The sky is gray, Uber is no longer profitable in the U.S. and most of you are probably on vacation. In other words, it’s time for some Friday Feedback:
• Mike: “How do you feel about monitoring fees in general? Are they fair to the portfolio companies, or simply a way for PE funds to extract a “dividend” before they sell a company for a profit. Seems to me that PE firms would want to monitor their investment, even if they didn’t get paid for it.” I don’t like them Mike, accelerated or not. I understand the PE argument that these effectively replace third-party consulting fees, but PE firms already are paid by their LPs for such services via management fees. If the monitoring fees are 100% offset, then I’m more agnostic on the matter.
Seth: “I don’t know Ali Rashid but the fact that you… put his name out there to your readers, who are the ones who he may be looking to work for or with, without any hard proof is what is wrong with the media today. Doesn’t matter if he did it or not, doesn’t matter if you end up recanting or not, it’s out there and searchable and people typically remember the first story they read not the subsequent apology. What did you gain by naming the individual?” Well, I don’t expect to recant or apologize since he: (a) Didn’t deny it when given the opportunity; and (b) Already reimbursed Apollo in full. My job is to report what happens, not protect the professional prospects of individuals.
• Todd on GM/Lyft: “No one would/should give M&A rights to a corporate minority investor. Usually the compromise is they would get 20-30 days to respond to another offer that came across from another party.”
• Chris on Ford/GM: “The app is the smallest piece of the value stack (look at the sea of taxi hailing apps). Either company would be shortsighted to acquire an existing app rather than build their own. Look at how quickly people switch from Uber to Lyft during surge pricing.”
• Pete on ESPN vs. DFS: “I get wanting to fact-check the ESPN piece, but this one seemed like you’ve chosen a side.”
• As you might imagine, we also got some carried interest taxation emails. Here’s JB: “The key issue with taxing carried interest as income is that GPs have to invest their own post-tax dollars alongside LPs to earn carried interest. This is a critical part of the alignment between the economic interests of the two groups. How do you motivate someone to invest post-tax dollars which is locked up for years if it gets taxed as income ? So most likely the LP/GP structures will have to change and the biggest danger is that achieving that economic interest alignment will become much more fragile. I am a Democrat and totally for fair taxation but this one is tricky for most to understand and especially to understand the implications of a change.”
Ryan: “Why the focus on whether or not individuals become/remain VCs? Aren’t the things that really matter here the investments themselves? Changing the tax treatment might not result in fewer VCs, but could result in fewer deals being done? You could imagine the treatment changing the return profile and making fewer deals attractive.”
Jack takes the other side: “[NVCA president Bobby] Franklin’s argument holds no water if he has to admit that no VC would withdraw from the market if there is a tax change to carried interest. It does not impact the volume of VC available in any geographical area. Besides which, with the risk free rate at zero, any new business not able to forecast a pos-ttax capital gain to investors of meaningfully above this shouldn’t be raising money anyway.”
• Have a great weekend!
THE BIG DEAL
• Apollo Global Management has agreed to acquire San Antonio-based cloud computing company Rackspace (NYSE: RAX) for $4.3 billion. The $32 per share deal represents a 38% premium over where Rackspace was trading on August 3, when the first reports of a possible acquisition emerged. The deal also includes a strategic equity investment in Rackspace by Searchlight Capital Partners. Read more.
VENTURE CAPITAL DEALS
• Denali Therapeutics Inc., a San Francisco-based biotech startup focused on neurodegenerative diseases led by former Genentech executives, has raised $130 million in Series B funding. Baillie Gifford led the round, and was joined by “several new and large institutional investors.” Return backers – which had committed an initial $217 million in Series A funding — include Fidelity Biosciences, ARCH Venture Partners, Flagship Ventures and the Alaska Permanent Fund (represented by Crestline Investors). Read more.
• MobiKwik, an India-based mobile wallet company, has raised $40 million in strategic equity funding from Net1 (Nasdaq: UEPS). Existing shareholders include Sequoia Capital. Read more.
• Songkick, a New York-based artist-ticketing and concert discovery platform, has raised $15 million in new VC funding from Access Industries. www.songkick.com
• Symphony Commerce, a San Francisco-based provider of commerce-as-a-service solutions, has raised $11 million in new VC funding. Backers include CRV, Blue Cloud Ventures, Bain Capital Ventures and FirstMark Capital. www.symphonycommerce.com
• Inscopix, a Palo Alto, Calif.-based developer of a brain mapping platform, has raised $10 million in Series A funding. Playground Ventures led the round, with AME Cloud Ventures and Floodgate Fund serving as co-lead underwriters. www.inscopix.com
• Gobiquity, a Scottsdale, Ariz.-based provider of mobile vision screening technology, has raised $6 million in Series B funding led by InterWest Partners. www.gobiquity.com
• Dice, a London-based ticketing startup that doesn’t use booking fees, has raised $6 million in Series A funding. Evolution Equity Partners led the round, and was joined by Lumia Capital and return backers White Star Capital, Designer Fund and Kima Ventures. Read more.
• Mint Solutions Holding BV, a Dutch developer of a medication safety system, has raised €5 million in Series B funding. Brabant Development Agency was joined by return backers like Life Sciences Partners and NSA Ventures. www.mintsolutions.eu
• Grabr, a San Francisco-based P2P delivery platform, has raised $3.5 million in VC funding from RBV Capital and N-Trans Group. www.grabr.io
• Salesfloor, a Montreal-based provider of online sales management, has raised an undisclosed amount of Series A funding led by White Star Capital. www.salesfloor.net
PRIVATE EQUITY DEALS
• Bain Capital and KKR are among six or seven suitors short-listed as acquirers by Takata Corp. (Tokyo: 7312), the troubled Japanese maker of car airbags, according to Reuters. Others include Japanese chemical company Daicel Corp. and the Chinese parent company of Michigan-based Key Safety Systems. Read more.
• The Blackstone Group has formed a venture to target assets and leasehold in the Delaware Basin located in West Texas and southern New Mexico. The total investment, some of which will come from Blackstone’s partners on the project, is $1 billion. www.blackstone.com
• Nets, a Denmark-based payments processor, plans to float its stock in Copenhagen in late September, according to a local media report. The company was acquired in 2014 by Bain Capital, Advent International and pension fund ATP for approximately $2.6 billion. Read more.
• The Carlyle Group is in talks to sell Shanghai office tower Central Plaza to Chinese homebuilder China Vanke for around $369 million, according to a local media report. Read more.
• Ministry Brands LLC, a Lenoir City, Tenn.-based provider of software for faith-based organizations, has hired Bank of America to explore a sale of the company, according to the WSJ. The deal could be valued at more than $1.5 billion. Ministry Brands is currently owned by Genstar Capital and Providence Equity Partners. Read more.
FIRMS & FUNDS
• Afore Capital has been launched as a new San Francisco-based VC firm by Anamitra Banerji (ex-Foundation Capital partner) and Guarav Jain (ex-Founders Collective principal). According to an SEC filing, the pair is seeking $40 million for its debut fund.
MOVING IN, ON & UP
• Stefania Perrucci has joined Turner Investments as global head of fixed income and as a member of the Berwyn, Penn.-based firm’s investment committee. She previously founded New Sky Capital. www.turnerinvestments.com
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