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Axios Pro Rata

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Top of the Morning

Illustration: Aïda Amer/Axios

Gambling has always been about the flypaper. Use glitz to get customers in the door, free drinks to get them in the seats and then loyalty perks to get them to tables with higher minimums.

  • A version of the flypaper effect is now happening with the gambling industry itself, which is experiencing a major consolidation wave.
  • Online content drives people to online sports betting, which then drives them to interactive online gaming, which is higher margin and often partners with physical casinos for co-branding or white-label opportunities. And within all of that is online ad tracking, which lets operators retarget and significantly increase conversion rates.

Driving the news: CNBC yesterday reported that DraftKings had offered to buy Entain, the listed British sports betting firm that owns Ladbrokes and Coral, for $20 billion. Entain later confirmed it had received a takeover offer from DraftKings, but didn't provide additional details.

  • A source familiar with the situation says that DraftKings made its offer more than two months ago for just under that $20 billion mark, and that there have not been counterbids.
  • This would be DraftKings’ largest acquisition to date, but it’s been active. Just this year it bought the Golden Nugget Online Casino for $1.5 billion in stock, sports betting video content company VSiN for what Axios hears is around $100 million and reportedly is among the suitors for a $3 billion brand licensing deal with ESPN.
  • Entain has bankers, harkening back to an earlier $11 billion takeover offer that it rejected from MGM Resorts, with which it has a U.S. online sports betting partnership called BetMGM.

Big picture: Gaming company M&A hit an all-time high in 2021, per CrunchBase, and just last week we saw a massive IPO for SportRadar, a provider of data technology to sports betting companies.

The bottom line: This is about expected growth in U.S. online sports betting, as more states legalize and bettors become more comfortable. That's where both DraftKings and MGM see upside for Entain, which mostly operates in the matured European market. Or, put another way, we're still in the early innings.

The BFD

Illustration: Aïda Amer/Axios

Toast, a Boston-based restaurant management platform, raised $870 million in an IPO that values the company at nearly $20 billion. It priced at $40 per share, which was above its original and upwardly-revised ranges, and will list on the NYSE (TOST).

  • Why it's the BFD: This is whiplash success story. Toast was valued by VCs at $5 billion heading into the pandemic, but in April 2020 laid off nearly half of its employees and furloughed another 12%.
  • Details: Toast reports a $235 million net loss on $704 million of revenue for the first half of 2021. It had raised around $900 million from firms like Tiger Global (12.8% pre-IPO stake), Bessemer Venture Partners (12.5%), T. Rowe Price (6%) and TCV (5.5%).
  • The bottom line: "Toast says it's serving more than 48,000 restaurant locations as of the end of June, up from 27,000 in 2019. Annual recurring revenue surged 118% in the second quarter from a year earlier to $494 million. The bulk of Toast's revenue comes from what the company calls financial technology solutions, consisting primarily of fees paid by customers for payment transactions. Less than 10% comes from subscriptions." — Ari Levy, CNBC
Venture Capital Deals

Kavak, a Mexico City-based used car marketplace, raised $700 million in Series E funding at an $8.7 billion valuation. General Catalyst led, and was joined by Tiger Global, Spruce House, D1, SEA, Founders Fund, Ribbit Capital and SoftBank. http://axios.link/8Uy6

Mirakl, a French marketplace platform for e-commerce sites, raised $555 million at a $3.5 billion valuation. Silver Lake led, and was joined by insiders 83North, Elaia Partners, Felix Capital and Permira. http://axios.link/0oSX

Genesis Digital Assets, a London-based Bitcoin miner, raised $431 million. Paradigm led, and was joined by NYDIG, FTX, Ribbit Capital, Electric Capital and Kingsway Capital. http://axios.link/Aq8O

Hai Robotics, a Chinese warehouse robotics company, raised $200 million in combined Series C (led by 5Y Capital) and Series D funding (led by Capital Today). Other backers include Sequoia Capital China, Source Code Capital, VMS, Walden International, Scheme Capital, Legend Star and 01VC. http://axios.link/Ft0r

Vestiaire Collective, a French marketplace for secondhand luxury and fashion items, raised €178 million in Series D funding. SoftBank Vision Fund 2 led, and was joined by Generation Investment Management and insiders Conde Nast and Eurazeo. http://axios.link/SRx4

Sunday, an Atlanta-based restaurant payment app, raised $100 million in Series A funding. Coatue led, and was joined by DST Global. www.sundayapp.com

Pager, a New York-based virtual care navigation and collaboration platform, raised $70 million in Series C equity and debt funding. Susquehanna led, and was joined by Horizon Healthcare Services and SVB. www.pager.com

🚑 Nomad Health, a New York-based online marketplace for temporary healthcare jobs, raised $63 million in equity and debt funding. Adams Street Partners led, and was joined by insiders Icon Ventures, Polaris Partners, RRE Ventures, .406 Ventures, First Round Capital and SVB. http://axios.link/q6FX

Bilt Rewards, a New York-based loyalty program for renters, raised $60 million at a $350 million valuation from Wells Fargo, Blackstone Group, Mastercard, AvalonBay Communities, Equity Residential, GID-Windsor Communities, LENx, The Moinian Group, Morgan Properties, Starwood Capital Group and Related Cos. http://axios.link/T880

ZestMoney, an Indian BNPL startup, raised $50 million in Series C funding from Australia’s Zip. http://axios.link/MY1m

Raspberry Pi, a nonprofit foundation that makes low-priced microprocessors, raised $45 million at a $500 million pre-money valuation co-led by Lansdowne Partners and The Ezrah Charitable Trust. http://axios.link/5Qfj

Almanac, an SF-based operating system for remote work, raised $34 million in Series A funding. Tiger Global led, and was joined by Floodgate and General Catalyst. http://axios.link/M4aQ

Spenmo, a Singapore-based cloud payments software startup, raised $34 million in Series A funding. Insight Partners led, and was joined by Addition, Alpha JWC, Global Founders' Capital, Operator Partners and Commerce Ventures. www.spenmo.com

Omnidian, a Seattle-based provider of solar system performance plans and performance guarantees, raised $33 million in Series B funding. Activate Capital led, and was joined by Liberty Mutual, Copec and insiders City Light Capital, IA Capital, Evergy Ventures, Avista Development, Congruent Ventures, Centrica, National Grid Partners, Energy Foundry and Blue Bear Capital. www.omnidian.com

Evermos, an Indonesian social commerce startup, raised $30 million in Series B funding. UOB Venture Management led, and was joined by IFC, MDI Ventures, Telkomsel Mitra Innovation, Future Shape and insiders Jungle Ventures and Shunwei Capital. http://axios.link/Sid5

🍓 Advanced Farm Technologies, a Davis, Calif.-based maker of strawberry-picking robots, raised $25 million in Series B funding. Catapult Ventures led, and was joined by insiders Kubota, Yamaha Motors and Impact Ventures. www.advanced.farm

Different, an Australian property management startup, raised A$25 million in Series B funding from Commonwealth Bank, x15ventures and Antler. www.different.com.au

NEXT, a motion entertainment startup with offices in Hong Kong and San Jose, Calif., raised $25 million in Series B funding. Blue Pool Capital led, and was joined by Samsung Ventures, SparkLabs and Susquehanna. http://axios.link/t7Jh

🚑 Xealth, a Seattle-based provider of digital health solutions for hospitals, raised $24 million in Series B funding. Advocate Aurora Enterprises led, and was joined by 13 other health systems. http://axios.link/wSAD

🚑 Alpha Medical, a remote women’s healthcare startup, raised $24 million in Series B funding from SpringRock Ventures, Margo Georgiadis, Outcomes Collective Growth Capital, FMZ Ventures, Samsung Next, Chamaeleon, AV8 Ventures and GSR Ventures. http://axios.link/8TL1

🚑 Pearl Health, a care delivery and billing software company for primary care physicians, raised $18 million in Series A funding. Andreessen Horowitz led, and was joined by AlleyCorp and Kevin Ryan. www.pearlhealth.com

Clovers, an LA-based recruiting software startup, raised $15 million in seed funding. Greycroft and Alpha Edison co-led, and were joined by Crosslink Capital, Acadian Ventures, Fika Ventures and Act One Ventures. www.clovers.ai

Niio, an Israeli digital art platform, raised $15 million in Series A funding co-led by L Catterton, Entrée Capital and Pico Venture Partners. http://axios.link/dxaX

Tag, a Pakistani employee banking services startup, raised $12 million in seed funding from Liberty City Ventures, Canaan Partners, Addition, Mantis and Banana Capital. http://axios.link/iaNH

Just Insure, an LA-based pay-per-mile auto insurer, raised $8 million co-led by CrossCut Ventures, ManchesterStory and Western Technology Investments. http://axios.link/716x

🚑 Vodori, a Chicago-based provider of online marketing software for life sciences, raised $7.5 million in Series A funding led by Baird Capital. www.vodori.com

Loft Labs, an SF-based provider of self-service namespaces and virtual clusters for engineering teams, raised $4.6 million in seed funding. Fusion Fund led, and was joined by RTP Seed, Emergent Ventures and Berkeley SkyDeck Fund. www.loft.sh

Plannuh, a Boston-based provider of marketing leadership automation SaaS, raised $4.1 million. Ripple Ventures led, and was joined by insiders Glasswing Ventures and Gradient Ventures. www.plannuh.com

🚑 Mojo, a men’s sexual health startup that focuses on therapy, raised £3.25 million co-led by Kindred Capital and Octopus Ventures. http://axios.link/9Lbf

Business Canvas, a South Korean document management SaaS startup, raised $2.5 million in seed funding. Mirae led, and was joined by Kakao Ventures and Nextrans. http://axios.link/spMn

Dispense, a Boston-based digital dispensary management platform, raised $2 million in seed funding. NextView Ventures led, and was joined by Arrive, Achari Ventures and Poseidon Asset Management. www.dispenseapp.com

Private Equity Deals

Allied Universal, a Santa Ana, Calif.-based security and facility management services provider, acquired MSA Security, a New York-based physical security tech provider, from GreyLion. Allied Universal backers include Warburg Pincus, MKH Capital Partners and W Capital Partners. www.msasecurity.net

GI Partners bought Patriot Growth Insurance Services, a Fort Washington, Pa.-based insurance distributor, from Summit Partners (which retains a minority stake). www.patriotgis.com

Graycliff Partners acquire Electro-Mechanical Corp., a Bristol, Va.-based manufacturer of engineered electrical equipment. www.electro-mechanical.com

Hidden Harbor Capital Partners acquired SuperHero, a Lawrenceville, Ga.-based fire, life and safety equipment installer. www.superherofireprotection.com

LLCP acquired In-Place Machining, a Milwaukee-based provider of field machining, metrology and diamond wire-cutting services, from Platte River Equity. www.inplace.com

MiddleGround Capital bought Arrow Tru-Line, an Archbold, Ohio-based provider of sectional overhead garage door components, from Sun Capital Partners. www.arrowtruline.com

🚑 Pharos Capital Group acquired Vantage Outsourcing, an Effingham, Ill.-based cataract surgical service provider. www.vantageoutsourcing.com

🚑 RLDatix, a London-based portfolio company of Five Arrows and TA Associates, acquired Allocate Software, a British provider of HR management software for healthcare. www.rldatix.cokm

🚑 Sopris Capital invested in SmyphonyCare, a Madison, Wis.-based healthcare data analytics platform. www.smyphonycare.com

Public Offerings

A.K.A. Brands, a Gen Z-focused online fashion brands portfolio owned by Summit Partners, raised $110 million in a downsized IPO. It priced 10 million shares at $11, versus original plans to offer 13.9 million at $17-$19, for a $1.4 billion market cap. The company will list on the NYSE (AKA) and reports $15 million of net income on $215 million in revenue for 2020. http://axios.link/CogA

Freshworks, a San Mateo, Calif.-based provider of customer support software, raised $1 billion in its IPO. The company priced at $36 per share (above $28-$32 range), for a valuation north of $10 billion, will list on the Nasdaq (FRSH) and reports a $10 million net loss on $169 million in revenue for the first half of 2021. Freshworks raised around $400 million, most recently at a $3.5 billion valuation, from firms like Tiger Global (26.2% pre-IPO stake), Accel (25.8%), CapitalG (8.3%), Sequoia Capital India (12.3%) and Steadview Capital Management. http://axios.link/HOy5

Yesway, a Fort Worth, Texas-based convenience store chain backed by Brookwood Financial Partners, filed for an IPO. It plans to list on the Nasdaq (YSWY) and reports $2 million of net income on $815 million in revenue for the first half of 2021. http://axios.link/eBmw

Liquidity Events

🚑 Boston Scientific (NYSE: BSX) agreed to buy the 84% stake it doesn’t already hold in Devoro Medical, a Fremont, Calif.-based blood clot removal biotech, for up to $336 million ($269m upfront). Devoro raised $26 million from firms like Norwest Venture Partners, ShangBay Capiytal and Synergy Ventures. http://axios.link/aSIF

🚑 Imperial Capital Group hired Houlihan Lokey to find a buyer for Keplr Vision, a Bloomington, Ill.-based provider of operational support to U.S. optometry practices, per the WSJ. A deal could be worth around $1.8 billion. http://axios.link/GuAI

JPMorgan Chase (NYSE: JPM) acquired Frank, a college planning platform that had raised over $20 million (plus got a PPP loan) from backers like Apollo Global Management, Chegg, Gaingels, Swat Equity Partners, GingerBread Capital and Aleph. http://axios.link/5FfO

Sonic Automotive (NYSE: SAH) agreed to buy RFJ Auto Partners, a Texas-based auto dealer network, for $700 million from The Jordan Company. www.sonicautomotive.com

More M&A

Source: Giphy

Netflix (Nasdaq: NFLX) agreed to buy the catalog of Roald Dahl, the novelist whose works included "Charlie and the Chocolate Factory," according to Bloomberg, which says this would be Netflix's largest-ever acquisition. http://axios.link/Zri6

🚑 Boehringer Ingelheim agreed to buy Abexxa Biologics, an Arlington, Texas-based oncology startup that the German pharma company had seeded. http://axios.link/D8O4

Westpac (ASX: WBC) no longer plans to auction off its wealth management unit, per The Australian. www.westpac.com.au

Fundraising

New Mountain Capital raised $507 million for its third CLO. www.newmountaincapital.com

Section Partners, a Palo Alto-based growth equity firm, raised $245 million for new funds. www.sectionpartners.com

It's Personnel

David Pakman. Photo: David Paul Morris/Bloomberg via Getty Images

David Pakman tells Axios that he is leaving Venrock after nearly 13 years, to become managing partner of CoinFund.

  • He expects to remain on the boards of several Venrock portfolio companies, including Dapper Labs, which this morning announced another $250 million in funding led by Coatue at a $7.6 billion valuation.

Argentum, a New York-based growth equity firm, promoted Michael Lipin to VP and hired Mariano Salinas (ex-WebMD/Internet Brands) as an associate. www.argentumgroup.com

David Lynch joined Ara Partners, a PE firm focused on industrial decarbonization, as a principal. He previously was with Alinda Capital Partners. www.arapartners.com

QED Investors promoted Laura Bock to partner. www.qedinvestors.com

Vijay Reddy (ex-Intel Capital) joined Clear Ventures as a partner. www.clear.ventures

Final Numbers
Data: Yahoo Finance; Chart: Axios Visuals

Zoom (Nasdaq: ZM) is running into troubles with its $14.7 billion deal to buy Five9 (Nasdaq: FIVN), a cloud-based call center operator.

  • The U.S. Justice Department is investigating the merger on national security grounds, due to Zoom's ties to China (including R&D operations).
  • For the record, Zoom is based in Silicon Valley, CEO Eric Yuan is a naturalized U.S. citizen its top outside shareholders are T. Rowe Price and Vanguard.
  • Institutional Shareholder Services recommended that Five9 shareholders vote against the all-stock deal, saying it would expose them to “a more volatile stock whose growth prospects have become less compelling as society inches towards a post-pandemic environment."

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