On deals and dealmakers.
BRAIN → STORMED
Good morning from New York. Yesterday was the third and final day of Brainstorm Tech. I interviewed Mike Cagney, CEO and founder of online lending and personal finance startup SoFi. My first question was about the company’s delayed IPO plans. (Is SoFi waiting for the public markets to like online lending again, or is he trying to shift the image of SoFi away from just online lending?) His answer:
“The industry in general was getting hit pretty hard on the public market side. We were able to raise capital from a tier one investor [Silver Lake] … at a valuation that was a premium to the last round we did,” Cagney said.
He noted that going public is a valuable branding exercise but also introduces a level of complexity in SoFi’s financial reporting. “Our view is we’ll go public when we’re ready to. We’re profitable. We’re growing at a very aggressive pace right now.”
He added: “I wouldn’t say we’re not ready. It’s a process of getting the right folks in place.” (For example, SoFi lost its CFO earlier this year.)
He concluded: The company will be opportunistic. “There’s no urgency to do it. We’re fortunate to have investors that have a long time horizon like SoftBank. We’ll do it when it makes sense.”
The other notable piece: SoFi is using blockchain technology to change the way title insurance is done for home buyers. Fortune’s Jen Wieczner reports:
SoFi got into the real estate business when it began offering mortgages in the fall of 2014. But the title insurance process, which involves checking property ownership records to determine whether a house can be rightfully sold, is still painfully old-fashioned, Cagney said. Under the current system, a home buyer typically pays thousands of dollars to hire someone to go to the county courthouse and search through documents for any outstanding liens on the property.
Instead, those paper records could be moved to the blockchain, where a transaction log can be securely stored—and still easily accessible—on what’s known as a distributed ledger, “where you have absolute truth in terms of what those liens are and what that information is,” Cagney explained. In order to generate revenue to fund the development of such a system, he suggested, the information could be encrypted, and SoFi could sell the key to unlock it.
The main challenge for SoFi to pull this off is persuading a county government to agree to fully switch over to the digital system—a move without which SoFi wouldn’t be able to monetize it. “If you run [both systems] in parallel, the blockchain or the Ethereum aspect of it is not enforceable, because [users] can revert back to the paper trail,” Cagney said. “So you need to find a county that’s willing to do a complete conversion onto a distributed network, and when you have that, there’s an interesting application there. And that’s a multibillion dollar industry.”
Fortunately for SoFi, it has already found a county willing to get on board, Cagney said. (He didn’t specify which county as the deal isn’t done yet.) But the company may reveal more details soon. Asked whether SoFi expects to launch the blockchain system for title insurance later this year, Cagney responded, “We’re trying.”
More news + analysis tomorrow, but first I must deal with my disaster zone of an inbox. Thanks to the many Term Sheet readers who came to Brainstorm and said hello! ⚡
THE LATEST FROM FORTUNE...
• Do VCs need a conduct board for sexual harassment?
• Women perform better than men in crowdfunding.
• How Kohl’s plans to avoid the store closings plaguing retail.
• What Mobike can teach us about global business.
• Plenty, a San Francisco-based agriculture technology company, raised $200 million in Series B funding. SoftBank Vision Fund led the round, and was joined by investors including Moore Capital Management, Innovation Endeavors, Bezos Expeditions, DCM, Data Collective and Finistere.
• Receipt Bank, a London-based fintech startup that helps companies automate elements of their bookkeeping, raised $50 million in Series B funding from Insight Venture Partners, according to VentureBeat. Read more.
• Shift, a San Francisco-based used car marketplace, raised $38 million in Series C funding. BMW iVentures led the round, and was joined by DCM Ventures, G2VP, DFJ, Highland Capital, and Goldman Sachs.
• Dynamic Yield, an Israel-based industry’s personalization operating system, raised $31 million in Series C funding. Investors include DTCP, La Maison, Claltech, Baidu, Vertex and Bessemer Venture Partners.
• Karmic, a San Francisco-based provider of payment and expense management solutions, raised $17.2 million in Series B funding. Investors include Alsop Louie Partners, Arbor Ventures, Greycroft, Marketplace Funds, and Startup Capital Ventures.
• Insight Engines, a San Francisco-based natural language search assistant developer, raised $15.8 million in Series A funding. August Capital led the round, and was joined by investors including Splunk, Real Ventures, Data Collective, Erik Swan and Simon Crosby.
• Gravie, a Minneapolis-based provider of a reinvented health benefits marketplace, raised $14.1 million in Series C funding. GE Ventures led the round, and was joined by investors including FirstMark Capital, Aberdare Ventures and Split Rock Partners.
• LendKey, a New York-based lending-as-a-service solution for banks and credit unions, raised $13 million in Series C funding. North Atlantic Capital led the round, and was joined by investors including DFJ, Updata Partners, Gotham Ventures, and TTV Capital.
• Molekule, a San Francisco-based molecular air purifier manufacturer, raised $10.1 million in Series A funding. Crosslink Capital led the round, and was joined by investors including SoftTech VC, Translink Capital, and Foxconn.
• Kahoot!, a Norway-based learning platform, raised $20 million in Series A funding. Investors include Microsoft Ventures, Creandum, and Northzone.
• LiveStories, a Seattle-based civic intelligence and engagement platform, raised $10 million in Series A funding. Ignition Partners led the round, and was joined by True Ventures and Founders Co-Op.
• Integrate, a Phoenix, Ariz.-based marketing software developer, raised $8 million in funding, according to TechCrunch. Investors include Iron Gate Capital, Foundry Group, Comcast Ventures, and Liberty Global. Read more.
• Plexchat, a Redwood City, Calif.-based developer of a communication platform for mobile gamers, raised $7 million in seed funding. Raine Ventures led the round, and was joined by investors including First Round Capital, Dream Incubator, Lumia Capital, Macro Ventures, Singularity Ventures and Hany Nada.
• Flybits, Inc., a Canada-based context-as-a-service company that enables enterprises to leverage data intelligence, raised $6.5 million in Series B funding. Investors include Information Venture Partners, Portag3 Ventures, Robert Bosch Venture Capital and Trellis Capital.
• DataRails, a Tel Aviv-based platform that tracks, controls, and manages spreadsheets, raised $6 million in funding. Vertex Ventures led the round, and was joined by investors including Cyrus Angel Fund, Oryzn Capital and Joey Low.
• Ada Support, a Toronto-based customer support chatbot developer, raised $2.5 million in funding. Bessemer Venture Partners led the round, and was joined by Version One Ventures.
• FinTech Studios, a New York-based cloud platform of AI-based financial information apps, raised $1 million in seed funding. KEC Ventures led the round.
• DocASAP, a Broadlands, Va.-based provider of online appointment scheduling, raised funding of an undisclosed amount from Cohen Private Ventures.
• Country Archer Jerky Co., a San Bernadino, Calif.-based meat snacks brand, raised a ‘significant’ amount in funding from Monogram Capital Partners.
HEALTH AND LIFE SCIENCES DEALS
• Trevi Therapeutics, a New Haven, Conn.-based late-stage clinical development company, raised $50.5 million in Series C funding. New Enterprise Associates led the round, and was joined by investors including Lundbeckfonden Ventures, Omega Funds, Aperture Venture Partners, and TPG Biotech.
• NeuroVia, Inc., a Cambridge, Mass.-based biopharmaceutical company focused on developing innovative therapies for rare genetic neurological diseases, raised $14 million in Series A funding. Novartis Venture Fund and Sanofi-Genzyme BioVentures led the round, and was joined by investors including BioMed Ventures and Enso Ventures.
PRIVATE EQUITY DEALS
• Arsenal Capital Partners acquired PolyOne Corp’s (NYSE:POL) designed structures and solutions unit, which will be rebranded as Spartech. Financial terms weren’t disclosed.
• Seligman Private Equity Select invested $5 million in B2X, a Germany-based customer care solutions provider.
• WestView Capital Partners acquired a minority stake in Abacus Group, a New York-based provider of managed IT solutions and infrastructure for the financial services sector. Financial terms weren’t disclosed.
• One Equity Partners acquired a minority stake in Intren, a Union, Ill.-based specialty utility contractor. Financial terms weren’t disclosed.
• Boyne Capital Partners acquired AmeriBest Home Care, a Philadelphia-based home care company. Financial terms weren’t disclosed.
• Silver Oak Services Partners recapitalized Redwood Dental, a Detroit-based provider of general and specialty dentistry services. Financial terms weren’t disclosed. Additionally, Redwood made three add-on acquisitions: Signature Smiles, Affordable Dental Care and Holly Dental Care.
• Lincoln Hill Holdings acquired Fibre-Tec Partitions, a Chicago-based provider of customized, fiber and corrugated box partitions. Financial terms weren’t disclosed.
• Cardinal Health (NYSE:CAH) has put its China business up for sale, according to Reuters. It has drawn interest from Shanghai Pharmaceutical Holding, China Resources Pharmaceutical Group, and Sinopharm Group Co Ltd. The deal could be worth up to $1.5 billion. Read more.
• Abu Dhabi National Oil Company, the United Arab Emirates’ state-owned oil company, has chosen First Abu Dhabi Bank, HSBC, Bank of America Merrill Lynch, and Citigroup to help with the IPO of its retail unit, Reuters reported citing people with knowledge of the matter. The offering could raise between $1.5 billion to $2 billion.
• Kala Pharmaceuticals, a Waltham, Mass.-based biotech focused on treating eye diseases with nanoparticles, raised $90 million in an offering of 6 million shares for $15 a piece. J.P. Morgan, Wells Fargo, Bank of America Merrill Lynch, and Wedbush have been named underwriters for the company, which plans to go public on the Nasdaq as “KALA.” In 2016, the company booked losses of $33 million, and has yet to show revenues. The company is backed by Longitude Capital (11.9% pre-IPO), OrbiMed (11.9%), Polaris Partners (10.9%), Wellington Management (10%), Third Rock Ventures (9.6%), and RA Capital Management (9.1%).
• YogaWorks, the Culver City, Calif-based yoga studio chain, said it has postponed its IPO. YogaWorks previously said it plans to raise $65 million. In 2016, the company booked losses of $9.5 million on revenue of $55.1 million. The company, which filed confidentially mid-April, has 50 studios, and about 3 million student visits in 2016. Cowen, Stephens, and Guggenheim are lead underwriters in the deal. Great Hill Partners backs the company, which plans to list as “YOGA” on the Nasdaq.
• Calyxt, the New Brighton, Minn.-based company based on gene-editing foods, said it would offer 7 million shares at $8—at the low end of its range of $8 to $10. The company raised $56 million. Calyxt plans to go public on the Nasdaq as “CLXT.” The company is being underwritten by Citi, Credit Suisse, and Jefferies. The company lost $12.1 million on revenue of $339 million in 2016. Calyxt is backed by French biotech, Cellectis.
• Oaktree Capital Management completed a controlling investment in My Alarm Center, a Newtown Square, Penn.-based home security and automation provider. Financial terms of the investment weren’t disclosed. My Alarm Center raised approximately $10 million in venture funding from investors including Ironwood Capital, NXT Capital, OFS Capital Corporation, and Saratoga Investment Corp.
• Viber acquired Chatter Commerce, a San Francisco-based platform for message commerce, according to TechCrunch. Financial terms weren’t disclosed. Chatter Commerce had raised $1.25 million in venture funding from Rakuten. Read more.
• Littlejohn & Co agreed to acquire Cornerstone Chemical Company, a Waggaman, La.-based manufacturer of key intermediate chemicals for high-value industrial and consumer applications, from an affiliate of H.I.G. Capital. Financial terms weren’t disclosed.
• Clairvest Group Inc. agreed to sell CRS Contractors Rental Supply LP, a Canada-based provider of construction rental equipment, to Sunbelt Rentals.
FIRMS + FUNDS
• BlackRock (NYSE:BLK), a New York-based investment manager, raised $1.4 billion for its Renewable Income U.K. fund, which invests mostly in solar and wind generation in the U.K, according to Financial News. Read more.
• Fundamental Advisors LP, a New York-based private equity firm, raised $993 million for its third private equity fund, Fundamental Partners III.
• Summit Partners, a Boston-based private equity and venture capital firm, raised 700 million euros ($806.9 million) for its second Europe Growth Equity fund.
• Pearl Energy Investments, a Dallas, Texas-based private equity firm, raised $600 million for its second fund.
• Qumra Capital, an Israel-based venture capital firm, raised $115 million for its second fund, Qumra Capital II. The fund’s target is $150 million.
• Ken Gonzalez joined Trident Capital Cybersecurity as a managing director. Previously, Gonzalez was at FireEye.
• Carmel Partners named Trey Hilberg as head of investments.