Axios Pro Rata: SEC clamps down on Chinese IPOs

Plus, Elon's *other* company raises big cash. | Friday, July 30, 2021

Open in app View in browser   Presented By Duolingo   Axios Pro Rata By Dan Primack ·Jul 30, 2021 🚨 Breaking: I'm on a beach for the next two weeks, with Kia Kokalitcheva holding down the Axios Pro Rata fort. Yes, I'll miss you too. Please send news, tips and plenty of coffee to kia@axios.com.     Top of the Morning Illustration: Sarah Grillo/Axios   Chinese companies will be unable to go public in the U.S. unless they make new risk disclosures, according to a statement released Friday morning from SEC chair Gary Gensler. Why it matters: Chinese companies, and tech startups in particular, are already under growing pressure from their own government. Now they're also getting squeezed by U.S. officials. How we got here: SEC commissioner Allison Lee said earlier this week that Chinese companies listed in the U.S. must disclose the risk of Chinese government interference in their business, following its punitive actions against companies like Didi. Just hours before Gensler's statement, Reuters reported: "The SEC has asked companies not to submit any registrations for the issuance of securities until it gives them specific guidance on how to disclose the risks they face in China." What Gensler said: Chinese companies seeking to register in the U.S. must disclose if they: "Received or were denied permission from Chinese authorities to list on U.S. exchanges; the risks that such approval could be denied or rescinded" and if such approval was rescinded. Such companies also must allow the Public Company Accounting Oversight Board to inspect the issuer's public accounting firm within three years. If PCAOB is unable to do so, the company may be delisted. He also "asked staff to engage in targeted additional reviews of filings for companies with significant China-based operations." What it could mean, at least for now: Delayed or blocked U.S. IPOs for Chinese companies, several of which are in the post-Labor Day pipeline. Ditto for secondary stock offerings for already-public Chinese companies. It's less clear if this would affect Chinese companies going public in the U.S. via SPAC. The SEC registration process on such deals is technically for the SPAC, not for the company being acquired. For context, Chinese companies have raised nearly $13 billion so far in 2021 via U.S. stock listings, an all-time record. The bottom line: Chinese companies, and tech startups in particular, have long been supported by both local officials and U.S. markets. Now their friends have become foes.     The BFD Illustration: Lazaro Gamio/Axios   Neuralink, Elon Musk's embedded brain chip startup, raised $205 million in Series C funding led by Vy Capital. Why it's the BFD: Musk can be maddening, and a violator of securities laws, but his companies tend to achieve their moonshot ambitions. Other investors include GV, Valor Equity Partners, Craft Ventures and Founders Fund. Bottom line: "Neuralink aims to implant wireless brain computer chips to help cure neurological conditions including Alzheimer's, dementia and spinal cord injuries and fuse humankind with artificial intelligence." — Reuters     Venture Capital Deals 🚑 Deep Genomics, a Toronto-based drug discovery startup that leverages AI, raised US$180 million in Series C funding. SoftBank Vision Fund 2 led, and was joined by CPPIB, Fidelity, Alexandria Venture Investments and insiders Amplitude Ventures, Khosla Ventures, Magnetic Ventures and True Ventures. http://axios.link/zHgD 🚑 Rakuten Medical, a San Mateo, Calif.-based developer of drugs for head and neck cancers, raised $166 million in Series D funding. General Catalyst led, and was joined by insiders Rakuten Group and SBI Group. http://axios.link/05ph • La Haus, an online real estate marketplace in Mexico and Colombia, raised $50 million in new Series B equity funding (plus $50m in debt). Acrew Capital and Renegade Partners co-led, and were joined by Bezos Expeditions, Endeavor Catalyst, Moore Strategic Ventures, TIME Ventures, Maluma, Greenspring Associates, Kaszek, NFX and 75 & Sunny Ventures. http://axios.link/imRN • Merqueo, a Colombian on-demand delivery service, raised $50 million in Series C funding. IDC Ventures, Digital Bridge and IDB Invest co-led, and were joined by MGM Innova Group, Celtic House Venture Partners and Palm Drive Capital. http://axios.link/uQoW 🚀 Varda, a developer of in-space factories, raised $42 million. Khosla Ventures and Caffeinated Capital co-led, and were joined by Lux Capital, General Catalyst and Founders Fund. http://axios.link/VLWa 🚑 Talkiatry, a New York-based in-network psychiatric care startup, raised $20 million in Series A funding led by Left Lane Capital. http://axios.link/7gCo • Tenderly, a platform for Ethereum devs to ship decentralized apps, raised $15.3 million in Series A funding. Accel led, and was joined by Point Nine Capital. http://axios.link/tEg0 • The New Primal, a Charlestown, S.C.-based maker of "clean ingredient" meat snacks, raised $15 million in Series B funding from Manna Tree. www.thenewprimal.com • Amplify Life Insurance, a digital permanent life insurance platform, raised $2.5 million in seed funding. Anthemis led, and was joined by Transverse Venture Fund. www.beamplify.com • Mentor Spaces, a Denver-based mentorship platform for corporate DNI efforts, raised $2.5 million in seed funding led by the American Family Insurance Institute for Corporate and Social Impact. www.mentorspaces.com • Hello Divorce, an online divorce enablement platform, raised $2 million in seed funding. CEAS led, and was joined by Lightbank, Northwestern Mutual Future Ventures and Gaingels. http://axios.link/zmDr • Pangea, a Providence-based student labor marketplace, raised $2 million in seed funding. IDEA Fund Partners led, and was joined by Unpopular Ventures, Brown Angel Group and PJC. http://axios.link/5GWF • Settle, a San Francisco-based provider of cashflow management solutions, is in talks to raise funding at a $600 million valuation, per Bloomberg. To date it's raised $23 million from firms like Kleiner Perkins, Founders Fund, SciFi and Caffeinated Capital. http://axios.link/ZGij     A message from Duolingo Duolingo is the world's #1 education app     500 million exercises a day are learned on Duolingo. The background: Duolingo offers free, fun and effective language lessons to half a billion learners and uses AI to keep improving the experience for all of them. Get to know Duolingo today.     Private Equity Deals • Airtel Mobile Commerce, the mobile money business of Airtel Africa, raised $200 million from Qatar Holdings. http://axios.link/IEeg • Apollo Global Management made a $200 million preferred equity investment in FirstDigital Telecom, a Salt Lake City-based carrier. www.firstdigital.com • Astorg and Bridgepoint completed their previously announced purchase of Fenergo, an Irish provider of regulatory software to financial institutions, from Insight Partners. http://axios.link/imEW • Prelude Growth Partners invested in Fly by Jing, a Los Angeles-based Asian food brand. www.flybyjing.com • Serent Capital agreed to invest in First Due, a New York-based provider of records and operations software for fire and EMS agencies. http://axios.link/mxth     Public Offerings Source: Giphy • Dole, the branded fruit and vegetable purveyor, raised $400 million in its IPO. The company priced at the low end of its downwardly-revised $16-$17 range, and will list on the NYSE (DOLE). http://axios.link/zAPw 🚑 Rani Therapeutics, a San Jose, Calif.-based developer of a "robotic pill" for drug delivery, raised $73 million in its IPO. The company priced at $11 (below $14-$16 range), will list on the Nasdaq (RANI) and had raised around $220 million in VC funding from firms like InCube Ventures, GV, Novartis, AstraZeneca, Ping An Ventures and Shire. http://axios.link/lEXn • Teads, a Dutch digital advertising platform owned by Altice, postponed an IPO that was expected to raise around $750 million. http://axios.link/N1wT     SPAC Stuff • Hawks Acquisition, a SPAC for recaps of highly-levered businesses, filed for a $200 million IPO. http://axios.link/B8RT ⚡ Kimbell Tiger Acquisition, an energy and natural resources SPAC, filed for a $200 million IPO. http://axios.link/uL88 🚑 LifeSci Acquisition, a life sciences SPAC, filed for a $75 million IPO. http://axios.link/6oWw     Liquidity Events 🚑 Cobepa is considering a sale of BioAgilytix, a Durham, N.C.-based drug research services firm that could fetch more than $2 billion, per Bloomberg. http://axios.link/1HTV • Substack acquired Letter, an Australia-based free platform for written debate. Sellers include CMB Capital and Sydney Angels. http://axios.link/bmAv     More M&A • Qualtrics (Nasdaq: XM) agreed to buy Clarabridge, a Reston, Va.-based customer experience platform, for $1.1 billion in stock. Clarabridge had raised around $200 million (plus a PPP loan) from firms like General Catalyst, Summit Partners and Harbert Growth Partners. http://axios.link/trCp • Xavier Niel offered to pay €3.1 billion for the 29% stake he doesn't already hold in French telco Iliad (Paris: ILD), thus taking it private. http://axios.link/iKjy     Fundraising • Ares SSG raised more than $1.6 billion for its third secured lending opportunities fund focused on Asia-Pacific. www.aresmgmt.com • B Capital Group, a VC group led by Eduardo Saverin, raised $225 million for a health care fund and $223 million for a China fund, per an SEC filing.     It's Personnel • Canada Pension Plan Investment Board promoted Suyi Kim to head of Asia operations. http://axios.link/AtSt • T. Rowe Price said that Rob Sharps, president and head of investments, will become CEO next year, succeeding Bill Stromberg. http://axios.link/ctW2     Final Numbers Data: YCharts; Chart: Axios Visuals Robinhood shares closed down 8% on their first day of trading, after the no-fee trading app priced its IPO at the low end of a $38-$42 range. Most notable might have been some of the glee expressed on Reddit message boards, suggesting that there are still hard feelings from the GameStop saga. Reminder: Day one trades make for good stories, but aren't determinative of future performance. Just ask Facebook. Nasdaq president Nelson Griggs yesterday said that there is "a bit of fatigue" around IPOs, but added that there's a crowded slate of listings set for September and October. Watch party: Me talking HOOD IPO with CNBC     A message from Duolingo Duolingo is the world's #1 education app     500 million exercises a day are learned on Duolingo. The background: Duolingo offers free, fun and effective language lessons to half a billion learners and uses AI to keep improving the experience for all of them. Get to know Duolingo today.   🙏 Thanks for reading Axios Pro Rata! Please ask your friends, colleagues and beachcombers to sign up. Like this email style and format? Learn more about Axios HQ. It'll help you deliver employee communications more effectively.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Suite 1300, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: