New Fund, Fintech, Yahoo
Fund: Merus Capital has raised $85 million for its third fund. It’s around double the size of the early stage venture fund’s last fund, a $43 million vehicle. In the past, Merus has raised separate special purpose vehicles for its LPs to do follow-on investments in its most successful portfolio companies. Partner Salman Ullah explains that the larger fund streamlines that process.
Merus, which backs enterprise tech companies, has had three exits from its first fund: Ecommerce data company Runa sold to Staples, virtualization startup IOTurbine sold to Fusion.io, and a smaller exit to Facebook.
Given the fact that every Term Sheet of 2017 has included the term “AI,” and I’d hate to ruin a streak, I asked Ullah his thoughts on investing in artificial intelligence:
“We think of a company as a recipe and AI is an ingredient. It’s just a component of that, and not an end in itself. It’s like saying you are diving deep into HTML. Sure, you need a web page, but it’s not enough.”
Yahoo: Despite the storm clouds swirling the company, Yahoo actually beat its quarterly earnings expectations last night. It also delayed its merger close by a quarter. Given news of the SEC investigation over the way the company disclosed its hacking, my colleague Jen Wieczner found out whether Mayer’s $141 million payday could be affected. The short answer is no:
Yahoo has a clawback provision, and Mayer’s pay is covered by it. But the company’s policy only permits Yahoo to recoup executive pay “in the event of a restatement of incorrect Yahoo financial results.” Basically account fraud, and that’s it. Not covered by a clawback: Allegedly covering up two hacking incidents so you can complete a multi-billion sale of your companies main business.
There’s next to no chance of that happening no matter what the SEC investigation finds, because the Yahoo hacks, no matter when the gap was between when they were discovered and when they were disclosed, aren’t going to change how much money the company made in the past. And that means Mayer gets to keep her pay, even if the company ends up paying a big fine for breaking securities laws.
Wieczner notes that Yahoo’s clawback provision is behind the times – in the past clawbacks only covered a company’s financial statements, but now they tend to be much broader. Wells Fargo’s, for example, included revoking bonuses if an executive managed risk improperly. Verizon’s clawback policy is stricter, too:
Verizon’s broader clawback policy stipulates that a company can “cancel” or require repayment of executive pay if that person engages in “certain fraudulent or other inappropriate conduct” including “financial misconduct.”
Fintech capital of the world: Chinese fintech companies raised more capital than North American ones in the first three quarters of last year, accounting for more than half of all investments in the category. My colleague Robert Hackett explains:
Mishaps at fintech upstarts in the Unites States have cooled investor enthusiasm in the private markets there. Once-soaring firms such as Zenefits, Lending Club, OnDeck, and others, have run afoul of regulation, struggled to meet expectations, or both.
In China, the biggest fintech accelerants involve the concurrent explosion of Internet connectivity through mobile devices and the rise of a middle class. This revolution has created an opening for new businesses, filling a void left by incumbent financial firms, which are more accustomed to working with state-owned entities than ordinary consumers.
It also helps that China has “light regulatory touch, at least initially,” per the report.
THE LATEST FROM FORTUNE…
• Federal judge blocks Aetna and Humana merger.
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• A Fortune feature story on Huawei, the Chinese smartphone maker, and its global expansion.
• Why Salesforce is snapping up AI startups and skipping marketing ones.
• The MPW OnStage podcast features Marianne Cooper, Ph.D. Sociologist at the Clayman Institute for Gender Research at Stanford University and an affiliate at the Stanford Center on Poverty and Inequality
• Attendance at the Women’s March events was bigger than estimated.
The Wall Streeters that went long on Trump. Faraday Future sued. Horse Diapers vs. the Amish. Blame technology for health spending increases. Peak millennial. The collapse of Dewey & LeBoeuf, part two. Activist-in-chief.
• Koubei, a Chinese joint venture between Alibaba and Ant Financial focused on commerce, raised $1.1 billion in funding led by Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital.
• Turbonomic, a Boston-based cloud company, has raised $50 million in financing led by General Atlantic, with participation from existing investors Bain Capital Ventures, Highland Capital, Globespan, and Iconiq.
• Whistle Sports, a New York-based media startup, has raised $27.5 million in from Beringea, TEGNA Inc, NBC Sports Ventures, Sky and Emil Capital.
• EquipmentShare, a construction rental site, has raised $26 million from Insight Venture Partners and existing investors Romulus Growth and Y Combinator.
• LiquiGlide, a technology platform for permanently wet, slippery surface coatings, raised $16 million in new financing from Structure Capital, Valia Investments, Struck Capital and Pilot Grove.
• Fuse, an Oslo-based creator of a tool suite for app developers and designers, raised $12 million from Northzone and Alliance Venture.
• Credible, a San Francisco startup providing an exchange for student and personal loans, raised $10 million led by Regal Funds Management with existing investor Carthona Capital.
• Bought by Many, a London-based insurance-tech startup, has raised $9 million (£7.5 million) in Series A funding led by Octopus Ventures with participation from Munich Re / HSB Ventures.
• The Noodle Companies, a New York-based group of education technology companies, raised $5 million in funding from SWaN & Legend Venture Partners.
• Careship, a Berlin-based elderly care startup, has raised $4 million from Spark Capital, according to TechCrunch. Read more.
• Cybellum, a cybersecurity company based in Tel Aviv, has raised $2.5 million in seed funding led by Blumberg Capital,
• Shoptalk, a New York-based conference provider, has raised $2 million in funding from Primary Venture Partners with participation from Commerce Ventures and individual partners at Bain Capital Ventures and NEA.
HEALTH + LIFE SCIENCES DEALS
• Aldevron, a Fargo, N.D.-based contract development and manufacturing organization specializing in the production of plasmid DNA, proteins and antibodies, received an investment from TA Associates.
PRIVATE EQUITY DEALS
• ARCOM, a Salt Lake City specification company backed by Alpine Investors, has acquired InterSpec, a provider of BIM-to-specifications software.
• Nustef Foods, a Mississauga, Ontario, cookie and cracker company, has sold an investment of undisclosed size to The Riverside Company.
• Sterling Partners’ Education Opportunity Fund will has invested in Amerigo Education, a Chicago-based company that works with international students seeking to attend U.S. prep schools and elite universities.
• AppDynamics, a San Francisco-based provider of software that helps companies monitor the performance of their networked applications, has raised its IPO terms from $10 to $12 per share to a range of $12 to $14 per share. The company plans to go public on Nasdaq this week with the symbol “APPD.” Existing shareholders include General Atlantic, Adage Capital Partners, LP and Altimeter Partners Fund.
• Time Inc. (NYSE: TIME), the parent company of Fortune, has acquired Adelphic, a Waltham, Mass.-based provider of advertising technology. Adelphic has raised $23 million from GV and Matrix Partners.
• IBM (has acquired Agile 3 Solutions, a San Francisco-based cyber security startup, for an undisclosed amount. Read more at Fortune.
• The Chan Zuckerberg Initiative, Mark Zuckerberg’s philanthropic organization, has acquired Meta, a Toronto-based AI startup focusing data analytic technology in the healthcare industry. Meta has raised $7.5 million in funding from investors including Rho Canada Ventures. Read more at Fortune.
FIRMS + FUNDS
• Origin Ventures, a Chicago venture capital firm, has raised $65.9 million toward a $100 million target for its fourth fund
• Diagram, a Toronto and Montreal-based venture fund focused on financial, insurance, and healthcare tech, has raised $25M funding. Power Financial Corporation (TSX: PWF) backed the fund via its Portag3 Ventures investment arm, as well as Adam D’Angelo, Ryan Holmes, and Joe Lonsdale.
• Incline Equity Partners, a Pittsburgh, Penn.-based private equity firm, closed its fourth fund with $601.1 million in capital commitments.
• Phil Fernandez, founder of Marketo, has joined Shasta Ventures as a venture partner.
• Adam Fless has joined Paine & Partners as managing director of portfolio performance. Fless was formerly a director at KKR Capstone.
• George Osborne, the former finance minister of the UK, will join the research arm of the BlackRock Investment Institute as a senior adviser.
• Tamim Abdul Majid has been promoted to vice president at OCA Ventures, a early-stage venture capital firm based in Chicago.
• Jay Pauley and Thomas Tarnowski have been promoted to managing director and Antony Clavel and Peter Francis to principal at Summit Partners.
• Dan Costello and Michael Layman have been promoted from principal to managing director at TSG Consumer Partners. The firm did not specify their previous titles before.
• Joseph M. Salley, former CEO of Milliken & Company, joined Arsenal Capital Partners as an operating partner.