Term Sheet — Thursday, March 2

Food for Thought

Chicken, pork, and beef producer Tyson Foods made headlines last year when it debuted a venture capital fund that will invest as much as $150 million into food startups. VC arms are a trendy way for Big Food—multibillion-dollar legacy players like Tyson—to participate in disruptive food startups. General Mills, Kellogg, and Campbell Soup have also launched their own VC funds under varying structures. Some are internally managed, others externally.

Tyson’s new CEO Tom Hayes swung by Fortune’s office on Wednesday. I asked him why his company launched Tyson New Ventures LLC.

“It is a great way for us to look at deals we can do and companies we can get involved in,” he told me. “It’s not necessarily to go buy something, but to make an investment and get a foothold and learn more.”

Hundreds of food startups have raised billions of dollars in funding in recent years, a pace of investment that has led to major disruption in the grocery aisle. Whole Foods in particular gives many of these brands a chance to shine, and other grocers are following suit. That’s pressuring the big guys.

Tyson New Ventures already made an investment in plant-based food startup Beyond Meat, which also scored funding from General Mills’ VC arm 301 Inc. “The reason Beyond Meat made sense to us is because we are focused not only on animal protein, but protein overall,” Hayes said. “We want to make sure we are driving protein growth, and it doesn’t matter to us where it comes from.”

I also asked Hayes about a common complaint in the Big Food world: These startups are too expensive to invest in. “Frothy” is the word Hayes used, completing the sentence before I fully asked my question. “The magic is making sure you are getting a fair deal upfront for what you think the vision of the company will be.”

He says that Tyson’s goal is to focus less on the startup’s cost structure and what margins will look like today—benchmarks that any investor surely must consider—and instead take in consideration the brand’s idea, the team behind it, and, perhaps most importantly, the entrepreneur. “Their vision is what we are buying into,” Hayes said.

Tyson New Ventures is on the hunt for more deals and has said it will focus on three areas: alternative proteins, the elimination of food waste, and bets on innovative trends in technology.

While Big Food VC arms seem trendy, some on Wall Street complain that they are a waste of time. They distract big companies and their management at a time when legacy brands are flailing. Cost cutting should be a priority to boost margins. And some are calling for major mergers, not bolt-on deals.

Hayes doesn’t agree. “The reason to do Tyson New Ventures LLC is so people can focus on examining deals and understanding if they should be brought into the portfolio. They have their own resources and their own funding.” That lets the employees at Big Food companies do what they do best: Build big brands. —John Kell

Oh, Snap

It's the day technology companies and investors have been waiting for: Snap, the parent company of disappearing-photo app Snapchat, has finally priced its stock in the most highly anticipated initial public offering in years.

Snap stock will begin trading Thursday at $17 per share on the New York Stock Exchange, under ticker symbol SNAP.

The IPO price is above Snap's expected range of $14 to $16 per share, and values the company at $24 billion.

When can investors buy Snap stock? The U.S. stock market opens at 9:30 a.m. Eastern on Thursday, and Snap shares are expected to start trading between 11 a.m. and 11:30 a.m. Alibaba, for one—which will continue to hold its title as the biggest IPO on a U.S. stock exchange in history even after Snap goes public—began trading at 11:54 a.m. the day of its debut in Sept. 2014.

Snap stock will come with a few caveats that investors should be aware of before buying. Snap grew revenue roughly 600% in 2016 to more than $404 million, but it is still not profitable, losing nearly $515 million last year.

That means that Snap stock will be insanely expensive: At a $24 billion valuation, Snap shares will have a price-to-sales ratio of 59, making it far richer than Facebook stock and other social media companies—and likely the most expensive tech IPO ever. (If you use the ratio of market cap to sales, Snap is still valued at nearly 28 times sales—far more than its tech company peers.)

Also, in an unprecedented move for U.S. publicly traded companies, Snap stock will have zero voting rights. That means Snap shareholders will not have standard checks and balances that are considered a pillar of corporate governance. They won't be able to nominate or replace directors on the board, vote for or against proposed mergers or acquisitions, or submit shareholder proposals at an annual meeting—which activist investors frequently use to push management to adopt their agenda. MSCI on Wednesday gave Snap one of its lowest grades of corporate governance, a "B," labeling it a "laggard" on such measures.

Investors will be watching Snap stock closely Thursday to see if it goes up or down—indications of whether investment bankers priced the shares appropriately. But in any case, Snap, which raised $3.4 billion in its IPO, is now officially the biggest American technology offering since Facebook, which raised more than $16 billion and was valued at $104 billion at its IPO in 2012.

There is one positive sign that Snap has timed its IPO perfectly: U.S. stocks hit new highs on Wednesday, with the Dow Jones industrial average rising more than 300 points to above 21,000 for the first time. —Jen Wieczner

THE LATEST FROM FORTUNE...

• What to expect from Snap’s market debut.

• How to buy Snap stock.

• The stock market reacts to Trump’s “presidential’ speech.

• A mainstream meat-free burger?

• Oprah’s loss is Weight Watchers’ gain.

• Bridgewater’s founder and co-CEO is stepping down.

…AND ELSEWHERE

How Herbalife became a battleground for financiers fighting over the American Dream. Amazon is more than an online store. Obama, Trump, and Russian spies. Jeff Sessions and Russian officials. Branding via viral milkshakes.

VENTURE DEALS

• Grail, a life sciences company focused on early cancer detection that operates as a subsidiary of Illumina Inc. (Nasdaq: ILMN), raised more than $900 million in Series B funding. Arch Venture Partners led the round, and was joined by Johnson & Johnson Innovation, and other unnamed investors.

• Lyft, a San Francisco-based ridesharing service, is seeking to raise at least $500 million in new funding at a valuation between $6 billion and $7 billion. Read more at Fortune.

• Instacart, a San Francisco-based grocery-delivery startup, is in talks to raise around $400 million in new funding at a $3 billion valuation, according to Bloomberg. Read more.

• ChargePoint, a Campbell, Calif.-based operator of an electric vehicle charging network, raised $82 million in funding. Daimler led the round, and was joined by BMW i Ventures, Linse Capital, Rho Capital Partners, and Braemar Energy Ventures. Read more at Fortune.

• Freenome, a Philadelphia-based developer of a genomic thermometer, raised $65 million in Series A funding. Andreessen Horowitz led the round, and was joined by Data Collective, Founders Fund, GV, Polaris Partners, Innovation Endeavors, Asset Management Ventures, Charles River Ventures, and Spectrum 28.

• VeloCloud, a Mountain View, Calif. provider of cloud-delivered SD-WAN solutions, raised $35 million in Series D funding. Hermes Growth Partners led the round, and was joined by Telstra Ventures, Khazanah Nasional Berhad, New Enterprise Associates, Venrock, March Capital Partners, Cisco Investments, and other undisclosed investors. [Update: a previous version of this item misstated where VeloCloud is based.]

• Klook, a Hong Kong-based attractions, tours, and activities booking platform, raised $30 million in Series B. Sequoia Capital China led the round, and was joined by Matrix Partners and Welight Capital.

• Hedvig, a Santa Clara, Calif. Developer of cloud-based software storage systems, raised $21.5 million in Series C funding. Investors include EDBI, Hewlett Packard Pathfinder, Atlantic Bridge Ventures, True Ventures, and Vertex Ventures.

• Urjanet, an Atlanta provider of utility data, raised $20 million in Series C funding. Oak HC/FT led the round.

• 2nd Watch, a Seattle-based managed cloud company, raised $19 million in Series D funding. Delta-v Capital led the round, and was joined by Madrona Venture Group, Columbia Capital, and Top Tier Capital Partners.

• Boragen, a synthetic chemistry platform, raised $10 million in Series A funding. Investors include Alexandria Venture Investments, Arch Venture Partners, Bayer, the Bill & Melinda Gates Foundation, Elanco Animal Health, Flagship Pioneering, Hatteras Venture Partners, Mountain Group Capital, Pappas Capital, and Syngenta Ventures.

• Nimble, a Santa Monica, Calif. SaaS-based platform providing small businesses with CRM systems, raised $9 million in a Series A funding. Imagen Capital Partners led the round, and was joined by Radical Investments, Google Ventures, Indicator Ventures, and angel investors.

• Brillouin Energy, a Berkeley, Calif. producer of thermal energy products, raised $7.8 million in Series B funding. James Farrell led the round.

• Zenrez, a San Francisco app for managing fitness classes and gym appointments, raised $6 million in Series A funding. Artis Ventures led the round and was joined by Summit Action Fund, Precursor Ventures, Nucleus Adventure Capital, C2 Ventures, and Transmedia Capital.

• Pickit, a Swedish image platform, raised $4.6 million in Series A funding. Investors include Microsoft Ventures.

• Whereable Technologies, a Charleston, S.C. developer of a wearable personal security device, raised $1.5 million in funding from unnamed investors.

HEALTH + LIFE SCIENCES DEALS

• P2 Science, a Woodbridge, Conn. biorenewable chemistry company, raised $9.6 million in Series B funding. Xeraya Capital and BASF Venture Capital led the round, with participation from Elm Street Ventures, Connecticut Innovations, and Ironwood Capital Connecticut.

PRIVATE EQUITY DEALS

• Littlejohn & Co. acquired Tidel, a Carrollton, Texas maker of cash management systems.

• Lund International, a portfolio company of Highlander Partners, acquired the assets of RoadWorks Manufacturing, a Lafayette, Ind. manufacturer and distributor of aftermarket accessories to the heavy truck market.

• PAG agreed to acquire the collective stakes from the three founders of Chinese industrial gas company Yingde Gases (SEHK:2168) for $616 million, according to Reuters. Read more.

• Mitie (LSE:MTO) agreed to sell its home healthcare (and money losing) business to Apposite Capital for £2 ($2.5). Read more.

• EIG Global Energy Partners acquired Kinder Morgan‘s (NYSE:KMI) 49% stake in Elba Liquefaction Company, a Savannah, Ga.-based natural gas producer, for about $385 million in cash.

• Sentinel Capital Partners acquired Cabi Holdings, a distributor of designer clothing. Financial terms weren’t announced.

• Soundcore Capital Partners acquired Sweeping Corporation of America, a Nashville-based power sweeping company.

• Clearlake Capital Group agreed to acquire NetDocuments, a Lehi, Utah-based provider of secure cloud-based document and email management services. Financial terms weren’t disclosed.

IPOS

• Snap Inc, a Venice, Calif.-based maker of the popular messaging app Snapchat, raised $3.4 billion by offering 200 million shares. At $17 per share, above its expected range of $14 to $16, Snap has a market valuation of around $24 billion. Snap plans to list on the NYSE under the symbol SNAP. Morgan Stanley, Goldman Sachs, J.P. Morgan, Deutsche Bank, Barclays, Credit Suisse and Allen & Company served as lead managers on the deal. Read more at Fortune.

• Canada Goose, a Toronto-based winter apparel maker backed by Bain Capital, set its IPO terms. The company is seeking to raise C$320 million ($240 million) by offering 20 million shares priced within the range of C$14 to $16 ($10.5 to $12) a share, and plans to list on the NYSE and TSX under the symbol GOOS. CIBC, Credit Suisse, Goldman Sachs, RBC Capital Markets, BofA Merrill Lynch, Morgan Stanley, Barclays, BMO Capital Markets, TD Securities, and Wells Fargo Securities serve as the joint bookrunners on the deal.

FIRMS + FUNDS

• Cordillera Investment Partners, a San Francisco-based investment management firm, raised $197 for its inaugural fund, Cordillera Investment Fund I.

• Floodgate, a Palo Alto, Calif.-based early-stage venture capital firm, raised $131 for its sixth fund, according to an SEC filing.

• ChrysCapital, a Port Louis, Mauritius-based private equity and venture capital firm, raised $600 million for its seventh fund, according to an SEC filing.

PEOPLE

• Eric Xu has joined GGV Capital as a managing partner. Previously he was a managing director at SIG Investment Asia.

• Tower Three Partners has promoted Philip Taub to senior associate.

• David Azéma has joined Perella Weinberg Partners as a partner in its advisory business. Previously, Azéma was at Bank of America Merrill Lynch.

SHARE TODAY'S TERM SHEET

Term Sheet is produced by Laura Entis. Submit deal items here. View this email in your browser.