'THE SIDE DOOR'
The college admissions cheating saga continues. New details are emerging around the scam, in which 50 people were accused for paying bribes to get their children into elite schools.
“We’re not talking about donating a building, we’re talking about fraud,” said Andrew Lelling, the US Attorney for Massachusetts who announced the indictments in the scheme.
William Rick Singer, the founder of a for-profit college counseling and preparation business who’s at the center of the scandal, was paid roughly $25 million by parents to help their children get into schools including Georgetown, Stanford, UCLA, and Yale.
Here’s how Singer described the process: “What we do is we help the wealthiest families in the U.S. get their kids into school. They want guarantees, they want this thing done. They don’t want to be messing around with this thing. And so they want in at certain schools. So I did 761 what I would call, ‘side doors.’”
That means he facilitated 761 “side doors” to admission. Some of the parents spent between $200,000 to $6.5 million to get their kids admitted to their schools of choice.
There have also been Silicon Valley elite caught in the mayhem who have not been charged with wrongdoing.
For instance, I was reading the 204-page FBI affidavit (because that’s what I do for fun these days) that includes excerpts from recordings of conversations between Singer and parents involved in the scheme when one bit caught my eye.
The documents outline a recorded phone conversation between Singer and Bruce Isackson, president of real estate development firm WP Investments. In it, Isackson expresses concern about the potential repercussions if the IRS was to uncover the true purpose of the payments:
Isackson: “Oh, yeah. I’m just thinking, oh my God, because you’re thinking, does this roll into something where, you know, if they get into the meat and potatoes, is this gonna be this– be the front page story with everyone from Kleiner Perkins do whatever, getting these kids into school, and–”
I was curious about Isackson’s reference to storied venture firm Kleiner Perkins, so I reached out to Kleiner to ask. A spokesperson told me that Kleiner chairman John Doerr and general partner Ted Schlein were clients of Singer’s firm but says they only used services related to test tutoring and help with college applications. Below is the official comment provided to Term Sheet:
“We’re not sure what that reference means, but we do know that William Singer used high profile client names to market his services. John Doerr and Ted Schlein were clients of William Singer’s firm together with a long list of Valley luminaries. The scope of services provided to their children was limited to test tutoring and help with college applications — typical of services provided by thousands of private college counselors across the country — and nothing further. Neither individual is part of the Fed’s probe into William Singer.”
UBER MONEY: Two days after reports surfaced that Alphabet’s self-driving unit Waymo may raise outside funding for the first time, Uber has some news of its own. The tech behemoth is in talks to sell a $1 billion stake in its autonomous driving unit to SoftBank and other investors. The deal would value the autonomous-vehicle business at $5 billion to $10 billion, and Uber would retain majority ownership, according to The Wall Street Journal.
Uber investors have been nervous about the self-driving unit’s steep losses and lack of revenue and have been pushing Uber CEO Dara Khosrowshahi to spin it off or seek outside investment. The autonomous division was formed in 2014 and reportedly loses between $100 million and $200 million each quarter. Selling a part of its self-driving business for $1 billion would allow Uber to offload some expenses as it prepares for an initial public offering that could value the company at $120 billion. Read more.
FACEBOOK’S ABOUT-FACE: In the latest issue of Fortune, my colleague Michal Lev-Ram pulls back the curtain to reveal what’s going inside Facebook as the company battles everyone from Google to Elizabeth Warren. “Facebook may be changing, but it aims to preserve what it’s got until it figures out a way to replace the business too much change would jeopardize,” she writes. Read the full feature here.
• Workfront, a Lehi, Utah-based work management platform, raised approximately $280 million in funding. Investors include W Capital Partners, Susquehanna Growth Equity, AB Private Credit Investors, Openview, Greenspring and JMI Equity.
• Newsela, a New York-based instructional content platform, raised $50 million in Series C funding from TCV.
• LaunchDarkly, an Oakland, Calif.-based feature management platform for software teams, raised $44 million in Series C funding. Bessemer Venture Partners led the round, and was joined by investors including Redpoint, Vertex Ventures, DFJ, and Uncork Capital.
• TriNetX, a Cambridge, Mass.-based health research network, raised $40 million in Series D funding. Merck Global Health Innovation Fund led the round, and was joined by investors including Mitsui & Co., Ltd., ITOCHU Technology Ventures, ITOCHU Corporation, MPM Capital, F2 Ventures and Deerfield Management.
• CXA Group, a predictive and data intelligence platform for wellness choices, raised $25 million in funding. Investors include HSBC, Singtel Innov8, Telkom Indonesia MDI Ventures, Sumitomo Corporation Equity Asia, Muang Thai Fuchsia Ventures, Humanica and Heritas Venture Fund.
• Sketch, a digital design toolkit, raised $20 million in Series A funding from Benchmark.
• Whatfix, a California and India-based digital adoption platform, raised $12.5 million in Series B funding. Eight Roads Ventures India led the round, and was joined by investors including F-Prime Capital, Cisco Investments, Stellaris Venture Partners and Helion Ventures Partners.
• CesiumAstro Inc, an Austin-based maker of high-performance multi-beam active phased array communication systems for space and airborne platforms, raised $12.4 million in Series A funding. Airbus Ventures led the round, and was joined by investors including Kleiner Perkins, Franklin Templeton Venture Fund, Lavrock Ventures, Honeywell Ventures and Analog Devices Ventures.
• Polarr, a Palo Alto, Calif.-based operator of an online photo editing software, raised $11.5 million in Series A funding. Threshold Ventures led the round, and was joined by investors including Cota Capital and Pear Ventures.
• Gem, a San Francisco-based HR recruiting platform, raised $9 million in Series A funding from Accel.
• Physera, a Palo Alto, Calif.-based telehealth company, raised $8 million in Series A funding. BlueCross BlueShield Venture Partners led the round.
• Cymulate, an Israel-based cyber simulation platform provider, raised $7.5 million in Series A funding. Vertex Ventures and Dell Technologies Capital co-led the round.
• Capital Markets Gateway Inc, a financial technology firm offering an integrated digital workflow and analytics platform for capital markets professionals, raised $7.5 million in Series A funding. StageDotO led the round, and was joined by investors including Franklin Templeton and Shea Ventures.
• Fi, a New York-based dog technology startup launching an “Apple Watch for dogs,” raised $7 million in Series A funding. RRE Ventures led the round, and was joined by investors including Lerer Hippeau and Freestyle VC.
• Therapixel, a France-based developer of AI-based algorithms for breast cancer screening, raised 5 million euros ($5.6 million) in Series A funding. Omnes and M Capital Partners co-led the round, and was joined by investors including Région Sud Investissement (managed by Turenne Capital), IT-Translation and Credit Agricole.
• Ovation.io, a Boston-based provider of cloud based laboratory management software to independent molecular and sequencing labs, raised $5 million in Series A funding. Investors include Madrona Venture Group, Borealis Ventures, and Stagedot0.
• Populus, a San Francisco-based data management platform for shared mobility services, raised $3.1 million in seed funding. Investors include Relay Ventures, Precursor Ventures, and a fund exclusively supporting MIT alumni.
• ProdPerfect, an end-to-end platform using live traffic to automatically build and maintain QA testing for web applications, raised $2.6 million in seed funding. Eniac Ventures and Fika Ventures co-led the round, and was joined by investors including Entrepreneurs Roundtable Accelerator.
• CryptoNumerics, a Canada-based enterprise software company, raised $2.5 million in seed funding. 11.2 Capital led the round, and was joined by investors including Lux Capital.
• StoryFit, an Austin-based provider of predictive AI analytics for the publishing and entertainment industry, raised $1.75 million in new funding. ff Venture Capital led the round, and was joined by investors including Bertelsmann Digital Media Investments, Ascend Venture Capital and Walt Winshall.
• Ferntech, a Germany-based controller provider for off-grid, hybrid, and microgrid power systems, raised seed funding of an undisclosed amount, from Factor[e] Ventures.
HEALTH AND LIFE SCIENCES DEALS
• Gencove, a New York-based low-pass genome sequencing platform, raised $3 million in funding. Spero Ventures led the round, and was joined by investors including Alexandria Venture Investments, Burst Capital, Third Kind Venture Capital and Version One Ventures.
PRIVATE EQUITY DEALS
• Strand Equity made an investment in The Real Good Food Co, a Glendale, Calif.-based provider of high protein, low-carb comfort food. Financial terms weren’t disclosed.
• Corin Group, which is backed by Permira, acquired OMNI Orthopaedics, a Canton, Ohio-based provider of robotic-assisted total knee replacements. Financial terms weren’t disclosed.
• Innovative Chemical Products, a portfolio company of Audax Private Equity, acquired Benefect, a Canada-based provider of disinfectant and cleaning supplies for the environmental remediation industry. Financial terms weren’t disclosed.
• ImagineSoftware, a portfolio company of Mountaingate Capital, acquired ProviderAlly, a Slingerlands, N.Y.-based provider of accounting reconciliation services and related capabilities to the healthcare RCM space. Financial terms weren’t disclosed.
• Abry Partners made an investment in Dr. Dental Management, a Framingham, Mass.-based dental management service organization. Financial terms weren’t disclosed.
• Laurel Solutions, a portfolio company of FFL Partners, acquired Servelec Technologies, a provider of remote monitoring systems and business optimization software. Financial terms weren’t disclosed.
• LongWater Opportunities acquired Soho Myriad, Inc, an Atlanta-based consultant, curator, and manufacturer of custom art packages. Financial terms weren’t disclosed.
• Network International, the Dubai-based payments group known to be the largest in the Middle East and Africa, is prepping for an IPO on the London Stock Exchange for later this year. Read more.
• Traton, the trucking unit of carmaker VW, has halted its German IPO plans on account of market conditions. Read more.
• HCL Technologies acquired Strong-Bridge Envision, a digital transformation consulting firm. Financial terms weren’t disclosed. Sellers include Bow River Capital Partners.
FIRMS + FUNDS
• Keensight Capital, a France-based private equity and venture capital firm, raised 1 billion euros ($1.1 billion) for its fifth pan-European growth buyout fund.
• Summit Partners promoted Peter Francis to managing director; Matt Curtis to portfolio manager; Gus Phelps to principal; and Chris Bon and Jono Pagden to senior associate.