2016-12-07-1

Term Sheet — Wednesday, June 7

Jun 07, 2017

500

Hello, it’s Fortune 500 day! The 2017 list is live here. For 63 years, this list has ranked the largest companies in the U.S. by revenue.

Berkshire Hathaway hit its highest ever ranking at No. 2, surpassing Apple and Exxon Mobile. (Walmart is No. 1 for the 5th year in a row.)

KKR got rather dramatically knocked off the list – last year it was #347; this year it’s #656. As Fortune’s Lucinda Shen explains:

KKR earned some $5.5 billion from its investments in 2015, but that figure dropped to $109 million in 2016. That was partly due to a poor-performing bet in an energy exploration company, Samson Resources, and a slide in the value of KKR's shares of payment-tech company First Data Corp after a volatile start to 2016.

Blackstone and Carlyle Group clock in at #503 and #869, respectively.  Icahn Enterprises, which some consider a buyout firm, ranks No. 168.

A few other notable tidbits: Apple is the most profitable Fortune 500 company. New York state has the most Fortune 500 companies, followed by California and Texas. The median revenue for a Fortune 500 company is $11.4 billion. 41 of them are worth more than $100 billion. Oil prices are to blame for many of the 15 companies that fell off the list.

There are 32 female CEOs, marking a new record of 6% (and up from 21 last year.) Just 18 Fortune 500 CEOs are the founders of their companies. And the biggest sector represented is utilities.

We also have two feature stories on new entrants to the list. Michal Lev-Ram has a profile of Activision Blizzard’s plans to become the ESPN of competitive gaming. Gaming is hits-driven and few companies figure out how to building a lasting business in the category. This year Activision Blizzard entered the Fortune 500 for the first time and it’s only the third gaming company to ever join the list. (Electronic Arts was on it once in 2010 and Atari, twice in 1988 and 1989.)

And there’s a feature story by Scott Cendrowski about new entrant Tesla’s ambitions in China.

***

I’m calling the rest of today’s column UNPOPULAR OPINION WEDNESDAY. Feel free to weigh in if you disagree with the following takes on news from three potential, maybe, someday Fortune 500 companies:

🔥 Meal kits are not going to save media. Vice Media, a media company worth as much as $5 billion with a $1 billion “revenue run rate,” has launched its own meal kit business in partnership with Chef’d, a startup that creates meal kit businesses for media partners.

I’m going to repeat an argument I made a year ago: The media industry loves a fad business model and meal kits is starting to feel that way. When daily deals were all the rage, everyone from the New York Times to glossy magazines and radio stations jumped into the fray with their own Groupon-killers. Those all, of course, went nowhere.

Now they’re doing it again with meal kits. The Times, Men’s Health, Real Simple and Cooking Light have all ventured into meal kit partnerships. Some of them have already dissipated. In another year, I’d like to check in with Vice and the others to see where their food-in-a-box experiments have landed.

🔥 Pinterest will be a sleeper success. Raising a round of funding from inside investors is often seen as a sign of weakness. Pinterest yesterday announced exactly that -- $150 million in new funding at a valuation of $12.3 billion. The valuation represents a slight step up from the company’s last private valuation, but only because of an increase in share count. In other words, this does not look great.

The knock on Pinterest is that it hasn’t moved fast enough to introduce new features, to create innovative ad products, to catch up on mobile, to increase its users. It also has been fairly quiet and hype-averse, a reflection of its media-shy founder Ben Silbermann. Pinterest was founded two years before Snap, which is now publicly traded, worth $23 billion, forecasting $770 million in annual revenue. (Pinterest expects $500 million this year, sources say.)

However! People close to Pinterest say the financing doesn’t change the company’s plans to go public next year; this is just existing investors wanting to invest more. I am willing to bet that when Pinterest finally goes public, it will have better business fundamentals than Snap. Perhaps I’ve been brainwashed by bullish Pinterest investors and my own use of the service, which I find myself mindlessly scrolling through more often than Snapchat or Facebook. It’s also the one service that knows my purchase intent and directly influences my purchase decisions.

Pinterest plans to use the new money to expand its visual search tools and improve its recommendations to users. The company says it has doubled revenue per search query since the beginning of the year.

🔥 215:20 is not a great ratio of sexual harassment claims to firings. Uber’s internal investigation has turned up 215 claims of sexual harassment. That’s a high number for a 12,000-person company. The news that Uber had fired 20 employees as a result was unveiled at an internal meeting yesterday and publicly leaked within seconds. More heads may roll: The company is still investigating 57 of the cases.

Meanwhile Uber has not announced any progress on its COO hunt and it’s also in the market for a new CFO, having lost finance head Gautam Gupta last week. And the much-anticipated independent report from Eric Holder is expected to be released very soon.

The silver lining is that Uber has snagged two notable hires: Harvard Business School Professor Frances Frei and Apple Music marketing head Bozoma Saint John. Saint John will focus on re-branding Uber as … the opposite of what it is now. She explained her decision in an interview with Business Insider:

"It’s grown so quickly in such a short amount of time — and leadership and others have been so focused on growing the business — that this very moment is about changing the image of Uber and crafting what that brand story is. That hasn’t been done yet."

She told Recode: “I know what I’m walking into.”

IRL: I’ll be at the Fortune Venture stage at the Northside Festival in about an hour, interviewing David Pakman of Venrock. If you’re attending, say hello!

THE LATEST FROM FORTUNE...

• Did I mention it’s Fortune 500 day?

…AND ELSEWHERE

Inside the Vatican’s tech accelerator. A London startup where job perks include pole dancers and human sushi platters. The Silicon Valley billionaires remaking America’s schools. Goldman Sachs dominates deal fees. Pizza cheese billionaire. Prince was a secret patron of clean-tech startups. The decline of the summer job. David Einhorn’s failed activist campaign against GM. Why failed banks need regulators. China’s robot glut. Accounting freakout!

VENTURE DEALS

Pinterest, a San Francisco-based social pinning site, raised $150 million in funding from a group of existing investors at a valuation of $12.3 billion. Previous investors include Andreessen Horowitz, Fidelity, and Bessemer Venture Partners, although it's unclear which of them agreed to invest again. Read more at Fortune.

Illumio, a Sunnyvale, Calif.-based cloud security startup, raised $125 million in Series D funding. J.P. Morgan Asset Management led the round. Existing investors Andreessen Horowitz, General Catalyst, 8VC, Accel and DCVC participated. Read more at Fortune.

Cadre, a New York-based real estate startup, raised $65 million in Series C funding. Andreessen Horowitz led the round, and was joined by Jim Breyer, Ford Foundation, General Catalyst Partners, Goldman Sachs, Khosla Ventures, and Thrive Capital.

Coursera, a Mountain View, Calif.-based online education platform, raised $64 million in Series D funding. GSV Asset Management led the round, and was joined by New Enterprise Associates, Kleiner Perkins Caufield Byers, Learn Capital, and the Lampert Foundation. The company is valued at approximately $800 million, according to TechCrunch. Read more.

Plume Design, a Palo Alto, Calif.-based provider of WiFi solutions, raised $37.5 million in funding. Investors include Comcast Cable, Samsung Venture Investment Corporation, Presidio Ventures, Liberty Global Ventures, Shaw Ventures, and Jackson Square Ventures.

Plynk, a Dublin-based money messaging app platform, raised 25 million euros ($28 million) in Series A funding. Swiss Privée Ltd led the round. [This item has been updated to reflect the correct funding amount.]

Yubico, a Sweden-based enterprise authentication solutions provider, raised $30 million in funding. Investors include New Enterprise Associates, the Valley Fund, and Bure.

Scout RFP, a San Francisco-based cloud strategic sourcing platform, raised $15.5 million in Series B funding. Menlo Ventures led the round, and was joined by New Enterprise Associates. [This item has been updated to reflect the correct headquarters city.]

Autopilot, a visual marketing software provider with offices in the U.S. and Australia, raised $12 million in funding. Blackbird Ventures led the round, and was joined by investors including Rembrandt Venture Partners, Salesforce Ventures and Southern Cross Venture Partners.

BAM, a cash management provider for the transportation industry, raised $10 million in funding. Millstone Capital Partners led the round.

Misterb&b, a Paris-based short-term apartment rental platform focused on the LGBTQ community, raised $8.5 million in funding, according to TechCrunch. Investors include Project A and Ventech. Read more.

Tractable, a London-based deep learning company specializing in computer vision, raised $8 million in Series A funding. Ignition Partners led the round, and was joined by Zetta Venture Partners, Andy Homer, Scott Roza, Tony Emms, Greg Gladwell, and Stuart Bartlett.

Stem, a Los Angeles, Calif.-based financial platform for musicians and content creators, raised $8 million in Series A funding. Evolution Media and Aspect Ventures co-led the round, and were joined by Upfront Ventures.

Minerva, an Israel-based endpoint security solutions provider, raised $7.5 million in Series A funding. Amplify Partners led the round, and was joined by investors including StageOne Ventures and Webb Investment Network.

Chewse, a Los Angeles, Calif.-based online catering provider, raised $7.3 million in Series B funding, according to TechCrunch. Foundry Group led the round, and was joined by Telegraph Hill Capital, Rocketship VC and Galvanize. Read more.

Mercadoni, a grocery delivery platform with operations in Colombia, Argentina and Mexico, raised $6.2 million in Series A funding, according to TechCrunch. Axon Partners Group and Grupo Pegasus led the round. Read more.

Savonix, a San Francisco-based digital neurocognitive assessment platform, raised $5.1 million in Series A funding. DigiTx Partners led the round, and was joined by Rethink Impact.

Singa, a Helsinki, Finland-based digital karaoke service provider, raised €1.75 million ($2 million) in seed funding, according to TechCrunch. Initial Capital led the round, and was joined by Tamares Holdings, Superhero Capital, Reaktor Ventures, and Tekes. Read more.

Shortlist, a talent management platform with offices in San Francisco and New York, raised $1.5 million in seed funding. Investors include Impulse VC, FundersClub, and Alchemist Accelerators. Read more.

HEALTH AND LIFE SCIENCES DEALS

Trice Medical, a King of Prussia, Penn.-based provider of private diagnostics solutions focused on micro-invasive technologies, raised $19.3 million in Series C funding. Investors include Smith & Nephew, Safeguard Scientifics, HealthQuest Capital and BioStar Ventures.

Neuronetics, a Malvern, Penn.-based medical device company developing non-invasive therapies for psychiatric and neurological disorders, raised $15 million in Series G funding. Investors include Ascension Ventures, Accuitive Medical Ventures, GE Ventures, Interwest Partners, New Leaf Venture Partners, Onset Ventures, Polaris Venture Partners and Three Arch Partners.

Lung Therapeutics Inc, an Austin, Texas-based clinical stage pharmaceutical company, raised $14.3 million in Series B funding. Bios Partners led the round, and was joined by the UT Horizon Fund.

PRIVATE EQUITY DEALS

KKR made a $1.7 billion takeover offer for Vocus Group Ltd (ASX:VOC), an Australia-based telecommunications company, according to Reuters. KKR made a non-binding indicative offer to buy Vocus Group’s shares for A$3.50 ($2.65) in cash, a 22% premium to the stock's closing price the previous day. Read more.

Bain Capital Private Equity acquired a controlling stake in Hugel (KOSDAQ:A145020) for KRW 927.5 billion ($831 million), according to Private Equity International. Read more.

Ardian Infrastructure has agreed to acquire a 49% stake in Autovia Padana, an Italy-based operator of the A21 Piacenza-Cremona-Brescia motorway. The transaction price is approximately 80 million euros ($90 million).

Advent International acquired a majority stake in GMD, a Peruvian IT services fir and subsidiary of Graña y Montero SAA for $84.7 million.

Rutland Partners made an investment of an undisclosed amount in Aston Barclay, a U.K.-based car auction group. Financial terms weren’t disclosed.

CI Capital Partners acquired a majority interest in SavATree, a Bedford Hills, N.Y.-based landscape maintenance service provider. Financial terms weren’t disclosed.

BlackRock acquired First Reserve Energy Infrastructure Funds, the equity infrastructure franchise of First Reserve. Financial terms weren’t disclosed.

Wind Point Partners acquired Valicor Environmental Services, a Middletown, Ohio-based provider of non-hazardous wastewater treatment services in North America. Financial terms weren’t disclosed.

Exari, which is backed by Beacon Equity Partners, acquired Adsensa, a U.K.-based provider of contract data discovery and analytics. Financial terms weren’t disclosed.

OTHER DEALS

Valeant Pharmaceuticals International (NYSE:VRX) is in talks to sell its Bausch & Lomb unit's surgical products business to Germany's Carl Zeiss Meditec AG (XTRA:AFX), according to Bloomberg. The deal would value Valeant's eye-surgery assets at about $2 billion. Read more.

Datatec unveiled plans to sell its Westcon-Comstor American, a U.S.-based distributor of technology and services for network security and data centers, to Synnex Corp (NYSE:SNX) in a deal worth up to $800 million, according to Reuters. Synnex would also buy 10% of Westcon-Comstor operations outside the United States for $30 million with an option to double that within 12 months, valuing the unit at around $1.1 billion. Read more.

New World Department Store China (SEHK:825) said its parent firm New World Department Store plans to take it private for HK$934.5 million ($120 million), according to Reuters. The HK$2 ($0.26) per share offer represents a 50.4% premium to New World Department Store China’s previous close. Read more.

Anders Holch Povlsen, owner of Danish fashion retailer Bestseller, is buying a stake of at least 10% in Klarna, a Sweden-based online payment solutions provider, according to Reuters. Read more.

Ignite Restaurant Group (OTCPK:IRGT), owner of the Joe's Crab Shack casual dining chain filed for Chapter 11 bankruptcy, according to Reuters. It plans to sell the company for at least $50 million to a private equity firm. Read more.

Allergan (NYSE:AGN) plans to buy privately-held medical device company Keller Medical Inc., a Stuart, Fla.-based developer a funnel used during breast surgery procedures. Financial terms weren’t disclosed.

IPOs

Emaar Properties, the Dubai-based company that built the world’s largest tower, announced plans to list its United Arab Emirates real estate development business on Wednesday.  Emaar plans to offer about 30% of that business. The IPO will be the largest on the Dubai markets in two and a half years, when Emaar Properties listed its shopping mall and retail subsidiary, Emaar Malls. That business was valued at $10.27 billion, or 37.7 billion dirhams, according to Reuters.

Celltrion Healthcare, a South Korean company selling biosimilar drugs, said Wednesday that it plans an offering of at least $799.6 billion won, or $712.7 million, sometime next month on the Korean exchange. According to Reuters, Celltrion plans to sell 26.6 millions shares priced between 32,500 won ($28.91) to 41,000 won($36.47). UBS and Mirae Asset Daewoo are advisors in the listing.

EXITS

Investcorp agreed to acquire Abax AS, a Norway-based vehicle monitoring software company, for $210 million. The seller was Norvestor Equity AS.

Alteryx, Inc. (NYSE: AYX) acquired Yhat., a Brooklyn, N.Y.-based data science software company. Yhat raised approximately $2.6 million in venture funding from investors including Boldstart Ventures, Contour Venture Partners, Ignition Partners, KEC Ventures, and RRE Ventures. Financial terms weren’t disclosed.

Highland Capital Management acquired Structural and Steel Products, a Fort Worth, Texas-based manufacturer and distributor of highway safety products. The seller was Merit Capital Partners.

Ideal-Tridon, which is backed by Industrial Growth Partners, acquired Fast-Lok, a maker of hose clamps, strapping, buckles and various installation tools. The seller was Deco Products. Financial terms weren’t disclosed.

Evolution Midstream, which is backed by EnCap Flatrock Midstream, agreed to acquire Rowdy Gas Gathering System, a Wyoming-based system composed of about 1,000 miles of gas gathering lines. The seller was Lucid Energy Group. Financial terms weren’t disclosed.

FIRMS + FUNDS

Causeway Media Partners, a Boston-based venture capital firm, raised $207.3 million for a second venture fund, Causeway Media Partners II.

Kasikorn Bank, a Thailand-based commercial banking provider, raised approximately 1 billion THB ($29.4 million) for its inaugural fintech fund, according to TechCrunch. Read more.

PEOPLE

Michael Hirsch joined JEGI as a managing director. Previously, Hirsch was at Piper Jaffray.

Michael Segal was promoted to a vice president at Bessemer Venture Partners.

Andriy Mykhaylovskyy joined Fifth Wall as a principal and COO. Previously, Mykhaylovskyy was at Elliott Management.

Landon Tucker joined Fifth Wall as an entrepreneur-in-residence. Previously, Tucker was at Nelson Peltz’s Trian Fund Management.

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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.

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