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Democrats look to Billionaire tax on unrealized capital gains

October 25, 2021, 2:32 PM UTC

As Democrats seek ways to pay for a proposed roughly $2 trillion social spending bill, a new annual tax on the unrealized capital gains of billionaires is likely to be included, House Speaker Nancy Pelosi (D.,-Calif.) told CNN Sunday.

This comes as Democrats have shorn down the size of the proposed spending bill, but have struggled to agree on a way to pay for its costs after Sen. Kyrsten Sinema (D.-Ariz.) voiced opposition to increasing capital gains taxes on individuals and marginal tax rates on corporations.

So what could such a new tax look like? The new potential “wealth tax” (notably U.S. Treasury Secretary Janet Yellen pushed back against calling it as such) is expected to hit those with over $1 billion in assets or $100 million in income for three consecutive years, per the Wall Street Journal. These individuals could also take deductions on annual losses in value for those assets. Numbers on how many the proposal would affect range, though it’s typically been reported as between 700 and1,000 individuals.

Many in the venture industry spoke out against the proposal, arguing it will discourage innovation and force billionaires to sell their stock holdings to pay taxes—thereby hurting the stock market—though it is also worth mentioning that, just a smidgen behind the finance industry, the tech sector is the second largest producer of billionaires, according to Forbes’ April 2021 billionaires list. Another major question that will require answering: How will regulators handle the administrative task before them, including the challenge of valuing illiquid assets such as artwork? 

It’s still unclear if the proposal will gain enough support, though it does undeniably point to a larger theme at play: Billionaires and their wealth are in the limelight in Washington D.C.—and not for the reasons they want.

YOU CAN’T MAKE THIS UP: Facebook whistleblower Frances Haugen set off a bomb for her former employer last month, supplying key information on Facebook’s (mis)handling of misinformation. Here’s a fascinating behind-the-scenes story from the New York Times’ Ben Smith on Haugen, on how the leaks came together, including this tidbit about how Haugen is faring financially. And well, it’s a lot to try and absorb:

For the foreseeable future, I’m fine, because I did buy crypto at the right time,” she told me.

She noted that she had moved to Puerto Rico to cope with a health condition — but also to join her ‘crypto friends’ on the island, whose capital gains tax exemptions have made it a hub for that novel financial system.” Read more.

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

Jessica Mathews helped curate the deals section of this newsletter, and compiled the IPO and SPAC sections of this newsletter.

VENTURE DEALS

- Thrasio Holdings, a Walpole, Mass.-based acquirer of companies selling on Amazon, raised $1 billion in Series D funding. Silver Lake led the round and was joined by investors including Advent International, Upper90, Oaktree Capital Management, PEAK6 Investments, and Corner Capital.  

- Groww, an Indian fintech, raised $251 million in Series E funding at a $3 billion valuation. Iconiq Growth led the round and was joined by investors including Alkeon, Lone Pine Capital, Steadfast, Sequoia Capital India, Ribbit Capital, YC Continuity, Tiger Global, and Propel Venture Partners.

- Tier Mobility, a Berlin-based e-scooter company, raised $200 million in Series D funding. SoftBank Vision Fund 2 led the round.

- Billie, a Berlin-based BNPL startup focused on business-to-business transactions, raised $100 million in Series C funding. Dawn Capital led the round and was joined by investors including Tencent and Klarna.

- Clear, an Indian fintech software startup, raised $75 million in Series C funding. Kora Capital led the round and was joined by investors including Stripe, Alua Capital, and Think Investments.

- Egle Therapeutics, a Paris-based biotech focused on oncology and autoimmune diseases, raised €40 million ($46.6 million) in Series A funding. LSP and Bpifrance led the round and were joined by investors including Fund+, Bioqube Ventures and Takeda Ventures.

- Justos, a Brazilian insurance company, raised $35.8 million in Series A funding. Ribbit Capital led the round and was joined by investors including SoftBank’s Latin American Fund and GGV.

- GreenPark Sports, a Burlingame, Calif.-based social sports gaming developer, raised $31 million in Series B funding. Terraform Capital led the round and was joined by investors including Galaxy Interactive, Sapphire Sport, SignalFire, and ADvantage.

- Citcon, a San Jose, Calif-based payments company, raised $30 million in Series C funding. Norwest Venture Partners and Cota Capital co-led the round and were joined by investors including Sierra Ventures and Sonae IM.

- Humanising Autonomy, a London-based A.I. company focused on predicting human behavior, raised $11 million in Series A funding. Beacon Capital and Emellience Partners led the round.

- Vopero, a Latin America-based fashion resale marketplace, raised $7.5 million from Grupo Axo and thredUP (NASDAQ: TDUP).

- YData, a Portugal-based A.I. development company, raised $2.7 million in seed funding. Flying Fish Partners led the round and was joined by investors including Faber, EDP Ventures, and Real Ventures.

- Button Finance, a New York City-based mortgage lender focused on home equity, raised $2 million in seed funding. Investors included Hildene Capital Management.

- Superdao, an operating system for decentralized autonomous organizations, raised $1 million in preseed funding. Investors include Shima Capital, Fundamental Labs, Fifty Years, Lemniscap, Magic Fund, Jesse Clayburgh, Thomas Chen, and Matt Brezina

PRIVATE EQUITY

- Ares Management invested in LaserAway, a Los Angeles-based provider of aesthetic dermatology. Financial terms weren't disclosed. Seidler Equity Partners’ remains an investor. 

- Blue Wolf Capital Partners agreed to acquire CIVCO Radiotherapy, an Iowa-based radiotherapy company, from Roper Technologies. Financial terms weren't disclosed.

- Emergency Care Partners, backed by Varsity Healthcare Partners, merged with Hernando County Emergency Physicians, a Pensacola, Fla.-based provider of outsourced emergency department management services. Financial terms weren't disclosed.

- Providence Equity Partners invested in Seesaw Learning, a San Francisco-based student engagement platform. Financial terms weren't disclosed.

- TT Capital Partners invested in MediStreams, a Roswell, Ga.-based provider of remittance, reconciliation, and payment automation software for healthcare providers. Financial terms weren't disclosed.

EXIT

- 23andMe (Nasdaq: ME) will acquire Lemonaid Health, a San Francisco-based telemedicine company, for about $400 million in cash and stock. Investors in the latter include Hikma Ventures and Novartis Venture Fund.

OTHERS

- PayPal says it is not pursuing an acquisition of Pinterest, the social media company. 

- Macquarie Group (AUS: MQG) agreed to acquire Central Park Group, a U.S.-based wealth management advisory. Financial terms weren't disclosed.

- Klarna acquired Inspirock, an East Palo Alto, Calif.-based online-trip planning company. Financial terms weren't disclosed.

IPO

- Volvo Car Group, a Swedish-headquartered car company, now plans to raise about $2.3 billion in an IPO in the country—it had previously planned to raise around $2.9 billion, per Bloomberg. Zhejiang Geely Holding Group owns the firm.

- Paytm, an Indian payments company, received regulatory approval for a $2.2 billion IPO in the country, per Bloomberg. SoftBank, Berkshire Hathaway, and Ant Group back the firm.

- FSN E-Commerce Ventures, the company that runs Indian beauty company Nykaa, plans to raise around $500 million in an offering in India, according to Reuters. TPG, Fidelity, and Indian actress Alia Bhatt, back the firm.

- Allbirds, a San Francisco-based wool shoemaker, plans to raise $269 million in an offering of 19.2 million shares (20% sold by insiders) priced between $12 and $14 per share. The company posted net revenue of $219 million in 2020 and reported a net loss of $26 million. Maveron, Tiger Global, T. Rowe Price, Fidelity Investments, and Lerer Hippeau Ventures back the firm.

- Entrada Therapeutics, a Boston, Mass.-based intracellular therapeutics company, plans to raise up to $158 million in an offering of 7.5 million shares priced between $19 and $21 per share. The company reported a net loss of $27 million in 2020 and has yet to post revenue. MPM Capital, 5AM Ventures, Roche Venture Fund, and MRL Ventures Fund back the firm.

- Sonendo, a Laguna Hills, Calif.-based tooth decay medical technology company, plans to raise up to $133 million in an offering of 7.8 million shares priced between $15 and $17 per share. The company reported $23 million in revenue in 2020 and a net loss of $47 million. General Atlantic, OrbiMed, Meritech Capital, and EW Healthcare Partners back the firm.

- AMTD Digital, a Hong Kong-based digital solutions platform, plans to raise up to $131 million in an offering of 16 million ADSs priced between $6.80 and $8.20. The company reported $25 million in revenue for the 12 months ending in April 2021 and a profit of $22 million. AMTD Group owns the firm.

- Aura Biosciences, a Cambridge, Mass.-based cancer treatment targeted oncology platform, plans to raise up to $80 million in an offering of 5 million shares priced between $14 and $16 per share. The company reported a net loss and comprehensive loss of $22 million in 2020 and has yet to post revenue. Medicxi, Matrix Capital Management, Surveyor Capital, Advent Life Sciences, and Lundbeckfonden Ventures back the firm.

- Braze, a New York City-based customer engagement platform, and its insiders filed for an IPO. The company posted $96 million in revenue in 2020 and a net loss of $32 million. Battery Ventures, ICONIQ Capital, Rally Ventures, InterWest Partners, MCG7 Capital, Blumberg Capital, and Meritech Capital Partners back the firm.

- Sono Group, a German solar-powered electric vehicle company, filed for an IPO in the U.S. The company reported a loss of $65 million in 2020 and has yet to post revenue. E.ventures backs the firm.

- Synergy, a Westbrook, Maine-based consumer health care, beauty, and lifestyle product company, filed for an IPO. The company reported revenue of $40 million in 2020 and net income of $3 million. Knight Therapeutics backs the firm.

- Journey Medical, a Scottsdale, Ariz.-based dermatology pharmaceuticals company, filed for an IPO. The company reported net product revenue of $45 million in 2020 and net income of $5 million. Fortress Biotech backs the firm.

- Epta, an Italian refrigeration company, is seeking investment bankers for an IPO in Milan, according to Bloomberg.

SPAC

- FaZe Clan, a Los Angeles-based gaming, esports, sports merchandise content platform, said it would go public via a merger with B. Riley Principal 150 Merger Corp., a SPAC. A deal would value the company at around $1 billion.

F+FS

- Bain Capital Ventures, a Boston-based investor, is raising a $300 million fund focused on crypto, per the Information.

- Promus Ventures, based in Luxembourg, announced that Orbital Ventures closed at €120 to focus on early-stage, space-related companies.

PEOPLE

-Arctos Sports Partners hired Chad Hutchinson as a partner.

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