Hello Term Sheet readers. It’s Lucinda, who is taking over this newsletter until you jet off to a hopefully sunny, but not too hot location for July 4. In the meantime, please send deals to email@example.com.
Social Capital fell apart after co-founder Chamath Palihaptiya shook up his investing approach, with plans to make fewer but larger investments in a bid to boost returns. Now, Palihapitiya is back, reportedly spinning out a new data-driven venture firm dubbed “Caas,” or capital-as-a-service, per TechCrunch. The idea is to simplify and to some extent, automate, the VC investing process.
This might sound familiar. Polina wrote about Social Capital’s testing around another so-called CaaS operating system in Oct. 2017—at a time when Social Capital’s other two co-founders Ted Maidenberg and Mamoon Hamid were beginning to distance themselves from the firm. Palihapitiya though was pitching the platform, dubbed “magic 8-ball,” not only for its ability to capitalize on the vast amount of data the internet revolution had brought about, but also the platform’s lack of gender and racial bias. As Polina explains:
“Here’s how the self-serve platform works: Entrepreneurs fill out a questionnaire, submit relevant figures such as revenue and raw engagement data, and/or grant the firm access to its cloud services. Social Capital will then evaluate the company and write a check or pass and deliver feedback.
Social Capital evaluated nearly 3,000 companies during its private beta and committed to funding several dozen across 12 countries. An interesting byproduct of the data-oriented approach was that CEO demographics skewed 42% female and majority non-white. (For context, female founders received 2.19% of venture capital funding in 2016.) In an email to Term Sheet, Social Capital CEO Chamath Palihapitiya called the 42% data point ‘simply fucking awesome.’”
Palihapitiya’s move also comes after Social Capital alumni built their own data-driven venture fund. Social Capital’s “Magic 8-Ball” platform was built by reportedly by Jonahthan Hsu, who has in fact moved on to found Tribe Capital alongside Maidenburg and Arjun Sethi—a firm using a platform based on the “Magic-8-Ball.”
It’ll be interesting to see how the two firms develop. Quantitative investing firms guard their algorithms and data sources tightly for a reason—because it is the crux of their success. But unlike Renaissance Technology or Two Sigma, venture capital also has a heavier emphasis on relationships and gut instinct. After all, it is an industry of spotting firms early on—firms that don’t have a repository of data and history but may have an impressive founder and vision.
TIKTOK GOES BOOM: TikTok videos are everywhere. Even if you don’t know you’ve seen one, you’ve seen one. The app is hard to explain if you’re not a teenager, but in essence, it’s used for making & sharing short videos. Users can engage with other users through “response” videos or “duets” — by duplicating videos and adding themselves alongside.
Fortune just published a deep-dive into the viral social media app — it has been downloaded 950 million times in two years. From the story:
Facebook is clearly paying attention. Last year, it introduced its own rival video-sharing app, Lasso. But the wannabe-TikTok has been downloaded just 187,000 times as of June, according to Sensor Tower. Meanwhile, Facebook-owned Instagram is also adding TikTok-like features. Last year, for instance, Instagram incorporated music into Stories, its ephemeral feed of photos and videos, while in May it started letting users append song lyrics to their videos so viewers could sing along.
But none of that has slowed TikTok’s rapid growth. In the first quarter, on Android phones alone, U.S. users spent 85 million hours in the app, nearly five times as many hours as were spent during the same period last year, according to analytics firm App Annie.
“ByteDance [which owns TikTok] has hundreds of engineers in A.I. alone and is known for its algorithms, which are just really good at figuring out what you like and sharing with you other stuff it thinks you’ll like,” says Hans Tung, a managing partner at investment firm GGV Capital who was an early backer and board member of Musical.ly.
• TripActions, a Palo Alto, Calif.-based business travel platform, raised $250 million in Series D funding. Andreessen Horowitz led the round, and was joined by investors including Zeev Ventures, Lightspeed Venture Partners and Group 11, valuing the firm at $4 billion.
• Commonwealth Fusion Systems, a Cambridge, Mass.-based startup commercializing fusion energy, raised $115 million and closed its Series A round. Future Ventures, Khosla Ventures, Lowercase Capital, Moore Strategic Ventures, Safar Partners, Schooner Capital, and Starlight Ventures invested.
• Aera Technology, a Mountain View, Calif.-based developer of cloud-based supply chain intelligence software solutions, raised $80 million in Series C funding. DFJ Growth led the round, and was joined by investors including NewView Capital and Georgian Partners.
• Degreed, a San Francisco-based learning and skill tracking platform, raised $35 million in funding. Investors include Owl Ventures, Jump Capital, Signal Peak Ventures, GSV Accelerate, and Alliance Bernstein.
• Cobalt Robotics, a San Mateo, Calif.-based builder of indoor autonomous robots raised $35 million in Series B funding. Coatue led the round.
• eSmart Systems, a Norweigan provider of AI-based analytics for infrastructure inspection and asset health monitoring, raised $34.4 million in funding. Energy Impact Partners and Innogy Ventures invested.
• Creative Group, a Dutch e-voucher website, has secured 22 million euros ($25 million) in funding. Prime Ventures invested.
• Metropolis Technologies, a Los Angeles-based mobility startup focused on building integrated networks, raised $17.5 million in funding. Zigg Capital led the round, and was joined by investors including Slow Ventures and RXR Realty.
• AUrate, a direct-to-consumer fine jewelry brand, raised $13 million in Series A funding. Bluecrest Capital led the round, and was joined by investors including Point King Capital, Arab Angel Fund and Drake Management.
• GreatHorn, a Waltham, Mass.-based email security platform provider, raised $13 million in funding. RRE Ventures and .406 Ventures led the round.
• Vulcan Cyber, an Israel-based vulnerability remediation platform, raised $10 million in Series A funding. Investors include Ten Eleven Ventures and YL Ventures.
• Climb Credit, a New York-based student lending company, raised $9.8 million in Series A funding. Third Prime and New Markets Venture Partners co-led the round, and were joined by investors including Acumen, Impact Engine, Two Culture Capital, Elizabeth Tse, 1/0 Capital, Learn Capital, Montage Ventures, Hill Hedge Funds and Michael Sidgmore.
• Qover, a Belgium-based insurance partner for digital businesses, raised EUR 8 million ($9 million) in funding. Alven and Portag3 Ventures co-led the round, and were joined by investors including Anthemis.
• Taster, a London-based delivery-only online restaurant brand maker, raised $8 million in Series A funding from Battery Ventures, Heartcore Capital, LocalGlobe, and others.
• CryoTherapeutics, a Belgian based firm focused of cryotherapy to prevent heart attacks, raised 7 million euros ($8 million) in series B funding. Noshaq , Peppermint Venture Partners, Creathor Ventures, and Getz Brothers invested.
• Fellow, a startup building software for managers, raised $6.5 million in seed funding. Felicis Ventures, Inovia Capital, and Garage Capital led the round.
• SoundCommerce, a Seattle-based data platform provider, raised $6.5 million in seed funding. Defy Partners led the round, and was joined by investors including Voyager Capital, Stage Venture Partners, and the Alliance of Angels.
• Lulalend, a South African automated provider of short-term funding for small and medium enterprises, raised $6.5 million in series A funding. IFC and Quona Capital led the round.
• Skubana, a New York-based commerce operations platform, raised $5.4 million in Series A funding. Defy Partners led the round, and was joined by investors including Advancit Capital and FJ Labs.
• dfuse, a Canada-based blockchain API company, raised $3.5 million in funding. Multicoin Capital led the round, and was joined by investors including Intel Capital, BoxOne Ventures, Panache Ventures, and White Star Capital.
• Aromyx, a Mountain View, Calif.-based maker of biotechnology and data science to capture unique sensory data, raised $3 million in funding. Ulu Ventures led the round, and was joined by investors including Rationalwave Capital Partners, Merus Capital, CE Venture Capital, Stanford University, and Radicle Growth.
• BUREA, a Puerto Rico-based retail shopping app that gives users cash back when they shop, raised $2 million in Series A funding. Independent Capital and Expresión 2020 co-led the round.
• Bicameral Ventures invested in Balance, a crypto custodian. Financial terms weren’t disclosed.
HEALTH AND LIFE SCIENCES DEALS
• Omada Health, a San Francisco-based developer of online digital healthcare programs, raised $73 million in funding. Wellington Management Company LLP led the round, and was joined by investors including Cigna Ventures, Andreessen Horowitz, U.S. Venture Partners, Norwest Venture Partners, Kaiser Permanente Ventures, Sanofi Ventures, Civilization Ventures, and Providence Ventures.
• PanTheryx, a Boulder, Colo.-based biotech, raised $50 million in funding from Perceptive Advisors.
• DayTwo, an Israel-based microbiome human discovery platform, raised $31 million in Series B funding. aMoon and Ofek Ventures co-led the round, and were joined by investors including Seventure Partners and Johnson & Johnson.
PRIVATE EQUITY DEALS
• TDR Capital agreed to buy car auctioneer BCA Marketplace for about 1.91 billion pounds ($2.4 billion), per the Financial Times.
• Centerbridge Partners is in talks to acquire Magellan Health, a Scottsdale, Ariz.-based managed care provider, the Wall Street Journal reports citing sources.
• Alpine Investors, invested in Northeast Ohio Eye Surgeons, an Ohio-based eye care business. Financial terms weren’t disclosed.
• Thomas H. Lee Partners acquired Nextech Systems, a Tampa, Fla.-based provider of healthcare technology solutions for specialty physician practices, from Francisco Partners. Financial terms weren’t disclosed.
• EMEX a portfolio company of O2 Investment Partners, invested in Patriot Energy Group, a Houston-based natural gas management firm. Financial terms weren’t disclosed.
• Manna Tree Partners invested in Vital Farms, an Austin-based pasture-raised eggs and butter maker. Financial terms weren’t disclosed.
• Apollo Global Management agreed to acquire Cox Media Group’s radio stations, CoxReps and its Gamut advertising business. Financial terms weren’t disclosed.
• One Equity Partners completed its acquisition of Walterscheid Powertrain Group, a German provider of original equipment and aftermarket parts and services for off-highway powertrain applications, from GKN Limited.
• Forterro, a portfolio company of Battery Ventures, agreed to acquire Abas Software, a German enterprise resource planning software maker.
• Axalta Coating Systems Ltd, a U.S. coatings company backed by Berkshire Hathaway, is exploring a sale of the company, Reuters reports.
• Ascensus agreed to acquire HR Simplified, a Minneapolis, Minn.-based third-party administration firm that services consumer-directed health (CDH) plans. Financial terms weren’t disclosed.
• Investcorp Credit Management US, a New York-based subsidiary of Investcorp Bank B.S.C., agreed to acquire a majority stake of CM Investment Partners, from Cyrus Capital Partners and Stifel Venture Corp.
• Integrated Oncology Network, a portfolio company of Silver Oak Services Partners, acquired e+CancerCare, an operator of outpatient cancer care centers, from Kohlberg & Company.
FIRMS + FUNDS
• Warburg Pincus closed its $4.25 billion Warburg Pincus China-Southeast Asia II fund.
• Matt Petronzio joined Twin Bridge Capital Partners as a partner.
• Sergey Sherman was named managing director at Tuatara Capital.
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