On Friday, The Wall Street Journal reported that DraftKings, a Boston-based real money fantasy sports site, had raised $250 million in new funding from The Walt Disney Co. (whose properties include ESPN) at a valuation of around $900 million. It added that, as part of the deal, DraftKings “has committed to spend large sums of advertising dollars – just north of $500 million – on ESPN’s platforms in coming years.”
You might recall that we originally discussed the Disney/DraftKings talks last month, and that we previously reported how rival site FanDuel also was in talks for its own new round of funding. So a bunch of notes about all of this.
1. The DraftKings deal is not yet done. It’s very, very close, but final paperwork has not been signed. There also is a remote possibility that Friday’s leak will have an impact, particularly if Disney feels it’s getting too much flak for morphing into America’s most family-friendly gambling company.
2. My understanding is that the $500 million advertising commitment begins in 2015, and runs through the end of 2018 (i.e., around 3.5 years). It also will include all sorts of integration with ESPN content (particularly TV broadcasts), and basically means that rival FanDuel will no longer advertise on ESPN once its existing 2015 commitments run out (currently, around 10% of FanDuel’s ad spend is with ESPN). What remains a bit unclear, however, is how DraftKings can make such a huge financial commitment given that it reportedly generated just around $30 million in 2014 revenue (although it only really needs to come up with $250m, if you subtract the new Disney investment).
3. FanDuel also hasn’t finished up its new round, but it is extremely close. Sources tell me that existing investor KKR (via its London office) will lead the deal, which will come with a post-money valuation of around $1.5 billion (or perhaps just a hair shy, depending on the final investment figure).
4. No comment on any of this from DraftKings, Disney, KKR nor FanDuel.
5. The most surprising part about all of this remains the absence of Yahoo — which currently has more fantasy sports players than anyone on the planet (yet barely monetizes them). It has not held investment nor acquisition talks with either DraftKings or FanDuel. Does it plan to move into this space on its own, ignore it completely or pick a target once they’re both worth $2 billion?
Both focused on Pao’s thoughts about gender issues in Silicon Valley, since she steadfastly refused to discuss anything about her case against Kleiner Perkins. How come? From the end of her Couric interview, Pao said that she and her attorneys are “still in the midst of making some decisions” about a possible appeal.
• Update: Adam Levine has formally responded to TPG Capital’s original lawsuit against him for allegedly leaking confidential information, by asking the court to dismiss the charges for want of jurisdiction. Or, in layman’s terms, Levine is arguing that TPG cannot sue him in Texas since he worked for TPG in California and the improprieties (which he denies) are alleged to have occurred in California.
• Game Time: March Madness comes to an end this evening (after all, it is April), and that also means we’re nearing the end of our contest. If Wisconsin prevails, then our winner is Mark Yurko of Spurrier Capital Partners. If Duke wins, then our victor is someone going by Hunter38579.
But here’s the catch: It turns out that around 150 of you played in last year’s group, rather than using this year’s system (where we have around 800 players). So honorary mentions go to Wisconsin booster Jelani Roy of PLYFE (who also happens to be a current Amazing Race contestant) and Josh Stein of DFJ (who picked Duke). If the Blue Devils do win tonight and Hunter38579 doesn’t identify him or herself, then Josh wins the prize.
• Another reminder: We’re about to begin sending Term Sheet via a new system with the goal of improving delivery times. Please take a quick moment to add email@example.com to your email address book (particularly if you’re a Gmail user).
THE BIG DEAL
• Virtu Financial Inc., a New York-based high-speed trading company, has set its IPO terms to around 16.53 million shares being offered at between $17 and $19 per share. It would have an initial market cap of approximately $1.02 billion, were it to price in the middle of its range. The company plans to trade Nasdaq under ticker symbol VIRT, with Goldman Sachs, J.P. Morgan and Sandler O’Neill serving as lead underwriters. Shareholders include Silver Lake (10.7% pre-IPO stake) and Temasek Holdings (9.2%).
Virtu had originally planned to go public last year, but postponed the offering due to PR fallout over the publication of Flash Boys by Michael Lewis. www.virtu.com
VENTURE CAPITAL DEALS
• ZenPayroll, a Palo Alto, Calif.–based provider of payroll process automation solutions, has raised $60 million in new VC funding. Google Capital led the round, and was joined by Emergence Capital, Ribbit Capital return backer Google Ventures. Read more.
• Mojix, a Los Angeles-based provider of wide area sensor networks, has raised $14 million in Series D funding. OMERS Ventures led the round, and was joined by Mercury Ventures. www.mojix.com
• Reformation, an “eco-friendly” apparel maker, has raised $12 million in VC funding led by Stripes Group and 14W. Read more.
• Educents, an Oakland-based marketplace for education instructional materials, has raised $2.9 million in seed funding. SoftTech VC led the round, and was joined by Crosslink Capital, Deep Fork Capital, Kapor Capital, Learn Capital and individual angels like Deborah Quazzo and Joanne Wilson. Read more.
• CodeFights, a San Francisco-based online platform for coders and developers to test their skills and compete against one another, has raised $2 million in seed funding. Backers include Felicis Ventures, Sutter Hill Ventures and individual angels like Adam D’Angelo and Auren Hoffman. Read more.
• Buttercoin, a bitcoin exchange seeded by Google Ventures and Y Combinator, is shutting down at the end of April after failing to raise new capital, according to TechCrunch. Read more.
PRIVATE EQUITY DEALS
• Blue Star Media, an Irving, Texas-based producer of consumer shows and events, has acquired VEE Corp., a Minneapolis-based producer of family-friendly entertainment. No financial terms were disclosed. Blue Star is a portfolio company of AUA Equity Partners. www.VEE.com
• Envelopes.com, an Amityville, N.Y.-based e-commerce company focused on envelopes and customized stationery, has raised an undisclosed amount of equity funding from TZP Group. www.envelopes.com
• Istituto Centrale delle Banche Popolari, an Italian provider of banking services, has admitted three investor groups into its second round of takeover bidding, according to Reuters. The remaining suitors are: Advent International with Bain Capital and Clessidra, BC Partners with Cinven; and Permira with CVC Capital Partners. The deal could be valued at around $2.2 billion. Read more.
• Mansa Capital Management has invested $5.5 million for a majority stake in Accreon Inc., a Boston-based provider of cloud solutions for healthcare and life sciences companies. Read more.
• Infraredx Inc., a Burlington, Mass.-based developer of medical devices for the diagnosis and management of coronary artery disease, has withdrawn its IPO registration. No explanation was provided. The company had planned to sell 4 million shares at between $13 and $15 per share, with RBC Capital Markets, Canaccord Genuity and BMO Capital Markets serving as lead underwriters. It reports a $24.5 million net loss on $3.68 million in revenue for the first nine months of 2014. Infraredx has raised more than $175 million in equity funding from backers like Sanderling Ventures, Nipro Corp. and Eastwood Capital. www.infraredx.com
• Milacron LLC, a Cincinnati-based provider of plastics processing technologies and metalworking fluids, has filed for a $100 million IPO. It plans to trade under ticker symbol MCRN, with BofA Merrill Lynch, Barclays and J.P. Morgan serving as lead underwriters. The company reports a $15 million net loss on $1.21 billion in revenue for 2014, compared to a $25 million net loss on $1.03 billion in revenue for 2013. Milacron was acquired in 2012 by CCMP Capital Partners. www.milacron.com
• Party City, an Elmsford, N.Y.-based party supplies retailer, has set its IPO terms to around 21.88 million shares being offered at between $15 and $17 per share. It would have an initial market cap of around billion, were it to price in the middle of its range. The company, which originally filed for its IPO in January 2014, plans to trade on the NYSE under ticker symbol PRTY, with Goldman Sachs and BofA Merrill Lynch serving as co-lead underwriters. Shareholders include Thomas H. Lee Partners (69.3% pre-IPO stake) and Advent International (23.8%). TH Lee acquired its stake in 2012 via a $2.7 billion transaction. www.partycity.com
• Ventas Inc. (NYSE: VTR) has agreed to acquire Ardent Medical Services Inc., a Nashville, Tenn.–based for-profit hospital operator, for $1.75 billion in cash from Welsh, Carson, Anderson & Stowe. www.ardenthealth.com
• Valore, a Boston-based collection of online education brands, has acquired Boundless, a Boston–based digital publisher and platform for customizable textbooks, teaching resources, and learning tools. No financial terms were disclosed. Valore shareholders include Atlas Venture, Flybridge Capiutal Partners, North Hill Ventures and Velocity Financial Group. Boundless had raised VC funding from Kepha Partners, NextView Ventures, SV Angel and Venrock. www.valore.com
FIRMS & FUNDS
• LetterOne Technology has been launched by Russian billionaire Mikhail Fridman to invest, private equity-style, in U.S. and European tech and telecom companies, according to the FT. The group has an initial $16 billion in capital commitments. Read more.
MOVING IN, UP, ON & OUT
• Justin Grimm has joined AB Private Credit Investors as a director. He previously was a vice president with GE Capital. www.alliancebernstein.com
• Donald Meltzer, former global head of M&A at Credit Suisse, is expected to join Rabobank as vice chairman and head of North American M&A, according to the NY Times. Read more.
• Kelly Williams, president of GCM Grosvenor Private Markets, has been elected to the board of directors at The Greenbrier Cos (NYSE: GBX). www.gbrx.com
• Roseanne Wincek has joined Institutional Venture Partners as an associate. She previously was a principal with Canaan Partners. In other IVP news, Alexander Lim (ex-Credit Suisse) has joined as an associate. www.ivp.com
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