On deals and dealmakers.
CRYPTO BUBBLE, DIVERSITY, JOBS, BURNOUT
Good morning. Many, many private equity deals this morning, including two notable acquisitions for Vista Equity Partners and a $13.5 billion Blackstone exit that isn’t an IPO. Plus a new health-tech unicorn. But first, a new notes!
Today in Blockchain: Soaring cryptocurrency prices means talk of a bubble. And a question for Term Sheet: Should we be including ICO fundraises in our deal listings? Technically they are a fundraise, but technically they are not equity. Today, for example, TechCrunch covered an ICO (Omise raised $19 million) like it would a normal fundraise. The deal is worth noting here because, according to the article, it is the first venture-backed company do so. Omise had previously raised $20 million in equity from SBI, Sinar Mas and Ascend Group.
I’m interested to watch when the reverse happens – cryptocurrency-funded startups want to raise traditional equity funding. While some investors are selling themselves as a source of capital before the token sale, these startups no longer need to go to traditional venture investors if they can raise $20 million in tokens practically overnight.
Meanwhile, many large funds are in precluded from investing in tokens, aka, unregistered securities, in their partnership agreements. (Some tokens come with voting rights and dividends. Others do not.)
So that could mean two things: One, traditional venture firms could find themselves locked out of investing in these technologies. Some are investing in “conduits” like cryptocurrency hedge funds, but their LPs could also do just that directly.
And two, down the line, the companies themselves could be unable to raise capital from the traditional venture funds that can write the biggest checks. Then again, if the price of various cryptocurrencies keeps going up, perhaps they won’t need to.
As for Term Sheet, we’re holding off on including ICOs for now.
Diversity: A new study shows that venture firms with greater gender diversity perform better, and that diversity is more apparent in funds where partners have, on average, more daughters. Fortune’s Lucinda Shen writes:
“Parenting daughters reduces the bias that one has towards women, which leads to more female hires,” the researchers wrote, noting that firms with a greater number of daughters over the age of 12 also lead to even greater gender diversity in firms. “This is consistent with fathers observing potential gender biases that their daughters face as they get older,” they wrote.
Also: Replacing a daughter with a son would also make the fund 24% more likely to hire a senior female investor. Read more here.
Jobs: At the Code Conference yesterday, venture investor Marc Andreessen argued that self-driving cars will actually create jobs, not kill them, just as cars led to jobs for road-pavers, as well as jobs related to the rise in restaurants, movie theaters, motels, and the suburbs more generally. For self-driving cars, he suggested:
Maybe self-driving cars will lead to the creation of exurbs — a layer beyond a city’s suburbs — that will actually work. This could cause a huge construction boom, which, in turn, could create jobs for the people who were ever involved in driving cars.
Speaking of work: Amid the culture of nonstop hustling and crushing it, founders are starting to speak out about burnout and the emotional struggles associated with entrepreneurship. Venture firms are now offering free initial therapy sessions to their portfolio companies. Firms including Slow Ventures and Refactor Capital are using a service called Kip (provided by a startup, of course) to pay for founders to make an initial visit to a therapist, CNBC reports.
It’s great sentiment, that shouldn’t be limited to startup founders. Executives in many industries struggle with burnout and mental health, to the point where Fortune 500 companies are now offering their top executives anti-burnout packages that include physiologist, a dietitian, an executive coach, and $100,000 in special services. This only furthers my theory that today’s executives are basically thoroughbred horses.
THE LATEST FROM FORTUNE...
• 7 people making a killing in the bitcoin boom.
• Wal-mart has its eye on blockchain technology.
• Luxury spending is expected to rise this year.
• Choosing love or hate.
• Yes, Fearless Girl is a marketing ploy, but ‘Pissing Pug’ is still sexist.
• Uber fires Anthony Levandowski.
• Investor Leon Cooperman saw the United Airlines incident as an opportunity to buy.
• Steve Cohen raising the largest ever U.S. hedge fund.
• Andy Rubin is back with a new phone.
• 10 ways you could be sabotaging your career.
Is British fast fashion too fast? How the trendiest grilled cheese venture got burnt. Kevin Systrom: Don’t call Instagram Stories a copycat. 😳 Uber fires Anthony Levandowski. Pop-ups thrive as retail vacancies rise. Goldman Sachs’ hot deal and moral mess. Theranos board directors did not follow-up on allegations about the company’s technology.
• Market Logic, a provider of enterprise SaaS marketing information systems with locations in Berlin and Chicago, raised €45 million ($50 million) in funding. Investors include Sycamore, Summit Partners and GENUI.
• 128 Technology, a Burlington, Mass.-based networking solutions provider, raised $21.5 million in Series C funding. Investors include G20 Ventures.
• StreamSets, a San Francisco-based data ingest technology provider, raised $20 million in Series B funding. Investors include Accel Partners, Battery Ventures and New Enterprise Associates.
• Lob, a San Francisco-based platform allowing companies to manage and send physical mail to customers, raised $20 million in Series B funding from Y Combinator’s Continuity Fund. Existing investors including Polaris Partners, Floodgate, First Round Capital, and Initialized Capital participated.
• High Brew Coffee, an Austin, Texas-based natural beverage company, raised $17 million in funding. BIGR Ventures led the round.
• TouchBistro, a New York City-based iPad point of sale solutions provider, raised C$16.3 million ($12.1 million) in Series C funding. Napier Park Financial Partners and Recruit Holdings Co led the round. Existing investors including BDC IT Venture Fund, Relay Ventures and Kensington Capital Partners participated.
• Epic!, a Redwood City, Calif.-based digital brand for kids, raised $8 million in Series C funding. Reach Capital led the round, and was joined by TransLink Capital, Rakuten Ventures, Menlo Ventures, WI Harper, Brighteye Ventures and Innovation Endeavors.
• People.ai, a Menlo Park, Calif.-based predictive sales management platform, raised $7 million in Series A funding. Lightspeed Venture Partners led the round, and was joined by Index Ventures, Shasta Ventures, Y Combinator, and SV Angel.
• UltraSoC, a U.K.-based semiconductor intellectual property provider, raised $6.4 million in funding. Atlante Tech led the round, and was joined by investors including Enso Ventures, Oxford Capital, Octopus Ventures and South East Seed Fund.
• Playsnak, a virtual reality gaming startup with locations in Los Angeles and Berlin, raised $1.2 million in seed funding from Gumi.
• Nivesh.com, an India-based mutual funds investment platform, raised funding of an undisclosed amount. Investors include Rahul Gupta, Sandeep Shroff, and P V Sahad.
HEALTH AND LIFE SCIENCES DEALS
• Outcome Health, a health intelligence platform with offices in Chicago and New York City, raised nearly $600 million in funding at a $5 billion valuation. Investors include Goldman Sachs Investment Partners, CapitalG, Leerink Transformation Partners, Pritzker Group Venture Capital, Balyasny Asset Management.
• Evolve Biosystems, a Davis, Calif.-based microbiome company, raised $20 million in Series B funding. Spruce Capital Partners/MLS led the round, and was joined by investors including Horizons Ventures, Tate & Lyle Ventures, Bow Capital and Acre Venture Partners.
• Carrum Health, a San Francisco-based payment platform for employers, raised $6.5 million in seed funding. Wildcat Venture Partners led the round, and was joined by SJF Ventures and SpringRock Ventures.
PRIVATE EQUITY DEALS
• China Investment Corporation is in late-stage negotiations to acquire Logicor, a London-based warehouse property group, from Blackstone, according to The Financial Times. The deal would value the Logicor at more than €12 billion ($13.5 billion) including debt. Read more (subscription required).
• Vector Capital agreed to acquire Sandvine Corp. (TSX:SVC) for approximately 483 million Canadian dollars ($358.4 million). The C$3.80 ($2.82) per share offer represents a premium of about 20% to Sandvine’s closing price on May 25.
• Yuanfudao, a China-based online tutoring company, raised $120 million from Warburg Pincus and Tencent Holdings. The company is now valued at more than $1 billion.
• HGGC has agreed to take a majority stake in Idera, a Houston, Texas-based database software firm. The deal values the company at roughly $1.125 billion including debt, according to Reuters. Read more.
• Blackstone Group made an investment of an undisclosed amount in Entic, a Pembroke Pines, Fla.-based cloud energy consumption and efficiency analytics platform, according to The Wall Street Journal. Read more.
• Optimal Blue, which is backed by GTCR, acquired Comergence Compliance Monitoring, a Mission Viejo, Calif.-based SaaS mortgage technology business. Financial terms weren’t disclosed.
• Softvision, a Tower Arch Capital portfolio company, acquired Momentus Software, a tech solution developer for Fortune 500 companies. Financial terms weren’t disclosed.
• General Atlantic has agreed to invest in Grupo Axo, a Mexico-based retailer. Financial terms weren’t disclosed.
• Partners Group acquired a minority stake in Green Tea Restaurant, a China-based casual dining restaurant chain. Financial terms weren’t disclosed.
• Gridiron Capital has acquired a controlling stake in Rough Country, a Dyersburg, Tenn.-based suspension system manufacturer. Audax Private Equity, the current majority shareholder in Rough Country, will retain a minority stake in the company. Financial terms weren’t disclosed.
• GRAIL, Inc., a Menlo Park, Calif.-based life sciences company, has agreed to combine with Cirina, Ltd., a Hong Kong.-based company focused on early detection of cancer. Financial terms weren’t disclosed. [This item has been updated to reflect the correct headquarters city.]
• Vista Equity Partners has agreed to acquire Lithium Technologies, a San Francisco-based provider of social media management and online community solutions. Financial terms weren’t disclosed.
• Portobello Capital acquired Centauro Rent a Car, a Spain-based provider of car rental services. Financial terms weren’t disclosed.
• KPS Capital Partners LP agreed to acquire DexKo Global, a Novi, Michigan-based provider of running gear technology, chassis assemblies and related components. Financial terms weren’t disclosed.
• Consonance Capital Partners sold KEPRO, a medical management and cost containment solutions for government and private sector clients in the healthcare sector. Financial terms weren’t disclosed.
• Pelican Energy Partners made a “significant” investment in Johnson Specialty Tools, a Houston, Texas- based fluid management systems provider for drilling rigs.
• Vista Equity Partners agreed to acquire Xactly (NYSE:XTLY), a San Jose, Calif.-based provider of cloud-based incentive solutions, for approximately $564 million.
• LLR Partners made an investment of an undisclosed amount in Kemberton Healthcare Services, a Brentwood, Tenn.-based provider of revenue cycle management services to hospital.
• Opus Equity Partners has made an equity investment in Destination Pet, a U.K.-based provider of pet care services. Financial terms weren’t disclosed.
• Iberchem, a Spain-based fragrance maker, has attracted first-round offers from private equity groups including CVC, Bridgepoint and Charterhouse, according to Reuters. The deal could value the company at about 400 million euros ($448 million). Read more.
• E.ON (DB:EOAN) is exploring options for a sale of the group’s remaining stake in Uniper (XTRA:UN01), the German-based power generation and commodity trading business it spun off last year, according to Reuters. Read more.
• WPP made an investment of an undisclosed amount in 88rising, U.S.-based producer of digital content catering to the Asian millennial market.
• Zhong An Online Property and Casualty Insurance, China’s first online-only insurer based out of Shanghai, is now planning raise least $1 billion in a Hong Kong offering, Reuters reported Wednesday citing people with knowledge of the matter. Back in October, Zhong An choose Credit Suisse, J.P. Morgan, and UBS to carry out the deal in the mainland—but paused due to regulatory hold ups. The company is backed by Chinese giants Tencent Holdings and Alibaba spinoff Ant Financial.
• Hennessy Capital Acquisition III, a Wilson, Wyo.-based blank check company seeking to combine industrial manufacturing, distribution or services companies, filed for an IPO Tuesday seeking to raise $225 million. The company plans to trade on the NYSE under “HCAC.U.” The firm is 80%(pre-offering) owned by Daniel Hennessy’s Hennessy Capital Partners III, and 8.9% by River Hollow Partners’ Kevin Charlton. Credit Suisse and Stifel Nicolaus are underwriters for the deal.
• Kinder Morgan Canada, the Canadian subsidiary of the Houston-based oil giant, closed nearly flat on its first day of on the Toronto Stock Exchange Tuesday. The company was initially priced at $17 a share, but fell as much as 4.5% in trading Tuesday. Kinder Morgan will retain 70% of the company.
• The Public Sector Pension Investment Board and ASUR have acquired a 50% stake in Aerostar Airport Holdings, the Puerto Rico-based operator of the Luis Muñoz Marín International Airport, for $430 million. The seller was Oaktree Capital Management LP.
• 1-800-FLOWERS.COM sold Fannie May Confections Brands, a Melrose Park, Ill.-based gourmet chocolate and candy producer, to Ferrero International SA for $115 million.
• Mediware Information Systems, a TPG Capital portfolio company, acquired Kinnser Software, an Austin, Texas-based provider of software solutions for home health and hospice providers. The seller was Insight Venture Partners. Financial terms weren’t disclosed.
• SoftBank Group purchased a significant minority equity interest in OSIsoft, a San Leandro, Calif.-based operational intelligence platform, from Kleiner Perkins, TCV, and Tola Capital.
• LOGIX Communications, a portfolio company of Astra Capital Management, agreed to acquire Alpheus Communications, a Houston, Texas-based provider of telecommunications and data center services. The sellers were The Gores Group and Scott Widham. Financial terms weren’t disclosed.
• Leonard Green & Partners is considering selling USIC, an Indianapolis-based company which locates and maintains the underground cables of utilities, according to Reuters. The company could be valued at close to $2 billion, including debt. Read more.
• Alsea (BMV:ALSEA) agreed to sell its minority stake in Grupo Axo, a Mexico-based department store operator, to General Atlantic, according to Reuters. Alsea also announced a deal with Grupo Axo that would allow Axo to acquire the minority stake owned by Alsea in Axo units in Chile. The two deals are worth a combined 1.6 billion pesos ($85.5 million), according to Reuters. Read more.
FIRMS + FUNDS
• New Harbor Capital, a Chicago-based private equity firm, raised $265 million for its sophomore private equity fund, New Harbor Capital Fund II.
• Riordan, Lewis and Haden Equity Partners, a Los Angeles, Calif.-based private equity firm, is seeking to raise $500 million for its fourth fund, RLH Investors IV, L.P.
• Salesforce (NYSE:CRM) announced a new $50 million fund from Salesforce Ventures called SI Trailblazer Fund. It will invest in cloud consulting firms. The vehicle has thus far backed three services companies: 7Summits, Arxxus, and ATG.
• Josh Mohrer joined Tusk Ventures as a managing director. Previously, Mohrer was the general manager at Uber.
• Eric Hazard joined Vested Ventures as CEO. Previously, Hazard was at Cognito.
• Jay Sung joined Brentwood Associates as an operating partner and chief marketing officer for its operations group. Previously, Sung was at The Proactiv Company.
• John Cavalier, a co-managing partner and former chairman of Hudson Clean Energy Partners, has retired from the private equity firm.