Sep 26, 2017

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning

Remember Quirky, the crowd-sourced invention platform that burned through around $200 million in funding from groups like Andreessen Horowitz and GE before going bust in late 2015? Well, it's back:

  • New biz model abandons in-house manufacturing. Instead, it focuses on licensing out invention IP, working with partners like HSN, Atomi and Vanderbilt Home.
  • There are no plans to raise outside funding.
  • Quirky's website received over 50,000 invention submissions during its reorganization, according to new company president Gina Waldhorn: "You'd have thought most of the traffic would disappear since we weren't picking new products, but the community just wouldn't quit."
  • Quirky founder and ex-CEO Ben Kaufman, who now leads e-commerce for Buzzfeed, tells Axios that he "hopes it works out" for the new team. "I'd glad to see someone try, but it'll be hard."

• What took so long? Equifax announced this morning that chairman and CEO Richard Smith is "retiring." A search is now underway for his replacement. The company also announced that board member Mark Feidler, a co-founding partner of private equity firm MSouth, will serve as non-executive chairman.

• Self-drivers: Kia today posted a Q&A with Reilly Brennan, the former head of Stanford's auto research program who last year co-founded transportation-focused Trucks Venture Capital. He tells her that there are too many startups selling dongles for car data, and too few startups involved in autonomous decision-making and driver monitoring:

"There's a lot of people focused on external sensors that are shooting laser beams out, and trying to make a map of what's outside the car, and I would suggest that there's a huge opportunity for taking that same type of thinking but doing it inside the cabin."

• Up & down morning in Boston-area ag-tech:

  • UP is Indigo Agriculture, which has raised $156 million in Series D funding at a $1.4 billion post-money valuation. Baillie Gifford and Activant Capital were joined by return backers Flagship Pioneering and the Alaska Permanent Fund. The startup — led by a former pharma exec and housed in an old milk bottling plant — develops bugs that can improve crop yield. For more on Indigo, check out this piece I wrote last year for Fortune.
  • DOWN is Freight Farms, a VC-backed startup that makes hydroponic farms that live in old shipping containers. The company recently had a round of layoffs, and separately lost a couple of key executives. CEO Brad McNamara confirmed the movers, saying that "sales have not been growing as aggressively as we'd like." He adds that y-o-y numbers are mostly flat, and that the company is refocusing a bit on small farmers rather than large corporate accounts (which have proven difficult to close).

• Chip chat: The Toshiba memory chip saga has taken a couple of new turns in the past 24 hours. First, Toshiba joint venture partner Western Digital said that it will seek an injunction to block the unit's sale to a Bain Capital-led group for $18 billion. But that's assuming that there actually is a viable Bain bid. Yesterday we noted that Apple hadn't yet signed the final papers, and Bloomberg now reports that KKR is wooing the iPhone maker to join its rival bid.

The BFD

Greenhill & Co. (NYSE: GHL), a New York-based investment bank, has announced plans to a leveraged recap and share repurchase. The multi-stage transaction would include $300 million in financing from Goldman Sachs, which would mostly be used to buy back stock. The investment bank's founder Robert Greenhill and its CEO Scott Bok each will buy $10 million worth of shares, with Bok taking a 90% salary cut. Overall, Greenhill could repurchase up to 30% of its outstanding stock.

  • Why it's the BFD: Because this is Greenhill taking a big step toward re-privatization, 13 years after becoming one of the first M&A boutiques to go public. The firm's shares have plummeted by more than 75% since the beginning of 2014.
  • Bottom line: "Greenhill ranks 49th this year among global deal advisers, down from 16th in 2012, according to research firm Dealogic. Year-to-date revenue is 20% below 2016 and, with few big fees coming soon, executives have signaled the third quarter is likely to be another tough one." — Liz Hoffman, WSJ
Venture Capital Deals

🚑 Tempus, a Chicago-based developer of a library of molecular/clinical data and a related operating system, has raised $70 million in Series C funding co-led by NEA and Revolution Growth. http://axios.link/HBSC

• ProsperWorks, a provider of Google-centric CRM tools, has raised $53 million in Series C funding. Norwest Venture Partners led the round, and was joined by Google Ventures. http://tcrn.ch/2yF61bM

• JingChi, a Chinese autonomous driving startup, has raised $52 million in first-round funding. Qiming Venture Partners led the round, and was joined by Qiming Venture Partners. China Growth Capital and Nvidia GPU Ventures. The company is led by Wang Jing, former head of Baidu's self-driving unit. http://axios.link/8uZK

• Ritual Technologies, a Toronto-based takeout meal ordering app, has raised US$43 million in Series B funding led by Insight Venture Partners. http://on.wsj.com/2wijIvY

🚑 Fusion Pharmaceuticals, a Canadian developer of alpha-particle radiotherapeutics for treating cancer, has raised US$21 million in new Series A funding (bringing the round total to $46m). Adams Street Partners, Seroba Life Sciences and Varian Medical Systems were joined by return backers FACIT, Genesys Capital, HealthCap, Johnson & Johnson Innovation and TPG Biotech. www.fusionpharma.com

• Dreamscape Immersive, a Santa Monica, Calif.-based developer of full-body motion capture VR technology, has raised $20 million in Series B funding led by movie theater chain AMC. http://tcrn.ch/2xCUNGA

🚑 Eligo Bioscience, a French developer of precision drugs to prevent and treat microbiome-associated diseases, has raised $20 million in Series A funding. Khosla Ventures led the round, and was joined by return backer Seventure Partners. http://tcrn.ch/2hsX7KC

🚑 Deep Genomics, a Toronto-based deep learning platform for the life sciences sector, has raised C$16 million in new VC funding led by Khosla Ventures. http://axios.link/AMS0

🚑 IsoPlexis, a Branford, Conn.-based developer of single-cell analytics technology for the development of cancer treatments, has raised $13.5 million in Series B funding. Spring Mountain Capital led the round, and was joined by Connecticut Innovations, North Sound Ventures and Ironwood Capital. www.isoplexis.com

• AutocloudPro, a Shanghai-based developer of smart cloud platforms for auto parts sales and distribution, has raised $9 million in Series B funding led by Star VC. http://axios.link/riB5

• Koho, a Vancouver-based personal financial services platform, has raised C$8 million in VC funding from Portag3 Ventures. http://axios.link/IFoT

• Jopwell, a New York-based recruitment platform focused on diversity, has raised $7.5 million in Series A funding. Cue Ball Capital led the round, and was joined by Magic Johnson Enterprises, Andreessen Horowitz, Kapor Capital and Joe Montana. http://tcrn.ch/2wSEB08

• Fairphone, a Dutch designer of modular smartphones, has raised of €6.5 million in funding from Pymwymic Impact Investing Cooperative and DOEN Participaties. http://tcrn.ch/2fOGd5e

• Transit, an urban public transit app, has raised $5 million in new VC funding led by Accel. http://tcrn.ch/2hv6GbH

🚑 Lively, a health savings account startup, has raised $4.2 million in VC funding from Transmedia Capital, Streamlined Ventures, Y Combinator, SV Angel and Kevin Durant. http://tcrn.ch/2hrW2mf

• Picfair, a UK-based photo marketplace, has raised £1.5 million in VC funding led by Claverley Group. http://tcrn.ch/2htbJ94

🚑 ADC Biotechnology, a UK-based cancer pharma manufacturing company, has raised an undisclosed amount of new funding from Maven Capital Partners, Seneca and Finance Wales. www.adcbio.com

Private Equity Deals

• Acorn Growth has acquired CIS Secure Computing, a Dulles, Va.-based provider of computing and communication solutions for government and commercial customers. No financial terms were disclosed. www.cissecure.com

• Availity, a Jacksonville, Fla.-based real-time health information network, has raised an undisclosed amount of growth equity funding led by Francisco Partners. www.availity.com

⛽ Black Bay Energy Capital has sponsored a recapitalization of SCS Technologies, a provider of liquid production measurement equipment, controls and automation solutions in the Permian Basin. No financial terms were disclosed. www.scstechnologiesllc.com

• CVC Capital Partners has agreed to acquire VelocityEHS, a Chicago-based provider of business environmental, health and safety regulation compliance solutions, from Actua (Nasdaq: ACTA) for an undisclosed amount. www.msdsonline.com

• Exponent Private Equity has acquired a majority stake in Bullitt Group, a British designer of private-label mobile phones. No financial terms were disclosed. http://on.ft.com/2wiqjGB

• MSI Capital Partners and Aavin Equity Partners have recapitalized Green Diamond Sand Products, a Riddle, Ore.-based industrial minerals manufacturer. No financial terms were disclosed. www.greendiamondsand.com

• Stahlgruber, a German auto parts retailer owned by its founding family, is seeking a buyer in a deal that could be worth around $1.4 billion, according to Reuters. Second-round bidders include Advent International, Apax Partners, Bain Capital, EQT and U.S. peer LKQ (Nasdaq: LKQ). http://reut.rs/2xtnlTy

• Temasek has acquired a minority equity stake in talent agency CAA, which will continue to be controlled by TPG Capital, according to the NY Times.

Public Offerings

• Baidu (Nasdaq: BIDU) is considering a 2018 IPO for its iQiyi video streaming service (i.e., Chinese Netflix) that could value the business at between $8 billion and $10 billion, according to Bloomberg. https://bloom.bg/2wiyTVM

• Merchants Bancorp, a Carmel, Ind.-based bank focused on FHA loans, has filed for a $115 million IPO. It plans to trade on the Nasdaq under ticker symbol MBIN, with Sandler O'Neill listed as left lead underwriter. http://axios.link/dbtz

🚑 Rhythm Pharmaceuticals, a Boston drugmaker focused on treating genetic obesity, has set its IPO terms to 6.67 million shares being offered at between $14 and $16 per share. It would have a fully-diluted market value of $404 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol RYTM, with Morgan Stanley listed as left lead underwriter. Shareholders include NEA (22.75% pre-IPO stake), Third Rock Ventures (20.76%), MPM Capital (13.54%), OrbiMed (13.28%), Pfizer (7.24%) and Baker Brothers (6.07%). http://axios.link/UlKg

Liquidity Events

• The Blackstone Group has agreed to sell Alliance Automotive Group, a France-based auto parts distributor, to Genuine Parts Co. (NYSE: GPC) for $2 billion. http://on.ft.com/2xCCl0L

• CVC Capital Partners and Temasek have held talks about selling Alvogen, a Pine Brook, N.J.-based generic drugmaker that could be worth around $4 billion, according to Bloomberg. One conversation has been to sell the U.S. business to Shanghai Pharmaceutical, while retaining Asia and European operations. https://bloom.bg/2ypxMEx

• IHS Markit (Nasdaq: INFO) has acquired AutomotiveMastermind, a New York-based predictive analytics company, from shareholders like JMI Equity. No financial terms were disclosed. www.automotivemastermind.com

• J.C. Flowers is seeking a buyer for its remaining 20% stake in Japanese lender Shinsei Bank (Tokyo: 8303), according to the FT. The shares have a current market calue of around $895 million. http://on.ft.com/2xxoQ0L

🚑 RoundTable Healthcare Partners has agreed to sell Argon Medical Devices, a Plano, Texas-based maker of, to China's Shandong Weigao Group Medical Polymer for $850 million. https://bloom.bg/2wQ3FVn

More M&A

• Alibaba Group (NYSE: BABA) has increased its stake in Chinese logistics network Cainiao from 47% to 51%, and said that it will invest $15 billion into the business over five years. http://reut.rs/2xHwVBY

⛽ Rowan Cos. (NYSE: RDC) is in talks to acquire the drilling business of A.P. Moller-Maersk, which could be valued at around $4 billion, according to Bloomberg. https://bloom.bg/2wfXOcI

Fundraising

• Institutional Venture Partners has closed its sixteenth fund with $1.5 billion in capital commitments, as first reported by Axios. http://axios.link/xymh

• Trivest Partners, a private equity firm focused on founder and family-owned companies, has closed its twelfth fund with $600 million in capital commitments. www.trivest.com

It's Personnel

• Viviana Faga has joined VC firm Emergence Capital Partners as an operating partner. She previously led marketing for enterprise social at Microsoft. www.emcap.com

• Carlos Garcia, a managing partner with Brazil-based Victoria Capital Partners, has been elected chairman of the The Latin American Private Equity & Venture Capital Association (LAVCA). http://reut.rs/2ypwPvS

• Craig Lewis has joined fund placement firm FirstPoint Equity as a managing director. He previously was director of private markets and real assets at the Alfred I. duPont Testamentary Trust. www.firstpointequity.com

Final Numbers
  • More from the comparative analysis by Kaal and Dell'Erba: We interpret parts of the data as suggesting that larger private investment fund advisers in Europe may be more willing to make the required investments into blockchain infrastructure whereas in the US the legacy systems utilized by larger private investment fund advisers create barriers to entry for larger advisers to invest in, and utilize blockchain technology."
Dan Primack