With the path to an exit already so thin, venture capital investors are pooling their collective weight to publicly condemn the Federal Trade Commission and try to protect one of the only clear paths to exit they have right now: M&A.
Yesterday, 27 venture capital firms—including Kholsa Ventures, NEA, Tiger Global, M12 and NFX—signed a statement of support to an amicus brief a handful of VC firms had filed in court earlier this year regarding the federal agency’s continuous efforts to block the Microsoft-Activision Blizzard deal. In the statement, the VC firms argued that the FTC’s strategy as it appeals a judge’s decision this summer would harm the broader ecosystem.
“If the FTC’s approach were adopted, many more acquisitions would be subject to lengthy and expensive regulatory review and litigation that few if any transactions would be able to withstand,” the statement said, noting that “many transactions” would be “abandoned upon challenge or never pursued, grinding American innovation to a halt.”
The statement comes ahead of an upcoming Ninth Circuit Court of Appeals hearing, where the FTC will, again, attempt to block Microsoft from acquiring Activision Blizzard. If this sounds like deja vu, it’s because a California judge this summer denied the FTC’s injunction request to stop the deal after Microsoft agreed to, among other things, keep Call of Duty on PlayStation for 10 years, add the game to Switch, and bring Activision content to several cloud gaming services.
After the big win in court—and after the U.K.’s competitive watchdog backed down as well—Microsoft finally closed its $69 billion deal for the video game company in October, nearly 22 months after it agreed to acquire the company. Even so, the FTC has refused to back down, appealing the decision and continuing to fight the deal after its close.
Venture capitalists, in their statement, said they were concerned that the FTC’s recent enforcement actions and policy initiatives could end up clogging up an important means for them to realize gains on their investments. “Exits through acquisition are critical to creating and maintaining a self-sustaining cycle of innovation,” the letter wrote.
It’s not all that surprising that some VC firms are willing to go public right now with their distaste toward the current administration’s approach to M&A. In the last two years, IPOs have been few and far between. With few distributions available, returns are low and limited partner dollars are tied up and unavailable during fundraising. The Biden Administration’s federal trade agency has been aggressive under Lina Khan, making these difficult market dynamics all the more painful to venture capitalists.
While it seems unlikely the statements will actually carry much weight in the courtroom, venture capitalists are making their dissatisfaction clear.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
Submit a deal for the Term Sheet newsletter here.
Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Dust Identity, a Newton, Mass.-based company that authenticates and tracks objects with invisible diamond dust, raised $40 million in funding. Castle Island Ventures led the round and was joined by Amex Ventures, Airbus Ventures, Kleiner Perkins, and 8VC.
- Replicate, a San Francisco-based portfolio of many open source machine learning models, raised $40 million in Series B funding. Andreessen Horowitz led the round and was joined by NVentures, Heavybit, Sequoia, and Y Combinator.
- Center, a Bellevue, Wash.-based corporate card, travel, and employee expense management platform, raised $30 million in Series C funding. Top Tier Capital Partners led the round and was joined by existing investor Durable Capital Partners.
- Mine, a Tel Aviv, Israel-based developer of data privacy software, raised $30 million in Series B funding. Battery Ventures led the round and was joined by PayPal Ventures, Nationwide Ventures, and others.
- EnCharge AI, a Santa Clara, Calif.-based developer of AI chips designed for more efficient and sustainable computation, raised $22.6 million in funding from VentureTech Alliance, RTX Ventures, ACVC Partners, and others.
- Machinery Partner, a Boston, Mass.-based company that procure and finances heavy machinery and equipment purchases, raised $11 million in funding. Armory Square Ventures led the round and was joined by Pritzker Group and others.
- Milano Vice, a Berlin, Germany-based virtual pizza restaurant chain, raised $9 million in Series A funding. Coefficient Capital led the round and was joined by True, Geschwister Oetker, and Speedinvest.
- Pachama, a San Francisco-based platform designed to help companies invest in reforestation and conservation projects, raised $9 million in a Series B extension from T.Capital, Lowercarbon Capital and Positive Ventures.
- Necto, a New York City and Singapore-based developer of software designed to make communication between corporate banks secure and efficient, raised $8 million in seed funding from Nyca Partners, Point72 Ventures, Vine Ventures, Avenir Growth, Communitas Capital, Edison Partners, and AFG Partners.
- Asato, a Saratoga, Calif.-based AI assistant for enterprise asset management, raised $7.5 million in seed funding. Intel Capital and Lip-Bu Tan led the round and was joined by Shah Capital Partners and angel investors.
- Respell, a San Francisco-based AI bot designed to automate workflows, raised $4.8 million in seed funding. Craft Ventures led the round and was joined by Abstract Ventures, Zapier, and others.
- sipMARGS, a New York City-based line of canned margaritas, raised $2 million in funding from Lab Capital Advisors.
- GameTree, a Los Angeles, Calif.-based app for gamers to find teammates and friends, raised $1.7 million in seed funding from Corazon Capital, Full Stack Ventures, Goodwater Capital, and others.
PRIVATE EQUITY
- Francisco Partners took Blancco Technology Group, a Hertfordshire, U.K.-based provider of data erasure software, private for approximately £175 million ($220.2 million).
- BazaarVoice, backed by Thomas H. Lee Partners, acquired Granify, an Edmonton, Canada and Austin, Texas-based platform designed to help retailers personalize shopping experiences and increase shopper conversions. Financial terms were not disclosed.
- Blackford Capital acquired LTD Online Stores, a San Diego, Calif.-based patio furniture e-commerce website and retail store. Financial terms were not disclosed.
- Hudson Hill Capital acquired a majority stake in MarketTime, a Dallas, Texas-based provider of software designed to automate the wholesale transaction process for sellers and manufacturers. Financial terms were not disclosed.
- Mercer Global Advisors, backed by Oak Hill Capital and Genstar Capital, acquired Paragon Wealth Strategies, a Jacksonville, Fla.-based wealth management firm. Financial terms were not disclosed.
EXITS
- ADNEC Group acquired Karavel, a Paris, France-based tourism and travel company, from Equistone Partners Europe. Financial terms were not disclosed.
- Blackstone acquired Power Grid Components, a Bessemer, Ala.-based provider of power grid equipment, from Shorehill Capital. Financial terms were not disclosed.
OTHER
- Roche Holding agreed to acquire Carmot Therapeutics, a Berkeley, Calif.-based developer of weight-loss and diabetes treatments, for up to $3.1 billion.
- Workleap acquired Pingboard, a San Antonio, Texas-based human resources platform. Financial terms were not disclosed.
This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers in venture capital and private equity. Sign up for free.
