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The bitter lesson founders can learn from Eden’s acquisition of Managed by Q

March 4, 2020, 2:49 PM UTC

Be careful who you sell your company to.

That timeless lesson is in full view today: WeWork has sold Managed by Q, the New York City-based on-demand office services startup. Here’s the twisted story of the battle over it. 

In April 2019, WeWork agreed to acquire Managed by Q for $220 tomillion. According to the terms of the deal, Managed by Q CEO Dan Teran would stay on after the acquisition, and the company, along with its 500 employees, would remain a wholly-owned separate entity from its parent.

But then WeWork’s plans for a flashy initial public offering imploded, and it had no choice but to put the office services firm on the chopping block as part of its cost-cutting measures. As the situation got more serious, Teran was determined to try to control his company’s fate. He began raising money to buy back his company at a fraction of the price for which it was acquired. 

But there was an outside bidder lurking: Eden, a San Francisco-based startup and one of Managed by Q’s biggest competitors, was also interested in buying Teran’s company. 

About three months later, Eden has won the bitter battle for Managed by Q. Teran was unable to win back ownership of his firm. According to TechCrunch, the purchase price was $25 million, a tiny slice of what WeWork paid for the company less than a year ago. (Eden declined to confirm or correct the amount with TechCrunch.)

Eden also announced a $29 million funding round led by JLL Technologies, which was used to fund the acquisition.

It’s a blow to Teran, but the story serves as a reminder that once you sell your company, its fate is fully in the hands of its new owner. Some version of the WeWork fiasco might happen more often than we realize.

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

VENTURE DEALS

- Alignment Healthcare, an Orange, Calif.-based insurance company, raised $135 million. Investors include Fidelity Management & Research Company, T. Rowe Price Associates, Inc., and Durable Capital Partners L.P. 

- Boutiqaat, a Kuwait-based beauty products e-commerce company, is raising between $100 million and $150 million in funding, according to Reuters. The deal could value the company anywhere between $800 million to $900 million, Read more.

- Netlify, a San Francisco-based platform that automates web projects, raised $53 million in Series C funding. EQT Ventures led the round, and was joined by investors including Andreessen Horowitz, Kleiner Perkins, and Preston-Werner Ventures.

- Five, a U.K.-based self-driving company, raised $41 million in Series B funding. Investors include Trustbridge Partners, Direct Line Group, Sistema VC, Lakestar, Amadeus Capital Partners, Kindred Capital and Notion Capital.

- Sensel, a Mountain View, Calif.-based developer of touch interfaces, raised $28 million in Seris A funding. Investors include Susquehanna International Group, Morningside Group, SMiT, Palm Commerce Holdings Co. Ltd, Chariot Gold Limited, SV Tech Ventures, and Innolinks Ventures. 

- Sourcegraph, a San Francisco-based startup that provides Universal Code Search, raised $23 million in Series B funding. Craft Ventures led the round, and was joined by investors including Redpoint Ventures and Goldcrest Capital.

- Talespin, a Culver City, Calif.-based spatial computing company, raised $15 million in Series B funding. Cornerstone OnDemand led the round, and was joined by investors including HTC and Farmers Insurance Exchange. 

- Membrion, a Seattle-based manufacturer of ion exchange membranes, raised $6 million in Series A funding. Bellingham Angel Investors led the round, and was joined by investors including WRF Capital and SeaChange Fund.

- Arya Collateral Warehousing Services Pvt Ltd, an India-based storage and warehousing services company, raised $6 million in pre-Series B funding from Omnivore and LGT Lightstone Aspada.

- BoxLock, an Atlanta-based developer of delivery technology for homes and businesses, raised $4.5 million in funding. Investors include Dan McHugh, former CEO of Livingston, Southern Air and DHL Asia Pacific, Michael Monahan, former CFO/COO of Pitney Bowes, and Robert Williams, former Amazon and Microsoft executive. 

HEALTH & LIFE SCIENCES

- Culture Biosciences, a South San Francisco biotechnology company, raised $15 million in Series A funding. Cultivian Sandbox Ventures led the round, and was joined by investors including The Production Board, Verily Life Sciences, Section 32, YCombinator, and E14 Fund. 

PRIVATE EQUITY DEALS

- Direct Health Care Group, a portfolio company of ArchiMed, acquired GATE Rehab Development, a Sweden-based developer of rehab equipment. 

- AE Industrial Partners acquired G.S. Precision, Inc, a Brattleboro, Vermont-based manufacturer of high precision components and specialty hardware used primarily in aerospace engines and defense systems. Terms of the transaction were not disclosed.

- Vision Innovation Partners acquired Baltimore Eye Physicians, a Baltimore-based ophthalmology practice. Financial terms weren't disclosed. 

- Summit Partners made a majority investment in Viroclinics Biosciences B.V., a Netherlands-based specialized contract research organization. Financial terms weren't disclosed. 

OTHER DEALS

- Thermo Fisher Scientific Inc agreed to acquire Qiagen NV (NYSE:QGEN) in an $11.5 billion deal. Read more.

IPOs

- Nikola Corporation, a Phoenix-based maker of zero-emission semi trucks, plans to go public via merger with blank check company  VectoIQ Acquisition Corp. (NASDAQ: VTIQ). The enterprise value of the merger is $3.3 billion. The company plans to remain NASDAQ-listed under ticker symbol "NKLA." Read more.

- Banque du Caire, an Egyptian state-owned bank, plans to offer a minor $500 million stake via initial public offering starting mid-April, per Reuters. Read more.

- Prima Foods SA, a Brazilian meatpacker, filed for an IPO that is expected to raise $222 million in the country, Reuters reports citing sources. Jose Batista Junior backs the firm. Read more.

EXITS

- Exor agreed to sell PartnerRe, a Bermuda-based reinsurer, to Covea for $9 billion in cash, according to Reuters. Read more.

PEOPLE

- Laconia Capital Group promoted Geri Kirilova to partner.

- Winston Lin joined Verizon Ventures as a principal.