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Amid SEC battle, crypto company Ripple Labs buys back its Series C investment

January 26, 2022, 5:05 PM UTC

This newsletter is called Term Sheet for a reason, and every once and a while we see the behind-closed-doors negotiations between businesses and investors spill out into the open.

That’s exactly what’s happening over at Ripple Labs, the San Francisco-based blockchain technology company that supports more than 300 financial institutions in sending assets across borders. At the end of 2019, Ripple raised $200 million in Series C funding led by Tetragon and joined by SBI Holdings and Route 66 Ventures. Now Ripple is buying it all back—at a premium.

The crypto payments company has purchased all the preferred stock it sold in its Series C round, Ripple CEO Brad Garlinghouse told me in an interview yesterday afternoon. Per the negotiated terms of the original agreement, Ripple paid those investors a 50% premium for those shares, he says (A Tetragon spokesperson says that the investment company also received accrued paid-in-kind dividends from Ripple). After the buyback, Ripple is now valued at $15 billion—up from $10 billion from its Series C, according to the company.

“We decided that this was a good use of capital and very accretive to other shareholders, in my judgment. And so we decided to exercise that right,” Garlinghouse says.

All of this comes amid Ripple’s ongoing—and heated—battle with the Securities and Exchange Commission. In 2020, the regulator sued Ripple, charging the company and its executives of selling $1.3 billion in unregistered securities due to the sale of XRP, a digital asset affiliated with the company that was once the second most popular cryptocurrency after Bitcoin. It’s a lawsuit that could have wide implications on the crypto market. Garlinghouse and Ripple have maintained that the SEC is “dead wrong” and accused the agency of attacking the entire U.S. crypto market.

Shortly after the SEC filed its charges, U.K.-based investment firm Tetragon sued Ripple, too, seeking $175 million in repayment from its Series C investment. In March 2021, a Delaware judge rejected Tetragon’s claim. 

“As you might imagine, that set an awkward footing for your lead investor to have sued you and lost,” Garlinghouse says.

After the lawsuit’s close, Tetragon purchased additional shares of the company on the secondary market. (A Tetragon spokesperson says the company remains invested in these shares and “is supportive of the company’s current position as well as its direction and maintains its conviction in its prospects.”)

Ripple is leaving the Series A and B investments be—those shares weren’t tied to governance or dividends rights like the preferred stock from the Series C rounds, Garlinghouse says. Additionally, “the Series A and Series B are happy shareholders,” Garlinghouse pointed out. Indeed, SBI Holdings came to Ripple’s defense regarding the SEC lawsuit and later launched an On-Demand Liquidity (ODL) service with the company in Japan.

After the buyback, Ripple has $1 billion in cash in the bank and zero debt, according to Garlinghouse. Transactions for RippleNet, the company’s global payments network, doubled in 2021, and its payment volume run rate—meaning the flows of cross-border payments taking place on its platform—exceeded $10 billion, doubling that of 2020, according to the company. It plans to hire “hundreds” of employees this year after signing partnerships with the Royal Monetary Authority of Bhutan and the Republic of Palau.

“We think the shares are worth more than the $15 billion,” Garlinghouse says. Why not buy them back?

Inside Katie Haun’s new fund: The former prosecutor made a splash when she departed a16z to branch out on her own and launch a new crypto fund late last year. With a scrappy team of six, she is out raising $1 billion to make it happen, which would be the biggest crypto raised by a solo female VC. “Will Haun 2.0 have what it takes to survive that volatility and get founders to sign on the dotted line?” My colleague Michal Lev-Ram has the story.


Gwyneth Paltrow’s next move: The actress and founder of Goop is now an investor and board member at Wonder, the food delivery and cloud kitchen venture of Jet.com founder Marc Lore. “We’ve always been aligned on great food and wine,” Paltrow tells my colleague Emma Hinchliffe.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com

VENTURE DEALS

- West Realm Shires Services, FTX’s crypto exchange in the U.S. known as FTX US, raised $400 Million in Series A funding from investors including Paradigm, Temasek, NEA, Multicoin Capital, Tribe Capital, Ontario Teachers’ Pension Plan Board, SoftBank, Greenoaks Capital, Steadview Capital, and Lightspeed Venture Partners.

- Plenty Unlimited, an indoor, vertical farming technology company, raised $400 million in Series E funding. One Madison Group and JS Capital led the round and were joined by investors including Walmart and SoftBank.

- Creditas, a Sao Paulo, Brazil-based digital lender, raised $260 million in a Series F funding led by Fidelity was joined by investors including SoftBank.

- Hometap, a Boston, Mass.-based loan alternative company for tapping into home equity without taking on debt, raised $245 million from investors including Bain Capital and Group 1001’s Delaware Life Insurance Company.

- Fever, a New York-based live-entertainment discovery platform, raised $227 million in Series D funding. Goldman Sachs led the round and was joined by investors including Alignment Growth, Goodwater Capital, and Smash Capital.

- Leyden Laboratories, an Amsterdam-based preventative medicine developer for respiratory viruses, raised $140 million in Series B funding. Casdin Capital and GV led the round and were joined by investors including SoftBank and Bluebird Ventures.

- SparkCognition, an Austin, Tex.-based AI software solutions company for business, raised $123 million in Series D funding from investors including March Capital, Doha Venture Capital, B. Riley Venture Capital, AEI Horizon X, Temasek, Brevan Howard Asset Management, Alan Howard, and former Siemens CEO Peter Löscher

- Athletic Greens, a Cayman Islands-based health supplements developer, raised $115 million in funding led by Alpha Wave Ventures and was joined by investors including Mark Vadon, SC.Holdings, Bolt Ventures, and Dr. Peter Attia

- MinIO, a Palo Alto, Calif.-based company behind the MinIO multi-cloud object storage suite, raised $103 million in Series B funding. Intel Capital led the round and was joined by investors including SoftBank, Dell Capital, General Catalyst, and Nexus Venture Partners

- Vecna Robotics, a Waltham, Mass.-based autonomous mobile robots developer, raised $65 million in Series C funding led by Tiger Global Management and was joined by investors including Lineage Logistics, Proficio Capital Partners, and IMPULSE

- Cheetah, a Pleasanton, Calif.-based technology supply chain company for wholesale food and restaurant supplies, raised $60 million in Series C funding.Manna Tree and Sator Grove Holdings co-led the round and were joined by investors including Lineage Logistics, Grupo Nutresa, Eclipse Ventures, and Hanaco Growth Ventures

- BenchSci, a Toronto-based machine learning application developer for medicine development, raised $50 million in Series C funding led by Inovia Capital and TCV.

- Domain Money, a New York-based online investment and wealth-building platform, raised $33 million in funding from Bessemer Ventures, Maveron, and RRE Ventures.

- Sylvera, a London-based carbon offset ratings provider, raised $32.6 million in Series A funding co-led by Index Ventures and Insight Partners and were joined by investors including Salesforce Ventures, and LocalGlobe.

- Logixboard, a Seattle, Wash.-based customer experience platform for freight forwarders and logistics service providers, raised $32 million in Series B funding led by Insight Partners and was joined by investors including Redpoint Ventures, F-Prime Capital, Social Leverage, and Founders’ Co-op.

- Infermedica, a Wroclaw, Poland-based symptom checker and analysis company, raised $30 million in Series B funding led by One Peak and was joined by investors including Karma Ventures, European Bank for Reconstruction and Development, Heal Capital, and Inovo Venture Partners.

- Order, a New York-based inventory management platform formerly known as Negotiatus, raised $30 million in Series B funding led by Stage 2 Capital and was joined by investors including Clocktower Ventures, Collaborative Fund, Seven Peaks Ventures, Ankona, and former Salesforce CEO Mark Hawkins.

- Verusen, an Atlanta, Ga.-based supply chain management company, raised $25 million in Series B funding led by Scale Venture Partners and was joined by investors including Glasswing Ventures, Flyover Capital, Zetta Venture Partners, Forte Ventures, BMW i Ventures, and Kubera VC

- Eaglebrook Advisors, a Washington, D.C.-based cryptocurrency separately managed account (SMA) platform, raised $20 million in Series A funding. Castle Island Ventures and Brewer Lane Ventures led the round and were joined by investors including Gemini Frontier Fund, Avon Ventures, a Fidelity Investments affiliate, Jump Capital, and Sybil Capital

- SiteAware, a Houston, Tex.-based Digital Construction Verification (DCV) technology company, raised $15 million in Series B funding led by Vertex Ventures and was joined by investors including Robert Bosch Venture Capital GmbH, Axon Ventures, Oryzn Capital, and lool Ventures.

- Project Galaxy, a Calif.-based Web3 credential data network, raised $10 million in funding. Multicoin Capital and Dragonfly Capital led the round and were joined by investors including Spartan Group, Sky9 Capital, Coinbase Ventures, Binance Smart Chain Growth Fund, C-Squared Ventures, Lattice Capital, and Mirana Ventures.

- Sync Computing, a Cambridge, Mass.-based deep tech and distributed cloud infrastructure company, raised $6.1 million in funding. Moore Strategic Ventures and National Grid Partners led the round and were joined by investors including The Engine

- anch.AI, a Stockholm, Sweden-based B2B risk and ethics assessment platform for the usage of AI, raised $2.1 million in seed funding led by Benhamou Global Ventures and was joined by investors including Terrain Invest, Magnus Rausing, Kent Janér, and Fredrik Andersson.

- Kleoverse, a Helsinki, Finland-based Web3 startup for freelancers to create a professional identity, raised $1.2 million in funding led by byFounders, Sfermion, crypto entrepreneur Ville Vesterinen, and Equilibrium.

PRIVATE EQUITY

- Regina Miracle International agreed to acquire a 49% stake of the China business of Victoria's Secret, a Columbus, Ohio-based women’s lingerie company, for $45 million in cash.

- JPMorgan Chase agreed to acquire a 49% stake in Viva Wallet, a Marousi, Greece-based online payments firm. Financial terms were not disclosed.

- Avision Sales Group, an Osceola Capital portfolio company, acquired OneSolution, an Alpharetta, Ga.-based outsourced sales and marketing provider for industrial and commercial safety manufacturers, and J.J. Shearer Company, a Minneapolis, Minn.-based outsourced sales and marketing services provider focused on facility maintenance. Financial terms were not disclosed.

- Colibri Group, a Gridiron Capital portfolio company, and Wendel agreed to acquire the financial services segment of Adtalem Global Education, which includes Becker Professional Education, OnCourse Learning, and the Association of Certified Anti-Money Laundering Specialists. Financial terms were not disclosed.

- PDQ.com, a TA Associates portfolio company, acquired SmartDeploy, a Bellevue, Wash.-based remote computer management company. Financial terms were not disclosed.

- Monomoy Capital Partners acquired and merged Artesian Spas, a Las Vegas-based hot tub and swim spa manufacturer, and Marquis Hot Tubs, an Independence, Oreg.-based hot tub manufacturer. Financial terms were not disclosed.

- Powerhouse Retail Services, a Lincolnshire Management portfolio company, acquired Advanced Service Solutions, a Hammonton, N.J.-based facilities maintenance management company. Financial terms were not disclosed.

- Worldwise, an Alvarez & Marsal Capital Partners’ portfolio company, acquired Kitty Sift. an   Eden Prairie, Minn.-based cat litter and accessories company. Financial terms were not disclosed.

EXITS

- Temasek Holdings acquired Element Materials Technology, a London-based testing, inspection, and certification company, from Bridgepoint Group. Financial terms were not disclosed.

OTHER

- The FTC filed an antitrust lawsuit that could terminate Lockheed Martin’s $4.4 billion planned acquisition of Aerojet Rocketdyne Holdings, an El Segundo, Calif-based aerospace and defense products manufacturer.

- Coaching.com acquired the World Business and Executive Coach Summit (WBECS), the corporate entity behind professional coaching programs and the annual WBECS event. Financial terms were not disclosed.

- PriceSpider agreed to acquire Hatch, an Amsterdam-based SaaS company that helps brands drive sales. Financial terms were not disclosed.

- WeWork agreed to acquire Common Desk, a Dallas, Tex.-based flexible workspace provider. Financial terms were not disclosed.

IPOS 

- Gopuff, a Philadelphia, Penn.-based food and essentials delivery platform, is working with bankers on an IPO for the second half of the year, according to Reuters. SoftBank backs the firm.

FUNDS + FUNDS OF FUNDS

- Castlelake, a Minneapolis, Minn.-based alternative investment firm, raised $1.6 billion for two new funds.

- Post Road Group, a Stamford, Conn.-based middle-market alternative investment firm, raised $300 million for a new fund.

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