Sep 18, 2020

Axios Pro Rata

🎧 Axios Re:Cap digs into Amazon's $2 billion fund focused on climate change tech. Is it more spin than substance? What kind of company does it want to back, but can't yet find. We talk to Matt Peterson, Amazon's head of new initiatives.

Top of the Morning

Photo illustration: Aïda Amer/Axios; Photo via the Washington Post

Every merger story is its own special snowflake, but TikTok goes down as the strangest one I've ever covered. And the first page of the final chapter should get written later today, with a statement from President Trump.

The latest: The Commerce Department this morning issued an order blocking new downloads of TikTok by U.S. users, beginning Sunday.

  • TikTok itself would be allowed to continue operating at least through Nov. 12, for those who've already downloaded it.
  • Apple and Android would be allowed to keep TikTok in their app stores for non-U.S. users.

Between the lines: Commerce had to come out with rules, per Trump's original executive order. So to some extent this was expected, but it's surprising that Commerce got ahead of the president — were Trump to accept the proposed deal with Oracle, then there would be no need for the Commerce rules.

  • It's also worth remembering that TikTok has an existing lawsuit to block the executive order, based on both process and substance (it has a better chance of winning on the former than on the latter).
  • If there is a ban, or if Trump doesn't make an announcement, TikTok likely will file for an emergency injunction before the close of court in California.

Trump was noncommittal yesterday when asked by reporters about TikTok. Per a pool report: "Well we're making a decision. We spoke today to Walmart, Oracle. I guess Microsoft is still involved. We'll make a decision, but nothing much has changed. We'll make a decision soon."

  • Microsoft is not involved. No one seems to know why Trump said that and the WH won't elaborate.
  • He's also wrong about nothing changing. ByteDance sent Treasury its proposal on Sunday. On Wednesday night, Treasury sent back a redlined version. Yesterday, ByteDance agreed to all the substantive changes, most of which were about source code assurances, data sovereignty and other tech specs.
  • Axios' Ina Fried scooped lots more detail on what the current proposal includes.

Bottom line: Don't lose sight of how abnormal this all is. A company with hundreds of U.S. employees and around 100 million U.S. users is waiting for one man to decide if it can continue operations, less than 24 hours after that man was unclear on which parties were even still involved. No one-minute video could ever do it justice.

The BFD

Illustration: Sarah Grillo/Axios

GNC Holdings, the Pittsburgh-based nutritional supplements retailer, received bankruptcy court approval to sell itself to China’s Harbin Pharma for $770 million, although the deal still faces U.S. political pressures over how GNC customer data is protected.

  • Why it's the BFD: It's a reminder that the U.S.-China merger mess goes well beyond smartphone apps, with Sen. Marco Rubio asking for a CFIUS review.
  • Details: Harbin still needs Canadian bankruptcy court approval for the deal, which would see it assume around 1,400 storefronts (some of which it would close). For 2019, GNC reported a $35 million net loss on over $2 billion in revenue.
  • The bottom line: "GNC traces its roots to 1935 when David Shakarian opened a health-food shop selling yogurt and sandwiches in Pittsburgh. The chain rode a wave of interest in nutrition, eventually expanding to over 9,000 outlets. It’s using the bankruptcy process to get out of and renegotiate expensive leases." — Katherine Doherty, Bloomberg
Venture Capital Deals

Affirm, a San Francisco-based credit card alternative founded by Max Levchin, raised $500 million in Series G funding. GIC and Durable Capital Partners co-led, and were joined by Lightspeed Venture Partners, Wellington Management, Baillie Gifford, Spark Capital, Founders Fund, and Fidelity. http://axios.link/SGMU

Chime, a San Francisco-based U.S. challenger bank, raised an undisclosed amount of new funding at a $14.5 billion valuation, per CNBC. It previously was valued at $6 billion in a round from just six months ago, led by DST Gloal. Other backers include Aspect Ventures and Menlo Ventures. http://axios.link/X4hc

🚑 Palleon Pharmaceuticals, a Waltham, Mass.-based developer of cancer checkpoint drugs, raised $100 million in Series B funding. Matrix Capital Management led, and was joined by Surveyor Capital and return backers SR One, Pfizer Ventures, Vertex Ventures HC, Takeda Ventures, and AbbVie Ventures. http://axios.link/rjc1

Boosted Commerce, a Los Angeles-based e-commerce brand portfolio, raised $87 million from Torch Capital, Crosscut Ventures, and individuals like Spencer Rascoff and Elie Seidman. It also announced the purchase of six Amazon fulfillment companies. http://axios.link/LTze

🚑 Lava Therapeutics, a Dutch developer of bispecific gamma delta T-cell engagers, raised $83 million in Series C funding. Novo Ventures and Sanofi Ventures co-led, and were joined by Redmile Group, Ysios Capital, BB Pureos Bioventures, and return backers Versant Ventures, Gilde Healthcare and MRL Ventures Fund. http://axios.link/ARSD

🚑 RapidAI, a San Mateo, Calif.-based provider of neuroimaging tech for strokes, raised $25 million in Series B funding led by Lennertz & Co. http://axios.link/vPNy

Treez, an Oakland-based provider of cannabis retail automation solutions, raised $13 million in Series B funding led by Intrinsic Capital Partners. http://axios.link/rna2

Forage (fka InsideSherpa), an Australian provider of virtual work experience programs for college students, raised $9.3 million in Series A funding. Lightspeed Venture Partners led, and was joined by FundersClub. http://axios.link/pimr

Buster + Punch, a London-based luxury interior fashion label, raised £7 million in Series B funding from Mobeus Equity Partners. http://axios.link/ASdk

Pachama, a forest carbon sequestration monitoring startup, raised $5 million. Breakthrough Energy Ventures led, and was joined by Amazon Climate Pledge Fund. http://axios.link/eQqa

Demand Sage, a Boston-based sales and marketing data accessibility startup, raised $3 million in seed funding co-led by Eniac Ventures and Underscore VC. http://axios.link/cgIP

TCare, a St. Louis-based support platform for family caregivers, raised $3 million. SixThirty Ventures led, and was joined by Aflac Ventures, BlueCross BlueShield MN, Blu Ventures, Village Capital, Connetic Ventures, and Gener8tor fund. http://axios.link/Lbeq

Private Equity Deals

Apollo Global Management is considering a takeover bid for listed German plastics maker Covestro, which has a current market cap just south of $10 billion, per Bloomberg. http://axios.link/35yr

Bloomerang, an Indianapolis-based provider of nonprofit donor management software, raised an undisclosed amount of growth funding from JMI Equity. http://axios.link/uhBR

TA Associates acquired a minority stake in DOCU Nordic, a Swedish provider of business intelligence and data analytics for the construction, property, and health care markets, from majority owner Stirling Square Capital Partners. www.docunordic.com

Public Offerings

Illustration: Aïda Amer/Axios

Unity Software, a San Francisco-based 3D game development platform, raised $1.3 billion in its IPO. The company priced 25 million shares at $52 (above upwardly revised range), using a new online bidding system developed by Goldman Sachs. It had raised $700 million in VC funding from firms like Sequoia Capital (24.1% pre-IPO stake), Silver Lake (18.2%), and D1 Capital (5.3%).

🚑 Athira Pharma (fka M3 Biotech), a Seattle-based regenerative medicine startup focused on neurological diseases, raised $204 million in its IPO. It priced 12 million shares at $17, versus plans to offer 10 million shares at $15-$17, for an initial market cap of $490 million. It will trade on the Nasdaq (ATHA) with Goldman Sachs has lead underwriter, and raised $112 million in VC funding from firms like Perceptive Advisors (11.6% pre-IPO stake), RTW Investments (10.8%), Viking Global (7.7%), and Franklin Templeton (5.4%). http://axios.link/tFPX

🚑 Compass Pathways, a London-based developer of mental health therapies, raised $128 million in its IPO. The pre-revenue company priced 7.5 million shares at 417 (above range), and will trade on the Nasdaq (CMPS) with Cowen as lead underwriter. It raised around $133 million from ATAI Life Sciences (29% pre-IPO stake), Founders Fund (7.5%), McQuade Center for Strategic R&D (5.8%), Able Partners, Camden Partners, Perceptive Advisors, Skyviews Life Science, and Soleus Capital. http://axios.link/AIpn

LoanDepot, a Foothill Ranch, Calif.-based residential mortgage lender backed by Parthenon Capital Partners, is in talks to go public at a valuation of between $12 billion and $15 billion. It previously attempted to go public in 2015, before abandoning the effort. http://axios.link/Ub5q

Max Stock, an Israeli discount retailer backed by Apax Partners, went public in Tel Aviv with an initial market cap of around $500 million.

Nuix, an Australian information management software company owned by Macquarie Group, is prepping an IPO that would value the company at nearly $1.5 billion, per Reuters. http://axios.link/yLYf

Palantir pushed back its NYSE direct listing date from Sept. 23 to Sept. 29. http://axios.link/Ht0E

🚑 Taysha Gene Therapies, a Dallas-based gene therapy startup focused on monogenic CNS diseases, set IPO terms to 6.6 million shares at $18-$20. It would have a fully diluted market value of $725 million, were it to price in the middle, would list on the Nasdaq (TSHA), and raised $125 million from PBM Capital (31.4% pre-IPO stake), Fidelity (6.5%), BlackRock, GV, Invus, Casdin Capital, Franklin Templeton, Octagon Capital, Perceptive Advisors, Sands Capital, ArrowMark Partners, Venrock, and Nolan Capital. http://axios.link/ie8t

• Vitru, a Brazilian post-secondary tutoring platform, raised $96 million in its IPO. The company priced 6 million shares at $16, versus original plans to sell 11.2 million shares at $22-$24. It will trade on the Nasdaq (VTRU) with Goldman Sachs as lead underwriter, while shareholders include The Carlyle Group, Vinci Partners, and Neuberger Berman. http://axios.link/AiaF

SPAC Stuff

XL Fleet, a Boston-based vehicle electrification company, agreed to go public via a reverse merger with Pivotal Investment Corporation II (NYSE: PIC), a SPAC led by Jonathan Ledecky (owner of the NY Islanders). The company would have an initial enterprise value of around $1 billion, while XL Fleet had raised $51 million from firms like Constellation Technology Ventures and Oil and Gas Climate Initiative. http://axios.link/DHjv

ACON S2 Acquisition, a sustainable biz-focused SPAC formed by ACON Investments, raised $250 million in its IPO. http://axios.link/M5XL

🚑 Alpha Healthcare Acquisition, a healthcare focused SPAC led by Rajiv Shukla, raised $100 million in its IPO. http://axios.link/5VxS

Landcadia Holdings III, an entertainment-focused SPAC led by Tilman Fertitta (Houston Rockets owner and CEO of Landry’s) and Richard Handler (Jefferies CEO), filed for a $500 million IPO. http://axios.link/URFl

Liquidity Events

Ericsson agreed to buy Cradlepoint, a Boise, Idaho-based wireless networking company focused on distributed enterprises, for $1.1 billion. Cradlepoint had raised around $165 million from firms like TCV, Sorenson Capital, Delta-v Capital, and The Caprock Group. http://axios.link/88ow

More M&A

The London Stock Exchange (LSE: LSE) picked Euronext (Paris: ENX) as preferred bidder for Borsa Italiana. Rival offers had come from Deutsche Boerse and Switzerland’s Six. http://axios.link/vqJ7

Ontex Group of Belgium is considering a $1.1 billion takeover bid for Domtar’s (NYSE: USF) personal care unit, per Bloomberg. http://axios.link/qZIY

Fundraising

🐐 Goat Capital launched as a seed-stage investor and incubator, co-led by Justin Kan (co-founder of Twitch) and Robin Chan (founder of XPD Media, sold to Zynga). http://axios.link/bFWx

Hillhouse Capital Group of China is raising $3 billion for its latest fund, per Reuters. http://axios.link/yFtq

Northern Light Venture Capital, a Chinese VC firm, is raising $375 million for its sixth flagship fund, per an SEC filing. www.nlvc.com

Seaside Equity Partners, a private equity firm focused on mission critical services companies in the Western and Southwestern U.S., is raising $125 million for its debut fund, per SEC filings. It’s led by Bill Shen (ex-Encore Consumer Capital) and Andrew Thompson (ex-Wafra).

Wix.com (Nasdaq: WIX), an Israeli website creation company, launched a corporate VC arm called Wix Capital. http://axios.link/6OQh

Final Numbers
Source: Renaissance Capital. Data through Sept. 18, 2020.

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