Sep 20, 2017

Axios Pro Rata

Greetings from New York City, where I'm in town for the Bloomberg Global Business Forum. Some quick notes before working my way through the UN Week traffic maze...

Top of the Morning

• Chip chat: Toshiba Corp. announced late last night that it has agreed to sell its memory chip unit to a consortium led by Bain Capital, which also includes Apple and SK Hynix. But don't take it to the bank quite yet.

  • Just 24 hours ago, it appeared that Toshiba memory chip partner Western Digital was in pole position, with an offer that included participation by KKR. The big question now is if Western Digital will go along with the Bain deal, as it has argued in legal filings that it maintains a right to block any transaction it finds unsatisfactory. Moreover, if Western Digital does decide to fight, it's unclear how patient Bain and its partners would be.
  • Toshiba said the deal would be valued at around $18 billion. That's in line with original expectation, although subsequent reporting suggested that bids had risen into the $20 billion to $22 billion range.

• Fighting back: The National Venture Capital Association yesterday sued the Trump Administration, arguing that it violated proper administrative procedures when it delayed the International Entrepreneurs Rule in July.

  • Why it matters: For starters, the IER was sensible policy that the Administration dislikes primarily because it's pro-immigration. So blame Trump for pandering and Obama for getting around to this so late that Trump was able to kill it in the crib. Second, it's a major escalation by the NVCA, a bipartisan campaign contributor that doesn't get involved in presidential politics because it feels its membership is too split on such contests.

New firm alert: Elsewhere Partners has been launched as a growth equity firm focused on companies not on the East or West Coast. It's being led by Chris Pacitti and John Thornton, former partners with Austin Ventures, a onetime industry giant that collapsed in 2015.

  • Context: This is really Plan C for Pacitti and Thornton, who originally planned to raise $150 million for a fund called Outfit Ventures (alongside fellow AV vet Tom Ball). But that group fell apart after closing on $75 million, at which point Pacitii planned to launch a solo-GP pledge fund called Connective Partners.

• Craigslist killer? I guest-hosted on CNBC Squawk Box earlier this morning, and one of our guests was Alec Oxenford, co-founder and president of mobile secondhand goods marketplace LetGo. Notes:

  • Oxenford confirmed that the company's January funding round made it a "unicorn," adding off-air that South Africa's Naspers is the startup's majority owner (even though Naspers does not control LetGo's board).
  • He does not believe that LetGo is in a winner-take-all market, battling incumbent Craigslist and rival upstart OfferUp.

Deutsche Telekom and SoftBank are talking about a deal whereby T-Mobile would acquire rival carrier Sprint, via a stock-for-stock transaction. Yes, again.

  • Why it's the BFD: Because it was thought that these discussions had stalled to the point of no return, both over questions of future governance (how much of a say would minority owner SoftBank have) and U.S. antitrust concerns born of merging the country's third and fourth-largest mobile carriers.
  • Bottom line: "A Sprint-T-Mobile tie-up would certainly make a more robust competitor to the top two national carriers (AT&T and Verizon) in a saturated wireless market. The real question, though, is if a horizontal deal like this gets through the antitrust scrutiny at the FCC and DoJ. Both regulators under Obama made clear they weren't willing to see the market lose a competitor. But under Trump, the FCC has declared the wireless market to be 'effectively competitive' (for the first time since 2009) and is likely to be more open to it. (FCC chair Ajit Pai declined to comment on a potential merger when asked by Axios' Ina Fried last week.) — Kim Hart, Axios
Venture Capital Deals

• Gogoro, a Taiwanese electric scooter company led by former HTC executive Horace Luke, has raised $300 million in new funding. Backers include Generation Investment Management, Sumitomo, Engie, Panasonic and Temasek.

• MissFresh, a Chinese e-commerce platform for fresh produce, has raised $230 million in Series C funding co-led by Tiger Global Management and Genesis Capital.

• Patreon, a San Francisco-based artist sharing and funding site, has raised $60 million in Series C funding. Thrive Capital led the round, and was joined by Index Ventures, CRV, Freestyle, and DFJ.

• Vexata, a San Jose, Calif.-based provider of “active data infrastructure solutions," has raised $54 million in VC funding from Mayfield, Intel Capital, Lightspeed Ventures and Redline Capital.

• Younited Credit, a French crowd-lending platform, has raised €40 million from Eurazeo, Crédit Mutuel Arkéa, Bpifrance, AG2R La Mondiale, Weber Investissements, Matmut Innovation and Zencap Asset Management.

• The Zebra, an Austin, Texas-based comparison engine for car insurance, has raised $40 million in new VC funding led by Accel.

• Digital Shadows, a London-based digital risk management company, has raised $26 million in Series C funding. Octopus Ventures led the round, and was joined by World Innovation Lab, Industry Ventures and return backers like Passion Capital and Trinity Ventures.

• Aqua Security, an Israel-based startup focused on securing virtual container applications, has raised $25 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by return backers Microsoft Ventures, TLV Partners and Schlomo Kramer.

• MealPass, a take-out meal subscription service, has raised $20 million in Series B funding. Menlo Ventures led the round, and was joined by return backers Bessemer Venture Partners, Comcast Ventures, Haystack and NextView Venture Partners.

• Victor, a London-based B2C jet charter marketplace, has raised $20 million in Series B funding led by BP Ventures.

• TenFour, a Morristown, N.J.-based IT network infrastructure utility, has raised $18 million in new equity funding led by NewSpring Growth.

• Citizen, a startup that alerts people to nearby public safety threats as reported by 911, has raised $12 million in Series A funding led by Sequoia Capital.

• Clearcover, a Chicago-based car insurance startup, has raised $11.5 million in new VC funding led by Lightbank.

• DSP Concepts, a Santa Clara, Calif.-based developer of embedded digital signal processing audio solutions, has raised $10 million in Series A funding. BMW i Ventures led the round, and was joined by Walden International and David Tsang.

• Ushr, a Livonia, Mich.-based provider of mapping technology and software for autonomous vehicles, has raised $10 million in Series A funding. Forté Ventures led the round, and was joined by EnerTech Capital, Emerald Technology Ventures and GM Ventures.

• Luno, a Singapore-based bitcoin wallet and exchange, has raised $9 million in Series B funding. Balderton Capital led the round, and was joined by AlphaCode and return backer Digital Currency Group.

🚑 Synthace, a London-based maker of a language and software platform for biology research, has raised £7.3m in Series A funding. White Cloud Capital, Amadeus Capital Partners and Eleven Two Capital were joined by return backers Sofinnova Partners, SOSV and Bioeconomy Capital.

• Capsule8, a Brooklyn-based cyberattack protection and response platform for cloud-native environments, has raised $6 million in Series A funding led by Bessemer Venture Partners.

• TrustRadius, an Austin, Texas-based review platform for B2B technologies, has raised $5.5 million in new VC funding. LiveOak Venture Partners led the round, and was joined by return backer Mayfield.

• AlphaFlow, a San Francisco-based automated alternative investment platform for real estate, has raised $4.1 million in seed funding. Resolute Ventures and Point72 Ventures co-led the round, and were joined by Upside Partnership, Social Capital, Y Combinator, Clocktower Technology Ventures, Drobny Capital and Red Swan Ventures.

• Loftium, a Seattle-based home finance startup that incorporates aspects of the sharing economy, has raised $2.5 million in VC funding from DFJ.

• Braze (f.k.a. Appboy), a New York-based provider of business software lifecycle engagement technology, has raised an undisclosed amount of funding from Meritech Capital Partners. It comes just months after a $50 million Series D round led by Iconiq Capital.

Private Equity Deals

• Blue Equity has acquired Two Twelve Management, a New York-based chef representation management company, from Golden Gate Capital portfolio company Next Management. No financial terms were disclosed.

• Covercraft Industries, a Pauls Valley, Okla.-based portfolio company of Century Park Capital Partners, has acquired GT Covers, an Aurora, Colo.-based manufacturer of custom-fit vehicle seat covers. No financial terms were disclosed.

• Huron Capital has launched a new roll-up platform focused on the adhesives and sealants industry, in partnership with David Brunori (ex-Quest Specialty Chemicals executive). No financial terms were disclosed.

⛽ SPL, a Houston-based hydrocarbon measurement company owned by Industrial Growth Partners, has acquired American Measurement Services, a provider of critical measurement services to the oil and gas industry in Oklahoma, Kansas and Texas. No financial terms were disclosed.

Public Offerings

🚑 Celcuity, a Minneapolis-based developer of diagnostic tests for cancer patients, raised $22.8 million in its IPO. The company offered 2.4 million shares at $9.50 per share (within $8-$10 range), and will trade on the Nasdaq under ticker symbol CELC. Craig-Hallum Capital Group served as lead underwriter.

•, an Argentina-based online travel booking site, raised $332 million in its IPO. The company priced 12.8 million shares at $26 per share (high end of range). It will trade on the NYSE under ticker symbol DESP, while Morgan Stanley and Citigroup served as lead underwriters. The company reports around $18 million in net income on $248 million in revenue for the first half of 2017. Shareholders include Tiger Global (57.3% pre-IPO stake), Expedia (16.4%) and General Atlantic (5.4%).

🚑 Krystal Biotech, a Pittsburgh-based gene therapy company, raised $40 million in its IPO. The company priced 3.96 million shares at $10 per share (middle of range). The company will trade on the Nasdaq under ticker symbol KRYS, while Ladenburg Thalmann served as lead underwriter.

Liquidity Events

• The Carlyle Group has agreed to sell its 53.3% stake in Australian earth-moving equipment maker Coates Hire to Seven Group Holdings (ASX: SVW) for A$517 million.

More M&A

• Catalent (NYSE: CTLT) has agreed to acquire Cook Pharmica, a Bloomington, Ind.-based contract manufacturer for the pharma market, for $950 million in cash.

• Cementir (Milan: CEMI) has agreed to sell its Italian cement-making assets to a subsidiary of Germany's HeidelbergCement for €315 million.

• ManTech (Nasdaq: MANT) has acquired InfoZen, a Bethesda, Md.-based IT modernization company whose clients include NASA and the U.S. Department of Homeland Security, for $180 million.

• Post Holdings (NYSE: POST) has agreed to acquire breakfast sausage maker Bob Evans Farms (NYSE: BOBE) for $1.5 billion, $77 per share (5.6% premium). The deal includes a $50 million termination fee, which is notable given that there was not unanimous support for the deal from the Bob Evans board.

It's Personnel

• Mathew Feldman has joined The Carlyle Group as a managing director on its credit opportunities team. He previously was a member of the special situations group at Davidson Kempner.

• Michael Gerend and Mark Thom have joined Norwest Equity Partners as operating partners. Gerend is the former CEO of NEP portfolio company Edge Fitness, while Thom was COO of NEP portfolio company Movati Athletic.

• Salim Ismail, former executive director of Singularity University, has joined Miami-based VC firm Rokk3r Fuel as a general partner.

• Gajan Rajanathan has joined Highland Europe as a London-based principal. He previously was with Qatalyst Partners.

• Eric Requenez has joined Stroock as a New York-based partner in the law firm's private funds group. He previously was with Morrison & Foerster.

• Aaron Rudberg has joined Seed 2 Growth as a managing director and COO. He previously was a partner with Baird Capital.

• Melissa Wasser has joined FT Partners as a director and head of private capital markets. She previously was part of the global private placements group at Goldman Sachs.

🚑 Andrew Witty, former CEO of GlaxoSmithKline, has joined Hatteras Venture Partners as a venture partner.

Final Numbers