Mar 9, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

President Trump yesterday had lunch with select cabinet members and biz folks to discuss his massive infrastructure plan, which is expected to lean heavily on public-private partnerships. The private equity industry representation, however, didn't include anyone whose firm has an actual infrastructure fund. One of the PE bigs, Josh Harris (Apollo and Joel Embiid's medical bills), made sense given his firm's broad industrial and real estate holdings. The other, however, was Bill Ford of General Atlantic -- whose firm is focused on tech, biz services, healthcare and consumer goods.

A source familiar with the situation says that Ford was there to discuss digital infrastructure, which likely is code for things like increasing rural broadband access (which Wilbur Ross had mentioned during his confirmation hearings). It also means that a much larger pool of private equity (and even VC) firms might benefit from the Trump infrastructure plan. Firms that do mobile towers or even less "physical" projects might get to cash in, even if they never touch bridges or tunnels.

• Not crying uncle: Liberal advocacy group Public Citizen yesterday sent a formal letter of complaint to the House about Carl Icahn, over his unpaid advisory role in the Trump White House. In short, it argues that Icahn should have been registered as a lobbyist while advocating recently for a change to the EPA's ethanol mandate ― a change that could benefit Icahn's holdings in CVR Energy.

Icahn responded publicly by calling Public Citizen's claims "fake news" (no Carl, that's not what "fake news" is) and then basically arguing his case on the EPA rules (as opposed to the lobbying issue, which he quickly dismisses by saying his lawyers signed off). This is, of course, what happens when a White House taps an activist shareholder as an advisor on regulatory overhaul without any disclosure requirements. As predictable as a square table having corners.

• Instacomment: Yesterday I spoke with Instacart CEO Apoorva Mehta about his grocery delivery company's giant new fundraising, its recent contractor compensation changes and margin tweaks. Read it here. We also touched on competition:

"We think about this as a two horse race: Us and Amazon... Amazon is building their warehouses to compete with the entire grocery landscape, while we're empowering the entire grocery landscape. The reason we think we have a good shot against Amazon is that customers want choice. It's the same reason why people buy Netflix even if they have Amazon Prime ― you can't get House of Cards through Amazon. We have unique product from some of the best grocery stores in the country, and grocery is really a long-tail business where selection matters."

• Long game: WSJ yesterday reported that hedge funder Anthony Scaramucci was "blindsided" when his expected White House communications job was given to someone else. When I asked for comment, "Mooch" used a favorite quote of his that has been attributed both to Elizabeth Proctor (convicted in the Salem Witch Trials, but later granted a reprieve) and Winston Churchill: "The best among choose not to judge human frailty too harshly." In other words, he expects to have the last laugh.

• PR behaving badly: The BBC recently learned of exploitative images and language related to children on the Facebook platform, and that flagging them to moderators didn't have much impact. When BBC called Facebook, the company set up and interview and asked the BBC to send over some examples. When the BBC complied, Facebook canceled the interview and called British authorities, since BBC had "distributed" objectionable material. Just trying to imagine how much more attention this would be getting if Facebook were Uber... Would we be saying the problem is a lack of "adult supervision?"

• Data delay: Harvard private equity professor Josh Lerner had expected to have updated data by Q2 for his landmark 2011 study on private equity job creation/destruction. Now he's saying that the earliest will be mid-year. You might recall that the 2011 effort found that private equity had just a 1% net negative impact on portfolio company jobs, although the disruption was significant (i.e., PE firms fired lots of people at first, and then made lots of new hires in subsequent years). He expects the updated figures to show something less ambivalent.

• Unconventional wisdom: Silicon Valley generally despises President Trump, but NY Times columnist Charles Duhigg argues that Trump is really the first "Silicon Valley President" (in terms of style, not ideology). He quotes Y Combinator prez (and huge Hillary supporter) Sam Altman: "He took on a system he thought was broken and then disregarded the rules, he got to know his users well and tested his product early and iterated rapidly. That's the startup playbook."

The BFD: Sandy bottom

Royal Dutch Shell has agreed to sell most of its Canadian oil sands assets to Canadian Natural Resources (NYSE: CNQ) for around $7.25 billion.

Why it's the BFD: When Exxon Mobil and Norway's Statoil either canceled or delayed Canadian oil sands projects over the past couple years, some industry execs wagged their blame fingers at President Obama's rejection of the Keystone XL pipeline. But Shell is bailing after President Trump put Keystone back on track, because current oil prices no longer make it cost effective. There also is an environmental angle here for Shell, as oil sands are particularly filthy and the Dutch company just tied 10% of exec bonuses to progress in cutting greenhouse gas emissions from its refineries, chemical plants and natural gas fields.

Bottom line: "Oil-company executives have worried about whether oil-sands projects will become an albatross. Production in some areas is so expensive that it can't be justified without oil prices much higher than the $50 to $55 a barrel that crude futures have traded at in recent weeks." ― Ian Walker

Venture Capital Deals

• Cradlepoint, a Boise, Idaho-based provider of 4G LTE networking solutions for distributed enterprises, has raised $89 million in Series C funding from Technology Crossover Ventures. The company previously raised over $50 million from firms like Sorenson Capital, Delta-v Capital and The Carock Group. http://tcrn.ch/2moDhAe

• Breath Therapeutics, a German developer of drug-aerosol therapeutics in pulmonary orphan indications, has raised €43.5 million in Series A funding. GIMV and Sofinnova Partners co-led the round, and were joined by Gilde Healthcare. http://bit.ly/2ni5FRV

• Vertiflex, a Carlsbad, Calif.-based developer of spinal stenosis implants, has raised $40 million in new VC funding. Endeavour Vision and H.I.G. BioHealth Partners co-led the round, and were joined by NEA, Alta Partners and Thomas, McNerney & Partners. http://bit.ly/2mkiDzi

• CurrencyCloud, a London-based developer of backend technologies for remittances and money transfers, has raised £20 million in Series D funding. GV led the round, and was joined by return backers Anthemis, Rakuten, Notion Capital and Sapphire Ventures. http://bit.ly/2mJPh00

• Kinsa, a San Francisco-based developer of smartphone-connected thermometers, has raised $17 million in new VC funding from GSR Ventures, Kleiner Perkins Caufield Byers and FirstMark Capital. www.kinsahealth.com

• Fluxx, a San Francisco-based provider of grants management software, has raised $16 million in Series B funding. Canvas Ventures led the round, and was joined by the Kresge Foundation and Felicis Ventures. www.fluxx.io

• ScyllaDB, an Israel-based developer of a "drop-in replacement for Apache Cassandra," has raised $16 million in Series B funding from Western Digital Capital, Samsung Ventures, Magma Ventures, Qualcomm Ventures and Bessemer Venture Partners. http://bit.ly/2m2IoCH

• Garrison Technology, a London-based provider of anti-malware solutions, has raised £12 million in Series A funding. Touchstone Innovations led the round, and was joined by BGF Ventures and NM Capital. http://bit.ly/2n2Wb11

• Goldbely, a San Francisco-based specialty food marketplace, has raised $10 million in Series A funding. Global Founders Capital and return backer Intel Capital co-led the round, and were joined by seed backers CrunchFund, 500 Startups, 645 Ventures and FundersClub. http://read.bi/2jeomFu

• Liven, an Australian cashback app for restaurant patrons, has raised $10 million in VC funding from an unidentified Australian VC firm. http://bit.ly/2mJWe11

• LoopMe, a London-based developer of AI solutions for optimizing mobile video advertising, has raised $10 million in new VC funding. Impulse VC and Harbert European Growth Capital co-led the round, and were joined by Holzbrinck Ventures and Open Ocean Capital. http://bit.ly/2mRfD0s

• Prevedere, a Columbus, Ohio-based predictive analytics company, has raised $10 million in Series B funding. Norwest Venture Partners led the round, and was joined by Rev1 Ventures, Microsoft Ventures and PointGuard Ventures. http://bit.ly/2mF7Fqu

• Charish, an online marketplace for vintage and used furniture, has raised $8 million in new VC funding. Altos Ventures led the round, and was joined by OATV and Azure Capital Partners. http://tcrn.ch/2niqw7Y

• Quidd, a digital collecting platform with offices in Brazil and Brooklyn, has raised $6.75 million from undisclosed investors. http://bit.ly/2m2YA6N

• Kiddom, a San Francisco-based visual collaborative system for K-12 classrooms, has raised $6.5 million in new VC funding led by Khosla Ventures. http://bit.ly/2lE30Wp

• Dialogue, a Montreal-based mobile app for employee healthcare, has raised $C4 million in seed funding. Diagram led the round, and was joined by BDC Capital and Hacking Health Accelerator. http://bit.ly/2mJWAET

• Cymulate, an Israeli cyberattack simulation startup, has raised $3 million in Series A funding from Susquehanna Growth Equity. www.cymulate.com

• Wrapify, a San Francisco-based startup that lets users "wrap" their cars as advertisements, has raised $3 million in seed funding from adhesives manufacturer Avery Dennison. http://tcrn.ch/2lUGeEW

• Identify3D, a San Francisco-based developer of digital manufacturing software, has raised an undisclosed amount of seed funding led by SoftTech VC. Bee Partners and Siemens VC also participated. www.identify3d.com

Private Equity Deals

• Advent International has acquired a minority equity stake in Easynvest, a Brazilian online investment marketplace. No financial terms were disclosed. www.easynvest.com.br

• Advent International and Misys, a British financial software company owned by, Vista Equity Partners, have both made takeover bids for DH Corp. (TSX: DH), a Canadian payments and lending software company that is currently valued at around C$2.5 billion, according to the FT. http://on.ft.com/2niqzAA

• The Carlyle Group has completed its previously-announced acquisition of Italian luxury lifestyle fashion company Golden Goose Deluxe from Ergon Capital Partners. No financial terms were disclosed. http://bloom.bg/2l00bKy

• Lombard Instrument, a Norfolk, Va.-based ophthalmic instruments distributor backed by Atlantic Street Capital, has acquired Toronto rival Innova Medical Opthalmics. No financial terms were disclosed. www.lombardinstrument.com

• Telestream, a Genstar Capital portfolio company that provides digital video tools and workflow solutions, has acquired IneoQuest, a Mansfield, Mass.-based provider of video quality monitoring and analytics solutions for content distribution. No financial terms were disclosed. www.telestream.net

Public Offerings

• Evry, a Norwegian IT company owned by Apax Partners, has hired Goldman Sachs and Morgan Stanley to lead an Oslo IPO that could value the company at nearly $2 billion, according to Dow Jones. http://bit.ly/2m5VJep

Liquidity Events

• Amazon has acquired Do.com, a San Francisco-based meeting productivity startup that will be rolled into Chime. No financial terms were disclosed. Do.com had raised more than $2 million in seed funding from groups like NEA, Slow Ventures and QueenBridge Venture Partners. http://tcrn.ch/2mZ1vSW

• Google has agreed to acquire Kaggle, a San Francisco-based platform for hosting data science and machine learning competitions, as first reported by TechCrunch. No financial terms were disclosed. Kaggle had raised over $12 million in VC funding from firms like Index Ventures, SV Angel and Khosla Ventures. http://tcrn.ch/2mheAEb

• The Jordan Co. has hired Deutsche Bank to explore a sale of Chicago-based Vantage Specialty Chemicals, in a deal that could be valued at upwards of $1.5 billion, according to Bloomberg. http://bloom.bg/2mH76wF

More M&A

• Azko Nobel, a Dutch paints and coatings maker, has rejected an unsolicited $22 billion takeover offer from U.S. rival PPG Industries (NYSE: PPG), and said that it plans instead spin off its chemicals business. http://on.wsj.com/2nh1ki8

• Edgar Brofman Jr. and Access Industries reportedly will not bid on Time Inc. http://nyti.ms/2mEEuUH

• Cathay Financial (Taiwan) is in exclusive talks to acquire the Malaysian unit of Bank of Nova Scotia for between $200 million and $300 million, according to Reuters. http://reut.rs/2lHePLy

• General Electric (NYSE: GE) has agreed to sell its water treatment business (GE Water), to France's Suez SA and Canada's Caisse de dépôt et placement du Québec for $3.4 billion. The move is designed to ease antitrust concerns over GE's proposed takeover of Baker Hughes (NYSE: BHI). http://bloom.bg/2m3POq0

• Localytics, a Boston-based mobile engagement platform, has acquired Tapglue, a Berlin-based startup that helps app developers add social features. No financial terms were disclosed. Localytics has raised around $60 million in VC funding from firms like Sapphire Ventures, Foundation Capital and Polaris Partners. http://tcrn.ch/2mi79fQ

• Novo Nordisk has approached Global Blood Therapeutics (Nasdaq: GBT), a South San Francisc-based biotech whose current market cap if around $1.7 billion, about a possible acquisition, according to Reuters. http://reut.rs/2m3H4QO

Fundraising

• Blumberg Capital has closed its fourth VC fund with $200 million in capital commitments. http://tcrn.ch/2m3mb7j

It's Personnel

• Trevor Oelschig has stepped down as a Bay Area partner with Bessemer Venture Partners, in order to join General Catalyst, per Dow Jones. His deals have included Shopify, Knewton and Pure Networks. www.generalcatalyst.com

• Alice Ruth has stepped down as chief investment officer of Willett Advisors, which manages Michael Bloomberg's money. She is succeeded by new co-CIOs Brad Briner and Andrew Mulderry (who will continue to lead PE investments). http://bit.ly/2mpcsvP

Final Numbers
Dan Primack