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NVCA Pushes Back Against Antitrust Legislation
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By Yuliya Chernova, WSJ Pro
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Good day. Several recently proposed antitrust bills in the U.S. would restrict the ability of large technology companies to make acquisitions.
That, in turn, would discourage venture investors from making deals, hurt their returns and decrease the number of new venture funds, says a new report funded by the National Venture Capital Association. A venture-backed company is about ten times more likely to be acquired than to go public, according to the NVCA.
“We are very concerned that these restrictions on acquisitions will at least partially, if not completely, shut off that avenue of exit,” said Jeff Farrah, general counsel at the NVCA, in a call with media on Monday.
The NVCA took aim at the Competition and Antitrust Law Enforcement Reform Act, sponsored by Sen. Amy Klobuchar (D. Minn.); the Trust-Busting for the Twenty First Century Act, sponsored by Sen. Josh Hawley (R. Mo.); and the Platform Competition and Opportunity Act, sponsored by Rep. Hakeem Jeffries (D., N.Y.) and introduced Friday.
“This antitrust reform legislation will support startups by making it possible for more, not fewer, businesses to thrive and by stopping the biggest companies from gobbling up potential competitive threats,” a spokesperson for Sen. Klobuchar said in a statement.
But the NVCA argues these bills would make too many acquisitions impossible. The House bill, for example, would severely restrict companies that have a market cap of at least $600 billion from making acquisitions of targets that are in some way competitive, according to Mr. Farrah. In the last five years that would have banned at least 100 acquisitions of venture-backed companies, he said.
Rep. Ken Buck (R. Colo.), who co-sponsored the House bill, says the bill would help startups. He said there is data to show that after a large tech company makes an acquisition, investments in startups in the same sectors fall. “The harms that NVCA is alleging will happen are already happening under the status quo,” Rep. Buck added.
And now on to the news...
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Renee Jones will serve as the SEC’s top staff regulator of public companies.
PHOTO: ADAM DETOUR/BOSTON COLLEGE LAW SCHOOL
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New regulator. The Securities and Exchange Commission said it had hired Renee Jones, a Boston College law professor, as its top staff regulator of public companies, The Wall Street Journal’s Dave Michaels reports. Ms. Jones will oversee a division of more than 400 lawyers and accountants that draft rules for companies raising capital and disclosing material news and events to shareholders. The division has a leading role in drafting a planned rule proposal that would require public companies to reveal more about the risks and impacts of climate change on their business.
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Ms. Jones, 56 years old, has written critically about large, private companies known as unicorns, which are valued at over $1 billion before going public. The SEC has over the past decade made it easier for private companies to raise capital, which largely exempts them from the agency’s oversight.
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$1.7 Trillion
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Bonds issued last year in the U.S. by nonfinancial companies, nearly $600 billion more than the previous high, according to Dealogic. (WSJ)
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New Fund Targets Up to $55 Million for Seed Deals
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New venture-capital firm Tenacity Venture Capital is aiming to raise up to roughly $55 million to invest in seed-stage startups as investors across the industry increasingly both target younger companies and scuffle to lead deals, WSJ Pro’s Marc Vartabedian reports. Ben Narasin, a venture partner at New Enterprise Associates, said he plans to leave the firm by the end of the year to focus on the new venture where he will invest in startups, which oftentimes have only a handful of employees and little to no revenue.
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Mr. Narasin said he is fundraising for the Atherton, Calif.-based firm, while Chevy Chase, Md.-based NEA and its managing general partner Scott Sandell are committing capital to the fund. Mr. Sandell will serve on the Tenacity Venture’s advisory board.
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Lordstown Executives Exit After Preorders Turmoil
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Lordstown Motors Corp., one of the most ambitious electrical-vehicle startups, said its chief executive and top financial leader resigned after a new report from a board committee found inaccuracies in parts of the company’s disclosures on truck preorders, WSJ's Ben Foldy and Micah Maidenberg report. The upheaval marks the latest setback not only for Lordstown Motors but for electric vehicle startups, which have captured the imaginations, and funds, of investors but in several cases have stumbled as newly public companies.
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Tech Talent Migrates to Collaboration Startups
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Executives at some of the world’s largest technology firms are leaving prime jobs to join startups that build communications and collaboration tools, a market expected to skyrocket as more businesses settle into hybrid work arrangements, WSJ’s Angus Loten reports. Sarah Cannon, a partner at Index Ventures, said she knows of at least a dozen recent communication and collaboration startups founded or led by former top people at big tech firms. Many high-level developers and engineers have been building these kinds of apps inside large companies for years, she said, and Covid-19’s impact on conventional workplaces is now prompting them to strike out on their own.
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Funds
Flagship Pioneering, which re-opened its Fund VII in April to current limited partners and new investors, has closed the vehicle with $3.37 billion to continue investing in human health and sustainability startups. The Cambridge, Mass.-based firm now operates with an aggregate capital pool of $6.7 billion, with $14.1 billion in assets under management.
SOSV closed its latest fund at its $100 million hard cap. Over the next three years, the Princeton, N.J.-based firm will tap SOSV Select Fund to make Series B or later investments of between $2 million to $5 million in 20 to 30 existing portfolio companies. Limited partners in the new fund include Credit Suisse, WTT Investment Ltd., Golden Vision Capital and AIFAM Group, along with family offices across the U.S., Europe, Asia and Australia. Alongside the new Select Fund, SOSV will continue to deploy capital from its $277 million SOSV Fund IV fund.
Tel Aviv-based Meron Capital closed its second fund with $50 million in commitments. The new fund will target between 18 to 20 pre-seed and seed investments in Israeli startups that are building software-based technology for enterprise, cybersecurity, digital health, fintech and DevOps. To date, Meron II has invested in LendAI, Sorbet, Firmbase and Laminar.
People
Distributed SQL database provider Cockroach Labs named Lorenzo Montesi as chief financial officer. He was most recently senior vice president of finance at Cohesity. In January, New York-based Cockroach Labs landed a $160 million investment led by Altimeter Capital at a $2 billion valuation.
Exits
AbSci LLC, a startup that provides a protein expression platform for biopharmaceutical discovery and manufacturing, is adding antibody and target discovery technology with the acquisition of Totient. Terms weren’t disclosed. Vancouver, Wash.-based AbSci in March raised a $125 million funding round from investors including Casdin Capital, Redmile Group, aMoon and Irving Investors. Totient, of Cambridge, Mass., had secured funding from Mission BioCapital, Sands Capital, Viva Biotech, Kaitai Capital and Tau Ventures.
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Lyra Health, a Burlingame, Calif.-based provider of mental-health care benefits for employers, picked up a $200 million investment, valuing the company at $4.6 billion. Coatue Management led the round, with additional participation from Sands Capital and others.
ecoATM Gazelle, which enables people to sell or recycle their smartphones at designated kiosks, scored $75 million in growth equity funding from existing investor Cowen Sustainable Advisors.
Immersive Labs, a U.K.-based startup that helps teams improve their cybersecurity skills, completed a $75 million Series C round. Insight Partners led the funding, which saw participation from Menlo Ventures, Citi Ventures and Goldman Sachs Asset Management. Ryan Hinkle, managing director at Insight Partners, will join the company’s board.
Motorway, a London-based used car marketplace, raised £48 million ($67.7 million) in Series B funding led by Index Ventures. Additional new investors BMW i Ventures and Unbound also contributed to the round, along with existing backers Latitude Ventures and Marchmont Ventures. Danny Rimer, partner at Index, will join the board.
BillionToOne Inc., a Menlo Park, Calif.-based molecular diagnostics startup, closed a $55 million Series B round. Hummingbird Ventures and Four Rivers Group led the investment, which included participation from Neotribe Ventures, Norwest Venture Partners, Y Combinator and Libertus Capital.
Hello Alice, a Houston-based machine learning platform connecting small business owners to capital, networks and business services, grabbed $21 million in Series B financing. Lead investor QED Investors was joined by Backstage Capital, Green Book Ventures, Harbert Growth Partners, How Women Invest, Silicon Valley Bank, Serena Ventures and others in the round.
Macrometa Corp., a Palo Alto, Calif.-based provider of an edge computing cloud and global data network for developers, nabbed a $20 million Series A round. Pelion Venture Partners led the funding, which included participation from existing investors DNX Ventures, Benhamou Global Ventures, Partech Partners, Fusion Fund, Sway Ventures and Shasta Ventures.
Dishpatch, a London-based provider of meal-kits from local restaurants, was seeded with a £10 million ($14.1 million) investment co-led by Andreessen Horowitz and LocalGlobe.
Underground Cellar, a San Francisco-based wine ecommerce startup, snagged $12.5 million in Series A financing. Accomplice led the round, which included participation from Golden Ventures and Bling Capital. In addition to the funding, the company appointed Jeff Hardy as chief operating officer. He was previously chief business officer at Tapingo.
UtilizeCore, a New York-based service management automation platform, secured a $5.3 million investment. Boldstart Ventures led the round, which included contributions from Mantis VC and others.
Anrok, a San Francisco-based sales tax service built specifically for software-as-a-service businesses, was seeded with a $4.3 million investment co-led by Index Ventures and Sequoia Capital.
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Tesla held about $1.3 billion in bitcoin at the end of the first quarter.
PHOTO: JOE RAEDLE/GETTY IMAGES
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