Happy Friday, Term Sheet readers.
Thank you to everyone who responded to yesterday’s question: As the capital market for technology companies continues to evolve, will today’s VCs be best positioned to fund companies in the future? Or will we see token sales and other democratized funding mechanisms become the preferred path for entrepreneurs?
Below, a selection of your responses:
Gregg writes: I personally believe ICOs will consume an ever larger piece of the pre-seed/seed/Series A market, while VC rounds will continue to dominate later growth stages.
Jon writes: I think that AngelList and ICOs will eventually lead to the end of generalist funds. There seems to be a shift in the ecosystem over the last few years where the small group of tier 1 VCs like Seqouia, a16z, and NEA keep getting bigger, and then you’re seeing a bunch of vertical/sector focused funds emerge which can by their nature be value add to their portfolio companies (which will entice founders to work with them versus getting commodity capital).
Brian writes: I have been traveling through the first quarter this year to the traditional US VC hubs in the Bay area, Boston and New York, as well as Europe and the mid-continent in the U.S. What I find very interesting is that the topic of coins, tokens, ICOs and cryptocurrency comes up constantly in discussions in the Bay area, but very rarely in the other regions. The other consistent point of feedback is that traditional VCs are “exploring,” “getting smart” or “evaluating different partner perspectives” on the topic and there seems to be no clear view.
Personally, I do not believe private companies will be able to operate outside of public market regulatory scrutiny while using ICOs to achieve a broadly distributed, and freely exchangeable financing alternative to offering public equity (and also avoiding founder dilution in certain instances). Unfortunately, you cannot have it both ways. Ultimately, ICOs will be better regulated in the future thus limiting demand, and the traditional VC model will persist as a primary route for entrepreneurs.
Paul writes: With the exception, perhaps, of “household name” entrepreneurs that have a high enough public profile, and sufficient proven success, to raise funds and build companies on their own, the best deals will ultimately be done by the best investors. Similar to Crowdfunding, at the end of the day, the good VCs bring more to the table than cash, and other things close to equal an entrepreneur will be better off with a small group of sophisticated value-add investors than a flock of inexperienced widows and orphans wearing rose-colored glasses. The role and nature of the professional investor may evolve, but the pros will still be doing the best deals, and won’t be sharing them with the amateurs.
Edward writes: Democratized funding lacks the distinct advantage of VC value-add. Advice on how to approach markets, who to hire, how aggressive to be, etc. I suspect it will benefit the entire market by providing funding for true moonshot ideas that people didn’t have the imagination/guts to fund — however, the nature of token funding being liquid means VC firms could invest in such companies early on once they realize the traction of said moonshot ideas.
THE LATEST FROM FORTUNE…
• Chainalysis Raises $16 Million (by Fortune Staff)
• Jamie Dimon Just Revealed Details About the Big Amazon, JPM, Berkshire Health Care Venture (by Sy Mukherjee)
• America’s Largest Bitcoin Exchange Is Going to Invest in Cryptocurrency Startups (by David Meyer)
Grab’s Uber deal. Hacked crypto exchange sold for $34 million. Activist fund thinks Toshiba chip unit may be as much as $40 billion. CalSTRS CIO deactivates Facebook account, citing poor management. WageWorks shuffles leadership, needs to restate finances. MoviePass owner to buy MoviePhone. Instacart raises another $150 million.
• WorkFusion, a New York City-based robotic automation software company, raised $50 million in Series E funding. Hawk Equity and Declaration Partners led the round and was joined by investors including Georgian Partners, iNovia Capital, and NGP Capital.
• BetterCloud, a New York-based SaaS operations management platform, raised $60 million Series E funding. Bain Capital Ventures led the round, and was joined by investors including Accel, Greycroft Partners (through Greycroft Growth), Flybridge Capital Partners, Tribeca Venture Partners, and New Amsterdam Growth Capital.
• Nantero, a Woburn, Mass.-based developer of next-generation memory, raised a total of $29.7 million in funding. Investors include Cisco Investments, CFT Capital, and Dell Technologies Capital.
• PFL, a Livingston, Montana-based marketing company, raised $25 million in funding. Goldman Sachs Growth Equity was the investor.
• Great Jones, a Florida-based real estate tech firm, raised $8 million in funding. Crosslink Capital led the round.
• Arkera, a London and New York City-based artificial intelligence investing platform, raised 4 million pounds ($5.6 million) in funding. XTX Markets and Alan Howard led the round and was joined by investors including DOCOMO Digital and Henry Ritchotte.
• Igloohome, a Singapore-based provider of smart locks, raised $4 million in funding. Insignia Ventures Partners led the round and was joined by investors including Phillip Private Equity, X Capital Ventures, and Wavemaker Partners.
• Beta Hatch, a Seattle, Wash.-based producer of insects as a sustainable protein for animal feed, raised $2.1 million in seed funding. Investors included Cavallo Ventures, Element 8 Fund, Keiretsu Capital, NQV8, and Frontier Angels.
• Summersalt, a St. Louis-based designer of eco-friendly swimwear, raised $2 million in seed funding. Dundee Venture Capital led the round and was joined by investors including Breakout Capital, Revolution’s Rise of the Rest Seed Fund, Cultivation Capital, Victress Capital, M25, The Syndicate Fund, and Silas Capital.
• North American Wave Engine Corp., a aerospace company, raised $1.45 million in funding. Abell Foundation and the University System of Maryland led the round.
• RoundTrip, an on-demand medical transport firm, raised $1.9 million in funding. The investors were the Abell Foundation, Ben Franklin Technology Partners, Johns Hopkins University, and Brown Advisory.
• YouEarnedIt, an Austin-based employee engagement platform, raised an undisclosed amount of funding. Vista Equity Partners, Ridge Ventures, and Silverton Partners were the investors.
• By CHLOE, a New York-based fast casual vegan restaurant brand, raised an undisclosed amount of funding. Bain Capital Double Impact led the round and was joined by investors including Kitchen Fund, Collaborative Fund, TGP International/Qoot International, and RiverPark Ventures. Read More.
HEALTH AND LIFE SCIENCES DEALS
• ITBMed, a Swedish biopharmaceutical firm, raised up to $67 million in funding. Pablo Legorreta, founder and CEO of Royalty Pharma, led the deal.
PRIVATE EQUITY DEALS
• Temasek will invest up to $38 million in Ezion Holding, a Singaporean ship operator, with funds from Pavilion Capital Fund Holdings. Read more.
• Main Street Capital Corp recapitalized $35.2 million in DPI Inc, a St. Louis, M.O.-based provider of consumer electronics products.
• Quorum, a portfolio company of Silver Lake Partners, acquired Entero Corporation, a Calgary-based oil and gas software maker. Financial terms weren’t disclosed.
• EQT Mid Market, will invest in BBS Automation Gmbh, a manufacturing automation provider with offices in Germany, China, Malaysia, and Chicago. Financial terms weren’t disclosed.
• Alex Meruelo acquired ownership of SLS Las Vegas Hotel & Casino.
• Dunn’s River Brands, backed by Fireman Capital Partners, acquired a majority interest in Temple Turmeric, Inc, a health food maker. Financial terms weren’t disclosed.
• OMV, the Austrian oil and gas group, plans to take a 20% stake in two oilfields in the United Arab Emirates in a $1.5 billion deal with ADNOC. Read more.
• Blackstone seeks to take over Hispania, the Spanish hotel group, via investment vehicle Alzette Investment. Read more.
• Intercontinental Exchange Inc will acquire the Chicago Stock Exchange for an undisclosed amount. Read more.
• Australia’s Macquarie and three Danish pension funds will acquire 88% of TDC, a Danish telecoms company. Read more.
• Nine West Holdings, the U.S. retailer, may file bankruptcy as soon as this week and sell the its Authentic Brands Group, Reuters reports citing sources.
• Unity Biotechnology, a Brisbane, Calif.-based biotech tackling aging diseases, filed for an IPO of up to $85 million. Arch Venture Partners (27.5%), WuXi AppTech (8.9%), Venrock (7.3%), Mayo Clinic (6.9%), Ballie Gifford & Co. (7%), and Fidelity (6.1%) back the firm. Goldman Sachs, Morgan Stanley, and Citi are underwriters in the deal. It plans to list on the Nasdaq as “UBX.” Read more.
• Canaan Creative, a Hangzhou-based cryptocurrency mining maker, is weighing an IPO in China or Hong Kong. Read more.
• HNA Group, the Chinese insurance giant, will sell some or all of its $6.3 billion stake in Hilton Worldwide Holdings. Read more.
• Ardian, the French buyout group, plans to sell its stake in Encevo, a Luxembourg-based utility firm, Reuters reports.
• SSENSE, a Montreal-based fashion retailer, acquired Polyvore, a Mountain View, Calif-based ecommerce firm, from Oath Inc. Financial terms weren’t disclosed.
FIRMS + FUNDS
• General Atlantic raised $3.3 billion in a fund from 159 investors, per an SEC filing.
• Makers Fund, a San Francisco-based venture fund, raised $200 million. Read more.
• Unusual Ventures Fund, a venture fund formed by former Lightspeed Venture partner John Vrionis, raised $160 million for its first fund, an SEC filing revealed.
• Razor’s Edge, a Reston, Va.based venture capital fund, raised $158.8 million for its second fund.
• Bowside Capital, a Charleston, S.C.-based firm, raised $34.5 million for its fourth fund, according to an SEC filing.
• Adrian R. Ironside was named partner at Guardian Capital Partners.