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Amid a coronavirus-led market route that has scorched public valuations across the board, some late-stage firms better known for their private-market chops are finding opportunities on the Nasdaq and NYSE.
“Currently, private companies have unrealistic price expectations. So even though private companies grow faster, the public stuff is attractive right now—there are some awesome deals out there,” says Mitchell Green, founder of Lead Edge Capital.
Private valuations tend to lag months behind their public cohorts. So Lead Edge has been investing in small- to mid-cap software companies whose revenue multiples are far below that of their private market counterparts. Lead Edge is looking at stocks that it believes will bounce back strongly when the stock market recovers—or be acquired by buyout firms looking to deploy a record level of dry powder if valuations don’t return. Amid the market selloff, the firm has invested in Talend, Tenable, and Crowdstrike (which is up 100% since, says Green) through Lead Edge Capital IV. Up to 25% of the fund can be invested in public market stock, says Green.
And while Green turned down a broker trying to sell shares of still-private home-sharing company Airbnb that valued the firm at $30 billion earlier this month (Call me when they want $10 billion”), Lead Edge also tried to buy shares of publicly-traded Uber, but “didn’t mobilize fast enough.”
Many, especially the smaller, growth-stage shops—likely won’t dip their toes into the public markets. While Edison Partners, for instance, can technically invest in public markets, it’s “highly unlikely” the firm will take advantage of falling equity markets, says Managing Partner Christopher Sugden. It would be an overly concentrated bet for a fund of its size (their most recent, fund nine, raised $365 million), and their LPs at least are expecting private deals from the shop, rather than public ones.
But during financial recessions, growth equity firms are known to seek public market stock when private valuations look out of whack with an economic meltdown. I wouldn’t be surprised to see more of what Lead Edge is doing.
Another WeWork spin-off: WeWork acquired a string of companies in its heyday. But after its public-market pummeling, the office-sharing company is selling its acquisitions at a bargain. The most recent spin-off: Meetup, a social events platform that WeWork acquired for $156 million in 2017. Two years and a handful of months later, the company is selling to AlleyCorp and a team of private investors for a fraction of that figure. Fortune has the exclusive. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Via, a New York-based ride-sharing app, raised $200 million in Series E funding. EXOR led the round, valuing the company at $2.25 billion.
- ElevateBio, a Waltham, Mass.-based creator and operator of a portfolio of cell and gene therapy companies, raised $170 million in Series B funding. The Invus Group, Surveyor Capital (A Citadel company), EDBI, and Vertex Ventures were the new investors, joining existing investors F2 Ventures, MPM Capital, EcoR1 Capital, Redmile Group, and Samsara BioCapital.
- Affinia Therapeutics, a Waltham, Mass.-based gene therapy company, raised $60 million in Series A funding. Seed investors F-Prime Capital and New Enterprise Associates co-led the round alongside new investor Atlas Venture, and were joined by investors including Alexandria Venture Investments, Lonza, and Partners Innovation Fund.
- Olive AI, a Columbus, Oh.-based company building AI to automate healthcare administrative services, raised $51 million in funding. General Catalyst led the round.
- OZON Group, a Russian ecommerce platform, raised $50 million in funding from Princeville Capital as well as $100 million from existing investors Baring Vostok Capital Partners and Sistema PJSFC.
- Kyash, a Tokyo-based mobile banking business, raised $45 million in a Series C funding. Greenspring Associates and Goodwater Capital led the round.
- Strivr, a Palo Alto, Calif.-based maker of VR workforce training solutions, raised $30 million in Series B funding. Georgian Partners led the round, and was joined by investors including Franklin Templeton, Prologis Ventures, GreatPoint Ventures, and Alumni Ventures Group.
- Natel Energy, a hydroelectric equipment manufacturer and developer, raised $11 million in funding. Schneider Electric Ventures led the round, and was joined by investors including Breakthrough Energy Ventures Fund, a fund founded by Bill Gates. Read more.
- Allset, a Los Angeles-based food pre-ordering company, raised $8.25 million in Series B funding. EBRD led the round and was joined by investors including existing investors Andreessen Horowitz, Greycroft, SMRK VC Fund, as well as new investor Inovo Venture Partners.
- Phenix, a Chicago-based streaming technology platform, raised an additional $7.6 million in Series A. An affiliate of KB Partners led the round.
- Qarnot Computing, a London-based firm, raised €6 million from a syndicate of investors including Banque des Territoires, Caisse des Dépôts, Engie Rassembleur d'Énergies, A/O PropTech, and Groupe Casino.
- Orum Inc, a San Francisco based AI-sales platform, raised $4 million in seed funding. Unusual Ventures led the round and was joined by Neo.
- RoadSync, an Atlanta-based digital payments platform for the transportation industry, raised $5.7M in Series A funding. Base10 Partners led the round.
PRIVATE EQUITY
- A holding company established by Alchemist Capital Partners Korea and Credian Partners acquired MagnaChip Semiconductor Corporation’s Foundry Services Group (NYSE: MX) and the factory in Cheongju, Korea. The deal is valued at about $435 million, including about $344.7 million in cash.
- Palm Beach Capital made an investment in Allen Brothers Wholesale Distributors, a Philadelphia-based wholesale distributor to the convenience and grocery store industry. Allen Brothers, J. Polep Distribution Services, and Harold Levinson Associates will be included in the newly created National Convenience Distributors, creating a firm with $3 billion in annual revenue. Financial terms were not disclosed.
- Resilience Capital Partners invested in Leader Auto Resources, a Montreal-based car dealership buying group. Financial terms weren't disclosed.
- Culligan, backed by Advent International, completed its acquisition of AquaVenture, a Tampa-based bottleless, filtered water provider. Culligan also sold Seven Seas Water, an operating segment of AquaVenture, to Morgan Stanley Infrastructure Partners. Financial terms weren't disclosed.
- One.com, backed by Cinven, acquired Hostnet, a Netherlands-based competitor with about 210,000 customers. Financial terms weren't disclosed. Read more.
OTHERS
- Sumitomo Mitsui Banking will invest $383.8 million in Ares Management (NYSE ARES), a New York-based alternative asset manager. Read more.
- Durable Capital Partners will buy $70 million of equity stock in Redfin (Nasdaq:RDFN), a Seattle-based real estate broker, and $40 million of its convertible preferred stock—a discount to its trading price Monday. Read more.
- Gazprombank unit Gazprombank Leasing completed its acquisition of leasing company Carcade from Poland-based Getin Holding, valuing the deal at 2.9 billion rubles ($36 million). Read more.
- Owl Private Office, a London-based investment and advisory service, will separate into two businesses: Delfin Private Office, the international family office advisory business, and Owl Private Office Holdings
IPOs
- Zentalis Pharmaceuticals, a New York-based biotech developing therapies for cancers, says it plans to raise $130 million in an offering of 7.7 million shares priced at a range between $16 to $18. Recurium Equity, Matrix Capital Management, and Viking Global back the firm. It plans to list on the Nasdaq as “ZNTL.” Read more.
EXITS
- Stonepeak Infrastructure Partners completed its acquisition of TRAC Intermodal, a Middlesex, N.J.-based intermodal infrastructure provider, and its subsidiaries from an affiliate of Fortress Investment Group. Financial terms weren't disclosed.
F + FS
- Gilde Healthcare closed Gilde Healthcare V, after raising €416 million ($450 million) for its venture and growth capital fund.
PEOPLE
- Harrison Street promoted Carolyn Arida and Michael Leonczyk to Directors in its Social Infrastructure Fund.
