Axios Pro Rata

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February 11, 2020

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Top of the Morning

Illustration of the Brandless logo as a lightbulb with a hand reaching out to pull it's chain and turn it off.

Illustration: Aïda Amer/Axios

Brandless, the SoftBank-backed e-commerce startup that originally sold all of its products for $3, confirmed yesterday that it will shut down.

The big picture: Sources say Brandless had sought a buyer, via a bank-led process, but was unable to garner any bids.

  • The company had enough cash to last the year, but its board concluded that the business model wasn't viable long-term and that the best option was to return some money to investors and provide severance to the 80 or so employees who will lose their jobs.

The company announced nearly $300 million in total funding, including a $240 million Series C round in late 2018 led by SoftBank Vision Fund.

  • But Brandless never really raised that much.
  • The Series C round was tranched, with SoftBank only investing around $100 million upfront and committing to fund around another $120 million if certain milestones were met. That final tranche never came.

This isn't really a story about SoftBank Vision Fund, beyond how it reflects the firm's belief in the supremacy of capital and structural misalignment of staff incentives. SoftBank was in the car when Brandless went off the cliff, but it didn't set the GPS.

Brandless was primarily felled by a thesis that never panned out — that there were young consumers who craved a digital middle ground between dollar stores and malls. People who were price-sensitive, cared somewhat about quality, but not about brands. Walmart for hipsters. Trader Joe's for millennials.

  • It's unclear if this cohort really exists. Brands do matter to people. And, when they don't, there's no particular reason to pick Brandless over the top/cheapest choice on Google or Amazon.
  • Brandless also suffered from a lack of focus and quality, offering everything from spatulas to pet food to candy, to blenders. Doing everything, but none of it particularly well.

There should be no gloating here, even among those who were waiting for a SoftBank Vision Fund portfolio company to outright fail. Lots of people are out of work, other investors lost money, and countless hours of work will go without reward.

Instead, let it serve as a reminder that core ideas and execution remain paramount for startups. Fundraising, no matter how big the numbers, are just an enabling tool.

🎧 Pro Rata Podcast digs into Vladimir Putin's problem with YouTube. Listen here.


Illustration of a slide puzzle with the TMobile and Spring logos all jumbled up.

Illustration: Aïda Amer/Axios

T-Mobile US this morning won U.S. District Court approval for its $26.5 billion merger with Sprint, overcoming objections from 13 state attorneys general.

Why it matters: This deal would reduce the number of national mobile carriers from four to three.

  • AT&T and Verizon shares are largely unchanged in early trading, suggesting that investors aren't sure yet if the primary result will be higher competition or higher prices. Sprint shares, on the other hand, are soaring — as the markets had expected a different ruling.

But, but, but: The merger still must gain approval from the California Public Utilities Commission. There's also the possibility of an appeal, which New York AG Letitia James has already said she'll consider.

The bottom line, per Axios's Ina Fried: "The judge's ruling might pave the way for Sprint and T-Mobile to merge while not weighing too heavily on the future of antitrust regulation. This deal was a classic merger of two companies in the same market, while many of the biggest questions now center around how much power tech companies should be allowed to amass through vertical integration."

Venture Capital Deals

SoundCloud, a Germany-based music streaming service, raised $75 million from SiriusXM.

🚑 Vezeeta, a health care services booking platform in the Middle East and Africa, raised $40 million in Series D funding. Gulf Capital led, and was joined by return backer Saudi Technology Ventures.

Cysiv, a Dallas-based SOC-as-a-service startup, raised $26 million in Series A funding. ForgePoint Capital led, and was joined by Trend Forward Capital.

MoEngage, a customer engagement and insights startup with offices in San Francisco and Bangalore, raised $25 million in Series C funding. Eight Roads led, and was joined by F-Prime Capital, Matrix Partners India, and Ventureast.

Impala, a London-based provider of real-time data on hotel rooms, raised $20 million in Series B funding. Lakestar led, and was joined by Latitude Ventures and LocalGlobe.

🚑 Stilla Technologies, a French genetic analytics startup, raised €20 million in Series B funding from TUS-Holdings and return backers Illumina Ventures, Kurma Partners, LBO France, Paris Saclay Seed Funds, BNP Paribas Développement, and Idinvest Partners.

SteelEye, a London-based compliance startup, raised $10 million in Series A funding. Eight Roads led, and was joined by return backer Illuminate Financial.

EmployStream, a Cleveland-based provider of onboard automation solutions for the staffing industrry, raised $7 million in Series B funding. Plymouth Growth Partners, led, and was joined by JumpStart, Rev1 Ventures, Ohio Innovation Fund, and North Coast Angel Fund.

Gento, a Los Angeles-based on-demand medical staffing startup, raised $5 million in Series A funding led by Palisades Growth Capital.

🚑 Inotrem, a Paris-based biotech focused on inflammatory diseases, raised €5 million in new Series B funding from Fountain Healthcare Partners (round total now €44m) and secured a €13 million credit line from Kreos Capital.

BizAway, an Italy and Spain-based business travel platform, raised €2.5 million in second-round funding led by MundiVentures.

Sandbridge Capital invested in Peach & Lily, a New York-based K-beauty and skincare brand.

Warburg Pincus invested in Circles Life, a Singapore-based mobile data services company that last year raised $50 million from Sequoia Capital India, Founders Fund, and EDBI.

Private Equity Deals

A&R Logistics, a Louisville, Ky.-based portfolio company of Wind Point Partners, acquired First Choice Logistics, a Chicago-based provider of bulk liquid transportation and logistics services to the chemical industry.

🚑 Gryphon Investors agreed to invest in Pacur, an Oshkosh, Wis.-based provider of specialty plastic packaging materials for the medical device industry.

🚑 KKR said it won’t bid for NMC Health (LSE: NMC), the UAE’s largest private healthcare company.

• Manna Pro Products, a Chesterfield, Mo.-based portfolio company of Morgan Stanley Capital Partners, acquired Promika Pet Brands, a provider of flea and tick solutions.

Morgenthaler Private Equity acquired Teel Plastics, a Baraboo, Wis.-based manufacturer of custom plastic tubing.

Smith System, an Arlington, Texas-based portfolio company of Levine Leichtman Capital Partners, acquired Driver’s Alert, a Deerfield Beach, Fla.-based provider of fleet safety management solutions.

Trilantic North America acquired a stake in Gorilla Commerce, a direct-to-consumer home and pet product development platform.

W.W. Williams, a Dublin, Ohio-based portfolio company of One Equity Partners, acquired CP Company, a provider of cold transportation equipment.

Public Offerings

Locaweb, a Brazilian web services company, went public in Sao Paulo. The company generated around $75 million of revenue during the first nine months of 2019, and shareholders include Sumeru Equity Partners.

TFI International (TSX: TFII), a Montreal-based transportation and logistics company, filed to trade on the NYSE with Morgan Stanley as lead underwriter. The float could raise US$199 million, on an as-converted basis.

Liquidity Events

Infosys (NYSE: INFY) will pay $250 million to buy Simplus, a Salt Lake City-based provider of Salesforce quote-to-cash implementations that had raised $56 million from firms like Epic Ventures, Kensington Capital Ventures, Cross Creek, and Salesforce Ventures.

Insight Partners hired Credit Suisse to find a buyer for E2Open, an Austin, Texas-based a supply chain operating network that could fetch between $2.25 billion and $3 billion, per PE Hub.

🚑 Partners Group hired Jefferies to find a buyer for PDI Parma Services, a Philadelphia-based pharma outsourcing company that could fetch around $2.5 billion, per the WSJ.

Sherpa Capital sold Cegasa Portable Energy, a Spanish producer of electrolytic manganese dioxide, to Mexico’s Compañía Minera Autlán for €26 million.

More M&A

Abanca, a Spanish lender, agreed to buy a 95% stake in Portugal’s EuroBic.

Metro (DE: B4B), a German wholesaler, said it will sell its Real hypermarkets chain to property investors X+Bricks and the SCP Group at an enterprise value of around €1 billion.

🚑 Valeritas (Nasdaq: VLRX), a New Jersey-based maker of wearable and disposable insulin pumps, filed for Chapter 11 bankruptcy and will sell itself to Danish drugmaker Zealand Pharma for around $23 million.


Equal Ventures, a New York-based seed firm led by Richard Kerby (ex-Venrock) and Rick Zullo (ex-LightBank), raised $56 million for their debut fund.

Oxx, a VC firm focused on European SaaS startups, raised $133 million for a new fund.

It's Personnel

🚑 Ryan Anderson stepped down as a healthcare-focused managing director and partner with CCMP Capital, after two decades with the firm, per PE Hub.

Prelude Ventures promoted Victoria Beasley to partner.

Final Numbers

Data: CB Insights; Chart: Axios Visuals
Data: CB Insights; Chart: Axios Visuals

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