By Erin Griffith
April 18, 2017

ET CETERA

Unicorn Watch: Houzz, an online platform for home remodeling and design services, is in the market raising a large new round of venture funding that could value the company at more than $5 billion, several sources familiar with the situation tell my colleague Leena Rao and I. The talks are early, but sources say the company could raise as much as $500 million. Asked to comment, a Houzz representative wrote, “It’s not true.”

Founded in 2009 by Adi Tatarko and Alon Cohen, Houzz has raised $213 million in funding to date. The Palo Alto-based company’s latest round, a $165 million Series D in late 2014 led by Sequoia Capital, valued it at $2.3 billion.

Houzz is notable for a couple of reasons: It’s a marketplace and e-commerce site that is both highly community-focused and content-focused. (Some say it combines Pinterest, Yelp, Amazon, and Taskrabbit.) It has three revenue streams: advertising, commissions from its local services marketplace, and fees from its listings business. It claims 40 million monthly active users. And it’s one of the only startups worth $1 billion or more with a female co-founder.

This deal may mark the beginning of a bifurcation of the billion-dollar startup club. Many so-called “unicorns” raised huge cash reserves in late 2014 and early 2015 on fears that the go-go market for funding might dry up. Now, two to three years later, many of them face the decision to raise more money or suck it up and go public. Houzz is clearly choosing the former.

Being Honest: Yesterday I got exactly three minutes to ask Jessica Alba exactly two questions about her startup, The Honest Company, at an event. I asked about the company’s “reset” earlier this year, with layoffs, restructuring, and a new CEO. Here’s what she said:

“For me its just part of the natural evolution – I hope five years from now I’m not the same person I am today and as a business I want to put that same wisdom into how we operate the company. 

“We had to reevaluate and restructure for where the consumer wants us to be, and we realized we were really heavy on e-commerce and needed more expertise in more traditional CPG, and certainly more sales expertise, R&D innovation, and marketing, and not just direct-to-consumer marketing. So we really looked at ourselves and saw where we were really strong and where we could fill in the gaps, and so last year was about that – reevaluating who we are today what our consumers want from us, and just refreshing our business to meet the consumers’ needs.”

…and about the company’s decision to characterize (and value) itself as a tech company rather than a more traditional consumer products company:

“There are lots of nuance in there. We have tech and e-commerce expertise and competencies – that’s how we launched – and we never have to learn that behavior. A lot of other people in branding today, when they don’t start [direct to consumer], they’re trying to learn that behavior and how to run a business online, and we see these giant companies that just can’t crack it because it’s nuanced and it changes every couple of years and it’s difficult, frankly. I think every brand is a consumer-facing brand – we are evolving and we are omni-channel. It shouldn’t even be a ‘thing’ to be omni-channel – every brand should just be where consumers want to be.”

Later on stage, Alba was asked whether female founders like herself, or, say, Elizabeth Holmes, get an unfair amount of attention – positive and negative — because they are women. Alba said that’s likely the case because there are so few women in business. “People want to spotlight me because it’s salacious or it’s a headline,” she noted.

That’s amplified by about 1,000x for a celebrity, which is the double-edged sword of celebrity-driven companies. They’re great for generating a lot of attention. But the attention doesn’t go away if the news is bad.

One last thing: When Alba was initially pitching investors on The Honest Company, she says the most common feedback from VC’s was, “I’m going to go home and ask my wife.” So, even movie stars aren’t immune to that lame feedback, which I am hoping has disappeared from pitch meetings in the years since Honest was starting out.

Speaking of: Theranos said it has reached an agreement with regulators to stay out of blood testing for two years in exchange for reduced penalties. Read more here.

Meanwhile, the Delaware courts are scrutinizing the share exchange offer Theranos is offering is investors, Reuters reports. The judge is especially concerned about potential coercion, since the exchange would require shareholders to abandon any fraud claims against Theranos, its CEO Elizabeth Holmes, and its directors and officers – a highly unusual deal term.  Read the full analysis here.


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…AND ELSEWHERE

Snapdeal taking heat for Snapchat founder’s comments. Uber loses another program lead. I-95 is the Stink Highway. Belle of the private equity ball. Cloudera IPO: Ouch.


VENTURE DEALS

Reltio, a Redwood Shores, Calif.-based data management platform-as a-service company, raised $40 million in a Series C funding. New Enterprise Associates led the round, and was joined by Sapphire Ventures, Crosslink Capital and .406 Ventures. Read more.

CyberGRX, a Denver, Colo.-based cyber risk management company, raised $20 million in Series B funding. Bessemer Venture Partners led the round, and was joined by Aetna Ventures, Allegis Capital, ClearSky, GV, MassMutual Ventures, Rally Ventures, and TenEleven Ventures. Read more at Fortune.

Avegant, a Silicon Valley developer of displays for holographic or “mixed reality” headsets, raised $13.7 million in funding, according to the Financial Times. Hangzhou Lian Luo led the round, and was joined by existing investors, including Applied MaterialsIntel (Nasdaq:INTC) previously invested in the company. Read more (subscription required). [This item has been update to reflect that Intel is an existing investor, but did not participate in the round.]

Zinc, a San Francisco enterprise communication platform, raised $11 million in funding. GE Ventures led the round, and was joined by Hearst Ventures, Emergence Capital, and CRV.

Narrative Science, a Chicago platform that automatically translates data into narratives, raised $11 million in funding, according to Crain’s. Sapphire Ventures led the round, and was joined by Jump Capital. Read more.

VICIS, a Seattle designer and manufacturer of football helmets, raised $9 million as part of a convertible note, bringing the company’s total funding to about $30 million.

Factom, an Austin, Texas-based blockchain as-a-service technology company, raised $8 million in Series A funding. Investors include Draper Associates, Stewart Title, Overstock, Fenbushi Capital, Plug & Play, Peeli Ventures, and Harvest Equity.

Akoonu, a San Francisco developer of a content marketing platform for B2B marketers, raised $8 million in Series A funding. Shasta Ventures led the round.

Lumen Learning, a Portland, Ore. provider of open courseware material, raised $3.75 million in Series A funding, according to GeekWire. Investors include Follett, Portland Seed Fund, and Alliance of Angels. Read more.

Xero Limited, a Wellington, New Zealand provider of a platform for online accounting, raised funding from Technology Crossover Ventures.


HEALTH AND LIFE SCIENCES DEALS

Frequency Therapeutics, a Woburn, Mass. biotech company developing a pipeline of new drugs that activate progenitor cells within the body, raised $32 million in Series A funding. CoBro Ventures led the round, and was joined by Morningside Ventures, Emigrant Capital, Korean Investment Partnership, Alexandria Real Estate Equities, and others.

Aspect Imaging, a Tel Aviv-based MRI systems manufacturer, raised $30 million in funding.


PRIVATE EQUITY DEALS

General Atlantic acquired a minority stake in Torchy’s Tacos, an Austin, Texas-based chain of taco restaurants.

Platinum Equity agreed to acquire American Traffic Solutions, a Mesa, Ariz.-based provider of traffic safety services for state and local governments. Financial terms weren’t disclosed.

Thomas H. Lee Partners recapitalized Material Handling Systems, a Louisville, Kans.-based material handling systems operator. Terms weren’t disclosed.

Silver Oak Services Partners acquired Legacy Farms, a Buena Park, Calif.-based grower of fruits and vegetables.

Permira agreed to acquire DiversiTech, a Duluth, Ga. aftermarket manufacturer and supplier of highly-engineered components, from The Jordan Company.

Energy Services Group, a Accel-KKR portfolio company, acquired Utiligroup, a U.K. provider of cloud-based transaction management services to the retail energy industry. Terms weren’t disclosed, but media reports value the deal at about £100 million ($127 million).


OTHER DEALS

Post Holdings (NYSE:POST) agreed to buy Weetabix, a British breakfast cereals company, from Bright Food Group, a Chinese food manufacturer, for £1.4 billion ($1.8 billion). Read more at Fortune.

SharkNinja Operating, a privately held, Champlain, N.Y.-based manufacturer of Ninja blenders and Shark vacuum cleaners, is considering selling itself in a deal that could value the company at more than $1.5 billion, including debt, according to Reuters. Read more.

BJ’s Wholesale Club, A Westborough, Mass.-based operator of warehouse clubs owned by CVC Capital and Leonard Green & Partners, is reportedly up for sale. According to The New York Post, Amazon has “expressed modest internal interest” in acquiring the chain. Read more at Fortune.

Ecoark Holdings (OTCQX: EARK) sold the assets of its subsidiary, Eco3d, a Phoenix provider of modeling, animation and other 3D services, for $4.8 million in a cash and stock deal.

Bustle, a New York City-based media site aimed at millennial women, acquired Elite Daily, a New York media site focused on generating viral content, from the Daily Mail (LSE:DMGT). Terms weren’t disclosed. The Daily Mail, which acquired Elite Daily for a reported $47 million in 2015, took a $31 million write-down on the acquisition last year.


IPOS

TPG Pace Energy Holdings, a Fort Worth, Texas-based blank check company formed by TPG, filed to raise up to $600 million in an initial public offering. It plans to trade on the NYSE under the ticker symbol TPGEU. Deutsche Bank and Goldman Sachs are serving as co-lead underwriters.

Carvana, a Phoenix-based marketplace for used cars, is seeking to raise $225 million in an IPO by offering 15 million shares priced between $14 to $16 a share. The company plans to list on the NYSE under the symbol CVNA. Wells Fargo Securities, BofA Merrill Lynch, Citigroup, and Deutsche Bank Securities serve as joint bookrunners.


EXITS

Milestone Partners sold Quintus Technologies, a Swedish manufacturer of high pressure systems for sheet metal forming, to Kobe Steel (TSE:5406) for $115 million.

Oracle (NYSE:ORCL) agreed to acquire Wercker, a Dutch company that helps developers build and update software. Financial terms weren’t disclosed. Wercker raised $7.9 million in venture funding from backers including Notional Capital, Greylock Partners, and Tola Capital. Read more at Fortune.

Vista Equity Partners agreed to acquire Market Track, a Chicago-based provider of online marketing services, from Aurora Capital Group. Terms weren’t disclosed.


FIRMS + FUNDS

Silver Lake, a Menlo Park, Calif.-based private equity and venture debt firm, raised $15 billion for its latest fund, SLP V.

Oak HC/FT, a Greenwich, Conn.-based private equity and venture capital firm, raised $600 million for its second fund, Oak HC/FT II.

Obvious Ventures, a San Francisco-based early-stage venture capital firm, raised $178 million for its latest fund, according to an SEC filing. No target was listed.

Zetta Venture Partners, a San Francisco-based venture capital firm, raised $125 million for its second fund, according to an SEC filing.


PEOPLE

JMP Group (NYSE: JMP) promoted Gavin Slader to head of mergers and acquisitions. Slader was previously head of technology mergers and acquisitions at the firm.

John Lewis joined Madison Dearborn Partners as an executive partner. Previously, Lewis was  global president at Nielsen (NYSE:NLSN).

•  Paul Maritz joined Warburg Pincus as an industry advisor. Maritz previously held executive roles at VMware and Microsoft. Read more at Fortune.


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