Mar 24, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

Situational awareness: House Speaker Nancy Pelosi just told CNBC that there is "real optimism" that a stimulus deal will be reached "in the next few hours." Key is apparent GOP agreement with Democrats' calls for oversight of the proposed $500 billion bailout fund for impacted industries. Go deeper.

Top of the Morning

Illustration: Sarah Grillo/Axios

We're living through the third financial crisis of the modern venture capital era, following the dot-com crash and the housing bust.

Flashback: The VC market shrunk after 2000–2001. Some of that was tourist and corporate shakeout, but mostly it was limited partners successfully pressuring fund managers to give back portions of uncalled capital.

  • There wasn't a widespread push for "fund size cuts" in 2008, save for a few efforts tied to funds that had closed just before Lehman went under.

Fast forward: It's obviously too soon to know for sure which path LPs will take this time around, but odds are that it will look like the more recent experience — with already-raised fund sizes remaining static. Three reasons:

  1. Today's LP universe is more diversified than it was in 2001, when university endowments and private foundations ran the show (and many of the managers knew each other). It would be much harder in 2020 to coordinate consensus, particularly with massive money managers like sovereign wealth funds for whom venture is a tiny allocation.
  2. There aren't fundamental doubts about the legitimacy of tech startups. The 2001 experience wasn't just that firms had raised too much money in light of falling valuations, but also fears that the internet economy may be a mirage.
  3. Timing plays in general partners' favor. The dotcom crash was a slow burn that took nearly a year before limited partners agitated for fund size cuts. One big reason that we didn't see the same moves in 2008–2009 was that the recovery began in relatively short order. It likely will be harder to restart the U.S. economy than it was to shut it down, but most LPs I've spoken with believe that we'll at least be heading in a positive direction by Q3 (although several are worried about President Trump's itch to end lockdowns before the virus is contained).

But, but, but ... This isn't to say all will be copacetic between general and limited partners. Don't be surprised to see some pretty epic battles over clawbacks, particularly given how time-concentrated many VC funds have become.

The bottom line: U.S. venture capital funds raised $104 billion during 2018 and 2019. Don't expect retroactive shrinkage.


Illustration: Sarah Grillo/Axios

Neiman Marcus is in talks with lenders about filing for Chapter 11 bankruptcy, per Bloomberg. The Dallas-based luxury retailer is struggling under the weight of $4.3 billion in debt, related to its 2013 takeover by Ares Management and Canada Pension Plan Investment Board.

  • Why it's the BFD: Neiman Marcus is an anchor tenant to many shopping malls that were already struggling before the coronavirus pandemic.
  • The bottom line: "Neiman Marcus temporarily closed its stores last week in response to the health crisis. It manages 43 namesake stores across the U.S., two Bergdorf Goodman stores in Manhattan, 24 Last Call locations and one
    Mytheresa in Germany. Like other retailers, Neiman Marcus is bracing for a slump tied to the closures. The company said it will continue to serve its customers through online channels, including a new selling and styling tool
    designed to help remote purchasing." Gillian Tan & Katherine Doherty, Bloomberg
Pro Rata for Kids

Today’s project is to send me a new activity your kids have devised to pass the time, and then we can share them tomorrow. Please just hit reply or email me at For example...

  • E has a swing and has taken to putting three buckets at varying distances in front of her. Each bucket has a different point value. She then gets on the swing with a couple of balls in her hand, and throws them toward the buckets while swinging.
  • Pretty sure she’s just competing against herself, but that’s fine by me.

For grown-ups: Thanks to those readers who participated in last night's Peloton ride (including "pack leader" Patrick Cairns of Union Grove Venture Partners). Hope to do another one soon.

Venture Capital Deals

🚑 Iaso Biotherapeutics, a Chinese developer of cancer therapeutics, raised $60 million in Series B funding led by GL Ventures.

🚑 Design Therapeutics, a San Diego-based biotech focused on inherited degenerative disorders, raised $45 million in Series A funding. SR One led, and was joined by Cormorant Asset Management, Quan Capital, and WestRiver Group.

RigUp, an Austin, Texas-based marketplace for on-demand energy industry services and labor, secured at least $29 million of a $79 million Series D extension funding, per an SEC filing. The company last fall raised $300 million in initial Series D funding led by Andreessen Horowitz at a $1.9 billion valuation, and is said to have launched the new effort before the coronavirus crisis.

Pupil, a London-based developer of spatial data analytics, raised €14.9 million led by City Developments (Singapore).

🚑 Diligent Robotics, an Austin, Texas-based developer of hospital droids, raised $10 million in Series A funding. DNX Ventures led, and was joined by True Ventures, Ubiquity Ventures, Next Coast Ventures, E14 Fund, Promus Ventures, and Grit Ventures.

🚑 SouSmile, a Brazilian direct-to-consumer dental company, raised $10 million in Series A funding from Global Founders Capital, Kaszek Ventures, and Canary.

Frank, an online platform that helps students find financial aid, raised $5 million in new funding, per an SEC filing. Existing backers include Apollo Global Management, Aleph, Slow Ventures, Ground Up, and Reach Capital.

Private Equity Deals

BlackRock dropped out of the auction for a stake in Abu Dhabi National Oil Co.’s natural gas pipelines, which is expected to fetch around $15 billion, per Reuters. That leaves six remaining bidders, including Global Infrastructure Partners and Italian infrastructure firm Snam.

One Equity Partners agreed to acquire MCL Computer & Zubehör, a German provider IT consultant and hardware and software reseller.

🚑 The Riverside Company invested in Red Nucleus Enterprises, a Yardley, Penn.-based provider of learning and compliance services to pharma industry customers.

Thoma Bravo completed its $2 billion take-private acquisition of educational software company Instructure.

Public Offerings

Hunan Heshun Petroleum, a Chinese gasoline company, filed for a $131 million Shanghai IPO.

Prudential (LSE: PRU) said that it is considering alternate options for its U.S. business (Jackson), which it had been planning to take public.

More M&A

BT Group (LSE: BT) said it’s in exclusive talks to sell its French operations to Computacenter (LSE: CCC).

• Cognizant (Nasdaq: CTSH) agreed to buy Lev, an Indianapolis-based digital marketing consultancy.

• Credijusto, a Mexican online lending platform for SMEs, secured $100 million in new debt from Credit Suisse.

• Piaggio Aerospace, an Italian private jet maker, postponed deadline for indications of takeover interest from April 3 to May 4.


Collaborative Fund is raising up to $500 million for its first growth-stage fund, per an SEC filing.

Gryphon Investors, a San Francisco-based private equity firm, is raising up to $2.7 billion for its sixth fund, per an SEC filing.

KKR plans to target $750 million for its first Asia-focused TMT growth equity fund, per DealStreetAsia.

Nomo Ventures, a San Francisco-based pre-seed firm, is raising up to $25 million for its second fund, per an SEC filing.

Sorenson Capital, a Utah-based private equity firm, is raising up to $500 million for its fourth fund, per an SEC filing.

It's Personnel

April Underwood, Slack’s former chief product officer, joined Obvious Ventures as a venture partner.

Final Numbers
Data: Yahoo Finance; Chart: Axios Visuals
Dan Primack

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