FUNDING SECURED
Good morning, Term Sheet readers.
It was the tweet heard ‘round the world: “Am considering taking Tesla private at $420. Funding secured,” Tesla CEO Elon Musk tweeted on Tuesday.
Minutes later, chaos ensued, shares rose, and frantic reporters scrambled to figure out what was going on. Let’s deconstruct.
Wait, what? Though some speculated that the tech billionaire was joking, it seems he could be serious about taking Tesla private. At $420 a share, the company would have an enterprise value of about $82 billion, including debt. In order to take Tesla private, Musk would have to pull off the largest leveraged buyout in history.
Why would he do this? Tesla is the most shorted stock in the history of the stock market — and Musk doesn’t like that. In a letter to employees, he outlined some of the reasons for his decision. “The reason for doing this is all about creating the environment for Tesla to operate best,” he wrote. “As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.” Quarterly earnings reports, Musk adds, may distract from the long-term picture.
Who would the investors in the deal be? Musk’s first tweet came less than an hour after the Financial Times disclosed that Saudi Arabia’s Public Investment Fund had amassed a stake of 3 to 5% this year, which makes it one of Tesla’s largest investors. That stake would be worth approximately $2 billion. But nothing is confirmed and other speculation is that the funding could come from SoftBank or Tencent.
Is this likely? According to an analyst at Bloomberg Intelligence, the buyout is “highly unlikely” because “funding $50 billion plus for a negative free cash flow business would be difficult, if not extraordinary.” But if it does happen, it shouldn’t come as a surprise. For those paying attention, this is something Musk has been thinking about for a while. In a November 2017 Rolling Stone profile of Musk, he said, “I wish we could be private with Tesla. It actually makes us less efficient to be a public company.”
What are some lingering questions? Well, there are a lot. Here’s a good list of some of the most pertinent.
Whatever happens, this wild ride will be one to watch.
EXCLUSIVE: Little has been written about ex-Sequoia partner Timothy Lee after he left the firm in 2015. He had been with Sequoia for five years investing in early-stage companies such as App Annie, Thanx, and Shopular, after having spent time at Google and McKinsey. In the last three years, Lee has quietly funded, built, and sold a sports media company called Avid AI. Today, Avid AI is getting acquired by FITE, a premium digital network that streams live combat sports, in a cash and stock transaction. Read the full story here.
VENTURE DEALS
• Slack, a San Francisco-based team communication platform, is raising $400 million or more in funding, with a post-money valuation of at least $7 billion, according to TechCrunch. Read more.
• Actifio, a Waltham, Mass.-based enterprise Data-as-a-Service (DaaS) software provider, raised $100 million in funding at a $1.3 billion valuation. Crestline Investors led the round, and was joined by investors including North Bridge Venture Partners, 83North, Advanced Technology Ventures, Heritage Group, and Andreessen Horowitz.
• Dynamic Yield, an Israel-based AI-powered omnichannel personalization engine, raised $32 million in Series D funding. Viola Growth led the round, and was joined by investors including Union Tech Ventures.
• RiskRecon, a Salt Lake City, Utah-based provider of risk management cybersecurity services, raised $25 million in Series B funding. Accel led the round, and was joined by existing investors including Dell Technologies Capital, General Catalyst, and F-Prime Capital.
• Even Financial, a New York City-based fintech company, raised $18.8 million in Series A funding. GreatPoint Ventures led the round, and was joined by investors including Goldman Sachs, Canaan Partners, F-Prime Capital and Lerer Hippeau.
• Scale, a San Francisco-based helps business working on self-driving vehicles accelerate their AI development, raised $18 million in Series B funding. Index Ventures led the round, and was joined by investors including Accel and Y Combinator.
• Spruce, a national title insurance and escrow company, raised $15.6 million in funding. Investors include Bessemer Venture Partners, Omidyar Network and Collaborative Fund.
• Libra, a New York City-based provider of middle and back office technology and data services for the crypto asset ecosystem, raised $15 million in Series B funding. Investors include Liberty City Ventures.
• AlayaCare, a Canada-based cloud-based software for home and community care providers, raised $13.8 million in Series B funding. Inovia Capital led the round, and was joined by investors including Chrysalis.
• SPARK Neuro, a New York-based company focused on evaluating audience engagement in advertising and entertainment, raised $13.5 million in Series A funding. Thiel Capital led the round, and was joined by investors including Will Smith and Michael Eisner’s Tornante Company.
• Apica Systems, a Sweden-based performance monitoring and testing solutions provider, raised $12.7 million in funding. Investors include Industrifonden, SEB Venture Capital, Oxx and KTH Chalmers Capital.
• Popular Pays, a New York-based operating system for content creation, raised $5.5 million in funding. Beringea led the round.
• Unmade, a London-based fashion software company, raised $4 million in funding. Investors include Felix Capital, Connect Ventures, LocalGlobe, Carmen Busquets, Backed VC and C4 Ventures.
• FloodFlash, a London-based insurtech startup, raised 1.9 million pounds ($2.4 million) in seed funding. Investors include LocalGlobe, Pentech Ventures and InsurTech Gateway.
• Altru Labs, a New York-based recruitment marketing platform, raised $1.3 million in funding. Birchmere Ventures led the round, and was joined by investors including Active Capital and Techstars.
HEALTH AND LIFE SCIENCES DEALS
• Akouos, a Boston-based precision genetic medicine company, raised $50 million in Series A funding. 5AM Ventures and New Enterprise Associates co-led the round, and were joined by investors including Partners Innovation Fund, Sofinnova Ventures, RA Capital Management and Novartis Venture Fund.
• CureGenetics, a China-based biotechnology company focused on developing medicines and molecular diagnostics using gene editing technologies, raised $17 million in Series A funding. Qiming Venture Partners led the round.
PRIVATE EQUITY DEALS
• Optimal Investment Group acquired USA Dawgs Inc, a Las Vegas-based branded footwear distributor. Financial terms weren't disclosed.
• Investcorp and PSP Investments acquired a minority stake in United Talent Agency, a Beverly Hills, Calif.-based talent and literary agency. Financial terms weren’t disclosed.
IPOs
• China Tower, the Beijing-based telecom operator, raised $6.9 billion in a Hong Kong IPO valuing the firm at $28 billion. Read more.
EXITS
• Vista Equity Partners agreed to acquire Alegeus, a Waltham, Mass.-based consumer-directed healthcare payment and processing firm, from Lightyear Capital. Financial terms weren't disclosed.
• Blue Point Capital Partners sold its stake in Selmet, an Albany, Ore.-based maker of titanium castings, to Consolidated Precision Products Corp, which is backed by Warburg Pincus. Financial terms weren't disclosed.
FIRMS + FUNDS
• Quantum Energy Partners, a Houston, Texas-based private equity firm, raised $5.575 billion for its seventh fund.
• ClearSky, a North Palm Beach, Fla.-based venture capital firm, raised $244.7 million for its first security fund, according to a regulatory filing.
• Cowboy Ventures, a Menlo Park, Calif.-based venture capital firm, raised $93 million for its third fund, according to an SEC filing. The target is $95 million.
PEOPLE
• Indy Guha left his position as partner at Bain Capital Ventures to join Signifyd as the VP of enterprise marketing.
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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.
