Dec 2, 2019

Axios Pro Rata

By Dan Primack
Dan Primack

🏄 Greetings from Half Moon Bay, where I'm in town to do some conference moderating (and to escape the Boston snow). Hope you had a restful break. Here we go...

Top of the Morning

Illustration: Sarah Grillo/Axios

The 2020 bull case for tech startups, and the investors who love them, is that federal regulators will intensify their antitrust investigations into incumbents like Apple, Amazon, Facebook, and Google.

  • This isn't about successfully breaking up the goliaths, which could only come after years of legal challenges.
  • It's about distraction. And disincentives to move into new categories, thus creating more space for startups to grow — the same sort of environment that Google enjoyed in its early days, when Microsoft was otherwise engaged.
    • U.S. tech startups may have an added advantage as other federal authorities take a tougher tact toward Chinese upstarts (pay close attention to how the TikTok situation gets resolved).
  • The caveat, as perhaps evidenced by Google's recent deal for Fitbit, is that today's incumbents learned from the Microsoft example, and won't stop buying and building unless forced.

The bottom line: Big tech is unpopular in both political parties, particularly among some of the leading presidential candidates (despite their ad spends), and that antipathy could help birth big tech's next generation.

Also...

Deal scoop: Stone Point Capital agreed to buy PrismHR, a Massachusetts-based provider of HR software for small businesses, from Summit Partners (which will roll over part of its stake) and Accel-KKR (which exits completely).

  • The company's next goal is to provide more guided advice around employee benefits, leveraging data from its 80,000 clients who employ over 2 million people.
  • Stone Point got to know PrismHR via its ownership of Oasis Outsourcing, a PrismHR customer that was later acquired by Paychex for $1.2 billion.
  • "We're a company with profits and a long history of growth, not one that's mostly known for its cool logo and crazy multiple," says CEO Gary Noke.

New firm alert: Nuzzel and Friendster founder Jonathan Abrams has launched 8-Bit Capital, a VC shop focused on startups that "connect people and businesses in new ways." His partner is former Nuzzel COO Kent Lindstrom. No word yet on how much 8-Bit is seeking for its debut fund.

Harlem Capital raised $40 million for its debut fund, which focuses on startups led by women and people of color, co-founder Henri Pierre-Jacques tells Axios.

  • Limited partners include The State of Michigan, Vanderbilt University, the Consumer Technology Association, TPG, and the Harry and Jeanette Weinberg Foundation.
  • "I generally think venture is doing better in funding diverse entrepreneurs, but most of it has been gender focused and not on men and women of color," Pierre-Jacques says. "We had originally targeted less than $40 million but, one thing we realized as angel investors, was that lots of founders of color were taking longer to raise, and now we can help them get that million dollars instead of half a million dollars."

The White House is lashing out at private equity-backed ads about surprise medical bills, Axios' Caitlin Owens reports.

  • "The advertisements... being run by the private equity groups who are using the arbitrage on surprise medical billing should make every American and member want to puke," says Joe Grogan, President Trump's top domestic policy aid. "It is vile the way they buy these groups and they prey on people.”
  • Go deeper.
The BFD

Illustration: Sarah Grillo/Axios

Astralis, a Denmark-based e-sports group that includes the world's top-ranked Counter-Strike team, is planning to go public next week in Copenhagen.

  • Why it's the BFD: This would be the first-ever public listing of an e-sports group, possibly priming investors for future floats from larger organizations. Canada's Overactive Media, for example, has been weighing an IPO, and NRG Sports' Andy Miller tells Axios that he's been approached by Canadian banks about a Toronto listing ("we felt it was too early").
  • Details: Astralis is set to list on the Nasdaq's Copenhagen exchange for small companies, raising between $18 million to $22 million. Shareholders include Heartcore Capital.
  • Bottom line: "The global e-sports market will generate almost $2 billion in 2022, with global e-sports viewership expected to reach 595 million that year." — Nick Rigillo, Bloomberg
Venture Capital Deals

Vinted, a London-based online marketplace for secondhand clothes,, raised €128 million at a valuation north of $1 billion. Lightspeed Venture Partners led, and was joined by return backers Sprints Capital, Insight Partners, Accel, and Burda Principal Investments. http://axios.link/UsJs

Cazoo, a London-based used-car buying platform, raised £25 million from General Catalyst and Mubadala Capital. http://axios.link/WqXe

Hastee, a London-based on-demand wages startup, raised £8 million in new VC funding and secured a £200 million credit line. Umbra Capital led the equity tranche, and was joined by IDG Ventures. http://axios.link/mmIb

Ockam, a San Francisco-based IoT identity management platform, raised $4.9 million in seed funding from Core Ventures, Okta Ventures, SGH Capital, and Future Ventures. http://axios.link/mUVm

Foodvisor, a French food-tracking and advice app, raised $4.5 million led by Agrinnovation. http://axios.link/Q3UC

Rossum, a UK-based “cognitive data capture” startup, raised $4.5 million in seed funding from LocalGlobe, Seedcamp, Miton, and StartupYard. http://axios.link/XpfB

Private Equity Deals

Acosta, a Jacksonville, Fla.-based sales and marketing company owned by The Carlyle Group, last month filed for Chapter 11 bankruptcy protection. http://axios.link/ajx6

The Carlyle Group is seeking a buyer for Italian sneaker brand Golden Goose, which could fetch upwards of €1.4 billion, per Reuters. Likely bidders include Advent International, Permira, and VF Corp. http://axios.link/Eaef

🚑 Metric Capital and Morgan Stanley are in talks to pay nearly $200 million for a 30% stake in Turkish drugmaker Sanovel, per Bloomberg. http://axios.link/kyYu

Prometheus Group, a Raleigh, N.C.-based portfolio company of Genstar Capital, acquired Roser ConSys, a Holland-based provider of plant shutdown, turnaround, and outages software. www.prometheusgroup.com

TZP Capital Partners invested in Christy Sports, a Lakewood, Colo.-based winter sports retailer. www.christysports.com

Public Offerings

Bill.com, a Palo Alto-based provider of payment processing software for SMEs, set IPO terms to 8.8 million shares at $16-$18. It would have a fully-diluted market value of $1.3 billion, were it to price in the middle, and plans to trade on the NYSE (BILL) with Goldman Sachs as lead underwriter. The company reports a $7 million net loss on $108 million in revenue for the year ending June 30, 2019, and raised $320 million in VC funding from DCM (16.3% pre-IPO stake), August Capita (12.7%), Ossa Investments (9.1%), Emergence Capital (8.1%), Financial Partners (7.8%), Scale Venture Partners (6.2%), and Icon Ventures (5.7%). http://axios.link/3eBf

ChinData Group, a Chinese data center operator owned by Bain Capital, is prepping an IPO, per Bloomberg. http://axios.link/pncJ

Sprout Social, a Chicago-based provider of social media management software, set IPO terms to 8.8 million shares at $16-$18. It would have a fully-diluted market value of $882 million, were it to price in the middle, plans to trade on the Nasdaq (SPT) with Goldman Sachs as lead underwriter. The company reports a $21 million net loss on $75 million in revenue for the first nine months of 2019, and raised over $100 million in VC funding from firms like Goldman Sachs, NEA, Lightbank, and Greenspring Associates. http://axios.link/yEIt

Syska LED Lights, an Indian provider of LED lighting solutions, is seeking to sell a minority equity stake, with The Blackstone Group, General Atlantic, and TA Associates expressing interest, per LiveMint. http://axios.link/nepz

🍺 Thai Beverage (SI: TBEV) is prepping a Singapore IPO for some of its regional beer assets, per Reuters. The float could raise upwards of $3 billion. http://axios.link/6MVL

XP, a Brazilian brokerage and wealth manager, set IPO terms to 72.5 million shares at $22-$25. It would have an initial market cap of $13 billion, were it to price in the middle, and plans to trade on the Nasdaq (XP) with Goldman Sachs as lead underwriter. Shareholders include General Atlantic. http://axios.link/WRsG

More M&A

🚑 Centene (NYSE: CNC) agreed to sell its Illinois business, IlliniCare Health Plan, to CVS (NYSE: CVS). The goal is to better smooth Centene’s regulatory path for its $15 billion purchase of WellCare (NYSE: WCG). http://axios.link/a3dc

Northgate (LSE: NTG) agreed to buy British auto accident claims handler Redde (LSE: REDD) for around £394 million. http://axios.link/q13g

Prudential Financial (NYSE: PRU) hired Goldman Sachs to find a buyer for its South Korean unit, which could fetch around $1.7 billion, per Korea Economic Daily. http://axios.link/nljT

Hussain Sajwani, chairman of Dubai’s Damac Properties, acquired Italian fashion house Robert Cavalli. http://axios.link/MrLt

Fundraising

BID Equity, a German private equity firm focused on B2B companies, raised €125 million for its debut fund. http://axios.link/EdT9

Storm Ventures raised $130 million for its sixth fund, per an SEC filing. http://axios.link/8ilF

It's Personnel

Silver Lake said that Egon Durban and Greg Mondre will become co-CEOs, effective immediately, and that Ken Hao will serve as firm chairman. It also promoted Joe Osnoss to managing partner and said that current managing partner Mike Bingle will soon transition into a vice chairman role (while also managing his own family office).

Jason Ball joined European VC firm GR Capital to lead its new London office, per TechCrunch. He previously was with Qualcomm Ventures. http://axios.link/gfjJ

Jon Bradford stepped down as a partner with Motive Partners to join London-based Dynamo Ventures as a partner, per TechCrunch. http://axios.link/gfjJ

Graham McDonald is stepping down as head of global private equity at Aberdeen Standard Investments, as part of a group restructuring. http://axios.link/OqHi

Final Numbers
Source: Coller Capital Private Equity Barometer, representing a survey of 113 limited partners in private equity funds.
Dan Primack

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