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January 18, 2017
WITHER VR

The following is from the latest print edition of Fortune, where I write a regular column about technology and startups called "Boom With a View."

Virtual reality is greasy. That's all I could think as I wandered through the vast labyrinth of digital screens—the widest, flattest, clearest, shiniest, newest models in the world—at this year's CES in Las Vegas. At the sprawling technology trade show, I was eager to sample the latest in VR, a technology that's been hyped for a generation but remains a novelty to most people. Each headset I tested left me with a distinct urge to rub hand sanitizer all over my face.

 
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Still, the view from inside the virtual world is striking. In one demo I was transfixed by a trio of body-painted Cirque du Soleil contortionists five feet in front of me. I looked to my left and let out a tiny gasp as a tiger waltzed by. Later, I carefully traversed a (real) rope bridge over a (virtual) snowy overpass. I took in the Milky Way while reclining in a $7,000 full-body massage chair. (I endure these hardships for you, dear reader.) On the CES show floor, long lines formed around VR "experiences" that looked like carnival attractions: a virtual boat ride with nausea-inducing seats, a virtual plane ride with Top Gun-style twists and flips, a scream-inducing virtual spaceship ride.

I could tell which people were experiencing VR for the first time by their dazzled expression after they removed the goggles. But without the trade show's spinning chairs or relaxing massages, the novelty of virtual reality quickly wears off—especially when you notice the $800 price tag (excluding accessories). Cheaper headsets feel heavy after a few minutes. Some models are difficult to focus. All of them feel greasy. With the exception of elaborate gaming setups, you're unable to move around (you can't even see your hands), so the fun part—taking in the 360-degree views—requires awkwardly swiveling your head.

Worst of all, VR is isolating. Beyond the delight of watching someone else's first virtual reality experience (a moment Samsung promoted aggressively in a holiday ad campaign for its Gear VR headset), secondhand VR is no fun. The headset-headphones combination that virtual reality requires takes "phubbing"—­snubbing your real-world companions for the digital distractions of your phone—to a new level.

VR amounts to exhilaration followed by discomfort and apathy—an emotional journey that mirrors the technology's trajectory as a business. After years of barely containable buzz, Facebook's Oculus Rift fb and HTC's Vive htc became available last year, only to suffer from shipping delays and order cancellations. VR headsets and software missed sales predictions by 29% last year, bringing in just $2.7 billion, according to Digi-Capital, an M&A advisory firm. As a result, Digi-Capital slashed its sales projections for the market to $25 billion by 2021. It estimated that VR's more social cousin, augmented reality (e.g., Pokemon Go), would generate a whopping $83 billion by the same date.

The hype surrounding VR today reminds me of the early days of 3D printers: In the future, every home will have one! Except every home didn't need one, and they remain an expensive curiosity to most. Based on price and entertainment value, VR is in the same spot. Right now virtual reality is best experienced in a crowded, noisy convention center in Las Vegas—a place anyone would be eager to escape. Just bring your own Purell.

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Undercorn Watch: HPE has acquired Simplivity, a data center hardware startup that competes with Nutanix. As my colleague Barb Darrow notes, the company had raised $276 million in funding and claimed a $1 billion valuation. A few months ago, reports pinned a deal value at $3.9 billion. The deal announced last night is for much lower: $650 million in cash.

P.S. Other terms for unicorns that sell for less than their last private valuation, courtesy of the Twitter peanut gallery: A horse, a pony, a beast of burden, a Fauxnicorn, a uni-can't, a once-nicorn, for a data storage company, a "compression," and a unic-corn. Unicorpse is only for the dead ones.

IPO Watch: Much like the shadowy Unicode consortium controlling our emojis, there is a little-known third party group called the Options Clearing Corporation that regulates who has reserved which stock tickers (ahem, SNAP, UBER, ABNB). They're doled out on a first-come, first-serve basis, notes my colleague Jen Wieczner. So if you are dying to snap SNAP away from Snap, now is the time.

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THE LATEST FROM FORTUNE...

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 Zuckerberg testifies on Oculus Rift suit.

 Morgan Stanley's tech deals.

 Thousands of Verizon customers won't turn in their flammable phones.

 FTC accuses Qualcomm of antitrust violations.

 What Oracle's cozy Trump relationship could mean for rival Google.

Steve Cohen's worst year since the financial crisis.

Mary Jo White blasts Congress.

…AND ELSEWHERE

A rare corner of finance where women dominate. Lenovo thought it knew how to fix brands, then it bought Motorola. Catalog thinking in an online world. Robot nannies for chickens and the Fitbit for cowsHometown Tinder. A second Theranos lab failure.

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VENTURE DEALS

Practo, an Bengaluru, India-based platform that connects users with with doctors who can answer their healthcare questions, raised $55 million in Series D funding. Tencent Holdings led the round, and was joined by Ru-Net, RSI Fund, and Thrive Capital.

Collibra, a Brussels-based data management company, raised $50 million in Series C funding. ICONIQ Capital led the round, and was joined by Battery Ventures, Index Ventures, Dawn Capital, and Newion Investments.

InsideSales.com, a Provo, Utah-based AI-powered predictive sales acceleration platform, raised $50 million in funding. Polaris Partners led the round, and was joined by Microsoft (Nasdaq:MSFT), QuestMark Partners, the Irish Strategic Investment Fund,  Kleiner Perkins Caufield Byers, Hummer Winblad, U.S. Venture Partners, Epic Ventures, and Zetta Venture Partners.

Upside.com, a Washington, D.C.-based discount site for business travelers started by Priceline.com founder Jay Walker, raised $50 million in funding at a more than $200 million valuation, according to Bloomberg. Investors include Red Ventures and Leucadia National Corp. Read more.

Salsify, a Boston-based product content management platform for distributed commerce, raised $30 million in Series C funding. Underscore.VC led the round, and was joined by Venrock, Matrix Partners, and North Bridge.

ProtectWise, a Denver, Colo. enterprise security platform, raised $25 million in Series B funding from Arsenal Venture Partners, Top Tier Capital Partners, and Tola Capital.

Deputy, an Atlanta-based provider of cloud-based workforce management services, raised $25 million in Series A funding from OpenView.

Pipedrive, a New York City-based CRM platform, raised $17 million in Series B funding. Atomico led the round, and was joined by Bessemer Venture Partners, and Rembrandt Venture Partners.

Aviatrix Systems, a Santa Clara, Calif.-based developer of software that allows companies to build hybrid clouds, raised $15 million in Series B funding. CRV led the round, and was by Formation 8 and Ignition Partners.

SilverCloud Health, a Dublin-based provider of evidence-based online mental health and behavioral therapies, raised $8.1 million in Series A funding. B Capital Group led the round,  and was joined by ACT Venture Capital, Investec Ventures, and AIB Seed Capital Fund.

Rhythm Superfoods, an Austin, Texas-based kale and sweet potato chip producer, raised $6 million in Series D funding. 301 Inc., General Mills' (NYSE:GIS) venture capital arm, led the round, and was joined by CircleUp Growth Fund and Blueberry Ventures. Read more at Fortune.

TellusLabs, a Boston Earth monitoring and machine learning company,  raised $3.1 million in seed funding. IA Ventures led the round, and was joined by Hyperplane Venture Capital, Founder Collective, and Project 11 Ventures.

TeamDom, a Los Angeles branding and media advertising company, raised $1 million in funding. Danhua Capital led the round.

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PRIVATE EQUITY DEALS

Gen Cap America, Inc. acquired Gared Holdings, a Noblesville, Ind.-based designer and manufacturer of sporting goods equipment for athletes.

Bain Capital Private Equity acquired a majority stake in Daymon Worldwide, a Stamford, Conn.-based provider of branding, merchandising, and marketing services for retailers. Financial terms were not disclosed.

Alta Growth Capital invested in Maskota, a Mexico's largest pet store chain.

TRIGO Group, a France-based provider of quality management and inspection services for the automotive, railway, and aerospace industries backed by Adrian, acquired of Euro-Symbiose, a French specialist provider of quality training, audit and consulting services.

PrideSports, a Brentwood, Tenn.-based golf equipment manufacturer owned by Centre Partners, merged with MacNeill Engineering, a Marlborough, Mass.-based maker of athletic and industrial footwear components. Financial terms weren't disclosed.

 Bain Capital Private Equity agreed to acquire PSA Healthcare, an Atlanta-based pediatric home care services provider. The Boston-based private equity firm plans to combine PSA Healthcare with Epic Health Services,  the Dallas-based home care services provider  it acquired in December. Financial terms of the transactions were not disclosed. This item has been corrected to note the full name of the buyer. 

Parallel49 Equity purchased Kinetrex Energy, an Ind.-based supplier of liquefied natural gas, from Citizens Energy Group. Financial terms were not disclosed.

KPS Capital Partners' portfolio company Electrical Components International, Inc. agreed to acquire Fargo Assembly Company, a Fargo, N.D.-based manufacturer of electrical wiring assemblies.  Financial terms were not disclosed.

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OTHER DEALS

Toshiba (TSE:6502) is considering spinning off its semiconductor unit and selling around 20% of the business to Western Digital (Nasdaq:WDC) for about ¥200 billion to ¥300 billion ($1.77 billion to $2.66 billion), according to a report. Read more at Fortune.

Cable One Inc (NYSE:CABO) agreed to buy NewWave Communications, a Sikeston, Mo.-based broadband and cable company, for $735 million in cash, according to Reuters. Read more.

Eli Lilly and Co (NYSE:LLY) agreed to purchase CoLucid Pharmaceuticals Inc (Nasdaq:CLCD) for around $960 million,according to Reuters. At $46.5 per share, Lilly's offer represents a 33% premium to CoLucid's stock price close on Tuesday. Read more.

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IPOS

CEC Entertainment, the Irving, Texas-based parent company of pizza-and-arcade chain Chuck E. Cheese's, has begun prepping for an initial public offering that could value the company at more than $1 billion, according to a report by Reuters. CEC is owned by Apollo Global Management (NYSE:APO), which took the restaurant chain private in 2014. Read more at Fortune.

Claire's Inc, a Hoffman Estates, Ill.-based affordable jewelry and accessories retailer owned by Apollo Global Management (NYSE:APO), has withdrawn its plans for an initial public offering. The company filed to go public in May 2013. Read more.

Braeburn Pharmaceuticals, a Princeton, N.J.-based pharmaceutical company that offers an implantable device to treat opioid addiction, has set its IPO terms. It plans to offer 7.7 million shares priced between $18 to $21 per share. J.P. Morgan, and BofA Merrill Lynch are the lead underwriters on the offering.

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EXITS

Hewlett-Packard (NYSE:HPQ) agreed to acquire Simplivity, a Westborough, Mass.-based data center technology company, for $650 million in cash. Founded in 2009, Simplivity raised $276 million in equity funding. Backers include Kleiner Perkins Caufield & Byers, Accel Partners, Meritech, and Charles River Ventures. Read more at Fortune.

Microsoft (Nasdaq:MSFT) acquired Simplygon, a Swedish creator of 3D animation tools, for an undisclosed amount. Simplygon raised $1.49 million in equity funding from SEB Venture Capital. Read more at Fortune.

Synthesio, a Paris-based social intelligence platform, is acquiring Bunkr, an app designed to improve visual presentations that raised $1.4 million in equity funding, for an undisclosed amount. Bunkr's technology will be integrated into Synthesio's product, and its team will also join the company.

DataBank, a Dallas-based information management and security company owned by Digital Bridge, agreed to acquire C7 Data Centers, a Lindon, Utah-based data center service provider. C7 Data Centers raised $16.5 million in venture funding. Backers include BYU Cougar Capital and Canopy Ventures.

LFM Capital acquired EDSCO Fasteners, a Denton, Texas-based manufacturer of anchoring systems for large steel structures, from Validor Capital.

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FIRMS + FUNDS

New Enterprise Associates, Menlo Park, Calif.-based venture firm, is raising $3 billion for its latest fund, New Enterprise Associates 16, L.P., according to an SEC filing.

Kline Hill Partners, a Greenwich, Conn.-based private equity firm, raised $180 million for its first secondaries fund.

Rock Hill, a Houston-based private equity firm, raised $151 million for its third fund.

The Employees Retirement System of Hawaii has committed $35 million to a Hawaii Targeted Investment Program, a limited partnership managed by Stafford Capital Partners.

CEI Ventures, a Brunswick, Maine-based venture capital firm, raised around $10 million for its fund, Coastal Ventures IV.

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NEW JOBS

Arjun Arora has joined 500 Startups, a Mountain View, Calif. seed-stage investor, as a lead partner.

James Newell is joining Voyager Capital as a partner. Previously, Newell was a vice president at Institutional Venture Partners.

Eric Woersching has joined Initialized Capital as a general partner. In addition, Vincent Chu and Jen Wolf have joined the early-stage VC firm as operating partners.

Matt Gullen has joined Comvest Partners as a partner.

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