Jun 21, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

As you've probably heard by now, Travis Kalanick has resigned as CEO of Uber. The move was confirmed to the NY Times at around 1:20am ET, which also was 30 minutes after Axios first reported that a group of Uber investors were pushing to have him removed.

  • What happened: Five Uber investors — Benchmark, First Round Capital, Fidelity Investments, Lowercase Capital and Menlo Ventures — yesterday sent a letter to Kalanick, asking for his resignation. Most other Uber investors were unaware of the proceedings until they were publicly reported (or told by a reporter).
  • Why it matters: Venture capitalists once had a reputation for canning CEOs, but that was left behind in this "founder friendly" era. Each of the participating firms took a big reputation risk here when it comes to future deal-flow, despite how the chattering class seems to think removing Kalanick was a no-brainer.
  • How it went down: Honestly, I'm still a bit unclear on this. Remember that Kalanick technically controlled Uber's board of directors, so long as Garrett Camp (Uber's founder and chairman) and Ryan Graves (Uber's first employee and SVP of global ops) remained in his corner. Theoretically the board could vote Kalanick out as CEO, but then his ruling troika could effectively dissolve the board. It remains unclear if one of his longtime allies flipped yesterday. One source said yesterday was like Game of Thrones, which may be bad news for Daenerys (assuming that Camp and Graves are her dragons in this analogy). It's also possible that Kalanick realized how difficult recruiting and fundraising would be if a large investor group made a public vote on non-confidence in him.
  • Next: Uber's troubled COO search now becomes its gold-plated CEO search, with the company expected to look both inside and outside of Silicon Valley. Don't be surprised to see some Fortune 500 names bandied about. Some possible candidates that come immediately to mind include Jeff Immelt, Meg Whitman, Mark Fields, Sheryl Sandberg and Adam Bain.
  • Legacy: I was asked on BBC Radio earlier this morning about "how we will remember Travis Kalanick," as if he had died. The guy remains on Uber's board and, until we learn differently, still has a major portion of voting stock. In other words, he's going to have a say in the company's future (which he'll want, given that, as of last check, he's never cashed in any shares).
  • But if we must: Kalanick changed global transportation for the better in a remarkably short period of time, but that same laser-focused ambition too often ignored and marginalized those who had helped realize his goals. As someone close to Uber recently said to me: "It's wrong to say that that Uber doesn't care about women. It doesn't really care about people, and women are people. It's incidental."

• Coming attractions: Wellington Management is raising $1.5 billion for its second fund focused on investments in private companies, per a job listing. The Boston-based mutual fund manager's debut private company fund, branded as Hadley Harbor, closed on around $1 billion in 2014. And if Wellington is mentioning Hadley Harbor II in this sort of listing, chances are that most commitments are wrapped up.

• Chip dip: Toshiba Corp. has named a consortium that includes Innovation Network Corp. of Japan (INCJ) and private equity firm Bain Capital as the preferred bidder for its semiconductor business, with an offer of around $18 billion.

What's key to know here is that INCJ/Bain isn't the preferred bidder in terms of price or strategic synergies — a rival offer from Broadcom/Silver Lake seems to be superior on both fronts — but rather is preferred because INCJ is linked to the Japanese government. It's an interesting turn of the decade for Bain Capital, which in 2008 was effectively blocked by U.S. government regulators from buying networking company 3Com, because its partner on the deal was Huawei Technologies, which was believed to have ties to China's government.

The BFD

BMC Software, a portfolio company of Bain Capital and Golden Gate Capital, is in early talks to acquire CA Inc. (Nasdaq: CA), a New York-based business software company with a current market cap north of $13 billion, according to Bloomberg.

  • Why it's the BFD: If it were to happen, this would be the largest leveraged buyout of a tech company since PE-backed Dell bought EMC a couple of years back. It also would be significantly more expensive than Bain and Golden Gate's original takeover of BMC back in 2013, which was valued at around $6.9 billion.
  • Bottom line: "CA, formerly known as Computer Associates, has its roots in providing mainframe computers used by large institutions like banks. It has been trying to shift its business to the cloud, and announced in March that it was acquiring application security firm Veracode for $614 million." — Liana Baker, Reuters
Venture Capital Deals

🚑 Rubius Therapeutics, a Cambridge, Mass.-based developer of "technology to grow, genetically engineer and mature long-circulating red cell therapeutics," has raised $120 million in new VC funding. The only disclosed investor is founding backer Flagship Pioneering. http://bit.ly/2tss2Il

• Cybereason, a Cambridge, Mass.-based endpoint cybersecurity company, has raised $100 million in new funding from existing investor SoftBank. Other prior backers include CRV, Spark Capital and Lockheed Martin. http://on.ft.com/2rQ05NL

• Syntimmune, a New York-based FcRn biology startup, has raised $50 million in Series B funding led by Apple Tree Partners. http://bit.ly/2rCi5Xw

• Scalable Capital, a German robo-advisor, has raised €30 million in new VC funding. BlackRock led the round, and was joined by return backers Holtzbrinck Ventures and Tengelmann Ventures. http://reut.rs/2sAbEpd

• Textio, a Seattle-based developer of an augmented writing platform, has raised $20 million in Series B funding. Scale Venture Partners led the round, and was joined by return backers Bloomberg Beta, Cowboy Ventures, Emergence Capital and Upside Partnership. www.textio.com

• M. Gemi, a Boston-based online seller of handcrafted Italian shoes, has raised $16 million in new VC funding. Burda Principal Investments led the round, and was joined by return backers Accel, General Catalyst and Forerunner Ventures. http://bit.ly/2tpzt2W

• Keypr, a Los Angeles-based guest experience and management platform for hotels, casinos and residences, has raised $12.8 million in Series A1 funding. Karlani Capital led the round and was joined by individual angels. http://bit.ly/2sw00M7

• Unbxd, a Mountain View, Calif.-based product discovery platform for e-commerce, has raised $12.5 million in Series C funding. Eight Roads Ventures led the round, and was joined by Eight Roads Ventures, IDG Ventures, Inventus Capital Partners and Nirvana Ventures. www.unxbid.com

• EaseCentral, a San Francisco-based SaaS platform for HR and benefits, has raised $6.5 million in Series A funding. Propel Venture Partners led the round, and was joined by return backers Freestyle Capital, Compound, Upside Partnership and Transmedia Capital. http://bit.ly/2smNgsO

• GreatHorn, a Belmont, Mass.-based provider of cybersecurity solutions for cloud communications platforms, has raised $6.3 million in Series A funding. Techstars VC Fund and .406 Ventures co-led the round, and were joined by ff Venture Capital, SoftTech Ventures and RRE Ventures. www.greathorn.com

• Mic, a millennial-focused online content company, has raised $6.5 million in new Series C funding from WPP PLC, bringing the round total to $28.4 million. Existing backers include Lightspeed Venture Partners, Time Warner Investments, kyu Collective and You & Mr. Jones. http://bit.ly/2rRgrFz

• CloudPost Networks, a Santa Clara, Calif.-based developer of security and risk management software, has raised $4 million in Series A funding led by Wing Venture Capital. www.cloudpost.us

• Lingokids, a Madrid-based English learning platform, has raised $4 million in new VC funding from Holtzbrinck Ventures, JME Venture Capital and Bessemer Ventures Partners also participated. http://tcrn.ch/2sRP3Hz

• Modacruz, a Turkey-based mobile marketplace for secondhand women's clothing, has raised $2 million in Series B funding led by Middle East Venture Partners. http://bit.ly/2rzMrtH

🚑 Intelligent Retinal Imaging Systems, a Pensacola, Fla.-based provider of early detection systems for diabetic eye disease,, has raised an undisclosed amount of Series B funding. Ballast Point Ventures led the round, and was joined by Providence Ventures and CoxHealth. www.retinalscreenings.com

Private Equity Deals

• The Blackstone Group, Cindat Capital Management (China) and GIC (Singapore) are among the bidders for a 50% stake in the Australian senior housing business of LendLease Group (ASX: LLC), according to Bloomberg. The deal could be worth around A$1 billion. https://bloom.bg/2sSOsW3

• Callcredit Information Group, a British portfolio company of GTCR, has acquired Confirma Sistemas and Soluciones Confirma, a pair of Spanish sister companies that provide fraud prevention and anti-money laundering software. No financial terms were disclosed. www.callcredit.co.uk

• Hellman & Friedman has agreed to acquire SnapAV, a Charlotte-based maker of "installation-friendly audio, visual, networking, power and surveillance products for the home, from General Atlantic. No financial terms were disclosed. www.snapav.com

• Global Environment Fund has acquired Gro-Well Brands, a Phoenix-based provider of natural and organic lawn and garden products. No financial terms were disclosed. www.gro-well.com

• MidOcean Partners has acquired a controlling interest in Affinity Dental Management Holdings, a provider of management and administrative support services for dental practices in Western Massachusetts, Connecticut and Vermont. www.midoceanpartners.com

🚑 RoundTable Healthcare Partners has invested in Deerland Enzymes & Probiotics, a Kennesaw, Ga.-based maker of enzyme- and probiotic-based dietary supplements. No financial terms were disclosed. http://bit.ly/2sPD3FL

• Sverica has acquired iWave Information Systems, a Prince Edward Island-based provider of fundraising intelligence SaaS to healthcare, education and nonprofit organizations. No financial terms were disclosed. www.iwave.com

• Tech Air, a Danbury, Conn.-based portfolio company of CI Capital Partners, has acquired Angelus Welding, a Los Angeles-based distributor of welding supplies and industrial gases. No financial terms were disclosed. http://bit.ly/2sSQe9q

Liquidity Events

🚑 Lee Equity Partners has hired Moelis & Co. to find a buyer for Eating Recovery Center, a Denver-based provider of eating disorder treatment centers that is expected to generate around $45 million in 2017 EBITDA, according to Dow Jones.

More M&A

• Cosco Group, a Chinese state-owned shipping container operator, is in advanced talks to acquire smaller rival Orient Overseas Container Line for at least $4 billion, according to the WSJ. http://on.wsj.com/2sStwyB

• Ericsson has hired Morgan Stanley to explore a sale of its media solutions business, and hired Goldman Sachs to explore a sale for its broadcast and media services unit, according to Bloomberg. The Swedish tech company also agreed to sell its power modules business to Flex (Nasdaq: FLEX) for an undisclosed amount. https://bloom.bg/2sSeRDK

• Landing Trade Group has agreed to acquire Interstate Commodities, a Troy, N.Y.-based grain management company, for an undisclosed amount. http://reut.rs/2sNVDy9

⛽ Rio Tinto (LSE: RIO) has rejected a $2.5 billion offer from Glencore PLC (LSE: GLEN) for its Australian coal assets, instead recommending an earlier $2.45 billion offer from Yancoal Australia (ASX: YAL) – which Rio Tinto believes could be completed faster. http://on.wsj.com/2rCfnBo

• Unilever has agreed to acquire Hourglass, a luxury color cosmetics brand. No financial terms were disclosed. http://bit.ly/2rAmwlA

Fundraising

• Adams Street Partners has raised $475 million in LP commitments for new direct VC and growth equity efforts. www.adamsstreetpartners.com

• Morado Ventures is targeting $75 million for its third fund, per an SEC filing. www.moradoventures.com

• Seven Peaks Ventures, a Bend, Ore.-based VC firm, is raising upwards of $30 million for its second fund, per an SEC filing. www.sevenpeaksventures.com

• TPG Capital is planning to begin raising $3 billion for its fourth growth equity fund later this year, according to Bloomberg. https://bloom.bg/2tq7Yqf

It's Personnel

• Tony Bates, the former Skype executive who most recently was president at GoPro, has joined venture firm Social Capital as CEO of a new growth equity arm. http://bit.ly/2rzYsiW

• Kenna Baudin has been promoted to head of U.S. private equity at executive search firm Egon Zehnder.

• Bessemer Venture Partners has promoted Charles Birnbaum, Amit Karp and Kristina Shen to partner. www.bvp.com

🚑 Jorge Conde, former chief strategy officer for Syros Pharmaceuticals and the founding CEO of Knome, has joined Andreessen Horowitz as the second general partner on the firm's bio fund. www.a16z.com

• Mark Cranney, a former operating partner with Andreessen Horowitz and an ex-Opsware executive, has joined SignalFx as chief commercial officer.

• Jeffrey Housenbold has joined SoftBank as a senior investing member of the $93 billion Vision Fund. He previously was CEO of Shutterfly. SoftBank also confirmed earlier reports that former Deutsche Bank investment banker Colin Fan has joined in a similar capacity. www.softbank.com

• Mark Lehmkuhler has joined law firm Orrick as a Hong Kong-based partner in its M&A and private equity group. He previously was a partner with Davis Polk. www.orrick.com

• Hal Malone has joined WL Ross & Co. as head of its shipping and transportation practice. He previously was chief strategic officer of shipping management company Navig8 Group and, before that, was a maritime industry banker with Jefferies. www.wlross.com

• Go Yamashita has been named head of KKR Capital Markets Japan. He previously was with The Blackstone Group. http://bit.ly/2sUP7G5

Final Numbers

More: Oil's big slide

Dan Primack