Term Sheet April 25, Uber and Income Inequality, IPO Taxes, Deutsche Bank’s Merger Death,
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A potential bank with $2 trillion assets is dead.
Germany’s Deutsche Bank and Commerzbank have ended merger talks, after announcing formal discussions just a month ago follow pressure from investors displeased with the two banks' shoddy performance.
The deal would have given Deutsche Bank the security of a consumer deposit base from Commerzbank while creating back-office synergies. But the two were unable to figure out how to “overcome both the challenges of integrating the banks’ technology, back-offices and other operations,” the Wall Street Journal reports.
Now other European marriages may be on the table.
SUPERMARKETS: At the same time, a $9.4 billion deal that would have created the U.K.’s biggest supermarket chain, was formally blocked on antitrust concerns Thursday.
The U.K.’s Competition and Markets Authority said plans for J Sainsbury to merge with Walmart’s U.K. unit, Asda, would have raised prices for consumers.
That decision came though the combined giant offered concessions: $1.3 billion in price cuts and the offloading of as many as 150 stores.
Now, Sainsbury CEO Mike Coupe, who sold investors on the need for such a merger, will have to convince those same investors that he has a viable alternative plan even as Sainsbury’s market share loses ground to no other than Asda.
IPO TAX: The headline grabbing windfall investors, founders, and early employees are about to come into in public markets is the epitome of the American dream. Work hard and you get millions and billions.
That narrative gets less rosy when the new and shiny gig economy intersects a decades-long trend of falling wages in the low skilled labor force. Now as executives at Uber become some kind of -naire selling their IPOs on an automated future, the low-skilled workers that make up the company’s legs are frustrated over their considerably lower pay—saying they do not make a living wage.
Uber drivers in major cities are now also preparing to strike for 12 hours on May 8 in the hopes of greater pay, basic benefits, and more transparency regarding wage practices.
The reality is that Uber is a part of a larger trend in the economy of shrinking wages for low skilled labor force. That group "is doing terribly," Stanford Graduate School of Business Economics Professor Paul Oyer. "It's not an Uber specific thing, and it isn’t Uber that is causing low pay—it's the natural forces in the economy, through globalization and autonomization, that are doing it. But it does become their problem to make people with very reasonable complaints happy."
Think, for example, to the fast food industry, which itself is facing automation. Uber, for its part, appears to be heading in the same direction—it is spending heavily on a future where self-driving vehicles may be the norm, and drivers are obsolete. The firm spent over $457 million in 2018 to research and develop a unit focused on futuristic projects including autonomous vehicles and flying cars.
Larger trend or not, the gap between what founders are making compared to their workers have become a sign of income inequality.
“We know corporate IPOs alone did not cause income inequality and our social crises,” Bloomberg quotes from Mar’s prepared remarks. “But they have, and will, exacerbate it. So today I’m announcing a proposal to tax the wealth generated by IPOs to fund programs to address income inequality.”
Regardless whether or not the motion is approved and cemented in November via a ballot, driverless cars are years out into the future. Uber will have to find a way to appease drivers in order to continue scaling—and that’s no easy task for a firm also seeking to please public market investors.
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Saudi Arabia to set up $400 million worth in venture capital funds. Ontario Teacher’s VC platform. Blackstone Group to pay $1.1 million to tenants. Who knew that 6 people die in national parks a week. Facebook expects to be fined $5 billion for privacy issues. The Shelby Mafia. Elon Musk looks for more cash. Tesla’s solar business keeps cooling off. Also Tes’as insurance product.
• SalesLoft, an Atlanta-based sales engagement platform, raised $70 million in Series D funding. Insight Partners led the round, and was joined by investors including HarbourVest Partners.
• FullStory, an Atlanta-based software company focused on customer experience analytics, raised $32 million in Series C funding. Stripes led the round.
• Digital Guardian, a Waltham, Mass.-based data protection platform provider, raised $30 million in funding. LLR Partners led the round.
• Labster, A Danish VR maker for STEM students, raised $21 million in Series B funding. Owl Ventures led the round, and was joined by investors including Balderton Capital, Northzone, and Swisscom Ventures.
• Omiexperience, a Brazilian fintech for SMB billing and inventory management, raised around US$ 20.4 million from Riverwood Capital.
• Blueshift, a San Francisco-based customer data activation platform, raised $15 million in Series B funding. SoftBank Ventures Asia led the round, and was joined by investors including Storm Ventures and Nexus Venture Partners.
• Credly, a New York City-based digital credentialing platform, raised $11.1 million in funding. ZOMA Capital, Strada Education Network, New Markets Venture Partners, University Ventures, Pearson, Lumina Foundation, and Lion Brothers Company were the investors.
• Happy Returns, a Santa Monica-based provider of return and logistics solutions, raised funding through a strategic investment from PayPal as part of an $11 million round.
• Onera Health, an Palo Alto, California and Netherlands-based provider of sleep diagnostic solutions and services, raised over $9.3 million in Series A funding. Investors included Jazz Pharmaceuticals and imec.xpand.
• Suuchi, a NJ-based startup focused on supply chains in fashion brands, raised $8 million in growth equity in a round led by Edison Partners.
• Saleswhale, a Singapore-based AI sales emails automation platform, raised $5.3 million in Series A funding. Monk’s Hill Ventures led the round, and was joined by investors including GREE Ventures, Wavemaker Partners, and Y Combinator.
• InfoTycoon, an Atlanta-based management platform for the multifamily property industry, raised $5 million in seed funding. Shadow Ventures led the round.
• Embrace, a Culver City, Calif.-based provider of performance management technology for mobile, raised $4.5 million in funding led by Pritzker Group Venture Capital. Greycroft Partners and Vy Capital were also investors.
• Motimatic, a San Francisco-based firm aiming to prod advertising networks into achieving social good, raised $4 million in funding. City Light Capital led the round and was joined by investors including University Ventures and New Markets Venture Partners.
• Synthesia, a UK-based startup developing video AI technology, raised $3.1m in funding. LDV Capital led the round, and was joined by investors including MMC Ventures, Seedcamp, VAS Ventures and TransferWise co-founder Taavet Hinrikus.
• Simergent, an Oklahoma City-based creator of home dialysis, raised $2.8 million in seed funding. i2E Inc led the round.
• TripScout, a Chicago-based travel app, raised $2.1 million in seed funding. Corazon Capital led the round.
• MakersPlace, a San Francisco peer-to-peer digital creations marketplace on the blockchain, raised $2 million seed funding. Uncork Capital led the round, and was joined by investors including Draper Dragon Fund and Abstract Ventures.
PRIVATE EQUITY DEALS
• Hardy Capital acquired LD Vision Group, a Canadian and New York-based eyecare retailer. Financial terms weren't disclosed.
• Francisco Partners invested in PayScale, a Seattle-based SaaS-based compensation analytics provider.
• Willcrest Partners and Curran Companies recapped Precision Aerospace, a Phoenix-based provider of metal assemblies for aerospace and industrial applications. Financial terms weren't disclosed.
• HZO, a Raleigh, N.C.-based provider of protective nanocoatings for electronics, raised $70 million in funding, including $40 million from undisclosed investors and $30 million in credit facilities from Cathay Bank.
• Rocky Mountain Excavating, a Castle Rock, Colo.-based provider of civil design and specialty construction services, merged with PLM Asphalt & Concrete, an Aurora, Colo.-based provider of concrete construction services currently a portfolio company of Peninsula Capital Partners and Silver Peak Partners. Financial terms weren't disclosed.
• Ntiva, backed by Southfield Capital, acquired Diverse Technology Solutions, a New York-based cloud service provider for hosted data, voice and business IT solutions. Financial terms weren't disclosed.
• CortiCare, a Carlsbad, Calif.-based telehealth services and EEG brain monitoring solutions, acquired Physicians Ancillary Services, a Rocky Hill, Conn.-based provider of ambulatory EEG services. HCAP Partners also invested. Financial terms weren't disclosed.
• ClearCourse Partnership acquired NetXtra, a provider of intuitive integrated digital services to not-for-profit and e-commerce sectors.
• Varsity Healthcare Partners invested in Angels of Care, a provider of home health services to pediatric patients with complex medical conditions.
• Loon, a mobile network operator, raised $125 million from SoftBank Corp. subsidiary HAPSMobile.
• ASK Chemicals, a German maker or chemicals used in foundries, is up for sale, people close to the matter told Reuters. Rhone Capital backs the firm. Read more.
• Occidental Petroleum Corp offered a $38 billion bid for Anadarko Petroleum Corp. Read more.
• Hillhouse Capital is preparing for an IPO of some Chinese animal hospital assets that could raise $500 million, people with knowledge of the matter told Bloomberg. Read more.
• GLP, a Singapore-based industrial-warehouse manager, is planning an IPO of its U.S. arm that could value it at $20 billion, per the Wall Street Journal. Read more.
• Turning Rock Partners sold its stake in Capital Square 1031. Financial terms weren't disclosed.
• Upland Software Inc acquired PostUp, an Austin-based provider of email and audience development technology for media industries from Transition Capital Partners and Petra Capital Partners.
• XRI, a portfolio company of Morgan Stanley Energy Partners, acquired Fountain Quail Water Treatment, an Irving, TX-based water treatment firm from Fountain Quail Energy Services, a portfolio company of CSL Capital Management. Financial terms weren't disclosed.
FIRMS + FUNDS
• Arsenal Capital Partners raised $2.36 billion of committed capital for its fifth fund.
• Hosen Capital is looking to raise as much as $1 billion to buy stakes in Asian food producers, Bloomberg reports. Read more.
• WNG Capital raised $438 million for its WNG Aircraft Opportunities Fund II.
• Five Elms Capital, a growth equity firm focused on founder-owned software companies, closed its fourth fund with over $300 million in limited partner commitments. www.fiveelms.com
• AV8 Ventures, a firm focused on automation backed by Allianz, has closed a €150 million ( $170 million) TechCrunch reports.
• Tribe Capital is aiming for $150 million for its first fund.
• 137 Ventures named Nicholas Procaccini as investment partner. Procaccini started at the firm as an associate in 2014.