VCs stunned and alarmed by FTC move to block Harry's $1.4 billion sale - Business Insider

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Stunned venture capital investors say the government's move to kill shaving upstart Harry's $1.4 billion acquisition is a 'wakeup call' that could leave some types of startups unviable

Jeff Raider and Andy Katz-Mayfield, co-CEOs of Harry's, had decided to sell the shaving products company to Schick owner Edgewell Personal Care, but the Federal Trade Commission has moved to block the deal.The Federal Trade Commission's move this week to bar the maker of Schick razors from buying startup shaver maker Harry's took some in the venture community by surprise.

But another venture capitalist told Business Insider that even if antitrust regulators become more aggressive in scrutinizing certain proposed acquisitions, startups have plenty of other potential buyers.Venture capitalists this week were alerted to a risk many may not have been seriously considering. But that risk may now affect future investments, valuations, and even the viability of particular startups.

Harry's had previously raised some $475 million in venture funding through four standard rounds and a seed round from investors including Tiger Global Management, SV Angel, and Bullish, which also backed Peloton. The company, along with Dollar Shave Club, had helped to shake up the shaving industry by offering shaving kits online and selling razors at a discount to those of Schick and Procter & Gamble's Gillette..

"I was very surprised," said Charlie Plauche, a partner with Austin, Texas-based S3 Ventures. "I was in disbelief when I saw that headline." Regardless of the justification for the FTC's move, it has increased uncertainty about how the agency will act in the future, he said. And that's likely to affect investments, forcing venture capitalists to start factoring in antitrust considerations, if they weren't already, he and other investors said.

 

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