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Term Sheet — Thursday, September 8

Random Ramblings

Some items to kick off your Thursday…

• Back A’Round: Longtime venture capitalist Howard Morgan is stepping down as a partner with First Round Capital, the early-stage VC firm he co-founded back in 2004 with Josh Kopelman.

The move will become official at year-end ― when First Round begins investing a new $175 million fund it just quietly raised ― with Morgan expected to remain active in the startup world as an angel investor, while also maintaining some of his existing First Round board seats. And, yes, Morgan will still cameo in the firm’s next holiday video.

“He was my first angel investor and has backed every project I’ve worked on since,” writes First Round co-founder Josh Kopelman, in a Medium post scheduled to go live later this morning. “I know I speak for everyone here at First Round when I say we’re deeply indebted to him — for his wisdom, humor, and helping build this special place we get to work at every day.”

First Round also will announce the promotion of Brett Berson, current VP of platform, to the firm’s partnership. He actually began with the firm as an intern out of NYU (working on, among other things, the initial holiday video), and now will have a vote on new deals (he’ll also have the opportunity to lead deals, but his primary day job remains leading platform).

As an aside, Howard was the first venture capitalist I ever saw speak at an industry conference. It was just before the dotcom bust), and I’m pretty sure he was discussing Idealab and before a packed New York City hotel ballroom. A VC rock star before there really were VC rock stars….

• That was quick: Scott Belsky is no longer a general partner at venture capital firm Benchmark, just seven months after taking the job. Read more here. Also worth noting that while LPs had been saying for a while that Benchmark would raise its next fund in Q4, word now is that it won’t come until sometime in 2017.

• Meet the MPW: Fortune is out today with its annual Most Powerful Women in Business list. Those of particular interest to Term Sheet readers include Fidelity Investments boss Abby Johnson (#5), JPMorgan CFO Marianne Lake ($28), Syncrony Financial CEO Margaret Keane (#29), JPMorgan Asset Management boss Mary Erdoes (#30) Citigroup Latin America CEO Jane Fraser (#46) and GE vice chair Beth Comstock ($48).

You can view the full MPW list by going here (yes, EpiPen villain Healther Bresch is on there). Plus, here’s a discussion of last year’s honorees who didn’t make the 2016 cut.

• No go: President Obama is threatening to veto proposed bipartisan legislation that would reduce the amount of information that private equity firms and other financial advisors are required to provide to the SEC. Among other things, it would not requiring PE firms to submit the very investor communications that often have been found to lack information about such things as accelerated monitoring fees (thus leading to regulatory penalties). Here is the White House statement.

• Coming attractions: Snapchat is talking to “investment bankers about filing for an IPO towards the end of this year or early in 2017,” per The Information. Would be fascinating if the company, relatively new to revenue, were to reach the public markets before Uber, Airbnb, etc.

• Quiz Time: Can you name the CEO of a VC-backed e-commerce company (valued in the hundreds of millions of dollars) who was just booted as CEO? Hint: East Coast.

• Today in Theranos: Brooke Buchanan, the erstwhile PR rep who didn’t seem to know what she was getting into when she joined Theranos last November, yesterday took a job at Whole Foods. No word yet on if Elizabeth Holmes will be working the produce aisle.

• Reader reminder: If you haven’t already taken our annual Reader Survey, please do so by going here.


• TPG Capital has agreed to acquire a 51% stake in the McAfee security software business of Intel Corp. (Nasdaq: INTC) for $3.1 billion ($2 billion of which will be new debt). The deal values McAfee at around $4.2 billion, compared to the $7.7 billion Intel paid to acquire the business back in 2010. Read more.


• OfferUp, a Seattle-based mobile marketplace for U.S. buyers and sellers, has raised $119 million in Series C-1 funding at a valuation north of $1 billion. Warburg Pincus led the round, and was joined by GGV Capital, Altimeter Capital and return backers like investors Andreessen Horowitz, T. Rowe Price, Vy Capital and Coatue Management. Read more.

• HashiCorp., a San Francisco-based DevOps infrastructure startup, has raised $24 million in Series B funding. GGV Capital led the round, and was joined by Redpoint Ventures, Mayfield and True Ventures.

• Dizzion Inc., a Denver-based provider of end-user computing services, has raised $6.4 million in new VC funding. Grotech Ventures and Access Venture Partners co-led the round, and were joined by Correlation Ventures and Point B Capital.

• Armune BioScience, a Kalamazoo, Mich.-based developer of a blood test for prostate cancer, has raised $5 million in Series A funding from firms like Grand Angeles Venture Fund. The company also said that it has hired Mavericks Capital as placement agent for a $25 million Series B round.

• Octiv, an Indianapolis-based provider of sales productivity solutions, has raised $4.75 million in VC funding from GE Ventures, Greycroft Partners, High Alpha Capital and Allos Partners.

• Nextail, a Spanish provider of inventory management SaaS, has raised $1.6 million in new VC funding. Nauta Capital led the round, and was joined by seed backer Realiza. Read more.

• Ousta, an Egyptian ride-hailing app, has raised $1.25 million in bridge funding, according to TechCrunch. Read more.


• Area Wide Protective, a Kent, Ohio-based portfolio company of The Riverside Company, has acquired All State Traffic Control, a Bristol, Conn.-based provider of flagging services to utilities, utility contractors and roadway maintenance and repair customers in the Northeast. No financial terms were disclosed.

• Charme Capital Partners has acquired a majority stake in JD Classics, a UK-based restorer and retailer of premium classic road and race cars. No financial terms were disclosed.

• China Everbright Ltd. and IDG Capital Partners have acquired a control stake in China-based arts college Shanghai Film Academy, according to Private Equity International. No financial terms were disclosed.

• Golden Gate Capital has completed its previously-announced acquisition of bankrupt apparel retailer Pacific Sunwear of California Inc. (PacSun), including a debt restructuring. Read more.

• Harvest Partners has led a $250 million investment into OTG Management, a New York-based operator of airport food and beverage concessions with more than 230 locations across 11 airports.

• Nazca Capital has agreed to acquire around a 75% stake in CAIBA, a Spanish maker of PET preforms and containers for the food, household products and personal hygiene sectors. No financial terms were disclosed.

• Newfit, a licensee of six Fitness Connection health clubs in Dallas, has raised an undisclosed amount of private equity funding from LNK Capital (which also is an investor in Fitness Connection). No financial terms were disclosed, except that Golub Capital provided senior debt.

• Societe Generale is in talks to sell its 49% stake in a mutual fund joint venture with Chinese state-owned Baosteel Group, to Warburg Pincus, according to Reuters. Read more.


There is no IPO news this morning.


• Altamont Capital Partners has sold Modern Healthcare Inc., an Orlando-based specialty pharmacy focused on patients with chronic illnesses, to The Kroger Co. (NYSE: KR). No financial terms were disclosed.

• The Blackstone Group and portfolio company Fisterra Energy have sold 84-turbine Mexican wind farm Ventika to IEnova, a subsidiary of Sempra Energy (NYSE: SRE) at an enterprise value of $852 million (including $447m of assumed debt). Read more.

• Liberty Media (Nasdaq: LMCK) has agreed to acquire Formula One in a two-part transaction that would value the auto racing company at around $8 billion. First, Liberty Media will acquire an 18.7% stake in the company for $746 million in cash from an investor group led by CVC Capital Partners. Then next year it will purchase the rest from CVC and other shareholders ($354m in cash, $3.3b in newly-issued shares in a Liberty Media tracking stock to be renamed Formula One Group). Read more.

• PAI Partners and Goldman Sachs have launched an auction for Xella International SA, a German building materials company that could be worth more than €2 billion, according to Blomberg. Several private equity firms reportedly are considering bids. Xella last year postponed an IPO, citing unfavorable market conditions. Read more.


• Hewlett-Packard Enterprise (NYDSE: HPE) has agreed to spin off its software business to UK-based Micro Focus (LSE: MCRO) in an $8.8 billion deal. There had been earlier reports that private equity firm Thoma Bravo had serious buy-side interest. Read more.

• T. Rowe Price, the largest outside shareholder in Netsuite (NYSE: N), said that it will not tender its shares for Oracle‘s (Nasdaq: ORCL) proposed $9.3 billion acquisition of the cloud computing company. Read more.


• XIO Group of London completed its previously-announced acquisition of J.D. Power & Associates, a Costa Mesa, Calif.-based market research firm, from McGraw Hill Financial (NYSE: MHFI) for $1.1 billion.


• Dyal Capital Partners, a unit of Neuberger Berman Private Equity, has acquired a passive, non-voting minority interest in Starwood Capital Group. No financial terms were disclosed.


• Martin Beirne has joined private equity firm Cimbria Capital as an operating partner focused on the natural resources sector. He previously was president and CEO of Green Earth Fuels.

• Paul Gibson has joined Hercules Capital as a Washington, D.C.-based managing director in the firm’s technology group. He previously was a managing director at Horizon Technology Finance.

• Kevin Hartz, co-founder and former CEO of Eventbrite, has joined VC firm Founders Fund as a partner.

• Carl Mayer has joined Guggenheim Partners as a senior managing director focused on leveraged loans and high-yield bonds. He previously led U.S. leveraged finance for Nomura. Read more.

• Kelly McCullum has rejoined Frazier Healthcare Partners as an operating partner on the growth buyout team. He had first joined the Seattle-based firm as an operating partner in 2006, and helped form mobile radiology company TridentUSA Health Services. Most recently, he served as the company’s president and COO.

• Craig Phillips is leaving BlackRock, where he led the Financial Markets Advisory unit, according to Reuters. Read more.

• Revelstoke Capital Partners has promoted Andrew Welch and Arion Robbins to principal, and Jonathan Miller to senior associate. The firm also hired Michael Constantinides (ex-Cain & Co.) and Alan Fredian (ex-Houlihan Lokey) as associates.

• The Riverside Company has promoted both Meranee Phing (San Francisco) and Nick Speer (Melborune) to partner. The firm also formally announced the arrival of new partner Hunter Peterson (ex-Trinity Hunt Partners), as previously reported by Term Sheet.

• Daniel Yergin, vice chairman of HIS Markit and the author of a Pulitzer Prize-winning book about the oil industry, has joined The Carlyle Group as a senior advisor.

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