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Term Sheet — Friday, May 27

May 27, 2016, 1:54 PM UTC

Random Ramblings

Twilio is an unprofitable cloud software company that has been valued at more than $1 billion by venture capitalists. Yesterday the San Francisco-based company filed for an initial public offering. It’s about damn time.

To be clear, I have no idea if going public in 2016 is actually the right move for Twilio. Nor do I have any sense of whether its stock will go up, down or sideways. If you want someone to analyze Twilio’s growth prospects within the enterprise software world ― or API space, more specifically ― please look elsewhere.

For me, at this moment in time, Twilio is more about what it can do for others than what it can do for itself.

Tech startups have been staying private longer for a while but, even as of this time last year, it wasn’t terribly unusual to see a company like Twilio hit the public markets. Last year, for example, saw IPOs from Box, Pure Storage, Shopify and Square.

2016, however, has been a wasteland. Not a single “unicorn” has gone public yet, nor has one even filed for an IPO (Nutanix remains on file from last December). The closest we got was Massachusetts-based Acacia Communication, which never was valued at even $200 million by its VCs (i.e., its best public/private value comp is Fitbit).

And while some in Silicon Valley have blamed public market volatility, that hasn’t stopped biotech-focused venture capitalists from getting a bunch of their companies public. Ditto for private equity investors. And corporate spin-offs. And special purpose acquisition companies. Moreover, U.S. IPOs have actually outperformed the S&P 500 over the past three months, per Renaissance Capital.

If Twilio manages to price and doesn’t collapse in the early aftermarket, it could serve as the dam-breaker that other, less courageous unicorns have been waiting for. Or, as IPO consultant Lise Buyer explained it back in March: “There are certainly double-digit numbers of companies working on S-1’s, but bankers do a very good job of scaring people until waiting to go public until after someone else succeeds with one.”

Speaking of Twilio: (1) It's probably a good time to mention that Twilio CEO Jeff Lawson will be among those joining us July 11-13 at Fortune Brainstorm Tech. (2) Per the S-1, Lawson has cashed in over $15 million worth of stock, via transactions in 2013 and 2015. (3) This is probably the first ― but almost certainly not the last ― IPO filing to feature Uber CEO Travis Kalanick. His photo appears near the top, alongside a quote about being a satisfied customer.

Courthouse update: Patrick Chung yesterday filed his first response to the lawsuit filed by his former Xfund partner Hugo Van Vuuren, although it was not a full demurrer. Instead, it was something called an anti-Slapp motion, in which Chung effectively is asking the court to invalidate some of Van Vuuren's claims (primarily around defamation).  

 Deal data: Global M&A is down 18% year-to-date over 2015, according to Thomson Reuters. Private equity-backed deals have taken even deeper hits: Globally down 43% to $135.7 billion, and off 55% for U.S. targets to $64 billion.

 Birthday wishes: Today is J's birthday, and it's a big one. So I'm once again hoping you could help me out a bit.

As many of you know, her day job is a psychologist working with returning military and veterans. But she's also a voracious reader who runs book review and commentary site called The Readers Room. The site is doing well, but I'd like to again give it a massive, one-day bump (mainly because it will make her smile, and she indirectly helps out with Term Sheet more than you probably realize). So, if you would, please take a quick moment and visit BIG thanks in advance.

 Have a great holiday weekend (for those of you in the U.S.). Term Sheet will return on Tuesday...


 TPG Capital and Takeda Pharmaceutical Co. (Tokyo: 4502) submitted a takeover offer earlier this spring for Valeant Pharmaceuticals International (TSX: VRX), but were rejected, according to the WSJ. The unsolicited bid was said to be at a significant premium to where Valeant stock was trading, but still well below its peaks. Read more.


 AutoFi, a San Francisco-based point-of-sale financing solution for the auto market, has raised $17 million in new VC funding. Crosslink Capital led the round, and was joined by Lerer Hippeau Ventures and return backers like Toll Brothers founder Bruce Toll.

 Creema, a Japan-based online marketplace for handmade goods, has raised around $10 million in new VC funding. Globis Capital Partners led the round, and was joined by return backer KDDI Open Innovation Fund. Read more.

 Lumiata, a San Mateo, Calif.-based provider of predictive analytics software for the healthcare market, has raised $10 million in Series B funding. Intel Capital led the round, and was joined by return backers Blue Cross Blue Shield Venture Partners, Khosla Ventures and Sandbox Industries.

 Meural, a New York-based “connected canvas” startup that streams art directly to users’ walls, has raised $2.5 million in seed funding. Corigin Ventures led the round, and was joined by Barbara Corcoran Venture Partners and individual angels.


 Amulet Capital Partners has acquired SynteractHCR Holdings Corp., a Carlsbad, Calif.-based contract research organization for small to mid-sized biopharma clients, from Gryphon Investors. No financial terms were disclosed.

 Anglo American (LSE: AAL) has set June 6 as the date for final bids on its metallurgical coal mines in Australia, which could garner upwards of $1.5 billion, according to Reuters. Apollo Global Management is among the bidders, working with Pennsylvania-based Xcoal Energy & Resources. The frontrunner is believed to be BHP (ASX: BHP). Read more.

 Centauri Health Solutions Inc., a Scottsdale, Ariz.-based provider of risk adjustment solutions to the healthcare market, has raised $50 million in minority equity funding from Silversmith Capital Partners.

 Juggernaut Capital Partners has agreed to acquire Mitchell & Ness, a Philadelphia-based maker and seller of nostalgia sports apparel, from Adidas AG for an undisclosed amount. Read more.

 LDC has agreed to acquire the Magicard identification card business of British defense contractor Ultra Electronics (LSE: ULE) for up to £25 million in cash (£22m up front). Read more.

 PeopleAdmin, an Austin, Texas-based portfolio company of Vista Equity Partners, has acquired TeacherMatch, a Chicago-based SaaS platform for hiring teachers, from Prairie Capital. No financial terms were disclosed.


 Philips Lighting, a lighting business spinoff of Dutch electronics giant Philips NV, priced its Amsterdam IPO at €20 per share, for an initial market cap of around €3 billion. Read more.


 Twilio Inc., a San Francisco-based provider of API solutions for voice communications, has filed for a $100 million IPO. It plans to trade on the NYSE under ticker symbol TWLO, with Goldman Sachs and J.P. Morgan serving as lead underwriters. The company reports a $35.5 million net loss on $167 million in revenue for 2015, compared to a $27 million net loss on $89 million in revenue for 2014. Twilio raised around $240 million in VC funding from firms like Bessemer Venture Partners (28.5% pre-IPO stake), Union Square Ventures (13.6%), Fidelity (6.1%), Amazon, 500 Startups, Altimeter Capital, DFJ, Founders Fund, K9 Ventures, Kapor Capital, Lowercase Capital, Redpoint Ventures, Salesforce Ventures and T. Rowe Price. Read more


 JLL Partners has hired Jefferies to find a buyer for BioClinica Inc., a Newtown, Penn.-based pharma contract research organization that could be worth upwards of $1.3 billion (including debt), according to Reuters. Read more.

 VMG Partners has sold Justin’s LLC, a Boulder, Colo.-based maker of nut butters and nut snacks, to Hormel Foods (NYSE: HRL). No financial terms were disclosed.


 The Alaska Permanent Fund is seeking to sell up to 20 LP stakes in private equity funds, with an estimates value of around $271 million, according to board documents spotted by Private Equity International. The pension system has a total private equity portfolio value of around $3.6 billion.

 Data Collective has closed its fourth VC fund with $177.45 million in capital commitments, according to a regulatory filing.


 Mark Bodnick is stepping down as head of business and community at Q&A site Quora, in order to either return to investing or start a company. Prior to joining Quora, he had been a co-founding partner of Elevation Partners. Read more.

 Olivier Sarkozy is stepping down as head of the financial services practice at The Carlyle Group, according to Bloomberg. He had joined the firm in 2008 from UBS, and will remain as a senior advisor to Carlyle. Read more.

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