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Term Sheet — Monday, March 7

Random Ramblings

Some notes to kick off your Monday…

• Down rounding: Last month, the WSJ reported that on-demand food delivery company DoorDash recently “sold shares at a 16%” discount. Actually, that’s not technically true. DoorDash did indeed authorize the sale of $150 million worth of shares at (nearly) a 16% discount, but the round still isn’t completely closed (reports suggest the final total will be closer to $110 million).

Of greater interest, however, is that the original story referred to this deal as a “down round,” something that co-founder and CEO Tony Xu subsequently denied in an interview with Quartz.

From what I can tell, the conflict centers on how one actually defined down-round, in the context of share price vs. valuation. Yes, DoorDash is telling shares cheaper in its new Series C round than in its prior Series B round. But, at the same time, the company will be more highly valued after its Series C round than it was after its Series B round. Read more by going here.

• The deal-maker’s dilemma: In defending his past campaign contributions to Democrats (namely Hillary Clinton), Donald Trump has repeatedly said that it was just the cost of doing business. If he wanted to get his deals done, he had to play nice with everyone.

Okay, but doesn’t that then undercut his primary argument for the White House? Today he clearly isn’t playing nice with everyone, particularly Democrats. Yet he’s still promising to make the same types of “great” deals that he made as a businessman ― despite having intentionally burned down what he has said was the necessary scaffolding.

• Speaking of politics: Lots of buzz over the weekend from an interview that Chamath Palihapitiya, a former Facebook exec and founder of VC firm Social Capital, gave to Business Insider. In it, he talked about his hopes for a Mike Bloomberg presidential campaign, and then said this:

“I’ve told them [Bloomberg’s folks] that most of us would pause our day jobs to get him elected. I’ve offered to run ‘Growth’ for the period of his campaign. We are 100% serious… The same team that helped build Facebook to one billion users would do our best to activate the entire United States to put him in The White House.”

My gut reaction (via Twitter) was that Palihapitiya’s offer could constitute a breach of fiduciary duty to Social Capital’s limited partners (the firm’s third flagship fund closed just last year). Not only in terms of active portfolio management, but in terms of possibly missing out on quality investment opportunities between the summer conventions and November election.

Palihapitiya replied (again via Twitter), first saying that Social Capital is budget based and that he is its largest LP. When I pushed back a bit, he wrote: “We have built a lot of code that helps us engage deeply with out portfolio companies now…  It’s a semi-supervised system…needed upfront and then during exceptions. #TradeSecrets”

I couldn’t quite tell if this was tongue-in-cheek or a cop-out, so I reached out to a Social Capital spokeswoman. She replied that Palihapitiya’s use of “pause” was only in the context of a few people working with Bloomberg campaign staffers for a few days, and that the firm would not actually suspend its core operations for the length of a (still hypothetical) campaign.

• Deal data: Global announced M&A totaled $453 billion through last Thursday, according to Thomson Reuters. That’s off 17% from the same period in 2015, while U.S.-specific M&A is off 22%. Global private equity volume is at $44.7 billion, which is down 45% (U.S. is 54% off pace).

One other interesting data point is that “Any China Involvement M&A” is at $135.2 billion, which is a 71% year-to-date increase over 2015. It’s also the highest period for such deal activity since Thomson Reuters began keeping such records in 1980.

• Correction: In Friday’s column about the shutdown of Atherotech, I mistakenly wrote that Madison Capital Funding and Regions Bank provided loans to support Behrman Capital’s original buyout. They did not. Instead, they both became involved during the dividend recap. Also, the lead should have said that “more than 225” people lost their jobs when the company closed late last month. It had employed more than 300 people at its peak last year, before beginning layoffs. You can find the full story here.

• Publishing note: Tomorrow’s Term Sheet will be published from 30,000 feet, as I’m heading out to San Francisco for a couple of days. So preemptive apologies if it’s a bit late.


• BASF (DB: BAS) is prepping a takeover offer for DuPont (NYSE: DD), which in December agreed to a $130 billion mega-merger with Dow Chemical (NYSE: DOW), according to Bloomberg. Read more.


• Property Partner, a UK-based property crowdfunding platform, has raised £12.9 million in Series B funding. Octopus Ventures led the round, and was joined by Dawn Capital. The company also secured £3 million in venture debt from Silicon Valley Bank. Read more.

• LightSail, a New York-based adaptive literacy solution for K-12 education, has raised $11 million in Series B funding. Scott Cook (co-founder of Intuit) led the round, and was joined by the Bezos Family Foundation.

• Culture Amp, a San Francisco-based “people analytics platform” for insights on employee engagement and company culture, has raised $10 million in Series B funding. Index Ventures led the round, and was joined by Felicis Ventures and Blackbird Ventures.

• Zaloni Inc., a Durham, N.C.-based data lake startup, has raised $7.5 million in Series A funding. Sierra Ventures led the round, and was joined by Baird Capital.

• Correction: Routific, a Vancouver-based provider of route optimization software, recently raised $1.2 million in seed funding from firms like Pallasite Ventures and FireStarter Fund. The raise was in U.S., not Canadian, dollars.


• Bodytech Corp., a Colombia-based gym chain in Latin America, has secured an undisclosed amount of growth equity funding from L Catterton.

• Canada Pension Plan Investment Board and Saudi Agricultural and Livestock Investment Co. each have submitted bids for a minority equity stake in Glencore PLC’s (LSE: GLEN) agriculture unit, according to Bloomberg. The entire business is estimated to be worth around $10.5 billion. Read more.

• Distribution International Inc., a Houston-based portfolio company of Advent International, has acquired 3i Supply Co., a Midland, Mich.-based distributor of mechanical and industrial insulation, fabricated products, refractory and removable insulation pads.

• Protector Holdings, a San Francisco-based joint venture between Epic Insurance Brokers & Consultants and Dowling Capital Partners, has acquired BetterWay Insurance Services, a Concord, Calif.-based insurer focused on Hispanic consumers. No financial terms were disclosed.

• Staff Finder, a European on-demand marketplace for temporary staffing, has secured an undisclosed amount of growth equity funding from One Peak Partners and Goldman Sachs Private Capital.

• Thomson Reuters Corp. (NYSE: TRI) has hired JPMorgan Chase and Guggenheim Securities to find a buyer for its Intellectual Property & Science unit, which could be worth around $3 billion, according to Bloomberg. Likely suitors include Advent International, BC Partners, Cinven and KKR. Read more.


• Atkore International Group, a Harvey, Ill.-based maker of electrical circuitry raceway products for non-residential construction and renovation markets, has filed for a $100 million IPO. Credit Suisse, Deutsche Bank and J.P. Morgan are serving as lead underwriters. The company reports around $67.3 million of net income on $6.4 billion in revenue for the 12 months ending Dec. 25, 2015. It is owned by Clayton Dubilier & Rice.

• Hunting Dog Capital Corp., a San Francisco-based provider of financing solutions to lower middle-market companies, has filed for a $50 million IPO. It plans to trade on the Nasdaq under ticker symbol HDCC, with WR Hambrecht serving as lead underwriter. As part of the offering, the issuer would acquire Hunting Dog Capital LLC.


• BBVA has acquired Holvi, a Helsinki-based online banking startup. No financial terms were disclosed. Sellers include Seedcamp. Read more.

• TowerBrook Capital Partners has agreed to sell a majority equity stake in Van Geloven, a Dutch snack-maker that TowerBrook acquired just last year, to Toronto-based McCain Foods Ltd. No financial terms were disclosed. TowerBrook will retain a minority position. Read more.


• Kirchhofer, a Swiss luxury watch and jewelry retailer that has been family owned since its 1944 founding, is seeking a buyer, according to Reuters. The company generates around $302 million in annual revenue. Read more.

• Old Mutual PLC (LSE: OML) is considering all strategic options, including a possible takeover or break-up. Read more.


• Cinven next month is expected to close its sixth flagship fund with around €6.5 billion in capital commitments, according to Private Equity International.

• Jefferies Group is planning to merge its high-yield bond business with the high-yield business of MassMutual Financial Group, according to Reuters. As part of the move, Kevin Lockhart has stepped down as Jefferies’ head of leveraged finance and Adam Sokoloff has stepped down as global head of financial sponsors. Read more.

• North Edge Capital, a British buyout firm focused on opportunities in Northern England, has closed its second fund with £300 million in capital commitments. Read more.


• Janish Patel has joined HarbourVest Partners as a London-based principal, focused on investor relations. He previously was an IR-focused managing director with CVC Capital Partners.

• Tim Pryce reportedly has stepped down as CEO of Terra Firma Capital Partners, a firm he co-founded seven years ago with Guy Hands (who will serve as CEO on an interim basis). He is expected to remain a member of the firm’s board. Read more.

• Alok Sanghvi has joined H.I.G. Capital as a managing director and head of middle-market business services investments. He previously led corporate development at MultiPlan Inc. and, before that, spent time at Warburg Pincus. H.I.G.’s middle market group also has promoted Matt Lozow to managing director.

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