As I drove home from New York last night, my car began to make a high-pitched creaking sound around New Haven. So I pulled over, popped the hood and didn’t find anything. Maybe it was just the IPO window continuing to close.
For the past several months, most of our IPO attention has been paid to the dearth of VC-backed tech companies, particularly among the unicorn class. But then KKR-backed payment processing giant First Data priced below its original range last night (and then breaking price at open), and Cerberus-backed grocery retailer Albertsons postponed its offering altogether (arguably based on Walmart’s troubles). Add all of that to last week’s disappointing Pure Storage listing, and it really does appear that the macro is having an inside-out umbrella effect.
All of which brings is to Square, which yesterday filed for a $275 million offering. When we reported late last month that this filing was coming, we cautioned that it was paying particular attention to the economic environment. Yes, everyone does, but more so for Square because of its primary business (retail transaction infrastructure) and its board of directors (which includes Larry Summers). So the fact that Square is moving forward with its IPO — expect pricing before Thanksgiving — despite having nearly $200 million in cash on hand through the end of June, suggests that this past week’s troubles won’t scare everybody off.
And I’d expect that Silicon Valley will ultimately view Square as its IPO bellwether, rather than Pure Storage. Partially because it transverses the consumer/enterprise divide (more due to marketing than actual product), and partially because it will be the highest-valued “unicorn” to go public since Twitter (which just happens to have the same part-time CEO as Square). Smaller companies always look to the larger companies for inspiration, if not direct guidance. That’s why Facebook’s IPO helped convince other entrepreneurs that being public was cool again, even though none of their companies would approach Facebook’s value.
For more on Square’s financials, Leena Rao has a good round-up by going here (man, that Starbucks deal is brutal). She also has a post on who owns what (most notable are the VC names that don’t meet the 5% threshold).
• I’ll send a card: Today is The Blackstone Group’s 30th birthday, and it celebrated by reporting an earnings miss. Blackstone president Tony James stressed during a media call that while he does indeed expect a continued public market correction, Blackstone has still managed to bring three companies public (globally) over the past month. He also suggested that there is “already a recession” among global capital equipment and industrial companies.
• Go with the flow: Workday CEO (and former full-time VC) Aneel Bhusri stopped by the Fortune offices yesterday, and spent a bunch of time discussing how tech companies should be valued. First, he said it is incumbent on CEOs of highly-valued private companies to manage employee expectations — just as he said he did after Workday went public and spent some time trading at around $110 per share (it’s now down to $77, which he says is more reasonable).
Second, he thinks we’re going back to valuing companies on cash flow: “If you aren’t generating cash, what are you doing this for?”
• Forgot to mention one more reason that EMC is unlikely to receive a superior takeover bid during its ‘go shop’ process: Almost every major bank is committed to the Dell transaction. Here they are: Barclays, BofA Merrill Lynch, Citi, Credit Suisse, Deutsche Bank Securities Inc., affiliates of Goldman, Sachs & Co. and RBC Capital Markets. All that’s really missing is Morgan Stanley (which is serving as lead financial advisor to EMC) and UBS. So that means a rival bidder would probably have to use UBS and some group of alt lenders, possibly from China. That’s a tough trick.
• New firm alert: Wavecrest Growth Partners has launched as a Boston-based growth equity firm focused on profitable North American healthcare and tech companies. Its two principals are Deepak Sindwani, who just stepped down as a partner with Bain Capital Ventures, and David Lang, a former managing director with TA Associates.
• Transition time: Matt LeBaron has quietly transitioned from a managing director role at American Securities to a senior advisor role. He has been with the New York-based private equity firm since 1999, and serves as chairman of portfolio companies Fairmount Santrol, GT Technologies, and The United Distribution Group.
THE BIG DEAL
• First Data Corp., an Atlanta-based payments technology company backed by KKR, raised $2.6 billion in its IPO. The company priced 160 million shares at $16 per share (below original $18-$20 range), which gives it an initial market cap of $14.7 billion and an enterprise value of $33.6 billion.
The company will trade on the NYSE under ticker symbol FDC, while Citigroup listed as left lead underwriter. It reports a $30 million net loss on $5.57 billion in revenue for the first half of 2015.
VENTURE CAPITAL DEALS
• 23andMe, a Mountain View, Calif.-based genetic testing and data company, has raised $115 million in Series E funding at a reported $1.1 billion valuation. Fidelity led the round, and was joined by Casdin Capital, WuXi Healthcare Ventures, Xfund and return backers Google Ventures, New Enterprise Associates, Illumina Inc. and MPM Capital. Read more.
• Decibel Therapeutics, a Cambridge, Mass.-based developer of medicines to protect, repair and restore hearing, has raised $52 million in Series A funding. Third Rock Ventures led the round, and was joined by SR One. www.debiceltx.com
• Bracket Computing, a Mountain View, Calif.-based provider of virtual infrastructure for multiple heterogeneous clouds, has raised more than $45 million in Series A funding. Fidelity and Goldman Sachs were joined by return backers Allegis Capital, Andreessen Horowitz, ARTIS Ventures, Columbus Nova Technology Partners, Norwest Venture Partners, and Sutter Hill Ventures, plus strategic investors GE and Qualcomm. www.brkt.com
• Galera Therapeutics Inc., a Malvern, Penn.-based developer of cancer treatments, has raised $37 million in Series B funding. Novo Ventures led the round, and was joined by New Enterprise Associates, Novartis Venture Fund, Correlation Ventures and Galera Angels. www.galeratx.com
• Cymax, a Vancouver-based online retailer focused on the home and office furniture verticals, has raised US$25 million in Series A funding from Frind Holdings, BDC Ventures and Salman Partners. Garibaldi Capital Advisors served as placement agent. www.cymax.com
• DrFirst, a Rockville, Md.-based provider of healthcare IT solutions, has raised $25 million in equity funding from Goldman Sachs. www.drfirst.com
• OpenGov, a Mountain View, Calif.-based developer of cloud-based web apps for analyzing and sharing government data, has raised $25 million in Series C funding provided by return backers Andreessen Horowitz, Formation8, Thrive Capital and AITV. Read more.
• Kinnek, a New York-based marketplace for small businesses to find suppliers and manage purchasing, has raised $20 million in Series B funding. Thrive Capital led the round, and was joined by return backers Matrix Partners, Sierra Ventures, Version One Ventures and Angelpad. www.kinnek.com
• Niantic Inc., a social mobile gaming company that recently spun out of Google, has raised $20 million in Series A funding from Pokémon Company Group, Google and Nintendo. The deal also includes up to $10 million in earn-outs. Read more.
• Stockpile, a Palo Alto, Calif.-based developer of gift cards for company stock, has raised $15 million in Series A funding. Backers include Sequoia Capital. www.stockpile.com
• 8i, a consumer media platform for virtual reality, has raised $13.5 million in new VC funding. Backers include from RRE Ventures, Founders Fund Science, Horizons Ventures, Signia Venture Partners, Samsung Ventures, Dolby Family Ventures, Bertelsmann Digital Media Investments, Sound Ventures, Inevitable Ventures, Freelands and Advancit Capital. www.8i.com
• Hatch Baby, a Menlo Park, Calif.-based developer of wireless-enabled smart parenting devices, has raised $7 million in Series A funding led by True Ventures. www.hatchbaby.com
• KAfe Group Ltd., an urban fusion cafe chain in Vietnam, has raised $5.5 million in Series A funding led by Cassia Investments (Hong Kong).
• PubNub, a San Francisco-based cloud-hosted messaging service for building real-time Web and mobile applications, has raised $5 million in new Series C funding. This brings the round total to $25 million, including an earlier first close led by Sapphire Ventures. Other company backers include included Robert Bosch Venture Capital, Sound Ventures, Envision Ventures, Relay Ventures, TiE Angels and Scale Venture Partners. www.pubnub.com
• Service, a Los Angeles-based provider of on-demand customer service solutions, has raised $3.1 million in seed funding. Founders Fund led the round, and was joined by Menlo Ventures, Maveron, Eight Ventures, Arena Ventures and individual angels. www.getservice.com
• DashBid, a New York-based video supply-side platform, has raised $1.7 million in new VC funding from SV Frontiers and Centripetal Capital Partners. www.dashbid.com
• Gitter, a messaging and community tool for open source collaborative projects on Github, has raised £1.45 million in seed funding. Index Ventures led the round, and was joined by Faber Ventures, Nexus Ventures and Kima Ventures. www.gitter.im
• Roostify, a San Francisco-based provider of automated mortgage transaction tech, has raised an undisclosed amount of Series A funding. USAA led the round, and was joined by Colchis Capital and “two Tier 1 banks.” www.roostify.com‘
PRIVATE EQUITY DEALS
• Community Intervention Services Inc., a Brockton, Mass.-based portfolio company of H.I.G. Capital, has acquired Northstar Psychological Services Inc., an Alpharetta, Ga.-based provider of behavioral health services. No financial terms were disclosed. www.southbaymentalhealth.com
• Micronics Filtration Holdings Inc., a Portsmouth, N.H.-based portfolio company of Vance Street Capital, has acquired United Process Control Inc., a Mount Vernon, Ohio-based provider of baghouse inspection, mechanical repair, bag change outs and aftermarket parts. The seller was Roper Technologies Inc. (NYSE: ROP). No financial terms were disclosed. www.micronicsinc.com
• Webster Capital has acquired MedMark Services Inc., a Lewisville, Texas-based provider of opioid treatment, from CHL Medical Partners and Capital Resource Partners. No financial terms were disclosed. www.medmark.com
• Apellis Pharmaceuticals, a Louisville, Ky.-based developer of immunotherapies, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol APLS, with Citigroup listed as left-lead underwriter. The pre-revenue company has raised around $55 million in VC funding, from Morningside Ventures (32.6% pre-IPO stake), AJU IB Investment (7.2%) and Epidarex Ventures. www.apellis.com
• Congatec, a Washington, D.C.-based provider of embedded computing solutions, has filed for a $60 million IPO. It plans to trade on the Nasdaq under ticker symbol CONG, with Stifel and Needham & Co. serving as lead underwriters. www.congatec.com
• Deezer, a Paris-based music streaming service has set its IPO terms to 8.24 million shares being offered at between €36.40 and €49.24 per share. It plans to list in France by the end of this month. Deezer has raised more than $140 million in funding from such firms as Access Industries, CM-CIC Capital Prive and IDInvest Partners. Read more.
• Blucora Inc. (Nasdaq: BCOR) has agreed to acquire HD Vest Financial Services, an Irving, Texas-based broker-dealer that provides wealth management and advisory solutions via tax professionals, for approximately $580 million. Sellers include Parthenon Capital Partners, Lovell Minnick Partners and Fisher Lynch. www.hdvest.com
• KKR has hired BofA Merrill Lynch to review strategic options for SMCP, the parent company of French fashion brands Sandro, Maje and Claudie Pierlot, according to Reuters. Either a sale or public floatation could value SMCP at around €1 billion. Read more.
• WJ Partners has sold Global Medical Imaging, a Charlotte, N.C.-based provider of ultrasound and nuclear medicine sales and services, to JI Ventures for an undisclosed amount. www.gmi3.com
• Dish Network (Nasdaq: DISH) asked the FCC to block Charter Communications’ (Nasdaq: CHTR) proposed takeovers of Bright House and Time Warner Cable (NYSE: TWC), saying they’d be “no better for the public interest” than Comcast’s (Nasdaq: CMCS) failed acquisition attempt of Time Warner Cable. Read more.
• FamilyMart (Tokyo: 8028) has agreed to acquire rival Japanese convenience store chain Uny Group Holdings (Tokyo: 8270) for around $1.4 billion. Read more.
FIRMS & FUNDS
• Catalyst Capital Group, a Canadian private equity firm focused on “distressed-for control” investing, has closed its fifth fund with US$1.5 billion in capital commitments. www.catcapital.com
MOVING IN, UP, ON & OUT
• Icon Ventures has promoted Michael Mullany to general partner. He joined the firm last year as a venture partner, before which he was CEO of Icon portfolio company Sencha. www.iconventures.com
• Bill Murnighan has stepped down as acting director of private equity with the Kentucky Retirement Systems, in order to become a senior investment analyst at CUNA Mutual Group. www.cunamutual.com
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