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Term Sheet — Tuesday, October 27

Random Ramblings

I’m predisposed to story lines, and already had one worked out for the Square IPO. It began with Jack Dorsey being named permanent CEO of Twitter, followed by Square’s IPO filing (with better numbers than expected, particularly a whopping 110% rate of transaction revenue retention), followed by Twitter raising Q3 guidance and then (I assumed) Square disclosing increased growth in its Q3 numbers (the first period in which Dorsey ran both companies). It all played out right, until that last part.

Square yesterday disclosed its Q3 financials, which included a $53.9 million net loss on $332.2 million in revenue. Those figures represent slower revenue growth and faster loss growth than in the year-earlier period. Not the sort of top-line figures you want to bring on a road show, given that some investors are sure to be skeptical about backing a part-time CEO (particularly in light of broader VC-backed tech IPO difficulties of late).

To be sure, there are some mitigating factors. First, the company added 111 net employees in Q3, including some upper-level hires. Second, in Q3 it lengthened the period during which departing employees can exercise stock options to one year post-IPO. And I’m sure that Dorsey will argue that the backslide was based on an intentional strategy of investing in product R&D rather than slowing down for the sake of Wall Street. Plus, its financials continue to be strangled by that awful Starbucks partnership (that gets closer to ending with each passing day).

Moreover, Square doesn’t technically need money. It had $174 million on hand at the end of Q3. At its most recent burn rate, it technically could have lasted through the middle of 2017 without either public or private funds.

So there are indeed ways to spin the story. But the original arc would have been the straightest line, and the simplest.

• Today in Theranos: The back-and-forth continued yesterday on Theranos, the controversial blood-testing startup that was valued at $9 billion last year by private investors. CEO Elizabeth Holmes told a The Cleveland Clinic conference that her secretive company soon will release data proving its tech efficacy. At the same time, there are some new questions being raised about her company’s revenue (or lack of revenue) from big pharma companies like GSK and Pfizer. And from a pure news perspective, Theranos outside counsel David Boies will join its board of directors.

Okay, that’s the stenography. But I’d like to give you something new, so…

Theranos has been notoriously tight-lipped about the identities of its many investors, save for DFK, ATA Ventures, Don Lucas, Larry Ellison and Tako Ventures (it also hasn’t filed a Form D with the SEC since 2010). But a lovely reader sent over one of the company’s early pitch decks, which shows that it raised early capital from the following groups and individuals that have not been previously identified: Jupiter Partners, Esoom Enterprise (Taiwan), Continental Properties Co., Palmieri Trust, Dixon Doll, Ray Bingham and B.J. Cassin.

I’m also closing in on info about some of its more recent, hedge-type backers and should have more later this week (if you’ve got any info, please let me know… your confidentiality is always guaranteed).

 

 

 

• LP move: Commonfund Capital executives Don Pascal and Greg Jansen are stepping down as CEO and managing director, respectively, Fortune has learned. Each will stick around through the end of next June (i.e., the end of Commonfund’s fiscal year), after which their plans are unclear.

Peter Burns, president of Commonfund Capital, will assume the CEO role once Pascal departs. He and Pascal had joined the Connecticut-based organization at the same time 17 years ago, while Jansen joined in 1995. Commonfund Capital is the private capital business of Commonfund, which manages around $25 billion in investor assets.

THE BIG DEAL

• Canada Pension Plan Investment Board and BC Partners have committed to provide approximately 30% of the equity to support Altice’s $17.7 billion purchase of CablevisionSystems Corp. Each investor will commit $400 million, with another $200 million coming from co-investors. The deal is the pro rata result of CPPIB and BC’s agreement to sell a majority stake in Suddenlink to Altice. Read more.

VENTURE CAPITAL DEALS

• Sportradar, a Swiss developer of big data applications for sports, has raised €40 million in VC funding. Revolution Growth led the round, and was joined by Michael Jordan and Mark Cuban. Read more.

• Taris Biomedical LLC, a Lexington, Mass.-based developer of treatments for urologic diseases, has raised $32 million in new VC funding. Flagship Ventures led the round, and was joined by RA Capital Management and return backer Polaris Venture Partners. www.tarisbiomedical.com

Cato Networks, an Israel-based network security-as-a-service platform, has raised $20 million in Series A funding co-led by U.S. Venture Partners and Aspect Ventures. www.catonetworks.com

• Signals Group, an Israeli data analytics company focused on product development strategy for Fortune 500 companies, has raised $15 million in Series B funding. Sequoia Capital Israel led the round, and was joined by return backer TPY Capital. www.signalsgroup.com

• Desktop Metal, a Cambridge, Mass.-based 3D printing startup that works with metal, has raised $14 million in VC funding. Backers include New Enterprise Associates, Kleiner Perkins Caufield & Byers, Lux Capital and Bolt. Desktop Metal was founded by Ric Fulop, the founder of A123 Systems who more recently was a general partner with North Bridge Venture Partners. Read more.

• Spigit, a San Francisco-based “SaaS provider for crowdsourcing innovation,” has raised $14 million in new VC funding led by existing backer Investor Growth Capital. www.spigit.com

• Zebit, a La Jolla, Calif.-based automated payment system that provides zero-interest credit to unbanked Americans, has raised $10 million in Series A funding. Crosslink Capital led the round, and was joined by Wildcat Venture Partners, Leapfrog Ventures and Correlation Ventures. www.zebit.com

• Fieldwire, a San Francisco-based mobile and web platform for collaborating on construction projects, has raised $6.6 million in new VC funding. Formation 8 led the round, and was joined by return backers Bloomberg Beta, Trinity Ventures and AngelPad. Read more.

• APL Software, a San Jose, Calif.-based parallel computing company, has raised $5.2 million in new VC funding from Accomplice, Wing Venture Capital and company co-founder Cheng Wu. www.apl-soft.com

• Commerce Signals, a Charlotte, N.C.-based data collaboration startup for serving retailers, mobile operators, banks and payment networks, has raised $4 million in Series A funding led by OpenAir Equity Partners. www.commercesignals.com

• DirectScale, a Provo, Utah-based cloud software platform for the direct and social selling industry, has raised $4 million in Series A funding from Kickstart Seed Fund and NetSuite. www.directscale.com

• Petnet, a Los Angeles-based provider of connected pet feeding technologies, has raised $4 million in VC funding. Backers include Black River Ventures, Aspiration Growth, iRobot and the Amazon Alexa Fund. www.petnet.io

• SmartZyme, an Israeli developer of a tech platform for protein design and engineering, has raised $4 million in VC funding led by OrbiMed. www.smzyme.com

• Nuritas, an Irish therapeutics discovery startup that leverages artificial intelligence, has raised $3.2 million in new VC funding. New Protein Capital (Singapore) led the round, and was joined by Ali Partovi. www.newproteincapital.com

• Convoy, a Seattle-based on-demand platform for small trucking companies, has raised $2.5 million in new VC funding. Backers include Bezos Expeditions, Marc Benioff and Drew Houston. Read more at Fortune.

• Virtuagym, a Dutch developer of fitness apps, has raised €2.1 million in Series A funding from Saffelberg Investments. www.virtuagym.com

PRIVATE EQUITY DEALS

• Audax Private Equity has acquired California Products Corp., an Andover, Mass.-based provider of branded architectural interior and exterior paints and stains, sports surfaces coatings systems, and mold and abatement remediation coatings. No financial terms were disclosed. Audax recently formed an acquisition platform focused on the specialty coatings and adhesives markets, with CPC being the second related investment. The first was Nicoat. www.audaxgroup.com

• Baring Private Equity Asia has completed its previously-announced acquisition of Vistra Group Ltd., a Luxembourg-based trust and custodial services provider, from IK Investment Partners. No financial terms were disclosed, although prior reports suggested around an €800 million asking price. www.vistragroup.com

• The Blackstone Group is in talks to acquire nearly a 38% stake in the Taipei Financial Center Corp., operator of the Taipei 101 tower, according to Reuters. The deal could be valued at upwards of $700 million, with Blackstone reportedly promising the Taiwan government that it will not use an Chinese-backed money for the deal. Read more.

• Galil Medical, an Israeli developer of oncology cryoablation technology, has agreed to acquire Perseon Corp. (Nasdaq: PRSN), a Salt Lake City-based microwave ablation company, for $10.6 million in cash. The deal is contingent on Perseon raising around $26 million concurrent with the deal’s closing. Galil Medical shareholders include Investor Growth Capital, Elron Electronic Industries, Thomas McNerney & Partners and The Vertical Group. www.galilmedical.com

• The Gordian Group, a Mauldin, S.C.-based provider of construction cost estimating data and analytics and procurement solutions, has acquired Sightlines LLC, a Guilford, Conn.-based provider of facilities benchmarking data and expertise to higher education institutions. No financial terms were disclosed. Gordian is backed by Wicks Group, while sellers included Education Growth Partners. www.thegordiangroup.com

• Philips NV said that it may be unable to complete the sale of a 80.1% stake in its lighting components unit for $2.8 billion to an investor consortium led by Go Scale Capital, due to U.S. regulatory concerns. Read more.

• Searchlight Capital Partners has acquired a majority stake in Roots, a Toronto-based lifestyle brand and retailer and with 220 stores in North America and Asia. www.roots.com

• Stoic Holdings, a Denver-based private equity firm, has acquired a majority stake in Store It Cold, a New Paltz, N.Y.-based provider of cooling technology to the walk-in cooler industry. No financial terms were disclosed. www.storeitcold.com

• Topspin Partners has acquired a majority stake in JD Beauty, a Hauppauge, N.Y.-based maker of branded hair brushes and beauty care accessories. No financial terms were disclosed. www.jdbeauty.com

• United Sports Brands, a Minnetonka, Minn.-based portfolio company of Bregal Investments, has acquired Nathan Sports, a Sharon Hills, Penn.-based provider of athletic hydration, visibility and performance gear. No financial terms were disclosed. www.nathansports.com

IPOs

• Brakes Group, a UK-based food services company owned by Bain Capital, has picked banks for its upcoming IPO, according to Bloomberg (with a reported caveat that Bain may ultimately opt against the float, which could value Brakes at around $3.8 billion). Read more.

• Xtera Communications Inc., an Allen, Texas-based provider of optical transport solutions, has set its IPO terms to 5.5 million shares being offered at between $9 and $11 per share. It would have an initial market cap of around $176 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol XCOM, with Needham & Co. listed as left lead underwriter. Xtera reports a $10 million net loss on around $43.6 million in revenue for the first nine months of 2015. It has raised over $100 million in VC funding, from firms like New Enterprise Associates (23.4% pre-IPO stake), The Wellcome Trust (15.5%), ARCH Venture Partners (13.1%), Sevin Rosen Funds (8.3%) and VantagePoint Capital Partners (6.2%). www.xtera.com

EXITS

• Intel (Nasdaq: INTC) has agreed to acquire Saffron AI, a Cary, N.C.-based maker of a cognitive computing platform that is reminiscent of IBM’s Watson technology. No financial terms were disclosed. Saffron had raised VC funding from Intel Capital, Catalysta Ventures and Aurora Funds. Read more at Fortune.

• Roper Technologies Inc. (NYSE: ROP) has agreed to acquire two companies: CliniSys Group Ltd., a UK-based provider of laboratory information management systems; and Atlas Medical, a Calabasas, Calif.-based provider of clinical process and connectivity solutions. No financial terms were disclosed for either deal. CliniSys Group is currently backed by ECI Partners. www.roperind.com

OTHER DEALS

• Duke Energy (NYXE: DUK) has agreed to acquire Charlotte, N.C.-based Piedmont Natural Gas (NYSE: PNY) for approximately $4.9 billion in cash, or $60 per share (40% premium to last Friday’s closing price). Read more.

• Nippon Life Insurance has agreed to acquire National Australia Bank‘s (ASX: NAB) insurance unit for around US$1.8 billion. Read more.

FIRMS & FUNDS

• Stone-Goff Partners, a New York-based private equity firm that invests between $6 million and $20 million in consumer and services companies, has closed its third fund with an undisclosed amount of committed capital. The fund’s anchor LP is Carl Marks & Co. www.stonegoff.com

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