Fidelity Investments has become one of the most active investors in privately-held startups, buying into popular companies and then divvying up the shares among its various mutual funds. Now, however, it looks like the investment giant is beginning to reconsider the prices it paid just earlier this year.
Earlier this week came reports that Fidelity had marked down the value of its investment in Snapchat by around 25% between the end of July and the end of September, based on an investment it had made just this past spring. A lot of that stock is held by Fidelity in its Blue Chip Growth Fund, a $69.5 billion mutual fund that primary invests in S&P 500 or DJIA companies, but which also has plugged around $300 million into still privately-held growth companies like Snapchat.
Fortune has reviewed these holdings, and learned that Snapchat is hardly the only one to receive a serious markdown over the past few months. In fact, others have fared far worse.
Take Blue Bottle Coffee Co., for example. Fidelity led a $70 million investment for the trendy coffee chain this past May, investing just over $21 million. It held that investment at cost through the end of July but, as of Sept. 30, it was marked down a whopping 43.3% — perhaps due to Blue Bottle’s decision to kill off its wholesale business, although that announcement came in June. Or what about Zenefits, officially known as YourPeople, the popular HR automation platform in which Fidelity first invested back in May? The mutual fund slashed the value of those shares by 48%. Or Dataminr, a big data startup that analyzes social media, which has been marked down by 35%.
And then there ins NJoy, the electronic cigarette maker that has raised over $160 million. Fidelity Blue Chip Growth Fund owns three different types of NJoy securities, but has all but written them off entirely. Its $4.91 million investment from June 2013 is now valued at just $300,000. Its $2.5 million investment from February 2014 is now valued at just $70,000. And, even worse, what appears to be a $9.52 million common stock investment from Sept. 2013 has been written down to just $12.
Overall, the Blue Chip Growth Fund is carrying its privately-held companies above cost — thanks in large part to appreciation in shares of Uber and The Honest Company (both of which were static between July and September). But of the 23 companies we examined , more than one-third were marked down between July and September (not including five portfolio additions during the period). Only a small handful were marked up, while the rest remained static.
It is worth noting, of course, that marking values of private companies to "market" is much more art than science, which is why most traditional venture capital firms only change their valuations when there is a subsequent financing event. But Fidelity clearly is feeling some frost.
For a full list of the holdings and prices in the Fidelity Blue Chip Growth Fund, please go here.
• Smartening up? Today's top two VC deals are for education companies, Udacity and Varsity Tutors. And even though the ed sector has been particularly unkind to VCs over the years, investment in the sector has been consistently rising over the past decade, according to data from Pitchbook.
In 2006, for example, there was just $176 million disbursed by VCs to 176 education companies (global). Both the dollar and deal numbers have risen in every single year since, topping out in 2015 year-to-date at more than $2 billion for over 500 companies.
• And the winner is... Fortune today revealed its Businessperson of the Year. Check out the top boss, and the entire list of contenders, by going here.
THE BIG DEAL
• The Blackstone Group has agreed to invest $820 million into NCR Corp. (NYSE: NCR), a based maker of automated teller machines, in the form of perpetual convertible preferred shares.
The deal gives Blackstone around a 17% equity stake in NCR, which will use the proceeds to help fund a share repurchase through a self-tender of up to $1 billion of its common stock.
Blackstone originally held discussions about taking NCR private, but no such deal was consummated. Read more.
VENTURE CAPITAL DEALS
• Udacity, a San Francisco-based online provider of "nanodegree" courses in technical subjects, has raised $105 million at around a $1 billion valuation. Existing investor Bertelsmann led the round, and was joined by Baillie Gifford, Emerson Collective, Google Ventures and return backers Andreessen Horowitz, Charles River Ventures and Drive Capital. Read more.
• Varsity Tutors, a St. Louis-based live learning platform for private instructors, has raised $50 million in Series B funding. Technology Crossover Ventures led the round, and was joined by individual angels like musician Adam Levine and education executive Stuart Udell. www.varsitytutors.com
• NextVR, a Laguna Beach, Calif.-based provider of in live-action virtual reality broadcast technology, has raised $30.5 million in Series A funding. Formation 8 led the round, and was joined by Time Warner Investments, Comcast Ventures, Peter Gruber, RSE Ventures, The Madison Square Garden Co. and Dick Clark Productions. www.nextvr.com
• ClassPass, a New York-based fitness class subscription service, has raised $30 million in Series C funding. Google Ventures led the round, and was joined by return backers General Catalyst and Thrive Capital. Read more.
• Eyefluence, a Milpitas, Calif.-based “eye-interaction technology platform” for augmented and virtual reality devices, has raised $14 million in Series B funding. Motorola Solutions Venture Capital led the round, and was joined by Jazz Venture Partners, NHN Investment, Dolby Family Ventures and return backer Intel Capital. www.eyefluence.com
• Zola Inc., a New York-based online wedding and gift registry, has raised $10 million in Series B funding, according to VentureWire. Canvas Ventures led the round, and was joined by return backer Thrive Capital. Read more.
• Flexe, a Seattle-based startup that lets warehouse owners rent out empty space on a monthly basis, has raised $4.4 million in new VC funding from Tom Lanman, Hank Vigil, Second Avenue Partners and SV Angel. Read more.
• Iceye, a Finland-based provider of “quick-response imagery from space” via microsatellites, has raised $2.8 million in Series A funding. True Ventures led the round, and was joined by Lifeline Ventures and Founder.org. www.iceye.fi
• Panaseer Ltd., a London-based enterprise cybersecurity startup, has raised $2.25 million in seed funding from Albion Ventures, Notion Capital, Winton Technology Ventures, C5 Holdings and Elixirr. www.panaseer.com
• Cenergistic, a Dallas-based energy conservation company founded 30 years ago, has raised an undisclosed amount of equity funding from Kleiner Perkins Caufield & Byers. www.cenergistic.com
PRIVATE EQUITY DEALS
• Inoca Capital has sponsored a recapitalization of Levementum LLC, a Chandler, Ariz.-based provider of provides management consulting, system integration and resale of cloud-based CRM and digital solutions. No financial terms were disclosed. www.levementum.com
• Verti Capital has acquired unprofitable pharma retailer and wholesaler Drogaria Mais Econômica SA from listed Brazilian drugstore chain Brasil Pharma SA for approximately $12 million. Read more.
• WaVe Life Sciences, a Boston-based genetics startup focused on stereopure nucleic acid therapies for patients impacted by rare diseases, raised $102 million in its IPO. It priced 6.4 million shares at $16 per share, compared to original plans to offer 5 million shares at between $15 and $17 per share. Its initial market cap is around $397 million, and the company will trade on the Nasdaq under ticker symbol WVE. Jefferies and Leerink Partners served as lead underwriters. The company had raised around $84 million in VC funding from RA Capital Management, Foresite Capital, Kagoshima Shinsangyo Sosei, Fidelity, New Leaf Venture Partners, Redmile Group, Jennison Associates, Cormorant Asset Management and Clough Capital Partners. www.wavelifesciences.com
• Duke Street and Europa Capital have agreed to sell Sandpiper, a Channel Islands retailer, to a group of Channel Islands investors that include Bailiwick Investments, Sealyham Ltd. and Ravenscroft Ltd. No financial terms were disclosed. www.dukestreet.com
• EQT Infrastructure has agreed to sell Koole Terminals, a Dutch liquid bulk storage operator, to unidentified institutional investors advised by J.P. Morgan Asset Management. No financial terms were disclosed. www.eqt.se
• IAC/Interactive Corp. (Nasdaq: IACI) has made an unsolicited $512 million cash offer to acquire Angie’s List (Nasdaq: ANGI), an Indianapolis-based local services marketplace and review site. The $8.75 per share offer represents a 10.5% premium to Angie’s List’s closing price on Wednesday, and comes after IAC says it has spent “many months” failing to develop a “meaningful dialog” with Angie’s List management. Read more.
• The Kroger Co. (NYSE: KR) has agreed to acquire smaller supermarket chain Roundy’s Inc. (NYSE: RNDY) for around $800 million in cash, or $3.60 per share (65% premium to Tuesday's closing price). Read more. today announced a definitive merger agreement under
• Idemitsu Kosan Co. (Tokyo: 5019) has agreed to acquire smaller Japanese oil refiner Showa Shell Sekiyu (Tokyo: 5002) for approximately $4 billion. Read more.
• Salini Impregilo (Italy: SAL) has agreed to acquire Cheshire, Conn.-based Lane Industries, a family-owned construction group, for approximately $406 million. Read more.
FIRMS & FUNDS
Elevar Equity, a Seattle-based VC firm focused on businesses the provide services to low-income communities (primarily in India and Latin America), has closed its third fund with $74 million in capital commitments. Limited partners include the Rockefeller Brothers Fund, Oblate International Pastoral Investment Trust, JPMorgan Chase & Co., Omidyar Network, Prudential Financial, the Rockefeller Foundation, Blue Haven Initiative and Treehouse Investments. www.elevarequity.com
• Rakuten (Tokyo: 4755) has launched a $100 million venture capital fund focused on early and mid-stage private companies in the financial tech sector. www.rakuten.com
MOVING IN, UP, ON & OUT
• Kristin Newhall has joined High Road Capital Partners as partner of investor relations and administration. She previously was a partner with The Riverside Company. www.highroadcap.com
• Sharon Weinbar has been named CEO of Hackbright Academy, a San Francisco-based provider of computer science programs for women (succeeding founder David Phillips, who will serve as chairman). She previously had been a general partner with Scale Venture Partners, where she will continue to serve as a venture partner. www.hackstaracademy.com
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