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Ready? Let’s talk money, startups and spicy IPO rumors.
Sweet dreams are made of IPOs, so merry f****** Christmas
We’re all very tired but there’s still so much news to go over I am sorry
Can you IPO sneakers? Also, this is the last Exchange roundup of the year
Hello everyone, hope you are well. This is the final Exchange newsletter of 2020. There will be a handful of columns next week before I take some time off. Equity will publish episodes throughout the termination of this accursed annum, as well.
And now that we’re done with housekeeping, our two focuses of the week: Who is going public and how fast a particular cohort of startups are growing.
Sure, the two topics aren’t incredibly related issues, but I am not going to let unending IPO news ruin what I wanted to talk about. So, SEC broccoli first, and then we get to have some fun.
IPOh-no-they-didn’t
IPO news was busy this week, with Coinbase and UIPath filing privately, Poshmark filing publicly, and Bumble reportedly filing privately. In short, we’ve added four names to our IPO roll-call, that already included Affirm and Roblox, which have delayed their own offerings.
And with names like Chime, Robinhood, Expensify, and others already of sufficient scale to go public at-will, the brand-name IPO crop of 2021 could rival what we saw this year.
Thanks to unicorns looking to graze public pastures, and public markets near all-time-highs, it appears that we’re going to see it rain liquidity over the coming months. This means that aggregate venture capital DPI and TVPI metrics will scoot higher, making the entire asset class even more attractive than it was in today’s yield-hungry world.
The music continues.
Just how big is the software business?
Earlier this week, TechCrunch covered Ramp’s new round. Ramp launched in February, and was dismissed by some as a Brex clone at the time. Ramp and Brex compete with Divvy and other startups (more on two others in a moment) to help other companies manage their spend through a combination of real and virtual cards, and software.
Along with some new software features, Ramp announced growth metrics as part of its news bundle. When reached to Divvy for similar numbers, the company supplied them. Brex declined to share results, which was fine. And I failed to mention a few competing companies, namely Airbase and Plate IQ.
Airbase I should have included as I covered it in March, 2020 when it raised $23.5 million in a Series A-extension (the new capital came in at a trebled-valuation, so you could call it a Series B, frankly). Regardless, Airbase matters not only because it is a competitor to Ramp and Divvy and Brex, but because while it offers similar products to its rivals, it also charges for its software.
This is in contrast, as far as I can tell, with Divvy and Brex and Ramp, companies more focused on signing up great masses of companies and driving revenues from interchange incomes. (Not charging for software that is wrapped around commodity cards is a way to keep sales-friction low, and thus, in theory, customer-growth high.)
But while Airbase wants corporate customers to pay for its software, it’s still growing like all heck. According to an email from Airbase CEO Thejo Kote, the startup’s annual recurring revenue (ARR) has grown by 2.5x this year, and payment volume has “grown 7X on an annualized basis.”
Those are super-good numbers. Adding another company to the success mix, well-known investor Garry Tan said on Twitter that Plate IQ, a company I have yet to meet, is “doing more than $500M in annual transactions and is profitable (real earnings).” For contrast, the relatively young Ramp just announced that it had cleared $100 million in aggregate managed spend.
My takeaway from this spate of reporting is not that any single company is going to win, or that one company is the clear leader. Instead this week’s poking around a single software niche reminded me of just how big the software market is.
How is there room for all of these competing startups to grow so quickly at the same time? The answer is that the global economy is huge, and software is still merrily grinding its way into more and more of its heft. I bet we wind up with three of our five companies in this piece surviving to public-scale, and just two being snapped up by private rivals or public giants.
I suppose this makes me long cloud. Whatever. Just don’t tell VC Twitter.
Market Notes
This week to make things easy, I’ve broken up the rest of the things you need to know into two groups. The first is everything that was not a round. The second is all the rounds. Let’s go:
- Slack’s venture capital fund is back for more, the parent company is self-funding the project, and the capital pool has doubled in size to $50 million.
- StockX has reached IPO scale. TechCrunch covered its fundraising news this week, writing at the time that the marketplace for used clothing goods was an IPO candidate. So we took a look. Yep. It’s an IPO candidate.
- The Information reported this week that SoFi did around $200 million in revenue during Q3, and was EBITDA-positive.
- Axios reported on the growth of the creator economy. Stop rolling your eyes. It’s more than big enough to take seriously, so get on board. We also chatted about the situation on Equity, if you are into podcasts with jokes.
- Crypto is back in the headlines, and recent price gains amongst the asset category are not based on pure hype.
- Robinhood had a tough week. The company’s shot at an IPO if it wants one probably won’t come under siege — it wouldn’t be the only company to go public in recent quarters with some legal matters underway — but it was still not the week that the stock trading company wanted. And its rival Public.com raised precisely as much money as Robinhood had to pay in fines. Ouch.
- Startup valuations are, in Silicon Valley at least, on the other-side of the COVID-depression.
Now, a stampede of megarounds.
Huge and Important
Our Various & Sundry section this week is anything but. So I renamed it for this final newsletter of the year. Here they are, the rounds both huge and important:
- Brazil’s Creditas raised $255 million. TechCrunch placed the round amongst a larger wave of Latin America-focused fintech rounds.
- Zenoti, based in Bellevue near Microsoft, raised $160 million, a round that made it a unicorn. What does it do? Per The Seattle Times, it “makes cloud-computing software for managing spas and salons.” Don’t laugh. Vertical SaaS is huge. Barbershop focused vertical SaaS player Squire was valued at $250 million the other week.
- Adding another payments-focused round to the newsletter, GoCardless is nearly a unicorn after raising more money this week.
- And sticking to fintech, France’s Lydia, which “aims to be an all-in-one, in-hand platform for any financial needs” of younger consumers, according to Tech.EU, extended its Series B by $86 million this week. (Accel led that round, and Public’s latest as well. Big week for that firm.)
- TechCrunch reported that ClickUp has put together a new $100 million round that values the company at $1 billion. It raised $35 million in June. Why do we care about ClickUp? It’s part of a wave of companies that closed two rounds in 2020. Ramp. Welcome. SkyFlow. The list goes on.
- In the Insurtech world, Bestow raised $70 million for its digital life insurance product. Insurtech has been hot lately, with AgentSync, a player in the space, raising two rounds this year alone.
- Finally, Paxos, which does crypto work for PayPal among other things, raised $142 million in a mammoth Series C. Chalk this one up to the crypto boom.
And now I shall disappear in a cloud of JUUL mist to lose some more games of Civ 6 to my nemesis, Hugs and and all the best.
