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Term Sheet — Wednesday, April 27

Random Ramblings

Some notes to kick off National Prime Rib Day…

• Crib death: Rory Eakin is co-founder and COO of CircleUp, an online crowfunding marketplace focused on helping to capitalize retail and consumer brand companies. And he has an unexpected message to share: “We think equity crowdfunding is dead.”

That’s pretty problematic, given that it won’t actually be legal until May 16, when Title III of the Jobs Act becomes effective.

To be sure, CircleUp has been operating for several years by not accepting unaccredited investors, but there had been a thought that platforms like his would open wider once the rules changed. Eakin, however, believes that institutions can provide capital much more efficiently to companies than can individuals, so is moving CircleUp in that direction. “People believed that ‘the crowd’ would improve capital efficiency for private companies, but the reality is that it really doesn’t scale,” he says.

To that point, CircleUp quietly launched what it called the Marketplace Index Fund, which brings an ETF model to VC investing — providing a basket of early-stage company stakes for institutions that want to write larger checks without sacrificing diversification. It initially raised a $4.25 million test fund, and is now launching a larger version this week (expected to hold 25 companies). Minimum investments are $25k, with a 0.5% management fee and no carry.

“The signaling risk of fundraising through an online platform has not been problematic, at least for the types of companies we work with,” Eakin says. “What’s been interesting is that the interest in ‘quality’ participation has come from the other side, and institutions have been answering the call.”

 

• Job description: Last week, a group of (largely) unidentified SoftBank investors called on the company to investigate and possibly dismiss company president Nikesh Arora, who is viewed as the eventual successor to SoftBank founder Masayoshi Son. They basically accused Arora of making bad deals for Softbank, and suggested that his role as an advisor to private equity firm Silver Lake constitutes a conflict of interest.

Erin Griffith wrote a detailed profile of Arora last fall, but the piece did not include comments related to the Silver Lake arrangement. so she dug into her notes to find what Arora said, months before this shareholder letter emerged:

“Oh, I don’t do any companies. I met [Silver Lake pasrtner Egon Durban] in London 11 years ago, he had just moved there…. I said, ‘I don’t want to do board meetings, I don’t want to sit in rooms, I don’t want to be bored to death.’ He said, ‘It’s very simple. I’ll call you for advice when I need you and if you are not conflicted, you tell me what you think. And if you’re conflicted, just tell me, ‘I’m conflicted’ and I won’t ask.” So that’s the arrangement.”

• Printing money: Yesterday we noted how Desktop Metal, the new commercial metal 3D printing startup led by A123 founder (and ex-VC) Ric Fulop, had raised nearly $34 million in new VC funding, per a regulatory filing. A couple additional notes, after speaking with folks familiar with the deal:

1. The new round values the Lexington, Mass.-based company at more than $100 million, even though it remains at least nine months away from commercialization (plans are to begin selling machines in early 2017). One big difference between the Series B and last fall’s Series A, however, is that the company has now proven out its technology, which is expected to be able to print via a large variety of metals — creating everything from tiny fasteners to large aerospace components. When Desktop Metal raised its Series A round, its tech was still in the PowerPoint presentation stage.

2. Desktop Metal has had three VC firms represented on its board since the Series A, and received Series B term sheets from all three. Kleiner Perkins ultimately won out over Lux Capital and NEA, although all did make new investors. Other company backers include Data Collective and Founder Collective.

• Today in… The Honest Company? It got sued. Again.

• Expectation game: If I were CEO of a company that didn’t give guidance, but had its stock price fall after “missing” its numbers (e.g., Twitter), I’d lead off my earnings call by saying: “Don’t sell our stock. Sell the stock of banks whose analysts got our numbers so wrong.”

• Mailbag: I received an enormous amount of email in response to the “American Dream” column, and many of them were quite detailed. Some agreed with me, some didn’t. Many took issue with Legg Mason’s definition of “affluent” and, by extension, my agreement with it. Still trying to figure out how to best share them — since it’s so massive — but should have a solution by tomorrow morning. Much thanks to all of you who wrote in, including so many long time listeners, first time callers.

 

THE BIG DEAL

• Leonard Green & Partners has agreed to acquire ExamWorks Group Inc. (NYSE: EXAM), an Atlanta-based provider of medical examination services, for around $2.2 billion. The $35.05 per share deal represents a 4.4% premium to yesterday’s closing price. Read more.

VENTURE CAPITAL DEALS

• BitFlyer, a Japanese bitcoin exchange, has raised $27 million in Series C funding. SBI Investment led the round, and was joined by return backer Venture Labo Investments. Existing shareholders include Digital Currency Group, Mitsubishi UFJ Capital Co and Dentsu Digital Holdings. www.bitflyer.jp/en

• RayVio Corp., a Hayward, Calif.-based developer of ultraviolet LED technology for point-of-use water disinfection and other health and hygiene applications, has raised $26 million in new funding co-led by IPV Capital and Tsing Capital. www.rayvio.com

• Seclore, an India-based provider of enterprise digital rights management solutions, has raised $12 million in Series B funding from Helion Ventures, VentureEast, Sistema Asia Fund and India Alternatives. www.seclore.com

• TaskEasy, a Salt Lake City-based provider of on-demand exterior maintenance services, has raised $12 million in Series B funding. Delta Electronics Capital led the round, and was joined by Moderne Ventures, MTD Products Inc. and return backers Grotech Ventures, Access Venture Partners and Kickstart Fund. www.taskeasy.com

• UrbanStems, a Washington, D.C.-based on-demand flower delivery service, has raised $6.8 million in Series A funding. SWaN & Legend Venture Partners led the round, and was joined by Middleland Capital, NextGen Venture Partners, Interplay Ventures and Sagamore Ventures. www.urbanstems.com

• Disruptive Technologies, a Norway-based developer of wireless sensors, has raised around $6.15 million in new VC funding from Ubon Partners. www.disruptive-technologies.com

• SparkCognition, an Austin, Texas-based cognitive security analysis startup, has raised $6 million in Series B funding. CME Ventures led the round, and was joined by Verizon Ventures and return backers The Entrepreneurs’ Fund and Alameda Ventures. www.sparkcognition.com

• Immunio, a Montreal-based provider of runtime application software protection solutions, has raised US$5 million in Series A funding led by White Star Capital. www.immunio.io

• Stem, a Los Angeles-based platform for ensuring musicians and video creators collect money when their content is played online, has raised $4.5 million in new VC funding. Upfront Ventures led the round, and was joined by Vayner Capita, Mark Cuban and Scooter Braun. Read more.

• SnappyData, a real-time analytics platform that is spinning out of Pivotal, has raised $3.65 million in Series A funding from Pivotal, GE Ventures and GTD Capital. Read more.

• ClearTax, a tax filing platform for India, has raised $1.3 million in seed funding from individual angels like Max Levchin, Naval Ravikant and Scott Banister. Read more.

• BlueVine, a Palo Alto, California, provider of working-capital financing to small businesses, has raised an undisclosed amount of strategic funding from Citi Ventures. Existing shareholders include Lightspeed Venture Partners, 83North, Correlation Ventures, Menlo Ventures and the Rakuten Fintech Fund. www.bluevine.com

PRIVATE EQUITY DEALS

• ArcLight Capital Partners has invested around $225 million via a preferred equity PIPE into American Midstream Partners (NYSE: AMID), to fund “the acquisition of interests in strategic Gulf of Mexico midstream infrastructure and incremental ownership in Delta House.” www.americanmidstream.com

• Francisco Partners has acquired SintecMedia, a New York-based provider of broadcast management software, from a group of shareholders that includes Riverwood Capital. SintecMedia management also participated on the deal. www.sintecmedia.com

• Pacific Catch, a San Francisco-based chain of seafood restaurants, has raised an undisclosed amount of private equity funding from Brentwood Associates. www.pacificcatch.com

• Peak Rock Capital has agreed to acquire Diamond Crystal Brands Inc., a Savannah, Ga.-based maker and distributor of portion control and single serve food and beverage products, from Hormel Foods Corp. (NYSE: HRL). No financial terms were disclosed. www.dcbrands.com

• The Riverside Company has acquired Momentum Group, an Irvine, Calif.-based provider of sustainable textile products. No financial terms were disclosed, except that Maranon Capital provided an equity co-investment and mezzanine financing. www.themomgroup.com

• TPG Growth has agreed to acquire a majority stake in Cancer Treatment Services International, a Wexford, Penn.-based network of cancer treatment facilities. No financial terms were disclosed. www.cancertreatmentservices.com

• Wincove Partners has sponsored a recapitalization of Aloi Solutions LLC, a Rochester, N.Y.-based distributor of material handling and automation solutions. No financial terms were disclosed. www.aloi.com

• Vivint Inc., a Provo, Utah-based smart home products company owned by The Blackstone Group, has raised $100 million in new minority equity funding from Solamere Capital and Peter Thiel. Read more.

IPOs

• Oncobiologics, a Cranbury, N.J.-based developer of biosimilar therapeutics, has set its IPO terms to 5 million shares being offered at between $11 and $13 per share. It would have an initial market cap of around $242 million, were it to price in the middle of its range. The company plans to trade on the Nasdaq under ticker symbol ONS, with Jefferies and Barclays serving as lead underwriters. Oncobiologics has raised over $43 million in VC funding, from firms like Perceptive Advisors, Cormorant Global Healthcare Master Fund, Longwood Capital Partners, venBio Select Fund, Proximare Lifesciences Fund, OSSB Pharma Fund and MIH Fund. www.oncobiologics.com

• Red Rock Resorts, a Las Vegas-based operator of 21 casino properties, raised $531 million in its IPO. The company priced 27.3 million shares at $19.50 per share (middle of range), for an initial market cap of approximately $2.26 billion. It will trade on the Nasdaq under ticker symbol RRR, while Deutsche Bank Securities was listed as left lead underwriter. Read more.

• Spring Bank Pharmaceuticals Inc., a Hopkinton, Mass.-based developer of drugs based on a proprietary small molecule nucleic acid hybrid, has reduced its proposed IPO terms from 2.86 million shares being offered at between $13 and $15 per share, down to 1.15 million shares being offered at between $12 and $14 per share. The pre-revenue company plans to trade on the Nasdaq under ticker symbol SBPH, and has replaced original underwriter William Blair with Dawson James Securities. www.springbankpharm.com

• Telepizza, a Spanish pizza delivery company backed by private equity firm Permira, raised €605 million in Spain’s largest IPO of 2016. Read more.

EXITS

• Alliance Consumer Growth has sold Ripple Brands Collective LLC (a.k.a. BarkThins), a Congers, N.Y.-based maker of chocolate snack products, to The Hershey Co. (NYSE: HSY). No financial terms were disclosed, although one report pegs the price-tag at around $300 million. Read more.

• MBK Partners has retained Morgan Stanley to sell its stake in ING Life Korea, according to the WSJ. The deal could be worth more than $3 billion. MBK Partners had paid $1.6 billion for the position from Dutch parent ING Groupe back in 2013. Read more.

• Platinum Equity has agreed to sell the European business of Mactac, a Stowe, Ohio-based adhesives maker, to Avery Dennison (NYSE: AVY) for around €200 million (including assumed debt). www.averydennison.com

OTHER DEALS

• Bank of New York Mellon (NYSE: BK) is in talks to acquire DBV-X, a European repurchase trading platform, from Swiss interdealer broker Tradition (SWX: CFT), according to the FT. Read more.

• Comcast (Nasdaq: CMCS) reportedly is in talks to acquire DreamWorks Animation (Nasdaq: DWA) for approximately $3 billion. Read more.

• SumUp, a European mobile payments startup, has merged with rival Payleven. No financial terms were disclosed. Both companies were founded in Berlin, but now are based in the UK. SumUp has raised over $50 million in VC funding, from firms like Propel Venture Partners, Venture Incubator, Groupon, American Express and BBVA Ventures. Payleven backers include Rocket Internet, Holtzbrinck Ventures, NEA, B Cinque, MePay and Seventure Partners. Read more.

• Tech Pack, a Chile-listed packaging group, has retained Citigroup to explore strategic options that could include a sale of the company for around $500 million, according to Bloomberg. Tech Pack’s controlling shareholder is Quinenco SA. Read more.

FIRMS & FUNDS

• Apollo Global Management has partnered with International Finance Corp., a unit of The World Bank, to launch a $1 billion distressed assets fund focused on emerging markets. Read more.

• HTC (TSEC: 2498) has launched a $100 million corporate VC firm focused on virtual reality-centric statrtups. Read more.

• Lone Star Funds has closed its fifth global commercial real estate private equity and debt fund with $5.9 billion in capital commitments. Read more.

• Meridiam of France has raised €1.3 billion for a new European infrastructure private equity fund. Read more.

MOVING IN, ON & UP

• CeCe Cheng has joined tech talent platform Andela as director of strategic partnerships. She is a former director of First Round Capital’s Dorm Room Fund. www.andela.com

• Chris Price has joined Oak HC/FT as a venture partner. He previously was a senior VP with healthcare advisory firm ADVI Health. www.oakhcft.com

• Ben Wildsmith has joined NorthEdge Capital, a private equity firm focused on Northern England, as a portfolio director. He previously was a corporate finance director with EY. www.northedgecapital.com

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