Term Sheet — Wednesday, November 18

Nov 18, 2015

Random Ramblings

Some items to kick off your Wednesday:
•  Software eats medicine: Andreessen Horowitz this morning will announce that it has raised $200 million for a new fund “focused on the intersection of computer sciences and life sciences.” This is all new money from existing LPs, rather than a carve-out allocation from A16Z’s flagship venture or opportunities funds.
It will be led by new general partner Vijay Pande, who most recently founded the Folding@Home Distributed Computing Project for disease research and, before that, was a professor of chemistry, structural biology and computer science at Stanford. Pande will have economics in existing A16Z funds, while existing A16Z partners also will share in the new vehicle.
“We raised $200 million today, but think this is a very large opportunity and expect that number to grow in the future,” explains Scott Kupor, managing partner at A16Z. “We’re more constrained by the fact that we don’t have 5 Vijays, rather than the market size.”
Pande says that the fund’s investment thesis will lean heavily on the Erooms Law (i.e., Moore’s Law spelled backwards), which suggests anything with highly-specific individual applications (pharma, tuition, etc.) sees its cost rise exponentially on a regular basis. So don’t expect many drug deals. Instead, Pande cites three areas of particular interest: Digital therapeutics, tech-enabled biology and computational medicine.
•  Warning sign? The NY Times reports this morning that lenders on The Carlyle Group's $8 billion purchase of Veritas Technologies from Symantec are postponing their syndication of "several billion dollars" of the deal's $5 billion in leveraged financing, after not finding enough takers. The acquisition itself will move forward, but the banks will hold onto the notes until at least January. Got to wonder if we're going to soon begin seeing more stringent financing conditions on new LBOs...
•  Mutual markdowns: The SEC is beginning to explore how mutual funds value privately-held shares, according to the WSJ. My guess is that they'll find it's entirely subjective, because marking private companies to market -- particularly disruptive tech startups for which there aren't adequate comps -- is one of those things that makes a lot more sense to regulators than it does to those who've stopped to think about it for a few minutes. It also would be interesting to see if they compare the valuations to those of venture capital firms, many of which are even more conservative (which isn't necessarily better or worse).
In related news, yesterday I dove into private market holdings of mutual funds managed by both The Hartford and T. Rowe Price. This included a lot of companies not held by Fidelity, including DraftKings, Glam Media, Lookout and Flipkart. I've posted trhe data and analysis, which you can view by going here.
•  Wipe your nose: One of today’s VC deals is that Lucidworks, a San Francisco-based provider of enterprise search solutions for brands, has raised $21 million in new equity and debt funding. Last week I spoke with company CEO Will Hayes about the fundraising process. Hayes is an early Splunk employee who was brought into LucidWorks late last year, so this was his first time running a venture fundraising process. His thoughts:
“I’m a young, black non-founding CEO of an enterprise tech company, so we joked before going into VC meetings that they’re so into pattern matching that they’ll mistake me for a CMO or CTO,” Hayes said. “That didn’t happen, but I was stunned by some of the things I saw. One guy came in totally jacked up -- my first thought was he had already had way too much coffee -- but then we saw a little bit of cocaine fall out of his nose. It was shocking. There was another guy who literally fell asleep in the middle of his own sentence… Most of our meetings were great, but it really shows that there is a wide gap in terms of investors who want to work with and those you don’t.”

THE BIG DEAL

•  Athos, a Redwood City, Calif.-based maker of “smart fitness apparel,” has raised $35.5 million in Series C funding. Return backer Social+Capital Partnership led the round, and was joined by MAS Holdings, Lightspeed Venture Partners, Felix Capital, DMC, True Ventures and Joe Lacob. Read more at Fortune.

VENTURE CAPITAL DEALS

•  Ola, an Indian ride-hailing startup, has raised $500 million in new VC funding at a reported $5 billion valuation. Investors include Baillie Gifford, Falcon Edge, Tiger Global, SoftBank Group, DST Global and Didi Kuaidi. Read more.
•  WeBank, the Chinese online bank whose major shareholders include Tencent, is in talks to raise around $1 billion at a $5 billion valuation, according to the WSJ. Read more.
•  Lyft is seeking to raise another $500 million in equity funding at a $4 billion valuation (compared to its last mark of $2.5b), according to the NY Times. Read more.
•  IIX Inc., a Santa Clara, Calif.-based software-defined interconnection company, has raised $26 million in Series B funding. Formation 8 led the round, and was joined by AME Cloud Ventures and return backer New Enterprise Associates. www.iix.net
•  Stuart, a European on-demand, same-hour delivery startup, has raised €22 million in Series A funding led by GeoPost, according to TechCrunch. Read more.
•  Lucidworks, a San Francisco-based provider of enterprise search solutions for brands, has raised $15 million in new VC funding (plus another $6m in debt). Allegis Capital led the round, and was joined by return backers Shasta Ventures and Granite Ventures. www.lucidworks.com
•  APX Labs, a Herndon, Va.-based enterprise smartglasses platform, has raised $13 million in new VC funding. Existing backer New Enterprise Associates led the round, and was joined by CNF Investments, GE Ventures, Salesforce Ventures and SineWave Ventures. Read more.
•  Joyable, a San Francisco-based online program for overcoming social anxiety, has raised $8 million in Series A funding co-led by seed backers Thrive Capital and Harrison Metal. www.joyable.com
•  Styletag, an Indian flash sales site,, has raised $7.5 million in angel funding from Jitu Virwani (chairman of Embassy Group). Read more.
•  ArabiaWeather Inc., an Amman, Jordan-based provider of of weather forecasts and content, has raised $5 million in new VC funding. Silicon Badia and Wamda Capital co-led the round, and were joined by Jabbar Internet Group and DASH Ventures. www.arabiaweather.com
•  Descartes Labs, a San Francisco-based satellite imagery analysis company for the agriculture market, has raised $5 million in Series A funding. Cultivian Sandbox led the round, and was joined by Crosslink Capital, TenOneTen, Data Collective and ValueStream Labs. www.descarteslabs.com
•  TinyRx, a San Francisco-based on-demand service for drug prescription delivery and management, has raised $5 million in new VC funding from Eight Partners, Google Ventures and StartX. www.tinyrx.com
•  Tuition.io, a Santa Monica, Calif.-based provider of student loan management solutions, has raised $5 million in Series A funding. Backers include MassMutual Ventures, Mohr Davidow Ventures and Wildcat Venture Partners. www.tuition.io
•  Oak Labs, a San Francisco-based maker of “smart mirrors” for clothing store fitting rooms, as raised $4.1 million in seed funding led by Wing Venture Capital. Read more.
•  Deep Genomics, a Toronto-based developer of deep-learning technology that searches for genetic mutations that lead to disease, has raised C$3.7 million in seed funding. True Ventures led the round, and was joined by Bloomberg Beta. www.deepgenomics.com
•  TuringSense, a Campbell, Calif.-based developer of wearable sports technology, has raised $3 million in seed funding from Angel Plus, ChinaRock Capital, Ideosource, SV Tech Ventures, Zen Water Capital and individual angels. www.turingsense.com
•  Goodbox, an India-based marketplace app that serves as a home for small brick-and-mortar retailers, has raised $2.5 million in Series A funding from Nexus Venture Partners. www.goodbox.in
•  Hostmaker, a London-based hospitality management company for Airbnb hosts, has raised $2 million in seed funding led by DN Capital. www.hostmaker.co
•  Nuvolo Technologies, a New York-based developer of enterprise applications on the ServiceNow platform, has raised $2 million in seed funding from New Enterprise Associates and ServiceNow (NYSE: NOW). www.nuvolotechnologies.com
•  ClearCare, a San Francisco-based provider of software for private duty home care agencies, has raised an undisclosed amount of strategic funding from McKesson Ventures. www.clearcareonline.com

PRIVATE EQUITY DEALS

•  Alpine Investors has acquired a majority stake in Optima Healthcare Solutions, a therapy management SaaS software company with offices in Atlanta and Palm City, Fla. No financial terms were disclosed. Josh Pickus, an Alpine CEO-in-residence, will become Optima’s new CEO. www.optimahcs.com
•  August Equity has sponsored a management buyout of Wax Digital Ltd., a UK-based provider of e-procurement software. No financial terms were disclosed. Sellers include Nova Capital Ltd. www.waxdigital.com
•  Cortec Group has sponsored a recapitalization of Community Veterinary Partners LLC, a Philadelphia-based network of veterinary hospitals (mostly in the northeastern U.S.). No financial terms were disclosed. www.cvpco.com
•  KKR has completed its previously-announced acquisition of a 25% stake in SoftwareOne, a Swiss provider of software portfolio management solutions. No financial terms were disclosed. www.softwareone.com
•  Liquid Asset Brands and Spirits Investment Partners have invested $14 million for a majority stake in Stolen Spirits, a New Zealand-based independent maker of rums and other spirits. www.liquidassetbrands.com
•  Morgenthaler Private Equity has sponsored a recapitalization of B&E Group LLC, a maker and repairer of aerospace components and assemblies. No financial terms were disclosed. B&E has dual headquarters in Southwick, Mass. and Fort Myers, Florida. www.morgenthaler.com
•  Orchid Underwriters, a Vero Beach, Fla.-based portfolio company of Gryphon Investors, has agreed to acquire Platinum Partners, a Peabody, Mass.-based wholesale brokerage firm focused exclusively on the high net worth personal lines marketplace. No financial terms were disclosed. www.platinumpartnersma.com
•  Rift Valley Equity Partners has acquired Arlington Machine and Tool Co., a Fairfield, N.J.-based manufacturer of close-tolerance, machined components for the aerospace, defense, semiconductor and healthcare sectors. No financial terms were disclosed. Heritage Equity Partners served as sell-side advisor. www.arlingtonmachine.com
•  SIM Partners has acquired SyCara Local, a Scottsdale, Ariz.-based digital presence and SEO measurement platform for brands and agencies. No financial terms were disclosed. www.sycaralocal.com
•  SolarCity (NHasdaq: SCTY) today is expected to announce a $113 million investment from Silver Lake Kraftwerk, according to the NY Times. Kraftwerk had invested around $25 million into the company in early 2012, before the solar installer went public. Read more.
•  Tonka Bay Equity Partners has acquired NPI/Medical, an Ansonia, Conn.-based maker of precision-injected, molded components for the medical device and life sciences markets. No financial terms were disclosed. www.npi-med.com

IPOs

•  Match Group and Square both are expected to price IPOs this evening, and begin trading tomorrow. Read more.

EXITS

•  BV Investment Partners has agreed to sell INetU Inc., an Allentown, Penn.-based provider of managed hosting and cloud services, to ViaWest Inc., a unit of Shaw Communications (TSX: SJR) The deal is valued at $162.5 million. www.viawest.com

OTHER DEALS

•  Air Liquide (Paris: AI) has agreed to acquire Radnor, Penn.-based Airgas (NYSE: ARG) for $10.3 billion in cash, or $143 per share (35.8% premium to yesterday’s opening price). Read more.
•  Card.com, a Santa Monica, Calif.-based online financial services provider, has secured a $9 million growth capital facility from Columbia Pacific Advisors and Fenway Summer Ventures. www.card.com
•  ON Semiconductor (Nasdaq: ON) has agreed to acquire Fairchild Semiconductor International Inc. (Nasdaq: FCS) for $2.4 billion in cash, or $20 per share (11.86% premium over yesterday’s closing price). Read more.
•  UBS has agreed to acquire Santander’s Italian private banking business, which has around $2.9 billion in assets under management. Read more.

FIRMS & FUNDS

• Berkshire Partners, a Boston-based private equity firm, has formally begun raising its ninth fund, according to a regulatory filing. It closed its eighth fund in 2011 with $4.5 billion in capital commitments. www.berkshirepartners.com
• OnRamp Fund has been launched by Lawrence Ng (co-founder of Oversee.net) as a $10 million incubator focused on early-stage companies. www.onrampfund.com
• Tritium Partners, an Austin, Texas-based private equity firm focused on the lower middle-markets, has closed its debut fund with $309 million in capital commitments. Tritium was founded by former Austin Ventures partners David Lack and Phil Siegel. www.tritiumpartners.com

MOVING IN, UP, ON & OUT

•  Isauro Alfaro has joined The Blackstone Group as a senior advisor to focus on investment opportunities in Mexico. He is co-founder of Alfaro, Dávila y Ríos and, before that, was managing director and head of Credit Suisse Mexico. www.blackstone.com
•  Michael Geldart has joined Denver-based private equity firm Excellere Partners as a partner. He previously was chief operating officer of BioTelemetry (Nasdaq: BEAT). www.excellerepartners.com
• S. “Soma” Somasegar has joined Madrona Venture Group as a venture partner. He had spent the past 27 years with Microsoft, most recently as corporate VP of the company’s developer division. www.madrona.com
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