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November 20, 2020

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Top of the Morning

Illustration of Robert Smith with a money pattern

Illustration: Eniola Odetunde/Axios

Robert Smith on Wednesday made his first public appearance since copping to tax fraud, and agreeing to pay $140 million in back taxes and penalties, appearing on a "Race and Corporate America" panel at the NY Times DealBook Summit.

  • The big takeaway was that Smith didn't just get a pass, he got image rehab from his fellow panelists.

The private equity titan's legal situation didn't come up until the 52-minute mark of the hourlong conversation, when he was asked by moderator Andrew Ross Sorkin about lessons learned.

  • Smith, who remains legally precluded from directly discussing settlement terms, replied: "A big part of life is that if you make mistakes you have to in some way clarify them, clear them up and get beyond them ... I can learn from my mistakes and I have. In order to focus on the problems of the present I need to resolve the issues of the past and the settlement offered me the opportunity to do that."

But Sorkin didn't really get a chance to ask a follow-up. Instead, rapper/activist Killer Mike interjected with a full-throated defense of Smith:

"People make mistakes ... Never forget that this country was founded by people who didn't want to pay taxes to a crown. Let us never forget that our forefathers ... were slaveowners. Let us never forget the sins of our past because, when you do, you start to judge people as if your moral authority is higher.
As hard as it may be to forgive a rich guy, he did what he did at Morehouse before that. What he did for Morehouse wasn't, "Let me clean my image back up," it was his honest and true heart. So I just want to tell Black people: Defend him vigorously."

First, some of the historical stuff was strange. Is he arguing that Smith's tax evasion was a political statement, in line with "no taxation without representation?" Is he further arguing that we forgive the moral abomination of slavery because America's founding fathers also had virtues? Or was this just reflexive defense of a philanthropist and successful Black businessman, in the context of a panel on race and Corporate America?

But, beyond that, Killer Mike was wrong on his timeline. Robert Smith's decision to pay off $40 million in student debt for around 400 Morehouse graduates last year, while noble, was not before he was in trouble with the government. It was before he settled, yes, but he was well aware of the investigation and had been trying to negotiate his way out of it.

  • Moreover, Smith's tax avoidance deprived the federal government of funds that could have been used to fund programs for which Killer Mike advocates.
  • It's also worth noting that former Xerox CEO Ursula Burns also offered a forgive and forget defense of Smith, although she acknowledged having not read about his tax troubles.

The bottom line: Leave aside what Smith's fellow panelists said about him. Watch the video. He could have interrupted, reiterating his culpability and explaining that he doesn't deserve a mulligan. But he didn't. He smiled and nodded along as his reputation was laundered.

The BFD

Illustration of the Roblox logo with a cube of money replacing one of the 'O's.

Illustration: Aïda Amer/Axios

Roblox, a San Mateo, Calif.-based social gaming platform for tweens and teens, filed for a $1 billion initial public offering.

  • Why it's the BFD: This is another of the lucky few companies for whom the pandemic has been a business blessing, as lockdowns and school closures caused parents to let their screen time limits slide. Roblox reports 31.1 million average daily active users for the nine-month period ending in September, up 82% from the year-earlier period.
  • Details: Roblox reports $206 million of losses on $589 million in revenue for the first nine months of 2020, compared to $46 million in losses on $350 million for the same period in 2019. It plans to list on the NYSE (RBLX) and raised $335 million in VC funding from firms like Altos Ventures, First Round Capital, Meritech Capital Partners, Andreessen Horowitz and Index Ventures.
  • Not investment advice: Emma, my resident Roblox addict, asked me to explain the IPO. Upon learning that shareholders wouldn't receive any "Robux," she said people shouldn't buy into the IPO.
  • Bottom line: "The average lifetime of a paying Roblox user is about 23 months. Among the risk factors Roblox faces is ensuring a civil environment for children online, which isn’t easy given all the different ways online systems are attacked." — Dean Takahashi, GamesBeat

Venture Capital Deals

Forter, a New York-based e-commerce fraud prevention company, raised $125 million in Series E funding at a $1.3 billion valuation. Bessemer Venture Partners, Felix Capital and Itai Tsiddon co-led, and were joined by Sequoia Capital, NewView Capital, Scale Venture Partners, March Capital Partners and Commerce Ventures. http://axios.link/x868

🚑 Medable, a Palo Alto-based provider of clinical trial management software, raised $91 million. Sapphire Ventures led, and was joined by GSR Ventures, PPD Inc. and Streamlined Ventures. http://axios.link/uY8A

Zapata, a Boston-based quantum machine learning startup, raised $38 million in Series B funding. Comcast Ventures, Pitango and Prelude Ventures co-led, and were joined by BASF VC, Robert Bosch VC, The Engine, Ahren Innovation Capital, Alumni Ventures Group, Honeywell Venture Capital, ITOCHU Corporation and Merck Global Health Innovation Fund. http://axios.link/Zcat

Canvas, a San Francisco-based construction robotics startup, raised $19 million from Innovation Endeavors, Obvious Ventures, Brick & Mortar Ventures and Grit Ventures. www.canvas.build

Transfr VR, a New York-based VR skills training startup, raised $12 million in Series A funding led by Firework Ventures. www.transfervr.com

Private Equity Deals

Eureka Equity Partners acquired iPEC Coaching, a Shrewsbury, N.J.-based provider of coach training and certification solutions. www.ipeccoaching.com

Gryphon Investors acquired Kano Labs, a Nashville, Tenn.-based maker of branded industrial and consumer oils and lubricants. www.kanolabs.com

Leonard Green & Partners agreed to buy ECI Software Solutions, a Fort Worth, Texas-based provider of business management software for SMBs, from Apax Partners (which will retain a minority stake) and The Carlyle Group. www.ecisolutions.com

Warburg Pincus invested in McMakler, a German real estate brokerage. www.mcmakler.de

Public Offerings

Fortune Teller Wish GIF - Find & Share on GIPHY
Source: Giphy

Wish, a San Francisco-based mobile shopping app, filed for a $1 billion IPO. It plans to list on the Nasdaq (WISH) with Goldman Sachs as lead underwriter, and reports a $176 million net loss on $1.7 billion in revenue for the first nine months of 2020. The company was most recently valued by private investors at $11.2 billion, and raised $1.8 billion from such firms as DST Global, Founders Fund, Formation8, General Atlantic and GGV Capital. http://axios.link/lDvH

🚑 Maravai LifeSciences, a San Diego-based provider of acid production, safety testing, and protein detection products for biotech, raised $1.6 billion in its IPO. It priced at $27 per share (high end of range) for an initial market cap of nearly $7 billion, and will list on the Nasdaq (MRVI). The company is backed by GTCR, used Morgan Stanley as lead underwriter and reports $64 million of net income on $186 million of revenue for the first nine months of 2020. http://axios.link/vNAj

🚑 Sotera Health, a Broadview Heights, Ohio-based medical sterilization company backed by GTCR and Warburg Pincus, raised $1.1 billion in its IPO. The company priced at $23 per share (high end of range) for an initial market cap of $6.4 billion, and reports $5.3 million of net income on $401 million in revenue for the first half of 2020. It will list on the Nasdaq (SHC) and used JPMorgan as lead underwriter. http://axios.link/JxYo

Yatsen, a Chinese cosmetics company, raised $617 million in its IPO. The company priced at $10.50 (high end of range) and plans to list on the NYSE (YSG). It reports a $170 million net loss on $481 million in revenue for the first nine months of 2020. Shareholders include Hillhouse Capital (13.8% pre-IPO stake), ZhenFund (10.5%), and Banyan Partners (9.2%). http://axios.link/Dk3v

SPAC Stuff

🚑 Butterfly Network, a Guilford, Conn.-based medical imaging company, agreed to go public via a reverse merger with Longview Acquisition (NYSE: LGVW) at around a $1.5 billion enterprise value. The deal includes a $175 million PIPE from Fidelity, Glenview, Ridgeback, Tenet Healthcare, UPMC and Wellington Management. Butterfly had raised $390 million in VC funding from firms like Fidelity, Fosun Pharma, Bill & Melinda Gates Foundation and Jamie Dimon. www.butterflynetwork.com

Lightning EMotors, a fleet electrification startup, is in talks to go public via a reverse merger with GigCapital3 (NYSE: GIK), at a valuation of between $700 million and $1 billion, per Bloomberg. Lightening EMotors has raised around $27 million from backers like BP Ventures. http://axios.link/mvIH

• Perella Weinberg Partners is seeking to go public via a reverse merger with a SPAC, in a deal that could value the investment bank north of $1 billion, per Reuters. http://axios.link/kFG7

DD3 Acquisition II, a SPAC formed by DD3 Capital Partners, filed for a $100 million IPO.

Investindustrial Acquisition, a SPAC formed by Investindustrial, raised $350 million in its IPO. http://axios.link/HRZr

Kingswood Acquisition, a financial services-focused SPAC formed by Kingswood, raised $100 million in a downsized IPO.

OTR Acquisition Corp., a SPAC formed by Nicholas Singer’s Purchase Capital, raised $104.5 million in its downsized IPO.

Spartan Acquisition II, a North American energy-focused SPAC formed by Apollo Global Management, cut its IPO size from $400 million to $250 million.

Liquidity Events

FireEye (Nasdaq: FEYE) agreed to buy Respond Software, a Mountain View, Calif.-based provider of robotic decision automation software for security ops, for around $186 million in cash and stock. Respond had raised around $35 million from ClearSky, Foundation Capital and CRV. In other FireEye news, the company disclosed a $400 million investment led by Blackstone Tactical Opportunities. http://axios.link/zRTT

Warburg Pincus is seeking a buyer for Hygiena, a Camarillo, Calif.-based environmental testing and sanitation business, per PE Hub. www.hygenia.com

More M&A

BNP Paribas is considering a sale of Italian payments unit Axepta, which could fetch around €200 million, per Bloomberg. http://axios.link/iYyv

Elliott Management offered to buy Arzyta, a Swiss baking company and McDonald’s supplier, for around $872 million, per Bloomberg. http://axios.link/19Vx

L3Harris Technologies is seeking a buyer for its pilot training services business, which could fetch $1 billion, per Bloomberg. http://axios.link/uDCG

Fundraising

Astanor Ventures raised $325 million for its debut fund that will focus on European agri-food tech startups. Its team includes Eric Archambeau, who previously was with Benchmark and Wellington Partners. http://axios.link/JFav

Centerbridge Partners is raising $6 billion for its fourth flagship fund, and first since firm co-founder Mark Gallogly’s retirement. http://axios.link/keXn

Revolution is raising up to $500 million for its fourth growth equity fund, per an SEC filing. http://axios.link/0A0C

Sound Ventures, led by Ashton Kutcher and Guy Oseary, is raising $150 million for its third fund, per an SEC filing. http://axios.link/DeFd

🚑 SR One raised $500 million for its first fund since spinning out of GlaxoSmithKline, where it spent decades as the pharma giant’s VC arm. http://axios.link/kqT2

It's Personnel

Jennifer Morgan, former co-CEO of SAP, joined The Blackstone Group as global head of portfolio transformation and talent. www.blackstone.com

Final Numbers

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