THE TRUMP CONUNDRUM
The following column appears in the latest issue of Fortune. (View online version here.)
“F*CK TRUMP.” That was the message Charles River Ventures, a Boston-based venture capital firm, blasted at anyone who visited its website this fall. It’s homepage railed against Donald Trump’s anti-immigration stance: “If you are for building walls and stopping change, stay away. Bigots need not apply.”
It was a potent sentiment shared throughout the tech industry and expressed equally on Twitter, in Medium blog posts, on conference stages, and in campaign donations. One hundred forty-five tech leaders signed an open letter opposing Trump. Amazon CEO and Washington Post owner Jeff Bezos declared that Trump is eroding the U.S. democracy. Hewlett Packard Enterprise CEO Meg Whitman, a Republican, donated to Hillary Clinton and called Trump a “dishonest demagogue.” No sector of business was more vocal in its opposition.
I say “was” because those sentiments are fading. CRV’s homepage has returned to normal. Some venture investors admitted to me that they deleted their anti-Trump tweets. Whitman announced that “it is the obligation of every citizen to support our President.” And in December, a cabal of Silicon Valley’s top leaders—Bezos among them—trudged to Trump Tower to glad-hand the President-elect.
The reversal has not gone unnoticed. Writer Paul Carr called it Silicon Valley’s “Come to Satan” moment. Venture capitalist Chris Sacca shamed the tech leaders for “legitimizing fascism.” Worker bees inside tech companies banded together in opposition, pledging to resist Trump’s proposal to register Muslims in the U.S.
The dirty secret is that a President Trump will be very good for certain power players in Silicon Valley. Set aside morality—in Trump’s America, fiduciary duty comes first. Despite tough campaign talk about consolidation, Trump is not expected to oppose monopolistic behavior. Good news if you’re Amazon, Alphabet or Facebook.
Trump may also benefit startups. A Republican-controlled Congress could end gridlock, creating opportunities to reform laws that are slowing down startups, says Bradley Tusk, CEO of Tusk Holdings, a political consultancy and venture firm known for advising Uber. Areas of interest include contract-worker rights, peer-to-peer lending laws, online gambling restrictions, and scrutiny toward for-profit education.
An extremely business-friendly administration will only help. Elaine Chao, Trump’s nominee for Transportation secretary, has signaled a friendliness to the so-called gig economy that includes Uber and Lyft’s fleets of part-time drivers. And while the Securities and Exchange Commission has recently started paying closer attention to large private startups, most observers don’t expect that to be a focus under Trump.
The prospect of a Trump-size cut to corporate taxes could even send the public markets soaring—just the thing to jump-start a string of long-overdue tech IPOs.
It could be huge. Trust me.
Holiday Fun: First Round Capital released its famous annual holiday video this morning, with references to “clean deals,” Theranos, the Samsung Note, and NPV to the tune of the year’s pop hits. This year’s video features an extra Hamilton-themed solo in honor of partner Howard Morgan’s retirement. Enjoy it in all its dancing, mannequining, costume-filled seven-minute glory right here.
THE LATEST FROM FORTUNE…
• IBM employees on Rometty on Trump.
• Samsung’s rough year.
• SoftBank’s weird deal.
• Walgreens divests to save its merger.
• Goldman on the yuan.
• Uber’s losses.
• Femasys, an Atlanta-based developer of medical devices for the women’s health care market, raised $40 million in Series C funding. Salem Partners led the round, with participation from undisclosed investors.
• Starry Internet, a Boston-based broadband internet company started by the founder of Aereo, raised $30 million in funding, according to TechCrunch. Read more.
• Providence Medical Technology, a Walnut Creek, Calif.-based provider of tissue-sparing, cervical-fusion technology, raised $10.5 million in funding. MVM Life Science Partners led the round, with participation from Stanmore Medical Investments, Aphelion Capital, and other investors.
• Superflex, a powered clothing company spun out of the Menlo, Calif.-based research institute SRI International, raised $9.6 million in Series A funding. Global Brain led the round, and was joined by Horizons Ventures, Root Ventures, and Sinovation Ventures.
• Zipari, a New York City-based tech healthcare insurance startup, raised $7 million in Series A funding. Vertical Venture Partners led the round.
• eSub, a San Diego-based developer of mobile and cloud-based project management and document control software for subcontractors, raised $5 million in Series A funding from Revolution Ventures.
• Price f(x), a German pricing optimization SaaS, raised €4 million ($4.1 million) in Series A funding, according to TechCrunch. Credo Ventures led the round, and was joined by Talis Capital. Read more.
• iPrice, a Malaysia-based e-commerce aggregation service operating in Southeast Asia, raised $4 million in Series A funding, according to TechCrunch. Asia Venture Group and Venturra Capital led the round, with participation from Gobi Partners, DMP, Econa and Starstrike Ventures. Read more.
• Preservica, a Boston-based developer of digital preservation software, raised £3 million ($3.7 million) in funding from Mobeus Equity Partners.
• Paystack, a Nigerian provider of payments software for businesses, raised $1.3 million in seed funding from Tencent, Comcast Ventures, Singularity Investments, M&S Partners, Tokyo Founders Fund, Blue Rinc Capital, Pave Investments, and KIBS-CFY Partners.
• Haystax Technology, a McLean, Va. security analytics platform provider, raised an undisclosed amount in funding from Fishtech.
PRIVATE EQUITY DEALS
• Volvo Cars, a Gothenburg, Sweden-based car manufacturer owned by Zhejiang Geely, raised SKr5bn ($533m) in convertible preference shares from Swedish investors AMF, Folksam and AP1, an indication the company is preparing for an IPO. Read more at Fortune.
• The Riverside Company has acquired Lakeview Health, a Jacksonville, Fla.-based accredited substance abuse treatment provider, from Trinity Hunt Partners. Financial terms were not disclosed.
• WayPoint Capital Partners, a Rye, N.Y.-based private equity firm, has invested in DME Express, a Port Allen, La.-based provider of medical equipment rental and services to the hospice industry. Financial terms were not disclosed.
• First Reserve, a Greenwich, Conn.-based private equity firm, has invested up to $250 million in the Texas American Resources Company, an Austin, Texas-based company that produces and distributes oil and natural gas liquids.
• Harbour BioMed, backed by Advantech Capital and Legend Capital, has acquired Harbour Antibodies BV, a Dutch biotech company developing cancer treatments, for an undisclosed amount.
• Lynwood Capital Partners has acquired Rocket Seals, a Denver-based provider of maintenance parts, for an undisclosed amount.
• Upper Street Events, backed by Livingbridge, has acquired Escape Events, a U.K.-based provider of events and trade shows, for an undisclosed amount.
• Gemspring Capital, a Westport, Conn.-based private equity firm, has invested in United Group Programs, a Boca Raton, Fla.-based provider of healthcare benefit products and services. Financial terms were not disclosed.
• Glansaol, a beauty and personal care company backed by Warburg Pincus, has agreed to acquire three brands: Laura Geller, Julep and Clark’s Botanicals. Terms were not disclosed.
• Praxair Inc. (NYSE:PX) and Linde AG (DB:LIN) have agreed to merge in a deal to create a $65 billion company. Read more at Fortune.
• Icahn Enterprises L.P. (NasdaqGS:IEP) has agreed to sell American Railcar Leasing, a Saint Charles, Miss.-based company that leases and sells railroad tank and covered hopper railcars, to SMBC Rail Services, a subsidiary of Sumitomo Mitsui Banking Corp., in a deal worth up to $3.4 billion, according to the Wall Street Journal. Read more.
• Lloyds Banking Group (LSE:LLOY) has agreed to acquire MBNA Limited, Bank of America Corp.’s (NYSE:BAC) U.K. credit card business, for £1.9 billion ($2.34 billion), according to the Wall Street Journal. Read more.
• Netmarble Games Corp., a Seoul-based online and mobile game company, is buying the majority of San Francisco-based mobile gaming studio Kabam Inc.’s assets. Financial terms were not disclosed, but the Wall Street Journal values the deal at between $700 million to $800 million. Read more.
• CCL Industries Inc. (TSX:CCL.B) has agreed to buy Innovia Group, a Wigton, U.K.-based manufacturer of biaxially oriented polypropylene and cellulose films that supplies the new plastic £5 note, for C$1.13 billion ($842 million).
• Nielsen Holdings Plc (NYSE:NLSN) has agreed to acquire Gracenote, an Emeryville, Calif.-based television “metadata” provider, from Tribune Media Co. (NYSE:TRCO) for $560 million. Read more at Fortune.
• Hubert Burda, a German media company, has agreed to buy Immediate Media, a U.K. company that owns a number of magazine brands including the Radio Times, as part of a deal worth about £260 million ($320 million), according to the Financial Times. Read more (subscription required).
• TTS, LLC, a Frisco, Texas-based trucking company, has completed its previously announced merger with Sunteck Transport Group, a Jacksonville, Florida trucking firm. The combined company will operate under the name SunteckTTS.
• Smarsh, a Portland, Ore.-based provider of cloud-based archiving and compliance software, has acquired MobileGuard, a Raleigh, N.C. company that develops applications for mobile communication monitoring and retention.
• Jagged Peak Energy, a Denver, Colo.-based oil and gas E&P, has filed to raise up to $100 million in an initial public offering. It plans to trade on the NYSE under the ticker symbol JAG.
• The Carlyle Group, along with other investors, has sold its minority stake in Avalon Advisors, a Houston-based investment manager, to four private families and the company’s employees.
• Bain Capital Private Equity has agreed to acquire Epic Health Services, a Dallas-based provider of home health care services for children with medical conditions, from Webster Capital for an undisclosed amount.
• Benford Capital Partners has recapitalized Saco Foods, a Middleton, Wis.-based manufacturer of cooking and baking ingredients. Financial terms were not disclosed.
FIRMS + FUNDS
• Bono, TPG Growth’s Bill McGlashan, and Jeff Skoll, along with other investors, have founded The Rise Fund, a $2 billion social impact fund that will operate as part of TPG Growth. (This item has been corrected to note that the fund’s full name is The Rise Fund and it operates out of TPG Growth, a subsidiary of TPG.)
• Kohlberg & Company, a Mount Kisco, N.Y.-based private equity firm, raised $2.2 billion for its eighth fund, Kohlberg Investors VIII, L.P.
• Euromena, a private equity subsidiary of The Capital Trust Group, raised $150 million for its third fund, EuroMena III.
• LetterOne, a Luxembourg-based investment firm, launched L1 Retail, a new London-based retail investment arm. L1 Retail will invest up to $3 billion in a small number of retailers mostly in Europe and in the emerging markets except for Russia.
• Apax Partners, a London-based private equity firm, raised $9 billion for its ninth fund.
• HarbourVest Partners, a Boston-based private equity firm, has made a series of promotions. Ryan Gunther, Senia Rapisarda and Kelvin Yap are now managing directors. Greg Ciesielski, Shumin Gong, Ryan Jones, McComma Grayson III, W. Fran Peters, Dustin Willard, and David Zug are now principals. Monique Austin, Tony Cobuzzi, and Danielle Green are now senior vice presidents.
• Hossam Radwan is now a senior external advisor at the Abraaj Group, according to Reuters. Previously, he was the head of the private equity and venture capital firm’s Saudi Arabian business. Read more.
• Peter Christiansen has joined Scenic Advisement as director of research. He previously worked as director at BlackRock.
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