Jul 23, 2020

Axios Pro Rata

By Dan Primack
Dan Primack

🎧 Axios Re:Cap talks to Bill Ackman about raising the largest SPAC in history, what he plans to do with it, and if he still thinks a national shutdown is the best medicine. Listen via Apple or via Axios.

  • Big thanks to everyone who listens to these daily pods, which launched two years ago today under the Axios Pro Rata brand. Please let me know what you like and what you think we could do better.
Top of the Morning

Illustration: Sarah Grillo/Axios

The University of Texas' endowment recently made its first-ever fund commitment to Sequoia Capital, which is among the top-performing venture capital firms of all time.

Why it matters: It is the final coda to venture capital's fight to prevent disclosure of its funds' performance, which raged in courtrooms and newspapers during the early aughts.

The backstory: VC fund returns once were held in strict confidence between general partners and limited partners. But then, beginning in 2002, a series of media FOIA requests and at least one fat finger incident by someone at a California public pension began to erode the opacity.

  • Sequoia was the loudest firm in wanting to maintain confidentiality. It demanded that the University of Michigan's endowment leave its active LP roster, and vowed to never let it invest again, although Michigan later passed a shield law that largely kept such data under wraps. Sequoia's fund performance — plus that of Kleiner Perkins — also was the basis of a lawsuit brought by the San Jose Mercury News against the University of California Regents.
  • The University of Texas Investment Management Co. (UTIMCO) was the loudest limited partner in supporting disclosure of fund-level returns, in light of media insinuations that it had given sweetheart deals to some individuals affiliated with the school. Its disclosure efforts were boosted by then Texas AG John Cornyn (now a U.S. senator), and the accusations disintegrated in the sunlight.

At issue was venture capital's claim that fund performance was a trade secret, and that funds would be put at a competitive disadvantage if performance was disclosed.

  • There also were slippery slope concerns about how fund-level disclosures could evolve into portfolio-level disclosures.

Fast forward: Sequoia's fears were unfounded, as it has since tacitly acknowledged. Around a decade ago, it quietly re-added the University of Michigan to its LP roster, and subsequently brought the University of California back as well. No public pension has ever disclosed underlying portfolio company information.

  • But UTIMCO is the most notable, because it remains the gold standard of public LP transparency. Whereas UC Regents and many other public pensions report with an extended lag, UTIMCO is much more up-to-date, and enables disclosure requests via a dedicated web form.

The bottom line: Disclosure within alternative investments rarely leads to disaster, no matter how hard the industry fights to maintain its secrets.

The BFD

Illustration: Eniola Odetunde/Axios

Marathon Petroleum (NYSE: MPC) this week is expected to get first-round bids of between $15 billion and $18 billion for its Speedway gas station chain.

  • Why it's the BFD: The price tag is large, but still reflects a pretty steep pandemic discount. Marathon had been in exclusive negotiations to sell Speedway for between $20 billion and $22 billion to 7-Eleven owner Seven & i Holdings, before talks fizzled in early March.
  • First-round bidders reportedly will include Seven & i Holdings (Tokyo: 3382), Circle K owner Alimentation Couche-Tard (TSX: ATD), and private equity firm TDR Capital.
  • The bottom line: "If Marathon does not secure a sale of Speedway, it will seek to spin it off to its shareholders. Under pressure from hedge fund Elliott Management, the Findlay, Ohio-based company has said the spin-off would happen by the first quarter of 2021. Speedway comprises more than 3,900 convenience stores." — David French & Greg Roumeliotis, Reuters

Venture Capital Deals

Missfresh, a Chinese grocery delivery company, raised $495 million. State-backed CICC Capital led, and was joined by ICBC International Securities, Tencent, Goldman Sachs, Abu Dhabi Capital Group, Tiger Global and a government fund of Suzhou City. http://axios.link/5ocq

Talkdesk, a San Francisco-based “contact center as-a-service” company, raised $143 million in new funding at a valuation north of $3 billion, per Bloomberg. Franklin Templeton, Skip Capital, Willoughby Capital, Top Tier Capital Partners, and Lead Edge Capital were joined by return backers Viking Global Investors and Threshold Ventures. http://axios.link/MLKv

🚑 Olema Oncology, a San Francisco-based biotech focused on women’s cancers, raised $54 million in Series B funding. BVF Partners, Logos Capital and Janus Henderson co-led, and were joined by Cormorant Asset Management, RA Capital Management, Wellington Management, Surveyor Capital, Venrock, and Foresite Capital. http://axios.link/mN3G

Quantexa, a British provider of entity resolution and network analytics platform, raised $64.7 million in Series C funding. Evolution Equity Partners led, and was joined by ABN AMRO, Dawn Capital, AlbionVC, HSBC and Accenture. http://axios.link/QNsj

CyCognito, a Palo Alto-based network security analysis platform, raised $30 million in Series B funding. Accel led, and was joined by return backers Lightspeed Venture Partners, Sorenson Ventures and UpWest. www.cycognito.com

🚑 Vesigen Therapeutics, a Cambridge, Mass.-based intracellular drug delivery startup, raised $28.5 million in Series A funding. Bayer and Morningside Ventures co-led, and were joined by Linden Lake Ventures and Alexandria Venture Investments. http://axios.link/89RL

CreatorIQ, a Los Angeles-based provider of influencer marketing software, raised $24 million in Series C funding. Kayne Anderson led, and was joined by TVC Capital and Unilever Ventures. http://axios.link/T2SA

Cowboy, a Belgian e-bike maker, raised €23 million in Series B funding from Index Ventures, Exor Seeds, HCVC, Isomer Capital, and Future Positive Capital. http://axios.link/RQa6

🚑 Tasso, a Seattle-based self-sampling blood collection startup, raised $17 million in Series A funding. Hambrecht Ducera Growth Ventures led, and was joined by Foresite Capital, Merck, Vertical Venture Partners, Techstars, and Cedars-Sinai. http://axios.link/ptCA

Sea Machines Robotics, an autonomous ship navigation startup, raised $15 million in Series B funding. Accomplice led, and was joined by Toyota AI Ventures, Brunswick, Geekdom Fund, NextGen Venture Partners, Eniac VC, and LaunchCapital. http://axios.link/YV0p

Selina Finance, a French online lender to SMBs, raised £12 million in equity funding from Picus Capital and Global Founders Capital. It also secured £30 million in debt. http://axios.link/iSZu

Mobalytics, a Santa Monica, Calif.-based automated gaming coach, raised $11 million in Series A funding. Almaz Capital and Cabra VC co-led, and were joined by HP Tech Ventures, General Catalyst, GGV Capital, RRE Ventures, Axiomatic, and T1 Esports. http://axios.link/KLJq

🐔 Cooks Venture, a New York-based heirloom poultry startup, raised $10 million in Series A funding co-led by SJF Ventures and Cultivian Sandbox. http://axios.link/48pb

Odilo, a Spanish educational digital content management platform, raised $10 million. Swanlaab Venture Factory led, and was joined by Endeavor Catalyst, CDTI, Kibo VC, JME VC and Active VP. http://axios.link/5Ca3

🚑 RealView Imaging, an Israeli medical holography startup, raised $10 million in Series C funding from such backers as OurCrowd. http://axios.link/EegQ

🚑 StuffThatWorks, an Israeli treatment information sharing community for those with chronic conditions, raised $9 million in seed funding from Bessemer Venture Partners, 83North, and Ofek Ventures. http://axios.link/V4lE

🚑 The Helper Bees, an Austin, Texas-based home care startup, raised $6 million in Series A funding. Silverton Partners led, and was joined by Austin Impact Capital and Techstars. https://news.crunchbase.com/news/the-helper-bees-raises-6m-series-a/

Safehub, a San Francisco-based earthquake damage analytics startup, raised $5 million in seed funding co-led by Fusion Fund and Ubiquity Ventures. www.safehub.io

Partipost, a Singapore-based social marketing startup, raised $3.5 million in new funding. Singapore Press Holdings led, and was joined by Quest Ventures. http://axios.link/Cobt

GridRaster, a Mountain View-based provider of infrastructure for enterprise AR/VR/MR experiences on mobile devices, raised $2.5 million. Blackhorn Ventures led, and was joined by MaC VC and Exfinity Venture Partners. http://axios.link/hhav

Private Equity Deals

Ceros, a New York-based SaaS design platform, raised $100 million from Sumeru Equity Partners. www.ceros.com

Harrington Industrial Plastics, a Chino, Calif.-based portfolio company of Nautic Partners, acquired Aetna Plastics, a Valley View, Ohio.-based provider of industrial plastics and plastic piping systems. www.aetnaplastics.com

Highline do Brasil, a portfolio company of Digital Colony, submitted the highest offer for the mobile assets of Brazilian telecom Oi SA (which has set a $2.93 billion bid floor). http://axios.link/d4MP

KnowFully, a Radnor, Penn.-based portfolio company of NexPhase Capital, acquired CME Outfitters, a Bethesda, Md.-based provider of continuing medical education. www.knowfully.com

🚑 Nexelis, a Canadian portfolio company of Ampersand Capital Partners, acquired AIT Bioscience, an Indianapolis-based bioanalytical lab. www.nexelis.com

🚑 Vernacare, a UK-based portfolio company of H.I.G. Capital, acquired the infection prevention business of Frontier Medical Group, a portfolio company of Kester Capital. www.vernacare.com

Silver Lake agreed to buy a majority stake in Groupe Meilleurtaux, a French financial brokerage, from Goldman Sachs’ West Street Capital Partners for a reported €700 million. http://axios.link/SCnp

Sovos, a Wilmington, Mass.-based portfolio company of HgCapital, acquired the unclaimed property consulting services and reporting of New York-based Keane. www.sovos.com

Public Offerings

🚑 AlloVir, a Cambridge, Mass.-based developer of T cell therapies for viral diseases, set IPO terms to 14.8 million shares at $16-$18. It would have a fully-diluted market value of $1 billion, were it to price in the middle, and list on the Nasdaq (ALVR). AlloVir raised $154 million in VC funding from firms like Fidelity, Gilead Sciences, Invus Group, Samsara BioCapital, F2 Ventures, EcoR1 Capital, Redmile Group, and SVB Leerink. http://axios.link/25vs

🚑 Inozyme, a Boston-based developer of treatments for mineralization disorders, upped its IPO terms from 5 million shares at $14-$16 to 6.5 million shares at $16. The pre-revenue company would have a market cap of $378 million, plans to list on the Nasdaq (INZY), and raised $115 million from Longitude Venture Partners (15.6% pre-IPO stake), NEA (15.6%), Novo Holdings (15.6%), Sofinnova Ventures (11.3%), Pivotal bioVentures (10%), RA Capital Management (10%), and Cowen Healthcare (6%). http://axios.link/bkWV

🚑 Nurix Therapeutics, a San Francisco-based oncology biotech, upped its IPO terms from 8.8 million shares at $16-$18 to 11 million shares at $17-$18. It plans to list on the Nasdaq (NRIX) with J.P. Morgan as lead underwriter, and raised $224 million in VC funding from such firms as The Column Group (26% pre-IPO stake), Third Rock Ventures (20.9%), and Foresite Capital (7.5%). http://axios.link/2b2k

Liquidity Events

Thomas H. Lee Partners hired Jefferies to find a buyer for Alfresco Software, a provider of enterprise content management and process automation software, per PE Hub. http://axios.link/NZ89

🚑 Vistria Group hired Houlihan Lokey to find a buyer for St. Croix Hospice, a provider of end-of-life care facilities in the Midwest, per the WSJ. http://axios.link/oCJu

More M&A

Amazon (Nasdaq: AMZN) is in talks to acquire a 9.9% stake in Reliance Retail, a unit of conglomerate Reliance Industries, per the Economic Times. http://axios.link/XALZ

Ascena Retail Group (Nasdaq: ASNA), the parent company of Ann Taylor and Lane Bryant, filed for Chapter 11 bankruptcy protection. http://axios.link/kqV8

ConocoPhillips (NYSE: COP) agreed to buy 140,000 acres in British Columbia’s Montney shale oil basin from Kelt Exploration (TSX: KEL) for US$375 million. http://axios.link/uhBJ

Curaleaf (CSE: CURA) completed its purchase of Grassroots, a Deerfield, Ill.-based cannabis company. http://axios.link/J07g

Flipkart, an Indian e-commerce giant controlled by Walmart (NYSE: WMT) acquired its parent company’s Indian wholesale business. http://axios.link/cLbK

Fundraising

🚑 Longwood Fund, an early stage life sciences VC firm, raised $170 million for its fifth fund. www.longwoodfund.com

Primetime Partners, a New York-based VC firm focused on startups serving older adults, secured $32 million so far for its debut fund, per an SEC filing. It's led by Abby Levy (ex-Thrive Global, ex-SoulCycle).

Range Ventures, a Colorado-based early stage VC firm led by Adam Burrows (ex-Guild Education, ex-HomeAdvisor) and Chris Erickson (ex-Apartment List), secured $18 million so far for its debut fund, per an SEC filing.

Shamrock Capital raised $400 million for its second content-focused fund. http://axios.link/zbuL

Venn Growth Partners launched as a growth equity firm co-led by Jon McCarthy (ex-OMERS PE) and Chris Reynolds (ex-strategy VP for Hudson’s Bay), per PE Hub.

Warburg Pincus will not make deals directly related to fossil fuels in its next global fund, per the WSJ. http://axios.link/sr4e

It's Personnel

Win Bear joined Canadian VC firm Kensington Capital Partners as a managing director. He previously was with Silicon Valley Bank. www.kcpl.ca

Sebastien Kiekert Le Moult stepped down as a partner with OpenGate Capital, per Buyouts. No word yet on his future plans. http://axios.link/Z1YS

Laurence Vigeant-Langlois joined AE Industrial Partners as a managing director. She previously was an exec with GE Aviation. www.aeroequity.com

Final Numbers
Reproduced from CivicScience; Note: ±3.3% margin of error; Chart: Axios Visuals
Dan Primack

✔️ Thanks for reading Axios Pro Rata! Please ask your friends, colleagues, and FOIA fans to sign up.