Skip to Content

Term Sheet — Thursday, March 1

REBEL IPO

Good morning, Term Sheet readers.

Music streaming company Spotify finally filed for its non-traditional IPO yesterday, suggesting it will begin trading publicly later this month. Spotify is the first large, high-profile company to pursue a direct listing of its shares. It’s an unusual move with some clear benefits — no banks, no roadshow, no crazy fees, and no lock-up period.

But of course, the faster and cheaper route comes with risks. As it notes in its prospectus, there are no safeguards to protect it from volatility. It reads, “…the trading volume and price of our ordinary shares may be more volatile than if our ordinary shares were initially listed in connection with an underwritten initial public offering.”

Some notes from the Form F-1:

• The filing showed heavy losses. Last year, when it generated €4.1 billion ($5.02 billion) in revenue, it lost €1.24 billion ($1.51 billion) — up from €539 million in 2016 and €230 million the year before that.

• Investors trading Spotify’s shares in private transactions have valued the company as highly as $23 billion.

• By the end of 2017, Spotify reported 159 million active users, including 71 million paying subscribers. “We believe that our number of Premium Subscribers is nearly double the size of our nearest competitor, Apple Music,” the filing said. The statement is in line with Apple’s report from February that it has approximately 36 million paid subscribers.

• The largest stakeholders are its two founders: CEO & co-founder Daniel Ek, who owns 25% of the company, and co-founder and director Martin Lorentzon, who owns 13%.

• The duo also has “beneficiary certificates,” which entitle them to extra voting rights. Ek has 37.3% voting power while Lorentzon has 43.1%.

• Spotify intends to list on the NYSE under the symbol “SPOT.”

The bottom line is: All eyes will be on Spotify’s much-anticipated IPO. Depending on how it goes, the company’s direct listing could serve as a template for existing unicorns looking for a cheaper, more innovative approach to going public.

THIS JUST IN: DoorDash, a San Francisco-based on-demand restaurant food delivery company, is raising $535 million in funding at a $1.4 billion valuation. SoftBank led the round, and was joined by investors including Sequoia Capital, and Singaporean sovereign wealth fund GIC. Here’s where it gets complicated thanks to Softbank (again): The Japanese tech behemoth is also an investor in Uber, whose UberEATS is a competitor to DoorDash…Read more at Fortune.

THE LATEST FROM FORTUNE…

• Bill Ackman Calls It Quits on Herbalife (by Lucinda Shen)

• So Many Self-Driving Car Startups, So Little Time (by Adam Lashinsky)

• Dick’s Bold Move on Assault Rifles Is Also Good Business (by Phil Wahba)

• How Elon Musk’s Tesla Could Contaminate Mars With Earth Bacteria (by Don Reisinger)

…AND ELSEWHERE

Tencent Music is valued at over $12 billion. Japan Post’s $1.1 billion buyout fund aims to invest with KKR and Permira. Subpoenas signal S.E.C. crackdown on Initial Coin Offerings. Spotify was a terrible business until the record labels stepped in.

VENTURE DEALS

Bugcrowd, a San Francisco-based bug bounty platform, raised $26 million in Series C funding. Triangle Peak Partners led the round, and was joined by investors including Blackbird Ventures, Costanoa Ventures, Industry Ventures, Paladin Capital Group, Rally Ventures, Salesforce Ventures, Stanford, Hostplus and First State Super.

Astranis, a San Francisco-based manufacturer of small, low-cost telecommunications satellites, raised $13.5 million in Series A funding. Andreessen Horowitz led the round, and was joined by investors including Y Combinator, Fifty Years, Refactor Capital and Indicator Fund.

Coalition Inc, a San Francisco-based cyber insurer, raised $10 million in Series A funding. Investors include Vy Capital, Ribbit Capital, Valor Equity Partners, Y Combinator President Sam Altman and Deep Nishar.

Smartcar, a Mountain View, Calif.-based connected car technology platform, raised $10 million in Series A funding. New Enterprise Associates led the round, and was joined by investors including Andreessen Horowitz.

Triplebyte, a San Francisco-based recruiting and technical screening platform for tech companies, raised $10 million Series A funding. Initialized Capital led the round, and was joined by investors including  Caffeinated Capital, Felicis Capital, Jessica Livingston, Paul Graham, Emmett Shear, Kyle Vogt, and Marissa Mayer.

Woebot Labs, Inc, a chatbot who helps monitor moods, raised $8 million in Series A funding. New Enterprise Associates led the round, and was joined by investors including the AI Fund.

Virtualitics, a Pasadena, Calif.-based platform that merges AI, big data, and virtual/augmented reality, raised  $7 million in Series B funding. Centricus led the round, and was joined by investors including Venture Reality Fund.

Eko, a Berkeley, Calif.-based maker of an acoustic cardiac monitoring, raised $5 million in Series A funding. Artis Ventures led the round, and was joined by investors including Strategic Partners, Dreamlt Ventures, 1812 Ventures and Founder.org.

Edgybees, an Israel-based creator of an augmented reality development platform for fast-moving platforms, raised $5.5 million in seed funding. Investors include Motorola Solutions Venture Capital, Verizon Ventures, OurCrowd, 8VC, NfX and Aspect Ventures.

OnScale, a platform that allows engineers to accelerate innovation in 5G, biomedical, and IoT markets, raised $3 million in seed funding. Thornton Tomasetti led the round.

Blueprint Income, a New York-based fintech startup, raised $2.75 million in seed funding. NextView Ventures and Green Visor Capital co-led the round, and were joined by investors including Center for Financial Services Innovation FinLab, Core Innovation Capital, Kairos Ventures, Jean Chatzky, and Plug ’n Play.

Current, a New York-based debit card for teens, raised $1 million in funding from Fifth Third Capital.

HEALTH AND LIFE SCIENCES DEALS

Viela Bio, which spun off from MedImmune, the global biologics research and development arm of AstraZeneca, raised $250 million in funding. Investors include Boyu Capital, 6 Dimensions Capital, Hillhouse Capital, Temasek and Sirona Capital.

Quentis Therapeutics, a New York City-based biotech company that focuses on treating cancer patients, raised $48 million in Series A funding. Investors include Versant Ventures, Polaris Partners, AbbVie Ventures, Taiho Pharmaceutical Co. Ltd, Yonghua Capital, Alexandria Venture Investments and New York Ventures.

PRIVATE EQUITY DEALS

Caymus Equity sold Direct Marketing Solutions, a Portland, Ore.-based provider of omnichannel direct marketing solutions, to Main Street Capital Corp. Financial terms weren’t disclosed.

Consolidated Aerospace Manufacturing LLC, which is backed by Tinicum, acquired Moeller Manufacturing & Supply Inc, an Anaheim, Calif.-based producer of commercial aerospace and defense washers and spacers. Financial terms weren’t disclosed.

Radian Capital invested $10 million  in TCGplayer, a vertical marketplace and commerce software vendor for the collectible gaming and hobby industry.

OTHER DEALS

Roomi acquired Symbi, a New York-based New York’s roommate matching service. Financial terms weren’t disclosed.

Harley-Davidson, Inc. (NYSE: HOG) invested in Alta Motors, a Brisbane, Calif.-based lightweight electric vehicles company. Financial terms weren’t disclosed.

EXITS

Valor Water Analytics, a big data company providing financial and conservation solutions for water utilities, has been acquired by Xylem (NYSE: XYL). Valor Water Analytics had previously raised $2.8 million in venture funding from investors including the Urban Innovation Fund and Y Combinator.

Reputation.com acquired SIM Partners, a Chicago-based provider of location marketing technology. SIM Partners’ backers included River Cities Capital Funds and Jump Capital.

GI Partners acquired a majority stake in Doxim Inc, a Canada-based provider of customer engagement and content management SaaS solutions for financial services organizations, from Strattam Capital.

FIRMS + FUNDS

SwanCap, a Germany-based private equity firm, raised 433 million euros (approximately $528 million) for its new fund, SWAN III.

PEOPLE

Asif Giga joined Ericsson Ventures as an investment director.

Greg Byrnes joined PSP Capital as managing director, and Tom Wyler joined as senior vice president for global strategy and business development.

SHARE TODAY’S TERM SHEET

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.