On deals and dealmakers.
GROCERY WARS, GRAVITY, CHEERLEADING
The ripple effects of Amazon’s $13.7 billion Whole Foods deal are only starting to show. Nobody knows exactly what Amazon is going to do with Whole Foods, and that uncertainty is freaking everyone out.
The deal has been a convenient scapegoat for Blue Apron’s disappointing IPO. “Amazon’s Whole Foods deal pretty much sunk Blue Apron’s IPO,” screamed one headline. “Jeff Bezos has officially spoiled Blue Apron’s IPO,” declared another.
Now, grocery chain Albertsons has put its plans to go public on hold, Bloomberg reports. Of course, the culprit is Amazon-Whole Foods. Cerberus Capital Management acquired Albertsons in 2006 and planned to take it public in 2015. Those plans stalled after a disappointing profit forecast from Wal-Mart spooked the markets. Albertsons renewed its IPO plans earlier this year. Meanwhile Albertsons attempted to buy Whole Foods but was “spurned.” Now the IPO plans are on ice again:
To convince potential investors of its growth prospects in its 2015 IPO roadshow, Albertsons pitched plans to expand its natural and organic foods offerings. Now, the looming Amazon-Whole Foods tie-up squelches confidence in those hopes.
But I’m not sure I understand the kneejerk dread over the certain, unstoppable path of destruction expected by Amazon-Whole Foods. Is all the gloom because Whole Foods struggled as a public company, therefore all public grocery stories are doomed? Or are we bearish because Amazon is now armed with a chain of physical grocery stores, and therefore all competitors are automatically and without a doubt doomed? And also: Is every story about the grocery industry required to include apocalyptic quotes from experts like, “They don’t have a shot. Traditional grocery is fading fast.”
Whatever effect Amazon-Whole Foods has on the grocery industry, it won’t happen overnight. Even combined, Amazon and Whole Foods are barely a blip on the overall food market in the U.S. As Jefferies points out in its analyst note on the deal: Whole Foods owns just 1.7% of the U.S. grocery market. Amazon owns 0.8%. By comparison, Wal-Mart has around 18% and Kroger is just under 10%. Albertson’s, in third place, is around 6%.
I imagine Amazon has big plans to change its market share. But we have no idea what they look like, or how quickly Amazon, which has been a laggard in food for a decade now, will move. But in the meantime, just to be safe, everybody better panic.
CRASHING BACK TO EARTH: DataGravity, a data security startup which raised $92 million in venture funding from Andreessen Horowitz, Accel Partners, CRV and General Catalyst, sold to HyTrust, a computer security company based in Mountain View.
Yesterday’s Term Sheet included this news, but it’s worth elaborating on because the price is well below DataGravity’s onetime valuation, Fortune’s Barb Darrow reports. Just 20 of the company’s employees (which once numbered 150) will join HyTrust. Founder Paula Long, a respected technologist who sold her last company to Dell for more than $1 billion, left DataGravity in recent weeks. Read more.
DEBATE: Last week CB Insights asked its readers to vote on a Twitter debate I got myself sucked into. And… I guess I won? The question was, “Should VCs only support startups and the industry, at least publicly?”
The background: Phin Barnes of First Round Capital criticized Goodwater Capital, a fellow VC firm, for publishing a detailed analyst report about Blue Apron. (First Round is a Blue Apron investor.) I asked Barnes whether he thinks every VC firm is required to support every startup, and he said, generally, yes: “Those in the industry should support the industry.” I disagreed. Here are the final results:
I expected it to be a lot closer. I understand how close-knit and intertwined the startup “ecosystem” needs to be in order to work. And I’ve been called a “hater” by plenty of thin-skinned founders. (Shout-out to the one that called me a “batsh*t crazy b*tch” for writing the truth about his acqui-hire deal! 😘)
But in the era of “open secrets” being exposed amid real questions about Silicon Valley’s culture and ethics, I think people are suddenly wary of suppressing criticism of any sort. The era of blind cheerleading may be over.
THE LATEST FROM FORTUNE...
• BlackRock’s top economist thinks Bitcoin and Ethereum look like a bubble.
• What to know about Nevada’s marijuana shortage.
• Uber tells its shareholders that gross bookings increased 10% in Q1.
• The gig economy may be coming to a nurse near you.
• Google reportedly paid professors for favorable policy papers.
Sun Valley time! The secretive government teams rolling back regulations, led by hires with deep industry ties. New Twitter CFO. Startups help landlords turn their buildings into hotels. Shoppers can buy bad debt on Taobao. Paul Singer could finally get Warren Buffett to punch back.
• CompareAsiaGroup, a Hong Kong-based financial comparison website, raised $50 million in funding, according to Reuters. Investors include The International Finance Corp, Alibaba Entrepreneurs Fund, and SBI Group. Read more.
• Move Guides, a U.K.-based talent mobility cloud platform, raised $48 million in Series C funding, according to TechCrunch. Investors include Future Fund, New Enterprise Associates, and Notion Capital. Read more.
• Transfix, a New York-based transportation startup, raised $42 million in Series C funding. New Enterprise Associates led the round.
• ZeroFox, a Baltimore, Md.-based social cybersecurity intelligence startup, raised $40 million in Series C funding, according to TechCrunch. Redline Capital Management and Silver Lake Waterman led the round. Existing investors NEA, Highland Capital Partners and Core Capital participated. Read more.
• Brandless, a San Francisco-based consumer goods startup, raised $35 million in Series B funding. New Enterprise Associates led the round, and was joined by GV, Redpoint Ventures, Cowboy Ventures and Slow Ventures.
• Deep Instinct, an Israel-based cybersecurity startup, raised $32 million in Series B funding. CNTP led the round, and was joined by investors including NVIDIA and Coatue Management.
• Flashpoint, a New York-based Business Risk Intelligence company, raised $28 million in Series C funding. Georgian Partners led the round.
• Gong.io, a Palo Alto, Calif.-based SaaS company ￼￼for sales teams, raised ￼$20 million in Series A1 funding. Norwest Venture Partners and Shlomo Kramer led the round, and were joined by Wing Venture Capital and ￼NextWorld Capital.
• Clear Ballot, a Boston, Mass.-based election software company, raised over $18 million in funding. Investors include Bessemer Venture Partners, Ventureforgood, and DN Capital.
• Voices.com, a Canada-based global voice over online marketplace, raised $18 million in funding from Morgan Stanley Expansion Capital.
• Spotinst, an Israel-based cluster software and prediction algorithm provider, raised $15 million in funding. Investors include Intel Capital and Vertex Ventures.
• Care/of, a New York City-based personalized vitamin and supplement company, raised $12 million in Series A funding. Goodwater Capital led the round, and was joined by investors including Tusk Ventures, RRE Ventures, and Juxtapose.
• Hutch Interiors, Inc, a Los Angeles-based interior design tech startup, raised $10 million in Series A funding. Zillow Group led the round.
• Sonoma Creamery LLC, a Sonoma, Calif.-based maker of cheeses and cheese snacks, raised $10 million in funding from Svoboda Capital Partners.
• Curve, a London-based fintech startup, is on the verge of raising $10 million in Series A funding, according to TechCrunch. Connect Ventures is leading the round, and will be joined by Santander Ventures. Read more.
• Nok Nok Labs, a Palo Alto, Calif.-based online security and authentication company, raised $8 million in Series D funding. Motorola Solutions Venture Capital led the round. Existing investors including DCM Ventures, DDS, Inc., DOCOMO Innovations, Korea Information Certificate Authority, Lenovo Group, and ONSET Ventures participated.
• Aptrinsic, a San Mateo, Calif.-based developer of enterprise software as a service for product managers, raised $7.5 million in Series A funding. Storm Ventures and Opus Capital co-led the round.
• Qloo, a New York-based cultural artificial intelligence data science platform, raised $6.5 million in funding. Investors include AXA Strategic Ventures and Sir Elton John.
• CAILabs, a France-based provider of photonics solutions, raised 5 million euros ($5.7 million) in funding. Investors include Safran Corporate Ventures.
• RiskLens, a Spokane, Wash.-based provider of cyber risk quantification solutions, raised $5 million in Series A funding. Osage Venture Partners led the round, and was joined by Paladin Capital Group, Dell Technologies Capital and Kick-Start.
• Astronomer, a Cincinnati-based collaborative data platform developer, raised $3.5 million in funding, according to TechCrunch. Wireframe Ventures led the round, and was joined by Frontline Ventures, Grand Ventures, Drummond Road, Core Network, M25 Group, and Silicon Valley Bank. Read more.
• Datatron, a San Francisco-based data management startup, raised $2.7 million in seed funding. Investors include Start X, Credence Partners, Authentic Ventures, Enspire Partners, Plug and Play and 500 Startups. Read more.
• Revere, a New York City-based health startup delivering natural, personally tailored fitness nutrition, raised $2 million in seed funding. Lerer Hippeau Ventures led the round, and was joined by SterlingVC and Brand Foundry Ventures. [This item has been updated to include the correct link and company description.]
• Sendence, a New York City-based platform for building and running real-time applications, raised $1.5 million in seed funding, according to TechCrunch. Investors include Boldstart Ventures, Greycroft, Contour Venture Partners, Notation Capital, and Resolute Ventures. Read more.
• RecordGram, a Miami-based music collaboration app developer, raised $1 million in seed funding. Investors include New World Angels.
HEALTH AND LIFE SCIENCES DEALS
• E-Scape Bio, a San Francisco-based biopharmaceutical company developing therapies to treat neurodegenerative diseases, raised an extension of its Series A funding bringing the total amount raised in the round to $63 million. OrbiMed led the round, and was joined by Novo Holding A/S, Johnson & Johnson Innovation, Novartis Venture Fund, Osage University Partners, Lilly Asia Ventures and Sutter Hill Ventures.
• Evelo Biosciences, a Cambridge, Mass.-based biotech company, raised $50 million in Series B funding. Investors include Flagship Pioneering, GV, Celgene, Mayo Clinic, and Alexandria Venture Investments.
PRIVATE EQUITY DEALS
• L Catterton made a “significant” minority investment in Equinox, a New York-based fitness club operator. Financial terms weren’t disclosed.
• Rent-A-Center Inc (Nasdaq:RCII) rejected Vintage Capital’s $15 a share takeover bid, according to The New York Post. The company called the $800 million offer “inadequate and opportunistic.” Read more.
• Centana Growth Partners invested $24 million in Quantitative Brokers, a New York-based financial technology company.
• The Riverside Company made an investment of an undisclosed amount in LILLEbaby, a Boulder, Colo.-based provider of baby carriers.
• Marlin Equity Partners acquired Zetta Inc, a Sunnyvale, Calif.-based provider of cloud-based backup and disaster recovery solutions and merged it with portfolio company Arcserve, an Eden Prairie, Minn.-based provider of data protection and recovery software. Financial terms weren’t disclosed.
• Seventure Partners is backing two European digital health startups: Machtfit and Push Doctor. The firm participated in Push Doctor’s recent Series B funding round that raised 23.05 million euros ($26 million) and Machtfit’s Series A round that raised 2.2 million euros ($2.5 million).
• Consolidated Machine & Tool Holdings, which is backed by White Wolf Capital LLC, acquired Astro-Tek Industries Inc, an Anaheim, Calif.-based maker of specialized equipment for aerospace and defense companies. Financial terms weren’t disclosed.
• Mercer Advisors acquired Wealth Design Services, a Rochester, N.Y.-based financial planning, investment management, and tax planning company. Financial terms weren’t disclosed.
• Leeds Equity Partners made an investment of an undisclosed amount in Dalton Education, a Suwanee, Ga.-based financial services education provider, and • Money Education, a New Orleans, La.-based publisher of financial planning digital textbooks.
• Ant Financial, the affiliate of China’s Alibaba Group Holding Ltd (NYSE:BABA) that agreed to buy MoneyGram International Inc (Nasdaq:MGI) for $1.2 billion, has resubmitted the deal for U.S. review, according to Reuters. Read more.
• Britain’s Equiniti Group Plc will buy Wells Fargo & Co‘s share registration business for $227 million as it looks to enter the United States, the largest and most active share registration market. Read more.
• UBS Financial Services invested in iCapital Network, a New York-based financial technology platform. BlackRock is a strategic partner. Financial terms weren’t disclosed.
• Toosum Healthy Foods acquired KUTOA, an Austin, Texas-based health snack bar maker. Financial terms weren’t disclosed.
• AudienceView acquired TheaterMania, a New York-based SaaS provider of ticketing and related digital media offerings for the entertainment industry. Financial terms weren’t disclosed.
Landis+Gyr, Toshiba’s smart meters unit, hopes to raise up to about $2.5 billion, 2.4 billion Swiss francs, in an IPO, Reuters reported. Landis+Gyr is is seeking to price shares between 70 francs to 82 francs a share, or about $73 to $85. The shares are set to be sold on the Swiss Exchange starting July 21.
Razer, a U.S.-based gaming firm, is seeking an IPO that would value it between $3 billion to $5 billion, Bloomberg reported citing those with knowledge of the matter. The company revealed loss of $59.6 million on revenue of $392.1 million in 2016. The company’s overwriters are Credit Suisse and UBS. Voyager Equity, Lim Teck Lee Land Pte, Primrose Ventures, Archview Capital, and Sandalwood Associates back the company. It is seeking an IPO in Hong Kong.
Votorantim Metais Holding, a Sao Paulo-based company that produces base metals, is reportedly seeking an IPO on the Toronto Stock Exchange, Reuters reported citing people with knowledge of the matter. The company is seeking a valuation of roughly $4 billion.
PetIQ, an Eagle, Idaho-based pet medication maker, set a range for its $85 million IPO Tuesday. The company, which booked losses of $3.4 million on revenue of $200.2 million on 2016, plans to offer 5.7 million shares between $14 to $16 a piece. PetIQ is backed by Eos Funds, Labore et Honore, Porchlight Entities, True Science Founders, and NBTS Holdings. The company plans to list on the Nasdaq as “PETQ.” Exact terms of the IPO, being led by Jefferies and William Blair, have yet to be disclosed.
Albertsons, a grocery-chain based out of Boise, Idaho, has reportedly put its IPO talks on ice again, Bloomberg reported citing those with knowledge of the matter. Amazon reportedly eyed Albertson’s before ultimately snapping up Whole Foods for $13.7 billion earlier this year. Albertsons is owned by a consortium of investors including Cerberus Capital Management.
• ABM Industries said it would buy GCA Services Group, a Cleveland, Ohio-based janitorial services provider, for about $1.25 billion in cash and stock, according to Reuters. GCA Services is owned by Goldman Sachs Group Inc and Thomas H Lee Partners LP. Read more.
• Bayview Asset Management has agreed to buy Pingora, a Denver, Colo.-based specialized asset manager focused on mortgage servicing rights and servicing residential mortgage loans. The seller was Annaly Capital Management. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Alphabet has officially announced the formation of Gradient Ventures, a new firm within Google that will invest in early-stage artificial intelligence startups. Gradient will invest in 10 to 15 deals this year and will typically commit $1 million to $8 million in each, according to CNBC.
• Autotech Ventures, a Palo Alto, Calif.-based venture capital firm, raised $120 million for its inaugural fund.
• Toyota Research Institute, Toyota’s Los Altos, Calif.-based research organization, raised $100 million for its new corporate venture capital subsidiary, Toyota AI Ventures, to back early-stage startup companies in artificial intelligence, robotics, autonomous mobility, and data and cloud computing. Read more at Fortune.
• Growth Capital Partners, a U.K.-based private equity firm, raised 205 million pounds ($264 million) for its fourth fund, Growth Capital Partners Fund IV.
• FlyBridge Capital Partners raised $3 million for XFactor Ventures, a new venture fund that will invest $100,000 into 30 companies raising pre-seed or seed stage rounds. The companies must have at least one female founder.
• Michael Ronen will join Softbank’s Vision Fund as a partner. Previously, Ronen was the co-chief operating officer of Goldman’s global technology, media and telecom group.
• Bessemer Venture Partners promoted Andrew Hedin to vice president. Prior to joining Bessemer, Hedin was at F-Prime Capital.
• Eaton Partners named Bill McLeod as a managing director. Previously, McLeod worked in Stifel’s equities group as a senior managing director.
• Jeff Fraser joined Leonis Partners as a vice president. Previously, Fraser was the founder and managing director of Sebonac Advisors.
• Inbar Haham joined Capital A Partners as a partner. Previously, Haham was at Magma Venture Partners.