Dec 12, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Hey D.C. readers: Join Axios tomorrow morning for our rescheduled breakfast conversation on how AI will impact the economy, including interviews with House AI caucus chairs Rep. John Delaney (D-Md.) and Rep. Pete Olson (R-Texas). RSVP here.

Top of the Morning

President Trump and Sen. Tim Scott (R-SC), at an event about Opportunity Zones. Photo by Alex Wong/Getty Images.

President Trump today is expected to sign an executive order related to opportunity zones, a part of last year's tax bill designed to increase investment and economic development in underserved communities.

  • The signing was supposed to happen at a big event in Baltimore, but now will take place in the White House. The official explanation for canceling on Charm City was "scheduling," but it couldn't have helped that neither Maryland's Republican Governor Larry Hogan nor Baltimore's Democratic Mayor Catherine Pugh planned to attend. Or maybe it's the reports on how Jared and Ivanka could personally benefit from the Opportunity Zones, which they've championed, via their existing real estate holdings.
  • Axios has learned that the EO will announce the creation of the White House Revitalization Opportunity Council — considering of 13 federal agencies, co-led by HUD and the U.S. Domestic Policy Council. Expect other included agencies to include Commerce, Interior and SBA.
  • Yesterday there was a meeting of just over 30 stakeholders, led by Trump special assistant Ja'Ron Smith.
  • An attendee tells Axios that the EO is intended to "synchronize" federal dollars around loans, grants and other forms of relevant financing for underserved communities (including possible infrastructure funding). It also will streamline applications for relevant federal resources and create a process for addressing regulations that may cause "friction" (particularly environmental and labor regs).
  • "The goal isn't just to address opportunity zones, specifically, but also adjacent issues like workforce development and crime prevention."
  • No comment from the WH, but we did just get word of a related briefing that begins right about now.

Verizon has finally figured out that it way overpaid for Yahoo and AOL, perhaps after going back and reading all the contemporaneous media analysis and armchair tweets.

  • The company, now led by a CEO who prioritizes media like Bill Belichick prioritizes fashion, yesterday wrote down the value of its entire Oath unit by $4.6 billion.
  • For context, Oath basically consists of Yahoo ($4.8 billion purchase last year) and AOL ($4.4 billion in 2015).

Uber has picked Morgan Stanley to lead its IPO, per Bloomberg.

  • That's a pretty big upset, given that Goldman Sachs was considered a shoo-in for the role before last year's Uber management shakeup.
  • Got to wonder if it helped that Morgan Stanley's Michael Grimes moonlighted as an Uber driver.
  • Someone mentioned to me that Uber could, at least in theory, tell prospective IPO buyers that their allocations would be tied to agreements not to buy into Lyft's IPO. Again, no inside info here — just a theory based on its prior hardball tactics with private market investors. One banker tells me he thinks it wouldn't be legal, at least for public mutual funds, but that there could be wink-wink agreements for investors that put themselves on the cover with pre-arranged purchase agreements. Kind of like we see with extended lockups.

We've now had more than 1 million downloads of the Pro Rata podcast, on topics ranging from Facebook's emails to New York's Amazon HQ2 deal to firearms investments to a silver lining for social media. Each just 10 minutes, to get you smarter, faster on the collision of business, tech and politics.

The BFD

Dell Technologies yesterday received shareholder approval for its $23.9 billion reverse merger with the tracking stock for VMWare, paving the way for Dell's return to the public markets on December 28.

  • Why it's the BFD: Because Michael Dell will return to a public equities arena that he famously despised the last time around, and one in which he may have more enemies — given how many investors feel they got short-changed on both sides of Dell's private markets sojourn.
  • Bottom line: "The business logic for relisting is clear. What was once a fading PC business has been transformed into a diversified technology group going head-to-head with the likes of IBM, Microsoft, HP and Cisco." — Sujeet Indap & James Fontanella-Khan, FT
Venture Capital Deals

PT Tokopedia, an Indonesian generalist e-commerce site, raised $1.1 billion co-led by SoftBank Vision Fund and Alibaba Group at a reported valuation north of $7 billion. http://axios.link/P6Wm

InVision, a design collaboration startup, raised $115 million in Series F funding at a $1.9 billion valuation. Spark Capital led, and was joined by Goldman Sachs, Atlassian and return backers Battery Ventures, Iconiq Capital, Tiger Global Management, FirstMark and Geodesic Capital. http://axios.link/8e5B

Luckin, a Chinese coffee shop chain, raised $200 million in Series B funding at a $2.2 billion valuation from return backers GIC, China International Capital Corp., Joy Capital and Dazheng Capital. http://axios.link/IgqP

Bowery, a New York-based indoor farming startup, raised $90 million in Series B funding led by existing backer GV. www.boweryfarming.com

Nexthink, a Swiss analytics platform for end-user IT performance, raised $85 million. Index Ventures led, and was joined by Highland Europe, Forestay Capital, Galéo Capital and TOP Funds and Olivier Pomel. http://axios.link/YVdR

AtScale, a San Mateo, Caif.-based data warehouse visualization platform, raised $50 million in Series D funding. Morgan Stanley led, and was joined by return backers Storm Ventures, Wells Fargo and Atlantic Bridge. www.atscale.com

Optibus, an Israeli provider of public transportation scheduling and operations SaaS, raised $40 million in Series B funding. Insight Venture Partners led, and was joined by Alibaba. www.obtibus.co

NinjaCart, an India-based fresh produce marketing and delivery platform, raised $35 million in Series B funding co-led by Accel and Syngenta. http://axios.link/k6xE

Robotiq, a Quebec City-based maker of tools for the collaborative robotics market, raised C$31 million from Battery Ventures. www.robotiq.com

LogDNA, a Mountain View-based startup that wants to simplify server data logging, raised $25 million in Series B funding. Emergence Capital led, and was joined by Initialized Capital. http://axios.link/iVo5

Happiest Baby, a Santa Monica, Calif.-based provider of noise machines and other baby products, raised $23 million in Series B funding. Greycroft led, and was joined by Sallfort Bank and GV. www.happiestbaby.com

Black Diamond Therapeutics, a cancer biotech focused on allosteric mutant oncogenes, raised $20 million from Versant Ventures. http://axios.link/w0jO

4iQ, a Los Altos, Calif.-based provider of identity attribution analytics, raised $18 million in Series B funding. C5 Capital led, and was joined by ForgePoint Capital, Adara Ventures and Benhamou Global Ventures. www.4iq.com

🚑 Spring Discovery, a Palo Alto-based drug discovery startup focused on aging, raised $18 million in Series A funding. First Round Capital and General Catalyst co-led, and were joined by Zhen Fund, Susa Ventures, Village Global, SciFi and return backers Longevity Fund, Felicis Ventures and Caffeinated Capital. http://axios.link/sDw8

TechSee, an Israeli provider of video-enabled tech support, raised $16 million in Series B funding led by Scale Venture Partners. http://axios.link/nB2E

🚑 Aro Biotherapeutics, a Philadelphia-based startup whose first candidate focuses on non-small cell lung cancer, raised $13 million from firms like Johnson & Johnson Innovation and BioMotiv. http://axios.link/h6Gk

MachineMetrics, a Boston-based provider of machine-monitoring software for factories, raised $11.3 million in Series A funding. Tola Capital led, and was joined by Hyperplane VC, Long River Ventures, Mass Ventures, Hub Angels and Firebolt Ventures. http://axios.link/kE1C

Avoxi, an Atlanta-based provider of cloud communications services to contact centers, raised $10 million led by Ballast Point Ventures. www.avoxi.com

Hemper, a New York-based cannabis accessories and lifestyle brand, raised $10 million in Series A funding from Poseidon Asset Management and Evolution VC Partners. http://axios.link/e67c

Roposo, an India-based multilingual video-sharing app, raised $10 million in Series C funding from insiders Tiger Global and Bertelsmann. http://axios.link/9lWT

🚑 InterVenn BioSciences, a Redwood City, Calif.-based developer of a mass spectrometry platform, raised $9.4 million. Genoa Ventures led, and was joined by True Ventures, Amplify Partners, Boost VC, and Prado SV. www.intervenn.bio

🚑 Aspen RxHealth, maker of an app that connects pharmacists with patients to deliver clinical services, raised $9 million in Series A funding led by Flare Capital Partners. www.aspenrxhealth.com

Private Equity Deals

H.I.G. Capital acquired Vision Integrated Graphics, a Chicago-based print marketing company, from Concentric Equity Partners. www.visionps.com

🌶 L Catterton agreed to buy hot sauce maker Cholula (it’s the one with the wooden bottle tops) from Mexican tequila maker Jose Cuervo. http://axios.link/vca7

Maple Media, a Los Angeles-based portfolio company of Shamrock Capital, purchased the mobile game portfolio of San Francisco-based Banana & Co. www.maplemedia.io

MidOcean Partners purchased a majority stake in Meyers Research, a Beverly Hills, Calif.-based provider of data for residential real estate development and construction, which will be merged with existing portfolio company Hanley Wood. Seller Kennedy Wilson (NYSE: KW) retained a minority stake. www.meyersllc.com

Permira agreed to buy five educational institutions in Spain and Portugal from Laureate Education (Nasdaq: LAUR), for $871 million.

🚑 PharMerica, a Louisville, Ky.-based pharmacy services company owned by KKR and Walgreens Boots Alliance, agreed to buy BrightSpring Health Services, a Louisville-based provider of home and community-based health services, from Onex Corp. http://axios.link/5YWx

Public Offerings

Acelity, a San Antonio-based wound care company owned by Apax Partners, is considering an IPO for the first half of 2019 that could value it at around $5 billion, per Bloomberg. It had last planned to go public in late 2016, but pulled the offering due to “market conditions.”

Ping Identity, a Denver-based identity management software company owned by Vista Equity Partners, hired Goldman Sachs to lead an eventual IPO that could value the company at upwards of $3 billion, per Reuters. http://axios.link/rGHe

Liquidity Events

Cisco (Nasdaq: CSCO) is in talks to buy Luxtera, a Carlsbad, Calif.-based optical chip technology company that’s raised over $170 million in VC funding, per Bloomberg. Luxtera backers include NEA, Tokyo Electron VC, August Capital, Sevin Rosen Funds and Lux Capital. http://axios.link/gfOf

Morgan Stanley Capital Partners sold Hojeij Branded Foods, an Atlanta-based airport food and beverage concessionaire, to Lagardère Travel Retail (Paris: MMB) for $330 million.

Tencent Music, a Chinese streaming music service, raised $1.1 billion in its IPO after pricing at $13 per share (low end of range). It will trade on the NYSE (TME) while Morgan Stanley was lead underwriter.

More M&A

Arctic Wolf, a Sunnyvale, Calif.-based security operations center-as-a-service company, acquired RootSecure, a Canadian security operations center-as-a-service company. Arctic Wolf has raised over $80 million in VC funding from firms like Sonae IM, The Future Fund, Lightspeed Venture Partners, Redpoint Ventures, Knollwood Investment Advisory, Adams Street Partners and Unusual Ventures. www.arcticwolf.com

Fundraising

Boyu Capital, a Chinese venture capital firm, is raising its fourth fund, per an SEC filing. www.boyucapital.com

🚑 Frist Cressey Ventures has secured $50 million for an $80 million second healthcare-focused VC fund, per an SEC filing. Firm co-founder Bryan Cressey is not listed as a general partner. www.fcventures.com

Oak Hill Capital Partners is raising up to $3 billion for its fifth fund, per an SEC filing.

Tikehau Capital and Total SA held a €350 million first close on a new private equity fund focused on “energy transition.” LPs include Bpifrance and Groupama. www.tikehaucapital.com

Two Sigma Ventures is raising its third fund, per an SEC filing. www.twosigmaventures.com

It's Personnel

Joe Cozzolino, former SVP and worldwide GM of Cisco Services, joined Siris Capital Group as an executive partner. www.siriscapital.com

Tailwind Capital, a mid-market private equity firm, promoted Brian Berkin and Andrew Mayer to partner and Will Fleder to managing director. www.tailwind.com

🚑 Nick Smith (ex-Winton Group) joined Foresite Capital as head of investor relations. www.foresitecapital.com

Dan Primack