acquire Juno Therapeutics (Nasdaq: JUNO), a Seattle-based developer of cancer therapeutics, according to The Wall Street Journal. Juno had a market cap of $5.2 billion prior to the report, but shares jumped more than 50% in after-hours trading.

  • Why it's the BFD: Because Celgene, with $82 billion in market cap and nearly $12 billion in cash, is on a big buying spree in the cancer space. Just last week it agreed to buy Impact BioMed for upwards of $7 billion.
  • Bottom line: "Celgene, which already had a relationship with Juno, wants to own a piece of CAR-T treatments, which use a person's own immune cells to fight off cancer and are expensive. Celgene also appears to be prepping itself for 2027, when its blockbuster blood cancer drug Revlimid loses U.S. patent protection." — Bob Herman, Axios
Venture Capital Deals

Ziroom, a Chinese apartment rental startup, has raised $622 million in Series A funding co-led by Warburg Pincus, Tencent and Sequoia Capital China. Others backers include General Atlantic, Source Code Capital, Strait Capital, Huasheng Capital, Sunac and New Hope Group. https://axios.link/B0GQ

Caocao Zhuanche, a Chinese electric vehicle sharing company backed by automaker Greely, said it has raised $156 million in Series A funding at a valuation north of $1.6 billion. No investors were disclosed. https://axios.link/YUMJ

Bingobox, a Chinese automated convenience store startup, has raised $80 million in Series B funding. Fosun Capital led, and was joined by Prometheus Capital, Qiming Venture Partners, GGV Capital and Ventech China. https://axios.link/QU9G

Wattpad, a Canadian storytelling and reading app that includes both professional and crowdsourced content, has raised C$61.25 million in new funding. Backers include Tencent, Kickstart Ventures and the Peterson Group. https://axios.link/oq5q

Anomali, a Redwood City, Calif.-based provider of threat management and collaboration solutions, has raised $40 million in Series D funding. Lumia Capital led, and was joined by Deutsche Telekom Capital Partners, Telstra, Sozo Ventures and return backers GV, General Catalyst, IVP and Paladin Capital Group. www.anomali.com

CircleCI, a San Francisco-based continuous integration and delivery platform, has raised $31 million in Series C funding. Top Tier Capital Partners led, and was joined by Industry Ventures, Heavybit and return backers Scale Venture Partners, Baseline Ventures, Harrison Metal and DFJ. www.circleci.com

Bringg, a Chicago-based delivery logistics platform, has raised $12 million in new Series B funding (bringing the round total to $22m). New backers include Salesforce Ventures. http://axios.link/RHSL

Centerity, a Newton, Mass.-based provider of performance analytics and business services management for complex technology environments, has raised $10 million from Merlin International. www.centerity.com

Jump Bikes (f.k.a. Social Bicycles), a New York-based provider of pedal-assist e-bikes, has raised $10 million in Series A funding. Menlo Ventures led, and was joined by Sinewave Ventures and Esther Dyson. http://axios.link/LejG

Sweatcoin, an app that lets users earn cryptocurrency in exchange for working out, has raised $5.7 million in seed funding. Goodwater Capital led, and was joined by backers like Greylock, Rubylight and Seed Camp. https://axios.link/YHlC

Finery, a New York-based “automated online wardrobe platform,” has raised $5 million in seed funding. NEA led, and was joined by backers like Farfetch, BBG Ventures, C Ventures, Correlation Ventures, Next Coast Ventures, Halogen Ventures. http://axios.link/wuGO

🚑 Tissue Analytics, a Baltimore-based provider of wound and skin tracking solutions, has raised $5 million in new VC funding. DigiTx Partners led, and was joined by Tencent, Dreamit, Molnlycke Health Care, Intermountain Healthcare and Penn Medicine. http://axios.link/kEgH

Forest, a French maker of an enterprise administration interface, has raised €3 million from backers like Connect Ventures and Xavier Niel. http://axios.link/4UgH

Hyr, a New York-based on-demand marketplace for hourly workers, has raised $1.3 million in seed funding. Flybridge Capital Partners led, and was joined by XFactor Ventures and Newark Venture Partners. www.hyr.work

Private Equity Deals

Affinity Equity Partners is the preferred bidder for Trimco International, a Hong Kong-based maker of garment labels that is being sold by Partners Group for more than $500 million, per Bloomberg. https://axios.link/qgX3

Brookfield Asset Management and Onex Corp. are considering a $3.7 billion takeover bid for IWG (LSE: IWG), a Swiss commercial office space owner and operator that competes with WeWork, per Bloomberg. https://axios.link/9rXG

Clearlake Capital Group has agreed to acquire Janus International Group, a Temple, Ga.-based maker of interior door and hallway systems for self-storage, industrial and commercial facilities, from Saw Mill Capital. www.janusintl.com

Diversis Capital has acquired Marketron, a Hailey, Idaho-based provider of broadcast radio and TV ad management software, from BlackRock Capital (which will retain a minority stake). https://axios.link/s67l

Halo Branded Solutions, a Sterling, Ill.-based portfolio company of Audax Private Equity, has acquired Caliendo-Savio Enterprises, a Berlin, Wis.-based provider of promotional merchandise and workwear. www.csepromo.com

🍿 Highlander Partners has acquired Kernel Season’s, a Chicago-based maker of popcorn seasoning, from VMG Partners. www.kernalseasons.com

MediaRadar, a New York-based ad intelligence company, has raised an undisclosed amount of growth equity funding from Frontier Capital. www.mediaradar.com

Pillar Technology Group, a Columbus, Ohio-based tech consulting firm, has raised an undisclosed amount of funding from NewSpring Mezzanine. www.pillartechnology.com

Public Offerings

🚑 ARMO BioSciences, a Redwood City, Calif.-based immuno-oncology company, set its IPO terms to 6.7 million shares being offered at $14-$16. It would have a fully-filuted market value of around $450 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker ARMO, with Jefferies serving as lead underwriter. It has raised around $167 million in VC funding, from firms like Kleiner Perkins (19.6% pre-IPO stake), OrbiMed (18.9%), DAG Ventures (11.1%), Nanodimension (10.1%), GV (5.6%), Decheng Capital (5.6%), Qiming Venture Partners, Sequoia Capital, Quan Capital, RTW Investments, HBM Healthcare Investments, Celgene Corp. and Clough Capital Partners. www.armobio.com

Penti, a Turkish lingerie and swimsuit retailer owned by The Carlyle Group, is considering an IPO, according to Reuters. https://axios.link/VR0o

PlayAGS, a Las Vegas casino equipment company owned by Apollo Global Management, set its IPO terms to 10.3 million shares being offered at $16-$18. It would have a fully-diluted market vakue of around $586 million, were it to price in the middle. PlayAGS plans to trade on the NYSE under ticker AGS, with Credit Suisse and Deutsche Bank serving as lead underwriters. https://axios.link/Z9YZ

🚑 ResTORbio, a Boston-based developer of therapeutics for age-related diseases, set its IPO terms to 5.7 million shares at $14-$16. It would have a fully-diluted market value of around $410 million, were it to price in the middle. The pre-revenue company plans to trade on the Nasdaq under ticker TORC, with BoA Merrill Lynch serving as lead underwriter. It has raised $65 million in VC funding from firms like OrbiMed (20% pre-IPO stake), Novartis (9.4%), Fidelity, Rock Springs Capital, Quan Capital and Nest Bio. www.restorbio.com

🚑 Solid Biosciences, a Cambridge, Mass.-based drug developer focused on Duchenne muscular dystrophy, set its IPO terms to 5.9 million shares at $16-$18. It would have a fully-diluted market calue of around $551 million, were it to price in the middle. The company plans to trade on the Nasdaq under ticker SLDB, with J.P. Morgan serving as lead underwriter. It has raised over $50 million in VC funding, from firms like JPMorgan (11.4% pre-IPO stake), Perceptive Advisors (11%), Bain Capital Life Sciences (6.7%), RA Capital (6.4%), RTW Investments, Foresite Capital, Cormorant Asset Management, Janus Capital Management and Biogen. Its last round was a Pro Rata BFD.

Liquidity Events

Hudson River Trading has agreed to acquire Chicago-based high-frequency trader Sun Trading. Sellers include Summit Partners. https://axios.link/KUns

Instacart, the VC-backed grocery delivery “unicorn,” has acquired Unata, a Toronto-based developer of e-commerce tools, for around US$65 million, per Bloomberg. Unata had been seeded by MaRS Investment Accelerator Fund and the Golden Triangle Angel Network. http://axios.link/rgqa

More M&A

Allot Communications (Nasdaq: ALLT) has agreed to acquire Netonomy, a provider of cybersecurity software for the connected home. www.netonomy.com

Grab, a Southeast Asian ride-hail company, has acquired India-based payments startup iKaaz. https://axios.link/GI3U

Informa (LSE: INF) is in talks to buy British events organizer UBM (LSE: UBM) for more than $4 billion in cash and stock. https://axios.link/Fw23

Melrose Industries (LSE: MRON) has increased its unsolicited takeover offer for British engineering company GKN (LSE: GKN) to around $10.2 billion. GKN had rejected an earlier $9.65 billion approach, and said that it would instead split its business in two. https://axios.link/zfXZ

Nestle (Swiss: NESN) formally announced yesterday that it will sell its U.S. confectionary business to Italy’s Ferrero for $2.8 billion. https://axios.link/TvHK


Round Hill Music Royalty Partners has closed its second fund with $263 million in capital commitments. www.roundhillmusic.com

Sequoia Capital has raised $180 million for a new fund that will focus exclusively on seed-stage opportunities. Axios first discussed the effort last November, and TechCrunch has more today.

It's Personnel

Barings has hired the five-person investment team of Aldea Capital Partners, a separate accounts-focused private equity group that specializes in emerging managers. Included is Aldea co-founder and managing partner Mina Pacheco Nazemi. www.barings.com

Billy Deitch has joined Oak HC/FT as a San Francisco-based principal. He previously was with Francisco Partners. www.oakhcft.com

Bradley Giordano has joined the Chicago office of King & Spalding as a bankruptcy and restructuring-focused partner. He previously was a partner with Kirkland & Ellis. www.kslaw.com

Taylor Greene has joined Collaborative Fund as a partner. He previously was a partner with Lerer Hippeau Ventures. www.collaborativefund.com

Jeremy Smith, former chief strategy officer for SecondMarket, has joined insurance-tech startup RiskGenius as COO. www.riskgenius.com

🚑 SV Health Investors has promoted Denise Marks to chief administrative partner from CFO and Brent Faduski to CFO from controller. www.svhealthinvestors.com

Brian Thorne has stepped down as a principal with Tengram Capital in order to become a partner with Silas Capital, a growth equity firm focused on consumer brands. www.silascapital.com

Trident Capital Cybersecurity has promoted Will Lin to principal. www.tridentcybersecurity.com

Monique Woodward has stepped down as a venture partner with 500 Startups. https://axios.link/l2x2

Final Numbers

More from KKR's 2018 Global Macro Outlook:

Irrespective of where we are in the cycle, we believe that – compliments of central bank intervention – the current prices of many financial assets appear more cyclically elevated than current economic conditions might otherwise support. Indeed, the S&P 500 has been up for nine consecutive years, despite a U.S. economic recovery that has been lackluster by most standards. This performance feat by the U.S. equity market is quite extraordinary, as it has occurred only one other time on record – the 1991-1999 period.