Oct 19, 2018

Axios Pro Rata

Top of the Morning

Source: Giphy

LendUp , a San Francisco-based fintech company that has raised over $300 million from firms like Google Ventures and Y Combinator, is splitting up the company, Axios has learned from multiple sources.

  • The core payday lending business will remain under the LendUp brand with founding CEO Sasha Orloff at the helm, but the company is in talks to sell off a credit card unit that launched last year. One interested suitor is Philadelphia-based private equity firm LL Funds.
  • The split was largely borne of feedback LendUp received while trying to raise new funding, with investors not believing that the "financial inclusion" business and card business really worked together, let alone LendUp's larger vision of a full-stack financial services business for the working poor.
  • One issue was that credit card issuers often require bank partners for scale, and many top-tier banks won't work with a company that also offers loans at payday-level APRs.
  • As part of the pending split, LendUp also recently had a round of layoffs.
  • No comment from the company.

Saudi saga: Since we last chatted, there have been several more notable drop-outs from next week's Future Investment Initiative conference in Riyadh. They include Treasury Sec. Steve Mnuchin, Warburg Pincus co-CEO Joseph Landy, IHS Market's Daniel Yergin, seed investor Seth Bannon and Goldman Sachs' Dina Powell. Also out is Fox Business Network, which had been the event's last remaining U.S. media partner.

  • Still no word from SoftBank.

📅 Calendar watch: Dell Technologies will ask holders of its VMWare tracking stock to vote on Dells's $21.7 billion reverse merger plan on December 11, per Reuters. This is the plan opposed by Carl Icahn, who has at least an 8.3% stake in the tracking stock.

Today in Social Capital: Three more departures from the shrunken Silicon Valley venture firm, all from the engineering department: Ashok Raju, Ian Mendiola and Prabhdeep Gill.

  • The three were working on the "capital-as-a-service" project that Chamath Palihapitiya has talked about spinning out into an independent business, but they were dissatisfied with the financial arrangement and will now launch something on their own.
  • Per an email from Palihapitiya: "We were very transparent that any company incubated within SC would have a predefined cap table and to stay would mean to accept those allocations in return for a prefunded company. They decided that those terms weren’t amenable to them. I think they are excellent and am excited to see what they build on their own. Also - it’s important to note that we are backfilling them with engineers in Canada and Europe."
  • Also, this is very late, but: We confirmed a Business Insider report that Social Capital laid off several investors last month, including Ashley Carroll, Kristin Baker Spohn and Adam Nelson.

🎤 Pro Rata Podcast: Our new episode focuses on the (waning?) impact of money in the midterm elections, and I'm joined by Axios' Mike Allen.


Invesco (NYSE: IVZ) agreed to buy OppenheimerFunds from Mass Mutual for $5.7 billion in stock.

  • Why it's the BFD: Because it means Invesco will manage over $1 trillion in total assets, making it one of the world's largest money managers.
  • Bottom line: "Active management is losing out to passive, low-fee indexing products, and the remaining stock and bond pickers need to consolidate to stay afloat." — Brian Chappatta, Bloomberg
Venture Capital Deals

JMGO, a Chinese smart projector and laser TV manufacturer, raised nearly $87 million in Series D funding. Alibaba led, and was joined by Junsan Capital, Sunz Fund, Stone Capital, GF Xinde Investment, Beijing D.Z Capital and 36Ker Fund. http://axios.link/ElfS

Vector, a launch platform for small satellites in low Earth orbit, raised $70 million in Series B funding. Kodem Growth Partners led, and was joined by Morgan Stanley Alternative Investment Partners, Sequoia, Lightspeed Venture Partners and Shasta Ventures. http://axios.link/jeLG

🚑 Oxford Nanopore, a UK-based developer of a portable genome sequencer, raised £50 million from Amgen (Nasdaq: AMGN). http://axios.link/jpop

Incorta, a San Mateo, Calif.-based provider of enterprise analytics software, raised $15 million from M12 and Telstra Ventures. www.incorta.com

NAE, a Shanghai-based provider of chassis electronic control products, raised $14.4 million in Series B funding from Qiming Venture Capital and GP Capital. http://axios.link/3hQx

🚑 Future Family, a San Francisco-based provider of fertility services financing, raised $10 million in Series A funding. Aspect Ventures led, and was joined by iNovia, BBG, Ulu Ventures, LaunchCapital and Portfolia. http://axios.link/vyn2

Change Clothing Technology, a Chinese developer of wearable flexible screens, raised $3.6 million in seed funding from DT Capital Partners and Zhencheng Capital. http://axios.link/TOmr

Alta Motors, a Brisbane, Calif.-based electric motorcycle maker that had raised around $40 million in VC funding, has shut down. Backers include Grassey Creek, Mountain Nazca, Modara Technologies and Harley-Davidson. http://axios.link/9TVM

Public Offerings

🚑 LogicBio, a Cambridge, Mass.-based gene editing company focused on rare diseases, raised $70 million in its IPO. The company priced 7 million shares at $10 versus initial plans to offer 5.8 million shares at $12-$14. It will trade on the Nasdaq (LOGC) with Jefferies as lead underwriter, and raised around $50 million from firms like OrbiMed (35.33% stake), Arix Bioscience (15.26%) and Pontifax (9.15%). www.logicbio.com

🛴 Niu Technologies, a Chinese e-scooter maker, raised $63 million in its IPO. The company priced 7 million shares at $9, versus plans to offer 8.3 million shares at $10.50-$12.50. It will trade on the Nasdaq (NIU), used Credit Suisse as lead underwriter and reports a $48 million net loss on $84 million in revenue for the first half of 2018. Shareholders include GGV Capital (11.2% stake).

• SolarWinds, an Austin, Texas-based provider of IT management software, raised $375 million in its IPO. The company priced 25 million shares at $15, compared to original plans to offer 42 million shares at $17-$19, for a fully-diluted market value of $4.8 billion. It will trade on the NYSE (SWI), used Goldman Sachs as lead underwriter and reports an $87 million net loss on $399 million of revenue for the first half of 2018. SolarWinds was taken private in 2016 for $4.5 billion by Silver Lake and Thoma Bravo. www.solarwinds.com

Liquidity Events

• Alpine Investors agreed to sell Vionic Group, a San Rafael, Calif.-based footwear brand, to Caleres (NYSE: CAL) for $360 million. http://axios.link/nmUZ

• CVC Capital Partners is considering either a sale of IPO for Nordic optical retailer Synsam, which could fetch more than $950 million, per Reuters. http://axios.link/MaCi

• Lion Capital agreed to sell Dutch retail chain HEMA to Ramphastos Investments. http://axios.link/uCi1

Patriarch Partners hired Jefferies to find a buyer for Auburn Hills, Mich.-based auto parts maker Dura Automotive Systems, which could be worth around $1 billion, per Bloomberg. http://axios.link/iS3e

Quantum Energy Partners hired Jefferies to find a buyer for Intensity Midstream, a Tulsa, Okla.-based natural gas pipeline that could fetch around $1.5 billion, per Bloomberg. http://axios.link/tSkt

Warburg Pincus hired Jefferies to find a buyer for Navitas Midstream Partners, a Texas-based natural gas pipeline and processing company that could fetch $3 billion, per Bloomberg. http://axios.link/aUYo

More M&A

Giorgio Armani, the Italian fashion house, says it plans to remain independent, despite several takeover offers. http://axios.link/aagA

Intu Properties (LSE: INTUP), a British shopping center owner, received a $3.8 billion takeover offer from its deputy chairman John Whittaker, Saudi Arabia’s Olayan Group and Canada’s Brookfield Asset Management. http://axios.link/vIa0

Micron (Nasdaq: MU) is buying out Intel’s (Nasdaq: INTC) stake in the IM Flash Technologies joint venture. The deal includes a $1.5 billion cash payment, and the assumption of around $1 billion in debt. http://axios.link/sqWG

🚑 Sosei Group (Tokyo: 4565) passed on an exclusive buyout option on MiNA Therapeutics, a British biotech focused on liver disease, tied to a £35 million equity infusion from early 2017. http://axios.link/a16w

ZF Friedrichshafen acquired a 35% stake in ASAP, a German provider of software and testing systems for autonomous and electric cars. http://axios.link/P8TF


Balance Point Capital of Connecticut raised $380 million for its fifth mid-market private equity fund. www.balancepointcapital.com

First Round Capital is raising around $220 million for its seventh venture capital fund, according to SEC filings. http://axios.link/Hoz5

GI Partners is planning to raise more than $1 billion for a “digital infrastructure” fund, which would invest in assets like data centers, per Bloomberg. http://axios.link/Y1bF

Matchstick Ventures of St. Paul, Minn. is raising $25 million for its second fund, per an SEC filing. www.matchstickventures.com

QED Investors of Virginia is raising $25 million for its second Latin America-focused fund, per an SEC filing. www.qedinvestors.com

It's Personnel

David Marchick is stepping down as The Carlyle Group’s global head of external affairs, per the Washington Post. He will remain as senior advisor to the firm, which he joined in 2007. http://axios.link/KuyQ

Larry Yu is leaving venture firm Accel, where he has led marketing since 2015. No word yet on future plans. www.accel.com

Final Numbers
Expand chart
View interactive version. Data: U.S. Census Bureau via Brookings, Opportunity Insights; Note: “Economic mobility” is measured as the average income percentile of children whose parents were in the lowest income quartile; Graphic: Harry Stevens/Axios.

If this newsletter was forwarded to you, please subscribe at GetProRata.axios.com.