Top of the Morning
SoftBank Group reports earnings tomorrow, which is a bit like hosting a dinner party when your kids have the flu and your kitchen is being remodeled.
- Pay most attention to fundraising progress, or lack thereof, for SoftBank's next Vision Fund. Pay less attention to portfolio markups/markdowns, outside of how it may affect potential LP sentiment.
SoftBank announced in July that it had $108 billion in commitments for Vision Fund 2 but, as we reported at the time, those weren't really commitments. They were non-binding memorandums of understanding.
Now there's an FT report that SoftBank will insist on stronger governance controls at portfolio companies, although that feels like a pretty empty threat.
- Would SoftBank really deny follow-on funds to an existing investment in need, thus threatening existing value?
- And given its demonstrated willingness to turn on a founding CEO, how would it sell this to prospective investees?
- Maybe it's just a Saudi sales pitch...
Vision Fund is larger than all Silicon Valley venture capital funds put together, so the existence/disappearance of Vision Fund 2 will have an earthquake-like impact on the future funding environment.
• Speaking of earnings: Uber beat Wall Street estimates yesterday with its Q3 financials, on both the top and bottom line, but shares still tumbled due to more than $1 billion in losses.
- The ride-hail giant also said it expects to be adjusted EBITDA positive in 2021 — mirroring similar 2021 optimism from Lyft — although traders focused on the squishy "adjusted" part.
- Lots of Uber lock-ups expire tomorrow, so we'll soon get a much better sense of insider sentiment.
- This morning we got the first post-IPO report from Peloton, which also beat the Street with $228 million in quarterly revenue ($112m in year-earlier period) and a $50 million net loss ($55m year-earlier). Initial market reaction was positive, but then returned to red.
We also need a better shorthand than "earnings," when talking about companies without, you know, earnings. Best two suggestions I've seen are "quarterly burnings" (thx Gabe Rivera) and "quarterly yearnings" (thx Alex Danco).
🐔 Does private equity deserve credit for the Popeye's chicken sandwich? And, if so, does that forgive all of the industry's transgressions? Private equity's top lobbyist makes the (first) case over at Fox Biz.
🎧 Pro Rata Podcast digs into Elizabeth Warren's Medicare-for-All plan, which would end the healthcare industry as we've known it. Listen here.
Xerox agreed to sell its 25% stake in a joint venture with Fujifilm to its Japanese partner for $2.3 billion.
- Why it's the BFD: This ends a 57-year partnership between the two companies, and comes after the pair's proposed merger was scuttled by activist investors Carl Icahn and Darwin Deason.
- More: As part of the deal, Fujifilm will drop its lawsuit against Xerox over the failed merger.
- Bottom line: "Some analysts and investors expected that pressure from the lawsuit could eventually bring Xerox back to the negotiating table. But the two sides publicly disagreed about how much Xerox was worth, with Icahn and Deason arguing a deal would need to value Xerox at $40 a share or more in cash. Xerox shares closed Monday at $34.67." — Cara Lombardo, WSJ
Venture Capital Deals
• Riskified, an Israeli provider of anti-fraud software for online purchases, raised $165 million in Series E funding at a valuation north of $1 billion. General Atlantic led, and was joined by return backers Qumra Capital, Pitango Venture Capital, and Entrée Capital. www.riskified.com
• Volterra, a Santa Clara, Calif.-based provider of distributed cloud services, raised over $50 million from Khosla Ventures, Mayfield, and M12. http://axios.link/cdbQ
• Papaya Global, a New York-based payroll and payment management platform, raised $45 million in Series B funding. Insight Partners led, and was joined by Bessemer Venture Partners and return backers New Era Capital Partners and Dynamic Loop Capital. www.papayaglobal.com
🚑 Medopad, a UK-based developer of trackable, digital biomarkers, raised $25 million in Series B funding. Bayer led, and was joined by NWS Holdings and Healthbox. http://axios.link/7y4d
• RenoRun, a Montreal-based construction materials delivery app, raised C$22.5 million in Series A funding. Inovia Capital and Obvious Ventures co-led, and were joined by ScaleUp Ventures, Real Ventures, Maple VC, and SVB. http://axios.link/ha6C
🚑 Clarify Medical, a San Diego-based developer of a phototherapy device for treating psoriasis, raised $18 million in Series A funding from H.I.G. BioHealth Partners, 7wire Ventures, SV Health Investors, and Bluestem Capital. http://axios.link/O6ew
• Senreve, a San Francisco-based maker of luxury handbags, raised $16.75 million in Series A funding led by Norwest Venture Partners. http://axios.link/9g0w
🚑 Healthify, a New York-based healthcare referrals platform, raised $16 million in Series B funding. SV Health Investors led, and was joined by return backer BlueCross BlueShield Venture Partners. www.healthify.us
🚑 PathAI, a Boston-based computational pathology startup, raised $15 million in new Series B funding from Merck and Bristol-Myers Squibb. The round total is now $75 million, including prior investments form General Atlantic and General Catalyst. www.pathai.com
• Inkbit, a Medford, Mass.-based maker of 3D printers, raised $12 million in Series A-1 funding. Stratasys and Royal DSM co-led, and were joined by Ocado, 3M, and Sant-Goban. http://axios.link/ApBo
• Boulevard, a West Hollywood-based provider of appointment-booking software for spas and salons, raised $11 million in Series a funding. Index Ventures led, and was joined by Bonfire Ventures, Ludlow Ventures, BoxGroup, and Luma Launch. http://axios.link/ehqb
• Mylo, a Montreal-based personal savings and investing app, raised C$10 million in Series A funding. National Bank led, and was joined by Desjardins Capital, Ferst Capital Partners, and Tactito. http://axios.link/VrR3
• CTO.ai, a Vancouver-based provider of, raised US$7.5 million in seed funding co-led by Tiger Global and Slack Fund. http://axios.link/NUAn
• Geenee, a Los Angeles-based brand engagement platform, raised $7 million in seed funding led by IDI Partners. http://axios.link/920d
• Gradeup, an Indian exam prep platform, raised $7 million in Series A funding from seed backer Times Internet. http://axios.link/7cjN
• Robocorp, a San Francisco-based robotic process automation startup, raised $5.6 million led by Benchmark. http://axios.link/n4Rk
• NeighborSchools, a Boston-based child-care platform, raised $3.5 million in seed funding. Accomplice led, and was joined by Tuhaye Venture Partners and World within. www.neighborschools.com
Private Equity Deals
• Angeles Equity Partners acquired Minnesota-based steel cab maker Crenlo from KPS Capital Partners. It will merge Crenlo with WEIC, which it just acquired from Worthington Industries (NYSE: WOR), in a cashless transaction whereby Worthington retains a minority stake. www.crenlo.com
• Apax Partners acquired Lexitas, a Houston-based litigation services firm, from Trinity Hunt Partners. www.lexitaslegal.com
• Bain Capital, CVC Capital Partners, and KKR are among the bidders for game developer Leyou (HK: 1089), which has a market cap just north of US$1 billion, per Bloomberg. http://axios.link/I2iN
🚑 BV Investment Partners acquired EDCO, a provider of automated unstructured data indexing software for healthcare providers. www.solidaritybyedco.com
⛽ CPPIB agreed to buy San Francisco-based renewable energy group Pattern Energy (Nasdaq: PEGI) for $2.63 billion, or $26.75 per share (4% discount to Friday’s closing price). http://axios.link/tJQz
• First Reserve agreed to buy Lamons, a Houston-based gaskets manufacturer, from TriMas (Nasdaq: TRS) for $135 million. http://axios.link/vjzi
🚑 H.I.G. Capital acquired BioVectra, a Canadian contract manufacturer for pharma ingredients and intermediates. www.biovectra.com
• Novacap acquired Foliot Furniture, a Canadian maker of furnishings for the hospitality and educational housing sectors. www.foliot.com
• OpenGate Capital acquired CoreMedia, a German provider of content management software, from Deutsche Telekom Capital Partners. www.coremedia.com
• Lion Air, an Indonesian airline, is prepping an IPO for early 2020 that could raise upwards of $1 billion, per Reuters. http://axios.link/8cby
• SalesLoft, an Atlanta-based sales software company valued at around $500 million by VC firms like Insight Partners, bought Costello, an Indianapolis-based sales assistant software company that last year raised $2 million in seed funding from M25, Elevate Ventures, and Dundee VC. http://axios.link/4FOM
• Turbonomic, a Boston-based app resource management platform, acquired SevOne, a Boston-based performance management data platform. Turbonomic has raised $125 million in VC funding, most recently valued at $850 million, while SevOne had raised over $200 million, including at a valuation approaching $900 million, from firms like Westfield Capital Management, Bain Capital Ventures, Brookside Capital, HarbourVest, and Osage Partners. http://axios.link/UiUI
⛽ Chevron (NYSE: CVX) agreed to sell its stake in an Azerbaijani oilfield for $1.57 billion to Hungary’s MOL. http://axios.link/iCXR
• First Horizons National (NYSE: FHN) agreed to merge with rival Southeastern U.S. lender Iberiabank (Nasdaq: IBKC). http://axios.link/e7Dq
🚑 Notre Dame Intermedica Participações agreed to buy Brazilian medical health insurer Clinipam for around $653 million. http://axios.link/17aq
• Peloton Interactive (Nasdaq: PTON) acquired Silicon Valley design firm Gossamer Engineering, per Bloomberg. http://axios.link/qV5U
⛽ Royal Dutch Shell agreed to acquire French floating offshore wind developer Eolfi. http://axios.link/dv6Q
• Sachem Head Capital acquired a stake in 2U (Nasdaq: TWOU), a Maryland-based education software company with a market cap of $1.34 billion, and will push the company to consider a sale, per Bloomberg. http://axios.link/NWVs
🚑 Takeda (Tokyo: 4502) agreed to sell its Russia and CIS over-the-counter and prescription drug business to Germany’s Stada (DE: STAG) for $660 million. http://axios.link/zw6R
• Aspirant Group, a Japanese mid-market buyout firm, raised ¥50 billion (US$460m) for its third fund. http://axios.link/SyP5
• Brookfield Asset Management raised $9 billion for its fifth flagship private equity fund. http://axios.link/SbET
• Elliott Management raised $2 billion for a buyout fund, per the WSJ. http://axios.link/K1ys
• KKR raised €5.8 billion for its fifth European buyout fund. www.kkr.com
• Klaros Group launched as a San Francisco-based advisory services and investment firm focused on companies dealing with U.S. and international financial services regulation. Its principals are Konrad Alt (ex-chief banking officer of Green Dot), Brian Graham (ex-CEO of BancAlliance), and Adam Shapiro (ex-BBVA). www.klaros.com
• L Catterton Asia raised $1.45 billion for its third fund, with the team scrapping a proposed spinout from its U.S.-based parent firm, per PE International. http://axios.link/4PRw
• Herald Chen stepped down as head of TMT investing at KKR, in order to become president and CFO of KKR portfolio company AppLovin. KKR declined to comment on his successor.
• Burak Cendek joined Autotech Ventures as a principal, per his LinkedIn page. He previously was with Revo Capital. www.autotechvc.com
• Sean Daugherty joined Guggenheim Partners as a senior managing director focused on the consumer sector. He previously was with Lazard. www.guggenheimpartners.com
• Michael Kuh joined law firm Hogan Lovells as a corporate partner, with a focus on sports and entertainment transactions. He previously was with Latham Watkins. www.hoganlovells.com
• Ryan Levitt joined Intermediate Capital Group as a managing director, per his LinkedIn page. He previously was a managing director with Drum Capital and, before that, a partner with Pomona Capital. www.icgam.com
• Scott Mozarsky, a former president of Bloomberg Law, joined JEGI/Clarity as a managing director focused on legal market M&A. www.jegiclarity.com