2016-12-07-1

Term Sheet — Monday, May 1

May 01, 2017

STARWOOD-IFICATION OF REAL ESTATE

Increasingly, venture investors view real estate as the next industry to be transformed by disruptive technology. But as they start investing in the category, they might find that traditional real estate investors, including Brookfield Property Partners, one of the country’s largest landlords, are already ahead of them.

Convene, a New York City-based startup, is Brookfield’s only startup investment, and today Brookfield has doubled down on the bet. Brookfield led a $68 million Series C investment in the company alongside Conversion Venture Capital and ArrowMark Partners, the companies tell Fortune. The Durst Organization and Elysium Capital Management also participated. Convene previously raised $45 million in funding. Brookfield is “eager to explore working with and investing in” exiting startups, a company spokesperson said.

Convene’s business – “workplace as a service” -- takes some explaining, which might be why CEO Ryan Simonetti frequently employs comparisons to other companies. “We are helping landlords run an office building like a full service lifestyle hotel,” he says. “It’s the Starwood-ification of real estate.”

Also: “What’s happening to landlords is, they’re the taxi cab industry before Uber. Convene is offering them the ability to not be disintermediated.”

And also: “We often get compared to WeWork, but we believe co-working is the first step in a much larger opportunity.”

Essentially, Convene manages the amenities of an office building, like the food, the conference rooms, event spaces, the gym. It currently offers 12 “branded” retail locations in three U.S. cities. In addition, the company offers a “managed amenities” package to landlords, where the company handles the service part of all those amenities. Notably, Convene offers these services on behalf of the landlords, not the tenants. Tenants are increasingly asking for these things when they move in, Simonetti says, and landlords are willing to pay for them. It has opened two of those so far in New York City.

Simonetti was previously an investor at Lehman Brothers, where he focused on office buildings and hotels. Amid the financial crisis, he realized landlords weren’t paying attention to the needs of their customers. They weren’t providing “amenity-rich experiences” the same way boutique hotels and luxury condo developers were starting to, he says.

Convene is capitalizing on that trend. Further, employees’ ability to work from anywhere at any time has merged personal and professional into what Simonetti calls “work-life integration.” Beyond that, companies are now using fancy offices as a way to attract talent, rather than as a balance sheet liability.

Convene, which has 262 employees, has grown profitably since it was founded in 2009. It took the company some time to get to a place where it is ready to grow quickly, but now, Convene is poised to grow exponentially, Simonetti says. “We feel comfortable dramatically accelerating the speed at which we scale,” he says. In the next year, the company will more than double the number of managed locations to 30.

Convene’s amenities business does not feel much like a tech startup business model, but Simonetti says the next phase includes a software product that will “digitize” the buildings Convene is in, allowing employees to do everything from going through security and booking a conference room to booking a class and sending feedback about the temperature, all within one app. Technology’s role in the buildings is to reduce friction, Simonetti says.

“We think the massive shift toward amenities and flexible space is something landlords have to respond to,” he says.

(View this article online here.)

***

Deals. No matter how fierce the competition in new tech categories may seem, there’s always a good chance they’ll end up merging. Didi and Uber. LivingSocial and Groupon. DraftKings and FanDuel. ELance and ODesk. The latest? Taboola and Outbrain, the billion-dollar “around the web” links rivals, according to reports. That makes past instances public taunting a bit awkward. For example, the time Outbrain’s CEO in 2012 posted a photo of himself “eating Taboola for lunch” and later sniped on Twitter after Taboola’s revenue run rate announcement. Here’s a 2014 story I did on their rivalry.

Also notable: Blackstone Group and 21st Century Fox are discussing an acquisition of Tribune Media. And ESW Capital is taking Jive Software private. More details on both below.

PE + Tech + Girls: KKR has partnered with Girls Who Code, the nonprofit working to close the gender gap in technology. It’s the first time Girls Who Code has teamed up with a private equity firm, and it’s significant given how many businesses KKR owns and how active the company has become in technology. To start, KKR companies GoDaddy and First Data will sponsor Girls Who Code’s Summer Immersion Program. The firm says it hopes to get more of its 100 portfolio companies involved soon.

Tech + Girls: Along a similar line, BBG Ventures has expanded Wave, a program that pairs girls with mentors in tech companies, from 150 mentors to 350.

Correction: Domo raised $100 million in new funding, not $200 million, as Friday’s Term Sheet stated.

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VENTURE DEALS

Head InfoTech, an India-based online gaming company, raised $73.7 million in funding. Investors include Clairvest Group.

Live.me Inc, a live video streaming platform and subsidiary of Cheetah Mobile (NYSE:CMCM), raised $60 million in funding. Investors include Matrix Partners China, Evolution Media China, Gobi Partners, IDG Capital and Welight Capital and Cheetah Mobile.

3D Robotics, a Berkeley, Calif.-based drone manufacturer, raised $53 million in Series D funding. Atlantic Bridge led the round, and was joined by Autodesk Forge Fund, True Ventures, Foundry Group, Mayfield.

Airwallex, a Melbourne, Australia-based international payments company, raised $13 million in Series A funding, according to TechCrunch. Tencent led the round. Investors including Sequoia China and Mastercard participated. Read more.

Deep Sentinel, a San Francisco AI-based home security company, raised  $7.4 million in Series A funding. Shasta Ventures led the round, and was joined by Bezos Expeditions, Lux Capital, and UP2398.

Cars45.com, a Lagos, Nigeria-based car buying service, raised $5 million in Series A funding, according to TechCrunch. Investors include Frontier Cars Group, a holding company whose backers include Balderton Capital, EchoVC, TPG Growth, and NEA. Read more.

Prefer, a New York-based platform that recommends services like massages, babysitting, and hair styling, raised an undisclosed amount of funding from Benchmark. Read more at Fortune.

HEALTH AND LIFE SCIENCES DEALS

Catalia Health, a San Francisco-based patient care management company, raised $2.5 million in funding. Khosla Ventures led the round.

PRIVATE EQUITY DEALS

ESW Capital, through its affiliate Wave Systems, acquired Jive Software (Nasdaq:JIVE), a Palo Alto, Calif.-based office collaboration provider, for $462 million. At $5.25 per share, the offer represents a 20% premium to Jive’s closing price on April 28. Jive will become a part of the Aurea family of companies.

Lux Global Label Company, a company backed by Resilience Capital Partners, has purchased certain assets from National Label, a Lafayette Hill, Penn.-based package printing and labeling services provider. Financial terms were not disclosed.

AEA Investors recapitalized National Carwash Solutions, a Grimes, Iowa-based a commercial car wash service operator. Financial terms weren’t disclosed.

Bloomin’ Brands (Nasdaq:BLMN), a Tampa, Fla.-based casual dining restaurant company, sold and re-franchised 45 Outback Steakhouses in Arizona, Colorado, Nevada and New Mexico to Cerca Trova Restaurant Concepts, which is backed by H.I.G. Capital. Bloomin’ Brands also sold eight Outback restaurants and one Carrabba’s Italian Grill to Evergreen Restaurant Group. Financial terms were disclosed for either transaction.

Dane Creek Capital increased its stake in Midgard Insect Farm, the Canada-based cricket producer, from 48% to 65%. Financial terms weren’t disclosed.

OTHER DEALS

Twenty-First Century Fox (Nasdaq:FOXA) is in talks with Blackstone Group (NYSE:BX) about making an offer to acquire Tribune Media Co (NYSE:TRCO), the Chicago-based media and entertainment company. Read more at Fortune.

One97 Communications, an India-based telecommunications provider and owner of online marketplace Paytm, is set to raise 120 billion rupees ($1.87 billion) in funding at a $9 billion valuation from SoftBank Group (TSE:9984), according to the Economic Times. In March, Paytm raised $200 million from Alibaba (NYSE:BABA) and SAIF Partners. Read more.

Fortress Investment Group (NYSE:FIG), which SoftBank has agreed to acquire for $3.3 billion, is exploring a sale of Logan Circle Partners, a Philadelphia-based asset management firm, according to Reuters. The deal could value the company at $250 million. Read more.

Maersk Lines has agreed to acquire Hamburg Sud, a Hamburg, Germany-based container shipping services provider, for €3.7 billion ($4 billion), according to Reuters. Read more.

Purdue University has agreed to acquire Kaplan University, a Ft. Lauderdale, Fla.-based for-profit college chain of Kaplan Inc., which is owned by Graham Holdings Co. Purdue paid $1 in the deal, with further plans to turn Kaplan into “a new, nonprofit, public-benefit corporation,” according to an SEC filing.

• A U.S. appeals court blocked Anthem’s (NYSE:ANTM) bid to merge with rival Cigna (NYSE:CI), stating the $54-billion deal should not be allowed because it would cause higher prices in healthcare, according to Reuters. Read more.

Shaw Communications (TSX:SJR.B) is looking to sell ViaWest, the Greenwood Village, Colo.-based information technology company it bought three years ago, according Reuters. Read more.

IPOS

Zymeworks (NYSE:ZYME), a Vancouver-based clinical-stage biopharmaceutical company, raised $58.5 million in its initial public offering, after pricing its 4.5 million shares at $13 apiece. The company began trading on the New York Stock Exchange and on the Toronto Stock Exchange under the ticker ZYME. Citigroup Global Markets Canada Inc., Barclays Capital Inc. and Wells Fargo Securities, LLC are the lead underwriters. Zymeworks backers include Eli Lilly (17.5% pre-IPO), CTI Life Sciences (14.5%), Celgene Alpine Investment (6.1%), BDC Healthcare Venture, Brace Pharma Capital, Lumira Capital, Northleaf Venture Catalyst Fund, Merlin Nexus, and Teralys Capital.

GPM Petroleum, a Richmond, Va.-based motor fuel distributor, filed to raise up to $100 million in an initial public offering. The company plans to trade on the NYSE under the ticker GPMP. Raymond James, Wells Fargo Securities and RBC Capital Markets are the joint bookrunners on the deal. Pricing terms weren’t disclosed.

Avenue Therapeutics, a New York-based specialty pharmaceutical company, filed to raise up to $50 million in an initial public offering. It is owned by Fortress Biotech (Nasdaq:FBIO). The company plans to trade on the Nasdaq under the ticker ATXI. Raymond James is the sole bookrunner on the deal. Pricing Terms weren’t disclosed.

EXITS

HgCapital agreed to sell Qundis, a Germany-based metering devices manufacturer, to Kalorimeta. Financial terms weren’t disclosed but media reports value the deal for as much as €400 million ($436 million). Read more.

Thales (ENXTPA:HO) has agreed to acquire Guavus, a San Mateo, Calif.-based big data analytics company, in a cash transaction valued at up to $215 million. Guaves raised more than $100 million in venture funding from investors including Artiman Ventures, Goldman Sachs, Intel Capital, Investor Growth Capital, Liberty Global, and Sofinnova Ventures.

SiriusXM (NASDAQ:SIRI) acquired Automatic Labs, a San Francisco-based provider of connected vehicle services for $115 million, according to an SEC filing.  Automatic raised more than $20 million in venturing funding from investors including USAA, Comcast Ventures, eLab Ventures, Anthemis Group, Amicus Capital, and YCombinator.

Vector Capital has agreed to sell 20-20 Technologies, a Canada-based interior space planning software provider, to Golden Gate Capital. Financial terms weren’t disclosed.

Centerbridge Partners acquired ICSH Parent, a Maitland, Fla.-based reconditioned container services provider and parent company of Industrial Container Services. The seller was Aurora Capital Group. Financial terms weren’t disclosed.

Permira acquired Lyophilization Services of New England, a Manchester, N.H.-based contract manufacturer, from Clairvest Group (TSX:CVG). Clairvest invested nearly $30 million and realized approximately $87 million.

Yik Yak, an Atlanta-based social messaging app, will shut down in the next week after Square (NYSE:SQ) acquired the company’s engineering team for $1 million. Yik Yak raised more than $70 million in venture funding from investors including Sequoia Capital, Tim Draper, Atlanta Ventures, Azure Capital Partners, DCM Ventures, and Vaizra Investments.

Bridj, a Cambridge, Mass.-based smart transit system, is winding down operations after funding talks with “a major car company” fell apart. Bridj raised about $4 million in venture funding from investors including Accomplice, Atlas Ventures, FreshTracks Capital, and NextView Ventures.

FIRMS + FUNDS

Leerink Transformation Partners, Boston-based private equity firm specializing in growth capital investments, raised $200.5 million for its inaugural fund. The fund’s target is $250 million.

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