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Why Venture Capitalists Are Pouring Money Into Male Fertility Startups: Term Sheet

In the last decade, startups with egg-freezing services have been focused on hyper-targeting female millennials. “Egg freezing has become like a mantra for how to be an independent woman,” said a marketing director at one such company. “It's part of the ‘You don’t need a man and if you’re single, you don’t have to have kids right now’ moment — a new wave of feminism.”

Let me put things in perspective: In 2009, only 475 women in the United States froze their eggs, according to the Society for Assisted Reproductive Technology. By 2016, that number had increased to 7,300. And it’s still on the rise. 

Although 7,300 may seem like a small number, it’s big money. Venture capital firms have poured more than $102 million into fertility startups so far in 2019, which is on track to outpace the $122 million raised in all of 2018.

What you’ll notice if you read the Term Sheet deal section every day is that sperm storage startups are also on the rise. Today, Dadi, a New York-based health company focused on male fertility testing and sperm storage, raised $5 million in funding from TCG, Firstminute Capital, and Third Kind Ventures.

“Society at large doesn’t understand the subject of fertility,” Tom Smith, the co-founder and CEO of Dadi told TechCrunch. “People see it as a female issue.”

Dadi's website features the following stats: "Men age 40+ have a decreased sperm count compared to men ages 20-29," "50% of known couple infertility cases can be attributed to the man," and "Millennials are 50% as fertile as their father's generation."

The company raised $2 million in seed funding earlier this year. So did Legacy, a sperm testing and freezing service, which raised $1.5 million in a round led by Bain Capital Ventures. At-home sperm testing company ExSeed Health raised $1.2 million from venture investors.

In addition to Dadi and Legacy, other male wellness startups have raised substantial amounts of money including Hims and Ro, which was largely focused on erectile dysfunction before re-branding as "a mission-driven healthcare company” so that it could create new products for smokers and menopausal women. 

There is a growing awareness around male fertility, and startups and their deep-pocketed backers are here to capitalize on it. Although there’s no question that companies in the space are making fertility more accessible and affordable, they have been criticized for their fear-inducing marketing strategies and that they are more focused on wooing customers than providing quality care. 

I’m personally more concerned about the lack of medical expertise at many of these venture-backed startups. Tech entrepreneurs have (successfully) re-branded everything from mattresses to razors through Instagram-friendly marketing and flashy ads. But these companies aren’t selling razors or mattresses — they’re offering medication or providing a medical service. I think history has taught us that "move fast and break things" should come with the asterisk of "and tread very carefully" when building products that deal with people’s health. 

WEWORK UPDATE: WeWork has turned to a complex corporate structure for its initial public offering that would give tax benefits to co-founder Adam Neumann and early investors in the office space provider, according to The Financial Times. Read more.

VENTURE DEALS

Webflow, a San Francisco-based provider of a web-based service that allows users to create websites, raised $72 million in Series A funding. Accel led the round, and was joined by investors including Silversmith Capital, Rainfall Capital, FundersClub, and Draper Associates.

LanzaTech, a Skokie, Ill.-based sustainable fuels and chemicals platform, raised $72 million in funding, from Novo Holdings A/S.

Jollychic, a Malta-based ecommerce platform, raised $65 million in funding, from G42 Group.

Ezoic, a California and UK-based AI-driven platform for digital publishers, raised $33 million in funding, from Sageview Capital.

Cloudleaf Inc, a Milpitas, Calif.-based provider of digital supply chain solutions, raised $26 million in Series B funding. Intel Capital and WRVI Capital led the round.

WSC Sports, an Israel-based creator of AI-powered sports video content, raised $23 million in Series C funding. Eyal Ofer’s O.G. Tech Ventures led the round, and was joined by investors including NTT DOCOMO Ventures, HBSE Ventures – the venture arm of Harris Blitzer Sports & Entertainment, Maor Investments, ISF and Go4it Capital. 

SignalWire Inc, a Palo Alto, Calif.-based developer of an open-source enterprise communication platform, raised $11.5 million in Series A funding. Storm Ventures led the round.

XOi Technologies, a Nashville-based provider of field service communication solutions, raised $11 million in Series C funding. PeakSpan Capital led the round, and was joined by investors including Grotech Ventures, Vocap Investment Partners and Nashville Capital Network.

Sunverge, a San Francisco-based provider of a distributed energy resource control and aggregation platform, raised $11 million in funding. Ecosystem Integrity Fund led the round, and was joined by investors including Equinor Energy Venturesand Evergy Ventures.

Tripalink, a Los Angeles-based co-living start-up, raised $10 million in Series B funding. Investors include Calin SJG Fund, L.P, K2VC, Tekton Ventures and Oriza Venture.

Sunday, a Boulder, Colo.-based direct-to-consumer lawn care company, raised $6 million in Series A funding. Tusk Venture Partners led the round, and was joined by investors including Forerunner Ventures and Bullish. 

Dadi, a New York-based health company focused on male fertility testing and sperm storage, raised $5 million in funding. TCG, an affiliate of The Chernin Group, led the round, and was joined by investors including firstminute Capital and Third Kind Ventures.

Crosschq, a San Francisco-based developer of a talent acquisition platform, raised $4.1 million in seed funding. GGV Capital led the round, and was joined by investors including Bessemer Venture Partners.

PurpleLab, a healthcare data and analytics platform, raised $3 million in funding, from Edison Partners

STRT, a Utah-based designer and operator of living and working accommodations, raised seed funding of an undisclosed amount. Celtic Investment, Inc., Sentry Investments LLC and 4-D Investments led the round.

Capsule8, a Brooklyn, N.Y.-based provider of attack protection solutions for Linux production environments, raised funding of an undisclosed amount from Intel Capital. 

HEALTH AND LIFE SCIENCES DEALS

Glycomine Inc, a San Carlos, Calif.-based biotechnology company, raised $33 million in Series B funding. Novo Holdings A/S led the round.

PRIVATE EQUITY DEALS

Mesmerize, a portfolio company of the Beekman Group, acquired Pharmacy Health Network, an out-of-home digital network focused on retail pharmacies. Financial terms weren’t disclosed. 

Altamont Capital Partners agreed to acquire Topa Insurance Company, a property and casualty insurance carrier, from Topa Equities. Financial terms weren’t disclosed. 

Reedy Industries, a portfolio company of Audax Private Equity, acquired Just Service Inc and AirMasters, two providers of HVAC and other mechanical services. Financial terms weren’t disclosed. 

Trinity Hunt Partners acquired Wexco International, a Marina del Rey, Calif.-based provider of litigation-focused forensic engineering services. Financial terms weren’t disclosed. 

Defi Solutions and Sagent Auto, two auto lending technology and services providers, agreed to merge. The newly combined company will be known as Defi Solutions and be backed by Warburg Pincus, Bain Capital Ventures and Fiserv, Inc. Financial terms weren’t disclosed. 

Pestell Group, a portfolio company of Wind Point Partners acquired Pro-Ag Products and Verus Animal Nutrition. Financial terms weren’t disclosed. 

IPOs

Helios Towers, a mobile tower operator in sub-Saharan Africa, is reviving plans for an IPO, Bloomberg reports citing sources. George Soros backs the firm. Read more.

Transsion, a Shenzhen-based smartphone seller with a strong presence in Africa, could raise up to 3 billion yuan ($426 million) in an IPO on the STAR Market in Shanghai, TechCrunch reports. Read more.

InMode Limited, an Israeli maker of minimally-invasive medical aesthetic products, raised $70 million in an offering of 5 million shares priced at $14 apiece, the low end of its range. It posted revenue of $85 million and income of $22.4 million in 2018. It plans to list on the Nasdaq as “INMD.” Read more.

EXITS

Francisco Partners agreed to sell ClickSoftware, a Burlington, Mass.-based provider of field service management solutions and optimization technology, to Salesforce (NYSE: CRM) for $1.4 billion.

Qatar Investment Authority acquired a “significant” stake (approx. $550 million) in Oryx, a midstream crude operator in the Permian Basin, from Stonepeak Infrastructure Partners.

FIRMS + FUNDS

Corigin Ventures, a New York City-based venture capital firm, raised $32.5 million toward a target of $50 million for its second fund, according to an SEC filing.

PEOPLE

Steven Westerback joined Atlantic-Pacific Capital Inc as a partner. 

Lovell Minnick Partners promoted Scott Shebelsky to chief financial officer.