By Polina Marinova
January 9, 2018

A DYNAMITE YEAR

Good morning, Term Sheet readers.

Let’s look back at 2017 one more time before we close that chapter completely. It was a banner year for venture capital.

The U.S. venture capital industry deployed $84 billion invested in 8,035 companies across 8,076 deals, according to a new PitchBook-NVCA Venture Monitor report.  For context, this is the highest annual amount of capital invested in the entrepreneurial ecosystem since the early 2000s.

These figures reveal something else of note — investors are pumping larger amounts of capital into fewer companies. Deal counts have dropped to an all-time low since 2012. In other words, a small percentage of deals are driving much of the growth in the sector.

The driver behind this trend? Unicorns. These venture-backed companies valued at $1 billion or more, alone raised a record-setting $19.2 billion in capital last year. Although the group received a dramatically outsized portion of VC dollars, they made up less than 1% of deal volume. That tells you all that you need to know about the state of VC In 2017.

The record-breaking year brought forth massive fund sizes (which are only getting bigger) and gave rise to numerous mega-deals. However, this is a somewhat troubling trend as investment firms are sitting on unprecedented levels of dry powder, participating in larger deals, and helping create a sluggish exit market.

CRYPTO REGRETS: Remember when JPMorgan’s chief Jamie Dimon lit the Internet on fire back in September after his comments on Bitcoin suggested the cryptocurrency is “a fraud” and that he would fire any employee trading Bitcoin for being “stupid”?

Well, four months later, Dimon is singing a different tune. In an interview with Fox, Dimon said he regrets calling Bitcoin “a fraud” but he’s still “not interested that much in the subject at all.” He re-iterated his view, however that blockchain “is real”.

Unlike Dimon, I think Bitcoin and other cryptocurrencies have the potential to fundamentally reshape global finance. And unfortunately, many will undoubtedly get burned along the way as a result of entrepreneurs/investors who abuse the lack of regulations around ICOs. As Peter Smith, the CEO of Blockchain, said at Fortune’s Brainstorm Tech conference in July, “We’re cautious about it in the short term. But you have to temper that with the idea that every new technology is going to be like that in the beginning.”


THE LATEST FROM FORTUNE...

• Why autonomous cars are so challenging, according to Nvidia’s CEO (by Andrew Nusca)

• Who’s leading the race in self-driving cars? (by Kirsten Korosec)

• Privacy app telegram plans mass crypto sale (by Jeff John Roberts)

• 5 New Year’s resolutions from highly successful people (by Anne VanderMay)

…AND ELSEWHERE

Fund managers say bitcoin ETF proposals withdrawn due to SEC concern. Tech backlash grows as investors press Apple to act on children’s use. Didi Chuxing declares war on China’s bike-sharing startups. Mike Novogratz wants to build the Goldman of crypto.


VENTURE DEALS

Smava, a Germany-based startup that has built a marketplace for people to search for and take out loans, raised $65 million in funding. Investors include Vitruvian. Read more.

REX Real Estate Exchange, a Woodland Hills, Calif.-based real estate agency, raised $15 million in Series B funding. Investors include Scott McNealy, Dick Schulze, Gordon Segal, Amit Singhal, and Jack Greenberg.

Wonderschool, a San Francisco-based network of early childhood programs, raised $2.1 million in funding. Investors include Omidyar Network, Be Curious Partners, Rethink Education, Edelweiss Partners and Learn Capital.

Amiko Digital Health Limited, a London-based developer of advanced medication sensor technologies and AI-powered digital health tools, raised funding of an undisclosed amount. Sanner Ventures and Breed Reply led the round.


HEALTH AND LIFE SCIENCES DEALS

Intuity Medical Inc, a Sunnyvale, Calif.-based developer of technologies for diabetes management, raised $70 million in funding. Investors include Accuitive Medical Ventures, Investor Growth Capital, KCK Group, Luther King Capital Management, PTV Healthcare Capital, U.S. Venture Partners, Versant Ventures and Hercules Capital.

Leading Pharma LLC, a Fairfield, N.J.-based maker of generic drugs, raised $40 million in funding. Signet Healthcare Partners led the round, and was joined by investors including Crestline Investors and Cane Investment Partners.

Neural Analytics, a Los Angeles-based medical device company focused on measuring, diagnosing and tracking brain health, raised $15 million in Series B funding. Alpha Edison led the round.

Juvenescence, a developer of therapies for ageing and age-related diseases, raised $12.3 million in seed funding round. Investors include Foresite Capital and Apeiron Investment Group.

Vitruvias Therapeutics Inc, an Auburn, Ala.-based maker of generic drugs, raised $11.5 million in funding. JW Asset Management LLC and Perceptive Advisors led the round.

Inocucor Corp, a Canada-based developer of biological inputs for produce and row crops, has raised an additional $9.5 million for its Series B funding. Pontifax AgTech led the round, and was joined by investors including Cycle Capital Management, Desjardins Innovatech and Cairn Investments.

Storm Therapeutics, a U.K.-based developer of  small molecule drugs that target RNA-modifying enzymes, raised 4 million pounds ($5.4 million) in funding. The investor was Taiho Ventures LLC.


PRIVATE EQUITY DEALS

Dessert Holdings, a holding company formed by Gryphon Investors, acquired Atlanta Cheesecake Company, a Kennesaw, Ga.-based manufacturer of high-end frozen cheesecakes. Financial terms weren’t disclosed.

Incline Equity Partners acquired P.T. International Corp, a Charlotte, N.C.-based supplier of mechanical power transmission products and replacement components. The seller was Tonka Bay Equity Partners. Financial terms weren’t disclosed.

GAL Manufacturing, a portfolio company of Golden Gate Capital, acquired Courion, a  St. Louis, Missouri-based provider of door systems for freight elevators. Financial terms weren’t disclosed.

Family RV Group, a portfolio company of Kidd & Company, acquired Dunlap RV Centers, an RV dealership with locations in Kentucky, Tennessee and Georgia. Financial terms weren’t disclosed.

LoyaltyExpress, a portfolio company of New Capital Partners, acquired Lending Manager, a Newark, Delaware-based software company offering point-of-sale solutions for lenders and loan officer websites. Financial terms weren’t disclosed.

Centre Lane Partners acquired Infobase, a cloud-based subscription provider of digital educational content solutions. Financial terms weren’t disclosed.

Hg made an investment of an undisclosed amount in MeinAuto.de, a Germany-based B2C online platform for new car purchasers. Financial terms weren’t disclosed.

Mercer Advisors Inc., a Genstar Capital-backed company, acquired two registered investment advisors – Murray & Co., an Austin, Texas-based privately owned and independent RIA, and Pinnacle Investment Management Inc., a Hartford, Conn.-based investment management and financial planning firm. Financial terms weren’t disclosed.


OTHER DEALS

FAW Car Co Ltd will take a 10% stake in Mobike’s new car-sharing unit Mobike Chuxing Technology Co, according to Reuters. Mobike Chuxing was set up in December with registered capital of 20 million yuan ($3 million). Read more.


IPOs

Bioceres, a Rosario, Argentina GMO firm, filed to raise up to $100 million in an initial public offering. Jefferies, Piper Jaffray and Banco Santander are joint bookrunners in the deal. It plans to list on the NYSE as “BIOX.”

Nine Energy Services, a Houston-based onshore oil and gas firm, said it plans to raise $150.5 million in an IPO of 7 million shares, priced between $20 to $23 a piece. L.E. Simmons (55.7% pre-offering) backs the company. J.P. Morgan, Goldman Sachs, and Wells Fargo are underwriters in the deal.

Evolus, an Irvine, Calif.-based maker of a Botox rival, filed for a $75 million IPO. Alphaeon Corporation (100% pre-offering) backs the firm. Cantor and Mizuho are underwriting the deal. The company plans to list on the Nasdaq as “EOLS.”


EXITS

Monomoy Capital Partners sold Katun Corp, a Minneapolis-based provider of OEM-compatible imaging supplies, toner, photo receptors and parts for copiers, printers, and other equipment for the imaging industry. The buyer is General Plastic Industrial Ltd. Financial terms weren’t disclosed.

The Carlyle Group and Level Equity agreed to acquire Net Health, a Pittsburgh, Penn.-based provider of cloud-based clinical documentation, practice management, and billing solutions for specialized outpatient healthcare providers. The seller was Spectrum Equity. Financial terms weren’t disclosed.

Riverstone Holdings LLC and Goldman Sachs Group‘s merchant banking division agreed to acquire Lucid Energy Group II LLC from Lucid Energy Group for about $1.6 billion in cash.

Ardian sold RGI, a Milan-based provider of software products and technology services to the insurance industry, to Corsair Capital. Financial terms weren’t disclosed.

Incline Equity Partners acquired P.T. International Corp, a Charlotte, N.C.-based supplier of mechanical power transmission products and replacement components. The seller was Tonka Bay Equity Partners. Financial terms weren’t disclosed.

Oak Hill Capital Partners acquired Safe Fleet, a Belton, Mo.-based provider of safety and productivity solutions for fleet vehicles, from The Sterling Group. Financial terms weren’t disclosed.


FIRMS + FUNDS

Morgan Stanley Alternative Investment Partners Private Markets raised $425 million for its debut private equity co-investment fund.

Transom Capital Group, a Los Angeles-based private equity firm, raised $300 million for its third fund, Transom Capital Fund III LP.

Baidu (Nasdaq:BIDU) and Asia Mobility Industries will form a $200 million Singapore-based mobility venture fund, called “Apollo Southeast Asia,” according to TechCrunch. Read more.

MediaMath has formed MathCapital, a venture capital fund to back early-stage ventures in advertising, marketing and media.


PEOPLE

EQT Partners promoted Fabian Gröne, Bert Janssens, Kasper Knokgaard, Ulrich Köllensperger, Johannes Reichel, Niklas Ringby, and Jan Vesely to partner.

Harvest Partners named Steven Duke, Sean Murphy, Stephen Carlson, Paige Daly, Uzair Dossani, Nick Romano, Marc Unger, and Campbell MacColl partners.

David Mellstrom joined TVC Capital as an associate. Previously, he was at GCA Savvian.

SV Health Investors promoted Michael Balmuth to managing partner and Houman Ashrafian to partner.

GMB Mezzanine Capital promoted Judd Stevens to principal.


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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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