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Term Sheet — Wednesday, April 13

Random Ramblings

E.W. Scripps yesterday announced that it will purchase the Cracked humor brand and its assets from Demand Media for $39 million in cash. As someone who grew up occasionally reading the print version of Cracked (you know, while waiting for the new issue of Mad to arrive), this one was of particular interest.

So I spent some time on the phone with Scripps chief digital officer Adam Symson, who says that the current Cracked (now all digital) is strictly aimed at millennials and is mildly cash-flow positive with $11 million in annual revenue. It also has 20 million unique visitors per month, with average session lengths of 8 minutes (thanks, largely, to video).

Scripps first met with the Cracked editorial team last year after Scripps bought Midroll, a podcasting company that hosted a popular Cracked program. Soon conversations over a sale began with Demand, which perhaps felt that it didn’t have the financial resources to keep building out the brand (particularly as an over-the-top product).

Symson said that he thinks Scripps got a very good deal from Demand, even though he paid the equivalent of 38% of Demand’s market cap for a product that generates less than 10% of its revenue. The key, apparently, is that Demand only paid around $1 million in the first place for Cracked, with Scripps believing this to be a long-term play…

• Update: Late last year we reported that Colorado-based VC firm Foundry Group was launching a new platform called Foundry Group Next, which would both make later-stage direct investments and also invest in third-party VC funds (75/25 split). This was in the wake of Foundry hiring former UTIMCO private markets boss Lindel Eakman.

Now comes an SEC filing that shows Foundry Group Next is targeting $500 million, and a source saying that a sizeable first close in “imminent.” We also hear that the fund already has made four LP commitments (and warehoused them, pending the first close).

• Calendar watch: Securities exchange operator BATS Global Markets is expected to price its IPO later this week, with some media reports suggesting that it’s already oversubscribed (terms are 11.2 million shares at $17-$19). Sure this isn’t the most traditional listing, given some weird IPO history with BATS and the fact that the company plans to trade… well, on itself. But if BATS can successfully price, it could be the float that breaks the IPO dam, particularly given that several other companies just launched road-shows and we’ve also seen a bunch of new filings/amended filings over the past week.

• Audit alert: A report from Tax Analysts says that upwards of 100 private equity firms are facing “concentrated exam attention on their management fee waivers.” The firms reportedly represent a cross-section of private equity, in terms of both size and geography. Moreover, they began prior to the IRS issued proposed fee waiver regulations last year, and have continued into 2016.

• Donation data: VenturePAC, the political action committee of the National Venture Capital Association, has donated nearly $75,000 to political candidates since the beginning of 2015, according to FEC data. This includes $18,700 to 11 GOP candidates and $15,500 to 10 Democratic Party candidates. VenturePAC also has donated $20,000 each to GOP and Democratic Party campaign committees.

I also did a similar analysis of the Private Equity and Growth Capital Council’s donations. It has given $32,500 to 10 GOP candidates, $11,000 to four Democrats, $20,000 to GOP campaign committees and $8,500 to Democratic PACs.

• To invest or not invest… Verizon yesterday said that it would spend $300 million over the next six years to bring its Fios high-speed service to Boston. Leaving aside the fact that the actual Verizon workers are now on strike, this does seem to be a mark against those who argued that net neutrality would cause big broadband providers like Verizon to stop making new investments.

• Field of Dreams: I am once again trying to put together a team of Term Sheet readers to participate in a charity softball game at Fenway Park, to benefit an ABCD “red shirts” program that provides summer jobs and tutoring for low-income teenagers in the city. We haven’t done this for a few years, but it’s a great time (and your friends and family are invited to watch from the stands, eat free hot dogs, etc.).

This year’s event is scheduled for Tuesday, June 28. Each game lasts about 90 minutes, and you get to hit, field and sit in the dugouts. To make sure everyone can play, the price-tag comes out to $909 per head (tax-deductible). If you are interested in participating, please let me know ASAP via email.

• 61k and counting… Every time I add another thousand Twitter followers, I ask you to join the others so we can chat/argue/joke throughout the day. Follow me @danprimack.

THE BIG DEAL

• Affirm, a San Francisco-based provider of micro-loans for online purchases, has raised $100 million in new VC funding at a pre-money valuation of around $700 million. Founders Fund led the round, and was joined by return backers Lightspeed Venture Partners, Spark Capital, Khosla Ventures, Andreessen Horowitz, and Jefferies. The company, founded by Max Levchin, has now raised a total of $425 million in equity and debt funding. Read more.

VENTURE CAPITAL DEALS

• Ele.me, a Chinese food delivery service, has raised $1.25 billion from Alibaba Group and its Ant Financial unit. Read more.

• Kala Pharmaceuticals Inc., a Waltham, Mass.-based developer of ophthalmic products based on muscle-penetrating particle technology, has raised $68 million in Series C funding. Longitude Capital led the round, and was joined by OrbiMed Advisors, Vivo Capital, CAM Capital, RA Capital Management, Wellington Management, Polaris Partners, Lux Capital and CVF LLC. www.kalarx.com

• Vacasa, a Portland, Ore.-based tech-enabled vacation rental platform, has raised $35 million in VC funding led by Level Equity. www.vacasa.com

• Nauto, a Palo Alto, Calif.-based autonomous vehicle technology startup, has raised $12 million in new VC funding. Playground Global led the round, and was joined by Draper Nexus. www.nauto.com

• Nodesource, a San Francisco-based provider of enterprise-grade solutions for Node.js development and operations, has raised $10 million in Series A funding. RRE Ventures led the round, and was joined by Crosslink Capital and Resolute.vc. www.nodesource.com

• CloudEndure, an Israel-based provider of live-migration and disaster recovery solutions, has raised $6 million in new Series B funding. The company previously announced a $7 million first close from Infosys and Magma Venture Partners. www.cloudendure.com

PRIVATE EQUITY DEALS

• Apollo Global Management is teaming with Brazil-based miner Vale to bid on the Brazilian niobium and phosphates business of Angelo American (LSE: AAL), according to Reuters. The deal could be valued at around $1 billion. Read more.

• BC Partners and Nordic Capital have been short-listed in the auction for Dermapharm, a German generic drug-maker that could be sold for around $1.3 billion, according to Reuters. Read more.

• Centerbridge Capital Partners is partnering with Deutsche Telekom (DB: DTE) on a bid for Tipico, a German private sports betting group, according to Reuters. Centerbridge would take a majority stake in Tipico, which is being sold by its founders in a deal that could be worth upwards of $1.1 billion. Read more.

• Data Device Corp., a Bohemia, N.Y.-based portfolio company of Behrman Capital, has agreed to acquire the Microelectronics business unit of Maxwell Technologies Inc. (Nasdaq: MXWL) for $21 million. www.ddc-web.com

• The Halifax Group has sponsored a management recapitalization of Familia Dental Group Holdings LLC, a Chicago-based dental services organization. No financial terms were disclosed. www.familiadental.com

• Investindustrial has agreed to acquire a 60% stake in Artsana SpA, an Italian baby and healthcare products brand, at an enterprise value of around €1.3 billion. Read more.

• Schweiger Dermatology Group LLC, a provider of medical, cosmetic and surgical dermatology services in New York and New Jersey, has raised $35 million in private equity funding led by LLR Partners. www.schweigerderm.com

• TowerBrook Capital Partners has agreed to sponsor a spin-out of TriMedx, an Indianapolis-based provider of healthcare technology management services, from nonprofit health system Ascension. No financial terms were disclosed for the deal, which includes a new long-term customer contract between TriMedx and Ascension. www.trimedx.com

IPOs

• No IPO news this morning.

EXITS

• Berkshire Partners has sold Tower Development Corp., a Boston-based developer of wireless communications infrastructure in the U.S. and Puerto Rico, to Crown Castle International Corp. (NYSE: CCI) for approximately $461 million in cash.

• Pegasystems Inc. (Nasdaq: PEGA) has acquired OpenSpan Inc., an Atlanta-based provider of robotic process automation and workforce analytics software. No financial terms were disclosed. OpenSpan had raised around $24 million in VC funding from firms like In-Q-Tel, FTVentures, Globespan Capital Partners, Matrix Partners, Sigma Partners and Imlay Investments. www.pegasystems.com

• Shanghai Jahwa United Co. (SHSE:600315), a Chinese chemicals company, is in talks to acquire British baby products maker Tommee Tippee from 3i Group for nearly £300 million, according to Sky News. Read more.

• Shopify (NYSE: SHOP) has agreed to acquire Kit CRM, a San Francisco-based virtual assistant app to help entrepreneurs with sales and marketing. No financial terms were disclosed. Sellers include SGH Capital and Visionnaire Ventures. www.shopify.com

• TPG Capital has hired Bank of America to help find a buyer for Vertafore Inc., a Bothell, Wash.-based provider of insurance industry software, according to Reuters. The deal could value Vertafore at around $2.5 billion (including debt). Read more.

OTHER DEALS

• Anheuser-Busch InBev has agreed to buy Virginia-based craft brewer Devils Backbone Brewing Co. for an undisclosed amount. Read more.

• McCormick & Co. Inc. (NYSE: MKC) has withdrawn its $2.2 billion takeover offer for Premier Foods PLC (LSE: PFD), saying that Premier was demanding too high a price. Premiere shares are down more than 30% on the news. Read more.

• Medivation (Nasdaq: MDVN), a San Francisco-based prostate cancer drug-maker currently valued at $7.5 billion, has rejected a takeover approach from Sanofi (Paris: SAN), according to Bloomberg. Read more.

• Peabody Energy (NYSE: BTU), a St. Louis-based coal company, has filed for Chapter 11 bankruptcy protection. Read more.

FIRMS & FUNDS

• Council Capital, a Nashville, Tenn.-based private equity firm focused on the healthcare sector, has closed its third fund with more than $150 million in capital commitments. www.councilcapital.com

• Forbion Capital Partners, a life science-focused venture capital firm that invests in both Europe (70%) and North America, has closed its third fund with 183 million in capital commitments. www.forbion.com

• GREE International has launched a $12 million VC fund focused on gaming startups. Read more.

• Spark Capital is raising upwards of $500 million for its second growth equity fund, according to a regulatory filing. www.sparkcapital.com

MOVING IN, ON & UP

• John Bozalis has rejoined ORIX Leveraged Finance as a Dallas-based managing director. He had been with ORIX between 2003 and 2009, and most recently served as a senior VP with BBVA Compass. www.orix.com

• John Clendening, former co-head of retail brokerage at Charles Schwab, has joined the board of online lender Betterment, which recently raised $100 million in new VC funding. Read more.

• Dan Graves has joined M&A advisory firm Signal Hill as a New York-based managing director and member of its sponsor coverage group. He previously founded Spinnaker Capital Advisors. www.signalhill.com

• Ryan Kruizenga has joined Arthur Ventures as a Minneapolis-based partner. He previously was a vice president with Mainsail Partners. www.arthurventures.com

• Tyler Scriven has joined Techstars Atlanta as a director. He previously was chief of staff and head of operations at Palantir Technologies. www.techstars.com

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