Term Sheet — Friday, May 1


Random Ramblings

Yesterday I verged pretty far outside my normal beat, to publish a piece about a childhood sexual abuse case in which the alleged victim is a VC-backed tech CEO, and how he has used social media to seek justice (when more traditional means failed). It's too involved to fit in this space, but I do hope you read it by going here.

Now, onto a bunch of more traditional Term Sheet items:

Debacle: As you've probably heard by now, anonymous social app Secret announced on Wednesday that it was shutting down. The company had raised $35 million in VC funding, including a $25 million Series B last July at a $100 million valuation.

In a blog post announcing the shutdown, CEO David Byttow wrote: "Secret, Inc. still has a significant amount of invested capital, but our investors funded the team and the product, and I believe the right thing to do is to return the money rather than attempt to pivot. Innovation requires failure, and I believe in failing fast in order to go on and make only new and different mistakes."

None of Secret's investors are talking publicly, but word is that they'll receive around $10 million back (in aggregate). The biggest losers will be the lead investors in that Series B round -- Index Ventures and Redpoint Ventures. Much smaller losses will go to Series A backers like Google Ventures and Kleiner Perkins.

But here's what's really important to remember about the $25 million Series B: $6 million of it went to the company's two co-founders, David Byttow and Chrys Bader-Wechseler (who left the company several months later). My understanding is that the secondary was at Secret's behest, and that both Index and Redpoint acceded as a condition for getting the deal.

For years, VCs have been telling me that founder liquidity is fine, because it helps entrepreneurs focus on the business rather than on paying the rent. But $3 million each? These guys succeeded before they... you know, succeeded. And there is no indication that either one of them is giving back any of their loot. All of the loss will fall on the VCs and, in turn, their limited partners.

To be clear: If I were an entrepreneur and a VC offered to put $3 million into my personal bank account, I'd take it. And there is honor is shutting down rather than running out the clock. But if I were one of that VC's investors, I'd be raising holy hell right about now. And if I were the entrepreneur and had any hopes of raising capital for a future startup, I'd figure out a way to make some sort of good-faith, partial repayment. Finally, it will be interesting to see what impact this experience has on future founder liquidity rounds, particularly for companies that haven't even hit a Series C round (or generated a lick of revenue).

Of jokes and grains of truth: Oracle still isn't publicly addressing rumors that it would have interest in acquiring Salesforce, but that doesn't mean that it's ignoring the subject altogether. During the company's first-ever media day, co-CEO Safra Catz said the following about Salesforce:

“If it’s acquired by someone else, it’s probably good for us. Everybody brings their own stuff to these things. It would be interesting to watch it play out. It will cause a lot of disruption to the market. It would be helpful to us in the short- and medium-term.”

Personnel scoop: Mark Greenbaum has stepped down as a managing director with GCA Savvian, where he had spent the past decade specializing in M&A. His next gig is as a Palo Alto-based partner with Luma Partners.

News about news: Mobile news app Circa is seeking a buyer after failing to secure a new round of venture capital funding, as we were first to report yesterday afternoon.

The San Francisco-based company had raised more than $5 million in angel and seed funding since 2012, from such investors as Quotidian Ventures and Lerer Hippeau Ventures. A report from late last year suggested that Circa was seeking to raise another $8 million, but the new deal never materialized.

Company co-founder and CEO Matt Galligan says that there was a term sheet on the table, but the two sides were unable to finalize certain particulars. From a broader perspective, he feels Circa struggled to find new investors because of the company’s focus on mobile (thus not generating millions of web pageviews) and working to retain current users via product enhancement at the expense of acquiring new users. You can read more by going here.

Have a great weekend...


 Foodpanda, a European food delivery service that also has operations in Brazil, has raised $100 million in new VC funding. Goldman Sachs led the round, and was joined by founding backer Rocket Internet. The company previously raised more than $200 million. Read more.


 MyoKardia Inc., a South San Francisco-based provider of therapies for genetic heart disease, has raised $46 million in Series B funding. Backers include Casdin Capital, Cormorant Asset Management, Perceptive Life Sciences, BioBridge LLC and return backer Sanofi. Also participating was an unidentified “public investment fund.” www.myokardia.com

 Payzer, a Charlotte, N.C.-based mobile and cloud based financial technology platform, has raised $4.2 million in Series A funding co-led by Grotech Ventures and Route 66 Ventures. www.payzer.com

 Dopay, a London-based financial services startup for the unbanked, has raised $2 million in seed funding from ACE & Co., Techstars Ventures and individual angels. www.dopay.com

 Kiana Analytics, a location-based marketing company headquartered in Sunnyvale, Calif., has raised more than $1 million in VC funding from Plug and Play Ventures, Sand Hill Angels and Hawaii Angels. www.kianaanalytics.com


 AGM Automotive, a Troy, Mich.-based portfolio company of Trive Capital, has acquired a controlling interest in Durmont Teppichbodenfabrik, an Austria-based carpet supplier for the European auto market, from CROSS Industries AG (which will retain a minority position). No financial terms were disclosed. www.agmautomotive.com

 Aurora Capital Group has completed its previously-announced acquisition of Restaurant Technologies Inc., a Mendota Heights, Minn.-based provider of cooking oil management and distribution services to the U.S. foodservice industry, from EQT Partners. No financial terms were disclosed. RTI generated $34 million in EBITDA on $136 million in revenue for 2013, according to EQT's website. www.rti-inc.com

 Baird Capital has acquired SloanLED, a Ventura, Calif.–based manufacturer of LED technology, from the Harbour Group. No financial terms were disclosed, except that Golub Capital provided debt financing. Equity co-investments came from Golub, JZ Partners and Hexagon Inc. www.sloanled.com

 Berkshire Partners has agreed to acquire a majority stake in Implus Corp., a Durham, N.C.-based maker of footwear accessories, from Trilantic Capital Partners. No financial terms were disclosed, although an earlier Reuters report suggested that the deal could be valued at more than $600 million. www.implus.com

 BigRentz Inc., an Irvine, Calif.-based rental network for aerial equipment and earth-moving equipment, has secured an undisclosed amount of growth capital funding from St. Cloud Capital. www.bigrentz.com

 CarTrawler, an Ireland-based online aggregator of car rental and ground transportation services, has agreed to acquire Cabforce, a Finnish provider of taxi-booking solutions. No financial terms were disclosed. CarTrawler is a portfolio company of BC Partners and Insight Venture Partners. Cabforce backers include KoppiCatch Inc., Miston Oy and Veraventure. www.cartrawler.com

 Clearent, a Clayton, Mo.-based payment processing company, has raised $25 million in private equity funding from FTV Capital. www.clearent.com

 Clessidra SGR has agreed to acquire a majority equity stake in Italian fashion house Roberto Cavalli. No financial terms were disclosed. Read more.

 Forte Research Systems Inc., a Madison, Wis.-based developer of specialized clinical research management software, has raised an undisclosed amount of growth equity funding from Primus Capital. www.forteresearch.com

 Fulcrum Capital Partners has acquired Innovative Steam Technologies, an Ontario–based maker of heat recovery steam generators for power generation and oil recovery applications, from Aecon Group Inc. (TSX: ARE). No financial terms were disclosed. www.otsg.com

 SK Capital Partners has acquired a control interest in AEB Group, an Italian provider of wine and beer ingredients. Sellers include Investindustrial. No financial terms were disclosed. www.aeb-group.com

 Tectum Holdings Inc., an Ann Arbor, Mich.–based portfolio company of TA Associates, has acquired A.R.E. Accessories LLC, a Massillon, Ohio-based maker of truck caps and related products, from Crystal Ridge Partners. No financial terms were disclosed. Western Reserve Partners managed the sale process. www.4are.com


 Arcadia Biosciences Inc., a Davis, Calif.-based agricultural biotech trait company, has set its IPO terms to 7.15 million shares being offered at between $13 and $15 per share. It would have an initial market cap of around $532 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol RKDA, with Credit Suisse, J.P. Morgan and Piper Jaffray serving as lead underwriters. Shareholders include Mandala Capital (11.5% pre-IPO stake). www.arcadiabio.com

 Black Stone Minerals LP, a Houston-based company with royalty and working interests in U.S. oil and natural gas mineral interests, raised $428 million in its IPO. The company priced 22.5 million shares at $19 per share (low end of $19-$21 range), and will trade on the NYSE under ticker symbol BSM. Barclays, BofA Merrill Lynch and Citigroup served as lead underwriters. www.blackstoneminerals.com

 McGraw-Hill Education, a textbook publisher owned by Apollo Global Management, is prepping an IPO that could come as early as Q4 with an enterprise value of $5 billion, according to Reuters. Read more.


 GTCR has completed its previously-announced sale of Fundtech, an Israel-based provider of global payments and transaction banking software, to DH Corp. (TSX: DH) for $1.25 billion in cash. www.fundtech.com

 Nomura Research Institute (Tokyo: 4307) has agreed to acquire Brierley+Partners, a Plano, Texas-based provider of loyalty and marketing solutions. No financial terms were disclosed. Sellers include Sutter Hill Ventures and Walden International. www.brierley.com


 Imprivata (NYSE: IMPR) has acquired HT Systems, a Tampa, Fla.-based provider of vein-scan biometric technology. No financial terms were disclosed. Read more.

 Monsanto Co. (NYSE: MON) has held acquisition talks with Swiss agribusiness Syngenta AG (Swiss: SYN), according to Bloomberg. This comes around one year after Monsanto’s prior attempt to purchase Syngenta collapsed. Syngenta has a current market cap of around $31 billion. Read more.

 Pfizer Inc. (NYSE: PFE) is the mystery suitor for Swedish Orphan Biovitrum (Oslo: SOBI), a Swedish maker of medicines for rare diseases, according to Reuters. Swedish Orphan Biovitrum had said earlier this week that it had received a takeover offer from an undisclosed buyer. At the time, its market cap was around $3.35 billion. Read more.


 Catalyst Investors, a New York-based growth equity firm focused on tech-enabled services companies, has closed its fourth fund with $377 million in capital commitments. www.catalyst.com


 Sarah Dahlgren is stepping down as head of bank supervision at the Federal Reserve Bank of New York, effective this fall. Read more.

 Lazard has named Alexander Stern as CEO of its financial advisor business, and Matthieu Pigasse as global head of M&A. Stern also will continue to serve as Lazard’s chief operating officer, while Pigasse had been leading Lazard’s French operations. www.lazard.com

 Praesidian Capital has promoted Tom Duffy from vice president to principal. www.praesidian.com

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