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Govtech intelligence platform, The Atlas for Cities, bought by Government Executive Media Group

The Atlas for Cities, the 500 Startups-backed market intelligence platform connecting tech companies with state and local governments, has been acquired by the Growth Catalyst Partners-backed publishing and market intelligence company Government Executive Media Group.
The San Diego-based company will become the latest addition to a stable of publications and services that include the Route Fifty, publication for local government and the defense-oriented intelligence service, DefenseOne.
The Atlas provides peer-to-peer networks for state and local government officials to share best practices and is a marketing channel for the startups that want to sell services to those government employees. Through The Atlas, …

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Floww raises $6.7M for its data-driven marketplace matching founders with investors, based on merit

Floww – a data-driven marketplace designed to allow founders to pitch investors, with the whole investment relationship managed online – says it has raised $6.7M / £5M to date in Seed funding from angels and family offices. Investors include Ramon Mendes De Leon, Duncan Simpson Craib, Angus Davidson, Stephane Delacote and Pip Baker (Google’s Head of Fintech UK) and multiple Family Offices. The cash will be used to build out the platform designed to give startups access to over 500+ VCs, accelerators and angel networks.
The team consists of Martijn De Wever, founder and CEO of London based VC Force Over Mass; Lee …

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MSCHF’s Push Party raises an unconventional seed round at a $200 million valuation

As part of its latest stunt, MSCHF, a venture-backed creative studio that’s smarter and more audacious than most, is poking a little fun at the venture industry itself and perhaps publications like TechCrunch too. The startup has spun out a rather simplistic app into a separate company and raised an undisclosed amount of seed funding from a very real venture capital firm at an eye-popping $200 million valuation.

For the time being, the actual completion of the legal paperwork to cement this valuation seems like a more complex hurdle than the technical challenges of building the app itself. Push Party is by all means a Gen-Z Yo, it does one thing and one thing only, allows people to push a button which sends a push notification to every user of the app. There are no friends, no groups, no influencers. It’s a big button that fires off an awful lot of notifications.

Image via MSCHF

Like everything else MSCHF does, the app is designed with virality in mind. The startup’s last application they shipped, “Finger on the App” launched a huge online contest that ended after multiple winners who spent several days with their finger sitting on their phone screen. The fun with this rollout is that there’s no telling who pushed the button especially when users can set their own user names and unsurprisingly seem keen to pick celebrity names.

If the app Push Party takes some heavy inspiration from Yo, it’s also taking a page from what helped make it famous, namely a quizzically high early valuation for a product that did almost nothing. Back in simpler times, 2014, Yo raised $1.5 million on $10 million. But fast forward to 2020 and earning a $10 million valuation for a half-baked conceptual take doesn’t mean quite as much, it’s been normalized to a degree. As a result, MSCHF upped the ante and banked a $200 million valuation for Push Party in this raise.

It used to be that a $200 million valuation was a sign of late-stage traction rather than early-stage hype, but high valuations have grown increasingly common for investors racing to win the most competitive deals. Earlier this summer, audio startup Clubhouse raised eyebrows when it banked a $100 million early valuation, and just a few months ago, Roam, a note-taking app with a cult following raised a seed round on $200 million.

Push Party’s round was financed by Founders Fund with Principal Trae Stephens driving the deal. If you’re puzzled how the MSCHF team bagged a real investor from a real firm for a dubiously real project, the mystery fades when you find Stephens is unsurprisingly a backer of MSCHF itself. Stephens is by all means, in on the joke.

In a tongue-in-cheek press release, Stephens notes that, “We were a bit concerned by the valuation at first, but I told my people to run toward gunfire for anything less than $250 million.”

Is any of this real? Well, MSCHF insists that they went through all of the legal steps of incorporating Push Party and raising this round. How much the startup actually raised is perhaps more suspect, it’s unclear whether this was a $10 million investment or $1 million or $10,000, the team wasn’t too keen to go into details there, though I did ask someone from MSCHF whether the round was more than $100, and they confirmed that it was definitely more than $100.

Though the company refused to dissect what exactly it’s trying to communicate here, I think a good part of it is just poking at the idea that in today’s climate of ridiculous valuations there’s a tendency for some fairly nebulous numbers to signal value or innovation where this isn’t quite as much. And that often times a high valuation from a prestigious firm is a vote of confidence that drives Silicon Valley watchers to drive downloads while other investors toss in checks, engineers send in job applications and, yes, journalists write stories.

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Will new SEC equity crowdfunding rules encourage more founders to pass the hat?

The flow of venture capital in 2020 has been surprisingly strong given the year’s general uncertainty, but while investors have showered plenty of dough on growth-stage companies, seed-stage startups are down 32% last quarter compared to the year before.

There have been plenty of recent conversations about alternative funding routes for founders, and one of those oft-overlooked paths has been equity crowdfunding. While crowdfunding platforms like Kickstarter push consumers to back unrealized projects in exchange for products or other services, equity crowdfunding allows consumers to actually invest cash and receive a piece of the company. It’s not a conventional path, but it can be a viable option for companies that have a close relationship with an engaged customer base.

The Security and Exchange Commission’s Regulation Crowdfunding guidelines were adopted under Title III of the JOBS Act back in 2016, but because many entrepreneurs were unfamiliar with how to participate, many of the startups that have taken advantage of it haven’t been the highest quality. The tide could be turning: This week, the SEC updated some of its guidance on crowdfunding, eliminating some ambiguities and increasing the amount of capital companies can raise from both accredited and nonaccredited investors. Additionally, companies can now raise $5 million per year using equity crowdfunding, compared to the previous limit of $1.07 million.

But life has gotten easier in other ways as well for founders pursuing this fundraising type and the platforms that seek to simplify it.

Wefunder is one of a handful of equity crowdfunding platforms that have popped up in the last few years. Before a company can raise on its platform, Wefunder vets them before allowing them to tap into their network of amateur investors who can invest as little as $100 with the median investment sitting at $250. Last month, 40 companies launched on Wefunder and collectively raised $12 million, according to Wefunder CEO Nicholas Tommarello.

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Do Dunkin’ and Arby’s Go Together? Private Equity Group Bets $11 Billion They Do

In one of the largest restaurant deals in more than a decade, Dunkin’ will join some of America’s best-known restaurant chains, including Arby’s and Buffalo Wild Wings, under a single privately held owner.

Dunkin’ Brands, the parent of Dunkin’ and Baskin-Robbins, agreed on Friday to sell itself for $11.3 billion, including debt, to Inspire Brands, the holding company that owns Sonic Drive-In and Jimmy John’s as well as Arby’s, Buffalo Wild Wings and others. Backed by the private equity firm Roark Capital, Inspire had already grown into one of the country’s largest restaurant operators since it formed less than three years ago. It employs more than 325,000 people, directly and via franchises, across more than 11,000 restaurants.

Buying Dunkin’ will more than double Inspire’s footprint, adding 12,700 Dunkin’ and 7,900 Baskin-Robbins outlets, which are all franchised. Inspire is paying a steep price: a 20 percent premium to Dunkin’s share price in the days before The New York Times first reported the talks. The shares were already trading near a record high, more than doubling since the pandemic hit in March.

“Dunkin’ and Baskin-Robbins are category leaders with more than 70 years of rich heritage, and together they are two of the most iconic restaurant brands in the world,” Paul Brown, the chief executive of Inspire Brands, said in a statement on Friday.

The deal is a bet that Dunkin’ will survive — and even thrive — as much of the industry has been ravaged, with about one in six restaurants having closed this year, some permanently. Fast-food outlets have held up better than full-service restaurants, as takeout and drive-through options have proved to be more appealing than long meals in a room full of strangers.

Dunkin’ has drive-through windows in about 70 percent of its restaurants and was already investing in digital-ordering tools to promote “high-frequency, low-touch” service. A $100 million plan to “accelerate its beverage-led strategy,” as the company described it in 2018, has also paid off as the pandemic has scrambled people’s routines. Customers are coming in later than the traditional before-work rush and ordering more expensive drinks.

“This team’s grit and determination has enabled us to deliver outsized performance and made our brands among the most elite in the quick service industry,” Dunkin’s chief executive, Dave Hoffmann, said in a statement on Friday. “I am particularly proud of our actions since March of this year. During the global pandemic, we have stood tall. We’ve had each other’s backs and are now stronger than ever.”

The chain dropped the word “Donuts” from its name last year, and now generates more than half of its sales from drinks. It serves more than two billion cups of coffee a year, with higher-margin, espresso-based coffees growing in popularity over cheaper options.

“They’re not getting people on their way to work, but they are getting people that are sick of making coffee at home,” said Adam Werner, who works in the restaurants, leisure and hospitality practice at AlixPartners, a consulting firm. Happy to be out of the house, those people might also be enticed to “pick up a couple of doughnuts for kids that are home-schooling,” he added.

Dunkin’ Brands generated $74 million in profits in the third quarter, up about 2 percent from a year earlier. Still, it has been affected by the recession, announcing a plan in the summer to close 800 “low-volume, underperforming locations” this year.

Bill Rosenberg opened the first Dunkin’ Donuts in Quincy, Mass., in 1950. He turned it into a franchise business and passed it on to his son Robert in the 1960s. Since then, the chain has spent time as a publicly listed company as well as a part of larger corporations until, in 2005, a consortium of private equity firms — Bain Capital Partners, the Carlyle Group and Thomas H. Lee Partners — bought it for $2.4 billion from its parent at the time, France’s Pernod Ricard. The consortium owned it for six years before returning it to public investors.

Image
Credit…Angela Rowlings/Associated Press

The takeover by Inspire is the second time that Dunkin’ will be owned by private equity. While Dunkin’ Brands is in a different industry, the private equity owners of retail brands like Neiman Marcus, Payless ShoeSource and Toys “R” Us have been criticized in recent years for those leveraged buyouts, which left behind debt that limited the brands’ ability to respond to new needs before they succumbed to bankruptcy.

Inspire’s primary backer, Roark Capital, isn’t the stereotypical private equity firm. Roark, which is named for the protagonist in “The Fountainhead,” by Ayn Rand, is known for investing in its companies’ digital abilities, managing them at arm’s length and holding investments for longer than the typical three to five years for private equity firms. In some cases, it has held on to companies for more than a decade.

Roark was founded in 2001 with a focus on franchised businesses. It bought Arby’s in 2011, turned the ailing business around and merged it with Buffalo Wild Wings in 2018 to form Inspire Brands, which is controlled by Roark but also raises its own funds from other investors. It acquired Sonic in 2018 and Jimmy John’s in 2019.

What it was missing, until now, was coffee.

With Dunkin’, Inspire is squaring off more directly against Starbucks and JAB Capital, the European private equity firm that owns Panera, Peet’s, Krispy Kreme and others. The digital investments that bolstered Inspire’s other portfolio companies could help Dunkin’ compete where it is already strong in the Northeast. But to grow to more than 17,000 locations, as Dunkin’ has cited as a long-term goal, it may need to go where it has not gone before, at least in earnest — west of the Mississippi, into Starbucks territory.

“The ability to expand on the West Coast is essential,” said Peter Saleh, an analyst at BTIG, a brokerage firm. He warned in a research note in October that Dunkin’ was “approaching saturation in its core Northeast markets.” Dunkin’ opened its first outlets in California in 2015.

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Leon Black Calls Relationship With Jeffrey Epstein a ‘Terrible Mistake’

Leon Black, the billionaire private equity executive whose financial ties to Jeffrey Epstein have sparked questions from his powerful clients, said Thursday that it had been a “terrible mistake” to give Mr. Epstein a second chance after his sex-crimes conviction in 2009.

“I wish I could go back in time and change that decision,” Mr. Black said in prepared remarks during an earnings call for his firm, Apollo Global Management.

The statement was the latest attempt by Mr. Black to quell client worries after The New York Times revealed that he had made at least $50 million in payments and charitable contributions to entities associated with Mr. Epstein over the past decade.

“Knowing all that I have learned in the past two years about Epstein’s reprehensible and despicable conduct, I deeply regret having had any involvement with him,” he said.

Mr. Black, who is also the chairman of the Museum of Modern Art, said he had paid Mr. Epstein for advice on personal financial matters, including the structuring of “art entities” associated with his vast collection, which is valued at more than $1 billion.

Mr. Epstein’s advice, which Mr. Black said had cost him “millions of dollars annually,” was vetted by leading lawyers and accountants, he said. “There has never been an allegation by anyone that I engaged in any wrongdoing, because I did not,” Mr. Black said.

Although Mr. Epstein had been convicted of soliciting prostitution from an underage girl in 2008, Mr. Black said it had only been since 2018 that he became aware of the conduct that led federal authorities to charge Mr. Epstein with sex trafficking last year. Mr. Epstein died in a Manhattan jail cell in August 2019; his death was ruled a suicide.

“Any suggestion of blackmail or any other connection to Epstein’s reprehensible conduct is categorically untrue,” Mr. Black said.

Mr. Black said he had given Mr. Epstein a second chance after his 2008 case because many others in the world of business, politics and academia had continued to associate with him or retain his services. That had given Mr. Black “misplaced comfort,” he said.

“Like many other people I respected, I decided to give Epstein a second chance,” he said. “This was a terrible mistake. I wish I could go back in time and change that decision, but I cannot.”

At the request of Mr. Black, who is Apollo’s chief executive and chairman, the firm’s independent board members have already hired the law firm Dechert to investigate his dealings with Mr. Epstein. The review is expected to take several weeks to complete.

Many big pensions and the consultants who advise them about where to invest their dollars are waiting for the results of the inquiry. At least one client, a public pension fund for Pennsylvania teachers, has already said it will not invest more money with Apollo until the investigation is over.

Mr. Black, who said he was “by nature a private person,” delivered his remarks in a call with analysts. Normally, Mr. Black stays on such calls to answer questions, but on Thursday he turned matters over to his co-founders Josh Harris and Marc Rowan and other top executives.

The call began with Gary Stein, the firm’s head of investor relations, reiterating that the firm had never done business with Mr. Epstein and saying Apollo would not address the matter beyond Mr. Black’s remarks.

Apollo reported net income of $272.4 million for the third quarter, or $1.11 a share, down from $363.3 million, or $1.63 a share, a year earlier. Distributable earnings, a closely watched measurement of the firm’s ability to return cash to investors, was $272.4 million, or $1.11 a share, in the period, down from $363.3 million, or $1.63 a share, a year earlier.

But Apollo reported that total assets under management at the firm, which specializes in using leverage and investor dollars to take over ailing companies, rose to $433 billion in the third quarter, which was up from $413.6 billion in the second quarter.

Shares of Apollo were down 2.65 percent on Thursday. The stock has fallen nearly 19 percent since the Times report on Oct. 12.

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