CryptocurrencyInvestingBanksReal Estate

Term Sheet — Monday, February 8

February 8, 2016, 2:11 PM UTC

Random Ramblings

This has been a terrible year so far for tech stocks. The Nasdaq is off 12.9% as of market close on Friday. LinkedIn shares have fallen more than 51%. FitBit is off 47%. Twitteris down 32%. So is WorkDay.

Even three of the four vaunted FANG stocks ― Amazon, Netflix and Google ― are underwater. The fourth, Facebook, is basically at break-even. And don’t go looking to Apple for salvation. It’s also in the red for 2016.

At the same time, we are beginning to see erosion in the valuations of privately held technology stocks. Not just in the carrying prices from their existing investors, but also in the form of down rounds and lower valuations at even the early stages of venture capital. If 2015 was the year of unicorns, 2016 might be the year of magical glue.

Not surprisingly, all of this has resulted in comparisons to 2001 and 2002, when the dotcom dream became a nightmare.

While there certainly are some similarities ― namely in investors first valuing growth over unit economics, and then changing their collective mind ― it’s a pretty poor analogy. In fact, if you need to find a decent parallel, it would be better to look at the more recent financial crisis.

Between at the beginning of 2000 until the end of 2002, the Nasdaq composite fell by around 53%. During that same period, the S&P 500 was off 22% and the Dow Jones Industrial Average was down just under 13%. In other words, tech was hit much harder than were the broader markets.

In 2016, however, the losses are distributed much more evenly. The S&P 500 and DJIA each are down more than 8%. That’s smaller than the NASDAQ’s 12.9% drop, but not nearly by the differential that we saw during the dotcom crash. Kind of like what we saw during the financial crisis ― albeit less severe ― when the NASDAQ was down 35% between 2007 and 2009, compared to a 30% drop for the DJIA and a 36% fall for the S&P 500.

Moreover, recent markdowns for privately held companies are not exclusive to tech. Just check out how deep Fidelity has slashed the value of its holdings in coffee chain Blue Bottle. Or the pressure put by investors on non-tech companies like Nasty Gal and BirchBox, each of which just announced layoffs.

Today’s stock sign is a downward arrow, without too much regard for industry sector. Almost everyone got ahead of their skis, and macro factors are pulling them back. Last time it was a mortgage debacle that sparked a massive recession. This time it’s a credit crunch, slowing Chinese economy, and low energy prices (that last one is crazy counterintuitive, but it’s a real thing). Plus, of course, a six-year bull market for stocks.

In 2001, the technology companies had gotten far ahead of a market in which only 4.5% of all Americans were broadband subscribers. Many of them weren’t “real” businesses because they didn’t have much total addressable market. In 2016, the problem isn’t tech. Instead, tech is just a party to other problems.

Video is up: My interview with Fred Wilson during last week's Upfront Summit has gotten lots of attention, in part because of Fred telling Uber CEO Travis Kalanick to "take the goddman company public." But there also was a lot more to the conversation, including a discussion of Foursquare's recent financing, succession planning at Union Square Ventures and Fred's philosophy of getting partial liquidity before his portfolio companies IPO. 

We've posted video of the entire conversation, which you can view by going here.

 59k and counting: Every time I add another thousand Twitter followers, I like to ask you to join the others so we can chat/debate/joke throughout the day. Follow me @danprimack.


 Apollo Global Management, Najafi Cos and The Vistria Group have agreed to acquire Apollo Education Group Inc. (Nasdaq: APOL), the for-profit education company that manages The University of Phoenix, for $1.1 billion.

The $9.50 per share deal represents a 44% premium over the company’s stock price on Jan. 8, which was just before it announced that its board was pursuing strategic alternatives. For the record, there was no affiliation between Apollo Global Management and Apollo Education before this transaction. Read more.


 Xignite, a San Mateo, Calif.-based provider of market data cloud solutions for financial institutions and financial technology companies, has raised $20.5 million in Series C funding. QUICK Corp. (Japan) led the round, and was joined by StarVest Partners, Altos Ventures, and Startup Capital Ventures.

 Amperity, a Seattle-based provider of enterprise marketing software, has raised $9 million in Series A funding led by Madrona Venture Group.

 KnowBe4 Inc., a Clearwater, Fla.-based provider of a security awareness training and integrated phishing platform, has raised $8 million in Series A funding led by Elephant.

 Revolut, a British maker of a mobile foreign exchange app, has raised around $4.8 million in seed funding from Balderton Capital, Seedcamp, Point Nine, Venrex and Index Ventures.

 Invictus Oncology, an India-based developer of cancer therapeutics, has raised an undisclosed amount of Series A funding from Navam Capital, Aarin Capital and Ratan Tata.


 Apax Partners and NB Renaissance have agreed to acquire a 37.1% stake in Engineering Ingegneria Informatica SpA (BIT: ENG), an Italian provider of IT software and services, for €66 per share. The deal would trigger a mandatory takeover process for the company. Read more.

 AXA Insurance has invested €75 million for an 8% equity stake in Africa Internet Group, operator of Africa-focused ecommerce sites like Jumia. Read more.

 May River Capital has acquired Hunt Valve, a Salem, Ohio-based fluid power engineering company specializing in severe duty valves and components. No financial terms were disclosed. Sellers included PNC Mezzanine Capital.

 Mintra Trainingportal AS, a Norway-based e-learning company for the oil and gas industry, has acquired OCS HR AS, a provider of crew scheduling and payroll software for the maritime and oil & gas industries. No financial terms were disclosed. Mintra is a portfolio company of The Riverside Company.

 Monica Vinader, a UK-based “affordable luxury jewelry brand,” has raised £20 million in equity funding from Piper (£14m) and Winona Capital (£6m).

 PSA Healthcare, a Norcross, Ga.-based portfolio company of J.H. Whitney Capital Partners, has acquired Care Unlimited Inc., a provider of home care services to medically fragile children in Pennsylvania. No financial terms were disclosed.

 Silver Lake and Thoma Bravo have completed their previously-announced $4.5 billion take-private purchase of SolarWinds, an Austin, Texas-based provider of IT management software.


 Five companies are expected to price IPOs on U.S. exchanges this week: OTG EXP, Advanced Disposal Services, AveXis, Proteostasis Therapeutics and Mapi-Pharma. Read more.

 Bain Capital has hired Citigroup and Goldman Sachs to lead a Paris listing for French furniture retailer Maisons du Monde, according to Reuters. The IPO could value Maisons at more than €1 billion. Read more.


 Johnson Electric Holdings Ltd. (Helsinki: 179) has agreed to acquire the holding company of AML Systems, a French provider of active modules for vehicle headlamp systems, from Syntegra Capital for €65 million in cash.

 MidOcean Partners has sold the operations of The Allant Group Inc., a Naperville, Ill.-based provider of data analytics and customer insights solutions, to Vencap Technologies. No financial terms were disclosed.

 Rock Hill Capital Group has sold Tideland Signal Corp., a Houston-based provider of marine navigation products and services, to Xylem Inc. (NYSE: XYL). No financial terms were disclosed.


 Chobani LLC, a Greek yogurt maker which received a $750 million loan from TPG Capital in 2014, has rejected an acquisition offer from PepsiCo (NYSE: PEP). Read more.

 Groupe Casino (Paris: CO) has agreed to sell its 58.6% stake in Thai hypermarket operator Big C Supercenter for €3.1 billion to a holding company for Thai billionaire Charoen Sirivadhanabhakdi. Read more.

 One Medical Group, a San Francisco-based provider of tech-enabled primary care, has acquired Rise, a nutrition and health coaching platform. No financial terms were disclosed. Rise had raised over $2 million in seed funding from firms like Foodgate. One Medical has raised more than $180 million from firms like Benchmark, J.P. Morgan Asset Management, Redmile Group, Google Ventures, Maverick Capital and Oak Investment Partners.


 Garrison Capital is raising upwards of $500 million for its second middle-market lending fund, according to a regulatory filing.

 Matrix Partners China has closed its fourth VC funding with $500 million in capital commitments, according to a regulatory filing.

 Network Ventures, a Chicago-based seed-stage VC firm led by Jeffrey Maters (ex-Pritzker Group Venture Capital), is raising $10 million for its debut fund, according to a regulatory filing.


 Chris Buckman has joined EnerTech Capital as a vice president, effective next month. He previously was VP of business development with Moore Pipe.

 VMG Partners, a San Francisco-based private equity firm focused on branded consumer products, has promoted Angad Hira, Jonathan Marshall and Carle Stenmark to vice presidents.

Share today's Term Sheet: