Term Sheet — Tuesday, January 27


Random Ramblings

When we began work on our Age of Unicorns cover for Fortune, one internal conversation was about cautionary tales. Fab? Sure. Box? Seemed so at the time, not so much today. “What about Groupon?” someone asked with a chuckle.

Social buying site Groupon was one of the original unicorns, becoming valued at more than $1 billion by venture capitalists less than two years after its founding. It later would turn down a reported $6 billion acquisition offer from Google, before going public in November 2011 at an initial market cap of $12.65 billion and closing its first day of trading worth more than $23 billion.

But it didn’t take long for the wheels to fall off: By June 2012, the company was valued below Google’s proposed acquisition price. The following March, founding CEO Andrew Mason was fired. The company that was supposed to re-energize Chicago’s startup scene — replete with a warehouse chic headquarters that also served as a new business incubator — had run out of gas.

And then everyone seemed to forget about it, as a much larger group of billion-dollar startups emerged. Everyone, that is, except for people who wanted to make jokes about past valuation excess.

But from my snow-covered perch, the laughter is unwarranted.

Groupon not only was an original unicorn, but it remains a successful one. The company currently has a market cap of $4.9 billion, which is higher than it ever was valued by venture capitalists. Its revenue and EBITDA have consistently climbed in each year since going public, and there is plenty of cash on hand without a single cent of debt.

If you want to criticize someone for overvaluing Groupon, take a good long look at public market investors. You know, the folks who are supposed to use all sorts of clear-headed, quantitative metrics (as opposed to VCs, who are said to pull unicorn valuations out of thin air). In fact, even Groupon’s final deals in the private market were largely driven by mutual fund managers dipping down to buy secondary shares from VCs who were smart enough to bake in some early gains.

It would be like if the smartest guys in the room convinced everyone that this year’s beloved Boston Celtics were going to win 60 games, and then making fun of the Celtics when they failed to achieve such lofty goals. Obviously the team isn’t where it ultimately wants to be, but it wasn’t the one making bold predictions. Nor has it collapsed.

If Groupon is a cautionary tale for other unicorns, perhaps it only is in the context of going public. Groupon’s decision to IPO when it did is arguably the reason it remains in business. As venture capitalist Bill Gurley noted, it is much easier to survive a valuation decline as a public company than as a private one. Had Groupon waited a couple more years, perhaps it would have been worthy of derision. But it didn’t. And it isn’t.


 Bain Capital has agreed to acquire TI Automotive, an Auburn Hills, Mich.-based car parts maker owned by firms like Oaktree Capital. No financial terms were disclosed, although earlier press reports suggested that the deal could be valued at around $1.8 billion. Bain had tried two prior times to acquire TI Automotive, but apparently the third time was the charm. www.tiautomotive.com


 Ele.me, a Shanghai-based food delivery service, has raised $350 million in Series E funding. Backers include CITIC, Tencent, Dianping.com, JD.com and Sequoia Capital. Read more.

 Innovent Biologics Inc., a Shanghai-based drugmaker, has raised $100 million in Series C funding. Legend Capital led the round, and was joined by Temasek, two undisclosed investors and return backers Fidelity Biosciences, Fidelity Growth Partners Asia, Lilly Asia Ventures and Frontline Bioventures. www.innoventbio.com

 Xenex Disinfection Services, a San Antonio, Texas-based provider of automated environmental disinfection technology for healthcare facilities, has raised $25 million in new equity funding. Brandon Point Industries Ltd. was joined by return backers Battery Ventures, Targeted Technology Fund II and RK Ventures. www.xenex.com

 CloudBees, a Boston-based developer of a cloud computing platform to build, run and manage web apps, has raised $23.5 million in Series D funding. Lightspeed Venture Partners led the round, and was joined by fellow return backers Matrix Partners, Verizon Ventures and Blue Cloud Ventures. www.cloudbees.com 

 Crossover Health Inc., a Palo Alto, Calif.-based provider of on-site health care for large employers, has raised $15 million in VC funding from Norwest Venture Partners. www.crossoverhealth.com

 Roadie Inc., an Atlanta-based on-demand delivery app that “taps into the excess capacity of passenger vehicles already on the road,” has raised $10 million in Series A funding. Backers include UPS Strategic Enterprise Fund, TomorrowVentures and individual investors. www.roadie.com

 3Scan, a San Francisco-based developer of a knife-edge scanning microscope, has raised $6.7 million in Series A funding led by Lux Capital. www.3scan.com

 Dizzion Inc., a cloud-delivered desktop provider headquartered in Denver, has raised $3.9 million in Series A funding. Grotech Ventures and Access Venture Partners co-led the round, and were joined by Point B Capital, Correlation Ventures and Service Provider Capital. www.dizzion.com

 Fuse, a Palo Alto, Calif.-based mobile app development platform, has raised $2.8 million in new VC funding led by Northzone. www.fusetools.com

 Scout RFP, a cloud-based sourcing platform, has raised $2.75 million in seed funding. New Enterprise Associates led the round, and was joined by Google Ventures, Zapis Capital and individual angels. www.scoutrfp.com

 Starcounter, a Sweden-based in-memory application platform, has raised $1.8 million in new VC funding led by Industrifonden. www.starcounter.com


 Court Square Capital Partners has acquired Research Now Group Inc., a Plano, Texas-based digital data collection and analytics company, for an undisclosed amount. Sellers include TA Associates, European Founders Fund, Polaris Partners, Sutter Hill Ventures and WPP PLC. www.researchnow.com

 GCR Inc., a New Orleans–based portfolio company of Clearview Capital, has acquired Quest Information Systems Inc., an Indianapolis-based provider of software to help state and local governments manage voter information and registration, elections and campaign finance information. No financial terms were disclosed. www.gcrincorporated.com

 KKR is among several private equity firms considering a buyout offer for NERS Global Talent, a British recruiter for the oil and gas industry that is owned by AEA Investors, according to Bloomberg. A deal could be valued at more than $680 million. Read more.

 L Capital is among the bidders for a minority equity stake in Bateel, a Saudi Arabia-based date farming company, according to Reuters. Read more.

 Money Mailer LLC, a Garden Grove, Calif.-based provider of hyperlocal direct marketing services, has raised an undisclosed amount of funding from Babson Capital Management. www.moneymailer.com

 Orix Corp. and Pinestreet Group each have bid for a 36.7% control stake in South Korean securities brokerage Hyundai Securities Co Ltd., which is being offered up by parent company Hyundai Group, according to Reuters. Each bid is worth more than $920 million. Read more.

 Spectro Scientific, a Chelmsford, Mass.–based provider of analytical tools and software for industrial fluids analysis, has acquired On-Site Analysis Inc., a Palm Beach Gardens, Fla.-based provider of fluids analysis hardware and software for municipal and commercial fleet vehicles. No financial terms were disclosed. Spectro Scientific is a portfolio company of SFW Capital Partners. www.spectrosci.com

 Tronair Inc., a Holland, Ohio-based maker of ground support equipment for aircraft, has acquired the commercial towbar and tailstand product lines of WASP Inc. No financial terms were disclosed. Tronair is a portfolio company of Levine Leichtman Capital Partners. www.tronair.com


 DTLR Holding (a.k.a. Down Town Locker Room), a Hanover, Md.-based retailer of “street-inspired” footwear, apparel and accessories, has withdrawn registration for a $75 million IPO. No explanation was provided. The company had planned to trade on the Nasdaq, with Baird and Piper Jaffray serving as lead underwriters. DTLR reported $5 million of net income on $181 million in revenue for the year ending February 2, 2013. Shareholders include Bruckmann, Rosser, Sherrill & Co. (88.19% of common stock) and Golub Capital (6.9%). www.dtlr.com

 Nexvet Biopharma, an Australian developer of biological drugs for companion animals, has set its IPO terms to 4 million shares being offered at between $13 and $16 per share. It would have an initial market cap of approximately $161 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol NVET, with BofA Merrill Lynch and Cowen & Co.  serving as lead underwriters. Shareholders include One Funds Managemen (11.9% pre-IPO stake), Ute Holdings (11.6%), Bushranger Funding (11.4%), Adage Capital Partners (11.2%), Foresite Capital (10%), Irrus Investments (9.1%) and AustralianSuper (6.3%). www.nexvet.com

 Zosano Pharma Corp., a Fremont, Calif.-based developer of transdermal delivery patches for the treatment of severe osteoporosis, has increased the number of shares being offered in its IPO from 3 million to 4.3 million. It still plans to offer the shares at between $10 and $12, and trade on the Nasdaq under ticker symbol ZSAN. Ladenburg Thalmann  and Roth Capital Partners are serving as lead underwriters. Shareholders include BioMed Realty (43.53% pre-IPO stake) and New Enterprise Associates (38.75%). www.zosanopharma.com


 Dropbox, a VC-backed cloud storage company, has acquired Pixelapse, a Palo Alto, Calif.–based provider of collaboration tools for developers. No financial terms were disclosed. Pixelapse had been seeded by Y Combinator and Spark Capital. www.pixelapse.com

 Veronis Suhler Stevenson has sold its stake in trial strategy consulting firm DOAR to company management for an undisclosed amount. www.doar.com


 3SBio Inc., a Chinese biotech company owned by Decade Sunshine Ltd., has acquired Sirton Pharmaceuticals SpA, an Italian contract manufacturer for the pharma industry, from First Shanghai Ltd. No financial terms were disclosed. www.sirton.it

 PluralSighta Layton, Utah-based provider of online education for software developers, has acquired Code School, an Orlando–based learn-to-code platform. No financial terms were disclosed, although TechCrunch reported that the deal was worth around $36 million. PluralSight recently raised a $135 million Series B round at nearly a $1 billion valuation from Insight Venture Partners, Iqoniq Capital and Sorenson Capital. Smarterer had raised around $2 million from backers like Rethink Education, Deborah Quazzo (GSV Advisors), Google Ventures and True Ventures. www.pluralsight.com


 The Blackstone Group is raising between $500 million and $1 billion its first energy-focused credit fund, according to Reuters. Read more.

 Maslow Capital Partners has launched as a Paris-based merchant bank focused on the technology space. Its founding partner is Marc Goldberg, who previously spent more than five years as a managing director of principal investments for Bryan Garnier & Co. www.maslowcapital.com


 Catalyst Investors has promoted Eric Steele to vice president. The growth equity firm also has promoted both Mia Hegazy and Rob Schnitzler to associate, and hired Kapil Desai as an analyst and Isaac Schlecht as a business analyst. www.catalyst.com

 DCM Ventures has promoted Osuke Honda to general partner. He joined the firm in 2007, and has worked on such deals as Daum Kakao (Kosdaq: 035720), Freee, Happy Elements, and Scigineer (Tokyo: 6031). www.dcm.com

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