MASA WATCH 2018
Good morning, Term Sheet readers.
The relationship between Softbank CEO Masayoshi Son and Saudi Arabia’s Crown Prince Mohammed bin Salman remains under scrutiny over the murder of journalist Jamal Khashoggi.
On Friday, we discussed Softbank’s awkward position after it publicly touted that Saudi Arabia’s Public Investment Fund (PIF) contributed nearly half of the money for its $93 billion Vision Fund. Recently, bin Salman announced that he planned to pour another $45 billion into SoftBank’s second Vision Fund.
Various media outlets posited whether the scandal could freeze Softbank out of future deals or whether it would have an impact on subsequent Vision funds.
Looks like the former hasn’t happened (and likely won’t happen) given that Softbank led two massive deals last week — it invested $375 million in food logistics startup Zume (with plans to invest another $375 million at a later date) and poured $1.1 billion into ‘smart window’ glass maker View.
As for the effect on future Vision funds, Son shed some light this morning over whether he plans to shun Saudi Arabia in raising capital for its second tech investment vehicle. In his first public remarks about the Khashoggi controversy, Son condemned the murder, saying it was “a horrible and deeply regrettable act.” He noted that he met with senior Saudi officials to raise his concerns about the incident.
But the bottom line? Son is reluctant to sever social & financial ties with the kingdom. He was careful to position the sensitive issue as his ‘responsibility’ in helping the Saudi people, not the Saudi government.
“We want to see those responsible held accountable. But at the same time, we have also accepted the responsibility to the people of Saudi Arabia — an obligation we take quite seriously — to help them manage their financial resources and diversify their economy,” he said at a SoftBank earnings presentation. “As horrible as this event was, we cannot turn our backs on the Saudi people as we work to help them in their continued efforts to reform and modernize their society.”
According to Recode, Son declined to say whether he would take capital from Saudi’s sovereign wealth fund for a future Vision Fund, but he said he’d be paying attention to how the Saudis explain the Khashoggi death going forward. “For the new cases or new projects, we would like to carefully watch the outcome of the case,” Son said. “And once the explanation is fully made, then we will think about it.”
He added that “as a businessman, I believe I should not be involved in the political side of such a case.” And just like that, Son told us that he’s not willing to put his business relationship with the kingdom on ice. It makes sense — so much of Son’s fate lies in the hands of the Saudi royal family that it’s no surprise he’ll find a way to justify his decision.
It’s now up to founders to decide whether they’ll reject Softbank’s money on moral grounds. As some have predicted, SoftBank could face “a revolt in Silicon Valley,” but just take a look at the first item in the VC deals section below & you’ll see why I’m not expecting that to happen anytime soon.
FUND ALERT: Approximately 2,000 startups and 1,500 investors are arriving at Web Summit today, a three-day technology conference held in Lisbon, Portugal. Looks like Web Summit is attempting to be more than just a regular conference.
The organization filed paperwork with the SEC in May to form its own $50 million venture capital fund named Amaranthine. The fund will take minority stakes in companies across various stages, according to The Financial Times. The fund will be led by Patrick Murphy, previously of Goldman Sachs and Universal’s venture arm, and Web Summit co-founder David Kelly.
“Look, we help some companies in a really huge way for three days,” said Paddy Cosgrave, the chief executive of Web Summit. “What about the other 362 days?” Read more.
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CreditKarma acquires credit reporting service Noddle. The dirty legacy of China’s and India’s growth. London scrambles to deal with quitting the EU. Elon Musk shows off Boring Company‘s Los Angeles tunnel. HQ Trivia was a blockbuster hit but internal turmoil pushed it to the brink. A cryptocurrency millionaire wants to build a utopia in Nevada.
• View Inc, a maker of glass used in internet-connected window panes, raised $1.1 billion in funding from SoftBank.
• HashiCorp, a San Francisco-based cloud infrastructure automation company, raised $100 million in Series D funding. IVP led the round, and was joined by investors including Bessemer Venture Partners, GGV Capital, Mayfield, Redpoint Ventures and True Ventures.
• Astroscale, a Singapore-based developer of a space debris removal service to secure long-term spaceflight safety, raised $50 million in funding. INCJ Ltd led the round, and was joined by investors including SBI Investment Co. Ltd and Mitsubishi Estate Co. Ltd.
• Rockset, a San Mateo, Calif.-based serverless search and analytics company, raised $21.5 million in funding. Investors include Greylock Partners and Sequoia Capital.
• PlayerLync, a mobile content platform for modern learning and performance management, raised $12.5 million in funding. Volition Capital led the round, and was joined by investors including Anschutz Venture Group.
• EDO, a Los Angeles and New York-based advertising tech company, has secured $12 million in Series A funding. Jim Breyer of Breyer Capital led the round with participation from other investors that included Robert Smith and Brian Sheth, co-founders of Vista Equity.
• Sharegain, a London-based developer of a ‘securities lending’ platform, raised $12 milion in funding. Investors include Blumberg Capital, Target Global, Maverick Ventures Israel, and Rhodium.
• Inpher Inc, a New York and Switzerland-based data security and analytics company, raised $10 million in Series A funding. Investors include JPMorgan Chase, Crosslink Capital, Bowery Capital and Polytech Ecosystem Ventures.
• Scoro, an Estonia-based business management platform, raised $5.2 million in Series A funding. Livonia Partners led the round, and was joined by investors including Inventure and Tera Ventures.
• Emesent, a drone autonomy spin-out from CSIRO’s Data61, raised $3.5 million in funding. Main Sequence Ventures led the round, and was joined by investors including Andy Greig.
• Journy, a New York City-based travel planning service, raised $3.15 million in seed funding. Menlo Ventures led the round, and was joined by investors including Pear Ventures and Caviar founder Jason Wang.
• The Minte, a Chicago-based provider of hotel-style housekeeping to luxury residences, raised $2.25 million in seed funding. Dundee Venture Capital led the round, and was joined by investors including MATH Venture Partners, Revolution’s Rise of the Rest Seed Fund, Firebrand Ventures and Blue Note Ventures.
HEALTH AND LIFE SCIENCES DEALS
• Omeicos Therapeutics, a Berlin-based biopharmaceutical company, raised 17 million euros ($19.4 million) in Series C funding. Forbion led the round.
PRIVATE EQUITY DEALS
• The Riverside Company acquired SureWerx Inc, a Vancouver, British Columbia and Elgin, Illinois-based provider of branded professional safety products, tools and equipment. Financial terms weren’t disclosed.
• High Road Capital Partners acquired Radix Wire, a Cleveland, Ohio-based maker of of high-temperature and fire-resistant wire and cable. Financial terms weren’t disclosed.
• Rotunda Capital Partners acquired a majority stake in MacQueen Equipment, a company that sells street sweepers, fire trucks, snow removal equipment and refuse trucks. Financial terms weren’t disclosed.
• Magnate Worldwide, a partnership between CIVC Partners L.P. and Magnate Capital Partners, acquired Domek Logistics LLC, a Crystal Lake, Ill.-based provider of freght forwarding and customs house brokerage services. Financial terms weren’t disclosed.
• Dunes Point Capital LP acquired Specialty Products and Insulation, a provider of mechanical insulation and complementary products for commercial and industrial applications. Financial terms weren’t disclosed.
• Resource Label Group LLC, which is backed by First Atlantic Capital and TPG Growth, acquired Spectrum Label, a Hayward, Calif.-based provider of labeling solutions. Financial terms weren’t disclosed.
• Mercer Advisors Inc, a Genstar Capital portfolio company, acquired Beacon Wealth Management, a boutique wealth management firm. Financial terms were not disclosed.
• ConversionPoint Technologies agreed to acquire Inuvo, Inc. (NYSE:INUV) for approximately $75.5 million.
• Qualtrics International, a Provo, Utah.-based customer and employee experience software maker, says it plans to raise $399.75 million in an IPO of 20.5 million shares priced between $18 to $21. It posted revenue of $289.9 million in 2017 and income of $2.6 million. Accel, Insight Venture Partners, and Sequoia Capital back the firm. Morgan Stanley and Goldman Sachs are underwriters. It plans to list on the Nasdaq as “XM.” Read more.
• Centrexion Therapeutics, a Boston-based maker of therapies to moderate to severe chronic pain, plans to raise $75 million in an IPO of 5 million shares priced between $14 to $16. It has yet to post a revenue. New Enterprise Associates backs the firm. BofA Merrill Lynch, Leerink Partners and Evercore ISI are underwriters. It plans to list on the Nasdaq as “CNTX.” Read more.
• Vapotherm, an Exeter, N.H.-based maker of noninvasive breathing aids to treat respiratory distress, plans to raise $60 million in an IPO of 5 million shares priced between $14 to $16. It posted revenue of $35.5 million and loss of $31 million in 2017. SightLine Partners and Gilde Healthcare Partners back the firm. BofA Merrill Lynch and William Blair are underwriters. It plans to list on the NYSE as “VAPO.” Read more.
• One Equity Partners acquired Alltub Group, a provider of aluminum and laminate specialty packaging for the cosmetics, pharmaceutical, food and industrial end markets, from Aurora Resurgence, which is backed by Aurora Capital Group. Financial terms weren’t disclosed.
• Digital Fuel Capital sold Logo Sportswear, a Wallingford, Conn.-based provider of custom apparel to companies and teams, to Digital Room. Financial terms weren’t disclosed.
• Interior Logic Group Inc acquired Coleman Floor Company, a design center services and flooring installation business. The seller was BMC Stock Holdings Inc. Financial terms weren’t disclosed.
• Golden Gate Capital agreed to acquire Vector Solutions, a Tampa, Fla.-based company focused on eLearning and performance support, from Providence Equity Partners. Financial terms weren’t disclosed.
FIRMS + FUNDS
• Morgan Stanley Expansion Capital, the growth-focused private investment platform within Morgan Stanley Investment Management, raised approximately $400 million for North Haven Expansion Equity LP and its related funds.
• Todd Kaplan joined Centerview Partners as a partner.