Skip to Content

Term Sheet — Monday, September 26

Random Ramblings

Unlike most advertising technology startups, San Francisco-based AppLovin never raised any traditional venture capital. Instead, it was bootstrapped, profitable by the end of its first month and backed by just $4 million in angel funding.

Also unlike most advertising technology startups, AppLovin is now being acquired at a “unicorn” valuation.

Fortune has learned that the company has agreed to sell a majority stake to Chinese private equity firm Orient Hontai Capital at an enterprise value of $1.42 billion. The deal was announced to company employees earlier this morning, and is expected to close before year-end.

“We started the business five years ago, back before Facebook had even launched mobile advertising, because there were no good ways for app developers to promote themselves,” says Adam Foroughi, AppLovin’s CEO and, to date, the only member of its board of directors. “Our mission statement when we began was to help mobile app developers grow their businesses in smart and efficient ways, and it hasn’t changed since.”

Foroughi adds that earlier this year he began visiting China, where he believes his company’s next major growth will occur. He met with lots of potential investors and partners, but was attracted to a purchase offer from OHC because of what refers to as alignments on how to grow in China, and how to “bring Chinese companies West” via the Applovin platform. He adds that he’s “sort of a private person, and don’t want to be CEO of a public company.”

As for the lack of venture capital, it wasn’t necessarily intentional. Instead, it was more a byproduct of Foroughi having enough personal resources to bootstrap the launch, and then the company’s immediate success.

“I couldn’t find anyone to give us an investment at what I thought was a reasonable starting point valuation (maybe $4 million or $5 million) and, by the end of our first year of operations, we were profitable and doing over $1 million a month in revenue,” he explains. “So I put together a round with angels not really because we needed the cash, but because I thought these were influential people who could help us grow.”

Inc. reports that Applovin generated $234 million in revenue last year (a figure Foroughi does not dispute). Expectations are that revenue will be at least double in 2016, as Applovin has done every year of its existence to date.

• VC nerdery: Yesterday I wrote about cloud security company Skyhigh Networks raising $40 million in Series D funding. The pre-money valuation was modestly higher than the $340 million post-money valuation it received in its Series C round two years ago. To me, that makes it an “up round.”

The complication, however, is that the Series D stock actually was priced lower than the Series C stock, because Skyhigh has been increasing its employee option pool in the interim. To me, the “up round” characterization still applies ― if a public co splits its stock, we don’t automatically claim the company lost value ― but I’m interested in your thoughts on these terms of art.

• Gametime: A group of Term Sheet readers will be playing softball this afternoon at Fenway Park. First pitch is 2:10pm, and you’re all welcome to come hang out, eat hot dogs and root us on (trust me, we’ll need it). Also, special congrats to our caption winners from last Friday:

  • Whitney Wells: “Raise your hand if you look good in orange”
  • Drew Jordan: “I wasn’t aware that the shredder was running, when I tried to catch Pikachu.”
  • David Wiesenfeld: “Raise your hand if you have ever been personally victimized by Elizabeth Warren.”

• Flashback: There has been a lot of attention paid over the past week to lousy performance at the Harvard University endowment, but this isn’t a new issue. Pretty sure we discussed it in late 2013.

• Can you hear me now? The silence from Verizon on its commitment to the Yahoo acquisition is deafening.

• Monday haiku
Marc Andreessen gone
From Twitter, without a cause
Who to argue with?

THE BIG DEAL

• CBOE Holdings Inc. (Nasdaq: CBOE) has agreed to acquire Bats Global Markets (BATS: BATS) for approximately $3.2 billion in cash and stock. Bats shareholders include TA Associates (21.06% stake). Read more.

VENTURE CAPITAL DEALS

• FreshDirect, a Long Island City, N.Y.-based grocery delivery service, has raised $189 million in new funding. JPMorgan Asset Management led the round, and was joined by return backers W Capital and the AARP Innovation Fund. Read more.

• InstaMed, a Philadelphia-based payments network for the healthcare market, has raised $50 million in new funding from Carrick Capital Partners. www.instamed.com

• Skyhigh Networks, a Campbell, Calif.-based provider of cloud security and control solutions for the enterprise, has raised $40 million in Series D funding. Thomvest Partners led the round, and was joined by return backers Greylock Partners and Sequoia Capital. Read more.

• Certona, a San Diego-based provider of omnichannel personalization solutions for brands and retailers, has raised $30 million in new growth equity funding led by Primus Capital. www.certona.com

• FinalCAD, a France-based provider of mobile construction apps and predictive analytics, has raised $20 million in Series B funding from Serena Capial, Caphorn Invest and Aster Capital. www.finalcad.com

• MemberSuite, an Atlanta-based provider of customizable association management software, has raised $11 million in Series B funding led by Revolution Ventures. www.membersuite.com

• Podium Data Inc., a Lowell, Mass.-based data lake management platform for the enterprise, has raised $9.5 million in Series A funding led by Malibu Ventures. www.podiumdata.com

• Estify, a Los Angeles-based startup that automates integration of estimate data between auto insurance companies and body shops, has raised $6.3 million in Series A funding. Romulus Capital led the round, and was joined by ff Venture Capital. www.estify.com

• Kinetica, a San Francisco-based developer of an in-memory database “accelerated by GPUs,” has raised $6 million in new VC funding led by Ray Lane. www.kinetica.com

• Mautic, a Boston-based provider of open-source marketing automation solutions, has raised $5 million in Series A funding co-led by G20 Ventures and Underscore.vc. www.mautic.com

• Paddle, an ecommerce platform for software businesses, has raised $3.2 million in Series A funding. BGF Ventures led the round, and was joined by Spring Partners. www.paddle.com

• Zero, a San Francisco-based mobile banking startup, has raised $2.5 million in seed funding. Eniac Ventures led the round, and was joined by NEA, Nyca Partners, Lightbank and Middleland Capital. www.zerofinancial.com

PRIVATE EQUITY DEALS

• Abraaj Group has acquired a “significant minority stake” in Capa de Ozono, a Mexican fashion footwear company. No financial terms were disclosed. www.abraaj.com

• Baring Private Equity Asia has agreed to acquire SAI Global Ltd. (ASX: SAI), an Australian provider of risk management and property services, for around A$1 billion. Read more.

• CVC Capital Partners has acquired Logen Group, a South Korean parcel delivery business, from Baring Private Equity Asia. No financial terms were disclosed, but local media reports suggest around a $300 million purchase price. Losing bidders included Affinity Equity Partners and The Carlyle Group. Read more.

• Equistone Partners Europe has acquired a majority stake in D3T Distribution, a French online retailer of motorcycle accessories and clothing, from Inspirational Stores. No financial terms were disclosed, except that D3T generated around €38 million in revenue during its most recent fiscal year. www.equistonepe.com

• Permira is among the five bidders for the share registry business of Hong Kong-based Bank of East Asia, which is under pressure from activist investor Elliott Management, according to Reuters. The deal could be valued at around $800 million. Read more.

• Vista Equity Partners has agreed to acquire GovDelivery, a St. Paul, Min.-based digital communication platform for government, for $153 million. www.govdelivery.com

IPOs

• Five companies are expected to price IPOs on U.S. exchanges this week, including Nutanix. Read more.

• Aritzia Inc., a Canadian women’s fashion retailer owned by Berkshire Partners, has increased the number of shares being offered in its upcoming IPO from C$14 per share to C$16 per share. The company now could raise upwards of C$400 million. Read more.

• AquaVenture Holdings, a Tampa, Fla.-based provider of wastewater treatment and purification services and systems, has set its IPO terms to 6.5 million shares being offered at between $18 and $20 per share. It would have an initial market cap of around $483 million, were it to price in the middle of its range. The company plans to trade on the NYSE under ticker symbol WAAS, with Citigroup, Deutsche Bank and RBC Capital Markets serving as lead underwriters. AquaVenture reports around an $8.2 million net loss on $55 million in revenue for the first six months of 2016. Shareholders include Element Partners and the Virgin Green Fund. www.aquaventure.com

• Camping World Holdings Inc., a retailer of recreational vehicles and TV accessories, has set its IPO terms to 11.36 million shares being offered at between $21 and $23 per share. The company plans to trade on the NYSE under ticker symbol CWH, with Goldman Sachs and J.P. Morgan serving as co-lead underwriters. Camping World is controlled by Crestview Partners, and reports $178.5 million of net income on $3.3 billion in revenue for 2015. www.campingworld.com

• Everspin Technologies, a Chandler, Ariz.-based maker of magnetic RAM products, has set its IPO terms to 3.75 million shares being offering at between $11 and $13 per share. The company plans to trade on the Nasdaq under ticker symbol MRAM, with Stifel and Needham & Co. serving as lead underwriters. Everspin has raised around $77 million in VC funding, from firms like New Venture Partners (31.5% pre-IPO stake), Sigma Partners (9.3%), Lux Ventures (7.6%), Globasl Foundries (6.23%), Freescale Semiconductor (5.3%), Epic Ventures (4.6%) and Draper Fisher Jurvetson (4.6%). www.everspin.com

• Gridsum Holding Inc., a provider of data analysis software for multinational and domestic enterprises and government agencies in China, raised $87 million in its IPO. The company priced 6.7 million American depository shares at $13 per share (above $10.50-$12.50 offering range). It will trade on the Nasdaq under ticker symbol GSUM, while Goldman Sachs (Asia) and Citigroup served as lead underwriters. The company reports a $4.5 million net loss on around $22 million of revenue for the first half of 2016. Shareholders include Steamboat Ventures and Nokia Growth Partners. www.gridsum.com

• iRhythm Technologies Inc., a San Francisco-based developer of cardiac diagnostic monitoring solutions, has filed for an $86.25 million IPO. It plans to trade on the Nasdaq under ticker symbol IRTC, with J.P. Morgan and Morgan Stanley serving as lead underwriters. The company reports a $10.6 million net loss on $28.6 million in revenue for the first half of 2016. It has raised nearly $100 million in VC funding from firms like Synergy Life Science Partners (16.39% pre-IPO stake), Norwest Venture Partners (16.01%), Novo AS (13.68%), New Leaf Venture Partners (12.03%), Mohr Davidow Ventures (9.76%) and Kaiser Permanente Ventures (9.37%) and Stanford University. www.irhythmtech.com

EXITS

• CA Technologies (Nasdaq: CA) has agreed to acquire BlazeMeter, an Israel-based provider of continuous application performance testing software. No financial terms were disclosed. Blazemeter had raised around $7 million in VC funding from firms like YL Ventures, Glilot Capital Partners, Flint Capital and Western Technology Investment. www.ca.com

OTHER DEALS

• BandLab of Singapore has acquired a 49% stake in Rolling Stone magazine from Wenner Media for an undisclosed amount. Read more.

• Lanxess AG, a listed German maker of synthetic rubber, has agreed to acquire Philadelphia-based Chemtura (NYSE: CHEM) for around $2.12 billion in cash (not including assumed debt). The $33.50 per share deal represents around a 19% premium to Friday’s closing price for Chemtura shares. Read more.

• Pfizer (NYSE: PFE) has abandoned plans to split into two separate, publicly-traded companies. Read more.

• StellaService, a New York-based provider of customer service ratings for online retailers, has acquired ICC/Decision Services, a New York-based provider of customer experience management services to large retailers. No financial terms were disclosed. StellaService has raised around $37 million in VC funding from firms like Comcast Ventures, Toba Capital, Novel TMT, Norwest Venture Partners, Battery Ventures, DFJ Gotham Ventures, RRE Ventures and Forerunner Ventures. www.stellaservice.com

FIRMS & FUNDS

• Aleph, an Israeli early-stage venture capital firm, has closed its second fund with $180 million in capital commitments. www.aleph.vc

• Canvas Ventures has closed its second fund with $300 million in capital commitments. www.canvas.vc

• Firebrand Ventures, a Kansas City-based VC firm focused on early-stage companies in the greater Midwest, is raising $15 million for its debut fund, according to a regulatory filing. www.firebrandvc.com

• FTV Capital has closed its fifth growth equity fund with $850 million in capital commitments. www.ftvcapital.com

• Procuritas, a Nordic private equity firm, is nearing a €300 million final close for its sixth fund, according to Dow Jones. www.procuritas.se

• Razor’s Edge Ventures, a Reston, Va.-based venture firm focused on the “intersection of national security and commercial enterprise,” is raising upwards of $250 million for its second fund, according to a regulatory filing. www.razorsvc.com

• TCA Fund Management Group, an Aventura, Fla.-based, is raising upwards of $400 million for its first private equity fund (focused on small-cap, growth-stage companies in the US and UK), according to Dow Jones. www.tcaglobalfund.com

MOVING IN, ON & UP

• Goldman Sachs is cutting around 30% of its 300 investment banking jobs in Asia (non-Japan), according to Reuters. Read more.

• Nairi Hourdajian is stepping down from her longtime communications role with Uber, in order to become VP of communications with venture firm Canaan Partners. Read more.

Share today’s Term Sheet:
http://fortune.com/newsletter/termsheet