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Term Sheet — Tuesday, January 31

VISIONS OF UNICORNS

Hello from the air, where I’m on my way to L.A. for the Upfront Summit. A few brief notes:

Oh, SNAP: NYSE has won the competition for Snapchat’s listing. My reaction: Sure, Facebook’s infamously rocky debut on Nasdaq may have been the reason certain high-profile listings like Twitter or Alibaba chose NYSE. But that was now five years ago and plenty of high profile tech companies have chosen Nasdaq since. (For example, AppDynamics… almost.)

I would estimate Snap’s decision had more to do with (1) The company’s pattern of doing the exact opposite of whatever Silicon Valley companies, especially Facebook, would do, and (2) NYSE’s heavy courting. For the past several months, the Wall Street exchange’s stately facade has been covered in a giant banana-yellow “ADD US ON SNAPCHAT” banner. NYSE President Tom Farley has even taken to wearing Snapchat spectacles during closing bell ceremonies.

There’s more riding on this than just a day o’ hype. As I noted last month:

The listing could do more than warm up a chilly IPO market. The investment world is hoping that Snap’s IPO will help get millennials interested in investing. Most young people don’t play the stock market, according to surveys, because they don’t have the money or the understanding. Personally, I would be surprised if Snap’s IPO will change that reality. But the company twice defied the world’s expectations to generate buzz for connected eyewear and a public offering. Why not a third time?

Unicorn Watch: Back in those halcyon days of 2015, nearly every new round of venture funding for billion-dollar startups resulted in a higher valuation. But a recent “unicorn” survey from Fenwick & West shows what we knew anecdotally already: “Up rounds” are no longer the default. The percentage of up rounds fell from 97% in 2015 to just 75% last year. Meanwhile flat rounds increased from zero to 21% and down rounds were unchanged in the low single digits. As Postmates CEO Bastian Lehmann said when his company raised its latest round of funding, “flat is the new up.”

Visions: SoftBank Group is already putting its massive Vision Fund to work. WSJ reports that the company is in discussions to invest $1 billion into WeWork. A few thoughts:

• The most interesting detail of the story isn’t the headline. The story notes that SoftBank has also discussed investing in Uber. Such a deal would only further complicate the convoluted web of relationships between Uber, Didi, Alphabet, Apple, and SoftBank. (Alphabet now competes with its investment Uber, Uber merged with Didi, Didi has investment from SoftBank, SoftBank has Apple as one of its limited partners, Apple competes with Alphabet, etc.)

• WeWork and Uber aren’t particularly creative investment choices. It shows the challenge of deploying a $100 billion fund. When you have this much money to put to work, the only logical thing to do is look at the list of the world’s most highly valued startups and ask, ‘Whose cap table can absorb a check this big?’ It’s why we should expect the Vision Fund to do acquisitions in addition to venture-style deals.

• One of the Vision Fund’s biggest investors, Saudi Arabia’s public investment fund, has already poured a lot of its own money directly into Uber, minus the management fees and carried interest SoftBank is charging on the Vision Fund.

Secondaries Watch: Evercore has a report out on the state of the private capital secondary market. It’s a bit rough: Transaction volume in 2016 fell 12% from the year prior and almost 60% of buyers surveyed have lowered their return targets. And yet! Dry powder is at $90 billion, an all-time high, compared with $70 billion six months ago. Buyers plan to raise an additional $30 billion this year.

In other words, a giant pile of secondary money is sitting on the sidelines. Nigel Dawn, global head of private capital advisory at Evercore, blames cauation around Brexit and the U.S. election for the drop in deal volume in the second half of last year. He expects transactions to pick back up, despite the decreased return expectations (which Dawn attributes to the secondary market maturing). Lastly, Dawn argues the low volume is also a technical issue, since fewer primary funds were raised between 2009 and 2012. The pickup in fundraising from 2013 will lead to higher secondary volumes in the coming years, he says.

Sinister Startups: Over the years I’ve seen plenty of clever games meant to simulate the experience of founding a startup. The lesson is usually, “See guys? It’s harder than it looks!” A new one called The Founder as a much darker message: As a virtual startup founder, you must grapple with the understanding that all of your decisions are responsible for turning the world toward dystopia. There’s… a lot to unpack in that concept. More on it here.

Clarification: Amplify Partners, a venture firm based in Menlo Park, is separate from Amplify.LA, a Los Angeles startup accelerator that announced it raised $10 million for its third fund yesterday.

PS. The rest of yesterday’s Q&A with Don Harrison, head of M&A at Google, is available right here.

THE LATEST FROM FORTUNE…

• Lloyd Blankfein’s response to the immigration ban. JPMorgan Chase’s response, other Wall Street leaders’ responses. Biopharma leaders’ responses. Harvard University’s president’s response. Mark Cuban and Elon Musk’s responses. Jeff Bezos’ response. Silicon Valley leaders are gathering today to discuss an amicus brief. And 400 New York tech companies weigh in.

• Geoff Colvin on the bind the immigration issue creates for CEOs.

• The Fortune Unfiltered podcast features Scott O’Neil, CEO of the New Jersey Devils, Philadelphia 76ers and the Prudential Center.

Fortune’s Most Powerful Women Onstage podcast features Tamara Ingram, CEO of J. Walter Thompson Company.

• Dropbox’s plan to take on Google, Microsoft and Box.

• Ikea’s ‘open source’ sofa.

• Short sellers are giving up on Twitter

…AND ELSEWHERE

The Trump and Dump bot. Goldman Sachs vs. Government Sachs. Robot baristas. Facebook is trying everything to enter China. Sequoia did more deals outside the U.S. than it did in the U.S. last year. Factory workers now need college degrees.

If you’re struggling to keep up with every development in Trump-land, here is a handy tool to track the President’s agenda and cabinet confirmation votes. Next up: He’ll “do a big number” on Dodd-Frank.

VENTURE DEALS

• WeWork, a New York City-based provider of co-working spaces, could receive more than $1 billion in funding from SoftBank Group’s (TSE:9984) $100 billion technology fund, according to a report by the WSJ. WeWork is valued at $17 billion. Read more at Fortune.

•  SoundHound, a Santa Clara, Calif.-based search technology company, raised $75 million in Series D funding. Investors include Global Catalyst Partners, Walden Venture Capital, Translink Capital Partners, KPBC, Samsung Catalyst Fund, NVIDIA, Nomura Group, Sompo Holdings, RSI Fund, SharesPost 100 Fund, and MKaNN. The company has raised $115 in VC funding million to date.

• CSDC Systems, a Toronto-based provider of process automation software, raised $30 million in funding from BuildGroup.

• TeamSnap, a Boulder, Colo.-based provider of team management applications for sports teams and clubs, raised $25 million in funding. Foundry Group led the group, and was joined by Fairfax Financial Holdings Limited.

• Feedvisor, an Israeli algorithmic repricing platform for Amazon sellers, raised $20 million in Series B funding. General Catalyst led the round.

• YouEarnedIt, an Austin, Texas-based developer of employee engagement software, raised $6.5 million in Series A funding. Silverton Partners and IDG Ventures USA led the round.

• Radish, a Los Angeles-based platform for reading serialized fiction, raised $3 million in seed funding, according to TechCrunch. Investors include Greylock, Lowercase Capital, Softbank Next Media Innovation Fund, and Sherpa Capital. Read more.

• GoKid, a Detroit-based startup helping parents coordinate carpools for their kids, raised $1 million in seed funding. InMotion Ventures, Jaguar Land Rover’s VC arm, led the round, and was joined by Fontinalis Partners.

PRIVATE EQUITY DEALS

• Lightstone Generation, a joint venture between Blackstone (NYSE: BX) and ArcLight Capital Partners, acquired four power plants from American Electric Power (NYSE: AEP) for approximately $2.1 billion.

Lovell Minnick Partners invested in Currency Capital, a Los Angeles-based online equipment financing company for small and medium-sized businesses. Financial terms were not disclosed.

CenterOak Partners acquired a majority stake in Aakash Chemicals and Dye-Stuffs, a Glendale Heights, Ill.-based supplier of colorants, additives and other specialty chemicals. Terms of the transaction were not disclosed.

ARX Equity Partners agreed to acquire Nutricia Deva, a Czech producer of baby fruit drinks and desserts.

• Dos Rios Partners acquired Pathfinder Aviation, a Homer, Alaska provider of helicopter tours and logistical support services.

• Tech Air, a Danbury, Conn.-based distributor of industrial, medical, and specialty gases backed by CI Capital Partners, acquired Gases Arc Supply, a Denver, Colo.-based distributor of welding & industrial supplies and industrial gases.

• AirXpanders, a Palo Alto-based medical device company, raised $34 million in funding.

OTHER DEALS

• Iconix Brand Group (Nasdaq:ICON) is considering selling its majority investment in Peanuts Worldwide, a New York City-based company that owns the rights to the Peanuts comic strips, DVD, and TV shows. Read more at Fortune.

• Return Path acquired ThreatWave, a Colorado-based email data company.

IPOS

• Snap Inc, the Los Angeles-based parent company of the social media app Snapchat, has chosen the New York Stock Exchange (NYSE) for its initial public offering. Read more at Fortune.

EXITS

Radware (Nasdaq:RDWR) acquired Seculert, an Israeli cloud-based cyber security company. Seculert raised $15.6 million in venture funding from investors including Sequoia Capital and Norwest Venture Partners.

• SmartRecruiters, a San Francisco-based talent acquisition platform, acquired Jobspotting GmbH, a Berlin-based job-discovery engine. Jobspotting raised $705,000 in VC funding from investors including Horizons Ventures.

FIRMS + FUNDS

• Susquehanna International Group, a Bala Cynwyd, Pa.-based global quantitative trading company, launched Susquehanna Private Capital, a private equity arm that will be focused on buyouts of middle-market companies.

Richard Anton and Mikael Johnsson, both have Amadeus alums, launched Oxx, a growth capital investment firm.

PEOPLE

Jim Dai has joined Illuminate Ventures as a venture partner. Dai is the former CTO of Coupang and the founder of Calm Sea.

• Claus Benkert is joining KKR (NYSE:KKR) as the head of KKR Capstone Europe. Previously he was at McKinsey, where he led that firm’s Munich office.

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