THE CULTURE FUND
Good morning, Term Sheet readers.
VC firm Andreessen Horowitz is raising a new $15 million fund “targeted at black celebrities, athletes and media figures,” according to the WSJ. Basketball star Kevin Durant, actor Will Smith and Essence magazine publisher Richelieu Dennis are among the first limited partners to commit. The article does not elaborate on what type of founders the fund would invest in, the size of the average investment, or how long it took to raise this fund. (Andreessen declined to comment for this story.)
It does note that the fund, which is called “Culture” will not function like a traditional venture fund. While investors will profit if the fund performs well, Andreessen Horowitz won’t collect the proceeds it would normally generate from fees and carried interest. Instead, investment returns will go toward nonprofits focused on increasing the black community's engagement in tech. And it’s also worth noting that none of the 29 investing partners, who are responsible for writing checks, at Andreessen Horowitz are black.
Though many people on Twitter applaud the effort, it’s hard to look past the size. Compare it to Andreessen’s $1.5 billion main fund or its newly-announced $300 million crypto fund.
One of my biggest questions when a storied firm forms an independent fund to back diverse founders is why—if they're genuinely committed to being more inclusive—must the effort be separate from the main fund? A few months ago, I posed this question to Arlan Hamilton, a VC who’s backing women, people of color, and LGBTQ founders from her firm Backstage Capital. She said:
Here’s the thing: In an ideal world, they wouldn’t think about it as something separate. But at least, it’s a step forward. I’d rather them do that than completely ignore it … It’s all about getting the capital access — the politics of it we can talk about another time. That is not a bad idea, and I applaud the people who are already doing that. They may not have it perfect, but they’re attempting it, and that’s a good start.
Yesterday, she tweeted that her answer remains the same. Hamilton has raised $5 million to back underrepresented founders — "Andreessen Horowitz's Christmas party budget," she’s joked before. (Marc Andreessen is an LP in her fund).
Hamilton recently announced that she plans to raise $36 million for a new seed fund focused exclusively on black female founders. On average, women founders receive less than 3% of total VC dollars and women of color receive only 0.2%.
I also reached out to Female Founders Fund partners Anu Duggal and Sutian Dong to gauge whether this is enough capital to make a meaningful difference in the ecosystem. Duggal said it’s imperative for a traditional VC firm to develop new networks, and “the Culture Fund has launched with a group of influential partners who are well-respected and can help attract strong talent.”
Dong added that it will take time to see a material difference given the fund’s size. She told Term Sheet that she sees small diversity-focused funds as “vehicles to create dealflow for the main fund or beta vehicles that will scale into larger fund IIs and IIIs.” Dong adds:
It will take much more capital than a single-instance seed vehicle to appropriately finance venture-scale opportunities, and my hope is that the seed capital will serve as a galvanizing force for some of these founders for continued access to capital, network, and support.
"At least they’re trying” seems to be the consensus view on this, at least among the experts I've spoken to. As someone said on Twitter, “A rising tide lifts all boats.”
A WAR IS BREWING: Electric scooter startup Bird, which is based in Santa Monica, suddenly shuttered its operations in the city. The move came after an official selection committee recommended giving control of the shareable scooters in the city to two ride-sharing companies — Lyft and Jump (owned by Uber).
This leaves Bird and Lime high and dry. Yesterday, the company sent an email to local riders in an attempt to rally support. “Giving complete control of sustainable transportation alternatives to two rideshare corporations is like giving Exxon and BP Oil a monopoly on solar power,” the email reads. Both companies plan to rally outside City Hall today as their future hinges on one key meeting.
Expect to see more city-by-city fights such as this one. Bird & Lime are up against the 800-pound gorillas — it’s hard to match Uber & Lyft's experience in aggressively setting up local operations around the country.
THE LATEST FROM FORTUNE...
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• Coca-Cola's Investment in BodyArmor Challenges Pepsi's Stranglehold on the Sports Drink Market (by Hallie Detrick)
• What Big Tech's New Alliance Means for the Health of AI (by David Meyer)
• Elon Musk Says Goldman Sachs Is Working on His Bid to Take Tesla Private (by Hallie Detrick)
VENTURE DEALS
• Exabeam, a San Mateo, Calif.-based security information and event management company, raised $50 million in Series D funding. Lightspeed Venture Partners led the round, and was joined by investors including Aspect Ventures, Cisco Investments, Icon Ventures, Norwest Venture Partners, and Shlomo Kramer.
• Profusa, a company focused on the development of tissue-integrating biosensors for continuous monitoring of body chemistries, raised $45 million in Series C funding. Investors include VMS Investment Group, Tasly Pharmaceutical Group, Maxim Integrated Ventures, and 3E Bioventures Capital and Atinum Investment.
• Carbyne, an Israel-based company focused on public safety, raised $15 million in Series B funding. Elsted Capital Partners led the round, and was joined by investors including Founders Fund.
• Airspace Technologies, a technology enabled provider of time definite logistics, raised $8 million in Series A funding. Defy led the round, and was joined by investors including Qualcomm Ventures, Cross Culture Ventures, and Schematic Ventures.
• Sansoro Health, a company focused on data integration for health care, raised $8 million in Series B funding. LRVHealth led the round, and was joined by investors including Bain Capital Ventures and Healthy Ventures.
• Skupos, a San Francisco-based analytics platform for the convenience store industry, raised $6.4 million in Series A funding. Toba Capital led the round, and was joined by investors including Dynamo Fund and Loup Ventures.
• Expedi, a Houston-based e-commerce and procurement marketplace for the oil & gas industry, raised $2.25 million in seed funding. Investors include Bowery Capital and Blue Bear Capital.
PRIVATE EQUITY DEALS
• Graham Partners made an investment of an undisclosed amount, in Nuconic Packaging LLC, a Vernon, Calif.-based provider of rigid PET plastic packaging solutions to commercial and industrial food processors.
• Wattle Hill RHC Fund and Roc Partners agreed to buy Capilano Honey Ltd, an Australia-based honey company, for A$189.8 million ($138 million). The deal will offer the honey producer’s shareholders A$20.06 per share in cash or stock, representing a premium of 28.2% to the stock’s last close. Read more.
• Esure (LSE:ESUR) is in advanced talks over a possible 1.17 billion pound ($1.49 billion) bid from Bain Capital Private Equity. Read more.
• H.I.G. Growth Partners made an investment in Sage Hospice, a Phoenix-based provider of hospice and palliative care services. Financial terms weren't disclosed.
• Blackstone agreed to invest in TaskUs, a Santa Monica, Calif.-based customer service and business process outsourcing services provider for technology companies. The investment, before funding, values TaskUs at more than $500 million.
• Silver Oak Services Partners recapitalized Innovative Discovery, an Arlington, Va.-based provider of technology-driven eDiscovery solutions. Financial terms weren't disclosed.
• AlpInvest Partners invested $260 million in The Stagwell Group, a Washington D.C.-based principal investment firm.
IPOs
• NIO, a Shanghai, China-based electric vehicles maker, filed for a $1.8 billion IPO. The firm posted revenue of $7 million in the six months ending June, with loss of $502.6 million. Tencent (15.2% pre-offering) and Hillhouse Capital (7.5%) back the firm. Morgan Stanley, Goldman Sachs, and J.P. Morgan are underwriters. It plans to list on the NYSE as “NIO.” Read more.
• Atotech, a German specialty chemicals group, is preparing for an IPO that could value it at $5 billion, Reuters reports citing sources. Carlyle backs the firm. Read more.
EXITS
• Amadeus IT Group agreed to buy TravelClick, a New York-based operator of travel booking systems, for $1.52 billion from Thoma Bravo. Read more.
• Intapp acquired DealCloud, a Jersey City, N.J.-based company that specializes in CRM and deal management for investment banking and private equity firms. Financial terms weren't disclosed. DealCloud had raised more than $10 million in venture funding from investors including FINTOP Capital, Hamilton Lane, and Cultivation Capital.
• Thoma Bravo acquired Quorum Software, a Houston-based provider of finance, operations, and accounting software, from Silver Lake. Financial terms weren't disclosed.
• Ancor Capital Partners sold WellSpring Pharma Services, Inc, a Sarasota, Fla.-based distributor of prescription and over-the-counter medicines, to ANI Pharmaceuticals, Inc. Financial terms weren't disclosed.
PEOPLE
• Gareth Domingo joined Altas Partners as an associate.
• Edison Partners promoted Doba Parushev, James Hill, and Jennifer Lee to vice president.
• JMI Equity promoted Krishna Potarazu and Vincent Prajka to partner; Sureel Sheth, Jackie Coombe, and Melissa Guttman to principal; and Ryan Russell, Chase Thomet, and Mac Williams to vice president.
• Sumeru Equity Partners promoted Vinay Kumar to senior associate. Sumeru also hired Maddison Smith and Nathan Stanley as associates.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.
