Data Collective Raises a New Fund, Private Equity Under Fire for ‘Surprise Billing,’ and the Rise of Financial Memes: Term Sheet
Data Collective (DCVC), a San Francisco-based venture capital firm, has raised $725 million for its fifth flagship “deep tech” fund. The new fund, DCVC V, will back early-stage startups and reserve some capital to follow on in later rounds. Limited partners include university endowments, global charities, global insurance funds, and pension funds.
The firm also announced several personnel changes: It promoted Kelly Chen to partner, and hired Alan Cohen (formerly of Cisco) and Matt Michelsen (formerly of 8VC) as partners, and Kate Reed as the vice president of marketing.
Established in 2011, DCVC invests in companies “applying deep tech to transform giant industries.” In non-startup speak, this means that the firm backs entrepreneurs who focus on solving highly technical problems (usually involving big data) in sectors such as life sciences, agriculture, security, industrial transformation, and computational healthcare.
DCVC Managing Partner Matt Ocko says raising a fund this size shows that “deep tech can be both massively profitable and equitable.” Just last month, venture firm Lux Capital, which also backs frontier technology companies and often co-invests with DCVC, raised $1 billion across two new funds.
“Another reason for going up in fund size is that deep tech companies’ growth is a little slower and a little longer than a flashy consumer deal,” Ocko told Term Sheet. “The ability to soberly back them as they continue to show great progress actually drives higher returns.”
Ocko made it a point to underscore that DCVC is “most explicitly not a double bottom line fund,” referring to funds that measure their performance in terms of positive social impact. “We are here to drive returns for our LPs,” he added.
DCVC has several satellite startups in its portfolio including Planet Labs, Rocket Lab, and Capella Space. Managing partner Zack Bogue sits on the board of Planet, which uses satellites to capture images of the Earth every day. The company, he says, was instrumental in tracking the fires ravaging the Amazon rainforest.
“Planet provides its imagery to the media, but it also has paying customers in the agriculture industry, in the U.S. and foreign governments, and big technology companies that are interested in mapping,” Bogue said.
Because DCVC wants to back companies that tackle the thorniest of societal problems, the firm has also invested in several physical and digital security companies. “When societies are in distress, you see things like this horrific rash of shootings in the U.S, for example, and acts of terrorism in Europe,” Ocko said. “The problems can be addressed outside the realm of politics and addressed in a way — even whilst profitable — that saves lives and stabilizes societies.”
That’s a tall order given that there have been 38 shootings with three or more fatalities in the United States so far this year. Ocko and Bogue point to Evolv Technology, a company that uses sensors to scan individuals for concealed weapons and explosives in public venues. This immediately raises ethical questions around privacy, facial recognition, and the usage of the collected data.
This is a larger challenge for venture firms and the companies they back. As the pace of innovation accelerates, there are ethical challenges startups will need to address — such as the dehumanization of decision-making and the use of surveillance to collect and analyze mass amounts of data. Ocko says he and his partner look for businesses that are “massively profitable and equitable.”
“We will screw up and accidentally, at some point, invest in a company with the best of intentions that has unforeseen side effects,” Ocko said. “That being said, the way you reduce errors, is to make sure that the notion of equitability is always fulfilled. And that’s really all we can do.”
SURPRISE BILLING: The bipartisan leaders of the House Energy and Commerce Committee are launching an investigation into what role private equity firms may play in the problem of patients getting stuck with massive “surprise” medical bills. This “surprise billing” practice isn’t a new phenomenon. It can occur, for example, if a patient goes to a hospital that’s within their insurance network but are treated by a doctor who isn’t.
“We are concerned about the increasing role that private equity firms appear to be playing in physician staffing in our nation’s hospitals, and the potential impact these firms are having on our rising health care costs,” wrote Reps. Frank Pallone Jr. (D-N.J.) and Greg Walden (Ore.) in the letters to the private equity firms KKR, Blackstone Group, and Welsh, Carson, Anderson & Stowe.
Doctors and hospitals have been lobbying against the legislation, arguing that it would result in damaging cuts to payments to physicians. Supporters of the legislation argue the physician companies and their private equity owners are simply trying to stop any reform and protect their profits. Read more at Fortune.
THE ‘FINMEME’ INFLUENCERS: ‘Finmemes’ are memes that are highly specific to finance — and on Instagram, they’re growing more popular by the day.The new reigning king of financial memes is @litquidity. The account often makes fun of the average Wall Streeter via these stereotypes: They sport Patagonia vests, drink White Claw hard seltzers, Juul regularly, and wear Airpods. (I know, I know, it’s incredibly nerdy but also incredibly funny.)
The meme accounts used to be intended for a small subculture of people, but now they’re making their way into the mainstream. Institutional Investor wrote an entire feature that delves deep into the weird world of Wall Street Instagram. Read it here.
- GitLab, a San Francisco-based company that allows users to create, review, and deploy code, raised $268 million in Series E funding at a valuation of $2.75 billion. ICONIQ Capital and Goldman Sachs co-ledd the round, and was joined by investors including Y Combinator Continuity Fund, Adage Capital Management, L.P, Alkeon Capital, Altimeter Capital, Coatue, D1 Capital Partners LP, Franklin Templeton, Light Street Capital, Tiger Global Management, and Two Sigma Ventures.
- TouchBistro, a New York-based developer of iPad point of sale solutions for restaurants, raised CDN$158 million ($119 million) in Series E funding. OMERS Growth Equity led the round, and was joined by investors including Barclays Bank, RBC Ventures, BMO Capital Partners, OMERS Ventures, JPMorgan Chase, Napier Park Financial Partners, BDC IT Venture Fund, and Kensington Capital Partners.
- Ironclad, a San Francisco-based digital contracting platform for legal teams, raised $50 million in Series C funding. Y Combinator Continuity led the round, and was joined by investors including Emergence Capital, Accel and Sequoia Capital.
- Wanderjaunt, a San Francisco-based vacation property management company, raised $15 million in Series B funding. Founders Fund led the round, and was joined by investors including Tribe Capital.
- FarmWise, a San Francisco-based business that builds autonomous farming robots, raised $14.5 million in Series A funding. Calibrate Ventures led the round, and was joined by investors including Wilbur Ellis, Xplorer Capital and Alumni Ventures Group.
- Alloy, a New York-based identity operating system for the financial services industry, raised $12 million in Series A funding. Bessemer Venture Partners led the round and was joined by previous investors including Eniac Ventures and Primary Venture Partners.
- Celona, a Cupertino, Calif.-based 5G enterprise company, raised $10 million in Series A funding. Investors include Norwest Venture Partners, Lightspeed Venture Partners, and Cervin Ventures.
- Cortilia, an Italy-based e-commerce business delivering fresh food products, raised €8.5 million ($9.4 million). Investors include Five Seasons Ventures and Indaco Ventures I.
- Idelic, a Pittsburgh-based data and analytics company focused on the commercial/industrial transportation industry, raised $8 million in Series A funding. Origin Ventures led the round, and was joined by investors including TDF Ventures, Birchmere Ventures, Bain Capital Ventures, and SaaS Venture Capital.
- INDUS.AI, a San Francisco-based construction software company using computer vision to track and analyze construction project performance in real-time, raised $8 million in Series A funding. Millennium New Horizons led the round, and was joined by investors including Foundamental and Groundbreak Ventures, and were joined by investors including Spero Ventures, UP2398, and Bootstrap Labs.
- Picterra, a Switzerland-based geospatial software organization that enables users to extract satellite and drone imaging insights, raised $3.3 million in funding. Investors include Space Capital, Omidyar Network, and Atlantic Labs.
- XY Gaming, a San Francisco-based esports tournament platform where users compete for cash prizes across games, raised $2.5 million in seed funding. KB Partners and Varga Capital co-led the round.
- Strider, a risk intelligence platform leveraging proprietary datasets, raised $2 million in funding. DataTribe led the round.
HEALTH & LIFE SCIENCES DEALS
- Themis, an Austria-based developer of immunomodulation therapies for infectious diseases and cancer, raised EUR 40 million ($44 million) in Series D funding. Farallon Capital and Hadean Ventures co-led the round, and were joined by investors including MSD, Adjuvant Capital, Global Health Investment Fund, aws Gruenderfonds, Omnes Capital, Ventech and Wellington Partners Life Sciences.
- Kaia Health, a Germany-based digital therapeutics company, raised $8 million in funding. Optum Ventures led the round.
- Unnatural Products, a Santa Cruz, Calif.-based developer of a drug discovery platform, raised more than $6 million in seed funding. ARTIS Ventures led the round, and was joined by investors including Abstract Ventures, Asset Management Ventures, Better Ventures, Blue Bear Ventures, and Rising Tide Fund.
PRIVATE EQUITY DEALS
- Anacapa Partners made an investment in Dooblo, an Israel-based provider of mobile survey software, data collection and analysis solutions. Trail Mark Partners also participated in the investment. Financial terms weren't disclosed.
- L Squared Capital Partners recapitalized GWS Tool Group, a Tavares, Fla.-based manufacturer of custom, standard, and modified standard cutting tools. Financial terms weren't disclosed..
- Enlightenment Capital made an investment in Expression Networks, Washington D.C.-based provider of tailored and integrated electromagnetic spectrum management solutions, automation and visualization technology, software engineering, and data analytics to the national security community. Financial terms weren't disclosed.
- Karat Packaging, a Chino, Calif.-based maker of sustainable food packaging, filed for a $50 million IPO. The firm posted sales of $175.4 million in 2018 and loss of $124 million. It plans to list on the Nasdaq as “KRAT.” Read more.
- Datadog, a New York-based SaaS-based analytics and monitoring platform for technology stacks, now plans to raise $600 million in an offering of 24 million shares priced between $24 to $26, above a previously stated range of $19 to $22. 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.
- Envista Holdings, a Brea, Calif.-based maker of dental supplies carved out of Danaher, raised $589 million in an initial public offering of 26.8 million shares priced at $22. It posted revenue of $2.8 billion and earnings of $237.7 million in 2018. Foresite Capital, Venrock, Paladin Capital, and Fidelity back the firm. It plans to list on the NYSE as “NVST.” Read more.
- IGM Biosciences, a Mountain View, Calif.-based biotech firm developing antibody therapies for cancer, raised $175 million in an upsized IPO of 10.9 million shares priced at $16, between its $15 to $17 range. The firm posted q loss of $22.7 million in 2018 and has yet to post a revenue. Haldor Topsøe Holding, Baker Bros., Janus Capital, and Redmile Group back the firm. It plans to list on the Nasdaq as “IGMS.” Read more.
FIRMS + FUNDS
- Advent International, a Boston-based private equity firm, raised $2 billion for its Advent Global Technology fund.
- Revolution, a Washington D.C.-based investment firm, raised $215 million for its third ventures fund, Revolution Ventures III.
- Ignition Partners promoted Cameron Borumand to principal.
- Tekfen Ventures promoted Jay Ribakove to senior associate.
- Turnspire Capital Partners promoted Abel S. Osorio to partner.
- David Misch joined Livingstone as a partner.