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Introducing Yet Another WeWork Challenger in the U.S.: Term Sheet

Another WeWork competitor is on the prowl.

International Workplace Group (LSE:IWG), a Switzerland-based shared office provider, is reportedly mulling the spin off of its U.S. business into a separately listed company in New York. Mark Dixon, IWG's CEO, is in talks with investment banks about creating a standalone business that would become a publicly traded rival to WeWork, according to SkyNews.

IWG's current market cap in London is £3.64 billion ($4.5 billion), and if the company pursues this plan, its US business could be worth as much as £3 billion ($3.7 billion) as a standalone franchise. IWG generated about 41% of its $3.4 billion of revenue in the Americas last year, according to data compiled by Bloomberg.

Here’s what’s interesting: IWG is larger than WeWork in terms of space. The company has ~60 million square feet (5.6 million square meters) globally, while WeWork had 45 million square feet as of March. WeWork’s largest backer SoftBank has valued the company at $47 billion, which is way more than IWG’s market cap as noted above. Plus, WeWork’s IPO may be among the year’s biggest.

IWG CEO Mark Dixon said earlier this month that WeWork’s visibility has helped his company’s U.S. business. “That’s a market that’s deemed to be very competitive,” Dixon said. “It is the home of WeWork, so by WeWork and others talking more in the market, it generates more business for us.”

As I noted on Friday, the co-working market is out of control. There’s Convene, Knotel, Industrious, Spacious, The Yard, The Wing, and Alley — all smaller rivals with plenty of venture capital to go around. I’m not convinced that any of them, including IWG, will challenge WeWork’s business in any real way, but like Dixon said, they all stand to reap the benefits if its IPO goes well. 

ANOTHER IPO: On Friday, DataDog filed its S-1 on Friday. Datadog, a New York-based cloud app monitoring service, increased its revenue roughly 97% last year to $200 million in 2018 on $11 million profit loss. Datadog previously raised $147.9 million in equity at a valuation of $640 million from investors including ICONIQ Capital and Index Ventures. Check out the S-1 here.

PEOPLE MOVES: Dean Takahashi, who is the second-most powerful figure at the Yale Investment Office, is stepping aside, according to Institutional Investor. He will reportedly focus on “developing solutions that address the existential threat of climate change.” Takahashi joined the now-$29 billion endowment operation in 1986, just a year after chief investment officer David Swensen took over. Read more.

VENTURE DEALS

Boll & Branch, a Summit, N.J.-based designer and retailer of sustainable home goods, raised $100 million in funding from L Catterton

Procore, a Carpinteria, Calif.-based developer of cloud-based construction management software, is seeking to raise up to $112.5 million in Series H1 funding, according to PitchBook. The funding would value the company at approximately $3.3 billion. Read more.

Form Energy, a Somerville, Mass.-based energy storage company, raised $40 million in Series B funding. Eni Next LLC led the round.

Mux, a San Francisco-based cloud video infrastructure company, raised $20 million in Series B funding. Evolution Media led the round, and was joined by investors including Accel and Y Combinator.

FreshToHome, an India-based e-commerce startup that sells fresh vegetable, fish, chicken, and other kinds of meat, raised $20 million in Series B funding. Investors include Iron Pillar and Joe Hirao.

Zenoti Software, a Bellevue, Wash.-based cloud-based platform for the spa, salon and med spa industry, raised $20 million in funding, from Steadview Capital.

Stylitics, a New York-based startup powering outfit-based shopping recommendations for online retailers, raised $15 million in Series B funding. PeakSpan Capital led the round.

Capacity, a St. Louis-based knowledge sharing platform, raised $13.2 million in Series B funding. The investors were not named.

Molecula, an Austin, Texas-based enterprise software company, raised $6 million in seed funding. Investors include Seraph Group, Lontra Ventures, Velar Capital, Capital Factory, Andrew Busey and Jason Dorsey.

Enable My Child (EMC), a New York-based pediatric therapy provider offering raised $1.2 million in seed funding. CMI Ventures led the round.

HEALTH & LIFE SCIENCES DEALS

Finch Therapeutics Group Inc, a Somerville, Mass.-based microbiome therapeutics company, raised $53 million in Series C funding. Investors include OCV Partners, Susquehanna International Group, Symbiosis LLC, the Trans-Pacific Technology Fund, Avenir Growth Capital, Morgan Noble, Shumway Capital and Willett Advisors.

PRIVATE EQUITY DEALS

Serent Capital made an investment in Davisware, a West Dundee, Ill.-based provider of ERP software for field service businesses. Financial terms weren’t disclosed. 

RRJ Capital is in advanced discussions to lead a $4 billion investment in Ingram Micro Inc, an Irvine, Calif.-based distributor of IT products, according to Reuters. Read more.

EW Healthcare Partners invested in Cognate BioServices, a Hanover, Md.-based contract development and manufacturing organization. Financial terms weren’t disclosed. 

OTHER DEALS

Cisco (NASDAQ: CSCO) agreed to acquire CloudCherry, a Salt Lake City, Utah-based customer experience management company. Financial terms weren’t disclosed. CloudCherry had raised approximately $16 million in venture funding from investors including Pelion Venture Partners, Cisco Investments, Vertex Ventures, IDG Ventures, and Chiratae Ventures. 

IPOs

Datadog, a New York-based SaaS-based analytics and monitoring platform for technology stacks, filed for an $100 million IPO. The firm posted $198.1 million in revenue and a loss of $10.8 million in 2018. Index Ventures (20.1% pre-offering), OpenView Venture Partners (16%), and ICONIQ Strategic Partners (11.3%) back the firm. It plans to list on the Nasdaq as “DDOG.” Read more.

Exagen, a Vista, Calif.-based diagnostic blood test maker focused on lupus and rheumatoid arthritis, refiled for an $58 million IPO. The firm raised $32.4 million in an IPO and loss of $18.5 million in 2018. The New Mexico State Investment Council (31.5%) and Tullis-Dickerson Capital (25.4%) back the firm. backs the firm. It plans to list on the Nasdaq as “XGN.” Read more.

Megvii Technology Ltd, a Chinese AI firm known for facial recognition, filed for an IPO in Hong Kong. Alibaba backs the firm. Read more.

Cole Haan, the U.S.-based shoemaker, is preparing for an IPO. Apax, which acquired the company for $570 million from Nike in 2013, backs the firm. Read more.

EXITS

BaltCap agreed to sell auto24, an Estonia-based automotive classifieds portal in Estonia, to Baltic Classifieds Group. Financial terms weren’t disclosed. 

Arlington Capital Partners will sell Ontario Systems, a provider of enterprise software that automates operations and accelerates revenue recovery for clients in the healthcare, accounts receivable management, and government markets, to New Mountain Capital. Financial terms weren’t disclosed. 

BV Investment Partners sold Plasco ID, a Miami-based provider of ID badging, access control, and visitor management solutions, to the Barcodes Group. Financial terms weren’t disclosed. 

Avenue Capital Group made an investment of more than 250 million euros ($278 million) in Castlehaven Finance, an Ireland-based development and bridging finance lending problem. Pollen Street Capital was the seller.

PEOPLE

Pratap Penumalli joined Human Ventures as a partner.