CONFLICTS OF INTEREST
Good morning, Term Sheet readers.
Let’s try to untangle the messy web of e-scooter deals. If you're getting confused as to who's buying, who's investing, who's raising, and who's getting in regulatory trouble, welcome to the club.
Today, Axios reported that Fidelity will lead a $300 million funding round in e-scooter startup, Bird. Well, that’s a head-scratcher given that Fidelity also invested in Lime’s $335 million Series C round in July. (Bird and Lime are fierce rivals.)
You follow? Good, because there’s more. Fidelity led Uber’s $1.2 billion Series D round in 2014 and also led Lyft’s $600 million funding round in June 2018. Uber owns a minority stake in Lime, and there were recent rumors that Uber has held potential acquisition talks with both Bird and Lime.
If that’s not a tangled mess of conflicts of interest, I don’t know what is. As a Recode article explains: “Shareholders typically try to avoid conflicts of interest in their investments, but when it comes to Uber and Lyft it seems like all’s fair.”
And now, it looks like that notion of “all’s fair” is extending into the micro-mobility market as well. Just look around — Accel is an investor in both Bird and Skip. Sequoia is behind Bird, Mobike, and Ninebot. Menlo backed both Jump (acquired by Uber) and Skip. GGV is in Lime and Hellobike. Coatue Management invested in Lime and Ofo.
The reason VCs typically try to avoid doing competitive deals is that it creates perceived (if not actual) confidentiality issues, companies have to worry about how much info to share with investors who are also close with their biggest competitor, and it just simply looks bad.
“It’s very unusual to allow the same parties to invest and get information rights of sworn mortal enemies,” Max Wolff, chief economist at Manhattan Venture Partners, told Reuters in 2016 when some of these investor conflicts began to emerge.
It may have been unusual three years ago, but it’s become pretty common in recent days. To me, Fidelity’s investment in the competing scooter companies presents a blatant conflict of interest on many fronts, but I decided to reach out to several VCs in the industry & ask for their take as well. Here are some things to consider:
— Did Fidelity have the same team/fund invest in both companies or were the decisions made by separate entities under the larger Fidelity umbrella?
— It’s possible Lime took away some of its information rights as a result of Fidelity’s investment in Bird.
— Fidelity may just be a passive investor in Bird with no board seat, so it has less access to and control over the company.
I asked Fidelity the questions above, and they declined to comment saying, “We do not comment on individual companies.” Either way, the larger question remains — why is everyone investing in everything? My theory is that they're taking a page straight out of Softbank's playbook — who cares who wins the race if you've bet on the entire ecosystem?
NEW FUND ALERT: LearnVest founder Alexa von Tobel plans to raise a $200 million venture fund called Inspired Capital Partners. It’s unclear what types of companies she’ll back through her new venture, but based on her angel investments, it’s likely she’ll focus on financial technology with an emphasis on underserved populations. Read more.
VENTURE DEALS
• N26, a fintech banking startup, raised $300 million in Series D funding at a $2.7 billion valuation. Insight Venture Partners led the round, and was joined by investors including GIC.
• OneLogin, a San Francisco-based single sign-on and identity-management platform, raised $100 million in funding. Greenspring Associates and Silver Lake Waterman co-led the round, and were joined by investors including CRV and Scale Venture Partners.
• Talentsoft, a Paris-based provider of learning and human capital management software, raised $50 million in funding. Francisco Partners led the round, and was joined by investors including Bpifrance and Goldman Sachs.
• Emeritus, a company that partners with universities to offer digital courses, raised $40 million in Series C funding. Sequoia India led the round, and was joined by investors including Bertelsmann India Investments. Read more.
• Badi, a Barcelona-based mobile chat app that helps users find compatible roommates, raised $30 million in Series B funding. Goodwater Capital led the round, and was joined by investors including Target Global, Spark Capital and Mangrove Capital.
• TemperPack, a manufacturer of thermal packaging solutions, raised $22.5 million in Series B funding. Revolution Growth led the round, and was joined by investors including Harbert Growth Partners, Arborview Capital, Tao Capital Partners, and SJF Ventures.
• Boston Metal, a developer of a process that aims to reduce carbon emissions in steel making by using electricity instead of traditional pollution-heavy techniques, raised $20 million in funding. Breakthrough Energy Ventures led the round, and was joined by investors including Prelude Ventures and The Engine.
• Mr Jeff, a Madrid-based laundry service startup, raised $12 million in Series A funding. All Iron Ventures led the round.
• Neosensory, a developer of sensory augmentation wearable products, raised $10 million in Series A funding. Excel Venture Management and DigiTx Partners co-led the round, and were joined by investors including True Ventures.
• Infinitum Electric, a developer of ultra high-efficiency, durable, lightweight and cost-effective electric motors, raised $1.8 million in Series A funding. Cottonwood Technology Fund led the round.
PRIVATE EQUITY DEALS
• Gladson, a portfolio company of The Jordan Co and Wicks Capital Partners, has acquired ItemMaster, a Chicago-based product content management company. Financial terms weren't disclosed.
• Smile Brands Inc, a portfolio company of Gryphon Investors, invested in DecisionOne Dental Partners, a Schaumburg, Ill.-based dental group. Financial terms weren't disclosed.
• BBH Capital Partners invested in Ethos Veterinary Health, a Woburn, Mass.-based provider of specialty veterinary health services, via a recap. Financial terms weren't disclosed.
• Roland Foods, a portfolio company of Vestar Capital Partners, acquired Albert Uster Imports, Inc, a Gaithersburg, Md.-based distributor of food products. Financial terms weren't disclosed.
OTHER DEALS
• Atria Wealth Solutions agreed to acquire NEXT Financial Group, Inc, a Houston-based independent wealth management firm. Financial terms weren't disclosed.
IPOs
• Refinitiv, a financial data firm, has filed confidentially for an IPO of its bond trading platform, Tradeweb Markets, that could value it at over $4 billion, Bloomberg reports citing sources. Thomson Reuters and Blackstone back the firm. Read more.
PEOPLE
• Pritzker Group Venture Capital promoted Sonia Nagar to partner, Ty Findley to vice president and Eric Duboe to senior associate.
• Encore Consumer Capital promoted Nichole Novak and Paul Rivenburgh to vice president.
• Three Ocean Partners promoted Brett Jacobs to vice president.
• Paine Schwartz Partners promoted John Novak to managing director, Alex Corbacho to director, and Brian Thies to principal.
• Cinven promoted Phil Cathcart to principal
• Carrick Capital Partners promoted Chris Wenner to managing director.
• Sumeru Equity Partners promoted Mark Haller to principal.
• Wes Mendenhall joined Fireman Capital Partners as a principal. Previously, Mendenhall was at Bank of America Merrill Lynch.
• Oliver Bradley rejoined Macquarie Capital as a managing director.
• Johan Svanström and Lyle Fong joined EQT Ventures as partners on the London team.
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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.
