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Another day, another SoftBank portfolio company in hot water.
Scott Painter, the founder and CEO of embattled car-leasing startup Fair has resigned. His company underwent sweeping layoffs, which accounted for roughly 40% of its staff, and his CFO (who was his brother) also left the company last week. SoftBank’s Adam Hieber, one of Fair’s largest investors, will take over as interim CEO.
SoftBank led Fair’s $385 million funding round last year, making the startup’s valuation rocket to $1.2 billion from about $450 million. Prior to the capital infusion, Fair had raised $115 million in equity funding and almost $1 billion in debt.
Last year, Fair acquired Uber’s car-leasing program, known as Xchange Leasing. Uber sold the business after heavy losses, according to the WSJ. As part of that deal, Fair signed an exclusive agreement to lease cars to Uber drivers.
In a statement to The Verge on his resignation, Painter wrote: “Successful companies MUST operate and grow in a sustainable manner and ultimately be profitable. The decisions that get made while growing a game changing business at speed are tough but they are necessary if you are going to build enduring companies.”
Profitability has reared its ugly head again. Even though Peloton’s CFO recently remarked that she hopes the public’s bias against unprofitable companies changes, I actually think that day is far away. We’re seeing the tide turn against venture-backed unicorns with big losses and a tough time explaining how they plan to reach profitability.
Choosing growth over profitability has become a cliché in tech circles, with founders trying to explain that losing billions of dollars is justified as long as you’re growing. Now, it seems as though companies are starting to correct for years of choosing hyper-growth over building sustainable businesses with sound financials. Patricia Nakache, General Partner at Trinity Ventures, described this as “a pendulum swing” at Fortune’s Most Powerful Women event earlier this month.
“We have swung way out towards growth at most costs. But now public markets have weighed in and resoundingly said, this has gone too far,” she said.
She cautioned: “It’s a mistake in private markets to go from extreme to extreme.” Yet “extreme to extreme” is the new normal for private, well-capitalized companies like Fair, Wag, and WeWork.
2018 was a year of excess. 2019 was a year of reality checks. Let’s see what 2020 has in store.
- Vindex, a New York-based esports infrastructure platform, raised $60 million in Series A funding. The investors were not named.
- B8ta, a San Francisco and New York-based operator of an experiential retail-as-a-service platform, raised $50 million in Series C funding. Evolution Ventures led the round, and was joined by investors including Macy’s, Khosla Ventures, and Peak State Ventures.
- Particle, a San Francisco-based internet of things platform, raised $40 million in Series C funding. Qualcomm Ventures LLC and Energy Impact Partners led the round, and were joined by investors including Root Ventures, Bonfire Ventures, Industry Ventures, Spark Capital, Green D Ventures, Counterpart Ventures and SOSV.
- MIRROR, a New York-based developer of an in-home fitness platform, raised $34 million in in Series B-1 funding. Point72 Ventures led the round, and was joined by investors including Lululemon, LionTree LLC, Spark Capital, and Lerer Hippeau.
- Crunchbase, a San Francisco-based provider of private-company prospecting and research solutions, raised $30 million in Series C funding. OMERS Ventures led the round, and was joined by investors including Emergence, Mayfield, Cowboy Ventures, and Verizon.
- TOCA Football Inc, a Costa, Mesa, Calif.-based soccer-focused and technology-enabled experience company, raised $25 million in Series D funding. Investors include WestRiver Group and RNS Partners.
- Stampli, a Mountain View, Calif.-based provider of cloud based invoice management software, raised $25 million in Series B funding. SignalFire led the round, and was joined by investors including Hillsven Capital, Bloomberg Beta, and NextWorld Capital.
- dotData, a Cupertino, Calif.-based data science automation platform, raised $23 million in Series A funding, JAFCO led the round, and was joined by investors including Goldman Sachs and NEC Corporation.
- Crimson Education, a New Zealand-based edtech and college admissions support company, raised $20 million in Series C funding. Investors include CTF (Chow Tai Fook) Education Group.
- Cytovale Inc, a San Francisco-based medical technology company, raised $15 million in funding. Breakout Ventures and Blackhorn Ventures led the round.
- Folloze, a San Mateo, Calif.-based provider of applied hyper-personalization solutions, raised $11 million in Series B funding. BGV led the round, and was joined by investors including Canvas Ventures, Cervin Ventures, Grayhawk Capital and SVB.
- Tactile Mobility, an Israel-based auto tech firm, raised $9 million in funding. Investors include Porsche and Union Tech Ventures.
- Freetrade, a London-based provider of a mobile app for zero-commission share dealings and professional advice, raised $15 million in Series A funding. Investors include Draper Esprit.
- Link3D, a Boulder, Colo.-based provider of additive manufacturing execution system workflow software, raised $7 million in funding. AI Capital led the round.
- Techtonic, a Boulder, Colo.-based developer of onshore, product-driven software, raised $6 million in Series B funding. Camden Partners led the round, and was joined by investors including University Ventures and Zoma Capital.
- Kubit, a Fremont, Calif.-based augmented analytics provider, raised $4.5 million in seed funding from Shasta Ventures.
- Kangarootime, a Buffalo, N.Y.-based provider of early childhood software, raised $3.5 million in Series A funding. Investors include Cultivation Capital.
HEALTH & LIFE SCIENCES DEALS
- Arranta Bio, a Watertown, Mass.-based biotech firm, raised $82 million in funding. Investors include Ampersand Capital Partners and Thermo Fisher.
- Tmunity Therapeutics, a Philadelphia-based biotherapeutics company, raised $75 million in Series B funding. Andreessen Horowitz led the round, and was joined by investors including Kleiner Perkins, Westlake Village BioPartners, Gilead Sciences, The University of Pennsylvania, Be The Match BioTherapies and BrightEdge Venture Fund.
PRIVATE EQUITY DEALS
- Accumen, which is backed by Arsenal Capital Partners, acquired 3DR, a Louisville, Ky.-based provider of outsourced post-processing services to hospitals and radiology departments in the U.S. Financial terms weren't disclosed.
- Confluence Technologies, which is backed by TA Associates, acquired StatPro, a U.K.-based provider of cloud-based portfolio analytics, asset data services and data management tools, for more than $207 million.
- Meili Auto Holdings, a Beijing-based used car loan platform, filed for an $100 million IPO. It posted revenue of $241.3 million in 2018 and loss of $46.5 million. It plans to list on the NYSE as “ML.” Read more.
- Oyster Point Pharma, a Princeton, NJ-based clinical stage biotech focused on ocular diseases, raised $80 million in an IPO of 5 million shares priced at $16, the low end of its range. The firm posted a loss of $16.5 million in 2018 and has yet to post a revenue. New Enterprise Associates (32% pre-offering), Versant Ventures (32%) and Invus Opportunities (11.8%). It plans to list on the Nasdaq as “OYST.” Read more.
- Workforce Logiq, which is backed by The Carlyle Group, acquired Engage Talent, a Charleston, S.C.-based predictive analytics and AI software company. Financial terms weren't disclosed. Engage Talent had raised $9.8 million in venture funding from investors including Refinery Ventures, Ventures, Revolution Rise of the Rest Seed Fund and High Alpha Capital.
- Graham Partners acquired Gatekeeper Systems Inc, an Irvine, Calif.-based provider of intelligent cart solutions, from HKW. Financial terms weren't disclosed.
- Tech Data agreed to acquire DLT Solutions, a Herndon, Va.-based government IT solutions aggregator. Financial terms weren't disclosed. The seller was Mill Point Capital.
- Platinum Equity acquired De Wave Group, an Italy-based marine contractor that specializes in cruise ship interiors, from Xenon Private Equity. Financial terms weren't disclosed.
- Aaref Hilaly joined Wing Venture Capital as a partner. Previously, he was at Sequoia.
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