NO NEW FUND
Happy Friday, Term Sheet readers.
SV Angel, the prominent seed stage venture capital firm, will not be raising a new fund from outside investors. Ron Conway and his son Topher, who manage the firm, said they will be investing their own money in startups from now on.
The Conways will continue to use the SV Angel brand going forward, but they will be cutting much smaller checks — to the tune of $25,000 to $100,000 per company.
The firm had raised $53 million for its latest fund in late 2016. It will now part ways with partners Brian Pokorny, Kevin Carter and Robert Pollak, who will reportedly remain advisers to SV Angel.
Founded in 2009, SV Angel was one of very few seed funds, and it made early bets on Facebook, Twitter, and Airbnb. But now, it’s competing in an increasingly crowded and competitive market flush with capital. The firm wrote in a Medium post:
Today there are thousands of firms and individuals investing in seed rounds. Seed investors are raising larger funds, becoming more ownership-focused and investing primarily on adoption and traction. Seed investing now encompasses both backing founders at the earliest stages of a company and investing in teams with early-adoption. The amount of money raised in seed rounds has doubled and valuations have increased significantly.
Again, this doesn’t really come as a shock. As we have pointed out time & time again in the last year, the seed stage has become increasingly crowded, competitive, and expensive. VCs are raising larger funds, writing bigger checks, and inflating already-inflated startup valuations. Put simply, it’s getting expensive to invest in companies whose seed rounds are really the equivalent of Series A rounds.
According to PitchBook, roughly two-thirds of the deals they analyzed in 2017 were between $1 million and $5 million, while only about 5% were between $500,000 and $900,000 — which was once the typical range for a seed deal.
In January, we saw Arena Ventures, the Los Angeles-based early-stage venture capital firm, say that it would pause seed investing “until the seed market corrects.” Arena managing partner Paige Craig sent out a private letter to LPs laying out concerns about the seed market — overvalued seed companies, excessive capital supply, and imbalanced market forces.
Two months later, Craig halted all seed investing through the fund and joined electric scooter company Bird as its head of U.S. city operations. Bird is actually a beautiful example of this trend — a company that raised $3 million in seed funding last June, $15 million in Series A in February, $100 million in Series B in March, and another $150 million (at least) in May. And BAM, in less than a year, we’ve got a scooter unicorn on our hands.
Everything is bigger in 2018.
NEW CRYPTO FUND: Binance, the world’s largest crypto exchange based on daily trade volumes, announced a $1 billion fund to back blockchain and crypto startups. Read more.
MONSTER ICO: Headphones maker Monster Products is planning to hold one of the biggest initial coin offerings of all time. The company is looking to raise as much $300 million in an ICO for its Monster Money Tokens. It plans to use the capital to create an Ethereum-based e-commerce platform under the name Monster Money Network. To hedge itself, Monster is also issuing 75 million shares of common stock. If the e-commerce plan doesn’t work, Monster Products will allow investors to redeem tokens for shares of stock at a four-to-one ratio rather than return their funds, according to Bloomberg.
Q FOR YOU: If you work at a traditional venture capital or private equity firm, I’m curious to hear how you are thinking about these initial coin offerings and new blockchain/crypto-focused funds? Reply to this email & share some insight with me.
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• Ripple CEO Says Bitcoin Is the 'Napster of Digital Assets' (by Polina Marinova)
• 125 Million Electric Vehicles Will Be on the Road by 2030 (by Sarah Gray)
VENTURE DEALS
• Chime, a San Francisco-based challenger bank known for consumer-friendly features and lack of fees, raised $70 million in Series C funding at a $500 million valuation. Menlo Ventures led the round. Investors include Forerunner Ventures, Aspect Ventures, Cathay Innovation, Northwestern Mutual, Crosslink Capital, and Omidyar Network.
• Protean Electric, an Auburn Hills, Mich.-based automotive technology company, raised $40 million in funding. Weifu High-Technology Group Co Ltd and Oak Investment Partners co-led the round.
• CleanSlate, a Nashville, Tenn.-based company focused on outpatient pharmacological treatment for the chronic disease of addiction, raised $25 million in a funding. HealthQuest Capital led the round, and was joined by investors including Granite Growth Health Partners.
• Azimo, a U.K.-based digital money transfer service, raised $20 million in Series C funding. Rakuten Capital led the round, and was joined by investors including e.ventures, Frog Capital, GR Capital Partners, Greycroft Partners, MCI, Quona Capital and Silicon Valley Bank.
• CyberInt, an Israel-based cybersecurity detection and response services company, raised $18 million in funding. Viola Growth led the round.
• Kneron, a San Diego-based provider of edge artificial intelligence solutions, raised $18 million in funding. Horizons Ventures led the round.
• Honest Buildings, a New York City-based project management platform for real estate owners, raised $5 million in funding. First Capital Realty led the round.
• Pingboard, an Austin, Texas-based developer of a real-time organization chart software, raised $5 million in seed funding. Active Capital led the round, and was joined by investors including Bill Boebel, Silverton Partners, and Capital Factory.
• Weights & Biases, a San Francisco-based company that builds tools for machine learning developers, raised $5 million in Series A funding. Investors include Trinity Ventures and Bloomberg Beta.
• ConDati, a Palo Alto, Calif.-based provider of next-generation analytics for digital marketing, raised $4.75 million in Series A funding. The investors were not named.
• NorthOne, a Canada-based mobile digital-only banking platform, raised $2 million in seed funding. Investors include Peter Graham, Tom Williams, and Ferst Capital Partners.
HEALTH AND LIFE SCIENCES DEALS
• Cortexyme, Inc., a San Francisco-based clinical-stage pharmaceutical company developing therapeutics to alter the course of Alzheimer’s disease and other degenerative diseases, raised $76 million in Series B funding. Investors include Sequoia Capital, Vulcan Capital, Verily Life Sciences, EPIQ Capital Group, RSL Investments, and Huizenga Capital. Existing investors Pfizer, Takeda Ventures, Lamond Family, Breakout Ventures, and Dolby Family Ventures participated.
PRIVATE EQUITY DEALS
• Aquiline Capital Partners acquired Aspirion Health Resources, a Columbus, Ga.-based tech-enabled revenue cycle management company helping hospitals navigate less common sources of health coverage. Financial terms weren't disclosed.
• Thoma Bravo agreed to acquire a majority stake in LogRhythm, a Boulder, Colo.-based provider of security information and event management solutions. Financial terms weren't disclosed.
• Bain Capital Private Equity agreed to recapitalize TriTech Software Systems, a San Diego, Calif.-based provider of public safety software. Financial terms weren't disclosed.
• Cache Creek Industries, agreed to acquire Mountain Secure Systems, a Longmont, Colo.-based provider of proprietary electronic solutions to defense contractors in the United States. The seller was Phillips Service Industries, Inc. Financial terms weren't disclosed.
• The Carlyle Group acquired Accolade Wines, a U.K.-based wine company. Financial terms weren't disclosed.
• SK Capital Partners agreed to acquire SI Group, a Schenectady, N.Y.-based developer and manufacturer of performance additives and intermediates. Financial terms weren't disclosed.
OTHER DEALS
• ParkWhiz acquired CodiPark, an Israel-based SaaS company focused on parking solutions. Financial terms weren't disclosed.
IPOs
• Neon Therapeutics, a Cambridge, Mass.-based immuno-oncology firm, filed for a $115 million IPO. The firm has yet to post a revenue. Third Rock Venture (44.4% pre-offering), Access Industries Holdings (12.7%), and Fidelity (7.5%) back the firm. Morgan Stanley, BofA, and Mizuho Securities are underwriters in the deal. The firm plans to list on the Nasdaq as “NTGN.” Read more.
• Adaptive Insights, a Palo Alto, Calif.-based business-planning-cloud software maker, says it plans to raise $114.8 million in an IPO of 8.2 million shares priced between $13 to $15. The firm posted revenue of $93.9 million the 12 months ending Jan. 31, 2018. Onset Ventures (17.9% pre-offering), Norwest Venture Partners (16.5%), Bessemer Venture Partners (11.7%), and Information Venture Partners (11.2%) back the firm. Morgan Stanley, BofA, Jefferies, and RBC Capital are underwriters in the deal. The firm plans to list on the NYSE as “ADIN.” Read more.
• Neuronetics, a Malvern, Penn.-based firm treating depression with magnets, filed for an $86.3 million IPO. The firm posted revenue of $40.4 million in 2017. Investor Growth Capital (15.9% pre-offering), Onset Management (8.9%), InterWest Partners (9.2%), New Leaf Ventures (13.7%), and Polaris Venture Partners (7.3%) back the firm. Piper Jaffray and William Blair are underwriters in the deal. It plans to list on the Nasdaq as “STIM.” Read more.
• European Medical Center, a Russian private health clinic, is weighing an IPO this year. Read more.
EXITS
• Corsair Capital acquired Jackson Hewitt Tax Service Inc, a Jersey City, N.J.-based tax preparation service. The seller was H.I.G. Bayside Capital. Financial terms weren't disclosed.
• Box acquired Progressly, a Redwood City, Calif.-based startup that focuses on workflow. Financial terms weren't disclosed. Progressly had raised approximately $6 million in venture funding from investors including Sway Ventures, 8VC, and A-Level Capital.
FIRMS + FUNDS
• Mill Point Capital, a New York-based private equity firm, raised $450 million for its first fund, Fund I.
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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.
