When Amazon called off its acquisition of iRobot on Monday, the impact was immediate: The Roomba maker’s longtime cofounder and CEO stepped aside and hundreds of staffers were laid off.
But, coming on the heels of Adobe’s abandoned $20 billion Figma buyout last year in the face of regulatory pushback, a longer-term and more unsettling air is sending shudders through the startup world and raising anxiety about the exit environment for a certain class of company.
In this antitrust-fueled climate change, being a unicorn isn’t easy.
“If you’re under a billion dollars, you’re actually looking a lot better right now than if you’re a unicorn trying to make an exit,” said Cathay Innovation partner Simon Wu.
The glorious corporate exit for a mature startup is looking increasingly difficult, drawing attention to another tricky option—IPOs, which companies will be under even more pressure to undertake due to regulatory standstills, said Bhaskar Chakravorti, Tufts’ Dean of Global Business.
It isn’t just unicorns that are affected by these stumped deals, which “send waves through the ecosystem around questioning what exit paths can exist,” said Pari Passu Venture Partners managing partner Julia Krieger. Losing M&A as a viable exit for late-stage startups of all kinds could cause “substantial damage to the venture ecosystem,” said angel investor Adam Nash, an early Figma backer and current CEO-cofounder of Daffy.
Some have even harsher words. NVCA president and CEO Bobby Franklin told Term Sheet via email that FTC Chair Lina Khan’s charge has left “startups that could have secured a profitable exit to wither on the vine…threatening the crown jewel of the American economy.”
Thomvest Ventures managing director Don Butler tells Term Sheet via email that the exit “chill” might last through 2024 as companies put off “these larger types of transactions until the election.”
But it’s also important to not take this too far—there are things about this fallout that, frankly, have a whole lot to do with iRobot itself. The deal was initially announced in August 2022, and the price last year dropped from the initial $1.7 billion. At the time, the explanation was tied to debt that iRobot was taking on. For Paolo Pirjanian, the former iRobot CTO who is now the founder of robotics startup Embodied, the trouble at his former company is really a sign of floundering innovation efforts.
“IRobot has been losing market share, it’s a falling knife,” he said. “I can imagine if I was sitting in Amazon’s shoes, I’d say this deal isn’t worth it to me anymore.”
For my part, I’ve begun imagining private markets right now as a bathtub, with water sitting in it yet to be drained. I ran the image by Mark Patricof, founder of athlete-focused investment firm Patricof Co, who digs it.
“You’re going to need to see some rationalization around exits. If you can’t move the water down the drain, maybe you can pick it up and put it in another bathtub. It’s the only way to prevent the water from getting dirtier and staler than it is.”
Today… The Federal Reserve today is holding its first rate meeting of 2024. The bank has previously signaled that rate cuts are on the table this year. Every Fed day could be a big day.
And last call… Term Sheet is partnering with Semaphore again for its 16th annual confidence survey of private equity, venture capital, hedge fund, and other professionals–and today’s the last day to participate! It’s anonymous and should take you 3–4 minutes. You can take the survey here. Have a look at last year’s results here, here, and here.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: [email protected]
Submit a deal for the Term Sheet newsletter here.
Update, Jan. 31, 2024: An earlier version of this article stated Patricof Co is a bank. This has been updated to reflect that it is a firm.
Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- TravelPerk, a Barcelona, Spain-based business travel management platform, raised $104 million in a Series D extension. Softbank Vision Fund 2 led the round and was joined by existing investors Kinnevik and Felix Capital.
- Inari, a Cambridge, Mass.-based producer of sustainable soybean, corn, and wheat seeds, raised $103 million in Series F funding from Hanwha Impact, Canada Pension Plan Investment Board, Rivas Capital, NGS Super, State of Michigan Retirement System, and others.
- Codeium, a Mountain View, Calif.-based AI-powered toolkit designed to improve coding efficiency, raised $65 million in Series B funding. Kleiner Perkins led the round and was joined by Greenoaks and General Catalyst.
- Accompany Health, a Bethesda, Md.-based primary, behavior, and social care provider for low-income patients, raised $56 million in Series A funding from Venrock, ARCH Venture Partners, IVP, Granite Capital Management, and Evidenced.
- Owner, a Palo Alto, Calif.-based platform for ordering, marketing, website-building, and more for restaurant owners, raised $33 million in Series B funding. Redpoint and Alt Capital led the round and was joined by Horsley Bridge, Activant Capital, and Transpose Platform Management.
- Sema4.ai, an Atlanta, Ga.-based AI assistant for knowledge workers, raised $30.5 million in Series A funding from Mayfield, Benchmark, and Canvas Ventures.
- Crux, a New York City-based company developing a market for transferable tax credits, raised $18.2 million in Series A funding. Andreessen Horowitz led the round and was joined by existing investors Lowercarbon Capital, New System Ventures, Overture, and The Three Cairns Group.
- Vital Interaction, an Austin, Texas-based developer of patient communication technology for health care providers, raised $15 million in Series A funding. Next Coast Ventures led the round and were joined by existing investors Michael Dearing and Walter Kortschak.
- Cultivo, a Pleasanton, Calif.-based company that identifies portfolios of nature-based projects for outside investment, raised $14 million in Series A funding. MassMutual Ventures and Octopus Energy Generation led the round and was joined by Salkantay Ventures and Peña Verde.
- Nile, a San Francisco-based data layer for software-as-a-service applications, raised $11.6 million in seed funding. Benchmark led the round and was joined by angel investors.
- Aim Security, a Tel Aviv, Israel-based generative AI security platform for enterprise generative AI, raised $10 million in seed funding. YL Ventures led the round and was joined by CCL and angel investors.
- Roofer.com, an Arlington, Texas-based provider of roof health technology and re-roofing services, raised $7.5 million in seed funding. Mucker Capital led the round and was joined by Soma Capital, HF0, Asymmetric Capital Partners, Alumni Ventures, HustleFund, and others.
- Haven Energy, a Los Angeles, Calif.-based provider of home battery systems, raised $7 million in Series A funding from Comcast Ventures, LifeX, TO VC, Habitat Partners, and existing investors Lerer Hippeau, Giant Ventures, and Raven One Ventures.
- Crescendo, a San Francisco-based AI call center for businesses, raised $4.5 million in seed funding from General Catalyst.
- Inference.ai, a Palo Alto, Calif.-based supplier of GPU models for AI development, raised $4 million in seed funding. Cherubic Ventures and Maple VC led the round and was joined by Fusion Fund.
PRIVATE EQUITY
- Arlington Capital Partners acquired a majority stake in Afton Scientific, a Charlottesville, Va.-based manufacturer of sterile injectable drugs. Financial terms were not disclosed.
- GS Foods Group, a portfolio company of Highview Capital and A&M Capital Partners, acquired Diamond Foods, a New Orleans, La.-based distributor of school foods. FInancial terms were not disclosed.
- NDH, a portfolio company of Unity Partners, acquired Jain & Jain, a Houston, Texas-based tax and accounting firm. Financial terms were not disclosed.
EXITS
- Summit Partners acquired a majority stake in CollisionRight, a Dallas, Texas-based provider of auto body repair services, from CenterOak Partners. Financial terms were not disclosed.
PEOPLE
- Alpine Investors, a San Francisco-based private equity firm, promoted Mark Strauch to president, April Smith, Haley Van Cleve, and John Wanglin to partner, and Erin Ruck, Leslie Foard, Patrick Eble, and Will Chance to principal.
- Flexpoint Ford, a Chicago, Ill. And New York City-based private equity firm, promoted Karan Sabharwal to principal.
- Garnett Station Partners, a New York City-based private equity firm, hired Justin Nihiser as operating partner. Formerly, he was with Code Ninjas.
- Gradient Ventures, a San Francisco-based venture capital firm backed by Google, has hired Andrew Brackin as a partner. Formerly, he was a cofounder at Vial.
- Levine Leichtman Capital Partners, a Los Angeles, Calif.-based private equity firm, hired Brian Klaban as head of capital markets and a director on the originations team. Formerly, he with Platte River Equity.
- Lovell Minnick Partners, a Radnor, Pa., New York City, and Los Angeles, Calif.-based private equity firm, promoted Spencer Hurst to principal.
- One Equity Partners, a New York City-based private equity firm, promoted Greg Belinfanti to president.
- Pritzker Private Capital, a Chicago, Ill. And Los Angeles, Calif.-based private equity firm, hired Dwight Gibson as operating partner. Formerly, he was with BlueLinx Corporation.
- RCP Advisors, a Chicago, Ill.-based private equity firm, promoted Patrick dePenaloza to principal.
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