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Term Sheet — Tuesday, February 26


Good morning, Term Sheet readers.

Private equity broke records last year.

PE funds produced another surge in investment value in 2018, capping the strongest five-year stretch in the industry’s history with $2.5 trillion (!) in disclosed buyout deal value, according to Bain & Company’s 2019 Global Private Equity report. In the last five years, more money has been raised, invested and distributed back to investors than in any other period in the industry’s history.

“Private investment in general, and private equity in particular, seems to be on a secular penetration curve that has no end in sight,” writes Hugh MacArthur, the head of Bain’s global private equity. “Yet, there are also some cautionary notes to sound.”

Returns have slowly declined toward public market averages during the period. Persistent high prices, volatile capital markets, US-China trade arguments, Brexit worries, and the ever-present threat of a looming recession have injected a worrying sense of uncertainty.

As private multiples have surged and public multiples begin to price in the threat of a recession, a record number of companies are drifting into private equity’s public-to-private sweet spot. These are companies with an enterprise value between $2 billion and $10 billion that could be purchased for a multiple plus take-private premium that is still below the average private-market multiple. But if private multiples remain elevated over the long-term, Bain & Company notes several implications:

— IPOs on ice: If private multiples remain high relative to public valuations, it will become less attractive to exit via an IPO.

— Public company acquisition targets: For many large firms, the public markets will likely become an increasingly important target environment, requiring a shift in their approach to deal sourcing, screening and due diligence.

— Mega-funds get even bigger: Funds are already growing in size, and the take-private opportunity in the public markets makes a case for even bigger funds capable of transacting ever-larger P2P deals.

— Private equity becomes more accessible: Given the growth of the private markets and their higher return potential vs. public markets, making private equity more accessible to retail investors is gaining importance. Already, retail investors are struggling to gain exposure to the small and middle-market companies that have been the bread and butter of private equity. These companies are increasingly turning to private financing to avoid the cost and hassle of being publicly traded.

See the full report here.


VAST Data, a storage architecture startup, raised $80 million in funding. Investors include Norwest Venture Partners, Dell Technologies Capital, 83 North, Goldman Sachs and a TPG Growth-sponsored investment platform.

YieldStreet, a digital wealth management platform, raised $62 million in funding. Edison Partners led the round.

Kryon, a robotic process automation company, raised $40 million in Series C funding. Oak HC/FT led the round, and was joined by investors including Aquiline Technology Growth and Vertex Ventures.

Affirmed Networks, an Acton, Mass.-based provider of virtualized mobile networks, raised $38 million in funding. Centerview Capital Technology led the round.

Bishop Fox, a private professional services firm focused on offensive security testing, raised $25 million in Series A funding, from ForgePoint Capital.

FreightWaves, a Chattanooga, Tenn.-based provider of data and news for global freight markets, raised $21 million in Series B funding. 8VC led the round.

Tulip, a Massachusetts-based manufacturing app platform, raised $18.4 million in Series B funding. Vertex Ventures US led the round, and was joined by investors including NEA and Pitango Ventures.

The Action Network, a sports media company providing in-depth betting content, raised $17.5 million in Series B funding. Fertitta Capital led the round.

Cmd, the creator of a security platform that provides control and visibility into production workloads in the cloud and on premise, raised $15 million in Series B funding. GV led the round, and was joined by investors including Expa and Amplify Partners.

TheGuarantors, a New York-based insurtech provider for the real estate industry, raised $15 million in Series B funding. Global Founders Capital led the round.

i2x, a Germany-based company focused on automated real-time communications analysis and training, raised €10 million ($11.4 million) in Series A funding. UVC Partners and btov Partners co-led the round, and were joined by investors including MS&AD Ventures and Asgard.

GoExpedi, an e-commerce, supply chain and analytics company focused on industrial and energy MRO (maintenance, repair and operations), raised $8 million in Series A funding. Crosslink Capital led the round, and was joined by investors including Bowery Capital, Blue Bear Capital, Hack VC, and SaaS Ventures.

Dipsea, a San Francisco-based developer of an audio platform for sexual wellbeing, raised $5.5 million in funding. Bedrock Capital and Thrive Capital co-led the round.

Sideqik, an Atlanta-based provider of an influencer marketing and social engagement platform, raised $5 million in a Series A funding. Jackson Square Ventures led the round, and was joined by investors including Fuqua Capital, Tom Noonan, Bee Partners and Bonfire Ventures.

Breathe Life, a Canada-based provider of consumer-centric digital solutions for the insurance industry, raised $4.5 million CAD ($3.4 million) in seed funding. Diagram Ventures led the round, and was joined by investors including Real Ventures.

Solidus Labs, a New York City-based provider of a machine learning-powered trade surveillance platform for digital assets, raised $3 million in seed funding. Hanaco Ventures led the round.

Zone7, a Palo Alto, Calif.-based developer of an AI-powered athlete injury prediction tool, raised $2.5 million in seed funding. Resolute Ventures led the round, and was joined by investors including UpWest, Amicus Capital, Dave Pell, and PLG Ventures.


Oyster Point Pharma, Inc., a New Jersey-based clinical-stage pharmaceutical company with an initial focus on developing novel therapies to treat Dry Eye Disease, raised $93 million in Series B funding. Invus Opportunities and Flying L Partners co-led the round, and was joined by investors including Falcon Vision, New Enterprise Associates, Versant Ventures, and Vida Ventures.

Gracell, a China-based cellular gene therapy company, raised $85 million in Series B funding. Temasek led the round, and was joined by investors including Lilly Asia Ventures, Kington Capital, King Star Capital and Chengdu Miaoji.


Marlin Equity Partners acquired Worksoft, a Dallas, TX-based provider of end-to-end, continuous test automation software for packaged applications. Financial terms weren’t disclosed.

Thoma Bravo LLC will buy ConnectWise, a Tampa, Fla.-based provider of professional services automation solutions for small and mid-sized companies. Financial terms weren’t announced, but media reports peg the deal at $1.5 billion.

Hoffman Southwest Corp, which is backed by ORIX Capital Partners, acquired Tri-State, a Chesapeake, Va.-based provider of trenchless repair, rehabilitation, inspection and other maintenance services for the municipal utility market. Financial terms weren’t disclosed.

Aquiline Technology Growth made an investment in Utilant, a Buffalo, N.Y.-based provider of loss control inspection and survey management software for P&C insurers. No financial terms were disclosed.

Warburg Pincus agreed to acquire a majority stake in Kestra Financial, an Austin, Texas-based financial adviser. Financial terms weren’t disclosed.

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.

Therma Holdings, a portfolio company of Gemspring Capital, acquired the assets of Integrated Mechanical Systems, an Irwindale, Calif.-based provider of mechanical design, fabrication, construction and maintenance services. Financial terms weren’t disclosed.


ShockWave Medical, a Santa Clara, Calif.-seller cardiovascular disease treatments, plans to raise $75 million in an offering of 5 million shares priced between $14 to $16. It posted revenue of $12.3 million and loss of $41.1 million in 2018. Sofinnova Capital (19.7% pre-offering), Venrock (10.4%), and Fidelity (9.9%) back the firm. Morgan Stanley and BofA Merrill Lynch are underwriters. It plans to list on the Nasdaq as “SWAV.”Read more.


Quad-C Management Inc agreed to sell its stake in Compassion-First Pet Hospitals, an operator of a network of emergency and general practice veterinary hospitals, to JAB for $1.214 billion.

Lineage Logistics agreed to acquire Preferred Freezer Services, a Chatham, N.J.-based network of temperature-controlled warehouses. The seller was Fenway Partners. Financial terms weren’t disclosed.

Apax Partners agreed to sell its stake in Exact Software, a provider of business and accounting software in the Benelux region, to KKR. Financial terms weren’t disclosed.

DataRobot acquired Cursor, a San Francisco-based company that provides a data collaboration platform which helps organizations sort data. Financial terms weren’t disclosed. Cursor had raised approximately $2 million in funding from investors including Toba Capital and Ride Ventures.

Instructure, Inc. (NYSE: INST) agreed to acquire Portfolium, a company that showcases digital work samples of students to potential employers. Financial terms weren’t disclosed. Portfolium had raised approximately $7.8 million in venture funding from investors including SJF Ventures and University Ventures.


Section 32, a San Diego, Calif.-based venture capital firm, raised $199.4 million for its second venture-capital fund.

Blossom Capital, a London-based venture capital firm, raised $85 million for its new fund.


Rob Ruegger joined Kainos Capital as a managing director.

NRD Capital promoted John Teza to principal.


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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.