Sep 27, 2018

Axios Pro Rata

Top of the Morning

Illustration: Rebecca Zisser/Axios

It's not unusual for founders to regret selling their startups, even for tons of money. Sure it's a bit tough to empathize when that regret gets expressed via satellite phone on a yacht off of Saint-Tropez, but it's still out there.

The exception, it had seemed until fairly recently, were founders who sold big to Facebook. But now that seems to be unraveling, following Monday's sudden resignations of Instagram's co-founders and yesterday's searing attack on the social network from WhatsApp co-founder Brian Acton (who left late last year).

  • To be clear, I'm not suggesting Facebook is now lower on the M&A pecking order than its Silicon Valley mega-peers. Simply that it's no longer viewed differently than its mega-peers in terms of things like ongoing founder control.
  • But it does have a different problem that isn't universally shared, in that folks on Capitol Hill keep equating Mark Zuckerberg with the Monopoly Man. Were an Instagram-like opportunity to come up right now, it's pretty hard to see how Facebook would get it past regulatory review.

Bottom line: Facebook has gotten used to being attacked from the outside. What makes this week's developments really hurt is it comes from within the bubble.

Big deals day: Just a ridiculous amount of venture capital funding news in the past 24 hours, with today's VC Deals section totaling over $1.6 billion.

  • I joked with Stripe co-founder John Collison about how, in this environment, his company's $245 million raise doesn't really seem so large. His reply: "It's what we'd now call a boutique, artisanal round."

SurveyMonkey priced its IPO on Tuesday night, and yesterday its shares closed up around 44% on its first day of trading. Three notes from a conversation with CEO Zander Lurie:

  • He was surprised by the number of prospective investors who asked during the road-show about company culture, many of whom seemed to care as much about that as about the financials.
  • Speaking of the financials, Lurie kept turning the conversation to free cash-flow when I asked about SurveyMonkey's lack of profits.
  • "One of the reasons I think the brand is beloved is because we sit between a human being asking another human being for her opinion."

🎧 Podcast: Our latest episode focuses on how 2018 has been a glass half full/empty year for women in business, and I'm joined by Fortune's Leigh Gallagher. "Progress still comes with a caveat." Listen here.


Source: Giphy

Aetna (NYSE: AET) agreed to sell its Medicare prescription drug business to WellCare (NYSE: WCG). No financial terms were disclosed.

  • Why it's the BFD: Because Aetna believes this will secure U.S. antitrust approval for its $67.5 billion takeover by CVS.
  • Related: Aetna's divestiture is dependent on that mega-merger closing.
  • Bottom line: "CVS has the largest market share in the Medicare drug-plan business, with around 6.1 million members, according to a recent tally from Wells Fargo. Aetna is the fifth-biggest Part D seller, with around 2.2 million members, according to Wells Fargo." — WSJ
Venture Capital Deals

Compass, a New York-based online platform for real estate purchases and rentals, has raised $400 million in Series F funding at a $4.4 billion valuation. SoftBank Vision Fund and Qatar Investment Authority co-led, and were joined by return backers Fidelity, IVP and Wellington Management.

Opendoor, a San Francisco-based home buying and selling platform, raised $400 million in new equity funding from SoftBank Vision Fund.

🚑 Butterfly Network, the Guilford, Conn.-based maker of a handheld whole-body ultrasound system, raised $250 million at a $1.25 billion valuation. Fidelity led, and was joined by Fosun Pharma, Gates Foundation and Jamie Dinan.

Stripe, a payments infrastructure company, raised $245 million in new funding at a $20 billion valuation from Tiger Global and DST Global. It also quietly expanded its board to include independent directors Jonathan Chadwick (ex-VMWare) and Michelle Wilson (ex-Amazon).

Darktrace, a British enterprise cybersecurity firm, raised $50 million at a $1.65 billion valuation. Vitruvian Partners led, and was joined by KKR and 1011 Ventures.

🚑 IDx, a Coralville, Iowa-based developer of an autonomous medical diagnostic system, raised $33 million. 8VC led, and was joined by Optum Ventures, Alpha Edison and Heritage Provider Network.

The Infatuation, a New York-based restaurant discovery platform, raised $30 million from WndrCo., a Bellevue, Wash.-based TV ad measurement company, raised $30 million in Series C funding from Insight Venture Partners and Madrona Venture Group.

• Nozomi Networks, a San Francisco-based industrial cybersecurity company, raised $30 million in series C funding. Planven Investments led, and was joined by GGV Capital, Lux Capital, Energize Ventures and THI Investments.

🚑 Lyra Therapeutics, a Watertown, Mass.-based biotech focused on ear, nose and throat diseases like chronic rhinosinusitis, raised $29.5 million in Series B funding. Perceptive Advisors led, and was joined by RA Capital, ArrowMark Partners, Soleus Capital and return backers Polaris Partners, North Bridge Venture Partners and Intersouth Partners.

Cargo, a startup that provides ride-hailing drivers with snack boxes and other items passengers can purchase, raised $22 million in Series A funding led by Founders Fund, with Coatue Management, Aquiline Technology Growth also participating.

🚑 Minoryx, a Spanish biotech focused on neurodegeneration, raised €21.3 million in Series B funding. Fund+ led, and was joined by SFPI, SRIW, Sambrinvest and return backers Ysios Capital, Kurma Partners, Roche Venture Fund, Idinvest Partners, Chiesi Ventures, Caixa Capital Risc and HealthEquity.

Yunshan Networks, a Beijing-based SDN provider, raised $11 million in Series B funding. Lenovo Capital, Incubator Group and China Growth Capital were joined by return backers Northern Lights VC and Redpoint Ventures.

🚑 AbCellera, a Vancouver-based therapeutic antibody discovery startup, raised US$10 million in Series A funding led by DCVC Bio.

Source Defense, an Israeli provider of prevention solution for website supply-chain attacks, raised $10 million in Series A funding. AllegisCyber led, and was joined by Global Brain, Connecticut Innovations and return backer JVP.

TapClicks, a San Jose, Calif.-based provider of marketing analytics and workflow management SaaS, raised $10 million from Boathouse Capital.

🚑 Proscia, a Philadelphia-based digital pathology startup, raised $8.3 million in Series A funding. Flybridge Capital led, and was joined by Fusion fund, Emerald Development Managers, Razor’s Edge Ventures and RobinHood Ventures.

Plant Prefab, a Rialto, Calif.-based home design and prefabrication tech startup, raised $6.7 million in Series A funding from Obvious Ventures and Amazon Alexa Fund.

Kobiton, an Atlanta-based mobile app testing startup, raised $3 million in seed funding led by Kinetic Ventures.

The Lobby, a job-seeking and mentorship platform for aspiring finance professionals, raised $1.2 million from backers like YC, Ataria Ventures and 37 Angels.

Private Equity Deals

Angeles Equity Partners and Clearlake Capital acquired Meek’s, a Sacramento-based building products distributor.

BC Partners agreed to buy a majority stake in European telecom operator United Group from KKR, at a reported enterprise value of around $3 billion (including debt).

🍔 Inspire Brands, a restaurant platform owned by Roark Capital, agreed to take Sonic (Nasdaq: SONC) private for $2.3 billion.

J.W. Childs acquired Walker Edison, a Salt Lake City-based provider of ready-to-assemble furniture.

Lightyear Capital acquired a control stake in Augeo FI, a Naperville, Ill.-based outsourced loyalty program provider for banks and credit unions, for $140 million.

Mid Europa Partners acquired Urgent Cargus, Romania’s second-largest courier business, from Abris Capital Partners.

🚑 Nautic Partners acquired Mikart, an Atlanta-based contract development and manufacturing org for solid dose and non-sterile liquid pharmaceuticals.

Public Offerings

Arco Platform, a provider of online educational content for private schools in Brazil, raised $194 million in its IPO. The company priced 11.1 million shares at $17.50 (high end of range), and will trade on the Nasdaq (ARCE). Goldman Sachs was lead underwriter.

🚑 Arvinas, a New Haven, Conn.-based biotech focused on prostate and breast cancers, raised $120 million in its IPO. The company priced 7.5 million shares at $16 (high end of range, upsized shares), and will trade on the Nasdaq (ARVN). Goldman Sachs was lead underwriter. Arvinas had raised around $117 million in VC funding from firms like Canaan Partners (18.52% pre-IPO stake), 5AM Ventures (18.52%), RA Capital (7.94%), OrbiMed (5.95%) and Nextech (5.13%).

Liulishuo, a Shanghai-based English language learning app, raised $72 million in its IPO. It priced 5.75 million shares at $12.50 (midpoint), and will trade on the NYSE (LAIX). Morgan Stanley was lead underwriter. Shareholders include IDG (13.4% pre-IPO stake), Trustbridge Partners (13.4%) and GGV Capital (11.7%).

🚑 RA Medical Systems, a Carlsbad, Calif.-based developer of a laser-based platform for treating vascular and dermatological diseases, raised $66 million in its IPO. The company priced 3.9 million shares at $17 (above $14-$16 range, more shares), and will trade on the NYSE (RMED). Piper Jaffray was lead underwriter.

🚑 Urovant Sciences, a London-based developer of an oral therapy for overactive bladder raised raised $140 million in its IPO. The company priced 10 million shares at $14 ($14-$16 range), and will trade on the Nasdaq (UROV). It is being spun out by SoftBank-backed Roviant Sciences.

🚑 Sutro Biopharma, a South San Francisco-based developer of cancer immunotherapies, raised $85 million in its IPO. The company priced 5.67 million shares at $15 (middle of range, upsized shares) and will raise another $10 million from Merck via a private placement. It will trade on the Nasdaq (STRO) while Cowen was lead underwriter, and had raised over $200 million in VC funding from Merck (12.5% pre-IPO stake), Skyline Ventures (11.9%), Alta Partners (11.9%), SV Health Investors (11.1%), Celgene (10.5%), Samsara BioCapital (5.6%), and Vida Ventures (5.6%).

Liquidity Events

Grab, a Singapore-based ride-hail company, is in talks to sell a “decent-sized stake” in its Thailand business to Thai retailer Central Group, per Reuters.

  • Calendar check: I'll be interviewing Reuben Lai (head of Grab Financial) and Jason Thompson (head of GrabPay) on October 24 at the Money 20/20 conference in Las Vegas.

GrubHub (NYSE: GRUB) agreed to buy Tapingo, a San Francisco-based food ordering service focused on college campuses, for $150 million. Tapingo had raised around $66 million from DCM, Fosun International, Greenfield Cities Holdings, Khosla Ventures, Qualcomm Ventures, Kinzon Capital and Viola Ventures.

More M&A

Axiata Group, a Malaysian telecom company and largest shareholder in Singapore mobile operator M1, is likely to reject a $1.4 billion takeover offer for M1 from Keppel Corp and Singapore Press Holdings, per Reuters.

TomTom, a listed Dutch navigation software company, said it would consider the sale of its telematics unit.

Nomura (Tokyo: 8604) bought a minority stake in the Japanese unit of Swiss private bank Julius Baer (SWX: BAER).

🍕 Papa John’s (Nasdaq: PZZA) has asked potential acquirers to submit first-round takeover offers by the end of October, per Reuters.

It's Personnel

Ray Conner, former vice chair of Boeing Co. and CEO of Boeing Commercial Airplanes, joined Clayton, Dubilier & Rice as an operating advisor.

Tsana Nobles, former head of global strategy and investments at XL Catlin, joined Blackstone as chief risk officer for its insurance solutions group.

Final Numbers: Interest rates
Source: St. Louis Fed

Go deeper: Fed hikes rates amid booming economy

President Trump, during yesterday's press conference:

"In all fairness to the fed raising rates, they’re raising rates because we’ve never done like we’re doing now... So in one sense, I like it. But basically, I’m a low interest rate person."