Jan 13, 2020

Axios Pro Rata

Top of the Morning

Illustration: Aïda Amer/Axios

Atrium, a law firm for startups led by Twitch co-founder Justin Kan, is laying off most of its lawyers and paralegals, Axios' Kia Kokalitcheva reports.

  • The San Francisco-based company has raised around $75 million since 2017, from firms like Andreessen Horowitz, General Catalyst, and Y Combinator.
  • It now will focus primarily on tech tools it developed for lawyers and law firm clients.

Kia writes: "Even lawyers aren't immune to the unpredictability of working for a startup—and the appeal of generating high margins from selling software instead of human services." Go deeper.

#HimToo: David Drummond is out as chief legal officer of Google's parent company Alphabet, amid an internal investigation into sexual misconduct that involved Drummond both for how he handled complaints (including one against former Android chief Andy Rubin) and for his own workplace relationships.

  • We discussed Drummond last August, in the context of his organizational oversight of Google's venture capital unit: "How can GV plausibly insist its founders deal properly with their own workplace equality issues if it can't get its own house in order?"
  • No word yet from GV on who takes Drummond's place. Also, private equity giant KKR says that Drummond remains on its board of directors.
  • GV founder Bill Maris sent Axios a reaction that was savage by venture capital standards:
"The news of David Drummond leaving Google today brings to mind a quote from one of my most favorite creatures. 'At an end, your rule is. And not short enough, it was.' I had been asked in the past why I left Google in 2016, and I have never really commented on that. David Drummond is the reason I left Google. I simply could not work with him any longer. It’s that simple. We have very, very different ideas about how to treat people, and this was a long time coming."

🎖️ Tony "T2" Thomas, a retired 4-star general and former commander of U.S. Special Operations Command, has joined Lux Capital as a venture partner.

  • Why it matters: There has been a growing rift between Silicon Valley and the U.S. military, even though the region's tech industry was arguably birthed by semiconductor sales to the U.S. Department of Defense.

Lux's Josh Wolfe tells me that Thomas could help identify technologies that weren't designed for the military, but which nonetheless could have dual use:

"When it comes to Trump, it's hard for me to find anyone intelligent in venture who supports him. So a lot of people avoid the defense industry because they don't want to put something in that guy's hands. But T2 oversaw thousands of our most elite people, who literally help us sleep safe at night by stopping horrible people with bad intentions. We should want to advantage them."

Thomas says he hopes to help portfolio companies by working with old colleagues at DoD, where tech acquisition is a lengthy, byzantine process.

The BFD

Illustration: Sarah Grillo/Axios

EQRx, a developer of drug equivalars, raised $200 million in Series A funding from GV, Arch Venture Partners, Andreessen Horowitz, Casdin Capital, Section 32, Nextech, and Arboretum Ventures.

  • Why it's the BFD: First, because this is the largest (so far) of what will be a wave of biotech funding announcements, timed to this week's J.P. Morgan Healthcare Conference. Second, because equivalars are a burgeoning class of pharma that sidesteps patent law — mimicking the effects of blockbuster drugs without technically copying the formulations.
  • Bottom line: "It says a lot about the wildly-high pricing and bloat in the U.S. pharma system when VCs see a big potential return in drugs that would essentially act as generics (despite having brand names). But the success of something like this also rests heavily on whether drug pricing middlemen even want to include these drugs on their approved medication lists." — Bob Herman, Axios
Venture Capital Deals

Hesai, a Chinese LiDAR manufacturer, raised $173 million in Series C funding. Robert Bosch and Lightspeed Venture Partners co-led, and were joined by ON Semiconductor, Qiming Venture Partners, DT Capital Partners, and Axiom Asia Private Capital. http://axios.link/LTUi

🚑 PACT Pharma, a South San Francisco-based developer of personalized adoptive T cell therapies, raised $75 million in Series C funding. Vida Ventures led, and was joined by return backers like AbbVie Ventures, Foresite Capital, and Canaan Partners. http://axios.link/KEfN

🚑 Omniome, a San Diego-based DNA sequencing platform, raised $60 million in Series C funding. Madrone Capital Partners led, and was joined by return backers Arch Venture Partners, Decheng Capital, Domain Associates, Biomatics Capital Partners, Altitude Life Sciences Ventures, and Nan Fung Life Sciences. http://axios.link/vrh5

🚑 Tyra Biosciences, a Carlsbad, Calif.-based developer of therapies targeted at drug-resistant cancer cells, raised $50 million in Series A funding from Alta Partners, RA Capital Management, Boxer Capital, and Canaan Partners. http://axios.link/U5eI

ToursByLocals, an Austin, Texas-based online marketplace for private tours, raised $33 million from Tritium Partners. www.toursbylocals.com

🚑 Inflammatix, a Burlingame, Calif.-based developer of point-of-care infection diagnostics, raised $32 million in Series C funding from Grey Sky Venture Partners and return backers Khosla Ventures, Northpond Ventures, and Think.Health Ventures. http://axios.link/mvdQ

🚑 Kyverna, a Berkeley, Calif.-based developer of cell therapies for serious autoimmune diseases, raised $25 million in Series B funding from Gilead Sciences, Vida Ventures, and Westlake Village BioPartners. www.kyvernatx.com

Jolt, a London-based business school startup, raised $14.1 million led by Balderton Capital. http://axios.link/iT5k

EpiFi, an Indian neo-banking platform, raised $13.2 million in seed funding at around a $50 million valuation, co-led by Sequoia India and Ribbit Capital. http://axios.link/skxk

SimpliField, a Paris-based retail performance platform, raised $11 million in Series A funding. Five Elms Capital led, and was joined by Cap Horn and Runa Capital. http://axios.link/p3ku

Abacode, a Tampa, Fla.-based cybersecurity and compliance services startup, raised $4.85 million in Series A funding led by Ballast Point Ventures. http://axios.link/KvtR

Private Equity Deals

Anixter International (NYSE: AXE), an Illinois-based maker of enterprise communications and security products, agreed to buy acquired for $4.5 billion by Wesco Interational (NYSE: WCC), after previously having agreed to be bought for $3.8 billion by Clayton, Dubilier & Rice. http://axios.link/p2ls

Arcapita acquired Waste Harmonics, a Victor, N.Y.-based provider of waste management solutions, from Prospect Partners and Expedition Capital Partners. www.wasteharmonics.com

The Blackstone Group agreed to pay $54 million for a stake in Indian warehouse company Allcargo Logistics. http://axios.link/KhCv

Denham Capital invested $250 million in Ceiba Energy, a developer and owner of power generation assets in Latin America. http://axios.link/Hk62

Goldman Sachs agreed to buy Aptos, an Atlanta-based provider of retail industry software, from Apax Partners. www.aptos.com

IK Investment Partners agreed to buy a majority stake in Acture, a Dutch provider of outsourced social services in the case of workforce illness or disability. http://axios.link/Xjz0

Kellermeyer Bergensons Services, a portfolio company of Cerberus Capital Management, acquired Hospitality Staffing Solutions, an Atlanta-based hospitality staffing provider, from Littlejohn Capital.

KPS Capital Partners agreed to buy IKG, a Channelview, Texas-based manufacturer of steel and aluminum bar grating, from Harsco (NYSE: HSC) for $85 million. www.harscoikg.com

Peak, a Denver-based portfolio company of ORIX Capital Partners, acquired Riley Brothers, a provider of natural gas and electric utility construction services in New England. www.peakusg.com

Public Offerings

Five companies plan to price U.S. IPOs this week: I-Mab Biopharma, LIZHI, Phoenix Tree Holdings, Velocity Financial, and AnPac Bio-Medical Science. http://axios.link/3ELI

👻 Casper, a New York-based mattress maker, filed for a $100 million IPO. It plans to trade on the NYSE (CSPR) with Morgan Stanley as lead underwriter, and reports a $67 million net loss on $312 million in revenue for the first nine months of 2019. The company has raised over $355 million in VC funding, most recently at a valuation just north of $1 billion, from backers like IVP, Target, Norwest Venture Partners, Vaizra, and NEA. http://axios.link/0aEj

🚑 Schrödinger, a New York-based platform for life sciences and materials research, filed for a $100 million IPO. It plans to list on the Nasdaq (SDGR) with Morgan Stanley as lead underwriter, and reports a $262,000 net loss on around $60 million in revenue for the first nine months of 2019. Shareholders include David Shaw and the Bill & Melinda Gates Foundation. http://axios.link/PNwP

Liquidity Events

🎲 The Chernin Group is in talks to sell its majority stake in digital media company Barstool Sports to Penn National Gaming (Nasdaq: PENN), per Recode. http://axios.link/8WvQ

🚑 Teledoc Health (NYSE: TDOC) agreed to buy InTouch Health, a Santa Barbara, Calif.-based provider of enterprise telehealth solutions for hospitals and health systems, for around $600 million in cash and stock. InTouch had raised $114 million in VC funding from firms like Beringea. Galen Partners, InvestCare Partners, InvestMichigan, and iRobot. http://axios.link/ePJl

More M&A

Aston Martin (LSE: AML), the struggling British automaker, is in talks to raise around £200 million from Canadian billionaire Lawrence Stroll, per Bloomberg. http://axios.link/YqtT

Casino (Paris: CASP) is in talks to sell discount retailer Leader Price to Germany’s Aldi for around €750 million, per Reuters. http://axios.link/b6j0

Hexcel (NYSE: HXL), a Stamford, Conn.-based composites tech company, and Woodward (Nasdaq: WWD), a Ft. Collins, Colo.-based aircraft parts maker, agreed to an all-stock merger worth around $6.4 billion. Both companies are major suppliers to Boeing. http://axios.link/PG9d

Meredith (NYSE: MDP) acquired SwearBy, a New York-based crowdsourced recommendation platform for women’s products. http://axios.link/LD5U

🚑 Sorrento Therapeutics (Nasdaq: SRNE), a San Diego-based oncology drugmaker, saw its market cap rise to nearly $1 billion, after disclosing a takeover offer from an unidentified private equity firm. http://axios.link/38F6

Takeaway.com won its battle for London-based food delivery company Just Eat, beating out with Dutch conglomerate Prosus with a £6.2 billion all-stock offer. http://axios.link/NnXl

Fundraising

🚑 Ex-Kleiner Perkins partner Lynne Chou O'Keefe has raised $87 million for a new fund, Define Ventures, that will focus on early-stage digital health companies. Kia has more.

Hollyport Capital of London raised $1 billion for its seventh private equity secondaries fund. www.hollyportcapital.com

It's Personnel

Arif Lakhani joined GIC as a San Francisco-based vice president, per his LinkedIn page. He previously was with SoftBank Vision Fund.

Jack Macfarlane (ex-Lazard) and Anila Thompson (ex-Jones Lang LaSalle) joined H.I.G. Capital as principals focused on fundraising and IR. www.higcapital.com

Vinay Trivedi joined General Atlantic as a vice president, per his LinkedIn page. He previously was with SoftBank Vision Fund. www.generalatlantic.com

Final Numbers
Source: PitchBook. Data for U.S. deals.

🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and biotech copycats to sign up.