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Term Sheet — Friday, June 30

Jun 30, 2017

ET CETERA

New Money: Headspace, a Los Angeles-based maker of a meditation app, has raised $36.7 million in funding from Spectrum Equity. Headspace would not comment on its valuation but said it has increased from the reported $250 million valuation from its prior round.

The funding comes a few months after Headspace co-founder Rob Pierson replaced Sean Brecker as CEO. Not long after taking the helm, Pierson laid off 13 staffers who were part of an in-house branding agency. He also hired Ross Hoffman, a former head of content partnerships at Twitter, as its chief business officer.

Alongside the layoffs came accusations of “cultural woes,” according to Fast Company, which Pierson says is a part of the company growing up. “We have a very idealist mission and it’s very special and brings an incredibly passionate set of people to come work with us,” he says. “At the same time, we’re growing and we went from 15 people to 160 people in less than two years. We’re growing up as a business and for some people, that’s really different and some people don’t like it. We’re going from a startup to a real business with real revenue and real ambition.”

That ambition is big – thus the monster round of funding. Headspace has now raised a total of $73.7 million in funding and is cash flow positive, thanks to the annual $96 subscription fee paid by many of its users. More than 16 million people have downloaded its namesake app, though the company will not disclose how many are active users or subscribers. The company does not disclose its annual revenue but Pierson says it’s above $10 million and “maybe” above $50 million.

Headspace plans to continue capitalizing on the fact that it has convinced tens of thousands of users to actually pay for content – something the world’s most sophisticated media companies struggle with. It will use the new capital to expand internationally, translating its app into more languages. Headspace also plans to sell expand into more types of content, including nutrition, exercise, science, and kids content. “I feel like we have cracked the hardest thing, which is that we’ve got people to pay for our content,” Pierson says. “[Now] how can we support that and make it a more valuable subscription?”

Lastly, Headspace plans to seek out more corporate partnerships. Human resources departments at large companies including Google, Genentech and LinkedIn have bought subscriptions to Headspace in bulk as a perk for their employees. Corporate mindfulness is a trend, but Headspace has not done much to capitalize on it until now. Currently, corporate accounts make up just 3% of the company’s revenue, but Pierson thinks it can rise to 50% in the next few years.

Why team up with a private equity firm for that? Pierson says Spectrum Equity has deep experience with three areas that are critical to its future success: subscription businesses, enterprise businesses, and international expansion. “I think they’re real company builders,” he says. “They think about long term. They’re not swing for the fences at all costs.” Those skills complement Headspace’s the media-focused investor, Chernin Group.

***

Decency: Apologies if it feels like I’m stuck on the Justin Caldbeck situation, but it’s an important one.

Yesterday Pando’s Sarah Lacy issued a chilling warning to Lightspeed, and other firms that have turned a blind eye or enabled bad behavior. As a reminder: Ann Lai is the former Binary principle now suing the firm for harassing her after she resigned. The lawsuit describes the way Jonathan Teo and Justin Caldbeck threatened to ruin her career. Lacy writes:

A firm many are watching now is Lightspeed Capital. Now that the truth has come out that they knew Justin Caldbeck was sexually harassing women, and used the unstated threat of thwarting future fundraising to silence her, while giving Caldbeck a positive reference to the LPs who would fund Binary.

If the partners of Lightspeed have a soul, they must die inside reading Ann Lai’s complaint. This firm didn’t have to exist. We could have ended it.

Lacy is correct: Sources tell Term Sheet that Lightspeed gave a Caldbeck a positive review to potential limited partners in Binary Capital. Limited partners aren’t very press-friendly, so you won’t see many of them tweeting about this situation. But behind the scenes, they’re furious to be involved in this mess. It’s worth noting that there are generally more women in the limited partners ranks than there are among general partners. (Some institutional investors even have diversity mandates.) Lightspeed did not respond to Term Sheet’s request for comment.

There are a lot of other people “open secrets” in startup-land. Some of them have been even been publicly reported on, causing momentary grief for the perpetrators, who hid for a few months and later emerged with new jobs. Others will come out in time.

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VENTURE DEALS

Kakao Mobility, the South Korea-based ride-hailing service platform run by Kakao Corp, raised 500 billion KRW ($437 million) in funding from TPG.

Science Exchange, a Palo Alto, Calif.-based operator of a platform for scientific services, raised $28 million in Series C funding. Norwest Venture Partners led the round. Existing investors Union Square Ventures, Maverick Capital and Collaborative Fund participated.

Spruce Finance Inc, a San Francisco-based provider of consumer financing for residential energy efficiency and solar technology, raised $25 million in funding from HPS Investment Partners.

Vector, a Tucson, Ariz.-based micro-satellite launch company, raised $21 million in Series A funding. Sequoia Capital led the round, and was joined by Shasta Ventures and Lightspeed.

Lynq, a New York City-based location technology startup, raised $19 million in seed funding. Plus Eight Equity Partners led the round, and was joined by investors including ARC Angel Fund and Angel Investor Forum.

Bonfire, a Canada-based sourcing enablement software, raised $11 million in funding. Battery Ventures led the round, and was joined by investors including Crosslink Capital and Spider Capital.

Make.TV, a Seattle, Wash.-based cloud live video acquisition and management solution, raised $8.5 million round of funding. Voyager Capital led the round. Microsoft Ventures, Vulcan Capital and Arnold Ventures participated.

Harver, an Amsterdam-based HR tech company, raised $8.1 million in Series A funding. Insight Venture Partners led the round.

Work Truck Solutions, a Chico, Calif.-based provider of commercial truck inventory solutions, raised $5 million in funding. Autotech Ventures led the round, and was joined by investors including Belle Michigan, Wakestream Ventures, Moneta Ventures and Golden Seeds.

UpKeep, a Los Angeles-based provider of maintenance management solutions for facility maintenance teams, raised $2.7 million in seed funding. Investors include Battery Ventures and Bain Capital Partners.

AUrate, a New York-based jewelry startup, raised $2.62 million in funding. Investors include Arab Angel and Victress Capital.

Emocha, a Baltimore, Md.-based mobile health platform for patient engagement, raised $1 million in seed funding. Investors were Propel Baltimore Fund, Kapor Capital, Sand Hill Angels, Baltimore Angels, and Blue Jay Syndicate.

Terran Orbital, an Irvine, Calif.-based nanosatellite design, development, manufacturing, testing and launch company, raised funding of an undisclosed amount from Lockheed Martin Ventures.

ProSteel Security, a Provo, Utah-based maker of safety and security products, raised funding of an undisclosed amount. Investors include City Capital Ventures and Promus Equity Partners LLC.

HEALTH AND LIFE SCIENCES DEALS

LogicBio Therapeutics, a Foster City, Calif.-based gene therapy company, raised $45 million in Series B funding. Arix Bioscience led the round, and was joined by investors including OrbiMed, Edmond De Rothschild Investment Partners, Pontifax, SBI and OrbiMed Israel Partners.

Zai Lab Limited, a Shanghai-based biopharmaceutical company, raised $30 million in Series C funding. OrbiMed led the round, and was joined by Vivo Capital, Cormorant and Rock Springs Capital.

PRIVATE EQUITY DEALS

Monomoy Capital Partners agreed to acquire West Marine, a retailer of boating gear, apparel, footwear and other waterlife-related products, for $12.97 per share in cash. The deal is valued at $338 million.

Tikehau Captal acquired Credit.fr, a France-based crowdlending platform for small businesses, for 12 million euros ($13.4 million).

PNC Riverarch Capital acquired Painters Supply & Equipment Co, a Taylor, Mich.-based distributor of automotive, industrial, and architectural coatings. Financial terms weren’t disclosed.

KKR will acquire a majority of Dixon Hospitality, an Australia-based hospitality group operator. Financial terms weren’t disclosed.

Ardian made an investment of an undisclosed amount in Tolve Windfarm Holdings, an owner of three wind farms in Italy. Ardian will have an 80% stake in Tolve.

Marquis Software Solutions, a portfolio company of Falfurrias Capital Partners, acquired DocuMatix, a Draper, Utah-based provider of email marketing solutions used by credit unions and banks. Financial terms weren’t disclosed.

Vista Equity Partners acquired a majority stake in PayLease, a San Diego, Calif.-based payments and billing provider for the property management and HOA industry. Financial terms weren’t disclosed.

Alohma Holdings and Madvapes Holdings, which is backed by Meriturn Partners and Panorama Point Partners, merged to form AMV Holdings LLC, a vaping company. Financial terms weren’t disclosed.

Jacuzzi Brands LLC, which is backed by Ares Management, Clearlake Capital Group and Apollo Global Management, acquired Hydropool, a Canada-based provider of hot tubs and swim spas, and BathWraps, a Roselle, Ill.-based maker acrylic wetspace walls, tubs and showers. Financial terms weren’t disclosed.

OTHER DEALS

Knorr-Bremse, a Germany-based car parts maker, will continue its pursuit of Haldex (OM:HLDX), despite the Swedish company's management withdrawing its support for a takeover because of expected regulatory opposition to a deal, according to Reuters. Read more.

Enson acquired Inframon, a U.K.-based cloud transformation company. Financial terms weren’t disclosed.

IPOs

Delivery Hero, a Berlin-based food delivery service, got a valuation exceeding $5 billion on the Frankfurt stock exchange, Bloomberg reported. The company went public at 25.50 euros a share. 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.

Blue Apron, the New York City-based meal kit company, remained largely flat on its first day of trading, at $10 a piece. That gave the company a valuation of about $1.9 billion. 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.

 Cision, a cloud-based media software provider, announced that it plans to raise $325 million and become a public company via a merger with blank check company, Capitol Acquisition Corp. III. The company plans to go public on the NYSE under “CISN.”

Clementia Pharmaceuticals, a Montreal, Canada-based clinical stage biopharmaceutical company focused on bone diseases, filed for an IPO to raise $115 million. The company plans to go public on the Nasdaq as “CMTA.” Morgan Stanley, Leerink Partners are heading the underwriters. Clementia has yet to post a revenue. OrbiMed Private Investments(42.7% pre-offering), BDC Capital(22.9%), and New Enterprise Associates(8.1%) back the company. Exact terms of the deal have yet to be disclosed.

Byline Bancorp, a Chicago-based financial firm, said it offered 5.7 million shares at $19 a piece, on the low end of its $19 to $21 a share range. The company raised $108 million in the offering. The company had 57 bank branches and $2.2 million in loans and leases by the end of 2017’s first quarter. Pre-offering, MBG Investors I holds nearly 47% of the bank, ECR Holdings with 8%, and Fambeck Servicios Financieros del Exterior with 7%. Bank of America and Keefe Bruyette and Woods are acting as joint bookrunners of the deal.

•  Tintri, a Mountain View, Calif.-based company focused on virtual machine storage, said it raised $60 million in an offering of 8.7 million shares at $7, at the low end of its $7 to $8 range. Morgan Stanley and Bank of America are joint bookrunners in the deal. Pre-IPO, New Enterprise Associates owns 22.7% of the company, Lightspeed owns 14.5%, Insight Venture Partners owns 20%, and Silver Lake Kraftwerk owns 20.4%. The company booked revenue of $125.1 million for the year ending January 2017, and loss of $105.3 million. It plans to list on the Nasdaq as “TNTR.”

•  ShiftPixy, a Wyoming-based platform for restaurants to schedule shift workers, raised $12 million in an offer of 2 million shares at $6 a piece. That’s at the low end of the company’s $6 to $8 range. The company, backed by 1 Venture, will list on the Nasdaq as “Pixy.” W.R. Hambrecht has been named underwriter in the deal.

EXITS

Roche bought mySugr, a Vienna-based diabetes management platform, according to Reuters. mySugr raised more than $6 million in venture funding from investors including iSeed Ventures, Roche Venture Fund, XLGroup and XLHealth. Financial terms weren’t disclosed. Read more.

TIAA Private Investments and Antarctica Capital led a consortium to acquire InterPark, a Chicago-based parking facility operator. Financial terms weren’t disclosed. The seller was Alinda Capital Partners.

FIRMS + FUNDS

Vitruvian Partners, a U.K.-based private equity firm, raised €2.4 billion ($2.74 billion) for its third fund, according to The Wall Street Journal. Read more (subscription required).

OrbiMed, a New York-based private equity and venture capital firm, raised $431.53 million for its third Asia fund, according to an SEC filing. The fund’s target is $450 million.

EMH Partners, a Germany-based private equity and venture capital firm, raised €350 million ($400 million) for its debut fund.

Kairos Ventures, a Los Angeles-based venture capital firm, raised $74.7 million toward a $150 million venture fund, according to an SEC filing.

Growth Street Partners, a San Francisco-based venture capital firm, raised $70 million for its debut fund.

PEOPLE

Anisha Malhotra joined GPB Capital as a managing director and head of capital markets. Previously, Malhotra was at Goldman Sachs.

Tariq Rafique joined RKR Capital as a managing partner. Previously, Rafique was at Morningstar.

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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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