On deals and dealmakers.
Today Yext will go public on NYSE under the symbol YEXT. It’s a small IPO, valuing the company at around $940 million. Last night the company boosted pricing by $1 a share to $11 a share, for a total raise of $115.5 million.
Yext makes software for businesses to maintain information about themselves online; it has expanded from the SMB market to reach for larger enterprise customers. The 11-year-old company lost $43 million on $124 million in revenue last year.
Yext raised $117 million in funding. Sutter Hill Ventures owns 26.3% of the company prior to listing, Institutional Venture Partners owns 16%, Market Financial Advisors owns 10.3% and Insight Venture Partners owns 8.7%.
Two things about this deal: One, strong demand for enterprise tech. (Strong demand for any tech, but enterprise is what we’re getting right now.) Two, investors don’t seem to care about profitability, even on small companies.
And yet! Privately, a number of investors expressed caution on the recent outbreak of IPO fever, saying they expect some of these high flyers to stumble, especially the small ones. Since these businesses are not profitable, they’re pitching themselves on their net revenue, their customer retention, and their predictability of revenue. (“There’s not a lot of conversations on the fundamentals going on,” one investor told me. “It feels ‘toppy.’”) The smaller the company, the higher the growth variability. They expect that the first one to hit a wonky quarter will be punished by the market.
NYC Tech: While modest, Yext is a noteworthy exit for New York City’s tech scene. I find it bizarre how eager some people are to crap on NYC tech. Yesterday VentureBeat called the city’s tech ecosystem “beleaguered,” noting that “New York City’s overhyped startup scene has generally failed to deliver,” for example. Years ago, my predecessor was even harsher, writing, “Dear New York City, The only thing larger than your buildings is your sense of self.”
I am not a fan of blind cheerleading for the home team, and will concede two points: One, Expectations. Nobody expected L.A. to beat New York in building a big, independent, publicly traded, consumer-facing “tentpole” company in Snap. Everyone expected Foursquare and Tumblr to become those companies. So on that point, New York has fallen short. (VentureBeat called Tumblr, which Yahoo bought for $1.1 billion then significantly wrote down, a “latter-day turd.”)
A thriving tech ecosystem does not need a consumer-facing “tentpole,” but it certainly helps with attracting talent, attention, credibility, and money. Still, the “mafia effect,” where early employees of a blockbuster success leave to start new companies and actively invest in others, can happen with any exit. Like, say, Yext, Jet.com, Shutterstock, Etsy, Buddy Media, Tumblr, or Trello. Or IPO candidates Blue Apron, AppDynamics, BuzzFeed and WeWork.
And two, the hype for some New York startups has gotten ahead of the reality. I blame the proximity to so many national media outlets. But that doesn’t take away from a half-decent reality, which is that NYC companies have raised more in venture funding since 2012 than their peers in Boston or L.A. Later today I’ll pull the exit data to see how they compare on returning capital, post-Snap-IPO…
Snap lawsuit: Yesterday Snap revealed previously undisclosed information about its performance, releasing redacted parts of a lawsuit from a former employee alleging that the company misled investors. My colleague Jen Wieczner has some details on the dispute, which shows there were some discrepancies early on about when Snap hit the 100 million daily active user mark and how well it retained users who signed up. It’s a complicated back-and-forth, which you can read here. These claims don’t cover anything that Snap’s current publicly traded investors might be worried about, like whether Snap can kickstart user growth after a sluggish end of 2016. For that, they have Snap’s first earnings call to look forward to, on May 10.
New unicorn: Michael Marks, the former CEO of Flex, has a new startup called Katerra aimed at streamlining the building process in the construction industry. My colleague Jonathan Vanian reports that the two-year-old company has just raised $130 million, bringing its total funding to $220 million at a valuation of over $1 billion.
THE LATEST FROM FORTUNE...
• Uber’s ‘Hell’ program against Lyft.
• What the tech industry told the FCC about Net Neutrality
• One of Twitter’s top engineers left the company last month.
• CEOs just had their largest pay raise in three years.
• Greenlight Capital accuses General Motors of misrepresenting stock plans.
• All the top Uber executives who’ve left since February.
• Tech companies are shutting employees out of the stock market’s boom.
• Zuckerberg says Facebook will tackle fake news as it did clickbait.
• Why the auto industry is on the brink of a decline.
• Oracle CEO: We can beat Amazon and Microsoft without as many data centers.
Birchbox is profitable. Uber’s executive exodus. Tanium’s family crisis. Google shows the receipts on pay gap accusations. The danger of being too good at your job. Oops: Elliott Advisors accidentally cc’s AzkoNobel on an internal email about their activist campaign against the company.
• Blink Health, a New York City-based prescription drug startup, raised $90 million in Series B funding led by 8VC.
• Peloton Technology, a vehicle technology focused on freight transportation, raised a $60 million Series B funding round led by Omnitracs, a fleet management company, alongside existing investors Intel Capital, DENSO International America, BP Ventures, Lockheed Martin, Nokia Growth Partners, UPS Strategic Enterprise Fund, Volvo Group, Sand Hill Angels, Band of Angels and Birchmere Ventures along with new investors B37 Ventures, Mitsui USA, Okaya, Schlumberger, US Venture and Breakthrough Fuel.
• PagerDuty, a San Francisco provider of digital operations management services, raised $43.8 million in Series C funding. Accel led the round, and was joined by Andreessen Horowitz, Bessemer Venture Partners, Baseline Ventures, and Harrison Metal.
• Plume, a Palo Alto Calif.-based Wifi device startup, raised $32.5 million in funding, according to an SEC filing. Tyson Marion, head of emerging technology and new business development at Comcast, has joined the startup’s board.
• ClearDATA, an Austin, Texas-based managed cloud provider focused on the healthcare industry, raised $12 million from Merck Global Health Innovation Fund, Norwest Venture Partners, Excel Venture Management, Heritage Group, HLM Venture Partners, and Flare Capital Partners.
• Tasktop, a Vancouver, Canada-based provider of automated deployed integration technology, raised $11.3 million in Series A funding. AVX Partners led the round, and was joined by Austin Ventures and Yaletown Partners.
• Atrium, a legal startup founded by Justin Kan, is raising $10 million in funding from investors including General Catalyst, according to TechCrunch. Read more.
• Ink, an advanced printing startup which recently moved its headquarters from Silicon Valley to Lincoln, Neb., raised $6.65 million in seed funding from VTF Capital, Base Ventures, G-Bar Ventures, Nelnet, IT-Farm and others.
• Teamable, a San Francisco HR referral recruiting platform, raised $5 million in Series A funding. True Ventures led the round, and was joined by the SaaStr Fund.
• ZEN Rooms, a Singapore-based chain of budget hotels, raised $4.1 million in Series A funding. Investors include Redbadge Pacific, SBI Investment Korea, and APACIG.
• Full Harvest, a business-to-business marketplace for the purchase and sale of surplus and imperfectly shaped produce, raised a $2 million seed round of financing led by Wireframe Ventures with participation from BBG Ventures, Early Impact Ventures, Impact Engine, and Radicle.
• Darkstore, a San Francisco-based provider of fulfillment services, raised $1.4 million in seed financing from PivotNorth.
• Charlotte Tilbury Beauty, a London-based beauty brand founded by makeup artist Charlotte Tilbury, is has taken a minority investment of undisclosed size from Sequoia Capital. Michael Moritz will join the company’s board.
HEALTH + LIFE SCIENCES DEALS
• Lyndra, a Watertown, Mass. developer of an oral drug delivery platform, raised $23 million in Series A funding. Polaris Partners led the round, and was joined by Quark Venture, GF Securities, Yonghua Capital, Healthlink Capital, Partners Healthcare, and Suffolk Equity.
• Sansoro Health, a Minneapolis startup that facilitates the exchange of health care data between digital health applications and electronic medical records, raised $5.2 million in Series A funding. Bain Capital Ventures led the round.
• Breakout Labs, a San Francisco-based fund operating out of the Thiel Foundation, made four investments: SciBac, a Milpitas, Calif.-based biotherapeutics company targeting antibiotic-resistant diseases; Gel4Med, a Boston-based regenerative medicine company engineering smart biomaterials to guide tissue regeneration; LogicInk, a San Francisco-based maker of temporary tattoos that can transform their shape and color to convey specific health information about their user, and Envisagenics, a New York City-based a bioinformatics company.
PRIVATE EQUITY DEALS
• Silver Lake Partners and Broadcom (Nasdaq:AVGO) have offered about ¥2.5 trillion ($23 billion) to acquire Toshiba‘s (TSE:6502) chip unit, according to Reuters. At about ¥2 trillion ($18.3 billion), Foxconn’s (TSEC:2354) takeover bid is reportedly the second highest on the table. Read more.
• Lovell Minnick Partners acquired a majority stake in Global Financial Credit, a White Plains, N.Y. commercial and consumer finance company. Terms of the private transaction were not disclosed.
• A consortium of private equity firms offered around 200 billion Swedish crowns ($22.2 billion) to acquire SCA’s (OM:SCA B) hygiene arm, according to Reuters. Read more.
• Soundcore Capital Partners portfolio company Sweeping Corporation of America acquired Sky Sweeping, a Louisville, Ohio, provider of parking lot, street and industrial sweeping services.
• Gryphon Investors acquired Wind River Environmental, a provider of inspection, service, installation, repair, and maintenance of non-hazardous liquid environmental waste solutions, from RFE Investment Partners.
• America’s Auto Auction, a wholesale automobile auction company backed by Trinity Hunt Partners, acquired West Michigan Auto Auction, an auto auction company based in Grand Rapids, Mich.
• Ivanti, a Salt Lake City-based provider of integrated and automated IT tasks and portfolio company of Clearlake Capital, acquired Concorde Solutions, an Austin, Texas and UK-based software licensing business.
• Meredith’s (NYSE:MDP) preliminary bid to acquire Time Inc. (NYSE:TIME), the publisher of Fortune, Time, Sports Illustrated, and People, fell short of the company’s asking price of more than $20 per share, according to Reuters. The two publishers could still engage in further price negotiations. Read more.
• Gas Station TV, a video network provider for gas station pumps backed by Rockbridge Growth Equity, has combined with Verifone (NYSE:PAY) in a 50-50 joint venture. The new business will operate under the GSTV brand.
• Delivery.com has acquired Klink, an alcohol delivery startup based in Santa Barbara, Calif.
• SpotHero, a Chicago-based parking reservation service, acquired rival parking service Parking Panda, which is based in Baltimore. Parking Panda raised $4.7 million in venture funding. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Eniac Ventures raised $100 million for Eniac IV, its fourth fund, which will have an increased focus on investments in VR/AR, conversational user interfaces, robotics and software disrupting mature industries.
• BIP Capital, an Atlanta-based investment firm, has merged with Accelerant Venture Capital. Paul Iaffaldano, founder and managing partner of Accelerant, will join BIP Capital as managing director. Mark Buffington, who previously held the managing director title, has been promoted to CEO.
• Vision Venture Partners, a Beverly Hills, Calif.-based newly-formed private equity firm focused on esports, digital entertainment, and lifestyle sectors, has officially launched.