Jul 23, 2019

Axios Pro Rata

Dan Primack

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Top of the Morning

Source: Giphy

Yesterday I engaged in some Outrage Twitter, related to a revived controversy over how DoorDash includes customer tips in their guaranteed minimum payments to delivery workers. My basic sentiment was that DoorDash was deceiving customers for its own benefit.

  • Why it matters: It's a reputational mess for DoorDash, as the highly-valued startup tries to prove that its business model can work beyond billions of dollars in venture capital subsidies.

Then Kia told me I was wrong. Then I told Kia she was wrong. Then Kia wrote a piece explaining how DoorDash's model isn't much different than tipped earnings for restaurant waitstaff. And, much to the chagrin of my intellectual arrogance, she was right all along.

How it works: For each delivery a "Dasher" accepts, DoorDash displays a “minimum guaranteed” amount he or she is sure to earn.

  • For example, imagine a Dasher is guaranteed $7.00 to deliver a burrito.
  • No matter what, DoorDash will contribute at least $1 to the Dasher for this burrito delivery.
    • This is similar to how restaurants in most states pay their waiters a base wage below the full minimum wage, no matter how much the waiters also earns in tips.
  • The burrito recipient tips $3. This leaves a gap of $3 to reach the $7 guaranteed minimum, once DoorDash's $1 contribution is included. In this case, DoorDash provides the extra.
    • Waitstaff generally is guaranteed to make at least minimum wage, all in. So if it's a very slow night with few tips, restaurants must make up the difference.
  • If the burrito customer tips $10, the Dasher would get $11 in total, with DoorDash only kicking in its $1.

DoorDash may not be doing itself any favors by referring to these payments as "tips," but that's primarily because many restaurant customers haven't really thought too deeply about what tips really are. In this case, they are often in lieu of payments DoorDash would otherwise make to Dashers. At most restaurants, it's in lieu of wages that the restaurant would otherwise pay its waiters.

  • Caveats: Seven states, including California, require tipped staff to be paid state minimum wage by the restaurant itself. And the DoorDash system creates could prompt "Dashers" to request tips in cash, thus circumventing the system (much like waitstaff rarely report true earnings to the IRS).

Go deeper by reading Kia's full piece.

🕒 It's Day 10 of Leon Black, CEO of Apollo Global Management, refusing to confirm or deny that his family foundation was the source of a $10 million donation to Jeffrey Epstein's charity in 2015.


Sources suggest that this deal might involve a different type of Apple chips.

Apple (Nasdaq: AAPL) has is in talks to buy the smartphone-modem chip business of Intel (Nasdaq: INTC) for more than $1 billion, per the WSJ.

  • Why it's the BFD: Because this reflects how Apple wants to control more of its own supply chain. It's also bad news for Qualcomm, which thought it had cornered the market after recently settling its patent dispute with Apple — a settlement that prompted Intel to drop plans to develop 5G cellular modems.
  • Bottom line: "It's hard to imagine anyone other than Apple being interested in acquiring the business. The only other likely outcome, Intel shutting the entire unit, would have downsides for both companies." — Ina Fried, Axios
Venture Capital Deals

Robinhood, a Palo Alto-based securities trading app, raised $323 million in Series E funding at a $7.6 billion valuation. DST Global led, and was joined by return backers Ribbit Capital, NEA, Sequoia, and Thrive Capital. http://axios.link/VV7I

Thumbtack, a San Francisco-based local services marketplace, raised $150 million in new funding at a $1.7 billion valuation. Sequoia Capital led, and was joined by fellow return backer Baillie Gifford. http://axios.link/0vQQ

MoneyLion, a New York-based online consumer lending and savings app aimed at the middle class, raised $100 million in Series C funding co-led by Edison Partners and Greenspring Associates. Other backers include Capital One, MetaBank and FinTech Collective. http://axios.link/HPKl

Qomplx (fka: Fractal Industries), a Reston, Va.-based enterprise decision platform, raised $78.6 million in Series A funding. Cannae Holdings led, and was joined by Motive Partners. http://axios.link/wXj8

Heap, a San Francisco-based provider of user data capture tools, raised $55 million in Series C funding. NewView Capital led, and was joined by DTCP, Maverick Ventures, Triangle Peak Partners, Alliance Bernstein Private Credit Investors, Sharespost and return backers NEA, Menlo Ventures, Initialized Capital and Pear VC. www.heap.io

TrustRadius, an Austin, Texas-based B2B software review platform, raised $12.5 million in Series C funding. Next Coast Ventures led, and was joined by return backers Mayfield Fund and LiveOak Ventures. http://axios.link/HRqA

CircleCI, a San Francisco-based continuous integration and delivery platform, raised $56 million in Series D funding. Owl Rock Capital Partners and Next Equity co-led, and were joined by return backers Scale Venture Partners, Top Tier Capital, Threshold Ventures, Baseline Ventures, Industry Ventures, Heavybit and Harrison Metal. www.circleci.com

Atom Bank, a British challenger bank, raised £50 million at a £530 million valuation, per TechCrunch. BBVA led, and was joined by Toscafund, Woodford Patient Capital Trust and Perscitus. http://axios.link/vNCo

Arrcus, a San Jose, Calif.-based networking management startup, raised $30 million in Series B funding. Lightspeed Venture Partners led, and was joined by General Catalyst and Clear Ventures. http://axios.link/i8nK

Quiq, a Bozeman, Mon.-based conversational engagement platform, raised $12.5 million in Series B funding. Foundry Group led, and was joined by Teamworthy Ventures and return backers Venrock and Next Frontier Capital.

Gamaya, a Swiss developer of crop intelligence software, raised €10.9 million in Series B funding. Mahindra & Mahindra led, and was joined by return backers ICOS Capital and VI Partners. www.gamaya.com

Mixhalo, a real-time audio platform for venues and event organizers, raised $10.7 million in Series A funding. Foundry Group led, and was joined by Sapphire Sport, Founders Fund, Defy Partners, and Cowboy Ventures. www.mixhalo.com

Homeward, an Austin, Texas-based financing platform for homebuyers, raised $4 million in equity funding led by LiveOak Venture Partners and $21 million in debt funding from Genesis Capital and Keystone Bank. http://axios.link/lmQx

Flower Co., a YC alum referring to itself as the “Costco of cannabis,’’ raised $2.8 million in seed funding from backers like Slome Capital and Prehype. http://axios.link/g3gU

Genie AI, a UK-based provider of contract editing software for law firms and regulatory compliance, raised £1.2 million in seed funding led by Connect Ventures. http://axios.link/dhN3

VNPAY, a Vietnamese payments startup, is in talks to raise around $300 million from a group that includes SoftBank Vision Fund and GIC, per DealStreetAsia. http://axios.link/V1hQ

Private Equity Deals

Abris Capital Partners agreed to acquire a majority stake in Global Technical Group, a Romanian building management company.

BC Partners agreed to buy a majority stake in Garda World Security, a Montreal-based security services company, from Rhone Capital for around C$5.2 billion (including assumed debt) http://axios.link/1baX

Cerberus is in talks to buy a mortgage portfolio from London-based Metro Bank (LSE: MTRO) for around £500 million, per Sky News. http://axios.link/F21W

Continental, a Troy, Mich.-based food management company owned by New Heritage Capital, acquired Northern Vending Co., an Ann Arbor, Mich.-based vending machine supplier. www.northernvending.com

Incline Equity Partners acquired Brown & Joseph, an Itasca, Ill.-based debt collector for the insurance market, from LaSalle Capital. www.brownandjoseph.com

Silver Lake agreed to acquire a minority stake in EverCommerce, a Denver-based provider of payments software for SMEs, per the WSJ. The deal reportedly would value EverCommerce at nearly $2 billion, with existing backer Providence Strategic Growth maintaining a position. http://axios.link/7doA http://axios.link/7doA

Sure Shot Drilling, a Commerce, Colo.-based underground utility services company, acquired four Colorado-based utility services companies: DrillTech Directional Services, Pinnacle Development, BAS Rentals and A to Z Cable Construction. Sure Shot backers include Diamond State Ventures, Banyan Investment Partners, Asydan Capital Management and Post Road Group. www.sshotdrilling.com

Yellow Wood Partners agreed to buy the Dr. Scholl’s footcare brand from Bayer (DE: BAYN) for $585 million. http://axios.link/FbEo

Public Offerings

🚑 Envista, a Brea, Calif.-based dental products company being spun out of Danaher (NYSE: DHR), filed for a $100 million IPO. It plans to trade on the NYSE (NVST) with J.P. Morgan as lead underwriter, and reports around 37 million of net income on 673 million in revenue for Q1 2019. http://axios.link/03cZ

Freshworks, a customer support software company that recently relocated its headquarters from India to California, decided that its future IPO will be on the Nasdaq, per The Times of India. The company has raised nearly $250 million in VC funding, most recently at a $1.5 billion valuation, from firms like Accel, CapitalG and Sequoia Capital. http://axios.link/W4pP

Liquidity Events

The Blackstone Group is considering a sale of its 42% stake in listed regasification company Cheniere Energy Partners, per Bloomberg. http://axios.link/deqF

DC Capital Partners agreed to sell QRC, a Fredericksburg, Va.-based provider of services like RF spectrum survey to the U.S. military, to Parsons (NYSE: PSN) for $215 million in cash. www.qrctech.com

🎵 Etsy (Nasdaq: ETSY) agreed to buy Reverb, a Chicago-based marketplace for new and used music equipment, for $275 million in cash. Reverb had raised around $47 million from firms like Summit Partners and FJ Labs. http://axios.link/7Kt0

Sverica Capital Management agreed to sell Dexmet, a Wallingford, Conn.-based provider of expanded metal materials, to PPG (NYSE: PPG). www.dexmet.com

More M&A

Beijing Automotive Group acquired a 5% stake in Daimler. http://axios.link/f8QT

Catalyst Capital Group offered to buy a C$150 million stake in Hudson’s Bay (TSX: HBC), the owner of retailers Saks Fifth Avenue and Lord & Taylor, and said it would oppose a pending $1.74 billion takeover offer led by executive chairman Richard Baker. http://axios.link/mPBg

First State Super and VicSuper agreed to merge, in a deal that would form Australia’s second-largest pension fund with around A$120 billion in AUM. http://axios.link/pRXf


🚑 Flare Capital Partners, a healthcare-focused VC firm, raised $255 million for its second fund. www.flarecapital.com

Investcorp raised $142 million for its first India-focused buyout fund. http://axios.link/57gB

Mighty Capital, a San Francisco-based VC firm, is raising $30 million for its second fund, per an SEC filing.

Visionaries Club, a Berlin-based VC firm focused on B2B startups, raised a €40 million fund focused on pre-seed/seed opportunities and another €40 million fund focused on Series B rounds. http://axios.link/wSzG

It's Personnel

Adam Marcus joined Providence Equity Partners as a managing director, after a decade as a partner with OpenView Venture Partners, per his LinkedIn page.

Capital Dynamics promoted global compliance officer and US general counsel Hina Ahmad to COO. www.capitaldynamics.com

Matthew Potter joined TCV as a vice president, per his LinkedIn page. He’s a former Vista Equity Partners associate who recently received his MBA from Wharton. www.tcv.com

David Seider joined Weatherford Capital as a vice president. He previously led M&A for Roper Technologies. www.weatherfordcapital.com

Trivest Partners, a Miami, Fla.-based private equity firm, promoted Chris Berton to VP of biz dev. It also hired Tony Hill (ex-Siemens) as director of biz dev. www.trivest.com

Final Numbers
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Data: UNC Center for Innovation and Sustainability in Local Media; Chart: Andrew Witherspoon/Axios

Gannett Co., the largest U.S. newspaper publisher by circulation, reportedly is in talks to merge with GateHouse Media, the largest U.S. newspaper publisher by number of titles. The combined company would own one of every six American newspapers.

  • Axios' Sara Fischer writes that, unlike some recent M&A in broadcast and telecom — also legacy industries upended by technology — experts don't believe that a Gannett/GateHouse tie-up would spark regulatory concerns, because the companies don't have much overlap in key markets.
  • Go deeper: The next media mega-merger
Dan Primack

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