May 31, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Situational awareness: The Trump administration reportedly has decided to impose steel and aluminum tariffs on European countries, Canada and Mexico.

Top of the Morning
Source: Giphy

Go to any investor conference these days, and you're certain to hear about urbanization. "We're investing in [e-scooters, grocery delivery, futon factories, etc.] because more and more people are moving to cities."

Perhaps you might want to put a hold on some of those checks.

Here's what William Frey, a senior fellow at Brookings, found in an examination of U.S. census data:

While most big cities are still gaining population, the rates of that gain are falling off for many of them as the nation’s population shows signs of broad dispersal.

More specifically, 65% of American cities with at least 250k people either lost population last year or experienced lower rates of growth (including 21 of the 25 largest). New York City, for example, added more than 90,000 people in 2010 and 2011, but just 7,300 last year.

  • Some of those leaving big cities are simply going to smaller ones, relocating from big coastal hubs for more affordable digs in the Midwest or Sunbelt.
  • But leaving cities altogether is also happening, as suburban growth outpaced urban growth for the second straight year.

Bottom line: Obviously the urban markets remain enormous, but the long-term growth prospects have changed.

Musical chairs: We've learned that Bradley Twohig is stepping down as a managing director with Insight Venture Partners, in order to join Lightspeed Venture Partners.

  • No comment from any of the principals, Twohig has told folks that he'll likely work on a dedicated growth equity fund at LSVP, which it doesn't really have yet (it does have "select" funds, which do later-stage rounds for existing LSVP portfolio companies).

The Fed yesterday proposed loosening the Volcker Rule, which had banned banks from certain short-term trading activities.

  • Volcker is part of the Dodd-Frank financial reform bill that was designed to prevent another financial crisis, and the Fed action comes just days after Congress made its own Dodd-Frank cuts.
  • Paul Volcker himself gave tentative support, arguing the original language was needlessly complex, so long as its basic spirit remains intact (i.e., preventing banks for speculative trades for their own benefit, while putting taxpayers on the hook if they're wrong).
  • Progressive groups were not nearly so pleased, arguing that the changes basically put all the onus on regulators who either might not be capable or interested in preserving said spirit.
  • Most of the proposed changes relate to prop trading, but the venture capital lobby is excited by talk that a current restriction on bank investments into VC funds could be lifted.
The BFD

General Motors (NYSE: GM) said that SoftBank Vision Fund will invest up to $2.25 billion into its Cruise self-driving program, with GM itself investing an additional $1.1 billion.

  • Why it's the BFD: Because GM reiterated that it plans to commercialize autonomous vehicles next year, and $1.35 billion of the SoftBank money doesn't kick in until that happens.
  • Bottom line: Lyft cannot be pleased. The ride-hail company raised $500 million from GM in early 2006, and put GM president Dan Ammann on its board of directors. But when asked this morning about its ride-hail plans, vis-a-vis self-driving, Ammann said that working with SoftBank gives GM "enhanced flexibility" given SoftBank's many ride-hail partners (i.e., Uber).
Venture Capital Deals

Uber earlier this year held unsuccessful talks about raising $3 billion from Warren Buffett's Berkshire Hathaway, as first reported by Bloomberg. http://axios.link/N0Lx

SenseTime, a Beijing-based developer of AI technologies like facial recognition, has raised $620 million in new funding (on top of the $600m, Alibaba-led round announced just last month). Fidelity International, Hopu Capital, Silver Lake and Tiger Global were joined by existing backer Qualcomm. http://axios.link/zTcf

🚑 Cortexyme, a South San Francisco-based developer of Alzheimer’s disease therapeutics, raised $76 million in Series B funding. Sequoia Capital, Vulcan Capital, Verily Life Sciences, EPIQ Capital Group, RSL Investments, Huizenga Capital were joined by return backers Pfizer, Takeda Ventures, Lamond Family, Breakout Ventures and Dolby Family Ventures. www.cortexyme.com

Klaxoon, a Paris-based provider of meeting efficiency SaaS, raised $50 million in Series B funding. Idinvest Partners led, and was joined by return backers Bpifrance, Sofiouest, Arkea and White Star Capital Fund. http://axios.link/7hDe

Trilogy Education, a skills-based training startup that partners with universities, raised $50 million in Series B funding from Highland Capital Partners, Macquarie Group and Exceed Capital. http://axios.link/bH9U

Hello Alfred, an on-demand home chore startup, raised $40 million in Series B funding from Divco West, Invesco and return backers Spark Capital and NEA. http://axios.link/JL6d

Ecobee, a Toronto-based smart thermostat maker, raised US$36 million from Caisse de dépôt et placement du Québec, AGL Energy and BDC. www.ecobee.com

FlyHomes, a Seattle-based home-buying and selling platform, raised $17 million in Series A funding led by Andreessen Horowitz. http://axios.link/onml

SnackNation, a Los Angeles-based tech-enabled snack delivery service, raised $12 million in Series B funding led by 3L Capital. http://axios.link/obnJ

Plum, a Dania Beach, Fla.-based appliance to preserve, chill and serve wine by the glass, raised $10 million in Series B funding led by Las Olas VC. http://axios.link/sJkz

Curai, a machine learning startup for doctor-patient data sharing and communication, raised $10.7 million in Series A funding. General Catalyst led, and was joined by Khosla Ventures. http://axios.link/QBvp

Cursor, a San Francisco-based developer of a search tool for internal databases, raised $2 million in a round led by Toba Capital. http://axios.link/uokU

Private Equity Deals

Encore Consumer Capital has invested in Tender Belly, a Denver-based provider of bacon and pork products. www.tenderbelly.com

Gen Cap America has sponsored a buyout of Mid America Metals, an Ozark, Mo.-based metal and stone refinishing and wood restoration company. www.midamericametals.com

🚑 Linden Capital Partners has acquired Evolution Research Group, a Watchung, N.J.-based clinical research site services company, from DFW Capital Partners. www.endeavorct.com

⛽ Lone Star has agreed to acquire Australian gas company Sino Gas & Energy Holdings (ASX: SHE) for A$530 million. http://axios.link/Xthm

Marlin Equity Partners has acquired FrontStream, a Reston, Va.-based provider of non-profit fundraising and corporate giving software, from Arsenal Capital Partners. www.frontstream.com

Warburg Pincus has committed up to $1 billion to three ex-Genpact execs, for a new platform (Vivtera) that will acquire business process management companies. http://axios.link/o2Gu

Public Offerings

BrightView, a Plymouth Meeting, Penn.-based provider of commercial landscaping services, filed for a $100 million IPO. It plans to trade on the NYSE (BV) with Goldman Sachs as lead underwriter. The company reports a $2.7 million net loss on $1.14 billion in revenue for the six months ending March 31. Shareholders include KKR (75.8% stake) and MSD Capital (17.7%). http://axios.link/9D4T

🚑 Provention Bio, an Oldwick, N.J.-based pharma company focused on immune-mediated diseases, set terms for its “best efforts” IPO to 12.5 million at $4 per share. It plans to trade on the Nasdaq (PRVB), with MDB Capital as sole underwriter. Shareholders in the pre-revenue company include MDB Capital, Johnson & Johnson, MacroGenics and Vactech. http://axios.link/awym

Liquidity Events

⛽ Equistone and Inflexion have agreed to sell UK Power Reserve, a British developer and operator of flexible power generation, to Singapore-based Sembcorp at an equity value of £216 million. www.inflexion.com

More M&A

21st Century Fox has set July 10 for a shareholder vote on its proposed sale of entertainment assets to Walt Disney Co. (NYSE: DIS), despite a pending counteroffer from Comcast. http://axios.link/k2YB

🚑 Allergan (NYSE: AGN) is seeking buyers for its women’s health and infectious disease units, which could fetch a total of $4.5 billion. http://axios.link/eYYB

🚑 Denali Therapeutics (Nasdaq: DNLI) has exercised an option to acquire blood-brain barrier bispecific antibodies from F-star Biotech in a deal that could be worth $471 million (including $24m upfront). http://axios.link/ZDXk

⛽ nel (Milan: ENEI) has agreed to buy listed Brazilian grid operator Eletropaulo for around $2 billion, beating out a rival bid from Iberdrola (Milan: IBE). http://axios.link/5vd8

• Suning.com, a listed Chinese e-commerce company, sold $1.5 billion worth of Alibaba (NYSE: BABA) shares, bringing its stake down to 0.51%. http://axios.link/xhRD

• Zynga (Nasdaq: ZNGA) has agreed to buy Istanbul-based Gram Games, a franchise-based game publisher seeded by Hummingbird Ventures, for $250 million. http://axios.link/5coK

Fundraising

Amaranthine, a San Francisco-based VC firm led by Patrick Murphy (ex-Universal Music Group), is raising up to $50 million for its debut fund, per an SEC filing.

It's Personnel

Ethan Choi has quietly joined Accel as a principal, after having previously been a VP with Spectrum Equity. www.accel.com

Peter Freire, former CEO of the Institutional Limited Partners Association, has joined Star Mountain Capital. http://axios.link/zwTK

Final Numbers
Via Mary Meeker's Internet Trends 2018 report
  • Top trend, per Mary Meeker: "At 3.6 billion, the number of Internet users has surpassed half the world’s population. When markets reach mainstream, new growth gets harder to find — evinced by 0% new smartphone unit shipment growth in 2017."
  • Go deeper: Read the full report
Dan Primack