Term Sheet — Thursday, November 1

INTERNET CATS

Good morning, Term Sheet readers.

This week’s theme has been “crypto funding secured.”

On Monday, Israeli blockchain startup StarkWare raised $30 million in Series A funding. On Tuesday, Coinbase, the most popular cryptocurrency exchange in the U.S., raised $300 million in Series E funding at a $8 billion valuation. Today, we’ve got news from the world of CryptoKitties.

As you might already know, CryptoKitties is a blockchain-based game that lets users create and breed virtual cats. The game’s parent company Dapper Labs announced today that it raised $15 million in funding from a star-studded list of investors. They include Venrock, Samsung Next, and GV. The fresh infusion of capital brings the company’s total funding to approximately $27.9 million.

How is it that something as silly as cats on the blockchain can raise tens of millions of dollars? My colleague Lucinda Shen reports:

While the game has grown famous for the trading and breeding of digital cats (one cat sold for as much as $140,000), Dapper plans to include more functions. Enterprising fans for example have built ways to race and battle using the cartoon felines.

"Games are the way you understand how to use new tools," said Dapper Labs CEO Roham Gharegozlou, who pointed to early games that helped users familiarize themselves with Microsoft computers. "Solitaire taught drag-and-click. Minesweeper taught right click on a mouse. The original version of Hearts taught networking."

As Initialized Capital’s Alexis Ohanian told Term Sheet back in May, “[CryptoKitties] is easy to laugh at, but I think the first version of so many things looks like a toy and often has something to do with cats. It’s because the Internet loves cats.”

BIOTECH IPOS: Here’s some disturbing news: The biotech market has become so frothy that some startups are going public without even having a drug in clinical trials. Biotech IPOs are on track for a near-record year, with some offerings being riskier than ever, according to a report in The Wall Street Journal.

According to the WSJ, early-stage biotech companies, whose products aren’t yet tested in human clinical trials or are tested only in early Phase 1 studies, represented a total of 37% of biotech IPOs through the third quarter of 2018 and had an average market value of $535 million. An analyst at Leerink Partners put it best, “You better have your eyes wide open, as this industry is as risky as it’s ever been.” Read the full story here.

THE ANTI-PORTFOLIO: Around this time two years ago, I compiled some of venture’s biggest, most cringe-worthy missed deals. I was inspired by Bessemer Venture Partners’ “anti-portfolio,” which is a section on the firm’s website entirely dedicated to its biggest misses.

Some of my favorites include: Facebook (“Kid, haven’t you heard of Friendster? Move on. It’s over!”), Apple (“outrageously expensive”) and eBay (“Stamps? Coins? Comic books? You’ve GOT to be kidding”).

** I’d love to do an updated version of this list, so if you’re an investor, email me at [email protected] detailing your most painful misses and explain why you chose to pass on the deal at the time. **

VENTURE DEALS

• Neo4j, a San Mateo, Calif.-based developer of graph databases, raised $80 million in Series E funding. One Peak Partners and Morgan Stanley Expansion Capital co-led the round, and were joined by investors including Creandum, Eight Roads and Greenbridge Partners.

• Compare.com, a Richmond, Va.-based online car insurance comparison site, raised $35 million in funding. Investors include Admiral Group CEO Henry Engelhardt.

• RingDNA, a Los Angeles-based sales engagement and conversation analytics platform, raised $30 million in funding. Goldman Sachs Growth Equity led the round, and was joined by investors including Palisades Growth Capital and Bryant Stibel.

• Imbellus, a New York-based developer of simulation-based assessment technology, raised $14.5 million in Series A funding. Owl Ventures led the round, and was joined by investors including Upfront Ventures, Thrive Capital, and Rethink Education.

• Setter, a Canada-based personal home maintenance service, raised $10 million in Series A funding. Sequoia Capital and NFX co-led the round, and were joined by investors including the Hustle Fund.

• CitiXsys, a New York-based provider of omnichannel retail management solutions, raised $20 million in Series B funding. Housatonic Partners led the round.

• IntelyCare, a Mass-based provider of on-demand staffing services for healthcare organizations, raised $10.8 million Series A funding. Leerink Revelation Partners led the round, and was joined by investors including Longmeadow Capital, LRVHealth and Bill Mantzoukas.

• Vive Organic, a maker of cold-pressed wellness shots, raised $7 million in Series A funding. Powerplant Ventures led the round, and was joined by investors including Blueberry Ventures, Bill Moses, and Chris Hunter.

• Jane Technologies, the Santa Cruz, California-based e-commerce marketplace for the cannabis industry, raised $6 million in Series A funding. The investors were not named.

• Zylotech, an AI-driven customer analytics platform for marketers, raised $5.5 million in funding. Glasswing Ventures led the round, and was joined by investors including Geekdom, Revel Partners and Rubicon Ventures.

• 1DROP, a Boston and Switzerland-based developer of a medical diagnostic testing platform, raised $4.25 million in Series A funding. Christian Wildmoser led the round.

• Leap, a developer of a retail-as-a-service platform for brands, raised $3 million in seed funding. Costanoa Ventures led the round, and was joined by investors including Equal Partners and Brand Foundry Ventures.

• WeRide.ai, a China-based autonomous driving company, raised funding of an undisclosed amount, from Alliance Ventures.

PRIVATE EQUITY DEALS

• Vopne Capital made an investment in Dolphin Machine, a North Las Vegas, Nevada-based maker of precision-machined components various industries. Financial terms weren't disclosed.

• Generation Investment Management invested in DeepMap, a Palo Alto, Calif.-based provider of high-definition mapping technology for autonomous vehicles. Financial terms weren't disclosed.

• Genstar Capital acquired 2-10 Home Buyers Warranty,, a provider of home warranty products to homeowners and new home builders. Financial terms weren't disclosed.

IPOs

• Dell Technologies, the tech firm, has been sued by activist investor Carl Icahn over plans to go public. Read more.

• Ping An Insurance Group, the Chinese insurance giant, is planning a Hong Kong IPO that could raise $2 billion, Bloomberg reports citing sources. Read more.

• Axonics Modulation Technologies, an Irvine, Calif.-based maker of neural implants for overactive bladder, raised $120 million in an upsized IPO of 8 million shares priced at $15, the midpoint of its $14 to $16 range. It posted revenue of $128,000 in 2017 and loss of $18.1 million. Andrea Partners (14.4%), Longitude Venture Partners (12.9%), and Coöperatieve Gilde Healthcare (12%) backs the firm. BofA Merrill Lynch and Morgan Stanley are underwriters. It plans to list on the Nasdaq as “AXNX.” Read more.

• Twist Bioscience, a San Francisco-based DNA-based products manufacturer, raised $70 million in an IPO of 5 million shares priced at $14, the low end of its $14 to $16 range. Ever Alpha Fund (14.9%), ARCH Venture Partners (14.8%), and Illumina (7.7%) back the firm. J.P. Morgan and Cowen are underwriters. It plans to list on the Nasdaq as “TWST.”

EXITS

• Equistone Partners Europe sold Apogee, a managed print services provider, to HP Inc. (NYSE: HPQ), in a deal that values the company at £380 million ($491 million).