Aug 21, 2018

Axios Pro Rata

By Dan Primack
Dan Primack
Top of the Morning
Source: Giphy

Venture capitalist Mike Rothenberg yesterday settled with the SEC over allegations that he misappropriated investor money. Then he turned around and sued Silicon Valley Bank for allegedly making it look like he misappropriated investor money.

Is your head spinning yet? Here's the easy primer:

  • Rothenberg's venture capital career, which included investments in SpaceX and Robinhood, is likely over. Not only because he agreed to a 5-year investment advisory ban with the SEC, but also because his own lawsuit against SVB says that his career has been "destroyed" after "having been effectively branded as an embezzler."
  • It's worth noting that Rothenberg didn't admit of deny the SEC allegations — namely because the SEC really does seem to find such admissions to be quaint.
  • Rothenberg basically accuses SVB of mistakenly putting $4.25 million of investor money into a management company account rather into a fund account, thus making it look like he had misappropriated the cash (an oopsie that he says that bank later admitted via email).
  • This particular issue is addressed in the SEC complaint against Rothenberg — albeit without blaming SVB — but it is only one part of the SEC complaint.
  • The regulator also accuses Rothenberg of overcharging limited partners by more than $7 million and then using that extra cash "to support personal business ventures he claimed were self-funded and to pay for private parties and events at high-end resorts and Bay Area sporting arenas." None of that is addressed in Rothenberg's suit against SVB.
  • Yes, one of those parties was parodied by the HBO show "Silicon Valley." And that was before anyone knew it was funded via questionable means.

New firm alert: Sean Flynn quietly stepped down as a managing director with Shasta Ventures at the end of 2017, after a nine-year run. Now we hear he's seeking to raise around $50 million for a seed-extension fund under the working name of Domestique Ventures.

Pro tip: If you were part of a financial institution whose sudden collapse helped send the entire economy into the worst spiral since the Great Depression, don't throw a lavish party celebrating that collapse.

Today in Tesla: Morgan Stanley reportedly moved the automaker to a "not rated" status and removed its $291 per share price target. No word yet on if this relates to a possible advisory relationship between Morgan Stanley and a take-private player. Also, the WSJ reports on Tesla supplier fears of being repaid.

🎧 Listen up: The latest Pro Rata podcast focuses on why Americans stopped caring about digital privacy. Plus some Tesla and trade war talk. All in just 10 minutes. Check it out via Apple, other platforms or Axios.com.

The BFD
Source: Giphy

Slack, a San Francisco-based enterprise collaboration and communication platform, raised $427 million in Series H funding at a valuation north of $7.1 billion.

  • Why it's the BFD: Because while Slack is massive (8 million daily active users and over 70k paid teams) and has subsumed some rivals (RIP Hipchat), this new money reflects how competition is intensifying from deep-pocketed incumbents like Facebook and Microsoft.
  • Investors: Dragoneer Investment Group and General Atlantic co-led, and were joined by T. Rowe Price, Wellington Management, Baillie Gifford, Sands Capital and unidentified return backers.
  • Bottom line: It was just over three years ago that Slack founder and CEO Stewart Butterfield talked about the PR importance of being valued at $1 billion. Now it's actually raised more than that, with $1.27 billion in total funding.
Venture Capital Deals

Getaround, a San Francisco-based P2P car rental startup, closed a $300 million round led by SoftBank, with existing backers like Toyota also participating. http://axios.link/FxIx

Maimai.cn, a Chinese business-oriented social network, raised $200 million in Series D funding. DST Global led, and was joined by DCM, IDG Capital and Morningside VC. http://axios.link/vYYt

Consero Global, an Austin, Texas-based provider of finance and accounting software, raised $50 million from BV Investments Partners. www.conseroglobal.com

🚑 Dysis Medical, a Scottish developer of a device for cervical cancer screening, raised £18 million led by Lundbeckfonden Ventures. http://axios.link/BlMh

Gecko Robotics, a Pittsburgh-based maker of industrial safety and inspection robots, raised $7 million from Founders Fund, TC, Westly Group, Justin Kan and Mark Cuban. http://axios.link/vsUt

Previse, a London-based fintech startup that helps companies automatically pay suppliers upon invoice receipt, raised $7 million in Series A funding co-led by Augmentum Fintech and Bessemer Venture Partners. http://axios.link/hetn

Rotageek, a London-based provider of workforce management software, raised £4 million in funding led by Mobeus Equity Partners. http://axios.link/Y4RL

PLNAR, an Austin, Texas-based AR startup that creates real-time 3D models of rooms, raised $3.9 million in Series A funding from InsurTech, FinTech, MenchesterStory Group, Venture Reality Fund and Colopl Next. www.pro.plnar.co

CycloMedia Technology, a Dutch provider of geospatial imaging data and data analysis, raised an undisclosed amount of equity funding from Volpi Capital. www.cyclomedia.com

Private Equity Deals

Actis and Intermediate Capital Group agreed to buy Standard Chartered’s (LSE: STAN) private equity business, per Reuters. http://axios.link/kVvF

Francisco Partners completed its previously-announced $3.4 billion take-private acquisition of payments and commerce technology company Verifone (NYSE: PAY). http://axios.link/Pk7u

High Street Partners, a new insurance agency acquisition platform sponsored by Huron Partners, acquired Peterson McGregor and Associates, a Traverse City, Mich.-based provider of commercial insurance, personal lines and employee benefits services. http://axios.link/UDFW

🚑 IPM, a Fresno, Calif.-based pharmacy benefit manager focused on mid-market commercial clients, raised growth equity funding from Court Square Capital Partners. www.rxipm.com

⛽ Pattern Energy (Nasdaq: PEGI) completed the sale of its Chilean wind power facilities to Arroyo Energy Investors for $70.5 million. www.patternenergy.com

🍍 Pineapple Payments, a Pittsburgh-based portfolio company of Providence Strategic Growth, acquired Transax, a Rolling Meadows, Ill.-based provider of payment gateway software. www.transaxgateway.com

Rizing, a Stamford, Conn.-based portfolio company of One Equity Partners, acquired 3D Results, a Libertyville, Ill.-based provider of SAP consulting services. www.rizing.com

🚑 Sverica acquired a majority stake in Gener8, a Sunnyvale, Calif.-based maker of life science instruments and clinical devices. www.gener8.net

Velocity Solutions, a Ft. Lauderdale, Fla.-based portfolio company of H.I.G. Capital, acquired CourtesyConnect/CourtesyLimit, an automated overdraft management system, from BSG Financial Group. www.myvelocity.com

Public Offerings

Tianqi Lithium, a Chinese lithium producer traded in Shenzhen, is seeking to raise up to $1 billion in a Hong Kong listing, per Reuters. http://axios.link/Iqog

Liquidity Events

Industrial Growth Partners agreed to sell Grakon, a San Francisco-based maker of lighting systems, to Methode Electronics (NYE: MEI) for $420 million. www.grakon.com

More M&A

Bosch, a German auto parts supplier, is acquiring a 4% stake in Ceres Power (LSE: CWR), to jointly develop solid oxide fuel cells. http://axios.link/EAaQ

🚑 Capio, a Swedish healthcare company, agreed to sell its French business to Vivalto Sante for upwards of €455 million. http://axios.link/Aubb

🚑 Guizhou Ensure, a Chinese retail pharmacy chain, raised $121 million from Alibaba’s healthcare unit. http://axios.link/PTHN

Linde (DE: LING) and Praxair (NYSE: PX) received EU regulatory approval for their planned $79 billion merger, but continue to await U.S. approval. http://axios.link/0vWQ

Fundraising

Cerberus Capital Management is looking to raise more than $500 million to buy single family rental homes, per Bloomberg. http://axios.link/cj0L

Crescendo Equity Partners, a private equity firm focused on Korean tech companies, raised $410 million for its second fund. http://axios.link/63rl

Qualgro, a new Singapore-based VC firm led by Heang Chhor (ex-McKinsey & Co.), is raising $100 million for its debut fund, per TechCrunch. http://axios.link/RsIt

Saroras Private Capital, a new private equity firm led by Sanjay Swani (ex-Welsh Carson), is seeking $600 million for its debut fund, per peHUB. http://axios.link/sRKX

SDC Capital Partners, a New York-based private equity firm focused on the IT and communications infrastructure sectors, raised $400 million for its debut fund. http://axios.link/gnEv

It's Personnel

Desmond Nugent, formerly a managing director with OpenGate Capital, joined Los Angeles-based private equity firm Gallant Capital Partners as a partner and head of operations. www.gallantcapital.com

Final Numbers: Activist investor activity
Source: Thomson Reuters Deals Intelligence
Dan Primack

Thanks for reading. If this was forwarded to you, please subscribe at GetProRata.axios.com. And be sure to subscribe to the Pro Rata podcast.