DELL-EMC, NYC EXITS, HYPEMOBILES
Hello from Las Vegas, where I’m riding in cars with robots and hunting down the most ridiculous “smart” items CES has to offer. (Current front-runners: a smart mattress and a smart hairbrush.)
CES is a deal-making event, but not usually the kind of deals Term Sheet tracks. This week will be full of partnership announcements between manufactures and suppliers, joint ventures between tech’s coop-etition giants, and even a fair amount of ad sale deals. (Content is increasingly a big part of this crazy hype-fest. So is automotive. And mattresses, apparently.)
Like with South by Southwest, this event seems too noisy and overwhelming to imagine a corporate development head will stumble upon their next big acquisition opportunity on the showroom floor. Or that any company could successfully find a buyer or new investor here. And yet, so many corporate development heads, venture investors, M&A bankers, and even a few private equity pros have flocked to Vegas. It’s an excuse for everyone to network (ahem, party) with just about everyone in their network, all in one place, I suppose.
Also at CES: Well-funded start-ups facing accusations of overhype and a supplier lawsuit are forced to prove their muster. I’m talking about Faraday Future. The electric car startup last night revealed its Internet-connected, autonomous, electric FF91 vehicle in a flashy event. It didn’t go perfectly; my colleague Kirsten Korosec reports at one point the purported self-driving car “couldn't be convinced to move” in a demo. The car did eventually drive and park itself on stage.
But even a company accused of overhype couldn’t stop itself from thinking even bigger than the car of the future. Nick Sampson, Faraday Future's senior vice president of R&D and engineering declared: "We're not stopping with automotive. We don't consider ourselves a car company, we're a technology company reformatting the future of mobility," Kirsten reports. He ended with a promise to quiet the company’s critics.
A few quick non-CES notes:
As the Dell Turns: Fortune recently published an in-depth feature on the mega-mergeriest deal of 2016: Dell-EMC. Michael Lev-Ram gets the scoop on why the deal’s architects, Michael Dell and Silver Lake’s Egon Durban, think this Texas-sized gamble that bigger is better will actually work. You can read the whole story here. A few details that stuck out to me:
• Michael Dell first tried to take Dell private as early as 2007, talking to KKR, Blackstone and TPG about a potential deal. As Term Sheet readers know well, he wasn’t able to make it happen until 2012.
• Likewise, Michael Dell first tried to merge with EMC in 2009, creating “hundreds of pages of decks” on how to organize the merger. The deal fell through because many involved weren’t comfortable with the risk. My question is: What other deals has Michael Dell been dreaming about? If we wait long enough, they seem pretty likely to happen, too…
• “Bigger is better” also applies to Dell’s $57 billion in debt. The company is not likely to sell its most obvious divestiture, $34 billion VMware, to pay off that debt, Lev-Ram reports, because it is a small but important growth engine. Ironically, its customers are Dell’s primary competitors. (Regarding her competition, Hewlett Packard Enterprise CEO Meg Whitman argues that smaller is better, “The winners are going to be the companies that are nimble, fast, and focused.”)
• For the best deal flow, get a vacation house in Hawaii.
NYC Exits: Yesterday two startups that hadn’t raised a ton of money but were nonetheless well-known in the NYC startup scene announced sales: PureWow, a media backed by Bob Pittman’s Pilot Group, Lerer Hippeau Ventures, and Pritzker Group, sold to Gary Vaynerchuck and his business partners at RSE Ventures, a sports-focused investment firm and incubator. (Vaynerchuck’s advertising agency, VaynerMedia, was also an investor in PureWow.) PureWow CEO Ryan Hardwood will become CEO of something called The Gallery, which will be a sister company to VaynerMedia. They’re promoting the deal as a reverse-engineered BuzzFeed / Vice Media strategy: Those properties have added ad agencies to their content companies; this is an ad agency that now has its own content company.
And Floored, a commercial real estate software provider backed by RRE Ventures, Felicis Ventures, Greycroft Partners, Lerer Hippeau Ventures, and Two Sigma Ventures, sold to CBRE Group. All of the company’s 37 employees will join the new parent company. CEO David Eisenberg, who was previously Accel Partners’ first New York employee as its entrepreneur-in-residence, wouldn’t share details on the deal value but said “everyone is happy.”
Confidence: Term Sheet has teamed up with Semaphore on its 9th annual confidence survey of private equity and venture capital professionals. In the past, hundreds of you have chimed in with your confidence levels for the year ahead. Here’s the survey, I encourage you all to take it. The results will be published here later this month.
Thanks for all your feedback and comments on my feature yesterday. It’s a topic I plan to continue to follow…
THE LATEST FROM FORTUNE...
• Clifton Leaf: A crystal ball reading for Obamacare.
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• Ford and Toyota’s unusual alliance
• Investors bet on Samsung profits, despite the Galaxy Note mess
• Why Tesla missed its delivery goal
• Starbucks soon could be bigger than McDonald’s
Now trending: Low alcohol cocktails. Travis Kalanick’s 2008 guide to CES. An insult to swamps. Can technology make football safer? Larry Summers sees “extraordinary uncertainty.” Boxing Day is the new Black Friday for gaming companies. Mnuchin’s bank accused on “widespread misconduct.” A Bewkes hedge.
• Mobike, a Chinese bicycle rental app, raised $215 million in funding. Tencent Holdings and Warburg Capital led the round, with participation from TPG Capital, Ctrip.com International, Huazhu Hotels Group, Hillhouse Capital, and Sequoia Capital. Read more at Fortune.
• Ascletis, a Chapel Hill, N.C.-based specialty therapeutics company developing treatments for cancer and infectious diseases, raised $100 million in Series B funding. C-Bridge Capital led the round, and was joined by QianHai Equity Investment, Focus Media Jiangnanchun Foundation, WTT Investment, Goldman Sachs, and Tasly Pharmaceutical.
• Synthego, a Redwood City, Calif.-based genetic engineering startup, raised $41 million in Series B funding. 8VC led the round, and was joined by AME Cloud Ventures, Elements Capital, OS Fund, Alexandria Equities, ZhenFund, Founders Fund, Menlo Ventures, WI Harper Group, and SciFi VC.
• Sarcos Robotics, a Salt Lake City, Utah-based developer of dexterous industrial robots for use in unstructured environments, closed its Series A found at $15.6 million in funding. Schlumberger (NYSE:SLB) led the round, and was joined by Microsoft (NasdaqGS:MSFT), GE Ventures, and Caterpillar (NYSE:CAT).
• Rockets of Awesome, a New York City-based subscription kids' clothing startup, raised $12.5 million in Series A funding. August Capital led the round, and was joined by existing investors Forerunner Ventures and General Catalyst.
• Intact Vascular, a Wayne, Pa.-based developer of medical devices for minimally invasive vascular procedures, raised an additional $7.1 million in Series B funding (closing the round at $46 million) from New Enterprise Associates, Quaker Partners and H.I.G. BioHealth Partners.
• Audio Analytic, a Cambridge, U.K.-based company that produces sound recognition software for homes, raised $5.5 million in Series A funding. Cambridge Innovation Capital led the round, and was joined by IQ Capital, Rockspring, Cambridge Angels and Martlet.
• Ripio, a Buenos Aires, Argentina-based bitcoin and digital payments startup formerly known as BitPagos, raised $1.9 million in Series A funding, according to TechCrunch. Huiyin Blockchain Venture led the round, and was joined by Digital Currency Group, Boost VC and Draper VC. Read more.
PRIVATE EQUITY DEALS
• Acon Investments, a Washington, D.C.-based private equity firm, has invested in GMI, a provider of modular construction solutions in Mexico and Latin America. Financial terms were not disclosed.
• Genstar Capital, a San Francisco-based private equity firm, has invested in the newly-formed Alera Group, a Deerfield, Ill.-based insurance agency and employee benefits company.
• Hillhouse Capital has invested $250 million in Magento Commerce, a Culver City, Calif.-based ecommerce software company owned by Permira.
• GeoLOGIC Systems Ltd, a Calgary, Canada-based provider of data and integrated software to the energy and production industry, has acquired oil and gas firm Canadian Discovery Ltd‘s Well Completions & Frac Database. GeoLOGIC Systems Ltd is backed by BV Investment Partners. Financial terms were not disclosed.
• Platinum Equity, a Los Angeles-based private equity firm, has acquired Cox Target Media, a Saint Petersburg, Fla.-based digital marketing company, from Cox Media Group. Financial terms were not disclosed.
• Roxit Group, backed by Main Capital, has acquired PSMS, which develops software for the management of infrastructure and public spaces in the Netherlands.
• U.S. Fence Solutions Co, which is backed by Building Industry Partners, has invested in and recapitalized Binford Supply, a Dallas-based residential and commercial fencing distributor.
• AVI-SPL, a Tampa, Fla.-based audio visual software company backed by HIG Capital, has acquired VideoLink, a Boston-based broadcast company. Financial terms were not disclosed.
• TPG Real Estate, a Fort Worth, Texas-based real estate investment firm and TPG Capital subsidiary, has completed its purchase of A&O Hotels and Hostels, a Berlin-based hostel platform. Financial terms were not disclosed.
• Ares Capital Corporation (NASDAQ: ARCC) has completed its previously announced acquisition of American Capital, Ltd. (NASDAQ: ACAS) in a deal valued at $3.4 billion.
• Blackstone Group (NYSE:BX) is in advanced talks to purchase Sesac, a Nashville, Tenn.-based music rights manager, according to the Wall Street Journal. Read more.
• Intel (NasdaqGS:INTC) has purchased a 15% stake in Here Maps, Nokia’s former mapping unit that was acquired by the German carmakers Audi, BMW, and Daimler for $3 billion last year. Read more at Fortune.
• Sogou, China’s third-biggest search engine and a subsidiary of Sohu.com Inc. (NasdaqGS:SOHU), is preparing to sell about 10% of its shares in a U.S. IPO that would value the company at as much as $5 billion, according to a report by Bloomberg. Read more.
• Xerox (NYSE:XRX) has spun off Conduent (NYSE:CNDT), its business services unit, into a separate company. Read more at Fortune.
• Braeburn Pharmaceuticals, a Princeton, N.J.-based pharmaceutical company that offers an implantable device to treat opioid addiction, has filed to raise up to $150 million in an initial public offering. It plans to list on the Nasdaq under the ticker symbol BBRX. Pricing terms were not disclosed.
• Gary Vaynerchuk, a serial entrepreneur and CEO of the brand consulting agency VaynerMedia, has acquired PureWow, a New York City-based lifestyle media company aimed at millennial women. PureWow raised $2.5 million from investors including Melo7 Tech Partners and Lerer Hippeau Ventures.
• CBRE Group, Inc. (NYSE:CBG) has acquired Floored, a New York City-based developer of 3D modeling software for the real estate industry. Floored raised $7.4 million in funding from investors including Accel Partners, Lerer Hippeau Ventures, and Greycroft Partners.
• High Ridge Brands Co, a Stamford, Conn.-based hair and skin product manufacturer backed by Clayton, Dubilier & Rice, has acquired Dr. Fresh, a Buena Park, Calif.-based provider of oral care products, from a private equity fund co-advised by NexPhase Capital and Moelis Capital Partners.
• The Riverside Company, a New York City-based private equity firm, has purchased Castlewood Treatment Center, a St. Louis, Mo.-based company that operates a chain of treatment centers for eating disorders, from Trinity Hunt Partners. Financial terms were not disclosed.
• Argosy Private Equity and MTN Capital have acquired Rita’s Water Ice Franchise Company, a Trevose, Pa.-based Italian ice chain, from Falconhead Capital. Financial terms were not disclosed.
• Charlesbank Capital Partners, a Boston-based private equity firm, has sold Peacock Foods, a Geneva, Ill.-based manufacturer of chilled and frozen food, to Greencore Group plc. Financial terms were not disclosed.
• Clairvest Group, a Toronto-based private equity firm, has sold Cieslok Media, a Toronto-based out-of-home advertising firm, to Bell Media Inc., a Toronto-based multimedia company. Financial terms were not disclosed.
• Altus Capital Partners, a Wilton, Conn.-based private equity firm, has sold Rocla Concrete Tie, Inc., a Denver, Colo.-based concrete railroad ties manufacturer, to rail infrastructure supplier Vossloh Group. The deal earned Altus an estimated 4.5x return, according to the firm.
FIRMS + FUNDS
• Gamut Capital Management, a New York-based private equity firm, raised $1 billion for its debut fund.
• Versant Ventures, a San Francisco-based venture capital firm focusing on healthcare investments, raised $400 million for its sixth fund, which will target between 20 and 25 biotech companies in the U.S., Canada and Europe.
• SOSV Investments, a Cork, Ireland-based accelerator and venture capital firm, raised $150 million for SOSV III, its first fund open to external investors.
• David Epstein is joining Flagship Pioneering, a Cambridge, Mass.-based biotech-focused venture capital firm, as an executive partner, according to the Wall Street Journal. Previously, Epstein was the head of pharmaceuticals at Novartis AG (SWX:NOVN). Read more.
• Robin Bailey has been promoted to partner at Pantheon Ventures. Bailey was previously the firm’s chief financial officer.
• TA Associates, a Boston-based private equity firm, has made a series of promotions: Birker Bahnsen is now a managing director, Ethan Liebermann is now a principal, Aditya Sharma is now a senior vice president, and Vivek Mohan is now a vice president.
• Max Chee and Michael Cichowski have joined Aquiline Capital Partners. Both will help develop the New York City-based private equity firm’s technology growth fund.
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