A TALE OF TWO CEOS
Travis Kalanick’s shadow continues to loom at Uber. It’s very hard to carry out the “Dekalanickization of Uber” when Kalanick has made such a profound mark on the company’s operations.
The New York Times published an article that outlines Uber CEO Dara Khosrowshahi’s challenges in taking the company public — and those challenges have a lot to do with his predecessor.
From the article:
The C.E.O. wants to prove that the start-up has evolved past Mr. Kalanick’s raucous, tech-bro culture — and his strategy of setting barrels of money aflame in the pursuit of growth above all else. But Uber’s past, to state the obvious about a company that is only a decade old, is simply not that far gone. Almost every instance of Mr. Kalanick’s bare-knuckled approach to capitalism illuminates something about Uber’s viability as a business today. (Citing the quiet period before an I.P.O., representatives for Uber, Mr. Khosrowshahi and Mr. Kalanick all declined to comment.)
The company has little good will with consumers or regulators in multiple jurisdictions. And Uber still loses money on nearly every fare, using venture capital to subsidize rides, invest in new areas and beat back a set of global competitors that offer an essentially identical service.
Mr. Kalanick’s heavy reliance on venture funding could be problematic for a public Uber in at least two ways. Arguably, it instilled habits of indiscipline, because executives could simply ask for more money whenever they wanted it, like rich kids with no cap on their allowance.
Second, and more troubling for retail investors, the bulk of investment returns might have already been realized. Uber acknowledged in a recent filing that its growth is slowing, fueling concern that venture firms, private equity shops, sovereign-wealth funds and other elite insiders have not left much upside for mom-and-pop investors.
No matter what happens when Uber shares begin to trade, Kalanick will make several billion dollars — 600 times what Khosrowshahi’s stake will be worth. Read the full story here.
FUNDING VICE: Vice Media raised $250 million in debt from a group of investors including 23 Capital, Soros Fund Management, Fortress Investment Group LLC and Monroe Capital, according to the WSJ. Although the company states that the debt would be used toward accelerating growth, it’s not entirely clear to me what that growth entails. Nancy Dubuc, the company’s new CEO, is reportedly moving Vice’s emphasis away from the online content that made it popular with its young users … So if it moves away from online content, what will it focus on instead?
QUOTE OF THE WEEK: “I’m a card-carrying capitalist. You don’t have to worry about me changing in that matter. I also think capitalism does involve regulation. It involves taking care of people who are left behind. I don’t think the country will go into socialism in 2020 or 2040 or 2060.”
Those were the words of Warren Buffett at his annual Berkshire Hathaway meeting. Here’s everything you missed from this year’s “Woodstock for Capitalists.”
• Checkout.com, a London-based payment solutions provider, raised $230 million in Series A funding. Insight Partners and DST Global led the round.
• BigBasket, an India-based startup that delivers groceries and perishables across the country, raised $150 million in Series F funding. Investors include Mirae Asset-Naver Asia Growth Fund, CDC Group, and Alibaba.
• SendBird, a customizable chat and messaging API service for mobile and web applications, raised $50 million, bringing its total Series B funding round to $102 million. Tiger Global Management led the extension, and was joined by investors including ICONIQ Capital.
• Noom, a mobile wellness company, raised $58 million in funding. Sequoia Capital led the round, and was joined by investors including Aglaé Ventures, Samsung Ventures, Jan Koum, co-founder of WhatsApp, Tony Xu, Josh Kushner, Scooter Braun, and Fred Ehrsam.
• Immortals, a Los Angeles-based e-sports startup, raised $30 million in Series B funding. Investors include AEG, Lionsgate, the Milken Family, Steve Kaplan, Meg Whitman and March Capital Partners. Also, Immortals acquired Gamers Club, a Brazil-based game matchmaking platform for funding of an undisclosed amount.
• Trusted Health, a career platform for nurses, raised $20 million in Series A funding. Craft Ventures led the round, and was joined by investors including Felicis Ventures and Founder Collective.
• Confident Cannabis, a Palo Alto, Calif.-based developer of a laboratory information management system for cannabis analytical laboratories, raised $12 million in Series A funding. Poseidon Asset Management led the round, and was joined by investors including joined by existing investors Bullpen Capital, Y Combinator, Base Ventures, and FJLabs.
• InCountry, a San Francisco-based data residency-as-a-service platform, raised $7 million in seed funding. Investors include Caffeinated Capital , Felicis Ventures, Ridge Ventures, Bloomberg Beta, Charles River Ventures, Global Founders Capital, Parade Ventures and MState.
• Kitab Sawti, a Sweden-based Arabic audiobook platform, raised $6 million in Series A funding. Investors include Bonnier Ventures, Paltel Group, and Kaaf Investments.
• Crusoe Energy Systems Inc, a technology driven flare mitigation provider, raised $4.5 million in seed funding. Bain Capital Ventures and Founders Fund Pathfinder led the round, and was joined by investors including Wicklow Capital, Winklevoss Capital and Dragonfly Capital Partners.
• Indose, a Woodland, Calif.-based maker of a cannabis vaporizer, raised $3.5 million in Series A funding. Casa Verde Capital led the round.
• TransitScreen, a Washington, D.C.-based provider of real-time transportation information software, raised $3 million in funding, from TIMIA Capital.
PRIVATE EQUITY DEALS
• Artisan Design Group, which is backed by The Sterling Group, acquired two Lake Forest, California-based companies: Vintage Design LLC and Nu Wood Design. Financial terms weren't disclosed.
• Accel-KKR made an investment in OrthoFi Inc, a Denver-based software and technology-enabled service platform in the orthodontic specialty industry. Financial terms weren't disclosed.
• ClearCourse, which is backed by Aquiline Capital Partners, acquired Crafty Clicks, a U.K.-based specialist data provider and address validation platform. Financial terms weren't disclosed.
• NMS Capital, a portfolio company of Anne Arundel Dermatology Management, acquired Laser Skin & Vein Center of Virginia, a Virginia Beach, Va.-based provider of cosmetic dermatology patient care. Financial terms weren't disclosed.
• Pamlico Capital made an investment in Business Network International, a Charlotte, N.C.-based business development platform. Financial terms weren't disclosed.
• Cerberus and TCW made an investment in Frontier Spinning, a Sanford, N.C.-based producer of cotton and cotton/polyester blend yarns for the knitting and weaving industries. Financial terms weren't disclosed.
• Arsenal Capital Partners acquired Hopebridge, LLC, a Kokomo, Ind.-based center-based provider of behavioral health services for children affected by autism spectrum disorder. Financial terms weren't disclosed.
• Fastly Inc., a U.S. cloud services provider, plans to raise $169 million in an IPO of 11.25 million shares priced between $14 to $16. The firm posted revenue of $144.5 million in 2018 and loss of $30.9 million. August Capital (20.2% pre-offering), Iconiq (12.8%), and AlphaTech Ventures (10.7%) back the firm. BofA, Citi, and Credit Suisse are underwriters. Read more.
• Yunji, a Hangzhou, China e-commerce site using social platforms to promote its products, raised $121 million in an IPO 11 million shares priced at $11 apiece. It posted revenue of $1.9 billion in 2018 and loss of $335.7 million. Morgan Stanley, Credit Suisse, J.P. Morgan and CICC are underwriters. It plans to list on the Nasdaq as “YJ.” Read more.
• Clearlake Capital Group, L.P. agreed to acquire Dude Solutions, a Cary, N.C.-based software-as-a-service provider of operations management solutions, from Warburg Pincus. Financial terms weren't disclosed.
• Mastercard (NYSE: MA) agreed to acquire Transactis, a New York-based platform that helps businesses deliver bills and receive payments. Financial terms weren't disclosed. Transactis had raised approximately $66.8 million in funding from investors including Safeguard Scientifics, StarVest Partners, and Compound.
• Blue Sea Capital acquired Krueger-Gilbert Health Physics, LLC, a Towson, Md.-based diagnostic medical physics provider. The seller was Anacapa Partners. Financial terms weren't disclosed.
• Gen Cap America Inc sold Alpha Technics Inc, an Irvine, Calif.-based developer of precision temperature measurement solutions, to TE Connectivity. Financial terms weren't disclosed.
• Gridiron Capital acquired Colibri Group, a provider of online learning online solutions to licensed professionals, from Quad-C Management. Financial terms weren't disclosed.
FIRMS + FUNDS
• W Capital Partners, a New York-based investment firm, raised $251.4 million for its fourth fund, according to an SEC filing. The target is $750 million.
• The Ecosystem Integrity Fund, a San Francisco-based sustainability-focused early growth stage investment firm, raised $100 million for its third fund.
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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.