TRENDY IPO
Happy Friday, Term Sheet readers.
LET’S GO PUBLIC: The big news today: online personal styling company Stitch Fix filed for an IPO. This move will test investor appetite for e-commerce stocks. It is remarkable that the startup has only raised $42.5 million in venture funding from investors including Benchmark Capital, Baseline Ventures, and Lightspeed Venture Partners. (Benchmark & Baseline both have more than a 25% stake.)
Stitch Fix has been hyper-focused on profitability in fiscal year 2017. The company increased its revenue 13-fold since 2014 to an impressive $977.1 million. As I noted yesterday, it’s not easy being public. And it’s certainly not easy going up against Amazon.
What does Amazon have to do with Stitch Fix, you ask? Well, it turns out that Amazon has its eye on fashion retail, too. A few months ago, the tech behemoth announced the Prime Wardrobe, a new subscription service that lets customers try on clothes before they buy them and return them for free. The service is in direct competition with the likes of Stitch Fix and Trunk Club. So there’s that. Regardless of what happens, this one will be closely watched by its e-commerce peers. More here.
MONSTER FUNDING: Is the tortoise slowly beating the hare to win the ride-sharing race? When I saw that Lyft raised $1 billion at a $11 billion post-money valuation, my first thought was: “SoftBank coming in hot yet again!” To my surprise, the funding came from Alphabet. This obviously complicates things as Google was an early investor in ride-hailing rival Uber. The news comes at a time when Alphabet and Uber are entangled in a seemingly never-ending legal battle. As I’ve said before. 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.
PAY WITH BLOCKCHAIN?: In an interesting turn of events, MasterCard announced that it will now let you pay with blockchain, but not with Bitcoin. What does this mean exactly? For the first time, Mastercard is offering the ability to send money over a blockchain rather than by swiping a credit card.
My colleague Jen Wieczner reports:
For one, businesses could cut costs by using the blockchain to send cross-border payments, which usually pass through several foreign banks on their way overseas, racking up fees along the way. Mastercard's blockchain, however, could cut out those middlemen and connect a purchaser's bank directly to that of the supplier, remitting the payment more efficiently and possibly faster, Pinkham says. (Although the transaction itself will register on the blockchain instantaneously, the funds are still moving through the same system Mastercard uses now, meaning there won't necessarily be an improvement in speed, he cautions.)
WEEKEND READS: If you have some extra time this weekend, I recommend two great reads.
• Blockchain explainer: OZY published an interactive comic book-style explainer about the blockchain. It includes useful, detailed stories about how the blockchain could 1) change the way you vote and pay taxes 2) replace data centers 3) increase phishing attacks and 4) revolutionize how you consume media. Find it here.
• Opioid crisis: If you’re looking for more of a long-read, this story about the secretive family making billions from the opioid crisis is captivating. Here’s the teaser: Countless patients have become addicted to the pain medication OxyContin. The company that makes the drug, and reaps billions of dollars in profits, is owned by one family. Read the full feature here.
THE LATEST FROM FORTUNE...
• 50 companies poised for breakout growth (by Clifton Leaf)
• How Intuit reinvents itself (by Geoff Colvin)
• ‘I was sexually abused as an Olympic athlete too.’ (by Katherine Starr)
• Justin Trudeau sends an HQ2 love letter to Amazon (by Jeff John Roberts)
• Freelancers face a big gender gap (by Barb Darrow)
...AND ELSEWHERE
La Croix CEO is bubbling with frustration about short-sellers. WeWork is a $20B startup fueled by Silicon Valley pixie dust. SoftBank's big checks are stalling tech IPOs. Wealthy families are winning deals away from private equity. Atlassian is on a run. Sean Penn is fighting with Netflix. Under Armour is launching a subscription box.
VENTURE DEALS
• Meituan-Dianping, a China-based service-focused e-commerce platform, raised $4 billion in Series C funding. Tencent Holdings led the round, and was joined by investors including Priceline Group and a global syndicate of investors that includes Canada Pension Plan Investment Board. The deal values the company at $30 billion.
• Milhaus, an Indianapolis-based property developer, raised $245 million in funding. Investors include FrontRange Capital Partners and StepStone Realty Partners.
• Coda, a developer of online documents, raised $60 million in funding. Investors include Greylock Partners, Khosla Ventures, and General Catalyst.
• Contrast Security, a Los Altos, Calif.-based provider of security technology that enables software applications to protect themselves against cyberattack, raised $30 million in Series C funding. Battery Ventures led the round, and was joined by investors including General Catalyst and Acero Capital.
• Madison Reed, a San Francisco-based hair care products and services company, raised $25 million in funding. Comcast Ventures led the round, ad was joined by investors including Norwest Venture Partners, True Ventures and Calibrate Ventures.
• Amenity Analytics, a New York-based text analytics platform provider, raised $7.6 million in Series A funding. Investors include Intel Capital and State of Mind Ventures.
• Robart, an Austria-based developer of artificial intelligence for autonomous consumer robots, raised 6.1 million euros ($7.2 million) in Series B funding. CM-CIC Innovation led the round, and was joined by investors including Innovacom, Robert Bosch Venture Capital and SEB Alliance.
• SafeTraces Inc, a Livermore, Calif.-based provider of “food source assurance” solutions, raised $6.5 million in Series A funding. Omidyar Network led the round, and was joined by investors including UL Ventures, S2G Ventures, Maumee Ventures, City Light Capital and Tuscan Management.
• Intelligo Group, a New York-based automated background checks and due diligence technology platform, raised $5.7 million in Series A funding. Investors include Governing Dynamics.
• NYIAX, a New York-based guaranteed advertising contract exchange, raised $5.6 million in funding. WestPark Capital led the round.
• Constructor.io, a San Francisco-based on-site search company, raised $5 million in Series A funding. Zetta Venture Partners led the round, and was joined by investors including Signia Venture Partners.
• AdLeaks, a digital advertising platform, raised $3 million in funding from GO VC.
HEALTH AND LIFE SCIENCES DEALS
• Forty Seven Inc, a Menlo Park, Calif.-based developer of immuno-oncology treatments, raised $75 million in Series B funding. Wellington Management Company LLP led the round, and was joined by investors including Clarus, Lightspeed Venture Partners, Sutter Hill Ventures, and GV.
PRIVATE EQUITY DEALS
• Knox Capital Holdings LLC recapitalized HaystackID LLC, a Boston, Toronto and Paris-based eDiscovery and forensics services provider. Financial terms weren’t disclosed.
• Webster Capital acquired Cirrus Medical Staffing, a Charlotte, N.C.-based provider of travel nurse and travel allied healthcare professionals. Financial terms weren't disclosed.
• Sheridan Capital Partners recapitalized Smile Doctors, a Temple, Texas-based orthodontic service provider. Financial terms weren't disclosed.
• Duke Street acquired a controlling stake in TeamSport Karting, a U.K.-based indoor go-karting operator. Financial terms weren't disclosed.
• High Road Capital Partners acquired Akron Hardware Consultants, Inc, an Akron, Ohio-based wholesale distributor of door hardware. Financial terms weren't disclosed.
• Marlin Equity Partners acquired TopSpin Security, an Israel-based provider of network-based deception and detection technologies. Financial terms weren't disclosed.
• American Health Staffing Group, Inc, a portfolio company of BelHealth Investment Partners, acquired Advance Med, a Frisco, Texas-based provider of travel staffing solutions to hospitals nationwide.
OTHER DEALS
• Domino’s Pizza Group Plc’s joint venture will buy Hallo Pizza, a German-based largest independent pizza chain, according to Reuters. The deal is worth 32 million euros ($37.8 million) on a cash-and-debt-free basis. Read more.
IPOs
• Mosaic Acquisition, a blank check company seeking a manufacturing, consumer products, or business services acquisition, said it plans to raise $300 million in an IPO. The company, formed by Fortress, plans to offer 30 million shares at $10 a piece. Deutsche Bank, RBC Capital Markets, and J.P. Morgan are joint bookrunners in the deal. The company plans to list as “MOSC.U” on the NYSE.
• Altair Engineering, a Troy, Mich.-based engineering software maker, said it plans to raise $144 million in an IPO of 12 million shares at between $11 to $13. In 2016, the company posted revenue of $313 million, and income of $10.2 million. J.P. Morgan, RBC Capital Markets, Deutsche Bank, William Blair, and Canaccord Genuity are underwriters in the deal. The company plans to list on the Nasdaq as “ALTR.”
• Stitch Fix, a San Francisco-based personal styling company, filed for an IPO of $100 million. Goldman Sachs and J.P. Morgan are underwriters in the deal. The company plans to list as “SFIX” on the Nasdaq. Read more at Fortune.
• RumbleOn, a Charlotte, N.C.-based motorcycle e-marketplace, raises $16 million in an IPO of 2.9 million shares at about $5.50 a piece. In 2016, the company posted revenue of $138,141 on loss of $1.8 million. Ralph Wegis(9.9% pre-offering) and NexGen Dealer(16.9%) back the company. Roth Capital and Maxim Group are bookrunners in the deal. The company plans to list as “RMBL” on the Nasdaq.
EXITS
• Convey Health Solutions, which is backed by New Mountain Capital, acquired Gorman Health Group, a Washington, D.C.-based consulting and software solutions firm specializing in government health programs. Financial terms weren't disclosed.
• Quest Diagnostics (NYSE:DGX) agreed to acquire Cleveland HeartLab, a Cleveland, Ohio-based diagnostic services company, from investors including Cleveland Clinic. Financial terms weren't disclosed.
FIRMS + FUNDS
• Roark Capital, an Atlanta-based private equity firm, has set a $5 billion target for its fifth private equity fund, according to SEC filings.
• Riordan, Lewis & Haden Equity Partners, a Los Angeles-based private equity firm, raised $510.6 million for its fourth fund.
PEOPLE
• Centana Growth Partners hired Tom Davis as a principal and Matthew Alfieri as a vice president.
• Benjamin Erhart joined Unternehmertum Venture Capital Partners as a partner. Previously, Erhart was at High-Tech Gruenderfonds.
• Afsheen Afshar will join Cerberus Capital Management as a senior managing director and chief artificial intelligence officer.
• Ben Metcalfe joined Ridge Ventures as a principal, according to TechCrunch. Read more.
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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.
