By Polina Marinova CRYPTO HYBRIDSHappy Friday, Term Sheet readers.
DONE DEAL: SoftBank Group has officially closed its deal with Uber, making SoftBank the largest stakeholder in the ride-hailing company. The deal includes a large purchase of shares from existing Uber investors and employees at a $48 billion valuation, a discount from Uber’s most recent valuation of $68 billion. The investor group also completed a $1.25 billion investment of fresh cash at the other, higher valuation. SoftBank CEO Rajeev Misra said in a statement, “Uber has a very bright future under its new leadership. It is now part of a wider SoftBank network ranging from Sprint to WeWork. I look forward to SoftBank helping Uber become an even bigger global success.” .
HOT TAKES: Yesterday, I wrote about storage startup Omni and its decision to take the majority of its $25 million fundraise in Ripple’s XRP cryptocurrency. I suggested that the principal investment amount no longer held the same value as Ripple dipped 40% on Tuesday. Omni CEO Thomas McLeod tweeted to say, “I will confirm we are fine.” Regardless, I was less interested in short-term volatility and more curious about what readers thought about the future of this crypto-venture hybrid route.
Here are some interesting takes:
On accepting cryptocurrency:
I’m not sure I see any benefit to accepting investment using a high volatility currency like XRP. I think it makes a lot of sense for a project to raise an ICO if decentralization is fundamental in its nature and a token can be pegged to the fundamental value of the network, but if I am a company which needs money to spend on salaries, rent, marketing, etc. why would I ever accept anything but dollars? — Nitin
On VC’s power dynamic:
It’s fair to say that VCs will no longer have the power dynamic they have come to know. With the option of funding without loss of ownership via an ICO, what incentive is there for a startup to approach a VC? Granted, there is still immense value-add a top tier VC can offer, but lower level VC’s maybe hit with Darwinism as ICOs gain more solidity and founders will have more leverage in choosing their VC. — Tyler
On initial coin offerings:
VC is such a reputation-driven business, and crypto/ICOs are starting to get a bad one (price volatility, increased SEC involvement, etc). It feels like the early days of the dot-com bubble, where anyone with a unique domain could solicit funding before they finished saying “www.” I just don’t believe VCs have the expertise in parsing cryptocurrency whitepapers to really distinguish truly good ideas from jargon. — Mat
On safeguards against overexposure to cryptocurrency price volatility:
Right now, it’s like the Wild West without a sheriff. Regulations need to be in place; understanding of the applications must be more widespread. Otherwise, there is danger in you startups dabbling in crypto and I think the U.S. should lead on that regulation. — Jillian Manus, managing partner at Structure Capital
On crypto companies using ICO funds to invest in other crypto projects:
Currently there are not too many avenues through which you can actually use cryptocurrencies for day-to-day transactions, except to buy other cryptocurrencies or perhaps, cryptokitties! Also, entities that hold large amount of a given cryptocurrency cannot sell in large amounts because this would impact the price negatively since trading volumes for most cryptocurrencies are very low. So entities that are holding a large amount of cryptocurrencies may seek other avenues to diversify. One such avenue could be investing in start-ups. This could have been a motivation for Ripple’s investment in Omni. Then the questions is why Omni would accept cryptocurrencies as an investment instead of fiat currency? One reason could have been valuation. It’s possible Ripple paid a premium valuation in XRP vs what they would have paid in fiat, partly due to the volatility risk which may or may not have impacted Omni after the recent drop in XRP. — Ajay Chopra, general partner at Trinity Ventures
On the future of employee compensation:
We’ve started to get requests from customers who want to pay using digital currency. As someone managing the finance of a company, if it is only used as an exchange vehicle with practically no volatility, it is OK. But if it is used for currency in exchange for repetitive activities, like a job, the current market around digital currency is too volatile to be viable. I do believe a day can come when digital currency is stable, with rules governing it just like other currencies, with broad acceptance. Digital currency can be made more secure and accepted everywhere, thus it can be much more convenient to use. When that day comes, it is possible employees can choose to be paid in their local currency or a commonly accepted digital currency. Imagine a world where you can go anywhere and not to have to worry about exchanging money, because there is a universally common currency, a digital currency, that everyone has and everyone accepts. — Ning Wang, HackerOne CFO and COO
THE LATEST FROM FORTUNE…[ts_bullet_primary] Lessons from A CEO who got fired twice before she turned 30 (by Grace Donnelly)
[ts_bullet_primary] Pokemon Go’s creator is making a Harry Potter game (by Jonah B. Firestone)
[ts_bullet_primary] Kleiner Perkins partner: ‘We have to do more to support women’ (by Polina Marinova)
[ts_bullet_primary] How Zillow made it through the housing crisis (by Anne VanderMey)
VENTURE DEALS[ts_bullet_primary] defi SOLUTIONS, a Grapevine, Texas-based developer of SaaS based loan origination software solutions, raised $55 million in a Series C funding from Bain Capital Ventures.
[ts_bullet_primary] ForUsAll, a San Francisco-based provider of a financial platform that advises small and mid-sized businesses on their 401(k) plans, raised $21 million in funding. Ribbit Capital led the round, and was joined by investors including Foundation Capital.
[ts_bullet_primary] Pioneer Square Labs, a Seattle-based startup studio and venture firm that finances, creates and launches technology startups, raised $15 million in funding. Foundry Group led the round.
[ts_bullet_primary] Ollie, a micro-housing and coliving company, raised $15 million in Series A funding. Investors include Aviva Investors Real Estate Capital Global Co-Investment Fund and the Employees Retirement System of Texas.
[ts_bullet_primary] Eyeota, a Hong Kong-based data management technology company, raised $12.5 million in Series B funding. Jolt Capital SAS led the round, and was joined by investors including Project A Ventures and Qualgro.
[ts_bullet_primary] Iris Automation, a San Francisco-based developer of collision avoidance systems for operating industrial drones, raised $8 million in Series A funding. Bessemer Venture Partners led the round, and was joined by investors including Bee Partners.
[ts_bullet_primary] Hellas Direct, a Greece-based insurance company, raised 7 million euros ($8.6 million) in Series B funding. IFC, a member of the World Bank Group, led the round, and was joined by investors including Third Point LLC, Endeavor Catalyst and Portag3 Ventures.
[ts_bullet_primary] Floyd Inc, a Detroit-based online furniture company, has raised $5.6 million in Series A funding. Investors include Beringea.
[ts_bullet_primary] Shoof Technologies Incorporated, a Cupertino, Calif.-based provider of advanced wireless technology for the industrial IoT, raised $4.3 million in seed funding. Kleiner Perkins Caufield & Byers and Modiva Japan led the round.
[ts_bullet_primary] Techcyte Inc, a Orem, Utah-based provider of deep learning image analysis platform, raised $4.3 million in funding. The investors were not named.
[ts_bullet_primary] Finexio, an Orlando-based smart B2B payment network that eliminates paper-based checks for accounts payable departments, raised $4 million in Series A funding. James R. Heistand led the round, and was joined by investors including Florida Funders, Loeb.nyc, Zach Coelius and Mobile Financial Partners.
[ts_bullet_primary] Hyperlite Mountain Gear, a Biddeford, Maine-based manufacturer of ultralight outdoor equipment, raised $1.1 million early series round of financing. Investors include CEI Ventures, Telluride Venture Fund and Maine Venture Fund.
HEALTH AND LIFE SCIENCES DEALS[ts_bullet_primary] Pandion Therapeutics, a Cambridge, Mass.-based biotech company, raised $58 million in Series A funding. Polaris Partners, Versant Ventures and Roche Venture Fund led the round, and were joined by investors including SR One and BioInnovation Capital.
[ts_bullet_primary] Carmot Therapeutics Inc, a Berkeley, Calif.-based biotech company, raised $15 million in funding. Horizons Ventures and The Column Group led the round.
PRIVATE EQUITY DEALS[ts_bullet_primary] Warburg Pincus invested up to $150 million in Stronghold Energy II Holdings, a Midland, Texas-based oil and gas exploration and production company.
[ts_bullet_primary] Backcast Partners made an investment in Spectra Services Holdings, a provider of field-based HVACR business services.
[ts_bullet_primary] TRG, a portfolio company of Polaris Partners, acquired Screen Group, a Netherlands-based data software company based. Financial terms weren’t disclosed.
[ts_bullet_primary] Central Lake Armor Express, Inc, a Spanos Barber Jesse & Co. portfolio company, merged with KDH Defense Systems, Inc, a manufacturer of high performance body armor solutions. Financial terms weren’t disclosed.
IPOs[ts_bullet_primary] ADT, the home-security company backed by Apollo Global Management, raised $1.5 billion in in IPO of 105 million shares at $14 a piece, below its previous range of 111 million shares priced between $17 to $19 a share. Apollo previously acquired ADT for nearly $7 billion in 2016. In 2016, the firm posted revenue of $3 billion and loss of 536.6 million. Morgan Stanley, Goldman Sachs, Barclays, Deutsche Bank, RBC Capital Markets, Citigroup, BofA Merrill Lynch, and Credit Suisse are joint book-running managers. The company plans to list on the NYSE as “ADT.”
[ts_bullet_primary] Hudson, a Middlesex, U.K.-based travel retailer, said it plans to raise $788 million by offering 39.42 million shares priced between $19 to $21 a piece (100% insider). Dufry AG backs the company. Credit Suisse, Morgan Stanley, UBS, Merrill Lynch, Banco Santander, Credit Agricole CIB, Raiffeisen Centrobank, BBVA and HSBC are underwriters in the deal. The company plans to list on the NYSE as “HUD.”
[ts_bullet_primary] Leo Holdings, a London-based blank check company, filed for an IPO of up to $300 million. Leo was formed by executives of Lion Capital to acquire consumer or retail sector firms. Citigroup is underwriter in the deal. The firm plans to list on the NYSE as “LHC.U.”
[ts_bullet_primary] Nine Energy Services, a Houston-based onshore oil and gas firm, raised $161 million in an IPO of 7 million shares, priced at $23 a piece, the high end of its range. L.E. Simmons (55.7% pre-offering) backs the company. J.P. Morgan, Goldman Sachs, and Wells Fargo are underwriters in the deal. Nine plans to list on the NYSE as “NINE.”
[ts_bullet_primary] Stone Pagmentos, a Brazilian credit card processing firm, is planning for a New York IPO in the second half of the year, Reuters reports citing sources. .
EXITS[ts_bullet_primary] PM & Partners sold its controlling stake in Monviso, an Italy-based maker of gourmet and healthy bread substitutes, to Altabread, which is backed by C?r?a Partenaire and Capzanine. Financial terms weren’t disclosed.
[ts_bullet_primary] Stage Capital, which is backed by Goldman Sachs Asset Management and Glendower Capital, agreed to sell STI Group, a maker of medical devices for the healthcare industry, to M?rieux D?veloppement and GIMV. Financial terms weren’t disclosed.
FIRMS + FUNDS[ts_bullet_primary] Sentinel Capital Partners, a New York-based private equity firm, raised $2 billion for its sixth fund, according to an SEC filing.
[ts_bullet_primary] Bloomfield Capital, a Birmingham, Mich.-based real estate private equity firm, raised $100 million for its third fund.
PEOPLE[ts_bullet_primary] Sapphire Ventures promoted Anders Ranum, Kevin Diestel and Rajeev Dham to partner, and Winter Mead to principal.
[ts_bullet_primary] March Capital promoted Jed Leidheiser to vice president.
SHARE TODAY’S TERM SHEETView this email in your browser.
Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.
Term Sheet — Friday, January 19
By Polina Marinova CRYPTO HYBRIDSHappy Friday, Term Sheet readers.