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Term Sheet — Tuesday, March 5

CHAPTER 11

Embattled food delivery startup Munchery has officially filed for bankruptcy, and it owes a whole lot of people a whole lot of money.

The company owes $28.5 million in secured debt to lenders and $6 million in unsecured debt (half of it is to 230 vendors and suppliers and the other half is to thousands of former customers who are holding unfulfilled gift cards), according to a Chapter 11 filing. Munchery lists aggressive expansion, inability to attract new customers, and increased competition as reasons that contributed to the shuttering of its business.

Munchery seems like the classic tale of a startup going bust — raising more than $125 million in venture funding from investors such as Sherpa Capital, Menlo Ventures, e.ventures, and Greycroft, and reaching a valuation of $300 million at its peak before unceremoniously crashing down to Earth.

But in January, I wrote a column on the failed business to remind readers that when startups dissolve into obscurity, it’s important to remember that it’s not only deep-pocketed investors who lose out when a bet goes bad. A lot of vendors and suppliers do too — and unlike the shareholders invested in the business, it’s not something they can simply write off and walk away from.

Many small business owners went without payment, and one such owner, who claims she’s owed more than $20,000, called out the venture capitalists behind the defunct startup. “It’s not a lot of money to you, but to us it’s missed rent payments, layoffs, and waiting another year to expand to offer benefits,” wrote Three Babes Bakeshop owner Lenore Estrada.

In the Chapter 11 filing, Munchery CEO James Beriker writes that “Up until the evening of Sunday January 21, 2019, management was negotiating with the senior secured creditors and several investors to continue financing the operations of the company.” (Term Sheet Note: Jan. 21 was a Monday … which is also when the company sent an email to customers to notify them it is ceasing operations effective immediately.)

In other words, the company waited until the last possible second, leaving many of its vendors high and dry for services they provided & would not be compensated for. What’s worse is that Munchery investors had known the company was in financial trouble since early last year. Some had encouraged the startup to wind down operations, but the company’s management team chose to forge ahead.

The reality is that vendors like Estrada probably will not get compensated for the services they provided. Munchery checked this box on a filing: “After any administrative expenses are paid, no funds will be available for distribution to unsecured creditors,” according to The SF Chronicle.

Meanwhile, Beriker is still getting paid. The filing states that his salary is $18,750 per month, which is half of his previous salary, and he anticipates it to continue through April. Additionally, he stands to receive a success fee up to $250,000 for selling company assets.

Read this story on Fortune.com

THE LATEST FROM FORTUNE…

• Apple Acquires Lighthouse AI’s Patent Portfolio in Possible Home Security Push (by Don Reisinger)

• How Ford CEO Jim Hackett Impressed Designers, But Not Investors (by Adam Lashinsky)

• Do You Have a ‘Work Wife?’ These Founders Think You Should (by Erica Cerulo & Claire Mazur)

• Does Design Pay Off? Yes. (And There’s Data to Prove It.) (by Robert Horn)

…AND ELSEWHERE:

Police launch fraud investigation into Revolut. Social Capital’s Chamath Palihapitiya has a lot to say. How the greatest system ever conceived (and its billionaires) need to change. VC firm Floodgate set to turn early bet on ‘Zimride’ into Lyft bonanza. Kleiner Perkins expected to lead investment in Rippling. Elon Musk financed a new satire venture.

VENTURE DEALS

Chime, a San Francisco-based challenger banking, raised $200 million in Series D funding at a valuation of approximately $1.5 billion. DST Global led the round, and was joined by investors including Coatue, General Atlantic, ICONIQ Capital, Dragoneer Investment Group, Menlo Ventures, Forerunner Ventures, and Cathay Innovation.

Trustpilot, a Denmark-based provider of consumer reviews on various companies, raised $55 million in Series E funding. Sunley House Capital Management led the round, and was joined by investors including Draper Esprit.

eSentire, a Canada-based provider of managed detection and response solutions, raised $47 million in funding. Warburg Pincus led the round, and was joined by investors including Georgian Partners and Edison Partners.

Zinier, a provider of intelligent field service automation, raised $22 million in Series B funding. Accel led the round, and was joined by investors including Founders Fund, NGP Capital, Qualcomm Ventures LLC, and Newfund.

Functionize, a developer of a cloud-based software testing solution, raised $16 million in Series A funding. Canvas Ventures led the round.

Mocana, a San Francisco-based provider of device security solutions for IoT and industrial control systems, raised $15 million in funding. Sway Ventures led the round, and was joined by investors including Shasta Ventures and ForgePoint Capital (formerly Trident Cyber).

RackTop Systems, a designs and develops data center solution, raised $15 million in Series A funding. Razor’s Edge Ventures and Grotech Ventures co-led the round, and was joined by investors including Maryland Venture Fund, Blu Venture Investors and Gula Tech Adventures.

Tagomi Holdings Inc, a New York-based an electronic brokerage for digital assets, raised $12 million in funding. Investors include Paradigm and Pantera.

Kuli Kuli, a superfood moringa brand, raised $5 million in Series B funding. Griffith Foods led the round, and was joined by investors including eighteen94 capital, InvestEco, S2G Ventures, Authentic Ventures, VilCap Investments, Rocana Venture Partners, Portfolia, Astia Angels, Next Wave Impact, and individuals from Golden Seeds. [This item has been updated.]

Market Beyond, an Israel-based ecommerce analytics company, raised $4 million in funding. The investors were not named.

QuotaPath, a Philadelphia and Austin-based sales performance management software, raised $3.5 million in seed funding. ATX Seed Ventures led the round.

Emmersion Learning, a Lehi, Utah-based edtech company, raised $2.4 million in funding. Imagen Capital Partners led the round.

Zabo, a cryptocurrency banking application, raised $1.15 million in funding, from Blockchange Ventures.

PRIVATE EQUITY DEALS

Carlyle Group acquired a 9% stake in SBI Life Insurance Ltd, an India-based life insurance company, from BNP Paribas in a deal that could be worth about $653 million. Read more.

Borgman Capital acquired Gilman Cheese Corporation, a Gilman, Wisc.-based maker of processed cheese. Financial terms weren’t disclosed.

GHK Capital Partners recapitalized Brown & Settle, a provider of large-parcel site development services. Financial terms weren’t disclosed.

CoolSys, a portfolio company of Audax Private Equity, acquired ABC Refrigeration & HVAC, a Syracuse, N.Y.-based commercial refrigeration and air conditioning services provider. Financial terms weren’t disclosed.

WJ Partners divested its stake in Mobile Communications America, a provider of lifecycle communication solutions to government agencies and public safety organizations, to Sentinel Capital Partners. Financial terms weren’t disclosed.

OTHER DEALS

Biogen will acquire Nightstar Therapeutics, a London-based gene therapy company, for $25.50 per share pending customary closing conditions. The deal values Nightstar at $800 million after expenses. Read more at Fortune.

IPOs

Silk Road Medical, a Sunnyvale, Calif.-based maker of medical devices treating carotid artery disease, filed for a $86 million IPO. The firm posted revenue of $34.6 million and loss of $37.6 million in 2018. Warburg Pincus (56% pre-offering), The Vertical Group (18.9%), Norwest Venture Partners (11%) back the firm. J.P. Morgan and BofA Merrill Lynch are underwriters. It plans to list on the Nasdaq as “SILK.” Read more.

EXITS

BC Partners acquired United Group, an Amsterdam-based media and communications services provider, from KKR. Financial terms weren’t disclosed.

Juniper Networks agreed to buy Mist Systems, a Cupertino, Calif.-based AI-powered networking startup, for $405 million. Mist Systems had raised approximately $88.4 million in funding from investors including GV, Kleiner Perkins, Lightspeed Venture Partners, Norwest Venture Partners, and Cisco Investments.

SurveyMonkey agreed to acquire Usabilla, an Amsterdam-based Voice of Customer (VoC) technology provider, for approximately $80 million. Usabilla had raised approximately $1 million in funding from investors including Boralis BV.

FIRMS + FUNDS

Aero Capital Solutions, a provider of aircraft and engine leasing services, raised $200 million for its debut aviation fund.

PEOPLE

David George joined Andreessen Horowitz as a general partner. Previously, George was at General Atlantic.

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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.