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Term Sheet — Tuesday, May 12

May 12, 2015

Random Ramblings

Some notes to kick off your Tuesday:

• But is it significant? Today's big deal is that Verizon has agreed to buy AOL for $4.4 billion, which comes five months after Bloomberg first reported that the two sides were in merger talks. At the time, however, Verizon CEO Lowell McAdam said that his company wasn't having any “significant acquisition discussions," and suggested that Bloomberg's sources had misconstrued strategic partnership talks.

That leaves us with three options: (1) McAdam lied; (2) The strategic partnership talks evolved into M&A sometime after January; (3) Verizon doesn't consider a $4.4 billion acquisition to be terribly "significant," no matter how much AOL might mean to both Internet and corporate M&A history buffs.

• Bulging wallet: Personal finance site  NerdWallet this morning announced that it has raised $64 million in Series A funding led by Institutional Venture Partners. It's the company's first round of VC funding since being founded six years ago and sources familiar with the situation peg the pre-money valuation at $500 million.

• Just saying: One man can deflate 12 footballs in 90 seconds, but a group of officials can't measure 24 balls in 10+ minutes. Makes total sense to me.

• Biotech boomer: Regular readers know that one of the very few VC-backed companies that actually excites me is Moderna Therapeutics, which is working to help patients create medicines within their own cells via the creation of injectable mRNA molecules. Two big developments for the company today: First, it was put atop CNBC's Disruptors list (knocking off SpaceX). Second, it has launched its third spin-out, this one focused on rare genetic disorders. For more on Moderna, here's my story on the company from earlier this year.

• Fee fun: The Blackstone Group included the following on Friday in its 10-Q regulatory filing: "Recently, the SEC has informally requested additional information about our historical monitoring fee termination practices. The SEC also has asked for additional information about certain pre-2011 practices relating to the application of disparate vendor discounts to Blackstone and to our funds that were changed in 2011 and had also been previously reviewed by the SEC in 2012. We are in discussions with the SEC regarding a potential resolution of these matters."

• Nothing new: There have been a number of stories lately about how most of these later-stage "unicorn" funding rounds carry liquidation preferences, thus suggesting that the valuations are not entirely valid comps to public equities. And each of these stories have been correct.

What surprises me, however, is how this is being treated by some as a massive revelation. Liquidation preferences have been part of VC rounds (of all stages) for decades. In other words, nothing new to see here. Now if more unicorns begin following Snapchat's lead and demand common stock without downside protection, then that would be a story.

THE BIG DEAL

•  Verizon (NYSE: VZ) has agreed to acquire AOL Inc. (NYSE: AOL) for $4.4 billion, or $50 per share (17.4% premium over yesterday's closing price). Read more.

VENTURE CAPITAL DEALS

•  DocuSign, a San Francisco-based electronic signature platform, has raised $233 million in new funding. Brookside Capital led the round, and was joined by Generation Investment Management, ClearBridge Investments and return backers Wasatch Advisors, Iconiq Capital, Wellington Management Company, and Sands Capital Ventures. Fortune reports that the deal was done at around a $3 billion valuation. Read more.

•  MarkLogic, a San Carlos, Calif.-based provider of an enterprise NoSQL platform, has raised $102 million in Series F funding at around a $1 billion valuation. Wellington Management led the round, and was joined by Arrowpoint Partners and return backers Northgate Capital, Sequoia Capital, Tenaya Capital and MarkLogic CEO Gary Bloom. Read more.

•  NerdWallet, a San Francisco-based personal finance site that helps users make money decisions, has raised $64 million in Series A funding. Institutional Venture Partners led the round, and was joined by RRE Ventures, iGlobe Partners and individual angels like Vikram Pandit. www.nerdwallet.com

•  Autonomic Technologies, a Redwood City, Calif.-based developer of a microstimulator to treat severe headaches, has raised $38 million in Series D funding. Edmond de Rothschild Investment Partners led the round, and was joined by Forbion Capital Partners and return backers Kleiner Perkins Caufield and Byers, InterWest Partners, Novartis Venture Fund, Aberdare Ventures and the Cleveland Clinic. www.ati-spg.com

•  Bit Stew Systems, a Vancouver-based provider of software-defined operations solutions for the industrial Internet, has raised $17.2 million in Series B funding. GE Ventures led the round, and was joined by return backers Cisco Investments and Yaletown Venture Partners. www.bitstew.com

•  Blue Danube Systems, a Mountain View, Calif.-based provider of mobile wireless access solutions, has raised $16 million in Series B funding. AT&T was joined by Northgate Capital and return backer Sequoia Capital. www.bluedanube.com

•  Juventas Therapeutics Inc., a Cleveland-based developer of non-viral gene therapies to treat advanced cardiovascular disease, has raised $13.5 million in Series B-2 funding. Green Cross Holdings and POSCO Capital co-led the round. In addition, the company secured $6 million in debt financing from Oxford Finance. www.juventasinc.com

•  Wave, a Toronto-based provider of free cloud-based software for the “money side of small business,” has raised US$10 million in Series C funding from CRV, The Social+Capital Partnership, OMERS Ventures and an undisclosed “strategic investor in the global fintech software space.” www.waveapps.com

•  Knod, a Salt Lake City-based provider of “its online experience-based employment and learning programs,” has raised $6.2 million in VC funding from Epic Ventures and Impact Investment Leaders. www.knod.net

•  Zuman, a Pleasanton, Calif.-based unified cloud human resource system, has raised $4 million in Series A funding. No investors were identified. www.zuman.com

•  Atia Medical Inc., a Campbell, Calif.-based medical device startup, has raised $3 million in Series B funding from Medvance Incubator Partners. The company plans to increase the round to a total of $5 million.

•  Hungryroot, a provider of “farm fresh 7 minute meals that remain fresh for 10 days,” has raised $2 million in seed funding. Brooklyn Bridge Ventures led the round, and was joined by Lerer Hippeau Ventures, Crosslink Capital and KarpReilly. www.hungryroot.com

•  MODE Inc., a San Mateo, Calif.-based Internet-of-things platform, has raised $775,000 in seed funding led by Metamorphic Ventures and , Kleiner Perkins Caufield Byers. www.tinkermode.com

•  Ameritas Technologies, a Weston, Mass.-based provider of outsourcing services for IT projects, has raised an undisclosed amount of VC funding from Moneta Ventures. www.ameritastech.com

PRIVATE EQUITY DEALS

•  CompoSecure, a Somerset, N.J.–based maker of financial cards focused on the affluent customers of credit card issuers, has raised an undisclosed amount of private equity funding from LLR Partners. www.composecure.com

•  Eureka Restaurant Group, a Hawthorne, Calif.-based restaurant chain, has raised an undisclosed amount of private equity funding from KarpReilly LLC. www.eurekarestaurantgroup.com

•  Lonsdale Capital Partners has acquired Nutrisure Ltd., a UK-based provider of superfoods like acai and cacao. No financial terms were disclosed, except that Praesidian Capital Europe provided leveraged financing. www.lonsdalepartners.com

•  Novacap, a French portfolio company of Ardian, has agreed to acquire Cu Chemie Uetikon, a German maker of chemicals and pharmaceutical production company, from Equistone Partners Europe. No financial terms were disclosed. www.uetikon.com

•  Tonka Bay Equity Partners has invested an undisclosed amount into Sierra Corp., a Minnetonka, Minn.–based maker of custom industrial coatings, sealants and paints. www.tkproducts.com

•  TRP Energy, a Houston-based exploration and production company focused on the development of direct, non-operated working interests across U.S. onshore plays, has been formed via a $250 million equity commitment from Trilantic Capital Management. www.trilantic.com

IPOs

•   Axovant Sciences Ltd., a Bermuda-based developer of an Alzheimer's therapy acquired from GlaxoSmithKline, has filed for a $172.5 million IPO. It plans to trade on the NYSE under ticker symbol AXON, with Jefferies, Evercore ISI and RBC Capital Markets serving as lead underwriters.

•  Corindus Vascular Robotics, a Waltham, Mass.-based maker of vascular robotic-assisted systems for use in interventional vascular procedures, has filed for a $46 million IPO. It plans to trade on the NYSE under ticker symbol CVRS, with Cowen & Co. and Stifel serving as lead underwriters. The company’s stock is currently listed on the OTC under ticker symbol CVRS, and finished trading last Friday at $4.23 per share. Shareholders include HealthCor Partners (42.43% stake) and Koninklijke Philips (20.01%). www.corindus.com

•  MindBody Inc., a San Luis Obispo, Calif.-based online wellness marketplace, has filed for a $100 million IPO. It plans to trade under ticker symbol MB, with Morgan Stanley, Credit Suisse and UBS serving as lead underwriters. The company reports a $24.6 million net loss on around $70 million in revenue for 2014, compared to a $16 million net loss on $49 million in revenue for 2013. Shareholders include Bessemer Venture Partners (20.3% pre-IPO stake), Catalyst Investors (15.5%), J.P. Morgan Digital Growth Fund (10.1%), Institutional Venture Partners (10%) and W Capital Partners (8.9%). www.mindbody.com

EXITS

•  Swander Pace Capital has hired Credit Suisse to run a dual-track exit process for Merrick Pet Care Inc., an Amarillo, Texas–based maker of premium pet food, according to LBO Wire. www.merrickpetcare.com

•  Towers Watson (Nasdaq: TW) has acquired Acclaris, a Tampa, Fla.–based provider of SaaS solutions that support account-based healthcare plans. The deal is valued at $140 million. Sellers include HarbourVest Partners, Staley Capital Management and Trident Capital. www.acclaris.com

OTHER DEALS

•  Hello Alfred, a New York-based automation platform for managing all of a user's on-demand subscriptions and services, has acquired WunWun, a New York-based on-demand delivery company. TechCrunch refers to the deal as a “fire sale.” Hello Alfred recently raised $10.5 million in Series A funding from NEASpark Capital, Sherpa Ventures and CrunchFund. Read more.

•  Koninklijke Ahold (Netherlands) and Delhaize Group (Belgium) are in talks about a possible merger, which could create a supermarket giant worth more than $28 billion. Ahold’s U.S. business includes the Stop & Shop and Giant chains. Read more.

FIRMS & FUNDS

•  Eucalyptus Growth Capital has been formed as an Israel-based growth equity firm that plans to raise $300 million for its debut fund. The group’s principals are Dadi Perlmutter (ex-chief product officer for Intel Corp.). Rami Hadar (ex-CEO of Allot) and Eldad Tamir (founder and CEO of the Tamir Fishman Group). www.eucalyptus-growth.com

•  Sherpa Ventures, a San Francisco-based early-stage tech VC firm, is raising $175 million for its second fund, according to a regulatory filing. www.sherpavc.com

MOVING IN, UP, ON & OUT

•  Nikesh Arora, former chief business officer at Google, has been named president of Japanese telecom firm and tech investor SoftBank. Read more.

•  Doug Brown has joined healthcare-focused investment bank Leerink Partners as a senior managing director and head of healthcare services and private equity coverage. He previously was with Lazard. www.leerink.com

•  Keith Canton has joined J.P. Morgan Chase as head of private capital markets, effective in August. He previously was co-head of private capital markets for Barclays. Read more.

•  Bill Frauenhofer has joined BofA Merrill Lynch as head of global semiconductor investment banking. He will be based in Palo Alto, and previously served in a similar position with Jefferies. Read more.

•  Paul Griffin has joined KeyBanc Capital Markets as a managing director in the firm’s financial sponsors investment banking group. He previously was with BMO Capital Markets. www.key.com

•  Smaiyra Million has joined Highland Consumer Partners as an operating partner. Million previously was CEO of Millennium Partners Sports Club Management. www.highlandconsumer.com

•  David Robbins has joined Monomoy Capital Partners as a managing director and head of credit strategies. He previously was a managing director with H.I.G. Bayside Capital. www.mcpfunds.com

•  Kevin Thau has joined Spark Capital as a San Francisco-based general partner. He previously was COO of Jelly and, before that, and VP of business and corporate development at Twitter. www.sparkcapital.com

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