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Tusk Holdings, a one-part political consultancy and one-part venture firm that works with startups facing regulatory hurdles, made its Silicon Valley splash early thanks to an investment in Uber.
In 2011, Tusk Holdings founder Bradley Tusk struck a deal with then-Uber CEO Travis Kalanick and offered his political advisory services in exchange for equity in the company. His shares (he sold half as part of SoftBank’s tender offer) are believed to be worth $100 million.
Tusk, who had a long career in politics, made the transition into venture capital in 2017 and raised $36 million for its debut venture capital fund at the time. The firm backed 16 companies and multiplied investors’ capital by 2.3 times (after fees have been subtracted), thanks to investments in Lemonade, Bird, and Roman. (The fund hasn’t yet had an exit as no companies have been acquired or gone public.)
Now, Tusk and managing partner Jordan Nof have raised $70 million for their sophomore vehicle in the venture unit, Tusk Venture Partners (TVP).
Tusk has been vocal about the challenges of being a first-time fund manager with a non-traditional thesis — and raising the second fund wasn’t a piece of cake. “For many limited partners, we’re still a square peg in a round hole,” Tusk told Fortune. “We’re a weird fund that’s leveraging politics to get into venture deals. I naively thought that given our performance, we would just walk right in, raise Fund II, and be set. No, it still took real work.”
The team plans to write checks that vary from $750,000 to $5 million for initial investments. TVP has already invested in several companies out of the second fund, including Sunday, a lawn care startup; Alma, a wellness and therapy venture; Enzyme Health, a digital health job marketplace; and Boulder Care, digital health platform focused on treatment for opiate use.
So many of the investments have been in digital health companies because the firm has a thesis that telehealth will present some thorny regulatory hurdles in 2020. “There’s going to be a lot of work done by us on state telehealth regulations,” Tusk said. “It’s not like there’s an existential threat to it right now, but it’s definitely a focus.”
When dealing with regulators, Tusk often advises companies to know when to ask for permission and when to beg for forgiveness. He told Fortune in 2018 that founders need to ask themselves the following questions: “What jurisdiction am I in? What are the laws on the books? What are the penalties if I get in trouble here? How powerful is the system I’m disrupting? What are the regulators I’m dealing with like?”
Tusk has referred to ex-Uber CEO Travis Kalanick as “driving, competitive, brilliant, visionary and ruthless” — all things that made him successful but also things that led to his downfall. But Kalanick led Uber in a different era. Now, in a time when the startup pendulum is swinging from aggressive growth to slowing down and focusing on the fundamentals, how does the firm’s strategy evolve?
“On the investing side, we’re very careful to marry the mindset that Bradley brings to the table on the regulatory front while taking into consideration the actual unit economics we’re seeing at the company level,” Nof says. “If we don’t see a path to profitability, there’s not a viable opportunity for us to invest.”
….AND TWO MORE NEW FUNDS:
— Sapphire Ventures, a Palo Alto, Calif.-based venture capital firm, raised more than $1.4 billion across several funds, including its Sapphire Growth Fund IV and its Opportunity Fund. Term Sheet recently interviewed Sapphire Ventures co-founder Doug Higgins about the firm’s focus on the intersection of sports and media.
—Katie Jacobs Stanton, a former Twitter executive and co-founder of the #ANGELS investment collective, raised $25 million for her debut venture fund Moxxie Ventures. “While Moxxie will invest in entrepreneurs of all genders and backgrounds, I am particularly excited to partner with those who have been traditionally underrepresented and underestimated,” she said in a statement to Term Sheet.
- OM1, a Cambridge, Mass.-based platform that enables healthcare organizations to collect and leverage health outcomes data, raised $50 million in Series C funding. Scale Venture Partners led the round, and was joined by investors including General Catalyst, Polaris Partners, and 7wire Ventures.
- PlayOn! Sports, an Atlanta-based high school sports media company, raised $25 million in Series B funding. BIP Capital led the round, and was joined by investors including Jeff Vinik, Teall Capital, and Crossover.
- Huckleberry, a San Francisco-based online insurance purchasing and management platform for small businesses, raised $18 million in Series A funding. Tribe Capital led the round, and was joined by investors including Amaranthine, Crosslink Capital and Uncork Capital.
- Alchemy, a San Francisco-based blockchain company, raised $15 million in Series A funding. Investors include Pantera Capital, Stanford University, Coinbase, Mayfield, SignalFire, Samsung, StartX, Kenetic, and Dreamers.
- Teraki, a Germany-based data processing technology company, raised $11 million in Series A funding. Horizons Ventures led the round, and was joined by investors including Rev1 Ventures, Bright Success Capital, Castor Ventures, Paladin Capital Group and innogy Ventures.
- Voximplant, a Palo Alto, Calif.-based cloud communications platform, raised $10 million in Series B funding. Baring Vostok led the round, and was joined by investors including RTP Ventures.
- Trainual, a Scottsdale, Ariz.-based business playbook software to streamline training, raised $6.75 million in Series A funding. Investors include 4490 Ventures and MATH Venture Partners.
- Pepper Financial, a Los Angeles-based financial analytics platform that helps businesses with their financial health, raised $5.6 million in seed funding. Investors include Upfront Ventures, Lerer Hippeau, and Manta Ray Ventures.
- Emilio Health, a Palo Alto, Calif.-based provider of behavioral health and family support service with digital software, raised $5 million in seed funding, from Oak HC/FT.
- Xendoo, a Fort Lauderdale, Fla.-based provider of online accounting and bookkeeping solutions, raised $3.5 million in funding. Malachi led the round, and was joined by investors including Revolution’s Rise of the Rest Seed Fund, DeepWork Capital, and Jason Calacanis’ LAUNCH Syndicate.
HEALTH & LIFE SCIENCES DEALS
- Paige, a New York-based company focused on computational pathology for the diagnosis and treatment of cancer, raised $45 million in Series B funding. Investors include Healthcare Venture Partners, Breyer Capital, and Kenan Turnacioglu.
- TMRW Life Sciences, a New York-based integrated platform for automated, software-guided embryology and cryo-management, raised $25 million in Series B funding. 5AM Ventures led the round.
PRIVATE EQUITY DEALS
- Genstar Capital made a “significant” investment in Truck-Lite, a Falconer, N.Y.-based provider of lighting, filtration systems and telematics services for commercial vehicles. Financial terms weren't disclosed.
- The Halifax Group recapitalized Maverick Fitness Holdings LLC, a Frisco, Texas-based franchisee of Orangetheory.
- Aspen Surgical Products Inc, which is owned by Audax Private Equity, acquired Beatty Marketing & Sales LLP, a Redmond, Wash.-based provider of orthopedic products.
- Episerver, which is backed by Insight Partners, agreed to acquire Insite Software, a Minneapolis-based provider of digital commerce solutions. Financial terms weren't disclosed.
- Lovell Minnick Partners made an investment in Fortis Payment Systems, a Novi, Mich.-based payments technology and merchant services provider. Financial terms weren't disclosed.
- Ardian agreed to acquire Audiotonix, a U.K.-based provider of professional audio mixing consoles, from Astorg.
- Humana Inc agreed to acquire Enclara Healthcare, a Philadelphia-based hospice pharmacy and benefit management providers, from Consonance Capital Partners and Enclara management. Financial terms weren't disclosed.
FIRMS + FUNDS
- Rev1 Ventures, a Columbus-based venture firm, raised $15 million for its second fund, Rev1 Catalyst Fund II.
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