Feb 20, 2020

Axios Pro Rata

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Top of the Morning

Illustration: Eniola Odetunde/Axios

Thanks to companies like AngelList and Carta that make it easier than ever to set up small VC funds, a new generation of so-called “super angels” is cropping up — and established venture funds are backing them.

Why it matters: Just like the boom in scout programs a number of years ago, it’s all about the deal flow.

Between the lines: “A founder will go to other operators first before they go to South Park or Sand Hill Road,” one industry insider tells me of larger venture funds' desire to get these entrepreneurs and execs into their networks, either as scouts or by backing their funds.

  • A number of established VC firms are backing other tiny funds, including Sequoia Capital, Bain Capital Ventures, Menlo Ventures, Lightspeed Venture Partners, Felicis Ventures, and Index Ventures.
  • While some like Bain have more established programs, others invest more ad hoc.

What they’re saying: “We’ve talked about doing a scout program … ultimately this feels more efficient as a process,” Felicis Ventures’ Katie Riester tells me.

  • Felicis has backed about a dozen other funds over the years and has backed four startups it met through them.
  • A partner at another major VC firm says about a fifth to a quarter of new deals come through either the firm’s scout program or the funds it’s backed.

For the super angels themselves, the upside to being a traditional scout for a VC fund is their independence and the ability to make their own name.

  • At the same time, these established firms often act as mentors and even invite them to co-invest in certain deals.

Yes, but: This approach is not new — rather, wider industry trends plus the availability of new tools appear to be allowing this new take on the scout model to flourish.

  • Plus, even some firms that do invest in these small funds caution that they’re not interested in becoming funds-of-funds, suggesting this will remain a niche part of their investments.
Also ...

Exchange news: Goldman Sachs and JPMorgan are joining the list of banks, brokerages and trading firms that back the Members Exchange, or "MEMX" — a new stock exchange that says it will go live in July and challenge incumbent exchanges by charging lower fees, reports my colleague Courtenay Brown.

  • Why it matters: MEMX, which is still awaiting regulatory approval from the SEC, could be a formidable competitor to the entrenched "big three" stock exchanges.
  • The big picture: All but one of the nation's stock exchanges (not including dark pools) are controlled by three big players: Intercontinental Exchange (the parent company of NYSE), Nasdaq and Cboe.
  • Read the full story.

🎧 Podcast: Beijing-based think tank D&C generated a series of reports rating state governors and White House officials on how "friendly" they are toward China. Pro Rata producer Naomi Shavin is joined by Axios China reporter Bethany Allen-Ebrahimian, who obtained and analyzed the reports. Listen here.


Photo: Keith Mayhew/SOPA Images/LightRocket via Getty Images

L Brands is reportedly near a deal to sell a 55% stake in Victoria’s Secret to Sycamore Partners, which will take the women’s lingerie company private and value it at about $1.1 billion, per the Wall Street Journal.

  • Details: L Brands will keep the remaining stake in a separate company along with sister brand Pink, while the core company will now only operate Bath & Body Works. Leslie Wexner will step down as CEO and chairman but remain on the boards of both companies.
  • Why it’s the BFD: It’s the end of an era — Wexner ran L Brands for 57 years.
  • The bottom line: “A $1.1 billion valuation would mark a sharp fall for a business that operates hundreds of stores, elevated the profiles of supermodels like Tyra Banks and Gisele Bündchen, and generated about $7 billion in annual sales in its last fiscal year.” — Khadeeja Safdar and Cara Lombardo, WSJ
Venture Capital Deals

OneTrust, an Atlanta-based cybersecurity company, has raised $210 million in Series B funding at a valuation of $2.7 billion led by Coatue Management and Insight Partners. www.onetrust.com

SentinelOne, a Mountain View, Calif.-based cybersecurity company, has raised $200 million in Series E funding at a $1.1 billion valuation led by Insight Partners, with Tiger Global Management, Qualcomm Ventures LLC, Vista Public Strategies of Vista Equity Partners, Third Point Ventures, and previous investors also participating. http://axios.link/9WSi

Swiggy, an India-based on-demand food delivery company, has raised $113 million in Series I funding led by Prosus Ventures (formerly Naspers Ventures), with Meituan Dianping and Wellington Management Company also participating. www.swiggy.com

Unacademy, an India-based edtech company, has raised $110 million from General Atlantic, Sequoia Capital India, Facebook, Nexus, Steadview, Blume Ventures, Flipkart CEO Kalyan Krishnamurthy and Udaan cofounder Sujeet Kumar. http://axios.link/2Nms

🚑 CANbridge Life Sciences, a China-based biopharmaceutical company, has raised $98 million in Series D funding led by General Atlantic and WuXi AppTec. www.canbridgepharma.com

ZeroFox, a Baltimore-based cybersecurity company, has raised $74 million in new funding led by Intel Capital, with NEA, Highland Capital Partners, Redline Capital Management, Hercules Capital and Core Capital also participating.

Outrider, a Golden, Colo.-based startup developing robots for warehouse yards, has raised $53 million in seed and series A funding led by NEA and 8VC, respectively. www.outrider.ai

🚑Maven, a New York-based company providing employee benefits focused on women’s health and family planning, has raised $45 million in Series C funding led by Icon Ventures, with Sequoia Capital, Oak HC/FT, Spring Mountain Capital, Female Founders Fund, Harmony Partners, Reese Witherspoon, Natalie Portman, and Mindy Kaling. http://axios.link/yj5t

Scipher Medicine, a Waltham, Mass.-based developer of a molecular technology platform, has raised $25 million in Series B funding led by Optum Ventures. www.sciphermedicine.com

🚑 EnClear Therapies, a Cambridge, Mass.-based life sciences company developing device-based therapies for the treatment of neurodegenerative disease, has raised $10 million in Series A funding led by 20/20 HealthCare Partners, with Peter Thiel, Amgen Ventures, GHS Fund, Presight Capital, and Dolby Ventures also participating. www.encleartherapies.com

The Org, a London-based startup providing company org chart management tools, has raised $8.5 million in Series A funding led by Founders Fund, with Sequoia Capital, Balderton Capital, and individuals also participating. http://axios.link/GSTl

Swivel, an Austin-based office leasing company, has raised $8 million in Series A funding led by Breyer Capital, with JLL Spark also participating. http://axios.link/fL8y

🚑 PocketPills, a Canada-based online pharmacy, has raised $7.35 million in new funding from Waterbridge Ventures. http://axios.link/1UrU

BluBracket, a Palo Alto, Calif.-based security startup, has raised $6.5 million in seed funding led by Unusual Ventures, with Point72 Ventures, SignalFire and Firebolt Ventures also participating. http://axios.link/Nq42

Hopin, a London-based remote live online events company, has raised £5 million ($6.5 million) in seed funding led by Accel, with Northzone, Seedcamp, Amaranthine Fund and Slack Fund also participating. www.hopin.to

ChartHop, a New York-based maker of software for managing company org charts, has raised $5 million in seed funding led by Andreessen Horowitz, with Abstract Ventures, the a16z Cultural Leadership Fund, CoFound, Cowboy Ventures, Flybridge Capital, Shrug Capital, Work Life Ventures, and individuals also participating. www.charthop.com

Zero Networks, an Israel-based cybersecurity company, has raised $4.65 million in seed funding led by F2 Capital and Pico Venture Partners. www.zeronetworks.com

Coassemble, an Australia and Denver-based provider of employee training content, has raised $4.4 million in Series A funding led by Equity Venture Partners. www.coassemble.com

Classtag, a New York-based provider of parent-teacher communication tools, has raised $3.6 million in additional seed funding from Contour Ventures, Founder Collective, John Martinson, Newark Venture Partners, Smart Hub and TMT Investments. http://axios.link/Rw06

⛽️ Electriphi, a San Francisco-base provider of software solutions for electric vehicle fleet and energy management, has raised $3.5 million in seed funding led by Wireframe Ventures, the Urban Innovation Fund, and Blackhorn Ventures, with Acario Innovation and Lemnos Labs also participating. www.electriphi.ai

Ikaria, a Santa Monica, Calif.-based startup developing an app to combat loneliness, has raised $1.5 million in seed funding led by Initialized Capital and Fuel Capital, with F7 Ventures, Weekend Fund, Backend Capital, Day One Ventures, Shrug, Todd Goldberg and Rahul Vohra also participating. http://axios.link/sLlP

Editor's note: The story has been corrected to remove a deal that was included by mistake.

Private Equity Deals

Verdane and Zobito have acquired Confirmit, a Norway-based maker of market research software, and will merge it with portfolio company Dapresy. www.confirmit.com

Thompson Street Capital Partners has acquired Len the Plumber, a Baltimore-D.C.-based full-service residential plumbing contractor. www.lentheplumber.com

Insightsoftware, backed by TA Associates, Genstar Capital and ST6 Partners, has acquired Longview Solutions, a Canada-based maker of enterprise tax and finance software. www.longview.com

Public Offerings

East Stone Acquisition, a Massachusetts-based blank check company formed by East Stone Capital to acquire a fintech business in North America or Asia-Pacific with overall transaction value of $300 million to $1 billion, raised $120 million by offering 12 million units at $10. Units consist of one share of common stock, one warrant to purchase a half-share of common stock at $11.50 per full share, and one-tenth of one right to receive a share of common stock upon an acquisition. It plans to list on the Nasdaq under the symbol ESSCU. I-Bankers Securities acted as lead manager on the deal, with EarlyBirdCapital as co-manager. http://axios.link/TYfd

⛽️ EnVen Energy, a Houston-based E&P focused on deepwater oil projects in the Gulf of Mexico, withdrew its plans for an initial public offering on Wednesday. http://axios.link/PB3n

Liquidity Events

Nokia has agreed to acquire Elenion Technologies, a New York-based semiconductor company. http://axios.link/c5rv

More M&A

Morgan Stanley has agreed to acquire E*Trade Financial Corp. in a $13 billion all-stock deal. http://axios.link/cTeN

Dialog Semiconductor has agreed to acquire Adesto Technologies, a Santa Clara, Calif.-based chip company, for $500 million. http://axios.link/3UKk

Simon Property Group, Brookfield Property Partners, and Authentic Brands Group have agreed to acquire Forever 21, with Authentic and Simon Property getting 37.5% each, while Brookfield Property gets 25% of the intellectual property and operating businesses. http://axios.link/i7SV


Marcy Venture Partners, co-founded by Shawn Carter (Jay-Z), Jay Brown and Larry Marcus, has raised $85 million for its flagship venture capital fund. www.marcyvp.com

It's Personnel

Noah Carr and Bill Hodak have joined Unusual Ventures as enterprise partner and marketing partner, respectively. www.unusual.vc

Jordan Viniar has joined Prudence Holding as principal in New York. He was previously at Goldman Sachs Investment Partners. www.prudenceholdings.com

Bommy Lee has joined Sofinnova Partners as head of communications. She was previously at Cellnovo Group. www.sofinnovapartners.com

Moritz Baier-Lentz has joined Bitkraft as a partner in New York. He was previously at Goldman Sachs. www.bitkraft.net

Vipin Chamakkala has joined Sequoia Capital as a director of business development. He was previously a principal with Work-Bench Ventures.

StepStone Group promoted Kieran Farrelly, Sheila Gibson, Adam Johnston, and Suzanne Tavill to partner. www.stepstoneglobal.com

Final Numbers
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Reproduced from Recording Industry Association of America; Chart: Axios Visuals