10X EXIT, CYBER, FASHION
Good morning, readers. Some quick notes to kick off your week.
This morning’s big exit comes from Trello. The New York City-based software company sold to Atlassian for $425 million ($360 million of which is cash). A few notes:
- It’s a healthy exit for Trello’s investors – sources tell Term Sheet the deal will deliver a multiple of around 10x. The company had raised $10.3 million from Index, Spark Capital and BoxGroup. Trello had sold just 22% of its shares to investors.
- That means it’s an especially big exit for the Trello’s founders and Fog Creek Software, the business that incubated and spun off Trello in 2014. Fog Creek and Trello were started by Michael Pryor and Joel Spolsky, who investors call the most “under-the-radar” founders in New York. (Pryor is CEO of Trello and Spolsky is CEO of Stack Exchange, another Fog Creek spin-off that has raised $40 million.)
- Even though it’s rare for a startup to spin off two different, successful products, Fog Creek is not an incubator or startup studio. The company recently appointed Anil Dash as its CEO to help it launch an app-building platform called Gomix.
- Atlassian and Trello’s products have some overlap, my colleague Barb Darrow notes, but Atlassian President Jay Simons says they are more complimentary. Simons sees Trello fitting in between Atlassian's existing Confluence software and JIRA, Darrow reports.
The Cyber: At any given time, at least two of the top stories on Techmeme are about another major hacking situation. (Today: MongoDB and ESEA.) We’re becoming numb to the headlines; we expect everyone will get hacked at some point. But each situation has profound implications for the businesses it affects. Sony is still recovering from the hack of the century. Yahoo faces an existential crisis because of its hack.
Venture capital and the startup community know this means major opportunity. But it’s becoming clear that they’re not alone: Big enterprise tech companies see it, too.
This morning Microsoft and Qualcomm invested an undisclosed amount in Team8, a cybersecurity startup studio based in Israel. The company is led by the veterans of Unit 8200, Israel’s digital intelligence unit, which my colleague Robert Hackett notes is often referred to as the country’s National Security Agency-equivalent. Microsoft and Qualcomm follow Cisco, Altatel-Lucent and Innovation Endeavors, which all invested in Team8 in 2015.
So far the incubator has created two standalone cybersecurity companies. It plans to create five by next year. They could wind up being owned by Team8’s investors.
Microsoft is big on Israeli cybersecurity. In 2015 the company acquired Aorato, an Israeli application firewall startup, for a reported $200 million. Last July, it bought up Adallom, an Israeli cloud security company, for a reported $320 million. In October, the company bought Secure Islands, an Israeli data security firm.
AI: Alexa “won” CES, meaning voice is the new bot. That sound you hear is dozens of “bot” startups repositioning themselves as AI companies.
Fashion Industry’s Turn: Venture investors might want to start reading the New York Times Style section. There they’ll find fashion designers spouting the Andreessen Horowitz thesis. From a recent profile on designer Tamara Mellon:
“Basically, every industry will be eaten by technology,” Ms. Mellon said. “Right now, it’s the fashion industry’s turn.”
Mellon’s company is testing whether luxury brands can really, actually, finally, go direct-to-consumer via digital. She took a $12 million investment from NEA after emerging from a pre-packaged bankruptcy in 2015.
That story of (potential) fashion industry redemption contrasts squarely with another direct-to-consumer fashion bankruptcy, at a slightly lower price point: Nasty Gal, which raised $65 million in venture funding, was the ultimate digital-first apparel brand. In November the company restructured, having prioritized top line growth over profitability. Boohoo.com, a British e-commerce site, bid $20 million for the assets. This morning the companies announced the U.S. Bankruptcy court approved the sale.
THE LATEST FROM FORTUNE...
• The markets were actually pretty normal in 2016.
• FBI arrests Volkswagen exec.
• Shkreli suspended from Twitter.
• Some of the coolest gadgets we found at CES.
• Kushner chases a Chinese deal.
• Ethics concerns about rush to confirm Trump’s nominees.
• Hyperloop One plans tests.
• This week’s Fortune Unfiltered podcast features Tom Farley, President of NYSE Group.
• The iPhone launch, ten years later. What the iPhone can teach business.
…AND ELSEWHERE
The statutory glue behind everything you love and hate about the internet. Trump’s Twitter account: security disaster-in-waiting. The next advertising frontier is the windshield… what could go wrong? Yugoslavian computer magazine cover girls of the 80s and 90s. Buyout deals slow, firms get creative. New power brokers in Trump’s Washington.
VENTURE DEALS
• Grail, a life sciences company focused on early cancer detection that operates as a subsidiary of Illumina Inc. (NasdaqGS:ILMN), is seeking to raise over $1 billion in Series B funding.
• CiVi Biopharma, a San Francisco-based biopharmaceutical developing treatments for cardiometabolic diseases, raised $40 million in Series A funding from Tavistock Group‘s Boxer Capital.
• Cavion, a Charlottesville, Va.-based clinical stage pharmaceutical company developing cancer-treatment drugs, raised $26.1 million funding. Lilly Ventures and Novartis Venture Fund led the round, with participation from Enso Ventures and additional existing investors.
• Microbion Corp, a Bozeman, Mo.-based biopharmaceutical company developing treatments for antibiotic-resistant infections, raised $25 million in funding from Quark Venture and GF Securities.
• SiteOne, a Bozeman, Mo.-based developer of pain therapeutics and diagnostic tools, raised $15 million in Series B funding. Amgen led the round, and was joined by Next Frontier Capital, 2M Companies Inc., Mission Bay Capital, Sears Capital Management, Biobrit LLC, and Z Investments.
• Satsuma Pharmaceuticals, a San Francisco-based pharmaceutical company focused on treating migraines, raised $12 million Series in A funding. RA Capital Management and TPG Biotech led the round.
• MyTomorrows, an Amsterdam-based a platform to help patients and physicians track treatments, raised €10 million ($10.5 million) in funding, according to TechCrunch. EQT Ventures and Octopus Ventures led the round, with participation from Balderton Capital, and Sofinnova Partners. Read more.
• Blue Pillar, an Indianapolis, Ind.-based provider of power and energy management services for facilities, raised $10 million in funding. Investors include GXP Investments, Elevate Ventures, EnerTech Capital, Allos Ventures, Arsenal Venture Partners, and Claremont Creek Ventures.
• Eleven James, a New York City-based annual membership club for watch rentals, raised around $9 million in new VC funding, according to an SEC filing.
• HousingAnywhere.com, a Dutch rental listings platform for students, raised €5 million ($5.3 million) from Real Web and VC firm henQ, according to Tech.eu. Read more.
• MatriSys Bioscience, a La Jolla, Calif-based company developing microbiome skin care treatments, raised $1.5 million in funding. Tech Coast Angels led the round.
• Team8, an Israel-based incubator for cyber security startups, raised an undisclosed amount in funding from Microsoft (NasdaqGS:MSFT) and Qualcomm’s (NasdaqGS:QCOM) venture arms. Read more at Fortune.
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
• Citic Capital Holdings and the Carlyle Group (NasdaqGS:CG) have agreed to purchase an 80% stake in McDonald's (NYSE:MCD) China operations for around $2.08 billion. The agreement is for 20 years. Read more at Fortune.
• Onex Corp (TSX:ONEX) is close to reaching a deal to buy Ferrara Candy Company, an Oakbrook Terrace, Ill.-based candy and snack manufacturer, from L Catterton for around $1.3 billion, including debt, according to a report by Reuters. Read more.
• Bain Capital Private Equity has acquired MSX International, a Detroit-based provider of specialized technology-based services to the automotive industry.
• Harvest Partners SCF is leading an $125 million recapitalization and minority investment in Roland Foods, a New York City-based speciality foods importer owned by Vestar Capital Partners.
• One Equity Partners has acquired Anvil International, an Exter, N.H.-based pipe fittings manufacturer, from Mueller Water Products (NYSE:MWA). Financial terms were not disclosed.
• McCubbin Hosiery, an Oklahoma City-based hosiery manufacturer backed by Guardian Capital Partners, has acquired Robeez, a Richmond, Ind.-based baby footwear brand, from Wolverine World Wide Inc (NYSE:WWW). Financial terms were not disclosed.
• Bow River Capital Partners, has acquired Irvine, Calif.-based RailPros Inc and Grapevine, Texas-based RailPros Field Services, providers of outsource engineering and safety services to the freight and transit and commuter rail industries.
• LLR Partners has acquired BluVector, a provider of machine learning threat detection and cyber hunting services, from Northrop Grumman Corporation (NYSE: NOC). Terms were not disclosed.
• Trilantic North America has acquired a majority stake in United Subcontractors, Inc., a St. Paul, Minn.-based manufacturer of installed insulation services.
• Pamplona Capital Management has formed a new business offering management services to assist physician practices called Formativ Health alongside Northwell Health, a New York state-based health care provider. Both Northwell Health and Pamplona invested capital to create Formativ, though deal terms were not disclosed.
IPOS
• Neiman Marcus, a Dallas, Texas-based luxury fashion retailer, is withdrawing its initial public offering. The department store operator reported five straight quarters of declining comparable sales. Read more at Fortune.
EXITS
• Trello, a San Francisco-based collaborative web and mobile app, has been acquired by Atlassian (NasdaqGS:TEAM) for about $425 million (about $360 million of that will be in cash, the rest in restricted Atlassian shares.) Trello raised $10.3 million from investors including Index Ventures and Spark Capital. Read more at Fortune.
• Ardian has sold its majority stake in Altares, a French data company, to Naxicap Partners.
• Schlumberger (NYSE:SLB) has acquired Peak Well Systems, a Perth, Australia-based designer and developer of advanced downhole tools for well maintenance, from Summit Partners. Financial terms were not disclosed.
• Sun Capital Partners has completed the sale of Lexington Home Brands, a Thomasville, N.C.-based manufacturer and marketer of residential and contract furnishings. Terms were not disclosed.
FIRMS + FUNDS
• Axiom Asia Private Capital, a Singapore-based private equity and venture capital firm, raised $1 billion for its fourth fund, Axiom Asia IV.
• Carousel Capital, a Charlotte, N.C.-based private equity firm, raised $400 million for its fifth buyout fund.
• PivotNorth Capital, a Menlo Park, Calif.based early-stage venture capital firm investing in software companies, raised an undisclosed amount to close its third fund.
• Vista Equity Partners received approval from investors to raise the $10 billion upper limit for its sixth fund by $500 million, according to the Wall Street Journal. Read more.
NEW JOBS
• Clayton, Dubilier & Rice has promoted Sarah Kim, Stephen Shapiro, Derek Strum, and JL Zrebiec from principals to partners.
• Frazier Healthcare Partners has made a series of promotions: Dan Estes is now a partner, Remy Durand is now a vice president, and Jamie Brush is now a senior associate.
• Scott Graves has joined Ares Management (NYSE:ARES) as a partner in the firm’s private equity group. Previously, Graves was Oaktree Capital Management’s head of credit strategies and portfolio manager of multi-strategy credit.
• Steve Duke and Sean Murphy have been promoted to managing directors at Harvest Partners SCF.
• Aly Champsi has been promoted to managing director and partner at DW Healthcare Partners.
• Bryan Sekino has joined Vesey Street Capital Partners as chief financial officer. Larry Marsh and David De Luca have also joined the firm as general partners.
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