Skip to Content

Term Sheet — Tuesday, Aug. 8


Term Sheet typically focuses on one very specific kind of entrepreneurial success study: The kind where startup founders raise giant piles of venture capital to fuel hypergrowth, and then ride said hypergrowth to an IPO or sale. But there are plenty of other paths to success. Not all of them involve venture capital, and some end up earning more money for their founders in the end.

Blaine Vess is one example. He founded Student Brands in 1999 out of his dorm room at North Central College in Illinois as a way to allow students to help each other study. At the height of the dotcom boom, he asked a family friend to invest in the company so he could hire a developer. The friend instead gave Vess an important piece of advice: Learn to program and build out the site yourself. Soon his site,, was earning around $400 a month on ads, which felt like a small fortune for a college student in the 90’s.

Vess kept the site going through the dotcom crash and college because it had few expenses. (Students would email in Word documents of study guides and Vess and his co-founders would manually upload them; they eventually built tools to automate that.) In 2005, the company switched to a paid subscription model and earned $60,000 in its first year. By 2007, Student Brands was making more than $1 million in subscriptions, operating out of a house in L.A. (After college, Vess moved there to take a marketing consulting job with New Line Cinema.)

By 2011, Vess’s college side hustle was successful enough that he decided finally “professionalize” it by renting an office, hiring a 25-person team, and putting processes into place. Along the way, Student Brands snapped up a number of educational tech services, including fellow Web 1.0 products and The company now operates more than 20 sites.

But Vess missed the early days of building things from scratch, so in 2015, he hired Thomas Swalla, a formerly COO of, to be the company’s president and he became chairman. Last year the company made $20 million in revenue. This year Barnes & Noble Education approached the company with a desire to expand its digital presence, and on Thursday, the company acquired Student Brands for $58.5 million in cash. Vess says he believes the company “has landed with an absolute perfect partner going forward.”

With no outside investors, Vess owned more than 80% of the company, earning at least $47 milllion on the sale. (Swalla and his co-founders, Chris Nelson and Todd Clemens, owned minority stakes.) He achieved a better personal payday than the founders of some venture-backed buyouts with price tags that were twice as high. He also avoided the pressure to achieve Silicon Valley-style hypergrowth, which is designed to produce all-or-nothing results. Under that model, startups find out very quickly if they are a wildfire or a bright flame that burns out quickly. Vess opted for a 17-year slow burn.

Now, he’s getting a taste of Silicon Valley-style priorities as part of the country’s most famous accelerator program, Y Combinator, with his new travel tech startup, Solve. The company provides airport services like expedited immigration and customs, transportation, and baggage assistance to international travelers in 500 airports. Costing $100 for two people in cities like Bangkok and $225 at London Heathrow, Solve’s service has appealed to business travelers and older travelers using travel agents, Vess says.

Y Combinator has given him a new perspective on how to grow a company. He plans to raise some outside capital from “strategic angels,” or people that can offer specific industry expertise. Solve, which was self-funded until it joined YC, has been earning revenue since it launched in February. Vess is not quite ready to adopt the Valley’s mentality of growth above all else.

“I think I’m probably more cautious about raising money than some other people because we don’t necessarily need it, and it’s just not the metric I’m looking at, as in ‘We raised $X million, okay, we’re successful now,’” he says. “It’s really just the beginning.” After 17 years, Vess says he has developed a healthy understanding of the ups and downs of running a business. “It definitely keeps me grounded.”

Giant Piles Of Venture Capital: Point of clarification from yesterday: WeWork raised $500 million more in funding yesterday from undisclosed investors. That’s on top of the $500 million it raised last week from SoftBank and Hony Capital. WeWork now has raised $4.5 billion in venture funding. Nobody has accused CEO Adam Neumann of having small ambitions. But this influx of cash also signals another thing: The company isn’t in any hurry to go public. Last year Neumann hinted to Fortune that a public offering would provide validation of the company’s valuation:

Neumann noted that private company valuations are “what one person is willing to sell for and one person is willing to buy.” He added: “Value in the public markets—that becomes a different story.”

“One thing we’re not afraid of is going public,” Neumann said. He would not give a time frame for an offering.

Baby’s First Deal: In April, when Netflix raised €1 billion in new debt for content acquisitions, we noted that the streaming giant has never acquired another company in its entire history. Not once, even for talent or tech. It’s remarkable, considering the company’s size ($78 billion) and age (20 years).

That changed yesterday when Netflix acquired Millarworld, an indie comic book publishing company founded by Mark Millar. The deal got everyone buzzing, but Netflix isn’t going to turn into an M&A machine – this deal is all about content and IP. Millarworld is a company built around one talented person; Netflix even framed the deal in terms of “storytelling,” not strategy.


• The anti-diversity guy at Google was fired. Read Sundar Pichai’s letter about it.

• Twilio had a good quarter.

• Mnuchin made at least $15 million selling his interests.

• Trump could be on the brink of starting a trade war with China.

• Online lenders are upbeat about a turnaround.

• H-1B Visas created a $431 million net gain for U.S. workers


The end of typing. Video game stocks surge. It’s raining private equity investments in India. The world’s most feared investor. Uber board member Garrett Camp: “Travis is not returning as CEO.” Peter Thiel may be having buyer’s remorse on his Donald Trump bet. The cult of Masa. Is Priceline the world’s best-run Internet company after Amazon? The actual differences between men and women.


Nadel and Gussman NV, a Tulsa, Okla.-based exploration and production company, raised $100 million in funding. Post Oak Energy Capital led the round., a Berkeley, Calif.-based vacation property rentals platform,raised $40 million in funding. Silversmith Capital Partners led the round.

TYT Network, a Los Angeles-based online news network, raised $20 million in funding. 3L Capital led the round, and was joined by investors including Greycroft, and WndrCo.

Quanterix Corporation, a Lexington, Mass.-based company digitizing biomarker analysis, raised $8.5 million in funding. T. Rowe Price Associates led the round.

MagicCube, a Sunnyvale, Calif.-based platform for securing data exchange between devices and the cloud, raised $8.5 million in Series A funding. Bold Capital Partners led the round, and were joined by investors including Epic Ventures, Social Starts and Silicon Valley Bank.

Crop Pro Insurance, a Grimes, Iowa-based insurance and technology firm dedicated to helping farmers manage risk and maximize profitability, raised $8 million in Series A funding. Investors include Finistere Ventures, Seed 2 Growth Ventures (S2G), and GuideOne Insurance.

Tinkergarten, a Northampton, Mass-based provider of outdoor early childhood education, raised $5.4 million in Series A funding. Owl Ventures led the round, and was joined by investors including Omidyar Network and Reach Capital.

CarDash, a Menlo Park, Calif.-based full-service automotive concierge provider, raised $5.3 million in funding. Felicis Ventures and Index Ventures led the round.

Darkstore, a San Francisco-based third-party logistics company, raised $1.4 million in seed funding from PivotNorth Capital.


Neuros Medical Inc, a Willoughby Hills, Ohio-based neuromodulation company, raised $20 million in funding. U.S. Venture Partners led the round, and was joined by investors including Boston Scientific, Aperture Venture Partners, Osage University Partners and JumpStart Inc.


Envision Healthcare Corp (NYSE:EVHC) said it would sell its ambulance business to KKR in an all-cash deal valued at $2.4 billion, according to Reuters. Read more.

Lion Capital is looking to sell HEMA, a Netherlands-based general merchandise retailer, according to Reuters. Read more.

Sweeping Corporation of America, a portfolio company of Soundcore Capital Partners, acquired Reilly Sweeping, a Fairless Hills, Penn.-based provider of parking lot and street sweeping services. Financial terms weren’t disclosed.

• An affiliate of Arsenal Capital Partners agreed to acquire Cyalume Technologies Holdings (OTCPK:CYLU) for $45 million.

Nissan Motor Co (TSE:7201) agreed to sell its electric battery business to GSR Capital for an undisclosed sum, according to Reuters. Read more.

Tri Con Works, which is backed by Aperion Management, acquired Diamondback Works, a La Porte, Texas-based provider of specialty construction services for the petrochemical industry. Financial terms weren’t disclosed.

Comvest Capital made an investment of an undisclosed amount in CarePayment Technologies Inc, a patient financial engagement company. Financial terms weren’t disclosed.

Thoma Bravo will acquire Frontline Education, an Exton, Penn.-based education software company. Financial terms weren’t disclosed.

Crossroads Holding, a portfolio company of Revelstoke Capital Partners, acquired Center of HOPE of Myrtle Beach, a Myrtle Beach, S.C. provider of substance abuse treatment services. Financial terms weren’t disclosed.


United Technologies Corp. made an approach to acquire Rockwell Collins Inc, a Cedar Rapids, Iowa-based aerospace supplier. The takeover price could exceed $20 billion, according to The Wall Street Journal. Read more.

Eden Creamery, the Los Angeles-based manufacturer of low-calorie ice cream brand Halo Top, is exploring a sale that it hopes will value the ice cream brand at as much as $2 billion, according to Reuters. Read more.

Potbelly Corp (Nasdaq:PBPB) is considering putting itself up for sale, according to The Wall Street Journal. Read more.

Eros (NYSE:EROS) is in early talks with Apple, Amazon and Netflix to sell its film and music library, according to Reuters. Read more.


Arqiva, a U.K.-based mobile and TV infrastructure company, has reportedly hired Barclays, Goldman Sachs, HSBC, and J.P. Morgan to head its initial public offering, Reuters reports citing people with knowledge of the matter. The company could be worth between 5 to 6 billion pounds, or $6.5 to $8.45 billion.

Global Blue, A Swiss VAT refund company, has reportedly hired Goldman Sachs, J.P. Morgan, and Morgan Stanley to steer its IPO, according to Sky News citing people with knowledge of the matter. The deal could value Global Blue at above $4 billion. The company, backed by Silver Lake, is said to be looking for an offering in London, New York, or Asia. Earlier this year, Reuters reported that the the company was seeking an offering in the first half of 2018.


WeWork acquired Spacemob, a Singapore-based co-working company, for an undisclosed amount. Spacemob had raised more than $5 million in funding from Vertex Ventures and Alpha JWC Ventures.

KKR will buy Covenant Surgical Partners Inc, a Nashville, Tenn.-based owner and operator of ambulatory surgery centers and physician practices. Financial terms weren’t announced. The sellers include DFW Capital Partners, Iroquois Capital Group and PineBridge Investments.


CapitalSpring, a New York-based private equity firm, raised $725 million for its fifth fund.

Vintage Investment Partners, an Israel-based venture capital firm, raised $215 million for its 10th fund.

March Capital Partners, a Santa Monica, Calif.-based venture capital firm, is seeking to raise $150 million for its second fund, according to an SEC filing.


Cack Wilhelm joined Accomplice as a partner. Previously, she was at Scale Venture Partners.

Michael Kalb has left Sun Capital Partners where he served as a senior managing director. According to the Financial Times, he left the company to “explore more entrepreneurial opportunities.” He will be replaced by Paul Daccus and Jerome Nomme. Prior to Sun Capital, Daccus was at Deloitte, and Nomme was at Ernst & Young.

Adrianne Shapira joined Eurazeo Brands as a managing director, and George Birman joined as an associate. Previously, Shapira was at David Yurman, and Birman was at VMG Partners.

John Tough joined the Invenergy Future Fund as a partner.

Saw Mill Capital hired Brett Lacher as a vice president and Ken Foskett and Varun Malkani as associates. It promoted Victor Krupinski to partner and co-director of research, Jason Mueller to principal and co-director of research, and Scott VandeKerkhoff to principal and head of one Saw Mill’s three investment teams.

JMI Equity promoted Larry Contrella to principal and Paul Chang to vice president.


View this email in your browser.

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