Term Sheet — Tuesday, September 19
VCs VERSUS ICOs
Companies have raised more than $1.7 billion through initial coin offerings this year, surpassing early-stage VC funding for Internet companies. It’s easy to see why an ICO is appealing to tech founders (No due diligence! LOL at governance rights!) But what about the more traditional venture capital firms? What role will they play in this brave new world of token sales?
• VCs are starting to warm up to the idea of ICOs because of: 1) profits and 2) liquidity. Crypto investors have made some pretty significant returns with the option to cash out faster than playing the long-game of waiting for an IPO or acquisition.
• Some of the largest ICOs include blockchain data storage network Filecoin, which raised $200 million in an hour, and self-amending cryptoledger Tezos, which raised more than $200 million in four days. It’s worth noting that Sequoia and Union Square Ventures participated in Filecoin’s $52 million pre-sale.
• Some of the established players like Sequoia, Andreessen Horowitz, Union Square Ventures, and Bessemer Venture Partners are also getting their feet wet by pouring money into cryptocurrency hedge funds. Returns of more than 500% are nothing to joke about.
• So can’t a traditional venture firm just say, “You know what? Screw it. Let’s just go all in on ICOs. Who needs due diligence when you’ve got a white paper on this token sale for a gentleman’s club in Vegas?” Well, as this WSJ article notes, some VCs lack a mandate from their limited partners to do so. Turns out due diligence and governance rights are a big deal.
• As token sales become more prevalent, what will happen to the more traditional VC firms that want a piece of a startup that, well, just doesn’t need their money?
I will leave you with this quote from Jamie Burke, founder and CEO of Outlier Ventures: “When a startup can raise $35 million in 30 seconds without any dilution, the genie is out of the bottle and it isn’t going back in.”
THE LATEST FROM FORTUNE...
• Researchers spend 8 months simulating life on Mars (by David Z. Morris)
• The lessons from 5 big Bitcoin crashes (by Jeff John Roberts)
• John Chambers steps down from Cisco’s board (by Jonathan Vanian)
• Joe Biden: Universal basic income sells American workers short (by Alana Abramson)
• Student debt has made young leaders more risk averse (by Susie Gharib)
World’s largest sovereign wealth fund hits $1 trillion. Best Buy’s secrets for thriving in the Amazon Age. Euro bills are clogging up toilets. A VC group sues Trump Administration over immigration rule.
• Raise, a Chicago-based retail payments company and gift card marketplace, raised $60 million in Series C funding. Accel led the round, and was joined by investors including PayPal, New Enterprise Associates, and Bessemer Venture Partners.
• Younited Credit, a France-based crowdlending platform, raised $47.8 million (€40 million), according to TechCrunch. Investors include Eurazeo, Crédit Mutuel Arkéa, AG2R La Mondiale, Weber Investissements, Matmut Innovation, Zencap Asset Management, and Bpifrance. Read more.
• Threat Stack, a Boston-based provider of cloud security management, raised $45 million in Series C funding. F-Prime Capital Partners led the round, and was joined by investors including Eight Roads Ventures, Scale Venture Partners, .406 Ventures, and Accomplice.
• GoCardless, a U.K.-based online payment processing services provider, raised $22.5 million in funding. Investors include Accel, Balderton Capital, Notion, and Passion.
• Smartly.io, a Facebook advertising creative, optimization and automation tool, raised $20 million in funding. Highland Europe led the round.
• Victor, a London-based on-demand private jet charter company, raised $20 million in funding. BP Ventures led the round.
• MealPal, a Miami, Fla.-based subscription service for lunch pick-up from restaurants, raised $20 million in Series B funding. Menlo Ventures led the round.
• 98point6, a Seattle-based healthcare technology company, raised $19.5 million in Series B funding. The investors were not named.
• Humatics Corporation, a Cambridge, Mass.-based developer of sensors, software, and control systems that enable robots to work within human environments, raised $18 million in Series A funding. Fontinalis Partners led the round, and was joined by investors including Airbus Ventures, Lockheed Martin Ventures, Intact Ventures, Tectonic Ventures, Presidio Ventures, Blue Ivy Ventures, Ray Stata, and Andy Youmans.
• TalkIQ, a San Francisco-based voice-to-text transcription service company, raised $14 million in Series A funding. Scale Venture Partners led the round, and was joined by investors including Aspect Ventures, Danhua Capital, Felicis Ventures LINE Corp and Salesforce Ventures.
• Clearcover, a Chicago-based car insurance startup, raised $11.5 million in funding. Lightbank led the round.
• Funnel, a Stockholm-based advertising SaaS company, raised $10 million in Series A funding. Investors include Balderton Capital.
• Luno, a London-based Bitcoin platform, raised $9 million in Series B funding. Balderton Capital led the round, and was joined by investors including AlphaCode and Digital Currency Group.
• Evident, an Atlanta-based cybersecurity solution for managing and sharing personal data, raised $8.8 million in Series A funding. New Enterprise Associates led the round, and was joined by investors including Tom Noonan, Lane Bess, and Mike Potts.
• Volo Commerce, a U.K.-based provider of multichannel e-commerce technology, raised £6.2 million ($8.4 million) in funding. NVM Private Equity led the round, and was joined by investors including Downing LLP.
• DouxMatok, an Israel-based developer of targeted flavor delivery technologies, raised $8.1 million in funding. Pitango led the round, and was joined by investors including Gil Horsky and FoodLab Capital.
• EiQ Networks, a Boston-based developer of security intelligence software, raised $7 million in funding. Arrowroot Capital led this round.
• Capsule8, a Brooklyn, N.Y.-based developer of a real-time threat protection platform, raised $6 million in Series A funding. Bessemer Venture Partners led the round.
• Resolute Innovation, a New York-based marketplace platform that connects startups and universities with corporate partners, raised $3.3 million in Series A funding. Revolution Ventures led the round.
• Alsid, a Paris-based cybersecurity editor, raised €1.5 million ($1.8 million) in seed funding. 360 Capital Partners led the round, and was joined by investors including Axeleo Capital.
• Packback, a Chicago-based education technology company, raised $1.5 million in funding. Investors include University Ventures and ICG Ventures.
HEALTH AND LIFE SCIENCES DEALS
• LifeMine Therapeutics, a Cambridge, Mass.-based drug discovery platform provider, raised $55 million in Series A funding. WuXi Healthcare Ventures led the round, and was joined by investors including Foresite Capital, GV, Arch Ventures, Boyu Capital, Blue Pool Capital, MRL Ventures Fund, and Alexandria Venture Investments.
PRIVATE EQUITY DEALS
• Apollo Global Management acquired ClubCorp, a Dallas, Texas golf club operator, for about $1.1 billion.
• Thoma Bravo acquired Frontline Education, an Exton, Penn.-based provider of administrative and HR software solutions for educational organizations. Financial terms weren’t disclosed.
• FFL made an investment in Bacharach Holding Corp, a New Kensington, Penn.-based manufacturer of refrigerant gas leak detection and monitoring instruments. Financial terms weren’t disclosed.
• Arsenal Capital Partners acquired Cyalume Technologies (OTCPK:CYLU), a Fort Lauderdale, Florida-based specialty chemicals provider. Financial terms weren’t disclosed.
• Brixley & Meyer Capital acquired 3 Sigma, a Troy, Ohio-based specialty provider of adhesive coated materials for converters and manufacturers. Financial terms weren’t disclosed.
• Sun Capital Partners Inc acquired AMES Taping Tools, a Stone Mountain, Ga.-based provider of automatic taping and finishing tools, supplies and training for the professional drywall finishing sector. Financial terms weren’t disclosed.
• Frontenac acquired Schlotterbeck & Foss Company, a Westbrook, Maine-based maker of gourmet sauces, marinades, condiments, salsas, ice cream toppings, spreads and salad dressings. Abacus Finance provided $21.7 million in senior debt financing to support the deal.
• Pamlico Capital made an investment in Cartegraph Systems, Inc, a Dubuque, Iowa-based provider of SaaS-based asset management solutions to local governments. Financial terms weren’t disclosed.
• Teva Pharmaceutical Industries Ltd (NYSE: TEVA) will sell the remaining assets in its specialty women’s health business for $1.38 billion in two separate transactions, according to Reuters. Read more.
• Flexera agreed to acquire BDNA, a Mountain View, Calif.-based enterprise technology data provider. Financial terms are not being disclosed.
• Qudian, Beijing, China-based company that provides small loans for e-commerce purchases, filed for an IPO raising up to $750 million. In 2016, the company posted revenue of $212.8 million on income of $85.1 million. Morgan Stanley, Credit Suisse, Citi, CICC, and UBS Investment Bank are joint bookrunners in the deal. The company plans to list as “QD” on the NYSE.
• Best Inc., an Alibaba-based Chinese supply chain network, has reportedly lowered its offering. The company is said to have cut its IPO to raise $495 million in an offering of 45 million shares priced at $10 to $11 a piece. Previously, the company said it planned raise $869 million by offering 62.1 million shares between $13 to $15 a piece. The offering would include 14% insiders. The company lost $815 million on revenue of $1.3 billion in 2016. Alibaba backs 23.4% of the company. Citi, Credit Suisse, Goldman Sachs, J.P. Morgan, and Deutsche Bank are underwriters in the deal. Best plans to list on the NYSE as “BSTI.” Reuters.
• CM Seven Star Acquisition, a China-based SPAC, plans to raise $150 million in an IPO of $15 million shares at $10 a piece. The firm is backed by China Minsheng Investment Group. EarlyBirdCapital is sole bookrunner in the deal and plans to list on the Nasdaq as “CMSSU.”
• Black Ridge Acquisition, a Minneapolis, Minn.-based SPAC, filed for an IPO of $100 million. The company plans to offer 10 million shares at $10 a piece. Black Ridge Oil and Gas, which backs the company, is seeking an energy company. EarlyBirdCapital is sole bookrunner in the deal. Black Ridge plans to list as “BRACU” on the Nasdaq.
• Deciphera Pharmaceuticals, a Waltham, Mass.-based cancer drug maker focused on kinase-inhibiting treatments, set the terms for its IPO Monday, saying it plans to raise $100 million. The firm said it plans to offer 6.3 million shares priced between $15 to $17 a share. The company shed $25.9 million in 2016. Brightstar Associates(67.85% pre-offering), and New Leaf Ventures(15.3%) back the company. J.P. Morgan and Piper Jaffray are underwriters in the deal. The company plans to list on the Nasdaq as “DCPH.”
• NuCana, an Edinburgh, U.K.-based chemotherapy biotech, said it plans to raise about $100 million in an offering of 6.7 million shares priced between $14 to $16. In 2016, the company posted loss of about $6.1 million. Sofinnova (45% pre-offering) and Morningside Venture(12%) back the company. Citi, Jefferies, and Cowen & Co. are joint bookrunners in the deal. The company planes to list on the Nasdaq as “NCNA.”
• OptiNose, a Yardley, Penn.-based company for nasal inflammation treatments, filed for an IPO of $100 million. The company posted revenue of $47.5 million and earnings of $9.5 million. The company is backed by Avista Capital Partners (58.85% pre-offering), TKWD Ventures (14.7%), Entrepreneurs Fund (10%), Ikos Invest AS (8.8%), and Fidelity Management and Research Company (7.5%). Jefferies, Piper Jaffray, BMO Capital markets, and RBC Capital Markets are joint bookrunners in the deal. OptiNose plans to list on the Nasdaq as “NOSE.RC.”
• Restoration Robotics, a San Jose, Calif.-based company focused robotics that assist doctors in hair restoration surgery, says it plans to raise $25 million in an offering of 3.1 million shares priced between $7 to $9. In 2016, the company posted revenue of $15.6 million and loss of $21.8 million. National Securities is sole bookrunner in the deal. It plans to list on the Nasdaq as “HAIR.”
• AMERI Holdings, a Princeton, NJ-based company creating ERP software, filed for an IPO of up to $10 million. The company posted revenue of $36.2 million on loss of $2.8 million in 2016. Lone Star Value Management (25.7% pre-offering) backs the company. Ladenburg Thalmann is sole bookrunner in the deal. The company plans to list as “AMRH on the Nasdaq. Pricing terms have yet to be disclosed.
• Eurofins Scientific agreed to acquire EAG Laboratories, a Maryland Heights, Mo.-based scientific services company, from Odyssey Investment Partners. Financial terms weren’t disclosed.
• Valora Holding AG plans to buy BackWerk, a Germany-based bakery chain, from EQT for 190 million euros ($227 million).
• Blin.gy, a California City, Calif.-based app that let users insert themselves into music videos, is shutting down after a potential acquisition fell through. The company launched at Chosen three years ago and raised approximately $10 million in venture funding form investors including The Perkins Fund, Scrum Ventures, Rhodium, and DCM Ventures.
• Platinum Equity agreed to sell Nilco, a Hartville, Ohio-based provider of specialty building materials and industrial products, to U.S. Lumber Group. Financial terms weren’t disclosed.
• J.H. Whitney Capital Partners acquired Accupac, a Mainland, Penn.-based liquid contract manufacturing company, from H.I.G. Capital. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Madison India Capital, a Mauritius-based private equity firm, raised approximately $230 million for its fourth fund, Madison India Opportunities IV.
• BEX Capital, a France-based private equity and venture capital firm, raised €120 million ($144 million) for its second fund, BEX Fund II.
• Kito de Boer joined The Abraaj Group as a managing partner.
• Christopher Keber joined McCourt Global, an alternative asset manager, as head of investments and strategy. Previously, Keber was at Hines Interests LP.
• Alicia Pando joined Adams Street Partners as a partner and chief technology officer. Previously, Pando was at Magnetar Capital.
• Metropolitan Partners Group Management appointed John Ioannou as president.
• Michelle Eidson joined Shorehill Capital LLC as managing director and head of business development. Previously, Eidson was at Platte River Equity,
• Andrew Cialino joined SFW Capital Partners as a vice president and head of business development.
• Gajan Rajanathan is joining Highland Europe as a principal.