Why did anyone invest in Quibi?

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox. 

R.I.P. Quibi. The short-form streaming service had its grave dug and wreathed with flowers well before consumers set eyes on a single episode, at least based on bets from onlookers. 

Take a scroll through Twitter and there are any number of “I told you so”’s—and resurfaced tweets from before Quibi’s launch—assigning blame to billionaire hubris and a saturated streaming environment.

So if there was so much certainty in Quibi’s demise before the service even hit the app store (see my predecessor Polina Marinova’s post), why did any investors make the leap?

I caught up with Anis Uzzaman, general partner and CEO of Pegasus Tech Ventures, which invested some $35 million in the company in one of its later rounds of funding.

Yes, he had his doubts about Quibi when investing, but the company “already had a lot of ad revenue completed,” says Uzzaman, pointing to deals inked with T-Mobile, General Mills, and Walmart. “What kinds of companies have that for a product that has not yet launched?”

And perhaps unfortunately, there was also some follow-the-leader logic: Big-name investors such as J.P. Morgan and Goldman Sachs gave Pegasus some comfort with the company’s viability.

Many will point to the lack of venture investors on Quibi’s roster of backers—which, at first glance, sets Pegasus apart. But that’s not exactly the case: Pegasus invested in Quibi in part because the fund works with corporations to make investments. Japan’s Asahi Broadcasting Group, which launched a $200 million fund with Pegasus, wanted to work with Quibi in the long term. 

Uzzaman was remarkably calm for an investor who expects to get none of the $350 million Quibi still holds in cash, since Pegasus flew in to a later round (though he is hoping he may recoup 20% to 40% of his investment via the sale of some of Quibi’s assets). I asked as much: Aren’t you angry? 

“My first reaction was, why are they giving up so fast? In startups, there are failures all the time—but people turn it around. Why didn’t the company get rid of the titles that didn’t do well, and retry? Instead they continued with the same business model for several months,” he says. “They still had $350 million, and they are getting out? It doesn’t make sense to me. It blows.”

At any rate, Quibi’s leaders say they did try to change the model—though to no avail.

“Over the summer, we started to see a slowdown in our momentum and we tried many different things—many different product packaging models, we changed our marketing, we changed the app around many different times, but it was clear for whatever reason, this was not going to be as successful as Jeffrey and I had hoped,” Whitman said on CNBC in late October

Meanwhile, Netflix last week said it would raise prices once again for its U.S. customers amid signs of slower customer growth—but also low turnover. Spotify is also planning to raise prices, according to CEO Daniel Ek following the company’s earnings call last week. And yes—I have no doubts consumers will pay for the Netflix bump, if only to keep bored-at-home children busy.

ANTITRUST MIXES UP THE M&A WORLD: Amid news that the U.S. Department of Justice is taking a hard look at deals by large incumbents to acquire fintech startups, one of those deals is now looking to offload a piece of the business to put out antitrust concerns. Credit Karma, which had agreed earlier this year to be acquired for $7.1 billion by tax-software maker Intuit, is looking to sell its tax preparation business to Square, per the Wall Street Journal.


- Polestar, a Swedish-based electric vehicle maker, is in talks to raise $500 million from investors at a $6 billion valuation, per Bloomberg. Volvo and Zhejiang Geely Holding Group back the firm. Another report though suggests that it is in talks to raise $800 million to $900 million at over a $5 billion valuation. Read more.

- Conductor, a Brazil-based card issuing software platform in Latin America, raised $150 million in funding. Viking Global Investors led the round and was joined by investors including Advent International’s affiliate Sunley House Capital.

- WiTricity, a Watertown, Mass.-based wireless power transfer firm, raised $34 million in funding. Stage 1 Ventures led the round and was joined by investors including Air Waves Wireless Electricity and Mitsubishi Corp. Americas.

- Onfleet, a San Francisco-based last mile delivery management software maker, raised $14 million in Series A funding. Kennet Partners led the round.

- Transcend, a New Jersey-based provider of inventory management and reporting solutions for financial firms, raised $10 million in a Series A funding. Nyca Partners.

- Teampay, a New York-based spend management platform, raised $5 million in Series A-1 funding. Fin Venture Capital led the round and was joined by investors including Tribe, Crosscut, and Precursor.

- Lucidum, a San Jose, Calif.-based a cybersecurity platform for finding blind spots across operations, raised $4 million in seed funding. GGV Capital and Silicon Valley CISO Investments led the round. 


- Inspire Brands will buy Dunkin’ Brands Group (Nasdaq: DNKN), a company behind the eponymous donut brand, for about $8.8 billion not including debt.

- Ares Management offered to acquire AMP (ASX: AMP), an Australian asset management company, for about A$6.4 billion ($4.8 billion). Read more.

- Clearlake Capital Group agreed to acquire Endurance International Group Holdings (Nasdaq:EIGI), a provider of cloud-based platform solutions designed to help small and medium-sized businesses, for about $3 billion including debt. 

- Advent International plans to acquire Nielsen Holdings’ consumer goods data unit for $2.7 billion. Read more.

- Anexinet, a portfolio company of Mill Point Capital, plans to acquire SereneIT, an Atlanta area-based engineering and IT solutions firm. Financial terms weren't disclosed.

- Belcan, backed by AE Industrial Partners, acquired Telesis Corp., technology services and solutions firm serving defense and civilian federal government customers. Financial terms weren't disclosed.

- Centre Partners partnered with LP First Capital to form United Land Services Holdings, a platform for landscape services provider in the Southeast. Its companies include United Landscapes, Blandford Turf, Tree World, O’Hara and River Region Sports Fields. Financial terms weren't disclosed.

- Comlinkdata, backed by Alpine Investors, acquired ShareTracker, an Oakland, Calif.-based telecom research and analytics firm. Financial terms weren't disclosed.

- Francisco Partners agreed to acquire MyFitnessPal, a San Francisco-based food-tracking and fitness app, from Under Armour (NYSE: UAA). Financial terms weren't disclosed.

- FullSpeed Automotive, backed by CenterOak Partners, acquired Uncle Ed’s Oil Shoppe, a Battle Creek, Mi.-based provider of preventative maintenance and car wash services. Financial terms weren't disclosed.

- Granicus, a portfolio company of Vista Equity Partners, acquired Calytera, an Austin-based data platform for government agencies, from BuildGroup. Financial terms weren't disclosed.

- Owner Resource Group invested in SURESTAFF, an Itasca, Ill.-based provider of temporary, temp-to-hire, direct hire and on-premise staffing solutions. Financial terms weren't disclosed.

- Serent Capital invested in Employer Direct Healthcare, a Dallas-based surgical network. Financial terms weren't disclosed.

- Stonepeak Infrastructure Partners agreed to acquire Astound Broadband, the sixth largest U.S. cable operator in the United States that operates leading regional providers RCN, Grande, Wave and enTouch, 


- Nestlé USA agreed to acquire Freshly Inc, a Tempe, Ariz.-based deliverer of healthy meals, for up to $1.5 billion. Investors included Insight Partners and Highland Capital Partners.

- IPSY, a beauty sampling service, says it will acquire BoxyCharm, a South Florida-based provider of full-size beauty product subscriptions, to form BFA (Beauty For All) Industries. The duo is on track for over $1 billion in annual revenue this year. BoxyCharm investors included KarpReilly. Financial terms weren't disclosed.

- Ocado, the U.K. online grocer, acquired two U.S. robotics companies: Kindred Systems, a San Francisco-based robotics company backed by investors including Bloomberg Beta and Data Collective, for $262 million in cash; and Haddington Dynamics, a Las Vegas-based robotic arm maker for $25 million in cash and stock. 

- CM Group,backed by Insight Partners, acquired Selligent Marketing Cloud, a Belgium-based marketing cloud company, from HGGC. Financial terms weren't disclosed.

- Oetker Group initiated plans to acquire flaschenpost, a German online beverage delivery service. Investors include Cherry Ventures, Vorwerk Ventures, and Tiger Global.


- Juul Labs, the vaping startup, dropped its valuation to about $10 billion, per the Wall Street Journal. It was once valued at $38 billion. Read more.

- CoConstruct, backed by Serent Capital, acquired CBUSA, a group purchase organization for home builders to combine their buying power to more compete with national builders. Financial terms weren't disclosed.

- Societe Generale SA plans to sell its Lyxor asset management business, with $175 billion, per Bloomberg. Read more.


- Mavenir, a Richardson, Texas-based cloud-native software company, withdrew plans to raise $275 million in an IPO. 


- Dragoneer Growth Opportunities II, a SPAC formed by Dragoneer Investment Group, filed to raise up to $200 million via IPO. 


- Ardian hired Scarlett Omar Broca and Heiko Geissler as managing directors in Paris and Frankfurt respectively, as part of the buyout team. Omar Broca was previously of Goldman Sachs’ Merchant Banking Division, while Geissler came from Montagu Private Equity. Ardian also promoted three to managing director: Nicolas Darnaud and Emmanuel Miquel in Paris, and Marco Bellino in Milan. 

- Water Street Healthcare Partners, a Chicago-based private equity firm, appointed Michael S. Zappala to vice president. 

- Hunter Point Capital, a New York-based mid-market alternative asset manager, was formed by Bennett Goodman and Avi Kalichstein.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet