CryptocurrencyInvestingBanksReal Estate

Term Sheet — Thursday, April 16

April 16, 2015, 2:03 PM UTC

Random Ramblings

Ted Ullyot, Facebook's former general counsel, is joining Andreessen Horowitz as its first partner to focus on policy and regulatory affairs. In fact, he would seem to be the first person that any venture capital firm has hired to focus on policy and regulatory affairs.

Ullyot originally joined Facebook as general counsel in September 2008, when the site still had just around 100 million users. He would stick around through the company's May 2012 IPO and as its user base easily surpassed 1 billion. Since leaving he has advised several younger tech companies on a part-time basis, including Palantir Technologies.

"I think a lot of the uncertain legal and regulatory issues we faced in the earlier days at Facebook -- explaining the business to people in DC and in Brussels and state AGs -- made for the most exciting and interesting work there for me," Ullyot says. "When I was leaving Facebook, which by then was pretty stable, I thought it would be nice to work again with companies that face similar issues."

At Andreessen Horowitz, Ullyot will have plenty to keep him occupied. The VC firm's portfolio is full of legal minefields, including ride-sharing (Lyft), bitcoin (Coinbase) and drones (Airware).

He isn't expected to parachute into portfolio companies -- nor will be register as a lobbyist -- but rather will serve as an outside advisor.

More personnel news: Former Wal-Mart CEO Mike Duke has joined The Carlyle Group as an operating executive focused on the retail sector. It's a part-time job, with Duke telling me this morning that he has no plans to become a portfolio company CEO.

D said it was "too early" for him to comment on specific investment opportunities (he was officially a Wal-Mart employee until Feb. 1), but did say: "The business is changing so rapidly and, in times of change, there are great opportunities… I think there are going to be opportunities to serve customers both online and with bricks and mortar.”

Narrative superiority: Most of this morning's IPO headlines have been abut Etsy's successful offering, but Virtu Financial may actually be a better story. Not only did it also price at the top of its range and raise more money, but its path was stranger.

Remember, this is the high-speed trading firm that was all set to go public in the first half of 2014, but then postponed after its industry took a PR pummeling from the Michael Lewis book Flash Boys. Later in the year, when the IPO still seemed questionable, minority shareholder Silver Lake sold nearly half of its Virtu stock to Temasek. Pretty volatile year to come to such a quietly successful conclusion...

Emerging markets: The Blackstone Group reported strong Q1 earnings this morning, with economic net income nearly doubling over Q1 2014 (from $814m to $1.6b).

During the media call this morning, I asked firm president Tony James if Blackstone was yet taking a serious look at future investment opportunities in Iran. His reply was, in short, no. That said, he did say that Blackstone is closely watching what happens in Iran -- particularly vis-a-vis sanctions -- due to its likely impact on short-term oil prices.

Political yawnings: Hillary Clinton got some attention yesterday for comments about CEO and hedge fund manager pay. The latter, of course, relates to carried interest tax treatment. Sounds like Clinton thinks carried interest should be treated like ordinary income. I'd pay lots of attention, except that Barack Obama said the same thing back in 2007.

Join us: A reminder that tonight is the 2015 TUGG Wine and Tequila Party in Boston, beginning at 6:30. Join yours truly and more than 1,500 local tech folks and investors for some very good causes (and some very good booze). Hope to see a lot of you there.


 Etsy, a Brooklyn-based homemade crafts marketplace, raised $267 million in its IPO. The company priced 16.66 million shares at $16 per share (high end of range), for an initial market cap of around $1.78 billion. It will trade on the Nasdaq under ticker symbol ETSY, while Goldman Sachs and Morgan Stanley served as co-lead underwriters.

Etsy reports a $15.2 million net loss on around $195.5 million in revenue for 2014. Shareholders include Accel Partners (27% pre-IPO stake), Union Square Ventures (15.2%), Index Ventures (12.8%), Tiger Global Management (7.3%), Hubert Burda Media and Glynn Capital Management. Read more.


 Sprig, a San Francisco-based meal delivery service, has raised $45 million in Series B funding co-led by Social Capital+Partnership and Greylock Partners. Read more.

 Appirio, a San Francisco-based cloud services company, has raised $35 million in Series E funding led by Fidelity Investments. The company previously was over $75 million in VC funding from General Atlantic, Sequoia Capital and GGV Capital.

 Billtrust, a Hamilton, N.J.–based provider of outsourced billing services, has raised $25 million in new VC funding. Goldman Sachs Private Capital Investing led the round, and was joined by return backer Bain Capital Ventures.

 Pepperdata, a Sunnyvale, Calif.-based provider of Hadoop cluster performance management solutions, has raised $15 million in Series B funding. Wing Venture Partners led the round, and was joined by Citi Ventures, Silicon Valley Data Capital and return backers Signia Ventures and Webb Investment Network. Read more.

 CurrencyFair, a UK-based currency exchange marketplace, has raised €10 million in new VC funding. Octopus Investments led the round, and was joined by return backer Frontline Ventures.

 Number26, a German payment and prepaid credit card app, has raised €10 million in Series A funding. Valar Ventures led the round, and was joined by seed backers Earlybird Venture Capital and Redalpine. Read more.

 The Flatiron School, a computer science educational platform for kids and young adults, has raised $9 million in Series B funding. Thrive Capital led the round, and was joined by CRV and Matrix Partners. Read more.

 Attivo Networks, a Fremont, Calif.-based provider of cyber-threat detection technology, has raised $8 million in Series A funding led by Bain Capital Ventures.

 Peak, a UK-based provider of mobile brain-training games, has raised $7 million in Series A funding. Creandum led the round, and was joined by return backers DN Capital, London Venture Partners and Qualcomm Ventures.

 Benchling, a life science data management and collaboration platform, has raised $5 million in new VC funding. Andreessen Horowitz led the round, and was joined by Thrive Capital. Read more.

 COBI, a German developer of a connected biking system, has raised more than $4 million in VC funding from Capnamic Ventures, Iris Capital and Creathor Venture.

 LoveTheSign, an Italian home design e-commerce platform, has raised more than $4 million in Series A funding led by United Ventures.

 MoneyStream, a Los Gatos, Calif.-based personal financial management service that leverages predictive analytics, has raised $3.2 million in Series A funding. H&R Block led the round, and was joined by Individual angels like Bruno Bowden and Kim Polese.

 Phantom Cyber, a Palo Alto, Calif.-based startup that automates enterprise security operations, has raised $2.7 million in seed funding. Foundation Capital and Rein Capital were joined by individual angels like Zach Nelson (NetSuite) and John Thompson (ex-CEO of Symantec).

 Purch, a network of websites about technology, is raising between $50 million and $60 million in new VC funding, according to Fortune’s Erin Griffith. The deal would be a mix of secondary and primary stock, with a valuation of between $175 million and $250 million. Read more.


 Genstar Capital has acquired Boyd Corp., a Modesto, Calif.–based maker of energy management and environmental sealing solutions for large OEMs, from Snow Phipps Group. No financial terms were disclosed.

 Halyard Capital has acquired sales and marketing intelligence groups Harte Hanks Market Intelligence and The Aberdeen Group from Harte Hanks Inc. (NYSE: HHS). No financial terms were disclosed.

 Lindsay Goldberg Vogel is in “advanced talks” to acquire the VDM alloys business of ThyssenKrupp, according to Reuters. Read more.

 Luminate Capital Partners has acquired PDI, a Temple, Texas–based provider of retail automation software systems to the convenience-store and foodservice industries, from McLane Co. (which is owned by Berkshire Hathaway). No financial terms were disclosed.

 Terra Firma Capital Partners reportedly has expressed interest in bidding for struggling British gym operator LA Fitness, which also has received offers from Pure Gym (backed by CCMP Capital) and Fitness First. Read more.

 TPG Capital and China’s Fosun International reportedly are in final negotiations to acquire Cirque du Soleil. The pair beat out a rival bid from CVC Capital Partners and Providence Equity Partners. The deal is expected to be worth nearly $1.5 billion. Read more.

 Versa Capital Management has completed its acquisition of Foothill Ranch, Calif.-based apparel retailer Wet Seal Inc., via a bankruptcy court process.

 WME|IMG has agreed to acquire Professional Bull Riders Inc., a Pueblo, Colo.–based bull riding circuit, from Spire Capital Partners and HarbourVest Partners. No financial terms were disclosed. WME|IMG shareholders include Silver Lake.


 Cidara Therapeutics Inc., a San Diego-based developer of immunotherapies to treat fungal and other infections, raised $77 million in its IPO. The company priced 4.8 million shares at $16 per share (high end of range). It will trade on the Nasdaq under ticker symbol CDTX, while Jefferies and Leerink Partners served as lead underwriters. The pre-revenue company had raised around $74 million in VC funding, from firms like 5AM Ventures (22.1% pre-IPO stake), Fidelity Investments (14.2%), InterWest Partners (12.7%) and Frazier Healthcare (12.2%).

 Clarus Therapeutics Inc., a Northbrook, Ill.-based developer of an oral testosterone replacement product, has withdrawn registration for an $86.25 million IPO, saying that the “terms currently obtainable in the public marketplace are not sufficiently attractive.” Clarus originally filed for an IPO in 2010, before withdrawing in 2011 and refiling last May. Citigroup and Credit Suisse were serving as lead underwriters. Shareholders in the pre-revenue company include Thomas, McNerney & Partners (58.8% pre-IPO stake), H.I.G. Ventures (24.5%) and ProQuest Investments (16.2%).

 First Foundation Inc., an Irvine, Calif.-based provider of wealth management services to high-net-worth individuals in California, has withdrawn its IPO registration. The company had planned to offer 2.22 million shares at between $21 and $24 per share, before first postponing the offering in early 2014. I Sandler O’Neill + Partners and Keefe, Bruyette & Woods were serving as lead underwriters.

 Galapagos NV, a Belgium-based drug company focused on such conditions as rheumatoid arthritis, has filed for a $150 million IPO. It plans to trade on the Nasdaq under ticker symbol GLPG, with Morgan Stanley, Credit Suisse and Cowen & Co. serving as lead underwriters. The company’s shares already trade on the Euronext Brussels and Euronext Amsterdam under the symbol GLPG. Shareholders include Johnson & Johnson (7.61% stake), Van Herk Investments (5.14%) and The Capital Group Companies (5.04%). It reports €33 million of net income on €90 million in revenue for 2014.

 KemPharm Inc., a Coralville, Iowa-based developer of “abuse-deterrent” version of pain therapies, raised $56 million in its IPO. The company priced 5.1 million shares at $11 per share (below $12-$14 range). It will trade on the Nasdaq under ticker symbol KMPH, with Cowen & Co. and RBC Capital Markets serving as lead underwriters. Shareholders include Deerfield Management (9.9% pre-IPO stake) and Bridgepoint Capital Partners (5.2%).

 Party City, an Elmsford, N.Y.-based party supplies retailer, raised $372 million in its IPO. It priced around 21.88 million shares at $17 per share (high end of range), for a fully-diluted market cap of around $2 billion (and enterprise value of $3.9b).  The company, which originally filed for its IPO in January 2014, will trade on the NYSE under ticker symbol PRTY, while Goldman Sachs and BofA Merrill Lynch served 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.

 Virtu Financial Inc., a New York-based high-speed trading company, raised $314 million in its IPO. The company priced around 16.53 million at $19 per share (high end of range). It will trade on the Nasdaq under ticker symbol VIRT, while Goldman Sachs, J.P. Morgan and Sandler O'Neill served as lead underwriters. Shareholders include Silver Lake (10.7% pre-IPO stake) and Temasek Holdings (9.2%).

 XBiotech Inc., an Austin, Texas-based developer of monoclonal antibodies, raised $76 million in its IPO, by pricing 4 million shares at $19 per share (middle of range). It will trade on the Nasdaq under ticker symbol XBIT, while WR Hambrecht managed the offering via a “best efforts” process.


 Brait SE, a listed South African investment firm, has offered to pay $1 billion to acquire an 80% stake in health-club chain Virgin Active, which currently is owned by Richard Branson and CVC Capital Partners. Read more.


 American International Group (NYSE: AIG) has acquired a minority equity stake in K2 Intelligence, a New York–based investigative consultancy. No financial terms were disclosed.

 Conwert Immobilien Invest, a listed Australian property company, yesterday failed to get shareholder approval for a proposed $1.1 billion acquisition by Germany’s Deutsche Wohnen AG. Read more.


 .406 Ventures is raising up to $200 million for its third fund, according to a regulatory filing.

 Kohlberg Kravis Roberts & Co. has raised $1.34 billion for a new direct lending fund that, with leverage, would have around $3 billion in lending capacity. Read more.

 Waterland Private Equity, a Dutch private equity firm, has closed its sixth fund with €1.55 billion in capital commitments.

 Thoma Bravo has closed its second “special opportunities” fund with $1.065 billion in capital commitments. It will co-invest with Thoma Bravo’s $3.66 billion eleventh flagship fund, which closed last May.


 Mike Duke, former CEO of Wal-Mart, has joined The Carlyle Group as an operating executive. Read more.

 Chris Karkenny has joined Frazier Healthcare as an operating partner in the firm’s growth buyouts group. He previously was executive VP and CFO of Apria Healthcare.

 John O’Neill has joined Levine Leichtman Capital Partners as a London-based managing director focused on investment opportunities in the UK. He previously was a partner with Graphite Capital.

 Wells Fargo has promoted Guy Fuchs to president and COO of Wells Fargo Capital Finance. Fuchs has been with the firm for 14 years, most recently serving as executive VP and head of the corporate finance group for Wells Fargo Capital Finance.

Share today's Term Sheet: