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Term Sheet — Wednesday, August 23

Aug 23, 2017

THE NIKE OF SLEEP

This morning Fortune published my latest (and sadly, my last!) magazine feature story. It’s a profile of mattress startup Casper and its CEO Philip Krim, who ranked #28 on our 40 under 40 list.

What I find most fascinating about Casper is its brand. The company took a boring category – mattresses – and managed to make it cool. Now, the company’s ambitions have expanded beyond mattresses to what it’s dubbed the “sleep” category. From the article:

Casper is the latest and arguably most successful in a class of upstarts turning mundane, unloved consumer products like beds, toothbrushes, suitcases, water bottles, and vitamins into something covetable and cool. These companies have relationships with their customers that go beyond clean, welcoming webpages and cute Instagram posts. They make the shopping experience simple. They go over-the-top on customer service. And most important: They inject aspirations—the promise of some deeply meaningful purpose beyond the product itself—into the run-of-the-mill things we own.

Take Soma, a water-filter company with a mission to “hydrate the world.” Or Bouqs, an online florist founded “with the bold intention of bringing romance and delight back to what was once a noble exchange.” Or Ritual, a multivitamin startup with a mission of transparency (down to its clear pills) and the slogan, “The future of vitamins is clear.” Or, most egregiously, bkr, which markets its water bottles as beauty products. “This luminous beauty essential will motivate you to drink 10x more water, and love it (like it’s cake),” the company’s website states. Price tag for one glass bottle: $35.

It doesn’t really matter that these companies often make their products at the same factories as their uncool competitors, sometimes with barely perceptible improvements over their rivals. They’re selling something totally different. Casper’s beds aren’t just providing a place to sleep. They’re giving customers better sleep, which, the company’s website declares, is “the foundation of a great life.” And who doesn’t want a great life?

Casper “is focused on the benefit, not the feature,” says Mike Duda, founder and managing partner of Bullish, a tech accelerator and investor in Casper. “People want to buy into something better. They’re buying into a set of values.”

The promise of a great life is how Casper sold $200 million worth of mattresses, sheets, pillows, and dog beds last year, its third year in business. It has allowed the more-than-300-person company to raise $240 million in venture funding, valuing it at $750 million. (The company hasn’t said whether it’s profitable.) It earned Casper a name-check among the “risk factors” in analysts’ reports about publicly traded mattress companies like Tempur-Sealy, whose sales were 15 times that of Casper last year. It has spawned more than 100 copycat mattress startups, some of which have aped Casper’s strategies down to the exact wording of its ads. And most recently, Casper’s success enticed Target to float a $1 billion buyout offer, which the company quickly declined. “We didn’t get that far with it,” says CEO and cofounder Philip Krim. “We’re a three-year-old company, and we think we can be a lot bigger than this.” (Target opted to make an investment instead.)

When it launched in 2014, Casper called itself “the Warby Parker of mattresses,” referencing the popular direct-to-consumer eyeglasses startup. But mattresses are only a $16 billion market in the U.S. The company’s ambitions have grown. Now, Casper aspires to be “the Nike of sleep.” Krim explains that athletic gear wasn’t much of an apparel category until Nike turned sneakers into the core of a lifestyle. Lululemon did the same thing for “athleisure,” now a $78 billion market by some estimates. “We want to create sleep as a category,” Krim says. “That’s a really big opportunity.”

Read the whole thing here.

As often happens in print features, many details were left on the cutting room floor. One that might be of interest to Term Sheet readers: Casper passed on the opportunity to acquire Hello, the maker of sleep tracking hardware product Sense that shut down earlier this year. Despite its ambitions to expand into other sleep-related products, Casper wasn’t interested the tech or the product because telling someone how they slept doesn’t actually solve a problem. “You don’t need something that tell you whether you slept well or you didn’t you need products that change that,” he said.

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VENTURE DEALS

Sierra, a Houston-based exploration and production company focusing on oil and gas assets in South Texas, raised $100 million in funding from Post Oak Energy Capital.

Memphis Meats, a San Francisco, Calif.-based “clean” meat startup, raised $17 million in Series A funding. DFJ led the round, and was joined by investors including Cargill, Bill GatesRichard Branson, Atomico, New Crop Capital, SOSV, Fifty Years, KBW Ventures, Inevitable Ventures, Suzy Welch, Kyle Vogt, and Kimbal Musk. Read more at Fortune.

Forward Networks, a Palo Alto, Calif.-based provider of network visibility, policy verification, and change modeling, raised $16 million in Series B funding. DFJ led the round, and was joined by investors including Andreessen Horowitz and A.Capital Ventures.

Versive, a Seattle-based cybersecurity company, raised $12.7 million in funding. Investors include Goldman Sachs, Madrona Venture Group, Formation 8 and Vulcan Capital.

Roost, a Sunnyvale, Calif.-based smart home technology startup, raised $10.4 million in Series B funding. Aviva Ventures led the round, and was joined by investors including Desjardins Insurance and Fosun RZ Capital.

SLIVER.tv, a Cupertino, Calif.-based esports 360º virtual reality entertainment platform, raised $9.8 million in Series A funding. Danhua Capital led the round, and was joined by investors including Heuristic Capital Partners, ZP Capital, DCM, Sierra Ventures, The VR Fund, Samsung Next Fund and Sony Innovation Fund.

Truss, a Chicago-based commercial real estate tech platform, raised $7.7 million in Series A funding, according to TechCrunch. Navitas Capital led the round, and was joined by investors including Hyde Park Angels. Read more.

Innowatts, a Houston, Texas-based energy tech startup, raised $6 million in Series A funding. Shell Technology Ventures led the round, and was joined by investors including Iberdrola Ventures – Perseo and Energy & Environment Investment Inc.

Square Roots, a Brooklyn-based urban farming incubator, raised $5.4 million in seed funding, according to TechCrunch. Investors include Collaborative Fund. Read more.

StoryStream, a U.K.-based content acceleration platform provider, raised 1.2 million pounds ($1.5 million) in funding. MMC Ventures led the round.

Shot Hollow Partners, a Dallas-based oil and gas company, raised funding of an undisclosed amount from Carnelian Energy Capital Management LP.

SquadLocker, a Warwick, R.I.-based provider of athletic apparel, raised Series B funding of an undisclosed amount. Causeway Media Partners led the round, and was joined by James Lombardi. Financial terms weren’t disclosed.

Shanghai Distributed Technologies Co, a Shanghai-based blockchain startup, raised funding of an undisclosed amount from Fosun Group, according to Reuters. Read more.

PRIVATE EQUITY DEALS

KPS Capital Partners acquired C&D Technologies, Inc, a Blue Bell, Penn.-based manufacturer of systems for the power conversion and storage of electrical power. Financial terms of the transaction were not disclosed.

New Mountain Capital made an investment of an undisclosed amount in Sparta Systems Inc, a Hamilton, N.J.-based provider of cloud and on-premise quality management software.

WaterBridge Resources, which is backed by Five Point Capital Partners, acquired EnWater Solutions LLC, a Snyder, Texas-based produced water gathering and disposal company. Financial terms weren’t disclosed.

OTHER DEALS

GVC Holdings (LSE:GVC) recently held talks about a takeover of Ladbrokes Coral (LSE:LCL) but discussions ended without a deal, according to Reuters. GVC's proposal valued Ladbrokes Coral at about 2.7 billion pounds ($3.47 billion). Read more.

Vectren Corp (NYSE:VVC), an Evansville, Ind.-based gas and electric utility with a market value of almost $5.5 billion, is considering options including a potential sale, according to Bloomberg. Read more.

HGGC acquired Nutraceutical International Corporation (Nasdaq: NUTR) for $41.80 per share in cash, or about $446 million.

Osram (XTRA:OSR) agreed to buy Digital Lumens, a Boston-based software provider, for a mid-double-digit million-dollar sum, according to Reuters. Read more.

ANEXIO acquired the assets of Net Data Centers, a Los Angeles-based cloud and data center services provider. Financial terms weren’t disclosed.

Solar Spectrum merged with Horizon Solar Power, a Temecula, Calif.-based solar electric and pool heating systems installer, to create the nation's fourth largest residential solar system provider. Financial terms weren’t disclosed.

Ryanair would be interested in bidding for the whole of Air Berlin (XTRA:AB1), according to Reuters. Read more.

IPOs

Gates Global, a Denver, Colo.-based auto parts maker, is reportedly under consideration for an IPO by its owner, Blackstone, Reuters reports citing people with knowledge of the matter. Blackstone acquired Gates three years earlier for $5.4 billion. The IPO may value to the company at about $7 billion.

NIBC Bank, a Hague, Netherlands-based bank, is considering strategic options including a potential IPO, Reuters reports. Backed by J.C. Flowers, the company reported operating income of $266 million in the first quarter, up 37% from a year earlier.

The Tel Aviv Stock Exchange, plans to IPO in 2019, said its chief executive Ittai Ben Zeev in an interview with Bloomberg. First, a court must approve the exchange’s decision to become a private, for-profit organization.

EXITS

Rock Hill Capital Group sold Alpha Technical Services Corp, a Pasadena, Texas-based operator of an industrial cleaning facility. The buyer was Quala. Financial terms weren’t disclosed.

FIRMS + FUNDS

Seaport Capital Partners, a New York-based private equity and venture capital firm, raised $230 million for its fifth private equity fund, Seaport Capital Partners V.

Longevity Fund, a San Francisco-based investment firm, raised  $22 million for its second fund, Longevity Fund 2.

1confirmation, a newly-formed cryptocurrency fund, is seeking to raise $20 million for its maiden fund, according to an SEC filing.

PEOPLE

Jump Capital promoted Saurabh Sharma to partner and Yelena Shkolnik to vice president.

Beidi Gu joined The Rohatyn Group as a portfolio manager. Previously, Gu was at the Caravel Flagship Fund.

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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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