• Big money contract: I have a love-hate relationship with The Players' Tribune, which yesterday announced $40 million in new funding (led by IVP, which was joined by GV and existing backer NEA). The love is getting unfiltered content straight from athletes, and an advertising model that shares a lot of similarities to what we're doing here at Axios (no banners, etc). The hate... well, it was founded by a New York Yankee.
Anyway, let's move the story forward a bit: The round was done at a pre-money valuation of approximately $100 million, per a source familiar with the situation. That's around a 10x multiple on 2016 revenue.
• Say it ain't so: BJs Wholesale Club, a retailer owned since 2011 by CVC Capital Partners and Leonard Green Partners, is pitching a $2.45 billion dividend recap. The cov-light deal is split between first-lien ($1.85b) and second-lien ($600m) tranches, per LevFin Insights. More importantly, Bloomberg reports that this is the third time that BJs' private equity owners have done a dividend recap, and this one could mean they've effectively tripled their original $630 million equity check (without selling any shares).
To be sure, the debt markets are saying that BJs is plenty strong to handle this sort of transaction. Then again, debt markets also thought that once about The Limited. Companies can always handle a dividend recap until it can't. For those who don't struggle, the private equity sponsors likely could have still gotten paid out in the end, since the underlying balance sheet would have far fewer liabilities. For those who do, the recap is a knot in the noose. Juicing IRRs just isn't worth the risk...
• Why NEA returned: Earlier this week I expressed surprise that New Enterprise Associates was back in market for a new mega-fund ― $3 billion target, per SEC filing ― less than two years after raising $3.1 billion. Particularly given that PitchBook reports that $3.1 billion was less than 40% called through the end of Q2 21016.
So I've asked around, and learned that the new effort is more about macro than the micro: (1) NEA recognizes that 2017 is going to be a pretty light year for big VC fundraises, which basically means there could be some opportunity cost to waiting until 2018. Particularly among LPs with vintage year allocation desires. (2) Despite current economic conditions, there is some concern at NEA about the uncertainty that accompanies Donald Trump into office today, and would prefer to be fully-stocked while the store remains open.
• Obamacare and entrepreneurs: There has been a lot of talk about how ACA repeal could affect American companies, particularly those in the healthcare space. But Sam Altman of Y Combinator has a different perspective: He believes that repeal without adequate replacement will result in fewer new companies being created.
Altman recently emailed YC founders to ask how ACA helped them get started, and posted a small selection of the replies. Here's how he summed it up to Axios: "There are plenty of people who want to become entrepreneurs and have plenty of money in the bank, but they don't because they don't have health insurance... I'm not someone who believes ACA is perfect or that it shouldn't be improved, but repealing it without a replacement will certainly make it harder for founders."
He adds that, if ACA is indeed repealed without adequate replacement, that YC might try to create some sort of health insurance plan for founders in its program. But, he warns, most other accelerators and VC groups don't have the same sort of scale to pull that off.