Good morning, Term Sheet readers.
Hope you had a wonderful Thanksgiving. To kick off your week, Fortune published an in-depth profile on legendary activist investor Nelson Peltz this morning.
You know Peltz as an investor who is startlingly comfortable with dramatic change. No other activist has prompted more of it. He instigated the transformation of DuPont into three independent companies after first combining with Dow Chemical. He forced the separation of Kraft into Kraft Foods Group and Mondelez International. He tried and failed to break up PepsiCo. In other words, Peltz is no stranger to taking bold risks.
Currently at the top of his list is a duo of big, bold, blue-chip bets — General Electric and Procter & Gamble. Much of Peltz’s personal wealth and his reputation as a high-performing activist are tied up in those two companies.
Peltz’s odyssey with GE and P&G outlines the limits of activism. As investors with non-controlling stakes, activists can’t run a company day-to-day, which means they’re always a couple of steps removed from solving the deep cultural problems afflicting many companies in an age of disruption. Influencing the choice of the CEO is about the best they can hope for. But the real transformation is in that person’s hands, not in the activists’. That’s why so many of their proposals are structural, mostly for reorganizing or breaking up the company. The logic is that newly liberated business will benefit from clearer incentives, less complexity, and more options, and that strategy has often worked. Most of the companies that Trian has broken up have proved more valuable in pieces. But it isn’t a strategy that preserves great old institutions. The hard reality may be that at a certain point, they aren’t worth preserving any longer.
SOFTBANK FEEDBACK: Last week, I wrote a column on SoftBank’s ability to close deals even in the face of the Saudi Arabia – Jamal Khashoggi scandal. I explained that I thought it had the power to freeze SoftBank out of deals, affect future Vision funds, or even tarnish Son’s reputation. Turns out, it really didn’t.
Here’s what Term Sheet readers had to say:
Z: “While I totally understand and respect your opinion on businesses turning down money from SoftBank as tainted, I just don’t see that happening. While Softbank’s situation is in a class of it’s own, how many of these other funding sources are being scrutinized closely and/or turned down? I’m 100% a capitalist, but I do feel our financial systems are often morally bankrupt. I’m including some/many (not all) VC & PE money in that.”
R: “The argument against founders and startups taking money from SoftBank is valid. However, if companies were to rebuke investment from firms that have capital from a repressive regime, or similarly, if companies were to not do business with a company due to their location or backing in or from a repressive regime, then look no further than China. Everyone seems to omit China because of the astonishing growth and opportunity there, but they are just as guilty of atrocities that suppress individuality and free speech. This proves that ultimately money is money. People are happy to take money and investment in areas that pursue their own interests and ultimately provide necessary returns. Additionally, Saudi Arabia has been committing these type of atrocities for years. This shouldn’t be news to folks. From a U.S. Foreign Policy perspective, they are the lesser of evils in the Middle East.”
C: “One thing to keep in mind is that companies often sign term sheets many months before the public learns a SoftBank deal has closed. So the fact we have heard about some SoftBank closings after the MBS news doesn’t necessarily mean companies in the future won’t be more reticent to take money from Saudi Arabia.”
THE LATEST FROM FORTUNE…
• Bitcoin’s Roller Coaster Year Continues with a Slide to Under $3,500 (by Hallie Detrick)
• European Union Leaders Endorse Brexit Deal During Special Summit in Brussels (by Erin Corbett)
• Inside Netflix’s Oscar Factory (by Stacey Wilson Hunt)
• DoorDash and Postmates Have Built a Potent Rivalry (by Carson Kessler)
• How the Space Mining Industry Came Down to Earth (by Andrew Zaleski)
The US Postal Service exposed data of 60 million users. More institutional investors say no to tobacco & weapons. The poker aces playing a key hand in the $5 trillion ETF market. The new breed of elite dating apps designed for wealthy singles. How Guy Raz built ‘How I Built This.’
• Agora.io, a Palo Alto, Calif.-based voice, video and live broadcasting platform, raised $70 million in Series C funding. Coatue Management led the round, and was joined by investors including SIG, Morningside and Shunwei Capital.
• PlayVS, a Santa Monica, Calif.-based company building the infrastructure and platform for high school esports, raised $30.5 million in Series B funding. Elysian Park Ventures led the round, and was joined by investors including New Enterprise Associates, Science Inc., Crosscut Ventures, Coatue Management, WndrCo, Adidas, Samsung NEXT, Plexo Capital and Sean “Diddy” Combs.
• Botkeeper, a Boston-based automated bookkeeping solutions provider, raised $18 million in Series A funding. Investors include Greycroft, Gradient Ventures, Ignition Partners and Halfcourt Ventures.
• Charlie, a San Francisco-based text-based AI chatbot for personal finance, raised $9 million in Series A funding. Propel Venture Partners led the round.
• CropIn Technology Solutions Pvt. Ltd., an India-based agriculture technology startup, raised $8 million in Series B funding. Investors include Chiratae Ventures and the Bill & Melinda Gates Foundation Strategic Investment Fund.
• Quantum Machines, an Israel-based developer of control and operation systems for quantum computers, raised $5.5 million in seed funding. TLV Partners led the round, and was joined by investors including Battery Ventures.
• ApisProtect, an Ireland-based company that uses the internet of things to monitor honey bee colonies, raised 1.5 million euros ($1.7 million) in seed funding. Finistere Ventures and Atlantic Bridge Capital led the round, and were joined by investors including Radicle Growth, the Yield Lab and Enterprise Ireland.
• Living Security, an Austin, Texas-based cybersecurity training company, raised $1.25 million in seed funding. Active Capital led the round, and was joined by investors including Cathexis Ventures and Capital Factory.
PRIVATE EQUITY DEALS
• Corsearch, a portfolio company of Audax Private Equity, acquired Yellow Brand Protection Group AB, a provider of online anti-counterfeiting and brand protection services. Financial terms weren’t disclosed.
• Wind Point Partners agreed to acquire The Kleinfelder Group, a San Diego-based provider of engineering, construction management, design and environmental services. Financial terms weren’t disclosed.
• Silver Oak Services Partners LLC recapitalized North American Roofing, a Tampa, Fla.-based provider of commercial re-roofing and maintenance services. Financial terms weren’t disclosed.
• MOGU, a Hangzhou, China-based online fashion platform, plans to raise $71 million in an IPO of 4.7 million shares priced between $14 to $16. It posted revenue of $69.4 million and loss of $181.5 million in the year ending March 2018. Tencent (18% pre-offering) and Hillhouse Capital Management (10.2%) back the firm. Morgan Stanley, Credit Suisse, and China Renaissance are underwriters. plans to list on the NYSE as “MOGU.” Read more.
• Autodesk will buy PlanGrid, a San Francisco-based cloud-based productivity software startup for the construction industry, for $875 million. PlanGrid had raised approximately $69 million in venture funding from investors including Sequoia Capital, Northgate Capital, and GV.