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WeWork lawsuit against SoftBank highlights investor rift
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| (Drew Angerer/Getty Images News) |
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SoftBank's decision to back out of a $3 billion tender offer for WeWork shares is now the subject of a lawsuit that highlights a potential financial blow to Benchmark and former WeWork CEO Adam Neumann, both large stakeholders in the company.
A special committee of WeWork's board announced Wednesday that it has filed a lawsuit in the Delaware Court of Chancery, alleging that SoftBank is in breach of its October agreement and its fiduciary duties. The suit charges that SoftBank's failure to make good on the deal is a sign of its "desperate financial condition" and pressure from activist investor Elliott Management.
Last week SoftBank listed five conditions of the rescue deal that were not met by WeWork, which the lawsuit is now aiming to refute.
Companies rarely sue their investors, but the dispute lays bare how much is riding on SoftBank's decision. A termination of the offer threatens to hold back a massive payday for Neumann, Benchmark, WeWork employees and other stakeholders. More than half of the $3 billion tender offer would have gone to Benchmark and Neumann, with less than 10% going to WeWork employees, according to SoftBank.
Benchmark general partner Bruce Dunlevie is one of two independent directors of the special committee that brought the lawsuit, along with former Coach CEO Lewis Frankfort.
Coronavirus news: Continuing coverage from PitchBook |
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Away, Toast, ezCater join other VC-backed unicorns in laying off staff
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Restaurant software developer Toast let go of hundreds of employees on Tuesday, and the total number of workers affected could near 1,000, The Information reported. The news comes nearly two months after the company reportedly raised $400 million in a Series F at a $4.9 billion valuation.
Corporate catering startup ezCater, meanwhile, laid off more than 400 of its 900 employees, according to Axios. It raised $150 million at a $1.25 billion valuation just one year ago, according to PitchBook data.
Luggage manufacturer Away is in the process of furloughing roughly half of its workforce and laying off an additional 10% of its staff, co-founders Steph Korey and Jen Rubio wrote in a Medium blog post on Tuesday. Founded in 2015 and backed by investors including Wellington Management and Global Founders Capital, Away was valued at $1.4 billion last May. It has recently seen its sales plummet by more than 90% in the wake of the pandemic.
Restrictions resulting from the coronavirus outbreak have continued to batter the travel industry, with several startups in the sector also reporting layoffs in March. |
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Examining the impact of US elections on cyclicality in dealmaking
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SPONSORED
M&A activity has a cyclical nature—so does the democratic process. The thread that ties the present moment in the M&A cycle to past election years in the US is volatility. Not only did the 2008 election unfold against the backdrop of the financial crisis, but the fallout from the bursting of the dot-com bubble rippled through the 2000 cycle.
With the past serving as a guide, this full-length white paper, anchored by an interview with Craig Clay, president of global capital markets at DFIN, draws on PitchBook datasets to examine the impact of US election cycles on dealmaking since 2006.
Download the white paper |
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SoFi snaps up Galileo in $1.2B deal
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Personal finance company SoFi has agreed to buy payments startup Galileo Financial Technologies for $1.2 billion, continuing a string of high-profile acquisitions of VC-backed fintech companies.
Visa agreed in January to purchase Plaid for $5.3 billion, and Intuit struck a $7.1 billion deal for Credit Karma in February. The combined price of these three deals is higher than the value of all global M&A of VC-backed fintech companies during the previous two years, according to PitchBook data.
The Galileo acquisition marks a significant exit for Accel, which led the startup's $77 million Series A last year, as well as for Mercato Partners, the lead investor on an $8 million round in 2014. Accel will see a return of more than 4x on its investment, according to TechCrunch.
Through its APIs, Salt Lake City-based Galileo provides the payments infrastructure that underlies services from other fintech companies such as Chime, Revolut and TransferWise. Several of those customers compete with SoFi, which plans to operate Galileo as an independent company.
Despite a big blow to consumer spending, the global coronavirus crisis has accelerated user adoption of many fintech services. |
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Congress could add $250B to small-business loan program
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| Steven Mnuchin speaks to the press outside the White House in March. (Drew Angerer/Getty Images News) |
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US Treasury Secretary Steven Mnuchin has requested an additional $250 billion from Congress to aid small businesses impacted financially by the coronavirus, a move that comes after banks were overwhelmed by loan requests when an initial $350 billion program launched last Friday. Senate Republicans have indicated hopes of passing a bill to provide the new funding as soon as this week.
There are already signs that the original $350 billion plan, a key part of the $2 trillion US stimulus package passed late last month, may not be enough to meet demand in a ravaged economy. After lawmakers sent out mixed signals last week, it appears most companies backed by VC and PE firms lack clear access to loans from the massive program. It's unclear whether VC- and PE-backed companies would be eligible for the new round of loans.
Last week, we took a closer look at what the stimulus means for VC and PE. |
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The coronavirus outbreak is threatening businesses of every stripe—even boardwalk T-shirt vendors on the Jersey shore. [Vice]
The acquisition of Instagram has proven to be one of Facebook's greatest successes. The relationship between the two companies' CEOs was a different story. [Bloomberg]
Behind the scenes during an unprecedented time at Thamee, one of countless restaurants around the world where life has been overturned by the coronavirus. [Slate]
A white-haired farmer in Maine is the unlikely source of one of the world's great collections of seed diversity. As it always does, though, time is beginning to catch up. [Down East] |
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Since yesterday, the PitchBook Platform added:
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5
VC valuations
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812
People
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204
Companies
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9
Funds
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2016 Vintage Global PE Funds between $250M and $500M
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Webinar: Assessing the pandemic's impact on emerging tech
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Join PitchBook analysts Paul Condra, Robert Le and Cameron Stanfill as they walk through their recent report, "The Ripple Effects of COVID-19 on Emerging Technologies," and discuss how the crisis is affecting different sectors of the startup ecosystem. Other topics will include:
- The outlook on funding for tech startups as investors adjust to the new reality
- How the crisis differs from the global financial crisis and what that means for deal volume
- Current early-stage investment activity and how that's anticipated to change
The webinar will be held on Thursday at 12 p.m. ET/9 a.m. PT.
Register now |
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| Podium has raised a $125 million Series C led by YC Continuity. The company offers software to manage online reviews for businesses. Founded in 2014 and based in Utah, Podium raised $60 million in 2018 at a $435 million valuation, according to PitchBook data. |
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| IVP has led a $100 million Series E for CircleCI, the developer of a platform that helps businesses such as Lyft, PagerDuty and Ford manage software development projects. The San Francisco-based company raised $56 million in July at a $331 million valuation, according to PitchBook data. IVP partner Cack Wilhelm will join CircleCI's board as part of the latest round. |
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Cato Networks collects $77M for security platform
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Analytics startup Glassbox lands $40M Series C
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| Glassbox has raised $40 million in a round led by Brighton Park Capital. The London-based company's platform allows enterprise customers to analyze user behavior on websites and apps. Glassbox has secured a total of $70 million in funding. |
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Logistics startup pulls in $30M
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| Viola Growth has led a $30 million Series D for Bringg, the Tel Aviv-based provider of a delivery logistics platform for restaurants, grocery stores, healthcare companies and other businesses. Bringg has raised more than $83 million in total VC funding, including a $25 million round last year that generated an estimated valuation of $214.7 million, according to PitchBook data. |
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Airbnb could raise another $1B
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| Airbnb is in talks to secure between $500 million and $1 billion in additional debt, according to Bloomberg. The report surfaced one day after the vacation rental leader announced $1 billion in debt and equity funding from Silver Lake and TPG Sixth Street Partners, and a little less than a week after the Financial Times reported Airbnb had cut its valuation to $26 billion. The company said the $1 billion investment announced Monday would be used in part to support its community of hosts hit hard by the coronavirus outbreak. |
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"In total, $1.0+ billion funds accounted for a quarter of all closed funds and nearly 80% of capital raised—both proportions are up significantly from 3.2% and 26.9%, respectively, in 2009. It appears the consolidation in funds stems from the fact that real estate pricing has continued to reach record highs, crimping the return prospects from price appreciation alone."
Source: PitchBook's 2019 Annual Real Assets Report |
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