Mar 2, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
It's A Spectacle

As you've likely heard by now, Snap last night priced its IPO at $17 per share. That's above the proposed $14-$16 price range, which means that the Los Angeles-based "camera company" raised $3.4 billion at around a $24 billion valuation. For context, the 15 U.S.-based tech companies that went public in 2016 raised a total of just $1.44 billion (per Richard Peterson at S&P Global).

Pop pop: Finding the right IPO price for an oversubscribed offering like Snap can be tricky. On the one hand, companies want to raise every last dollar, since it helps to fund growth. On the other, negative aftermarket performance can weigh on a company's reputation with both potential customers and employees (something Facebook experienced after its troubled offering in 2012). There's also the unavoidable reality that if Snap shares soar or tank today, critics will slam the offering's bankers for being either dumb or greedy.

Key indicator: One big thing we still don't know is how many of Snap's IPO buyers are long-term investors. Reports earlier this week suggested that the company is asking investors for a one-year lock-up ― which is more than twice the lockup period for most of Snap's VC backers and vested employees ― which would be a big vote of confidence in a company that has yet to produce profits and whose growth is under attack by Facebook's Instagram.

Bull case: CNBC's Jim Cramer yesterday predicted that Snap stock will nearly double today, giving it a $40 billion market cap. But when I asked him if he'd buy at that price with a one-year lockup: "No- I think the deal will be jacked up by too much retail enthusiasm AND big institutions trying to average up on IPO stake."

Collateral beneficiary: Keep an eye on shares for Snap-On (NYSE: SNA) this morning, which could get boosted by sloppy day-traders. Kind of like what happened with a penny stock trading under FACE when Facebook went public.

Rival watch: Not only does Snap have to deal with competition from Instagram, but it also has a big Asia rival called Snow, which had been downloaded 100 million times through December, and has 40 to 50 million monthly active users. Here's more on Snow.

From The Stage

Bit of a different Pro Rata format this morning, due to the Snap IPO (which, of course, is the BFD). But two quick notes from the VC panel I moderated yesterday in Durham:

• Due diligence: Kia yesterday wrote about how alleged sexual harassers are legally enabled to job-hop without new employers learning about their pasts, in relation to an ex-Google exec who landed at Uber (which subsequently fired him). I raised the situation yesterday, asking how VCs can adequately vet founders or senior portfolio execs. From Don Rainey of Grotech Ventures: "I try to find people who were fired by the person we're looking at, because people who have been fired have a certain zest for telling you things that might not otherwise show up."

• Stasis: President Trump on Tuesday night talked about further streamlining the FDA's drug approval process, despite having not yet nominated an FDA chief (Dr. Scott Gottlieb, a venture partner with NEA, is still believed to be the front-runner). Two of my VC panelists yesterday ― Adele Oliva (1315 Capital) and Paul LaViolette (SV Life Sciences) ― said that while the FDA process has improved markedly over the past few years, the predictability problem is still not entirely fixed. In that regard, they welcomed Trump's comments. LaViolette, however, added that Trump's federal hiring freeze is actually making FDA approval more difficult, by starving the department of human resources. He felt the situation is particularly egregious given that drug developers themselves now fund much of the FDA vetting via user fees.

Venture Capital Deals

• ChargePoint, a Campbell, Calif.-based provider of electric car-charging stations, has raised $82 million in the first close of a new VC funding round expected to total $100 million. Daimler led the round, and was joined by return backers BMW i Ventures, Linse Capital, Rho Capital Partners, and Braemar Energy Ventures.

• Freenome, a Philadelphia-based liquid biopsy diagnosis platform, has raised $65 million in Series A funding. Andreessen Horowitz led the round, and was joined by fellow return backers Data Collective and Founders Fund. New investors included GV, Polaris Partners, Innovation Endeavors, Spectrum 28, Asset Management Ventures, Charles River Ventures, AME Cloud Ventures and Allen and Co.

• Kensho, a Cambridge, Mass.-based provider of AI-powered analytics for traders, has raised $50 million in Series B funding at a valuation north of $500 million, according to Forbes. S&P Global led the round, and was joined by J.P. Morgan Chase, BofA Merrill Lynch, Morgan Stanley, Citigroup, Wells Fargo and return backers General Catalyst, Goldman Sachs and Breyer Capital.

• VeloCloud, a Mountain View, Calif.-based , has raised $35 million in Series D funding. Hermes Growth Partners led the round, and was joined by Telstra Ventures, Khazanah and return backers NEA, Venrock, March Capital Partners and Cisco Investments.

• Blackbuck, an India-based online freight aggregator, has raised $30 million in Series C funding, according to Live Mint. Sands Capital and International Finance Corp. each contributed $10 million, and were joined by return backers Accel Partners and Flipkart.

• Klook, a Hong Kong-based travel activities booking platform, has raised $30 million in Series B funding. Sequoia Capital led the round, and was joined by Wecapital, Matrix Partners China and China Growth Capital.

• Muse Bio, a Boulder, Colo.-based genome engineering startup, has raised $23 million in Series B funding. Venrock led the round, and was joined by Foresite Capital, Paladin Capital and return backers NanoDimension and Sprice/MLS.

• Hedvig, a Santa Clara, Calif.-based provider of software-defined storage solutions, has raised $21.5 million in Series C funding. EDBI and HP Pathfinder co-led the round, and were joined by return backers Atlantic Bridge Ventures, True Ventures and Vertex Ventures.

• Urjet, an Atlanta-based provider of utility payment data to lenders, has raised $20 million in new VC funding. Oak HC/FT led the round, and was joined by return backers Grotech Ventures, and Correlation Ventures, Imlay Investments, and the Georgia Research Alliance.

• Dora's Dream, a Chinese women's clothes rental platform, has raised $12 million in new Series A funding. Legend Capital led the round, and was joined by La Chapelle Fashion (Shanghai).

• Belong, an Indian predictive outbound hiring platform, has raised $10 million in Series B funding. Sequoia Capital India led the round, and was joined by return backer Matrix Partners India.

• Omeicos Therapeutics, a Berlin-based developer of treatments for atrial fibrillation, has raised €8.3 million in Series B funding. Vesalius Biocapital and SMS Co. co-led the round, and was joined by KfW, VC Fonds Technologie Berlin and High-Tech Grunderfonds.

• Banyan Technology, an Elyria, Ohio-based provider of freight management software, has raised $7 million in new VC funding from JumpStart and River SaaS Capital.

• Pickit, a digital image service that makes curated content accessible to Microsoft Office users, has raised $4.6 million in Series A funding from firms like Microsoft Ventures.

• ZoneFox, a Scottish cyber threat detection platform, has raised £3.6 in Series A funding. Archangels led the round, and was joined by Scottish Investment Bank and TriCap.

• Artomatix, an Irish provider of AI solutions for automating 3D art in games, has raised £2.1 million in seed funding from Enterprise Ireland and individual angels.

• Silly season: Lyft reportedly is raising $500 million at between a $6 billion and $7 billion valuation (per WSJ). China's Didi Chuxing reportedly is thinking about raising "billions" in new funding (per Bloomberg). Didi rival UCAR is raising $1 billion, weith $670 million already signed (per TechCrunch).

Private Equity Deals

• Clearlake Capital has agreed to acquire NetDocuments, a Lehi, Utah-based provider of cloud software for law firms and corporate legal and compliance departments. No financial terms were disclosed. Sellers include Frontier Capital.

• EIG Global Energy Partners has acquired a 49% stake in Elba Liquefaction Co., an operator of 10 small-scale liquefaction units, from Kinder Morgan (NYSE: KMI) for around $385 million.

• EQT Partners is among the bidders for European parking lot operator Q-Park, which could be valued at more than $2.4 billion, according to the FT. Others submitting first-round offers include Cheung Kong Infrastructure, China Oceanwide, Shougang Group and Fosun International.

• Highlander Partners has acquired Hi-Tech Industries, a Farmington, Mich.-based provider of professional car care product accessories and aerosols. No financial terms were disclosed.

• Littlejohn & Co. has acquired Tidel, a Carrolton, Texas-based provider of cash management systems. No financial terms were disclosed.

• Sentinel Capital Partners has acquired Cabi, a Compton, Calif.-based direct seller of women's apparel, from Irving Place Capital. No financial terms were disclosed.

• SMS Systems Maintenance Services, a Goleta, Calif.-based portfolio company of Partners Group, has acquired Curvature, a Santa Barbara, Calif.-based provider of new and used network hardware and IT infrastructure services, from Quad-C Management. No financial terms were disclosed.

• Soundcore Capital Partners has acquired Sweeping Corp. of America, a Nashville, Tenn.-based power sweeping company. No financial terms were disclosed.

Public Offerings

• Adama Agricultural Solutions, an Israeli maker of crop protection products, has withdrawn registration for a $400 million IPO, citing changes to "strategic plans." The company originally filed for the IPO in August 2014. Backers include China National Chemical Corp. and Koor Industries.

• Ecovacs Robotics, a Chinese maker of robot vacuum cleaners whose backers include IDG Capital, has filed for a Shanghai IPO.

• Hamilton Lane, a Bala Cynwood, Penn.-based alternative asset manager and advisor, raised $190 million in its IPO. The company priced nearly 11.9 million shares at $16 per share (middle of range), for an initial market cap of around $720 million. It has begun trading on the Nasdaq under ticker symbol HLNE, while J.P. Morgan and Morgan Stanley served as lead underwriters.

Liquidity Events

• IO Data Centers, a Phoenix-based data center operator owned by Sterling Partners, has hired Goldman Sachs to explore a possible sale, per Dow Jones. The company could be valued at upwards of $1.1 billion.

• Yelp (NYSE: YELP) has acquired Nowait, a Pittsburgh-based provider of front-of-house restaurant software, for $40 million in cash. Nowait had raised over $10 million in VC funding from firms like Drive Capital and Birchmere Ventures.

More M&A

• Etouches, a Norwalk, Conn.-based provider of cloud event management software, has acquired Loopd, a San Francisco-based provider of attendee experience SaaS solutions. No financial terms were disclosed. Etoches has raised over $50 million in VC funding from firms like The Argentum Group and First Analysis Group. Loopd had raised just over $2 million in seed funding from backers like Marc Benioff, Tim Draper and Mesh Ventures.

• Henkel of Germany has offered to acquire Darex Packaging Technologies, a Cambridge, Mass.-based maker of sealants for beverage, food and aerosol cans, from GCP Applied Technologies (NYSE: HCP) for $1.05 billion.


• DSG Consumer Partners, an Indian VC firm focused on the consumer product sector, has closed its second fund with $40 million in commitments.

• Floodgate, a Palo Alto, Calif.-based early-stage VC firm, has raised $131 million for its six fund, per an SEC filing.

Next Coast Ventures of Austin, Texas has closed its debut fund with $85 million in capital commitments.

• Park Square Capital and SMBC are partnering on a €3 billion direct lending fund focused on providing multi-tranche loans to European mid-market companies.

• Ribbit Captial, a Palo Alto, Calif.-based VC firm focused on fintech, is raising upwards of $300 million for its fourth fund, per an SEC filing.

• Sofinnova Partners, a Paris-based venture capital firm, has closed its first fund dedicated the renewable chemistry sector, with €106 million in capital commitments.

Final Numbers: AI talk in earnings calls

Dan Primack