Term Sheet: Nov. 29, 2018

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FOLLOW subscribe ANON TIP November 29, 2018 ADDICTED Good morning, Term Sheet readers. My colleague Lucinda and I recently went to a meeting at an investment bank in the heart of New York City. A group of what appeared to be junior bankers were huddled outside of the building with their Juuls in hand. Lucinda asked, "What is this—Juul alley?"   . .   Juul Labs, the wildly popular e-cigarette startup is everywhere. It's in front of buildings, it's in high schools, and it's all over the Internet. This year, I've read at least three deeply-reported features on the company — about its rise, its underage customer problem, and its FDA investigation. Although Juul found itself at the center of a federal investigation for deceptive marketing that reportedly helped hook teens on nicotine, the scrutiny is not enough to keep opportunistic investors away. Today, The Wall Street Journal reported that tobacco company Altria is in talks to buy a "significant minority stake" in Juul. Investors including Fidelity Investments, Tao Capital, and Tiger Global have all poured money in the company. I haven't written too much about Juul in Term Sheet, but it is the company readers email me the about the most often. Last week, when I wrote about the ethics of accepting SoftBank money despite its close ties with Saudi Arabia's government, people still found a way to bring up Juul. I received an email that said, "When are you going to do a piece exposing the board members and investors in Juul for being complacent in driving an epidemic in the US? You may not know, but thousands of kids right here in the Bay Area and parents are silently suffering through nicotine addictions. Tiger Global, Tao and others invested, and this, in many ways, is worse than the Softbank/Saudi connection." But here's the thing: Juul is a little bit of a Silicon Valley anomaly. It's growing at lightning speed (roughly $1.8 billion in annual retail sales). It's one of the most valuable U.S. startups (a valuation of $16 billion). It has innovative technology. Basically, it has the makings of a tech darling yet traditional venture investors are staying far away and backing much-smaller nicotine startups instead. Why? Erin Griffith (former Term Sheet author) wrote an entire column on this for The New York Times, in which she noted that "as technology — and Silicon Valley influence — spreads to every aspect of people's lives, investors must decide which technologies will help and which will cause more harm than good. They want to avoid sending an innocent-seeming check to a company that sets off outrage once it becomes large and powerful." That's precisely the problem though — like its SV startup peers, Juul was founded with good intentions. It aimed to give the world's billion smokers an alternative to combustible cigarettes. But its growth got out of hand with the wrong demographic, and it's a little too late for damage control. So founders have to consider from the very inception of their company — Could my technology be used in ways that harm, and if so, what safeguards can we put in place to avoid losing control of the product? Because once the genie is out of the bottle, there's no going back. KING MIDAS OF CHINA: Kicking off Fortune's Global Tech Forum in Guangzhou this morning was 'King Midas of China' Sequoia Capital China founding partner Neil Shen. His firm is one of the backers of Chinese tech unicorn Meituan Dianping. Now valued at roughly $35.8 billion, the-yet-to-be profitable food delivery giant went public in September on the Hong Kong Stock Exchange with a valuation of roughly $50 billion. Shen thinks the company is on the road to dominance. In fact, he's so bullish that he hasn't sold a single share in Meituan Dianping since Sequoia made its first investment in the firm 13 years ago. Now, that stake is valued at about $4 billion (HK$ 31.4 billion). "I see Chinese companies become bigger when compared to their U.S. counterparts. In many cases, the products they are offering may be more sophisticated," he said. Read more. . . VENTURE DEALS • Auris Health Inc, a Redwood City, Calif.-based developer of robotics technology for medical applications, raised $220 million in funding. Partner Fund Management led the round, and was joined by investors including Wellington Management, D1 Capital Partners, Senator Investment Group, Mithril Capital, Lux Capital and Viking Global Investors. • Bright Health, a Minneapolis-based insurance company that provides exclusive Care Partner Health Plans, raised $200 million in Series C funding. Investors include Declaration Partners, Meritech Capital, Bessemer Venture Partners, Cross Creek Advisors, Flare Capital, Greenspring Associates, Greycroft Partners, New Enterprise Associates, Redpoint Ventures, and Town Hall Ventures. • Aras, a company focused on open product lifecycle management software for the enterprise, raised $70 million in Series D funding. Goldman Sachs Private Capital Investing led the round, and was joined by investors including Silver Lake Kraftwerk. • Asana, a work management platform for teams, raised $50 million in Series E funding at a valuation of $1.5 billion. Generation Investment Management led the round, and was joined by investors including 8VC, Benchmark Capital and Founders Fund, and new investors Lead Edge Capital and World Innovation Lab. • OpenLegacy, a Princeton, N.J.-based provider of microservices-based API integration for back-end applications, has raised $30 million in funding. Silverhorn Investment Advisors led the round. • The Madera Group, a Los Angeles-based hospitality company, raised $20.85 million in funding from Breakwater Management LP. • Roam Robotics, a company building robotic exoskeletons, raised $12 million in Series A funding. Yamaha Motor Co., Ltd. led the round, and was joined by investors including  Boost VC, Heuristics Capital Partners, Menlo Ventures, R7 Partners, Spero Ventures, Valor Equity Partners, and Venture Investment Associates. • Tock Inc, a Chicago-based reservations platform for restaurants, wineries and pop-ups, raised $9.5 million in funding. Valor Equity Partners and Origin Ventures led the round. • Point Inside, a Bellevue, Wash.-based provider of indoor mapping and SaaS solutions for all industries, raised $3.5 million in funding. Vestech Partners led the round. • Phiar, a Palo Alto, Calif.-based machine learning and augmented reality company, raised $3 million in seed funding. Venture Reality Fund and Norwest Venture Partners led the round, and were joined by investors including Anorak Ventures, Mayfield Fund, Zeno Ventures, Cross Culture Ventures, GFR Fund, Y Combinator, Innolinks Ventures and Half Court Ventures. • MedPilot, a New York-based patient financial engagement platform working with outpatient facilities, hospitals, revenue cycle management companies, and practice management systems, raised $1.7 million in funding. Investors include Hudson River Capital Partners, Valley Growth Ventures, Cedars-Sinai,Techstars, and Tom Hirschfeld. • ARtGlass, a Richmond, Va.-based wearable augmented reality startup, raised $1.3 million in funding. Investors include Cavalier Angels, Central Virginia Angels, Charlottesville Angel Network, Trolley Venture Partners and the Center for Innovative Technology GAP Funds. • Bindable, a Boston-based insurance tech company, raised funding of an undisclosed amount. EPIC, Motive Partners and Wafra led the round. . PRIVATE EQUITY DEALS • Marlin Equity Partners acquired SHIFT, a Boston and Los Angeles-based provider of cloud-based media collaboration and digital asset management solutions. No financial terms were disclosed. • Pfingsten Partners acquired South-Tek, a Wilmington, Delaware-based maker of nitrogen generators. Financial terms weren't disclosed. • JLL Partners and Water Street Healthcare Partners made an investment in Cato Research LLC, a Durham, N.C.-based provider of regulatory and clinical research services. Financial terms weren't disclosed. . IPOs • Moderna, a Cambridge, Mass.-based biotech startup creating medicines based on messenger RNA, plans to raise $500 million in an IPO of 21.7 million shares priced between $22 to $24 a share. It posted revenue of $205.8 million and loss of $269.8 million in 2017. Flagship Pioneering and AstraZeneca back the firm. Morgan Stanley, Goldman Sachs, and J.P. Morgan are underwriters. It plans to list on the Nasdaq as "MRNA." Read more. • Synthorx, a La Jolla, Calif.-based developer of immunotherapies for solid tumors, plans to raise $100 million in an offering of 9.1 million shares priced between $10 to $12. Avalon Ventures (32% pre-offering), RA Capital Management (28.2%), and OrbiMed (21.5%) back the firm. Jefferies, Leerink Partners, and Evercore ISI are underwriters. It plans to list on the Nasdaq as "THOR." Read more. . FIRMS + FUNDS • H.I.G. Capital, a Miami-based private equity and venture capital firm, raised more than $1.2 billion for its strategic partners fund, according to an SEC filing. • ParkerGale, a Chicago-based private equity firm, raised $375 million for its second fund. • Qualcomm Incorporated (NASDAQ: QCOM) formed a $100 million Qualcomm Ventures AI Fund. . SHARE TODAY'S TERM SHEET View this email in your browser. Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here. . 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