ALL DEAL EVERYTHING
Some very brief notes today, as I spent a chunk of the morning on Twitter’s unusually early earnings call. In case you’ve been following the reported sale talks on that turnaround story, CEO Jack Dorsey kicked off the sale with a flat “no comment” on deal chatter.
Presumably he wants to keep Twitter independent. In that sense, the company’s slowness to fix its bullying problem has worked perversely to its advantage. (Salesforce reportedly walked away over abuse concerns.) On today’s call, execs touted product improvements and completely ignored analyst questions about M&A. Investors, desperate for some form of hope, traded the stock up, in part, because of a fresh round of layoffs.
• NXP, NBD: Another day, another mega-merger. Qualcomm is paying $47 billion for NXP Semiconductors ($38 billion excluding debt). By deal value, tech M&A is set to utterly dwarf that of IPOs this year. That’s great news for M&A bankers, who love telling me with a giant smile on their faces that “the IPO machine is structurally, permanently busted for innovative tech companies.” They argue that the public markets are not so great for mature tech companies, either. They’re holding out for a big, Fortune 100 take-private. (A favored rumor/fantasy is SoftBank using its $100 billion fund to take a behemoth like IBM private.)
• On the Other Hand: One person’s busted market is another’s opportunity. By now, the image of the public-market-fearing startup founder is so well-known that we assume every founder thinks they can carry on, unprofitably, with their giant Saudi Arabian cash piles and inflated paper money valuations, for eternity.
But a small (teeny tiny) minority of founders is bucking that trend: WeWork CEO Adam Neumann has declared his company unafraid of the public markets. Earlier this year he even taunted CEOs that hide behind their unicorn valuations. Private market valuations are merely “what one person is willing to sell for and one person is willing to buy,” he said. “Value in the public markets—that becomes a different story.”
Yesterday we got confirmation that Snap Inc. (fka Snapchat) CEO Evan Spiegel feels the same way. Snap is planning to raise as much as $4 billion from the public markets as soon as March. The reports have been swirling for some time now, but new details on size and timing make it a lot more real.
There’s one important difference in the banker bluster around mega-deals and IPOs, and that’s the payday. Where you can bet the bankers on Qualcomm-NXP or AT&T-Time Warner are enjoying some hefty fees for their work, it’s fair to assume the bankers on Snap’s IPO, other high profile ones like it, are working for free or close to it just for the branding.
• Cheese Stands Alone: Every time an innovative startup creates a revolutionary new business model (subscription commerce! meal kits! streaming music!), zillions of competitors flood the market with derivative products. None of it matters. Most likely this novel new market only has room for one winner. Even after it consolidates down to two competitors, they’ll eventually end up merging. My favorite example of this is Sirius and XM.
That’s why I was not surprised to read that Groupon finally bought its well-funded, long-struggling daily deals competitor LivingSocial for a “not material” price yesterday. I won’t be surprised to see similar moves, down the line, in meal kits, daily fantasy sports apps, food delivery, razors (yes, those are startups now), even ride-hailing.
• Lastly: Thank you for your many well-wishes yesterday. My inbox is completely overwhelmed with feedback and story ideas – please, keep it coming.
• And about that: This newsletter has an anonymous tipbox, which is a fantastic place to send deal scoops, story ideas, or anything you don’t want traced back to you. I also use Confide (find me via my Fortune email address) if you prefer your messages to disappear.
Finally, thank you (YES, I SAW IT) to the hundreds of you that pointed out the broken link to my twitter account yesterday. Here’s the correct link. See you out there!
VENTURE CAPITAL DEALS
• Busfor, a Russia-based online bus company, has raised $20 million led by Inventure Partners. Russian equity firms Baring Vostok, and Elbrus Capital all participated. Read more.
• Rokid, a Chinese AI and robotics company, has raised $65 million in Series B funding. IDG Capital Partners led the round, and was joined by Walden International. www.rokid.com/
• Bonesupport AB, a Swedish medical technology company that develops treatments for bone fractures, has raised $37 million in equity and debt funding. Tellacq AB led the round, and was joined by asHealthCap, Lundbeckfond Ventures, Industrifonden, AP3 and Carl Westin. www.bonesupport.com/en-us/
• Wochit, a New York City-based video software company, has raised $13 million in funding from ProSieben, Singapore Press Holdings’ SPH Media Fund, Carlo de Benedetti and existing investors Redpoint, Marker LLC and Cedar Fund. www.wochit.com/
• ForeverCar, a Chicago-based provider of extended service protection plans, has raised $10 million in funding, according to Crain’s. CUNA Mutual Group’s venture capital arm led the round, and was joined by KDWC Ventures and Jai Shekhawat. Read more.
• NanoPay, a Toronto-based payments company, has raised $10 million in Series A funding from Merchant Banking Division of Goldman Sachs, APAGM Services LLC (Andrew Prozes), Jarnac Capital Management Inc. and Rohatton Inc. nanopay.net/
• Imzy, a Salt Lake City, Utah-based social media company founded by ex-Reddit employees, has raised $8 million in Series A funding. Index Ventures led the round. www.imzy.com/
• DemystData, which uses big data to create credit profiles and is based in New York City, has raised $7 million in Series B funding. MissionOG led the round, and was joined by Notion Capital and and Singtel Innov8.
• PointGrab, an Israeli smart home sensor company, has raised $7 million in funding from Philips Lighting, Mitsubishi UFJ Capital Co. Ltd (MUCAP), and ABB Technology Ventures (ATV). www.pointgrab.com/
• Super League Gaming, a Los Angeles-based interactive video game league, has raised $5 million in funding from Toba Capital and aXiomatic. superleague.com/
• Securly, a Santa Clara, Calif.-based online platform for schools, has raised $4 million in Series A funding. Owl Ventures led the round. www.securly.com/
• BrainCheck, a Houston-based concussion diagnosis and monitoring app, has raised $3 million in seed funding. braincheck.com/
PRIVATE EQUITY DEALS
• Hamilton Robinson Capital Partners has recapitalized Unifiller Systems, Inc., a British Columbia-based baking and industrial food production manufacturer. www.unifiller.com/
• ATL Partners and British Columbia Investment Management have made an undisclosed, controlling investment in Pilot Freight Services, a Lima, Penn.-based transportation and logistics services provider. www.pilotdelivers.com/
• Snap Inc., a Venice, Calif.-based social media app maker, will seek to raise as much as $4 billion in its initial public offering. The offering could value it in the $25 billion to $35 billion range. Read more.
• ZTO Express, a Chinese package delivery company, has raised $1.4 billion in its initial public offering, the biggest U.S. IPO this year. The company priced 72.1 million shares at $19.50 a share, above its previously indicated range of $16.50 to $18.50 a share. ZTO Express is backed by private equity firms Warburg Pincus, Hillhouse Capital and venture capital firm Sequoia Capital. Read more.
• ConvaTec, a British medical tech firm, has raised £1.5 billion ($1.82 billion) in a stock market listing. The offer was priced at 225 pence per share, at the lowest point of its previously indicated range of 225 pence to 275 pence. In the offering, Nordic Capital and Avista Capital Partners will hold 45.1 percent and 19.5 percent of the shares. www.convatec.com/
• Qualcomm Inc has agreed to buy NXP Semiconductors NV, a Dutch semiconductor manufacturer, for $47 billion including debt. The equity value of the deal is $37.88 billion. Qualcomm said it would offer $110 per share, or 11.5 percent above NXP Semiconductor’s closing price on Wednesday. Read more.
• Bloomreach, a Mountain View, Calif.-based cloud marketing company, has acquired Hippo, a Dutch web content management company, for an undisclosed amount, according to TechCrunch. Bloomreach has raised $97 million in funding from Bain Capital Ventures, Battery Ventures, Lightspeed Venture Partners, New Enterprise Associates, and Salesforce Ventures.
• Verizon is buying the technology behind Vessel, a San Francisco-based video company founded by former Hulu CEO Jason Kilar, for an undisclosed amount. Verizon will shut down the service. Vessel had raised $132.5 million from Benchmark, Greylock Partners, Bezos Expeditions, Comcast Ventures, IVP, Saban Capital Group, and Third Wave Digital. www.vessel.com/
• GTCR has agreed to sell Camp Systems International Inc, a Merrimack, N.H.-based aviation software firm, to Hearst. No financial terms were disclosed, although reports suggest the deal valued the company at around $2 billion. Read more.
• Flexera Software, a Itasca, Ill.-based software asset management company, has acquired Palamida, a San Francisco-based commercial software company. Palamida has raised $18.5 million from Walden Venture Capital, Mitsui Global Investment, and HWVP. www.palamida.com/
• Oaktree Capital Management LP has acquired Trench Plate Rental Co, a provider of trench safety equipment to the underground construction industry, from PWP Growth Equity. No financial terms were disclosed. www.tprco.com/
FIRMS + FUNDS
• Javelin Venture Partners, a San-Francisco-based early-stage venture firm, has closed its fourth fund with $125 million. javelinvp.com/
• Freeport Financial Partners LLC, a Chicago-based middle-market direct lending manager, has raised $518 million for its third fund.
• Alex Gurevich is now managing director of Javelin Venture Partners. He previously was a partner at the firm. javelinvp.com/
• Christian Bearman is joining Situs, a a Houston–based provider of commercial real estate advisory services owned by Stone Point Capital, as CEO of Situs Europe. He was previously head of corporate development and operations at Valad Europe. www.situscos.com/
• Bob Kelly has joined Ignition Partners, a Bellevue-based early stage business software venture capital firm, as managing partner. He was previously corporate vice president for the cloud and enterprise business development and strategy at Microsoft. www.ignitionpartners.com/
• Richard Frankl has joined AHS Staffing, a Edmond Okla.-based healthcare staffing services provider owned by BelHealth Investment Partners, as chief financial officer. Previously he was vice president of finance at Acosta Sales & Marketing, which is owned by Carlyle. http://ahsstaffing.com/
• Mohamad Makhzoumi and Chetan Puttagunta have been promoted to general partners at New Enterprise Associates. They were previously partners at the firm. www.nea.com/
• Michael Farah has been promoted to partner, and Kam Shah to principal, at Linden Capital Partners. In addition, Michael Bernard and Max Gaby have joined the healthcare private equity firm as vice presidents. Bernard previously worked at 3i Group and Gaby was most recently at GTCR. www.lindenllc.com/
• Melanie Goward has joined Maven Capital Partners as an investment director on the firm’s London team. She was previously a fund manager at Finance Wales. www.mavencp.com/