Term Sheet — Friday, October 3

The only thing larger than your buildings is your sense of self. And I totally get it. You have more than your fair share of great restaurants, your sports teams spend the most money and our national media is so NYC-localized that it pays more attention to Manhattan thunderstorms more it does to Midwestern tornadoes.

But when it comes to technology success, would you mind waiting a bit longer before adopting the mantle of “next Silicon Valley” or “Silicon Valley of the East?”

For years, I’ve been hearing from entrepreneurs, venture capitalists and journalists that New York has become America’s next great market for tech startups. But the reality is that the Big Apple has been more talk than show for quite some time now, with just a single venture-backed startup in the past five years that has been sold or gone public at a valuation in excess of $1 billion.

That particular unicorn would be Tumblr, which was acquired last year by Yahoo for $1.1 billion. Beyond that, bupkis.

To be sure, you have plenty of tech startups that have been valued at more than $1 billion by venture capitalists and growth equity investors. Examples include MongoDB and AppNexus, while smaller companies like Buzzfeed and OnDeck are nipping at their heels. 

But paper valuations are not etched in stone. Just ask Foursquare, Fab and Gilt Groupe. Or any of the Silicon Valley venture capitalists who bought “work condos” in New York, or the Boston venture capitalists who used to brag about how they considered the Acela first-class car to be their second home.

What matters in this conversation is real $1 billion exits, of which New York has more tunnels to New Jersey.

For context, Boston-based e-commerce company Wayfair went public yesterday at a $2.4 billion valuation and closed its first day of trading with a market cap in excess of $3 billion. And that city 200 miles to your north has had several more exits that best or rival Tumblr, including Starent Networks (bought by Cisco for $2.9 billion), Netezza (acquired by IBM for $1.7 billion) and Endeca Technologies (acquired by Oracle for $1.1 billion).

Then there is Newton, Mass.-based TripAdvisor, now a $12 billion company that was spun out of Seattle-based Expedia. I bring it up not so much because of its massive size, but rather because of the whole ‘Seattle-based’ thing. That city also houses many more realized unicorns than does New York. Companies like Tableau, Zillow and Zulily.

Or what about Austin, with both HomeAway and RetailMeNot?

In terms of big exits, New York is actually much closer to Chicago than anything else, except that even a weakened Groupon continues to be worth around four times what Yahoo paid for Tumblr. Or perhaps Atlanta, where AirWatch was acquired earlier this year by VMWare for more than $1.5 billion.

Now I know what you might be thinking: Why is this guy trying to make us feel so bad about ourselves? Is it because he’s from Boston and worried that his football team is insta-morphing into the Jets?

No, I hope that New York — and every other market — is able to build many large tech companies that provide jobs, improve the local economies and better all of our home and/or work lives. And I certainly recognize that New York has several companies that went public at relatively modest valuations before later growing into the 10-figure mark (e.g., Medidata and Shutterstock). 

But I also think it's import to report on the world as it is, rather than as how we might want it to be. At this moment, New York is not the next Silicon Valley. It’s not even the next Seattle.

Sincerely,

-Dan Primack (born in the Bronx)

THE BIG DEAL

• Silver Lake Partners has hired Goldman Sachs and Evercore Partners to find a buyer for IPC Systems Inc., a Jersey City, N.J.–based provider of communication systems for Wall Street trader, according to Reuters. Silver Lake bought IPC in 2006 for $800 million from GS Capital Partners, and could be seeking more than $1.4 billion. Read more.

VENTURE CAPITAL DEALS

• StoreDot, an Israeli developer of fast-charging smartphone battery technology, has raised $42 million in Series B funding. No investor information was disclosed. www.store-dot.com

• Appboy, a New York-based provider of marketing automation solutions for apps, has raised $15 million in Series B funding. InterWest Partners led the round, and was joined by return backers Icon Venture Partners, Blumberg Capital, T5 Capital and IDG Ventures. www.appboy.com

• Scribble Technologies Inc., a Toronto-based provider of content engagement software for brands and media, has raised C$12 million in Series C funding. The Waterloo Innovation Network Fund led the round, and was joined by return backers Georgian Partners, Export Development Canada, Summerhill Venture Partners and Rogers Venture Partners. www.scribblelive.com 

• Lever, a San Francisco-based hiring and talent management platform, has raised $10 million in Series A funding led by Matrix Partners. www.lever.co

• Navdy, a San Francisco-based maker of aftermarket “head-up” car consoles for smartphones and other devices, has raised $6.5 million in seed funding. Upfront Ventures led the round, and was joined by Ludlow Ventures, Lightbank, Promus Ventures, MESA+ I, Eniac Ventures and Wareness.io. www.navdy.com

• Stratos Inc., an Ann Arbor, Mich.-based developer of a Bluetooth-connected digital payment card, has raised $5.8 million in new VC funding. Backers include Toba Capital Partners, Western Technology Investment, Resonant Venture Partners and Hyde Park Venture Partners. www.stratoscard.com

• Building Robotics, an Oakland, Calif.-based provider of cloud-based software for “comfortable commercial buildings,” has raised $5.5 million in Series A funding from by Claremont Creek Ventures and The Westly Group. www.buildingrobotics.com

• Eve, an app for helping non-programmers develop software, has raised $2.3 million in seed funding led by Andreessen Horowitz. Read more. 

• MedAware, an Israel-based developer of big data analytics for the medical prescription market, has raised $1 million in Series A funding. OurCrowd led the round, and was joined by GE Ventures. www.medaware.com

PRIVATE EQUITY DEALS

• Advent International and TPG Capital each have submitted preliminary proposals to acquire Prezzo (LSE: PRZ), a UK-based restaurant operator with more than 225 locations. Prezzo has a current market cap of around £320 million, and is being advised by Altium Capital. www.prezzoplc.co.uk

• AxelaCare Health Solutions, a Lenexa, Kansas-based provider of specialty home infusion services, has acquired Advanced Care, a New York-based provider of at-home intravenous therapy. No financial terms were disclosed. AxelaCare is a portfolio company of Harvest Partners. www.axelacare.com

• DCI Design Communications LLC, a New York-based “tech concierge” for hotel brands and management companies, has secured an undisclosed amount of growth equity funding from Light Beam Capital. www.dci-design.com

• Guggenheim Partners is in advanced talks to acquire UK-based corporate lender Hayfin Capital Management from TowerBrook Capital Partners for around £600 million, according to eFinancial News. Read more. 

• Onex Partners has completed its previously-announced $1.33 billion acquisition of York Risk Services Group, a Parsippany, N.Y.-based insurance claims services company, from ABRY Partners. www.yorkrsg.com

• SB Capital Partners has acquired Aerations Only Inc., a San Diego-based lawn care company with more than 10,500 household clients. No financial terms were disclosed. http://www.sbcappartners.com

• Siris Capital has completed its previously-announced $250 million acquisition of the Junos Pulse product portfolio from Juniper Networks (NYSE: JNPR). www.juniper.net

• WadeCo Specialties Inc., a portfolio company of Hastings Equity Partners, has acquired Elite Treating Solutions Ltd., a Midland, Texas-based provider of production chemicals and services to exploration and production companies in the Permian Basin. No financial terms were disclosed. www.wadecospecialties.com

IPOs

• American Addiction Centers, a Brentwood, Tenn.-based provider of inpatient substance abuse treatment services, raised $75 million in its IPO. The company priced 5 million shares at $15 per share (above $12-$14 range), for an initial market cap of $314 million. It will trade on the NYSE under ticker symbol AAC, while William Blair and Raymond James servedgas lead underwriters. AAC reports $1.1 million in net income on $59.2 million in revenue for the first half of 2014. www.americanaddictioncenters.org

• Atento SA, a provider of CRM and business process outsourcing solutions in Latin America and Spain, raised $150 million in its IPO. The company priced 10 million shares at $15 per share, compared to earlier plans to offer 14.6 million shares at between $19 and $22 per share. It will trade on the NYSE, while Morgan Stanley, Credit Suisse and Itaú BBA served as lead underwriters. Attento reports a $4 million loss on $2.34 billion in revenue for 2013, and is owned by Bain Capital. Its initial market cap is around $1.09 billion. www.atento.com

• Calithera Biosciences, a South San Francisco-based developer of cancer therapeutics, raised $80 million in its IPO. The company priced 8 million shares at $10 per share, compared to earlier plans to offer 6 million shares at between $13 and $15 per share. It will trade on the Nasdaq under ticker symbol CALA, while Citigroup and Leerink Partners served as lead underwriters. Calithera has raised over $100 million in VC funding from Delphi Ventures (19.5% pre-IPO stake), Morgenthaler Ventures (18.3%), Advanced Technology Ventures (18.3%), Adage Capital Partners (18.1%), T. Rowe Price (7.2%), Wellington Management (6%) and Longwood Fund (5.8%). www.calithera.com

• Fairmount Santrol, a Chesterland, Ohio-based maker of sand-based proppant solutions, raised $400 million in its IPO. The company priced 25 million shares at $16 per share, compared to earlier plans to offer 41.5 million shares at between $21 and $24 per share. It will trade on the NYSE under ticker symbol FMSA, while Morgan Stanley was listed as left lead underwriter. Fairmont Santrol reports around $79 million in net income on $629 million in revenue for the first half of 2014, and is owned by American Securities. www.fairmountminerals.com

• S1 Biopharma, a New York-based developer of therapies for sexual dysfunction, has filed for a $40.25 million IPO. The pre-revenue company plans to trade on the Nasdaq under ticker symbol SXB, with MLV & Co. serving as lead underwriter. www.sibiopharma.com

• Vascular Biogenics Ltd., an Israel-based developer of drugs to treat cancer and immune-inflammatory diseases, raised $40 million in its IPO. The company priced 6.7 million shares at $6 per share (below $13-$15 range), for an initial market cap of approximately $119 million. It will trade on the Nasdaq under ticker symbol VBLX, with Deutsche Bank Securities and Wells Fargo serving as lead underwriters. Shareholders in the pre-revenue company include The Keffi Group (24% pre-IPO stake), Aurum Ventures (23.5%) and Pitango Ventures (11.7%). www.vblrx.com

EXITS

• American Capital has sold Avalon Laboratories, a Rancho Dominguez, Calif.–based maker of single-use catheters and specialty medical tubing products for cardiology and pulmonology applications, to Nordson Corp. (Nasdaq: NDSN) for $180 million. www.avalonlabs.com

• Anadolu Group has offered to acquire a 40.25% stake in listed Turkish supermarket chain Migros from BC Partners, which holds around an 80% position. The offer comes at a 36% premium to yesterday’s closing price for Migros, which had a market cap of around $1.49 billion. www.migroskurumsal.com

• NRG Energy (NYSE: NRG) has acquired Pure Energies Group Inc., a Toronto–based residential solar  energy company that utilizes web-based customer acquisition. No financial terms were disclosed. Pure Energies had raised VC funding from New Enterprise Associates, NGEN Partners and Western Technology Investment. www.pure-energies.com

OTHER DEALS

• Cohere Communications, a New York-based provider of telephony and cloud hosting services, has acquired Another9 Inc., a Tarrytown, N.Y.–based provider of cloud computing and data center services. No financial terms were disclosed. www.coherecomm.com

• Dow Chemical Co. (NYSE: DOW) announced that it plans to sell three businesses -- Angus Chemical Company, Sodium Borohydride and AgroFresh – in a divestiture process that is designed to raise between $4.5 billion and $6 billion. www.dow.com

• Legendary Entertainment, a Burbank, Calif.-based film production and financing company, has secured as $250 million investment from Japan’s SoftBank Corp. Existing Legendary investors include Accel Partners and IDG Capital Partners. www.legendary.com

Salix Pharmaceuticals Ltd. (Nasdaq: SLXP) and Switzerland-listed Cosmo Pharmaceuticals SpA said they have terminated their merger agreement, citing a “changed political environment” regarding tax inversions. Read more.

• Springleaf (NYSE: LEAF) has held talks about a buyout of Citigroup’s OneMain Financial lending business, according to the WSJ. Read more. 

FIRMS & FUNDS

• The Blackstone Group has closed its sixth private equity secondaries fund with $4.4 billion in capital commitments. www.blackstone.com

• Goldman Sachs is considering raising a new infrastructure fund, according to Reuters. Read more. 

• First Reserve has closed its thirteenth flagship fund with $3.4 billion in capital commitments, according to peHUB. The energy-focused private equity firm originally had targeted $6 billion, and had raised $9 billion for its twelfth fund in 2009. Read more. 

• Quantum Energy Partners is holding a $2.5 billion second close on its sixth energy-focused private equity fund, which is being marketed with a $3.25 billion hard cap, according to peHUB. Read more. 

MOVING IN, UP, ON & OUT

• Michael McNamara has joined Manulife Asset Management Private Markets as senior managing director and global head of real estate investments. He previously spent two years with Brookfield Office Properties as senior VP and head of acquisitions and dispositions. www.manulifeam.com

• David Melvin has stepped down as head of investor relations at TDR Capital, after helping the firm finish raising its €2.1 billion third European buyout fund earlier this year, according to Private Equity International. No word yet on his future plans. www.tdrcapital.com  

• Lucas Testa has joined turnaround firm Alix Partners as an Italy-based vice president. He previously spent three years as a consultant with Bain & Company. www.alixpartners.com

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