On deals and dealmakers.
Uber CEO Travis Kalanick has taken an indefinite leave of absence from the company, which means this site was not helpful at all (you had one job…). As we noted on Monday, the company will be run by a committee, which is not ideal and makes me think the leave won’t last long.
Meanwhile the lone private equity player in this Shakespearean drama has been hoisted with his own petard. At an all-staff meeting to reveal the results of attorney Eric Holder’s investigation into Uber’s cultural issues, TPG founding partner and Uber board member David Bonderman made a sexist joke about how women talk too much.
Horrible taste. Even worse timing. And a very bad look for the company.
It’s difficult for me to imagine how, after all of this, something like that could be casually said aloud… on stage… at a company all-hands meeting… about the company’s cultural problems. The incident has me wondering about the Uber board’s seven-hour meeting on Sunday. Did board members ever discuss why discrimination, sexual harassment, retaliation, and other ethical lapses were problems for Uber? Has there been any agreement that solving these problems is important, not simply because of headline risk, or for the purpose of preserving shareholder value, but because it’s the right thing to do?
Bonderman apologized for the comment. But no matter – he was quickly removed from the board.
BIG AI DEAL: Element AI, a Montreal-based artificial intelligence startup, has raised $102 million ($137.5M Canadian) in Series A funding led by DCVC with participation from BDC, Fidelity Investments, Hanwha, Intel Capital, Microsoft Ventures, National Bank of Canada, Nvidia, Real Ventures, Tencent, and multiple sovereign wealth funds.
By now everyone knows that AI is the new mobile, or the new electricity, or the new marketing trend startups are using to raise highly valued rounds of funding. That means it’s difficult to suss out what’s real and what’s not. Half of the time it feels like PhD’s are banding together with no product or business application and calling themselves an AI startup in a plot to get acqui-hired by Google.
But this deal is notable for a few reasons:
• Element AI, which has 100 employees, is calling this deal the largest ever funding round for an pure AI startup.
• Co-founder Jean-François Gagné sold his last AI company, Planora, to JDA Software and spent time there developing software for Fortune 500 businesses. He is “relentlessly business-focused,” according to DCVC partner Matt Ocko. “This is not a rich man’s amusement or think tank project,” Ocko adds.
• The majority of Element AI’s investors are also customers, including the financial investors like DCVC. “Access to this firepower tremendously augments our portfolio companies,” Ocko says.
• Co-founder and Université de Montréal professor
Yoshua Bengio is known as an early leader in deep learning technology. Bengio plans to continue his relationship with Montreal Institute of Learning Algorithms (MILA) in a “non-predatory model of academic cooperation,” according to Ocko. Rather than poach a leading researcher and their students, as many tech companies do, Element AI has taken a “visiting researcher” approach, allowing university researchers to work at the company and even publish their research as long as it does not include proprietary information from clients.
• This underscores the continued rise of Montreal as a hub for AI tech. Microsoft bought Montreal-based AI startup Maluuba in January.
IN RELATED NEWS, the U.S. may restrict Chinese investment in Silicon Valley AI:
An unreleased Pentagon report, viewed by Reuters, warns that China is skirting U.S. oversight and gaining access to sensitive technology through transactions that currently don’t trigger CFIUS review. Such deals would include joint ventures, minority stakes and early-stage investments in start-ups.
TREND WATCH: A quick, fun story I did for the latest issue of Fortune: The fast fashion trend is coming to furniture.
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KKR gives portfolio companies employees an ownership stake. Dispatch from SuperReturn: Capital-call lines risk artificially inflating returns. Where the VC money is going in China. Now hiring dealmakers: Big oil.
• INTURN, a New York-based software developer that enables brands to liquidate excess inventory, raised $22.5 million in Series B funding. B Capital Group led the round.
• Bowery, a New York City-based farming startup, raised $20 million in Series A funding co-led by General Catalyst and GGV Capital with additional investment from GV.
• ShipBob, a Chicago-based shipping service provider, raised $17.5 million in Series B funding. Bain Capital Ventures led the round. Existing investors Hyde Park Venture Partners, FundersClub, Hyde Park Angels and FJ Labs participated.
• AEye, a Pleasanton, Calif.-based autonomous vehicle vision system manufacturer, raised $16 million in Series A funding. Investors include Kleiner Perkins Caufield & Byers, Airbus Ventures, Intel Capital, and Tyche Partners.
• CognitiveScale, an Austin, Texas-based provider of industry-specific machine intelligence software, raised $15 million in funding. Investors include Norwest Venture Partners, Intel Capital, Microsoft Ventures, The Westly Group and USAA.
• Snips, an artificial intelligence voice platform with locations in Paris and New York, raised $13 million in Series A funding. Korelya Capital and MAIF Avenir led the round, and were joined by BPI France and Eniac Ventures.
• Snapsheet, a Chicago-based virtual claims software provider for the personal and commercial insurance industry, raised $12 million in series D funding. Tola Capital led the round.
• Dispatch, a Boston-based enterprise platform for the home services industry, raised $12 million in Series A funding. ServiceMaster and GrandBanks Capital led the round, and were joined by Salesforce Ventures, Liberty Mutual Strategic Ventures, Assurant, Promus Ventures, Recruit Strategic Partners, Ray Lane, and Huff Capital.
• Snappcar, a Netherlands-based peer-to-peer carpooling platform, raised €10 million ($11.2 million), according to Tech.eu. Investors include Europcar Group, Autobinck Group and Startup Studio Founders. Read more.
• Humm Kombucha, a Bend, Ore.-based kombucha manufacturer, raised $10 million in funding. VMG Partners led the round
• Figure 1, a medical image sharing mobile platform, raised $10 million in Series B funding, according to TechCrunch. Kensington Capital Partners led the round, and was joined by Samsung NEXT, John Hancock/Manulife, WTI, Hedgewood, Union Square Ventures, Rho Canada Ventures, and Version One Ventures. Read more.
• SURE, a New York and Los Angeles-based on-demand personal insurance, raised $8 million in Series A funding. IA Capital led the round, and was joined by Menlo Ventures, FF Venture Capital, Nationwide Ventures, Assurant and AmTrust.
• Fortanix, a Menlo Park, Calif.-based cybersecurity company, raised $8 million in Series A funding. Investors include Foundation Capital and NeoTribe.
• Top Hat, a Toronto-based digital teaching platform, raised $7.5 million in funding from Leaders Fund.
• GeoQuant, a New York-based platform for measuring political risk in real time, raised $4 million in seed funding. Investors include Aleph and XL Innovate.
• Peerfit, a Tampa, Fla.-based digital platform for employee health benefits, raised $2.3 million in funding. Investors include Lee Arnold, Jeff Vinik, and Chris Sullivan.
• Osso VR, a Palo Alto, Calif.-based virtual reality surgical training technology company, raised $2 million in seed funding. SignalFire led the round, and was joined by Anorak Ventures. [This item was updated to reflect the correct headquarters city.]
HEALTH AND LIFE SCIENCES DEALS
• Xealth, a Seattle-based digital healthcare startup, raised $8.5 million in funding. DFJ led the round.
PRIVATE EQUITY DEALS
• Golub Capital invested $675 million in PetVet Care Centers, a Wesport, Conn.-based operator of veterinary hospitals for pets and portfolio company of Ontario Teachers’ Pension Plan.
• iAnthus Capital has agreed to buy Valley Agriceuticals, a Purchase, N.Y.-based medical marijuana company, for $17.3 million.
• Gold Star Foods, a portfolio company of Castle Harlan, acquired A&R Wholesale Distributors, an Anaheim, Calif.-based supplier of fresh and healthy foods to schools in Southern California. Financial terms weren’t disclosed.
• Great Hill Partners recapitalized Quantum Health, a Columbus, Ohio-based consumer navigation and care coordination company. Financial terms weren’t disclosed.
• SK Hynix (KOSE:A000660) joined a Japanese government-led consortium bidding for Toshiba Corp’s (TSE:6502) chip business, according to Reuters. The unit has been valued for at least 2 trillion yen ($18 billion). Read more.
• Neiman Marcus, a Dallas, Texas-based department store operator backed by Ares Management and Canada Pension Plan Investment Board, ended talks regarding a partial or full sale of the company, according to Reuters. Read more.
• Athenex, a Buffalo, N.Y.-based cancer biotech company, priced its IPO at $11 a share—on the low end of its previously stated $11 to $13 range. The company raised $66 million by offering 6 million shares. Credit Suisse, Deutsche Bank, and J.P. Morgan acted as lead managers. The company, which reported revenue of $20.6 million on loss of $87.7 million, is backed by Mandra Capital (pre-IPO 16.2%), Tencent CEO Ma Huateng (9.9%), Pharminex (6.5%), and Charter Link International (6%).
• CompuLab, an Israeli “mini-PC” maker, filed for an IPO Tuesday to raise up to $24 million. The company earned $1.4 million on revenue of $21.9 million in 2016. Maxim Group is underwriting the deal. The company is also backed by TechnoPlus Ventures (14.62% pre-offering).
• Guangzhou Rural Commercial Bank, priced its Hong Kong IPO slightly lower than expected, Reuters reports. The bank, which is the fifth-largest rural commercial bank by assets in China, priced at HK$5.10 a share after quoting HK$4.99-HK$5.27, people familiar with the matter told Reuters. The company plans to list under ticker symbol “GRCB” and offer some 1.58 billion shares.
• Amazon is in talks to acquire BigBasket, an India-based grocery site, according to Bloomberg. BigBasket raised more than $290 million in venture funding from investors including Trifecta Capital, Bessemer Venture Partners, Helion Venture Partners, and Abraaj Group. Read more.
• MidOcean Partners has agreed to sell Agilex Fragrances, a Piscataway, N.J.-based fragrance products aprovider, to Firmenich. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Carnelian Energy Capital, a Houston, Texas-based private equity firm, raised $600 million for its second fund. Carnelian focuses on investing in the lower-to-middle market oil and gas sector. No placement agent was used; however, Kirkland & Ellis LLP served as fund formation counsel.
• MedMen, a Culver City, Calif.-based company providing management services to licensed cannabis operators, raised $60 million for its cannabis-focused MedMen Opportunity Fund, according to a filing with the SEC. The fund has a target of $100 million.
• Extreme Venture Partners, a Canada-based venture capital firm and accelerator, raised just over $50 million for its third fund focused on immigrating international startups. Startups can apply to EVP’s accelerator and if accepted, up to five members of the startup team and their families will be immigrated to the Canadian city of their choice and started on the path to Canadian citizenship.
• Star Mountain Partners, a New York-based alternative asset manager, raised $13.94 million toward its second fund.
• Christina Bresani joined William Blair as a managing director and head of financial services investment banking, Previously, Bresani was at UBS.
• Tannon Krumpelman will join Evercore as a senior managing director.
• Rishi Jain joined Accordion as a managing director. Previously, Jain was at Alvarez & Marsal.