Jul 28, 2020

Axios Pro Rata

🎧 Axios Re:Cap digs into the expanded unemployment benefits that are set to expire on Friday.

Top of the Morning

Illustration: AĂŻda Amer/Axios

Venture capital activity has persisted in the COVID-19 era, as investors and founders have accepted virtual meetings as viable alternatives to the in-person standard.

What comes next: If society returns to "normal" at some point next year, will that also apply to pitch meetings, board meetings, etc?

Why it matters: One positive byproduct of the pandemic has been that investors have been more willing to entertain deals outside their ZIP codes.

  • After all, there's little difference right now between meeting with a startup based on the other side of the country or the other side of the city.
  • For entrepreneurs in oft-overlooked geographies, it's created a new opportunity.

What they're saying: Venture capitalists I speak with are split on the intrinsic value of returning to "the office," in keeping with white-collar workers everywhere.

  • Most believe that they've been just as productive as in the past, or even more so, by working at home.
  • At the same time, they're missing the tactile piece of advising founders. "The nurturing process is really important, particularly at the early stages, and I do think that will come back because what we have now is a bit of an awareness deficit," says Kevin Turner, the former Microsoft COO who just invested in a new firm called Fuse Venture Partners (more on that below).
  • There's also a concern among some younger VCs that the pandemic has made it more difficult for them to network. Or, as a Sand Hill Road associate recently explained it to me: "The way I become partner is to bring the next unicorn into my firm, and I do that by going out every night and meeting with tons of people — which is something a lot of our partners don't do, because they're older and have families. But, now, we're all at the same bar called Zoom."
Also...

• New firm alert: Fuse Venture Partners has launched as a Seattle-based shop focused on enterprise software startups in the Pacific Northwest.

  • It's targeting $100 million for its debut fund, with $67 million already banked, per SEC filings, and is led by former Ignition Partners principals Kellan Carter and Cameron Borumand.
  • It also has an unexpected venture partner: Bobby Wagner, who's better known as the Seattle Seahawks' captain and starting middle linebacker.

• Coming attractions: Pharmapacks later today will announce $150 million in growth financing from GPI Capital and JPMorgan Chase.

  • You may not have heard of Pharmapacks (I hadn’t), but it’s one of the largest-commerce sellers of health and beauty products (particularly via Amazon), generating $250 million in 2019 sales and projecting 70% year-over-year growth.

• Misfire: Remington Arms Co., America’s oldest gunmaker, filed for Chapter 11 bankruptcy protection yesterday. If this sounds familiar, it’s because Remington previously went bust in early 2018.

  • The big loser in 2018 was private equity firm Cerberus Capital Management, but this time it may be senior lenders like JPMorgan Chase and Franklin Advisors that resurfaced the company.
  • The big question will be what happened, given that U.S. gun sales have been surging since the pandemic began.

• PPP, Part 3: The White House and Senate Republicans yesterday unveiled their phase 4 stimulus proposal, which is called the HEALS Act (not to be confused with the HEROES Act, which House Democrats passed in May).

  • It includes $190 billion for a follow-on small business loan program, available to existing PPP loan recipients that have fewer than 300 employees and which can demonstrate gross revenue losses of at least 50%. The upper loan limit this time would be $2 million, foregivable if at least 60% of the proceeds cover payroll costs.
  • Go deeper: Axios' Alayna Treene breaks down the rest of the GOP proposal.

The BFD

Source: Giphy

RedBall Acquisition, a SPAC focused on buying a professional sports franchise, filed for a $500 million IPO. It's sponsored by private equity firm RedBird Capital Partners, and co-chaired by former Oakland A's executive Billy Beane.

  • Why it's the BFD: This is the intersection of two red-hot trends, raising blank-check acquisition companies and institutional investment in pro sports.
  • The bottom line: Don't be surprised if this SPAC, which has around $2 billion of buying power, focuses on European soccer. RedBird recently bought France's Toulouse FC, while Beane has spent the past few years advising Dutch club AZ Alkmaar.
Venture Capital Deals

🚑 Ro, a New York-based DTC pharmacy focused on men’s health, raised $200 million at a $1.5 billion valuation. General Catalyst led, and was joined by The Chernin Group and return backers FirstMark Capital, Torch, SignalFire, TQ Ventures, Initialized Capital, 3L, and BoxGroup. http://axios.link/48HG

• Geltor, a San Leandro, Calif.-based animal-free “ingredients-as-a-service” startup, raised $91.3 million in Series B funding. CPT Capital led, and was joined by WTT Investment. http://axios.link/RAex

đźš‘ Withings, a French developer of health and wellness smart devices, raised $60 million in Series B funding. Gilde Healthcare led, and was joined by return backers IDinvest Partners, Bpfrance and BNP Paribas DĂ©veloppement, ODDO BHF, and Adelie Capital. http://axios.link/BZpf

đźš‘ Nanox, an Israeli medical imaging startup, raised $59 million in new Series B funding (round total $110m) from SK Telecom, Industrial Alliance, Foxconn, and Yozma Korea. http://axios.link/5tuB

• ComplyAdvantage, a London-based financial crime detection startup, raised $50 million in Series C funding. Ontario Teachers’ led, and was joined by return backers Index Ventures and Balderton Capital. http://axios.link/AzoS

• Thought Machine, a London-based core banking platform, raised $42 million in Series B funding. Eurazeo Growth led, and was joined by Patient Capital and SEB. http://axios.link/E3vb

🚑 Indigo Diabetes, a Belgian developer of diabetes sensors, raised €38 million in Series B funding. Fund+ led, and was joined by Ackermans & van Haaren, Imec.xpand, Capricorn Digital Growth, QBICII, and Titan Baratto. http://axios.link/u8Bs

• True Link Financial, a San Francisco-based provider of digital financial services targeting retirees, raised $35 million in Series B funding. Khosla Ventures led, and was joined by Centana Growth Partners. http://axios.link/6o9Z

• Everphone, a Berlin-based mobile device rental service, raised €34 million in Series B funding. Signals VC led, and was joined by Deutsche Telekom, AlleyCorp, and NIBC. http://axios.link/aO0Q

• Explorium, a San Mateo, Calif.-based data science startup, raised $31 million in Series B funding. Zeev Ventures led, and was joined by Dynamic Loop, Emerge, and F2 Capital. http://axios.link/VaZH

🚑 Enthera Pharma, an Italian biotech focused on autoimmune conditions, raised €28 million in Series A funding. Sofinnova Partners and AbbVie co-led, and were joined by JDRF T1D Fund and Banor SIM. www.entherapharmaceuticals.com

• ClimaCell, a Boston-based weather intelligence platform, raised $23 million in Series C funding co-led by Pitango Growth and return backer Square Peg Capital. www.cimacell.com

• EMQ, a Hong Kong-based financial settlement network, raised $20 million in Series B funding. WI Harper led, and was joined by Abu Dhabi Capital, AppWorks, DG Ventures, Hard Yaka, Intudo Ventures, January Capital, Quest Venture Partners, SparkLabs Taipei, Vectr Fintech Partners, and VS Partners. http://axios.link/eEcP

• Mediant, a New York-based investor communications platform, raised $18.5 million. Argentum led, and was joined by Breakwater Mediant, Compo Seven Capital, Mathers Associates, and First Analysis Corp. http://axios.link/a1B4

• Advertima, a Swiss computer vision startup focused on physical retail, raised €15 million in Series A funding led by Fortimo Group. http://axios.link/S4ow

• Tandem, a Berlin-based language learning app, raised $5.7 million in Series A funding. Brighteye Ventures led, and was joined by Trind Ventures, Rubylight, and GPS Ventures. http://axios.link/Zoz3

Private Equity Deals

• Gemspring Capital acquired Cforia Software, a Westlake Village, Calif.-based provider of order-to-cash automation software. www.cforia.com

• Hornetsecurity, a German cloud-based email security company, secured new equity investments from Providence Strategic Growth and existing backer Verdane. www.hornetsecurity.com

đźš‘ TA Associates and Francisco Partners agreed to invest in Edifecs, a Bellevue, Wash.-based provider of health care IT solutions. www.edifecs.com

đźš‘ WindRose Health Investors acquired Caregiver, a Fort Worth, Texas-based provider of long-term care services to people with intellectual and developmental disabilities, from DW Healthcare Partners and Council Capital. www.cg-idd.com

Public Offerings

đźš‘ Harmony Biosciences, a Plymouth Meeting, Penn.-based biotech focused on sleep and CNS disorders, filed for a $100 million IPO. It plans to list on the Nasdaq (HRMY), and reports a $39 million net loss on $20 million in revenue for Q1 2020, and has raised $745 million from Valor Equity Partners, Fidelity, HBM Healthcare Investments, Vivo Capital, venBio Partners, Novo Holdings, and Nan Fung Life Sciences. http://axios.link/2Gz9

• Hensoldt, a German defense industry supplier owned by KKR, is prepping a Frankfurt IPO in September, per Reuters. http://axios.link/50AO

• Theeb Rent-a-Car, a Saudi Arabian car rental company backed by Investcorp, hired Fransi Capital to help prep a 2021 IPO, per Bloomberg. http://axios.link/oBPU

SPACs (yup, still doing this)

• ACE Convergence Acquisition, a tech-focused SPAC led by Behrooz Abdi, raised $200 million in an IPO. http://axios.link/DiFS

• Churchill Capital Corp IV, a new SPAC led by Michael Klein, upped its planned IPO size to $1.5 billion. http://axios.link/8jMU

• Lionheart Acquisition II, a real estate-focused SPAC formed by Lionhart Capital, filed for a $200 million IPO. http://axios.link/hRUJ

• Northern Genesis Acquisition, a SPAC focused on acquiring an environmentally-sustainable business, filed for a $300 million IPO. http://axios.link/ZBdl

Liquidity Events

• Eurazeo set September as the deadline for bids on troubled French auto rental company Europcar Mobility Group (Paris: EUCAR), in which it holds a 32% stake, per Reuters. http://axios.link/kydo

More M&A

• Reliance Industries is in talks to pay between $3.2 billion and $3.6 billion to buy Future Group’s Indian retain chains, per Mint. http://axios.link/slvx

• Tencent has offered to acquire the 63.5% stake it doesn’t already own in Chinese search company Sogou (NYSE: SOGO) for $2.1 billion, or at $9 per share (56.5% premium to Friday’s price). http://axios.link/DXkH

Fundraising

• Antin Infrastructure Partners raised €6.5 billion for its fourth fund. http://axios.link/tdjh

• Gallant Capital, a Los Angeles-based private equity firm founded by veterans of Gores Group, raised $378 million for its debut fund. www.gallantcapital.com

It's Personnel

• AnaCap Financial Partners, a European private equity firm focused on financial services, promoted Edward Green, Nassim Cherchali, and Tassilo Arnhold to partners. www.anacapfp.com

• Mano Nazar joined AE Industrial Partners as an operating partner and chair of AEI portfolio company BHI Energy. He previously was president of NextEra Energy’s nuclear unit. www.aeroequity.com

• Sisi Song joined Bessemer Venture Partners as a vice president, per her LinkedIn profile. She previously focused on cloud investing at Alibaba Group. www.bvp.com

• Justin White was named CFO of Willoughby Capital, the family office of Daniel Och. He previously was CFO and COO of Governors Lane. www.willcapllc.com

• Michael Woolhouse joined TPG as a partner in charge of secondary market activity. He previously led secondaries for Canada Pension Plan Investment Board. www.tpg.com

Final Numbers
Data: Yahoo; Chart: Axios Visuals

DraftKings stock stumbled yesterday on speculation that Major League Baseball's season could be in jeopardy, and what that might mean for other pro and college sports leagues.

  • But, but, but: The Boston-based sports betting company has had a remarkable run since going public via a SPAC reverse merger in April. Its market cap closed yesterday at $12.4 billion, despite the lack of live sports (beyond e-gaming). For context, DraftKings' all-time high private market valuation was $2 billion back in 2015, and it later raised down rounds.

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