Axios Pro Rata
August 29, 2018
Top of the Morning
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%.
- Axios' Courtenay Brown on why the stock markets shrug off trade wars but not trade deals.
🍕 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.
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The BFD
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
Private Equity Deals
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It's Personnel
Final Numbers
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.
Axios Pro Rata
Dan Primack’s briefing on VC, PE & M&A for dealmakers.