Term Sheet — Thursday, August 25

Aug 25, 2016

Random Ramblings

Some notes to kick off your Thursday...

• Getting in the way of a good story: ESPN yesterday published nearly 11,000 words on the "implosion" of daily fantasy sports companies DraftKings and FanDuel, each of which has been valued at more than $1 billion by venture capitalists and other private-market investors. Great piece. Well, except for the fact that daily fantasy hasn't actually imploded.

Had lots of challenges and missteps, yes. Imploded? No.

You can read my full rebuttal here, which includes exclusive info on how DraftKings just raised new venture capital funding led by Steve Case's Revolution. Strange development, given that the ESPN piece's author said on TV yesterday: DraftKings and FanDuel “can’t raise any more money.… it’s almost impossible for them to raise money."

• Well, that's unusual: If you visit the Charles River Ventures homepage today, you'll be greeted by an obscene message about Donald Trump. It links to this Medium post in which the venerable VC firm says that its entire partnership is standing against the GOP presidential nominee, largely due to his (now shifting) immigration rhetoric (CRV's nine partners hail from 7 countries -- including the U.S., Greece, India, Iran, Israel, Turkey, Venezuela). It's not surprising to see individual investors take political positions, but it's unusual to see an entire firm do so.

CRV also said it will begin "covering the costs for U.S. visas for any CRV company founders," and launched a fellowship program to "provide funding, support and office space for immigrant entrepreneurs."

I also spoke briefly with CRV partner George Zachary, who said the firm is not endorsing any of Trump's rivals. He also is unsure how his fellow partners have voted in past presidential elections.

• Fee follies: Yesterday we discussed how Apollo Global Management had settled with the SEC over improper fee disclosures. Today, the agency has settled with W.L. Ross & Co., the longtime private equity firm led by billionaire Wilbur Ross.

Basically, the SEC says that W.L. Ross miscalculated transaction fee offsets for management fees, causing limited partners to pay around $10.4 million more than they should have to the firm. As part of the settlement, W.L. Ross will reimburse the money to investors (with interest), plus pay a $2.3 million fine.

• Dear Lyft: If you hire an investment bank and open a data room for third parties, you're for sale. End of discussion.

• Follow-up: Earlier this week we discussed how The Clinton Foundation had formed a private equity fund (Fondo Acceso) to invest in Colombian small and mid-sized enterprises (via equity or loans), but how its website had disappeared after a newspaper story last fall about how the fund wasn't locally registered. A few follow-ups:

1. The registration issue is irrelevant, as Colombian private equity funds only are required to register if they plan to raise money inside the country. Fondo Acceso did not.

2. Fondo Acceso's strategy changed in 2013, as part of a broader Clinton Foundation shift, to focus on creating three types of social businesses aimed at poverty alleviation: "supply chain (farmer services and aggregation), inclusive distribution, and vocational training."

3. A Clinton Foundation spokesperson writes: "The Fondo Acceso website was removed since the content was no longer valid due to the change in strategy. Prior to the change in strategy, the website was primarily used by SMEs to apply for funding. Fondo Acceso today supports the current strategy of CGEP by funding the social businesses CGEP creates in Colombia. The activities are led by CGEP’s executive team and its corresponding management and investment committees."

No, this does not explain why the site was still active until a late 2015 newspaper story...

•  65k and counting ... Every time I add another thousand Twitter followers, I ask you to join the others so we can chat/argue/snark throughout the day. Follow me @danprimack.

THE BIG DEAL

•  Mill Road Capital has agreed to acquire Park City, Utah-based headphones maker Skullcandy Inc. (Nasdaq:SKUL), for $196.6 million. The $6.35 per share deal represents a 62% premium over the company’s stock price in early June, when the first reports of takeover talk emerged. It also means that Mill Road has beaten out rival bidder Incipio LLC, which is minority-owned by Goode Partners. Read more.

VENTURE CAPITAL DEALS

•  ClearCare, a San Francisco-based software platform for home care agencies, has raised $60 million in growth equity funding led by Battery Ventures. www.clearcareonline.com

•  Zoomcar, an on-demand car rental platform (i.e., Zipcar) in India, has raised $24 million in Series B funding. Ford Motor Co. led the round, and was joined by return backers Sequoia Capital, Nokia Growth Partners and Empire Angels. Read more.

•  Auth0, a Bellevue, Wash.-based universal identity platform, has raised $15 million in Series B funding. Trinity Ventures led the round, and was joined by return backers Bessemer Venture Partners, K9 Ventures and Silicon Valley Bank. www.auth0.com

•  BlueTalon Inc., a Redwood City, Calif.-based provider of “data-centric security solutions,” has raised $16 million in Series A funding. Maverick Ventures led the round, and was joined by Arsenal Venture Partners and return backers Signia Venture Partners, Data Collective, Divergent Ventures, Bloomberg Beta and Stanford-StartX Fund. www.bluetalong.com

•  Curology, a San Diego-based, has raised $15 million in Series B funding. Advance Vixeid Partners led the round, and was joined by return backers Sherpa Capital and Forerunner Ventures. www.curology.com

•  Sample6, a Cambridge, Mass.-based synthetic biology diagnostic company, has raised $12.7 million in Series C funding. Acre Venture Partners led the round, and was joined by Valley Oak Investments and return backers Canaan Partners and Cultivian Sandbox Ventures. www.sample6.com

•  SelfScore, a Palo Alto, Calif.-based startup that uses “data analytics and machine learning to measure credit potential,” has raised $7 million in new Series A funding. Pelion Venture Partners led the round, and was joined by return backers Accel and Aspect Ventures. www.selfscore.com

•  Prenav, a San Carlos, Calif.-based, has raised $6.5 million in seed funding. Crosslink Capital led the round, and was joined by Haystack, Liquid 2 Ventures, WI Harper Group and return backers like, Pear Ventures. www.prenav.com

•  SkyGiraffe, a San Mateo, Calif.-based enterprise mobility platform “that enables organizations to mobilize line-of-business systems,” has raised $6 million in new VC funding. SGVC led the round, and was joined by Trilogy Equity Partners and individual angels. www.skygiraffe.com

•  Navisens, a San Francisco-based developer of 3D location tracking solutions via smartphone sensors, has raised $2.6 million in seed funding. Resolute Ventures led the round, and was joined by groups like KEC Ventures, Amicus Capital and Arba Seed Investment Group. www.navisens.com

•  Coda Payments, a Singapore-based operator of both an online payment gateway and a consumer-facing gift code distribution platform, has raised $2 million in new VC funding. Backers include IMJ Investment Partners, Golden Gate Ventures and GMO Global Payments Fund. www.codapay.com

•  Treason Toting Co., a Baltimore-based producer of hand-made backpacks and accessories, has raised an undisclosed amount of funding from Sagamore Ventures (the investment group of Under Armour CEO Kevin Plank). Read more.

PRIVATE EQUITY DEALS

•  Brazil Tower Company LP, a developer and operator of wireless communications towers in Brazil, has raised $40 million from New York-based investment firm Silver Swan. www.braziltowercompany.com

•  Guardian Capital Partners has acquired Carson-Dellosa Publishing LLC, a Greensboro, N.C.-based provider of K-8 supplemental education content, from Birch Hill Equity Partners. No financial terms were disclosed. www.carsondellosa.com

•  H.I.G. Capital has acquired a 43,000 square meter industrial compound in Norway. No financial terms were disclosed. www.higcapital.com

•  J.F. Lehman & Co. has agreed to acquire the Heavy Equipment business of Milwaukee-based Oldenburg Group for an undisclosed amount. The business will be renamed Lake Shore Systems, and makes heavy equipment systems for use in harsh operating environments.
www.oldenburggroup.com

•  Leonard Green & Partners has agreed to a $625 million convertible preferred share investment in retailer Signet Jewelers Ltd. (NYSE: SIG), which will use the proceeds to fund a share repurchase program. www.signetjewelers.com

•  Mallinckrodt PLC (NYSE: MNK) has agreed to sell its Nuclear Imaging business to IBA Molecular, a Dulles, Va.-based portfolio company of CapVest, for upwards of $690 million. Read more.

•  Morgan Stanley Energy Partners has acquired a majority equity stake in XRI Holdings LLC, a water supply and pipeline transportation company for upstream oil and gas producers in the Permian Basin of West Texas and New Mexico. No financial terms were disclosed. Sellers include Entia Ventures. www.xriblue.com

•  Phoenix Rehabilitation and Health Services Inc., a Blairsville, Penn.-based portfolio company of 3 Rivers Capital, has acquired Wilmington, Del.-based The Physical Therapy Connection for an undisclosed amount. www.phoenixrehab.com

•  Odyssey Investment Partners has acquired Aero Precision Industries LLC, a Livermore, Calif.-based distributor of military and commercial aerospace and MRO services, from Greenwich AeroGroup Inc., a portfolio company of Berkley Capital. No financial terms were disclosed. www.aeroprecision.com

IPOs

•   Ant Financial, the finance affiliate of Alibaba Group (NYSE: BABA) that controls Alipay, is considering a Hong Kong IPO in the first half of 2017, “after running into regulatory hurdles for a dual listing that would have included Shanghai,” according to Bloomberg. Read more.

•  Lufax, a Chinese online lender most recently valued at $18.5 billion by VCs, is considering a Hong Kong IPO for 2017, according to the WSJ. Read more.

•  Novan Inc., a Durham, N.C.-based developer of dermatological therapies via a nitric oxide platform, has filed for a $60 million IPO. It plans to trade on the Nasdaq under ticker symbol NOVN, with Piper Jaffray serving as lead underwriter. Shareholders in the pre-revenue company include Malin Corp. (16.25% pre-IPO stake), Claris Ventures, OrbiMed Advisors, U.S. Venture Partners, Astellas Venture Management and 5AM Ventures. www.novantherapeutics.com

EXITS

•  DPE Deutsche Private Equity has agreed to sell Westfalia Group, a German maker of towing equipment, to Horizon Global Corp. (NYSE: HZN) for around €167 million (including assumed debt). www.horizonglobal.com

•  Silver Hill Energy Partners, a Dallas-based oil and gas exploration and production company, has hired Jefferies to explore a sale that could value the company north of $2 billion (including debt), according to Reuters. Shareholders include Kayne Anderson and Ridgemont Equity Partners. Read more.

FIRMS & FUNDS

•  Earlybird Venture Capital has held a first close on its new European health-tech fund, which is targeting a total of between €100 million and €120 million. No additional details on the first close were disclosed. www.earlybird.com

MOVING IN, ON & UP

•  Marcos Battisti has joined London-based C5 Capital as a partner. He previously was a managing director with Intel Capital. C5 plans to begin raising up to $150 million for a new VC and private equity fund focused on European cloud startups, which Battisti would lead. www.c5capital.com

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