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In a year when unicorn startups have become the norm rather than the exception, it’s easy to look at Intuit’s $12 billion deal to acquire an email marketing startup and say, “another day, another decacorn.”
But as others have noted, there’s two major themes that made the cash-and-stock acquisition very notable, even now: By choice, the company has raised a big fat zero from outside investors. At a time when startups are increasingly competing by throwing around millions in venture capital dollars, its growth to decacorn status is unprecedented. Per Axios, the deal is the largest ever by a privately-held bootstrapped company.
It also marks a decacorn outside of the typical venture capital trifecta of San Francisco, New York, and Boston. Mailchimp was born in, yes, Atlanta.
These two themes seem to be generally presented as separate points. It managed to bootstrap! And it’s in Atlanta?! But are the two points actually linked?
Here’s what I mean: There really aren’t that many companies that have bootstrapped themselves to unicorn status, but many that reach that or near those valuations are based outside of the world’s biggest tech hubs. There’s Atlassian, the Australian tech company now valued at $95 billion on the Nasdaq that helped jumpstart the tech ecosystem there. Epic Games, based out of North Carolina, was largely bootstrapped before its raise in 2012. Braintree Payments was based out of Chicago before it was acquired by PayPal for about $800 million. And Calendly, which raised at a $3 billion valuation earlier this year, had raised very little outside dollars from its perch in Atlanta.
I posed the question to Accel Partner, Rich Wong. This is after a big part of Accel’s claim to fame: It is known to fund companies that were previously bootstrapped like password management company 1Password in Toronto and Salt Lake City-based Qualtrics. Wong’s answer? Yes, this is no coincidence.
“It’s quite logical that in a market where there is a scarcity of Y-Combinator demo days and there isn’t a water refilling station that you tend to build quite interesting and durable businesses if you get off the launch pad,” he said. “Sometimes they are not as fast growing and quieter businesses, but they find a path to profitability sooner.”
Of course this is not a mutually exclusive situation. You don’t have to be in, say North Dakota to successfully bootstrap. Mojang, the gamemaker that sold to Microsoft for $2.1 billion, gained its unicorn status seemingly alongside an explosion of other Swedish companies such as payments business iZettle or Skype, both of which received venture-backing. Shutterstock got a $2 billion valuation in New York City, while Articulate earlier this year raised from General Atlantic.
But it remains true that bootstrapping and non-tech hubs go together: Meaning there are likely more of these non-trifecta unicorns out there, that have either chosen to avoid raising funding, or have in the past slid under the radar and therefore not been properly minted. That also means that, as venture capital funding explodes with new players and competition for deals, more stories of quiet, but highly-valued bootstrapped companies in places outside the San Franciscos and New Yorks could emerge. Granted, that also means that those bootstrapping to decacorn status will also be exceedingly rare as founders get inundated with hard-to-resist deal terms.
Investors are ramping up on such deals “as much as we wish they wouldn’t,” says Wong, as investors have been increasingly looking outside Silicon Valley and at deals with no previous investors.
For the record, Accel did also try to “encourage” Mailchimp CEO Ben Chestnut to take their investment, as Wong puts it. Though “he very politely declined.”
WHAT IS LITECOIN? Okay yes, it’s a cryptocurrency—but is it a security? Or is it a commodity? That is the question to ask when considering which regulator could be examining any wrongdoing from Monday, when a fake press release claiming Walmart was partnering with Litecoin for payments boosted the price of the coin. To onlookers, it looked an awful lot like the typical penny stock pump-and-dump scheme, though who put out the news and why is still unclear. Michael Dicke, a lawyer at Fenwick and West, notes that due to the case’s high profile, it’s likely regulators will want to look into it. But because not all cryptocurrencies are the same (some are considered securities, others not), regulators will have to determine what Litecoin is first, if an investigation is to be had. In a request for comment, the SEC and CFTC told Term Sheet they do not comment on the potential existence or nonexistence of a possible investigation.
LIGHTNING ROUND: I wrote, deleted, and then rejiggered the topic of this newsletter several times yesterday as the news spigot turned from a strong stream into a burst pipe. Here are some other tidbits that happened. PLEISTOCENE PARK: A startup looking to bring a woolly mammoth-esque animal back to life aptly dubbed Colossal raised $15 million in seed funding led by Thomas Tull, the former CEO of Legendary Entertainment—yeah, the company behind “Jurassic World.” There’s broader implications to this though than the theme park of the movies. The founders could in theory bring back creatures that have become extinct or are threatened by extinction in part due to climate change. EVERYONE IS INTO HOUSING: Ribbon, a home ownership startup that allows consumers to send all-cash offers, raised $75 million in Series C funding led by Greenspring Associates. The spokesperson that sent the news posed it as a way for consumers to compete with real estate investors at a time when the house-buying market has been hypercompetitive. Also on Tuesday, SoftBank led a $145 million Series C round in Pacaso, the vacation home startup that allows multiple folks to split ownership of this property. Like Airbnb though, the startup has gotten pushback from communities that worry the startup could buy up properties in the neighborhood, and destroy their sense of community. 10,000 CALLS: That’s the estimated number of calls Hopper CEO Frederic Lalonde estimates he received from angry and concerned customers at the start of the pandemic over travel changes and cancellations. The co-founder of the travel-booking site had his phone number and email address leaked online. Read more.
Sincerely, and ever so slightly dead inside,
Jessica Mathews compiled the IPO and SPAC sections of this newsletter.
- SpotOn, a San Francisco-based software and payments company for restaurants and retail businesses, raised $300 million in Series E funding, valuing it at $3.2 billion. Andreessen Horowitz led the round and was joined by investors including DST Global, 01 Advisors, Dragoneer Investment Group, Franklin Templeton, and Mubadala Investment Company, Wellington Management, and Coatue Management.
- GrubMarket, a San Francisco-based provider of software and services for food suppliers and their customers, raised $120 million in Series E funding. Investors include Liberty Street Funds, Walleye Capital, Japan Post Capital, Joseph Stone Capital, Pegasus Tech Ventures, Tech Pioneers Fund, Celtic House Asia Partners, INP Capital, Reimagined Ventures, and Moringa Capital Management.
- AgBiome, a Research Triangle Park, N.C.based microbial startup, raised $116 million in Series D funding. Blue Horizon and Novalis LifeSciences led the round.
- Sendoso, a San Francisco-based corporate gifting company, raised $100 million in Series C funding. SoftBank Vision Fund 2 led the round and was joined by investors including Oak HC/FT, Struck Capital, Stage 2 Capital, Craft Ventures, Signia Venture Partners, and Felicis Ventures.
- Tia, a New York City-based medical company focused on women, raised $100 million in Series B funding. Lone Pine Capital led the round and was joined by investors including Threshold, Define Ventures, Torch Capital, ACME, Compound, Combine, The Helm, Human Ventures, Seae Ventures, and Gingerbread Capital.
- Vanqua Bio, a Chicago-based biopharmaceutical company focused on neurodegenerative diseases, raised $85 million in Series B funding. Omega Funds led the round and was joined by investors including OrbiMed Surveyor Capital, Avoro Ventures, Casdin Capital, Pontifax, Eli Lilly and Company, Logos Capital, and Osage University Partners.
- Versatile, a San Francisco-based construction tech company, raised $80 million in Series B funding. Insight Partners led the round and was joined by investors including Tiger Global.
- Immutable, a blockchain scalability protocol for non-fungible tokens on Ethereum, raised $60 million in Series B funding. BITKRAFT Ventures and King River Capital led the round and was joined by investors including Prosus Ventures, Galaxy Interactive, Fabric Ventures, Alameda Research, AirTree Ventures, Reinventure, Apex Capital, and VaynerFund.
- CreatorIQ, a Los Angeles-based creator platform, raised $40 million. Investors included TVC Capital, Kayne Partners Fund, the growth private equity group of Kayne Anderson Capital Advisors, Affinity Group, Unilever Ventures, and Silver Lake Waterman.
- Sayari Labs, Washington D.C.-based financial tech and supply chain risk company, raised $40 million in Series C funding. Centana Growth Partners led the round and was joined by investors including Arsenal Growth, MissionOG, Lavrock Ventures, TFX Capital, and SAP NS2.
- Paperless Parts, a Boston-based provider of quoting software for job shops and contract manufacturers, raised $30 million in Series B funding. OpenView led the round.
- Sproutt, an insurance company, raised $26 million in Series B funding. MoreTech Ventures led the round and was joined by investors including Harel Group, The Raptor Group, and Falcon Edge Capital.
- Wild Earth, a Berkeley, Calif.-based, plant-based dog food company, raised $23 million. Investors include At One Ventures, Veginvest, Big Idea Ventures, Bitburger Ventures, and Gaingels.
- Rezilion, a St. Charles, Mo. and Israel-based security operations startup, raised $30 million in Series A funding. Guggenheim Investments led the round and was joined by investors including JVP and Kindred Capital.
- Patch, a San Francisco-based API-first carbon offsetting startup, raised $20.8 million in Series A funding. Coatue Management led the round and was joined by investors including Andreessen Horowitz, VersionOne, and Pale Blue Dot.
- Peach Finance, an Oakland, Calif.-based loan servicing platform, raised $20 million in Series A funding. Canapi Ventures led the round and was joined by investors including SciFi VC, Caffeinated Capital, Nyca Partners, and Moore Specialty Credit.
- Vector.ai, platform for freight forwarders, raised $15 million in Series A funding. Bessemer Venture Partners led the round and was joined by investors including Dynamo Ventures and Episode 1.
- MILLIONS.co, a Boston-based social commerce platform for professional and semi-professional athletes, raised $10 million in funding. Volition Capital led the round.
- BridgeLinx, a Pakistan-based digital freight marketplace and logistics solution provider, raised $10 million. Harry Stebbings’ 20 VC, Josh Buckley’s Buckley Ventures and Indus Valley Capital led the round.
- Grow Credit, a Santa Monica, Calif.-based credit building platform, raised $6.3 million. Mucker Capital and Commerce Ventures led the round.
- Strike Graph, a Seattle-based compliance automation startup, raised $8 million in Series A funding. Information Venture Partners led the round and was joined by investors including Madrona Venture Group, Amplify.LA, Revolution’s Rise of the Rest Seed Fund, and Green D Ventures.
- CruxOCM, a Canadian robotic industrial process automation company, raised $6 million in venture funding. Bullpen Capital led the round and was joined by investors including Angular Ventures, Root Ventures, Golden Ventures, Cendana Capital, and Industry Ventures.
- Clockwork Logistics Systems, an Elk Grove, Calif.-based logistics platform, raised $5.5 million in seed funding. Newtown Partners led the round and was joined by investors including Newark Venture Partners, PSA UnboXed, Vineta Ventures, and Estes Final Mile.
- Courier Health, a New York City-based patient engagement platform, raised $4 million in seed funding. Work-Bench led the round.
- Immi, a San Francisco-based maker of plant-based instant ramen, raised $3.8 million in seed funding. Siddhi Capital led the round and was joined by investors including Palm Tree Crew, Constellation Capital, Animal Capital, Pear Ventures, and Collaborative Fund.
- Private AI, a Canadian developer of machine learning and natural language processing tools, raised $3.2 million in seed funding. M12 and Forum Ventures led the round.
- Integrated Finance, a fintech infrastructure platform, raised £2 million in seed funding. Octopus Ventures led the round.
- California Cowboy, a San Francisco-based apparel brand, raised $2 million in seed funding round led by venn growth partners.
- Apollo Global Management offered to acquire Tronox Holdings, a pigment manufacturer, for $4.3 billion in cash.
- Anthology, backed by Veritas Capital and Leeds, acquired Blackboard, an education technology company backed by Providence Equity. The deal is estimated to be worth $3 billion, per Bloomberg.
- Oakley Capital Origin Fund is investing $35 million to acquire a minority stake in Seedtag, a contextual advertising company in EMEA and Latin America.
- AE Industrial Partners acquired Jennings Aeronautics, a provider of small unmanned aerial systems. It will be combined with UAV Factory. Financial terms weren't disclosed.
- Battery Ventures acquired Goodfellow, a a Cambridgeshire, U.K.-based supplier of materials for research and development, prototyping and specialized manufacturing. Financial terms weren't disclosed.
- Cerberus Capital Management will acquire Brooklyn Bedding and Helix Sleep, mattress companies. Financial terms weren't disclosed.
- Edifecs, backed by TA Associates and Francisco Partners, acquired Talix, a San Francisco-based information tech company for healthcare payers and providers. Financial terms weren't disclosed.
- GI Partners invested in LightEdge, a Des Moines, Ia.-based colocation, cloud and managed service solution. Financial terms weren't disclosed.
- Hidden Harbor Capital Partners acquired Air Conditioning Specialist, an HVAC services provider. Financial terms weren't disclosed.
- Hg invested in HHAeXchange, a provider of homecare management solutions for payers, providers, and state Medicaid. Cressey & Company will retain a stake. Financial terms weren't disclosed.
- Susquehanna Growth Equity invested in Pixieset Media, a Canadian software solutions provider for photographers and creative professionals. Terms of the transaction were not disclosed.
- Summit Partners, Oak HC/FT, and Sopris invested in TurningPoint Healthcare Solutions, a Lake Mary, Fla.-based care solution targeting complex conditions. Financial terms weren't disclosed.
- Victory Capital agreed to acquire New Energy Capital Partners, an alternative asset management firm investing in energy infrastructure projects and companies. Financial terms weren't disclosed.
- Crestview Partners acquired TenCate Grass Holding, a Netherlands-based artificial turf company, from a consortium led by Gilde Buy Out Partners. Financial terms weren't disclosed.
- Clearlake Capital Group agreed to acquire Mold-Rite Plastics, a maker of packaging components, from Irving Place Capital. Financial terms weren't disclosed.
- Qualcomm (Nasdaq: QCOM) made a bid to acquire Veoneer (NYSE: VNE), a Stockholm-based automotive tech company, for over $4 billion, per Bloomberg, beating an offer from Magna International.
- Kape Technologies (LON:KAPE) acquired ExpressVPN, a VPN company, for about $936 million.
- Knowlton Development Corporation, a Quebec-based health and beauty product manufacturer, plans to raise up to $857.1 million in an offering of 57.1 million shares priced between $13 and $15 per share. The company posted $2.1 billion in revenue in the year ending in April 2021 and reported a net loss of $125.8 million. Cornell Capital backs the firm.
- Sportradar Group, a Switzerland-based sports data provider and sports betting company, raised $513 million in an offering of 19 million shares priced at $27 per share. The company posted $478.8 million in 2020 and net income of $26.1 million. The Canada Pension Plan Investment Board backs the firm.
- Remitly Global, a Seattle, Wash.-based remittance company, plans to raise up to $510.8 million in an offering of 12.2 million shares priced between $38 and $42 per share. The company generated $257 million in revenue in 2020 and reported a net loss of $32.6 million. PayU Global, Threshold Ventures, and Trilogy Equity Partners back the firm.
- Sovos Brands, Louisville, Colo.-based consumer food brand company, plans to raise up to $373.3 million in an offering of 23.3 million shares priced between $14 and $16 per share. The company posted $560.1 million in revenue in 2020 and net income of $10.8 million. Advent International backs the firm.
- Brilliant Earth Group, a Dover, Del.-based sustainable jewelry company, plans to raise up to $266.7 million in an offering of 16.7 million shares priced between $14 and $16 per share. The company posted $251.8 million in net sales in 2020 and net income of $21.6 million. Mainsail Partners backs the firm.
- Tyra Biosciences, a Carlsbad, Calif.-based cancer therapy company, plans to raise up to $144 million in an offering of 9 million shares priced between $14 and $16 per share. The company reported a net loss of $9.3 million in 2020 and has yet to post revenue. Alta Partners, RA Capital, and Boxer Capital back the firm.
- MiNK Therapeutics, a New York City-based cell therapy treatment company, filed for an initial public offering. The company reported a net loss of $16.2 million in 2020 and didn’t post revenue. Biotechnology company Agenus backs the firm.
- Life Time Group Holdings, a Chanhassen, Minn.-based fitness health club chain, filed for an initial public offering after having reverted to a private company in 2015. The company posted $930 million in revenue in 2020 and reported a net loss of $360.2 million.
Gogoro, a Taiwanese scooter electric battery company, is in talks to go public via a merger with Poema Global Holdings Corp., a SPAC, per Bloomberg. A deal values the company at $1 billion. Temasek Holdings, Panasonic, and Generation Investment Management back the firm
- Forge Global, a San Francisco-based private securities marketplace, plans to go public via a merger with Motive Capital Corp., a SPAC. A deal values the combined entity at around $2 billion. Peter Thiel, Temasek, Wells Fargo, and BNP Paribas back the firm.
- Lightstone Ventures, a Menlo Park, Calif.-based venture investor, closed its third fund with $375 million. It also appointed Christina Isacson as a partner.
- Finback Investment Partners, a Miami-based private equity investor, closed its debut fund with $350 million.
- Coinbase Ventures, the venture capital arm of the crypto startup, added Katherine Wu as an investor. She was previously a principal at Notation Capital.
- Josh Garbe left Ripple Ventures, the Canadian venture investing firm, where he was a principal.
- H.I.G. Growth named Ross Hiatt and Scott Hilleboe as Managing Directors and Co-Heads.
- Regal Healthcare Capital Partners, a New York City-based healthcare growth equity and buyout firm, added Joseph Ibrahim as managing director.
- Acacia Partners, an Austin-based private equity firm, added Billy Duffy as a principal.
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