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Term Sheet — Tuesday, January 6

Random Ramblings

While strolling through the CES floor here in Vegas, it’s difficult to go more than a few seconds without seeing another “connected home” company or product. Some make intuitive sense, while others seem silly. But almost all of them have something in common: An appeal to homeowners. After all, an apartment-renter isn’t going to pay hundreds of dollars (or more) to improve his landlord’s property – nor is the landlord likely to even permit such a renovation.

All of this comes, however, as home ownership rates are falling. The Q3 2014 rate of 64.4% was nearly a full point lower than the Q3 2013 rate, and down 0.3% from Q2 2014. In fact, home ownership rates have been falling pretty steadily for the past decade (see chart).

Moreover, a lot of the new homeowners are buying urban condos or apartments that would not require the same scale of connected devices as would a larger, single-family home. Per my Fortune colleague Leigh Gallagher, author of a book titled The End of the Suburbs: “All of the momentum in home-building right now is in multifamily/apts and condos. And urban development is going up everywhere, not just cities— a lot of it is happening right in the suburbs.”

To be sure, a lot of these connected home devices could become part of the new building process, much like GPS and other connected technologies have become part of auto manufacturing. But it’s a much different sales process, and people don’t typically buy as many homes as they do cars.

I asked a couple of the connected home exhibitors about this trend, and none of them seemed worried about it. “Home Depot and Lowes are doing just fine,” one of them said, in dismissing any TAM shrinkage. But were I investing in such companies, it would have to work into my future projections.

• Last night Fortune hosted an dinner in Vegas titled Marketing Reimagined. Two key one-liners:

  • Marc Benioff, founder and CEO of, when asked what he thinks is the major tech trend of the next five years, responded that we are in an “AI Spring.” In other words, data science/artificial intelligence will reshape major aspects of most every business.
  • Tariq Shaukat, chief commercial officer of Caesar’s Entertainment, in response to the old chestnut about what happens in Vegas stays in Vegas: “Yeah, but it goes into my database.”

• Fee hogs: William Alden of the NY Times yesterday posted a piece related to partner Kevin Burns’s work with portfolio company Chobani, where he is considered a contender to take over as CEO (although not as soon as some suggest).

That Burns is spending lots of time at Chobani is not a secret –he even has a voicemail set up with the yogurt-maker — but Alden’s scoop is that TPG has a “recovery” team whose job it is to slice up the portion of monitoring fees from companies like Chobani that would otherwise be directed to limited partners. Namely, it deducts a portion of LP monitoring fee share that it deems to be compensation for Burns’s work with Chobani (even though he still pulls full comp as a TPG partner, where he is a key man and head of the firm’s industrials practice). In other words, LPs pay Burns twice — even though there is no indication that TPG has successfully cloned him.

I’ve written recently how TPG has done right by its LPs in many ways, including picking up most of their obligation for the giant PE collusion settlement tab, but this is the sort of thing that can erode trust pretty quick.

• Update: Glassdoor, an online jobs and career community, today announced that it has raised $70 million in new VC funding. Google Capital led the round, and was joined by return backers Tiger Global, Battery Ventures and Sutter Hill Ventures. This is the same round we discussed in this space four weeks ago, when we mentioned a valuation of around $1 billion (which I’m told was on target, even though the company isn’t disclosing).

• New firm alert: Avego Healthcare Capital has been launched as new healthcare private equity firm based in Alpharetta, Georgia. Its three principals are: Michael Goldstein,former director of sales operations and business analytics for the orphan biz unit of Horizon Pharma; Kemble Teague, former head of corporate development at Brightree; and Bala Venkataraman, co-founder of Vidara Therapeutics (sold to Horizon Pharma in September 2014).

• Morning missives: Do you have a colleague who wants to sign up for Term Sheet? Or perhaps you want to receive one of Fortune’s other morning newsletters, like Broadsheet (focused on women in business) or Data Sheet (enterprise tech). Now you can now do it all in one place, just by heading here.


• Moderna Therapeutics, a Cambridge, Mass.-based biotech company that is working to help patients create medicines within their own cells via the creation of injectable mRNA molecules, has raised $450 million in new VC funding. It is the largest-ever venture round for a biotech startup — let alone a preclinical one — and was done in a single tranche without milestone-based earnouts.

New investors include Viking Global Investors, Invus, RA Capital Management and Wellington Management. Existing strategic partners AstraZeneca and Alexion Pharmaceuticals also participated, alongside existing backers like Flagship Ventures.

The company had originally been seeking to raise upwards of $300 million, but capped the round at $450 million despite additional subscriptions. Moderna currently has around 45 different programs in process, and believes the new funding — in addition to the $350 million it already had in the bank — will help get several drug candidates through Phase II human clinical trials.

Despite all of the funding, do not expect an IPO anytime soon. Or even at all. Moderna structures each of its drug products as their own mini-companies within the larger business, meaning that a public offering may eventually be more likely from a Moderna spinout than from Moderna itself (although no ultimate liquidity decisions have been determined).


• Global Blood Therapeutics, a South San Francisco-based developer of small molecule therapeutics for the treatment of severe blood disorders, has raised $48 million in Series B funding. Backers include Wellington Management, RA Capital, Deerfield Management, Sabby Capital, Perceptive Life Sciences, an affiliate of Cowen Group and an “undisclosed blue chip public investment fund.”

• Isight Partners Inc., a Dallas-based provider of “cyber threat intelligence for global enterprises,” has raised $30 million in Series C funding from Bessemer Venture Partners.

• CytomX, a South San Francisco-based developer of cancer therapeutics, has raised $20 million in Series C funding. Pfizer Venture Investments led the round, and was joined by return backers Third Rock Ventures, Canaan Partners and the Roche Venture Fund.

• Symic Biomedical, a San Francisco-based developer of therapeutics for osteoarthritis and cardiovascular conditions, has raised $15 million in Series A funding. Lilly Ventures led the round, and was joined by Den Danske Forskningsfond, Mitsui Global Investment, Ally Bridge Group, InCube Ventures, Purdue Foundry Investment Fund, Mission Bay Capital and QB3 Partners.

• Blue Box Inc., a Seattle-based private cloud hosting company, has raised $14 million in Series B funding, according to VentureWire. An undisclosed “strategic investor” led the round, and was joined by Founders Collective and Voyager Capital.

• Reonomy, a New York–based provider of commercial real estate data and analytics, has raised $13 million in Series B funding. Bain Capital Ventures led the round, and was joined by Solon Mack Capital and return backers SoftBank Capital, Resolute Ventures, High Peaks Venture Partners, KEC Ventures and FinTech Collective.

• EnGeneIC Ltd., an Australian developer of a nanocell platform for the targeted delivery of cancer therapeutics, has raised US$10 million in Series B funding. GRT Capital Partners led the round, and was joined by Foley Ventures and various partners of Foley & Lardner LLP.

• Huolala Global Investment Ltd. (a.k.a. Lalamove), a mobile logistics booking platform for Asia, has raised $10 million in new VC funding. Crystal Stream Capital led the round, and was joined by Geek Founders, Mindworks Ventures, Sirius Venture Capital and Aria Group.

• BigTeams, a Warrenton, Va.-based provider of software systems for high school athletics programs, has raised $5 million in Series B funding from Gannett Co. BigTeams also has acquired Schedule Star, a Wheeling, W.V.–based provider of high school scheduling software, for an undisclosed amount.


• ALM, a portfolio company of Wasserstein & Co., has agreed to acquire Summit Professional Networks, publisher of Investment Advisor and insurance and legal publications like National Underwriter and InsideCounsel, from Eos Partners. No financial terms were disclosed, but a source familiar with the situation said that the deal was worth around $40 million.

• AxelaCare Health Solutions, a Lenexa, Kansas-based provider of specialty home infusion services, has acquired Ambient Healthcare, a Fla.-based provider of home intravenous therapies and nursing care in the southeastern U.S. No financial terms were disclosed. AxelaCare is a portfolio company of Harvest Partners.

• Brentwood Associates has acquired Excelligence Learning Corp., a Monterey, Calif.-based provider of educational products, from Sterling Investment Partners. No financial terms were disclosed.

• The Dwyer Group, a franchising platform company backed by The Riverside Company, has acquired Five Star Painting, a commercial and residential painting franchise with 77 locations in North America. No financial terms were disclosed.

• JLL Partners has acquired Pioneer, a provider of hardscaping materials in the southwestern U.S. No financial terms were disclosed.

• Magnate Capital Partners and CIVC Partners have committed an undisclosed amount of capital to form Magnate Worldwide, as an acquisition platform focused on the transportation and logistics industry.

• MSDP Group LLC, an El Paso, Texas-based portfolio company of Z Capital Partners, has acquired Accel Performance Group, a Cleveland–based performance aftermarket auto parts manufacturer. No financial terms were disclosed.

• MW Industries, a Rosemont, Ill.-based portfolio company of Genstar Capital, has acquired Maudlin & Son Manufacturing, a Kemah, Texas-based maker of slotted shims, coil & flat shim stock, key stock, feeler gauges, drill & threaded rod and tool room supplies. No financial terms were disclosed.

• Recorded Books Inc., a Prince Frederick, Md.–based portfolio company of Wasserstein & Co., has acquired Tantor Media Inc., an Old Saybrook, Conn.–based audiobook publisher. No financial terms were disclosed.

• Select Staffing, a Santa Barbara, Calif.-based staffing services company owned by Anchorage Capital Group and BlueMountain Capital Management, has acquired a majority stake in Atlanta-based EmployBridge from Morgan Stanley Global Private Equity and Constitution Capital. No financial terms were disclosed.

• SND Operating LLC, a Dallas-based portfolio company of Vortus Investment Advisors, has invested $129 million to acquire assets in east Texas and north Louisiana from Chesapeake Energy (NYSE: CHK) and Morgan Stanley (NYSE: MS).

• Stone Point Capital has acquired Situs, a Houston–based provider of commercial real estate advisory services, from Ranieri Partners and WL Ross & Co. No financial terms were disclosed.

• Taylor Precision Products, a consumer houseware products company owned by Centre Partners, has acquired The Chef’n Corp., a Seattle–based maker and distributor of housewares. No financial terms were disclosed.

• Wasserstein Partners has acquired Paris Presents Inc., a Gurnee, Ill.-based provider of branded cosmetic and bath accessories, from Mason Wells. No financial terms were disclosed. Co-investors on the deal included Ontario Pension Board and Northwestern Mutual.

•, a portfolio company of The Riverside Company, has acquired Digital Ignite, a Lombard, Ill.–based provider of continuing education and learning management software for member-based organizations. No financial terms were disclosed.


• The Acushnet Co., a Fairhaven, Mass.-based owner of golf product brands like Titleist, has picked Solebury Capital to advise on a 2016 IPO that could value the company at around $1.8 billion, according to Reuters. Acushnet was purchased in 2011 by a South Korean consortium that included Fila Korea and Mirae Asset Private Equity. Read more.


• LexisNexis Risk Solutions, a division of Reed Elsevier (LSE: REL), has completed its previously-announced acquisition of Health Market Science, a King of Prussia, Penn.–based provider of healthcare professional data. Sellers included Cross Atlantic Capital Partners.

• Lubrizol Corp., a Berkshire Hathaway company, has acquired Warwick Chemicals, a UK-based provider of stain removal technology, from CBPE Capital. No financial terms were disclosed.

• Sycamore Partners has agreed to sell Stuart Weitzman Holdings LLC, a designer and manufacturer of women’s luxury footwear, to Coach Inc. (NYSE: COH) for upwards of $574 million in cash (including a $530m upfront payment). Read more.


• Ally Financial (NYSE: ALLY) has completed its previously-announced sale of its 40% stake in its auto finance joint venture with China’s SAIC to General Motors Co. (NYSE: GM) for around $1 billion.

• EnerNOC Inc. (Nasdaq: ENOC) has completed its previously-announced  acquisition of World Energy Solutions Inc. (Nasdaq: XWES), a Worcester, Mass.-based energy management software and services firm, for $77 million in cash.

• Facebook (Nasdaq: FB) has acquired voice recognition startup for an undisclosed amount. Read more.

• Goldman Sachs analysts wrote in a research note yesterday that J.P. Morgan Chase (NYSE: JPM) should break itself up, either into four businesses or at least into two (consumer and institutional). Read more.

• NPS Pharmaceuticals Inc. (Nasdaq: NPSP), a Bedminster, N.J.-based drugmaker whose lead product treats short bowel syndrome in adults, has hired Goldman Sachs to find a buyer, according to the WSJ. A deal could be valued at more than $4.5 billion. Read more.

• The online education subsidiary of listed Chinese mobile platform developer NetDragon Websoft has raised $52.5 million in Series A equity funding via a private placement with IDG Capital Partners, Vertex Venture and Alpha Animation.


• Ardian is targeting $500 million for a new infrastructure secondaries fund, according to LBO Wire.

• Endeavour Capital, a Portland, Ore.-based private equity firm focused on lower middle-market companies in the Western U.S., has closed its seventh fund with $775 million in capital commitments.

• Paine & Partners, a private equity firm focused on food and agribusiness, has closed its fourth fund with $893 million in capital commitments.


• Gunderson Dettmer has promoted China-based venture capital attorney David Wang to partner.

• James Learner will rejoin Kirkland & Ellis International as a London-based partner in its corporate practice group, effective February 1. He had left the firm more than two years ago to join private equity firm HGGC as a managing partner and member of the executive committee.

• Levine Leichtman Capital Partners has promoted Michael Weinberg to partner. He has been with the firm since 2008. Levine Leichtman also added PGGM director Wouter Snoeijers as a managing director responsible for launching and managing a new Netherlands office.

• Jay Parkinson has joined Golden Gate Capital as an operating executive, with a focus on the energy sector. He previously was executive VP and CFO of Nuverra Environmental Solutions Inc. (NYSE: NES).

• Richard Rincón has joined the University of Texas Investment Management Co. (UTIMCO) as an investment professional focused on emerging markets private equity. He previously was a director with Accordion Partners.

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