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Term Sheet — Thursday, October 18

5 Qs WITH A DEALMAKER

Founders Fund partner Cyan Banister says capitalism saved her life.

Banister, who has made early bets on companies including Uber, SpaceX, and Postmates, was once a homeless high-school dropout who believed that corporations were pure evil. One paycheck, she said, is what fundamentally uprooted her entire world view.

“Literally it was a paycheck,” she told Term Sheet. “I realized that if I work hard, I get this check, and with this check, I can build my own businesses and lift myself up out of poverty. I began thinking, ‘Clearly, I can make more money than this. I just need to figure out how to play the game.’”

That game was capitalism. As a result, Banister has become a strong proponent of incrementalism, which is the notion of focusing on the next gradual step ahead, as well as individualism, which favors thinking independently and being self-reliant.

It’s difficult to describe Banister as she does not fit perfectly in any box, but here’s how Shrug Capital founder Niv Dror described her to me: “She likes to invest in weird things, sees things super early and just gets it.”

I was originally supposed to speak with Banister for 30 minutes, but our conversation lasted for more than an hour. In this wide-ranging interview, she talks about the value of independent thought, social media as a silencing tool, and why she thinks Elon Musk needs more sleep.  Read the full Q&A here.

TERM SHEET: At TechCrunch Disrupt, you said you started out as a socialist but capitalism saved your life. That’s a pretty extreme shift, so can you elaborate on how that happened?

BANISTER: Like many people, I am a child of public education, and in school they don’t teach you much about capitalism, so you learn based off of gut instinct. If you’re someone who cares about other people, you think that corporations are evil, people who have lots of money are evil, and wealth distribution should be a thing because it seems like the only fair option.

If I had gone out in the world saying, “I want my fair share,” I probably would’ve had a very miserable time. Instead, I started working and realizing I was working for business owners. It’s easy to say, “They’re business owners, therefore, they’re evil and greedy,” but instead, I started seeing them as heroic. I started to understand that this entrepreneur has put everything aside in their life to start a record store so that I could have a job. And that’s when I started realizing that this capitalism thing wasn’t so bad after all.

That was the wake-up call I had as a kid where the entrepreneur became this heroic figure in my life versus seeing them as the Antichrist. I mean, all of my friends saw every business owner on the planet as someone who was trying to exploit labor.

You tweeted a few days ago that “It’s super easy to agree with a vocal group. It’s harder to try to have independent thought and stumble and risk being wrong.” Do you think the tech ecosystem has become less interested in the diversity of thought?

BANISTER: Yes, I do. I absolutely think they talk a good talk about it, but they don’t walk the walk. It used to be that the Apple slogan of “Think different” was something people embraced. Now, it seems like it’s “Think the same or suffer.” It’s gotten a little ridiculous.

People like Kanye West are a really good example of this. Kanye is trying to make some really interesting points— one being that you don’t have to be black and be Democrat. He’s not saying you have to be Republican. You can be independent. You can be libertarian. You can be whatever you want is basically what he’s saying.

And the other issue is when he talked about abolishing the 13th Amendment [which abolished slavery and involuntary servitude, except as a punishment for a crime for which someone had been convicted.] He was talking about modern-day slavery, which is people being incarcerated at a rate that is unbelievable and then they’re used for prison labor. That’s what he was talking, but people were just like, “Yeah, whatever.”

He also said that slavery was a choice. He did not mean it that way; he meant that there’s a certain mindset you get into where you start to become complacent with the situation. What he doesn’t realize is that it was a very misguided and poor choice of words, but at the same time, these days, we don’t have the freedom to have a poor choice of words. You get crucified. I really miss the time where you could just put something out there and people could say, “You know, that’s a really crappy thing to think, and you’re super wrong about this issue.” That’s what should’ve happened to Kanye, but instead, people are calling him mentally ill.

I hate seeing this because I don’t agree with everything Kanye West says, but I respect the hell out of the fact that he’s trying to say something. That’s what Founders Fund stands for — we have people across the religious spectrum and the political spectrum, but we respect the heck out of each other. What happens is we have discourse with one another that is respectful, and that’s the most important tenet of a productive work environment.

You invested in Uber’s seed round (which had a pre-money valuation of less than $4 million). Some of the companies you’ve invested in were considered moonshots at the time you wrote the check. What gives you the conviction to bet on a company early on that other investors shy away from?

BANISTER: There’s this narrative that people will tell you when they’re trying to raise money. I look at the narrative and I look at the person, and I try to figure out first and foremost — Does the narrative fit the person? You can tell whether it’s a person who has found some sort of market niche that they’re just trying to exploit, and they’re pretending to be passionate. Those are the people I don’t think are going to win. And then there are the people who think about it day and night and look in the mirror and dream about this thing they’re trying to solve.

Then I ask myself: “Do I believe what you’re building is a fundamental shift in human behavior?” Then I have to try to imagine, literally daydream, people walking around collecting Pokemon, for example. It was hard for other people to imagine this, but it was easy for me because I had played the game they made before Pokemon Go. I got to experience the magic of what it’s like for eight people to get together, roam the earth, and play a game on top of the physical world.

The same thing happened with Uber. The narrative that people had against it was, “Nobody will get in a car with a stranger.” I was like, “You know, I get in cars with strangers all the time. I get in cabs. And they come with these taxi ID numbers, but if I ever had a problem with one, I’m not even sure that there’s anything I could do about it. Uber, on the other hand, is a system with accountability and reputation built in. It’s a way better system.”

I also have this mantra of: “If you give people their time back, they will love you forever.” So one of the things I’m looking for are solutions that gives people back the most precious thing they have in their lives, which is our time.

Those are the things I look for when people are pitching me, because like you said, otherwise it’s a total moonshot. And I’ve been wrong, but I always go back to figure out where I made my mistake.

Elon Musk has been under fire for his tweets and performance at Tesla. As someone who is familiar with his management style, what is your impression of him as a CEO?

BANISTER: He needs to sleep. It just comes down to that. I think he has taken on more than he can chew, and he needs to offload more of this on other executives. He probably needs a much more robust executive team. He tends to be very hands-on and likes to be in the thick of it. Both companies [Tesla and SpaceX] are tremendously amazing — one is revolutionizing the car industry and the other is revolutionizing the space industry. It’s just super ambitious to try to run both of these companies at the same time, so I just think what you’re seeing is a man who needs to sleep.

People who are overachievers and operate at such a high level sometimes try to figure out magical ways of evading sleep so they can achieve more, but it comes at such a high cost. If you don’t sleep enough, and you’re trying to do too much, your judgement is impaired.

Elon Musk recently reached a settlement with the SEC after allegations that he violated securities fraud over his abandoned attempt to take Tesla private. How do you respond to criticism that he’s being irresponsible as the CEO of a public company?

BANISTER: I think he could be more responsible. I think he knows he could be more responsible. He’s self-aware of what’s going on. I wish people would have a little more heart, but it’s hard because it’s a public company and people are shareholders. At the same time, a little more understanding is required that this isn’t a typical situation of Bill Gates with Microsoft. This is a situation where someone who is super smart and super driven is trying to operate two companies at the same time, and it’s not clear that either one would flourish without him.

I think people should offer to give advice and try to help fix the situation rather than trying to tear him down. When entrepreneurs reach this heroic status, people try to tear them down. You can never be too good. You see it happening with Jeff Bezos too. If you reach this level of success, people will do anything to tear you down if you have any holes in your armor anywhere.

Read the full Q&A here.

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VENTURE DEALS

Vacasa, a Portland, Ore.-based vacation home rental company, raised $64 million in funding. Riverwood Capital led the round, and was joined by NewSpring, Level Equity and Assurant Growth Equity.

WhiteSource, an Israel-based provider of IT security for open-source software developers, raised $35 million in funding. Susquehanna Growth Equity led the round, and was joined by 83North and M12.

Unifonic, a Saudi Arabia-based provider of cloud communications software for emerging markets businesses, raised $21 million in funding. STV led the round, and was joined by investors including RTF, Endeavor Catalyst, ELM, and Raed Ventures.

Cognata, an Israel-based autonomous driving simulation startup, raised $18.5 million in funding, according to TechCrunch. Scale Venture Partners led the round, and was joined by Emerge, Maniv Mobility, Airbus Ventures, and Global IoT Technology Ventures. Read more.

Cobo, a Beijing-based cryptocurrency wallet startup, raised $13 million in Series A funding, according to TechCrunch. The round was led by DHVC and Wu Capital. Read more.

SafeTraces, a Pleasanton, Calif.-based food safety technology company, raised $10 million in funding. S2G Ventures and Bunge Ventures led the round, and was joined by UL Ventures and Spero Ventures.

FundGuard, a New York-based company that makes AI-driven technology for investment fund managers, raised $4 million. Blumberg Capital and LionBird led the round.

Invisible, a New York-based AI startup that lets users outsource work to a task-managing bot, raised $2.6 million in seed funding. Investors include Backed Ventures, Loup Ventures, Horizons Alpha, and Day One Ventures, along with Mark Pincus, Siraj Khaliq, Howard Morgan, Charlie Songhurst, and Lee Linden.

HEALTH AND LIFE SCIENCES DEALS

Acticor Biotech, a Paris, France-based clinical stage biotech company focused on thrombotic disease treatments, raised 15.3 million euros ($17.6 million) in Series B funding. Newton BioCapital led the round, and was joined by, Mirae Capital, CMS Medical Venture Investment Limited, A&B and CapDecisif Management.

PRIVATE EQUITY DEALS

ORIX Growth Capital invested $20 million in Infusionsoft, a Chandler, Ariz.-based provider of customer relationship management software for small businesses.

Aventri, a portfolio company of HGGC, acquired ITN International, a Bethesda, Md.-based event software company. Financial terms were not disclosed.

Warburg Pincus invested an undisclosed amount in Capillary Technologies, a Shanghai-based provider of AI-driven consumer loyalty and analytics services.

Prism Spectrum Holdings, a portfolio company of White Oak, acquired AAIS, a West Haven, Conn.-based asbestos abatement and demolition contractor. The financial terms were not disclosed.

OTHER DEALS

Alibaba agreed to invest $288 million in a Chinese wine and spirits online retailer called 1919.cn, according to Reuters. Read more.

Gores Holdings II, a special purpose acquisition company backed by The Gores Group, acquired Verra Mobility, a portfolio company of Platinum Equity that manages toll transactions and traffic violations for commercial and rental car fleets. Financial terms were not disclosed.

OptimizeRx acquired CareSpeak Communications, a private health care messaging company, for $9 million.

Accenture acquired TargetST8 Consulting, a corporate and commercial lending services and advisory firm. Financial terms were not disclosed.

Aakash Chemicals & Dye-Stuffs, a portfolio company of CenterOak Partners, acquired Sandream Impact, a Fairfield, N.J.-based specialty chemical and colorant supplier. Financial terms were not disclosed.

IPOs

SolarWinds, an Austin, Texas-based IT infrastructure management software maker, has scaled back the size of its proposed IPO. It now plans to raise $387.5 million in an offering of 25 million shares priced between $15 and $16, down from its initial proposed $756 million IPO with 42 million shares priced between $17 and $19. The company posted revenue of $213.8 million in 2017 and loss of $351.8 million. Thoma Bravo Funds and Silver Lake back the firm. Goldman Sachs, J.P. Morgan, Morgan Stanley, Credit Suisse, BofA Merrill Lynch, Barclays, Citi, Evercore ISI, Jefferies, Macquarie Capital, Nomura Securities and RBC Capital Markets are the underwriters. It plans to list on the NYSE as “SWI.” Read more.

Studio City International Holdings, a Macau-based gaming and entertainment resort company, raised $359 million in an IPO of 28.8 million American depositary shares (ADS) priced at $12.50, according to Bloomberg. The firm posted revenue of $539.8 million and a loss of $76.4 million in 2017. Silver Point Capital backs the firm. Deutsche Bank, Credit Suisse, and Morgan Stanley are bookrunners. The company plans to list on the NYSE as “MSC.” Read more.

•  Niu Technologies, a Beijing, China-based lithium-ion electric scooter maker, has reduced the size of its proposed IPO. It now plans to raise $78.9 million in a US IPO of 8.3 million American depositary shares priced between $9 and $10. It had previously hoped to raise $95 million with shares priced from $10.50 to $12.50. The company posted revenue of $116.3 million in 2017 and loss of $27.9 million. GGV (11.2% pre-offering) backs the firm. Credit Suisse and Citigroup are underwriters. It plans to list on the Nasdaq as NIU.” Read more.

PhaseBio Pharmaceuticals, a Malvern, Penn.-based early-stage biotech developing rare disease treatments, raised $46 million in an IPO of 9.2 million shares priced at $5, below the range of $12 to $14. It had originally planned to raise $65 million in an offering of 5 million shares. The company has yet to generate revenue, and recorded a loss of $10.2 million in 2017. New Enterprise Associates, Zeneca, and Hatteras Venture Partners back the firm. Citi, Cowen and Stifel are bookrunners. It plans to list on the Nasdaq under the ticker symbol “PHAS.” Read more.

EXITS

The E.W. Scripps Company agreed to acquire Triton, a Sherman Oaks, Calif.-based provider of digital audio technology to the music streaming and podcast industry, for $150 million. The seller is Vector Capital.

Crestview Partners agreed to acquire Elo Touch Solutions, a Milpitas, Calif.-based provider of touchscreens for point of sale systems and self-service kiosks, from the Gores Group. Financial terms were not disclosed.

DuBois Chemicals acquired Water Treatment Solutions from Triwater Holdings, a portfolio company of Edgewater Funds. Financial terms were not disclosed.

Revolution Medicines acquired Warp Drive Bio, a Cambridge, Mass.-based biotech startup backed by Third Rock Ventures, Greylock and Sanofi.

FIRMS + FUNDS

• Tricia Black, the seventh employee at Facebook, has launched a new VC firm called Amplifyher Ventures. The New York-based fund will invest in early stage startups with female founders. It has raised an undisclosed amount of capital and is not currently accepting additional investments.

Vista Equity Partners, an Austin, Tx.-based private equity firm, has raised $11.4 billion for its seventh fund, according to The Wall Street Journal. The target is reportedly $16 billion. Read more.

C-III Capital Partners, an Irving, Tx.-based asset management and real estate investment firm, has raised $478 million for its latest private equity fund, according to an SEC filing.

Cordillera Investment Partners, a Silicon Valley-based private equitiy firm, has closed its second fund with $362 million in commitments.

Green Leaf Capital Partners, a Danville, Calif.-based private equity firm, has raised $228 million for its fourth fund, according to an SEC filing. The target is $300 million.

Castle Creek Capital Partners, a Rancho Santa Fe, Calif.-based private equity firm, has raised $144.4 million for its seventh fund, according to an SEC filing.

FSN Capital, a U.K.-based private equity firm specializing in investments in Northern Europe, has raised $83.4 million for a new fund, according to an SEC filing.

Benchmark, the Silicon Valley VC firm, has raised $77.5 million for its ninth flagship fund, according to an SEC filing. It is targeting $425 million, Term Sheet previously reported.

PEOPLE

Jimmy Frye has joined O2 Investment Partners as an associate.

Shasta Ventures promoted Nikhil Basu Trivedi to managing director.

Jim Brisimitzis has joined Quake Capital as a managing partner. He was previously at Microsoft.

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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.