BUBBLE-MAKER
Good morning, Term Sheet readers.
I’ve read quite a few articles recently about Masayoshi Son and his monster $100 billion Vision Fund. This morning, Reuters published an op-ed calling Son “a one-man bubble-maker.” The article argues that such extraordinary sums of capital flowing into the venture ecosystem are bound to inflate already-frothy tech valuations. Son is even talking about raising a second investment fund of some $200 billion, and said he expects “Vision Funds 2, 3, and 4” to be established every two or three years. In other words, he aims to invest in more than 1,000 companies over a decade.
But I’m willing to argue all this money is not bad. First, it helps to understand how Son sees the world. Over the weekend, I stumbled upon this SoftBank deck from June 2010. It outlines SoftBank’s 30-year vision, and it gives an interesting glimpse of Son’s ruthless ambitions.
For one, he has a 300-year view of SoftBank’s growth strategy. He says that artificial intelligence combined with data gathered by billions of sensors will bring on an “information revolution,” that will benefit people more than the 19th century Industrial Revolution. In May, SoftBank invested $300 million Guardant Health, a startup specializing in early cancer detection, and it bought a British semiconductor company called ARM. Son noted that sensor technology and innovation brought forth by these companies can enhance a doctor's surgical skills and the data will prove invaluable.
“Those who rule chips will rule the entire world. Those who rule data will rule the entire world," Son said. "That's what people of the future will say."
Here’s where this gets interesting. Son seems to be industry agnostic, betting on information and data instead. In the deck, there’s a slide that outlines the market cap of companies during the Industrial Revolution, including the Pennsylvania Railroad, U.S. Steel, and Standard Oil. The next frontier, he believes, is the data revolution. As people like Andrew Carnegie and John D. Rockefeller were able to drastically accelerate innovation by having a very large ownership over the inputs of the Industrial Revolution, it looks like Son is trying to do something similar. The difference being he’s betting on the notion that data is one of the most valuable digital resources of modern day. As Adam Lashinsky noted in this morning's Data Sheet, a $200 billion bet on a single investment theme around Big Data could be entirely crazy... Or brilliant.
Yes, SoftBank might be the cause for an IPO slump, and yes, Son might be a so-called “one-man bubble-maker,” but we’d be remiss not to look at what the Japanese tech behemoth’s infusion of cash is doing to move humanity forward in the long-term. It begs the question — even if all the criticism around SoftBank is accurate, will the 300-year outcome be a net positive for society?
QUOTE OF THE DAY: Jordan Belfort, the former stockbroker who pled guilty to fraud, is becoming pretty outspoken about crypto. The ‘Wolf of Wall Street’ followed up his earlier comments about bitcoin with more food for thought, this time around initial coin offerings. He said:
“Probably 85% of people out there don’t have bad intentions, but the problem is, if 5% or 10% are trying to scam you, it’s a f**king disaster. It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces,” he said, adding: “It’s far worse than anything I was ever doing.”
THE LATEST FROM FORTUNE...
• How intuitive surgical turned medical sci-fi into reality (by Sy Mukherjee)
• Tesla reaches deal to build a factory in China (by David Z. Morris)
• Meet the Tunisian dealmaker who speaks for the Weinstein Company (by Shawn Tully)
• The new book that puts tech’s sexism scandals into perspective (by Jeff John Roberts)
• This chart shows why Bitcoin can go higher than $6,000 (by Jen Wieczner)
• How one man built his startup while rebuilding his life (by Jennifer Alsever)
...AND ELSEWHERE
Grab raises $700 million in debt. Tech companies are paying huge salaries for AI talent. Trump says there won’t be 401(k) changes under his tax plan. A showdown brews between Amazon and Alibaba. Americans are retiring later, and dying sooner.
VENTURE DEALS
• ActionIQ, a New York-based marketing activation platform, raised $30 million in Series B funding. Andreessen Horowitz led the round, and was joined by investors including Sequoia Capital, Firstmark Capital, and Shutterstock.
• Spoke, a San Francisco-based internal request management platform, raised a total of $28 million across two funding rounds. Investors include Accel, Greylock, Felicis Ventures and Webb Investment Network.
• Solvvy, a Palo Alto, Calif.-based intelligent self-service platform for customer experience, raised $12 million in Series A funding. Scale Venture Partners led the round, and was joined by investors including Pear Ventures, Signatures Capital and True Ventures.
• EchoPixel Inc., a Mountain View, Calif.-based provider of interactive virtual reality software solutions for healthcare professionals, raised $8.5 million in Series A funding. Intel Capital led the round, and was joined by investors including Aurus Capital, Runa Capital and Harris & Harris Group.
• Zero, a San Francisco-based mobile banking company, raised $8.5 million in funding. ENIAC Ventures led the round, and was joined by investors including New Enterprise Associates, Nyca Partners, Lightbank, and Middleland Capital.
• Intezer, an Israel-based cybersecurity startup, raised $8 million in Series A funding. Intel Capital led the round, and was joined by investors including Magma and Samsung NEXT.
• Winnow, a U.K.-based developer of smart kitchen tech, raised $7.4 million in funding, according to TechCrunch. Investors include Circularity Capital, Mustard Seed, and D-Ax. Read more.
• Oliver Cabell, a Minneapolis-based startup selling bags and other accessories, raised $1.2 million in funding. The investors were not named.
• Fair, a Santa Monica, Calif.-based car-leasing app, raised funding of an undisclosed amount. BMW i Ventures led the round, and was joined by investors including Penske Automotive Group.
• Pireta, a U.K.-based smart textiles company, raised seed funding of an undisclosed amount from Rainbow Seed Fund.
PRIVATE EQUITY DEALS
• TPG Capital will acquire Exactech (Nasdaq: EXAC), for $625 million. The $42 per share offer represents a premium of about 31% to Exactech’s closing price on Oct. 20.
• Pearson, a U.K.-based educational materials provider, is in talks with a consortium of Asian private equity houses to sell its English-language school unit for more than $350 million, according to the Financial Times. Read more.
• Ardenton Capital made an investment of an undisclosed amount in Comtrad Strategic Sourcing, a Canada-based global parts supplier and international outsourcing services company.
• Quad-C Management Inc made an investment of an undisclosed amount in AIT Worldwide Logistics, a Chicago-based provider of air and sea freight, ground distribution, and warehouse management solutions.
• Carlyle Group joined the bidding for Old Mutual Global Investors fund business, according to the Financial Times. Four parties are now vying for the Old Mutual fund unit including Challenger, Macquarie Investment Management, TA Associates and Carlyle. Read more.
OTHER DEALS
• Cisco Systems Inc will buy BroadSoft Inc (Nasdaq:BSFT), a Gaithersburg, Md.-based telecommunications software firm, for $1.9 billion.
• Social Finance Inc, a San Francisco-based student loan refinancing services company, discussed a potential sale earlier this year with Charles Schwab Corp, but the talks fell apart over the $8 billion price the online lender sought, according to Reuters. Read more.
IPOs
• Sea Ltd., a Singapore-based entertainment company, raised $884 million in an IPO of 59 million shares at $15 a piece. The company posted revenue of $345.7 million and loss of $224.9 million in 2016. The company is backed by Tencent (39.7%) and Blue Dolphins Venture(14.7%). Goldman Sachs, Morgan Stanley, and Credit Suisse are bookrunners in the deal. It plans to list on the NYSE as “SE.”
• HelloFresh, the German meal kit maker, is seeking an IPO of up to 357 million euros of $421 million in Frankfurt. The company is seeking to offer up to 31 million new shares, Reuters reports. Read more.
• Sterling Bancorp, a mortgage loan company based out of Southfield, Mich., filed for a $230 million IPO. In 2016 the company posted income of $33.2 million with loans of $2 billion. Real estate developer Scott Seligman and his family backs the company. Sandler O’Neill and Partners is underwriter in the deal. The company has filed to list on the Nasdaq.
• Jianpu Technology, an asset management platform based in Beijing, China, has filed for an IPO of $200 million.The company posted revenue of $52.6 million in 2016 on loss of $26.9 million. Sequoia Capital China(17.6% pre-offering) Lightspeed Partners(16.7%), and Pavilion Capital International via Spring Bloom Investments (7.5%) back the company. Goldman Sachs, Morgan Stanley, and J.P. Morgan are underwriters in the deal.
• RISE Education, a Beijing-based education company providing English lessons, raised $160 million in an offering of 11 million shares at $14.50—above its previously stated range of $12 to $14 a piece. The company posted revenue of $104.9 million and earnings on $7.5 million in 2016. Bain Capital backs the company. Morgan Stanley and Credit Suisse are joint underwriters in the deal. It plans to list on the Nasdaq as “REDU.”
• SailPoint Technologies, an Austin, Texas-based company providing access management software, filed for an $100 million IPO. The company posted revenue of $132.4 million in 2016 and loss of $3.2 million. Thomas Bravo backs the company. Morgan Stanley, Citigroup, Jefferies, and RBC Capital Markets are underwriters in the deal. It plans to list on the NYSE as “SAIL.”
• iClick Interactive Asia Group Limited, a Hong Kong-based marketing platform, filed for an $100 million IPO. In 2016, the company posted revenue of $95.4 million and loss of $27.3 million. Bertelsmann Asia Investments(13.7% pre-offering). Blue Focus International(13.5%), Sumitomo(12.1%), and SSG Capital via Czerny Holding and Cervetto Holding back the company. Credit Suisse and Nomura are underwriters in the deal.
• WatchGuard, an Allen, Texas-based security video company, filed for a $75 million IPO. In 2016, the company posted revenue of $77.1 million and income of $9 million. The National Christian Foundation via the Vanham Family Partnership(15.7% pre-offering) backs the company. Barclays and SunTrust Robinson Humphrey are underwriters in the deal. The company plans to list on the Nasdaq as “WGRD.”
• Arsanis, a Waltham, Mass.-based clinical stage biopharmaceutical company focused on monoclonal antibodies, filed for an $58 million IPO. The company posted loss of $23 million in 2016. Polaris Ventures (17.8% pre-offering), SV Life Sciences(17.8%), OrbiMed(17.8%), NeoMed Management(7.4%), and the Bill and Melinda Gates Foundation (9.4%) back the company. Citigroup, Cowen, and Piper Jaffray are underwriters in the deal. The company plans to list on the NAsdaq as “ASNS.”
EXITS
• WeWork acquired the Flatiron School, a New York-based private coding academy. Financial terms weren't disclosed. The Flatiron School raised approximately $14.5 million in venture funding from investors including Thrive Capital, CRV, BoxGroup, and Matrix Partners.
FIRMS + FUNDS
• Serent Capital, a San Francisco-based private equity firm, raised $572 million for Serent Capital III.
• Blue Wolf Capital Partners LLC, a New York-based private equity firm, raised $540 million for its fourth fund, Blue Wolf Capital Fund IV, L.P.
• CapHorn Invest, a France-based venture capital firm, raised $150 million for a new fund, according to TechCrunch. Read more.
• Guardian Media Group, a U.K.-based newspaper publisher, will form a venture fund at 42 million pounds ($55.3 million). GMG Ventures will invest in early-stage media tech companies.
• Haystack Partners, a New York-based venture capital firm, raised $38 million for its initial venture fund, according to an SEC filing. The fund’s target is $50 million.
• TVV Capital Partners, a Nashville-based private equity firm, raised $30.2 million for its fourth fund, according to an SEC filing. The fund’s target is $50 million.
PEOPLE
• Rebecca Kaden joined Union Square Ventures as a general partner. Previously, Kaden was at Maveron.
• Eric A. Shuey joined Revelstoke Capital Partners as a managing director.
• Sue Siegel, CEO of GE Ventures, was named chief innovation officer for GE.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.
