CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Jack Dorsey’s Square is acquiring a big stake in Jay-Z’s Tidal

March 4, 2021, 4:17 PM UTC
Jay-Z
TORONTO, ON - JANUARY 27: Jay Z performs on stage at Air Canada Centre during his Magna Carter World Tour on January 27, 2014 in Toronto, Canada. (Photo by George Pimentel/WireImage)
George Pimentel—WireImage

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. 

It’s weird—but it makes sense.

Here’s what I’m talking about: Square, the payments company founded by Twitter CEO Jack Dorsey, will acquire a majority stake in Tidal, the audio streaming service founded by musician Jay-Z, for about $297 million in cash and stock, the companies announced early Thursday.

Tidal will remain a separate part of Square, while Jay-Z will join Square’s board. Existing artist shareholders in the Tidal business will remain stakeholders.

At first glance, it may seem a little bizarre: Square is a fintech that just launched its own bank while Tidal is a subscription-based streaming service focused on high-quality audio. The so-called synergies aren’t immediately obvious.

But everything is fintech now. And many investors are seeing an opportunity in companies that service the so-called creator economy, a class of individuals including artists, singers, and influencers that are trying to cut out expensive middlemen and brokers, effectively going it alone. It’s not just about the YouTube or TikTok creators: Prominent musicians such as Taylor Swift have been very public about their criticisms of music labels holding ownership of their works. The discontent has led to the creation of startups such as Stem, a nascent company that offers financing to musicians without taking ownership of their songs.

While Square was scant on the exact details of what fintech services it could offer musicians, executives pointed to the similarities between the needs of small businesses and artists—for example, selling tickets, per Tidal’s interim head Jesse Dorogusker, a longtime Square executive, to Bloomberg.

“It comes down to one simple idea: finding new ways for artists to support their work,”Jack Dorsey, cofounder and CEO of Square, said in a statement.

So in theory, the tie-up makes sense. But execution will be a different story. And Tidal itself has not cruised on the calmest of waters in the past: It’s lagged behind in the brutal streaming wars between players including Apple, Amazon, and Spotify. Norweigian authorities have also opened an investigation into allegedly false streaming numbers on the platform.

Given that, maybe it’s no surprise that this was the answer Dorogusker had for Billboard when asked about the streaming service: “We think the streaming service is an important part of it, and it is growing and will continue to grow. We love that and we intend to continue to invest in that business, but we’re especially interested in creating new adjacent opportunities in service of the whole artist experience and their experience with their fans in addition to the streaming service.”

So yes, Tidal’s streaming continues—but the intention behind the deal is to really focus on creating new services for artists, not just for the big-name headliners, but also for emerging names.

The deal marks a busy start to 2021 for Jay-Z, who is friends with Jack Dorsey. The duo partnered on a bitcoin endowment in February. A few weeks back, the rapper also sold 50% of his champagne business, Armand de Brignac, to luxury conglomerate LVMH. While the terms of that particular deal was not disclosed, the numbers of the Tidal tie-up are more clear: Jay-Z acquired the music-streaming service in 2015 for about $56 million along with other artists. 

MEGA DEAL ALERT 🚨: San Francisco-based Identity management company Okta announced plans to acquire another business in the space, Auth0, for $6.5 billion. It’s a massive bet: The valuation of the stock transaction represents nearly 22% of Okta’s valuation. While an IPO was an option for Auth0, says board member and Partner at Bessemer Venture Partners David Cowan, the duo ultimately decided the companies were better off together. 

While both focus on identity management (think the numerous login pages for your company and apps), Okta focuses on managing authentication for third-party software (think Concur or Salesforce), while Auth0 focuses on software and applications written within an organization itself, Cowan explained.

Bessemer, which plans to hold onto Okta stock per Cowan, has invested a total of $93.7 million in Auth0 since the company’s seed round. That stake is now worth over $1 billion.

VENTURE DEALS

- Hopin, a London-based virtual events provider, raised $400 million in Series C funding. Andreessen Horowitz and General Catalyst, and was joined by investors including IVP and was joined by investors including Coatue, DFJ Growth, Northzone, Salesforce Ventures, and Tiger Global. 

- Volocopter, a Germany-based flying taxi startup raised €200 million ($241 million) in Series D funding. Investors include BlackRock, Avala Capital, Atlantia S.p.A.,  Continental, NTT, and Tokyo Century. 

- DispatchHealth, a Denver-based provider of in-home medical care, raised $200 million in Series D funding. Tiger Global led the round valuing it at over $1.7 billion. 

- Atai Life Sciences, a German startup using psychedelics to treat mental-health disorders, raised $157 million in Series D funding, valuing it at about $2 billion, per Bloomberg. Founder Christian Angermayer and Thiel Capital, and was joined by investors including Woodline Partners. Read more.

- Exscientia, a U.K.-based pharmatech using AI to design new drugs, raised $100 million in Series C funding. Investors included by BlackRock, Novo Holdings, Evotec, Bristol Myers Squibb, and GT Healthcare Capital.

- Jungle Scout, an Austin-based platform for selling on Amazon, raised $110 million. Summit Partners and Jungle Scout Founder Greg Mercer led the round.

- Papaya Global, a Tel Aviv-based workforce management platform,  raised $100 million in  Series C funding, valuing it above $1 billion. GreenOaks Capital Partners led the round and was joined by investors including IVP Ventures and Alkeon Capital.

- Snapcommerce, a Toronto-based message-driven mobile commerce platform focused on promotions via mobile, raised $85 million. Inovia Capital and Lion Capital led the round and was joined by investors including Acrew DCF, Thayer Ventures and Full In Partners, and included existing investors Telstra Ventures and Bee Partners.

- Xendit, an Indonesia-based digital payments infrastructure company for Southeast Asia, raised US$64.6 million in Series B funding. Accel led the round and was joined by investors including YCombinator.

- Postscript, a San Francisco-based customer messaging company, raised $35 million in Series B funding. Greylock led the round and was joined by investors including YC, 1984vc, Ali Capital, Elephant VC, and Larry Fitzgerald. Read more.

- Iris Energy, an Australian Bitcoin-focused data center business, raised A$40 million ($31 million) from investors including Platinum Asset Management. Read more.

- Seebo, Tel Aviv-based maker of quality prediction software for manufacturers, raised $24 million in Series B financing. Vertex Ventures led the round and was joined by investors including 10D, The Phoenix, and Leumi Partners.

- Bionaut Labs, a Los Angeles-based company treating central nervous system disorders, raised $20 million in funding. Khosla Ventures led the round and was joined by investors including Upfront Ventures, Revolution, BOLD Capital, and Compound. 

- Minu, a Mexico City-based employee financial wellness company, raised $14 million in Series A funding. FinTech Collective led the round.

- FutureFuel.io, a New York-based student debt focused fintech, raised $10 million in what it calls Series A1 funding. UBS led the round and was joined by investors including Fiserv, Aflac Ventures, and Salesforce Ventures.

- VEIR, a Boston-based business focused on high temperature superconductors for electricity transmission, raised $10 million in Series A funding. Breakthrough Energy Ventures led the round and was joined by investors including Congruent Ventures and The Engine.

- CourseKey, a San Diego-based attendance and engagement tool for academia, raised $9 million in Series B funding. SignalFire led the round.

- Companion, a San Francisco-based maker of A.I for training dogs, raised $8 million in seed funding. Investors included IA Ventures, Tuesday Capital, frog Design, Companion Fund, backed by Mars Petcare, Michelson Found Animals Foundation, Wheelhouse Partners, PETStock, and Central Garden & Pet

- TechsoMed, an Israel-based developer of tissue damage imaging technology, raised $7 million in Series B funding. Axil Capital led the round and was joined by investors including Yongjin Capital, Cobro Ventures, Magna Capital Partners, and Radianx Capital, along with Johnson & Johnson Innovation and NextLeap Ventures.]

- Athennian, a Canadian legal entity management software, raised CAD$7 million($5.6 million in) Series A extension funding.  Arthur Ventures led the round.

- OpenComp, a San Francisco-based compensation tech company,  raised $4.6 million in seed funding. Investors included TIME Ventures (the investment fund for Marc Benioff) and Ev Williams from Medium.

- Doppler, a San Francisco-based security platform for developers, raised $6.5 million in funding. GV, Sequoia Capital, Addition, Todd Goldberg, Rahul Vohra, and Lachy Groom.

- Adimo, a U.K.-based consumer goods marketing technology company, raised $3.6 million in seed funding. Investors included Maven Capital Partners, Scottish Enterprise, GWC, ESM Investments, and Galvanise Capitaland LSIP.

- Ecomedes, a San Francisco, Calif.-based product developer tools in the cloud, raised $3.3 million in seed funding. M12 led the round and was joined by investors including NOVA by Saint-Gobain, PivotNorth, Mission Innovations Network, and AM Ventures.

- MemoryWell, a Washington, D.C.-based digital data platform promoting care through life storytelling, raised $2.5 million in seed funding. Argon Ventures led the round.

- Goldfinch Health, an Austin-based  surgery and recovery company, raised $1.4 million in seed funding. BrokerTech Ventures led the round.

PRIVATE EQUITY

- Apollo Global Management will take Michaels (Nasdaq: MIK), the Irving, Texas-based crafts company, private for about $3.3 billion.

- Andavi Solutions, backed by Endeavour Capital, acquired GreatVines, a Saint Helena, Calif.-based sales execution and trade promotion management software provider for the beverage alcohol industries. Financial terms weren't disclosed.

- Bonaccord Capital Partners  acquired a stake in Monroe Capital, a Chicago-based credit investment manager. Financial terms weren't disclosed.

- Direct Healthcare Group, backed by ArchiMed, acquired Talley Group, a U.K.-based provider of  vacuum and pressure application therapies for conditions tied to lack of movement. Financial terms weren't disclosed.

- Permira has reportedly made a takeover bid for LivaNova, a U.S.-listed medical device maker, per the Financial Times. Read more.

- Safe Fleet, a portfolio company of Oak Hill Capital Partners, acquired Durite, a U.K.-based provider of electrical, lighting, and vehicle safety products for the commercial vehicle aftermarket. Financial terms weren't disclosed.

- Sovos, backed by Hg and TA Associates, acquired Brazil-based Fit Sistemas, a Brazil-based provider of cloud-based regulatory reporting and e-invoicing solutions. Financial terms weren't disclosed.

- Thompson Street Capital Partners acquired Freddy’s Frozen Custard & Steakburgers, a Kansas-based franchisor of fast casual restaurants. Financial terms weren't disclosed.

- Tyto Athene, backed by Arlington Capital Partners, agreed to acquire AT&T Government Solutions from the telecoms company. Financial terms weren't disclosed.

- NewSpring invested in Deposco, an Alpharetta, Ga.-based provider of fulfillment software solutions. Financial terms weren't disclosed.

- KnowBe4, backed by KKR, acquired MediaPRO, a Bothwell, Wash.-based security and privacy training solutions company.  Financial terms weren't disclosed.

- JLL invested in Roofstock, an Oakland, Calif.-based online marketplace for real estate. Financial terms weren't disclosed.

- Creedence Energy Services, a portfolio company of Tower Arch Capital, recapitalized ProChem Energy Services, a Healdton, Ok.-based provider of chemicals for scale and corrosion prevention to oil and gas providers. Financial terms weren't disclosed.

EXITS

- Boston Scientific agreed to acquire the surgical business of medical device company Lumenis for $1.1 billion in cash. Baring Private Equity Asia was the seller.

- KKR will acquire a majority stake in Integrated Specialty Coverages, an insurance distributor, from Sightway Capital,. Financial terms weren't disclosed.

OTHER

- Aon’s $30 billion bid for Willis Towers Watson, a deal that would create the world’s largest insurance broker, is facing objections from the E.U.’s antitrust watchdog, per Reuters. Read more.

- Takeda Pharmaceutical plans to acquire the global rights of Soticlestat, a experimental drug being developed to treat epilepsy, for as much as $856 million from Ovid Therapeutics.

- Zynga (Nasdaq: ZNGA) acquired Echtra Games, a San Francisco-based game studio. Financial terms weren't disclosed.

IPO

- Hayward Holdings, a Berkeley Heights, N.J.-based provider of pool equipment and systems, now plans to raise $725 million in an offering of 40.3 million shares (45% insider) priced between $17 to $19. CCMP backs the firm. Read more.

- Alignment Healthcare, an Orange, Calif.-based healthcare platform, filed for an IPO. Warburg Pincus and General Atlantic back the company. Read more.

- InnovAge Holding, a Denver, Colo.-based provider of healthcare delivery to eligible seniors, now plans to raise $342 million in an offering of 16.7 million shares priced between $20 to $21. Read more.

- ThredUp, an Oakland, Calif.-based marketplace for second hand clothing, filed to raise $100 million. Investors include Trinity Ventures, Redpoint Ventures, and Highland Capital Partners. Read more.

- Olink Holding, a Swedish company focused on biomedical research, filed for a U.S. IPO. Summa Equity backs the firm. Read more.

- Club Brugge, the Belgian soccer club, is planning an IPO in Brussels. Read more.

SPAC

- Lilium, a German startup with an electric vertical takeoff and landing air taxi, is in talks to go public via merger with Qell Acquisition, a SPAC, per Bloomberg. A deal could value the entity at $2 billion. Read more.

- 1.12 Acquisition, a SPAC formed by Bridgeport Partners targeting financials and tech, filed to raise up to $350 million.

- Lead Edge Growth Opportunities, a SPAC  formed by Lead Edge Capital targeting software, internet, and tech-enabled businesses, filed to raise $300 million. 

- TCG Growth Opportunities, a blank check company formed by The Chernin Group, filed to raise up to $250 million.

- Anghami, a music streaming company serving the Middle East and North Africa, will go public via merger with Vistas Media Acquisition Company, a SPAC. The deal values the duo at $220 million.

F+FS

- Quadrille Capital, a Paris-based investor in technology and healthcare growth equity, raised €511 million for its fourth technology fund.

- Sofinnova Partners, a European life sciences venture capital firm based in Paris, London and Milan, closed Sofinnova Crossover Fund with €445 million ($540 million) in commitments.

- Presight Capital, a West Hollywood, Calif.-based venture firm, raised $350 million for its second fund. Read more.

- Crypto.com, a Hong Kong-based crypto company, launched Crypto.com Capital, its venture arm dedicated to investing in crypto startups, with $200 million.

PEOPLE

- OMX Ventures, a Chicago-based life sciences investor, added Jamie Kasuboski as a vice president, coming from RA Capital.

- Anzu Partners, a Washington D.C. firm focused on industrial and life science technology companies, named Jaione Maiz as a principal.

- ICV Partners, a New York-based investment firm focused on lower middle market companies in business services, consumer goods & services, food & beverage, and healthcare, named Bill Ford as a managing director.