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Dog-Walking Startup Wag Is Seeking an Owner: Term Sheet

October 30, 2019, 2:00 PM UTC

Wag, the dog-walking and pet-sitting startup, could sell itself to pet giant Petco, according to Recode. The two companies have reportedly held talks over the last few weeks about a potential deal.

Wag, which counts SoftBank as one of its largest investors, has had its share of struggles. It recently underwent a vast round of layoffs while also having to deal with issues around insufficient growth, financial underperformance, and even runaway dogs. According to this CNN investigation, the company’s woes became even more pronounced after SoftBank pumped a massive round of funding into the startup and its valuation soared to more than $600 million.

I recently spoke with Duncan Davidson, a general partner at early-stage venture capital firm Bullpen Capital and an investor in Wag, about SoftBank’s aggressive tactics. He dubbed them “the SoftBank Syndrome,” claiming the firm makes “founders and venture capitalists hostage to their money.”

“Our experience with SoftBank and their Wag investment has not been positive,” Davidson told Term Sheet. “I’d be reluctant to have them in one of our deals after that.” Davidson declined to divulge specific details of his experience on the record. SoftBank declined to comment.

Wag was originally looking to raise $100 million in its last private round, but that amount quickly jumped to $300 million once SoftBank expressed interest. Rover, its primary competitor, had also been in talks with SoftBank. But even without a SoftBank infusion, Rover has been gaining market share.

Wag’s lack of growth is yet another example of a struggling, beyond-well-funded company in the SoftBank Vision Fund portfolio. As CNN noted, Wag’s struggles since raising $300 million cast doubt on SoftBank’s ability to play kingmaker and declare winners in the market with its checkbook alone.

So what’s Wag to do? A deal with Petco would make sense as Wag needs the financial stability, while Petco needs help expanding its ecommerce arm. Whatever happens, the outcome carries a lot of weight not just for Wag, but also for its beleaguered investor. SoftBank must prove that its aggressive playbook works for the sake of its limited partners, its ecosystem of startups, and most importantly, for Masayoshi Son himself. 


- Ribbon, a New York-based startup that helps facilitate the homebuying process, raised $330 million in equity and debt funding. It includes a $30 million Series B round of funding led by Greylock, and a debt facility from Goldman Sachs that provides current financing capacity to $300 million upon closing.

- Faire, a San Francisco-based curated wholesale marketplace that connects independent retailers and makers, raised $150 million in Series D funding at a $1 billion valuation. Lightspeed Venture Partners and Founders Fund co-led the round, and were joined by investors including Forerunner Ventures, YC Continuity, and Khosla Ventures.

- Rokt, an Australia-based provider of e-commerce marketing technology, raised $48 million in funding. Investors include TDM Growth Partners.

- ElasticRun, an India-based virtual logistics network for the distribution of consumer products, raised $40 million in funding. Prosus Ventures (formerly Naspers Ventures) led the round, and was joined by investors including Avataar Ventures and Kalaari Capital.

- Curated, a San Francisco-based personalized online shopping platform, raised $27.5 million in Series A funding. Forerunner led the round.

- Fountain, a San Francisco-based recruiting platform for gig and hourly workers, raised $23 million in Series B funding. DCM led the round, and was joined by investors including 51job, Origin Ventures, and Uncork Capital.

- Duality Technologies, a Cambridge, Mass.-based provider of a secure collaboration platform for organizations, raised $16 million in Series A funding. Intel Capital led the round, and was joined by investors including Hearst Ventures and Team8.

- CoinList, a San Francisco-based company that connects investors to crypto projects, raised $10 million in funding. Polychain Capital led the round, and was joined by investors including Jack Dorsey.

- ALICE Technologies, a San Francisco-based AI-based simulation platform for construction, raised $8 million in Series A funding. Merus Capital led the round, and was joined by investors including Foundamental, Blackhorn Ventures and Lightspeed Venture Partners. 

- Oliver Space,  a home furnishing startup, raised $6.8 million in seed funding. Mayfield Fund led the round, and was joined by investors including Abstract Ventures. 

- Ruti, a Belmont, Calif.-based fashion brand, raised $6 million in Series A funding. Viola Ventures led the round.

- Fireflies.AI, a San Francisco based meeting transcription and collaboration tool, raised $4.6 million in seed funding. Canaan led the round, and was joined by F7 Ventures.

- Manime, a Los Angeles-based company making custom-fit gel nail adhesives, raised $2.6 million in seed funding. Canaan led the round, and was joined by investors including Trinity Ventures, Techstars and NFX.

-, a San Francisco-based developer of a document search software, raised $2 million in seed funding. Defy Partners led the round.

- Silbo, Inc., a Raleigh, N.C.-based provider of a platform connecting sports officials and amateur sports leagues, raised $1.1 million in funding. Investors include IDEA Fund Partners and Dantes Investments. 


- Workforce Logiq, a portfolio company backed by The Carlyle Group, acquired ENGAGE Talent, a Charleston, S.C.-based predictive analytics software company that helps employers acquire and retain talent. Financial terms weren't disclosed. 

- Audeo Capital made an investment in Pillir, a Chandler, Ariz.-based based software platform. Financial terms weren't disclosed. 

- Anacapa Partners made an investment in Auronix, a Mexico City, Mexico-based communications platform provider. Financial terms weren't disclosed. 


- Nestle SA (SWX: NESN) is weighing options including a sale for two Chinese units: Hsu Fu Chi, a local confectionery brand, and Yinlu, known for its ready-made Chinese porridge, according to Bloomberg. The company is seeking more than $1 billion for its controlling stakes in the two companies. Read more.


- China Feihe Limited, a Beijing-based infant formula maker, relaunched its Hong Kong IPO that could raise up to $1.14 billion, Reuters reports, citing sources. Read more.

- I-Mab, a Chinese drug developer focused on autoimmune diseases, filed to raise up to $100 million in an IPO. It listed revenue of $7.8 million in 2018 and loss of $58.7 million. C-Bridge Capital and Hony Capital back the firm. It plans to list on the Nasdaq as “IMAB.” Read more.

- Phoenix Tree Holdings, a Beijing-based online marketplace for residential rentals, filed for an $100 million IPO. The firm posted revenue of $374.3 million and loss of $191.6 million in 2018. Tiger Global (20% pre-offering), Joy Capital (15.7%), CMC Capital Partners (9.4%), and Ant Financial (7.8%) back the firm. It plans to list on the NYSE as “DNK.” “Read more.”


- The Carlyle Group (NASDAQ: CG) agreed to acquire The Hilb Group, a Richmond, Va.-based national insurance broker. Financial terms weren't disclosed. The seller was Abry Partners.


- Jungle Ventures, a Singapore-based venture capital firm, raised $240 million for its new fund.


- Angus Davis joined Foundation Capital as a partner.

- Jack Welch joined Bridge Growth Partners as an executive partner. Previously, Welch was at McKinsey & Company.


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