Pre-dawn greetings from north of Los Angeles, where the Upfront Summit begins in a few hours. My job is to interview Aydin Senkut of Felicis Ventures, so shoot over anything you think we should discuss. Okay, here we go...
Top of the Morning
After President Trump was elected, private equity firms rushed out to raise giant new infrastructure funds. It was a mistake.
- The idea was that the White House plan would lean heavily on public-private partnerships that leveraged federal dollars with outside investment. Everything from bridge repairs to rural broadband to upgrading ports, airports and highway rest-stops.
- Infrastructure improvement is a bipartisan goal, and the public-private model had historical support from many members of both parties.
- If Trump wanted to tout a $1 trillion infrastructure plan, then the private sector felt justified in seeking to raise hundreds of billions of dollars. Not only to fill their federal ask, but also to continue doing more traditional and state/local projects. Unprecedented investment opportunity.
But the White House infrastructure plan was stillborn, shunted aside for other priorities and midterm politics. Now the administration has again begun infrastructure discussions, both official and ad hoc, but Axios has learned that public-private partnerships are effectively off the table.
- There isn't yet a consensus replacement for funding mechanisms, particularly as many Trump advisors continue to oppose a gas tax increase.
- There also isn't too much infrastructure expertise left in the White House, with prior point person DJ Gribbin now at private equity firm Stonepeak Partners.
- Reuters recently reported that Trump may touch on infrastructure in his State of the Union address, but so far it sounds like any mention would be about the whys rather than the hows.
The bottom line is that many of the private equity firms insisted that they weren't banking on a federal infrastructure plan. They weren't really telling the truth, but now they'll have to make good on those false promises.
• Romney raise: Axios has learned that Solamere Capital, the Boston-based private equity firm co-founded by Tagg Romney (and, until recently, chaired by dad Mitt), recently raised $910 million for its fourth fund.
- This is a big jump over the $550 million that Solamere raised for Fund III in 2017.
- Solamere originally launched as a fund-of-funds that also did some direct investing, but it's since swapped that paradigm.
🎧 Podcast: Our latest episode focuses on the U.S. charges against Huawei, and what it means for U.S.-China trade and business relations. Listen here.
GameStop (NYSE: GME), a Grapevine, Texas-based video game retailer, said it has abandoned efforts to sell the company after failing to get an adequate bid, sending shares down more than 20%.
- Why it's the BFD: Because this seems to validate short-seller arguments that physical retail for video games is anachronistic, as more and more product is downloaded directly via mobile and consoles. There had been some hope that a buyer would bet on increased interest in things like VR hardware and collectibles, but apparently not.
- Reax: GameStop shares sunk more than 27% on the news, giving it a market cap of just $1.15 billion. Overall, company shares have lost more than 75% of their value since late 2015.
- Bottom line: Video game stores are the new record stores.
Venture Capital Deals
🚑 Clover Health, a San Francisco-based health insurance startup, raised $500 million in fifth-round funding led by existing shareholder Greenoaks Capital, per TechCrunch. http://axios.link/isP4
🌰 Acorns, an Irvine, Calif.-based micro-investing startup, raised $105 million in Series E funding at an $860 million post-money valuation from Comcast Ventures, NBCUniversal, Bain Capital Ventures, BlackRock, TPG’s Rise Fund, DST Group and MSD Capital. http://axios.link/u2tz
• Kinestral, a Hayward, Calif.-based maker of smart-tinting glass for homes and commercial buildings, raised over $100 million in Series D funding. SK Holdings led, and was joined by 5AM Ventures, Alexandria Real Estate, Capricorn Investment Group and Versant Ventures. www.kinestral.com
• FabFitFun, a Los Angeles-based subscription box service focused on health and beauty products, raised $80 million in Series A funding. Kleiner Perkins Digital Growth led, and was joined by return backers NEA and Upfront Ventures. A source tells Axios that the valuation is north of $1 billion, with the company already generating “hundreds of millions” in revenue. http://axios.link/feiP
• Billd, an Austin, Texas-based lending platform, raised $60 million in Series A funding led by LL Funds. http://axios.link/g7oN
🚑 Dewpoint Therapeutics, a Cambridge, Mass.-based drug discovery startup focused on biomolecular condensates, raised $60 million in Series A funding. Polaris Partners led, and was joined by Samsara BioCapital, 6 Dimensions Capital, EcoR1 Capital, Alexandria Venture Investments and Leaps by Bayer. http://axios.link/M54U
🚑 MabPlex, a Chinese contract development and manufacturing organization for biopharma, raised $59 million in Series A funding co-led by SDIC and Shenzhen VC. http://axios.link/fR8V
🚑 Lyndra Therapeutics, a Watertown, Mass.-based biotech startup focused on time-delayed drug delivery via pills, raised $55 million in Series B funding. Return backer Polaris Partners was joined by new investors HOPU Investments, Gilead Sciences, Invus, the Bill & Melinda Gates Foundation and Orient Life. http://axios.link/Gi79
• Madison Reed, a San Francisco-based maker of at-home hair coloring products, raised $51 million in Series D funding co-led by return backers Norwest Venture Partners and True Ventures. Other backers include Comcast Ventures and Meaningful Partners. http://axios.link/vjjD
• Gladly, a San Francisco-based customer service platform, raised $50 million in Series D funding. Future Fund and Glynn Capital were joined by return backers Greylock, GGV Capital and NEA. http://axios.link/aHs3
• Socati, a Woodburn, Ore.-based hemp genetics startup, raised $33 million from JJR Private Capital, Lorne Abony and Jim Mellon. http://axios.link/weO5
• Epic, a Redwood City, Calif.-based digital reading platform for kids, raised $30 million led by Evolution Media. www.getepic.com
• Mimiro (fka ComplyAdvantage), a London-based platform for analyzing the risk of financial crimes, raised $30 million in Series B funding. Index Ventures led, and was joined by return backer Balderton Capital. www.mimiro.com
• Pliops, an Israeli cloud storage startup, raised $30 million in Series B funding. Softbank Ventures Asia led, and was joined by Western Digital Capital, Xilinx and return backers Intel Capital, SPMV and Viola Ventures. www.pliops.com
• Verbit, an Israeli provider of transcription and captioning software, raised $23 million in Series A funding. Viola Ventures led, and was joined by Vertex Ventures, HV Ventures, Oryzn Capital, Vintage Venture Partners and Clal-Tech. http://axios.link/EmIN
• Timescale, a New York-based open-source time-series database, raised $15 million in Series A1 funding. Icon Ventures led, and was joined by return backers Benchmark, NEA and Two Sigma Ventures. www.timescale.com
• Sendle, an Australian parcel delivery service, raised A$14.3 million in Series B funding. Federation Asset Management led, and was joined by return backers Full Circle VC, Rampersand and Giant Leap. www.sendle.com
• Salt Security, an Israeli API protection startup, raised $10 million led by S Capital. http://axios.link/6ORI
• Filevine, a Provo, Utah-based provider of legal case management software, raised $8.3 million in Series A funding led by Signal Peak Ventures. http://axios.link/g0BH
🚑 Phynd Technologies, a Dallas-based information management platform for the healthcare market, raised $8 million from the MemorialCare Innovation Fund, Rex Ventures, Orlando Healthcare Ventures and Dallas Venture Partners. http://axios.link/FPvO
• Bipsync, a New York-based research platform for investment management firms, raised $7 million. Edison Partners led, and was joined by Fintop Capital. http://axios.link/0Mio
🚑 Perfuze, an Irish developer of catheter-based devices to treat acute ischemic stroke, raised €3 million in seed funding led by Earlybird. www.perfuze.com
• AirWorks Solutions, a Cambridge, Mass.-based provider of autonomous processing software for aerial mapping and surveying, raised $2.3 million in seed funding led by Innospark Ventures. www.airworks.io
Private Equity Deals
• Arlington Capital Partners agreed to buy the forming and fabrication facilities of Triumph Group (NYSE: TGI). www.triumphgroup.com
• Century Park Capital Partners acquired MCCi, a Tallahassee, Fla.-based corporate IT services firm. www.mccinnovations.com
⛽ Clear Creek Midstream, a Houston-based developer of midstream infrastructure for oil and gas producers in North American shale plays, secured a $300 million equity commitment from EnCap Flatrock Midstream. www.clearcreekmidstream.com
⛽ KKR completed its $1.56 billion purchase of petrochemicals company LCY Chemical Corp., which had been listed in Taiwan. http://axios.link/fS1l
• Vander-Bend Manufacturing, a San Jose, Calif.-based portfolio company of Aterian Investment Partners, acquired J.L. Haley Enterprises, a Rancho Cordova, Calif.-based metal fabrication manufacturer focused on cancer treatment equipment. www.vander-bend.com
• Pinterest picked Goldman Sachs and JPMorgan to lead an IPO that could raise upwards of $1.5 billion in the first half of 2019, per Reuters. http://axios.link/1EC2
⛽ Remora Royalties, an Austin, Texas-based owner of oil and gas mineral royalty interests, withdrew registration for an IPO that was seeking to offer 5.25 million shares at $19-$21.
• Altice is nearing a deal for a majority stake in French over-the-top streaming startup Molotov, per TechCrunch. Molotov has raised around $35 million from Idinvest, Sky, TDF and Cherry Tree Invest. http://axios.link/ZYRQ
• ScS Group and Sports Direct’s Mike Ashley reportedly are competing to buy Sofa.com, a British handcrafted furniture retailer owned by LGT European Capital. http://axios.link/dxSp
• Intel (Nasdaq: INTL) has offered to buy Israeli chipmaker Mellanox Technologies (Nasdaq: MLNX) for between $5.5 billion and $6 billion, per the Calcalist. http://axios.link/dlWW
• Pueblo Mechanical & Controls, a Tucson, Ariz.-based HVAC company owned by Huron Capital, acquired both Newgaard Mechanical (Chandler, Ariz.) and CFM Mechanical (Phoenix). www.pueblo-mechanical.com
• Taptica International (AIM TAP) is in talks to buy rival video advertising rival • RhythmOne (AIM: RTHM) for around £260 million in stock, per Sky News. http://axios.link/7F1H
• Midwest Growth Partners, an Iowa-based private equity firm, raised $113.5 million for its second fund. www.mgpfund.com
• John Startin is leaving Goldman Sachs to join Evercore as a senior managing director and head of its metals, materials and mining group. www.evercore.com