CAVA’s IPO was a ‘break in the clouds’ for the icy IPO market, says one of its early investors. Will others follow?

Klein, a partner at venture capital firm Revolution, hopped on the phone with Term Sheet less than two hours after market close and right before he headed off to a celebratory dinner with CAVA’s management team in Hudson Yards. After all, there was a lot to celebrate. After what’s been an extraordinarily dry IPO market, CAVA’s blockbuster IPO—in which shares rose 99% from market open to close to nearly $44—the Washington, D.C.-based fast-casual restaurant’s debut on the New York Stock Exchange offered a much-needed respite to the startup ecosystem: a glimmer of hope that exits are still within reach, even for unprofitable companies.

“I don’t want to overstate it, but it felt like a real break in the clouds from the environment that we’ve been in for the last 18 months or so,” Klein says.

CAVA’s IPO will likely offer a nice bump to the portfolios of CAVA investors like Klein’s firm Revolution and mutual fund manager T. Rowe Price. (None of CAVA’s major investors sold shares at the IPO, Klein says.) But it will likely make waves across the rest of the market, which has hundreds of unicorns waiting in the queue to go public.

“This listing represents a welcome, positive sign for the IPO market,” NYSE president Lynn Martin told Term Sheet in an email, noting that the exchange is looking forward to “hearing that first-trade bell ring with regularity.”

But don’t get your hopes up too high just yet. CAVA, though VC-backed, isn’t quite the venture darling that a Stripe or Databricks is. It’s hard to know whether the market is as ready for SaaS or fintech companies as it appears to be for consumer-focused CAVA, which has a heavy retail store footprint and sells products in grocery stores. 

Some investors are skeptical.

“Happy they did well,” says Wesley Chan, cofounder and managing partner at FPV Ventures, but “it’s not quite a tech company so while encouraging it’s not quite the harbinger everyone is hoping for.”

Food-focused or not—CAVA was, just yesterday, still a venture-backed unicorn. After its blockbuster IPO, the company is now worth nearly $5 billion, based on its market cap as of yesterday’s close. CAVA has been raising capital from investors for more than a decade and has a handful of venture capitalists on its cap table. SWaN & Legend Venture Partners, Riverbend Capital, and Chanel’s investment arm, Mousse Partners, have all invested. As Fortune’s Lucy Brewster reported yesterday, Invus is Cava’s largest shareholder through its affiliate company Artal, owning a 29% stake worth $1.5 billion when the stock was trading at $46 (shares closed around $44) after its debut. SWaN & Legend Venture Partners, where Klein used to work as CIO before Revolution and led the CAVA investment in 2015, owns 10% of the company after it went public, and its stake was worth $515.9 million at that price. Revolution owns a 6.9% stake, according to SEC filings. Former Panera CEO and current Cava board chair Ron Shaich has a sizable 11% stake in the company.

It’s hard to say what the next few months will hold post-CAVA IPO, but things are looking up on the secondaries market, according to Glen Anderson, CEO of secondary share broker Rainmaker Securities. He says that share prices for secondaries, which had still been on the decline earlier this year, have stabilized.

“Private market prices appear to have bottomed out—very few are making any new lows,” Anderson wrote Fortune in an email, noting that investors he works with seem more optimistic, which, in turn, correlates to IPO investors being more bullish.

As for CAVA, the IPO is a big moment for the brand, Klein says. The company plans to use the capital infusion to expand into new markets and add to its restaurant footprint, he says.

Klein says he is planning to stay on the board for approximately another year, then step off when it makes sense for CAVA—this time for good. After all, Klein has been on the board, as an official member and briefly as an observer, since 2015—first as the lead investor from SWaN & Legend Venture Partners, then later, as a Revolution investor in 2017.  “I don’t believe I missed a single board meeting,” he says.

The looming question for the private markets seems to be: Did the IPO market just reopen? 

“No one can go second unless someone goes first,” Klein says.

Move-fast-and-break-things university…When the University of Austin, founded by journalist Bari Weiss, venture capitalist Joe Lonsdale, Harvard University professor Arthur Brooks, and others, went live with a big splash of media attention and a plan to raise $250 million to rethink higher education, there was a problem with the announcement. The school wasn’t allowed to use the words “university” or “college,” as they are protected in the state of Texas. Emails from a Texas regulatory agency obtained by Fortune show that UATX, which is having Marc Andreessen lecture during an academic program this summer, may be more akin to a venture-backed startup than an academic institution. Read the full story here.

See you tomorrow,

Jessica Mathews and Anne Sraders
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- OneVest, a Calgary- and Toronto-based wealth management platform, raised Can$17 million ($12.85 million) in Series A funding. OMERS Ventures led the round and was joined by Luge Capital, Panache Ventures, AAF Management, FJ Labs, Fin Capital, Pivot Investment Partners, and Deloitte Ventures. 

- Telmai, a San Francisco-based data observability platform, raised $5.5 million in seed funding. Glasswing Ventures and .406 Ventures co-led the round and were joined by Zetta Venture Partners. 

- Epallet, a Los Angeles-based B2B marketplace, raised $4.5 million in seed funding. BoweryCapital led the round and was joined by C2Ventures, SilverCircle, I2BF Global Ventures, and Junction Venture Partners.

- The Wound Company, a Minneapolis-based wound and ostomy care delivery company, raised $4.25 million in seed funding from Susa Ventures and Sozo Ventures.

- Worknet.ai, a Seattle-based customer collaboration platform, raised $3.5 million in seed funding from Act One Ventures. 

PRIVATE EQUITY

- Capitol Imaging Services, a Clearview Capital portfolio company, acquired Houston Premier Radiology Center and Alliance MRI, a Houston and The Woodlands, Texas-based diagnostic imaging service providers. Financial terms were not disclosed. 

- General Atlantic acquired an approximately 20% stake in ATOSS Software, a Munich-based technology and consulting solutions provider for professional workforce management. Financial terms were not disclosed.

- MiddleGround Capital acquiredA.M. Castle & Co., an Oak Brook, Ill.-based metals, services, and supply chain solutions provider for industrial and aerospace customers. Financial terms were not disclosed.

- New State Aviation Holdings, the aviation-focused platform of New State Capital Partners, acquired Finnoff Aviation Products, a Broomfield, Colo.-based aircraft upgrades provider for the Pilatus PC-12. Financial terms were not disclosed.

EXITS

- Blackstone acquired a majority stake in Cvent, a Tysons, Va.-based  meetings, events, and hospitality technology provider, for $4.6 billion from Vista Equity Partners. 

OTHER

- Flowspace acquired RetailOps, a San Diego-based e-commerce software company. Financial terms were not disclosed.

- The Brandtech Group acquired Pencil, a Singapore-based A.I. ad generator. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- TA Associates, a Boston-based private equity firm, raised $16.5 billion for a fund focused on equity investments within the technology, health care, financial services, consumer, and business services sectors.

PEOPLE

- Menlo Ventures, a Menlo Park, Calif.-based venture capital firm, hired Amy Wu as a partner. Formerly, she was with FTX Ventures.

- a16z crypto, Andreessen Horowitz's crypto fund, hired Sam Broner as a partner. Formerly, he was with Dorm Room Fund.