Term Sheet — Thursday, March 12


Random Ramblings

For a company that made its bones with disappearing messages, Snapchat sure knows how to make a story stick around. The Los Angeles-based startup yesterday was the subject of several news reports about the same round of funding that was reported on last month.

The latest info, via Bloomberg, is that Alibaba will invest $200 million at a $15 billion valuation. TechCrunch adds that Saudi Arabia’s Prince Alwaleed Bin Talal also is involved in some way, with the overall round size expected to hit $500 million. And then there was a PandoDaily report that Snapchat is structuring the investment as common stock rather than as preferred stock, which is highly unusual in these sorts of rounds.

Two quick notes, while we wait for all of this to sort itself out:

1) At $15 billion, Snapchat would basically be valued at where private Facebook shares were valued in February 2010 (per this SecondMarket timeline). Snapchat is nearly 4years-old and just recently began generating revenue. Facebook was 6 years-old and on a $1 billion revenue run-rate.

2) Alibaba has quietly added a new partner to its U.S. investing group: Mike Katz, who had spent the past three years as a vice president with Battery Ventures. Read more here.

 Academia: For years, venture capitalists and entrepreneurs have complained that fewer companies were going public because of onerous Sarbanes-Oxley restrictions. I've always found it specious, and recently came across an academic paper that supports my supposition. Yes, it was published just over a year ago, but apparently escaped my attention at the time.

Rather than blaming SOX for the decline in IPOs over the past 15 years, the researchers present an "economies of scope" hypothesis: "The advantages of selling out to a larger organization, which can speed a product to market and realize economies of scope, have increased relative to the benefits of operating as an independent firm." Read the full paper by going here.

 From the courtroom: Ellen Pao continued to be cross-examined by Kleiner Perkins' attorney yesterday, with the back-and-forth largely focused on alleged inconsistencies in Pao's prior testimony. Read our roundup here.

A big question going into today is whether the judge is going to allow the defense to present information about the troubled personal finances of Pao and her husband Buddy Fletcher. If allowed, then Kleiner will try to knock down Pao's assertion that a large part of her motivation for suing was to prevent other women in Silicon Valley from experiencing gender discrimination (i.e., KPCB will say she needs to reach into its deep pockets). For a bit of a backgrounder on Pao and Fletcher, you can read Fortune's 2012 cover story on the pair.

 Up and down: Today’s big deal was that on-demand ride company Lyft has raised $530 million in new funding at a $2.5 billion valuation, led by a $300 million investment by Japan’s Rakuten. This comes less than 24 hours after a San Francisco court ruled that Lyft would have to convince a jury that its drivers are independent contractors instead of employees. Rival Uber received a similar ruling, in a separate case.

 BC Partners yesterday finished up its $8.7 billion take-private buyout of pet supplies retailer PetSmart, and I'm belatedly writing up a piece. To do so, I interviewed the lead partner at BC and the company's new CEO. Both mentioned "investing in associates," but neither would say if that would or wouldn't include raises (the CEO mentioned 'additional training). Both also mentioned growth, so I asked if there would be layoffs or additional hiring. Again, both demurred -- suggesting it was too early to know.

To be sure, no amount of due diligence can give a PE firm the same amount of visibility into a company as they get once becoming owners, but I don't buy for a moment that BC doesn't at least have a hypothetical headcount plan. If they don't want to share it publicly, I totally understand. But don't pretend like it doesn't exist...

 Correction: Yesterday I mixed up my Coulters. Jim Coulter is co-founder of TPG. Dave Coulter works with Warburg Pincus. Apologies.

 Life-saving: Arguably more important than either Snapchat or Lyft is a little-known company called ARC, which today raised $80 million in Series B funding. The Silicon Valley company is heading intop Phase 3 clinical trials for a desensitization treatment that could prevent life-threatening allergic reactions to peanuts -- just by spreading a bit of its protein-based product daily on food. Given that more than 2% of American kids now have peanut allergies, this could be a real game-changer. Read more by going here.


 Lyft, a San Francisco-based on-demand ride company, has raised $530 million in Series E funding at around a $2.5 billion valuation.

Rakuten (Tokyo: 4755) led the round with a $300 million investment. Lyft previously raised over $330 million from firms like Alibaba, Andreessen Horowitz, GSV Capital, Founders Fund, Mayfield Fund, Coatue Management and Third Point Management. www.lyft.com


 Allergan Research Corp., a Menlo Park, Calif.-based developer of a protein-based desensitization treatments for peanut allergies, has raised $80 million in Series B funding. Foresite Capital led the round, and was joined by Fidelity Management & Research Co., Aisling Capital, Adage Capital, RA Capital Management, Palo Alto Investors and existing shareholder Longitude Capital. Read more

 Kura Oncology, a La Jolla, Calif.-based developer of treatments for solid tumors and blood cancers, has raised $60 million in new private funding, including the conversion of around $7.5 million of bridge notes into common stock. EcoR1 Capital led the round, and was joined by Fidelity Management & Research Company, ARCH Venture Partners, Boxer Capital of Tavistock Life Sciences, Partner Fund Management and Nextech Invest. In other Kura Oncology news, the company signed an exclusive licensing agreement with Janssen Pharmaceuticals. www.kuraoncology.com

 Highfive, a Redwood City, Calif.-based maker of video conferencing devices and related cloud software, has raised $32 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by return backers Andreessen Horowitz, General Catalyst, Google Ventures, SV Angel, Aaron Levie, Drew Houston, Marc Benioff and Shishir Mehrotra. www.highfive.com

 SignalFx, a San Mateo, Calif.-based provider of an app monitoring platform, has raised $20 million in Series B funding. Charles River Ventures led the round, and was joined by return backer Andreessen Horowitz. www.signalfix.com

 Spaceflight Industries, a Seattle-based space products and services company has raised $20 million in Series B funding. RRE Ventures and Vulcan Capital co-led the round, and were joined by Razor’s Edge Ventures.

 Moonfrog Labs, an India-based maker of mobile games, has raised up to $15 million in Series A funding. Tiger Global led the round, and was joined by return backer Sequoia Capital. www.moonfroglabs.com

 Greenhouse Software, a New York-based recruiting optimization platform, has raised $13.6 million in Series B funding. Benchmark led the round, and was joined by return backers Social+Capital Partnership, Felicis Ventures and Resolute Ventures. www.greenhouse.io

 StarMaker, a San Francisco-based digital music talent platform, has raised $6.5 million in Series B funding. Backers include Crosscut Ventures, Three Bridges Ventures, Qualcomm Ventures, iGlobe Partners, GREE International, Allen DeBevoise (Machinima) and Joe Perez (Tastemade). www.starmakerstudios.com

 Bugcrowd, a San Francisco-based provider of crowdsourced security testing for the enterprise, has raised $6 million in Series A funding. Costanoa Venture Capital led the round, and was joined by return backers Rally Ventures, Paladin Capital Group and Blackbird Ventures. www.bugcrowd.com

 MySugr, a Vienna, Austria-based provider of digital health solutions for diabetics, has raised $4.8 million in new VC funding. Roche Ventures and iSeed Ventures co-led the round, and were joined by return backer XLHealth. www.mysugr.com

 Bento Labs, an anticipatory computing and mobile search startup, has raised $2 million in first-round funding from Google Ventures, First Round Capital and Social+Capital Partnership. The company is led by Nikhil Chandhok, a former entrepreneur-in-residence with Google Ventures. Read more.

 Surveypal, a European online customer survey platform that just opened a San Francisco office, has raised $1 million in new seed funding from  Vendep Fund, Finnvera Venture Capital and Ari Korhonen. www.surveypal.com


 Axia Energy II LLC, a Denver-based oil and gas E&P platform, has secured $200 million in private equity commitments from principally from Natural Gas Partners, Old Ironsides Energy and company management.

 LIV Capital, a Mexican private equity firm, has acquired a control stake in WOBI, a management content production and distribution firm. No financial terms were disclosed. www.livcapital.mx

 Summit Behavioral Healthcare, an Atlanta-based provider of addiction treatment and behavioral health services, has raised an undisclosed amount of private equity funding from Flexpoint Ford. www.summitbhc.com

 Summitview Capital, a Chinese private equity firm, is leading a $639.5 million buyout of Silicon Valley chipmaker Integrated Silicon Solution Inc. (Nasdaq: ISSI). The $19.25 per share deal represents a 16.17% premium to ISSI’s closing price yesterday. Other members of the buying consortium include eTown MemTek Ltd., Hua Capital and Huaqing Jiye. www.issi.com

 TDR Capital is nearing a deal to acquire Dutch leasing fleet manager LeasePlan Corp. for around $3.2 billion from Volkswagen AG and Metzler Bank, according to the WSJ. Read more.


 Aduro Biotech Inc., a Berkley, Calif.-based immuno-oncology company, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol ADRO, with BofA Merrill Lynch and Leerink Partners serving as lead underwriters. The company reports a $17 million net loss for 2014 on around $13  million in revenue. It has raised over $140 million in VC funding, from firms like Morningside Ventures (37.8% pre-IPO stake), Fidelity Investments (7.9%), Johnson & Johnson Development Corp. (6.6%), OrbiMed Advisors, Janus Capital Management, Franklin Advisers, Jennison Associates, Foresite Capital Management and Clough Capital Partners. www.aduro.com

 Summit Materials Inc., a Denver-based heavy-side construction materials company owned by The Blackstone Group, raised $400 million in its IPO. The company priced 22.22 million shares at $18 per share (middle of range). It will trade on the NYSE under ticker symbol SUM, while Citigroup and Goldman Sachs served as lead underwriters. Summit Materials reports $870 million in revenue for the first nine months of 2014. www.summit-materials.com


 CoBe Capital has agreed to sell Printing Systems Group, a Dutch distributor of industrial printing solutions, to Heidelberger Druckmaschinen AG (DB: HDD). No financial terms were disclosed. www.cobecapital.com

 InMobi, an Indian mobile advertising network, denied media reports that it was in talks to be acquired by Google. InMobi has raised around $215 million in private equity funding from Softbank, Sherpalo Ventures and Kleiner Perkins Caufield & Byers. Read more.

 ITV PLC (LSE: ITV) has agreed to pay upwards of $1.2 billion to acquire Talpa Media, the Dutch television producer whose shows include The Voice. Sellers include Nordian Capital Partners. Read more.


 Banco de Sadabell (CATS: SAB) has made a preliminary $2.6 billion takeover offer for TSB Banking Group (LSE: TSB), which spun out of Lloyds Banking Group last year. Read more.

 Endo Pharmaceuticals (Nasdaq: ENDP) has offered to acquire Raleigh, N.C.-based drugmaker Salix Pharmaceuticals (Nasdaq: SLXP) for $175 per share in cash and stock, topping Salix’s existing agreement to be acquired by Valeant Pharmaceuticals (TSX: VRX) for $158 per share in cash. The Endo offer would value Salix at around $11.2 billion. Read more.

 General Mills (NYSE: GIS) has hired Rothschild to find a buyer for its Green Giant frozen and canned vegetable business, according to Reuters. The business generated around $700 million in 2014 revenue. Read more.

 Lotte Group has agreed to acquire South Korean auto rental company KT Rental Corp. from KT Corp. for approximately $906 million. Affinity Equity Partners had also made an offer. Read more.

 United Technologies Corp. (NYSE: UTX) will consider spinning off its Sikorsky helicopter unit, which generated $7.5 billion in 2014 revenue, according to Reuters. Read more.


 General Electric is “considering making deeper cuts in its massive banking business,” GE Capital, according to the WSJ. Read more.

 The Hive, a Palo Alto, Calif.-based accelerator for startups that leverage data science and scale-out infrastructure, has closed its second investment fund with $22 million in capital commitments.  www.hivedata.com

 Nasdaq OMX Group is launching an energy futures market. Read more.

 Rhone Capital, a New York-based private equity group, is raising its fifth fund, according to regulatory filings. Lazard Freres is serving as placement agent. www.rhonegroup.com


 Patrick Baeuerle has joined MPM Capital as a managing director, effective April 1. He most recently was with Amgen Research as VP of research and general manager. www.mpmcapital.com

 Michael Carney has joined Los Angeles-based Upfront Ventures as an associate. He previously was an editor with tech blog PandoDaily. www.upfront.com

 Tim Kopp has joined Chicago-based VC firm Hyde Park Partners as a partner and head of a new Indianapolis office. He is the former chief marketing officer for ExactTarget. www.hydeparkvp.com

 Jim O’Connor has joined William Blair & Co. as a managing director and global head of venture capital coverage for the firm’s investment banking group. He previously was with MVC Capital. www.williamblair.com

 Bridget Rauvola has transitioned into an advisor role with Frazier Healthcare Partners, which she originally joined in 2011 as a partner in charge of investor relations and marketing. www.frazierhealthcare.com

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