PROFITABILITY OVER PASSION
Land of Opportunity: Yesterday’s Term Sheet included a link to this story about SoftBank’s ambitions in India that deserves a little more attention. Like so many articles about tech in India, this one draws comparisons between India’s current surge in entrepreneurship and the very recent one in China, which minted massive returns for SoftBank via Alibaba.
Investors in India really want it to be “the new China,” even though they know Chinese companies had huge regulatory advantages over Western competition that Indian companies do not have. (Alibaba never had to compete with Amazon, WeChat never had to compete with Facebook, Didi beat Uber. Yesterday Warren Buffett bemoaned India’s regulatory hurdles as a hindrance for Western company growth there.) From Reuters:
“[SoftBank founder Masayoshi] Son is thinking India is the place where he will create one or two Alibabas,” said one of the sources familiar with SoftBank ambitions, adding Son sees the country right now as the “land of golden opportunity.”
Ironic, considering that Son’s Indian successor-to-be, Nikesh Arora, caught some criticism from investors for spending too much time and money on “imprudent” Indian deals and was eventually pushed out of the company. (Also worth noting: SoftBank deals are usually outlandish by design.)
To win in India, Son appears to be playing the role of matchmaker, striking deals and mashing portfolio companies together to create scale. As previously reported, SoftBank is attempting to merge portfolio company Snapdeal with competitor Flipkart. The company is also investing $1 billion into Paytm, which could eventually merge into Flipkart, according to yesterday’s report. Meanwhile, SoftBank wants to merge on-demand grocery startup portfolio company Grofers and its competitor, BigBasket.
Between India, Sprint rumors, surprise buyouts like ARM Holdings, the $100 billion Vision Fund, and Pepper the robot (plus, the Softbank Hawks!), SoftBank continues to be as restless and unpredictable as its 59-year-old founder. Read more here.
M&A: It used to be a given that any company announcing an acquisition would see its stock price drop as a result. But data from JPMorgan (and shared by CNBC’s Michael Santoli) shows that is changing: In 2015, the average stock prices of acquiring companies rose on both the first day and after five days. Last year, the stock fell an average of 0.2% on the first day but rose an average of 0.1% after five days. View the chart here.
New money: Podium, a Utah-based business software startup, raised a $32 million Series A investment led by Accel with participation from GV, Summit Partners and Y Combinator.
If the deal sounds familiar to Term Sheet readers, it’s because we wrote about Podium’s fundraise in February. At the time, Podium was raising between $20 million and $25 million at a valuation of around $100 million.
The deal is notable because the company took an “unconventional” and formal approach to fundraising that venture investors said was more akin to a private equity deal than a venture capital deal. For example, Podium had hired the investment bank Houlihan Lokey to shop it to potential investors. Second, the company asked firms to submit a formal “indication of interest” (IOI) before beginning due diligence. Third, it used an online data room.
Another unconventional move: Raising $32 million and calling it a Series A. Before this capital, Podium had raised $4 million across two seed rounds. The company is using the new money to launch a messenger product, and, according to its press release, “evolve from a review tool into a Customer Interaction Platform.” The release also uses one of my favorite business phrases to use obnoxiously in normal conversation: “customer journey.”
Hustle Harder: At the Collision conference last week, WeWork co-founder Miguel McKelvey touted the company’s dedication to making WeWork a great place to work, particularly his personal focus on WeWork’s internal culture.
It may have been advance counter-programming for a Bloomberg investigation into the company’s culture, which published yesterday. In it, the company is accused of mistreating employees with long hours, low pay, and mandatory arbitration (at least one former employee is suing). The work environment described does not sound pleasant for WeWork’s community managers: “Sometimes the job involved catching mice and dealing with office party detritus, including used condoms in the meditation room and vomit in the phone booths.” Yes, this is the second billion-dollar-plus startup to have a used condom problem.
WeWork says the company’s issues are behind it, noting it has spent the last year “trying to make workers happier” with higher pay, more specific job roles, and rewards for good work. Read the article here.
Quote of the day: Fortune’s Barb Darrow reports from the Dell EMC World Congress where Michael Dell made the case for his company’s ambitions (emphasis mine):
Ray Wang, founder and principal analyst of Constellation Research, who did not attend the conference, said he is not sure that Dell is even a tech company anymore. Instead, he views it as a company owned by a private equity investors that will act in the best interests of that private equity firm. “As with most PE firms, innovation is put aside for profitability over passion,” he said. Read more.
Making It About Us: It takes a small village to put out a newsletter, readers. Polina Marinova will now be handling the deals roundup you see below, taking over for Laura Entis, who deserves a huge thanks for all her help.
Polina writes about venture and entrepreneurship for Fortune. (Check out her Founder Friday video series.) Follow her on Twitter here and submit deal items here. She’s getting an assist on IPOs from Lucinda Shen, who covers finance and the public markets for Fortune. Find Lucinda on Twitter here and send any IPO news here. And as always, submit anonymous tips here, or hit “reply” to this email – it goes straight to my inbox.
THE LATEST FROM FORTUNE…
• Why Comcast’s deal with Charter makes a Sprint buyout less likely.
• Best hedge fund stock picks from the Sohn conference.
• Warren Buffett, 3G and the battle for capitalism’s soul.
• The activist investor battle over Akzo roils on…
• A $2.5 million Kickstarter blanket.
• Trump’s review of Dodd-Frank is expected to be slower than planned.
• Wall Street fear index hits a two-year low.
The “horror” of Ebitda. Snapchat Discover, the company’s line of defense against Facebook. Keith Olbermann is missing liberal media’s boom times. The everyday bowtie. Dating your digital assistant. BuzzFeed’s growth driver: Tasty. Is the gig economy working? Silicon Valley: A retirement home for political operatives. Chamath Palihapitiya: IBM’s Watson is “a joke.” The new hotel trend: multiple brands under one roof. Shake-up at Goldman Sachs’ investment banking division. Has Uber killed off self-driving trucks? With KKR deal for Pandora, time to revisit this article on why that’s a bad idea.
• Grammarly, a San Francisco-based AI-powered writing assistant, raised $110 million in venture funding. General Catalyst led the round, and was joined by Breyer Capital, IVP, SignalFire, and Spark Capital.
• Microf, an Albany, Ga.-based provider of residential lease-to-own products, raised $96.7 million in growth funding from Atalaya Capital Management and BrandBank.
• StarLeaf, a cloud-based video conferencing platform with locations in Europe and the United States, raised $40 million in funding, according to Tech.eu. Investors include Highland Europe and Grafton Capital. Read more.
• Tubi TV, a San Francisco-based Internet TV network company, raised $20 million in Series C funding, according to the Wall Street Journal. Jump Capital led the round, and was joined by Danhua Capital, Cota Capital, and Foundation Capital. Read more. (This item has been updated to include the correct round.)
• Vera, a Palo Alto, Calif.-based data-centric security platform, raised $15 million in funding. Hasso Plattner Ventures (HP-Ventures) led the round, and was joined by Battery Ventures, Sutter Hill Ventures, Clear Venture Partners, Amplify Partners and Leslie Ventures.
• Signal Sciences, a Los Angeles-based security startup, raised $15 million in Series B funding. CRV led the round.
• RedLock, a Menlo Park, Calif.-based internet security software developer, raised $12 million in Series A funding. Investors include Sierra Ventures and Storm Ventures.
• Finxact, a Jacksonville, Fla.-based core-as-a-service banking technology platform, raised $12 million in seed funding. Investors include Live Oak Ventures.
• SimpleReach, a New York-based content data platform, raised $9 million in funding. Spring Mountain Capital led the round.
• Territory, an Alexandria, Va.-based prepared meal service company, raised $6.7 million in Series A funding. NRV led the round, and was joined by investors including Lewis & Clark Ventures, Upfront Ventures, and The Motley Fool Holdings.
• eRelevance Corporation, a Austin, Texas-based customer marketing automation service provider, raised $5.1 million in funding. Rally Ventures led the round, and was joined by Chicago Ventures, Miramar Venture Partners, Martin Investment Holdings, and Capital Factory.
• Revolution Prep, a Santa Monica, Calif.-based education and tutoring platform, raised $4 million in growth funding. Kennet Partners led the round.
• Hadean, a London-based Big Data operating system provider, raised $2.6 million in seed funding, according to TechCrunch. White Cloud Capital led the round, and was joined by Entrepreneur First. Read more.
• Member365, an Ottawa, Canada-based membership management startup, raised $1.3 million in funding. Investors include the Georgian Angel Network, Angel One and Capital Angel.
• Nutrafol, a New York-based nutraceutical hair health solutions provider, raised an undisclosed amount in Series A funding. Unilever Ventures led the round.
HEALTH AND LIFE SCIENCES DEALS
• Artemis Health, a Salt Lake City, Utah-based health data analytics company, raised $8.3 million in Series A funding. Maverick Ventures led the round.
• DBS System, a Switzerland-based micro-blood collection device manufacturer, raised €2.3 million ($2.5 million) in Series A funding. Investiere.ch led the round.
PRIVATE EQUITY DEALS
• KKR will invest $150 million in Pandora (NYSE:P), an Oakland, Calif.-based music platform. Under the terms of the deal, KKR will purchase an aggregate of $150 million in a new designated Series A convertible preferred stock. The Series A preferred stock is convertible into common stock, cash or a combination thereof at a conversion price of $13.50 per share. The offering may be upsized to a total of $250 million. Read more at Fortune.
• TPG Capital made an investment of an undisclosed amount in LLamasoft, an Ann Arbor, Mich.-based supply chain modeling and design software provider.
• ICV Partners acquired LeadingResponse, a Tampa, Fla.-based marketing services company. Financial terms of the transaction were not disclosed. [This entry was updated to reflect the correct headquarters city.]
• Media Prima (KLSE:MEDIA) has agreed acquire Rev Asia (KLSE:REV), a Malaysia-based digital media startup, for approximately $24.2 million.
• J.S. Held acquired a majority stake in Spex, a Denver, Colo.-based digital property inspection and reporting platform. Financial terms weren’t disclosed.
• Possible, a New York-based digital advertising company owned by WPP, acquired Marketplace Ignition, a consulting firm that helps brands develop their Amazon marketing strategies, according to the Wall Street Journal. Financial terms weren’t disclosed. Read more.
• Bayer (DB:BAYN) has agreed to sell its Liberty herbicide and LibertyLink-branded seeds businesses to win antitrust approval for its acquisition of Monsanto (NSEI:MONSANTO), according to Reuters. Read more.
G1 Therapeutics, a cancer treatment biotech company based out of the Research Triangle Park area in N.C., said it plans to raise about $100 million in an offering in 6.3 million shares between $15 to $17 a piece. The company plans to list on the Nasdaq under ticker symbol “GTHX.” The company is backed by Hatteras Venture Partners, MedImmune Ventures, and Eshelman Ventures. J.P. Morgan and Cowen and Company are the lead underwriters.
Contura Energy, a Bristol, Tenn.-based coal company which came out of Alpha Natural’s restructuring, filed for an IPO Monday. For now, Contura says it plans to raise $100 million, and list on the NYSE under symbol “CTRA.” Contura is currently trading on the OTC markets at $70.50 a share. Citi is acting as sole bookrunner in the deal.
argenx, a Netherlands-based biotech developing treatments for autoimmune diseases, announced the terms of its IPO Monday. The company plans to offer some 3.6 million ADSs at about $17.97—the price at which the company was most recently traded on the Euronext Brussels—and raising about $65 million. argenx will list on the Nasdaq as “ARGX.” Cowen and Piper Jaffray are lead underwriters in the deal.
Guaranty Bancshares, a Mount Pleasant, Texas-based bank raised $54 million in an offering of 2 million shares for $27 a piece—within its previously quoted range of $26 to $28 per share. The bank plans to list on the Nasdaq under “GNTY” Tuesday. Sandler O’Neill is lead underwriter.
• Ares Management is in talks to acquire Chuck E. Cheese, an Irving, Texas-based family dining and entertainment center chain, for approximately $2 billion from Apollo Global Management, according to Bloomberg. Read more.
• HGGC acquired eTouches, a Norwalk, Conn.-based cloud event management software provider. eTouches raised more than $50 million in venture funding from investors including Cava Capital, Greycroft Partners, and Level Equity. Financial terms weren’t disclosed.
• H.I.G. Capital sold Brand Addition, a U.K.-based branded merchandise company, to Elysian Capital. Financial terms weren’t disclosed.
• Maple, a New York-based prepared food delivery startup, is shutting down its operations. The company will join Deliveroo, a U.K.-based food delivery platform. Deliveroo will integrate Maple’s technology into its platform, according to TechCrunch. Maple raised approximately $29 million in venture funding from investors including Thrive Capital, Primary Ventures, Greenoaks Capital, and David Chang. Read more.
• The U.S. subsidiary of Searchmetrics, a Berlin-based search analytics software company, filed for Chapter 11 bankruptcy protection in Delaware, according to TechCrunch. Searchmetrics raised more than $30 million in venture funding from investors including Iris Capital, Holtzbrinck Digital, Kreos Capital, and Neuhaus Partners. Read more.
FIRMS + FUNDS
• 17Capital, a U.K.-based private equity firm, raised €1.2 billion ($1.3 billion) for its fourth fund.
• OMERS Ventures, a Toronto, Ontario-based private equity and venture capital firm, raised $300 million for its third fund.
• North Sky Capital, a Minneapolis, Minn.-based private equity and venture capital firm, raised $63 million for its fourth fund, Clean Growth Fund IV.
• MedMen, a Culver City, Calif.-based management company for the legal cannabis industry, raised $60 million for its first private equity fund, MedMen Opportunity Fund.
• Peak Ventures, a Provo, Utah-based venture capital firm specializing in early stage investments, raised $50 million for its second fund.
• Bowery Capital promoted Nic Poulos from a principal to a general partner.
• James Savage joined YFM Equity Partners as a portfolio director. Previously, Savage was a vice president at Barclay’s principal investments team.
• David Adams joined Grand Coast Capital Group as a managing director. Previously, Adams was the chief operating officer of Fullerton Investors.
• Ric Velez joined Scenic Advisement as a managing director.
• Arsenal Capital Partners promoted Joe Rooney to principal, and Robbie Cahill and Andrew Hudelson to senior associates.
• Chris Gaertner joined Rothschild & Co. as the global head of technology.