I know, I know. We were just talking about SPACs earlier this week. But this is big.
Gary Gensler, the SEC Chair, didn’t hold back yesterday morning at the Healthy Markets Association Conference. There are some considerable problems with the SPAC model, he argued, and he called on SEC staffers to suggest how to fix them.
His statements yesterday offer the most comprehensive look we’ve gotten thus far at how the SEC is thinking about regulating blank check mergers and public debuts. Apart from a handful of notable enforcement actions or probes, this is the first time we’ve gotten this level of clarity.
Here’s the gist of some of Gensler’s major concerns:
- SPACs may have more inherent conflicts of interest than IPOs
- Institutional investors may be getting early access to info and better share pricing than the general public
- Retail investors may be paying sponsor fees, or have their shares diluted, without them realizing it
- He doesn’t seem thrilled about “celebrity endorsements” and general marketing around SPACs announcing their targets
At the heart of the speech: A SPAC is kindred to a traditional IPO, but it’s not really treated like one.
The chatter over blank check companies is fairly new, especially if you consider they’ve been around for nearly two decades. At the same time, they’ve—quite suddenly—exploded in popularity. There were only 13 total applications for SPAC IPOs in 2016. Now they make up more than three-fifths of all public offerings, Gensler said. The more popular an investment vehicle becomes, the wider its propensity for harming investors. It shouldn’t come as a surprise that it’s a top item on the regulatory agenda.
The SEC will look into updating fee, projections, dilution, and conflict disclosures required for blank check companies and analyze how this information can be more apparent to the everyday investor.
“It is essential that investors receive the information they need, when they need it, without misleading hype,” Gensler said.
The speech doesn’t appear to have stifled deals just yet: Photo company Getty Images and accounting tech company Corcentric both said they had agreed to go public via blank check mergers just this morning.
Before I leave you, it’s worth noting that Gensler is pretty good at making videos. He posted an explainer on how SPACs work, and where they can pose problems, on Twitter yesterday. My colleague Declan Harty tells me Gensler was probably the “really cool professor” students always wanted to have back at MIT.
More updates on Better.com: CEO Vishal Garg “will be taking time off effective immediately,” according to an email from the company’s Board of Directors. The Board is also working with a third party firm “to do a leadership and cultural assessment.” As a reminder, Garg had come under fire for the way he handled laying off 900 of the company’s employees and his subsequent comments thereafter. Better is planning to go public via a SPAC merger and is backed by the likes of SoftBank, Novator Partners, and Activant Capital.
On the rise: $NU stock (aka Nubank’s holding company) rose 15% above its IPO price, hitting a market cap of $47.6 billion after its public debut yesterday on the New York Stock Exchange and São Paulo Stock Exchange. It’s the third-highest valuation of all public companies in Brazil, writes my colleague Felicia Hou.
Another call for feedback: We’ve already received hundreds of responses, but we could always use a few more. Tell us what you find most valuable in Term Sheet by taking this survey.
It’s been a fabulous first week taking over this newsletter. See you Monday,
- Shiprocket, a New Delhi-based e-commerce shipping and enablement platform, raised $185 million in Series E funding led by Zomato,Temasek, and Lightrock.
- CloudBees, a Lewes, Del.-based cloud-based platform for end-to-end augmented software delivery, raised $150 million in series F funding led by Goldman Sachs Asset Management and was joined by investors including Morgan Stanley, Bridgepoint Capital, HSBC, Golub Capital, and Delta-v Capital.
- Rho, a New York-based digital banking platform developer, raised $75 million in Series B funding led by Dragoneer Investment Group and was joined by investors including DFJ Growth, M13, Inspired Capital, and Torch Capital.
- Celigo, a San Mateo, Calif.-based iPaaS provider, raised $48 million in Series C funding led by OMERS Growth Equity and was joined by NewSpring Capital.
- Totus Medicines, a Cambridge, Mass.-based drug discovery company, raised $40 million in Series A funding led by DCVC Bio and Northpond Ventures and was joined by investors including Camford Capital.
- Petra, a San Francisco-based robotics company for hard rock drilling, raised $30 million in Series A funding led by DCVC
- Posh Technologies, a Boston-based conversational AI platform for financial services companies, raised $27.5 million in Series A funding led by Canapi Ventures and was joined by investors including Curql Collective, Human Capital, CMFG Ventures, JAM FINTOP, and Piedmont Capital.
- Atom Learning, a London-based primary school children edtech platform, raised $25m in a Series A round led by SoftBank.
- Resolve, a San Francisco-based B2B payments platform, raised $25 million in funding led by Insight Partners and was joined by investors including Initialized Capital, KSD Capital, Haystack VC, Commerce Ventures, and Clocktower Ventures.
- Mio, an Austin, Tex.-based bot syndication platform, raised $8.7 million in Series A funding led by Zoom Video Communications and Cisco Investments.
- Airplane, a San Francisco- based developer platform for automating internal workflows, raised $8.5 million in Series A funding led by Benchmark.
- Gadget, an Ottawa, Canada-based developer productivity company, raised $8.5 million in funding led by Sequoia Capital and Bessemer Venture Partners.
- The Desire Company, an Atlanta, Ga.-based consumer shopping platform, raised $8 million in Series A funding from Valor Equity Partners and Cleveland Avenue.
- Frameplay, A San Francisco-based in-game advertising company, raised $8 million in Series A funding led by Hiro Capital and was joined by investors including zVentures and Kona Venture Partners.
- Kevel, a Durham, N.C.-based ads infrastructure platform used to build custom ad servers, raised $10 million in Series B funding led by Fulcrum Equity Partners.
- Logical Buildings, a Livingston, N.J.-based smart building and VPP software and solutions provider, raised $10 million in funding led by Keyframe Capital.
- Pod Foods, a San Francisco-based grocery supply chain software company, raised $10 million in Series A funding led by Industrious Ventures and was joined by investors including M12 and Moment Ventures.
- Zorus, a Norwalk, Conn.-based cybersecurity platform to block malware threats from the cloud, raised $9 million in Series A funding led by Asymmetric Capital Partners and was joined by investors including Innospark Ventures and General Catalyst.
- FlyFin, a San Jose, Calif.-based A.I.-powered tax engine, raised $8 million in pre-Series A funding led by Accel Partners and was joined by Falcon Edge.
- Rainmaker Games, a P2E game platform, raised $6.5 million in seed funding from investors including CoinFund, Polygon Studios, Alameda Research, Republic Realm, Skyvision Capital, Animoca Brands, and Merit Circle.
- LIVEBUY, a Berlin-based live shopping startup, raised $5.6 million in seed funding led by RTP Global.
- Authoritive, a New York-based marketing solution developer for experts and creators, raised $5 million in seed funding led by Owl Ventures and was joined by Guardian Media Ventures.
- Kwara, a Nairobi-based neobank developer for credit unions, raised $4 million in seed funding from investors including Breega, SoftBank, Finca Ventures, New General Market Partners, Globivest, Do Good Invest, and others.
- Mnemonic, an NFT application building platform, raised $4 million in seed funding led by Kenetic and was joined by investors including Monochrome Capital, Sound Ventures, and Tribe Capital.
- Aquifer, an Austin, Tex.-based 3D animation content company, raised $2 million in seed funding and was joined by investors including Boost VC, Geekdom Fund, Wedbush Ventures, and Techstars.
- Itiliti Health, an Eden Prairie, Minn.-based health data and decision automation platform, today raised $2 million in funding co-led by Bread and Butter Ventures and Altitude Ventures and was joined by investors including M25, SpringTime VC, and Groove Capital.
- Silver Lake made a $1.2 billion investment in Integrity Marketing Group, a Dallas, Tex.-based omnichannel insurtech company.
- Battery Ventures invested $200 million into its new venture, Craftview, a software solution company for specialized domains within the construction industry. As part of the deal, Battery Ventures will acquire Germany and Netherlands-based WinWorker Software, es2000 Errichter Software, KS21 Software, OS Datensysteme, Moser, and Gilde Software.
- Accel-KKR invested in Entersekt, a Cape Town, South African device identity and authentication solutions company. Financial terms weren’t disclosed.
- Benevity, backed by The Rise Fund and Generation Investment Management, acquired Alaya, a Swiss employee engagement SaaS platform. Financial terms were not disclosed.
- CORE Industrial Partners acquired Precision Metal Fab, a Milton, Wis.-based metal fabrication product manufacturer, and Precision Tool & Die, a Derry, N.H.-based plastic injection mold manufacturer. Financial terms were not disclosed.
- Garnett Station Partners invested in WOW Carwash, a Las Vegas-based car washing brand. Financial terms were not disclosed.
- Gener8, a Sverica Capital Management portfolio company, acquired the RND Group, an Indianapolis-based life cycle software engineering services company. Financial terms were not disclosed.
- Global Critical Logistics, an ATL Partners portfolio company, acquired Dynamic International Freight Services and Dynamic Dox, U.K.-based film and television production logistics solutions based in the UK. Financial terms were not disclosed.
- The Ontario Teachers’ Pension Plan Board invested in GreenCollar, an Australian environmental markets consultancy services company also backed by KKR. Financial terms were not disclosed.
- Right Time Group of Companies, owned by Gryphon Investors, acquired Climate Air Heating & Air Conditioning, a Barrie, Ontario-based residential heating, cooling, air quality, and hot water services company. Financial terms were not disclosed.
- StarCompliance, owned by Marlin Equity Partners, acquired Six Lambda, a West Conshohocken, Penn.-based political contributions monitoring software company. Financial terms weren’t disclosed.
- TA Associates invested in Adcubum, a Swiss P&C insurance software provider. Financial terms weren't disclosed.
- ADT acquired Sunpro Solar, a Mandeville, La.-based rooftop solar system provider, from MGG Investment Group for $825 million.
- Kraft Heinz agreed to acquire Just Spices, a German seasoning retail distributor, from Coefficient Capital. Financial terms were not disclosed.
- Avast acquired Evernym, a Draper, Utah-based self-sovereign identity software company.
- Criteo agreed to acquire IPONWEB, a London-based advertising infrastructure technology company with media trading capabilities, for $380 million in cash and CRTO treasury shares.
- Picsart agreed to acquire DeepCraft, an Armenian research and development company. Financial terms were not disclosed.
- Hyundai Engineering, a South Korean construction company, plans to raise up to $1 billion in an IPO in the country, per Reuters. Hyundai Engineering is an affiliate of Hyundai Motor Group.
- GumGum, a Santa Monica, Calif.-based contextual intelligence advertising company, is weighing an IPO that could value the firm at $700 million, according to Bloomberg. Goldman Sachs backs the firm.
- SenseTime Group, a Chinese artificial intelligence company, is delaying its Hong Kong IPO, per Bloomberg. SoftBank backs the firm.
- VideoAmp, Los Angeles-based measurement and optimization software company for advertisers, is weighing an IPO, per Bloomberg.
- Rolf, a Moscow-based used car dealership, is weighing an IPO for the second half of 2022, according to Bloomberg.
- Nalu Medical, a Carlsbad, Calif.-based early-stage medical device company, withdrew its IPO filing. Boston Scientific, a medical device manufacturer, and Longitude Capital back the firm.
- Getty Images, A Seattle, Wash.-based photo developer and distributor, agreed to go public via a merger with CC Neuberger Principal Holdings II, a SPAC backed by Neuberger Berman. A deal values the firm at $4.8 billion.
- Corcentric, a Cherry Hill, N.J.-based payments and accounting technology platform, agreed to go public via a merger with North Mountain Merger Corp., a SPAC. A deal values the company at approximately $1.2 billion.
- Advent International, a Boston-based private equity firm, raised $4 billion for a new fund.
- Ascend Partners, a New York-based private equity firm, raised $570 million for its first fund.
- Mercury Capital Advisors, a New York-based private equity and investment advisory firm, added Masashi Hirose, who was previously at Teneo Partners, as partner and Eugene Park, who was previously at First Avenue Partners, as principal.
- Traub Capital Partners, a New York-based private equity firm, hired Sean Reilly as CFO. He was previously at Carta Fund Services.
- Wireframe Ventures, a Mill Valley, Calif.-based venture capital firm, hired Lily Bernicker as a principal. She was previously at Collaborative Fund.
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