Axios Pro Rata: Price discipline lost — Uber deals — Dyal eyes SPAC sale

Top of the Morning | Thursday, December 03, 2020

Open in app View in browser   Presented By Koch Industries   Pro Rata By Dan Primack ·Dec 03, 2020 🎧 Axios Re:Cap digs into GM's plan to become an all-electric vehicle company, including its ambition to be "significantly turned over" from combustion engines by 2025. Listen via Apple, Spotify or Axios. 🖥️ You're invited to an Axios virtual event today at 12:30pm ET on the future of broadband connectivity, including my conversation with FCC commissioner Geoffrey Starks. Register here.     Top of the Morning Illustration: Eniola Odetunde/Axios   Price discipline is dead. Long live the tech bubble. The big picture: Determining "proper" tech startup valuations has always been subjective, but lately it's been more akin to throwing a dart at the ceiling than at the board. By the numbers: Private markets are following public markets, as they're wont to do, with median valuations for early-stage and later-stage startups hitting record highs, per PitchBook. The pandemic is now viewed as a "heads I win, tails you lose" situation for a majority of startups. Either they benefit from trends like work-from-home, or investors are paying for expected growth post-vaccine. "I give up," a Silicon Valley venture capitalist told me while discussing Salesforce's $27.7 billion deal for Slack. "I could have made a solid case for Slack at one-third that amount or at even more than what Salesforce is paying, and I'm feeling the same about most of the venture deals I see getting done." There are signs of a bubble everywhere, but that's arguably been true for years. Any "smart money" that pulled back, including early in the pandemic, looks dumb, while plenty of dumb money looks prophetic. Venture capital shifted years ago into a less price sensitive model, deciding it was better to overpay for everything than hold the line and miss out on a mega-win. That trend has only accelerated, particularly after the seed-stage. The bottom line: "Value-add" has taken on increased importance when it comes to winning competitive deals, as so many investors have become price insensitive (in action, if not in words).     The BFD Illustration: Sarah Grillo/Axios   Uber (NYSE: UBER) is in advanced talks to sell its Uber Elevate unit to Santa Cruz, Calif.-based Joby Aviation, Axios has learned from multiple sources. A deal could be announced later this month. Why it's the BFD: Shedding money-losing experiments is a key part of Uber's push toward profitability. $$ history: Joby, a strategic partner to Uber Elevate, has raised around $730 million from firms like Toyota, Intel, JetBlue, AME Cloud Ventures and Ballie Gifford. Unrelated Uber: The company's deal for Postmates closed this week, but the all-stock deal's initial $2.6 billion value has now swelled to over $4.4 billion. None of the shares include lockup provisions. Bottom line: "[Uber's] plans were ambitious, and perhaps doomed, from the start. It relied on a technology — electric-powered aviation — that was still under development and had yet to be tested as part of a commercial service. And it would have been costly to implement, requiring the construction of a vast network of rooftop or ground-level 'skyports' and regulatory approval from a host of federal, state, and local agencies." — Andrew Hawkins, The Verge     Venture Capital Deals • TuSimple, a San Diego-based self-driving truck startup, raised $350 million. VectoIQ led, with TechCrunch reporting other investors included Goodyear, Union Pacific, CN Rail, U.S. Xpress, Kroger, Traton Group and Navistar. http://axios.link/k1eg 🚑 Everywell, an Austin, Texas-based in-home health testing platform, raised $175 million in Series D funding from BlackRock, TCG, Foresite Capital, Greenspring Associates, Morningside Ventures, Portfolio and return backer Highland Capital Partners. http://axios.link/EPdf • Amount, a Chicago-based API framework for retail banks, raised $81 million at a $600 million pre-money valuation. Goldman Sachs led, and was joined by return backers August Capital, Invus Opportunities and Hanaco Ventures. http://axios.link/EcKb 🚑 Virta Health, a San Francisco-based biotech that aims to reverse Type 2 diabetes, raised $65 million at a valuation north of $1 billion from Sequoia Capital Global Equities and return backer Caffeinated Capital. http://axios.link/BGq7 • Pigment, a Paris-based business forecasting platform, raised $25.9 million. Blossom Capital led, and was joined by FirstMark Capital. • Ultimate.ai, a German customer service automation platform, raised $20 million in Series A funding. Omers Ventures led, and was joined by Felicis Ventures, HV Capital and Makio.vc. http://axios.link/6TS9 • Shop-Ware, a San Francisco-based provider of management software for independent auto repair shops, raised $15 million in Series A funding led by Insight Partners. http://axios.link/Grgm • MEL Science, a London-based science educational platform, raised $14 million in Series B funding from Mubadala and Channel 4 Ventures. www.melscience.com 🚀 Space Perspective, an Orlando, Fla.-based space tourism startup, raised $7 million in seed funding from Prime Movers Labs and Base Ventures. http://axios.link/xKam • Fylamynt, a Mountain View, Calif.-based cloud workflow automation startup, raised $6.5 million in seed funding. Gradient Ventures led, and was joined by Mango Capital and Point72 Ventures. http://axios.link/P6mM • Supergreat, a New York-based community app for beauty, raised $6.5 million in Series A funding. Benchmark led, and was joined by Shrug Capital, Thrive Capital and individuals. http://axios.link/fP3Q • Karukuri, a British food robotics startup, raised £6.3 million. Firstminute Capital led, and was joined by Hoxton Ventures, Taylor Brothers, Ocado Group and Future Fund. http://axios.link/PBKT • Welcome, a New York-based hiring and onboarding platform, raised $6 million in seed funding. FirstMark Capital led, and was joined by Ludlow Ventures and individuals. http://axios.link/VnSC • Wellory, an "anti-diet" nutrition app, raised $4.2 million. Story Ventures led, and was joined by Harlem Capital, Ground Up Ventures and individuals. http://axios.link/BdzL • Orbit, a San Francisco-based community experience platform, raised $4 million in seed funding. Andreessen Horowitz led, and was joined by return backers Heavybit and Harrison Metal. http://axios.link/mocP • Soil Connect, a New York-based digital marketplace for the soil and aggregates industry, raised $3.25 million in seed funding led by Heartland Ventures. http://axios.link/BQ4y 🚑 Neuroglee, a Singapore-based digital therapeutics platform for neurodegenerative diseases, raised $2.3 million led by Japanese drugmaker Esai. http://axios.link/CEZb • Okay, a New York-based team performance dashboard, raised $2.2 million led by Sequoia Capital. http://axios.link/uScg • Jitsu, a Berkeley, Calif.-based enterprise predictive modeling platform, raised $2 million in seed funding. Costanoa Ventures led and was joined by YC. http://axios.link/fNfD 🚑 Segmed, a Stanford, Conn.-based cloud platform for medical data management, raised $2 million in seed funding. Blumberg Capital led, and was joined by Nina Ventures. http://axios.link/G3Zg • Heru, a Mexico City-based provider of software services for gig workers, raised $1.7 million led by Mountain Nazca. http://axios.link/8LLZ     A message from Koch Industries Bill Tai talks tech disruption and transformation     Prolific tech investor Bill Tai has learned what it takes to thrive in an industry defined by constant disruption and change. In a discussion with Koch Disruptive Technologies managing director Jason Illian, he shares what he's learned. More.     Private Equity Deals • Altair Investments agreed to buy the polymer screws and barrels product lines from Nordson (Nasdaq: NDSN). www.nordson.com • CVC Capital Partners agreed to buy the RiverStone Europe insurance business of Canada's Fairfax Financial (TSX: FFH) for $750 million. http://axios.link/FXUd • Hg Capital invested in Benevity, a Canadian corporate purpose cloud software provider. www.benevity.com • Insight Partners acquired a majority stake in CommerceHub, an Albany, N.Y.-based provider of e-commerce supply chain software, from GTCR and Sycamore Partners at a $1.9 billion valuation. http://axios.link/aWdp • KKR is nearing an $800 million deal for a portfolio of U.S. warehouses, per Bloomberg. http://axios.link/e8t3 • Nesco (NYSE: NSCO) agreed to buy CTOS, a Kansas City-based heavy equipment maker, for nearly $1.48 billion. Platinum Equity will help finance the deal via an $850 million common stock investment in Nesco, while existing CTOS backer The Blackstone Group will retain an equity stake. http://axios.link/IGhx • NuWave Solutions, a McLean, Va.-based portfolio company of AE Industrial Partners, acquired BigBear, a provider of big data analytics to the U.S. national security community. www.nuwavesolutions.com • Profile Products, a Buffalo Grove, Ill.-based portfolio company of Incline Equity Partners, acquired Sunterra Horticulture, a Canadian peat extraction company. www.profileproducts.com • Welsh, Carson, Anderson & Stowe completed its previously-announced buyout of TrueCommerce, a Cranberry Township, Penn.-based provider of trading partner connectivity solutions, from Accel-KKR. http://axios.link/Rvgm • York Capital invested in F1 Payments, an Austin, Texas-based payment processing app. www.f1payments.com     Public Offerings 🚑 Certara, a Princeton, N.J.-based drug development consultancy owned by EQT Partners, set IPO terms to 24.4 million shares at $19-$22. It would have a fully diluted market value of $3.1 billion, were it to price in the middle, and plans to list on the Nasdaq (CERT) with Jefferies as left lead underwriter. Certara reports $5 million of net income on $179 million in revenue for the first nine months of 2020. http://axios.link/gSmf 🚑 Kinnate Biopharma, a San Diego-based oncology biotech, raised $240 million in its IPO. The pre-revenue company priced 12 million shares at $20, versus initial plans to offer 11.5 million shares at $16-$18, for an initial market cap of $821 million. It will list on the Nasdaq (KNTE), used Goldman Sachs as lead underwriter and had raised nearly $200 million from Foresite Capital (33.3% pre-IPO stake), OrbiMed (10.5%), RA Capital Management (10%), Nextech (8.9%) and Vida Ventures (7.9%). http://axios.link/AtkT     SPAC Stuff • Dyal Capital Partners, a Neuberger Berman unit that buys passive stakes in alternative asset managers, and direct lender Owl Rock Capital Partners are in talks to be taken private via a combination and reverse merger with Altimar Acquisition Corp. (NYSE: ATACU), a SPAC formed by HPS Investment Partners. • Highland Transcend Partners I, a tech-focused SPAC formed by Highland Capital Partners and led by Ian Friedman (ex-Goldman Sachs), raised $275 million in an upsized IPO. http://axios.link/c49T • Far Peak Acquisition, the second SPAC formed by former NYSE president Tom Farley, raised $550 million in its IPO. http://axios.link/g8qO 🦈 Jaws Spitfire Acquisition, the second SPAC led by Barry Sternlicht, raised $300 million in an upsized IPO. http://axios.link/Ylob • Live Oak Acquisition II, a growth biz-focused SPAC formed by Live Oak Merchant Partners, raised $200 million in its IPO. http://axios.link/vy2w • RMG Acquisition II, a SPAC co-led by James Carpenter (Riverside Management Group) and Robert Mancini (ex-Carlyle Group), cut its proposed IPO size from $350 million to $250 million. The initial RMG SPAC recently agreed to buy EV battery maker Romeo Power. http://axios.link/SiXM     Liquidity Events • FedEx (NYSE: FDX) agreed to buy ShopRunner, a Chicago-based shipping payment e-commerce network that had raised around $40 million from August Capital, UPS and Illinois Growth & Innovation Fund. http://axios.link/7Thu • Google (Nasdaq: GOOG) agreed to buy Actifio, a Waltham, Mass.-based data management software company, for an undisclosed amount. Actifio had raised $460 million in VC funding, most recently at a $1.3 billion valuation, from firms like Andreessen Horowitz, North Bridge Venture Partners, 83North, Advanced Technology Ventures, Heritage Group and Crestline Investors. http://axios.link/pZih • Intuit (Nasdaq: INTU) completed its $7.1 billion purchase of Credit Karma, a San Francisco-based provider of consumer credit-score checks and monitoring services. Credit Karma had raised around $370 million in VC funding from firms like Ribbit Capital, Felicis Ventures, CapitalG, QED Investors, and Susquehanna Growth Equity. Silver Lake purchased a 12.5% stake from insiders in early 2018 at an estimated $4 billion valuation. • The London Stock Exchange (LSE: LSE) is expected to win EU antitrust approval for its $27 billion purchase of financial data company Refinitiv from The Blackstone Group, Thomson Reuters, GIC and CPPIB. http://axios.link/zBil     More M&A • Flutter Entertainment (Ireland: FLTR), the company formerly known as Paddy Power, will pay $4.2 billion in cash and stock to increase its stake in online sports betting and fantasy sports site FanDuel from 58% to 95%, buying the position from Fastball. http://axios.link/UKTX • Westdale made an all-cash takeover offer for Denver-based apartment Apartment Investment & Management Co. (NYSE: AIV), which had a $4.7 billion market cap before Bloomberg broke the news. http://axios.link/L1xR • XPO Logistics (NYSE: XPO) will split its trucking and logistics units into separate, publicly-traded business via a tax-free spinoff. http://axios.link/VrZs     Fundraising • Arena Investors raised $519 million for a credit-oriented opportunities fund. www.arenaco.com 🚑 OTV, an Israeli VC firm, raised $170 million for a fund focused on digital health startups. www.olivetree.vc • Plexo Capital, a VC firm led by Lo Toney (ex-GV), is raising $100 million for its second fund, per an SEC filing. www.plexocap.com • Scale Venture Partners raised $600 million for its seventh fund. www.scalevp.com     It's Personnel 🚑 Christina Farr is joining OMERS Ventures as a healthcare investor. She previously was a (frustratingly good) reporter at CNBC. • Jenny Harris (ex-BNP Paribas) joined Houston-based The Sterling Group as a managing director and head of the firm's credit fund. www.sterling-group.com     Final Numbers Source: Preqin. Notes: 2020 data is annualized based on data to October. 2022-2025 are Preqin's forecasted figures. Go deeper: PE fund management fee discounts are disappearing     A message from Koch Industries Bill Tai talks tech disruption and transformation     Prolific tech investor Bill Tai has learned what it takes to thrive in an industry defined by constant disruption and change. In a discussion with Koch Disruptive Technologies managing director Jason Illian, he shares what he's learned. More.   ✔️ Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and air taxi drivers to sign up.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. 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