Term Sheet — Monday, April 15

FAILING THE QUIZ

The latest drama out of startup-land? Of all the things, it's a power struggle of who will lead live trivia game show startup HQ Trivia.

According to a TechCrunch investigation, more than half of the company’s employees signed an internal petition to depose CEO Rus Yusupov who they saw as mismanaging the company. Then, Yusupov fired some core supporters of the mutiny, which plunged HQ Trivia into a spiral of chaos.

HQ Trivia is a live trivia game that exploded in popularity in 2017 after allowing players to compete for cash prizes twice a day. It raised $15 million in venture funding at a $100 million valuation (insert side eye here) from investors including Lightspeed Venture Partners and Founders Fund. TechCrunch reports that HQ recently only had around $6 million left in the bank but was burning over $1 million per month.

Although the trivia show’s host Scott Rogowsky is a gregarious and friendly presence on air, the clashing of personalities behind the scenes has bred an uncertain and turbulent environment.

Last year, HQ co-founder Colin Kroll was investigated for misconduct (none was found) by an early investor. Meanwhile, the other co-founder, Rus Yusupov, went on a tirade against a reporter after she interviewed Rogowsky without his permission. Lightspeed Ventures’ Jeremy Liew advocated for HQ to put Kroll into the CEO role in September 2018 and move Yusupov to chief creative officer. In December, Kroll was found dead in his apartment as the result of a drug overdose. So Yusupov became CEO again.

According to TechCrunch, this is when chaos ensued. In February, HQ staff wrote a letter asking the company’s board to remove Yusupov from the chief executive role. Liew, who is on the board, reportedly assured staff that Lightspeed would help find a new CEO and replace Yusupov.

And then on March 1, Yusupov and a committee of executives fired three employees, two of which had spearheaded the petition and had been critical of the company’s leadership. Rogowsky, the host of the show, has also left to pursue a role hosting sports streaming service DAZN’s baseball show ChangeUp.

All of this summarized in one word: Yikes.

To me, the drama indicates a larger issue than just poor management. HQ Trivia was an app that got a few things right — it brought a slew of strangers together at once to play a game that could yield cash prizes. The host was funny & personable and made for good fodder on Twitter. Last year, everyone I knew was obsessing over it. By January of 2018, HQ was the No. 6 overall app in the App Store, boasting 2.38 million players by March.

But here's the thing: at the end of the day, it was just an app that turned into an overnight sensation. And millennials love a buzzy new app... Until they don't. As all fads do, HQ soon began to lose users and fade into obscurity. HQ dropped out of the top 1500 iOS apps last month, and it’s failing to attract as many new players as it did last year, according to TechCrunch. The internal turmoil is certainly not helping, but I’m not at all convinced that a new CEO will be able to right the sinking ship and live up to the company’s $100 million valuation.

Read the full TechCrunch story here.

VENTURE DEALS

• Ajax Health, a medical device firm, raised more than $85 million in funding. HealthQuest Capital led the round, and was joined by investors including Aisling Capital and Polaris Partners.

• Mavenlink, an enterprise collaboration startup, raised $48 million in Series E funding. Carrick Capital Partners and Goldman Sachs Growth Equity co-led the round .

• Hireology, a Chicago-based provider of recruitment CRM solutions, raised $27 million in Series D funding. Blue Cloud Ventures led the round, and was joined by investors including Bain Capital Ventures, Baird Venture Partners and Silicon Valley Bank.

• Medbelle, a UK-based end-to-end platform for medical procedures, raised $7 million in Series A funding. Venture Capital led the round, and was joined by investors including Talis Capital, Mutschler Ventures, IBB Beteiligungsgesellschaft and Cavalry Ventures.

• Moi, a Japan-based live streaming platform, raised $6 million in Series A funding. Investors include GB-VI Growth Fund Investment Limited Partnership, KDDI Open Innovation Fund and SBI AI & Blockchain Fund.

• Talentuno, a Hungary-based HR startup, raised 4 million euros ($4.5 million) in funding. Hiventures Ventures Fund Management Plc and Bonitás Venture Capital Fund Management Ltd co-led the round.

• Blume, a Canada-based feminine hygiene company, raised $3.3 million in funding. Felicis Ventures led the round, and was joined by investors including Victress Capital.

• Showdigs, a Seattle-based rental property on-demand showing platform, raised $3 million in seed funding. Trilogy Equity Partners led the round, and was joined by investors including Amy McCullough.

• Howamigoing, a London-based HR Tech startup, raised £890,000 ($1.2 million) in seed funding. Investors include Chris Hadley and Richard Elmslie.

PRIVATE EQUITY DEALS

• Butterfly Equity agreed to buy Bolthouse Farms, a Bakersfield, Calif.-based producer of healthy products, from Campbell Soup Co. For $510 million in cash.

• TA Associates invested in Indira IVF, an India-based IVF network of in-vitro fertilization centers. Financial terms weren't disclosed.

OTHER DEALS

• Publicis Groupe SA agreed to acquire Alliance Data Systems Corp’s (NYSE:ADS) marketing-services business for $4.4 billion.

IPOs

• IPSCO Tubulars, the Houston-based subsidiary of Russian pipemaker TMK, withdrew its plans for a $500 million IPO. BofA Merrill Lynch, Morgan Stanley, J.P. Morgan, UBS Investment Bank, Citi, Credit Suisse, Barclays and Evercore ISI were joint bookrunners in the deal. The firm planned to list on the NYSE as “IPSC.” Read more.

• Parsons, a Centreville, Va.-based defense tech firm, filed for a $100 million IPO. It posted revenue of $3.6 billion in 2018 and income of $222 million. It plans to list on the NYSE as “PSN.” Read more.

• Mayville Engineering, a Mayville, Wi-based manufacturing services firm, filed for a $100 million IPO. GreatBanc Trust Company backs the firm. It plans to list on the NYSE as “MEC.” Read more.

• Cortexyme, a South San Francisco, Calif.-based biotech creating Alzheimer’s disease therapies, filed for an $86 million IPO. Pfizer (14.7% pre-offering) backs the firm. It plans to list on the Nasdaq as “CRTX.” Read more.

• Milestone Pharmaceuticals, a Montreal-based biotech focused on heart rate conditions, filed for an $86 million IPO. RTW Investments (15.7%) and Novo Holdings (12.9%) backs the firm. It plans to list on the Nasdaq as “MIST.” Read more.

• Applied Therapeutics, a New York-based Phase 2 biotech focused on diabetic cardiomyopathy, filed for an $86 million IPO. Alexandria Venture and E Squared back the firm. It plans to list on the Nasdaq as “APLT.” Read more.

• South Plains Financial, a Lubbock, Texas commercial bank, filed for a $50 million IPO. City Bank owns the firm. It plans to list on the Nasdaq as “SPFI.” Read more.

EXITS

• Red Ventures acquired HigherEducation.com, a Houston, Texas-based provider of marketing and enrollment services to post-secondary institutions in the U.S. The seller was The Vistria Group. Financial terms weren't disclosed.

FIRMS + FUNDS

• Hatteras Venture Partners, a Durham, N.C.-based venture capital and private equity firm, raised $94 million for Hatteras Venture Partners VI. The fund’s target is $200 million.