Jul 27, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Eniola Odetunde/Axios

Carta, an equity management "unicorn," on Friday held an all-staff meeting in which CEO Henry Ward addressed a gender discrimination and retaliation lawsuit brought by the company's former VP of marketing, Axios has learned from several sources.

Why it matters: The company, which recently was valued at $3.3 billion, has generated attention for its reports on gender disparities in equity ownership —often the primary source of wealth creation for startup employees.

Details: The lawsuit was brought by Emily Kramer, who was at Carta between February 2018 and November 2019.

  • Kramer alleges she was underpaid (per an employee comp audit), improperly passed over for promotion, and excluded from meetings after complaining about such issues as Carta's all-male board. She also claims Ward, her direct supervisor, effectively forced her to quit, after a meeting in which he allegedly called her an "asshole," said "no one likes you," and that she'd gotten "passes" for being a woman.
  • Axios has learned that at least one other former female Carta employee, who worked in a different department and did not directly report to Ward, is also considering a lawsuit.
  • Kramer and her lawyer declined to comment on whether she had attempted to settle with the company prior to filing suit.

Ward, during Friday's meeting, talked at length about his working relationship with Kramer.

  • A source says Ward acknowledged using the term "asshole," but said it was in the context of providing mentorship — sharing feedback from others at the company who had worked with Kramer. The source also said that Kramer "worked very well vertically," (i.e., with Ward), but needed to improve her horizontal work in order to achieve her goal of becoming a CMO at Carta or elsewhere.
  • We were unable to learn what, if anything, Ward said about Kramer's compensation claims (she did get a raise and much more equity following the audit, but neither was retroactive).

Axios also has learned that Carta seriously considered adding former True Religion CEO Chelsea Grayson to its board of directors — after Ward pledged to add a female director in 2018 — but ultimately didn't.

  • Ward didn't return requests for comment. A Carta spokesperson said that Carta is working on a statement, but it wouldn't be ready by the time Pro Rata publishes.

Bottom line: Carta plays a major role in the startup ecosystem, managing employee equity and developing a private company stock exchange (for which it quietly acqui-hired Australia' MarketGrid Systems).

  • Kramer may have a tough time proving her case, but Carta stands to lose the PR battle even if it wins the legal one (shades of Pao v. Kleiner Perkins).

Illustration: Sarah Grillo/Axios

Berkshire Partners agreed to buy fitness brand CrossFit, in partnership with CrossFit gym owner and former Datalogix CEO Eric Roza (who will become CrossFit CEO). The seller is CrossFit's founding CEO Greg Glassman, who resigned after making controversial comments about the killing of George Floyd.

  • Why it's the BFD: CrossFit needed a lifeline, due to both its management tumult and business challenges related to the pandemic.
  • Biz model: CrossFit is largely a brand licensing company, charging gyms $3k per year to become "affiliates," plus generating revenue from trainer certification courses and merchandise. In 2013, Inc. reported that it generated around $100 million in revenue, while the broader CrossFit empire netted between $1.5 billion and $2 billion.
  • Bonus: Berkshire's lead partner on this deal is Marni Payne, who was literally the girl next door when I was growing up. Close friends since we were both 4 years old, sometimes communicating at night via walkie-talkie, yet she's steadfastly refused to give me even a scintilla of private equity info, including on this deal.
  • The bottom line: "When Greg Glassman resigned as CEO of CrossFit, excoriated for comments about George Floyd’s death on Twitter and in a Zoom meeting, people who have worked there were surprised that his downfall was tied to accusations of racism. They had assumed that the reason would be routine and rampant sexual harassment." — Katherine Rosman, N.Y. Times
Venture Capital Deals

Revolut, a British app-based challenger bank, raised $80 million in new Series D funding from TSG Consumer Partners. The company held a $500 million initial close led by TCV at a $5.5 billion valuation back in February. http://axios.link/MW2F

Riiid, a South Korean test prep app, raised $42 million in Series D funding from Korea Development Bank, Nvestor, and return backer IMM Investment. http://axios.link/jGHf

FreightWaves, a Chattanooga, Tenn.-based freight data startup, raised $37 million. Kayne Partners led, and was joined by 8VC, Fontinalis Partners, Revolution Ventures, Hearst Ventures, Prologis Ventures, Story Ventures, and Engage Ventures. http://axios.link/U1V5

🚑 MBX Biosciences, a Carmel, Ind.-based biotech focused on rare endocrine diseases, raised $34.6 million in Series A funding. Frazier Healthcare Partners led, and was joined by OrbiMed, NEA, IU PhV, BioCrossroads, and Twilight Venture Partners. www.mxbio.com

Cargo.one, a Berlin-based air freight booking marketplace, raised $18.6 million in Series A funding. Index Ventures led, and was joined by Next47 and return backers Creandum, Lufthansa Cargo, and Point Nine Capital. http://axios.link/HGlv

Levitate, a Raleigh, N.C.-based provider of email marketing solutions for small businesses, raised $6 million from Tippet Venture Partners and Bull City Venture Partners. http://axios.link/5IQl

Tire Agent, a New York-based tire information platform, raised $5 million led by American Family Ventures. http://axios.link/5xX3

🚑 WhizAI, a Somerset, N.J.-based insights platform for life sciences, raised $4 million in seed funding. Healthy Ventures led, and was joined by Bling Capital and Firebolt Ventures. www.whiz.ai

Swoop, a Los Angeles-based transportation booking startup, raised $3.2 million in seed funding from backers like Signia Venture Partners and South Park Commons. http://axios.link/23nw

• Transformative, a New York-based provider of software that predicts sudden cardiac arrest, raised $1.7 million in seed funding led by Tera Ventures. www.transformative.ai

Private Equity Deals

Blue Yonder, a Scottsdale, Ariz.-based portfolio company of New Mountain Capital and The Blackstone Group, acquired Yantriks, a Westborough, Mass.-based provider of commerce and fulfillment SaaS. http://axios.link/ZHGZ

EV Private Equity acquired Trainor, a Norwegian training platform for the energy and maritime industries. http://axios.link/NLzK

Rolls-Royce (LSE: RR) is in early talks to sell ITP Aero, a jet engine parts unit that could fetch €1.5 billion, per The Sunday Telegraph. Talks reportedly have been held with The Carlyle Group, KKR, and The Blackstone Group. http://axios.link/UIcQ

SK Capital Partners agreed to buy the specialty polymers business of Baker Hughes (NYSE: BKR). http://axios.link/UCNl

Public Offerings

Seven companies and one SPAC plan to go public this week on U.S. exchanges, with plans to raise an aggregate $2.1 billion. http://axios.link/2S2T

SAP (NYSE: SAP) announced that it will spin out Qualtrics via IPO, less than two years after buying the Utah-based "experience management" company for $8 billion (just days before Qualtrics’ planned IPO). Axios has learned that SAP and Qualtrics began discussing a spinout around three months ago, in part to help give Qualtrics a more attractive currency with which to make acquisitions and retain employees. http://axios.link/6qOb

🚑 CureVac, a German developer of mRNA medicines (including a COVID-19 vaccine), filed for a $100 million IPO. It plans to list on the Nasdaq (CVAC) with BofA as lead underwriter, and recently raised $640 million in new funding from the German government, GlaxoSmithKline, and Qatar Investment Authority. http://axios.link/M1UP

Frontier Group, a Denver-based budget airline, withdrew an IPO registration filed in early 2017. http://axios.link/207w

KE Holdings (aka Beike Zhaofang), a Chinese online property platform, filed for a $1 billion IPO. It plans to trade on the NYSE (BEKE) with Goldman Sachs as lead underwriter, and reports a $174 million net loss on $1 billion in revenue for Q1 2020. Shareholders include Tencent, Hillhouse Capital, and SoftBank Vision Fund. http://axios.link/LxVR

Li Auto, a Chinese maker of electric SUVs, set IPO terms to 95 million shares at $8-$10. It would have a fully-diluted market value of $7.9 billion, were it to price in the middle, and plans to list on the Nasdaq (LI) with Goldman Sachs (Asia) as lead underwriter. The company reports an $11 million net loss on $120 million in revenue for Q1 2020. http://axios.link/L2Zj

Rackspace, a San Antonio-based managed cloud solutions company owned by Apollo Global Management, set IPO terms to 33.5 million shares at $21–$24. It would have an initial market cap of $4.48 billion, were it to price in the middle, and plans to list on the Nasdaq (RXT) with Goldman Sachs as lead underwriter. The company reports a $48 million net loss on $653 million in revenue for Q1 2020. http://axios.link/Ncek

SPACs (yeah, we're doing this now)

Clever Leaves, a multinational cannabis company based in Colombia, agreed to go public via reverse merge with a SPAC called Schultze Special Purpose Acquisition (Nasdaq: SAMA) at an initial enterprise value of $255 million. www.cleverleaves.com

🐲 Dragoneer Growth Opportunities, a tech-focused SPAC led by Dragoneer Investment Group, filed for a $600 million IPO. http://axios.link/KSB2

🚑 FS Development, a health care-focused SPAC formed by venture firm Foresite Capital, filed for a $100 million IPO. http://axios.link/NuuD

Fortress Value Acquisition II, the second SPAC led by managing partners at SoftBank-controlled Fortress Investment Group, filed for a $300 million IPO. http://axios.link/uJ09

NavSight Holdings, a national security-focused SPAC led by Robert Coleman (founder and ex-CEO of Integrated Data Systems), filed for a $200 million IPO. http://axios.link/gSbB

Rush Street Interactive, a Chicago-based online casino and sports betting company, agreed to go public via reverse merger with a SPAC called dMY Technology Group (NYSE: DMYT), at an initial enterprise value of $1.78 billion. http://axios.link/JzCy

Liquidity Events

Black Knight (NYSE: BKI) agreed to pay $1.8 billion to acquire a 60% stake in Optimal Blue, a Plano, Texas-based real estate software company owned by Thomas H. Lee Partners and Cannae Holdings (which will retain an equity stake in the newly-formed subsidiary). www.optimalblue.com

🚑 Thompson Street Capital Partners sold Analytical Lab Group, an Eagan, Minn.-based microbiology and viral lab, to U.K.-based Element Materials Technology. www.analyticallabgroup.com

More M&A

DP World, a Dubai-based port operator, agreed to buy a 60% stake in South Korea’s UNICO Logistics. http://axios.link/YIMi

Debenhams, a troubled British department store chain, hired Lazard to find a buyer so that it needn’t enter administration, per the FT. http://axios.link/rJhZ

It's Personnel

Philip Kirk joined ServiceNow as VP of corporate development, per his LinkedIn page. He previously spent 13 years in corp dev at Cisco Systems. www.servicenow.com

Final Numbers
Source: Refinitiv Deals Intelligence. Data through July 23, 2020

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