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Elizabeth Holmes’s attorneys paint a dark picture of venture capital as her sentencing looms

November 16, 2022, 12:06 PM UTC

An “ardently resilient optimist.” Curious. Thoughtful. Determined to change the world. A desire to serve. 

These are the words that will ring like sirens in your ears if you read aloud the 82-page document filed by Elizabeth Holmes’s attorneys late last week ahead of her sentencing, which is scheduled for this Friday morning. These words seem to jump off the page and catch in your throat. Perhaps this is because we have seen how Theranos played out—all the way from the cover of Fortune to the trial stand. Perhaps because we have seen or read so much that even the name “Elizabeth Holmes” triggers our deepest sense of skepticism and disbelief—rather than the trust the founder had once instilled in so many.

As Sam Bankman-Fried’s sprawling crypto empire was crumbling in a mere 48 hours last week, I was on vacation, sitting on the beach and reading Stephen King’s Salem’s Lot—absorbed in a world where red-eyed vampires are plucking off the gossipy residents of a small town that was none the wiser for it.

Silicon Valley is no Stephen King novel. In King’s stories, there are villains and there are heroes. Monsters are monolithic, self-pleasing, and blood-loving evil beings who can’t manage to scrape up even a page of reader sympathy. No, this is our very-real, vampire-free reality, where people are complex and nuanced, where individuals are shocked to learn they have been misled, where a judge must decide the fate of a founder who has become a poster child of startups-gone-wrong after a slew of various, and sometimes conflicting, testimony.

And in this nuanced world, and especially that of venture capital, there seems to sometimes be a blurry line between charisma and trickery, between lofty projections and lies, between optimism and fraud. That is until the money suddenly vanished.

In the aforementioned 82-page filing, Holmes’s attorneys, in an attempt to limit the prison sentence of the now-ostracized ex-CEO of Theranos, asked the judge not to look at Holmes as merely a “caricature in extensive and intrusive media portrayals,” and reminded him to see her company through the lens of, not the public markets, but the venture capital-backed startup world where she operated.

“That is the environment in which Theranos was founded, in which it was built, and in which investors decided whether and how much to invest,” her attorneys wrote.

And that Silicon Valley, they point out, is one where Adam Neumann, who “was accused of diverting millions of corporate assets for personal gain and walked away from his first company with hundreds of millions of dollars,” received a $350 million investment in his next venture. That Silicon Valley, as they point out, is one where venture capitalists sometimes make investments based on FOMO or hype (Holmes’s lawyer cites Sam Bankman-Fried for this one). That Silicon Valley, they point out, is one where women founders are told their visions aren’t bold enough. That Silicon Valley, they point out, is one where startup CEOs are “called upon to strike the incredibly difficult balance between painting a picture of the world as it could be, and as it actually is.” That Silicon Valley, they point out, is one where not all investors conduct extensive due diligence or look at the same information.

And this is also a world in which an “ardently resilient optimist” can actually do a lot of damage. This is the world where a venture capitalist who carefully considers the cost of success may not carefully consider the cost of failure.

We may not be in a Stephen King novel (thank God), but there is something eerily familiar in the everyday passerby characters who may have discovered they were living among vampires had they asked the right question, had they opened that closet door, had they told their neighbor something smelled a little funny, right at the moment they smelled that little funny-something. 

Instead, the townees went on as if nothing was happening at all, as if the sudden disappearance or deaths of their neighbors was a one-off, as if the very acknowledgment that vampires may be walking among them was more dangerous than if they actually were.

Please note…There were, regrettably, two errors in yesterday’s newsletter. The online version has been corrected to reflect that 9.7% of the total AUM of one of Multicoin Capital’s funds were held at FTX, not of the firm’s total AUM. Additionally, the story was updated to correct that Hard Yaka was not an investor in Race Capital’s fund. A spokesperson for Hard Yaka confirmed prior to publication that Hard Yaka was an investor in the fund, but later informed Fortune they were mistaken.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- WekaIO, a Campbell, Calif.-based data platform provider, raised $135 million in Series D funding. Generation Investment Management led the round and was joined by investors including 10D, Atreides Management, Celesta Capital, Gemini Ventures, Hewlett Packard Enterprise, Hitachi Ventures, Key1 Capital, Lumir Ventures, Micron Ventures, Mirae Asset Capital, MoreTech Ventures, Norwest Venture Partners, NVIDIA, Qualcomm Ventures, and Samsung Catalyst Fund

- CG Oncology, an Irvine, Calif.-based oncolytic immunotherapy company, raised $120 million in Series E funding. ORI Capital, Longitude Capital, and Decheng Capital led the round and were joined by investors including RA Capital Management, Acorn Bioventures, Malin Corporation, Ally Bridge Group, and Sirona Capital

- Attabotics, a Calgary, Canada-based robotics supply chain automation company, raised $71.7 million in Series C-1 funding. Export Development Canada and Ontario Teachers’ Pension Plan Board invested in the round. 

- Dandelion Energy, a Mount Kisco, N.Y.-based residential geothermal company, raised $70 million in Series B1 funding. LENX and NGP ETP co-led the round and were joined by investors including Breakthrough Energy Ventures, NEA, GV, Collaborative Fund, and Building Ventures

- Descript, a San Francisco-based video and audio editor company, raised $50 million in Series C funding. OpenAI Startup Fund led the round and was joined by investors including Andreessen Horowitz, Redpoint Ventures, Spark Capital, and investor Daniel Gross

- MotherDuck, a Seattle-based data analytics platform builder, raised $35 million in Series A funding led by a16z.

- Buildkite, a remote-based software development company, raised $21 million in Series B funding. OneVentures and AirTree co-led the round and were joined by investors including General Catalyst and Up founder Dom Pym.

- Impulse, a San Francisco-based carbon reduction home appliances company, raised $20 million in Series A funding. Lux Capital’s Josh Wolfe led the round and was joined by investors including Fifth Wall, Lachy Groom, and Construct Capital.

- EngFlow, an Austin-based build acceleration company for software development teams, raised $18 million in Series A funding. Tiger Global, Andreessen Horowitz, firstminute capital, and others invested in the round.

- Banked, a London, U.K.-based global payment network developer, raised $15 million in Series A extension funding. Insight Partners led the round and was joined by investors including Citi, National Australia Bank Ventures, and Rapyd.

- ArmorCode, a Palo Alto, Calif.-based application security management company, raised $14 million in Series A funding. Ballistic Ventures led the round and was joined by investors including Sierra Ventures, Cervin, and others.  

- Loops.ai, a San Francisco and Tel Aviv, Israel-based product growth platform, raised $14 million in seed funding. Scale Venture Partners led the round and was joined by investors including Cardumen Capital and other angels. 

- Buynomics, a Cologne, Germany-based revenue optimization SaaS platform, raised €13 million ($13.42 million) in Series A funding. Insight Partners led the round and was joined by investors including LaFamiglia, Seedcamp, Dieter von Holtzbrinck Ventures, and Tomahawk.

- Adway, a Gothenburg, Sweden-based automated social recruitment marketing solution, raised €10 million ($10.36 million) in Series A funding from Octopus Ventures and others. 

- Curavit Clinical Research, a Scarsdale, N.Y.-based virtual contract research organization company, raised $5 million in Series A funding. Osage Venture Partners led the round and was joined by investors including Royal Street Ventures and Narrow Gauge Ventures. 

- Zest, a New York-based gifting app, raised $4.2 million in seed funding. GV led the round and was joined by investors including BoxGroup, Character, Operator Partners, Bungalow Capital, and Company Ventures.

- CalmWave, a Seattle-based operational health platform for hospitals, raised $4 million in seed funding. Bonfire Ventures led the round and was joined by investors including Tau Ventures, AI2 Incubator, Seachange Ventures, Hike Ventures, and the co-founders of PagerDuty

- The Eighth Notch, an Alamo, Calif.-based logistics technology platform, raised $3.5 million in funding led by Ecosystem Integrity Fund

- Impacked, a New York-based B2B primary packaging marketplace, raised $2.5 million in seed funding led by TenOneTen Ventures.

- PlayEmber, a London, U.K.-based Web3 monetization platform for mobile games, raised $2.3 million in pre-seed funding. Shima Capital led the round and was joined by investors including Huobi Ventures, Big Brain Holdings, Hyperithm, Warburg Serres, and Lyrik Ventures.

- Clusiv, an Austin-based online vocational training and accessibility platform for individuals who are blind or visually impaired, raised $2.25 million in seed funding led by ECMC Group’s Education Impact Fund.

- Prof Jim, a Sunnyvale, Calif.-based generative A.I. company that auto converts textbooks into videos, raised $1.5 million in funding. Hannah Grey, Avalanche VC, Behind Genius Ventures, and other angels invested in the round. 

- Woven, an Indianapolis-based business management software company, raised $1.5 million in seed funding led by Glow Brands.

PRIVATE EQUITY

- Ara Partners acquired Lincoln Terminal Holdings, a Greenville, S.C.-based renewable fuel logistics and infrastructure provider. Financial terms were not disclosed.  

- Georgia Oak Partners recapitalized Sailfish Boats, a Cairo, Ga.-based designer and manufacturer of recreational power and sport-fishing boats. Financial terms were not disclosed. 

- Gryphon Investors acquired a majority stake in Caylent, an Irvine, Calif.-based cloud-native services business. Financial terms were not disclosed. 

- H.I.G. Capital acquired a majority stake in Onis Visa, a Fontanelle, Italy-based generating sets and motor pumps designer. Financial terms were not disclosed.

- Hunter Point Capital acquired a minority stake in The Vistria Group, a Chicago-based investment firm. Financial terms were not disclosed. 

- Renovus Capital agreed to acquire the Chicago-based Advisory business of HBR Consulting, a strategy, operations, and technology consulting firm. Financial terms were not disclosed.

OTHER

- CommerceHub acquired ChannelAdvisor Corporation, a Morrisville, N.C.-based cloud-based ecommerce solutions provider, for $23.10 per share.

- CardieX Limited acquired Blumio, a San Mateo, Calif.-based algorithms and technology developer for cardiovascular sensors. Financial terms were not disclosed.

- Fortis acquired Payment Logistics, a La Jolla, Calif.-based payment technology company. Financial terms were not disclosed. 

- Opn acquired MerchantE, an Alpharetta, Ga.-based payment processing and solutions provider to businesses. Financial terms were not disclosed. 

IPOS

- Acrivon Therapeutics, a Watertown, Mass.-based precision oncology therapeutics developer, raised $94 million in an offering of 7.6 million shares priced at $12.50. It had previously planned to price shares between $16 and $18. Wellington Management, Surveyor Capital, RA Capital, Perceptive Advisors, Sands Capital, and Chione back the firm.

FUNDS + FUNDS OF FUNDS

- Energy Impact Partners, a New York-based venture capital firm, raised $485 million for a fund focused on early stage climate technology companies. 

- Bling Capital, a Miami and San Francisco-based venture capital firm, raised $212 million across two funds. They raised $109 million for their seed stage fund and $103 million for their opportunity fund. 

- MassMutual Ventures, a Boston-based venture capital firm, raised $100 million for a fund focused on early and growth-stage companies across the U.S. in the climate technology sector.

PEOPLE

- Kohlberg & Company, a Mount Kisco, N.Y.-based private equity firm, hired Jessica Hoffman Brennan as partner, head of strategy and investor relations. Formerly, she was with Onex Corp.

- Olympus Innovation Ventures, the Center Valley, Pa.-based venture arm of Olympus, hired Abigail Hunter-Syed as director of the firm. Previously, she was within the digital unit of the company.

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