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Term Sheet — Thursday, January 24

HOLLYWOOD’S ODD COUPLE

Good morning, Term Sheet readers.

You may remember last summer when media mogul Jeffrey Katzenberg and former eBay and HP CEO Meg Whitman announced they had raised $1 billion in funding to create high-quality content for a mobile audience.

As expected, Katzenberg boasted a star-studded list of investors backing the new venture. They include Disney, Alibaba, NBCUniversal, 21st Century Fox, Lionsgate, Metro Goldwyn Mayer, Sony Pictures Entertainment, Viacom, and Warner Media. Of course, heavyweights Goldman Sachs, JP Morgan Chase, and Madrone Capital Partners also participated.

What no one really knew, however, is how exactly the duo planned to innovate in this world of mobile streaming. In a new Fortune feature, Katzenberg and Whitman open up about their new venture named “Quibi” they hope will become a dominant force in the entertainment industry.

“We’ll actually create the next chapter of film narrative,” says Katzenberg. “Five or 10 years from now, we’ll look back and go, ‘There was the era of movies, there was the era of television, and there’s the era of Quibi.’”

Quibi aims to update old-school video techniques for the mobile age. It will create an app-based subscription service that features high-quality programming specifically created for mobile devices. Rather than full-length TV shows, the company will release its videos in “bite-sized formats of 10 minutes or less.”

But mobile streaming is hardly a new concept. People have been consuming short-form videos on Facebook, Instagram, YouTube, and Snapchat for a pretty long time. Additionally, let’s not forget when Verizon tried something similar in 2015.

Three years ago, Verizon debuted its mobile video service Go90 in hopes of capturing a younger demographic that had ditched traditional TV in favor of watching videos on their phones. Verizon invested as much as $200 million early on to make Go90 work. But a few days ago, Go90 officially shut down after the service failed to gain traction with the public.

As the Fortune article notes, if Quibi can’t sign up customers who are willing to pay for a subscription, its clever approaches to content creation won’t much matter.

“If they don’t get the subscribers, and the cards are stacked against them getting subscribers, your series won’t be a hit, and who’s going to want to buy it?” wonders Dan Rayburn, who tracks streaming media for the consultancy Frost & Sullivan. “You don’t see people clamoring to rebroadcast stuff from go90,” he says.

I’m personally not convinced of the model (and I fall right in their target demographic, which is users who are 25 to 35 years old). I use Facebook and Instagram regularly.

Do I watch short-video content on Facebook Watch, Instagram TV, or Snap Originals? Never. And that content is free.

So would I pay for a mobile-video subscription? Absolutely not.

With that said, the duo is well-connected and has surrounded themselves with some of the best in the business — luring away executives from Hulu, Netflix, Snapchat, and Viacom. Let’s see how this marriage between Hollywood and Silicon Valley works out.

Read the full feature here.

THE BILL IS DUE: This Wall Street Journal report elicits an interesting question — Has the unbridled optimism that inhabits Silicon Valley come to an end? The attitude among technology investors is shifting, Lux Capital’s Josh Wolfe tells the Journal, “swapping ’fear of missing out’ for ’shame of being suckered.’ ”

Startup investors and company founders warn that the unchecked growth of the past several years could be hitting a limit, the article states. They provide a few examples — seed deals are shrinking, some startups are lowering their fundraising goals, and others are laying off employees to become “leaner.” But I’m still not convinced.

Remember in early 2018 when people thought that “the frenetic era of billion-dollar startup unicorns” was “slowing significantly” and that “the first red flag was the decline in ‘megarounds,’ of $100 million or more, beginning in Q4 2015.” Ha, tell that to SoftBank.

Needless to say, 2018 ended on a high note with a record-breaking year for venture capital — the most amount of money invested in the highest number of private tech company financing events on record; the largest venture capital deals in history; and the rise of mega-rounds.

So while many are predicting a recession in 2019, we haven’t exactly seen a real cooling of the markets yet.

SPACE FUNDING: Speaking of fundraising, my colleague Aaron Pressman has an exclusive on a fresh $25 million funding round for satellite startup Swarm Technologies. Investors include Earthlink founder Sky Dayton, Craft Ventures, Social Capital, 4DX Ventures, and NJF Capital.

The Series A money will help the company launch 150 of the smallest satellites ever made with a goal of providing Internet connectivity anywhere on earth within two years.

In 2018, a total of $404 million was invested across 22 small satellite constellation companies globally, Mark Boggett, CEO of Seraphim Capital’s Space Fund, tells Term Sheet.

And you can expect more from where that came from. The fast-growing field of small satellite startups is racing to capitalize on the parallel trends of plunging launch costs and cheap miniature satellites.

Read more about Swarm’s funding here

VENTURE DEALS

Confluent, Inc, a developer of a real-time data platform for organizations, raised $125 million in Series D funding. Sequoia Capital led the round, and was joined by investors including Index Ventures and Benchmark.

DISCO, a legal technology company, raised $83 million in funding. Georgian Partners led the round, and was joined by investors including Bessemer Venture Partners, LiveOak Venture Partners, The Stephens Group, and Comerica.

Caliva, a California-based vertically integrated cannabis companies, raised $75 million in funding. Investors include Carol Bartz and Joe Montana.

Wheels, a West Hollywood, Calif.-based dockless electric mobility and transportation company, raised $37 million in funding. Investors include Tenaya Capital, Bullpen Capital, Crosscut Capital, 3L Capital and Naval Ravikant.

Memebox, a K-beauty upstart, raised $35 million in Series D funding. JJDC led the round, and was joined by investors including Formation Group and Goodwater Capital.  

GeoPhy, a Netherlands-based AI-powered real estate valuation platform, raised $33 million in funding. Index Ventures led the round, and was joined by investors including Inkef Capital and Hearst Ventures.

Essentium, Inc, a provider and innovator of disruptive 3D printing solutions for industrial additive manufacturing, raised $22.2 million in Series A funding. BASF Venture Capital led the round, and was joined by investors including Materialise and Genesis Park.

Urgent.ly, a Vienna, Va.-based mobility and roadside assistance platform, raised $21 million in Series B funding. Investors include BMW i Ventures, InMotion Ventures and Porsche Ventures.

7shifts, a Canada-based labor management platform for the restaurant industry, raised $10 million in Series A funding. Napier Park Financial Partners led the round, and was joined by investors including with participation from Teamworthy Ventures, Relay Ventures and former CEO of Snag Peter Harrison.

Lumigo, an Israel-based based provider of a serverless intelligence platform, raised $8 million in seed funding. Investors include Pitango Venture Capital, Grove Ventures and Meron Capital.

Varada, an Israel-based provider of big data inline indexing, raised $7.5 million in seed funding. Lightspeed Venture Partners led the round, and was joined by investors including StageOne Ventures and F2 Capital.

Albo, a Mexico-based financial technology company, raised $7.4 million in a Series A funding. Mountain Nazca led the round, and was joined by investors including Omidyar Network and Greyhound Capital.

Modulated Imaging, an Irvine, Calif.-based provider of optical imaging solutions for noninvasive assessment of tissue health, raised $7 million in Series B funding. Pangaea Ventures led the round.

Apruve, a Minneapolis-based B2B credit automation platform, raised $6 million in Series A funding. Cloud Apps Capital Partners led the round, and was joined by investors including TTV Capital and Allegis Capital.

Lygos Inc, an Emeryville, Calif.-based producer of specialty chemicals, raised $5 million in funding. The investor was LG Technology Ventures, an investment arm of the South Korean conglomerate LG Group.

Ontic Technologies, an Austin, Texas-based protective intelligence technology platform, raised $4.65 million in funding. Silverton Partners led the round, and was joined by investors including Floodgate and Village Global.

Allvision, a Pittsburgh-based geospatial analytics company, raised $3.2 million in seed funding. Lavrock Ventures led the round, and was joined by investors including The Robotics Hub, IDEA Fund Partners, and Sands Capital Ventures.

HEALTH AND LIFE SCIENCES DEALS

Wren Therapeutics, a U.K.-based biopharmaceutical company, raised 18 million pounds ($23.4 million) in Series A funding. The Baupost Group led the round, and was joined by investors including LifeForce Capital.

PRIVATE EQUITY DEALS

Tencent Holdings, Hillhouse Capital and KKR & Co. are considering bids to acquire a major stake in Nexon Co (TSE:3659), according to Bloomberg. Read more.

Ardian sold its minority stake in Spie Batignolles, a France-based construction, infrastructure and services firm. Financial terms weren’t disclosed.

Cisive, a portfolio company of CIP Capital, acquired PreCheck, a Houston, Texas-based provider of background screening, compliance monitoring and credentialing solutions for the healthcare industry. Financial terms weren’t disclosed.

Beacon Specialized Living Services, a portfolio company of Pharos Capital Group, acquired Owakihi, a Saint Paul, Minn.-based provider of home and community-based support services to individuals with intellectual and developmental disabilities and mental health needs. Financial terms weren’t disclosed.

Wind Point Partners agreed to acquire and merge Clock Spring Company, Inc and Neptune Research, two providers of repair and rehabilitation products for global critical infrastructure. The combined business will be named ClockSpring|NRI. Financial terms weren’t disclosed.

Pritzker Private Capital acquired KabaFusion, a Cerritos, Calif.-based provider of acute and specialty home infusion services. Financial terms weren’t disclosed.

OTHER DEALS

Johnson & Johnson is pursuing an acquisition of surgical robotics firm Auris Health Inc, a Redwood City, Calif.-based developer of a robotic platform for diagnostic and therapeutic bronchoscopic procedures, according to Bloomberg. J&J is seeking to purchase Auris at a premium to the valuation from its latest funding round that valued the company at $2 billion. Read more.

IPOs

Gossamer Bio, a San Diego, Calif.-based maker of immunology-based therapies for asthma, plans to raise $230 million in an offering of 14.4 million shares priced at $16 (43% insider). ARCH Venture and Omega Fund back the firm. BofA Merrill Lynch, SVB Leerink, Barclays, and Evercore ISI are underwriters. It plans to list on the Nasdaq as “GOSS.” Read more.

Credito Fondiario SpA, an Italian financial firm backed by Elliott Management Corp., is weighing an IPO on the Milan stock market, Bloomberg reports citing sources. Read more.

EXITS

Whistle acquired New Form, a Los Angeles-based digital entertainment studio. Financial terms weren’t disclosed. New Form had raised approximately $18 million in funding from investors including Discovery and ITV.

HGGC will sell a minority stake in Davies Group Ltd, a U.K.-based provider of claims outsourcing and loss adjusting services to insurance companies, to Alberta Investment Management Corp. Financial terms weren’t disclosed.

FIRMS + FUNDS

Riverwood Capital Partners, a Menlo Park, Calif.-based investment firm, raised more than $1 billion for its third fund, according to an SEC filing.

Mayfair Equity Partners, a U.K.-based private equity firm, raised 650 million pounds ($846.2 million).

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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.