Term Sheet — Monday, November 14

Nov 14, 2016

ET CETERA

Hello from the home office, where any non-Trump news seems beside the point. A few brief notes to kick off your Monday:

Silicon Valley continues to react to the new reality. While Peter Thiel has been named to Trump’s transition team, his investment partners are speaking out against the President-Elect. In a blog post over the weekend, Geoff Lewis, a partner at Thiel’s Founders Fund, expressed his fears about the way social media has polarized the country, and about Trump’s stated threats to the First Amendment. “If some of the most frightening rumors circulating already are true, then I will face retaliation just for writing these words today,” he wrote.

At Y Combinator, where Thiel is a part-time investor, a pro-Trump startup CEO was recently removed from the accelerator program’s network after he engaged in harassing Facebook posts with other community members, BuzzFeed News reports. The founder politicized the incident, arguing he is being censored because of his political views. Y Combinator argued the founder’s profane and threatening messages were a clear example of harassment.

At Facebook, where Thiel is a board member, employees are questioning their company’s role in spreading misinformation. CEO Mark Zuckerberg recently used the same defense he’s used to avoid defining Facebook as a media company for years: “Identifying the ‘truth’ is complicated.” Naturally, the news fueled the spread of fake stories about Zuckerberg’s political views on (where else?) Facebook.

If this election has shown us anything, it’s that online communities don’t police themselves very well when it comes to hoaxes, harassment, or merely stretching the truth. As I wrote earlier this year:

Web services like Twitter had long hoped that the vibrant online communities they created would police themselves. Trolls and bullies would be shamed into playing nice.

But mob mentality and the impersonal way screens dehumanize digital communication have allowed hatred and venom to flourish online. Somewhere along the way to the web’s starry-eyed promise of a connected world, we lost track of common decency. Online harassment of women is becoming an “established norm,” according to a recent study by cyber­security company Norton, which found that 76% of the women under 30 surveyed had experienced abuse or harassment online.

Talent Wars: Bloomberg argues that the uneven year in startup successes and failures has hurt the startup world’s ability to recruit top talent. High private market valuations have raised questions about how much the stock options at a company like Uber or Airbnb can actually increase. Meanwhile high-profile failures make the risk seem a bit too risky for workers entering the prime earning years of their careers. Instead, workers are opting for stable jobs with higher salaries at public companies, the story argues. The evidence for the recruiting problem is mostly anecdotal, but if true, that’s a huge problem. I have yet to meet a startup CEO who doesn’t see recruiting as one of their top priorities.

It can be hard to tell from the outside which startups have real business models and which ones are hype machines. But there’s an easy way startups can show the world their businesses are solid: They can go public. I imagine the aforementioned businesses, which passed the “risky startup” phase years ago, are waiting to resolve some regulatory issues before they IPO. But if recruiting truly becomes a problem, why not voluntarily report GAAP earnings? It would be an easy way to put a stop to all the leaks and speculation about their business models, while advertising to potential hires that they’re here for the long haul. Until then, all we have to go on is executives telling us to trust them. This year there’s been enough instances of broken trust that I can understand why recruits are skeptical.

Frontier markets: Big buyouts are fading in Africa, while smaller deals pick up steam. KKR and Carlyle have been slow to deploy their funds dedicated to the continent, Reuters reports:

Around 75% of deals in the first half of 2016 were below $250 million, with most below $100 million. In 2014, around 70% of funds went on buyouts of more than $250 million.

Autotech: I often ask investors which category is most overhyped. Lately, their answer has been “mobility.” It started when General Motors shelled out $1 billion for tiny Cruise Automation and Uber paid $680 million for Otto, a fledgling trucking startup. Now it seems like a new mobility startup raises funding every week, and from what I understand, the valuations have increased dramatically throughout the year.

But startups, big auto and venture funds aren’t the only ones doing deals. Today Samsung Electronics announced it would pay $8 billion for Harman International Industries. Harman gets around 65% of its revenue from auto-related sales. Except more deals to follow.

Speaking of Mobility: This is an unusual deal: Ride-sharing startup Getaround has partnered with a 15-year-old San Francisco non-profit called City CarShare. In the deal, City CarShare will hand over its parking spaces and fleet to Getaround, which will handle bookings from Carshare’s 20,000 active members through its app, the San Francisco Chronicle reports. The reason for the deal? The non-profit could no longer compete with its venture-backed peers.

Correction: Last week's Term Sheet included the incorrect funding amount for vacation rental platform Vacasa. The correct information is listed below.

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…AND ELSEWHERE

Uncertainty putting the brakes on Chinese dealmaking. Life as an Amazon driver.

VENTURE DEALS

Roofstock, an Oakland, Calif. online marketplace for single-family rentals, raised $20 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by Khosla Ventures, Bain Capital Ventures, Nyca Partners, QED Investors, and SV Angel.

Vacasa, a Portland, Ore. tech-enabled vacation rental platform, raised an additional $5 million from Assurant, a risk management provider, as an extension to its previously announced Series A round of funding. The capital brings Vacasa's Series A funding to a total of $40 million.

CurrencyFair, a Dublin peer-to-peer currency exchange marketplace, raised €8 million ($8.6 million) in funding, according to VentureBeat. Octopus Ventures and Frontline Ventures led the round. Read more.

Perq, an Indianapolis marketing technology and advertising company, raised $1.7 million in funding from 4G Ventures, according to the Indianapolis Business Journal. Read more.

PRIVATE EQUITY DEALS

Graham Partners has acquired Mercer Foods, a Modesto, Calif.-based freeze-dried food provider. No financial terms were disclosed.

Marlin Equity Partners has acquired Test Direct, a U.K. software testing and quality assurance provider. The company will merge with Fairfield, Conn.-based QualiTest Group, another Marlin Equity Partners portfolio company.

Endeavour Capital has invested in OFD Foods, an Albany, Ore.-based company that produces freeze-dried ingredients.

OTHER DEALS

Novartis AG is in talks to acquire Amneal Pharmaceuticals, a Bridgewater, N.J.-based generic drug maker, for as much as $8 billion, according to Bloomberg. Read more.

Samsung Electronics has agreed to acquire Harman International Industries, a Stamford, Conn.-based U.S. auto-parts supplier and technology company, for around $8 billion. The all-cash deal values Harman’s stock at $87.65 per share, a 28% premium over the company’s Friday closing price. Read more at Fortune.

Siemens has agreed to buy Mentor Graphics, a Wilsonville, Ore.-based company that makes technology used to design semiconductors, for $4.5 billion in an all-cash deal. The industrial giant said it would pay $37.25 per share for the company, a 21% premium to its closing share price Friday. Read more at Fortune.

• French insurer AXA has agreed to sell its insurance broking arm Bluefin to Marsh, a New York City-based insurance company for around £295 million pounds ($369 million), according to Reuters. Read more.

Perella Weinberg Partners and Tudor, Pickering, Holt & Co. have agreed to merge. The financial services firms are based in New York City and Houston, Texas, respectively. The combined entity will be called Perella Weinberg Partners. TPH’s energy practice will continue operate under its existing name. Together, the firms have more than $12 billion in assets under management and more than 650 employees.

EXITS

Facebook has agreed to buy CrowdTangle, a Baltimore media-tracking company. Financial terms were not disclosed. CrowdTangle raised $2.2 million from investors including Advancit Capital, Betaworks, BoxGroup, and Lerer Hippeau Ventures. Read more at Fortune.

Blackstreet Capital Holdings sold Premier Care, a South Daytona, Fla. company that sells bathtubs and showers designed for people with restricted movement or disabilities, to the company's management.

FIRMS + FUNDS

Homestead Capital USA, a private equity firm that invests in U.S. operating farmlands, raised $400 million in capital commitments for Homestead Capital USA Farmland Fund II, its second fund.

NEW JOBS

Freya Macken has joined Aurelius Equity Opportunities SE & Co., a European mid-market investor, as an associate on its U.K. team. Previously Macken was an associate at Credit Agricole.

Align Capital Partners has hired seven new employees. Joining the private equity firm’s Cleveland office: Rick Costello as an operating partner, Katie Noggle as a director of business development, Matt Beesley as a vice president, and Dustin Brode as an associate. Joining the firm’s Dallas office: Jonathan Vadiee and Kurt Smentek as associates, and Joey Delgado as an executive assistant.

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