November 13, 2017
Alex Wilhelm is the Editor in Chief of Crunchbase News, covering the intersection of startups and money.
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Morning Report: The Uber-Softbank deal is underway. If enough shares can be found to complete its secondary sale, things may get easier for the ridesharing giant.

Uber, technology’s former golden child and recent contumacious youth, has an agreement with Softbank for a transaction that will allow the company to raise another billion dollars. The result of the funding will provide a huge slug of secondary liquidity to current shareholders and tidy up its management structure.

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That’s a lot going on at once, so let’s approach this in steps.

First, how much money is involved? Here’s our friend Katie Roof from TechCrunch with the core numbers:

Uber has not yet elaborated on plans, but we’ve been told that it includes a $1 billion investment in the company at the last private valuation of nearly $70 billion. A source with knowledge of the deal told TechCrunch that the documents label this as an extension of its last Series G round.

Including debt financing, Uber has raised around $11.5 billion before the new capital injection. That makes the new, potential cash a modest percentage of the firm’s aggregate raise to-date.

But fresh capital for the parent company, in this deal, is only a small part of the larger whole. The agreement also includes governance changes that are long-coming to the firm which has a history of chaos. From ReCode, the legal details:

Under the deal — which has not yet been signed — Kalanick will maintain his own seat on the board and also the right to appoint two other seats. He had done that unilaterally last month, causing much consternation. But those two seats will be subject to majority board approval in the future.

The piece goes on to note that the Benchmark-Uber lawsuit will end “once the SoftBank investment is completed.” And that means that this all hangs in the balance, at least as far as the number of shares offered for sale by employees and early investors.

The largest dollar-element of the transaction is the purchase of billions of dollars of Uber shares from current shareholders. The move will provide pre-IPO liquidity to holders of the firm’s equity from the early stage, and it will also allow new shareholders to purchase a material stake in Uber. If the tender offer fails, the deal could be in peril.

Uber is probably going to land this plane, despite the best efforts of some of its minority shareholders. Then it will have another billion dollars to use to help it go public and clear up its heavy losses.

From the Crunchbase Daily:

Razer scores in IPO

  • Gaming gear maker Razer made an impressive IPO debut, with shares closing up 18 percent in first-day trading on the Hong Kong Stock Exchange. The twelve-year-old maker of gaming laptops and accessories raised $530 million in the offering. Previously, the company raised about $175 million in venture funding.

Uber finalizes SoftBank deal

  • Uber has signed an investment agreement with a consortium led by SoftBank and Dragoneer Investment Group. The deal, which is said to value Uber around $70 billion, will reportedly include a direct investment into Uber of about $1 billion, along with the purchase of stock from employees and other shareholders valued at up to $9 billion, TechCrunch reports.

Qualcomm rejects Broadcom bid

  • Qualcomm’s board unanimously rejected rival Broadcom’s takeover bid, saying the offer dramatically undervalued the mobile chipmaker. Broadcom had made an unsolicited offer to buy San Diego-based Qualcomm for about $105 billion in cash, plus assumption of about $25 billion in debt, in what would potentially rank as the largest technology M&A deal ever.

Immigrants flock to found US startups

  • Over half of U.S. startups valued at $1 billion or more had at least one immigrant founder. But it’s not just a trend among unicorns. Crunchbase News reached out to foreign-born founders hailing from Iraq, Senegal and Brazil to chronicle their experiences building up earlier stage U.S. startups.

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