Feb 24, 2017

Axios Pro Rata

Greetings from the home office. Be sure to have your colleagues get these morning missives, plus the other great newsletters from Axios, by going here. Let's get to it...

Top of the Morning

• Worst week ever: As Uber continues to deal with the fallout from accusations of gender discrimination and sexual harassment ― here's the latest on that, per Buzzfeed ― the uber-corn might be dealing with an even more intractable issue: Google thinks Uber stole some of its technology. Kia has the breakdown here.

Yes, this is the same Google that is an existing Uber investor, and whose general counsel sat on the Uber board of directors until last summer. At issue was Uber's purchase of self-driving truck startup Otto last August for $680 million.

Otto was founded by ex-Google employees, and the Alphabet City now believes it has found evidence that one of them first downloaded thousands of proprietary files from its self-driving subsidiary, Moreover, it believes those files were used to build the core Otto technology, and also that Otto contacted a vendor that was under exclusive (and confidential) contract to Waymo.

If these allegations are true, then Uber doesn't just have a deep-pocketed adversary. It has, in the words of one Silicon Valley big, a "very, very angry" deep-pocketed adversary. Best case scenario for Uber would be that it was misled. Second-best case would be that it did shoddy due diligence. Worst case would be if it knew (i.e., was Otto really created as a vehicle to ferret Google employees and info to Uber?). This one bears watching.

• PE WH: Private equity execs not only are assuming roles inside the Trump Administration that normally would go to career bureaucrats, but they're even encroaching on my turf. KKR boss Henry Kravis last night interviewed President Trump at a private meeting of The Business Council, a Washington, D.C.-based group of 200 active CEOs. Then, this morning, The Carlyle Group's David Rubenstein interviewed Trump economic advisor Gary Cohn in front of the same group.

One interesting note to come out of the Cohn interview, per an attendee, was that the White House does not support the House GOP version of a border adjustment tax. This wouldn't have been news a week or two ago, but just yesterday Trump seemed to indicate some support for the language in a conversation with Reuters.

• See Jack talk: This morning I posted an interview with Jack Dorsey, one day after Square reported better-than-expected earnings that pushed its shares to an all-time high. We mostly talked about Square's business, with a little bit of politics thrown in. I also asked him, as the CEO of two listed companies that were once VC-backed "unicorns," for his thoughts on founder fears of taking companies public:

"It's definitely a transition, but it's not all that different from how, as a private company and especially as a startup, you take on investors and a board and are constantly having conversations about the company's performance. You can be a bit freer in the private world and the velocity of feedback and criticism is much higher with a public company, but the fundamental questions and accountability are the same. There are a lot of benefits to being a public company in terms of awareness, which is especially true for things like recruiting."

• Follow-up: Yesterday we discussed what was missing from the planned meeting of manufacturing CEOs at the White House. Namely, talk of automation and representation from the Dept of Education. Media was ushered out before the execs gave Trump feedback from their working groups, but one of the CEOs did talk to us about what was shared from the 'Workplaces of the Future' session. And my concerns were basically validated. Also interesting that the manufacturing CEOs told Trump that their big labor issue in the U.S. is finding highly-skilled workers (which runs counter to Trump's rhetoric on the issue). Here's the readout.

• Have a great weekend.


Time Warner has agreed to sell Atlanta-based broadcast television station WPCH for $70 million to Meredith Corp. (NYSE: MDP), per an FEC application.

Why it's the BFD: This is a small deal to Time Warner in terms of cash, but big in terms of possibly avoiding FCC scrutiny of its monster acquisition by AT&T. Specifically, the FCC steps in when its licenses are transferred, but now WPCH won't become part of the AT&T deal.

Bottom line: By selling the station and its airwave licenses the two companies could avoid an FCC review of the deal, since the agency steps in when licenses change hands. AT&T had already indicated that it didn't expect licenses to transfer as part of the deal, but this is a key step towards potentially avoiding an FCC review. ― David McCabe

Venture Capital Deals

• Fusion Pharmaceuticals, an Ontario-based developer of targeted alpha-particle radiotherapeutics for treating cancer, has raised US$25 million in Series A funding. Johnson & Johnson Innovation led the round, and was joined by HealthCap, TPG Biotech, Genesys Capital and Fight Against Cancer Innovation Trust. http://bit.ly/2mf6sXx

• MomentFeed, a Santa Monica, Calif.-based provider of mobile customer experience management solutions for multi-location brands, has raised $16.3 million in new VC funding. Level Equity led the round, and was joined by return backers Signia Venture Partners, Draper Nexus and DFJ Frontier. http://bit.ly/2mg67Rl

• Enbala, a Vancouver-based real-time energy-balancing platform, has raised C$12 million in Series B funding led by ABB Technology Ventures. http://bit.ly/2mqRLN6

• Tantalus Systems, a Raleigh, N.C.-based provider of smart grid solutions for municipal and cooperative utilities, has raised $6 million in new VC funding from groups like CT Innovations and Vareco Holdings. http://bit.ly/2l6RfCV

• Mercatus, a San Francisco-based provider of energy investment lifecycle solutions, has raised $5.1 million in new Series B funding (the round total is $16.8m) led by TPG ART. http://bit.ly/2lMPgYg

• Collage, a Toronto-based HR and benefits management platform for small businesses, has raised C$5 million in VC funding from Diagram. http://bit.ly/2lMSGdN

• Doctor.com, a New York-based provider of marketing automation SaaS solutions for the healthcare industry, has raised $5 million in Series A funding from Spring Mountain Capital. http://bit.ly/2m9XzhT

• TripleMint (f.k.a. Suitey), a New York-based real estate platform, has raised $4.5 million in Series A funding. DN Capital led the round, and was joined by Summit Action Fund and b-to-v Ventures. http://bit.ly/2mhgzbc

• Uponit, an Israeli blocked ad recovery platform, has raised $2.3 million in new VC funding. Jerusalem Venture Partners led the round, and was joined by KDC Media Fund. http://bit.ly/2mstRRn

• Fossa, a San Francisco-based provider of an open source management and license compliance tool, has raised $2.2 million in seed funding. Bain Capital Ventures led the round, and was joined by individual angels like Marc Benioff. http://tcrn.ch/2lzH37R

• Roadmunk, a Toronto-based visual platform for product roadmap collaboration, has raised C$1.5 million in VC funding from Golden Venture Partners, Felicis Ventures, Garage Capital and return backer BDC Capital. http://bit.ly/2msgPmY

• Sunlight Financial, a Teaneck, N.J.-based provider of loans for residential solar systems, has secured a $130 million financing commitment from Route 66 Ventures. http://bit.ly/2lzwqU9

• Zibby, a New York-based provider of point-of-sale and lease payment solutions, has secured an additional $150 million debt facility from Victory Park Capital. http://bit.ly/2meTs4e

Private Equity Deals

• Atlas Merchant Capital, the firm led by former Barclays CEO Bob Diamond, has agreed to acquire the Athens-based consumer finance arm of France's Credit Agricole. http://on.ft.com/2msto1o

• Blue Point Capital Partners has acquired Fire & Life Safety America, a Richmond, Va.-based provider of fire protection services. No financial terms were disclosed, except that Angelo Gordon subsidiary Twin Brook backed the deal with $61 million in leveraged financing. http://bit.ly/2lRF9SJ

• Emeram Capital Partners has agreed to acquire a majority stake in Frostkrone, a German maker of deep-frozen snacks, from Ardian. No financial terms were disclosed. http://reut.rs/2lztwi8

• H.I.G. Capital has acquired substantially all the assets of Xtera Communications, an Allen, Texas-based provider of sub-sea fiber optic solutions. H.I.G. previously had provided debtor-in-possession financing to Xtera, as part of a Chapter 11 bankruptcy proceeding. http://bit.ly/2kTWJFF

• The Jordan Company has sponsored a recapitalization of Quick International Courier, a Jamaica, N.Y.-based provider of asset-light transport solutions for time and temperature-sensitive goods. No financial terms were disclosed. www.quick.aero

• Madison Dearborn Partners has agreed to acquire BlueCat Networks, a Toronto-based provider of enterprise DNS solutions, from shareholders like Partners and Trident Capital. No financial terms were disclosed, but the Globe & Mail puts the price-tag at around C$400 million. https://tgam.ca/2lJAPEo

• Sterling Partners has acquired a stake in Grand Rapids Ophthalmology, a Michigan-based eyecare provider that will become part of a new Sterling-backed rollup platform called Great Lakes MSO. No financial terms were disclosed. http://bit.ly/2lzHe4F

Public Offerings

• Braeburn Pharmaceuticals, a Princeton, N.J.-based CNS drug company owned by Apple Tree Partners, has officially withdrawn registration for an IPO that it had postponed earlier this month. The company had planned to offer around 7.7 million shares at between $18 and $21 per share, with J.P. Morgan and BofA Merrill Lynch serving as lead underwriters. http://bit.ly/2mko0OI

Liquidity Events

• Fir Tree Partners has agreed to sell FTP Power (d.b.a. sPower), a Salt Lake City-based owner and operator of utility-scale solar assets, to AES Corp. (NYSE: AES) and the Alberta Investment Management Co. for $853 million in cash (plus the assumption of $724m in non-recourse debt).

• Revcontent of Sarasota, Fla. has acquired Rover, a Sunnyvale, Calif.-based machine learning startup focused on personalization and recommendations. No financial terms were disclosed. Rover had raised around $7 million in angel funding. http://tcrn.ch/2ldpd9B

More M&A

• Engie (Paris: ENGI) is seeking a buyer for a coal-fired power station in Australia that could be valued at around $1 billion. http://reut.rs/2lzm9aC

• Royal Bank of Canada has launched a strategic review of its Asia wealth management business, which could result in a sale process, according to Reuters. http://reut.rs/2mkoO6f


• Alta Partners is raising upwards of $200 million for its ninth life sciences-focused VC fund, per an SEC filing. www.altapartners.com

• LLR Equity Partners is raising its fifth private equity fund, per an SEC filing. The Philadelphia-based firm currently is investing out of a $950 million fund closed in 2012. www.llrpartners.com

• Pappas Ventures is raising up to $125 million for its fifth life sciences-focused VC fund, per an SEC filing. www.pappasventures.com

It's Personnel

• Ronald Blaylock, founder and managing partner of GenNx360 Capital Partners, has been named to the board of Pfizer (NYSE: PFE). http://reut.rs/2mspshh

Final Numbers