NO BUBBLES TO SEE HERE
Good morning, Term Sheet readers.
It was a busy Tuesday at Fortune’s Brainstorm Tech International in Guangzhou. A few notes:
‘DEFINITELY NOT A BUBBLE:’ China’s digital revolution was bankrolled with dollars, and it has emerged as the world’s second-largest destination for venture capital with more than 3,000 funds. But things have changed. These days, leading investors are as likely to hail from inside China as overseas. Among them are Alibaba Group and Tencent Holdings, which are not only global investor darlings but also powerful investors themselves. This has created an ecosystem in which two of the world’s richest and fastest-growing companies are bidding against one another for hot investments.
Here’s an excerpt from my story on what China-focused VCs had to say about Alibaba and Tencent pouring money into more and more tech companies:
The scale and speed at play in China’s VC scene have prompted “bubble” accusations in Silicon Valley and New York, Tung said. “Everyone knows that the first three years decide who will win,” he said. “It is definitely not a bubble. There’s a science to how this works.”
Nevertheless, recent media reports about the apparent boom-bust of some Chinese bike-sharing companies, for instance, have fueled bubble speculation. The companies have attracted a whopping $2 billion in venture capital collectively in the past 18 months. Flush with cash, some have attempted to go global, only to burn through their money and shutter operations. That’s a ‘bubbly’ narrative, but one panelist was careful to draw a distinction.
“I don’t think there’s a bubble, but I think there’s this herd mentality that is a little big dangerous,” said Anna Fang, CEO of ZhenFund. “There’s this herd mentality in our field where investors run to two or three themes a year, so it could develop into a bubble in that particular sector.”
THE KING OF E-COMMERCE: In less than a decade, China has emerged as the world leader in e-commerce. It claims more online shoppers than any other nation. The numbers speak for themselves. China is home to 730 million Internet users, it accounts for 40% (!) of global retail e-commerce, and its mobile payment market is a whopping 11 times the size of the U.S. market. This is only the beginning for China’s astronomical growth in the e-commerce space. Read more.
CONQUERING CHINA: The Chinese market is tough to crack — just ask Facebook and Twitter. Home-sharing company Airbnb has been working on its expansion in China since 2014, and it most certainly hasn’t been easy. Airbnb co-founder and chief strategy officer Nathan Blecharczyk said the team wasn’t sure if their model would even work in China. “We had heard the stories about other tech companies and how hard it is to succeed in China, so we weren’t sure whether to make it a priority or focus on other things that were more straightforward,” he said. After three years, the company has seen some pretty impressive growth, but there’s a lot left to prove in order to call this a success story. Read more.
Find all coverage from Guangzhou here.
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• Hellobike, a Shanghai, China bike-sharing firm, raised $350 million in its latest funding round from investors including Alibaba’s Ant Financial.
• Kespry, a Menlo Park, Calif.-based aerial intelligence solution provider, raised $33 million in Series C funding led by G2VP, and was joined by investors including Shell Technology Ventures, Cisco Investments, and ABB Ventures
• LaunchDarkly, an Oakland, Calif.-based feature management platform, raised a $21 million in Series B funding led by Redpoint Ventures and Vertex.
• Noodle Partners, a New York firm that helps colleges decrease the cost of online higher education, raised about $14 million in Series A funding led by Owl Ventures.
• Pilotworks, New York City-based a community of food entrepreneurs formerly known as FoodWorks, raised $13 million in Series A funding led by Techstars Ventures and Acre Venture Partners.
• Earny, a Santa Monica, Calif.-based personal financial service, raised $9 million in Series A funding led by Mayfield and was joined by investors including Comcast Ventures and Science Inc.
• ChemomAb, a Tel Aviv, Israel-based biopharmaceutical firm, raised $10 million in funding led by OrbiMed Israel and Peter Thiel, who were joined by investors including SBI Japan-Israel Innovation Fund and Milestone Venture.
• NS8, an Arlington, Va.-based ecommerce fraud prevention provider, raised $7.5 million in funding led by Arbor Ventures, and was joined by investors including TDF Ventures and Hanna Ventures.
• VirtualHealth, New York City-based provider of population health and care management technologies, raised $7 million from investors led by Edison Partners.
• IRONSCALES, a Tel Aviv-based cybersecurity company that combines human intelligence with machine learning to automatically detect phishing emails, raised $6.5 million in Series A funding from investors including K1 Investment Management and RDC.
• Guardian Optical Technologies, a Tel Aviv, Israel-based sensor technology maker for automobile manufacturers, raised $5.1 million in Series A funding from Maniv Mobility and Mirai Creation Fund.
• Powerful, a Miami-based food and beverage company, raised $4 million from two separate funding rounds from investors including Cambridge Companies SPG, River Hallow Partners and Gerber Finance.
• Continuum Security,a Spain-based threat modeling startup, raised €1.5 million ($1.7 million) in funding, led by Swanlaab Venture Factory and was joined by investors including JME Venture Capital and Sonae IM.
• Stateless, a Boulder, Colo.-based firm allowing network functions to be consumed through the “as a service” model, raised $1.4 million in a seed round led by Speedinvest and was joined by investors including Techstars, EVO Venture Partners, PV Ventures, and Service Provider Capital.
• Black Dog Venture Partners acquired a ten percent stake in Wobbl3 Entertainment, a Salt Lake City-based video game developer. Financial terms weren’t disclosed.
PRIVATE EQUITY DEALS
• Pandion Energy, a portfolio company of Kerogen Capital, agreed to buy a 10% stake in two North Sea fields from Norwegian oil firm Aker BP, Reuters reports. Read more.
• TPG Capital amended its deal to acquire Exactech, a Gainsville, Fla.-based orthopedic implant maker, for $49.25 per share rather than the previous amount of $42 per share.
• BV Investment Partners invested in Precision Nutrition, a Toronto-based nutrition certification and coaching software and services provider in North America. The Company’s co-founders will maintain a significant interest. Financial terms weren’t disclosed.
• Munch Supply, a portfolio company of Rotunda Capital Partners, acquired O’Connor Company, a Kansas-based HVAC company. Financial terms weren’t disclosed.
• Cirtec Medical, a portfolio company of 3i Group, acquired Vascotube, a Baden-Wuerttemberg, Germany-based maker of precision-engineered nitinol tubing. Financial terms weren’t disclosed.
• Great Range Capital led a group of investors that including The Bradley Family Office to acquire Labor Source, an Olathe, Kansas-based professional staffing company. Financial terms weren’t disclosed.
• Nellson Nutraceutical, a portfolio company of Kohlberg & Company, acquired Genysis Brand Solutions, Salt Lake City-based maker of functional powders. Financial terms weren’t disclosed.
• Water Street acquired Alliance Life Sciences and Health Strategies Group, Somerset, N.J. and Lambertville N.J.-based life sciences commercialization firms. Financial terms weren’t disclosed.
• Procare Software, a portfolio company of TA Associates, acquired KidReports, a Denver-based provider of real time reporting technology and services to child care providers. Financial terms weren’t disclosed. • Stone-Goff Partners invested in DSG, a Little Rock-based provider of outsourced sales training. Financial terms weren’t disclosed.
• Nordic Capital agreed to buy Alloheim, a German nursing home operators, for about 1.1 billion euros ($1.3 billion) including debt, Reuters reports citing sources. Read more.
• Jensen Hughes, a Baltimore, M.D.-based fire protection risk firm, acquired Russell Phillips & Associates, a Fairpoint, N.Y.-based fire safety company. Financial terms weren’t disclosed.
• Tokyo Gas Co. agreed to acquire LNG, an integrated gas pipeline in Alaska, from The Alaska Gasline Development Corporation.
• Intuit agree to acquire TSheets, an Eagle, Id.-based platform that businesses use to automate time tracking and scheduling for them and their workers, for $340 million.
• Newmark Group, a New York City-based real estate brokerage firm, plans to raise $615 million in an IPO of 30 million shares priced between $19 to $22. In 2016, Newmark, which includes the Newmark Knight Frank real estate firm and Berkeley Point mortgage services, posted revenue of $1.1 billion on loss of $42.6 million. BGC Partners backs the company. Goldman Sachs, BofA Merrill Lynch, Citigroup, and Cantor Fitzgerald are underwriters in the deal. The company plans to list on the Nasdaq as “NMRK.”
• Lufax, a Chinese wealth management firm, has reportedly hired Citic Securities, Citigroup, JP Morgan, Morgan Stanley, and Goldman Sachs to work on a $5 billion IPO, IFR reports citing sources. Lufax is backed by Ping An Insurance. Read more.
• Immobel agreed to acquire a stake of Nafilyan & Partners, a Paris-based real estate promoter, from Tikehau Capital. Financial terms weren’t disclosed.
• ERT agreed to acquire iCardiac Technologies, a Rochester, New York-based laboratory for cardiac safety biomarkers, from Norwest. Financial terms weren’t disclosed.
• AEA Investors closed its previously announced acquisition of Excelitas Technologies, the Waltham, Massachusetts-based provider of photonics technology solution from Veritas Capital. Financial terms weren’t disclosed.
• Macquarie Infrastructure and Real Assets agreed to acquire INEA, a Poznan, Poland-based telecom firm, from Warburg Pincus. Financial terms weren’t disclosed.
FIRMS + FUNDS
• RCP Advisors, a Chicago-based firm, raised over $284 million for its latest fund out of a $400 million target, according to an SEC filing.
• Astral Capital, a Boston-based venture capital firm, raised a $48.9 million venture fund, according to an SEC filing.
• Athyrium Capital Management and Neuberger Berman, both New York-based firms, raised $2.025 billion in their latest healthcare fund Athyrium Opportunities Fund III.
• Granite Growth Health Partners, a Stamford, Conn. and San Francisco-based growth equity firm, launched Monday. The firm invests $10 to $50 million in health services companies.
• Rene Chaze was appointed chief development officer and Jon Isaacson as chief financial officer at Edelman Financial Services. Previously, Chaze was a partner at Ernst & Young while Isaacson was a managing director of buyouts for American Capital.
• Chad Crank was appointed managing director of Grain Management’s investment team. Previously, Crank was head of Stephens Inc’s telecom, media and technology investment banking group.
• Chad Herrin joined Aspect Ventures’ team of investors.
• Steve Pusey and Hazan Rizvi joined Bridge Growth Partners as senior advisors.
• Suken Vakil and Randy Guttman were promoted to general partner at JMI Equity.
• Wylie Tollette, chief operating investment officer at the California Public Employees’ Retirement System, is leaving for Franklin Templeton Investments in January.
• Matt Flynn, will be interim COIO at CalPERS. He was previously investment director.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.