Random Ramblings
Today’s big news from the VC world was that Formation 8 is disbanding, rather than choosing to raise a third fund (it had just a bit of uncommitted dry powder left in its $500m second fund).
This is the firm launched in 2012 to primarily back Silicon Valley startups that had aspirations of expanding into Asia. Portfolio companies have included Oculus, RelateIQ, Plated, Oscar and Radius.
In a statement on its website, Formation 8 said:
"After thoughtful consideration, we have decided to continue with follow-on investments while managing our existing portfolio as we pursue different paths going-forward. Although we will not raise a Formation 8 Fund III, we are intently committed to our CEOs and will invest meaningfully in follow-on rounds for many years."
My understanding is that each of the firm’s three founding partners -- Joe Lonsdale, Jim Kim and Brian Koo -- will effectively have a budget going forward, through which they can pay for advisors and other needs related to existing portfolio companies. There will not be any sort of remnant crew sticking around, which means that a lot of folks will need to find new jobs. Formation 8 had a total of 32 employees and advisors, according to its website, of which 13 were in Asia.
So what happened? The best explanation I’ve heard so far is that the investment theses and interests of the firm’s principals had diverged a bit. Lonsdale, for example, is primarily interested in early-stage Silicon Valley companies. Koo is more intrigued by growth equity opportunities in Asia. Don’t be surprised to see each of them raise new funds with those focuses -- maybe with fellow Formation 8 partners on board (some regulatory filings are already circulating to that effect)
I’ve also received some emails from folks pointing out that this announcement comes just days after one of Lonsdale’s ex-girlfriends dropped sexual assault charges against him (and he, in turn, dropped a countersuit) -- two moves that were followed by Stanford University lifting a ban on Lonsdale being allowed to visit the campus. And, indeed, there have been rumors of this split coming for months (although, for the record, Lonsdale denied it was happening in a phone call several months ago, which is why I didn’t report it). My best guess -- and it’s only a guess -- is that the timing had more to do with the firm’s annual LP meeting, which occurs next week, than it did with the court proceedings.
None of the firm’s principals are commenting yet, beyond the blog post.
•Gracias: Big thanks to Erin Griffith for filling in over the past few days while I was away visiting Disney princesses (to be more specific, every single Disney princess... plus an assortment of fairies and amenable rodents).
THE BIG DEAL
• Expedia (Nasdaq: EXPE) has agreed to acquire vacation rental site HomeAway (Nasdaq: AWAY) for $3.9 billion in cash, or $38.31 per share (19.57% premium to yesterday’s closing price). The largest outside shareholder in HomeAway is Fidelity Investments, with a 7.05% stake. Read more.
VENTURE CAPITAL DEALS
• Coveo, a Canadian provider of intelligent search solutions for employees, has raised C$35 million in Series D funding. IQ Venture Capital led the round, and was joined by return backers Tandem Expansion Fund, BDC Capital, Propulsion Ventures SEC, Fonds de solidarité FTQ and company CEO Louis Tetu. www.coveo.com
• Elevo Therapeutics, a Cambridge, Mass.-based startup focused on “leveraged the power of the microbiome to develop novel therapies for cancer,” has raised $35 million in first-round funding from Flagship Ventures. www.evelotx.com
• Cask Data Inc., a Palo Alto, Calif.-based startup that helps developers deliver enterprise-class Apache Hadoop solutions, has raised $20 million in Series B funding. Safeguard Scientifics led the round, and was joined by Battery Ventures and Ignition Partners. www.cask.co
• M.Gemi, a Boston-based direct-to-consumer provider of handcrafted Italian shoes, has raised $18 million in Series B funding. Accel Partners led the round, and was joined by return backers General Catalyst Partners, Forerunner Ventures and Breakaway Ventures. www.mgemi.com
• BrightFarms Inc., a New York-based national brand of local produce, has raised $13.65 million in Series B-1 funding from firms like WP Global Partners, NGEN Partners and Emil Capital Partners. www.brightfarms.com
• 17 Media, a maker of a photo sharing and live video streaming app, has raised $10 million in Series A funding co-led by Infinity Venture Partners and Prometheus Capital. www.17.media
• Hivemapper Inc., a Burlingame, Calif.-based developer of 3D maps to help drone pilots avoid crashing into buildings, has raised $2.9 million in seed funding. Spark Capital led the round, and was joined by Founder Collective, Google Ventures, Harrison Metal and Homebrew. Read more.
PRIVATE EQUITY DEALS
• Abraaj Group has acquired a majority stake in two Moroccan companies: Centre de Traitement Al Kindy, Casablanca’s largest private oncology clinic; and and Clinique Spécialisée Menara, an oncology and imaging diagnostics center in Marrakech. No financial terms were disclosed. www.abraaj.com
• Bain Capital, Onex Corp. and CVC Capital Partners (working with KKR) all are prepping bids for the lighting unit of Royal Philips NV, according to Bloomberg. The deal could be valued at around €5.5 billion. J.P. Morgan and Goldman Sachs are managing the process. Read more.
• Charterhouse Capital Partners has short-listed three suitors to submit binding bids for French call center operator Webhelp, which could be sold for around €1 billion, according to Reuters. They are: Apax Partners, KKR and Cobepa. Read more.
• Freeman Spogli & Co. and the Wang family have acquired Regent Holding Co., a maker of home décor and accent products under the Creative Co-op and Bloomingville brands. No financial terms were disclosed. Sellers include Eureka Growth Capital. www.creativecoop.com
• Goldman Sachs and Thomas H. Lee Partners are in talks to acquire Cleveland-based facility management company GCA Services Group Inc. from The Blackstone Group for around $1 billion, according to Reuters. Read more.
• Grand Crossing Capital Partners has acquired a majority stake in Everglades, an Edgewater, Fla.-based maker of premium offshore fishing boats. No financial terms were disclosed. www.evergladesboats.com
• H.I.G. Growth Partners has sponsored a recapitalization of Centerfield Media Holdings LLC, an El Segundo, Calif.-based digital advertising technology company, in partnership with CMH co-founders Jason Cohen and Brett Cravatt. No financial terms were disclosed. www.centerfield.com
• Sverica Capital Management has acquired Synoptek LLC, an Irvine, Calif.-based outsourced IT managed services provider. No financial terms were disclosed. www.synoptek.com
IPOs
•KuraOncology, a La Jolla, Calif.-based developer of treatments for solid tumors and blood cancers, raised $50 million in its IPO. The company priced 6.25 million shares at $8 per share, compared to earlier plans to offer 3.75 million shares at $16 per share (which is where it had been trading on the OTC BB). It now will trade on the Nasdaq under ticker symbol KURA, while Citigroup and Leerink Partners serving as lead underwriters. The pre-revenue company has raised in VC funding, from firms like Fidelity (12.73% pre-IPO stake), EcoR1 Capital (9.99%), Arch Venture Partners (9.27%), Tavistock Life Sciences, Partner Fund Management and Nextech Invest. www.kuraoncology.com
• Interactive Data Corp., a Bedford, Mass.-based financial information provider owned by Silver LakeandWarburg Pincus, has formally withdrawn its IPO registration. The company late last month agreed to be acquired by IntercontinentalExchangeInc. (NYSE: ICE) for $5.2 billion in cash and stock. www.idc.com
• Shimmick Construction Co., an Oakland, Calif.-based civil construction company , has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol SCCI, with FBR serving as lead underwriter. The company reports around $8 million in net income on $242 million in contract revenue for the first half of 2015. www.shimmick.com
EXITS
• Duke Street has written down its investment in British legal services firm Parabis Group to zero, according to eFinancial News. Duke Street originally acquired the firm in 2012 at an enterprise value of between £150 million to £200 million, and now is exploring its sale options. Read more.
• Johnson & Johnson (NYSE: JNJ) has agreed to acquire NoviraTherapeutics Inc., a Doylestown, Penn.-based antiviral drug discovery company focused on the treatment of chronic hepatitis B virus infections. No financial terms were disclosed. Novira had raised around $25 million from Versant Ventures, 5AM Ventures, Canaan Partners, WuXi PharmaTech, BioAdvance, Mid-Atlantic Angel Group, Robin Hood Ventures and Delaware Crossing Investment Group. www.noviratherapeutics.com
• Polaris Private Equity has agreed to sell its 75% stake in Skånska Byggvaror, a Sweden-based online retailer of building and construction products, to Byggmax (Oslo: BMAX) for around $86 million (and upwards of another $13m in possible earn-outs). www.skanskabyggvaror.se
OTHER DEALS
• China Life Insurance has agreed to pay more than $1 billion to acquire around a 30% stake in a group of U.S. warehouse properties that were recently acquired by Singapore-listed Global Logistic Properties Ltd., according to the WSJ. Read more.
• GroupM, a unit of WPP PLC, has acquired Essence Digital, a London-based buyer of digital and programmatic media. No financial terms were disclosed. AdMedia Partners managed the process. www.essencedigital.com
FIRMS & FUNDS
• Falcon Investment Advisors is targeting $1.25 billion for its fifth fund, according to a regulatory filing. www.falconinvestments.com
• Greenspring Associates has closed its seventh venture capital fund-of-funds, which will go toward direct LP commitments, direct co-investments and secondaries. www.greenspringassociates.com
• Investcorp has acquired the hedge fund-of-funds unit of Wilton, Conn.-based SSARIS Advisors LLC. No financial terms were disclosed. www.investcorp.com
• O’Reilly AlphaTech Ventures is targeting upwards of $30 million for its fourth fund, according to a regulatory filing. www.oatv.com
• TEEC Angel Fund, a Palo Alto-based venture group formed by Tsinghua University alumni, has closed its third fund with $30 million in capital commitments. www.teec-angel.com
• Thoma Bravo plans to target $7 billion for its twelfth fund, which would be nearly double the size of its 2014 predecessor fund, according to Reuters. Read more.
MOVING IN, UP, ON & OUT
• Mike Fridgen has joined Madrona Venture Group as CEO of its Seattle-based startup studio, called Madrona Venture Labs. He previously co-founded companies like Farecast and Decide (which was purchased by eBay, where Fridgen became GM of the company’s Seattle office). www.madronaventurelabs.com
• Suman Prasad has been named head of startup and VC partnerships at Google, where he has worked since 2012. www.google.com
• Joseph Wilson has joined Golub Capital as a managing director and head of sales and trading for syndicated loans. He previously was a managing director with Citigroup. www.golubcapital.com
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