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Russia’s FaceApp Is a “Counterintelligence Threat”

December 3, 2019, 3:26 PM UTC

Happy Tuesday, Term Sheet readers. Lucinda here filing in for Polina until her return on Monday Dec. 9. In the meantime, please send deals to Lucinda.shen@fortune.com.

Any mobile app developed in Russia is being considered “a potential counterintelligence threat,” according to a letter sent by the FBI to Senate Minority Leader Chuck Schumer.

“The FBI considers any mobile application or similar product developed in Russia, such as FaceApp, to be a potential counterintelligence threat, based on the data the product collects … And the legal mechanisms available to the Government of Russia that permits access to data within Russia’s borders,” the letter read.

FaceApp, the viral app that allows users to alter their appearance in photos, has come under fire for its privacy policy and Russian roots—and become a target for U.S. lawmakers amid concerns about how foreign governments can use tech to influence elections. 

Schumer has focused hard on potential security concerns over foreign-made apps heavily used by U.S. consumers. The Democrat has also dubbed popular video app TikTok a “potential counterintelligence threat.” TikTok is owned by what is considered the world’s most valuable startup, China’s ByteDance. 

Still, while these national and personal security concerns are happening, they beg the question: What percent of Americans actually know—or care about—where their apps are developed? Two or three years ago, this was hardly a topic of conversation. A quick scan of the TikTok app at press time via the Apple App Store shows no mention of ByteDance or China.

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In case you missed it: Twitter and Square CEO Jack Dorsey plans to live in Africa for three to six months next year, according to a tweet. Dorsey already spent much of November on the continent, chatting with entrepreneurs and discussing crypto in countries such as Ghana, Nigeria, Ethiopia, and South Africa. 

Setting aside the governance issues that come with the CEO of a public social-media company moving away for so long, and in an election year no less, tech’s focus on Africa makes sense on the surface. The continent has become a hotbed of fintech activity, with heavy investment especially from Chinese entrepreneurs.

In late November, for instance, Lagos-based payments startup OPay raised $120 million in a Series B round from investors including China’s Meituan Dianping.

China leapt ahead in terms of going digital because it didn’t have sticky legacy infrastructure. Now it’s developed its own fascinating suite of fintech tools like WeChat, which has become a one-stop-shop of sorts for consumers to chat, pay for groceries, pay each other, and even pay for income tax. “If you want to see the future of fintech, just go to China,” Edith Yeung, managing partner of Proof of Capital, a blockchain-focused investment firm, told Fortune.

Africa is building up from a similar clean slate. It’ll be interesting to see how the fintech rails develop throughout the continent.

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VENTURE DEALS

- Migo, a San Francisco-based startup focused on credit lending in emerging markets using AI, raised $20 million in Series B funding. Valor Capital Group led the round, and was joined by investors including The Rise Fund (managed by TPG Growth) and Velocity Capital.

- Uncapped, a London and Warsaw-based startup seeking to provide financing to European businesses based on their revenue, raised £10 million in equity and debt funding. Rocket Internet’s Global Founders Capital, White Star Capital, and Seedcamp back the firm. Read more.

- Quorso, a London-based platform for managing business performance, raised $5.2 million in Series A funding. OMERS Ventures led the round and was joined by investors including by existing investor Hambro Perks.

 - Bokio, a Swedish AI-based accounting tool for small businesses, raised €4 million ($4.4 million). Creandum led the round, and was joined by investors including Svea, and an individual investment from Techstars Managing Director Chris Adelsbach. 

- Motivo, an Atlanta-based platform for therapist tele-supervision, raised $2.2 million of seed funding. Cox Enterprises led the round, and was joined by investors including Techstars, SEI Ventures, ECMC, Great Oaks VC, The Jump Fund, Emmett Partners, and Next Wave Impact Fund.

- Fulcrum, a La Jolla, Calif.-bsed job placement company, has raised $1 million in a seed funding from investors including Greatscale Ventures. Read more.

PRIVATE EQUITY DEALS

- Prometheus Group, a portfolio company of GenStar Capital, acquired Roser ConSys, a Holland-based plant shutdown, turnaround, and outages (STO) software provider focused on the oil, gas, and energy sector. Financial terms weren't disclosed.

- TZP Group invested in Christy Sports, a Lakewood, Colo.-based winter sports specialty retailer. Financial terms weren't disclosed.

- Monomoy Capital Partners acquired Sportech, an Elk River, Minn.-based supplier of cab components for vehicles in the powersports, golf, and industrial space. Financial terms weren't disclosed.

- DirectMed Parts & Services, a portfolio company of Mercury Partners, acquired Medical Systems Technologies, a Longmont, Colo.-based provider of magnetic resonance imaging repair and testing. Financial terms weren't disclosed.

- Dedalus Group, a portfolio company of Ardian, is in exclusive talks to acquire part of Belgium-based Agfa-Gevaerts healthcare software business. Financial terms weren't disclosed.

- Arlington Capital Partners acquired Forged Solutions Group, a Sheffield, U.K.-based maker of forged disks for aerospace and defense customers, from Arconic. Financial terms weren't disclosed.

- WILsquare Capital acquired Versare Solutions, a Minneapolis-based provider of workstations, privacy screens, and room partitions. Financial terms weren't disclosed

OTHER DEALS

- Acosta, a Jacksonville, Fla.-based marketing firm backed by Carlyle Group, filed for Chapter 11 bankruptcy protection. 

- Stada Group is acquiring Ukraine-based Biopharma’s prescription and consumer health businesses. Horizon Capital backs BioPharma.

- Accenture acquired Apis Group, a Canberra, Australia-based consultant for government organizations. Financial terms weren't disclosed.

- Xometry acquired, Shift, a Munich, Germany-based on-demand  manufacturing marketplace. 

IPOs

- XP Investimentos SA, a Brazilian financial services firm, plans to raise up to $1.81 billion in an IPO of 72.5 million shares (41% insider sold) priced between $22 to $25 apiece. The firm posted total revenue and income of $711 million in 2018 and net income of $111 million. It plans to list on the Nasdaq as “XP.” General Atlantic backs the firm. Read more.

- OneConnect Financial Technology, a Shenzhen, China-based platform for financial firms backed by Ping An Insurance, plans to raise $468 million in an IPO of 36 million ADSs priced between $12 to $14. The firm posted $197.8 million in revenue and loss of $111.1 million in 2018. It plans to list on the NYSE as “OCFT.” Read more.

EXITS

- GED Capital acquired Grupo OM, a Madrid-based firm focused on visual communication and merchandising, from Nazca Capital. Financial terms weren't disclosed.

- Hostess Brands agreed to acquire Voortman Cookies, an Ontario-based maker of wafers and cookies, for US$320 million (C$425 million), from Swander Pace Capital.

- PepsiCo agreed to acquire BFY Brands, the Middletown, New York-based maker of snacks such as PopCorners. Permira was the seller. Financial terms weren't disclosed.

FIRMS + FUNDS

- Accel closed on $550 million for its sixth venture fund in India. Read more.

- Portag3 Ventures, the VC arm of Sagard Holdings, raised C$427 million ($321.6 million) for its second venture fund focused on early stage investments in the global financial technology sector.

- Harlem Capital, a VC firm focused on diversity, raised $40.3 million in its first fund. 

PEOPLE

- Silver Lake named Managing Partners Egon Durban and Greg Mondre as co-CEOs of Silver Lake and Managing Partner Ken Hao will serve as Chairman. The firm also promoted Joe Osnoss to managing partner.

- Attention Capital named Brendan Ripp, former EVP advertising at Disney/National Geographic, as an operating partner. 

- E.ventures promoted Jett Fein to Partner.

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