On deals and dealmakers.
NEW MONEY, FOOD IPO
Spin-outs: Last week we reported on the trend of junior partners at venture firms striking out on their own. In addition to the seven new firms we named in that article, here are two more worth watching:
• Marissa Campise is raising $50 million from limited partners for Rucker Park, an early stage venture fund based in New York. Campise spent time at Greycroft Partners and Venrock before joining SoftBank Capital in 2014, a move that took her to the West Coast. She left SoftBank a year ago. Now, she’s back in New York for the new fund. (Rucker Park is a legendary basketball court in Harlem.) Campise declined to discuss the new firm, citing securities laws.
• John Komkov, an associate partner at Lightspeed Venture Partners, has formed a firm called Fathom Capital. Komkov left Lightspeed in February. The firm is not exactly a secret — an SEC filing from March revealed the firm has raised $52.3 million toward a $65 million target — but the only coverage of it I could find so far is buried in an interview on 512tech.com. In the interview, Komkov, who once worked at Austin Ventures, says he plans to target Austin as a place for deals.
IPO: That was fast. Yesterday’s Term Sheet discussed the potential IPO of Blue Apron. After the market closed, the company filed its S-1. Fortune’s John Kell has all the basics right here. Some thoughts:
• Model: Given that Blue Apron is perceived by many as the strongest contender in the meal kit category, this filing serves as a referendum on the business model. Blue Apron’s revenue is impressive ($795.4 million last year), and its growth is impressive (133% over 2015), though it is losing money ($54.9 million last year) and operating expenses more than doubled between 2015 and 2016.
• Marketing: Remember those $100 Blue Apron gift cards selling for $80 at Costco? It was a bit of a joke on Twitter, with plenty of investors chiming in to defend the company’s lifetime customer value. Now we know exactly how much it costs Blue Apron to acquire a customer, how much money it makes on them, and how long they stay.
According to the chart on page 63, Blue Apron pays $94 to acquire a customer. It had 1.04 million customers as of last quarter, and in that time period the average customer ordered 4.1 “orders” of around $60 each, spending an average of $236.
Blue Apron justifies this cost by using a “cumulative net revenue per order,” noting that the company makes four times the cost to acquire a customer within the first six months of acquiring them. Why is that the stat they want to emphasize? Because customers leave. “Over time our Customers on average order less frequently or sometimes cease ordering.”
Marketing spend continues to ramp up. In the first quarter the company spent 24.8% of its revenue on marketing, which is a significant jump from the year prior, when it spent 14.8% of revenue on marketing. The risk factors note that the company expects marketing expenses to continue to make up “a significant portion of our operating expenses.” That shows Blue Apron’s challenge of expanding beyond its existing base of customers, and luring back lapsed ones.
• Ownership: The biggest beneficiaries of this IPO will be Bessemer Venture Partners (which owns a 23.8% pre-IPO stake), Fidelity (6.2%), First Round Capital (10.5%), Stripes Group (6.5%), and a family trust controlled by CEO Matt Salzberg and his dad (12.9%).
• Buyout: As John Kell’s article notes, the best outcome for Blue Apron, last valued in the private markets at $2 billion, might be an acquisition by a large grocer like WalMart, Kroger or Amazon:
“We expect grocers to target a number of other leading meal-kit services as acquisitions, not unlike the acquisition of several apparel-oriented subscription services like Trunk Club and Gilt in the past several years,” wrote Morningstar analyst R.J. Hottovy in a broad report on the meal-kit space earlier this year. Read more.
Going rogue: In other IPO news, Spotify had to reassure investors, that, yes, its IPO plans are on track, after one of its board members denied the reports in a Swedish radio interview. Oops! The company, which has confirmed it hired banks for a public listing, had to quickly walk back the statements: “Martin is our co-founder and a board member, but not a spokesman for the company,” the company told Bloomberg.
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• Max, a France-based personal assistant startup, raised €20 million ($22.5 million) in funding from Crédit Mutuel Arkéa, according to Tech.eu. Read more.
• PlaySight, an Israel-based sports activity analysis provider, raised $11 million in funding. Investors include Verizon Ventures and Greg Norman.
• Evolve Vacation Rental Network, a Denver, Colo.-based vacation rental management services platform, raised $11 million in funding from T. Rowe Price Associates, Inc.
• Greenlight Financial Technology, an Atlanta-based creator of a smart debit card for kids, raised $7.5 million in seed funding. Relay Ventures led the round, and was joined by Social Capital, New Enterprise Associates, and TTV Capital.
• Yogome, a Mexico-based education game develope, raised $6.6 million in Series A funding. Investors include Seaya Ventures, Variv Capital and Endeavor Catalyst.
• Meero, a Paris-based photo and video producer for real estate agents, raised €4.1 million ($4.6 million), according to Tech.eu. Investors include Xavier Niel (Kima Ventures), Fabrice Grinda (FJ Labs), GFC, Rocket Internet and Aglaé Ventures. Read more.
• Everfest, an Austin-based festival experience platform, raised $3.6 million in series A funding. Live Nation Entertainment and ATX Seed Ventures led the round, and were joined by Red Frog Events, Chip Conley, and Bob Kagle.
HEALTH AND LIFE SCIENCES DEALS
• Monteris Medical, a Plymouth, Minn.-based minimally invasive neurosurgery procedure developer, raised $26.6 million in Series C funding. Versant Ventures and SightLine Partners led the round, and were joined by Birchview Capital and BDC Capital’s Healthcare Venture Fund.
PRIVATE EQUITY DEALS
• ChartCo, which is backed by Equistone Partners Europe, acquired Marine Position, a Sweden-based environmental shipping technology company. Financial terms weren’t disclosed.
• Eureka Growth Capital has recapitalized McCue Corp, a Peabody, Mass.-based provider of damage prevention and asset protection solutions. Financial terms weren’t disclosed.
• The Halifax Group made an investment of an undisclosed amount in BCI Burke, a commercial playground equipment manufacturer. Financial terms weren’t disclosed.
• Mercury Partners acquired DirectMed Parts & Service, a San Diego, Calif.-based provider of medical imaging aftermarket parts, systems and field service solutions. Financial terms weren’t disclosed.
• Beechbrook Capital has made an investment of an undisclosed amount in Wilton & Bain, a London-based advisory firm. Financial terms weren’t disclosed.
• Goldman Sachs’ West Street Capital Partners made an investment of an undisclosed amount in Transcendia, a Franklin Park, Ill.-based plastic film manufacturer.
• Stellwagen Group, which is owned by Acasta Enterprises Inc, acquired ECN Capital’s commercial aviation advisory and asset management business. Financial terms weren’t disclosed.
• Tiger Infrastructure Partners has made an investment of an undisclosed amount in Strategic Venue Partners, a Pasadena, Calif.-based provider of wireless infrastructure solutions for enterprise in-building distributed antenna systems. Financial terms weren’t disclosed.
• Allianz Global Investors made an investment of an undisclosed amount in Moapa Solar, a Clark County, Nevada-based solar photovoltaic facility. Financial terms weren’t disclosed.
• Pulse Secure, a portfolio company of Siris Capital, agreed to acquire the Virtual Application Delivery Controller business from Brocade Communications Systems, a San Jose, Calif.-based networking solutions provider. Financial terms weren’t disclosed.
• Baccarat (ENXTPA:BCRA), a Paris-based luxury crystal and jewelry maker, will sell the 88.8% stake currently owned by its majority shareholders, to Chinese investment group Fortune Fountain Capital. The company is valued at €185 million ($207 million). Read more.
• Apache Corp (NYSE:APA) is selling Canadian light oil assets to Canada’s Cardinal Energy Ltd (TSX:CJ) to focus on high-growth areas like the Permian basin shale play, according to Reuters. The deal is worth C$330 million ($244 million) in cash. Read more.
• Globant acquired PointSource, a design and development tech agency with locations in Raleigh, N.C. and Chicago, Ill. Financial terms weren’t disclosed.
• Lotte Chemical Titan Holding, a Malaysia-based producer of olefins and polyolefins, will raise 1.55 trillion won ($1.38 billion) from new shares issued in its initial public offering. The listing could be one of the biggest IPOs in years in Malaysia.
• Blue Apron, the New York City-based meal kit company, has registered plans to raise $100 million—which is likely a placeholder figure, in an IPO. Goldman Sachs, Morgan Stanley, Citigroup, and Barclays are lead underwriters in the deal. Pre-IPO, Blue Apron is backed 23.8% by Bessemer Venture Partners, 10.5% by First Round Capital, and 6.5% by Stripes Group. Exact terms of the IPO have yet to be disclosed. The company plans to list on the NYSE under “APRN.” Read more at Fortune.
• Tintri, a Mountain View, Calif.-based company focused on virtual machine aware storage, filed for an IPO Thursday. For now, the company says it plans to raise $100 million. Morgan Stanley and Bank of America are joint bookrunners in the deal. Pre-IPO, New Enterprise Associates owns 22.7% of the company, Lightspeed with 14.5%, Insight Venture Partners with 20%, and Silver Lake Kraftwerk with 20.4%. The company booked revenue of $125.1 million for the year ending January 2017, on loss of $105.3 million.
• Mersana Therapeutics, a cancer therapy biotech company based out of Cambridge, Mass., filed for an IPO to raise $75 million Thursday. The company plans to list on the Nasdaq under “MRSN.”. It booked revenue of $38.9 million on loss of $13.7 million for 2016. J.P. Morgan, Cowen and Company, and Leerink Partners are joint bookrunners in the deal. Pre-IPO, New Enterprise Associates owns 41% of the company Pfizer with 1.6%, and F-Prime Capital Partners with 9.9%. Exact pricing terms have yet to be disclosed.
• Bison Capital Acquisition, a Beijing-based blank check company formed by a private equity firm of the same name, filed for a $50 million IPO Thursday. EarlyBirdCapital was named lead underwriter. The company plans to list on the Nasdaq under symbol “BCACU.” The funds raised will be used to enter into a potential deal with a business that primarily operates in Asia and North America. Exact terms of the deal have not yet been disclosed.
• Riverside Partners sold Thinklogical, a Millford, Conn.-based fiber optic KVM solution developer, to Belden Inc. Financial terms weren’t disclosed.
• Kohlberg & Company acquired CIBT Global Inc, a McLean, Va.-based travel visa and immigration service provider, from ABRY Partners. Financial terms weren’t disclosed.
• Yellow Wood Partners agreed to sell PDC Brands, a Stamford. Conn.-based personal care products provider, to CVC Capital Partners. Financial terms weren’t disclosed.
FIRMS + FUNDS
• KKR (NYSE:KKR), a New York-based private equity firm, raised $9.3 billion for its Asian Fund III.
• Castlelake, a Minneapolis, Minn.-based investment manager, raised $1 billion for its aviation fund, Castlelake Aviation III Stable Yield LP.
• CIC Capital Canada, a Montreal-based subsidiary of CM-CIC Investissement, has raised $500 million for its new North American growth fund.
• True Ventures, a Palo Alto, Calif.-based venture capital firm, raised $112 million for its second select fund.
• Martin vom Hagen joined Adams Street Partners as a partner. He will lead the firm’s new Munich office. Previously, vom Hagen was at AllianceBernstein.
• Ben Falloon joined ParkerGale Capital as an associate. Previously, Falloon was at Parthenon-EY.