Mar 14, 2019

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Illustration: Rebecca Zisser/Axios

SmileDirectClub, a provider of at-home teeth straightening systems that lets users bypass the orthodontist's office, has picked bankers for an upcoming IPO, Axios has learned.

  • The Nashville-based company expects to file its S-1 document by the end of June, with J.P. Morgan listed as lead manager.
  • It was launched six years ago and expects to do at least $1 billion in 2019 revenue.
  • SDC has raised nearly $400 million in private funding, including an infusion last fall at a $3.2 billion post-money valuation. Backers include Clayton, Dubilier & Rice, Spark Capital and Kleiner Perkins. Both Spark and KP did the deals out of their growth funds.
  • A company spokeswoman declined comment for this story.

SDC's top comp is Align Technologies, the maker of Invisalign products, which generated nearly $2 billion in revenue last year and has a market cap just north of $20 billion. One big difference is that SDC doesn't use orthodontist offices for distribution, as does Align, which has led some orthodontist organizations to file safety complaints with state dental boards.

  • But Align also was a large investor in SDC, with around a 19% stake.
  • SDC last year sued Align for violating a non-compete agreement, and an arbitrator ruled in SDC's favor earlier this month.
  • The ruling requires Align to sell back its equity in SDC to the company (at a below-market rate), close all 12 of its Invisalign stores and extend the non-compete agreement through August 2022.
Also...
Source: Giphy

William "Rick" Singer yesterday told a federal court that he helped the parents of 761 high school students cheat the college admissions process, through a complex scheme that included falsifying answers on standardized tests, faking athletic profiles and outright bribery.

Singer didn't detail how he recruited the parents, but I spoke with a wealthy Silicon Valley investor who says he hired Singer several years ago to help his son with standard college coaching services, but "then it got weird." Read his full story here.

  • Don't expect Bill McGlashan to return to TPG Capital, where he had run the private equity giant's growth equity and social impact investing activities. TPG hasn't yet amended fund documents — including for Rise Fund II, which recently held a first close on over $1 billion — but a firm source says it's just a matter of time. The source adds that there has been extensive communication between TPG and concerned limited partners.
  • In unrelated news, TPG has quietly hired Mike Zappert (ex-Adams Street) as a partner on both the tech growth equity and Rise Fund strategies. Sorry it ended up in this section, Mike.
  • Law firm Willkie Farr & Gallagher yesterday put Gordon Caplan on a leave of absence.

Singer was a name-dropper, and still has a Facebook post up about some of the household names whose kids he helped.

  • Only one of those individuals, former PIMCO CEO Doug Hodge, was charged on Tuesday.
  • But remember that Singer claims to have helped over 750 kids, with means America's wealthy coastal enclaves are drenched in sleepless sweat.

Pro Rata Podcast dives into the college bribery scandal. My guest is Dan Wetzel, a columnist with Yahoo Sports. Listen here.

The BFD

Illustration: Sarah Grillo/Axios

Uber is in talks with firms like SoftBank Vision Fund and Toyota to raise around $1 billion for its self-driving unit, at an implied valuation that could reach $10 billion.

  • Why it's the BFD: Because while most companies try to maintain strict stability ahead of an IPO, Uber is continuing to significantly tweak its corporate structure. It also reflects the company's concerns over money-losing businesses — there's been chatter about similar outside investment talks for Uber Freight — and its desire to establish third-party valuation validation (although it's unclear how that would be accomplished via a deal with an interested party like SoftBank).
  • Sourcing: The talks were first reported by the WSJ, which didn't identify Toyota, and subsequently confirmed by Axios.
  • Bottom line: "There are a lot of partnerships forming in the AV business right now; everyone is realizing that developing self-driving cars is a lot harder than they thought and no company has all the pieces necessary. And there is no point in pouring a ton of money down a black hole with no guarantee of success. It's much better to hedge your bets with a few other players."— Joann Muller, Axios AV
Venture Capital Deals

Newsela, a New York-based literacy and education platform, raised $50 million in Series C funding led by TCV. http://axios.link/Rdar

Kerauno, an Indianapolis-based provider of communications workflow software, raised $25 million from backers like The Joan Hanley (Steinbrenner) Trust and Michael Andretti. http://axios.link/ZRVB

Sketch, a Dutch digital design tool, raised $20 million from Benchmark. http://axios.link/bEUa

Ideas United, an Atlanta-based content creation studio, raised $15 million from Kayne Partners. http://axios.link/Ngjj

Automation Hero, a Berlin-based process automation startup, raised $14.5 million. Atomico led, and was joined by Baidu Ventures and Cherry Ventures. http://axios.link/fpNQ

Adthena, a London-based provider of search marketing intelligence software, raised $14 million in Series A funding from Update Partners. http://axios.link/TspC

Polarr, a Mountain View, Calif.-based photo editing platform, raised $11.5 million in Series A funding. Threshold Ventures led, and was joined by Pear Ventures and Cota Capital. http://axios.link/cWnG

Determined AI, a San Francisco-based AI developer platform, raised $11 million in Series A funding. GV led, and was joined by Amplify Partners, Haystack and SV Angel. http://axios.link/WpzA

Cymulate, an Israeli cybersecurity startup focused on breach and attack simulation, raised $7.5 million in Series A funding. Vertex Ventures and Dell Technologies Capital co-led, and were joined by Susquehanna Growth Equity. http://axios.link/PMzn

Populus, a San Francisco-based mobility data analytics platform, raised $3.1 million in seed funding from Precursor Ventures and Relay Ventures. http://axios.link/BqvW

🚑 Gencove, a New York-based low-pass genome sequencing platform, raised $3 million. Spero Ventures led, and was joined by Alexandria Venture Investments, Burst Capital and return backers Third Kind VC and Version One Ventures. www.gencove.com

🐄 Breedr, a British provider of livestock data analytics for farmers, raised £2.2 million led by LocalGlobe. http://axios.link/TeaK

W Capital Partners, Susquehanna Growth Equity and AB Private Credit purchased around $280 million in equity of Workfront, a Lehi, Utah-based enterprise work management software company, from existing shareholders like Openview Venture Partners, Greenspring Associates and JMI Equity (all of whom retain some of their stakes). www.workfront.com

Private Equity Deals

CVC Capital Partners has offered £500 million for a minority stake in Six Nations, an international rugby union tournament, per the FT. http://axios.link/KxiW

Innovative Chemical Products, an Andover, Mass.-based portfolio company of Audax Private Equity, acquired Benefect, a Canadian provider of botanical antimicrobials. www.benefect.com

Laurel Solutions, a San Francisco-based portfolio company of FFL Partners, acquired Servelec Technologies, a provider of remote monitoring systems and control solutions. www.laurelsolutions.com

Public Offerings

Network International, a Dubai-based payment processor for Africa and the Middle East, said it is planning to go public in London. Shareholders are Emirates NBD, General Atlantic and Warburg Pincus. http://axios.link/iSSS

Shanghai Dongzheng Automotive Finance, a Chinese provider of loans for luxury cars, plans to raise upwards of $428 million in a Hong Kong IPO. http://axios.link/7l27

Volkswagen said it will delay an planned IPO of its trucks unit until market conditions improve. The float was expected to raise upwards of $12 billion. http://axios.link/GQHv

Liquidity Events

Apple (Nasdaq: AAPL) acquired Laserlike, a Mountain View, Calif.-based content discovery and personalization platform, per The Information. Laserlike had raised around $20 million from firms like Sutter Hill Ventures, Floodgate, 500 Startups and Pejman Mar Ventures. http://axios.link/oVkH

More M&A

I.D. Systems (Nasdaq: IDSY) acquired Pointer Telocation (Nasdaq: PNTR), an Israeli provider of telematics and mobile IoT software, for around $140 million in cash and stock. http://axios.link/w2u2

OneSavings (LSE: OSB) agreed to acquire rival British lender Charter Court (LSE: CCFS) in an all-share deal that values the combined company at £1.75 billion, per Reuters. http://axios.link/lP7G

🍷 Pernod Ricard (Paris: RI) is considering a sale of its wine unit, including the Jacob’s Creek and Campo Viejo brands, per Bloomberg. The business has annual sales of around $500 million. http://axios.link/bNBd

Fundraising

Keensight Capital, a pan-European growth buyout firm, raised €1 billion for its fifth fund. www.keensightcapital.com

It's Personnel

Sachin Sood joined venture firm CRV as chief financial officer, per his LinkedIn profile. He previously was with Social Capital. www.crv.com

Summit Partners promoted Peter Francis to managing director, Matt Curtis to portfolio manager, Gus Phelps to principal and Chris Bon and Jono Pagden to senior associates. www.summitpartners.com

Final Numbers: Crossing the streams
Source: PitchBook
Dan Primack