SCOOTING INTO SAN FRANCISCO
The crowded scooter market is starting to consolidate.
Bird agreed to acquire smaller electric scooter rival Scoot, a San Francisco-based company that operates a fleet of mopeds and scooters. Financial terms weren't disclosed, but the WSJ reports that Bird paid approximately $25 million in a cash and stock deal. That’s ... not exactly great news given that Scoot was last valued at $70 million in 2017. It had raised $47 million in venture funding from investors including Maveron and Elemental Excelerator.
So why Scoot? The second I saw the news, I thought “Duh, it’s about San Francisco.” Remember last year when San Francisco chose much-smaller players Skip and Scoot as its scooter launch partners, effectively shunning Bird and Lime? Yeah, Bird probably didn’t like that.
It looks like this acquisition gives Bird an opportunity to relaunch its service in San Francisco. The Information reports that San Francisco officials gave a green light to the deal, allowing Scoot to keep its permit as a wholly owned subsidiary of Bird.
My colleague Danielle Abril reports:
The acquisition, announced Wednesday, is an example of what many market watchers have been saying about the scooter industry: The long list of rivals will consolidate and that a few major players left standing will prevail. The survivors will be the ones that can find a way to turn a profit, experts say, reversing the huge losses that they’ve racked up since bursting onto the scene a couple of years ago.
Expect more acquisitions — especially of small players that have snagged permits to operate in key markets.
THE NEXT WAVE OF SOCIAL MEDIA: The group video chat app Houseparty has been acquired by Epic Games, the company that created popular game Fortnite. Financial terms weren't disclosed. Houseparty had raised approximately $70.2 million in venture funding from investors including Sequoia, Greylock, Arena Ventures, Aleph, and Soma Capital.
This seems like an unusual deal, but it makes more sense once you understand the reasons behind it. Houseparty CEO Sima Sistani tweeted that she kept hearing that people were using Houseparty to talk to their real-life friends while gaming together “and one game came up over and over again: Fortnite.”
Although Fortnite has an in-game voice chat function, many players choose to use independent group chat programs to communicate with other gamers. In other words, Houseparty allows players to talk regardless of whether they're gaming, unlike in-game voice chats. Sistani added: “If that last decade of social media was about sharing, the next decade will be about participating.”
One important thing to note is that Houseparty’s user base is largely made up of teens. Epic Games told Fortune it made the acquisition partly because of Houseparty’s focus on user privacy. Because so many Fortnite players are children, Epic must be careful about how it collects data and uses it.
CYBERSECURITY IS ON 🔥: The cybersecurity space is having a moment. Yesterday, we reported that private equity giant KKR is leading an additional $300 million in funding for cybersecurity firm KnowBe4, in a deal that values the startup at $1 billion.
And I'd be remiss not to mention that cloud-based cybersecurity company CrowdStrike made its public debut to a pop of nearly 80%, opening at $63.50 before retreating to close at $58 Wednesday.
The sector is about to heat up even more in 2019 — global spending on technology to protect sensitive data and information is expected to reach an unprecedented $124 billion this year.
ADDING TO THE BOARD: Quibi, the short-form media startup founded by Jeffrey Katzenberg and Meg Whitman, that we wrote about two days ago has selected several executives for its board of directors. They include Mellody Hobson, president of Ariel Investments and former chairwoman of DreamWorks Animation; Roger Lynch, CEO of Condé Nast and former CEO of Pandora; Ann Daly, co-founder at WndrCo Holdings and former president of DreamWorks; and others. Read more here.
PS: I’ll be at Fortune’s inaugural Brainstorm Finance conference next week in Montauk. If you’ll be there, let me know & we can meet in person.
VENTURE DEALS
• Symphony, a secure collaboration platform, raised $165 million in Series E funding. Investors include Goldman Sachs, Standard Chartered and MUFG Innovation Partners.
• SignalFx, a San Mateo, Calif.-based cloud application monitoring company, raised $75 million in Series E funding. Tiger Global Management led the round.
• SpotOn Transact, a San Francisco-based payments and software company, raised $40 million in funding. Franklin Templeton led the round, and was joined by investors including Dragoneer Investment Group.
• CRITICALSTART, a Plano, Texas-based provider of managed detection and response services, raised $40 million in funding from Sagemount.
• Zava, a U.K.-based online medical service provider, raised $32 million in Series A funding. HPE Growth led the round.
• Simulmedia, a New York-based media marketing firm, raised $29 million in Series E funding, according to a blog post on its site. Union Square Ventures led the round.
• Lifen, a France-based company that aims to facilitate communication between health professionals, is raising a $22.7 million (€20 million) in funding. Partech will lead the round, and will be joined by investors including Idinvest Partners and Majycc eSanté Invest.
• Helium, a San Francisco-based peer-to-peer wireless network, raised $15 million in Series C funding. Union Square Ventures and Multicoin Capital led the round.
• Traction Guest, a Canada-based cloud-based solutions for enterprise visitor management, raised $13 million in Series A funding. Bessemer Venture Partners led the round, and was joined by investors including Salesforce Ventures.
• Bux, an Amsterdam-based trading app, raised $12.5 million in funding. Velocity Capital and Holtzbrinck Ventures led the round.
• Orca Security, an Israel-based developer and operator of a cloud native security platform, raised $6.5 million in seed funding. YL Ventures led the round.
• CybeReady, a Tel Aviv-based cybersecurity training platform for enterprises, raised $5 million in funding. Baseline Ventures led the round.
• Funderbeam, an Estonia-based funding and trading platform, raised $4.5 million in Series A funding. Accelerated Digital Ventures led the round.
• Riverlane, a quantum computing software developer, raised £3.25 million ($4.1 million) in seed funding. Investors include Cambridge Innovation Capital, Amadeus Capital Partners, and Cambridge Enterprise.
HEALTH AND LIFE SCIENCES DEALS
• Purigen Biosystems Inc, a Pleasanton, Calif.-based provider of next-generation technologies for extracting, enriching, and quantifying nucleic acids from biological samples, raised $26.4 million in Series B funding. Agilent Technologies led the round, and was joined by investors including Cota Capital, 5AM Ventures and Roche Venture Fund.
PRIVATE EQUITY DEALS
• CutisPharma Inc, a portfolio company of NovaQuest Capital Management, acquired Silvergate Pharmaceuticals Inc, a developer of pediatric medications. Financial terms weren't disclosed. NovaQuest will own a majority of the combined company, called Azurity Pharmaceuticals.
• Xpressdocs Partners, which is backed by Falcata Capital, acquired Amazingmail, a Phoenix, Ariz.-based provider of direct mail solutions. Financial terms weren't disclosed.
IPOs
• ESR Cayman, a real estate developer backed by Warburg Pincus, has shelved its Hong Kong IPO that would have raised up to $1.24 million. Read more.
• Chewy, a Dania Beach, Fla.-based pet product ecommerce firm, now plans to raise $832 million in an IPO of 41.6 million shares (87% insider) priced between $19 to $21. The firm posted $3.5 billion in sales for the year ending January 2019 as well as loss of $267 million. PetSmart backs the firm. Allen & Company, J.P. Morgan, and Morgan Stanley are underwriters. It plans to list as “CHWY.” Read more.
• Fiverr International, a Tel Aviv-based online marketplace for freelancers,raised $111 million in an IPO of 5.3 million shares priced above range at $21. It posted $75.5 million in sales in 2018 and loss of $19.3 million. Bessemer, Accel, and Square Peg back the firm. J.P. Morgan, Citi, BofA Merrill Lynch, and UBS are underwriters. It plans to list on the NYSE as “FVRR.”
SHARE TODAY'S TERM SHEET
View this email in your browser.
Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.
