This article originally ran in Term Sheet, Coins2Day’s newsletter about deals and dealmakers. Sign up here.
As WeWork looks to sort out its future, the flashy startups it acquired are also seeking a new path forward.
WeWork announced yesterday that it would shut down Spacious, the company it acquired for $42.5 million just four months ago. Spacious transforms empty areas in restaurants during the day into co-working spaces. When Coins2Day reported on the deal in August, the story contained some cringe-worthy quotes like this one: “WeWork is still in growth mode—they need to hit those growth numbers post-IPO, and a couple acquisitions would help them do that,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital.
So much for the growth, so much for the IPO, and so much for those acquisitions.
Meanwhile, content marketing platform Conductor just announced a victory. The company’s CEO and co-founder Seth Besmertnik, COO Selina Eizik and investor Jason Finger bought back their company from WeWork. Financial terms weren’t disclosed.
When WeWork acquired Conductor for $113.6 million in March 2018, I wrote that the co-working giant was using its — what seemed like unlimited — cash to show that it was serious about growing and solidifying its position in the corporate world. (Hahahaha)
And then there was Managed by Q, the New York City-based on-demand office services startup. WeWork agreed to acquire the company in April for $220 million. According to the terms of the deal, Managed by Q CEO Dan Teran would stay on after the acquisition, and the company, along with its 500 employees, would remain a wholly-owned separate entity.
Now, Teran is reportedly locked in a battle with a rival to win back ownership of his old firm. Teran is in the process of raising capital to buy back Managed by Q, but workplace management platform Eden, one of Managed by Q’s biggest competitors, also bid on the sale of the company.
The fate of the three companies serves as an important lesson for founders: Be careful who you sell to.
Polina Marinova
Twitter: @polina_marinova
Email: [email protected]
VENTURE DEALS
- Caresyntax, a Boston-based developer of surgical analytics, raised $45.6 million in funding. Investors include Whiz Partners, Plug and Play, Barco Healthcare, Mitsubishi Corporation, Relyens, and IPF Partners.
- EdCast, a Mountain View, Calif.-based company focused on AI-powered personalized learning and knowledge management for enterprise customers, raised $35 million in Series D funding. Avathon Capital led the round, and was joined by investors including National Grid Partners and existing EdCast investors, including State Street Global Advisors, and REV Venture Partners.
- Game.tv, a mobile e-sports platform, raised $25 million in funding. Intel Capital led the round.
- Second Closet, a Toronto-based company offering self-storage services, raised $13.2 million in Series A funding. Whitecap Venture Partners led the round, and was joined by investors including Michael Hyatt, MIG Group, Dream Maker Ventures, and Cowie Capital Partners.
- Sproutt Insurance, a Hartford, Conn.-based platform aimed to make it more efficient to buy life insurance, raised $12 million in Series A funding. Investors include State of Mind Ventures, Moneta Capital, and Guardian Life.
- Kindbody, a New York-based health tech company providing fertility, gynecology, and wellness services, raised $10 million in funding from GV.
- Ecozen, an India-based agritech startup, raised $6 million in funding from Innovation in Food & Agriculture Fund (IFA Fund).
- Holo-Light, an Austria-based developer of holographic software solutions, raised €4 million - ($4.4 million) in Series A funding. Investors include EnBW New Ventures GmbH, Bayern Kapital GmbH, Toprope Ventures GmbH and innogy Innovation Hub.
- Bluespace.ai, a San Jose-based autonomous driving startup focused on mass transit, raised $3.5 million in seed funding. Fusion Fund led the round.
PRIVATE EQUITY DEALS
- Belcan, a portfolio company of AE Industrial Partners, acquired Base2, a Bellevue, Wash.-based provider of software and systems engineering consulting services. Financial terms weren't disclosed.
- One Equity Partners made a minority investment in Nexion, an Italy-based automotive solutions business. Financial terms weren't disclosed.
- The Riverside Company made an investment in HealthTech BioActives S.L, a Spain-based manufacturer of active pharmaceutical ingredients, excipients, flavorings and sweeteners for the pharmaceutical, nutraceutical and cosmetic industries. Financial terms weren't disclosed.
- Arcline Investment Management agreed to acquire Fairbanks Morse, a Beloit, Wisc.-based manufacturer of diesel engines and generator sets, for $450 million.
OTHER DEALS
- PSI Services acquired Caliper, a Princeton, N.J.-based talent assessment company. Financial terms weren't disclosed.
IPOs
- OneConnect Financial Technology, a Shenzhen, China-based platform for financial firms backed by Ping An Insurance, raised $312 million in an offering of 31.2 million ADSs priced at $10 apiece, the high end of its range. The firm posted $197.8 million in revenue and loss of $111.1 million in 2018. SoftBank backs the firm. It plans to list on either the Nasdaq or NYSE as “OCFT.” Read more.
- Sprout Social, a Chicago-based platform focused on social media for businesses, raised $150 million in an offering of 8.8 million shares priced at $17 apiece, the midpoint of stated range. It posted revenue of $78.8 million in 2018 and loss of $20.8 million. Goldman Sachs (35.5% pre-offering), NEA (30.9%), and Lightbank (21%) back the firm. It plans to list on the Nasdaq as “SPT.” Read more.
EXITS
- DataRobot agreed to acquire Paxata, a Redwood City, Calif.-based company focused on self-service data preparation and data fabric. Financial terms weren't disclosed. Paxata had raised approximately $61 million in venture funding from investors including Accenture, Intel Capital, EDBI, and Accel.
- Apax Partners agreed to acquire Coalfire, a Louisville, Colo.-based provider of cybersecurity advisory and assessment services, from The Carlyle Group (NASDAQ: CG) and The Chertoff Group. Financial terms weren't disclosed.
FIRMS + FUNDS
- Accolade Partners, a Washington D.C.-based venture capital firm, raised $280 million for its growth equity fund, Accolade Growth Equity I, LP, and $300 million for its second flagship venture fund, Accolade Partners VII, LP.
PEOPLE
- Oak HC/FT promoted Oivind Lorentzen to vice president and Brigitte Tondreau to senior associate.
- Michael Prescott joined TriArtisan Capital as an investor.
- Olympus Partners promoted Griffin Barstis to principal.
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