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Term Sheet — Friday, April 29

April 29, 2016, 2:23 PM UTC

Friday Feedback

The sun is shining, Carl Icahn has bailed on Apple and the ZeroHedge authors have been unmasked. In other words, it's time for some (lengthy) Friday Feedback:

First up are a bunch of emails related to the death of the American Dream.

Cindy: "Let's not distort reality or chastise the 'affluent' who want to be fiscally responsible and financially secure. We're not wallowing in self-pity, but rather smart enough to realize the importance of saving and avoiding a lifetime of debt. Privilege aside, here's the reality: your daughter is already living the American Dream, whatever that means. She'll be just fine as will most others, myself included, who have been born in the U.S. Yes, there remain socioeconomic disparities, so let's focus on the structural issues (tax law, education, cronyism) that create those disparities rather than vilify those that have worked hard to attain a certain level of wealth and yet still fell poor."

Brian: "I've always respected your writing and valued most of your opinions expressed. If, however, you are seriously trying to make the case that an American citizen today who has $200,000 sitting in an investment account, a family to support and recalls market events such as 2001 and 2008, is somehow out of line in feeling insecure about their financial future, I have to question my judgment in reading your column. Is such a person prosperous? Yes. Is he/she "simply fueling their own narcissism with self-pity?" Not even close, and to suggest such a thing is very odd."

Greg: "You’ve hit the proverbial nail on the head here. There is a pervasive entitlement culture and accompanying lack of self-discipline that has taken root. As I’ve now reached my mid-40s and fully believe I have lived the American Dream, and as an 'elder' in my firm, I see the large group of 25’s to 35’s in our firm and often shake my head at the financial choices they make. They deserve to drive a $75,000 car..."

David: "I fit into the anxious affluent segment with doubts about the American Dream. I have had a modestly successful career, building and selling a small business for low-seven-figures a few years back. I'm a millionaire on my personal balance sheet and live a good but far from luxurious lifestyle. Nevertheless, I still work for a living in my 50s because I am not yet confident that my investible assets and property are sufficient to live the retirement lifestyle that my wife and I want to live. The reason that I would agree that the American Dream is dead (or on life support) is the unprecedented economic uncertainty here in the U.S., and around the world. Every day I wonder what might happen in the global financial or political system that could make the vast majority of my hard-earned wealth go "poof" and disappear. Did I live the American Dream by gaining millionaire status as a small business person? Perhaps. Will I be able to keep it and grow my wealth over the next 30 years in the current economic and political environment?  I have my doubts.  Thus, the 'Dream' is more like an anxiety-filled nightmare to me."

Kirsten: "$200K of investable assets doesn’t get you very far if you factor in that most of the survey respondents need to save for retirement and probably dream of sending their kids to college. I can’t imagine many of the respondents have a pension, and suspect very few would qualify for financial aid. Leaving aside retirement, even an amount double $200K isn’t going to send 2.5 kids to a 4 year college without drowning them in student debt."

Stephen: "As a student preparing to enter the workforce, it is often discouraging to hear people talk about the waning of the American Dream. However, if you're right and the problem is sentiment among successful people in our country, the spreading of commentary like the one you provided is a step in the right direction."

Steve: "You're too much of a socialist to spend all day working on finance industry trends ― maybe that's what makes it more interesting."

KC: "I remain hopeful for E, and also for my own children... America is not without problems, of course, but people can still move quite a ways along with a combination of hard work, dedication, and yes, a little luck. Most of the rest of the world knows this, which is why people still immigrate here.  For some reason, though, it seems to be lost on the entitled class."

Some replies to Bill Gurley's suggestion that LPs only commit to VC funds that prohibit inside-led rounds and cross-fund investing. Josh: "I have no idea if the market dynamics make this possible or not, but I question the premise. Some term elements are strictly a splitting of the pie between LPs and GPs, and in times of leverage, maybe one party wants to increase its share of the pie. That makes sense to me. But trying to constrain what looks to me like fundamentally poor decisions by contract ― contractually bar investors from putting "good money after bad" ― feels misguided. Sure, maybe you ask for that, but why are you committing to invest in managers who you think would do this? And if they are that kind of investor, why not be happy you found out and sit out the next fund?"

Clayton: "While the issue Gurley raises is important, his proposed solution is equally likely to hamstring new funds from profitably investing and taking advantage of pro rata rights in successful portfolio investments by affiliated closed or fully-invested funds who can assign those rights to new affiliated funds. The customary way to address the conflict potential is requiring an independent board (such as an advisory board) to approve. The more interesting question is whether any payment ought to be made between the funds for the assignment of the rights."

J: "Somewhere along the line it was forgotten that your burn rate is someone else's salary. And if we can get more people to pour money into entrepreneurs, and therefore jobs, great. Sure I get why VCs would like founders to do more with less. Maybe they will get their way and driverless cares and two guys in a garage will be all the overhead we need to make them billions, but I don't see it, and I don't want it either."

Nate: "I wouldn't gloat too much yet over the Fidelity write-down of Stemcentrx, since that was as of Feb. 29. They might have marked it back up in March."

Paul: "Unicorns do not have wings. That would be a Pegasus! I thank my years of D&D for the distinction."

Have a great weekend...


 Rovi Corp. (Nasdaq: ROVI) has agreed to acquire TiVo Inc. (Nasdaq: TIVO) for approximately $1.1 billion in cash and stock, or $10.70 per share (15.8% premium to Wednesday’s opening price). Read more.


 Stance, a San Clemente, Calif.-based lifestyle apparel company, has raised $30 million in Series D funding. Mercato Partners led the round, and was joined by return backers August Capital, Kleiner Perkins Caufield Byers, Menlo Ventures, Shasta Ventures and Sherpa Capital.

 World View, a Tucson, Ariz.-based, has raised $15 million in Series B funding. Canaan Partners led the round, and was joined by Norwest Venture Partners, Tencent, Moment Ventures and Base Ventures.

 Levyx Inc., an Irvine, Calif.-based provider of big data infrastructure solutions, has raised $5.4 million in Series A funding. OCA Ventures led the round, and was joined by Amino Capital, Sumavision USA Corp. and individual angels.

 Slantrange, a San Diego-based provider of aerial remote sensing and analytics for agriculture, has raised $5 million in Series A funding led by The Investor Group.

 VividCortex, a Charlottesville, Va.-based database performance monitoring company, has raised $4.5 million in Series A funding. New Enterprise Associates led the round, and was joined by return backer Battery Ventures.

 Kitchit, a San Francisco-based startup focused on bringing a restaurant experience into user's homes, has shut down. The company had raised $7.5 million in Series A funding in late 2014 led by Javelin Venture PartnersRead more.


 Clayton Dubilier & Rice has agreed to acquire German sausage casings maker Kalle from Silverfleet Capital. No financial terms were disclosed, except that Silverfleet says that it expects a 3.5x return multiple on its original €71.5 million investment (and a 22.5% IRR).

 Goldman Sachs Merchant Banking and Silverfern have agreed to acquire Continental Bakeries, a Dutch maker of private-label biscuits and other bakery products, from NPM Capital. No financial terms were disclosed.

 Indigo Minerals, a Houston-based mining company operating in Louisiana and East Texas, has raised $375 million in equity funding. Trilantic North America led the round with a $300 million commitments, and was joined by return backers Martin Companies, Yorktown Partners and Ridgemont Equity Partners. Indigo also announced the acquisition of certain producing properties and undeveloped acreage in the Cotton Valley and Haynesville plays.


 Turning Point Brands Inc., a Louisville, Ky.-based maker of "other tobacco products" like loose leaf chew and Zig Zag rolling paper, set its IPO terms to 5.4 million shares being offered at between $13 and $15 per share. It would have a fully diluted market value of around $278 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol TPB, with FBR and Cowen & Co. serving as underwriters.


 Brazos Private Equity is in talks to sell Ennis-Flint Traffic Safety, a Thomasville, N.C.-based maker of road paints, according to Bloomberg. The company could be worth upwards of $1 billion.

 Wellspring Capital Management has hired Piper Jaffray to find a buyer for National Seating & Mobility Inc., a Franklin, Tenn.-based maker of rehabilitation equipment, according to the WSJ. The company could be valued at around $400 million.


 Alere Inc. (NYSE: ALR) said that it has rejected a request from Abbott Laboratories (NYSE: ABT) to terminate Abbott’s $5.8 billion agreement to purchase Alere. Abbott says it is concerned about various representation made by Alere, and offered between $30 million and $50 million to kill the existing agreement, which values Alere shares more than 50% above their current trading price. Read more.

 Anheuser-Busch InBev has offered to sell the Central and Eastern European businesses of SABMiller (LSE: SAB), in order to gain regulatory approval for its $100 billion brewery mega-merger. Read more.

 Carl Icahn said that he no longer owns any shares in Apple (Nasdaq: AAPL), largely due to concerns over possible interference by the Chinese government. Read more.

 Central Group (Thailand) has agreed to acquire Vietnamese grocery chain Big C from Casino Guichard-Perrachon (Paris: CO) for around $1.1 billion. Read more.

 Comcast (Nasdaq: CMCS) confirmed that it will acquire DreamWorksAnimation (Nasdaq: DWA) for approximately $3.8 billion. Read more.

 Eni SpA (BIT: ENI) has hired Goldman Sachs to hire most of its retail gas and power business, according to Reuters. The deal could be worth up to $3.4 billion, with bidders expected to include Edison (Italian unit of EDF), Gas Natural (Spain) and Centrica (UK). Private equity firms also may have interest. Read more.

 SpaceX secured an $83 million U.S. Air Force contract for a GPS satellite launch. Read more.

 Telegram, a Russian messaging app, is denying local media reports that it was approached for a takeover by Google (Nasdaq: GOOG). Read more.


 Ares Management and Apollo Investment each are bidding for American Capital (Nasdaq: ACAS), a Bethesda, Md.-based private equity and credit investment firm with around a $3.7 billion market cap, according to Reuters. Read more.

 Fortress Investment Group has agreed to sell its Convex Asia hedge fund unit to group management and London-based City Financial Investment Co. Convex Asia managed around $184 million as of February. Read more.

 Mayfield has closed its fifteenth early-stage VC fund with $400 million in capital commitments. It also has raised a $125 million “select” fund for later-stage investments.


 Olympus Partners, a Stamford, Conn.-based private equity firm, has named Jim Conroy as its third managing partner. He joined the firm back in 1990, and currently sits on the boards of portfolio companies FFR Merchandising, IXS and Ritedose.

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