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The drama at WeWork as SoftBank scraps their $3 billion deal

April 2, 2020, 1:48 PM UTC

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SoftBank officially scrapped a deal to buy up to $3 billion in stock from existing WeWork shareholders. 

Late last year, the Japanese telecom giant agreed to acquire shares as part of a wider bailout package for office-sharing startup, after the company’s attempt at a debut on the public markets fell flat.  

But now, citing its fiduciary duty to its own shareholders, SoftBank says such a deal would be “irresponsible.” In a press release, SoftBank noted WeWork’s ongoing criminal and civil investigations, WeWork’s failure to close a China joint venture, and the impact of coronavirus on a largely physical business.

The deal would have given former CEO and co-founder Adam Neumann nearly $1 billion for his shares alone, even as the company itself laid off thousands of workers. In its most recent release, SoftBank leaned hard into that oft-criticized narrative. The telecom giant pointed to its $14.25 billion investment in WeWork, emphasizing that Neumann “stood to benefit the most from the tender offer.” 

“Together, Mr. Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10% of the total,” SoftBank’s release read. Benchmark was another investor.

In a statement, Benchmark’s Bruce Dunlevie and former Coach CEO Lew Frankfort, as part of WeWork’s Special Committee of the Board of Directors, said they were “surprised and disappointed” and will “evaluate all of its legal options, including litigation.”

Meanwhile, SoftBank investment partner Kirthiga Reddy sits on WeWork’s board alongside the duo, as does WeWork CEO Marcelo Claure, a SoftBank executive himself.

It’s certainly a blow to Neumann and Benchmark. But does that mean SoftBank will tender a new deal—one that is kinder to employees?

At any rate: Talk about awkward.

The new man at the helm of T-Mobile: SoftBank-backed T-Mobile merged with Sprint on Thursday, putting a new CEO at the helm: Mike Sievert. While his predecessors may be reminiscent of startup land founders (goodbye suits and ties, hello big personalities), Sievert gives off a little more of a “suburban dad vibe,” as my colleague Aaron Pressman put it in an interview with him.

VENTURE DEALS

- iTeos Therapeutics, a Cambridge, Mass. and Belgium-based biotech focused on cancer immunotherapies, raised $125 million in Series B2 funding. RA Capital Management and Boxer Capital led the round, and were joined by investors including Janus Henderson Investors, RTW Investments, and Invus.

- Collibra, a New York and Brussels-based data compliance company, raised $112.5 million in funding for a post-money valuation of $2.3 billion. ICONIQ Capital and Index Ventures and Durable Capital Partners led the round, and was joined by investors including Henry Ellenbogen. Existing investors Battery Ventures, CapitalG and Dawn Capital also participated in the round.

- Pandion Therapeutics, a Cambridge, Mass-based biotech focused on modular protein therapeutics for autoimmune disease, raised $80 million inSeries B funding. Access Biotechnology and Boxer Capital led the round, and were joined by investors including  RA Capital and OrbiMed.

- Aspen Neuroscience, a San Diego biotech firm focused on autologous neuron replacement therapy to treat Parkinson disease, raised $70 million in Series A funding. OrbiMed led the round, and was joined by investors including ARCH Venture Partners, Frazier Healthcare Partners, Domain Associates, Section 32, and Sam Altman.

- MedGenome, a U.S. and India-based genetic diagnostics firm, raised $55 million in Series D funding. LeapFrog Investments led the round, and was joined by investors including Sofina and Sequoia Capital. Read more.

- Notion, a San Francisco-based workplace productivity platform, raised $50 million in funding from Index Ventures and others, valuing it at $2 billion valuation. Read more.

- AM-Pharma B.V., a Netherlands-based clinical stage biopharmaceutical company focused on acute kidney injury, raised €47 million ($52 million). Cowen Healthcare Investments led the round.

- Enovix Corporation, a Fremont, Calif.-based 3D Silicon Lithium-ion Battery company, raised $45 million in funding.

- Orion Labs, a San Francisco-based communication and automation platform for mobile workforces, raised 29 million in Series B funding. Dell Technologies Capital led the round, and was joined by investors including  WRVI Capital and existing investors including Avalon Ventures, Argentum Capital Partners, Allen and Company, and Mathers Associates.

- Phantom AI, a Burlingame, Calif.-based autonomous driving platform developer, raised $22 million in Series A funding. Celeres Investments led the round, and was joined by investors including Ford Motor Company and KT. Existing investors Millennium Technology Value Partners and DSC Investment also participated.

- Zucara Therapeutics Inc., a Toronto-based diabetes life sciences company, raised $21 million in Series A funding. Perceptive Xontogeny Venture Fund led the round.

- BigRentz, an Irvine, Calif.-based construction equipment rental marketplace, raised $15 million in funding. ITOCHU Corporation led the round.  

- Pulse, a San Francisco-based social research platform for CIOs and tech executives, raised $6.5 million in Series A funding. AV8 Ventures led the round.

- ModelOp, a Chicago, Ill.-based provider operations modelling software, raised $6 million in Series A funding. Valley Capital Partners led the round, and was joined by investors including Silicon Valley Data Capital.

- Plum Lending, a San Francisco, Calif.-based commercial real estate lending company, raised $2 million in funding. Resolute Capital Partners was the investor, joining Elliott Management and SoftBank.

- Mutable, a New York-based public cloud provider, raised $1.5 million in seed funding. Lunar Ventures and Fly Ventures invested, and were joined by Momenta Ventures, Acequia Capital, and Charlie Songhurst.

PRIVATE EQUITY

- L Catterton made a “significant investment” in ETVOS Co., an Osaka, Japan-based natural cosmetics brand. Financial terms weren't disclosed.

- HGGC acquired PCF Insurance, a Woodland Hills, Calif.-based insurance brokerage, Financial terms weren't disclosed.

- Pine Island Capital Partners and Bain Capital Credit acquired Precinmac Precision Machining, a manufacturer of machined components for companies in the aerospace and defense, semiconductor, and general industrials sectors in the U.S. and Canada.  Compass Partners Capital helped arrange the transaction and is also investing.  Financial terms weren't disclosed.

- KKSP Precision Machining, backed by Mill Point Capital, acquired Prime Engineered Components, a  Watertown, Conn.-based  maker of aluminum, brass and stainless steel custom metal components. Financial terms weren't disclosed.

- Francisco Partners completed its acquisition of Smith Technologies, a pharmacy technology and public sector software maker, from Asheville, N.C.-based J M Smith Corporation.

OTHERS

- Koch Engineered Solutions, a unit of Koch Industries, acquired Sentient Energy, a Burlingame, Calif.-based provider of line sensors and grid analytics software for the energy industry. Financial terms weren't disclosed.

- Rubicon Project (NYSE:RUBI), an advertising platform, completed its merger with Telaria (NYSE: TLRA), a video management platform. Financial terms weren't disclosed. The company will remain on the New York Stock Exchange as “RUBI.”

- Valsoft Corp acquired MacPractice, a Lincoln, Ne.-based macOS and iOS-based management software for medical practices. Financial terms weren't disclosed.

EXITS

- Nestle Purina acquired Lily’s Kitchen, a London-based natural pet food brand, from L Catterton. Financial terms weren't disclosed.

- Stone Canyon Industries Holdings acquired Kissner Group Holdings , an Overland Park, Ka.-based salt producer, from Metalmark Capital Holdings and Silvertree‐KMC II LP (a venture between Silverhawk Capital Partners and Demetree Salt). The price was $2 billion. 

- KKR paused plans to sell Goodpack, a Singapore-based provider of shipping containers and logistics services, due to the coronavirus, Reuters reports citing sources. Read more.

F + FS

- BIP Capital raised $101 million for its Venture Fund IV. 

PEOPLE

- KKR named Hidekazu Harada  a Managing Director on KKR’s Private Equity team in Tokyo.

- Sofinnova Investments promoted Maha Katabi to General Partner and Sarah Bhagat to Partner.

- HGGC promoted Dan Stanko from Principal to Partner.

- BIP Capital promosted Dan Drechsel to General Partner.