On deals and dealmakers.
A TALE OF TWO PITCH DECKS
Happy Friday, Term Sheet readers.
Term Sheet reported yesterday on the wild goose chase to answer the simple question: How much money did unicorn Rubicon Global raise and at what valuation?
A quick summary: On Tuesday, Forbes reported that recycling startup Rubicon Global reached unicorn status after raising $50M. However, the CEO told me they’re actually raising $100 million in total. Meanwhile, a Form D showed only $19.4M of raised capital. In other words, lots of numbers to work with for one simple question.
Here’s the latest:
• After numerous requests, the recycling startup still declined to offer supporting docs helping validate the $50M tranche. All I have is their word and this apparently outdated Form D, which states $19.4M. Guess I’ll have to wait for the correct up-to-date Form D.
• I obtained four pitch decks yesterday — one from 2014, two from 2015, and one from 2016.
• The two pitch decks from 2015 are basically identical until you get to the “financial overview” portion. There’s a discrepancy in the historical data for pretty much every year except for 2011. The revenue numbers for years 2012, 2013, and 2014 are not consistent across both decks.
• I asked Rubicon these two questions 1) Can you tell me which deck’s numbers are accurate? And 2) Why are they not consistent across decks? They said it’s “impossible to comment on something we haven’t seen.” The company added that they aren’t sure why the lower figures were reported in one of the decks and the individual responsible for creating the presentation is no longer with the company. “It obviously does not benefit us to report lower figures,” the email said.
• The company said the audited net revenue numbers are in line with the higher figures presented in one of the decks. But in 2014, the audited net revenue was $2.163 million. This number does not reflect what’s presented in either pitch deck as the 2014 actual revenue figure. Both decks say the numbers are adjusted from audited financials.
Since a potential investor in the company was given this deck, that becomes problematic. Now that it appears there are multiple versions of the numbers, I have asked for documentation of the audits.
• I spoke with an investor who passed on the company several times, and he said, “Every time you try to press down on a number, it evaporates.”
It’s possible there’s an explanation to the discrepancy between pitch decks. Whatever the reason, they can’t both be right. Numbers aren’t up for interpretation. I’ll update you as I get more clarification.
*Note: The Atlanta Business Chronicle article I referenced about a $75 million fundraise changed its headline to reflect the current round.
IPO 2.0: Changing gears a little bit. Social Capital CEO Chamath Palihapitiya raised $600 million in an IPO yesterday for his blank check company, Social Capital Hedosophia Holdings. The idea is that Social Capital Hedosophia will acquire a big tech company and help it circumvent the initial public offering process.
Term Sheet caught up with Palihapitiya after his morning at the NYSE:
You just took Social Capital Hedosophia Holdings public. What was the motivation behind that?
Palihapitiya: I really want to change the way companies are built in the Valley. Right now, a lot of these Silicon Valley unicorns are seeing unnecessarily high rates of attrition with employees. When that happens, it’s really hard to build a great business because a lot of these great people are leaving. Some of them just can’t afford to live in what is now one of the most expensive places in the world in the way the existing compensation model in the Valley is set up.
Typically, what happens is you take a really nominal base salary and you get a bunch of equity that would get liquid and realized in years 5, 6, or 7 of a company’s life cycle. Now, that’s no longer the case. Now, when you have companies that need to mature at 8, 9, 10, or 11 years, employees go and start to portfolio diversify. They spend two years at Unicorn A and two years at Unicorn B, and two more years at Unicorn C. That helps nobody. And when you think about why that liquidity isn’t provided earlier, it just ends up being a bunch of procedural issues that are easily fixable.
So part of doing this is just to have a vehicle where we can rewire some of that plumbing in a way that can be much more productive for these employees and for the founders. Get the company liquid sooner and into the hands of a very concentrated, sophisticated blue-chip investor base, and do it in a way where the CEO and founder has the ability to compensate their team, which then allows them to keep them longer and keep them happier.
Do you already have a company in mind?
Palihapitiya: Not yet. When our S-1 was filed, we had 15 of the most well-known unicorn founders and CEOs reach out. You can expect that we’ll start talking to them in detail starting October 1. We’re pretty sure we can find an iconic business that wants to go public and trailblaze in this new way. And once this happens, I think a bunch of other companies will follow suit.
So it looks like this is an attractive path for unicorns.
Palihapitiya: It’s a very attractive path for unicorns. Instead of a 12-month process where the CEO is distracted 50% of the time, it takes 60 to 90 days. Instead of six-month lockups, we waive all lock-ups. Instead of hundreds of investors who don’t know your company, it’s 15 to 20 that believe in your business. It just could not be more different.
LYFT FUNDING: So Alphabet is reportedly in talks with Lyft about a potential investment of $1 billion. Wow, what a plot twist. This comes at a time when Alphabet and Uber are entangled in a seemingly never-ending legal battle over trade secrets and patent infringement. This kind of investment could give Lyft the boost necessary to steal even more market share from rival Uber, the 800-pound ride-hailing gorilla. Read more at Fortune.
Correction: The Riverside Company raised more than 312 million euro ($371 million) for its fifth Europe-focused fund. Tuesday’s Term Sheet misstated the amount in dollars, not euros.
THE LATEST FROM FORTUNE...
• New iPhones to give stiff competition to the 1998 Compaq Presario 2200 (by Ashwin Rodrigues)
• Is DOJ preparing to go easier on corporate crime? (by Hallie Detrick)
• 10 best performing stocks since Lehman filed for bankruptcy (by Lucinda Shen)
• Makers of live streaming app YouNow plan ICO on Ethereum (by Robert Hackett)
• Why salad chain SweetGreen went cashless (by Jeff John Roberts)
Hampton Creek has a new board of directors. Three former female employees have sued Google for ‘pervasive’ pay inequities. Elizabeth Warren sets her sights on Equifax. Is this hotel an Airbnb killer? The race to run a two-hour marathon.
• Patreon, a San Francisco-based platform that enables creators and artists to fund their work, raised Series C funding of an undisclosed amount Series C at a $450 million valuation, according to TechCrunch. Read more.
• Federated Wireless, an Arlington, Va.-based provider of wireless infrastructure solutions, raised $42 million in Series B funding. Investors include Charter Communications, American Tower Corp, ARRIS International plc and GIC.
• AppGuard LLC, a Chantilly, Va.-based maker of intelligent prevention endpoint protection software, raised $30 million in Series B funding. JTB Corporation led the round.
• RealtyShares, a San Francisco-based online marketplace for real estate investing, raised $28 million in Series C funding. Investors include Cross Creek Advisors, Danhua Capital, Barry Sternlicht, Bow Capital, Union Square Ventures, General Catalyst Partners and Menlo Ventures.
• Sixgill LLC, a Santa Monica, Calif.-based provider of sensor data services for governing IoE, raised $27.9 million in funding. DRW Venture Capital led the round, and was joined by Mobile Financial Partners.
• KeyMe, a New York City-based provider of solutions for people to access and manage their keys, raised $25 million in Series D funding. Comcast Ventures was the lead investor, and was joined by investors including Battery Ventures, Benefit Street Partners, Michael Polsky, Questmark Partners, Ravin Gandhi, RiverPark Ventures, 7-Eleven and White Star Capital.
• Fauna Inc, a provider of adaptive operational database solutions, raised $25 million in Series A funding. Daniel Gwak of Point72 Ventures led the round, and was joined by investors including GV, Costanoa Ventures, Afore Capital, CRV, Data Collective, Quest Venture Partners, the Webb Investment Network and Ulu Ventures.
• Call9, a New York City-based emergency medicine provider, raised $24 million in Series B funding. Redmile led the round, and was joined by investors including Index Ventures, Refactor, Y Combinator and Western Technology Investment.
• Piper, a San Francisco-based STEM education company, raised $7.6 million in Series A funding. Owl Ventures led the round, and was joined by investors including Reach Capital, Stanford’s StartX fund and Charles Huang.
• ExecThread Inc, a New York-based job-sharing network for executives, raised $6.5 million in funding. Canaan Partners and Javelin Venture Partners led the round, and were joined by investors including Corazon Capital, CoVenture and NextView Ventures.
• CashShield, a Singapore-based online fraud management company, raised $5.5 million in Series A funding. GGV Capital led the round and was joined by investors including Tony Fadell, Heliconia Capital Management and Stream Global. Read more at Fortune.
• Augment, a San Francisco-based artificial intelligence startup, raised $5 million in Series A funding. Investors include Silicon Valley Data Capital and JAZZ Venture Partners.
• Clinch, a New York City-based video ad personalization firm, raised $3 million in Series A funding. Investors include Richard Gati.
• Swirlds, a Dallas, Texas-based developer of a distributed consensus platform, raised $3 million in seed funding. New Enterprise Associates led the round.
• Costello, an Indianapolis-based deal management platform, raised $1 million in funding led by Dundee Venture Capital with participation from Elevate Ventures, M25 Group, and Service Provider Capital.
• Grid Therapeutics LLC, a Durham, N.C.-based biotech company, raised Series A funding of an undisclosed amount. Longview International Ltd led the round, and was joined by investors Duke University.
PRIVATE EQUITY DEALS
• Monomoy Capital Partners completed its previously announced acquisition of West Marine, a Watsonville, Calif.-based retailer of boating supplies and accessories, for $12.97 per share or about $337 million.
• MSD Partners, L.P. agreed to acquire Ring Container Technologies, an Oakland, Tenn.-based manufacturer of plastic packaging and containers. Financial terms weren’t disclosed.
• Authority Brands, a portfolio company of PNC Riverarch Capital, acquired Homewatch International, a Denver-based provider of home elderly care services. Financial terms weren’t disclosed.
• Seacoast Capital invested $14 million in Cambium Limited, a Plano, Texas-based holding company consisting of two main units: building and construction services; and sustainable modular management.
• TrueCommerce, a portfolio company of Accel-KKR, acquired Datalliance, a Cincinnati, Ohio-based vendor managed inventory provider. Financial terms weren’t disclosed.
• Dole Food Co, a Westlake Village, Calif.-based company is exploring a sale, according to The Wall Street Journal. Dole Food could garner a valuation roughly in the $2 billion range. Read more at Fortune.
• Wish, a San Francisco-based e-commerce company, is raising approximately $250 million in new funding at a valuation that could be more than $8 billion, according to Axios. Several mutual funds are expected to participate, including Wellington Management. Read more.
• Nightstar Therapeutics, a London-based gene therapy company focused on retinal diseases, set the terms of its IPO. The company said it plans to raise $75 million in an offering of 5.4 million shares priced between $13 to $15 a piece. The company previously estimated that it could raise $86 million. In 2016, the company posted loss of $13.6 million, and has yet to posts a revenue. The company is backed by Syncona Partners and New Enterprise Associates. Jefferies, Leerink Partners and BMO Capital Markets are leader underwriters in the deal.
• Rovio, the Finnish mobile gaming studio and maker of the Angry Birds game, has set a price range for its IPO. The company says it plans to offer shares at between 10.25 euro to 11.50 euro, helping the company raise about 30 million euro. The price range gives the company a valuation of about $1 billion, down from the $2 billion rumored earlier. Previously, The Information reported that Chinese internet giant Tencent was considering buying Rovio for about $3 billion, citing sources. The company is 70% owned by venture capitalist Kaj Hed, who is also co-founder Niklas Hed’s uncle. Fortune
• LiveXLive acquired Slacker Radio, a San Diego, Calif.-based online radio service. Financial terms weren’t disclosed. Slacker Radio raised more than $70 million in venture funding from investors including Centennial Ventures, Rho Capital Partners, Austin Ventures, and Sevin Rosen Funds.
• UDG Healthcare plc acquired MicroMass Communications, a Cary, N.C.-based healthcare communications agency specializing in behavioral change, from Periscope Equity for a total consideration of up to $75.8 million. MicroMass is being acquired for an initial consideration of $63.8 million, with an additional consideration of up to $12 million payable over the next three years, based on the achievement of agreed profit targets.
• The Riverside Company sold G&H Orthodontics, a Franklin, Ind.-based company, that supplies clinical solutions for the orthodontic community, to Altaris Capital Partners. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Abris Capital Partners, a Poland-based private equity firm, raised 500 million euros ($598 million) for its third middle-market fund.
• Costanoa Ventures, a Palo Alto, Calif.-based venture capital firm, raised $175 million for its third fund.
• Hilltop Private Capital named Ed Moss as a partner. Prior to joining Hilltop, Moss was a managing director at Lincolnshire Management.
• Propel hired Rohit Bodas as a partner and promoted David Mort to vice president.
• Ash Egan joined ConsenSys as principal. Previously, Egan was at Converge.
• SoFi executive chairman Tom Hutton will become the interim CEO.