CES, CMO, IPO, CAIO
Unicorn Watch: Yesterday I interviewed Xiaomi CFO Shou Zi Chew, formerly a partner at DST Global. Xiaomi, valued at $45 billion, is at CES hoping to deliver on its promise of a broad tech ecosystem offering a variety of services and products beyond smartphones. My colleague Scott Cendrowski described this plan as “more ambitious than Apple” in an excellent profile of the company from last summer. To achieve its goal, Xiaomi has incubated and made minority investments in 77 different startups, building products like a fitness tracker and a smart pen that detect water impurities. Those companies get access to Xiaomi’s supply chain, marketing, and a team of 200-some engineers.
It’s a stark contrast to the way U.S. tech giants keep their investments cordoned off in separate VC arms (that is, until they acquire them outright, in some cases). Chew insists Xiaomi has no desire to own its incubated startups. The symbiotic relationship is more valuable.
Elsewhere at CES: Fortune hosted its annual Brainstorm Tech CMO dinner. Andrew Ng, Chief Scientist at Baidu, warned executives in the audience that “AI is the new electricity.” Companies need a Chief AI Officer (CAIO?) to help them navigate the complicated early days of the field, he said.
Later a panel of chief marketing officers from Visa, AT&T and StubHub defended their spending on TV advertising, noting that it’s all about live content. (The vast majority of 2016’s most-watched TV was live.) An audience member wanted to know: Who are you selling to? Nobody under the age of 50 watches TV anymore! StubHub CMO Jennifer Betka, who walked on stage wearing a pair of Snapchat Spectacles, said it’s all about the mix, and TV is still the “anchor.” Only two other people in the audience of around 80 people had ever even used Spectacles.
They could have grabbed a pair at the lone Spectacles vending machine spotted in Vegas for the week. Aside from that, Snap has been absent from the CES noise. It seems odd for a company that’s new to the consumer hardware game to skip the biggest consumer hardware show of the year. But after wandering the convention floor (and getting momentarily trapped inside a crowded Samsung Smart Home) I think Spectacles, a simple plastic device with a single functionality, might have felt out of place on the floor next to shiny connected cars, immersive VR experiences, cages full of drones carrying expensive 360-degree cameras and the an endless array of the biggest, shiniest, thinnest, curviest screens on earth. Besides, Snap always zigs when everyone else zags.
In other Snap news: A former employee has sued the company. The employee, terminated after three weeks at the company, accuses Snap of inflating its metrics in the run-up to its IPO. Most of the suit is redacted, though Variety reports that some of the redacted information may become public if it is not deemed in violation of Snap’s confidentiality agreement. Snap has said the suit has no merit.
Not So Fast: Odds that two widely-followed deals will close are looking less sure. Trump reportedly still opposes Time Warner-AT&T deal (despite indications to the opposite) and Verizon is still on the fence about its acquisition of Yahoo. Time Warner CEO Jeff Bewkes has already been publicly hedging, saying Time Warner “doesn’t need a Plan B” in recent interviews. Yahoo CEO Marissa Mayer, on the other hand, has been out of the public eye. We’ll likely next hear from her in early February, when Yahoo reports its quarterly earnings.
Correction: YES, I meant to say Magento, not Marketo, in this link in yesterday’s Term Sheet. I blame Vegas.
THE LATEST FROM FORTUNE...
• Nvidia’s big gamble.
• A $91 billion holiday season.
• Big distillers invest in more craft competitors.
• The investments we’re making – and not making – in digital health.
• Amazon Alexa’s big week.
• Trading on Trump’s tweets.
.....AND ELSEWHERE
Why have Facebook’s weekly staff meetings never leaked? The fallout of Medium’s pivot. A winery battling climate change with falcons and drones. Digging into the spike in non-tech startup deals.
VENTURE DEALS
• Bitglass, a Campbell, Calif.-based cloud security access broker, raised $45 million in funding. Future Fund led the round, and was joined by New Enterprise Associates, Norwest Venture Partners, Innov8, and others. Read more at Fortune.
• AOBiome, a Cambridge, Mass.-based company developing skin products that restore the body's ammonia-oxidizing bacteria, raised $30 million in funding from iCarbonX.
• Arcadia Healthcare Solutions, a Burlington, Mass.-based electronic health record data aggregation and analytics company, raised $30 million in funding. Investors include Merck Global Health Innovation Fund, GE Ventures, Peloton Equity, Zaffre Investments, and Morgan Stanley Alternative Investment Partners.
• Payfone, a New York City-based mobile authentication company, raised $23.5 million in Series E funding. BlueCross BlueShield Venture Partners and Andrew Prozes led the round, with participation from Strauss Zelnick, Maclab Development Group,Transaction Network Services, RRE Ventures, Opus Capital, Relay Ventures, Early Warning Services, American Express Ventures, Verizon Ventures, and Rogers Venture Partners.
• HealthWatch, an Israeli smart clothing startup, raised $20 million in funding from Shijiazhuang Yiling Pharmaceuticals, according to Tech.eu. Read more.
• BlackThorn Therapeutics, a San Francisco-based clinical stage biopharmaceutical company developing targeted treatments for neurobehavioral disorders, raised an additional $14 million in Series A funding (which brings the round to $54 million) from GV and Biomatics Capital.
• Mediafly, a Chicago-based maker of software for salespeople, raised $10 million in funding from Boathouse Capital.
• Integrated Diagnostics, a Seattle-based developer of blood-based molecular diagnostics tools, raised $6.1 million in funding from Baird Capital and InterWest Partners.
• Therachon AG, a French biotechnology company focused on rare genetic diseases, raised an additional $5 million in Series A funding, closing the round at $40 million. Investors include Versant Ventures, Inserm Transfer Initiative, OrbiMed, and Banque publique d'investissement.
• Blockstack Inc, a San Francisco-based developer of blockchain 2.0 applications for the financial services industry, raised $4 million in Series A funding. Union Square Ventures led the round, and was joined by Lux Capital, Naval Ravikant, Digital Currency Group, Compound, Version One, Kal Vepuri, and Rising Tide.
• Weedingtech, a London-based developer of a herbicide-free weed killer, raised £3 million ($3.7 million) in funding from Calculus Capital.
• Jupiter Orphan Therapeutics, a Jupiter, Fla.-based pharmaceutical company developing therapies for rare diseases, raised $2 million in funding from Tarnagulla Ventures.
• Sense, a platform that monitors and interprets power usage and activity for appliances and devices in the home, raised an additional $1 million in Series A funding from iRobot Ventures, closing the round at $15 million.
• Bardy Diagnostics, a Charlotte, N.C.-based developer of a cardiac arrhythmia monitoring devices, raised an undisclosed amount in funding from SV Life Sciences Advisers, Health Enterprise Partners, Ascension Ventures, and Square 1 Bank.
PRIVATE EQUITY DEALS
• Carlyle Group LP (NasdaqGS:CG) is considering selling New York-based Nature’s Bounty Co., a nutritional-supplements maker, for as much as $6 billion, according to a report by Bloomberg. Read more.
• Bain Capital and Advent are close to acquiring Concardis, a German debit and credit card payment transaction services company, for about €700 million ($741 million), according to a report by Reuters. Read more.
• Belcan, a Cincinnati-based supplier of engineering and technical recruiting services to the aerospace, industrial and government services industries, has acquired The Kemtah Group, an Albuquerque, N.M.-based IT services management company. Belcan is an AE Industrial Partners portfolio company.
• Gauge Capital has acquired Miami Beach Medical Group, a Miami Beach, Fla.-based operator of seven Florida medical clinics.
• Primus Capital has invested an undisclosed amount in Payspan, an Atlanta-based provider of reimbursement solutions to the healthcare industry.
• Impact Sales, a Boise, Idaho-based sales and marketing agency for companies in the consumer packaged goods industry, has acquired Harlow-HRK Sales & Marketing Inc, an Ohio-based sales and marketing agency. Impact Sales is owned by CI Capital Partners. Financial terms were not disclosed.
• The Riverside Company and The Silverfern Group have acquired Waste Services Group, a Melbourne, Australia-based waste management company. Financial terms were not disclosed.
OTHER DEALS
• Compuware Corp., a Detroit-based mainframe software company, has acquired MVS Solutions, a Markham, Canada-based developer of batch automation software. Terms were not disclosed. (This item has been corrected to accurately identify Compuware Corp.'s business).
• Constellation Brands (NYSE:STZ) has made minority investments in Catoctin Creek Distilling Company, a Virginia-based whisky and gin distillery, and Bardstown Bourbon Company, a Kentucky-based whiskey, bourbon, and rye producer. Read more at Fortune.
• Jet.com, through its parent company Walmart Stores Inc. (NYSE:WMT), has acquired ShoeBuy, a Boston-based ecommerce site selling shoes, apparel and accessories, from IAC (NasdaqGS:IAC) for around $70 million.
• Meredith (NYSE:MDP) has approached Time Inc (NYSE:TIME) to express interest in a potential merger, according to a report by Bloomberg. Read more.
• Bitcasa, a Palo Alto-based company that specialized in helping customers securely store their data on a variety of cloud services, has shut down. Bitcasa raised about $21 million in funding from Horizons Ventures, Pelion Venture Partners, and others. Read more at Fortune.
IPOS
• Frontier Airlines, a Denver, Colo.-based low-cost carrier, is preparing for an initial public offering, according to a report by The New York Times. The company is seeking to raise about $500 million, which would value it at about $2 billion. Read more at Fortune.
EXITS
• Net2Phone, a subsidiary of IDT Corporation (NYSE:IDT), has acquired LiveNinja, a Miami-based live messaging and video chat app, according to the Miami Herald. LiveNinja raised $3 million from investors including Scout Ventures, Citi Ventures, and Start Capital. Read more.
• Graphite Capital has agreed to sell UK-based Micheldever Tyre Services, a U.K.-based car and motorcycle tire distributor, to Sumitomo Rubber Industries for £215 million ($265.5 million).
• Transom Capital Group has acquired American Driveline Systems, a Horsham, Pa.-based franchisor of the AAMCO and Cottman Transmission & Total Car Care brands, from American Capital (NasdaqGS:ACAS). Financial terms were not disclosed.
• Lincolnshire Management has sold National Pen, a San Diego, Calif.-based manufacturer and marketer of custom pens, to Cimpress N.V. (Nasdaq: CMPR) for around $218 million.
• Novacap has sold Oxford Networks, a Lewiston, Maine-based fiber-optic bandwidth infrastructure services provider, to Oak Hill Capital.
FIRMS + FUNDS
• Hatteras Venture Partners, a Durham, N.C.-based early-stage venture capital firm that invests in life sciences and healthcare companies, raised $150 million for its fifth fund.
NEW JOBS
• Jeffrey Sung has resumed his role as partner at Method Advisors. In addition, Alexander Qirjazi and Kendall Valencia have joined the firm as analysts.
• David Schiller has joined Summit Partners as chief investor relations officer. Previously, Schiller was a managing director at Renaissance Institutional Management.
• Mark Briggs is now a senior advisor at Silversmith Capital Partners.
• Clearsight Advisors has promoted Alex Johnston and Kyle McNickle from associates to vice presidents.
• Versant Ventures has made several additions to its investment team: Clare Ozawa is now a managing director, Alex Mayweg and Mary Haak-Frendscho are now venture partners, and Lloyd Segal and Rahul Ballal are now entrepreneurs-in-residence at the firm’s Montreal and Boston office, respectively.
• Sean Kearney and Khalid Alkelabi have joined Greenstone Equity Partners as chief operating officer and managing director of investor relationships, respectively.
• Riverside Partners has made a series of promotions. Michelle Noon and Max Osofsky are now general partners, David Del Papa is now a partner, and Chris Ryan is now a principal.
• Nav Rahemtulla and Adam Stein, who both resigned from Ares Management (NYSE:ARES) last summer, are raising money for a new private equity fund, according to Reuters. Read more.
IN MEMORIAM
• William K. Bowes Jr, founder of the early-stage Silicon Valley venture firm USVP, died on Wednesday. Born in San Francisco in 1926, Bowes earned a BA in economics from Stanford University, an MBA from Harvard University and, as a senior partner in corporate finance at Blyth & Co, served as the lead underwriter of both Hewlett-Packard and Raychem. Read more about his life here.
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Have a great weekend!
