Random Ramblings
Some items to kick off your Tuesday...
• Carrying interest water: Both Hillary Clinton and Donald Trump have proposed tax plans that would include carried interest being reclassified as ordinary income. Or, put another way, they want to raise taxes on venture capitalists, private equity execs, hedge fund managers, etc.
There's nothing new about a Democratic presidential nominee seeking to close the loophole (Barack Obama campaigned on this in both 2008 and 2012), but Trump's endorsement puts industry lobbying groups in an unfamiliar position of having to persuade both parties to maintain the status quo.
So, not surprisingly, National Venture Capital Association CEO Bobby Franklin and chairman Venky Ganesan (a partner with Menlo Ventures) last week began their "education" campaign via an appearance on CNBC and corresponding column.
My goal here isn't to litigate the merits of capital gains vs. ordinary income (I've been on the opposite side of this for a decade), but rather to highlight how the NVCA has chosen to reframe its argument (based, in large part, on a phone conversation I had yesterday with Franklin).
In the past, NVCA has argued that a change to carried interest tax treatment would result in a significant decrease of venture capital investments to U.S. startups. It was always specious, given that not a single VC would say on the record that they'd stop being a VC if the law was changed.
So Franklin has abandoned that claim, acknowledging that "current VCs will continue to invest."
His new tact is to argue that a tax treatment change would discourage the next generation of VCs from emerging, particularly in geographic regions outside of VC hotbeds like Silicon Valley, Boston and New York.
"It's already hard for an entrepreneur in Northwest Arkansas, for example, to find venture investment," Franklin says. "Why would we want to make it even harder?"
Pretty smart strategic shift, particularly given that the vast majority of Congresspeople don't represent one of the VC-favored zip codes. I'd still maintain my general argument that carried interest is an ordinary income, but Franklin has certainly pulled a reliable rhetorical arrow from my quiver.
• Personnel note: Alex Clayton is joining Spark Capital to focus on growth equity investments in the enterprise tech space, Fortune has learned. Expect a formal announcement later today.
Clayton will be based in San Francisco, and previously was a senior associate with Redpoint Ventures (where he remains listed on the firm's website).
• When bad things happen to bad people: Regular readers should be familiar with Gurbkash "G" Chahal, the serial ad-tech entrepreneur and inspirational speaker who fell from grace after brutally beating an ex-girlfriend (there was a video, but it wasn't admissible in court ― so he plead down to misdemeanor counts of domestic violence battery and battery).
Chahal eventually was booted from the company he founded, RadiumOne, after the VCs on its board realized they could no longer sweep Chahal's misdeeds under the rug. Chahal then went on to found another ad-tech company called Gravity4, but soon was accused on abuse by a different girlfriend. The police report (there were no criminal charges this time) were enough for a judge to determine that Chahal had violated probation, and he now could be facing up to a year in prison. He also has stepped down as CEO of Gravity4, with his sister taking the reins.
The best piece I've seen so far on the latest machinations comes from Ellen Huet at Bloomberg, who has uncovered how Chahal's shady behavior extended to the boardroom ― including his creation of a fictional employee named Christian Gray (nope, he has zero self-awareness) that came complete with his own LinkedIn profile. Read Ellen's piece by going here.
THE BIG DEAL
• Velodyne LiDAR, a Morgan Hill, Calif.-based provider of technology that lets self-driving cars see and avoid what’s around them, has raised $150 million in equity funding from Ford Motor Co. and Baidu. Read more.
VENTURE CAPITAL DEALS
• Hike, an Indian messaging app, has raised $175 million in Series D funding at a $1.4 billion valuation. Tencent was joined by return backers Tiger Global and Bharti SoftBank. Read more.
• Tioma Therapeutics Inc., a developer of antibodies for the treatment of solid and hematologic cancers, has raised $86 million in Series A funding. Backers include RiverVest Venture Partners, Novo Ventures, Roche Ventures Fund and S.R. One Ltd. The company has offices in St. Louis and Brisbane, Calif. www.tiomatherapeutics.com
• Rubrik, a Palo Alto, Calif.-based provider of converged data management solutions, has raised $61 million in Series C funding. Khosla Ventures led the round, and was joined by return backers Lightspeed Venture Partners and Greylock. Read more.
• FloSports, a subscription-based director-to-consumer sports media company, has raised $21.2 million in new VC funding. DCM and Berlesmann Digital Media Investments co-led the round, and were joined by World Wrestling Entertainment, Discovery Communications and return backer Causeway Media Partners. www.flosports.tv
• ReviMedia Group BV, a New York-based provider of online lead generation and lead exchange solutions, has raised $12.5 million in equity funding from NewSpring Growth Capital. www.revimedia.com
• Pixelligent Technologies, a Baltimore-based developer of OLED products, has raised $10.4 million in Series C funding. Backers include the Abell Foundation, the Bunting Family Office and David Testa (ex-T. Rowe Price). Read more.
• Degreed, a San Francisco-based platform for career and lifelong learning, has raised $3.5 million in new Series B funding from GSV Acceleration (bringing the round total to $25m). www.degreed.com
• Oculis, an Iceland-based developer of a solubilizing nanoparticle drug delivery platform, has raised an undisclosed amount of Series A funding co-led by Brunner Ventures and Silfuberg. www.oculispharma.com
PRIVATE EQUITY DEALS
• Davalor Mold Corp., a Chesterfield, Mich.-based manufacturer of injection molded plastic products, has raised an undisclosed amount of private equity funding from Blackford Capital. www.davalor.com
• Norland Capital, Iconiq Capital and RIT Capital Partners have jointly acquired CSL, a UK-based provider of connectivity solutions for machine-to-machine communications, from Bowmark Capital. No financial terms were disclosed. www.csldual.com
• Tall Tree Foods, a portfolio company of Altamont Capital Partners, has acquired The January Co., a Kent, Wash.-based manufacturer of Chinese-style meat products. No financial terms were disclosed. www.januarycompany.com
• Topspin Partners has acquired a majority stake in Texas Family Fitness, an operator of fitness clubs in suburban Dallas, from founder Trevor Rogers (who will retain an ownership stake). No financial terms were disclosed. Going forward, the company will be led by new CEO Aaron Watkins, former president of Gold’s Gym International Inc. www.texasfamilyfitness.com
• Trident Maritime Systems, a Virginia-based portfolio company of J.F. Lehman & Co., has agreed to acquire Callenberg Technology Group, a Swedish maker of HVAC, electrical energy management and insulation systems for commercial and government vessels, from Wilhelmsen Maritime Services AS. No financial terms were disclosed. www.tridentmaritimesystems.com
IPOs
• There is no IPO news this morning.
EXITS
• BullGuard, a London-based maker of anti-virus software, has agreed to acquire Dojo-Labs, an Israeli developer of IoT security solutions. No financial terms were disclosed. BullGuard has raised around $20 million in VC funding led by ePlanet Capital, while Dojo-Labs was seeded by Glilot Capital Partners. Read more.
• Essilor International (Paris: EI) has acquired UK-based online glasses retailer MyOptique. No financial terms were disclosed, although TechCrunch puts the price-tag at around €140 million. MyOptique had raised approximately £55 million in VC funding from firms like Acton Capital Partners, Beringea, Cipio Partners, GP Bullhound, Highland Capital Partners and Index Ventures. Read more.
• Samsung disclosed that it paid nearly $170 million in June to acquire Joyent, a San Francisco-based provider of application containers in the enterprise. No financial terms had been disclosed at the time. Joyent had raised over $225 million in VC funding, from firms like Intel Capital, Orascom TMT Investments, El Dorado Ventures, EPIC Ventures, Greycroft and LGI Ventures. www.joyent.com
• Salesforce.com (NYSE: CRM) has acquired BeyondCore, a San Mateo, Calif.-based automated enterprise data analytics company that raised $9 million in Series A funding led by Menlo Ventures in 2014. No financial terms were disclosed for the acquisition. Read more.
• Snapchat has agreed to acquire Vurb, a San Francisco-based mobile search startup, for upwards of $185 million (including $75 million in retention bonuses and nearly $28 million in cash), according to The Information. Vurb had raised around $15 million, including a $12.83 million Series A round in 2014 ($21m pre-money valuation) led by Redpoint Ventures. www.vurb.com
OTHER DEALS
• Alimentation Couche-Tard (TSX: ATD), the Canadian owner of such convenience store chains as Circle K, is nearing an agreement to acquire CST Brands (NYSE: CST), a San Antonio, Texas-based convenience store chain with a market cap of nearly $3.4 billion, according to the WSJ. Read more.
• Arch Capital (Nasdaq: AGCL), a Bermuda-based insurance and reinsurance company, is in talks to acquire mortgage guaranty business United Guaranty from A.I.G. (NYSE: AIG) for $3.4 billion. Read more.
• Praxair Inc. (NYSE: PX), a Danbury, Conn.-based industrial gas supplier, reportedly is in merger talks with German peer Linde AG (DE: LING). The combined company could be valued north of $60 billion. Read more.
• European Institutional Investor, publisher of benchmark metal pricing information service Metal Bulletin, has acquired Fast Markets, a UK-based provider of real-time commodities exchange market information, for an undisclosed amount. Read more.
• Unilever (LSE: ULVR) has agreed to acquire Blueair, a Sweden-based maker of mobile indoor air purification technologies. No financial terms were disclosed, except that Blueair generated $106 million in 2015 sales. www.unilever.com
FIRMS & FUNDS
• Genesis Capital, a private equity fund led by former Tencent M&A exec Zhijian Peng, is raising upwards of $400 million for its debut fund, according to a regulatory filing.
• Susa Ventures, a San Francisco-based seed investment firm, has closed its second fund with $50 million in capital commitments. www.susaventures.com
MOVING IN, ON & UP
• Jeff Chapman has joined Wellington Financial as a Menlo Park-based partner and head of healthcare and life sciences. He previously led life sciences for Comerica Bank. www.wellingtonfund.com
• Michael Condon has joined Fund Evaluation Group as senior VP and outsourced chief investment officer, a new position focused on OCIO offerings to endowment and foundation clients. He previously was chief investment officer at Southern Methodist University, which has a $1.1 billion endowment. www.feg.com
• Scott Gilbertson has joined private equity firm Pfingsten as a principal. He previously spent 12 years as a principal with The Riverside Company. www.pfingsten.com
• Industry Ventures has hired Nate Leung (ex-Bain Capital Ventures) and vice president and Justine Huang (ex-Goldman Sachs) as an associate. www.industryventures.com
• Shaun Mehra has joined healthcare-focused VC firm Longitude Capital to focus on medical device investments. He previously was an analyst with Silver Lake. www.longitudecapital.com
• Greg Melconian has joined Sagent Advisors as a New York-based managing director and head of industrials. He previously was a managing director and co-head of diversified industrials at BMO Capital Markets. www.sagentadvisors.com
• David Ollila has joined Skypoint Ventures, a Flint, Mich.-based VC firm, as VP of innovation. He previously was president of Snapperhead LLC. www.skypointventures.com
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