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Oh man, it’s not looking good in the land of Softbank-backed startups.
Zume Pizza, the pizza-delivery and food-logistics startup, raised $375 million in funding from SoftBank at the end of 2018, which valued the startup at approximately $2.25 billion. That was a big leap from its prior private valuation of $170 million.
In November 2018, I asked, “Now, we eagerly await to see what Zume does with this avalanche of capital. It can’t just be spent on pizza, can it?”
Well, for one, it hired a lot of people, but as we’ve learned time and time again, money can’t solve all problems. Following an executive exodus, Zume is laying off 53% of its staff, according to a source close to the situation. The layoffs are reportedly a cost-cutting measure.
Trouble is also brewing at Getaround, the car rental company that raised a $300 million Series D round led by SoftBank in 2018. In a blog post, Getaround CEO Sam Zaid said the startup would continue to invest in product and technology, while also reducing field operations and the size of several global teams. This is startup speak for: We’re eliminating jobs. “Announcing layoffs is not the news we had hoped to share in the New Year, and it was the hardest of decisions given the talented and incredibly passionate team we’ve assembled,” Zaid wrote.
The Information reported that Zaid seemed to place some of the blame on the recent struggles of its deep-pocketed investor. According to the story, “Zaid called SoftBank a ‘thoughtful partner,’ but added that the world’s largest tech investment fund has ‘had their own challenges, and it’s hard to say that doesn’t have a ripple effect across their whole portfolio.’” The Information reports the company will lay off approximately 150 employees, roughly one-fourth of Getaround’s staff.
Finally, OYO, the hotel chain that has been called “SoftBank’s jewel in India,” plans to lay off approximately 2,000 people by the end of January, according to a report in the Economic Times.
Anyway, all this is to say that many of the CEOs who gobbled up SoftBank cash are proving that the mentality of “Why not just raise more?” is a double-edged sword. I still think about what Benchmark’s Sarah Tavel told me in 2018:
“There’s a lot of strength and value to having a lot of capital, but as you know, there’s a lot of damage that having a lot of capital can do to a company. It can diffuse focus, it can cover up things that aren’t working inside it, and it can stop the leadership from understanding the mechanics of its own business.”
NEW UNICORN ALERT: I often joke that a bunch of the products and services I use end up as unicorns. There’s Rent the Runway, Glossier, StitchFix, Canva, and Calm. And now I can add ClassPass to that list. (I don’t know about you, but my imaginary portfolio is lookin’ fiiine.)
ClassPass, the studio fitness and wellness platform, raised $285 million in Series E funding at a $1 billion valuation. The company will use the capital to accelerate its international expansion, grow its corporate wellness offering and continue adding wellness activities to its platform, like facials and massages.
“This is more than we sought out to raise. We were oversubscribed,” says ClassPass CEO Fritz Lanman. “But we brought it in from two great partners to finish our global footprint.”
L Catterton and Apax Digital co-led the round, and were joined by investors Temasek.
I wrote in 2017 that ClassPass had undergone quite a bit of change in an effort to focus on profitability—it reworked its business model, discontinued its popular unlimited class option, and hiked membership prices. All of this caused backlash from users, and it’s unclear whether the company is profitable or close to being profitable, but Lanman and founder Payal Kadakia said it was ultimately good for the company’s bottom line.
Note: This story previously said Zume was laying off 80% of its staff, according to media reports, but a source close to the company told Term Sheet the number was closer to 53%.
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- AvePoint, a Jersey City-based provider of data governance, protection and migration solutions, raised approximately $200 million in Series C funding. Investors include TPG Sixth Street Partners and Goldman Sachs.
- Indigo Agriculture, a Boston-based agricultural tech company, raised $200 million in funding. Investors include FedEx and Pacific Western Bank.
- HighRadius, a Houston, Texas-based order-to-cash and treasury management software, raised $125 million in Series B funding. ICONIQ Capital led the round, and was joined by investors including Susquehanna Growth Equity and Citi Ventures.
- Evolv Technology, a Waltham, Mass-based developer of weapons-screening and threat detection systems, raised $30 million in funding. Investors include Finback Investment Partners, Bill Gates, DCVC, General Catalyst Partners, Lux Capital, and SineWave Ventures.
- Pieces Technologies, a Dallas, Texas-based healthcare artificial intelligence and technology company, raised $25.7 million in Series B funding. Concord Health Partners led the round, and was joined by investors including Children’s Health of Dallas and OSF Healthcare System.
- The Guild, an Austin-based hospitality startup, raised $25 million in Series B funding. Investors include Maveron, Convivialite, and the Nicol Investment Company.
- Virtual Incision Corporation, a Lincoln, Nebraska-based medical device company, raised $20 million in a Series B+ funding. Bluestem Capital led the round, and was joined by investors including PrairieGold Venture Partners and Genesis Innovation Group.
- Sweepr, a Dublin-based customer care platform for the connected home, raised $9 million in Series A funding. Investors include the Amazon Alexa Fund.
- NinjaTrader, a Chicago-based provider of trading software and brokerage services to active traders, raised funding of an undisclosed amount. Long Ridge Equity Partners led the round, and was joined by investors including DRW Venture Capital.
HEALTH & LIFE SCIENCES DEALS
- Elysium Health, a New York-based life sciences company, raised $40 million in Series C equity and debt funding. GISEV Family Office led the round, and was joined by investors including Mayo Clinic Ventures, Western Technology Investment, General Catalyst, Morningside Ventures, and Breyer Capital.
- VectivBio, a Switzerland-based clinical-stage biotechnology company, raised $35 million in funding. Investors include Versant Ventures, OrbiMed, Novo Holdings, BPI France, Tekla Healthcare Investors, Inserm Transfer Initiative and Cowen Healthcare Investments.
- Eyevensys, a France-based clinical-stage biotechnology company developing non-viral gene therapies for retinal and other ophthalmic diseases, raised $30 million in Series B funding. Boehringer Ingelheim Venture Fund led the round and was joined by investors including Pontifax, Bpifrance, CapDecisif, Inserm Transfert, the Global Health Sciences Fund and Pureos Bioventures.
- TwinStrand Biosciences, a Bellevue, Wash.-based genetic sequencing technology company, raised $16 million in Series A funding. Madrona Venture Group led the round, and was joined by investors including Alexandria Venture Investments, Ridgeback Capital and Sahsen Ventures.
PRIVATE EQUITY DEALS
- Edgewater Midstream, a Houston, Texas-based provider of independent midstream solutions, raised $400 million from EnCap Flatrock Midstream and the Edgewater management team. Financial terms weren't disclosed.
- The Halifax Group recapitalized TriMech, a Glen Allen, Va.-based provider of computer-aided design and engineering software. The seller was McCarthy Capital. Financial terms weren't disclosed.
- Provation Medical, Inc, which is backed by Clearlake Capital Group, acquired MD-Reports, a Staten Island, N.Y.-based provider of electronic medical record, practice management, and report writing software. Financial terms weren't disclosed.
- NSA Industries, a portfolio company of Ironwood Capital , acquired Vitex Extrusions, a Franklin, N.H.-based manufacturer of metal extrusions. Financial terms weren't disclosed.
- Valet Living, a portfolio company of Ares Management, acquired Trojan Waste Solutions, a San Antonio, Texas-based doorstep waste and recycling provider. Financial terms weren't disclosed.
- Healthgrades, a portfolio company of Vestar Capital Partners, acquired Evariant, a Farmington, Conn.-based healthcare consumer and physician engagement company. Financial terms weren't disclosed.
- Springbrook Software, a Portland-based provider of payments software for local government, was acquired by Accel-KKR. Financial terms weren't disclosed.
IPOs
- China Railway, a state-owned rail network, seeks to raise $4.3 billion in an IPO. Read more.
EXITS
- Croft & Bender sold Astra Group Holdings, an Atlanta-based provider of general contracting and related construction services, to Equix. Financial terms weren't disclosed.
- Swander Pace Capital sold Voortman Cookies Limited, a Canada-based seller of cookies, to Hostess Brands. The deal is valued at approximately $320 million (C$425 million) in cash.
- Saw Mill Capital sold Pine Environmental Services, a Windsor, N.J.-based provider of environmental test & measurement equipment solutions. Financial terms weren't disclosed.
- WindRose Health Investors recapitalized Medical Knowledge Group, a New York-based provider of medical communication and data analysis services. The buyer was Court Square Capital Partners. Financial terms weren't disclosed.
FIRMS + FUNDS
- Platinum Equity, a Beverly Hills, Calif.-based private equity firm, raised $10 billion for its latest global buyout fund, Platinum Equity Capital Partners V.
PEOPLE
- Masha Khusid joined Drive Capital as a partner.
- Lincoln Road Global Management promoted Jagrit Rai to senior associate.
- TA Associates promoted Ethan Liebermann and Kevin Masse to managing director; and Lovisa Lander, Aditya Sharma, and Amara Suebsaeng to principal; Stefan Dandl, Jérémy Dréan, and Jessica (Cohen) Gilligan to senior vice president;
- Abris Capital Partners promoted Paulina Pietkiewicz, Edgar Kolesnik and Adrian Stanculescu to partners.
- Berkshire Partners named Matt Gooch, Saad Hasan and Ben Levy as managing directors.
- Mark Villanueva joined Union Square Advisors as a managing director.
- TCG promoted Michaela Venuti to vice president.
- Mark Satran joined AE Industrial Partners as a senior managing director.
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