CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

“Capitalism, As We Know It, Is Dead”: Term Sheet

October 15, 2019, 2:53 PM UTC

Capitalism needs to evolve.

At least, that’s the message Salesforce CEO Marc Benioff delivered in his recent Q&A with Fortune editor-in-chief Clifton Leaf on his new book Trailblazer: The Power of Business as the Greatest Platform for Change.

“I would say that capitalism, as we know it, is dead,” he said. “And that businesses have to move to a new capitalism: a more equal, fair, and sustainable way of doing business—one that values all stakeholders as well as shareholders.”

He continues: 

“But the new capitalism is one where we value all of our stakeholders: our customers and our employees, our public schools, our planet, as well as our shareholders. And going forward, this stakeholder return is as important as the shareholder return. That’s why we’ve given $300 million in grants towards worthy causes, our employees have volunteered 4 million hours to the community, and 40,000 nonprofits and NGOs use a billion dollars of our software for free each year. It’s also why we work so hard to evangelize to all businesses and to all CEOs that this really works—that this is an amazing way to run a business…”

Benioff has also audited Salesforce’s gender payback since 2015, doling out $3 million that first year and $8.7 million during the third audit to eliminate the disparity. Benioff says of the continuous audits:

“Because this is a subconscious bias, you have to monitor and measure it on a regular basis. So this is just happening automatically when people are getting hired. But number two is, we didn’t realize that when we acquired companies, we weren’t just buying their innovation, we were also buying their pay scales. And that can really, really impact you as a CEO—if you buy a company and you’ve done all this good work, and now you discover that they had the wrong pay scale.

Corporate governance is certainly shifting—consider BlackRock CEO Larry Fink’s letter in 2018. It’s also shifting in private markets, at a time when investors are hungry for returns and leaning toward the space, yet also dealing with greater opacity, more deference towards CEOs, and the blurring lines between private and public.

Take WeWork as an extreme example. The office-sharing company invested in a wave-making firm and an SEO marketing platform during Neumann’s time there—headscratchers that somehow made it through the sieve largely through Neumann’s force of will (the latter is now on the chopping block, according to sources). WeWork’s S-1 also initially gave CEO Adam Neumann majority control over the company, paid Neumann for control over the “We” trademark, and gave his wife outsized rights to choose We’s successor. 

Public market investors apparently didn’t like any of it. Most of those terms have either been gutted or significantly pared back in a sign that investors are set to take a tougher approach to “founder friendliness.” 

Benioff himself, in fact, wrote a blurb praising WeWork CEO Adam Neumann for Time’s Most Influential list in 2018: “Adam shows how we can ‘make a life, not just a living,’” he wrote. But in response to a question about WeWork and Uber at a recent TechCrunch conference, Benioff said companies are staying private for too long. Going public, he said, “cleanses their company of all of the bad stuff.”

Read the full Q&A here.

MILK AND CEREAL

Milk Bar, a bakery known for quirky concoctions like compost cookies and cereal milk soft serve, is set to close an undisclosed amount in its Series B funding led by Sonoma Brands. Its plan: Push deeper into e-commerce and open a 4,000 sqft flagship store in Manhattan by the end of the year. That’s in addition to its existing 16 locations.
Read more.

HOUSEKEEPING: Lucinda here, covering for Polina through Wednesday’s Term Sheet. Please send deals to lucinda.shen@fortune.com.

VENTURE DEALS

-Algolia, a San Francisco-based search and discovery platform for companies, raised $110 million in Series C funding. Accel led the round and was joined by investors including Salesforce Ventures. 

-Level Home Inc., a Redwood City, Calif.-based company focused on smart homes, raised $71 million. Walmart and Lennar Homes led the round.

-CleverTap, a Mountain View, Calif.-based user retention platform, raised $35 million in Series C funding. Tiger Global Management and Sequoia India led the round, valuing the firm at $385 million.

-Herow, a Paris and New York-based firm focused on boosting mobile engagement, raised $18.6 million in Series B funding. Investors included Xerys Fund, Siparex, and Calao Finance.

-Relative Insight, a Lancaster, U.K.-based language understanding platform, raised $5 million in Series A funding from Maven Capital Partners. Financial terms weren't disclosed.

-Radius Networks, a technology company that uses its machine learning location platform to help businesses conduct location-based transactions with their customers, has secured $15 million in Series A financing. The investors included Contour Venture Partners and Core Capital Partners. 

-Rho Business, a New York-based digital business banking platform, raised $4.9 million in its seed round. Alexa Von Tobel of Inspired Capital led the round.

-ZitSticka, an Australian-based brand focused on clearing zits with a patch, raised $5 million in Series A funding. BFG Partners led the round.

-Sofant Technologies, an Edinburgh-based developer of radio-frequency microelectromechanical systems, raised 1.8 million pounds in funding. Kelvin Capital led the round and was joined by investors including EMV Capital.

HEALTH & LIFE SCIENCES DEALS

-Redesign Science, a New York-based computational chemistry company, raised $2 million in seed funding. Notation led the round, and was joined by investors including Morningside, 3KVC, and Refactor.

-Abalos Therapeutics, a German-based company focused on differentiated immuno-oncology treatment based on arenaviruses, raised 12 million euros in Series A funding. Boehringer Ingelheim Venture Fund and Gruenderfonds Ruhr led the round, and was joined by investors including NRW.BANK and High-Tech Gruenderfonds.

PRIVATE EQUITY DEALS

-Lindsay Goldberg and American Securities agreed to buy the Germantown, Md.-based management services business of AECOM in a deal valued at $2.4 billion.

-KKR acquired a majority stake in Hyperoptic, a U.K.-based residential broadband provider, from Newlight Partners and Mubadala Investment. Financial terms weren't disclosed.

-Smile Brands, a portfolio company of Gryphon Investors, and affiliate A+ Dental Care acquired Dr. Glenn Misono‘s Natomas, Calif.-based dental practice. Financial terms weren't disclosed.

-Five Elms Capital invested in Facilities Management eXpress, a Columbus Oh.-based facilities maintenance management platform. Financial terms weren't disclosed.

-Sciens Building Solutions, backed by Huron Capital, acquired SmartWatch, a Mount Dora, Fla.-based security, fire alarm, and sound integrator. Financial terms weren't disclosed.

-Alta Growth Capital alongside others including Stella Maris Partners and Credit Suisse’s Mexico Credit Opportunities Fund invested in Lottus Education, a Mexico City-based higher education provider. Financial terms weren't disclosed.

-Lincolnshire Management invested in Powerhouse, Security Vault Works, and add-on One Source Security & Sound. Powerhouse is a Crowley, Texas-based remodeling maintenance services firm while Laurel, Md.-based Security Vault Works provides automated teller machines for financial institutions. Financial terms weren't disclosed.

-Lee Equity Partners acquired majority ownership in The Living Company, a Dallas, Texas-based provider of furniture, fixtures, and equipment to off-campus student housing properties.

IPOS

-RTW Venture Fund, a venture fund managed by U.S.-based RTW Investments, plans to raise $350 million in a London IPO. Read more.

-BRP Group, a Tampa-based provider of insurance distribution, now plans to raise $246 million in an initial public offering of 16.4 million shares priced at between $14 to $16. The firm posted revenue of $79.9 million in 2018 and income of $2.7 million. It plans to list on the Nasdaq as “BRP.” Read more.

-Bamboo Airways, a Vietnam-based firm, is seeking an IPO that could value it at as much as $1 billion in 2020. Read more.

-Progyny, a New York-based firm focused on fertility benefits, plans to raise roughly $150 million in an IPO of 10 million shares (33% insider sold) at a range of between $14 to $16 apiece. It posted a revenue of $105.4 million and  losses of $5.5 million in 2018.  TPG (27.2% pre-offering), KPCB (25.6%), and GlaxoSmithKline (13.9%) back the firm. It plans to list on the Nasdaq as “PGNY.” Read more.

-Galera Therapeutics, a Malvern, Pa.-based firm focused on reducing toxicity during radiotherapy, filed to raise $86 million in an IPO. It has yet to post a revenue and posted losses of $30 million in 2018.  New Enterprise Associates (20.4% pre-offering), Novartis Bioventures (17%), and Novo Nordisk (15%) back the firm. It plans to list on the Nasdaq as “GRTX.” Read more.

-89bio, a San Francisco-based biotech focused on metabolic diseases, filed for a $70 million IPO. It has yet to post a revenue and posted losses of $16.2 million in 2018.  OrbiMed (41.2% pre-offering), Longitude Venture Partners (24.9%), and RA Capital (21.6%) back the firm. It plans to list on the Nasdaq as “ETNB.” Read more.

-Centogene, a German firm focused on genetic testing, filed for a $69 million IPO. It posted a revenue of 40.5 million euros ($45 million) and posted losses of 11.4 million euros ($12.6 million) in 2018.  DPE Deutsche Private Equity (20% pre-offering), Equicore Beteiligungs (17%), and Careventures (11%) back the firm. It plans to list on the Nasdaq as “CNTG.” Read more.

-ESR Cayman, the warehouse logistics developer backed by Warburg Pincus, is reportedly gauging a Hong Kong IPO again after postponing a reported $1.24 billion raise in July, Bloomberg reports citing sources.

-Latitude Financial, an Australian loan services firm, reportedly pulled plans for an $925.42 million IPO raise. KKR, Deutsche Bank, and Varde back the company. Read more.

-DNEG, a British special effects firm that has worked on “Avengers: Endgame,” is mulling an IPO to raise £150 million ($189 million) in London. Read more.

EXITS

-Cerberus Capital Management agreed to acquire the North American, Costa Rican and Japanese businesses of Closure Systems International, a maker of capping and closure equipment, from Reynolds Group. 

-EQT is in talks to acquire EdgeConneX, a Herndon, Va.-based infrastructure solutions provider, in a deal valued at above $2.5 billion from Providence Equity Partners, Bloomberg reports citing sources. 

F+FS

-Thoma Bravo is weighing a $15 billion raise for a new fund early 2020, Bloomberg reports citing sources.

-Jackson Square Ventures announced its third and largest fund of $193 million. 

-M13 raised $175 million for its second venture capital fund.

-Hiro Capital has launched a fund at100 million euros ($110 million).

PEOPLE

-Dynamo Ventures named Jon Bradford as a partner. Bradford previously was a partner at Motive Partners.

-Pelion Venture Partners named Jeff Kearl as a managing director. Kearl was co-founder and CEO of Stance.

-Varsity Healthcare Partners promoted Michael Fisher to Partner from Principal at the firm.