HOUSEKEEPING: I’ll be on vacation until April 20, so my wonderful colleague Lucinda Shen will be compiling the deals below. So if you have a deal for Term Sheet, please send it to her at firstname.lastname@example.org. Thank you in advance!
EXCLUSIVE: Ripple, the fintech startup known for the XRP coin, made a $25 million investment in the form of its own cryptocurrency into a dedicated sidecar vehicle alongside Blockchain Capital’s fourth venture fund.
Blockchain Capital, the oldest venture capital firm dedicated to blockchain technology, announced last month that it raised $150 million to invest in equity and cryptocurrency assets.
Now, Blockchain Capital says it accepted XRP, reportedly making it one of the first venture firms to accept capital calls in digital assets. The fundraise carved out the XRP funds into a separate special purpose vehicle called Blockchain Capital Parallel IV, which only accepts contributions in cryptocurrencies.
“We created the parallel fund to separate our other LPs from the risk of any change in valuation associated with accepting Ripple’s investment in XRP,” said a spokesperson for Blockchain Capital.
XRP, the third-largest cryptocurrency by market cap after Bitcoin and Ethereum, is the name for both a digital currency and an open payment network. Users are able to efficiently send money globally using the blockchain. Blockchain Capital is looking to deploy the XRP into companies focused on healthcare or identity management, which are industries that “could benefit from blockchain or distributed ledger technology.” Blockchain Capital is also an investor in Ripple, the company.
“Whether it’s using XRP, bitcoin, or just the underlying blockchain technology, our goal is to find the best projects and give them the resources to be successful companies that deliver value to customers for the long-term,” said Blockchain Capital managing partner Bart Stephens.
If you’re scratching your head as to why a company would choose to accept capital in the form of a cryptocurrency, let’s remember what happened with storage startup Omni.
In December, Omni raised $25 million in Series B funding, opting to accept the majority of the investment in XRP. On the same day that the startup announced the fundraise, XRP plunged 46% to near 90 cents, meaning that the principal investment amount no longer held the same value. At the time, Omni CEO Tom McLeod said he wasn’t worried about the short-term price volatility. Rather, he’s betting on the long-term benefits of “having a potentially appreciating value on the balance sheet.”
I followed up with him yesterday to see how he has navigated Ripple’s price fluctuations over the last few months, and he noted that he hedged against some of the volatility by converting a portion of the investment to USD.
“We fully expect to see (and have seen) a lot of movement – up and down – in the coming months,” McLeod told Term Sheet. He added that XRP is “a highly usable currency” and some of his company’s vendors and employees have requested payment in the form of XRP.
So to founders working on cryptocurrency-related projects, it makes sense. For the rest of the venture community, investors need to ask themselves questions like, “Will future fundings be a mix of traditional VC and digital currency,” and “What safeguards will need to exist to prevent overexposure to cryptocurrency price volatility?”
As for Ripple, keep an eye out for more deals like this one. Patrick Griffin, Ripple’s SVP of Strategic Growth said, “This is the first fund that we’ve contributed to, and it won’t be the last.”
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• Knotel, a New York-based workspace provider raised $70 million Series B funding. Newmark Knight Frank and The Sapir Organization led the round, and were joined by investors including The Wolfson Group, The Moinian Group, and Wainbridge Capital.
• TravelPerk, a Spain-based business travel booking and management platform for companies, raised $21 million (£15m) in Series B funding. Target Global and Felix Capital co-led the round, and were joined by investors including Spark Capital, Sunstone and Amplo.
• SAY, a New York-based technology platform for open communication between companies and their owners, raised $8 million seed funding. Point72 Ventures led the round, and was joined by investors including Quiet Capital, Struck Capital, and Core Innovation Capital.
• DemandJump, an Indianapolis, Ind.-based marketing customer acquisition platform, raised $6 million in Series A funding. Investors include Revolution’s Rise of the Rest Seed Fund, Flyover Capital, Cultivation Capital, 4G Ventures, Bob Davoli and Hyde Park Venture Partners.
• Spectral Edge, a Cambridge, U.K.-based mobile apps developer, raised $5.3 million in Series A funding. Investors include Parkwalk Advisors and IQ Capital.
• Crayon, a Boston, Mass.-based market intelligence platform company, raised $5 million in funding. Baseline Ventures led the round.
• Upper Hand, Inc., a developer of cloud-based sports management software and business services, raised $1.5 million in Series A funding. Park Ten Capital led the round.
PRIVATE EQUITY DEALS
• Altaris Capital Partners agreed to buy Analogic Corp, a Peabody, Mass.-based company that develops computed tomography, ultrasound, and digital mammography, for about $1.1 billion, according to Reuters. Read more.
• One Equity Partners acquired ePak Resources, a designer and manufacturer of precision-engineered packaging for semiconductor, integrated circuits, and electronic components. Financial terms weren’t disclosed.
• Palladium Equity Partners, LLC agreed to sell Jordan Health Services, a home care providers, to Kelso & Company and Blue Wolf Capital Partners. In conjunction with the transaction Jordan will be merged with Great Lakes Caring Home Health and Hospice and National Home Health Care. Financial terms weren’t disclosed.
• 6sense acquired ZenIQ, a Los Altos, Calif.-based account-centric sales and marketing orchestration platform. Financial terms weren’t disclosed. ZenIQ had raised approximately $4.6 million in venture funding from investors including Salesforce Ventures and Costanoa Ventures.
• First Reserve acquired CHA Consulting Inc, an Albany, N.Y.-based engineering firm, from Long Point Capital. Financial terms weren’t disclosed.