A DISAPPEARING ACT
Good morning, Term Sheet readers.
Big news out of Snap: The company’s Chief Financial Officer Tim Stone has suddenly resigned after only eight months on the job. Previously, Stone spent 20 years as an executive at Amazon. Stone is also leaving behind a hefty share of his $20 million sign-on bonus, according to the WSJ.
Note that Stone came in to replace outgoing CFO Drew Vollero, who was there for less than three years. It’s not exactly a good look for a company to cycle through two CFOs in a matter of 12 months.
CEO Evan Spiegel informed employees that Stone is not leaving due to any “disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise).”
As I’ve written before, somehow, this company has perfected the "nothing to see here" narrative in the media about its high-level executive departures. And there have been many. As Cheddar’s Alex Heath noted yesterday: Since its 2017 IPO, Snap has lost its chief strategy officer, VP of product, SVP of engineering, two chief financial officers, general counsel, three VPs of hardware, chief security officer, VP of content, VP of sales, VP of marketing, VP of communications, head of investor relations, and HR chief. Business Insider counted 20 senior executives who have abandoned Snap in less than two years. I mean, come on.
Stone’s surprise exit comes at a time when the company's financial reality is also not very bright — Snap’s stock is plunging following an unpopular redesign, declining daily usage, an inability to turn a profit, and subpoenas from the DOJ and SEC.
Not sure what Spiegel is thinking right about now, but the revolving door at his embattled company has sped up to an alarming rate. As Brent Thill, an analyst at Jefferies who follows Snap, told the Journal: “Snap has an opportunity to pull out of a tailspin that it’s in, but the CEO has to act quickly.” Let's watch and see.
HIGH ON BILLIONS: With the help of Big Beer and Big Pharma, Brendan Kennedy’s Canadian cannabis company Tilray has unexpectedly become America’s gateway to the legal marijuana industry. Kennedy doesn’t smoke pot, but his cannabis business has made him a billionaire—and the face of legal weed’s future.
An excerpt from my colleague Jen Wieczner’s excellent feature:
The Tilray brand didn’t really gain recognition in America until July 19, when it became the first cannabis company to have its IPO on a U.S. Stock exchange. The offering raised $153 million, with shares priced at $17 apiece. At the stock’s peak in September, it had risen 1,159% in just two months.
Though the debut turned Tilray into a market darling, up until then it had been treated by much of Wall Street as a sort of redheaded stepchild. Kennedy was in a rental car garage in San Diego in mid-April on his wife’s birthday trip when he got the surprise phone call from the first bank that had agreed to underwrite Tilray’s IPO—letting him know they were backing out. (He won’t say which bank.) “I had to get out of my car because I was screaming so loudly, I didn’t want to scare my children,” he recalls. A second bank later had the same change of heart: Its board had nixed the deal for “reputational reasons.” When Cowen and Canada’s BMO eventually took it public, Tilray had to pay up for the privilege. To obtain the directors and officers liability insurance required of all public companies, Tilray had to pay five times as much as the typical rate for less than half the coverage, according to CFO Mark Castaneda.
In fact, while Tilray’s business may be perceived as involving a taboo or a vice, there’s no legal reason for banks or investors to be squeamish about working with it, according to John F. Walsh, the former U.S. Attorney for Colorado who is now a partner at WilmerHale. “Under U.S. Law, if there is essentially drug activity going on in another country that is entirely legal in that other country, it is not a U.S. Federal narcotics crime,” Walsh says. Importantly for investors, he adds, that means Americans who finance such a “foreign legal marijuana business” would not be violating U.S. Anti–money laundering laws: “It is pretty clear-cut.”
TO LISTEN: Dan Primack and Erin Griffith (who all of you know from Term Sheet) discussed Griffith’s much-talked about story on a small but growing number of startup founders who choose to shun venture capital. It’s a great conversation. I encourage you to listen here if you haven’t already.
VENTURE DEALS
• Katerra, a Menlo Park, Calif.-based provider of product design procurement, and logistics to the construction industry, will raise $700 million in funding, according to The Information. SoftBank Vision Fund will lead the round. Read more.
• QUARTERS, a Germany-based co-living provider, raised $300 million in funding. Investors include Medici Living and W5 Group.
• Jam City, a Los Angeles-based mobile gaming studio, raised $145 million in funding. Investors include JPMorgan Chase Bank, Bank of America Merrill Lynch, Silicon Valley Bank, SunTrust Bank and CIT Bank. Read more.
• Outdoorsy, an outdoor recreation marketplace, raised $50 million in Series C funding. Greenspring Associates led the round, and was joined by investors including Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital.
• ScoutRFP, a Cleveland, Ohio-based sourcing and supplier engagement platform, raised $33 million in Series C funding. Scale Venture Partners led the round, and was joined by investors including Menlo Ventures, NewView Capital, Workday Ventures and Salesforce Ventures.
• BenchPrep, a Chicago-based provider of an advanced white-label online learning platform for education and training organizations, raised $20 million in Series C funding. Jump Capital and Owl Ventures led the round.
• Contabilizei, a Brazil-based tax filing and accounting service for small- and micro-companies, raised $20 million in Series B funding. Point72 Ventures led the round.
• Big Squid, a Salt Lake City-based predictive analytics and automated machine learning software company, raised $9 million in funding. Lewis & Clark Ventures led the round, and was joined by investors including Silverton Partners, Signal Peak Ventures and Kickstart Seed Fund.
• Manual, a London-based wellbeing platform for men, raised £5 million ($6.4 million) in seed funding. Investors include Felix Capital, Cherry Ventures, and Cassius Capital.
PRIVATE EQUITY DEALS
• Apollo Global Management is nearing a deal to buy Arconic Inc (NYSE:ARNC) for more than $10 billion, according to The Wall Street Journal. Read more.
• Bain Capital Private Equity agreed to acquire a majority stake in Brillio, a Santa Clara, Calif.-based digital technology consulting and solutions company. Financial terms weren't disclosed.
• Gotham Green Partners invested $4 million in Chooze Corp, a company that owns the LucidMood brand of functional cannabis products.
• Apax Partners invested $200 million for a minority stake in Fractal Analytics, which provides AI to Coins2Day 500 companies.
• Therma Holdings, a portfolio company of Gemspring Capital, acquired Yearout Mechanical, an Albuquerque, N.M.-based design-build provider of mechanical, fabrication and maintenance services. Financial terms weren't disclosed.
OTHER DEALS
• Fiserv agreed to buy First Data (NYSE:FDC) in a $22 billion stock deal. Once the deal closes, Fiserv shareholders will own 57.5% of the combined company, while First Data shareholders will have 42.5%.
IPOs
• PagerDuty Inc, a San Francisco-based maker of tools for software developers, has filed confidentially for an initial public offering, according to Bloomberg. Morgan Stanley has been selected to lead the offering. PagerDuty has raised more than $170 million in venture funding from investors including Andreessen Horowitz, Accel, T. Rowe Price, Wellington Management, Bessemer Venture Partners, Baseline Ventures, and Harrison Metal.
EXITS
• Salesforce.com is in talks to acquire ClickSoftware Technologies, a U.S.-Israeli software developer, for approximately $1.5 billion, the Calcalist financial news website reported on Wednesday. The seller would be Francisco Partners Management. Read more.
• Zix agreed to acquire AppRiver, a Florida-based provider of cloud-based cybersecurity and productivity services, from Marlin Equity Partners for $275 million in cash.
FIRMS + FUNDS
• Warren Equity Partners Manager, L.P, a private equity firm, raised $310 million for its private equity investment fund, Warren Equity Partners Fund II, L.P. And Warren Equity Partners Fund II-A, L.P.
• Resurgens Technology Partners, an Atlanta-based private equity firm, raised $200 million for its flagship fund.
PEOPLE
• Austin McChord joined General Catalyst as a venture partner.
• Partech promoted Henrik Grosse Hokamp to senior associate and Tom Le Bras to associate.
• SK Capital promoted Barry Penney to managing director and Cole Abernathy to senior associate.
• Madrona Venture Group named Hope Cochran as managing director.
• Sapphire Ventures promoted Jai Das to president and Laura Thompson to principal.
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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.
