CryptocurrencyInvestingBanksReal Estate

Term Sheet — Monday, April 11

April 11, 2016, 1:47 PM UTC

Monday Mouth-Off

The sky is gray, the OECD says global economic growth is slowing and big congrats to the team from the BYU Marriott School for winning this year's VCIC International Finals. In other words, it's time for some Monday Mouth-Off.

I got a lot of emails in response to my decision to stop reporting on Fidelity's monthly carrying value changes for its privately-held companies. Tom leads us off: “I think you're wrong on the Fidelity comments and ask you to reconsider. Fidelity gives us the latest view of a sophisticated investor even if we don't quite know how they got there. Crucially, this is the same for any valuation announced by a company or their VC ― we really don't know how they got there either.”

John: “You got it right. When I found out how Fidelity is valuing some of this stuff (one of our portfolio companies, in particular), I was stunned how amateurish it was done. It’s not based on issues with the specific company (at least in our case) but a general view based on overall market valuations. Fidelity had zero information rights and didn’t even bother calling anyone at the company.”

Emanuel: “I'm really surprised that you would say that you're questioning the value of your reporting the mutual fund reports…By the mere fact that your commentary is impacting investors, startups, vendors, etc. means it's pretty relevant.  So, I would adamantly disagree that your ‘best of intentions is irrelevant.’ If you want to be critical of Fidelity's model, go ahead and report on that… If I'm an employee at a startup, I'd rather have more information than not. Unless you're telling me there is something illegal about how Fidelity is valuing their holdings, then their valuations are fair game in the mosaic of information available. “

Nathan: “I’ve been surprised by these ‘mark-to-market’ valuations for a slightly different reason: most of the markdowns seem to completely ignore the value of other economic terms in these late-stage venture deals, particularly liquidation preference. These are public markets investors, so maybe they’re focused on IPO exits and hence ignore the liq pref. But the IPO window is effectively closed, and many late-stage venture-backed companies will probably see M&A exits. Those liq prefs offer real downside protection in that case. Take SnapChat, which at one point Fidelity marked down 25%. The latest headline valuation is $16B, but what would it really take for Fidelity to see $0.75 on its dollar? Not a $12B acquisition - that would make Fidelity whole via the liq pref. There’s $1.3B of preferred equity in SnapChat, which probably all has a preference. Taking the conservative scenario where the pref is pari passu across all preferred shares, SnapChat would have to sell for just $1B for Fidelity to be 25% underwater (note SnapChat turned down a $3B bid from Facebook in 2013). Is -25% really Fidelity’s expected value? I don’t think so.”

WL: “I applaud your Fidelity qualification. It's been a long time since I have seen any journalist doing an introspection like this.”

Alan: Your stance on Fidelity is really thoughtful. Thanks for sharing and bravo for leaving behind a relatively easy monthly ‘news’ cycle.”

Cindy: “Please don't pander to tech VCs in deciding what to publish. Term Sheet shouldn't be a marketing arm for unicorns and their investors. If unicorns want the publicity of a high valuation but not the criticism, then they can choose to be more transparent or allow speculation based on info available.”

 Fred on Bain Capital's management and branding changes: “It feels to me like they are getting ready for an IPO.”

 Two emails on the Dan Lyons book and Hubspot. Paul: “Of course there is immaturity at Hubspot - there is immaturity at every tech company ever created. But I know people who work there who truly believe it is the job of their lives, so it is tough to see someone trying to rip into that. It makes me wonder that maybe the author just didn't fit in. (e.g., maybe the problem was actually him -- not his age, etc.).”

TD: “I don't see any irony in Hubspot having sales reps to close ― all leads do, indisputably, come from inbound leads created by the content, brand and buzz they have created. Just because they are closed by a sales force doesn't invalidate the generation of the lead.”


 Luxe Valet Inc., a San Francisco-based app for on-demand valet parking, has raised $50 million in new VC funding at a $110 million pre-money valuation. Hertz Global Holdings led the round, and was joined by return backers Redpoint Ventures and Venrock.


 MedDay, a Paris-based developer of treatments for CNS disorders, has raised €34 million in Series B funding. Edmond de Rothschild Investment Partners led the round, and was joined by Bpifrance and return backers Sofnnova Partners and InnoBio.

 STAT-Diagnostica, a Spanish medical diagnostics company, has raised €25 million in Series C funding. Gilde Healthcare led the round, and was joined by return backers Kurma Partners, Ysios Capital, Idinvest Partners, Boehringer Ingelheim, Caixa Capital and Axis.

 Eloquii, a New York-based e-commerce company focused on fast fashion for plus-sized women, has raised $15 million in Series B funding. Acton Capital Partners led the round, and was joined by Wildcat Capital Management, Blue Sky Venture Capital and return backers Greycroft Partners, Daher Capital and Female Founders Fund.

 Marxent, a Dayton, Ohio-based provider of VR and AR for retailers and manufacturers, has raised $10 million in Series B funding co-led by Detroit Venture Partners and Stage 1 Ventures.

 Even, an Oakland-based fintech startup focused on cash advances, has raised $9 million in VC funding. Backers include Khosla Ventures, Qualcomm Ventures, Camp One Ventures, BoxGroup, Homebrew Ventures, Henry Kravis and Allen & Co. Read more.

 Luka, a San Francisco-based iOS messaging app that utilizes AI, has raised $4.42 million in Series A funding. Sherpa Capital led the round, and was joined by Y Combinator, Ludlow Ventures and Justin Waldron.

 Keranova, a French developer of instruments for ophthalmic surgery, has raised €4 million in Series A funding. Mérieux Développement led the round, and was joined by CEA Investissement and return backer Bpifrance.

 Homemade, an app that “lets home cooks make money cooking for their neighbors,” has raised $2.1 million in seed funding. Backers include Rostrum Capital, Scrum Ventures, Slow Ventures, Third Kind Venture Capital and XG Ventures. Read more.

 Cambrooke Therapeutics Inc., an Ayer, Mass.-based maker of medical nutrition products, has raised an undisclosed of Series C funding. Seventure Partners led the round, and was joined by return backer Galen Partners.


 Aquiline Capital Partners has agreed to acquire Simply Business, a British digital SME insurance distributor, from AnaCap Financial Partners. No financial terms were disclosed.

 Diversis Capital has acquired a majority of the assets of Caligor Rx Inc., a Secaucus, N.J.-based provider of clinical supply chain maximization solutions for pharma and biotech companies. No financial terms were disclosed.

 Steve Kaplan, a co-founder of Oaktree Capital Management, is part of an investor group that “is close” to acquiring a 75% stake in British Premier League club Swansea City, at an enterprise value of around $200 million, according to Bloomberg. Read more.

 NetPlus, a Gaithersburg, Md.-based portfolio company of StoneCalibre, has acquired Amtel Inc., a Santa Clara, Calif.-based provider of SaaS solutions for enterprise mobility and expense management. No financial terms were disclosed.

 Wind Point Partners has acquired Evans Food Group, a Chicago-based maker of branded and private-label pork rind snacks. No financial terms were disclosed.

 Woodbury Health Products Inc., a Floral Park, N.Y.-based portfolio company of MTS Health Investors, has acquired certain assets of Advanced Medical Group LLC, a Suwanee, Ga.-based distributor of home urological supplies. No financial terms were disclosed.

 Z Capital Partners has agreed to acquire the Pink Taco restaurant brand, and merge it with existing portfolio company Real Mex Restaurants Inc. No financial terms were disclosed.


American Renal Associates Holdings, a Beverly, Mass.-based dialysis services provider, has set its IPO terms to 7.5 million shares being offered at between $20 and $23 per share. It would have an initial market cap of around $639 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol ARA, with BofA Merrill Lynch, Barclays and Goldman Sachs serving as lead underwriters. It reports $16 million of net income on $561 million in net patient revenue (revenue minus uncollectable accounts) for 2014. Centerbridge Capital Partners holds a 79.6% pre-IPO stake.

J. Jill Group, a Quincy, Mass.-based women’s apparel retailer purchased last year by TowerBrook Capital Partners, has hired BofA Merrill Lynch, Morgan Stanley and Jefferies Group to underwrite a possible IPO, according to the WSJ. Read more.

SecureWorks, an Atlanta-based cybersecurity unit of Dell Inc., has set its IPO terms to 9 million shares being offered at between $15.50 and $17.50 per share. It would have an initial market cap of around $1.87 billion if it were to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol SCWX, with BofA Merrill Lynch listed as left lead underwriter. SecureWorks reports a $57.5 million net loss on $245 million in revenue for the first nine months of 2015, compared to a $29.5 million net loss on $191 million in revenue for the year-earlier period. Read more.

Viamet Pharmaceuticals Holdings, a Durham, N.C.-based developer of inhibitors of validated metalloenzymes, has filed for a $100 million IPO. The company previously filed for a $75 million floatation in 2014, but withdrew its offering later that year. It plans to trade on the Nasdaq under ticker symbol VMET, with Morgan Stanley and Goldman Sachs serving as lead underwriters. Viamet has raised over $150 million in VC funding from firms like Novartis Bioventures (12.9% pre-IPO stake), Lilly Ventures (11.3%), Hatteras Venture Partners (7.8%) and Intersouth Partners (6.3%).


 Advent International has completed its previously-announced sale of Dominican airport group Aerodom to Vinci Airports for an undisclosed amount.


 CaixaBank (BME: CABK) has agreed to acquire a 20% stake in Portuguese bank Banco BPI from Isabel dos Santos, which would bring the Spanish firm’s total ownership up to 64%. Read more.

 Canadian Pacific (TSX: CP) has ended its efforts to acquire Norfolk Southern (NYSE: NCS), whose shareholders last year had rejected a takeover bid valued at $30 billion plus “contingent value rights.” Read more.

 HNA Group, the Chinese owner of Hainan Airlines, has offered to acquire GateGroup Holding (SWX: GATE), a Swiss provider of airline catering and logistics services, for approximately $1.5 billion. Read more.

 Standard Chartered (LSE: STAN) is seeking to sell upwards of $4.4 billion in Asia assets, according to Bloomberg. Read more.

 Vamos, a Berlin-based event discovery platform, has acquired Fanmiles, a Berlin-based loyalty rewards platform that connects fans with entertainment and sports celebrities. No financial terms were disclosed. Read more.


 The Carlyle Group has closed its second fund dedicated to investing in North American power generation, with more than $1.5 billion in capital commitments.

 Octopus Ventures, a London-based VC firm, has raised £100 million in new capital commitments for its evergreen early-stage fund.

 Upside, a seed-stage VC firm led by former First Round partner Kent Goldman, has closed its second fund with $44 million in capital commitments.


 Seth Carpenter, former assistant U.S. Treasury secretary for financial markets, has joined hedge fund firm Rokos Capital Management. Read more.

 David Enriquez has joined the NYC Comptroller’s Office as senior investment officer for private equity. He previously was an M&A banker with Rothschild.

 Newt Gingrich has joined JAM Capital Partners, a Georgia-based private equity firm focused on minority and majority investments in Southeastern U.S. lower middle market businesses. Yes, the man who promoted this video during the 2008 campaign has now joined a private equity firm.

 Michael Gladys has left the California Public Employees’ Retirement System (CalPERS), where he had worked on private equity investments since 2009, according to Private Equity International. No word yet on his future plans.

 The Halifax Group, a Washington, D.C.-based private equity firm, has promoted three investors to partners and members of its investment committee: Scott Van Duinen, Scott Plumridge and Chris Cathcart.

 Denise Kelly has joined France-based Seventure Partners as an investor advisor. She previously was CEO at GT Biologics and has spent decades as a professor of immunology and microbiology at the University of Aberdeen. Seventure also has added Oxana Kukhaneva, previously an investment manager with Inventages Venture Capital, as a venture partner.

 NASDAQ has named Jeff Thomas as a West Coast VP of listings. He previously was president of liquidity solutions, and is a onetime SecondMarket executive.

 Ram Velidi has joined LiveOak Venture Partners as a Dallas-based venture partner. He previously was managing director of Peroba Capital and is a former Sevin Rosen Funds investor. Read more.

Share today's Term Sheet: