Industrial IoT company PTC to acquire Onshape, maker of a SaaS product development platform for CAD, for $470M; Onshape has received over $150M in VC funding — The $470 million deal should help PTC, a major industrial IOT player, accelerate its transition to a SaaS-based business model.
Limited partners or LPs — the pension funds, the university endowments, the family offices that largely provide venture firms with their spending money — are receiving a lot of attention from venture capitalists, some of it unwanted. VCs have begun knocking down their doors with requests for fresh capital commitments so they’ll have money to invest if the market cools down.
The problem is, many of these LPs are already over-allocated. LPs traditionally invest in many asset classes, such as public equities, and they allocate a small percentage of their portfolio to venture capital. Suddenly, they’re finding they’ve forked over more than they’d intended to VCs.
There are several reasons for this situation. First, VCs are returning to them ever faster for more capital — sometimes in less than two years’ time — because they are in vesting at such a furious pace.
Compounding the problem, not all LPs have received returns from their VC investments that they can recycle into new venture capital allocations. In some cases, this capital is still tied up in startups that are raising much more money than in the past and staying private longer. “We have some large exposures to blue chip names where IPOs have been rumored to be coming for a long time already, and now it’s maybe 2021, maybe 2022,” says one endowment manager who asked not to be named. In other cases where startups have gone public, falling prices have prompted VCs to hang on to their shares instead of distribute them.
The result is that LPs are having to cut back on the number of managers they can fund, and that could mean bad news for venture capitalists and startups alike. These LPs don’t have much choice. As the LP explains it, “We have a pretty structured allocation process, and we’re really trying to be creative,” she says. One venture manager who reappeared too quickly for more money was “easy to walk away from,” says this person. “Others, we’re having to do financial backflips for them to remain strong partners.”
Either way, this LP adds, “We can’t add any new relationships right now,” meaning new venture teams in particular are out of luck. “When [VCs] shorten their fundraising cycle by nine months to a year, you can only squeeze the balloon so much.”
Backing up the truck
SoftBank’s $100 billion “Vision Fund” is one big reason LPs find themselves in their current predicament. From the moment SoftBank began waving money around several years ago, it launched a vicious cycle. According to Chris Douvos, whose investment firm, Ahoy Capital, owns stakes in such venture funds as True Ventures and First Round Capital, “When Andreessen Horowitz hit the scene a decade ago, they changed the tempo of investing and everyone got more aggressive in their dealmaking as a response. Then SoftBank entered the picture in a big way, and it was like a16z on steroids.”
In order to compete with SoftBank’s money cannon, other funds supersized their own investment vehicles, and startup valuations soared. Uber and WeWork were prime examples. Uber went public, pricing below expectations, and its shares have been falling ever since. WeWork and its unconventional S-1 filing never made it past the starting gate.
Competitors are enjoying some schadenfreude: they can’t help but delight in SoftBank’s pain. But WeWork’s slow-motion implosion comes at an uncertain moment in time. If a second massive Vision Fund doesn’t come together — and that seems more than likely at this point — it would mean a sharp drop-off in startup funding. That alone might be fine. It might even be healthy for the ecosystem. But the world is also grappling with a U.S. administration that appears increasingly unhinged. More, a recession that seemed far away as recently as early July but could be around the corner.
Collectively, these elements could change the picture dramatically for LPs. Specifically, if LPs aren’t getting enough money back from VCs and their public holdings fall in value because the markets hit the skids, their commitments to venture funds could become even larger as a percentage basis of their overall portfolio. That would create even more imbalance in their asset allocation. Which would mean even less money for new funds. Which would translate into less money for startups.
It’s a vicious cycle of another kind, in short.
Maybe it won’t happen. We aren’t there yet. But VCs of all sizes would be wise to take a lesson from their entrepreneurs and perfect their pitches. As is becoming clear, LPs can’t dole out capital at the same pace forever, especially without more money coming back to them. If VCs want to continue raising new funds, or raising funds as fast, they’d better have a very good story to tell.
Cision, a media monitoring services firm and parent of PR Newswire, to go private after being acquired by an affiliate of PE firm Platinum Equity for $2.74B — CHICAGO: An affiliate of private equity firm Platinum Equity has agreed to acquire Cision for $2.74 billion.
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If you are rocking a Redmi K20 then there is good news for you. The smartphone has started receiving the MIUI 11 update. You can check for the update on your Redmi K20 by going into the settings, then head into the 'about phone' option and click on system update. If you don't see the update immediately, then worry not. You should see it in a day or so. The MIUI 11 update is 766MB in size and brings with it the September 2019 Android security patch. Along with the Redmi K20, the Poco F1, Redmi Y3, Redmi 7, Redmi Note 7, Redmi Note 7s and the Redmi Note 7 Pro are the devices that will receive the MIUI 11 update first. These phones are a part of phase 1 and will receive the update between October 22 and October 31. Those rocking the Redmi K20 Pro will have to wait till phase 2 which is between November 4 and November 12.
Coming to the features of the update, it will rehaul the UI and the descriptor says that the visual clutter is removed and the touch controls have been improved. Users also get the option of an always-on display with dynamic themes. The descriptor reads, “Keep your screen alive with our amazing special effects” and we are looking forward to seeing these effects in action on the lock screen.
Users also get the sounds of nature, where they can “wake up to the gentle sounds of nature with our new alarm ringtones”. The notification sounds can also change dynamically. Mi Share will also make its way to the device and Xiaomi claims that this will let users “Transfer files from phone to phone at breakneck speeds”.
An interesting feature that makes its way to the device is the ability to preview a document before opening it. Users will also be able to print photos and documents directly from the phone without installing additional apps. So if you have a Wi-Fi enabled printer, you should be able to print without installing a third-party app.
If you want to know whether your Xiaomi device is receiving the MIUI 11 update, you can check out the list of all the devices receiving the MIUI update along with their release window here.
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Researchers: China's state sponsored hackers have switched tactics over the last few years, focusing increasingly sophisticated attacks on its ethnic minorities — SAN FRANCISCO — China's state-sponsored hackers have drastically changed how they operate over the last three years …
Confirming earlier reports, The We Company and SoftBank Group agreed to a new capital infusion which will see SoftBank committing $5 billion in new financing and issuing a tender offer for another $3 billion in buybacks for shareholders.
The company also said it would accelerate an existing commitment to put $1.5 billion into the short-term real estate rental company.
Under the specific terms of the deal, WeWork will receive $1.5 billion committed from SoftBank’s April 2020 cash infusion into the company at $11.60 per share. With that money expected to come in seven days after the deal is signed (subject to shareholder approval).
There’s also the tender offer for up to $3 billion worth of non-SoftBank owned shares at a price of $19.19 per share, which will begin in the fourth quarter of this year, with closing subject to regulatory approvals.
Finally there’s a joint venture share swap where all of SoftBank Vision Fund’s interests in regional joint ventures outside of Japan will be exchanged for WeWork shares at a price of $11.60 per share’ and a debt facility consisting of $1.1 billion in senior secured notes, $2.2 billion in unsecured notes, and a $1.75 billion letter of credit facility, which will occur after the tender offer is completed.
After the closing and the tender offer, SoftBank will own approximately 80 percent of the We Company, according to a statement.
But SoftBank will not actually will not hold a majority of voting rights at any stockholder or board of directors meeting, thanks to WeWork’s convoluted ownership structure. Therefore, even with its 80 percent stake in the business, WeWork isn’t a subsidiary, but an “associate” of SoftBank.
As part of the agreement, the company confirmed that Adam Neumann will become a board observer and Marcelo Claure, the chief operating officer of SoftBank Group will assume the position of executive chairman of the board of directors of WeWork — as soon as the company receives its $1.5 billion payment from SoftBank.
“SoftBank is a firm believer that the world is undergoing a massive transformation in the way people work. WeWork is at the forefront of this revolution. It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced,” said Masayoshi Son, chairman and chief executive of SoftBank Group Corp, in a statement. “Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support. We remain committed to WeWork, its employees, its member customers and landlords.”
The vision may remain unchanged, but the story that SoftBank will have to tell about its new “associate”. Under Neumann’s stewardship, We Company was a cash-burning, globe-spanning, all-encompassing community developer that would usher in a new kind of capitalism, operating under the banner of “We”.
Now, the company is more like a struggling purveyor of temporary office space, which has a mountain of leases it owns and is looking down the barrel of a potential cash crunch — even with the SoftBank lifeline.
Still, SoftBank’s executives and WeWork’s new leadership are standing by their rhetoric for what the company is… and can be.
“WeWork is redefining the nature of work by creating meaningful experiences through integrating design, technology and community. The new capital SoftBank is providing will restore momentum to the company and I am committed to delivering profitability and positive free cash flow,” said Claure in a statement. “As important as the financial implications, this investment demonstrates our confidence in WeWork and its ability to continue to lead in disrupting the commercial real estate market by delivering flexible, collaborative and productive work environments to our customers.”
Amazon debuts free, ad-supported news aggregation app for Fire TV in the US, letting users watch clips and live feeds from nearly 20 outlets like Reuters, CBS — Beginning today, Amazon will be rolling out a news aggregation app for Fire TV users in the U.S. The app serves …
Trend Micro acquires Cloud Conformity for $70M, says the acquisition will help it address security issues caused by cloud infrastructure misconfigurations — The deal will see all Cloud Conformity staff and customers join Trend Micro. — Trend Micro has announced the acquisition …
Financial Times : Russian cryptocurrency payment network A7 expands to Africa, as Moscow builds an alternative payments system amid weste...
