May 12, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Did it call glass? Apple this morning announced that it will invest $200 million into Corning (NYSE: GLW), as the first investment from its $1 billion Advanced Manufacturing Fund. Some notes, based on source conversations:

  • Don't view this deal as the template for future Apple AMF investments. Corning is a mature, publicly-traded company with which Apple has a longstanding commercial relationship (it makes the iPhone and iPad glass). But the next deal could be for much less money and into a startup with which Apple has no existing ties. Or not. It's really agnostic on these issues.
  • AMF obviously isn't looking to lose money, but $1 billion is a relative drop in the bucket for Apple. The key is helping to finance future innovations that Apple may eventually be able to somehow leverage.
  • Still no official word on how this fund is structured, but it's worth noting that Apple COO Jeff Williams is the one quoted in the press release.

Stop it. Just stop it: Yesterday we noted how Time Inc. CEO Rich Battista blamed his company's poor Q1 earnings on "relentless media speculation" over the company's sale process. Then NantHealth CEO Patrick Soon-Shiong took a similar tact in explaining his company's travails (fun fact: Soon-Shiong once spent months pulling strings to appear on-stage at a Fortune conference, before bailing with one day's notice). And then came the capper yesterday, when Eddie Lampert said that Sears has been "unfairly singled out" by an "irresponsible" media.

Look, I know it's easy to blame the media for your own objective failings. In fact, it's quite en vogue right now. But that doesn't mean people can't see through your desperate deflections.

Today in Google Ventures portfolio companies: Uber took a double smackdown in court yesterday, with a judge both rejecting its attempts to move the Waymo lawsuit into arbitration (i.e., proceedings will remain public) and recommending that the U.S. Attorney look into Waymo's claims of trade secret theft (i.e., this could expand from civil to criminal).

Trumpland: U.S. Commerce Sec. Wilbur Ross last night announced a series of U.S.-China trade developments, including a firm date for when U.S. beef exports to China can resume (a framework was previously reached in September by the Obama Administration, but it was never put into effect). The rest of it is, in the words of one trade expert, "mostly aspirational," including a line about how the "U.S. welcomes direct investment from Chinese entrepreneurs" ― without any mention of possible changes to the CFIUS process.

• Breaking: CNBC's David Faber reports that Spotify plans to go public via that rumored direct listing, and that it will be on the NYSE. He says either later in 2017 or in 2018, but I'm hearing the former is more likely.

Price check: Comcast NBCUniversal yesterday announced that it is acquiring Craftsy, a Denver-based online community known for its how-to videos on everything from quilting a blanket to baking a soufflé. No financial terms were disclosed, but a source familiar with the deal says it was $225 million in cash (plus some retention structure). Two other quick notes:

  • This appears to be the richest exit ever for a startup that participated in the Venture Capital Investment Competition, having "pitched" during the finals Chapel Hill five years ago.
  • Yes, NBCUniversal is an investor in Axios. No, it wasn't my source.

Have a great weekend... Go Celts!

The BFD

Improbable Worlds, a London-based platform for third-party VR and simulated world game developers, has raised $502 million in Series B funding. SoftBank led the deal, and was joined by return backers Andreessen Horowitz and Horizons Ventures.

  • Why it's the BFD: This appears to be the largest "venture capital" investment ever in a European startup (Improbable was founded in 2012), let alone in the software space. It's also yet another massive check from SoftBank, which did this deal off its balance sheet instead of via Vision Fund (although don't be shocked if this, and some other recent SoftBank investments, get rolled into Vision once it closes).
  • Bottom line: "AI gets all the press, [but] this idea of recreating reality is going to become something in the public consciousness that's as important, as significant, as artificial intelligence." -- Improbable CEO Herman Narula to Wired
Venture Capital Deals

• Clover Health, a San Francisco-based health insurance startup, has raised $130 million in fourth-round funding at a $1.2 billion valuation, according to Bloomberg. New investors reportedly include GV. The company previously raised nearly $300 million, from firms like Greenoaks Capital, AME Cloud Ventures, Casdin Capital, Floodgate, Nexus Ventures, Refactor Capital, Spark Capital, Arena Ventures, First Round Capital, Sequoia Capital, Social Capital and Wildcat Ventures. https://bloom.bg/2qsyOQd

• Pocket Gems, a San Francisco-based mobile game developer, has raised $90 million in new VC funding led by existing sharerholder Tencent. http://tcrn.ch/2r86uir

• Miva, a San Diego-based provider of e-commerce software and services, has raised $18 million in growth equity funding from Bison Capital Partners. www.miva.com

• Twiggle, an Israeli provider of e-commerce search tools, has raised $15 million in new VC funding co-led by MizMaa Ventures and Korea Investment Partners. http://tcrn.ch/2qzDEep

• Jinn, a London-based "shop of your behalf" delivery service, has raised $10 million in new VC funding from SDTE Capital, Samaipata Ventures and individual angels. http://tcrn.ch/2pFuRCJ

• IoTium, a Santa Clara, Calif-based network infrastructure company for industrial IoT, has raised $8.39 million in Series A funding. March Capital Partners and GE Ventures co-led the round, and were joined by OpenSource Ventures, Juniper Networks and Pankaj Patel (ex-Cisco exec). http://bit.ly/2q8ye9l

• Vivid Vision, a developer of VR-based solutions for binocular vision disorders, has raised $2.2 million in seed funding. Backers include SoftTech VC, The VR Fund, CRCM Ventures, SOS Ventures, Anorak Ventures and Liquid 2 Ventures. http://bit.ly/2qYW3Bj

Private Equity Deals

• Apollo Global Management has agreed to acquire West Corp. (Nasdaq: WSTC), an Omaha-based phone conferencing company, for $5.1 billion, or $23.50 per share (17% premium to where stock traded before West Corp. said it was exploring a possible sale). http://on.ft.com/2pFQwf6

• Ardian has acquired a minority equity stake in Abvent Group, a Paris-based publisher and distributor of software for architects. No financial terms were disclosed. http://bit.ly/2pEQGlW

• Ardian has agreed to acquire a 60% ownership stake in the R&D business of French engineering and consulting firm Assystem (Paris: ASY), which will retain the remaining 40% position. http://bit.ly/2pFGYR5

• Bestport Capital has sponsored a management buyout of Nu-Heat UK, a British provider of underfloor heating systems that generates nearly £15 million in annual revenue. No financial terms were disclosed, except that Beechbrook Capital provided leveraged financing. http://bit.ly/2qzw2ZA

• The Blackstone Group and Ctrip.com (Nasdaq: CTRP) each are weighing takeover bids for Etraveli, the online travel unit of ProSiebenSat.1 Media (Paris: PSM), according to Bloomberg. A deal could be valued at upwards of €500 million. https://bloom.bg/2r5XmLU

• Champ Private Equity and Pacific Equity Partners are expected to make bids for Australian food and beverage business Cerebos, which is being auctioned off by Japan's Suntory for around A$200 million, according to The Australian. http://bit.ly/2q911ul

• Clio Holdings, a Bloomfield Hills, Mich.-based portfolio company of O2 Investment Partners, has acquired Premier Surfaces, an Atlanta-based fabricator and installer of custom countertops. www.clioholdings.com

• Intermediate Capital Group has purchased a portfolio of direct equity and debt investments from Third Avenue Management for around $170 million, according to Private Equity International. The deal makes it the largest shareholder in two of the companies, Corporate Risk Holdings (f.k.a. Altegrity) and Affinion Group. http://bit.ly/2qcz5DK

Public Offerings

• Gardner Denver, a Milwaukee-based maker of industrial machinery owned by KKR, raised $826 million in its IPO. The company priced 41.3 million shares at $20 per share (below $23-$26 range), for an initial market cap of nearly $3.8 billion. It will trade on the NYSE under ticker symbol GDI, while Goldman Sachs was listed as left lead underwriter. Gardner Denver reports a $31 million net loss on around $1.9 billion in revenue for 2016, compared to a $352 million net loss on $1.13 billion in 2015. http://bit.ly/2qciNuU

• Appian, a Reston, Va.-based provider of a software development platform, has set its IPO terms to 6.25 million shares being offered at between $11 and $13 per share. It would have a fully-diluted market value of around $878 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol APPN, with Morgan Stanley listed as left lead underwriter. Appian reports a $14 million net loss on around $133 million in revenue for 2016, compared to a $6.6 million net loss on $111 million in revenue for 2015. Shareholders include Novak Biddle Venture Partners (21.5% pre-IPO stake) and NEA (11.7%). www.appian.com

• Loton Corp., a Beverly Hills, Calif.-based provider of online networks focused on the live and digital music space, has filed for a $100 million IPO. It plans to trade under ticker symbol LIVX, with BMO Capital Markets serving as sole underwriter. The company reports a $9 million net loss on $225 million in revenue for the last nine months of 2016. www.livexlive.com

• Smart Global Holdings, a Newark, Calif.-based maker of specialty memory solutions to the electronics industry, has set its IPO terms to 5.3 million shares being offered at between $13 and $15 per share. It would have a fully-diluted market cap of around $302 million, were it to price in the middle of its range. The Silver Lake-owned company plans to trade on the Nasdaq under ticker symbol SGH, with Barclays and Deutsche Bank serving as lead underwriters. http://bit.ly/2q9W8Rb

Liquidity Events

• Cisco Systems (Nasdaq: CSCO) has agreed to acquire MindMeld, a San Francisco-based developer of "AI to power conversational interfaces," for $125 million. MindMeld previously raised around $17 million from firms like IDG Ventures, United Services Auto Association, Samsung Ventures, Intel Capital, Telefonica Digital, Liberty Global Ventures, Fenox Ventures, Westcott, TenOneTen Ventures and Quest Venture Partners. http://tcrn.ch/2pDjA5P

• Itaú Unibanco of Brazil is in talks to acquire a 49% stake in XP Investimentos, a Brazilian investment broker owned by General Atlantic, for around $1.9 billion, according to the WSJ. http://on.wsj.com/2qcCXEV

More M&A

• Calpine Corp. (NYSE: CPN), a Houston-based power generation company valued north of $4 billion, has hired Lazard to explore a possible sale, according to the WSJ. http://on.wsj.com/2qTSMmy

Fundraising

• Highland Capital Management has closed a $147 healthcare-focused private equity fund that will be co-managed by Stonebridge Capital. The anchor LP is South Korea's National Pension Service.

• Lime Rock Partners is raising up to $1 billion for its eighth energy-focused private equity fund, per an SEC filing. Eaton Partners is serving as placement agent. www.lrpartners.com

• NewSpring Capital has closed its fourth growth equity fund with $280 million in capital commitments. www.newspringcapital.com

It's Personnel

• Nate McOmber has joined joined Sherwood Partners as a senior vice president. He previously was VP of corporate development at Beamreach Solar. www.shrwood.com

• Spencer Punter has joined VC firm Data Collective as an operating partner and COO. He previously was COO at Appcelerator. www.dcvc.com

• Justin Reger has joined PeakEquity Partners as a principal. He previously was with LLR Partners. www.peakequity.com

Final Numbers
Dan Primack