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Term Sheet — Monday, November 17

Random Ramblings

Back during the great Ebola Panic of October 2014, I read the following tweet from Silicon Valley academic Vivek Wadhwa: “Imagine if SV focused on detecting Ebola and developing cures for infectious diseases. Big data, Syn bio, sensors, …all can be combined.”

To which I immediately thought: Wait a minute. Didn’t venture capital firm Kleiner Perkins try to do this very same thing in 2006, when it raised $200 million for what it called the Pandemic and Bio Defense Fund? According to a press release, its goal was to “accelerate innovations for worldwide pandemic preparedness and global health over the next three years, with a focus on surveillance and detection, diagnostics, vaccines and drugs.”

The fund launched with the announcement of an investment in publicly-held BioCryst, which later had an emergency-use swine flu drug approved in 2009, and also has been working on an Ebola vaccine. It later would back such companies as flu-focused NovaVax, which also has an Ebola drug in the pipeline, and Trius Therapeutics, a developer of superbug antibiotics that was acquired for more than $700 million by Cubist Pharmaceuticals.

But that three-year investment period is long past, and Kleiner Perkins never raised a follow-on fund. So what happened? Is this stuff just too hard and/or unprofitable for Silicon Valley venture capitalists to pursue? Must they instead occupy themselves with the bits side of these problems, and leave the molecules to someone else?

To get some insights, I spoke with Beth Seidenberg, a healthcare-focused partner with Kleiner Perkins who helped to manage the Pandemic and Bio Defense fund. My takeaways from our interview can be found here.

Answer key (kind of): Back in August, I asked you to name the Bitcoin startup that was in talks to raise big new money from a corporate investor? One of your hints was that the overall round could be the largest-ever deal for a bitcoin startup.

The answer was Coinbase, but things might have changed a bit. Re/Code reported late Friday that the company was nearing a $60 million infusion at a $400 million valuation led by DFJ (likely via its Growth unit) and didn’t mention anything about a corporate. I’ll do some digging today to figure out if my initial info was off, or if the corporate investor backed out. For what it’s worth, $40 million would tie Coinbase with Xapo for the largest investment round for a Bitcoin-focused startup.

• Pinch-hitter: Mode Media (f.k.a. Glam Media) has quietly made a board switch, with Heidi Roizen replacing her DFJ colleague Tim Draper.

Too rich for their Botox: Actavis (NYSE: ACT) this morning announced an agreement to buy Botox maker Allergan Inc. (NYSE: AGN) for approximately $66 billion, or $219 in cash and stock. Valeant Pharmaceuticals and Bill Ackman haven’t officially bailed out of their hostile takeover attempt yet, but it seems to be coming. In a statement, Valeant CEO Michael Pearson said: “Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan.”

• Not holding my breath: James Stewart wrote in the NY Times yesterday that the incoming GOP Congress should change the tax treatment of carried interest, as a sort of proof that it can work on tax policy from a bipartisan perspective. A columnist can dream, I guess, but it’s worth pointing out that a Democrat-controlled Congress couldn’t get this done with a recently-elected President of the same party.

• Just asking: There was a lot of talk over the weekend about how Facebook is trying to get into the enterprise chat and collaboration game, by launching a new platform that could compete with everyone from LinkedIn to Jive to Google (Drive). But the real target would seem to be Slack, the fast-growing startup that just raised $120 million at a valuation north of $1 billion.

So here’s my question: When has an incumbent tech company successfully “killed” a popular startup by aping its primary product? This is different from generically asking when a popular startup has failed, and goes to the age-old venture capitalist question to entrepreneurs: Well, couldn’t Google/Facebook/Amazon build this?

One possible answer here could be Microsoft vs. Netscale, while another could be Amazon vs. Quidsi (a.k.a., although the former was fraught with regulatory questions and the latter seemed more an acquisition strategy than product innovation. Moreover, I don’t think Facebook has ever succeeded in such efforts, despite multiple attempts. Anyway, interested to know what I’m missing…


• Halliburton (NYSE: HAL) has agreed to acquire rival oilfield services provider Baker Hughes (NYSE: BHI), in a deal worth $34.6 billion in cash and stock. Read more.


• BeiGene Ltd., a Beijing-based developer of immune-oncology therapeutics, has raised $75 million in new VC funding. Backers include Hillhouse Capital, CTIC Capital Partners and an unidentified “blue chip U.S. public investment fund specializing in life sciences.”

• InsightSquared, a Cambridge, Mass.-based provider of cloud-based sales and marketing analytics, has raised $13.5 million in Series C funding. Two Sigma Ventures was joined by return backers Atlas Venture, DFJ and NextView Ventures. Read more.

• Glossier, a New York-based ecommerce company focused on curated beauty products, has raised $8.4 million in VC funding led by Thrive Capital. Read more.

• Marley Spoon, a Berlin-based curated recipe kit service, has raised €4 million in Series A funding from Global Founders Capital and Point9 Capital.

• Obillex, a UK-based provider of small business financing solutions, has raised £3 million in first-round funding. Dawn Capital led the round, and was joined by MMC Ventures. Read more.

• SysCloud, a Cranford, N.J.–based provider of data backup and security suite for Google Apps, has raised $2.5 million in Series A funding. Inventus Capital Partners led the round, and was joined by seed backer KAE Capital.

• Sliced Investing Inc., a San Francisco-based hedge fund investment platform, has raised $2 million in VC funding from Khosla Ventures, Data Collective and TriplePoint Capital, according to VentureWire.


• Bain Capital has agreed to invest several hundred million dollars to help form Virgin Cruises, a cruise ship business being launched by Richard Branson, according to Sky News. The entire startup cost would be around $785 million, including equity from Bain and other co-investors (including a Middle Eastern sovereign wealth fund), around $100 million from Virgin Group and debt. Read more.

• Bain Capital has dropped out of the process for buying the chemicals business of explosives maker Orica Ltd. (ASX: ORI), according to The Australian. That means that either The Blackstone Group will buy the unit for around A$1 billion, or it will be spun off into an independent entity. Read more.

• Baring Private Equity Asia has agreed to acquire Bushu Pharmaceuticals, a Japanese provider of clinical trial contract manufacturing services, from Tokio Marine Capital for approximately $668 million.

• H.I.G. Capital has agreed to acquire the distribution services unit of Pegasus Solutions Inc. for an undisclosed amount. The business provides information and data connectivity to nearly 100,000 hotels.

• Onex Partners and Partners Group are the two finalists to win the auction for Swiss packaging company SIG Combibloc Group AG, which is being sold by New Zealand’s Reynolds Group Holding for upwards of €3.9 billion, according to Bloomberg. BC Partners also has been reported to have submitted a second-round offer. Read more.

• The Riverside Company has acquired Fisher/Unitech, a Troy, Mich.-based reseller of 3D solid modeling design software, 3D printing hardware and related products. No financial terms were disclosed.

• Warburg Pincus is among those interested in bidding on a group of Chilean copper assets put up for sale by Anglo American (LSE: AAL), according to Reuters. The deal could be valued at upwards of $1 billion, with other likely bidders including Glencore (LSE: GLEN), X2, Lundin (TSX: LUN) and Nevsun Resources (TSX: NSU). Morgan Stanley and Goldman Sachs are managing the process. Read more.


• Histogenics Corp., a Waltham, Mass.-based regenerative medicine company focused on cartilage, has set its IPO terms to nearly 4.29 million shares being offered at between $13 and $15 per share. It would have an initial market cap of approximately $151 million, were it to price in the middle of its range. The pre-revenue company plans to trade on the Nasdaq under ticker symbol HSGX, with Cowen & Co. listed as left lead underwriter. Shareholders include Sofinnova Ventures (27% pre-IPO stake), Split Rock Partners (18%), Altima Partners (6.9%), Boston Millennia Partners (5.9%) and Intrexon Corp. (5.9%).

• Juno Therapeutics, a Seattle-based developer of immunotherapies for cancer, has filed for a $150 million IPO. The company plans to trade on the Nasdaq under ticker symbol JUNO, with Morgan Stanley, JP Morgan and Goldman Sachs serving as lead underwriters. The pre-revenue company has raised around $310 million over two rounds of VC funding, from firms like Crestline Management (34.75% pre-IPO stake, on behalf of the Alaska Permanent Fund), Arch Venture Partners (15.17%), Fidelity Investments, Bezos Expeditions and Venrock. Its strategic partners are The Fred Hutchinson Cancer Research Center (5.17%), Memorial Sloan-Kettering Cancer Center and the Seattle Children’s Research Institute.

• Ten companies are expected to price IPOs on U.S. exchanges this week, including Cnova and Peak Resorts, according to Renaissance Capital. Read more.


• TSG Consumer Partners has agreed to sell Garden Protein International Inc., a Canadian maker of the plant-based protein brand Gardein, to Pinnacle Foods Inc. (NYSE: PF). The deal will be valued at around C$175 million.


• GDF Suez SA (Paris: GSZ) has agreed to sell its Hungarian power trading unit to Hungary-based MET Group. No financial terms were disclosed.

• Farmer Bros. Co. (Nasdaq: FARM) has agreed to acquire the direct-to-store delivery business of Rae’ Launo Corp. for $1.5 million.

• Hasbro (Nasdaq: HAS) reportedly has ended talks to acquire DreamWorks Animation (Nasdaq: DWA).

• Hertz Global Holdings (NYSE: HTZ) said that in a regulatory filing that it will delay the planned spinoff of its equipment rental business until after completing an accounting review and filing the appropriate paperwork with the SEC.

• MacLean-Fogg Component Solutions has acquired the automotive division of Buffalo, N.Y.-based Curtis Screw Co. for an undisclosed amount. Lincoln International managed the process.

• Mitel (Nasdaq: MITL) has withdrawn its proposal to acquire ShoreTel (Nasdaq:SHOR), due to “the repeated refusal of ShoreTel’s Board of Directors to engage in discussions of any kind regarding a potential transaction.”

• Pfizer (NYSE: P) has agreed to a global oncology development deal with Merck KGgA (DB: MRK), in which Pfizer will pay Merck upwards of $2.85 billion (including $850 million upfront). Read more.


• Terra Firma Capital Partners has postponed plans to begin raising €2 billion for its fourth European buyout fund, according to Dow Jones. The London-based firm had planned to begin formal marketing next May, but is holding off as it continues to raise a separate infrastructure fund. In related news, managing director Arjan Breure reportedly is expected to leave at some point next year. Read more.

 Unitas Seed Fund, an India-focused venture fund, has secured more than $20 million in capital commitments from individual investors like Bill Gates and Steve Singh.


• Matthew Claughton has joined KKR Capstone, the operational group that works on KKR portfolio companies, as a Sydney-based director. He previously was group general manager of Pacific Brands‘ (ASX: PBG) Workwear business unit.

• Andre Francois-Poncet is planning to step down as a managing partner with BC Partners before the UK-based firm begins raising its next fund, according to Bloomberg. Read more.

• Aly Jeddy has stepped down as a New York-based partner with Abraaj Group, according to peHUB. He has returned to McKinsey & Co. as a director. Read more.

• Chris Metz has agreed to join snowmobile maker Arctic Cat Inc. (Nasdaq: ACAT) as president and CEO, effective Dec. 3. He has served for the past nine years as a managing director with Sun Capital Partners, before which he was with Black & Decker.

• Kara Nortman has joined Upfront Ventures as a partner. She previously co-founded Upfront portfolio company P.S. XO (f.k.a. Moonfrye).

• Jon Trousdale is stepping down as vice chairman of M&A with Credit Suisse, in order to join the new advisory firm being spun out of The Blackstone Group (which will be led by Paul Taubman), according to Reuters. Read more.

• Dag Skattum has agreed to rejoin JP Morgan as vice chairman of the EMEA region, according to IFR. He had stepped down as global co-head of M&A with JPMorgan in 2007 to join TPG Capital as a partner, before leaving earlier this year to lead a UK office for One Thousand & One Voices, a new Denver-based social investment firm focused on Sub-Saharan Africa. Read more.

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