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Term Sheet — Friday, May 13

Random Ramblings

Today’s big deal is that Apple has agreed to invest $1 billion into Didi Chuxing, the Chinese ride-hailing service that is now valued at approximately $25 billion. This is part of the previously-reported $2 billion raise by Didi, which previously raised capital from such groups as Alibaba, Tencent, SoftBank, Beijing Automotive, Ping An Insurance Group, Tiger Global Management, Coatue Management and D.E. Shaw.

For Didi, this makes all sorts of sense. For starters, the $1 billion will help it keep trying to beat out Uber for local transportation supremacy. And it doesn’t even have to give up much of the company or a board seat.

Apple’s intentions, however, are tougher to divine. My China-based colleague Scott Cendrowski thinks that Apple might be using Didi as a backdoor into expanding the use of Apple Pay China, which is a distant competitor to Alipay (owned, ironically, by earlier Didi investor Alibaba).

The deal also could indicate that Apple is further along on its autonomous cars than it has publicly let on, and wants to leverage Didi’s traffic pattern data (plus rural road mapping information).

Or perhaps Apple simply wants to distract and worry Uber, which also is working on its own autonomous fleet. For his part, Uber CEO Travis Kalanick responded to the news with an amusing tweet about how his girlfriend owns Apple stock, which now makes her an indirect Didi shareholder. Actually, it also makes her an indirect shareholder in Lyft, which sold some equity to Didi as part of a broader strategic partnership. Think it’s time to create a web-graph of sorts…

• Not so easy: I’ve been wanting to write about the official collapse of the Staples-Office Depot merger, which came this week after a federal judge ruled in favor of the U.S. Federal Trade Commission. My gut take is that for all the missteps Staples has made in this process ― including its legal gamble of not really putting on a legal defense ― the FTC acted capriciously. Even if you don’t accept that online retailers now serve as legitimate rivals to the big box stores (unlike the last time Staples and Office Depot tried to merge), the FTC objection was remarkably narrow (“consumables” for big business customers) and Staples did have a deal in place to divest many of those contracts.

Trouble is, the judge hasn’t yet explained his decision. That comes next week. Keep thinking there is something I’m missing because, even without a formal defense by Staples/Office Depot, it doesn’t appear that the FTC really proved its case. More on this once we’ve got a judicial opinion.

• Slam dunk: Square today announced that one of its board members is stepping down, but it’s not either of the two directors who also sit on the LendingClub board. Instead, the departing director is Magic Johnson ― which reminds me that Magic Johnson was on the board of a $3 billion, publicly-traded technology company. His successor is Paul Deighton, former UK Commercial Secretary.

• Quiz Time: Can you name the latest two-man venture capital fund to effectively collapse due to GP squabbles? Hint: Debut fund was sub-$50 million.

• Where in the World? Your next Term Sheet will come at you from Carlsbad, Calif., where I’ll be stationed until Wednesday for Fortune Brainstorm E. Hope to see some of you there.

• Have a great weekend…


• Didi Chuxing, a Chinese ride-hailing company that claims over 11 million rides each day, has raised $1 billion in strategic funding from Apple Inc. Read more.


• EndoStim Inc., a St. Louis-based developer of a neurostimulation therapy device for gastroesophageal reflux disease, has raised $25 million in Series D funding. Endeavour Vision led the round, and was joined by Wellington Partners, GIMV and return backer Santé Ventures.

• Viridity Energy Inc., a Philadelphia-based provider of battery storage and demand response solutions, has raised $8.5 million in new funding from AltEnergy LLC.

• Accion Systems, a Cambridge, Mass.-based developer of miniature space propulsion systems, has raised $7.5 million in Series A funding. Shasta Ventures led the round for Accion, which won the “unicorn idol” competition last summer at Fortune Brainstorm Tech. Other backers include RRE Ventures, Founder Collective and Slow Ventures. Read more.

• PebblePost, a New York-based personalized online mailing platform, has raised around $5.13 million in new VC funding, according to a regulatory filing. Greycroft Partners was joined by return backers Tribecca Venture Partners and ff Venture Capital.

• Medal, a San Francisco-based online platform for unifying medical records, has raised $3.78 million in new VC funding, according to a regulatory filing. No investors were disclosed.

• EnBiotix Inc., a Cambridge, Mass.-based bioengineering startup focused on combatting drug-resistant and drug-tolerant bacterial infections, has raised an undisclosed amount of Series A funding from backers like Wired Holdings Investment Corp. and Apeiron Holdings Ltd.


• Advanced Medical Personnel Services Inc., a Port Orange, Fla.-based portfolio company of Clearview Capital, has acquired Rise Medical Staffing LLC, a Sacramento, Calif.-based provider of travel nurse staffing solutions to hospitals and other healthcare facilities. No financial terms were disclosed.

• Montagu Private Equity has acquired a majority stake in Funeral Services Partnership, a British funeral services provider, from August Equity for an undisclosed amount.

• Optiv Security LLC, a Denver-based cybersecurity company backed by The Blackstone Group, has acquired Evantix GRC LLC, a Newport Beach, Calif.-based provider of a SaaS application for managing third-party risk. No financial terms were disclosed.


• Acacia Communications, a Maynard, Mass.-based provider of transceivers for ultra-high speed fiber optic transmission to the telecom infrastructure industry, raised $104 million in its IPO. The company priced 4.5 million shares at $23 per share (high end of $21-$23 range), for an initial market cap of around $820 million. It will trade on the Nasdaq under ticker symbol ACIA, while Goldman Sachs, BofA Merrill Lynch and Deutsche Bank served as lead underwriters. Acacia reports $40.5 million of net income on $239 million in revenue for 2015, compared to $13.5 million of net income on $146 million in revenue for the year-earlier period. Shareholders include Matrix Partners (39.2% pre-IPO stake), Commonwealth Capital Ventures (19.7%), Summit Partners (9.4%) and Egan Managed Capital.

• China Online Education Group, a Beijing-based online education platform focused on English language proficiency, has filed for a $100 million IPO. Morgan Stanley and Credit Suisse are serving as lead underwriters. The company reports a $50.5 million net loss on nearly $24 million in revenue for 2015. Shareholders include DCM (24.1% pre-IPO stake) and Sequoia Capital China (19.3%).


• Fosun International (HK: 0656) is among the bidders for Singapore reinsurer ACR Capital Holdings, according to Reuters. The deal could be valued at upwards of $1 billion. ACR’s current owners include 3i Group, Temasek, Khazanah Nasional and Marubeni Corp. Read more.

• IBM (NYSE: IBM) has acquired Bluewolf Group LLC, a New York-based designer of cloud computing solutions for enterprise clients via the Salesforce platform, from Riordan, Lewis & Haden Equity Partners. No financial terms were disclosed.


• Kickstart of Salt Lake City is raising its fourth seed fund, according to a regulatory filing.

• KKR is planning to open a Mexico City office and raise a Mexico-focused private equity fund, according to Bloomberg. The New York-based firm has not yet hired anyone to lead the new effort. Read more.

• LBC Credit Partners is raising upwards of $600 million for its fourth fund, according to a regulatory filing. So far it has secured $180 million in capital commitments.


• Mark Barnard plans to retire as a head of private investments at the $18.2 billion endowment for the Howard Hughes Medical Institute. He originally joined more than 20 years ago.

• William Ross has joined Grey Mountain Partners as a senior associate. He previously was with Stonehenge Partners. www.greymountaincom

• Marc Rossell has joined Greenberg Traurig as a New York-based partner in the law firm’s capital markets, Latin American and Iberian practices. He previously was with Chadbourne & Park.

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