Good morning, Term Sheet readers.
CTRL-labs, a New York City-based startup developing a non-invasive neural interface, raised $28 million in venture funding, from investors including GV, Amazon Alexa Fund, Lux Capital, Matrix Partners, Breyer Capital, Spark Capital, and Fuel Capital. What does “a non-invasive neural interface” do exactly? To put it more simply, CTRL-labs is building a device capable of translating electrical muscle impulses into digital signals (see it in action here).
I first learned about this company from Josh Wolfe, the co-founder and managing partner of Lux Capital, who invested in the company. Below is an excerpt from our Q&A in September, in which he describes the capabilities of CTRL-labs & the future of brain-computer interfaces.
TERM SHEET: More and more companies are working on building a brain-computer interface, which would allow the mind to connect with artificial intelligence. You’ve said the future of BCIs is non-invasive. Can you elaborate on this idea given that Elon Musk wants to put a chip in our brains?
WOLFE: There are certain directional arrows of progress, certain inevitabilities — and this is one of them. When we invested in this company called CTRL-labs, we had this thesis that we called “the half-life of technology intimacy.” Basically, you see this directional arrow of how computers keep getting closer and closer to you and it’s more sophisticated but it’s almost more invisible. So 50 years ago, you had a giant mainframe computer, 25 years ago you had a PC, 12 years ago, you had a laptop, six and a half years ago, you had the iPhone, three years ago, you had the iWatch which is touching your skin all day, and one year ago, we got AirPods.
That observable trend is that technology is becoming more and more intimate with us. So it seems that the next frontier is voice and gesture. The idea of a brain-machine interface is so misplaced to think that we’ll have some sort of surgical operation where we’re going to invasively put something in our brain. When you talked to the best and brightest in neuroscience, they just laugh at that. Rather, if you can pick up signals from the body using really advanced technology, then you can translate that signal into a device.
In CTRL-labs’ case, what the founder was able to do is take the signals coming off of the nerves that are firing to tell your muscles to move even if you’re typing or moving with your hands. And you can perfectly capture that. The crazy thing with what CTRL-labs has done is that just by thinking of moving your finger or hand, the machine can pick it up. [For a visual of what this looks like, watch this video.]
What does the world look like if BCI technologies like this go mainstream?
WOLFE: I literally see a world in the near future where I tap my fingers together to turn on Spotify. And instead of tapping a button to change the next song, I just swipe to the left. And if I want to raise the volume, I make a motion like a conductor.
IPO WATCH: Peloton, the home exercise equipment maker, has chosen Goldman Sachs and JPMorgan Chase to lead its initial public offering, which could value the company at more than $8 billion. Peloton raised approximately $550 million in funding last year that valued that company at $4.15 billion. Investors included TCV, Kleiner Perkins Caufield & Byers, Tiger Global Management and GGV Capital.
Peloton is a peculiar company as it has developed a loyal, cult-like following of customers who are willing to pay up to $4,000 for workout equipment, including bikes and treadmills. It offers live classes that are designed to make remote riders feel as if they’re part of a connected experience.
Ironically enough, seven months ago, Peloton co-founder and CEO John Foley told Fortune that people shouldn’t expect an IPO anytime soon. “The benefits of staying private would be not having to report quarterly earnings so you can invest more,” he said. “You can be more innovative I would say as a private company, you can disrupt yourself and not worry about how that will destroy your stock.”
Well, this is about to change in 2019.
DEBT DRAWBACK: Some private equity firms are paying for expensive acquisitions of fast-growing companies mostly out of their own pockets and trimming back their reliance on debt, according to a new report. PE firms are expanding beyond the traditional leveraged buyout model and turning to equity as they look to deploy the record $1.2 trillion they have raised from their investors. Read more here.
• Better.com, a digital mortgage company, raised $75 million in Series C funding. Investors include American Express Ventures, Kleiner Perkins, Goldman Sachs, and Pine Brook.
• Roadie, an Atlanta, Ga.-based crowdsourced delivery company, raised $37 million in funding. Investors include The Home Depot, Warren Stephens, and TomorrowVentures.
• Zededa, a Santa Clara, Calif.-based developer of virtualization software, raised $16 million in Series A funding. Energize Ventures and Lux Capital co-led the round.
• Accurx, a U.K.- based developer of a messaging service for doctor surgeries, raised £8.8 million ($11.5 million) in Series A funding, according to TechCrunch. Atomico led the round, and was joined by investors including LocalGlobe and EF.
• Showfields, a business that helps online brands move into offline, brick-and-mortar retail, raised $9 million in seed funding. Hanaco Ventures led the round.
• Funnel, a Sweden-based software company delivering automated data collection and transformation software to advertising and marketing business users, raised $8 million in funding from Oxx.
• Briq, a platform for construction data, raised $3 million in funding. Investors include Eniac Ventures and MetaProp NYC.
• Back to the Roots, an Oakland, Calif.-based organic food and gardening company, raised $3 million in Series C funding. Central Garden & Pet led the round, and was joined by investors including Blue Scorpion Investments.
• Szent, a Santa Monica, Calif.-based beverage startup, raised $2.2 million in funding. Gerald Poch led the round.
PRIVATE EQUITY DEALS
• Project Management Academy, which is backed by Leeds Equity Partners, acquired Watermark Learning, a Minneapolis-based provider of business analysis, project management and process improvement training. Financial terms weren't disclosed.
• First Reserve agreed to acquire Refuel Inc, a Charleston, S.C.-based retail fuel distribution and convenience store chain. Financial terms weren't disclosed.
• Cairngorm Capital acquired Sentry Doors, a U.K.-based maker of timber fire and security doors. Financial terms weren't disclosed.
• Hamilton Robinson Capital Partners recapitalized American Roller Company, a Union Grove, Wisc.-based provider of engineered services and industrial rollers. Financial terms weren't disclosed.
• Wind Point Partners will sell Paragon Films Inc, a Broken Arrow, Okla.-based supplier of stretch film products to customers, according to Bloomberg. The company could sell for $500 million. Read more.
• First Reserve agreed to acquire Weir Flow Control, a designer, manufacturer and aftermarket services provider of engineered valves and pumps used in energy and broader industrial applications, from The Weir Group PLC. Financial terms weren't disclosed.
• Roche Holding AG will buy Spark Therapeutics (Nasdaq: ONCE) in a $4.3 billion (£3.3 billion) deal. Roche will acquire U.S.-based Spark for $114.50 per share, which is a premium of approximately 122% to Spark’s closing price on Feb. 22. Read more.
• Danaher will buy the biopharmaceutical business of General Electric (NYSE: GE) in a $21.4 billion deal.
• Virgin Trains, a Miami-based express passenger rail system, withdrew plans for an IPO. Previously it planned to raise $510 million in an offering of 28.3 million shares priced between $17 to $19. It posted revenue of $5.2 million in the nine months ending Sept. 2018, and loss of $87 million. Barclays, J.P. Morgan and Morgan Stanley were underwriters. It planned to list on the Nasdaq as “VTUS.” Read more.
• Up Fintech Holding, an Beijing-based online brokerage focused on Chinese investors around the world, filed for a $150 million IPO. The firm posted sales of $33.7 million in 2018 and loss of $44.3 million. Xiaomi (17.3%) and Interactive Brokers Group (9.5%) back the firm. Citi and Deutsche Bank are underwriters. It plans to list on the Nasdaq as “TIGR.” Read more.
• Ping An Insurance, China’s insurance giant, is readying for a Hong Kong IPO of its fintech unit, OneConnect, that could value it at about $8 billion, Bloomberg reports citing sources. Read more.
• Peloton Interactive, the exercise video and gym equipment maker, has reportedly chosen Goldman Sachs and J.P. Morgan for an IPO that could value it at $8 billion, Bloomberg reports citing sources. L Catterton and venture capital firm TCV back the firm. Read more.
FIRMS + FUNDS
• Genstar Capital, a San Francisco-based private equity firm, raised $5.5 billion for its latest fund.
• SK Capital Partners, a New York-based private equity firm, raised approximately $2.1 for its fifth fund.
• John Eck joined Peakstone as a managing director.