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Term Sheet — Tuesday, June 13

Jun 13, 2017

ET CETERA

Good morning, I will try to abstain from covering every tremor in the Uber saga beyond yesterday’s analysis. (But here’s the latest: Emil Michael is out. He blames Uber’s board. Travis Kalanick, unclear. Sidenote, incredibly, Kalanick gets voting control of shares tendered by employees.)

In the meantime, a few random items:

DONE: Verizon has officially closed its acquisition of Yahoo. The closing of the deal means Yahoo has merged with AOL and is now a part of “Oath,” with Tim Armstrong as its CEO. Oath includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance, Yahoo Mail and others. And wither Marissa? From the release:

Given the inherent changes to Marissa Mayer's role with Yahoo resulting from the closing of the transaction, Mayer has chosen to resign from Yahoo. Verizon wishes Mayer well in her future endeavors.

I continue to expect she will land at a venture or private equity firm…

STARTUP ACCELERATORS: In the past I’ve made arguments against accelerators, against demo days, and in particular, against accelerator programs that charge money. But it should be said: Plenty of startup accelerators add lots of value! It’s just difficult to tell which ones do and which are a waste of time and equity. As Y Combinator founder Paul Graham has noted, lots of startups that go through these programs “were not accelerated.”

Here’s one way to do find the best programs: A new ranking financed by RICE University (where Yael Hochberg, the lead author, is an entrepreneurship professor). Taking into account data from 150 accelerator programs on factors such as valuation, exits, fundraising, survival, founder satisfaction, and alumni network, the study ranked Y Combinator and AngelPad as the nation’s top programs. AngelPad, based in New York and San Francisco, does not have a Dropbox or Airbnb in its portfolio like YC, but it boasts such portfolio companies as Postmates, Buffer, and Mopub. Other notable programs include Alchemist, Amplify LA, Chicago New Venture Challenge, Mucker Lab, StartX, and TechStars.

SPEAKING OF TECHSTARS, Global EIR, the first non-profit to go through TechStars’ Boulder program, is dedicated to helping entrepreneurs solve immigration issues. Today Foundry Group’s Brad Feld and Silicon Valley Bank announced they are matching $200,000 in donations to the program.

MEANWHILE, what are accelerators funding? AI bots for business, AI-powered digital assistants, temporary solutions for real estate, and smart transportation, according to Crunchbase.

SPEAKING OF REAL ESTATE, this morning Atomico, Sequoia, GV and Fifth Wall, a venture firm focused specifically on real estate, announced a significant new real-estate focused deal for an L.A.-based storage startup called Clutter (see full details of the deal in our listings below). Fifth Wall Partner Brendan Wallace noted in a blog post that Clutter represents a new category of company called “real estate as a service.” If that sounds familiar, recall Convene, the “real estate as a service” business that recently raised $68 million.

From Wallace:

The emerging “real estate-as-a-service” category is exploding: Airbnb, WeWork, Common, b8ta, and Clutter all fall into this category. All of these businesses monetize physical space to some extent, which is the definitional hallmark of any real estate business model, yet they also decouple the “service” of real estate from asset ownership. WeWork is selling you office space as a service , b8ta has created a physical storefront for online retailers as a service, Common is selling you a place to live as a service, and Clutter is moving and storing your belongings as a service .

He concludes: “You don’t need to own assets to build huge real estate companies anymore.”

WHAT ELSE are venture investors looking for? To be clear, talking about trends is as much a branding exercise for startups as it is an investment thesis for investors. But based on conversations over the last couple of months: Fin-tech is out. 💀  Insure-tech is hot. 🔥  Reg-tech is next. 📈

HARDWARE IS HARD: Hello, the startup behind Sense sleep tracking devices, plans to shut down. The company recently laid off most of its staff. Hello recently held discussions to sell its assets in what one source described as “a firesale” to Fitbit, but the deal fell through, according to a source familiar with the situation.

Hello’s founder James Proud participated in Peter Thiel’s fellowship, a group of college students that Thiel pays to drop out of college and pursue entrepreneurship. It was an early mover in the now-trendy sleep category. And it had a popular campaign on Kickstarter, raising more than $2 million from backers.

Hello went on to raise more than $40 million in venture funding from Temasek, the investment arm of Singapore, and angel investors. Its latest funding round, raised in 2015, valued the company as high as $300 million.

You can my full story about the news here, but here are a few takeaways:

• This may be yet another in a long line of “KPNAC” stories, meaning “Kickstarter Project, Not a Company.” (Inspired by "feature, not a company.")

• Press excitement for the idea of a young boy genius setting out to revolutionize an industry often gets ahead of reality. In 2016, Proud graced the cover of Forbes. Perhaps it's time headlines like “Meet The 23-Year-Old Who Had Such A Good Idea, Strangers Gave Him $13 Million To Build It” become reason for investors to reconsider the hype. In that article, Proud had a pearl of wisdom for other startup entrepreneurs: “The secret to making a successful tech product, Proud says, is to create something that works so well it fits naturally into your everyday life.” Except, as other reporters found, the product didn’t work all that well.

• And lastly, the lesson that can’t be repeated enough: Hardware is hard.

PS: Yesterday I learned that a hot wedding gift among techies these days is Bitcoin…

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VENTURE DEALS

Futu Securities, a China-based financial services company, raised $145.5 million in Series C funding from Tencent Holdings. Existing investors Matrix Partners China and Sequoia Capital China participated. Read more.

Actility, a France-based machine-to-machine communication platform, raised $75 million in Series D funding round. Investors include Cisco Investments, BNP Paribas, Creadev, Orange, Inmarsat and Robert Bosch Venture Capital.

Clutter, a Culver City, Calif.-based provider of on-demand self-storage services, raised $64 million in Series C funding. Atomico led the round, and was joined by Sequoia Capital, GV, and Fifth Wall.

Fusion Risk Management, a Rolling Meadows, Ill.-based provider of SaaS software for business continuity risk management, raised $41 million in Series C funding. Catalyst Investors led the round, and was joined by Level Equity.

ScriptDash, a San Francisco-based digital pharmacy startup, rebranded as Alto, and raised $23 million in Series B funding. Greenoaks Capital led the round.

CrowdFlower, a San Francisco-based data enrichment crowdsourcing platform, raised $20 million in funding. Industry Ventures led the round, and was joined by Salesforce Ventures, Canvas Ventures, Microsoft Ventures, and Trinity Ventures.

The Drone Racing League, a New York-based sports and media company, raised more than $20 million in Series B funding. Sky, Liberty Media Corporation (owner of Formula 1) and Lux Capital led the round, and were joined by Allianz and World Wrestling Entertainment.

Trusona, a Scottsdale, Ariz.-based identity authentication device developer, raised $10 million in Series B funding. Microsoft Ventures led the round, and was joined by Kleiner Perkins.

VICIS, a Seattle-based football helmet manufacturer, raised $10 million in funding. Harry Faith, a real estate developer and the minority owner of the Cincinnati Reds, led the round.

Notion, a Denver, Colo.-based home awareness sensor developer, raised $10 million in Series A funding. Draper Nexus and TransLink Capital led the round, and were joined by investors including XL Innovate, Mesh VC.

Oath Craft Pizza, a Nantucket, Mass.-based fast-casual pizza restaurant, raised $7 million in series B funding. Breakaway Ventures led the round.

Yumi, a Los Angeles-based baby food delivery service, raised $4.1 million in seed funding. Investors include Brand Foundry, August Capital and NEA, according to TechCrunch. Read more.

Grainful, an Ithaca, N.Y.-based savory oats brand, raised $3.3 million in funding. Advantage Capital, Rand Capital and CircleUp led the round.

Nona Lim, an Oakland, Calif.-based bone broth and drinkable soups brand, raised $3 million in funding. Harbinger Ventures led the round, and was joined by Echo Capital Group.

Mrs. Wordsmith, a London-based visual content startup, raised £2 million ($2.5 million) in seed funding, according to TechCrunch. Kindred Capital led the round, and was joined by Reach Capital, SaatciNvest and Ropart Asset Management. Read more.

Hurdl, a Nashville, Tenn.-based experiential marketing company, raised $2.5 million in seed funding. Investors include current or former athletes and executives across the NBA, NHL, CBS, 300 Entertainment, LaCorte Ventures, Turner Sports, CNBC, PRG and Morris Lighting and Sound.

Yofumo Technologies, a Denver, Colo.-based cannabis storage and processing manufacturer, raised $1.5 million in seed funding. MedScience Ventures led the round.

Thriva raised £1.5 million ($1.9 million) in seed funding. Investors include Seedcamp, 500 Startups and the London Co-Investment Fund.

Chef's Cut Real Jerky, a New York-based steak and chicken jerky producer, raised funding of an undisclosed amount from Olivia Munn. Existing investors include CAVU Venture Partners, David Ortiz, Von Miller and Earl Thomas. Read more at Fortune.

HEALTH AND LIFE SCIENCES DEALS

LabConnect, a Seattle-based provider of customized global central laboratory and support services to biopharmaceutical organizations, raised $24.5 million in Series A funding. Investors include ABS Capital Partners, Pablo Capital, and BroadOak Capital.

Art Medical, an Israel and Palo Alto, Calif.-based medical tech startup which focuses on providing smart tubes for ICU patients, raised $20 million in funding. Advanced Medical Technologies led the round.

NowRx, a Mountain View, Calif.-based on-demand pharmacy that provides delivery of prescription medications directly to consumers, raised $2 million in seed funding. The funding was a combination of crowdfunding via SeedInvest.com as well as individual investors.

PRIVATE EQUITY DEALS

Peak 10, a Charlotte, N.C.-based IT infrastructure provider and portfolio company of GI Partners, will acquire ViaWest, a Greenwood Village, Colo.-based enterprise IT provider and subsidiary of Shaw Communications, for $1.675 billion. The companies will combine to create a provider of colocation, connectivity, cloud, and managed solutions. GI Partners will remain the majority shareholder of the combined company.

Corrum Capital and Two Sigma Private Investments have made investments of undisclosed amounts in Wings Capital Partners, a Newport Beach, Calif.-based aviation leasing company. [This item has been updated to reflect the correct description of Wings Capital Partners.]

Serent Capital made an investment of an undisclosed amount in Pondera Solutions, a Gold River, Calif.-based provider of fraud detection solutions for large government programs.

J.F. Lehman & Company recapitalized NorthStar Group Holdings and its subsidiary, NorthStar Group Services, a New York-based remediation and asset recovery company for government and commercial markets. Financial terms weren’t disclosed.

Imperial Bag & Paper Co, which is backed by Audax Private Equity, acquired Dade Paper & Bag, a Miami-based food service disposables distributor. Financial terms weren’t disclosed.

Rubicon Oilfield International, which is backed by Warburg Pincus, acquired Calgary, World Oil Tools, a Canada-based maker of specialty inflatable products to the oil and gas sector. Financial terms weren't disclosed.

OTHER DEALS

Halyard Health (NYSE:HYH) is exploring a sale of its surgical and infection prevention business that could fetch more than $600 million, according to Reuters. Read more.

Synaptics will acquire Conexant Systems, an Irvine, Calif.-based fabless semiconductor operator, for about $342 million. Read more.

COSCO Shipping Holdings Co (SEHK:1919) bought a 51% stake in Noatum Ports, a Spanish container terminal operator, for 203.49 million euros ($227.81 million), according to Reuters. Read more.

LexisNexis acquired Ravel Law, a Nicasio, Calif.-based online legal research platform. Financial terms weren’t disclosed.

SAVO Group acquired KnowledgeTree, a Raleigh, N.C.-based on-demand sales enablement software platform. Financial terms weren’t disclosed.

Penn Virginia Corp (Nasdaq:PVAC) explores a possible sale, less than a year after it emerged from bankruptcy, according to Reuters. Read more.

•  Sears Canada (TSX:SCC) is considering selling itself, according to Reuters. Read more.

IPOs

Altice USA, the Bethpage, NY-based subsidy of European cable provider Altice, set a range for its IPO Monday. Altice plans to offer about 46.6 million shares at between $27 to $31. At the midpoint of the range, Altice USA seeks to raise $1.3 billion in the IPO. In 2016, Altice USA reported revenue of $6 billion on loss of $832 million. J.P. Morgan, Morgan Stanley, Citigroup, and Goldman Sachs are lead underwriters in the deal. The company plans to list on the NYSE as “ATUS.”

Allied Irish Banks, whose collapse helped push Ireland into bailout territory in 2010, has announced a price range for its IPO, the New York Times reports. The Irish government expects to price the offering of 679 million shares between 3.90 euro to 4.90 euro a piece. That would give Allied a market capitalization of $14.9 billion at the high end of the range. Earlier this year, Ireland’s Department of Finance revealed that it would sell roughly 25% of the bank, which was nationalized seven years earlier.

Navitas Petroleum, an Israeli oil exploration and production company, plans to go public on the Tel Aviv Stock Exchange, Reuters reported. The IPO will be valued at about $100 million. The company has been expanding further into the Gulf of Mexico and Canada.

EXITS

Hello, a San Francisco-based bedside sleep tracker manufacturer, is shutting down after looking for a buyer. Hello raised more than $40 million in venture funding from Temasek, the investment arm of Singapore, and angel investors. Its latest funding round valued the company as high as $300 million. Read more at Fortune.

Gymboree Corp, a San Francisco-based children’s apparel specialty retailer, filed for Chapter 11 bankruptcy with a plan to cut its debt by around $1 billion and close 375 stores, according to Reuters. Read more.

Ardian sold Clip Industrie, a France-based publisher of enterprise resource planning software, to Forterro and Battery Ventures. Financial terms weren’t disclosed.

PAI Partners closed its previously announced sale of IPH, a France-based industrial supplies distributor, to Advent International. Financial details of the transaction weren’t disclosed, but the company was valued at €465 million ($521 million) when PAI invested in February 2013, according to the Wall Street Journal. Read more.

Ares Management and Leonard Green & Partners agreed to boost their stakes in Aspen Dental Management, an East Syracuse, N.Y.-based dental services company. The seller was American Securities. Financial terms weren’t announced.

FIRMS + FUNDS

Centana Growth Partners, a New York-based venture capital firm, raised $250 million for its inaugural fund.

Grove Ventures, an Israel-based venture capital firm, raised $76.8 million for its maiden fund.

Serve Capital Partners, an Austin, Texas-based investment firm, raised more than $52.1 million for its first fund, Serve Capital Partners I.

NRV, a Richmond, Va.-based venture capital firm, raised $33 million for its early-stage growth fund, NRV Early Stage Growth Fund.

PEOPLE

Myra D’Souza joined ParkerGale Capital as a principal. Previously, D’Souza was at PwC.

Marc J. Carmel joined Longford Capital as a director.

Daniel Wang joined Harris Williams & Co as a managing director.

Partners Group appointed Stephan Schali as the chief investment officer and David Layton as the head of private equity.

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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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