BLURRED LINES, TRANSITIONS, ACCELERATORS
Oh SNAP: For the rest of the week, the tech press will be hitting refresh on the SEC’s website waiting for the Snap S-1. Today I’ll be doing so from the company’s hometown of Los Angeles, in a room of local investors who won’t be getting rich in the IPO. Snap’s early investors do not include any hometown firms or angel investors. (Upfront, Greycroft, Pritzker Group, A-Grade, Anthem, to name a few…)
Excluding Pritzker Group, the same thing happened with The Honest Company, which was even started in L.A. (Snap technically moved here after starting at Stanford.) Missing the next one, some venture associates tell me, is a fire-able offense.
Despite the disconnect, there is more excitement than bitterness about what Snap’s IPO will do for the L.A. tech scene. They’re banking on the fact that newly rich Snap employees will become active angel investors, and many of them will spin out and start their own companies. (Note: This item has been updated to note that Pritzker Group invested in The Honest Company.)
In Transition: Sequoia Capital is passing the torch from Jim Goetz to Roelof Botha. Goetz will continue to do investments, but Botha, alongside Doug Leone and Neil Shen (of Sequoia Capital China), will be the firm’s official “stewards.” That’s Sequoia’s term for a team captain in charge of preparing the firm for its next generation, focusing on high-level functions like strategy, mentoring, and fundraising.
The firm has a philosophy of not letting its partners stick around past their prime. (This is not a problem for Goetz yet – he is 51 and his biggest win, an approximate a 3578091238014x return on WhatsApp, happened just three years ago.)
Connie Loizos at TechCrunch points out that it’s likely Sequoia will raise another U.S.-based venture fund this year. Most of the big firms have been on a two-year re-up cycle, and Sequoia’s latest fund is a 2015 vintage. (This item has been updated to note that Doug Leone is a steward of Sequoia.)
Blurred lines: Last week Term Sheet discussed the need for private equity firms to be more creative in their deal sourcing. There are a lot of reasons behind that trend, including increased consolidation, greater competition from corporations with huge cash piles to spend with less regard to pricing, and increasingly massive fund sizes.
Activist investors are can take some blame, too. Activists often push for the same changes a private equity firm would: New management, divestitures, acquisitions, cost-cutting. If a company’s already been fixed up while it’s public, there’s less value for buyout firms to extract (or in their parlance, there’s less value for them to add) when they take it private.
Now activist investors are taking another tactic from buyout firms: Actual buyouts! Reuters reports that activists are increasingly looking at expanding into private equity-style investments. Hedge fund Elliott Management is one example of a firm that’s blurring the line, most recently pushing LifeLock to start an auction after it expressed interest in buying.
PE pros might be asking, “What’s wrong with activists pushing companies to start sale processes? More targets for us!” The problem is that the activists also expect a piece of the action after a deal is done. Elliot has been striking deals where it retains a stake in the company once it goes private. That’s where it gets interesting. Some buyout firms aren’t willing to share, according to Reuters, like Thoma Bravo’s “snub” of Elliot in its buyout of Riverbed Technology.
Now Elliott has its own buyout arm called Evergreen. As its name suggests, Evergreen’s money doesn’t come from a traditional private equity-style fund – Evergreen is investing from the same pool of capital all of Elliott invests from.
YCACLU: The ACLU has joined startup accelerator Y Combinator, in part to help the non-profit figure out how to most efficiently deploy the $24 million it raised last weekend. It’s not the first time YC has backed a non-profit (where the “investment” is essentially a donation). The program began doing that in 2013.
THE LATEST FROM FORTUNE...
• $1.9 billion worth of business robots.
• BlackRock’s ETF hits $1 trillion.
• VW and Bosch to pay $1.6 billion in diesel scandal.
• Ray Dalio warns on Trump’s policies.
• The worst January in 30 years for the dollar.
• We’re running low on bacon.
• Uber makes it easier to #DeleteUber.
• Elaine Chao is confirmed to head the Transportation Dept.
• A Facebook video app for set-top boxes.
81% of Capital One’s $690 million in taxi medallion loans are at risk of default. Peter Thiel became a New Zealand citizen without ever having lived there. Thiel vs. his portfolio companies. The tough life of China’s ecommerce couriers. The Apple TV is not selling well. Lynn Tilton’s empire is tested. Tinder for orangutans. WSJ discovers the She Shed.
• ClearMotion, a Boston-based maker of a shock absorber alternative, raised $100 million in funding, according to Bloomberg. JPMorgan Chase & Co. led the round, and was joined by New Enterprise Associates, World Innovation Lab, Eileses Capital, and Qualcomm Inc.’s VC arm. Read more.
• Kinestral Technologies, a San Francisco-based developer of energy-efficient smart-tinting glass, raised $65 million in Series C funding. AGC Asahi Glass (TSE:5201) led the round, and was joined by Hermes-Epitek, 5AM Ventures, Alexandria Venture Investments, Capricorn Investment Group, Mitsubishi UFJ Capital, and Versant Ventures.
• Uptake, a Chicago-based predictive analytics platform, raised $40 million in funding from Revolution Growth.
• Knock, a New York City-based platform for selling homes, raised $32.5 million in Series A funding. RRE Ventures led the round, and was joined by Redpoint, Greycroft, Correlation Ventures, Great Oaks Venture Capital, and FJ Labs.
• PATH, a Seattle-based healthcare nonprofit working primarily in Asia and Africa, raised $25 million in funding from the Global Health Investment Fund.
• Earnix, an Israeli provider of predictive analytics software for the financial services industry, raised $13.5 million in funding from Jerusalem Venture Partners, Vintage Investment Partners, and Israel Growth Partners.
• LogicHub, a Mountain View, Calif.-based security intelligence automation platform, raised $8.4 million in Series A funding. Storm Ventures and Nexus Venture Partners led the round.
• Qvivr, a Fremont, Calif.-based mobile payments company, raised $5 million in Series A funding. Khosla Ventures led the round, with participation from unnamed global investors.
• Trussle, a London-based online mortgage broker, raised £4.5 million ($5.7 million) in funding. Orange Growth Capital led the round, and was joined by LocalGlobe, Zoopla, Seedcamp, and angel investors.
• GoldenKey, a Durham, N.C.-based platform that connects home sellers with buyers, raised $1.75 million in funding. Investors include Lowe’s Ventures and NFX Guild.
• Xometry, a Gaithersburg, Md..-based on-demand manufacturing marketplace, raised an undisclosed amount in funding from GE Ventures and existing investors, including Highland Capital Partners, which brings the company's total funding to $23 million.
PRIVATE EQUITY DEALS
• Pamlico Capital completed a majority investment in Veson Nautical, a Boston-based provider of maritime commercial management and trading software. Terms of the deal weren’t disclosed. (This item has been corrected to say Pamilco's investment was a majority investment, not minority.)
• Crane 1 Services, a Franklin, Ohio-based provider of maintenance and equipment services for crane operators, acquired Crane Service & Inspections, which also provides services to crane operators and is based in Monroe, Ohio. Crane 1 Services Monroe is backed by Pfingsten Partners.
• Summit Partners invested in InfoArmor, a Scottsdale, Arizona-based provider of employee protection solutions and elite cyber intelligence services.
• Enlightenment Capital invested in Telos Corporation, an Ashburn, Va.-based cybersecurity company.
• Diversis Capital acquired Arrowstream, a Chicago-based foodservice supply chain technology and logistics services company.
• Kerogen Capital invested $100 million in Pandion Energy AS, a Norwegian exploration and production company.
• Pacific Equity Partners acquired Allied Mills Australia, a Sydney-based manufacturer and distributor of bakery products, in a deal that values the company at $455 million. The sellers are GrainCorp and Cargill Australia, which sold a their respective 60% and 40% stakes to Pacific Equity.
• Invitation Homes (NYSE: INVH), a Dallas-based home rental company, has priced its IPO at $20 per share, selling 77 million shares for a total of $1.54 billion. Deutsche Bank Securities, J.P. Morgan, BofA Merrill Lynch, Goldman, Sachs & Co., Wells Fargo Securities, Credit Suisse, Morgan Stanley, and RBC Capital Markets are joint book-running managers. The company was created by Blackstone Group in 2012. Read more at Fortune.
• Foundation Building Materials, a Tustin, Calif.-based distributor of drywall, insulation systems, and other building products backed by Lone Star Funds, set its IPO terms, offering 12.8 million shares priced between $17 and $19 a share. It plans to list on the NYSE under the symbol FBM. Deutsche Bank Securities, Barclays, and RBC Capital Markets are serving as joint book-runners.
• Clipper Reality (NYSE: CLPR), a Brooklyn-based REIT, plans to sell 7 million shares at a range of between $13.50 and $15.50 per share for a total of $103 million at the midpoint of the proposed range. Clipper is backed by Jerica Capital Management, Cedarview Capital Management and Falcon Global Partners.
• Laureate Education (Nasdaq: LAUR), will sell 35 million shares at $14.00 per share for a total of $490 million. The company is backed by KKR.
• ForeScout Technologies, a Cupertino, Calif.-based security startup, has filed confidentially for an IPO, according to TechCrunch. The company has last valued at $1 billion by investors Accel Partners, Meritech Capital Partners and Pitango Venture Capital, who invested more than $158 million. Read more.
• Take-Two Interactive (Nasdaq: TTWO) has agreed to acquire Social Point, a Barcelona-based mobile game developer, for $250 million. Social Point has raised $44.7 million from Highland Capital Partners Europe, Greylock, 83North, Idinvest Partners, and Nauta Capital.
• Fingerprint Cards, a Swedish biometric company, has acquired Delta ID, a Newark, N.J.-based supplier of iris recognition technology, for $106 million. Delta ID had raised $5 million from Intel Capital.
• British Columbia Investment Management Corporation agreed to acquire Hayfin Capital Management, a London-based European credit platform, from its institutional shareholders, including TowerBrook Capital Partners. .
• Eventbrite, a San Francisco-based platform for finding and creating events, acquired Ticketscript, a Amsterdam-based provider for online ticketing. Ticketscript raised $11.8 million in funding from Fleming Family & Partners and FPE Capital.
• Carbonite (Nasdaq:CARB) acquired Double-Take Software, a Southborough, Mass.-based developer of software support and workload management services, from Clearlake Capital Group-backed Vision Solutions.
• Lake Pacific Partners sold Gladson, a Lisle, Ill.-based provider of images and other digital content, to The Wicks Group. Terms were not disclosed.
• Razer, an Irvine, Calif.-based developer of gaming devices, wearables, and other products for gamers, acquired the assets of Nextbit Systems, a San Francisco-based maker of the Robin smartphone. Terms of the deal weren’t disclosed, but Razer said it will onboard Nextbit employees. Nextbit raised $17.8 million from investors including GV and Accel.
FIRMS + FUNDS
• Great Hill Partners, a Boston-based private equity and venture capital firm, raised $1.5 billion for its sixth private equity firm, Great Hill Equity Partners VI.
• Huron Capital Partners, a Detroit-based private equity firm, raised $550 million for its fifth fund, The Huron Fund V.
• Daniel Clare has joined Constitution Capital Partners as a partner and head of the firm’s new office in New York. Previously Clare was a managing director at Ascribe Capital.
• Greg Hughes, David Chung, and Bob Pender have joined HGGC as executive directors.
• Jon Weber has joined BlueMountain Capital Management as head of portfolio company management.
• Angela Tran Kingyens is joining Version One Ventures as a principal. Kingyens is the co-founder of Insight Data Science.
• Alex Ismail is now a managing partner at BC Partners. Ismail is the former president and CEO of Honeywell Automation and Control Solutions.