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Is there still appetite for direct-to-consumer businesses?

February 4, 2020, 2:48 PM UTC

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Casper could’ve potentially stayed private through 2020. 

The direct-to-consumer mattress startup tried to raise up to $200 million in funding days before filing to go public, according to a new report in The Information. Company executives reportedly felt comfortable going down the IPO path after they felt the dust had settled following WeWork’s failed public offering attempt. But the fact that it didn’t raise more funding could be indicative of a larger trend in the direct-to-consumer world.

Casper took a 32% haircut on its valuation as it filed for an IPO, estimating that it would sell 8.3 million shares at a price range of $17 to $19 apiece—raising as much as $182.4 million.

My colleague Lucinda Shen wrote about why investors’ enthusiasm about direct-to-consumer businesses has waned in recent days. There are questions about their valuations, growth prospects, competition, and the fundamental strategies they pursue.

“I’m not optimistic that they are going to have a strong acceptance form public markets,” Sandy Kory, managing director at Horizon Partners, told Fortune. “Right now, markets are saying, if you are spending a lot on sales and marketing, and you have software unit economics, you might not make it.”

I’m not so sure. Private investors may be over the direct-to-consumer trend, but does the same remain true for the public investor?

Read more at Fortune.

REIMAGINING THE CALL CENTER: Talk to any Silicon Valley investor, and they’ll tell you how artificial intelligence has all sorts of fancy applications. But AI’s most interesting use case may not be so fancy after all. 

Investors from venture capital firms like Andreessen Horowitz and Greylock Partners have invested $21 million in Cresta, a call center technology startup co-founded by Sebastian Thrun, a high-profile Silicon Valley executive who founded Google’s so-called X moonshot factory and online education company Udacity.

My colleague Jonathan Vanian reports that Cresta’s software analyzes a corporate client’s call center transcripts to learn which phrases or words top salespeople have used that ultimately led to successful sales. Other agents are then prompted to use that language when they field customer calls, in an effort to increase sales. Read more at Fortune.

Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com 

VENTURE DEALS

- Hinge Health, a San Francisco-based startup that offers a digital solution to treat chronic musculoskeletal conditions, raised $90 million in Series C funding. Bessemer Venture Partners led the round, and was joined by investors including Lead Edge Capital, Insight Partners, Atomico, 11.2 Capital, Quadrille Capital and Heuristic Capital.

- Top Hat, a Canada-based company that makes software tools for teachers in higher education, raised $55 million in Series D funding. Georgian Partners and Inovia Capital co-led the round, and were joined by investors including Union Square Ventures, Emergence Capital and Leaders Fund.

- Finix, a San Francisco-based payments infrastructure platform, raised a $35 million in Series B funding. Sequoia Capital led the round, and was joined by investors including Acrew Capital, Bain Capital Ventures, Activant Capital and Inspired Capital.

- Automox, a Boulder, Colo.-based cloud-native cyber hygiene platform provider, raised $30 million in Series B funding. Koch Disruptive Technologies led the round, and was joined by investors including CRV and CrowdStrike.

- Labelbox, a San Francisco-based training data platform for enterprise machine learning applications, raised $25 million in Series B funding. Andreessen Horowitz led the round, and was joined by investors including First Round Capital, Gradient Ventures, and Kleiner Perkins.

- Emerge, a Scottsdale, Ariz.-based digital freight marketplace, raised $20 million in Series A funding. NewRoad Capital Partners led the round, and was joined by investors including Greycroft and 9Yards Capital.

- Inato, a Paris-based platform that helps biopharmaceutical companies increase the pool of available patients engaged in clinical trials, raised $14 million in Series A funding. Obvious Ventures and Cathay Innovation co-led the round, and were joined by investors including Serena and Fly Ventures. 

- Accion Systems, a Boston-based in-space propulsion system company, raised $11 million in Series B funding. Boeing HorizonX Ventures and Shasta Ventures co-led the round. 

- CUUP, a New York-based direct-to-consumer intimates brand, raised $11 million in Series A funding. Insight Partners led the round, and was joined by investors including Forerunner Ventures, Global Founders Capital, Lerer Hippeau Ventures, and Bullish.

- Sendoso, a San Francisco-based sending platform, raised $40 million in Series B funding. Oak HC/FT led the round, and was joined by investors including Craft Ventures, Signia Venture Partners, Storm Ventures, Struck Capital, Stage 2 Capital, Felicis Ventures and Prologis.

- LoanStreet Inc, a New York-based developer of an online platform that streamlines the process of sharing, managing, and originating loans, raised $5 million in funding. Arbor Ventures led the round, and was joined by investors including Valar Ventures, Third Prime Capital, Rosecliff Ventures, Ride Ventures, The Gramercy Fund, Leland Hart, Sally Rocker, Rob Kiessling, and Richard Levin.

PRIVATE EQUITY DEALS

- One Equity Partners sold PeroxyChem, a Philadelphia-based manufacturer of peroxygen chemistries, to Evonik Industries AG (FRA: EVK), for $640 million. 

- Grant Avenue Capital acquired the Heartland Rehabilitation and MileStone businesses from HCR ManorCare. Financial terms weren't disclosed. 

- Globalization Partners Inc, a Boston-based provider of outsourced global professional employer organization and employment services, raised $150 million in funding from investors including Wincove Private Holdings TDR Capital, and Sands Capital. 

- ORIX Capital Partners acquired a majority interest in Specialty Welding and Turnarounds, a Gonzales, La.-based provider of specialty welding and other highly technical turnaround services to the oil and gas refinery. Financial terms weren't disclosed. 

- HEPACO, a portfolio company of Gryphon Investors, acquired Evergreen AES Environmental Services, a provider of environmental remediation services. Financial terms weren't disclosed. 

OTHER DEALS

- Beanfield Technologies Inc acquired Openface Inc, a Canada-based provider of fiber-based telecom services. Financial terms of the private transaction were not disclosed.

- Grab Holdings Inc. acquired Bento Invest Pte Ltd, a Singapore-based robo-advisory startup. Financial terms weren't disclosed.  

IPOs

- Passage Bio, a Philadelphia-based biotech focused on rare, monogenic central nervous system disorders, filed to raise $125 million in an IPO. It has yet to post a revenue, and revealed losses of $45.6 million in 2019. Frazier Life Sciences (13.9%), Orbimed (19.6%), and Versant Ventures (14.8%), back the firm.  It plans to list on the Nasdaq as “PASG.” Read more.

- Asana, a San Francisco-based software firm, says it has filed confidentially for a direct listing with the SEC. Read more.

EXITS

- Clearlake Capital Group agreed to acquire Innovative XCessories & Services LLC, a provider of coating solutions and vehicle upfit services to OEMs, from Olympus Partners. Financial terms weren't disclosed. 

PEOPLE

- Tess Hatch was promoted to vice president at Bessemer Venture Partners.

- Pappas Capital named Karen LeVert as a venture partner.