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Dell dumps another big asset, moving Boomi to Francisco Partners and TPG for $4B
It’s widely known that Dell has a debt problem left over from its massive acquisition of EMC in 2016, and it seems to be moving this year to eliminate part of it in multi-billion-dollar chunks. The first step was spinning out VMware as a separate company last month, a move expected to net close to $10 billion.
The second step, long expected, finally dropped last night when the company announced it was selling Boomi to a couple of private equity firms for $4 billion. Francisco Partners is joining forces with TPG to make the deal to buy the integration platform.
Boomi is not unlike MuleSoft, a company that Salesforce purchased in 2018 for $6.5 billion, although a bit longer in the tooth. They both help companies with integration problems by creating connections between disparate systems. With so many pieces in place from various acquisitions over the years, it seems like a highly useful asset for Dell to help pull these pieces together and make them work, but the cash is trumping that need.
Providing integration services is a growing requirement as companies look for ways to make better use of data locked in siloed systems. Boomi could help, and that’s one of the primary reasons for the acquisition, according to Francisco executives.
“The ability to integrate and connect data and workflows across any combination of applications or domains is a critical business capability, and we strongly believe that Boomi is well positioned to help companies of all sizes turn data into their most valuable asset,” Francisco CEO Dipanjan Deb and partner Brian Decker said in a statement.
As you would expect, Boomi’s CEO Chris McNabb put a positive spin on the deal about how his new bosses were going to fuel growth for his company. “By partnering with two tier-one investment firms like Francisco Partners and TPG, we can accelerate our ability for our customers to use data to drive competitive advantage. In this next phase of growth, Boomi will be in a position of strength to further advance our innovation and market trajectory while delivering even more value to our customers,” McNabb said in a statement.
All of this may have some truth to it, but the company goes from being part of a large amorphous corporation to getting absorbed in the machinery of two private equity firms. What happens next is hard to say.
The company was founded in 2000, and sold to Dell in 2010. Today, it has 15,000 customer, but Dell’s debt has been well documented, and when you string together a couple of multi-billion-dollar deals as Dell has recently, pretty soon you’re talking real money. While the company has not stated it will explicitly use the proceeds of this deal to pay off debt as it did with the VMware announcement, it stands to reason that this will be the case.
The deal is expected to close later this year, although it will have to pass the typical regulatory scrutiny prior to that.
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Calm raises $75M more at $2B valuation
Calm, a well-known meditation app, has raised new capital at a valuation of $2 billion. The round was anticipated after the company was reported to be hunting for up to $150 million at a valuation of $2.2 billion; perhaps Calm will follow in the steps of Robinhood and add a second tranche to the round in time.
Prior investor Lightspeed Venture Partners led the investment, which also saw participation from Insight, TPG and Salesforce CEO and new Slack owner Marc Benioff, among others.
That Calm was able to secure more capital is not surprising. The company has a history of quick revenue growth, and is reportedly profitable, to boot. And the investment comes after mental health-focused startups as a category have performed well from a venture capital perspective.
The coronavirus pandemic has likely also played into Calm’s attractiveness as an investment. Since the beginning, researchers have warned about the psychological toll that a pandemic could have on humanity. A recent Pew Research study suggested that people who have lost their jobs during the pandemic might be feeling higher levels of distress during this time. Rival service Headspace offered an annual subscription to its platform for free for those that are unemployed.
Calm responded to the toll of coronavirus by launching a page of free resources, and focusing on a partnership with nonprofit health system Kaiser Permanente. Kaiser was the first health system to make Calm app’s Premium subscription free for its members.
The startups sells a consumer service for around $70 per year, or $15 per month. And the startup has built out a corporate arm, “Calm for Business,” that likely brings revenue stability that augments its consumer efforts.
As part of a release concerning today’s news, Calm detailed a number of nearly useful growth metrics. The service has over 100 million downloads, up from 40 million downloads in February 2019. It also grew up from 1 million paying users to 4 million paying users in the same time period (we asked if that data was inclusive of any Calm for Business customers, a question Calm did not answer).
Other TechCrunch queries regarding the company’s economics, revenue growth and performance compared to its pre-COVID plan also went unanswered.
Calm and rival service Headspace have now raised a combined $434 million according to Crunchbase data, underscoring how attractive their models have proved to venture capitalists. According to a Bloomberg interview, Calm is considering acquiring smaller companies in the wake of its new capital event.
Regardless, Calm now has a refreshed war chest heading into 2021 and a plan to go hunting. That should generate a headline or two.
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Startups Weekly: Uber’s headline-grabbing week and sextech at SXSW
I spent the week at SXSW, Austin’s really, really huge technology, music, comedy and film festival. It’s my first year making the trek down here for the event, which I did to interview sextech entrepreneur Lora DiCarlo founder Lora Haddock, whose robotics innovation reward was infamously revoked at this year’s CES.
“I brush my teeth and I masturbate. It’s all normal,” she said, addressing the stigma surrounding female-focused pleasure tech. Haddock, during our chat, also announced the first-ever government grant for a sextech startup, a $99,637 funding for Lora DiCarlo from the state of Oregon. Lora DiCarlo plans to release its first product, the Osé, this fall.
Here’s what happened while I was wondering confused around Austin.
Uber dominated the news cycle this week; here’s the TL;DR. The ride-hailing company is probably, most likely going to unveil its S-1 next month and it’s tying up some loose ends ahead of its big IPO. Uber wants to raise roughly $1 billion at a valuation of between $5 billion and $10 billion for its autonomous vehicles unit — yes, the same one that was burning through $20 million per month. Waymo, similarly, is looking to raise outside capital for the first time for its AV efforts.
Top TPG dealmaker caught in college admissions scandal
Bill McGlashan, who built his career as a top investor at the private equity firm TPG, was fired (or maybe quit?) says the firm after he was caught up in what the Justice Department said is the largest college admissions scandal it has ever prosecuted. Even worse, McGlashan lead TPG’s social impact strategy under the Rise Fund brand, making the charges particularly damning.
HotelTonight and Slack stakeholder Accel raised $2.525 billion, sources confirm to TechCrunch; $525 million for its fourteenth early-stage fund, $1.5 billion for its fifth growth fund and $500 million for its second Leaders Fund, or a dedicated pool of capital meant to help the firm strengthen its positions on particularly competitive bets. Plus, 137 Ventures announced its fourth fund with $210 million in committed capital. The firm provides liquidity to founders and early employees of “sustainable, fast-growing, private companies.” In essence, 137 Ventures buys shares directly from employees at unicorn tech companies, like Palantir, Flexport and Airbnb.
Last week, we reported Y Combinator president Sam Altman would be stepping down to focus on OpenAI. TechCrunch’s Connie Loizos questions whether he had a positive or negative influence on the accelerator during his presidency. Altman was part of the first YC startup class in 2005 and began working part-time as a YC partner in 2011. He was ultimately made the head of the organization five years ago.
Brian O’Malley’s HotelTonight win
Forerunner Ventures general partner Brian O’Malley went long on HotelTonight and it paid off. For your weekend reading, we thought you might enjoy an oral history from O’Malley about how he stumbled upon HotelTonight and remained connected to the company across its nine-year history.
Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets.
- Drivezy is raising $100M+ at a $400M valuation, eyes US expansion
- Newsela gets $50M to expand its content repository
- AgroStar gets $27M Series C to give more Indian farmers increased crop production with data analytics
- Investing app Stash raises $65M
- Truepill, the ‘AWS for pharmacies,’ raises $10M from Initialized Capital
- Flight-hailing app BlackBird raises $10M to replace driving with flying
In an announcement that shocked VC Twitter, Tiger Global announced that Lee Fixel, whom Bill Gurley once said is one of the smartest investors on the scene, is leaving the firm at the end of June. Scott Shleifer and Chase Coleman will continue as co-managers of the portfolios Fixel has overseen, with Shleifer taking over as its head. “Lee has been a driving force behind the expansion of Tiger Global’s private equity investing activities in the United States and India, and he has distinguished himself as a world-class investor across multiple sectors and stages,” the firm stated. And on the hiring front, Canvas Ventures is expanding its team of three general partners to four with the hiring of Mike Ghaffary, a former general partner at Social Capital.
Subscribers to TechCrunch’s premium content can learn which types of startups are most often profitable.
YC demo days are coming up quick. The TechCrunch staff has been meeting with YC startups and documenting their journey through the startup accelerator. I spoke to YourChoice Therapeutics, a startup developing unisex, non-hormonal birth control, and Bottomless, which operates a direct-to-consumer coffee delivery service. TechCrunch’s Lucas Matney wrote about Jetpack Aviation, a YC startup, and its $380,000 flying motorcycle, and Adventurous, an augmented reality scavenger hunt crafted for families. TechCrunch’s Megan Rose Dickey spoke to Ysplit, which wants to make it so you never have to owe anyone money ever again.
This week on Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines, Crunchbase News’ editor-in-chief Alex Wilhelm and TechCrunch’s Connie Loizos discuss Uber’s IPO and Stash’s big round. Listen here.
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Zenefits Just Raised $500 Million At A $4.5 Billion Valuation
Zenefits today said it has raised $500 million in a round led by Fidelity and TPG at a whopping $4.5 billion valuation. The company, which allows small- and medium-sized businesses to manage human resources services in a much simpler fashion, is one of the fastest-growing SaaS businesses ever, and in an interview, Zenefits CEO Parker Conrad said the big round was raised to keep the company… Read More
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