Aug 29, 2018

Axios Pro Rata

By Dan Primack
Dan Primack

Hey Boston: We're (finally) doing our first Axios live event near the home office. It takes place at Cyclorama in the South End on Friday, Sept. 7, and will include me interviewing GM CEO Mary Barra, 11-time NBA all-star Chris Bosh and startup "fixer" Bradley Tusk. RSVP here.

Top of the Morning
Source: Giphy

Venture capital firm Andreessen Horowitz is changing up its fundraising strategy, moving away from multi-stage, multi-sector flagship vehicles, Axios has learned from multiple sources.

Why it matters: This is part of a broader alt assets trend toward specialized funds, in terms of both sector and stage. Most institutional investors seem to prefer this strategy, as it plays nicely with their own asset allocation plans, although some larger LPs still prefer to make single commitments to preferred managers.

  • History: Andreessen Horowitz has raised five flagship funds, most recently a $1.5 billion vehicle in mid-2016. But it began experimenting with sector-specific funds one year earlier, raising $200 million for a biotech-focused vehicle and a $450 million successor last year. Then, earlier this summer, it raised $300 million for a fund that both backs blockchain-focused startups and buys crypto-assets.
  • What's next: Expect Andreessen Horowitz early next year to raise around $750 million for an early-stage fund dedicated to consumer and enterprise software companies. It also will raise a growth equity fund, able to invest across sector.

No comment from the Silicon Valley-based firm, natch.

Cable commotion: Altice this week asked the FCC to reject the proposed merger between T-Mobile and Sprint, unless it applies conditions. Bottom line, per Axios' David McCabe:

This is about self-interest. Altice is worried about whether post-merger T-Mobile would offer adequate support to the resale deal it struck with Sprint last year, so is asking the FCC to either block the deal or require protections to wireless resellers.

Econ 101: Second quarter GDP was revised up from 4.1% to 4.2%.

🍕 Deal or no deal: Yum China (NYSE: YUMC), the exclusive operator of KFC and Pizza Hut stores in mainland China, reportedly rejected a $17.6 billion takeover offer from a consortium led by Hillhouse Capital.

  • It's a pretty stunning move, given that the bid price was at a 28% premium to Monday's closing price.
  • Other members of the buyside group included KKR and Baring Private Equity Asia.
  • Bloomberg's Nisha Gopalan writes that Yum China just made a huge mistake, particularly given the possibility that the trade tiff could result in a full-blown Chinese boycott of American brands.
  • Don't be surprised to see another private equity bid, particularly one that includes some tech expertise, or even another variation on the rejected deal.

🎧 Pro Rata podcast: Yesterday we talked Trump vs. Google with Axios executive editor Mike Allen. (Listen) (Subscribe)

  • We've also made it easier to find the latest podcasts on your Amazon Echo devices. Just go into Skills and search for Pro Rata.
Source: Giphy

Coca-Cola (NYSE: KO) agreed to buy Londonderry, N.H.-based soft drink maker Moxie from bottling partner Coca-Cola of Northern New England for an undisclosed amount. Deal talks came out of Coke's broader efforts to separate itself from its bottling operations.

  • Why it's the BFD: Because while most of you have probably never heard of Moxie, it's liquid religion in parts of New England (particularly in Maine, where it's the official state drink).
  • Bottom line: "Like its new corporate owner, Moxie was initially marketed as a cure-all. Beginning in 1885, it was cooked up by a Lowell, Mass. doctor: Augustine Thompson, a Maine native. But it never really caught on outside of New England, according to Moxie’s official history. Thompson said the name came from a Lt. Moxie, who discovered gentian root in South America, although the company has since admitted the lieutenant was part of marketing fiction created to promote the drink." — Patrick Whittle, AP
Venture Capital Deals

🚑 Outset Medical, a San Jose, Calif.-based developer of an all-in-one dialysis device, raised $132 million in Series D funding. Mubadala Investment Co. led, and was joined by return backers Baxter Ventures Fidelity, Partner Fund Management, Perceptive Advisors, Warburg Pincus and T. Rowe Price.

Dfinity, developer of a decentralized network to run mega-apps, raised $102 million from SV Angel, Aspect Ventures, Village Global, Multicoin Capital, Scalar Capital, Amino Capital and return backers Andreessen Horowitz and Polychain Capital.

Puls Technologies, a San Francisco-based in-home tech installation and services company, raised $50 million. Temasek led, and was joined by Hanaco Ventures, Hamilton Lane and return backers Sequoia Capital, Red Dot Capital Partners, Samsung Next and Viola Ventures., a Beijing-based autonomous driving startup, raised $32 million in Series B funding. CICC Jiacheng Investment led, and was joined by Source Code Capital, CICC Alpha and return backer Matrix Partners China.

🚑 KaNDy Therapeutics, a UK-based developer of non-hormonal treatments for menopause, raised £25 million in Series C funding. Longitude Capital led, and was joined by return backers Advent Life Sciences, Fountain Healthcare Partners, Forbion Capital Partners and OrbiMed.

Salary Finance, a London-based platform for helping employees save money and manage their finances, raised $20 million from Legal & General and Blenheim Chalcot.

Mitte, a Berlin-based smart residential water system, raised $10.6 million. Danone Manifesto Ventures led, and was joined by VisVires New Protein Capital and Kärcher New Venture.

Apperio, a London-based legal fee tracking and transparency platform, raised $10 million. Draper Espirit led, and was joined by return backers Notion Capital and IQ Capital.

Bark, an Atlanta-based app for tracking kids’ online activity, raised $9 million in Series A funding. Signal Peak Ventures led, and was joined by Two Sigma Ventures, Symmetrical Ventures, Fuel Capital, Hallett Capital and Atlanta Seed Co.

Singulato Motors, a Chinee electric vehicle startup, raised around $9 million from Japan’s Itochu (Tokyo: 8801), per Reuters.

Paystack, a Lagos-based digital payment startup, raised $8 million in Series A funding from Stripe, Visa and Tencent.

🚑 Sempre Health, a San Francisco-based startup focused on behavior-based healthcare pricing, raised $8 million in Series A funding. Rethink Impact led, and was joined by Social Capital.

Liquid IV, a Marina del Rey, Calif.-based maker of hydration powder mixes, raised $5 million in Series B funding led by CircleUp Growth Partners.

🚑 Nebula Genomics, a George Church co-founded startup that wants to put genomes on the blockchain, raised $4.3 million in Series A funding led by Khosla Ventures.

Private Equity Deals

Airwavz, a Charlotte-based provider of in-building wireless infrastructure, raised growth equity funding from Pamlico Capital.

Authentic Brands, a portfolio company of Leonard Green & Partners, has bid $35 million for the band name of bankrupt retailer Brookstone.

The Carlyle Group agreed to buy the stake it didn’t already hold in NEP Group, a Pittsburgh-based provider of live TV production services, from Crestview Partners.

Centerbridge Partners and Airstream maker Thor Industries (NYER: THO) are among those circling Hymer, a German maker of caravans and motorhomes that could fetch around €2 billion, per Bloomberg.

GDS Link, a Dallas-based provider of credit risk management software, raised equity funding from Serent Capital.

Munch’s Supply, a New Lennox, Ill.-based portfolio company of Rotunda Capital Partners, acquired Tonmark Co., an HVAC distributor with six Michigan locations.

Roadsafe Traffic Systems, a Chicago-based portfolio company of ORIX Capital Partners, acquired Optim Earth, a Reno Nev.-based provider of 3D subsurface information.

SpendMend, a Grand Raids, Mich.-based portfolio company of Sheridan Capital Partners, acquired Contract Management Strategies, an Irvine, Calif.-based provider of audit recovery and professional services.

Summit Partners acquired MercuryGate International, a Cary, N.C.-based provider of transportation management system SaaS, from Warburg Pincus.

Public Offerings

Aston Martin, the British sports car maker, is prepping a London IPO that could value the company at around £5 billion, per Bloomberg.

NIO, a Chinese electric car company whose backers include Baidu and Tencent, set IPO terms to 160 million shares at $6.25-$8.25. It would have a fully-diluted market value of $8 billion, were it to price in the middle. It plans to trade on the NYSE (NIO) with Morgan Stanley as lead underwriter.

Viomi Technology, a Chinese maker of smart home products that has a strategic partnership with Xiaomi, filed for a $150 million IPO. It plans to trade on the Nasdaq (VIOT) with Morgan Stanley as lead underwriter, and reports $11 million of net income on $157 million in revenue for the first half of 2018.

X Financial, a Chinese P2P lending platform, filed for a $250 million IPO. It plans to trade on the NYSE (XYF) with Deutsche Bank as lead underwriter, and reports a $67 million net loss on $279 million in revenue for the first half of 2018.

Liquidity Events

🚑 GTCR and Warburg Pincus are seeking a buyer for Sotera Health, a Broadview Heights, Ohio -based operator of medical and food sterilization facilities that could fetch upwards of $5 billion, per Reuters.

Sandbridge Capital sold men’s apparel brand Thom Browne to Italy’s Ermenegildo Zegna for around $500 million.

More M&A

🚑 Emergent BioSolutions (NYSE: EBS) agreed to buy Adapt Pharma, an Ireland-based maker of the emergency opioid overdose treatment Narcan, for up to $735 million in cash and stock ($635m upfront).

PJT Partners agreed to buy CamberView Partners, a corporate advisory firm specializing in activism defense, for $165 million.


465 Ventures raised $41 million for its second “growth seed” fund.

The Riverside Company raised $1.2 billion for its fifth micro-cap private equity fund.

It's Personnel

Jamie Athanasoulas joined HarbourVest Partners as a managing director focused on private credit. He previously was with Bain Capital Credit.

Ben Cox (ex-Bain & Co.) and Faton Gjuka (C3IoT) joined Sumeru Equity Partners as operating principals, while Michelle Ruggeri (ex-Marcato Capital) joined as controller.

Valentina Gentile is leaving Bain Capital to join Charterhouse Capital Partners as director of investor relations, per PE International.

Final Numbers
Source: PitchBook

Shots fired:

  • PitchBook's Anthony Mirhaydari recently wrote a piece titled "How VC is hurting the economy," focused on the massive influx of startup funding without nearly enough corresponding exits.
  • Greenspring Associates, which invests in both VC funds and directly in startups, didn't take too kindly to it, arguing in a response post that this was an attempt to "vilify tech founders and venture investors as cold-blooded capitalists living in a vacuum, rather than clear-eyed capitalists working to create value while helping to shape the future."

Bottom line: This has been the VC industry argument for at least the past two years, and it shows no sign of abating. Particularly as the trend-lines remain steady.

Dan Primack

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