The great inflation debate

It’s a little early for Halloween, but the U.S. economic data came dressed to scare.

On Tuesday, the U.S. Labor Department said that June’s consumer-price index grew about 5.4% compared to a year ago—the biggest increase in annual inflation in nearly 13 years. From a month to month basis, that figure grew about 0.9%, the largest jump since 2008 and higher than expected.

If such inflation sticks around, the Federal Reserve could increase interest rates, threatening to destabilize record returns from the stock market, increase mortgage rates, and challenge the proposed multi-trillion infrastructure bill. And, in the context of this newsletter, ultra-low interest rates have also been a massive boon to dealmaking, meaning higher rates could also lead limited partners to turn back to other asset classes and pull back from areas like venture capital and private equity.

Or at least, that’s the fear. The big question for both the Fed and onlookers is, are the numbers transitory as the economy emerges from stay-at-home orders, or is this something structural requiring a more active response from the Fed? Despite past months of inflation, Chief Jerome Powell has said that he expects the current price increases will prove to be temporary. Though not all within the Fed agree: St. Louis President James Bullard has more recently said he expects an initial interest rate increase to happen in late-2022, faster than the Federal Open Market Committee’s median outlook of two hikes in 2023.

The Tuesday report shows a lot of—well, “transitory” signs, so to speak. Shelter, used car prices, and transportation services accounted for 76% of the increase in core CPI (which does not include food and energy). The latter two categories are least driven by temporary supply issues, with shortage of new cars and sudden demand for travel driving the price increases.

Still, writes Daniel Casali, Chief Investment Strategist at Tilney Smith & Williamson in a Tuesday morning note, the increase in shelter prices is a concern: “The combination of low vacancy rates, rapidly rising house prices encouraging rentals and a return of workers back to cities could be a potential source of shelter and overall CPI inflation over the coming months.”

So yes, don’t panic about inflation, but there are signs that it could be more worrisome than previously expected.

MELINDA FRENCH GATES is investing in a new $57 million fund from Female Founders Fund through her firm, Pivotal Ventures. “I firmly believe we are missing out on transformational ideas by not putting resources behind women,” French Gates said in a statement. My colleague Emma Hinchliffe has the story here.

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

Jessica Mathews compiled the IPO section of the newsletter.

VENTURE DEALS

- Flipkart, the Indian grocery delivery startup, raised $3.6 billion at a $37.6 billion valuation. Investors included GIC, Canada Pension Plan Investment Board, SoftBank Vision Fund 2, and Walmart.

- Quantexa, a New York City-based data analytics software company, raised $153 million in Series D funding. Warburg Pincus led the round.

- Arctic Wolf, an Eden Prairie, Minn.-based cybersecurity startup, raised $150 million. Investors included Viking Global Investors and Owl Rock (Blue Owl Capital). The deal is valued at $4.3 billion.

- Impact, a maker of a marketing platform, raised $150 million in funding on a $1.5 billion valuation. Qatar Investment Authority led the round and was joined by investors including Providence Public.

- Flock Safety, an Atlanta-based maker of police cameras and software, raised $150 million in Series D funding. Andreessen Horowitz led the round and was joined by investors including Matrix, Bedrock, Initialized Capital, and Meritech. 

- Remote, a New York City-based human resources software maker, raised $150 million in Series B funding. Accel led the round and was joined by investors including Sequoia, Index Ventures, Two Sigma, General Catalyst, and Day One Ventures, valuing it over $1 billion. 

- Mark43, a New York City-based maker of software for law enforcement, raised $101 million million in Series E funding. The Spruce House Partnership and Tiger Global Management led the round.

- Aidoc, an Israel-based provider of medical imaging A.I., raised $66 million in Series C funding. General Catalyst led the round.

- Specright, a Tustin, Calif.-based supply chain software maker, raised $30 million in Series B funding. Sageview Capital led the round and was joined by investors including VMG Catalyst.

- SuperAnnotate, a San Francisco-based computer vision product maker, raised $14.5 million in Series A funding. Base10 Partners led the round and was joined by investors including Point Nine Capital, Runa Capital, and Fathom Capital.

- Endgame, a Los Angeles-based sales software provider, raised $12.3 million in Series A round funding. Menlo Ventures led the round.

- VU, an Argentina-based fraud and identity detection company, raised $12 million in Series B funding. Investors included Globant, Agrega Partners, NXTP Ventures, Bridge One, the IDB Lab, and Telefónica.

- Gembah, an Austin-based supply chain software maker, raised $11 million in Series A funding. ATX Venture Partners led the round and was joined by investors including Silverton, Flexport, Brett Hurt, Jim Curry, and Dan Graham.

- Axuall, a Cleveland, Oh.-based identity network, raised $10.4 million in Series A funding. Flare Capital Partners led the round.

- Marco, a Miami-based trade financing company, raised $7 million. Kayyak Ventures led the round.

- Code-X, a St. Petersburg, Fla.-based security startup, raised $5 million in Series A funding. By Light Professional IT Services LLC led the round and was joined by investors including fama Ventures.

- Shipyard Software, a San Francisco-based data workflow startup, raised $4 million for its decentralized exchange, Clipper. Polychain Capital led the round and was joined by investors including 0x Labs, 1inch, DeFi Alliance, and Quantstamp.

- Bimble, a U.K.-based app for sharing places, raised $2.5 million in seed funding. Dimitris Panagopoulos led the round.

PRIVATE EQUITY

- CVC Capital Partners agreed to acquire a minority stake in Aleph Holdings, a digital media company, for $470 million. The deal values Aleph at about $2 billion.

- The Hg Saturn 2 Fund will invest about $1 billion in insightsoftware , valuing the software company at about around $4 billion.

- LightBay Capital and Monogram Capital Partners invested $100 million in Foundry, a buyer of Amazon-based brands.

- A group led by Hohnhaus & Jansenberger and Cathay Capital Private Equity acquired Medifa Healthcare Group, a provider of medical technology for operating rooms.

- MAX Environmental Holdings, backed by Altus Capital Partners, acquired LEI, an Independence, La.-based recycling and waste management services company. Financial terms weren't disclosed.

- Beacon Mobility,  a portfolio company of Audax Private Equity, acquired WE Transport, a provider of special needs and education transportation services in New York City, Long Island, and Connecticut. Financial terms weren't disclosed.

- Bruin Capital agreed to acquire Oddschecker Global Media, a U.K.-based operator gambling data and media brands. Financial terms weren't disclosed.

- Turnspire Capital Partners agreed to acquire the Daniel Measurement and Control business, a Houston-based provider of energy measurement tech, from Emerson Electric Co. (NYSE: EMR). Financial terms weren't disclosed.

- Polished Metals, a portfolio company of Sky Island Capital, acquired Architectural Metal Polishing, a Union, N.J.-based metal polisher. Financial terms weren't disclosed.

- SkyKnight invested in GoodVets Group, a veterinary care network. Financial terms weren't disclosed.

- TZP Group recapitalized Force Management Holdings Company, a Charlotte, N.C.-based seller of sales force training software. Financial terms weren't disclosed.

EXITS

- Microsoft (Nasdaq: MSFT) agreed to acquire RiskIQ, a San Francisco-based security software maker, for about $500 million, per Bloomberg.

- ZoomInfo will acquire Chorus.ai, a San Francisco-based conversational A.I. company, for $575 million. Redpoint Ventures and Emergence Capital Partners backed Chorus.

OTHERS

- DouYu International terminated a $5.3 billion merger with Huya (NYSE: HUYA), a Chinese video game publisher, after regulators in the country rejected the deal.

- Novo Nordisk will acquire Dublin-headquartered Prothena Corp’s experimental heart therapy, PRX004, in a deal that could be worth up to $1.2 billion.

- The Rothermere family behind the U.K.-based publisher of Daily Mail newspaper, is weighing a $1.1 billion deal to take it private.

- Perch acquired Web Deals Direct, an Amazon-based seller, for over $100 million.

IPO

- Ryan Specialty Group, a Chicago-based international specialty insurance company, plans to raise up to $1.4 billion in an offering of 57 million shares priced between $22 and $25 per share. Onex Corporation backs the firm.

- Instructure Holdings, a Salt Lake City-based education technology company, plans to raise up to $262.5 million in an offering of 12.5 million shares priced between $19 and $21 per share. Thoma Bravo backs the firm.

- Mobikwik, an Indian mobile payments company backed by Sequoia Capital, filed for an IPO to raise about $255 million.

- Zevia, a Los Angeles-based health drink company, plans to raise up to $214.5 million in an offering of 14.3 million shares priced between $13 and $15 per share. CDPQ and Laird Norton Company back the firm.

- Cadre Holdings, a Jacksonville, Fla.-based security products company, filed for an initial public offering. 

- Knowlton Development Corporation, a Quebec-based health and beauty product manufacturer, filed for an initial public offering in the U.S. Cornell Capital backs the firm.

- Lalamove, a Hong Kong-based delivery logistics company, may move its planned U.S. IPO to Hong Kong over concerns from Chinese regulators’ proposed new rules, per Bloomberg. It filed confidentially last month for a $1 billion IPO.

- Impact Tech, a Santa Barbara, Calif.-based automation company that connects companies with publishers, plans to go public in the first half of 2022.

SPAC

- Altus Power, a Greenwich, Conn.-based solar power company, will go public via merger with CBRE Acquisition Holdings (NYSE: CBAH), a SPAC. A deal values the company at $1.6 billion.

F+FS

- Wavecrest Growth Partners, a Boston-based private equity, raised $290 million for its second fund. 

- The Ecosystem Integrity Fund, a San Francisco-based sustainability-focused early growth stage investment firm, closed its fourth fund with $250 million.

- OTB Ventures, a European venture capital firm investing in Central and Eastern Europe, launched OTB Growth Fund I with $60 million.