A few brief notes today…
Data Dump: PitchBook released its third quarter report on the private equity middle market. A few takeaways: Middle market deal volume continues to be on pace for a slower year than last year—as of Q3, we’re at 9.7% fewer transactions than last year. Good targets are hard to come by. Good exits are hard to come by, too. (Year-to-date they’re down 20% from the same period last year.) Median deal size is slightly down. Fundraising is on pace for a 9% drop.
It’d be easy to blame the election for the slow-down—investors often tend to take a wait-and-see approach—but PitchBook attributes the lag to market fundamentals that have been going on since before this election season. (So, since the beginning of time.) A bright spot: Add-on deals and niche specialist firms are driving the market.
Speaking of the Election: PE pros seem to have mixed emotions about its effect on the market. On one hand they’re hopeful that deal volume will pick up after the uncertainty ends on November 8. On the other hand, Nov. 8 may only bring more uncertainty. And as noted above, the macro trends are not moving in the right direction.
Bright Spots: A slow-down in mid-market exits makes the handful of them that do happen more noteworthy. Here’s one from today: KPS Capital Partners sold Anchor Glass Container Corporation to CVC Capital for $1 billion. It’s a quick turnaround for the glass packaging product company, which KPS bought two and a half years ago from parent company Ardagh Holdings USA. KPS spent “tens of millions” on the company’s facilities, increasing profits by 60%.* A source familiar with the situation says the firm earned a 5x return on its capital invested.
Digression: In addition to writing Term Sheet every morning, I cover a handful of Fortune 500 tech companies, including Facebook.
I won’t bore you with the gory details of the tech giant’s third quarter earnings call last night, such as why investors hated 166% EPS growth and 45% operating margins, or why one adverb did the company in, or why I think Facebook’s winning streak may be ending. But if you happen like those kinds of gory details, you can read about them here.
*Note a prior version of this newsletter said KPS increased revenue by 60% when it actually increased profits by that margin.
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• Hollar, a Santa Monica, Calif.-based online dollar store, has raised $30 million in Series B funding. Kleiner Perkins Caufield & Byers led the round, and was joined by Comcast Ventures, Greycroft Partners, Lightspeed Venture Partners, Index Ventures, Forerunner Ventures, and Pritzker Group. Read more at Fortune.
• Catchpoint Systems, a New York City-based digital performance analytics company, has raised $22.5 million in Series C funding. Sapphire Ventures led the round with participation from Battery Ventures.
• Zipongo, a San Francisco-based nutrition app, has raised $18 million in Series B funding. Mayfield led the round, and was joined by Excel Venture Management.
• Droit Financial Technologies, a New York City-based provider of software that automates derivatives trade compliance, has raised $16 million in Series A funding. Goldman Sachs, Pivot Investment Partners and Wells Fargo led the round, with participation from DRW.
• Recondo Technology, a provider of revenue management software, has raised $16 million in debt and equity. Lehmi Ventures led the round, and Bridge Capital provided debt.
• Owlet Baby Care , a Lehi, Utah-based maker of a baby monitor that includes heart rate and oxygen level measurements, has raised $15 million from Institutes of Health (NIH), Eclipse and Eniac, Trilogy Equity Partners, the Amazon Alexa Fund, RTP-HC, Capital Integral, and Broadway Angels.
• PlushCare, a San Francisco-based telemedicine company, has raised $8 million in Series A funding in a round led by GGV Capital and LightSpeed Venture Partners.
• Oben, a Pasadena, Calif.-based startup that uses selfies to make 3D models in virtual reality, has raised $7.7 million in funding. CrestValue Capital, DunAn Group in China’s investment arm, led the round, and was joined by Cybernaut Westlake Partners, and Leaguer Venture Investment.
• Borrowed & Blue, a Charlottesville, Va.-based wedding vendor marketplace, has raised $7 million in Series A funding. Foundry Group led the round, and was joined by Foxhaven Asset Management, Accomplice VC, Galvanize Ventures, and Service Provider Capital.
• Zarget, a Walnut, Calif.-based marketing automation platform, has raised $6 million in Series A funding. Sequoia led the round, and was joined by Accel and Matrix.
• Simulity Labs, a Welsh IoT development company, has raised £4 million ($5 million) in funding from Foresight Group.
• CollegeVine, a Cambridge, Mass.-based provider of high school mentoring for college applications, has raised $3.1 million in Series A funding. Morningside Technology Ventures led the round, and was joined by University Ventures.
• DJiT, a Paris-based maker of an app for DJs, has raised $2.6 million, according to TechCrunch. XLR Capital and Bpifrance led the round, and were joined by angels including David Guetta’s manager Jean-Charles Carré and DJ and producer Martin Solveig. Read more.
• Atomized, an Atlanta-based startup that makes connected calendars so teams can collaborate, has raised $2.5 million in seed funding.
• Linux Academy, an online training platform for employees, has raised $2.3 million in funding from Arthur Ventures.
• Indio, a San Francisco-based commercial insurance platform for brokers, has raised $2 million in seed funding from NEA, Compound, Merus Capital, 500 Startups, and insurance carrier Hiscox.
• StyleStage, a New York City-based data analytics company for retailers, has raised $2 million in seed funding. Trammell Venture Partners led the round, and was joined by Sonae IM, Sonae’s VC arm.
• Octane AI, a San Francisco-based bot creation platform co-founded by Ben Parr, the managing director of early-stage VC firm DominateFund, has raised $1.5 million in seed funding. General Catalyst led the round.
PRIVATE EQUITY DEALS
• Canyon Bridge Capital Partners has agreed to acquire Lattice Semiconductor Corporation, a maker of programmable logic devices, for approximately $1.3 billion, or $8.30 per share, a 30% premium on the company’s Wednesday’s trade price.
• General Atlantic has made an undisclosed investment in Synaptive Medical, a Toronto-based medical device company.
• Brambles, a supply-chain logistics provider, has agreed to divest CHEP Aerospace Solutions, one of its portfolio companies, to EQT Infrastructure II.
• Saratoga Partners has acquired Xenon Cinema, which manufactures xenon arc lamps for digital cinema projectors, from Philips Lighting.
• NxEdge, which is owned by Trive Capital, has acquired the assets of Flex’s Morgan Hill facility, a Morgan Hill, Calif.-based provider of machining and assembly capabilities. No financial terms were disclosed.
• Strattam Capital has agreed to make an undisclosed investment in Contegix, a St. Louis-based cloud computing and managed application hosting provider.
• Genstar Capital-owned Mercer Advisors has acquired Pegasus Advisors LLC, a Dallas-based investment advisory firm. No financial terms
• Ocean Rig Partners LP, a Cyprus-based offshore rig operator, has withdrawn its IPO registration. The company originally filed in October 2014, with plans to raise $305 million on the Nasdaq under the symbol ORLP.
• CVC Capital Partners and BA Glass have agreed to acquire Anchor Glass, a glass-packaging provider owned by KPS Capital Partners, for over $1 billion.
• Wynnchurch Capital has sold JAC Products, a Detroit-based supplier of roof rack systems and cargo management products, to Argonaut Private Equity and Hall Capital. Financial terms were not disclosed.
FIRMS + FUNDS
• Relay Ventures, a Canadian venture firm that invests in mobile software companies, has raised $150 million for its third fund.
• Annexus, an annuities and life insurance provider, has launched Annexus Ventures, its VC arm that will invest in early-stage insurance tech, financial tech, and software companies.
• John Perkins and Christy Carter have both joined the Boston Consulting Group as a partners. Perkins was previously managing director at Houlihan Lokey, an investment bank. Carter was most recently at CCMP Capital.
• Kurt Dammermann has been promoted to vice president of PCH’s startup accelerator Highway1. Brady Forrest, who was previously running the program, will remain on as a special advisor.
• James Buzzard has joined Advent International as an operating partner. He was previously president of global packaging company MeadWestvaco Corporation.
• Daniel Green is joining Meketa Investment Group as a senior director in the firm’s London office. He was previously the director of Gorst Capital.
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