Top of the Morning
SoftBank’s second Vision Fund “is going to be launched as scheduled” and be roughly the same size as the first, chairman Masayoshi Son said on Wednesday during the Japanese conglomerate’s quarterly earnings, although he declined to share more details.
That’s in spite of the storm of challenges it’s currently weathering, including rumored fundraising woes and its biggest problem child, WeWork.
- And speaking of WeWork…. Son’s story is that we’ve all been thinking about this cash lifeline wrong: Because $1.5 billion was already promised for April 2020 (along with $8 billion in a tender and debt), SoftBank is just giving WeWork the money six months earlier, and at a tenth of the cost per share. It’s really a great deal, he argued!
- Nevertheless, SoftBank Group posted a $6.5 billion loss for the quarter — its first in 14 years. Of that, $4.6 billion was tied to WeWork (much of the rest was from Uber). The Vision Fund posted a $8.9 billion operating loss, though it’s still in the black, for now.
- Son admitted that he made some poor judgements when it came to assessing WeWork as an investment, including in giving it a valuation of $47 billion.
- But he also took several opportunities to blame WeWork co-founder and ex-CEO Adam Neumann for the various troubles, given his outsized control over the company and its board.
- Yes, but: SoftBank had two seats on WeWork’s board and has been involved since 2017 — so it’s hard to believe that SoftBank was as blindsided as Son wants us to believe. Likely more accurate is Son’s admission that, in many cases, he "turned a blind eye, especially when it comes to governance.”
• Uber day: Today, Uber’s lockup expires, meaning that employees and VCs can finally sell their stock. One thing complicating the picture is that a sizable number of shares are currently under water.
- How it works: “In the three days around the lockup expiration, on average there is about a 2% drop in the price for VC-backed IPOs, but there is a lot of variation around this average,” University of Florida professor and IPO expert Jay Ritter told me via email.
- Yes, but: “My numbers show that in months 7-12, the VC-backed IPOs from 2001-2017 actually outperformed other stocks of the same market cap, on average,” he added.
- On Monday, Uber said it’s been in talks with major investors about the lockup’s expiration, and Menlo Ventures’s Shawn Carolan tweeted last night that the firm intends to hold its stake (though it’s unclear how much it still holds).
🎧Podcast: Private equity-backed companies account for around 5% of America's GDP and employ around 6% of all American workers. But private equity decisions are driven by a much more homogeneous group. Dan digs in with The Carlyle Group's Kara Helander. Listen here.
Walgreens Boots is reportedly in talks to be acquired by private equity firms, Reuters reported on Tuesday. The company is no stranger to private equity: KKR bought Alliance Boots in 2007 in what was, at the time, the largest-ever European buyout, and years later it sold it to Walgreens.
- Why it's the BFD: If it really happens, this would be the largest leveraged buyout in history.
- Bottom line: "The key word here is 'exploring.' Taking Walgreens private would take more than $70 billion, and pharmacies are a low-margin business right now that may not attract a group of private equity financiers that could fund that large of a deal. The most profitable entities in the supply chain are drugmakers and pharmacy benefit managers, not pharmacies, which have felt the effects of lower generic drug payments." — Bob Herman, Axios.
Venture Capital Deals
• Coveo, a Canada-based company that builds search and personalization services, has raised C$227 million (USD$172 million) in new funding led by Omers Capital Private Growth Equity Group, with Evergreen Coast Capital, FSTQ, and IQ Ventures also participating. It’s now valued above $1 billion. http://axios.link/wc0Q
• Figure Technologies, a San Francisco-based fintech company, is raising about $103 million in new funding, according to a new SEC filing.
• Kenzie Academy, an Indianapolis-based software engineering apprenticeship school, has raised $100 million in debt funding from Community Investment Management. www.kenzie.academy
• HomeLight, a San Francisco-based platform for matching home-sellers with real estate agents, raised $63 million in Series C funding. Zeev Ventures led, and was joined by Group 11, Menlo Ventures, Crosslink Capital, and Stereo Capital. http://axios.link/uHRt
🚑 A2 Biotherapeutics, an Agoura Hills, Calif.-based developer of cell therapies for cancer, raised $57 million in Series A funding from The Column Group, Vida Ventures, Samsara BioCapital, and Nextech Invest. http://axios.link/cgIR
• LeaseQuery, an Atlanta-based provider of lease accounting software, raised $40 million in Series A funding from Goldman Sachs. www.leasequery.com
🚑 Shape Therapeutics, a Seattle-based developer of RNA-editing gene therapies, raised $35.5 million in Series A funding. NEA led, and was joined by CureDuchenne Ventures. www.shapetx.com
🚙 Kovi, a Brazil-based startup that rents vehicles to on-demand drivers, has raised $30 million in Series A funding led by GFC Fund, with Quona Capital, Monashees, Maya Capital, Kevin Efrusy, Y Combinator, Broadhaven Ventures, Justin Mateen and OneVC also participating. http://axios.link/mtFn
• CrowdStreet, a Portland-based technology provider with an online marketplace for direct equity investment in commercial real estate, has raised $12 million in Series C funding. www.crowdstreet.com
• Chronosphere, a cloud-native monitoring tool, raised $11 million in Series A funding. Greylock led, and was joined by Lee Fixel. http://axios.link/283m
• RedMarlin, a Los Altos, Calif.-based anti-counterfeiting startup, raised $10 million in Series A funding co-led by Thomvest Ventures and Crosslink Capital. http://axios.link/sW0h
• Mooala, a Dallas-based maker of dairy-free beverages and creamers, raised $8.3 million in Series A funding led by Sweat Equities. http://axios.link/JWR3
• Arweave, a decentralized protocol project focused on permanent data storage, raised $5 million in seed funding from Multicoin Capital, Andreessen Horowitz, and Union Square Ventures. http://axios.link/QolQ
🚑 Imbed Biosciences, a Madison, Wis.-based developer of therapies for burns, chronic ulcers, and surgical wounds, raised $4 million in Series A funding from WISC Partners and a group organized by Formidable Asset Management. www.imbedbio.com
• Parabol, a Los Angeles-based provider of meetings management software, raised $4 million from CRV, Haystack, and Slack Fund. http://axios.link/LvpV
• HMBradley, a Santa Monica, Calif.-based fintech startup, has raised $3.5 million in seed funding from Accomplice Ventures, Walkabout Ventures, Mucker Capital, Index Ventures, and angels like Max Levchin. http://axios.link/dsu9
• Valence, a Los Angeles-based social network for black professionals, raised $2.5 million led by Upfront Ventures. http://axios.link/LEeZ
• Ash & Erie, a Detroit-based apparel e-commerce startup focused on shorter men, raised $1.2 million in seed funding led by Irish Angels. www.ashanderie.com
Private Equity Deals
🚑 Axia Women’s Health, a Voorhees, N.J.-based portfolio company of Audax Private Equity, acquired Indianapolis-based Obstetrics & Gynecology of Indiana. www.rwhm.org
• Stouse, a New Century, Kansas-based portfolio company of Goldner Hawn, acquired Magna-Plus, a Kansas City-based maker of promotional products like custom magnets and labels. www.magnaplus.com
• SureWerx, a Canadian portfolio company of The Riverside Company, acquired Sure Foot (dba Due North), a Grand Forks, N.D.-based provider of footwear traction aid products. www.surefoot.net
• Gravity, has agreed to acquire On Point Oilfield Holdings, an Austin-based midstream water company, from White Deer Energy. www.gvty.com
• Anacapa Partners has invested an undisclosed amount in Agasus, a Brazil-based rental service for technology hardware such as desktop computers, notebooks and tablets, to large and medium enterprises. www.agasus.com.br
🚑 OdontoCompany, a Brazil-based dental clinic franchisor, has raised an undisclosed amount from L Catterton’s Latin American fund. www.odontocompany.com
🚙 AAMP Holdings, a Clearwater, Fla.-based manufacturer of vehicle aftermarket and OEM technology, has received an undisclosed amount of investment from the Halifax Group. www.aampglobal.com
• Peloton paid nearly $50 million to acquire Tonic Fitness, one of its Taiwan-based bike manufacturing partners. http://axios.link/rfqy
• Q&K International Group, a Chinese long-term apartment rental platform, raised $46 million in its IPO. The company priced 2.7 million shares at $17, for an initial market cap of $807 million, versus plans to sell 5.2 million shares at $17-$19. It trades on the Nasdaq (QK), used Morgan Stanley as lead underwriter, and reports a $54 million net loss on $131 million in revenue for the first nine months of 2019. Shareholders include Crescent Capital, SAIF Capital, and North Haven Private Equity. http://axios.link/gTDX
• GFL Environmental, a Canada-based waste management company, postponed its IPO on Wednesday. It had filed to raise $1.9 billion by offering 87.6 million shares (1% insider) at a price range of $20 to $24. It had planned to list on the NYSE under the symbol GFL. J.P. Morgan, BMO Capital Markets, Goldman Sachs, RBC Capital Markets, Scotia Capital, Barclays, BC Partners Securities, Raymond James, Stifel, and TD Securities were set to be the joint bookrunners on the deal. www.gflenv.com
🚑 89bio, a San Francisco-based Phase 1 biotech company developing therapies for NASH and other metabolic diseases, postponed its IPO on Wednesday due to an administration issue. It had filed to raise $70 million by offering 4.4 million shares at a price range of $15 to $17. It planned to list on the Nasdaq under the symbol ETNB. BofA Securities, SVB Leerink and RBC Capital Markets were set to be the joint bookrunners on the deal. www.89bio.com
• PropTech Acquisition, a Wilson, WY-based blank check company targeting the real estate tech industry, filed on Tuesday with the SEC to raise up to $150 million in an initial public offering. It plans to raise $150 million by offering 15 million units at a price of $10, commanding a market value of $188 million. Each unit consists of one share of common stock and one half of one warrant to purchase common stock at a price of $11.50 per share.It plans to list on the Nasdaq under the symbol PTACU. Cantor Fitzgerald is the sole bookrunner on the deal. http://axios.link/DX8R
• Seismic, a San Diego-based sales enablement software company, agreed to buy New York-based content management platform Percolate. Seismic has raised nearly $200 million in VC funding, most recently at a $1 billion valuation, while Percolate had raised over $100 million from GGV Capital, Sequoia Capital, Lightspeed Venture Partners, and First Round Capital. http://axios.link/3yC8
🚑 Veeva Systems is paying $430 million in cash to acquire Crossix Solutions, a company that sells patient data and analytics to pharmaceutical companies. http://axios.link/Ey0J
• Wirecard has agreed to acquire the AllScore Payment Services, a China-based payments services provider, for €109 million ($120 million). http://axios.link/UpOJ
• The Chernin Group has raised $700 million for a new fund, according to PEHub. https://www.pehub.com/buyouts/media-mogul-peter-chernin-raises-more-than-700-mln-for-investment-fund/
• HarbourVest raised C$300 million for its second fund-of-funds focused on Canadian growth equity managers. www.harbourvest.com
• Drive Capital, a Midwest-focused venture capital firm cofounded by former Sequoia Capital partners Mark Kvamme and Chris Olsen, looks to have raised $350 million in capital commitments for its third venture fund, according to an SEC filing. www.drivecapital.com
• Modus Capital, a has launched Modus Mena Venture Fund with a target of $75 million to invest in early- and growth-stage companies in range of industries across the Middle East and North Africa. http://axios.link/su4r
🚑 AstraZeneca and China International Capital Corporation (CICC) have formed a $1 billion fund to invest in China’s healthcare sector. http://axios.link/tPi6
🚑 Steve Kafka joined San Diego-based venture firm Section 32 as a Boston-based managing partner. He previously was with Third Rock. www.section32.com
• Coatue has hired Caryn Marooney, a long-time VP of communications at Facebook, and Canaan Partners’ Michael Gilroy as general partners for its new venture capital fund. http://axios.link/F8Y8
• General Atlantic promoted Anton Levy, Gabriel Caillaux and Martín Escobari to co-presidents, effective Jan. 1, 2020. http://axios.link/mRDt
• JPMorgan has hired Pamela Aldsworth, Andy Kelly, Katie Taormino and Dave Reich for its new venture capital coverage team. All four were previously at Silicon Valley Bank. http://axios.link/GVqc
• G2 Capital Advisors has hired Howard Lanser as managing director and head of capital markets. He was previously at Robert W. Baird & Co. http://axios.link/S8y5
• Arcmont Asset Management has hired Bain Capital Credit’s David Brooks and PIMCO’s Alice Cavalier, who will join its London office. www.arcmont-am.com
The newsletter was updated to show that JPMorgan (not Morgan Stanley) made hires for its new VC coverage team.
- Go deeper: Pro Rata Podcast digs into why private equity remains a man's world. Dan's guest is The Carlyle Group chief inclusion and diversity officer Kara Helander. Listen here.