THE SEC SPEAKS
Happy Friday, Term Sheet readers.
NOT A SECURITY: William Hinman, the SEC’s director of corporate finance, declared yesterday that Ethereum is not a security, but some initial coin offerings may be.
“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” Hinman said.
In other words, if there is a centralized third party, along with purchasers with an expectation of a return, then it is likely a security. But, he noted, there is the possibility that a digital asset is structured more like a consumer item than a security — especially if it is purchased for personal use and not intended as an investment. Read more at Fortune.
A TOKENIZED FUTURE: Michael Novogratz, founder and chief executive officer of Galaxy Digital Capital Management, has gone all in on crypto. On Wall Street, the ex-hedge fund manager made three fortunes and lost at least two. His latest bet is cryptocurrency. In 2013, Novogratz put $7 million of his own money in Bitcoin when it was selling at around $100 a coin. It now sells for more than 60 times that amount.
Novogratz just announced a $15 million investment in AlphaPoint, a New York-based financial technology company that helps institutions launch trading platforms and tokenize assets with blockchain technology. He said, “we are in the early stages of a fundamental transformation in financial markets due to the digitization of assets.” [Explainer on tokenized assets here.]
I went to the “Bloomberg Invest” conference last week where Novogratz spoke about about the impact of cryptocurrencies on institutional investment. He said:
“Right now, the coins are kind of going sideways. But underneath, the people moving into the industry, it’s a straight line up. Job applications — straight line up. Private investing — straight line up. Part of that is Sand Hill Road, the great venture community of America, really missed Chapter 1. Marc Andreessen and Fred Wilson didn’t, they were involved. But broadly speaking they didn’t participate. And every deal now is getting funded by venture capitalists. And maybe part of it is FOMO. They are all now investing in the space, so you have much more prices in the private rounds.”
Venture firms like Andreessen, Benchmark, Sequoia, and USV have been investing in the space for quite some time. This “us versus them” mentality between crypto investors and everyone else is fascinating to watch, especially as more and more traditional Wall Street investors rush into the space.
BRAINSTORM TECH: Fortune’s annual Brainstorm Tech conference in Aspen kicks off on July 16. We’ll have the top emerging entrepreneurs of the tech world, and the most important investors who finance them. Take a look at the agenda here, and let’s meet if you’re planning to attend.
THE LATEST FROM FORTUNE...
• Robert Downey Jr., Jay Z, Durant Back Life Insurance Startup
• Consumers Are Spending Like Crazy Again. Here’s Why (by Brittany Shoot)
• Fyre Festival Founder Charged With Selling Fake Tickets to Big Events While Out on Bail (by Sarah Gray)
• Whole Foods CEO Says He’s Not Afraid to ‘Speak Truth’ to Jeff Bezos (by Kevin Kelleher)
• Pipedrive, a New York-based startup sales management tool to help small sales teams manage sales processes, raised $50 million in Series C funding. Insight Venture Partners and Bessemer Venture Partners co-led the round, and were joined by investors including Rembrandt Venture Partners and Atomico.
• Kustomer, a CRM platform for customer experience, service, and support, raised $26 million in Series B funding. Redpoint Ventures led the round, and was joined by investors including Canaan Partners, Boldstart Ventures, Social Leverage, and Cisco Investments.
• Mindstrong Health, a Palo Alto, Calif.-based healthcare company focused on measuring brain health, raised $15 million in Series B funding. Investors include Bezos Expeditions, Decheng Capital, Optum Ventures, ARCH Venture Partners and Foresite Capital.
• Sphero, a Boulder, Colo.-based robotic ball maker, raised $12 million in funding. The investors were not named.
• Chowbotics, a Redwood City, Calif.-based provider of robots for the food service sector, raised $11 million in funding. Foundry Group and Techstars led the round.
• TenantBase, Inc., an Irvine, Calif.-based technology-enabled commercial real estate brokerage firm, raised $10.7 million in funding. Stonecutter TenantBase Investors LLC, an affiliate of Stonecutter Capital, led the round.
• FaceMetrics, a Poland-based smart parental control startup, raised $2 million in funding. The investors were VP Capital and Larnabel Ventures.
PRIVATE EQUITY DEALS
• GI Partners will acquire California Cryobank, a Los Angeles, Calif.-based donor sperm and egg bank, and Cord Blood Registry, a San Bruno, Calif.-based stem cell collection and storage company, and will combine the two businesses. Financial terms weren’t disclosed.
• Stone Canyon Industries LLC agreed to acquire Industrial Container Services, a Maitland, Fla.-based provider of container solutions, container services and container management systems. No financial terms were disclosed. ICS is currently owned by Centerbridge Partners LP.
• U.S. Xpress Enterprises, a Chattanooga, Tenn.-based trucking firm, said it plans to raised $289 million in an IPO of 18.1 million shares priced at $16, below its $18 to $20 range. The firm posted revenue of $1.6 billion in 2017. BofA Merrill Lynch, Morgan Stanley, J.P. Morgan, and Wells Fargo Securities are underwriters in the deal. The firm plans to list on the NYSE as “USX.” Terms have yet to be announced. Read more.
• Twelve Seas Investment Company, a London-based blank check company seeking a business in Eurasia, said it plans to raise $150 million in an offering of 15 million units priced at $10, above its previous $100 million planned raise. Dimitri Elkin of Twelve Seas Capital is CEO of the firm. EarlyBirdCapital is the underwriter. It plans to list on the Nasdaq as “TWLVU.” Read more.
• Puxin Limited, a Beijing-based Chinese education firm, raised $122 million in an offering of 7.2 million ADSs priced at $17, the low end of its $17 to $20 range. Citigroup, Deutsche Bank, Barclays, Haitong International, and CICC are underwriters in the deal. The firm plans to list on the NYSE as “NEW.” Read more.
• Neon Therapeutics, a Cambridge, Mass.-based immuno-oncology firm, said it plans to raise $100 million in an IPO of 6.3 million shares priced between $15 to $17. The firm has yet to post a revenue. Third Rock Venture (44.4% pre-offering), Access Industries Holdings (12.7%), and Fidelity (7.5%) back the firm. Morgan Stanley, BofA, and Mizuho Securities are underwriters in the deal. The firm plans to list on the Nasdaq as “NTGN.” Read more.
• Charah Solutions, a Louisville-based coal and nuclear power generation maintenance firm, raised $88 million in an IPO of 7.4 million shares priced at $12, below its $16 to $18 range. BCP and CEP Holdings back the firm. Morgan Stanley, BofA, and Stifel are Joint book-running managers. The firm plans to list on the NYSE as “CHRA.” Read more.
• Verrica Pharmaceuticals, a West Chester, Penn.-based clinical stage dermatology firm focused on molluscum contagiosum, raised $75 million in an IPO of 5 million shares, priced at $15, the midpoint of its $14 to $16 range. It has yet to post a revenue. PBM Capital(58.4% pre-offering), Perceptive Life Sciences (12.1%), and OrbiMed (6.4%) back the firm. BofA, Jefferies, and Cowen are underwriters in the deal. The firm plans to list on the Nasdaq as “VRCA.” Read more.
• Neuronetics, a Malvern, Penn.-based firm treating depression with magnets, plans to raise $75 million in an IPO of 5 million shares priced between $14 to $16. The firm posted revenue of $40.4 million in 2017. Investor Growth Capital (15.9% pre-offering), Onset Management (8.9%), InterWest Partners (9.2%), New Leaf Ventures (13.7%), and Polaris Venture Partners (7.3%) back the firm. Piper Jaffray and William Blair are underwriters in the deal. It plans to list on the Nasdaq as “STIM.” Read more.
• CVC Capital Partners agreed to sell its interest in the Delachaux Group, a France-based industrial and manufacturing company focused on rail infrastructure, to Caisse de dépôt et placement du Québec and the Delachaux family. Financial terms weren’t disclosed.
• Stone Canyon Industries LLC agreed to acquire Industrial Container Services, a Maitland, Fla.-based provider of container solutions. Financial terms weren’t disclosed. The sellers include Centerbridge Partners LP.
• Blackstone agreed to sell Intelenet, an India-based provider of customer experience management, to Teleperformance for a consideration of $1 billion.
• Winchester Interconnect Corporation, a portfolio company of Snow Phipps Group, acquired Shanghai Phoenix Communication and Technology, a China-based producer of cable assemblies. The seller was Phoenix Chicago. Financial terms weren’t disclosed.
FIRMS + FUNDS
• True Ventures, a Palo Alto, Calif.-based venture capital firm, is seeking to raise $325 million for its sixth fund.