Axios Pro Rata: Biden punts on capital gains

Plus, Apple does a rare VC deal and the FTC seeks to block a biotech megamerger. | Wednesday, March 31, 2021

Open in app View in browser   Presented By Forge Global   Pro Rata By Dan Primack ·Mar 31, 2021 🖥️ Today at 12pm ET: Axios hosts a virtual event on the tech M&A market, including conversations with Slack CEO Stewart Butterfield and Merus Capital's Sean Dempsey and Salman Ullah. Join us. ✔️ Do you have colleagues, friends or casual acquaintances who don't get these morning missives? Please ask them to sign up.     Top of the Morning Illustration: Annelise Capossela/Axios   The carried interest loophole is beginning to look immortal. Driving the news: President Biden today will unveil a $2 trillion infrastructure plan that the White House hopes to pay for via changes to the corporate tax code. But it will not include any changes to individual income taxes, including on capital gains. Why it matters: Presidents don't normally get two swings at major tax reform, which is why Trump and Congressional Republicans did both corporate and individual taxes in the same 2017 bill. Biden may prove the exception by addressing income taxes in a subsequent "social infrastructure" plan but, for now, it looks like his focus is on raising the corporate rate from 21% to 28%. Plus implementing a global minimum tax of around 21% (calculated on a country-by-country basis), cutting a tax exemption on the first 10% of overseas profits and ending tax subsidies for fossil fuel producers. Biden pledged during the campaign to change capital gains taxation, and reports last week were that he would propose that individuals pay ordinary rates on all annual investment income of over $1 million. This would have been a backdoor way to increase taxes on carried interest, at least for many VC, private equity and hedge fund managers. Presidents Obama and Trump had pledged to directly change the tax treatment of carried interest, but neither succeeded. When asked about the capital gains omission last night during a press backgrounder, a senior administration official said: "Capital gains is not addressed here. The reason for that is that the focus of this plan is on corporate tax reform and reforming the corporate tax system. And we think that that is important as a matter of fairness and also important as a matter of encouraging domestic investment." Caveat: The White House still seems to be working through its legislative strategy on all this. If taxes and infrastructure spending get separated, then Biden's tax proposal could change. The bottom line: Private fund managers are unlikely to cheer any proposal that includes a major corporate tax rate increase. But they're certainly breathing some sighs of relief. 🎧 Listen up: White House economic adviser Jared Bernstein joins me on Axios Re:Cap after Biden's speech (we'll publish a bit later than usual). Subscribe here.     The BFD Illustration: Sarah Grillo/Axios   UnitedMasters, a Brooklyn-based distribution platform for musicians, raised $50 million in Series B funding led by Apple. Why it's the BFD: Apple rarely participates in a venture capital round, let alone leads one. In fact, the last one we can find was a 2017 investment in Didi Chuxing. Return backers were Alphabet and Andreessen Horowitz. Bottom line: This is kind of like Substack for music, in which artists can bypass record companies and release their music straight onto streaming platforms like Apple Music and Spotify. No wonder Andreessen Horowitz is involved. The company is led by music industry vet Steve Stoute, and claims to have over one million artists on its platform.     Venture Capital Deals • Nice Tuan, a Chinese community grocery buying app, raised $750 million. Alibaba and DST Global co-led, and were joined by D.E. Shaw, Anatole Investment, Beijing Shuhi Technology and Jeneration Capital. http://axios.link/ZMSW • HighRadius, a Houston-based provider of receivables software, raised $300 million in Series C funding at a $3.1 billion valuation. D1 Capital and Tiger Global co-led, and were joined by Iconiq and Susquehanna Growth Equity. http://axios.link/ujuq • Next Insurance, a Palo Alto-based small business, raised $250 million. FinTLV Ventures and Battery Ventures co-led, and were joined by CapitalG, Group 11, Zeev Ventures, Founders Circle and G Squared. www.nextinsurance.com • Tonal, an at-home strength and personal training platform, raised $250 million in Series E funding from Dragoneer, Cobalt Capital, L Catterton, Sapphire Ventures and individuals like Mike Tyson and Maria Sharapova. http://axios.link/86bE 🚑 Pyxis Oncology, a Cambridge, Mass.-based cancer biologics startup, raised $152 million in Series B funding. Arix Bioscience and RTW Investments co-led, and were joined by Perceptive Advisors, RA Capital Management, Pfizer Ventures, BVF Partners, Janus Henderson, Cormorant, HBM Healthcare, Tekla Capital, Acuta Capital Partners, Ridgeback Capital Investments, Surveyor Capital, Laurion Capital Management, Logos Capital and LifeSci Venture Partners. http://axios.link/tVfS • Uniphore Software, an Indian provider of customer service call analytics, raised $140 million in Series D funding. Sorenson Capital Partners led, and was joined by Cisco and insiders March Capital Partners and Chiratae Ventures. http://axios.link/nxrR • Otrium, a Dutch startup that helps clothing brands sell end-of-season items, raised $120 million in Series C funding. Bond and return backer Index Ventures co-led, and were joined by Eight Roads Ventures. http://axios.link/OOob 🚑 Entrada Therapeutics, a Boston-based biotech focused on neuromuscular diseases like Duchenne muscular dystrophy, raised $116 million in Series B funding. Wellington Management led, and was joined by Redmile Group, TCG Crossover, Greenspring Associates, Point72, QIA, Moore Strategic Ventures, Goldman Sachs, CureDuchenne Ventures and insiders 5AM Ventures, MPM Capital, Roche, MRL Ventures Fund and Agent Capital. http://axios.link/JLda • Manticore Games, a San Mateo, Calif.-based multiplayer game creation platform, raised $100 million in Series C funding. XN led, and was joined by SoftBank Vision Fund 2, LVP and insiders Benchmark, Bitkraft, Correlation Ventures and Epic Games. http://axios.link/5Uj3 🚑 Scribe Therapeutics, an Alameda, Calif.-based molecular engineering startup co-founded by Jennifer Doudna, raised $100 million in Series B funding. Avoro Ventures led, and was joined by OrbiMed, Andreessen Horowitz, Perceptive Advisors, T. Rowe Price, Wellington Management, RA Capital Management and Menlo Ventures. www.scribetx.com • Productiv, a Palo Alto-based SaaS management platform, raised $45 million in Series C funding. IVP led, and was joined by Atlassian and insiders Accel, Norwest Venture Partners and Okta. www.productiv.com 🚑 OncoResponse, a Seattle-based immune-oncology startup, raised $40.6 million in Series C funding. Magnetar Group led, and was joined by Yonjin Venture, Bering Capital and insiders RiverVest Venture Partners, QIA, Redmile Group, Helsinn Investment Fund, Canaan Partners and Arch Venture Partners. www.oncoresponseinc.com • Catalant Technologies, a Boston-based freelancer marketplace, raised $35 million led by Morningside Group. www.gocatalant.com • ImToken, a Singapore-based crypto wallet and blockchain tech startup, raised $30 million in Series B funding. Qiming Venture Partners led, and was joined by IDG Capital, Breyer Capital, HashKey, Signum Capital, Longling Capital, SNZ and Liang Xinjun. http://axios.link/ph5L 🚑 Outpace Bio, a Seattle-based developer of "smart cell therapies," raised $30 million in Series A funding. Artis Ventures and Lyell Immunopharma co-led, and were joined by Abstract Ventures, Civilization Ventures, Mubadala, Playground Global, Sahsen Ventures and WRF Capital. www.outpacebio.com 🚑 HealthPlix, an India-based digital health platform, raised $13.5 million in Series B funding led by Lightspeed Venture Partners. http://axios.link/y6TQ • Spekit, a Denver-based digital adoption and enablement platform, raised $12.2 million in Series A funding. Foundry Group and Renegade Partners co-led, and were joined by Operator Collective, Matchstick Ventures and Bonfire Ventures. www.spekit.co • SuperRare, an NFT art platform, raised $9 million in Series A funding. Velvet Sea Ventures and 1confirmation co-led, and were joined by CollabFund, Shrug Capital, Sound Ventures, Third Kind, Samsung Next and individuals. http://axios.link/CXlS • Gro, a London-based decentralized finance startup, raised $7.1 million in seed funding from Galaxy Digital, Framework Ventures and Northzone. http://axios.link/DxMU • Elistair, a French developer of tethered drones, raised €5 million in Series B funding from Omnes and insider Starquest Capital. www.elistair.com • Nested, a London-based real estate agency startup, raised £5 million from Axel Springer and insiders Balderton Capital and Northzone. http://axios.link/9BNu • Tugende, a Ugandan asset finance startup, raised $3.6 million in new Series A funding. Partech led, and was joined by Enza Capital. http://axios.link/lKGk • Gryps, a New York-based robotic process automation startup for construction, raised $1.5 million in seed funding. LDV Capital led, and was joined by Pear VC. www.gryps.io     A message from Forge Global SPACing Out: A window of opportunity     Before a SPAC completes its merger, investors can buy shares of the SPAC on the public market or of the merging company on the private market. Why it's important: Emerging trends in the private market are showing there is more than one way to take advantage of SPACs. Learn how to buy in pre-exit.     Private Equity Deals 🚑 Align Capital Partners acquired Custom Veterinary Services, a Miami, Fla.-based formulator and contract manufacturer for animal health. www.customvetservices.com 🚑 EQT is nearing agreement to buy French lab firm Cerba HealthCare from Partners Group for €4.5 billion, per Bloomberg. http://axios.link/4v5S 🚑 L Catterton invested around $180 million in PHCHD, a Japanese diabetes management and healthcare services company whose other shareholders include KKR, Panasonic, Mitsubishi Chemical and Mitsui & Co. • TDR Capital agreed to buy London-based asset manager Arrow Global (LSE: ARW) for £563 million., http://axios.link/d1qr • Thomas H. Lee Partners agreed to buy Bazaarvoice, an Austin, Texas-based provider of product review and user-generated content solutions, from Marlin Equity (which retains a minority stake) at what PE Hub reports was a valuation of over $1.5 billion. http://axios.link/sLA6     Public Offerings Illustration: Sarah Grillo/Axios   • Coursera, a Mountain View, Calif.-based online learning company, raised $519 million in its IPO. The company priced at $33 per share (high end of range), for an initial market cap of $4.3 billion, and will list on the NYSE (COUR). It reports a $67 million net loss on $294 million in revenue for 2020 and raised $463 million in VC funding from firms like NEA (18.3% pre-IPO stake), G Squared (15.9%), Kleiner Perkins (9.2%), Future Fund (7.9%), The Lampert Foundation, GSV Ventures and Learn Capital. http://axios.link/SRpo 🚑 Achilles Therapeutics, a London-based biotech focused on solid tumors, raised $176 million in its IPO. The pre-revenue company priced at $18 (middle of range), for an initial market cap of $731 million, and will list on the Nasdaq (ACHL). Shareholders include Syncona (35.9% pre-IPO stake), RA Capital (11.8%), Baker Brothers (10.5%) and Forbion (6.9%). http://axios.link/WYLg • Appier, a Taipei-based self-serve prediction platform for online marketers, raised $271 million in a Tokyo IPO. The company had raised around $160 million from firms like Sequoia Capital China, SoftBank, HOPU, Temasek, Insignia Venture Partners, JAFCO, UMC Capital and TGVest. http://axios.link/5bbW • GPS, a Brazilian facilities services provider backed by Warburg Pincus and Gavea Investimentos, plans to raise up to $656 million in its IPO. http://axios.link/0UXz • InMobi, an Indian mobile ad services firm, is prepping a U.S. IPO for later this year, per Bloomberg. The report suggests a possible listing value of $15 billion. http://axios.link/LDQ8 🚑 Treace Medical Concepts, a Ponte Vedra, Fla.-based maker of surgical orthopedic devices for treating bunions, filed for a $100 million IPO. It plans to list on the Nasdaq (TMCI) and reports a $3.7 million net loss on $57 million in revenue for 2020. http://axios.link/JDte     SPAC Stuff • 5G Edge Acquisition, a TMT SPAC led by Douglas Maine (ex-IBM), filed for a $300 million IPO. http://axios.link/in0H • Catcha Investment 2.0, an Asia Pacific SPAC formed by Catcha Group, filed for a $250 million IPO. http://axios.link/yNM6     Liquidity Events 🚑 The FTC says it will seek to block Illumina's (Nasdaq: ILMN) $7.1 billion purchase of Silicon Valley cancer detection company Grail, which had raised around $2 billion from firms like Illumina, Arch Venture Partners, Johnson & Johnson, Hillhouse Capital, Sequoia Capital China, PSP Investments, CPP Investments, and Amazon. http://axios.link/D4RL 🚑 Amgen (Nasdaq: AMGN) agreed to buy Rodeo Therapeutics, a Seattle-based biotech focused on the regeneration and repair of multiple tissues. The deal includes a $55 million upfront payment and up to $666 million in cash earnouts. Rodeo raised around $15 million in VC funding from firms like Accelerator, AbbVie, J&J, Eli Lilly, WRF Capital and Arch Venture Partners. http://axios.link/FD1X • Hitachi (Tokyo: 6501) agreed to buy GlobalLogic, a San Jose, Calif.-based provider of product lifecycle management software, for $9.6 billion from Partners Group and ACE & Co. http://axios.link/gW6V • PSG agreed to sell Pittsburgh-based payments tech provider Pineapple Payments to Fiserv (Nasdaq: FISV). www.pineapplepayments.com • Southern Capital Group and The Carlyle Group are reviving the $1 billion sale process for Indonesian telecom tower operator PT Solusi Tunas Pratama, per Bloomberg. http://axios.link/W7qN     More M&A • Bayer plans to launch an auction for its pest control unit, which could fetch more than $2.4 billion, per Reuters. http://axios.link/7fQB • Cargill agreed to sell its 50% stake in Alvean, the world's largest sugar trader, to Brazilian partner Copersucar. http://axios.link/NDXC     Fundraising • BlackRock raised $2.4 billion for its first private equity secondaries and "liquidity solutions" fund, plus another $600 million for the strategy. www.blackrock.com • Denali Growth Partners, a Boston-based growth equity firm led by Jesse Lane (ex-Summit Partners) raised $203 million for its debut fund. www.denaligrowth.com • Harlem Capital raised $134 million for its second VC fund. http://axios.link/FR77 • Kaya VC, a Central Europe-focused VC firm, raised €72 million for its new fund. http://axios.link/iWia     It's Personnel • Shikha Ahluwalia joined European VC firm Balderton Capital to focus on investments in the DACH region. She previously was an investment banker with JP Morgan. www.balderton.com • Tom Barrack is stepping down as executive chairman of Colony Capital, a year after stepping down as CEO. http://axios.link/Nsrr 🚑 Thomas Krummel joined Santé Ventures as a venture partner. He currently is a professor emeritus and co-director of the Byers Center for Biodesign at Stanford's medical school. www.sante.com     Final Numbers Source: PitchBook biotech report. Data for U.S. geography through March 17, 2021. Biotech boomed in 2020, with the median IPO size topping $450 million (34.5% year-over-year increase), while private round step-up multiples hit their highest mark since 2014. PitchBook explains: "This healthy valuation jump can be attributed to: biotech companies commanding higher valuations during a global pandemic as many allocated R&D capital toward COVID-19 efforts; a midyear dearth of other attractive, high-conviction names; and, finally, increasingly mature drug pipelines tackling a wider range of diseases."     A message from Forge Global Why unicorns should consider a new kind of cash-out program     Custom liquidity programs provide the same benefits of a tender offer and may result in better pricing. The reason: Companies gain insights into market-based pricing. Multiple investors can participate in the offer. Flexible selling windows for employees can increase retention.   ✏️ This newsletter is written in Smart Brevity®. Learn how your team can communicate in the same smart, clear style with Axios HQ.   Axios thanks our partners for supporting our newsletters. Sponsorship has no influence on editorial content. 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