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The narrative around SoftBank’s Vision Fund did a 180 over the last year, as the pandemic supercharged its e-commerce and delivery bets and pushed the telecom and venture investing giant to a record profit in the fourth quarter of 2020.
The Vision Fund has done so well that it’s easy to overlook parts of its portfolio that have been struggling. These investments have never shaken off the intense scrutiny SoftBank portfolio companies in general faced following the breakdown of WeWork’s IPO attempt in 2019.
On Sunday, Katerra, a company that looks to speed up the building process, filed for Chapter 11 bankruptcy protection in the U.S. after grappling with construction delays and losses. The news confirmed earlier reports from the Information. Selling investors on a grand and truly rare vision within the venture capital space—one that required heavy investment in physical goods and manufacturing facilities—the company, founded in 2015, raised over $2 billion from SoftBank.
But even by grand vision standards, the company was also burning cash at an alarming rate. Then in late 2020, the company raised another $200 million aimed at saving itself from bankruptcy as COVID-19 sidelined some construction projects.
The issues ran deeper than the pandemic. As far back as 2019, Katerra had raised eyebrows after layoffs and the closure of a major factory in Phoenix. I spoke with a handful of employees and former employees that year who, on the condition of anonymity, questioned the management team led by then-CEO and co-founder Michael Marks. The employees had doubts about the team’s understanding of the construction industry at large. (Marks, who was previously founding partner of private equity firm Riverwood Capital, was replaced by Paal Kibsgaard, a petroleum engineer, in 2020.)
Those concerns persisted in 2021. And more damningly, the Information’s much-recommended deep dive into the company found that Katerra had allegedly misled investors about its finances last summer, with the Securities and Exchange Commission also investigating the company.
For SoftBank, Katerra’s failure comes not long after another bet—in U.K.-based financial services company Greensill Capital—has also been heavily written down. Greensill filed for bankruptcy in March, after the Vision Fund invested an estimated $1.9 billion in the company over its lifetime.
It’s a stark reminder that a fund that takes big swings is sometimes going to deliver big, embarrassing misses.
A MEGA, 2021-STYLE LBO: Private equity firms Blackstone, Carlyle, and Hellman & Friedman agreed to acquire Medline, a Northfield, Ill.-based medical supplies company, for a reported $30 billion, marking the largest leveraged buyout since the Financial Crisis. Still, this deal showcases some differences from the era of the mega-LBOs: The deal is about 50% debt— “a fraction of the leverage in ‘Barbarians at the Gate era takeovers’,” per Bloomberg.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Getir, a Turkey-based grocery delivery app maker, raised $555 million in Series D funding at a $7.5 billion valuation, confirming earlier reports it was raising funding. Investors included Silver Lake, DisruptAD, Mubadala, Tiger Global, and Sequoia Capital.
- Trulioo, a Vancouver-based identity verification company, raised $394 million in Series D funding, valuing it at $1.8 billion. TCV led the round and was joined by investors including Amex Ventures, Citi Ventures, Blumberg Capital, and Mouro Capital.
- Flink, a Berlin-based grocery delivery business, raised $240 million in funding. Prosus, BOND and Mubadala Capital co-led the round.
- Grupo Bursátil Mexicano, a Mexico City-based brokerage, will raise up to $150 million from SoftBank’s Latin America Fund, valuing it over $1 billion.
- Capchase, a New York City-based provider of lending based on revenue, raised $125 million in debt and equity Series A funding. QED Investors led the round and was joined by investors including Bling Capital, ScifiVC and Caffeinated Capital.
- Delimobil, a Russian car-sharing company, raised $75 million. VTB invested, buying a 15% stake.
- CureFit, an Indian fitness startup, will raise up to $75 million from Tata Digital.
- Iksuda Therapeutics, a U.K.-based developer of antibody drug conjugates, raised $47 million. Mirae Asset Capital and its subsidiaries, Celltrion and Premier Partners, led the round.
- 99 minutos, a Mexico-based last-mile delivery service, raised $40 million in Series B funding. Prosus and Kaszek Ventures led the round.
- Avi Medical, a Munich-based digital healthcare company, raised about $34.7 million in Series A funding. Heal Capital and Addition led the round.
- Aunt Bertha, an Austin-based marketplace for social services, raised $27 million in funding. Warburg Pincus led the round and was joined by investors including Pershing Square Foundation, Techstars Ventures, Noro-Moseley Partners, Digitalis Ventures and The Social Entrepreneurs’ Fund.
- Poka, a Canada-based worker platform for manufacturers, raised $25 million in Series B funding. 40 North Ventures led and was joined by investors including McRock Capital, SE Ventures, CDPQ, Robert Bosch Venture Capital, and Leclerc.
- TailorMed Medical, a New York City-based provider of tech to estimate healthcare costs, raised $20 million. Providence Ventures led the round.
- Medallion, a San Francisco-based healthcare infrastructure startup, raised $20 million in Series A funding. Spark Capital led the round.
- Vault Platform, a London-based platform for misconduct reporting, raised $8.2 million in Series A funding. Gradient Ventures led the round and was joined by investors including Illuminate Financial, Kindred Capital, and Angular Ventures.
- Copeland, a San Francisco-based provider of online learning for trades and the construction industry, raised $5 million in seed funding. Collaborative Fund and Defy.vc led the round and were joined by investors including Harrison Metal.
- Heja, a Swedish communication platform for sports teams, raised $4.2 million in seed funding. Peak Capital led the round.
PRIVATE EQUITY
- KKR agreed to acquire Atlantic Aviation, a Plano, Texas-based aircraft care company, from Macquarie Infrastructure in a deal valuing it at $4.5 billion including debt.
- Primavera Capital agreed to acquire Reckitt Benckiser Group (LON:RKT)’s infant formula and child nutrition business in a deal valuing it at $2.2 billion.
- BGH Capital offered to acquire Hansen Technologies (ASX: HSN), a billing tech provider, for A$1.3 billion ($1 billion).
- Digital Fuel Capital acquired First Impression Ironworks, a Gilbert, Ari.-based provider of ornamental ironwork. Financial terms weren't disclosed.
- Duke Street acquired Compo Consumer , a Germany-based provider of soils, fertilizers, and planting goods. Financial terms weren't disclosed.
- IK Investment Partners invested in Mecenat Holding, a Sweden-based provider of discounts to its community of students and young professionals. Financial terms weren't disclosed.
- KKR acquired Ensono, a Downers Grove, Ill.-based IT services provider. Financial terms weren't disclosed.
- MPK Equity Partners invested in Zoom Drain, a Norristown, Pa.-based operator and franchisor of drain and sewer services. Financial terms weren't disclosed.
- Oakley Capital acquired controlling stakes in Afterbuy and DreamRobot, providers of e-commerce software in the German-speaking region, which will be combined to form ECOMMERCE ONE Group. Financial terms weren't disclosed.
- One Rock Capital Partners agreed to invest in ArchKey Solutions, a St. Louis, Mo.-based electrical and technologies contracting and services provider. Financial terms weren't disclosed.
- Shermco Industries, backed by Gryphon Investors, acquired Sigma Six Solutions and Innovative Electric, two Washington-based electrical specialty businesses. Financial terms weren't disclosed.
EXIT
- Lightspeed (NYSE: LSPD) agreed to acquire Ecwid, an Encinitas, Calif.-based e-commerce platform, for an estimated $500 million. It also agreed to acquire NuORDER, a Los Angeles-based marketplace for businesses and suppliers, for about $425 million. Ecwid is backed by investors including Morgan Stanley Expansion Capital and PeakSpan Capital. NuORDER is backed by Brighton Park Capital and the Argentum Group.
OTHERS
- Staples offered to acquire ODP Corp.'s (Nasdaq: ODP) consumer business for $1 billion.
IPOS
- Kanzhun, a Chinese operator of an online recruitment platform, plans to raise $864 million in an IPO of 48 million shares priced between $17 to $19 apiece. Tencent backs the firm.
- GH Research, an Ireland-based maker of therapies for depression, filed to raise $100 million. BVF Partners backs the firm.
- Graphite Bio, a South San Francisco-based company with gene editing therapies, filed to raise $100 million. Versant Ventures backs the firm.
- Intapp, a Palo Alto, Calif.-based provider of tech to financial services companies, filed to raise $100 million. Temasek and Great Hill Equity Partners back the firm.
- LegalZoom.com, a Glendale, Calif,.-based provider of tech for creating legal documents, filed to raise $100 million. Investors including Francisco Partners back the firm.
SPACS
- Dave, a Los Angeles-based banking app, will go public via merger with VPC Impact Acquisition Holdings III, a SPAC sponsored by Victory Park Capital, in a deal valuing it at $4 billion.
- HomeToGo, a Berlin-based travel rental search site, will go public in Frankfurt via merger with Lakestar SPAC I.
- BigBear.ai, a Columbia, Maryland-based provider of data analytics, will go public via merger with GigCapital4, a SPAC. The deal values BigBear at around $1.6 billion.
- Aurora, a Mountain View, Calif.-based autonomous driving startup, is close to a deal to merge with Reinvent Technology Partners Y, per TechCrunch. A deal could value the company at $12 billion.
- L Catterton Latin America Acquisition, a SPAC from L Catterton targeting consumer sectors in Latin America, filed to raise $200 million.
F+FS
- Alpine Investors, a San Francisco-based firm, is targeting $1.7 billion for its eighth flagship fund, per The Wall Street Journal.
PEOPLE
- Sidewalk Infrastructure Partners, a New York City-based firm investing in infrastructure , hired Kathryn Carpenter as a partner. She was a director of Clean Energy & Infrastructure at Capital Dynamics.
- WndrCo, the Los Angeles-based investor in consumer companies co-founded by Jeffrey Katzenberg, named Justin Wexler as a vice president.
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