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Term Sheet — Wednesday, July 5




Welcome back from the holiday weekend. Like many of you, my days off were peppered with a slew of push notifications about the sexual harassment reckoning happening in Startup-land. I felt disgusted by every new accusation. But I also felt reassured by the fact that exposing the industry’s dirty “open secrets” is making a difference.

A lot of people are asking why this is happening now. The simple answer is that until very recently, making a public accusation was a potentially career-ending risk. Anyone speaking up was likely to be ignored, labeled a problem, and avoided. The men who harassed them would stay in their jobs (or, as happened with Justin Caldbeck, be quietly let go and able to raise new funds).

But Susan Fowler’s February blog post about harassment, discrimination and retaliation at Uber struck a nerve, ignited a wildfire, caused a tipping point … choose your metaphor. The reaction to Fowler’s blog post showed women that their voices could make a difference, and that speaking up, while still a risk, might mean other woman won’t have to experience what they had experienced. Now, a major change is underway.

To catch everyone up on the latest:

On Friday, the New York Times reported that female entrepreneurs who were sexually harassed by investors including Dave McClure, founder of 500 Startups and Chris Sacca, who recently retired from Lowercase Capital, and Marc Canter, an entrepreneur-turned-investor. Following the report, a number of women chimed in on social media with their own tales of unwanted sexual advances from these men.

McClure wrote a blog post apologizing, announcing he was stepping down as CEO of 500 Startups, and noting that a month ago he had started counseling “to address my sh*tty behavior and poor judgment.” His partner and co-founder, Christine Tsai, said she’d been made CEO at the time when accusations came to light. Then Elizabeth Yin, a partner with the firm, resigned, saying the firm had not responded appropriately to an accusation from a 500 Startups employee. Then Cheryl Yeoh, an entrepreneur, outlined McClure’s attempt to force himself on her at her apartment in Malaysia. Then McClure resigned as a general partner from all of the firm’s funds.

Sacca, who retired from investing earlier this year, had already posted a pre-emptive apology to the Times story on Thursday night. Afterward, he updated his post with his side of the story and more apologies.

And then there’s Canter, who responded to the Times’ accusations of harassment by saying he “disliked [his accuser’s] ideas so he behaved the way he did to make her go away,” and that she had “used her sexuality publicly.” I’m incapable of doing the mental gymnastics necessary to understand that response, but I’ll try: Canter believes it was okay to come onto his accuser because she was asking for it, and also, he didn’t want to help her, so he tried to harass her away…? Appalling as it is, this twisted, blame-the-victim response isn’t unique to Canter. There is a whole crew of Medium-ranters out there claiming that men have a right to harass women. I don’t want to give them the oxygen (or links) except to say that no, serial sexual harassers are not the real victims here.

These stories are going to continue to come out. So what does the industry do?

The most common reaction so far is that VC’s are signing a bunch of pledges and publicly condemning bad behavior. And pledges and tweets are great! But investors and their portfolio companies should also pay close attention to the many guides that have emerged:

• In May, Susan Fowler advocated that tech companies end forced arbitration, end the practice of buying their employees’ silence with severance packages and non-disparagement agreements, end unnecessarily strict confidentiality agreements, institute training and enforce zero-tolerance policies:

Forced arbitration deprives employees of their constitutional rights, and it forces employees who have been treated unlawfully to keep silent about what they have experienced. It is entirely in the interests of the company, and not the employee. It prevents harassment, discrimination, retaliation, and other unlawful treatment that employees have experienced from ever becoming public, and in doing so it continues and supports further mistreatment and unlawful behavior.

Brittany Laughlin of Lattice VC argues against zero-tolerance policies because, she writes, the bar to report misconduct is currently too high, and we should give people a chance to fix their mistakes:

We are in a state of transition and this is a quick way to paralyze progress. We don’t want male investors to stop meeting with female entrepreneurs out of fear of offending. … To really change behavior in our industry, we need allies just as much as we need whistleblowers.

Cheryl Yeoh, who I mentioned above, proposes clear definitions of “inappropriateness levels,” as well as safe channels for reporting harassment, training for employees, and employee surveys. Defining levels of bad behavior is important, because we shouldn’t lump sexual assault in the same bucket as a sexist remark, she writes:

Providing a framework like this clearly defines which boundary level has been crossed to both parties and makes it easier for the victim to report the incident without fearing the need to quote the perpetrator verbatim. The perpetrator either made a comment, directly propositioned by inviting, made a threat, or made a physical move.  

Aileen Lee of Cowboy Ventures noted that some firms, including hers, have begun steering their most promising portfolio companies toward “modern venture firms that have women and people of color in investing positions,” according to TechCrunch:

The thinking is very simple, Lee suggested. “Why should we make money for assholes?” she asked.

Karin Klein of Bloomberg Beta writes that LPs should force their GPs to report data on how many female founders they back, how many female non-partner investors the firm hires, the number of female partners, and the composition of VC-backed startup boards:

We’re simply asking that we VCs begin to collect the data and that LPs ask us for it — a sort of transparency pledge.

Mitch and Freada Kapor, investors in 500 Startups, write that the problem won’t be solved with new pledges:

The tech ecosystem could pioneer safe, effective, confidential complaint mechanisms to surface issues early if it cared. Otherwise, we’ll continue to see blogs, tweets, and leaks to journalists serve as the de facto channels.

• Additional reading: The “he never harassed me defense is irrelevant. Male and female entrepreneurs get asked different kinds of questions by VCs.


• The latest celebrity trend is weird food.

• Is your craft beer really craft?

• Activist investor disrupts the Huntsman-Clariant deal.

• Samsung to invest $18 billion in new semiconductor factories.

• Bitcoin’s sweet spot, according to Goldman Sachs.

• Layoffs at Microsoft.

• The gender pay gap in the White House.

• GE’s big investment in oil and gas.


Tumblr’s demise shows there’s no money in Internet culture. Yelp’s six-year grudge against Google. Secret S-1’s for everyone! The tech industry’s Europe problem. The Feds want Shkreli to stop talking. The opportunity in Chinese capital limits.


Go-Jek, an Indonesian ride-hailing company, raised between $100 million and $150 million in funding from Tencent (SEHK:700), according to Reuters. Read more.

Push Doctor, a U.K.-based provider of online medical consultation services, raised $26.1 million in Series B funding, according to TechCrunch. Accelerated Digital Ventures and Draper Esprit led the round, with participation from European VCs Oxford Capital, Partech Ventures, and Seventure Partners. Read more.

URWork, a Beijing-based operator of co-working office spaces, raised RMB 200 million ($30 million) in funding from Aikang Group, according to TechCrunch. Read more.

Ohpen, an Amsterdam-based provider of cloud-based banking software, raised €15 million ($16.9 million) in funding from Amerborgh at a €100 million ($113 million) valuation.

Spotinst, an Israeli provider of cloud cost management company, raised $15 million in Series A funding, according to Globes. Intel Capital led the round, and was joined by Vertex Venture Capital. Read more.

Tide, a London-based mobile banking service for small businesses, raised $14 million in Series A funding, according to TechCrunch. Anthemis and Creandum led the round, with participation from Passion Capital and LocalGlobe. Read more.

InstaReM, a Singapore digital cross-border payments companies, raised $13 million in funding. GSR Ventures led the round, and was joined by SBI-FMO Emerging Asia Financial Sector Fund, Vertex Ventures, Fullerton Financial Holdings, and Global Founders Capital.

Qonto, a Paris alternative banking service, raised another €10 million ($11.3 million) in funding from Valar Ventures and Alven Capital, according to TechCrunch. Read more.

Abl, a San Francisco education technology company, raised $7.5 million in Series A funding. Rethink Education led the round, and was joined by Sinovation Ventures, Owl Ventures, Reach Capital, and First Round Capital.

THEVA, a German superconductor manufacturer, raised €7 million ($7.9 million) in funding. Investors include Target Partners and EnBW New Ventures.

DBmaestro, a Boston provider of DevSecOps services for database technology, raised $4.5 million in funding. Vertex Ventures led the round, and was joined by Stage 1, Lool Ventures, and iAngels.

UrbanYou, an Australian on-demand cleaning company, raised $1 million in funding, according to The Sydney Morning Herald. Investors include MicroEquity and angel investor Arun Nair. Read more.


NightstaRx, a London-based biopharmaceutical company developing therapies for retinal dystrophies, raised $45 million in a Series C funding. Investors include Syncona, New Enterprise Associates, Wellington Management Company, and Redmile Group.

Swift Biosciences, an Ann Arbor, Mich.-based provider of library prep solutions for genomic sequencing, raised $12.2 million in Series D funding. Arboretum Ventures led the round.

Theranica Bio-Electronics, a Israeli bio-medical technology company developing advanced electroceuticals to treat migraines, raised $6 million in Series A funding. Lightspeed Venture Partners led the round, and was joined by LionBird and Corundum Open Innovation., a startup that connects cancer patients with clinical trials, raised $2 million in seed funding from DCM Ventures, Bootstrap Labs and Launch Capital, according to TechCrunch. Read more.


KKR (NYSE:KKR) made a $500 million bid for Pepper Group (ASX:PEP), according to Reuters. Read more.

Castanea Partners invested in Simms Fishing Products, a Bozeman, Montana manufacturer of fishing gear.

H.I.G. Capital agreed to acquire NCI (Nasdaq:NCIT) for $283 million in cash.

Endo International (NASDAQ: ENDP) agreed to sell Grupo Farmacéutico SOMAR, a Mexico-based producer of pharmaceutical products, to Advent International for approximately $124 million, including debt.

3i Group agreed to invest $136 million in Cirtec Medical, a Los Gatos, Calif.-based medical device consulting company.

Red Ventures, a Fort Mill, S.C.-based digital marketing company backed by Silver Lake Partners and General Atlantic, agreed to acquire Bankrate (NYSE:RATE) for $1.24 billion. Read more at Fortune.

Greystar Real Estate Partners, a Charleston, S.C.-based real estate company, agreed to acquire Monogram Residential Trust, a Plano, Texas-based luxury U.S. apartment developer, for about $3 billion. Read more at Fortune.

Monomoy Capital Partners agreed to acquire West Marine (Nasdaq:WMAR) for $338 million.


Vantiv (NYSE:VNTV) agreed to acquire Worldpay (LSE:WPG) for £7.7 billion ($9.94 billion). JP Morgan Chase, which was previously invited to bid on the deal, will not submit an offer.

Danone (ENXTPA:BN) agreed to sell its U.S dairy business Stonyfield to Lactalis for $875 million, according to Reuters. Read more.

VTG (DB:VT9), a German rail logistics company, agreed to buy NACCO Group, a Paris-based private rail car rental company, from CIT Group (NYSE:CIT) for around €780 million ($883 million), according to Reuters. Read more.

True Religion Apparel, a Vernon, Calif.-based denim retailer owned by TowerBrook Capital Partners, has filed for bankruptcy protection and signed a restructuring agreement with its lenders. Read more at Fortune.


• Dropbox, in cased you missed it over the long July 4th holiday weekend, is reportedly seeking underwriters for an IPO, according to people familiar with the matter to Reuters. The company could become the largest tech IPO since Snapchat went public in early March. Dropbox was valued at about $10 billion in a 2014 fundraising round.

• Play Communications, which operates Poland’s second largest mobile network operator, plans an IPO of up to $1.4 billion (5.2 billion zlotys), according to Reuters. Play, backed by Greek fund Tollerton and Iceland-based Novatar, plans an IPO on about 48.6% of its shares in Warsaw. At most, each share will cost about 44 zlotys, giving the company a maximum valuation of about $3 billion.

• Lotte Chemical Titan Holdings Sdn Bhd, a Malaysian company owned by South Korea’s Lotte Group, lowered its IPO price to 6.5-8 ringgit a piece, according to the Financial Times. That implies that the company will raise up to $1.1 million, lower than the $2 billion previously estimated. The company’s cornerstone investors include Permodalan Nasional Bhd and Eastspring Investment Bhd.

• Razer, a U.S.-based gaming firm, has filed for a Hong Kong-based IPO, according to TechCrunch. The company may be seeking upward of $600 million. The company revealed loss of $59.6 million on revenue of $392.1 million in 2016. The company’s overwriters are Credit Suisse and UBS. Voyager Equity, Lim Teck Lee Land Pte, Primrose Ventures, Archview Capital, and Sandalwood Associates back the company.

• China Literature, backed by Tencent, filed for an IPO in Hong Kong, TechCrunch reports. The company similar to Amazon’s Kindle services, earned about $5.6 million on revenue of about $377 million in 2016.

Redfin, a Seattle-based tech real estate company, filed for an IPO of $100 million Friday. The company plans to list on the Nasdaq under “RDFN,” with Goldman Sachs, Allen & Company, Band of America, RBC, Oppenheimer, and Stifel as lead underwriters. The company booked loss of $22.5 million in 2016 on revenue of $267 million. Redfin is backed pre-IPO by Madrona Ventures (11.4%), Greylock Partners(12.4%), Draper Fisher Jurvetson(10.2%), Tiger Global Private Investment Partners(10.5%), Vulcan Capital Ventures(10%), and T. Rowe Price(7.1%).

• Sienna Biopharmaceuticals, a Westlake Village, Calif.-based clinical stage biotech focused on medical dermatology, filed for an IPO to raise $74.8 million. The company plans to go public on the Nasdaq under “SNNA.” In 2016, the company booked loss of $21.2 million, and reported no revenue. ARCH Venture Partners (23.4%), Partner Fund Management(9.5%), and Fidelity(6.6%) back the company. J.P. Morgan, Cowen, and BMO Capital Markets are the company’s underwriters.


Baidu (Nasdaq:BIDU) acquired, a Seattle AI startup, according to TechCrunch. raised an undisclosed amount in seed funding from Amazon’s Alexa Fund and Founders Co-op. Read more.

Odyssey Investment Partners agreed to acquire CPI International, a Palo Alto, Calif.-based circuits manufacturer, from Veritas Capital for more than $800 million, including debt, according to Reuters. Read more.

Dex Media, a Texas-based phone-book publisher, acquired rival YP Holdings, a Tucker, Ga.-based provider of marketing services and the publisher of the Real Yellow Pages and, from Cerberus Capital.

BC Partners agreed to sell a 30% stake in the Mergermarket Group, a London-based provider of M&A services, to GIC, Singapore’s sovereign wealth fund. Financial terms weren’t disclosed.

The Abraaj Group agreed to acquire Java House, a Nairobi-based coffee chain operator, from Emerging Capital Partners.

OptionsCity Software, a Chicago-based fintech company backed by Edison Partners, has been acquired by Vela Trading Technologies, a New York-based provider of high performance trading and market data technology.

Aiglon Capital sold Carter-Waters, a Kansas City, Mo.-based distributor of construction materials, to the Sterling Group-backed Construction Supply.


Vitruvian Partners, a London-based private equity firm, raised €2.4 billion ($2.7 billion) for its third fund, Vitruvian Investment Partnership III.

Palladium Equity Partners, a New York-based private equity firm, raised $1.5 billion for its fifth fund, according to an SEC filing.

IDG Capital, a Beijing-based private equity and venture capital firm, filed to raise a $589 million for its fifth Chinese venture capital fund, IDG China Venture Capital Fund V.

Cipio Partners, a Munich-based investment firm, raised €174 million ($197 million) for its seventh fund.


Jessica Straus joined GE Ventures as an entrepreneur-in-residence. Previously, Straus was at the National Venture Capital Association.

Stephen Morana has joined Octopus Ventures as a venture partner. Morana previously held executive roles at Betfair, Zoopla and

Corigin Ventures has promoted David Goldberg to general partner, Claire Fauquier to principal, and hired Jaclyn Vouthouris as head of platform.


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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.