On deals and dealmakers.
WHERE ARE THEY NOW?
In today’s issue of Term Sheet, I’m providing updates on some of the stories we’ve covered in the past.
Expansive Ventures: Over the summer Term Sheet reported on the unraveling of early stage venture firm Expansive Ventures. Co-founders Adeo Ressi and Jon Soberg had a major falling out involving accusations of office lock-outs, “ambushes” and threats. (Read the details of that here.) Soberg sued Ressi, and in arbitration, a judge ruled in favor of Soberg, requiring Ressi to pay him $3.5 million — $2.5 million in compensation to make up for lost management fees and an additional $1 million in damages to his reputation.
Ressi appealed. Since then, a Santa Clara county mortgage record indicates that Elon Musk, Ressi’s college roommate, loaned him $500,000 and took a lien against Ressi’s home in Palo Alto.
On August 1, Ressi filed a Form UCC1 financing statement, which gives a creditor – in this case, Musk — the right to take possession of assets for repayment. The collateral listed includes Ressi’s real estate, the furniture and fixtures at his Palo Alto Home, his Tesla, his advisory shares and options of three companies (called Mousera, Md Collab, and Sugegstuc), receivables from his accelerator program (The Founder Institute) and web project (TheFunded), and all cash and bank accounts.
When asked about Musk’s involvement, Ressi said “Elon is a long-time friend and supporter, who epitomizes going all-in on business.”
On September 30, Judge Harold E. Kahn in the Superior Court of California confirmed the arbitration award and denied Ressi’s motion to vacate or correct the decision, according to public court documents. In other words, Ressi must pay his former partner the $3.5 million.
On Nov. 11, Ressi filed an appeal to the confirmation. He was scheduled to appear in court on Wednesday for a debtor’s exam, but on Tuesday, he filed for Chapter 11 bankruptcy. (Typically Chapter 11 is for companies, but he has filed as an individual.) In the filing, he lists his assets as between $10 million and $50 million and liabilities between $1 million and $10 million. Musk is listed among his creditors.
The bankruptcy filing puts the pending lawsuit on hold. Expansive Ventures’ fund and its investments remain in limbo. Ressi and Soberg each provided statements to Term Sheet that are too long to include in this newsletter. I have included them in full in the web version of this story on Fortune.com.
Recruiting Scam: Earlier this year Term Sheet unveiled two strange, related scams aimed at the private equity and venture capital industries: One involving fake recruiting firms called Prelude Recruiting and Renaissance Recruiting, a fake VC firm called Sienna Ventures, and the other involving a fake venture capital firm called Asenqua Ventures.
The recruiting scam appears to be back in the form of a new firm called Lynn Recruitment LLC. (It’s separate from a legit firm called Lynn Recruitment in the UK.)
The firm appears to be using a similar email scheme — an attempt to extract a small fee and possibly steal identity data from job-seekers, according to Term Sheet tipsters, and pairing with a PR Newswire press release to make itself appear legitimate. At least one of the bios of the professionals listed does not check out. PR Newswire has since pulled its release about the firm. Emails to Lynn Recruitment have not been returned.
Gurbaksh Chahal: Term Sheet has been vocal about Gurbaksh Chahal, the startup executive who pled guilty to misdemeanor domestic violence and battery charges several years ago. He was removed from his role of CEO of the company he started (because the board failed to cover up the incident), but later resurfaced as CEO of a new company, adtech startup Gravity4. He was sued for gender discrimination and accused of domestic violence for a second time. In August, a judge deemed the second domestic violence accusation in violation of his probation, and he was sentenced to one year in jail. Chahal is appealing the sentence and returned to his role as CEO of Gravity4 in September.
This week, Nin Ventures, a Chicago-based early stage venture capital firm, announced Chahal has signed on as an advisor. I’ve reached out to the firm for comment on their relationship, but heard no response. Notably, Nin Ventures is run by a woman: Nin Desai.
It is impossible to imagine that any firm that has signed on to work with Chahal is not aware of his record of abuse. Which means doing business with him is an implicit signal that your company is simply willing to overlook such actions. There are so many qualified advisors out there. Whatever business benefits that may come from working with, and implicitly approving of, someone who has, on multiple occasions, physically attacked women, can’t be worth it.
That’s it for the updates, a few more notes below…
Housekeeping note: The “Subscribe” link on this newsletter has been broken for the last couple of days but should be fixed now. But just in case: You can go here to subscribe.
New fund note: Slow Ventures has raised its third fund. (See below for details.) Interesting tidbit here: Slow Ventures touts the active role its LPs play in the firm – they help with the sourcing and diligence on deals and offer mentorship, introductions, and business development opportunities to portfolio companies. It’s even part of the pitch the firm made to LPs while raising this fund. The push for firms to add value now goes beyond its GPs, various operating partners, and formal programs, all the way to the limited partners.
You may be thinking, if the LPs have to do all this work, what are they paying Slow Ventures a management fee for? The answer is time. Many of Slow Ventures’ investors are startup execs that want to “give back” to the community via angel investing but don’t have the bandwidth to take a 20 coffee meetings a week. They see Slow Ventures as an alternative to writing their own checks.
LA Auto Show note: My colleague Kirsten Korosec got a peek into the way Ford Motor Company thinks about investing in startups, as Silicon Valley and Detroit increasingly compete and collaborate. A key quote from CEO Mark Fields: “You can throw away a lot of money really quickly.” Read more here.
Pizza note: Several astute (hungry?) readers have pointed out that,yesterday’s Term Sheet included not one but two eight-figure funding deals for pizza chains. Pizza is the new grilled cheese, I guess…
Correction: Yesterday’s column about Snap Inc. misstated the company’s age. It is five years old.
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Lending Club’s Renaud LePlanche has a new startup. Prince Alwaleed open to selling Citi and Twitter stakes. More on KKR’s growth fund. Thiel’s conflicts. The complex tragedy and joy of human existence. Facebook’s unreality. Fake news outperformed real news on Facebook. Meet a fake news writer. Thanksgiving is cancelled. “Cyber sovereignty” in China. China’s cursed unicorns. A new group pushing for corporate transparency. Millennial pink. The latest Theranos stunner by John Carreyou. The professors that peddle mega-mergers.
• Zwift, a Long Beach, Calif.-based interactive indoor cycling company, raised $27 million in Series A funding, according to TechCrunch. Private equity firm Novator Partners led the round, and was joined by Shasta Ventures, Waypoint, Samchuly, and angel investors including Max Levchin. Read more.
• Honeygrow, a Philadelphia-based restaurant group, raised $20 million in Series D funding. Miller Investments led the round.
• Petuum, a Pittsburgh artificial intelligence and machine-learning platform, raised $15 million in Series A funding. Advantech Capital led the round, and was joined by Tencent, Northern Light Venture Capital, and Oriza Ventures.
• Yottaa, a Waltham, Mass. SaaS platform for facilitating online purchases, raised $13 million in funding. Stata Venture Partners led the round, and was joined by General Catalyst.
• Transcriptic, a Menlo Park, Calif. developer of robotic cloud technology for the life sciences, raised $13.4 million in funding. Data Collective led the round, and was joined by Digital Science, WuXi AppTec, and AME Cloud Ventures.
• Glycomine, a San Francisco-based biotechnology company developing therapies for orphan diseases, raised $12 million in Series A funding. Sanderling Ventures led the round, and was joined by Chiesi Ventures, and angel investors.
• Domino, a San Francisco provider of cloud computing software, raised $10.5 million in a funding. Sequoia Capital led the round.
• Particle, a San Francisco IoT platform, raised $10.4 million in funding. Root Ventures led the round, and was joined by O’Reilly Alpha Tech Ventures, and Rincon Venture Partners.
• BetterUp, a San Francisco coaching platform, raised $10 million in Series A funding. DFJ led the round, and was joined by SVAngel and Freestyle.
• CodeFights, a San Francisco online platform for learning coding skills, raised $10 million in Series A funding. E.ventures led the round.
• T-Rex, a New York City financial services technology company, raised $10 million in Series B funding. Safeguard Scientifics led the round, and was joined by Ecosystem Integrity Fund.
• Heptio, a Seattle company that uses Kubernetes to accelerate enterprise software development and increase infrastructure efficiency, raised $8.5 million in Series A funding. Accel led the round, and was joined by Madrona Venture Group. The company was founded by ex-Googlers Craig McLuckie and Joe Beda. Read more at Fortune.
• CoverWallet, a New York City online enterprise insurance management provider, raised $7.8 million in Series A funding. Union Square Ventures led the round, and was joined by Index Ventures, Highland Capital, Two Sigma Ventures, and Founder Collective.
• Yewno, a Redwood City, Calif. personalized learning platform, added $6.5 million in funding from strategic angel investor Desmond Shum. This brings its Series A round to $16.5 million. Existing investor Pacific Capital Group also contributed to the new financing.
• Jongla, a Finnish messaging startup, raised €5 million ($5.4 million) in Series B funding. Investors include Arto Boman, Circlion Capital Oy, Kontino Invest Oy, Takoa Invest Oy, Ingman Finance Oy, and JSH Capital Oy.
• M87, a Seattle provider of machine-to-machine connectivity software, raised $5 million in funding. Madrona Venture Group led the round, and was joined by Qualcomm Ventures, and Trilogy Equity Partners.
• SearchInk, a Berlin software company working to make hand-written documents searchable, raised €4.2 million ($4.5 million) in seed funding. Investors include IBB Berlin, and several angels.
• KnowledgeHound, a Chicago consumer market research company, raised $2.7 million in Series A funding round. Investors include George Spencer at Seyen Capital, Gaspar Group, InvestHer, and BRJ Ventures.
• Atomicorp Inc, a Chantilly, Va. company that develops cloud-based server security software, raised $1 million in seed funding. Blu Venture Investors led the round.
PRIVATE EQUITY DEALS
• General Atlantic has made a Rp1.08 trillion ($80.9 million) million convertible bond investment into PT MAP Boga Adiperkasa, the Indonesian operator of food and beverage brands including Starbucks and Pizza Express.
• LongWater Opportunities has acquired Fox River Mills, an Osage, Iowa-based sock manufacturer. No financial terms were disclosed.
• Charoen Pokphand Foods, which is owned by Thai billionaire Dhanin Chearavanont said it will acquire Bellisio Parent, a Minneapolis-based frozen-food producer for $1.075 billion. Read more at Fortune.
• WellCare Health Plans said it would buy fellow health insurance provider Universal American Corp for about $600 million, according to Reuters. At $10 per Universal American share, WellCare’s offer represents a 12.5% premium on the company’s Wednesday close. Read more.
• Facebook has acquired FacioMetrics, a face recognition technology company started out of Carnegie Mellon.
• Providence Equity Partners is working to find a buyer for Professional Association of Diving Instructors, a Santa Margarita, Calif.-based provider of accredited courses in scuba diving. The sale could value the company at about $1 billion, according to a report in Bloomberg. Read more.
• Exponent Private Equity has acquired mortgage finance provider Enra Group from Livingbridge and other shareholders. Financial terms were not disclosed.
• Sun Capital Partners has sold Admiral Petroleum Company and Lemmen Oil Company, a Coopersville, Mich-based gas station operator, to GPM Investments. Financial terms were not disclosed.
• Summit Partners has recapitalized FineLine Technologies, a Norcross, Ga. provider of data and radio-frequency identification solutions for retailers, consumer brands and manufacturers. Financial terms were not disclosed.
• Inmar, Inc., a Winston-Salem, N.C.-based provider of logistic management services for the consumer goods and healthcare industries, has agreed to acquire Collective Bias, a Rogers, Ark. social media content marketing company. Financial terms were not disclosed. Collective Bias, which raised $11 million in venture funding, is backed by Updata Partners.
• BeyondSpring, a New York City-based biotech company developing therapy for chemotherapy-induced neutropenia, filed to raise up to $100 million in an initial public offering. No pricing terms were disclosed.
FIRMS + FUNDS
• Intel said its venture capital arm would invest $250 million over the next two years in autonomous vehicle technology, particularly IoT companies working in the transportation sector. Read more at Fortune.
• Slow Ventures raised $145 million for its third fund, Slow Ventures III, to back early-stage startups and make follow-up investments in its existing portfolio companies.
• Dallas-based private equity firm Lone Star Funds raised $5.6 billion for its tenth fund, LSF X.
• EMR Capital, an Australian private equity firm, raised $860 million for its second fund, which will focus on investments in copper, gold, potash, and coking coal, according to Reuters. Read more
• Scott Marlette has joined Slow Ventures as a partner. Previously, he was the co-founder of GoodRx, a Los Angeles medical prescription marketplace.
• Andrew Collina has joined Alantra as a managing director in charge of US financial sponsor relationships. He was previously a managing director at BB&T Capital Markets.
• Frank Jordan has joined Crestline Investors as a managing director and head of business development and client partnerships. Previously, Jordan was a partner at GoldenTree Asset Management.