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Compass’ IPO takes a cut

April 1, 2021, 3:24 PM UTC

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As high-flying tech stocks are roiled by projections of a robust economic reopening, it’s becoming a tough time to go public.

That may be one way to explain the IPO of Compass, a real-estate tech business.

A week ago, the company sought to raise as much as $936 million in a sale of about 36 million shares priced between $23 to $26 apiece. 

But on Wednesday, the roughly nine-year-old business revealed that it had only raised $450 million in a sale of 25 million shares priced at $18 apiece.The pricing still values the SoftBank-backed company at about $7 billion, a slight uptick to its last-known private market valuation of about $6.4 billion.

In its IPO prospectus, the company emphasized its software that allows real-estate agents to list homes, schedule tours, manage relationships, and analyze the market. In turn, Compass takes a cut of the commission from selling a home.

“We are replacing today’s complex, paper-driven home-buying and selling process with an all-digital, end-to-end platform that empowers real estate agents to deliver an exceptional experience to every buyer and seller,” Compass founder and CEO Robert Reffkin touted in the letter published in the company’s IPO filing.

The IPO comes amid a pandemic-fueled housing boom in the country. Compass’s revenue rose 56% to $3.7 billion in 2020. But it still represented slower growth than in 2019, when the topline figure rose 170% to $2.4 billion. In a more positive sign, losses also narrowed last year by 30% to $270.2 million.

But for Compass, investors’ doubts may include not only concerns around the macroeconomic environment—but also about the company’s own business. The question Compass has faced in recent years and will continue to face: Is the company truly changing real estate and can it be categorized as a tech company?

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

P.S. Ed-tech companies have also taken off in the past year. Now, one has become a guinea pig for public-market investors: Coursera went public on Wednesday, raising nearly $520 million in an IPO of 15.7 million shares priced at $33 apiece, the high end of its range. On its first day of trading, the stock also jumped 36% in a sign that investors believe in its prospects even in a post-pandemic future. But what will that future look like? I spoke with Coursera CEO Jeff Maggioncalda on what he envisions for the coming years in education. Read the full interview here.

Correction: This article previously stated 2020 revenue rose 54% to $3.7 billion in 2020. The correct figure is 56%.

VENTURE DEALS

- Glovo, a Barcelona-based delivery company, raised €450 million ($530 million) in its Series F funding. Lugard Road Capital and the Luxor Capital Group led the round and were joined by Delivery Hero, Drake Enterprises and GP Bullhound.

- Tonal, a San Francisco-based strength and personal training platform, raised $250 million in Series E funding valuing the business at $1.6 billion. Dragoneer led the round and was joined by investors including Cobalt Capital, L Catterton, and Sapphire Ventures

- Uniphore, an India and California-based call center tech company, raised $210 million in Series D funding. $140 million.  Sorenson Capital Partners led the round and was joined by investors including Cisco Investments, March Capital Partners, and Chiratae Ventures.

- Pipe, a fintech focused on getting companies with recurring revenue their cash upfront, is in the process of raising $150 million in funding led by Greenspring Associates valuing it at $2 billion, per TechCrunch. Read more.

- Hotmart Company, an Amsterdam-based cloud-based platform focused on creators, raised $130 million in Series C funding. TCV led the round and was joined by investors including  Alkeon Capital.

- Otrium, an Amsterdam-based marketplace for end-of-season fashion, raised $120 million in Series C funding. BOND and Index Ventures led the round.

- Tyra Biosciences, a Carlsbad, Calif.-based biotech targeting acquired resistance in oncology, raised $106 million in Series B funding. Nextech Invest led the round and was joined by investors including Cormorant Asset Management, BVF Partners, Janus Henderson Investors, and Logos.

- Thrasio, a New York-based company acquiring Amazon businesses, raised $100 million in additional Series C funding.

- Sightline Payments, a Las Vegas-based fintech payments company for the gaming market, raised $100 million. Cannae Holdings led the round and was joined by investors including Genting Group, Point Break Capital, Searchlight Capital Partners, Shift4 Ventures, and Vectr Ventures.

- Stord, an Atlanta-based supply chain software company for retailers and e-commerce brands, raised $65 million in Series C funding. BOND led the round and was joined by investors including Lineage Logistics, Salesforce Ventures, Dynamo Ventures, Founders Fund, and Susa Ventures.

- Outpace Bio, a Seattle-based biotech focused on cell therapies, raised $30 million in Series A funding. ARTIS Ventures and Lyell Immunopharma and were joined by investors including Abstract Ventures, Civilization Ventures, Mubadala Capital, Playground Global, Sahsen Ventures, and WRF Capital. 

- CirrusMD, a Denver-based provider of on-demand virtual care services, raised $20 million in Series C funding. Blue Venture Fund led the round and was joined by investors including 7wireVentures, Drive Capital and the Colorado Impact Fund.

- ZEDEDA, a San Jose, Calif.-based distributed edge company raised $12.5 million in extended Series A funding. Rockwell Automation, Juniper Networks, and EDF North America Ventures invested. 

- New Equilibrium, a Cambridge Mass.-based drug design company focused on disordered proteins, raised $10 million in seed funding. RA Capital Management led the round.

- StarStock, a New York-based marketplace for sports fans and card hobbyists to buy, sell, and invest in their favorite athletes, raised $8 million in Series A funding. Andreessen Horowitz led the round. 

- Blaze, a Los Angeles-based maker of software and point of sale platform for legal cannabis, raised $8 million in Series A funding. Delta Emerald Ventures led the round and was joined by investors including Act One Ventures and SOJE Capital.

- Memfault, a San Francisco-based provider of a cloud-based platform for connected device monitoring, raised $8.5 million in Series A funding. Partech led the round and was joined by investors including Uncork Capital.

- Datapeople, a New York-based recruiting software company, raised $8 million. Investors include Uncork Capital, NextView Ventures, and First Round Capital. Read more.

- Lowkey, a San Francisco-based maker of software for game streamers, raised $7 million in Series A funding. Andreessen Horowitz led the round and was joined by investors including Figma’s Dylan Field, Loom’s Joe Thomas, and Plaid’s Zach Perret & William Hockey. 

- OVEX, a South African crypto broker, raised $4 million. Alameda Research invested.

- Ensemble, a Los Angeles-based expense tracking app for co-parents, raised $3 million in seed funding. Investors included TTV Capital, Lerer Hippeau, and Citi Ventures

- KPI Sense, a Chicago-based finance platform for Saas companies, raised $1.1 million in seed funding. Network Ventures led the round and was joined by investors including Goldin Ventures.

PRIVATE EQUITY

- RedBird Capital and Basketball player LeBron James invested in Fenway Sports Group, a Boston-based company behind Liverpool FC and the Boston Red Sox. The deal values the firm at about $7.4 billion.

- TDR Capital will acquire Arrow Global, a U.K.-based credit services company, for about 563 million pounds ($776 million). 

- A consortium led by Blackstone Infrastructure Partners will acquire Autogrill’s U.S. motorway food business for about $375 million. Financial terms weren't disclosed.

- L Catterton invested JPY 20 billion (about $180.6 million) into PHC Holdings, a Tokyo-based healthcare company. Financial terms weren't disclosed.

- A group led by Vestar Capital Partners invested $100 million in Friday Health Plans, a Denver-based health insurance company.

- Bridgepoint agreed to acquire Sun World International, a Palm Desert, Calif.-based fruit genetics, research and development, and licensing company. Financial terms weren't disclosed.

- Carrus, backed by Revelstoke Capital Partners, acquired Archetype Innovations, an electronic health record learning platform. Financial terms weren't disclosed.

- Compass Precision, backed by Main Street Capital Holdings, acquired Douglas Machining, a Winona, Minn.-based maker of precision metal components. Financial terms weren't disclosed.

- Ethos Capital acquired a controlling interest in Donuts Inc., a Seattle-based domain seller, from Abry Partners. Financial terms weren't disclosed.

- Gauge Capital recapitalized EMSAR, an Austin-based provider of equipment maintenance and repair services. Financial terms weren't disclosed.

- J.F. Lehman & Company invested in Trillium Engineering, a Hood River, Ore.-based maker of engineered camera gimbals for unmanned aerial systems. Financial terms weren't disclosed.

- Stellex Capital Management acquired Komatsu's U.S. and Australia-based conveying business units. Financial terms weren't disclosed.

- TPC Wire & Cable, a portfolio company of Audax Private Equity, acquired Hydro Group and ICS. Hydro, based out of the U.K., provides connectors and cables for harsh environments. Integrated Cable Systems, based in Longmont, Colo., provides custom cables, harnesses, and assemblies for medical devices. Financial terms weren't disclosed.

EXITS

- Squarespace acquired Tock, a Chicago-based maker of software for the hospitality industry, for over $400 million in a mix of cash and stock. Tock is backed by investors including Valor Equity Partners and Origin Ventures.

- Aurora Capital Partners acquired Curtis Bay Medical Waste Services, a Baltimore, Md.-based medical waste collection, treatment and disposal services, from Summer Street Capital Partners. Financial terms weren't disclosed.

- Francisco Partners agreed to acquire BARBRI, a Dallas-based company offering bar courses, from Leeds Equity Partners. Financial terms weren't disclosed.

- A special-purpose fund led by Neuberger Berman plans to acquire a stake in Springer Nature, an academic publisher, in a deal that would leave BC Partners as a minority investor, per Bloomberg. Read more.

OTHER

- The Federal Trade Commission is seeking to block Illumina’s $7.1 billion proposed acquisition of cancer detection test maker Grail, a cancer detection company that originally spun out of it. 

- Hitachi (TSE: 6501) agreed to acquire GlobalLogic, a U.S.-based digital engineering services company, for $9.6 billion.

- International Seaways (NYSE: INSW) and Diamond S Shipping (NYSE: DSSI), two tanker companies providing energy transportation services for crude oil and petroleum products, agreed to merge in a deal that values the duo at $2 billion.

- Micron Technology and Western Digital are each considering a bid for  Kioxia Holdings, a Japanese semiconductor firm, per the Wall Street Journal. A deal could value it at around $30 billion. Read more.

- The head of Greensill Capital’s Finacity will acquire the Stamford, Conn.-based financial services unit for $24 million. 

- Anduril Industries acquired Area-I, a Marietta, Ga.-based unmanned aerial systems company. Financial terms weren't disclosed.

IPO

- Zhejiang Geely Holding Group, a Chinese car company, is reviving plans for a potential IPO of its Volvo Cars unit in a deal that could value it at $20 billion, per Bloomberg. It is considering Amsterdam or Stockholm as a listing venue. Read more.

- InMobi, an Indian mobile-advertising services company, is weighing a potential IPO that could raise as much as $1 billion, valuing InMobi at $12 billion to $15 billion, per Bloomberg. Read more.

F+FS

- General Atlantic, a New York-based private equity firm, plans to raise $5 billion for its fourth flagship fund. Read more.

- B Capital Group, a Los Angeles-based multi-stage investment firm, raised $415 million for its Elevate fund, which provides follow-on capital to companies in its portfolio.

- Energize Ventures and Caisse de dépot et placement du Québec started a new co-investment partnership under which CDPQ will invest up to $125 million over the next three years in the energy and sustainable industry sectors.

- Harlem Capital, a New York-based venture firm focused on diverse founders, raised $134 million for its second fund. Read more.

PEOPLE

- B Capital Group, a Los Angeles-based multi-stage investment firm, hired Daisy Cai as a general partner as part of its expansion in China.