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Term Sheet — Friday, December 2


• This week Twitter (or at least my corner of it) has been buzzing over an essay penned by Om Malik about the tech industry’s lack of empathy for the people its products hurt. For example, Otto, the self-driving truck startup, will someday displace some three million trucking jobs. He warns that by 2020, “Silicon Valley will have become an even bigger villain in the popular imagination, much like its East Coast counterpart, Wall Street.”

The essay stirred up lots of scolding and self-loathing among the so-called coastal elites of the tech industry. I experienced that in real life last night at a dinner with some of those coastal elites, where the conversation inevitably turned to the topic.

I’ve concluded that yes, the tech industry is doomed to be hated, because that’s what happens to concentrated centers of wealth and power. Right now, Silicon Valley happens to be in that position, and likely will be for a long time. But my view is that the tension isn’t just a tech thing or a finance thing, it’s a capitalism thing. And for the record, it’s not just economically oppressed Rust Belt voters that are frustrated with the system. The majority of all millennials in the U.S. do not support capitalism.

But we can’t stop progress — some of it life-saving — to keep doing things the old way. In his essay, Malik stopped short of telling techies to stop building their products. In addition to displacing jobs, Otto is expected to save lives and increase productivity. It’s the same reason keeping 1,000 factory jobs in Indiana doesn’t change the broader economic trend that those jobs will be increasingly done by robots. And it’s why the Universal Basic Income idea has become so popular in Silicon Valley.

Taking a more hopeful approach, someone at the dinner asked what happens when tech displaces all of our jobs. Our jobs are our identities; they give us self-worth. That’s one reason many argue that simply paying people not to work won’t work. Can we all be artists? Will we be satisfied? To that question, I point to Life Magazine, which famously addressed the “threat” that too much leisure time posed to American society in the wake of increasing automation. That was in 1964.

Just like coastal elites never leave their bubbles with their five-dollar lattes and freshly pressed juices, as Malik sneers, many residents of red states never interact with anyone different from themselves. (I say this as someone who grew up in one of those red state bubbles.) The difference, of course, is that one bubble wields a lot of money, privilege and power and the other, not so much. That creates a greater burden on the coastal elites to be more empathetic. But I hope the empathy can go both ways.

• Road Not Taken: Most startups thrive on hype and venture capital-fueled growth, but Madison Logic, a little-known business-to-business marketing tech company based in New York City, has defied that by raising no money after its angel round and largely avoiding press.

Yesterday the company continued that non-traditional trajectory. Rather than go public or sell itself to a tech conglomerate, Madison Logic has agreed to sell to a middle market private equity firm.

Clarion Capital Partners has agreed to buy the company. Deal terms were not disclosed, but Fortune has learned the deal is worth “hundreds of millions” of dollars. (The company filed a Hart-Scott Rodino notification, which is required for any deal over $78.2 million.) Clarion Capital Partners typically targets deals in the range of $15 million to $50 million, so this is a significant transaction for the firm. Likewise, the deal marks a notable exit for the New York City tech scene.

This item has been corrected to say the HSR threshold for M&A deals is $78.2 million. 

• Buzz At First Sight: In addition to writing Term Sheet every morning, I have a column in the old-fashioned print version of Fortune. My latest, about Snap Inc., is out today. Read it here.

• Live from Vatican City: Fortune’s Global Forum conference is going on now in Rome. Follow along here.

Have a great weekend!


• So much for “peak car

• A new low for unemployment

• Turning breweries’ leftovers into granola bars

• Learning diversity from the U.S. government

• Smart toys invade the house

• Trump’s team is likely to approve AT&T

• Starbucks CEO Howard Schultz steps down, what’s next for him

• GE and Microsoft’s IoT venture in Israel

• A CEO’s most important day

• What top pharma execs expect under Trump

• Four charts that show why shopping malls are in trouble


Snap shares in high demand. (Subscription required.) Zenefits software found illegal in Washington state. Trump’s business is not too big to sell. How Snapchat kept fake news out. Mnunchin’s IndyMac millions. How Mnuchin’s bank filed to take a 90-year-old woman’s house after a 27-cent payment error.


Lumos Global, an Amsterdam off-grid solar firm, raised $90 million in funding from Overseas Private Investment Corporation, Pembani Remgro Infrastructure Fund, VLTCM and ICV.

Hyperloop Transportation Technologies, a company building a prototype of Elon Musk’s hyperloop system, raised $31.8 million in funding, according to TechCrunch. Read more.

Glossier, a New York City online beauty startup, raised $24 million in Series B funding. IVP led the round.

Exeger Sweden AB, a Stockholm developer of dye-sensitized solar cells, raised €5.2 ($5.5 million) from Fortum, a Finnish energy company.

Geenee, an image recognizing app that allows users to shop Instagram, raised $4.4 million in Series A funding. Investors included Highlight Communications AG, Constantin Media AG, Stephen Cohen and Steve Titus

SQZ Biotechnologies, a Boston biotech company using cell therapy to treat diseases, raised $4 million in funding from Quark Ventures.

Fidzup, a Paris provider of digital marketing tools for retailers, raised $3.7 million in funding from Cap Horn and Turenne Capital, among others.

Dashbot, a San Francisco provider of analytics software for bots, raised $2 million in seed funding. ff Venture Capital led the round, and was joined by Bessemer Venture Partners, Samsung Accelerator, Scrum Ventures, Bertelsmann Digital Media Investments, and Rembrandt Ventures.

LogicGate, a Chicago provider of software for businesses to automate risk and compliance operations, raised $1.9 million in funding from Chicago Ventures, OCA Ventures, Hyde Park Venture Partners, MATH Venture Partners, Techstars Ventures, Firestarter Fund, Sandalphon Capital, and Connetic Ventures.

Dream Payments, a Toronto provider of mobile point-of-sale software and hardware for Canadian merchants, raised $1.5 million in funding from Connecticut Innovations.

Grokker, a San Jose, Calif. online service for fitness, yoga, meditation, and cooking videos, raised an undisclosed amount in Series B round funding. Investors include SV Angel, First Round Capital, Khosla Ventures, Aspect Ventures, Interwest Partners, Comcast, and Correlation Ventures.


Allianz Global Investors has agreed to acquire Sound Harbor Partners, a New York City-based private credit manager. Financial terms were not disclosed.

Oaktree Capital Management has invested in Sterling Lumber Company, a provider of timber mat and ground protection solutions for the energy, power, and infrastructure industries. Terms of the deal were not disclosed.


Teleflex Inc (NYSE:TFX) has agreed to buy fellow medical device maker Vascular Solutions (NasdaqGS:VASC) for about $1 billion, according to Reuters. At $56 per share, Teleflex’s offer represents a 1.6% premium over Vascular Solutions stock’s close Thursday. The acquisition announcement comes less than a year after Vascular Solutions, along with its founder and chief executive, Howard Root, was found not guilty in a criminal suit tied to “off label” advertising strategies. Read more.

Canopy Growth (TSX:CGC), Canada’s largest marijuana distributor, has agreed to buy competitor Mettrum Health (TSXV:MT) for about C$430 million ($321 million), according to Bloomberg. The all-stock deal values Mettrum at C$8.42 per share, a 42% premium to the company’s closing price Wednesday. Canada plans to legalize recreational marijuana use in 2017. Read more.

• China’s Fujian Grand Chip Investment Fund has agreed to buy German semiconductor-equipment supplier Aixtron SE (DB:AIXA) for €670 million euro ($714 million). But in an unusual move, President Obama is expected to block the acquisition due to security concerns, according to Reuters. Last month, the Committee on Foreign Investment in the United States advised that the deal be stopped. Read more.

SessionM, a Boston platform for automated mobile marketing, has acquired LoyalTree, a Pittsburgh, Pa. point-of-sale integration platform. SessionM is backed by Kleiner Perkins Caufield & Byers, General Atlantic, CRV, among others.


WildHorse Resource Development, a Texas-based oil and gas E&P backed by Natural Gas Partners, has set its IPO terms. The company plans to raise $550 million by offering 27.5 million shares between $19 to $21 per share. If it priced in the midpoint of that range, it would have a diluted market value of $1.8 billion. WildHorse Resource Development plans to list on the NYSE under the ticker symbol WRD.


AngelList, a crowdfunding platform for startups and angel investors, has agreed to acquire Product Hunt, an online community for tech enthusiasts. Both companies are based in San Francisco. Product Hunt, which was founded three years ago by Ryan Hoover and Nathan Bashaw, has raised $7.1 million in funding from Andreessen Horowitz, GV, and Slow Ventures, among other investors. Read more at Fortune.

Fandango Media, an online movie ticketing platform owned by ComcastCorp, said it would buy Cinepapaya, a Peru-based website for purchasing movie tickets. Financial terms were not disclosed. Cinepapaya has raised $3 million in capital from investors including Movile, 500 Startups, and Wayra. Read more at Fortune.

Information Services Group (NasdaqGM:III) has acquired Alsbridge Holdings, Inc., a U.S.-based sourcing, automation and transformation advisory firm, for $74 million in cash and stock. Alsbridge was backed by LLR Partners.

Silver Oak Services Partners has sold Accent Food Services, an Austin vending food distributor, to Audax Private Equity.

Flexpoint Ford, a Chicago private equity firm, has acquired Purchasing Power, an Atlanta voluntary benefit company, from Rockbridge Growth Equity.

Matrix Capital Markets Group has sold two truck stops and one convenience store owned by 7-Eleven, Inc. to Parkland Fuel Corporation.

Return Path, a New York City-based email data company, has acquired Email Copilot, a San Diego, Calif.-based company that provides monitoring, reporting, and analysis of email deliverability data. Email Copilot raised $1.25 million from Promus Ventures, and Anthem Venture Partners, among other investors.


Huiyin Blockchain Ventures, a subsidiary fund of Chinese investment company the Huiyin Group focused exclusively on blockchain-related investments, has launched with $20 million in commitments, according to Coindesk. Read more.

Founder Collective, a Cambridge, Mass.-based seed-stage venture capital firm, raised $75 million for its third fund.

• Eddy Shalev, Jonathan Saacks, and Barak Rabinowitz, former partners at the Israeli VC firm Genesis Partners, have launched their own firm. Called F2 Capital, it will focus on early-stage investments and is in the process of closing a $50 million initial fund, according to TechCrunch. Read more.


Gianluca Banfi has joined Lincoln International as a managing director at the Chicago-based investment bank’s Milan office. Previously, Banfi was executive director of the corporate finance division at Finanziaria Internazionale, a private Italian investment bank.

Bennett Woodward is now a partner and chief investment officer at Waterloo Capital.


Term Sheet is produced by Laura Entis. Submit deal items here.