Oct 23, 2017

Axios Pro Rata

By Dan Primack
Dan Primack

Greetings from Las Vegas, where it was good to meet a bunch of you both before and after my on-stage interviews last night with Stripe's John Collison and PayPal mafiosi Max Levchin and Keith Rabois. I'll be hanging out in the hallways today (at least once the sun comes up). Here we go...

Top of the Morning

Buying binge: Cisco this morning announced that it's buying BroadSoft for $1.9 billion, making it Cisco's eighth acquisition of the year (and second-largest, behind AppDynamics). A few takeaways from a brief chat with Cisco M&A lead Rob Salvagno:

  • The strategic play here is about collaboration software. Most of Cisco's current product is on-premise and focused on large enterprise, while BroadSoft is more cloud-based and focused on SMBs.
  • Don't expect Cisco's M&A engine to slow down any time soon, particularly as it continues to diversify from its hardware roots.
  • He suggested that merger-related layoffs could be small do to the lack of overlap, but said those decisions won't be made until post-close (slated for Q1 18).

• Guidance gutted? The GAO has ruled that the Fed and other regulators overreached in 2013 when they issued leveraged loans guidance to banks, saying that it constituted a formal federal rule that needed to be presented to Congress (something that didn't happen). Still unclear what comes next, particularly given that banks have regularly flouted the "rule" since inception.

• Tax timeline: Mitch McConnell yesterday told CNN that "we're just beginning the process of actually crafting the bills... It's way too early to predict the various details." This morning, Sen. James Lankford (R-OK) told CNBC that all of those unpredictable details will be publicly available within the next 10 days.

  • Related: Trump tweeted this morning stuck a pin in the trial balloon about 401(k) contribution caps.

• Today in terrible: Tech entrepreneur Zain Jaffer is currently in a Silicon Valley jail cell, after being arrested for sexual assault of a child (among other awful things). He also has been put on indefinite leave as CEO of Vungle, the mobile video ad company that he founded in 2011. Kudos to Vungle's board for dumping Jaffer within 24 hours of his arrest, but demerits for only telling smaller investors that it was for "personal reasons." Yes, technically true, but your VCs shouldn't need to learn the specifics from the media (which is what happened).

• Sorry, SoftBank: Early Uber investor Max Levchin said last night that he does not plan to sell his shares via the upcoming tender.

• Reading between the lines: Saudi Aramco CEO Amin Nasser this morning told CNBC that the state-backed oil giant's IPO continues to be on track for the second half of 2018, and that Aramco is not in talks with China or any other sovereign wealth funds about a private placement. Worth noting, however, that the denial does not exclude the possibility that Saudi's government is having those discussions.

The BFD

Abra, a bitcoin-based digital wallet app primary focused on foreign exchange, has raised $15 million in Series B funding. Foxconn led the round, and was joined bu Silver8 Capital, Ignia and return backers Arbor Ventures, American Express, Jungle Ventures, Lerer Hippeau Ventures and RRE Ventures.

  • Why it's the BFD: Because this could help lead to a revolution in how people pay for consumer electronics and other household goods. Foxconn's investment does not have a strategic partnership attached, but Abra CEO Bill Barhydt believes that the inclusion of IoT chips in such things as flat-screen TVs – Foxconn now owns Sharp – could eventually be leveraged to enable pay-as-you go leasing programs transacted via Bitcoin.
  • Bottom line: Does it seem far-fetched? Sure. Well, until you realize that a version of this has been underway for several years with M-Pesa and solar home-lighting systems in Kenya.
Venture Capital Deals

🚑 ADC Therapeutics, a Swiss developer of antibody drug conjugates targeting cancer, has raised $200 million in new funding. Backers include AstraZeneca, Auven Therapeutics, Redmile and the Wild Family Office. http://axios.link/KBmM

🚑 Eargo, a Mountain View, Calif.-based hearing aid maker, has secured $45 million in tranched-out VC funding. Nan Fung Life Sciences led the round, and was joined by NEA, Maveron and Charles and Helen Schwab. http://axios.link/EwWH

• Automile, a Palo Alto, Calif.-based fleet and asset management IoT startup, has raised $34 million in Series B funding led by Insight Venture Partners. http://axios.link/WCNf

• ActionIQ, a New York-based enterprise customer data analytics platform, has raised $30 million in Series B funding. Andreessen Horowitz led the round, and was joined by Shutterstock and return backers Sequoia Capital and Firstmark Capital. http://axios.link/Z6eM

• Solvvy, a Pao Alto, Calif.-based self-service platform for customer experience, has raised $12 million in Series A funding. Scale Venture Partners led the round, and was joined by Pear Ventures, Signatures Capital and True Ventures. www.solvvy.com

• EchoPixel, a Mountain View, Calif.-based provider of interactive VR software for healthcare professionals, has raised $8.5 million in Series A funding. Intel Capital led the round, and was joined by LAM Research and Binomial, Aurus Capital, Runa Capital and Harris & Harris Group. http://axios.link/Hnva

• Zero, developer of a credit card that acts like a debit card, has raised $8.5 million in new VC funding. ENIAC Ventures led the round, and was joined by NEA and Lightbank. http://axios.link/Qigd

• Intezer, an Israeli provider of malware analysis and detection solutions, has raised $8 million in Series A funding. Intel Capital led the round, and was joined by Magma and Samung NEXT. http://axios.link/9Op9

• Amenity Analytics, a New York-based text analytics platform, has raised $7.6 million in Series A funding from Intel Capital and State of Mind Ventures. www.amenityanalytics.com

• Winnow, a British developer of smart kitchen technologies, has raised $7.4 million in new VC funding. Circularity Capital led the round, and was joined by Mustard Seed and D-Ax. http://axios.link/U6j1

• SafeTraces, a Pleasanton, Calif.-based provider of food source assurance solutions, has raised $6.5 million in Series A funding. Omidyar Network led the round, and was joined by UL Ventures, S2G Ventures, Maumee Ventures, City Light Capital, and Tuscan Management. www.safetraces.com

• Contructor.io, an on-site search startup, has raised $5 million in Series A funding. Zetta Venture Partners led the round, and was joined by Signia Venture Partners. www.contructor.io

• Equinom, an Israeli seed breeding startup focused on developing specialized crops for the food industry, has raised $4 million from Fortissimo Capital. www.equi-nom.com

Private Equity Deals

• Baring Private Equity and Citic Capital reportedly are in advanced talks to acquire the English-language school business of Pearson (LSE: PSON) for more than $350 million. http://axios.link/aF2b

• The Carlyle Group and TA Associates are among the bidders for Old Mutual Global Investors' (LSE: OML) £25 billion fund business, according to the FT. Macquarie Investment Management and Challenger also are bidding. http://axios.link/fEhT

• Quad-C Management has invested in AIT Worldwide, an Itasca, Ill.-based provider of transportation and supply chain management solutions. www.aitworldwide.com

Public Offerings

• Eight companies, including two blank check offerings, this week are expected to price IPOs on U.S. exchanges: ForeScout Technologies, Ablynx, CM Seven Star Acquisition, Haymaker Acquisition, BP Midstream Partners and National Vision Holdings, Merchants Bancorp and Nexa Resources. http://axios.link/yLP5

• Cabot, a British debt collection company owned by J.C. Flowers and Encore Capital Group, is prepping a £1 billion London flotation next month. http://axios.link/3VjV

• China Literature, a Chinese online publishing and e-book company majority-owned by Tencent, has launched an IPO that could raise upwards of $1.1 billion. Other shareholders include The Carlyle Group (12.2% stake) and Trustbridge Partners (6%). http://axios.link/hF5m

SailPoint Technologies, an Austin, Texas-based cybersecurity company backed by Thoma Bravo, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol SAIL, with Morgan Stanley listed as left lead underwriter. The company reports a $6.6 million net loss on $75 million in revenue for the first half of 2017. www.sailpoint.com

Liquidity Events

American Securities has completed its previously-announced sale of Indiana-based Royal Adhesives & Sealants to H.B. Fuller Co. (NYSE: FUL) for $1.575 billion. http://axios.link/aUna

• WeWork has acquired Flatiron School, a New York-based coding academy, for an undisclosed amount of cash and stock (a source says it was a competitive process). Flatiron had raised over $14 million in VC funding from Thrive Capital, CRV and Matrix Partners. http://axios.link/VfKz

More M&A

• Cisco (Nasdaq: CSCO) has agreed to acquire telecom software maker BroadSoft (Nasdaq: BSFT) for $1.9 billion, or $55 per share.

• The Hartford (NYSE: HIG) has agreed to acquire the U.S. group life and disability business of Aetna (NYSE: AET) for $1.45 billion in cash. http://axios.link/Jy6e

Fundraising

Blue Wolf Capital Partners has closed its fourth private equity fund with $540 million in capital commitments. www.bluewolfcapital.com

• Forerunner Ventures is raising around $55 million for a fund that will make follow-on investments in existing portfolio companies. www.forerunnerventures.com

• Nordic Capital is expecting to hold a first and final close on its ninth flagship fund at €3.5 billion by year-end, according to Financial News. http://axios.link/NugI

It's Personnel

• Cary Ho is joining CVC Credit Partners as a managing director and global head of CLO origination. He previously was head of credit restructuring at Nomura. www.cvc.com

• Rebecca Kaden has joined Union Square Ventures as a New York-based general partner. She previously was a general partner with Seattle-based Maveron. www.usv.com

• David Lang is joining KKR as a member in Australia. He previously was a partner and co-founder of Pamplona Capital Management. www.kkr.com

• Ben Metcalfe, co-founder of WPP Engine, has joined Ridge Ventures (f.k.a. IDG Ventures USA) as a principal. www.ridge.vc

• Howard Morgan, co-founder of First Round Capital, is joining Eduardo Saverin's B Capital as chairman. http://axios.link/Ct8w

• Eric Shuey has joined Denver-based private equity firm Revelstoke Capital Partners as a managing director. He previously was a corporate development executive at Fresenius Medical Care. www.revelstokecp.com

• Grace Yun Xia has joined Singapore-based Jungle Ventures, after having previously been a senior director for corporate strategy and development with Tencent. http://axios.link/06ly

Final Numbers
Dan Primack