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5 Qs WITH A DEALMAKER

Good morning, Term Sheet readers.

Jeff Jordan, a general partner at Andreessen Horowitz, specializes in marketplace businesses and has a strong thesis about the importance of network effects. He led investments in Airbnb, Instacart, Pinterest, and LimeBike. Before professionally investing, Jordan served as the CEO of OpenTable and president of PayPal.

In the Valley, Jordan is also known for mentoring investors with non-tech backgrounds. One examples is Golden State Warriors player Andre Iguodala, who credits Jordan for helping him learn about startup investing.

Below is an excerpt of our conversation (five questions & one follow-up):

TERM SHEET: You took OpenTable public in May 2009. What lessons did you learn & what was the most surprising part of taking a company public?

JORDAN: It was the first financing I had ever worked on. To take a company public in the depths of the financial crisis was a learning experience to say the least. The parts that were most interesting to me is that public markets aren’t this big black box — they’re a wide range of investors with a wide range of interests. I understood that a lot of the skill of doing a successful financing is picking the right investors. If you pick ones who believe in the vision and don’t freak out if something bad happens, then you have a lot of freedom in operating the business.

Social Capital’s new SPAC will help companies go public without an IPO. What are your thoughts on a company going public through a special vehicle versus the traditional route?

I think IPOs could use a level of innovation. It seemed incredibly analog to do the same meeting 47 times over the span of two weeks. The lawyers tell you that you have to tell the story exactly the same way, and it’s the most mind-numbing thing you could ever imagine. So I think there is the opportunity for innovation in the IPO process. That said, it’s not terribly broken. When you take venture money, there are three potential doors: go bankrupt, sell the company, or take it public.

You talk a lot about the network effect, which is obviously integral to blockchain and cryptocurrencies. How do you foresee those networks evolving over time?

Part of the appeal of a lot of these digital currencies, which we’re pretty long on, is that networks can emerge. I’m fascinated by it, and it’s core network effect. The part that is really exciting to me is that every two-sided marketplace has a “cold start problem.” OpenTable, for example, had no diners and had no restaurants. What comes first? Every two-sided marketplace wrestles with this cold-start problem, and how you get the flywheel spinning. A carefully constructed ICO could have financial incentives to create that early momentum. Filecoin clearly had financial incentives for people to offer storage to the network. So if they have financial incentives, there will be storage opportunities so that when people looking for storage come, their side of the marketplace is populated. It’s a potentially really interesting model around incentives that can overcome the hardest problem in marketplaces — the cold start problem.

Athletes like Golden State Warriors' Andre Iguodala regularly reach out to you for advice about getting into startup investing. How did you form those relationships?

I met Andre three or four years ago after I got a letter from his business partner Rudy Thomas. It said that he and Andre would like to have dinner. At first, I was like, “Alright, this is a scam.” I answered Rudy, and I said, “Why do you guys want to talk?” I learned that Andre has this passionate interest about technology, and he’d like to learn more about investing. I made introductions to a number of early-stage companies that they were interested in.

Many athletes have a strong interest in technology. Andre said that one of the key reasons he came to Golden State is because of its proximity to Silicon Valley and the tech world.

What is an investment you decided to pass on that you still regret?

One investment that we didn’t pass on, but we didn’t end up getting it done was Snap. I think Evan [Spiegel] is showing to be one of the best product builders of his generation in the Valley. What he’s done with the Snap product — both the amount of innovation and the quality of innovation is pretty astonishing. I would have loved to have the opportunity to work on that.

What do you think about how the market reacted once the company went public?

I mean, that can be the flip side to going public. The question becomes, ‘Oh what have you done for me lately?’ For his original investors, Spiegel created huge value, but for some of the later public investors, he has not yet done that. I don’t think that story’s over. I think he’s creative enough to continue to put out some interesting things.

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• How Baidu plans to win the artificial intelligence market (by Andrew Nusca)

• Only 3 of the top 25 wealthiest Americans are women (by Aric Johnson)

...AND ELSEWHERE

WalMart says it will acquire more startups. Twitter’s latest rules for fighting hate and abuse. Robots are coming for these Wall Street jobs. Why this streetwear brand is worth $1 billion. Trump narrows Fed leader search to five final candidates.

VENTURE DEALS

• Magic Leap, a Dania Beach, Fla.-based augmented reality startup, raised $502 million in Series D funding. Temasek Holdings led the round, and was joined by investors including Google, Alibaba, JP Morgan, Fidelity, EDBI, Grupo Globo, and Janus Henderson Investors. Read more at Fortune.

• Lightspeed POS, a Canada-based provider of point of sale, accounting, inventory management, and purchasing analytics, raised $166 million in Series D funding. Caisse de dépôt et placement du Québec led the round, and was joined by investors including iNovia Capital and Silicon Valley Bank.

• Finova Financial, a Palm Beach Gardens, Fla.-based operator of a platform for financial lending, raised $102.5 million in equity and credit facility funding. CoVenture led the round.

• Duo Security, an Ann Arbor, Mich.-based provider of cloud-based access protection solutions, raised $70 million in Series D funding. Meritech Capital Partners and Lead Edge Capital led the round, and was joined by investors including Geodesic Capital, Index Ventures, Redpoint Ventures and True Ventures. Read more.

• LendingHome, a San Francisco-based mortgage lender, raise $57 million in funding. Investors include Sberbank and Noah Holdings Limited.

• Feedzai, a San Mateo, Calif.-based risk management platform powered by artificial intelligence, raised $50 million in funding. Investors include Sapphire Ventures.

• Renew Energy Partners, a Boston-based provider of financing for renewable energy and energy efficiency projects, raised $40 million in funding. Rollins Capital led the round, and was joined by investors including Proficio Capital Partners.

• SelfMade, a New York-based professional photo editing service, raised $11 million in funding. Investors include Primary Venture Partners, FirstMark Capital, BoxGroup, Founder Collective, CrunchFund, SV Angel and GGV.

• DirectScale, a Lindon, Utah-based cloud-based software platform, raised $8.5 million in Series B funding. Grotech Ventures led the round, and was joined by investors including Origin Ventures and Kickstart Seed Fund.

• Pluto TV, a Los Angeles-based free internet television service, raised $8.3 million in funding. Investors include Samsung Venture Investment Corporation.

• Allset, a San Francisco-based restaurant order and prepay app platform, raised $5 million in Series A funding. Greycroft led the round, and was joined by investors including Andreessen Horowitz, Vaizra Investments, Compound, FJ Labs, and SMRK VC Fund.

• Zype, a New York City-based cloud video distributor, raised $4.9 million in Series A funding. Runa Capital led the round, and was joined by investors including Revel Partners, Point Nine Capital, Alpine Meridian Ventures and Entrepreneurs Investment Fund.

• Revelo, a Brazil-based job recruitment marketplace, raised $4.6 million in funding, according to TechCrunch. Valor Capital led the round. Read more.

• BuddyGuard, a Berlin-based startup behind the Flare AI-powered home security camera, raised €3.4 million ($4 million) in funding, according to TechCrunch. Bachmann Group led the round. Read more.

• Alloy, a New York-based platform bringing data-driven identify verification to the financial services industry, raised $3.8 million in funding. Eniac Ventures led the round.

• Torch 3D, a Portland, Ore.-based provider of an augmented and virtual reality prototyping platform, raised $3.5 million in an initial seed round. The Venture Reality Fund and Silicon Valley Data Capital led the round, and were joined by investors including Seven Peaks Ventures, GVR Fund, Presence Capital, Antipodean Ventures, Jerome Capital and TWB Investment Partnership.

• norbloc, a Sweden-based blockchain Know-Your-Customer provider, raised $1.6 million in seed funding. Marathon Venture Capital led the round, and was joined by investors including Digital Currency Group.

• Charity Checkout, a U.K.-based online charity donation system, raised $1 million in funding. Chris Hulatt and Simon Rogerson led the round.

• N3rd Street Gamers, a Philadelphia-based e-sports event producer, raised funding of an undisclosed amount from SeventySix Capital.

HEALTH AND LIFE SCIENCES DEALS

• Gemini Therapeutics, a Cambridge, Mass.-based precision medicine company, raised $42.5 million in Series A funding. Atlas Venture, Lightstone Ventures and OrbiMed led the round.

• Prenetics, a Hong Kong-based genetic testing startup, raised $40 million in Series B funding. Beyond Ventures and Alibaba Hong Kong Entrepreneurs Fund led the round, and were joined by investors including Yuantai Investment Partners, mFund and eGarden Ventures. Read more.

• Cydan, a Cambridge, Massachusetts-based orphan drug accelerator, raised $34 million in funding. Investors include Longitude Capital, New Enterprise Associates, Pfizer Venture Investments, Alexandria Venture Investments and Lundbeckfond Ventures.

• Gemini Therapeutics, a Cambridge, Massachusetts-based precision medicine company, has closed $42.5 million in Series A financing. Atlas Venture, Lightstone Ventures and OrbiMed led the round.

PRIVATE EQUITY DEALS

• 777 Partners recapitalized ML Healthcare, an Atlanta-based company which helps provide medical funding to those who are uninsured or underinsured. Financial terms weren't disclosed.

• VitalLink Research, a portfolio company of Great Point Partners, acquired Upstate Pharmaceutical Research, a Greenville, S.C.-based clinical trials provider. Financial terms weren't disclosed.

• The Hilb Group, a portfolio company of ABRY Partners, acquired CNC Insurance Associates Inc, a Denver-based provider of property and casualty insurance solutions. Financial terms weren't disclosed.

• Pelican Energy Partners made a “significant” investment in Gordon Technologies, a Scott, La.-based provider of measurement-while-drilling technology for the oil and gas industry. Financial terms weren't disclosed.

• Aurora Capital Partners acquired VLS Recovery Services LLC, a Hockley, Texas-based provider of specialty cleaning and waste processing services. Financial terms weren't disclosed.

• Affinity Equity Partners agreed to acquire franchise rights to the Burger King brand in Japan. Financial terms weren't disclosed.

OTHER DEALS

• Assurant Inc (NYSE:AIZ) will buy Warranty Group, a Chicago-based provider of underwriting, claims administration, and marketing services, for $1.9 billion. Read more.

IPOs

• Ablynx, a Zwijnaarde, Belgium-based company developing nanobodies to treat diseases, said it plans to raise $150 million in an offering of 7.2 million ADSs at $20.95 a piece. Another $25 million will be raised via private placement. The company posted revenue of 84.8 million euro and loss of 1.1 million euro in 2016. Van Herk Investment (10% pre-offering), Fidelity (9.15%), Perceptive Advisors (4.5%), Gam Holdings (3.92%), and Boehringer Ingelheim International (3.49%) back the company. BofA Merrill Lynch, J.P. Morgan and Jefferies are joint bookrunners in the deal. The company plans to list on the Nasdaq as “ABLX.”

• Qudian, Beijing, China-based company that provides small loans for e-commerce purchases, said it said it raised $900 million in an offering of 37.5 million shares(5% insider) priced at $24 a piece, above the range of $19 to $22. In 2016, the company posted revenue of $212.8 million on income of $85.1 million. Morgan Stanley, Credit Suisse, Citi, CICC, and UBS Investment Bank are joint bookrunners in the deal. The company plans to list as “QD” on the NYSE.

• ProLung, a Salt Lake City, Utah-based company developing a test for lung cancer, said it plans to raise $7 million in an offering of 930,000 shares between $7 to $8. Maxim Group and Aegis Capital are joint bookrunners in the deal. The company plans to list on the Nasdaq as “LUNG.”

EXITS

• JPMorgan Chase & Co will acquire WePay, a Redwood City, Calif.-based online payment provider. Financial terms weren't disclosed, but media reports peg the price at above the roughly $220 million valuation that WePay achieved in a 2015 fundraising. WePay had raised more than $74 million in venture funding from venture investors including Highland Capital Partners, Ignition Partners, FTV Capital, and August Capital. Read more.

• Genstar Capital acquired Tekni-Plex Inc, a Wayne, Penn.-based maker of medical tubing and compounds. The seller was American Securities. Financial terms weren't disclosed.

• Snow Phipps Group acquired Brook and Whittle Holdings, Corp, a North Branford, Conn.-based printing and packaging solutions provider, from RFE Investment Partners and Charter Oak Equity.

• Apollo Global Management agreed to acquire a majority stake in Catalina Holdings (Bermuda) Ltd, a Bermuda-based consolidator in the non-life insurance/reinsurance run-off sector. As a result of the deal, Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan will exit their stakes in Catalina. Financial terms weren't disclosed.

• Lovell Minnick Partners agreed to buy Tortoise Investments, a Leawood, Kansas-based energy investment manager. Sellers include Mariner Holdings and retiring Tortoise co-founders. Financial terms weren’t disclosed.

FIRMS + FUNDS

• Spectrum Equity, a Boston-based growth equity firm, raised $1.25 billion for its fund, Spectrum Equity VIII L.P.

• Imaginary Ventures, a New York-based investment firm, is seeking $100 million for its debut, according to an SEC filing..

• Blockchain Capital, a San Francisco-based venture capital firm, raised $59.72 million for its fourth fund. The fund’s target is $75 million.

PEOPLE

• Mark Fields joined TPG Capital as a senior adviser.

• Crestone Capital LLC named Jack Swift as president.

• Hammond, Kennedy, Whitney & Company Inc promoted Kent W. Robinson to partner of operations and Wilson Ren as senior associate. The firm hired John D. Lammers and Brendan P. McLoughlin as associates.

• Chris Sargent joined San Francisco Equity Partners as a vice president.