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Term Sheet — Monday, May 20

NOT JUST A TAX BREAK

There’s a new opportunity fund in town. Jim Sorenson’s Catalyst, a private equity firm he helped found, is raising $150 million to invest in opportunity zones.

The group’s first fund, which Sorenson is seeding with $10 million, will focus on developing real estate with an eye toward delivering both market-rate returns and measurable social good, according to Bloomberg. “This is a great opportunity to generate a return and make a positive contribution to society,” he said in the article.

There’s been a lot of talk and interest around Opportunity Zones, a new capital gains exemption for people who make long-term investments in underserved communities. There are currently 8,700 designated Opportunity Zones in the U.S.

You might remember that Term Sheet interviewed Peter Brack when he launched Hypothesis Ventures, which was one of the earliest venture firms to try to capitalize on the opportunity.

One thing to look out for is how people are trying to steer the pitch away from taxes and toward revitalizing underserved communities across America. Let’s not forget: The big appeal of Opportunity Zone-focused funds is that they allow investors to defer federal taxes on any recent capital gains until 2026, reduce that tax payment by up to 15%, and pay as little as zero taxes on potential profits from the fund if the investment is held for 10 years.

But you won’t hear about all that from the people launching such funds. Here’s a telling excerpt from the Bloomberg story:

Sorenson recently spoke on a panel about opportunity zones at a conference with about 1,000 people in the audience.

“The other three guys were just kinda talking about tax arbitrage,” said Keele, who attended. “Jim was talking about community health clinics and affordable grocery stores.” Afterward, the line of people waiting to speak with Sorenson was “a mile long.”

A DEFLATED UNICORN: NJOY has fallen short of its funding goal. The e-cigarette maker, which had been seeking a $5 billion valuation, has closed a funding round at a valuation of about $2 billion. The company had been aiming to raise $300 million at a valuation as high as $5 billion, but investors balked at that figure, according to The Wall Street Journal.

It’s still a pretty remarkable development given the fact that NJOY filed for bankruptcy protection three years ago due to heavy debt and plummeting sales. But now, in this brave new vaping world we live in, its sleek lower-priced vaporizer is gaining traction and wooing smokers who might have otherwise gone with Juul.

PAID OFF: Robert F. Smith, the founder and CEO of private equity firm Vista Equity Partners, delivered the commencement address at Morehouse College on Sunday. During the speech, the billionaire dropped a surprise: He vowed to pay off the student loans of every member of the graduating class.

“On behalf of the eight generations of my family that have been in this country, we’re gonna put a little fuel in your bus,” Smith said. “My family is going to create a grant to eliminate your student loans.” The gift has been estimated to be worth up to $40 million, according to The Atlanta Journal Constitution.

In January, I wrote about how America’s student loan debt problem is nearing a full-blown crisis. Outstanding student debt hit $1.5 trillion for the first time ever in 2018, and it doesn’t seem to be getting better. In fact, it appears that the trend is only accelerating when you consider that student debt accounted for $600 billion 10 years ago.

In a 2017 commentary piece for Fortune, veteran investor Jim Rogers and former academic dean Robert Craig Baum said the higher education bubble, which is one-sixth (!) of the U.S. economy, “will likely burst with the force of all previous catastrophes combined.”

Although Smith’s gesture is a potentially life-altering gift to the nearly 400 graduating seniors, this country’s student debt has the potential to do irreparable damage if left unaddressed on a mass scale.

BEST BUSINESS DOCUMENTARY: Over the weekend, I asked for documentary recommendations and received an overwhelming response of excellent suggestions. Now, I want to turn to you & ask for your favorite business documentary.

Send the name of the documentary along with a short explanation of what it’s about and why you enjoyed it to polina.marinova@fortune.com with the subject line “Business Documentary,” and I will compile a list of the best ones.

VENTURE DEALS

Auth0, a Bellevue, Wash.-based maker of an identity-as-a-service platform, raised $103 million in Series E funding. Sapphire Ventures led the round, and was joined by investors including Bessemer Venture Partners, K9 Ventures, Trinity Ventures, Meritech Capital, Telstra Ventures, and World Innovation Lab.  

Clinc, an Ann Arbor, Mich.-based creators of conversational, natural language AI, raised $52 million in Series B funding. Insight Partners led the round, and was joined by investors including DFJ Growth, Drive Capital and Hyde Park Venture Partners.

Siemplify, a New York-based provider of security orchestration, automation and response, raised $30 million in Series C funding. Georgian Partners led the round.

Snapsheet, a Chicago-based virtual claims solutions company, raised $29 million in Series E funding.

PROWLER.io, an artificial intelligence platform for decision-making, raised $24 million at a valuation of $100 million. Investors include Amadeus Capital Partners, Atlantic Bridge, Cambridge Innovation Capital, Mandatum Life, Passion Capital, Pearson, RB Capital, SGInnovate, and Tencent.

Wagestream​, a London-based flexible wage app, raised £15 million ($19 million) in funding​. Investors include Balderton​ and ​Northzone.

Health at Scale, a Cupertino, Calif.-based provider of machine intelligence for healthcare optimization, raised $16 million in Series A funding. The investors were not named.

Revenue Analytics, an Atlanta-based pricing & revenue management company, raised $11 million in Series A funding. Noro-Moseley Partners led the round, and was joined by investors including Blue Lagoon Capital.

Roundtrip, a Philadelphia-based provider of on-demand and scheduled non-emergency medical transportation, raised $5.14 million in Series A funding. Motley Fool Ventures led the round, and was joined by investors including Ben Franklin Technology Partners and Johns Hopkins University.

Outpost, a Bali-based hospitality brand serving the remote work lifestyle, raised $1.3 million in seed funding. Investors include EverHaus, Clarenberg Ventures, Broadwell (HK) and Strypes Holdings.

HEALTH AND LIFE SCIENCES DEALS

Actuate Therapeutics Inc, a Fort Worth, Texas-based clinical stage biopharmaceutical company, raised $21.7 million in Series B funding. Kairos Ventures led the round, and was joined by investors including DEFTA Partners, Tech Coast Angels and Bios Partners.

PRIVATE EQUITY DEALS

Five Point Energy sold a minority stake in WaterBridge Resources LLC, a Houston, Texas-based developer and operator of water infrastructure networks, to GIC. The deal values the company at approximately $2.8 billion.

Post Capital Partners recapitalized Property Registration Champions, LLC, a Melbourne, Fla.-based provider of rental, foreclosure, and vacant properties’ licensing and registration services. Financial terms weren’t disclosed.

SugarCRM, which is backed by Accel-KKR, acquired Salesfusion, an Atlanta-based provider of marketing automation solutions. Financial terms weren’t disclosed.

LDC acquired MSQ Partners, a London-based marketing agency. Financial terms weren’t disclosed.

Tapì, which is backed by Wise Equity SGR, acquired Les Bouchages Delage, a Cognac, France-based elite manufacturer. Financial terms weren’t disclosed.

By Light Professional IT Services LLC, which is backed by Sagewind Capital, acquired Metova Federal, a Cabot, Ark.-based cyber range and cyber training services provider for the U.S. government. Financial terms weren’t disclosed.

Sumeru Equity Partners invested $56 million in Criteria Corp, a West Hollywood, Calif.-based SaaS-based employment analytics platform.

42 North Dental, a portfolio company of Audax Private Equity, acquired Northborough Dental Associates, a Massachusetts-based dental office. Financial terms weren’t disclosed.

H.I.G. Capital agreed to make an investment in Riveron, a Dallas, Texas-based business adviser. Financial terms weren’t disclosed.

OTHER DEALS

JPMorgan Chase & Co agreed to buy InstaMed, a Philadelphia-based healthcare payments company. Financial terms weren’t disclosed.

IPOs

Safe Auto Insurance Group, a Columbus-based auto insurance provider, filed for a $50 million IPO. The firm posted $429.5 million in revenue in 2018 and income of $20.1 million. BofA Merrill Lynch and Deutsche Bank are underwriters. It plans to list on the Nasdaq as “SAIG.” Read more.

EXITS

Lovell Minnick Partners agreed to sell J.S. Held LLC, a Jericho, N.Y.-based consulting firm focused on the construction industry and insurance claim management, to Kelso & Co. Financial terms weren’t disclosed.

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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.