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Term Sheet — Wednesday, June 28

Jun 28, 2017

Et Cetera

Good morning! Some quick notes today…

Decency: Limited partners have voted to wind down the latest fund of Binary Capital, previous home to accused sexual harasser Justin Caldbeck, Bloomberg reports. That fund is a $175 million vehicle which closed last year and had hardly been deployed. (After the accusations toward Caldbeck arose, the firm had already put the close of a $75 million extension to that fund on hold.)

In other words, Binary is likely done. Remaining partner Jonathan Teo won’t be able to make new investments and his chances of raising a new fund under that umbrella are very low. The question is what will happen to Binary’s first fund, a $125 million vehicle that closed in 2014. Investors can allow Teo to manage the fund for the rest of its cycle, or hire a new person to manage it.

And what does that mean for existing portfolio companies? Some of Binary’s investments are distancing themselves. Havenly, an interior design startup, terminated its board relationship with Binary. Dia&Co, an apparel company, did the same. (Note: Both of these companies are female-led.)

Last night Assist, a business messaging startup, took it a step further. The company has requested to buy back its entire investment from Binary Capital, terminating its working relationship with the firm entirely, including board observer rights, voting rights, and buying any shares of Assist in the future.

One interesting twist: Founder Shane Mac writes: “If the Limited Partners were to hire a women-led venture capitalist to manage the current investments, we would reconsider our request and work directly with the LPs in this situation.”

I understand that the hope in making this request is that it will result in LPs assigning a new manager to deal with original Binary fund.

Assist is in a unique position. Binary Capital led Assist’s $4 million Series A round of funding in 2016. That means Binary is the company’s largest investor. (Dia&Co, on the other hand, took early stage money from Binary, which is tiny compared to the $20 million it raised from Sequoia last year.)

But more importantly, Assist has the cash available to buy Binary out. (The company has had profitable months.) Further, its investors are willing to support the company in its move by buying up Binary’s shares if necessary, or bringing in outside investors to buy the shares, Mac tells Term Sheet. “I am in a privileged situation and fortunate to be able to make that move,” he says.

Portfolio companies have limited options when it comes to giving investors their money back. Term Sheet previously discussed two situations where companies tried to do so over political disagreements: In the first case, Good Uncle, a meal delivery startup, returned its investment capital to angel investor Jared Kushner over disagreements with his role in the Trump campaign.

In the other case, Tracy Heller, founder of e-commerce site Brooklyn Born, had a dispute with her investors over some Instagram photos of the women’s march. (The investors did not like them.) As I noted at the time, deal documents don’t usually contain clauses about political Instagram posts, so Heller was entitled to keep their money despite her investors’ frustrations. She gave it back anyway, or at least, the 82% of it that her company hadn’t spent.

As Term Sheet noted at the time, there are two big sticking points to returning capital:

The logistics of returning investor money can be complicated, because the startup and all of its investors must unanimously agree. It’s not just the company and the single investor that wants out – every other investor needs to be offered the same deal, and they all have the ability to veto such a transaction. The more money the startup has spent, the more complicated the transaction becomes.

Other Binary portfolio companies include lawn care startup Lawnstarter, moving services startup Bellhops, hotel-by-the-minute service Recharge, and sports betting site Unikrn.

Another important wrinkle: Recall that The Information’s initial report noted that Lightspeed, Caldbeck’s former employer, agreed to remove him as a board observer of a company whose founder had been made uncomfortable by him. That company was Stitchfix, a high profile apparel startup that’s expected to go public, as Recode reported. After founder Katrina Lake complained to Lightspeed, the firm asked her to sign a non-disparagement agreement, preventing her from speaking out about the incident, according to Axios. Lightspeed responded that it “should have done more.” Regarding the non-disparagement agreement, it still can.

***

New money: Yieldmo, a New York City-based advertising technology startup, has raised $8.8 million in a new round of funding from existing investors, according to an SEC filing. Yieldmo investors Time Warner participated alongside Ross Levinsohn, GV, Vast Ventures and Union Square Ventures. Sources tell Term Sheet the new round values the company at more than $100 million.

Yieldmo, founded in 2012, had previously raised $22.1 million in venture funding.

IPO: Blue Apron has severely cut its IPO price range. More details below, but generally, you can blame Amazon, Whole Foods, and a bad churn rate.

PE Succession planning: First Reserve has named Alex T. Krueger president and CEO. Bill Macaulay, who co-founded the firm in 1983, will remain active as its executive chairman and chair of the funds’ investment committee. Krueger, who is 43 years old and was named co-CEO alongside Macauley in 2015, is known for leading First Reserve’s work with Alpha Natural Resources (First Reserve took the company public a decade before it went bankrupt in 2015) and the company’s $2 billion add-on deal for Foundation Coal. He’s been leading the private equity platform since 2015. First Reserve doesn’t expect to follow its peers footsteps into the public markets, the firm tells Term Sheet.

THE LATEST FROM FORTUNE...

• AMD makes a big bet on brand-new tech

• Lowe’s goes high on innovation.

Implantables.

• Google loses Supreme Court case over search results.

…AND ELSEWHERE

How America’s friends and enemies have adjusted in the age of Trump. Uber for toilets. Replacing the HR department with… algorithms. Uber’s unsettling alliance with New York’s shadiest car dealers. Trump’s lawyer steered donations toward his family members. The Fed’s mystery candidate. The struggle to find a community banker for the Fed board. Sprint needs a deal. Fake Time cover. ILPA to PE: Ease up on the subscription credit lines.

VENTURE DEALS

PatientPoint, a Cincinnati, Ohio-based exam room education display program provider, raised $140 million in funding, according to Reuters. Investors include Searchlight Capital Partners and Silver Point Capital. Read more.

Catalant Technologies, a Boston-based technology platform for business expertise, raised $41 million in Series D funding and an expansion of its existing debt facility. Highland Capital Partners and General Catalyst co-led the round, and were joined by Greylock Partners, GE Ventures and Mark Cuban.

Riskified, an Israel-based provider of e-commerce fraud prevention solutions, raised $33 million in funding. Pitango Growth led the round, and was joined by Capital One Growth Ventures, Groupe Arnault, and C4 Ventures.

Sitehands, a New York-based provider of enterprise IT field services, raised $25 million in funding from FTV Capital.

Platform9, a Sunnyvale, Calif.-based enterprise cloud vendor, raised $22 million in Series C funding. Canvas Ventures led the round, and was joined by HPE, Redpoint Ventures, and Menlo Ventures.

Xcalar, a San Jose, Calif.-based business analytics platform, raised more than $21 million in Series A funding. Khosla Ventures led the round, and was joined by investors including Merus Capital, Andy Bechtolsheim and Diane Greene.

Highcon, an Israel-based digital cutting and creasing solution provider, raised $20 million in funding. Jerusalem Venture Partners led the round, and was joined by existing investors including Landa Ventures, LR Group, OurCrowd, and Go Capital.

Xometry, a Gaithersburg, Md.-based on-demand manufacturing platform, raised $15 million in funding. BMW i Ventures led the round, and was joined by existing investors including GE Ventures and Highland Capital Partners.

Wonder, a Los Angeles-based mobile entertainment company, raised $14 million in Series A funding. Grishin Robotics and TCL Communication Holdings led the round, and was joined by investors including Gerard Pique, Neymar Jr, Shakira, 8VC, Moonshots Capital, and Cassius.

PHEMI Inc, a Canada-based big data warehouse company, raised $10 million in follow-on funding. CTI Life Sciences Fund, BDC Capital and Yaletown Partners co-led the round, and were joined by investors including Quark Venture and GF Securities Co Ltd.

The Safe + Fair Food Company, a Chicago-based food startup, raised $10 million in Series C funding. Acre Venture Partners led the round.

Fyber, a Germany-based mobile advertising technology company, raised $7.9 million (£5.8 million) from BillFront.

Cocoon Cam, a Mountain View, Calif.-based intelligent baby breathing video monitor developer, raised $4 million in Series A funding. Happiness Ventures led the round.

Car360, an Atlanta-based platform that enables interactive visualization of cars, raised $3.55 million in Series A funding. BIP Capital led the round, and was joined by Radical Investments and Service Provider Capital.

MessageGears, an Atlanta-based email marketing platform provider, raised $2.75 million in Series B funding. Existing investors Covalent Interests and Hallett Capital co-led the round.

Hometree, a U.K.-based home energy startup, raised £1.9 million ($2.4 million) in funding. Investors include LocalGlobe, DN Capital, Oxford Capital, and FJ Labs.

Flashnode, a Finland-based fintech company, raised 2 million euros ($2.3 million) in seed funding. Spintop Ventures led the round.

Acquired.io, a Foster City, Calif.-based user acquisition management platform, raised $2 million in funding. Investors include Jonathan Zweig and John Zdanowski.

StdLib, a San Francisco-based function as a service library and platform, raised $2 million in seed funding. BlueYard Capital led the round, and was joined by Liquid 2 Ventures, Aston Motes, Michael Dabrowski, and the Nordic Makers Venture Group.

HEALTH AND LIFE SCIENCES DEALS

Orig3n, a Boston-based biomedical research company, raised $20 million in funding. Hatteras Venture Partners led the round, and was joined by Spectrum Health Ventures, LabCorp, Syno Capital, KTB-KORUS Fund, MGC Venture Partners, DEFTA Partners, and 180 Degree Capital.

PRIVATE EQUITY DEALS

White Oak Equity Partners acquired a minority interest in ROW Asset Management, a Newport Beach, Calif.-based systematic quantitative macro investment firm. Financial terms weren’t disclosed.

HGGC, made an investment of an undisclosed amount in Denodo, a Palo Alto, Calif.-based data virtualization and integration platform.

TPG Growth agreed to acquire Discovery Midstream, a Dallas-based provider of oil and natural gas gathering. Financial terms weren’t disclosed.

Ardian acquired a minority stake in T20, a Spain-based digital media company. Financial terms weren’t disclosed.

Wynnchurch Capital made an investment of an undisclosed amount in Stampede Meat Inc, a Bridgeview, Ill.-based producer and seller of beef, pork, and chicken products.

OTHER DEALS

Philips (ENXTAM:PHIA)has agreed to buy Spectranetics Corp (Nasdaq:SPNC), for 1.9 billion euros ($2.16 billion) including debt. The $38.50 per share offer represents a premium of about 27% to Spectranetics’ closing price on June 27. Read more at Fortune.

Alibaba Group Holding Limited (NYSE: BABA) invested approximately $1 billion to increase its stake in Lazada Group, a Singapore-based e-commerce platform, from 51% to approximately 83%.

Halliburton Co (NYSE:HAL) is in late-stage talks to acquire Summit ESP Inc, a Tulsa, Okla.-based oilfield equipment supplier, according to Reuters. Financial terms weren’t disclosed. Read more.

jClub, a discount e-commerce retail store, acquired all of the assets of Choxi.com, a New York-based online shopping platform that declared bankruptcy in December 2016. Financial terms weren’t disclosed.

IPOs

Delivery Hero, a Berlin-based food delivery service, is expected to price in the upper half of its price range of between 22-25.50 euros a piece, Reuters reports citing people close to the matter. According to those people, the company has narrowed its range to 24.50-25.50 euros a share. The company has said that it plans to raise about 927 million euros, or $1.04 billion in an offering of up to 39 million shares on the Frankfurt Stock Exchange. The company, backed by German company Rocket Internet, posed revenue of EUR 349 million($393 million) in 2016. Citigroup, Goldman Sachs, Morgan Stanley have been named joint global coordinators. UniCredit Bank, Berenberg, Jefferies, and UBS have been named as additional joint bookrunners. Read more at Fortune.

Blue Apron, the New York City-based meal kit company, said it expects to sell 30 million shares in the range of $10 to $11 a share, significantly lower than its previous expectation of $15 to $17 a share. At the midpoint of that rangel, Blue Apron expects to raise $315 million. Goldman Sachs, Morgan Stanley, Citigroup, and Barclays are lead underwriters in the deal. The company brought in $795.4 million in revenue in 2016, on losses of $54.9 million. Pre-IPO, Blue Apron is backed 23.8% by Bessemer Venture Partners, 10.5% by First Round Capital, and 6.5% by Stripes Group. The company plans to list on the NYSE under “APRN.” Read more at Fortune.

TPG Pace Holdings, a blank check company formed by TPG, raised $400 million on Wednesday on an offering 40 million shares at $10 a piece. The SPAC is lead by Karl Peterson, a senior partner at TPG and Co-founder of Hotwire.com. The company plans to list on the NYSE as “TPGH.U.” Goldman Sachs, Deutsche Bank Securities, and J.P. Morgan Securities are lead underwriters in the deal. Exact pricing terms have yet to be disclosed.

Mersana Therapeutics, a cancer therapy biotech company based out of Cambridge, Mass., raised $75 million in an IPO of 5 million shares, priced at $15 a piece—within its previously stated range. In 2016, the company booked revenue of $3.98 million and 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%. The company plans to list on the Nasdaq under “MRSN.”

China Bohai Bank, backed by StanChart, is headed for an IPO, its Chairman Li Fuan said Tuesday, Reuters reports. Li said his bank was also seeking a foreign investor for the listing. The bank is currently backed by Standard Chartered Bank (19.99%).

EXITS

AKC Pet Care LLC acquired SPOT Canine Club, a New York-based dog care service provider. SPOT was backed by Mistral Equity Partners and Drayton Park Capital. Financial terms weren’t disclosed.

CastAR, an augmented reality headset startup, shut down operations after it failed to receive further investment, according to Polygon. It had raised about $15 million in funding from Playground Global. Read more.

FIRMS + FUNDS

Apollo Global Management (NYSE:APO), a New York-based private equity firm, raised $23.5 billion for the world’s largest-ever buyout fund, according to The Wall Street Journal.

Benhamou Global Ventures, a Palo Alto, Calif.-based early-stage venture capital firm, raised $80 million for its third fund, BGV III.

Alamere Ventures, a San Francisco-based investment firm, has set out to raise a $60 million maiden venture fund, according to an SEC filing.

Dyal Capital Partners made a minority investment in Atalaya Capital Management, a New York-based private credit and special opportunities alternative investment manager. Financial terms weren’t disclosed.

Verizon Ventures, the corporate venture capital unit of Verizon, announced the formation of Verizon Ventures Israel, which will invest in early- and late-stage Israel-based companies.

PEOPLE

Capstone Partners promoted Michael Keaveney and Jeff Walters to managing director and James Eland to principal.

Blackstone named Dwight Scott president of GSO Capital Partners, the private equity firm's credit unit, according to Bloomberg.

UBS named Greg Peirce and Pei Shen Chou as co-heads of M&A advisory in Asia Pacific.

Dino Becirovic and Michelle Valentine joined Index Ventures as associates. Previously, Becirovic was at Kleiner Perkins, and Valentine was at Goldman Sachs.

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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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