Oct 27, 2021

Axios Pro Rata

Top of the Morning

Illustration: Aïda Amer/Axios

There is now legislative language behind the push to tax American billionaires on unrealized capital gains, as Sen. Ron Wyden last night released his 107-page plan.

Why it matters: This would be a sea change in U.S. tax policy, which has only applied to realized gains (otherwise known as income).

  • Wyden's proposal would apply to those with more than $1 billion in assets or more than $100 million in adjusted gross income over three consecutive years.
  • The biggest tax bills would come up front, charging a long-term cap gains rates on all unrealized monies for tradeable investments. Payments could be spread out over five years. Then, going forward, payers would be on the hook for annual capital gains taxes on new unrealized income — although unrealized losses could be carried forward as offsets.
  • Pay special attention to the term "tradeable." Not only because it likely applies to crypto, but because it wouldn't apply to illiquid securities or real estate. Yes, there are deferred interest charges included for certain non-tradeable assets — to be paid upon sale or transfer — but, in general, Wyden is an indirect supporter of "stay private longer."

Be smart: Treasury Secretary Janet Yellen on Sunday pushed back against defining this as a wealth tax, likely for constitutional reasons (and because it's different from Sen. Elizabeth Warren's European-style net worth tax). House Speaker Nancy Pelosi, also on Sunday, did call it a wealth tax. Pelosi is right.

Be smarter: There are very good philosophical and practical arguments against taxing unrealized gains, but the hand-wringing from some about how this will kill capitalism is just laughable. People will still strive to become insanely wealthy because ... well, because they'll be insanely wealthy. And most of them can either sell some stock or take out loans to cover these tax bills (just like they currently take out loans against unrealized earnings).

Be smartest: Democrats haven't yet demonstrated an ability to get any of their major economic plans passed, beyond a COVID relief bill earlier this year. In other words, there's little imperative for celebration or consternation.

The bottom line: The definition of income could be changing, at least for the wealthiest of the wealthy.

The BFD

Source: Giphy

Rent the Runway, a New York-based clothing rental service, raised $357 million in an upsized IPO. The company priced 17 million shares at $21, versus plans to sell 15 million shares at $18–$21, for a fully diluted value of around $1.5 billion.

  • Why it's the BFD: Because it's the latest evidence that nothing matters. This is a consumer company that reports over $150 million in losses in each of the past two years, despite being founded in 2009 and raising nearly $700 million in venture capital. Plus, it excluded rental apparel depreciation from its adjusted EBITDA calculations (which were still negative).
  • ROI: Rent the Runway hit unicorn status in mid-2019, before raising a pair of down rounds, and is backed by such firms as Bain Capital Ventures Ares Management, Highland Capital Partners and TCV.
  • The bottom line: "The rent-what-you-wear business model appeals to customers with tighter budgets who are eager to access high fashion they wouldn’t otherwise be able to afford. Wealthier shoppers also like it because it offers them more wardrobe variety and the chance to check out new brands. The services are particularly popular in big cities such as New York where closet space is often at a premium." — Crystal Tse and Jeannette Neumann, Bloomberg
Venture Capital Deals

• Clickup, a San Diego-based workplace productivity platform, raised $400 million in Series C funding at a $4 billion post-money valuation. Andreessen Horowitz and Tiger Global co-led, and were joined by Lightspeed Venture Partners and Meritech Capital Partners. http://axios.link/EYdO

• Skyryse, a Hawthorne Calif.-based flight automation tech startup, raised $200 million in Series B funding. Fidelity and Monashee co-led, and were joined by ArrowMark Partners, Republic Capital, Raptor Group, Infinite Capital, Embedded Ventures, Fortistar, K3 Ventures, Rosecliff, SV Pacific Ventures, Laurence Tosi, Dmitry Balyasny and insiders Venrock, Eclipse Ventures and Fontinalis Partners. http://axios.link/8Tzn

🚑 Truepill, a San Mateo, Calif.-based digital pharmacy, raised $142 million in Series D funding at a $1.6 billion post-money valuation from backers like Initialized Capital and TI Platform Management. http://axios.link/z4eI

• DeHaat, an Indian provider of agricultural supply chain and productivity tech, raised $115 million in Series D funding. Sofina and Lightrock co-led, and were joined by insiders Prosus Ventures, RTP Global, Sequoia Capital India and FMO. http://axios.link/uoZl

Crossbeam, a Philadelphia-based accounts mapping startup for sales, raised $76 million in Series C funding. Andreessen Horowitz led, and was joined by Redpoint Ventures, FirstMark Capital, First Round Capital, Uncork Capital, Salesforce Ventures, HubSpot Ventures and Okta Ventures. http://axios.link/ZMWe

• Attest, a London-based research surveys platform, raised $60 million from backers like NEA and Kismet. http://axios.link/ktyp

🚑 Mozart Therapeutics, a Seattle-based biotech focused on autoimmune and inflammatory diseases, raised $55 million from Lilly Ventures, Merck, Bayer, Sofinnova Ventures and Arch Venture Partners. http://axios.link/Q1a1

Maxwell, a Denver-based digital mortgage software, raised $52.5 million. Fin VC led, and was joined by Wells Fargo Strategic Capital, Prudence, Rotor Capital and TTV Capital. www.himaxwell.com

• Love, Bonito, a Singapore-based omnichannel womenswear brand, raised $50 million in Series C funding. Primavera Capital led, and was joined by Alibaba, ByteDance, Yum China and Mead Johnson China. Adastria and Ondine Capital. www.lovebonito.com

• Zolve, a Bangalore-based neobank, raised $40 million in Series A funding. DST Global partners led, and were joined by Tiger Global, Alkeon Capital, Lightspeed Venture Partners and Accel. http://axios.link/hTi7

• Tactile Mobility, an Israeli tactile data and virtual sensing tech startup, raised $27 million in Series C funding. Delek Motors led, and was joined by Goodyear Ventures, Porsche Ventures, Union Group, The Group Ventures and Zvi Neta. www.tactilemobility.com

Admix, a London-based programmatic immersive advertising startup, raised $25 million in Series B funding. Elefund and DIP Capital co-led, and were joined by Force Over Mass, Notion Capital, Speedinvest, Rocket Capital, Colopl Next, Sure Valley Ventures, Sidedoor Ventures, Kuvi Capital. http://axios.link/ozRq

QuintessenceLabs, an Australian quantum cybersecurity startup, raised A$25 million in Series B funding. Main Sequence and Telus Ventures co-led, and were joined by InterValley Ventures and Capital Property Group. http://axios.link/9ITQ

Pragma, an L.A.-based backend game engine, raised $22 million in Series B funding. Insight Partners led, and was joined by Daher Capital and insiders Greylock, Upfront Ventures, and Advancit Capital. www.pragma.gg

• Cogniac, a San Jose, Calif.-based image and video analysis startup, raised $20 million in Series B-1 funding. National Grid Partners led, and was joined by Autotech Ventures, Cisco Investments, Energy Innovation Capital, London Technology Club, Vanedge Capital and Wing VC. www.cogniac.ai

HiveWatch, an L.A.-based physical security startup, raised $20 million. 01A led, and was joined by Lachy Groom, Elad Gil, Steph Curry, Crosscut Ventures, Freestyle Capital and SaaS Ventures. http://axios.link/AuHE

• UserGems, an SF-based sales prospecting platform, raised $20 million in Series A funding. Craft Ventures led, and was joined by Battery Ventures, Tiger Global and insider Uncork Capital. http://axios.link/OUhX

RealEats, a Geneva, N.Y.-based meal delivery service, raised $16.3 million in Series A funding. Hamilton Lane led on behalf of the New York State Common Retirement Fund, and was joined by GNC, Armory Square Ventures and Excell Partners. www.realeats.com

• Trellis, an L.A.-based research platform for litigators, raised $14.1 million in Series A funding led by Headline Ventures. http://axios.link/rbfc

🚑 Anomaly, a Pasadena, Calif.-based medical billing software startup, raised $12 million in Series A funding. RRE Ventures led, and was joined by Link Ventures, Madrona Venture Group, Declaration Partners and Redesign Health. http://axios.link/fkV5

Testlio, a Palo Alto-based software testing startup, raised $12 million in Series B funding. Spring Lake Equity Partners led, and was joined by insiders Altos Ventures and Vertex Ventures US. http://axios.link/xmkK

Piiano, an Israeli customer data privacy startup, raised $9 million led by YL Ventures. http://axios.link/aiE0

• Coefficient, a Mountain View, Calif.-based no-code business analytics startup, raised $6.7 million in seed funding led by Foundation Capital. http://axios.link/jmy4

Rally, a headless e-commerce startup, raised $6 million. Felix Capital led, and was joined by Rainfall Ventures, Long Journey Ventures, Afore Ventures and Commerce Ventures. http://axios.link/s7up

Immunefi, a Singapore-based Web3 bug bounty platform, raised $5.5 million led by Electric Capital. http://axios.link/Pylx

• Union34, a Zambian card-issuing API, raised $3 million in seed funding. Tiger Global led, and was joined by Runa Capital, Ace & Co., Todd & Rahul Angel Fund and Vibe VC. http://axios.link/hIjY

Button Finance, a New York-based home mortgage lender, raised $2 million in seed funding from Hildene. www.buttonfinance.com

Private Equity Deals

• EQT is in talks to buy listed Swiss banking software company Temenos, which has a US$9.9 billion market cap, per Bloomberg. http://axios.link/dlFN

Global Infrastructure Partners said it won't bid for Saudi Aramco's gas pipeline assets. http://axios.link/kk0U

• Logicbroker, a Shelton, Conn.-based provider of drop ship and marketplace functionality, raised $135 million from K1 Investment Management. www.logicbroker.com

Periscope Equity invested in Praecipio Consulting, an Austin, Texas-based IT services and business process management consulting firm. www.praecipio.com

• Summit Partners bought a minority stake in Hairstory, an Irvington, N.Y.-based "clean" hair care brand. www.hairstory.com

• Sverica Capital Management acquired a majority stake in Automated Control Concepts, a Neptune, N.J.-based industrial systems integrator. www.automated-control.com

UpperStage Capital acquired Talius, a Canadian provider of roll-shutters and habitat screens for buildings. www.talius.com

• Valence Surface Technologies, a Texas-based portfolio company of ATL Partners and BCI, acquired H&W Global Industries, a Blairsville, Pa.-based provider of surface treatment for aerospace and defense products. www.valencesurfacetech.com

Public Offerings

• Informatica, a Redwood City, Calif.-based enterprise cloud data management platform, raised $841 million in its IPO. It priced at the low end of its $29-$32 range, for a $7.9 billion market cap, will list on the NYSE (INFA) and reports a $36 million net loss on $676 million in revenue for the first half of 2021. Backers include Permira and CPPIB.

• NerdWallet, a S.F.-based personal finance platform, set IPO terms to 7.3 million shares at $17-$19. It would have a $1.3 billion fully diluted value, were it to price in the middle, and plans to list on the Nasdaq (NRDS). The company reports a $35 million net loss on $280 million in revenue for the first nine months of 2021, and raised $192 million from firms like Innovius Capital, IVP, RRE Ventures and iGlobe Partners. http://axios.link/3Ik2

• Softline, a Russian IT services company, was valued at around $1.5 billion in its London IPO. Backers include Zubr Capital and Da Vinci Capital Management. http://axios.link/Zq32

SPAC Stuff

Namaste World Acquisition, a TMT SPAC led by Suresh Guduru (Organic Ingredients), filed for a $200 million IPO. http://axios.link/8t5t

Liquidity Events

Gusto, a cloud HR services company valued by VCs at $9.5 billion, is buying Remote Team, an SF-based payroll software startup seeded by Active Capital, IT-Farm and Atanova Ventures. http://axios.link/kCkY

• Permira is seeking a buyer for DiversiTech, an Atlanta-based maker of HVAC and refrigeration components that could fetch up to $1.5 billion (including debt), per Bloomberg. http://axios.link/oN8u

🚑 The Riverside Company agreed to sell Actineo, a German provider of digitization and medical assessment solutions for bodily injury claims, to Verisk (Nasdaq:VRSK). www.actineo.de

🚑 Shore Capital Partners is seeking a buyer for Novi, Mich.-based vet chain Mission Veterinary Partners, per PE Hub. http://axios.link/OODN

More M&A

Crestwood Equity Partners (NYSE: CEQP) agreed to buy Oasis Midstream Partners from Oasis Petroleum (Nasdaq: OAS) for around $1 billion in cash and stock. http://axios.link/kmrP

• Emerson Electric (NYSE: EMR) is seeking a buyer for thermostat maker Therm-O-Disc, which could fetch around $1 billion, per Bloomberg. http://axios.link/YXwB

🐔 Foster Farms, a family-owned poultry producer in Livingston, Calif., is seeking a buyer, per Bloomberg. http://axios.link/BNZ9

🚑 Novartis (NYSE: NVS) is considering a sale process for its Sandoz generics unit, which had around $9.7 billion in 2020 sales, per multiple reports. http://axios.link/Tt5G

Fundraising

• Platinum Equity is seeking to raise up to $15 billion for its sixth buyout fund ($12B target) and up to $1 billion for its first credit fund, per Bloomberg. http://axios.link/q0tE

It's Personnel

• Evercore said that John Weinberg will become the firms sole CEO when co-CEO Ralph Schlosstein steps down next February. http://axios.link/fCba

• Charles Alutto, former president and CEO of Stericycle, joined PE firm The Halifax Group as an operating executive. www.thehalifaxgroup.com

• Matthew Ochsner joined Piper Sandler as a tech investment banker in Austin. He previously worked on M&A for Amazon Web Services. www.pipersandler.com

• Jai Ramaswamy joined Andreessen Horowitz's crypto business as chief regulatory officer. He previously was chief risk and compliance officer at cLabs, and is a former DOJ official. www.a16z.com

• Carlos Soto joined MSD Capital as a managing director, per his LinkedIn. He previously was a managing director and head of biz dev at Comvest Partners. http://axios.link/O4kJ

Final Numbers
Expand chart
Data: Heartland Forward; Chart: Will Chase/Axios. Go deeper.

Impellent Ventures is raising its second fund, Axios has learned, with plans to back Rust Belt tech startups that could benefit from capital connections and mentorship from East Coast hubs like Boston and New York.

  • Word is that the firm is about to hold a sizable first close toward its $50 million target, with return backers including the family office of Paychex founder Tom Golisano.
  • One big change from Fund 1 ($10.5m) is the addition of veteran Boston tech entrepreneur and operator Phil Beauregard. Impellent founder David Brown, a former Bostonian known for running the TUGG tech philanthropy program, works out of Rochester.
  • Oh, they also have a website that will warm the heart of old video game aficionados.
  • Neither Beauregard nor Brown would comment due to regulatory restrictions, natch.

The bottom line: Venture capital is rapidly expanding beyond its traditional homes, but geographic ties will continue to have value.

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