Axios Pro Rata

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October 10, 2018

Top of the Morning

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The Wall Street Journal last night reported that SoftBank Vision Fund is "in discussions to take a majority stake in WeWork," the co-working space giant in which SoftBank last year acquired a 20% stake for $4.4 billion. Here's what we've learned, per sources familiar:

WeWork co-founder and CEO Adam Neumann originally was amenable to a deal whereby he'd lose at least short-term control of the company, but with the ability to regain control were WeWork to hit certain revenue milestones (e.g. some sort of clawback). Now, however, the talks involve Neumann retaining control, although the ultimate structure could be pretty convoluted.

But no final agreement is signed or very close to being signed, and there may even be talks with other parties or with SoftBank about alternate structures.

SoftBank basically wants to accelerate its "gain market share at all costs" strategy, which has been talked about inside of WeWork since the day SoftBank first invested.

  • This is similar to what the Japanese giant has employed at other Vision Fund portfolio companies, and a hot topic among VCs has become if it can really work beyond the consumer services sector (particularly in enterprise software, where Vision Fund has been taking a hard look).

WeWork bonds, which recently hit their lowest mark since early June, are getting a small bump from the report, re-approaching 96 cents on the dollar.

I'm still wondering how the Jamal Khashoggi situationwhich intensified last night — would play into WeWork's willingness to give Saudi-backed Vision Fund an even bigger stake.

  • In that vein, it's worth noting that Sam Altman (Y Combinator), Marc Andreessen (Andreesssen Horowitz) and Dan Doctoroff (Google's Sidewalk Labs) reportedly joined an advisory board for the Saudi government's $500 billion mega-city project, called Neom.

Dating docket: Match Group yesterday responded to Sean Rad and the other founders of dating app Tinder, who sued Match and parent company IAC two months ago for allegedly undervaluing Tinder last year, thus depriving them of compensation. In short, Match argued in a new court filing that this is just sour grapes from those who sold their shares too soon and is asking a New York court to dismiss the lawsuit. Go deeper.

🎧 Pro Rata Podcast: Our latest episode focuses on Google's latest user data leak, and why it took so long to disclose. Listen here.


Sears Holdings (Nasdaq: SHLD) is preparing for a possible bankruptcy filing that could come as soon as this week, ahead of a $134 million debt payment due Monday, according to the WSJ. The company also yesterday added restructuring expert Alan Carr to its board of directors.

  • Why it's the BFD: Because Sears was to the last century of American retail what Amazon has become to this century: Trailblazing, ubiquitous, and iconic.
  • Wild card: Eddie Lampert, the company's CEO, largest shareholder and largest creditor, who believes a bankruptcy filing could be Sears' reputational death knell. He's proposed a severe slim-down plan that would include divestitures of real estate and the Kenmore brand, the latter of which he offered to buy for $400 million.
  • Bottom line: "This is the inevitable end game of an effective liquidation process that has been going on for many years. Throughout that time the sale of various assets along with injections of cash from Eddie Lampert have kept the ailing retailer from going under. However, the activity is akin to bailing out water from a holed ship: It keeps the vessel afloat for longer but does nothing to sort out the underlying problem." — Neil Saunders, GlobalData Retail

Venture Capital Deals, a Chinese e-commerce platform for fresh produce that connects farmers with restaurants, reportedly raised $600 million in sixth-round funding from Hillhouse Capital and return backer Tiger Global.

Egnyte,, a Mountain View-based content collaboration and governance platform, raised $75 million from Goldman Sachs.

🚑 Gotham Therapeutics, a New York-based developer of drugs targeting RNA-modifying proteins, raised $54 million in Series A funding. Versant Ventures, Forbion and S.R. One co-led, and were joined by Celgene and Alexandria Venture Investments.

🚑 Rgenix, a New York-based developer of small molecule and antibody cancer therapeutics, raised $40 million in Series C funding. Lepu Medical led, and was joined by Oceanpine Capital, WuXi AppTec and return backers Novo Holdings, Sofinnova Partners, Alexandria Venture Investments, and the Partnership Fund for New York City.

Netlify, a San Francisco-based app delivery network, raised $30 million co-led by Kleiner Perkins and Andreessen Horowitz.

CNEX Labs, a San Jose, Calif.-based developer of architecture for solid state drive controllers, raised $23 million in Series D funding led by Dell Technologies Capital.

Kettlebell Kitchen, a Brooklyn-based prepared healthy meal service, raised $26.7 million in Series B funding led by North Castle Partners.

TidalScale, a Campbell, Calif.-based developer of software-defined servers, raised $24 million in Series B funding from Bain Capital Ventures, Hummer Winblad, Sapphire Ventures, Infosys and SK Hynix.

🚑 Glympse Bio, a Cambridge, Mass.-based developer of in vivo sensing technology for disease monitoring, raised $22 million in Series A funding led by LS Polaris Innovation Fund and Arch Ventures co-led, and were joined by CRV, Gilead Sciences, Yonghua Capital, Inevitable Ventures and return backers GreatPoint Ventures, Heritage Provider Network and Rivas Capital.

Once Upon a Farm, a Berkeley, Calif.-based organic baby food startup co-founded by actress Jennifer Garner, raised $20 million in Series B funding led by CAVU Venture Partners.

Finger, a Chinese online music education platform, raised $14.5 million in Series B funding. Residential property manager Greentown Service Group led, and was joined by SVB and return backer Vision Plus Capital.

RWDC Industries, a Singapore-based developer of biopolymer material solutions, raised $13 million in Series A-2 funding co-led by Vickers Venture Partners and WI Harper Group. The company has a production facility in Athens, Georgia.

Gowork, an Indonesian co-working space startup, raised $10 million co-led by Gobi Partners and The Paradise Group.

Pipedrive, a New York-based provider of sales pipeline software, raised $10 million in Series C funding from Deutsche Telekom Capital Partners.

Accion Systems, a Cambridge, Mass.-based small satellite propulsion startup, raised $3 million from Boeing’s HorizonX Ventures.

Teraki, a Berlin-based edge processing startup, raised $3 million from Paladin Capital Group and GPS Ventures.

Private Equity Deals

AE Industrial Partners bought The Atlas Group, a Phoenix-based maker of complex assemblies for aircrafts that will be combined with existing AEI portfolio company FMI.

BGH Capital is leading a A$1.97 billion takeover offer for Australian private education company Navitas (ASX: NVT).

The Blackstone Group and Hellman & Friedman are considering a joint takeover bid for Nielsen (NYSE: NLSN), the market research firm with an enterprise value of around $17 billion, per the FT. The consortium also could include GIC and Canada Pension Plan Investment Board.

New Water Capital invested in The Perfect Bite, a Glendale, Calif.-based R&D firm for the frozen food industry.

Peak Rock Capital acquired Louisiana Fish Fry, a Baton Rouge-based maker of branded food products like sauces and rice mixes.

Thoma Bravo agreed to buy Redwood Shores, Calif.-based cybersecurity company Imperva (Nasdaq: IMPV) for $2.1 billion, or $55.75 per share (29.5% premium over yesterday’s closing price).

Thoma Bravo completed its purchase of Apttus, a San Mateo, Calif.-based provider of quote-to-cash business process automation solutions that had raised over $400 million in VC funding (most recently at a $1.8 billion valuation). Sellers included Premji Invest, Salesforce Ventures, K1 Capital, Iconiq Capital, IBM Ventures and Kuwait Investment Authority.

Public Offerings

🚑 LogicBio, a Cambridge, Mass.-based gene editing company focused on rare diseases, set IPO terms to 5.8 million shares at $12-$14. It would have a fully-diluted market value of $294 million if it were to price in the middle, and plans to trade on the Nasdaq (LOGC) with Jefferies as lead underwriter The company has raised around $50 million from firms like OrbiMed (35.33% stake), Arix Bioscience (15.26%) and Pontifax (9.15%).

Niu Technologies, a Chinese e-scooter maker, set IPO terms to 8.3 million shares at $10.50-$12.50. It would have a fully-diluted market value of $900 million if it were to price in the middle, and plans to trade on the Nasdaq (NIU) with Credit Suisse as lead underwriter. The company reports a $48 million net loss on $84 million in revenue for the first half of 2018. Shareholders include GGV Capital (11.2% stake).

Studio City International, a Macau resort and casino company being spun out of Melco International,(HK: 200), set IPO terms to 28.8 million shares at $10.50-$12.50. It would have a fully-diluted market value of $854 million if it were to price in the middle, and plans to trade on the NYSE (MSC) with Deutsche Bank as lead underwriter.

Liquidity Events

🚑 Therachon, a Swiss biotech focused on rare diseases like achondroplasia, agreed to buy GLyPharma Therapeutic, a Montreal-based developer of drugs for short bowel syndrome and other rare gastrointestinal diseases. Therachon has raised $100 million in VC funding from firms like Novo Holdings, Pfizer, OrbiMed and Versant Ventures. GLyPharma raised $12 million in 2012 from Fonds de solidarité FTQ, CTI Life Sciences Fund and Ferring Pharmaceutical.

More M&A

TransDigm Group (NYSE: TDG) agreed to buy smaller aircraft component supplier Esterline Technologies (NYSE: ESL) for $3.6 billion.

Trian Fund Management has taken a 2.9% stake in paints and coatings company PPG Industries (NYSE: PPG), valued at $690 million, per the WSJ.


Aldrich Capital Partners, a Vienna, Va.-based growth equity firm, closed its debut institutional fund with $256 million.

Alexander Navab, KKR's former head of Americas private equity, is forming a new buyout firm with the backing of Goldman Sachs, per Reuters.

🚑 HealthpointCapital held a $100 million first close for its fourth private equity fund focused on the musculoskeletal space, which is targeting a total of $500 million.

It's Personnel

David Lee has left Houlihan Lokey to join Piper Jaffray as a New York-based managing director within its financial sponsors coverage group.

FTV Capital promoted Robert Anderson to partner. His board seats include Tango Card, Neon One, Catalyst, EBANX, Enfusion Systems and VPay.

Final Numbers: Fund managers incorporating ESG

Source: Cambridge Associates; ESG=Environmental, social & corporate governance.