SoftBank founder Masayoshi Son vowed tonight to “double down” on its investment in WeWork as he confirmed plans for a $9.5 billion rescue package that will provide up to $1.7 billion to WeWork cofounder Adam Neumann in exchange for cutting most ties with the company and will give SoftBank an 80 percent stake in the business. In a statement tonight in New York, SoftBank said it would “accelerate” WeWork’s path to profitability and positive free cash flow. More here in the Financial Times.
Forty-six attorneys general have joined a New York-led antitrust investigation of Facebook, officials announced this morning, raising the stakes in a sweeping bipartisan probe that could result in massive changes to the company’s business practices. The Washington Post has more here.
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Have We Reached the Tipping Point?
Limited partners or LPs — the pension funds, the university endowments, the family offices that largely provide venture firms with their spending money — are receiving a lot of attention from venture capitalists, some of it unwanted. VCs have begun knocking down their doors with requests for fresh capital commitments so they’ll have money to invest if the market cools down.
The problem is, many of these LPs are already over-allocated. LPs traditionally invest in many asset classes, such as public equities, and they allocate a small percentage of their portfolio to venture capital. Suddenly, they’re finding they’ve forked over more than they’d intended to VCs.
There are several reasons for this situation. First, VCs are returning to them ever faster for more capital — sometimes in less than two years’ time — because they are in vesting at such a furious pace.
Compounding the problem, not all LPs have received returns from their VC investments that they can recycle into new venture capital allocations. In some cases, this capital is still tied up in startups that are raising much more money than in the past and staying private longer. “We have some large exposures to blue chip names where IPOs have been rumored to be coming for a long time already, and now it’s maybe 2021, maybe 2022,” says one manager who asked not to be named. In other cases where startups have gone public, falling prices have prompted VCs to hang on to their shares instead of distribute them.
The result is that LPs are having to cut back on the number of managers they can fund, and that could mean bad news for venture capitalists and startups alike. These LPs don’t have much choice. As the LP explains it, “We have a pretty structured allocation process, and we’re really trying to be creative,” she says. One venture manager who reappeared too quickly for more money was “easy to walk away from,” says this person. “Others, we’re having to do financial backflips for them to remain strong partners.” Either way, this LP adds, “We can’t add any new relationships right now,” meaning new venture teams in particular are out of luck. “When [VCs] shorten their fundraising cycle by nine months to a year, you can only squeeze the balloon so much.”
SoftBank’s $100 billion “Vision Fund” is one big reason LPs find themselves in their current predicament. From the moment SoftBank began waving money around several years ago, it launched a vicious cycle. According to Chris Douvos, whose investment firm, Ahoy Capital, owns stakes in such venture funds as True Ventures and First Round Capital, “When Andreessen Horowitz hit the scene a decade ago, they changed the tempo of investing and everyone got more aggressive in their dealmaking as a response. Then SoftBank entered the picture in a big way, and it was like a16z on steroids.”
Blueground, a six-year-old, New York-based startup providing turnkey flexible rental apartments, has raised $50 million in Series B funding, roughly six months after raising $20 million in Series A funding. WestCap Investment Partners and Prime Ventures co-led the round. More here.
Databricks, a six-year-old, San Francisco-based SaaS business that’s built on top of a bunch of open source tools, has raised a massive $400 million in Series F funding at a post-money valuation of $6.2 billion valuation. Today’s funding brings the total raised to almost a $900 million. Andreessen Horowitz led the round with new investors BlackRock, T. Rowe Price Associates, and Tiger Global Management also participating. TechCrunch has more here.
IonQ, a four-year-old, College Park, Md.-based startup that uses charged particles suspended in a vacuum, as the basis for its hardware, has raised $55 million in funding. Samsung and Mubadala Capital co-led the round, joined by Amazon, GV, and New Enterprise Associates. Fortune has more here.
Aurora Insight, a three-year-old, Washington, D.C.-based startup that provides a “dynamic” global map of wireless connectivity that it built and monitors in real time using AI combined with data from sensors on satellites, vehicles, buildings, aircraft and other objects, has raised $18 million in Series A funding. Alsop Louie Partners and True Ventures co-led the round, joined by Tippet Venture Partners, Rise of the Rest Seed Fund, Promus Ventures, Alumni Ventures Group, ValueStream Ventures, and Intellectus Partners. TechCrunch has more here.
Benevity, an 11-year-old, Calgary, Alberta-based company that makes corporate social responsibility and employee engagement software, has raised $30.5 million in Series C funding from General Atlantic and JMI Equity. More here. EV Connect, a 10-year-old, L.A.-based company that sells software to manage electric vehicle charging, has raised $12 million in a Series B round led by Mitsui & Co. and Ecosystem Integrity Fund. The company has raised $25 million to date. TechCrunch has more here.
Octave, a year-old, San Francisco-based tech-based behavioral health practice, has raised $11 million in Series A funding led by Greycroft, with participation from Obvious Ventures and earlier backers. The company has raised at least $14 million to date. Crunchbase News has more here.
Signal AI, a six-year-old, London-based business intelligence and media monitoring startup, has raised $25 million in Series C funding. Redline Capital led the round, joined by MMC Ventures, GMG Ventures, and Hearst Ventures. TechCrunch has more here.
AllWork, a 3.5-year-old, New York-based on-demand work platform that’s targeting large enterprise customers in need of temporary workers, has raised $3.8 million in seed funding from Great Oaks, Lightspeed Scout Fund, The Fund, Fernbrook, SmartHub, and numerous angel investors. More here.
Beem, a year-old, Boston-based CBD company that’s marketing its branded oils, protein bars, and a salve to athletes who may be looking for alternatives to chemically derived pain relievers and anti-inflammatories, has raised $5 million in seed funding led by Obvious Ventures. TechCrunch has more here.
Intrepida Bio, a newly launched, San Diego-based biotech focused on modulating innate immune systems, has raised $9.5 million from Sofinnova and Canaan Partners. FierceBiotech has more here.
LabGenius, a seven-year-old, London-based startup that’s applying AI and robotic automation to protein drug discovery, has raised $10 million in Series A funding. The round was led by Lux Capital and Obvious Ventures, with participation from Felicis Ventures, Inovia Capital, Air Street Capital and earlier investors, along with numerous notable individuals. TechCrunch has more here.
Margin Edge, a four-year-old, Falls Church, Va.-based maker of restaurant management software, has raised $5 million in Series A funding led by Osage Venture Partners, with participation from Good Company. More here.
Medinas, a two-year-old, Berkeley, Ca.-based company that helps healthcare organizations resell their surplus medical equipment and supplies, has raised $5 million in seed funding led by NFX. Additional investors in the round include Precursor Ventures, Sound Ventures, FJ Labs and Bryan Frist (of HCA Healthcare’s founding family). Crunchbase News has more here.
MediView XR, a two-year-old, Cleveland, Oh.-based medical device company working on a surgical navigation system that leverages augmented reality and spatial computing to provide surgeons with advanced visualization, has raised $4.5 million in seed funding. Backers include Inside View Investment,Plug and Play Ventures and Northwest Ohio Tech Fund. More here.
Reibus, a year-old, Atlanta, Ga.-based online marketplace for industrial materials, has raised $3.25 million in seed funding led by Bowery Capital, with participation from Initialized Capital and Stage 2 Capital. More here.
|Mubadala, which is owned by the United Arab Emirates and headquartered in Abu Dhabi, has earmarked $150 million for a fund-of-funds strategy targeting funds that will invest in the Abu Dhabi-based Hub71 regional tech ecosystem and it says three recipients of these investing dollars include DCVC, the Palo Alto-based firm led by Matt Ocko and Zachary Bogue; Global Ventures, a Dubai-based growth-stage investor in enterprise tech startups; and Lebanon-based Middle East Venture Partners. Pitchbook has more here.|
|Roku is beefing up its advertising business with the acquisition of Boston-based dataxu, a demand-side platform that will allow marketers to plan, buy and optimize their video ad campaigns that run on Roku’s devices and services. The deal, a mixture of cash and stock, is for $150 million and has been approved by each company’s board of directors. It’s expected to close in the fourth quarter. TechCrunch has more here.|
Marcelo Claure, the chief operating officer of SoftBank Group, will assume the position of executive chairman of the board of directors of WeWork when the company receives a planned $1.5 billion payment from SoftBank. TechCrunch has more here.
John Donahoe, the current president and CEO of ServiceNow, is taking over as the CEO and president of Nike in January, replacing Mark Parker who has been since 2006 and lived through numerous controversies over the years. Donahoe knows Nike well, having joined its board, where he will retain a seat, since 2014. In the meantime, Parker will become the company’s executive chairman and Bill McDermott, who abruptly resigned as the longtime CEO of SAP earlier this month for reasons that weren’t clear, is taking over as CEO of ServiceNow. The company’s shareholders apparently prefer Donahoe, who is also the chairman of PayPal and a former CEO of eBay, which he led from 2008 through 2015. At least, shares of ServiceNow dropped in price on the news.
Zaz Floreani has joined the Austin-based venture firm Next Coast Ventures as a principal. Floreani was most recently the VP of corporate development at the same-day delivery company Dropoff. More here.
Manuel Henriquez, founder and former CEO of Hercules Growth Technology Capital, and his wife Elizabeth have both pleaded guilty for their roles in the college admissions cheating scandal. She is to be sentenced Feb. 7 and her husband on March 5. The San Jose Mercury News has more here.
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|Facebook has pledged $1 billion to help address the affordable housing crisis in California. Vox’s Kurt Wagner notes the announcement is timely, given that tomorrow, “Zuckerberg will speak before the House Financial Services Committee, which oversees housing and urban development issues.”|
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