Dec 5, 2017

Axios Pro Rata

Top of the Morning

Last night I interviewed Michael J. Fox and Debi Brooks, a former Goldman Sachs banker and co-founder of the Michael J. Fox Foundation, at an event in Half Moon Bay. No matter how cliche it may sound or how jaded I typically am, the only appropriate word for it was: Inspiring.

One piece is that Fox, who was diagnosed with Parkinson's Disease back in 1991, manages not only to make such appearances despite his obvious challenges, but also that he does so more out of optimism than obligation. When I asked him before we went on stage if he dreads this sort of thing, he gave me a look that said both: I've been asked this before, and I still don't really understand the question.

The other piece is that the Fox Foundation, which now has raised around $750 million since its 2000 founding, is disruptive in a way that should appeal to financiers and founders. It has partnered directly with pharma companies without asking for equity in return (that may not sound unusual, but it really is). For example, it played an integral role in Denali Therapeutics, which is expected to go public this week, but isn't on the cap table. Its early grants came with two-week turnaround times. It has no endowment, nor wants one. Money goes out almost as soon as it comes in, with a sincere goal of putting itself out of business. A few Fox quotes from our on-stage conversation:

  • "It's not a nebulous cloud of doom that hangs over my head. It's a set of challenges and there are rewards in meeting those challenges.... When I go see a doctor there's no question who the expert is. I'm the expert, because I'm living it."
  • "As I learned in school, biology is hard."
  • "When we started the Foundation it was how can we solve this problem... I had a lot of friends in hedge funds and on Wall Street and I thought I need some of these guys. We approached it like a startup."
  • "I recently did an interview with Jane Pauley and I was in tears when I left the patient roundtable portion of the segment. Because it reminded me how much they mean to me. A 34 year-old mother of three in the suburbs and who doesn't have access to the same things I have access to, but she has the same experiences. We don't want anything ridiculous – we just want a cure."

• Papers filed: Suneel Gupta, a former Groupon product development exec who later founded VC-backed Rise Labs (sold to One Medical last year), yesterday announced that he is running for Congress in Michigan's 11th district.

  • Why it matters: Gupta says he's the first tech entrepreneur to run for Congress in a Rust Belt state. He's also married to tech journalist Leena Rao, who many of you likely know from her days at Fortune and TechCrunch, and is the brother of CNN doc Sanjay Gupta.
  • Ballot basics: He's a Democrat and will have to navigate a crowded primary field, but it's an open seat as current Rep. Dave Trott (R) has decided not to run for reelection.
  • Bio pitch: Gupta was born and raised in the district, before eventually leaving for Silicon Valley. He says his mother was a refugee from India who "walked into Ford Motor Company, asked for a job and was hired as its first-ever female engineer." Both of his parents, however, experienced being laid off from their auto sector jobs on the same day in 2001.
  • Political pull: Gupta and Rise Labs worked with Michelle Obama on her obesity and healthcare initiatives, ultimately forming a sort of public-private partnership between the startup and The White House. He later would be part of the Hillary Clinton transition team — charged with staffing the Office of Science and Technology — but obviously that was a short-lived post.

• Sooooo quiet: It's been five days since Bloomberg revealed sexual harassment allegations by five women against venture capitalist Shervin Pishevar, who has denied the allegations. A few notes:

  • The relative silence on this from Pishevar's peers in Silicon Valley, via social media or other means, is deafening. I'm not sure if it's fatigue over these types of stories, a reflection on Pishevar being more connected and successful than someone like Justin Caldbeck or case-specific disbelief. All I know is what I don't hear.
  • Silicon Valley Bank, which just last month launched a major partnership with Pishevar's Sherpa Foundry, will not return phone calls nor emails about the situation. That goes for both PR and SVB CEO Greg Becker. TPG Capital, an early LP in Sherpa Capital funds, will at least pick up the phone, but then declines comment. Hyperloop One, which Pishevar co-founded and where he serves as co-executive chairman, also isn't talking (possibly because it's in the midst of fundraising).
  • Definers, the oppo research firm Pishevar sued last month for running an alleged "smear campaign" against him, has until tomorrow to file its reply with the court.

Discovery Communications (Nasdaq: DISC) has agreed to pay $70 million for an additional 24.5% stake in OWN, the cable channel joint venture with Oprah Winfrey. This gives Discovery a majority ownership north of 70%, with Winfrey's Harpo Inc. retaining the rest.

  • Why it's the BFD: Um, it's a deal involving Oprah, who extended her exclusivity agreement with OWN through 2025. It's the first time she's taken any cash out of OWN, which she and Discovery first announced back in 2006.
  • Bottom line: "Discovery is increasing its stake in OWN as it looks to complete its acquisition of fellow cable programmer Scripps in early 2018, whose stable including Food Network and HGTV will be combined with Discovery's portfolio of female-focused networks, including TLC, ID and OWN. That gives Discovery five of the top pay-TV networks for women, representing 20% share of women watching primetime pay-TV in the U.S." — Nellie Andreeva, Deadline
Venture Capital Deals

• Kespry, a Menlo Park, Calif.-based industrial drone startup, has raised $33 million in Series C funding. G2VP led, and was joined by Shell Technology Ventures, Cisco Ventures and ABB Ventures.

• Contentful, a Berlin-based "API-driven content management developer platform," has raised $28 million in Series C funding. General Catalyst led, and was joined by return backers Benchmark, Balderton Capital and Point Nine Capital.

• NGData, a New York-based provider of customer experience management solutions, has raised $19 million in Series C funding. HPE Growth Capital led, and was joined by Idinvest Partners, Pamica, SmartFin Capital, Capricorn Venture Partners and Nausicaa Ventures.

🚑 Qvella, a Toronto-based molecular diagnostics startup focused on rapid detection of infectious agents via direct blood sample, has raised C$25 million in Series C funding from RA Capital, Whitecap Venture Partners, Hatteras Ventures, BioMérieux and Sands Capital.

• Simplus, a Salt Lake City-based quote-to-cash startup, has raised $9.3 million in Series B funding. Epic Ventures led the round, and was joined by fellow return backers Salesforce Ventures and Cross Creek Advisors. The company also secured $8.5 million in new debt financing from Silicon Valley Bank.

• Earny, an app that "automatically monitors for and claims refunds when prices drop on past purchases," has raised $9 million in Series A funding. Mayfield led, and was joined by Comcast Ventures and return backer Science Inc.

• Guardian Optical Technologies, an Israeli developer of sensor technology for automobile manufacturers, has raised $5.1 million in Series A funding from Maniv Mobility and Mirai Creation Fund.

• Elsen, a Boston-based quant investing platform-as-a-service for financial institutions, has raised $2.4 million in seed funding. Hyperplane Venture Capital led the round, and was joined by Accomplice and Launch Capital.

• TravelNest, a Scottish ad platform for holiday rentals, has raised £3 million in seed funding from Pentech, Mangrove Capital Partners, Frontline Ventures and Mark Logan.

• Leapmotor, a Chinese automaking startup founded by Dahua Technology, has raised its first round of outside funding led by Sequoia Capital China.

• Rani Therapeutics, a San Jose, Calif.-based biotech startup focused on converting injectable drugs into oral drugs, has secured an equity investment from Shire (Nasdaq: SHPG) as part of a broader research partnership. Rani previously raised around $100 million in VC funding from firms like GV.

• WM Motor Technology, a Chinese electric vehicle startup, has raised an undisclosed amount of new funding from Baidu, Amiba Capital and Susquehanna International Group.

Private Equity Deals

The Access Group, a Berkeley Heights, N.J.-based life sciences commercialization company owned by Water Street Healthcare Partners, has acquired Alliance Life Sciences (revenue and pricing optimization) and Health Strategies Group (market intelligence for pharma and biotech).

AEA Investors has completed its previously-announced acquisition of Excelitas Technologies, a Waltham, Mass.-based provider of photonics technology solutions, from Veritas Capital.

• Affinity Equity Partners, Baring Private Equity and Yue Yuen Industrial Holdings are among the final bidders for Trimco International Holdings, a Kong Hong-based garment label maker that could be worth $500 million, per Bloomberg. Sellers would include Partners Group.

• DSG, a provider of outsourced sales training and enabling services, has raised an undisclosed amount of equity funding from Stone-Goff Partners.

• H.I.G. Capital has acquired Velocity Solutions, a Ft. Lauderdale, Fla.-based provider of enhancement solutions to regional banks, community banks and credit unions.

• Macquarie Infrastructure has agreed to acquire a majority stake in INEA, a Poland-based cable and fiber-to-the-home operator, from Warburg Pincus.

• Nellson Nutraceutical, an Irwindale, Calif.-based nutritional bar company owned by Kohlberg & Co., has acquired Genysis Brand Solutions, a Salt Lake City-based manufacturer of functional powders. Not included are Genysis affiliates Dyad Labs (fk.a. Genysis Labs) and Sensapure Flavors, which were spun of as independent entities.

• Oncap has acquired IntraPac International, a Mooresville, N.C.-based provider of specialty rigid packaging solutions, from CI Capital Partners.

• Procare Software, a Medford, Ore.-based child care management company owned by TA Associates, has acquired KidReports, a Denver-based provider of real-time reporting solutions for child care providers.

Public Offerings

• Casa Systems, an Andover, Mass.-based maker of cable and mobile edge devices, set its IPO terms to 8.4 million shares at $15-$17. It would have a full-diluted market value of $1.5 billion, were it to price in the middle. The company plans to trade on the Nasdaq under ticker CASA, with Morgan Stanley and Barclays serving as lead underwriters. Casa Systems reports $6 million of net income on $234 million in revenue for the first nine months of 2017. Shareholders include Summit Partners (52% pre-IPO stake) and Liberty Global Ventures (6%).

Liquidity Events

• Zeta Global, a New York-based SaaS marketing automation platform, has acquired online commenting service Disqus. Zeta recently raised $115 million in Series F funding at a $1.3 billion valuation, while Disqus had raised over $14 million in VC funding from firms like North Bridge Venture Partners, Iris Capital Management and Union Square Ventures.

More M&A

• Banca Carige (Milan: CRGI) has agreed to sell its consumer credit business to British hedge fund Chenavari (LSE: CCSL).

• Bank of Nova Scotia (TSX: BNS) has agreed to acquire a majority stake in the Chilean operations of Spanish bank BBVA for around $2.2 billion.

• Cineworld (LSE: CINE) has agreed to buy U.S. peer Regal Entertainment (NYSE: RGC) for around $3.6 billion in cash.

⛽ Sinochem is seeking to sell its logistics unit for upwards of $500 million.


• Audax Group recently held unsuccessful discussions to sell a piece of itself to other private equity firms, per the WSJ.

• Corridor Capital, as Los Angeles-based private equity firm focused on lower middle-markets, is raising upwards of $200 million for its third fund, per an SEC filing.

⛽ EnCap Investments has raised $7 billion for its ninth private equity fund focused on the North American upstream oil and gas sector.

• Rise of the Rest, the Revolution-affiliated fund focused on startups outside of major tech centers, has raised $150 million for a new fund.

It's Personnel

• Chris Cho has joined Adams Street Partners as a principal and head of the firm's new office in Seoul. He previously was in Lazard Asset Management.

• General Atlantic has promoted Wai Hoong Fock and Paul Stamas to managing director, Pierre Samec to operating partner and Luis Cervantes, Christian Figge, David George, Anna Golynskaya, Shaw Joseph and Melis Kahya to principal.

• JMI Equity has promoted both Suken Vakil and Randy Guttman to general partner. Guttman also will continue to serve as the growth equity firm's CFO.

• Mike Pellini, the former CEO of cancer companies Foundation Medicine (Nasdaq: FMI), has joined Section32, the venture capital firm launched earlier this year by Google Ventures founder Bill Maris.

• Steve Pusey (ex-CTO of Vodafone) has joined Bridge Growth Partners as a London-based senior advisor.

• Wylie Tollette is stepping down as chief operating investment officer at CalPERS, which he joined in 2014. He'll be succeeded on an interim basis by Matt Flynn.

Final Numbers

More findings from the new Probitas Partners survey of 98 institutional investors:

  • Increased fear of a market top.
  • Investors remain most interested in middle-market buyout funds (North America and Europe), despite concerns about high valuations.
  • Strong interest in sector-specific funds, particularly in tech and healthcare.
  • Interest in VC funds decreased after three straight years of growth.