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Term Sheet — Friday, September 28

THREE THINGS

Good morning, Term Sheet readers.

TESLA TROUBLE: This is what happens when you aren’t careful on Twitter. The SEC sued Tesla CEO Elon Musk for violating securities fraud laws Thursday afternoon, alleging his Aug. 7 tweet about having “funding secured” to take Tesla private was “false and misleading.” “Neither celebrity status nor reputation as a technological innovator provide exemption from federal securities laws,” said Stephanie Avakian, co-director of the SEC’s division of enforcement. For a full timeline of the evidence the SEC is using in its case against Musk, read more here.

DIRTY DEALINGS: I first reported on ‘Uber for trash’ startup Rubicon Global almost exactly one year ago when I reviewed multiple pitch decks presented to potential investors and spoke with former employees, former and current executives, potential investors who met the team and evaluated the company, and waste industry analysts.

At the time, I raised concerns about the company’s growth, tech capabilities, and executive turnover. Rubicon acquired three waste brokers this summer, which was a surprising move given that it has marketed itself as the “Uber for trash,” and being a waste brokerage is a descriptor the company has long resisted. I noted that it was worth watching whether Rubicon pivots to a more traditional, brokerage business or whether it stays course as a sophisticated, high-growth startup.

Now, the company is restructuring, and Rubicon confirmed to Term Sheet this morning that it has laid off 44 (!) of its employees.

“In the process of incorporating the acquired companies, we recognized that our revised sales structure had increased elements of digital sourcing, as well as created overlapping areas through the acquired companies,” according to an emailed statement. “We evaluated our overall workforce, our synergies and our needs for the future, and accordingly, 44 employees were offered severance packages and have left the company. We wish them all the very best and we move forward as one Rubicon team.”

Rubicon declined to share growth or revenue numbers. It also continues to cycle through executives with a new president and CFO coming on this fall. (The last president was at the company for 7 months and the outgoing CFO for a year and two months.)

Why continue reporting on this? Because Rubicon is not a trivial startup—it’s valued at more than a billion dollars, with hundreds of millions of dollars raised and a history of talking seriously about an IPO. The company is a reminder that big ambitions, positive press, and slick marketing are not enough to stop investors and reporters from asking the hard questions.

As a reminder, you can find Term Sheet’s anonymous tip box here.

A CRYPTO POWERHOUSE: Kathryn Haun put some of the earliest Bitcoin criminals in jail. Now, she’s one of the world’s most important crypto investors in her new role as general partner at venture firm Andreessen Horowitz. My colleague Robert Hackett profiles Haun in the newest issue of Fortune Magazine. Here’s an excerpt:

In 2012, Haun heard about Bitcoin for the first time when one of her bosses asked her to prosecute it—whatever it was. The currency was virtually unknown at the time, but Haun soon understood its underbelly. In the early days, crooks, pornographers, and other unsavory types adopted the cryptocurrency as a preferred means of transferring money.

The next year Haun created the first federal “digital currency task force,” a collaboration among the Justice Department, the IRS, the Treasury’s Financial Crimes Enforcement Network, and other agencies. The team investigated a fatal hack of Mt. Gox, then the world’s biggest Bitcoin exchange. It went on to lead a takedown of BTC-e, a crypto exchange the feds charged with money laundering. (Multiple countries continued to argue over the alleged proprietor’s extradition.)

The prosecutions made Haun a known quantity in Silicon Valley, where investors were trying to figure out if the field would be as ripe for legitimate startups as it was for criminals. “She showed an incredible entrepreneurial flair,” says Josh Stein, CEO of Harbor, an Andreessen Horowitz–backed crypto startup that aims to “tokenize” traditional securities. “She turned that first case into a string of cases, into a specialty, into a public persona, into producing public policy for the good of society.”

Read the full feature here.

VENTURE DEALS

Nozomi Networks Inc, a San Francisco-based provider of real-time cybersecurity and operational visibility for industrial control systems, raised $30 million in Series C funding. Investors include Planven Investments SA, GGV Capital, Lux Capital, Energize Ventures and THI Investments.

Softomotive, a company focused on Robotic Process Automation (RPA), raised $25 million in Series A funding, from Grafton Capital.

Netradyne, a San Diego, Calif.-based company developing artificial intelligence technology focusing on driver and fleet safety, raised $21 million in Series B funding. Investors include Reliance Industries Limited (through its subsidiary RIIHL) M12, and Point72 Ventures.

Guardhat, a Detroit-based internet of things industrial safety technology developer, raised $20 million in Series A funding. RTP Ventures led the round, and was joined by investors including 3M Ventures, Caterpillar Venture Capital, Revolution’s Rise of the Rest Seed Fund, SVB and DVP.

LiveSafe, an Arlington, Va.-based provider of a mobile safety communications platform, raised $11 million in Series B-1 funding. Investors include Hearst, Enterprise Investment Partners, L.P, IAC, Dave Duffield, Revolution’s Rise of the Rest Seed Fund, GXPI, and the Kilberg family.

Source Defense, an Israel and Stamford, Connecticut-based provider of prevention solutions for website supply-chain attacks, raised $10 million in Series A funding. Investors include AllegisCyber, Jerusalem Venture Partners, Global Brain and Connecticut Innovations.

Covr Financial Technologies, a Boise, Idaho-based life insurance platform for financial institutions, raised $10 million in Series A funding. Investors include Nyca Partners, Commerce Ventures, Countour Venture Partners, Connectivity Capital Partners and Allianz Life Ventures.

HqO, a Boston-based tenant experience platform for commercial real estate, raised $6.6 million in seed funding. Investors include Accomplice, Navitas Capital and Pritzker Group Venture Capital.

SoloLearn, a Pleasanton, Calif.-based coding community, raised $5.6 million in funding. Naspers led the round, and was joined by investors including Learn Capital.

Goals101, an India-based provider of big data platform solutions, raised $3.5 million in pre-series A funding from Nexus Venture Partners.

The Alexa Fund made investments in three early-stage voice startups Bamboo Learning, Endel and Aiva. Financial terms weren’t disclosed.

HEALTH AND LIFE SCIENCES DEALS

KSQ Therapeutics, a Cambridge, Mass.-based preclinical-stage biotech, raised $80 million in Series C funding. The investors were not named.

Akrevia Therapeutics, a Cambridge, Mass.-based biopharmaceutical company focused on developing immuno-oncology therapeutics, raised $30 million in Series A funding. F-Prime Capital Partners and Atlas Venture co-led the round.

PRIVATE EQUITY DEALS

OSG Billing Services, a portfolio company of Aquiline Capital, acquired Applied Revenue Analytics, a Temple, Texas-based provider of healthcare IT and business intelligence solutions for hospitals and health systems. Financial terms weren’t disclosed.

Crown Laboratories, a portfolio company of Hildred Capital Partners LLC, acquired Bellus Medical, an Addison, Texas-based provider of medical aesthetics treatments. Financial terms weren’t disclosed.

Great Point Partners agreed to sell Clinical Supplies Management, a  Malvern, Penn.-based provider of clinical trials drug packaging, labeling and logistics solutions for the global life science, pharmaceutical and biotechnology industries. Financial terms weren’t disclosed.

Nautic Partners acquired Mikart Inc, an Atlanta-based contract development and manufacturing organization. Financial terms weren’t disclosed.

IPOs

Lyft, the ride sharing giant, is reportedly in talks with J.P. Morgan in search of underwriters, Reuters reports citing sources. Read more.

Gritstone Oncology, an Emeryville, Calif.-based preclinical biotech for immuno-oncology drugs, raised $100 million in an offering 6.7 million shares priced at $15, an upsized offering at the high end of its range. Versant Ventures (14% pre-offering), The Column Group (14%), and Clarus Lifesciences (10%) back the firm. The firm posted loss of $41.5 million in 2017. Goldman Sachs, Cowen, and Barclays are underwriters. It plans to list on the Nasdaq as “GRTS.” Read more.

CooTek, the Shanghai-based maker of an input method for mobile devices, says it plans to raised $52 million in an IPO of 4.4 million ADSs priced at $12, the low end of its $12 to $14 range. Qiming Funds (18.2%), Sequoia (17.9%), and SIG China (14.2%) back the firm. Credit Suisse, BofA Merrill Lynch and Citi are underwriters in the deal. It plans to list on the NYSE as “CTK.”  No pricing terms were disclosed. Read more.

EXITS

Mid Europa Partners acquired Urgent Cargus, a Romanian courier company, from Abris Capital Partners. No financial terms were disclosed.

Battery Ventures agreed to acquire TTP Labtech Ltd, a U.K.-based developer and manufacturer of automated laboratory equipment, from the TTP Group. Financial terms weren’t disclosed.

FIRMS + FUNDS

Arrowroot Capital, a Santa Monica-based private equity firm, seeks to raise $315 million for its fourth fund, according to an SEC filing.

NovaQuest Capital Management, a Raleigh-based private equity and venture capital firm, raised more than $95 million for its debut private equity fund, according to an SEC filing.

PEOPLE

Evolution Equity Partners named Karthik Subramanian as a partner.

Brian Sapp joined Runway Growth Capital as managing director. Previously, he was at Hercules Capital.

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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.