term sheet

By Dan Primack
July 14, 2016

Random Ramblings

So far this year in the U.S. there have been over 500 children unintentionally injured or killed by a firearm. Last year, over 200 American adults were unintentionally shot by a child using a gun, with more than 80 fatalities. There also will be more than 10,000 suicides by firearm, often by teens or young adults who use a gun owned by their parents.

These are the sorts of tragedies that I know upset a lot of venture capitalists. Not only because VCs are human, but also because I see many of the social media posts whenever one of these horrors gets widespread public attention. Very often those posts include some sort of plea for gun control ― sometimes mild reform, sometimes outright repeal of the 2nd Amendment.

But here’s what I concluded yesterday, after our session on smart-gun technology during Fortune Brainstorm Tech: VCs are unintentionally complicit in this epidemic.

There currently are many entrepreneurs working on smart-gun technologies that could take a giant chunk out of teen suicide and unintentional firearm deaths. Some are working in fingerprint technologies, which would primarily be used by target shooters and the like. Some are working on RFID technologies, which would prevent a gun from being fired by anyone not carrying the proper token (such as in a watch or a bracelet or even inserted surgically just under the skin). Some are working on smart-grip technology, which can recognize the “proper” user.

The trouble, however, is that almost no venture capitalists have interest in funding these entrepreneurs. “It’s about investment,” said Margot Hirsch, president of The Smart Tech Challenges Foundation. “It’s very hard to create a real technology company on just grant funding.”

To be sure, the preferred VC metric of TAM (total available market) is not an issue here. There are going to be around 15 million firearms sold in the U.S. this year, and surveys have shown that many buyers would purchase a smart-gun, were it to be both available and reliable (to date, no smart gun has ever been commercially available in the U.S.). But smart gun entrepreneurs get a nearly-universal cold shoulder from VCs, some of whom cite regulatory risks that don’t seem to bother them when investing in Uber or Airbnb or a pharmaceutical company.

Legacy firearm manufacturers are not going to do the R&D here. Namely because they view the politics as too tricky, with many of their most loyal customers viewing smart guns as backdoor gun control (which it needn’t be). As always, real technological disruption will come from somewhere else, financed largely by venture capitalists.

Or it won’t. And more kids will die.


THE BIG DEAL

• Dalian Wanda Group Co. is in talks to acquire a 49% stake in Paramount Pictures from Viacom Inc. (Nasdaq: VIAB), according to the WSJ. Such a deal could value Paramount at between $8 billion and $10 billion. Read more.


VENTURE CAPITAL DEALS

• Unity Technologies, a San Francisco-based software platform for mobile game developers, has raised $181 million in Series C funding at around a $1.5 billion post-money valuation. DFJ Growth led the round, and was joined China Investment Corp., FreeS Fund, Thrive Capital, Max Levchin and return backers Sequoia Capital and WestSummit Capital. Among the games using Unity are Pokemon Go. Read more.

• Bay Dynamics, a San Francisco-based provider of cyber risk analytics, has raised $23 million in Series B funding. Carrick Capital Partners led the round, and was joined by return backers Comcast Ventures. www.baydynamics.com

• Docent Health, a Boston-based healthcare experience platform, has raised $15 million in Series A funding from Bessemer Venture Partners, NEA and Maverick Ventures. www.docenthealth.com

• Caremerge, a Chicago-based post-acute care coordination platform, has raised $14 million in new VC funding. Insight Venture Partners led the round, and was joined by return backers Grażyna Kulczyk, Cambia Health Solutions, Ziegler LinkAge Longevity Fund, GE Ventures, and Arsenal Venture Partners. www.caremerge.com

• Magnolia Medical Technologies, a Seattle-based developer of a blood collection system and in vitro diagnostic testing solutions, has raised $13.8 million in Series B funding led by HealthQuest Capital. www.magnolia-medical.com

• Indegy, an Israeli provider of industrial cybersecurity solutions, has raised $12 million in Series A funding. Vertex Ventures led the round, and was joined by Aspect Ventures, SBI Holdings and return backers Schlomo Kramer and Magma Venture Partners. www.indegy.com

• Appthority, a San Francisco-based provider of enterprise mobile threat protection solutions, has raised $7 million in Series B funding. Trident Capital Cybersecurity led the round, and was joined by US Venture Partners, Venrock, Blue Coat Systems and Knollwood Investment Authority. www.appthority.com

• Augmenix Inc., a Waltham, Mass.-based developer of invasive hydrogel products to improve outcomes following cancer radiotherapy, has raised $6 million in Series E funding. Existing backers include Excelestar Ventures, Catalyst Health Ventures and Sparta Group. www.Augmenix.com

• Snupps, a London-based visual organizer and social network, has raised $4.75 million in new VC funding from individual angels and family trusts.

• FiveAI, a London-based artificial intelligence startup, has raised $2.7 million in new VC funding. Amadeus Capital Partners led the round, and was joined by Spring Partners and Notion Capital. www.five.ai


PRIVATE EQUITY DEALS

• Ardian has acquired a majority stake in Ionisos, a French-based provider of cold sterilization services, from Agilitas. No financial terms were disclosed. www.ardian.com

• Premise Health, a Brentwood, Tenn.-based worksite engagement company owned by Water Street Healthcare Partners, has acquired TransformHealthRx Inc., a company focused on onsite and multi-employer health and wellness centers. No financial terms were disclosed. www.premisehealth.com

• Thoma Bravo has agreed to acquire Imprivata (NYSE: IMPR), a Lexington, Mass.-based healthcare IT security company, for approximately $544 million. The $19.25 per share deal represents a 33% premium to Imprivata’s closing stock price on Tuesday. www.imprivata.com

• Titan Spine, a Mequon, Wis.-based developer of surface-enhanced spinal interbody fusion implants, has raised “a substantial round of financing” from Southlake Equity Group. No financial terms were disclosed. www.titanspine.com

• Permira, Thoma Bravo and Vista Equity Partners are among the private equity firms conducting preliminary due diligence on McAfee, the computer security business being sold off by Intel Corp. (Nasdaq: INTC), according to Bloomberg. Read more.


IPOs

• Line, the Japan-based operator of a messaging app that is popular in Asia, begins trading today in both New York and Tokyo, following its $1.1 billion IPO. Read more.


EXITS

• The Carlyle Group is in talks to sell a stake in Brazilian lingerie maker Scalina SA via a debt restructuring, according to Reuters. Read more.

• Waterland Private Equity is in talks to sell Dutch waste management group Attero for around €1 billion, according to Reuters. Read more.


OTHER DEALS

• Hasbro (NYSE: HAS) has agreed to acquire Irish animation studio called Boulder Media for an undisclosed amount. Read more.

• Koninklijke Ahold NV and Delhaize Group have agreed to sell 86 U.S. supermarkets, in order to win FTC approval for their merger. No financial terms were disclosed for the deal, which will include the sale of 38 Food Lion stores to Weis Markets (NYSE:WMK), 22 Food Lion stores to Supervalu (NYSE: SVU) and smaller divestitures to Albertsons, Big Y Foods and Publix Super Markets. Read more.

• Monsanto (NYSE: MON) is considering an offer for BASF’s agriculture-solutions unit, according to Bloomberg. Read more.

• Tencent (HK: 700) has agreed to acquire a control stake in music streaming company China Music Corp. at an enterprise value of around $2.7 billion, according to the WSJ. Read more.


FIRMS & FUNDS

• Minella Capital Management has agreed to acquire a majority stake in W.E. Donoghue & Co., a Norwood, Mass.-based investment advisor with $1.6 billion in client assets under management. No financial terms were disclosed. www.donoghue.com


MOVING IN, ON & UP

• Charlie Denison has stepped down as a principal with Adams Street Partners, where he has worked for the past seven years. No word yet on his future plans. www.adamsstreetpartners.com

• Deutsche Bank has named promoted Charlie Dupree to head of M&A investment banking in the Americas. Read more.

• Stephen Fromm, former vice chairman of Deutsche Bank’s financial institutions group, has joined Star Mountain Capital as a senior advisor. www.starmountaincapital.com

• Faiza Sayeed is expected to be named presiding partner of Cravath Swaine & Moore, the first woman to hold the role, according to the NY Times. She currently helps lead the law firm’s M&A practice. Read more.

• Natalie Tydeman has stepped down as a senior partner GMT Communications Partners, a European private equity firm that also is bailing on a new fundraise in favor of a deal-by-deal model, according to Dow Jones. The story also reports that senior advisor Massimo Prelz and principal Francois Stoessel also left GMT. No word yet on future plans for any of them. Read more.

• Howard Weiss has joined Stella Point Capital as chief financial officer. He previously was senior VP and CFO of Castle Harlan. www.stellapoint.com

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