Term Sheet — Tuesday, May 14

May 14, 2019, 1:58 PM UTC


As of Monday’s market close, those who bought into Uber at its IPO were down roughly $1.4 billion. Eesh.

But wait — there are people who are doing just fine. Early investors and the bankers who helped take the company public. Uber paid $106.2 million to a bevy of underwriters led by Morgan Stanley, according to SEC filings. The group also includes Goldman Sachs, BofA Merrill Lynch, Barclays, Citigroup, and Allen & Company.

There’s been a deluge of criticism around Morgan Stanley’s role in Uber’s IPO. “The underwriters should have done a better job at figuring how strong the true demand was,” Jay Ritter, a professor at the University of Florida’s Warrington College of Business, told Bloomberg.

My colleague Lucinda recounts an incident that occurred after Facebook’s IPO:

That IPO, too, involved Morgan Stanley in the lead role. Following a lackluster first day of trading, the bank’s fees, as well as trades stemming from its role as the lead in the deal, were heavily scrutinized. A Massachusetts regulator later fined Morgan Stanley $5 million over the IPO, arguing the underwriter had selectively disclosed information to certain clients over others.

Now, Morgan Stanley finds itself in hot water again as it sold Uber stock to its wealth management clients at a $48.77 share price with a 180 day lock-up period before they can sell. Uber closed down more than 10% to below $38 a share Monday.

In an all-hands email, Uber CEO Dara Khosrowshahi attempted to calm his employees. He wrote, “Like all periods of transition, there are ups and downs. Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”

Although Uber hasn’t pointed the finger at Morgan Stanley for its performance on the public markets, I’m not sure the bank’s clients are as level-headed. As Josh Brown of Ritholtz Wealth Management said on Twitter, “This will be a fun phone conversation for their financial advisors.”

CRYPTO CRAZE: Bitcoin’s price crossed $8,000 as it hit its highest level since July 2018. As the digital currency gains momentum, Fortune’s Jeff John Roberts reports that it could soon enter mainstream commerce. Big name retailers—including Crate and Barrel, Nordstrom, and Amazon-owned Whole Foods—will reportedly accept Bitcoin and three other types of digital money.

The retail initiative comes via a partnership between Flexa, a payments startup, and Gemini, the Cameron and Tyler Winklevoss-owned digital currency company. It works by piggybacking on the digital scanners that many big retailers use to accept phone-based payments from their apps and from digital wallets like Apple Pay.

Read the full story here.


Nextdoor, Inc., a social network for the neighborhood, raised $123 million in funding at a $2.1 billion valuation. Riverwood Capital led the round, and was joined by investors including Benchmark, Tiger Global Management and Kleiner Perkins.

DocPlanner, a healthcare booking platform, raised €80 million ($89.7 million) in Series E funding. One Peak Partners and Goldman Sachs Private Capital Investing led the round, and were joined by investors including Piton Capital and ENERN Investments.

Tempo Automation, a San Francisco-based electronics manufacturer for prototyping and low-volume production of printed circuit board assemblies, raised $45 million in Series C funding. Point72 Ventures led the round, and was joined by investors including Lockheed Martin, Lux Capital and Uncork Capital.

Respond Software, a Mountain View, Calif.-based developer of software for security operations, raised $20 million in Series B funding. ClearSky Security led the round.

Hatch, a lifestyle brand for women before, during and after pregnancy, raised $5 million in Series A funding. Silas Capital led the round, and was joined by investors including M3 Ventures.

Soundstripe, a Nashville-based company providing music and sound effects to digital creators, raised $4 million in Series A funding. Vocap Investment Partners led the round.

NanoPhotonica, a Lake Mary, Fla.-based provider of quantum dot, nanomaterials and device technology, raised $3.5 million in funding. Samsung Ventures led the round, and was joined by investors including DeepWork Capital.

CodeSandbox, a Netherlands-based online code editor, raised $2.4 million in seed funding. Kleiner Perkins led the round, and was joined by investors including Arches Capital.


ElevateBio, a Cambridge, Mass.-based biotech holding company, raised $150 million in Series A funding. Investors include UBS Oncology Impact Fund, EcoR1 Capital, Redmile Group and Samsara BioCapital.

Livionex, a Los Gatos, Calif.-based biotech firm, raised $4 million in Series A funding. The investors were not named.


BlackBern Partners acquired Zentech Manufacturing, a Baltimore, Md.-based electronics contract manufacturer. Financial terms weren't disclosed.

Sky Island Capital acquired Material Sciences Corporation, a Canton, Mich.-based provider of advanced materials and specialty coated metals. Financial terms weren't disclosed.

Sterling Partners’ Education Opportunity Fund made an investment in Reading Plus, a Vermont-based provider of literacy solutions for grades 3-12. Financial terms weren't disclosed.

Splash Car Wash, which is backed by Palladin Consumer Retail Partners, acquired Wash Co, a Middletown, N.Y.-based operator of car wash facility and laundromat. Financial terms weren't disclosed.

Tikehau Capital will invest 26 million pounds ($33.6 million) in Medtrade, a U.K.-based developer of medical device products.

Cove Hill Partners made an investment in NetDocuments, a Lehi, Utah-based cloud-based content services platform for law firms and corporate legal and compliance departments. Financial terms weren't disclosed.

Riverside Partners made a majority investment in 3Play Media Inc, a Boston-based provider of video captioning, transcription, subtitling, and audio description services. Financial terms weren't disclosed.

Lee Equity Partners agreed to acquire a majority stake in K2 Insurance Services, a specialty insurance services holding company. Financial terms weren't disclosed.


CM Group acquired Vuture, a New York-based cross-channel marketing platform for legal and professional service providers. Financial terms weren't disclosed. In conjunction with the acquisition, CM Group also completed $410 million in financing to provide capital for future acquisitions.

ArchiMed acquired Bomi Group, an Italy-based provider of logistic services and solutions for diagnostic and medical sectors, for approximately €70 million ($78.5 million).


L Squared Capital Partners sold its stake in Virtium, a Rancho Santa Margarita, Calif.-based provider of solutions of industrial-grade memory and storage solutions, to Court Square Capital Partners. Financial terms weren't disclosed.

Webster Equity Partners acquired Vivona Brands, a London-based provider of beauty, wellness, and lifestyle products, from Inflexion Private Equity. Financial terms weren't disclosed.

Onit, Inc acquired SimpleLegal, a Mountain View, Calif.-based provider of modern legal spend, matter and vendor management software. Financial terms weren't disclosed.


Sapphire Ventures, a Palo Alto, Calif.-based venture capital firm, has set out to raise a $150 million opportunity fund, according to an SEC filing.

FUEL Capital, a Burlingame, Calif.-based early stage venture capital firm, raised $75 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.

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