2019 CRYSTAL BALL
Good morning, Term Sheet readers.
HOUSEKEEPING: Term Sheet will take a break for the holidays, but I’ll be back in your inboxes on Monday, Jan. 7. Feel free to stay in touch on Twitter or find me here every Sunday. Wishing you a wonderful holiday season, and a Happy New Year. See you in 2019!
Before we get to your 2019 business predictions, I wanted to share with you some news from Fortune. Chatchaval Jiaravanon, the executive chairman of Thailand’s biggest conglomerate Charoen Pokphand Group, is officially the new owner of Fortune after buying it for $150 million. The deal closes today.
Jiaravanon says he intends to increase investment in Fortune’s “digital capabilities, geographic expansion, and editorial talent as part of a strategy to become the premium business content provider worldwide.”
I’ve been with Fortune for more than four years, and I’ve never been more optimistic about the future of the company. I’ll continue to be in your inboxes every day, and my colleagues and I will uphold our commitment to journalistic excellence, editorial independence, and most importantly, our commitment to you.
In the last year and a half, this Term Sheet community has become a huge & important part of my life, so I will continue to keep you updated along the way.
Fortune president and CEO Alan Murray wrote today: “We’ll be looking to all of you to give us guidance and feedback; to criticize us when we go astray; and maybe even to give us a pat on the back when we get it right. If we do our job well, we will be at your side as you create the future.”
Cheers to the future. 🎉
THE 2019 CRYSTAL BALL: Thank you to everyone who responded to the question: “What’s your top business-related prediction for 2019?” Below is an excerpt of your predictions, but I encourage you to check out the full list here.
Here are the highlights:
RECESSION: Term Sheet readers predict an economic downturn in 2019.
“Huge stock market crash, particularly in the U.S. and U.K., will lead to falling house prices and a long recession.” — Gareth Stephens
“The relative youth of the tech sector has been an essential part of its decades-long dominance. But in 2019, it is possible that many burgeoning entrepreneurs, investors, and employees in the tech sector will see for the first time what life is like through a recession. While the fundamental drivers of technology will continue to strongly impact innovation across most sectors, an economic downturn will show us which companies, young or not-so-young, are truly able to withstand the slings and arrows of real-world economic cycles.” — Yann Ranchere, partner at Anthemis
“In 2019, there’s a high probability we’re going to hit a recession and if we do, everyone is going to pull back on spending all at the same time leaving small businesses in a lurch. For small business owners, now is the time to reduce expenses, not the time to expand. As interest rates rise, a recession could arrive fast and it could be quite painful for those small businesses that aren’t prepared.” — Ian Crosby, CEO & founder of Bench
“Economists and analysts agree that a recession and market correction could happen within the next 12 to 18 months. Since a downturn will likely cascade to many compensation-related issues—such as benchmarking, dilution, goal setting, and disclosure, more companies will devise a ‘CEO Pay playbook’ to handle these facets in a potential downturn.” – Robin Ferracone, founder and CEO of Farient Advisors
“U.S. – China trade war escalates, China’s debt bubble bursts, markets crash to 1929 level and great depression starts off, leading to nationalist riots worldwide in a social media fueled dimension … or party goes on for a year and people talk about the incredible end of Snapchat instead. — Tim Bartel
CRYPTO: Readers are betting on the growth of blockchain technology.
“I expect one or more major breakthroughs in blockchain network and infrastructure in 2019. Lack of performance, security and privacy have stunted the adoption of public blockchain technologies at scale.” — Scott Beechuk, partner at Norwest Venture Partners
“As Bitcoin and Ethereum continue their downward slide, a new protocol will emerge that solves current scalability problems and reignites global interest in blockchain.” — Aaron Jacobson, partner at NEA
“Activist investing in crypto. Along the lines of what Vista did with smaller SaaS companies.” — Michael Nov
“Massive hassles for many US-based crypto projects in trying to distribute tokens legally and in maneuvering around the regulators as the rules of the road become more clear.” — David Pakman, partner at Venrock
“Facebook announces launch of its own blockchain & accompanying development platform for dApps” — Nikao
“Compliance headaches for banks leads the way for blockchain technology.” — Navin
STARTUPS: Readers predict more money to chase even fewer deals in 2019.
“It’s easier than ever to raise a pre-seed or seed round, but Series A/B investors are setting the bar higher than ever and looking for very strong traction before making an investment. On the flipside, once they see it, they are prepared to write larger checks than before.” — Matt Hartman, partner at betaworks Ventures
“I think that the piles of VC and PE money will chase even fewer deals than they have been in 17’ 18’.” — Elias
“We see a lot more down rounds for unicorns (and soon to be former unicorns!)” — Angela Graves Winegar
“A record number of new U.S.-based unicorns in 2019 will be based in the Pacific Northwest, and more than half will be based outside of the SF Bay Area.” — Karan Mehandru, general partner at Trinity Ventures
“On the private investment side, we have begun to see valuations begin to moderate, although they are still at relatively high levels on an historic basis. That said, the quality of the companies we are seeing in the late-stage private market is very impressive and, in fact, the best ever. Particularly, we are seeing a large number of companies with very rapid (40-100% annual) rapid growth at scale (greater than $50MM in revenue).” — Sandy Miller, general partner at IVP
“The big will get bigger. The great will get bought by them. And trillion-dollar market caps will become more than a temporary phenomenon.” — Ben Narasin, venture partner at NEA
• Woowa Brothers Corp, a South Korea-based operator of a food delivery app, raised $320 million in funding. Investors include Hillhouse Capital, Sequoia Capital and GIC. The deal values the company at about $2.6 billion, according to Reuters. Read more.
• Crew, a chat app for companies that employ shift workers, raised $35 million in Series C funding. Investors include DAG Ventures, Tenaya Capital, Greylock Partners, Sequoia Capital, Harrison Metal Capitaland Aspect Ventures.
• Price f(x), a developer of a cloud pricing software, raised €25 million ($28.5 million) in Series B funding. Digital+ Partners and Bain & Company co-led the round, and were joined by investors including Credo Ventures and Talis Capital.
• FloWater, a Burlingame, Calif.-based maker of water refill stations, raised $15 million in Series B funding from Bluewater.
• Albert, a Los Angeles-based developer of a financial tool, raised $15 million in funding. Portag3 Ventures led the round, and was joined by investors including QED and American Express Ventures.
• DrChrono Inc, a Sunnyvale, Calif.-based electronic health record platform for physicians and patients, raised $10 million in funding. Investors include SQN Venture Partners.
• Pip’s Island, a New York-based immersive theatrical adventure for kids, raised $10 million in Series A funding. The investors were not named.
• PopDog, a Los Angeles-based developer of tools for esports, raised $9 million in Series A funding. Makers Fund led the round, and was joined by investors including Korea Investment Partners.
• Halo Labs, a Philadelphia-based developer of tools for biologics researchers, raised $5.6 million in Series B funding. Research Corporation Technologies led the round.
• Changing Health, a U.K.-based provider of digital behaviour change programs, raised 3 million pounds ($3.8 million) in funding. Shift Invest led the round.
• Simplifya, a Denver, Colo.-based developer of regulatory compliance software for the cannabis industry, raised $3 million in Series C funding. Merida Capital Partners led the round.
HEALTH AND LIFE SCIENCES DEALS
• Kypha, a St. Louis, Mo.-based medical diagnostics company, raised $4 million in Series A funding. Arsenal Capital Management led the round.
PRIVATE EQUITY DEALS
• Trive Capital made an investment in Florida Spine and Joint Institute, a Boca Raton, Fla.-based provider of full spectrum spinal and extremity care services. Financial terms weren’t disclosed.
• Palladium Equity Partners LLC made an investment in Quirch Foods, a Miami-based distributor and exporter of protein and Hispanic food products. Financial terms weren’t disclosed.
• Stone-Goff Partners made an investment in Danforth Advisors LLC, a Somerville, Mass.-based provider of outsourced finance, accounting, and strategic services to life science and healthcare companies. Financial terms weren’t disclosed.
• Warren Equity Partners acquired StormTrap, a Romeoville, Ill.-based provider of stormwater management solutions to the municipal, commercial, industrial, and residential markets. Financial terms weren’t disclosed.
• Ikon Science, which is backed by Great Hill Partners, acquired Perigon Solutions, a U.K.a and Houston-based wellbore data management and visualization solutions. Financial terms weren’t disclosed.
• EPTAM, a portfolio company of New Heritage Capital, acquired Relius Medical, a Colorado Springs, Colo.-based provider of complex metals machining solutions for the medical device market. Financial terms weren’t disclosed.
• Jiayin Group, a Shanghai-based online lending marketplace, filed to raise $57.5 million in an IPO. The firm posted revenue of $327.7 million and income of $78.5 million in 2017. Roth Capital and Shenwan Hongyuan Securities are underwriters. It plans to list on the Nasdaq as “JFIN.” Read more.
• Rheos Capital Works, a Japanese asset management firm, shelved its 17.7 billion yen ($158.96 million) IPO, Reuters reports. The firm planned to list on a junior board of the Tokyo Stock Exchange. Read more.
• IBEX Holdings, a Hamilton, Bermuda-based customer service company, withdrew its $60 million IPO of 4 million shares priced between $14 to $16 apiece. Previously, the firm postponed the listing in March. In the year ending June 2017, the firm posted revenue of $334 million and loss of $9 million. TRG Pakistan Limited backs the firm. Baird, Piper Jaffray, William Blair and SunTrust Robinson Humphrey were underwriters in the deal. The firm planned to list on the Nasdaq as “IBEX.” Read more.
• Northill Capital agreed to acquire a majority stake in Strategic Investment Group, an Arlington, Va.-based provider of outsourced CIO solutions, from FFL Partners. Financial terms weren’t disclosed.
• Permira agreed to acquire a majority stake in Cielo, a Brookfield, Wisc.-based recruitment process outsourcing partner, from Accel-KKR. Financial terms weren’t disclosed.
• Zynga agreed to acquire Small Giant Games, the startup behind mobile game Empires & Puzzles, in a deal expected to total $700 million. Small Giant Games had raised approximately $50 million in venture funding from investors including EQT Ventures, Creandum, Spintop Ventures, and PROfounders Capital.
• BVI agreed to acquire PhysIOL, a Belgium-based medical device company, from TA Associates. Financial terms weren’t disclosed.
• Greif Inc agreed to buy Caraustar Industries Inc, an Austell, Ga.-based maker of recycled materials and paper products, from H.I.G. Capital in a deal valued at $1.8 billion.
• Dassault Systèmes agreed to acquire IQMS, a developer of enterprise resource planning software, for $425 million in an all-cash transaction. The sellers were TCV and Banneker Partners.
• TowerBrook Capital Partners L.P. acquired Orchid Underwriters Agency, a Vero Beach, Fla.-based specialty underwriter of catastrophe exposed property insurance, from Gryphon Investors. Financial terms weren’t disclosed.
FIRMS + FUNDS
• J.F. Lehman & Company promoted Glenn M. Shor to partner and David F. Thomas to principal.
• SV Health Investors promoted Houman Ashrafian to managing partner and Greg Madden to partner.
• Newark Venture Partners promoted Joanne Lin to principal.
• Aurora Capital Partners promoted Randy Moser and Andrew Wilson from principal to partner.