|
|
|
PitchBook
|
|
|
|
|
The Weekend Pitch |
April 19, 2020 
|
|
Presented by Secfi |
|
|
|
|
For decades now, technology has been transforming how people manage and spend their money. Whether it's online banking or online shopping, cross-border payments or high-frequency trading, the financial world was already in the midst of a slow-motion revolution.
Then the coronavirus arrived. In a new reality where nearly every aspect of life has shifted from the analog to the digital, that fintech revolution could be accelerating.
Welcome to The Weekend Pitch. I'm Kevin Dowd, and you can reach me at weekend@pitchbook.com. Some of the biggest startups in fintech are chasing down new funding, and one of the biggest firms in VC is leading the charge. That combination is one of nine things you need to know from the past week: |
|
|
|
|
|
 |
| (CSA Images/Getty Images) |
|
|
1. Money moves
The most notable funding was at Stripe, which said it raised $600 million at a $36 billion valuation, just the latest example of payments processing startups loading up on VC dollars.
The round is an extension of a $250 million Series G that Stripe raised in September at a $35 billion pre-money valuation, so while the figures are massive, the shift in valuation isn't. But perhaps that should be taken with a grain of salt: Considering widespread expectations that VC valuations are in line for a decline in the coming months, a whole lot of unicorns might be just fine with hauling in a few hundred million in what's essentially a flat round.
Stripe's services are central to many companies that are increasingly relevant during a time of social distancing, including names like Instacart, DoorDash, Slack, DocuSign and Blue Apron. That's probably one reason big-name investors such as Andreessen Horowitz, General Catalyst and Sequoia were willing to write big checks for the second time in less than a year.
Sequoia may also soon provide new funding to a different fintech unicorn. The firm is in talks with Robinhood to lead a $250 million round at a pre-money valuation of around $8 billion, according to Bloomberg. The provider of online stock brokerage services was valued at $7.6 billion with a VC round last fall, according to PitchBook data. So once again, the new capital wouldn't represent a huge valuation leap. But in this environment, raising funds at just about any figure might count as a victory.
Early last month, as the stock market began to plummet, Robinhood experienced multiple high-profile platform outages, prompting outrage from users and skepticism about its scalability. But hidden within the bad news was a kernel of optimism: The company attributed the issues in part to record numbers of new accounts. In some ways, at least, it seems like the current market turmoil could be good for Robinhood's business—if it can keep up with the traffic.
The wave of fintech fundings this week reached all the way to Australia, where Airwallex raised $160 million in Series D funding at a reported $1.8 billion valuation to continue building its cross-border payments platform. And once again, Sequoia is an investor, this time via its Sequoia China arm.
The firm and Airwallex's other investors are backing a business built on the idea that the fintech revolution will be total. "The global shift to digital is imminent," CEO Jack Zhang said in a written statement. "We envision a world in the not-too-distant future where all businesses will operate and conduct their affairs online."
It isn't only new VC deals: Other fintech startups have been garnering hefty price tags in recent months on the M&A market. Visa agreed to buy Plaid for $5.3 billion. Intuit is planning a $7.1 billion purchase of Credit Karma. And last week, SoFi lined up a $1.2 billion acquisition of Galileo Financial Technologies.
Each of the past two years, the fintech industry set a new annual record for cumulative global investment across VC, PE and M&A, according to PitchBook data. Even in the face of a global disaster, it could be in line for another new record in 2020.
2. SoftBank-backed layoffs
Lost jobs continue to mount across the startup sector, and companies funded by SoftBank continue to be among those hit the hardest. Home-buying startup Opendoor laid off a reported 600 workers this week, representing about 35% of its staff, a little more than a year after attaining a $3.8 billion valuation. Zume, a unicorn originally known for developing pizza-making robots, reportedly conducted 200 layoffs, its second major round of cuts this year. And TechCrunch reported that View, a SoftBank-funded maker of dynamic glass, has parted ways with an unspecified number of workers.
3. PE-backed bankruptcies
Tough times in the energy and retail sectors are creating major financial woes for some PE portfolio companies. Power-plant operator Longview Power, which is backed by KKR, filed for Chapter 11 bankruptcy protection this week, with plans to use a small-business loan from the recent government stimulus package to meet payroll, according to The Wall Street Journal. True Religion Apparel, which has received backing from TowerBrook Capital Partners, also reportedly filed for Chapter 11 protection, in this case for the second time in four years.
4. Big healthcare bucks
Blackstone made an unorthodox bet on biotech this week, agreeing to invest $2 billion in debt and equity in publicly traded Alnylam. The deal calls for Blackstone to receive 10% of all future royalties from a new treatment for high cholesterol called inclisiran. Elsewhere, PE Hub reported that TPG Capital agreed to invest in LifeStance Health Partners, a provider of outpatient behavioral health service based near Seattle, at a $1.2 billion valuation. |
|
 |
| The coronavirus crisis is causing increased investor interest in healthcare. (Marco Di Lauro/Getty Images News) |
|
|
5. Full steam ahead
Fantasy sports specialist DraftKings revealed this week that it plans to go forward with a $3.3 billion reverse merger that was announced in December, even though there are no sports going on for its users to follow. The energy industry is also in turmoil, but Blackstone seems set to complete its planned $6.3 billion acquisition of Tallgrass Energy after the pipeline operator's shareholders approved the deal this week.
6. Huge buyout funds
A fundraising drought is expected to materialize soon. But it hasn't arrived yet. Clearlake Capital closed its latest fund this week on more than $7 billion. Francisco Partners registered its newest flagship effort with the SEC, indicating a $6.6 billion target. Clayton, Dubilier & Rice has so far raised $6 billion for an in-progress vehicle, according to PE Hub. And General Atlantic is reportedly planning a new $5 billion fund along with longtime credit investor Tripp Smith.
7. Huge venture funds
Top-tier firms are also still raising funds in VC. Lightspeed closed three massive funds by itself, collecting a total of $4.2 billion across separate early-stage, growth and opportunities vehicles. Andreessen Horowitz, meanwhile, is seeking $450 million for its second cryptocurrency fund, the Financial Times reported this week.
8. Rack 'em up
With a couple exceptions, IPOs have vanished entirely during the coronavirus crisis. An enormous offering could soon be in the offing, though, as Reuters reported this week that Rackspace has filed for a stock-market debut that could value the cloud services company at some $10 billion. At that level, it could be a very profitable exit for Apollo Global Management, which has owned Rackspace since taking the company private for $4.3 billion in 2016.
9. Experimental beer
Searching for optimism in these trying times? Look no further than Province Brands, a startup that raised $1.6 million in venture funding this week to support a truly groundbreaking technology: It "has developed a way to make beer from any plant material," according to TechCrunch, an idea that originated from the company's earlier efforts to brew beer using cannabis. Who needs barley when you have bamboo and bananas?
View the full list online |
|
|
|
|
|
|
|
|
|
|
|
Liquidity during a crisis while keeping your shares
|
|
Secfi provides non-recourse financing solutions to private company shareholders who want to unlock liquidity from their shares without selling. Secfi has helped numerous founders, executives, angel investors and startup employees with both our platform's intuitive tools and financing for their options or shares.
Request financing on our platform and one of our licensed professionals will schedule a call with you to go through the various options available.
Apply today, or contact us at hello@secfi.com. |
|
|
|
|
|
|
|
|
The coronavirus outbreak has already created wholesale changes in the US venture capital industry, and experts predict more major disruptions to come. But for now, at least, data on dealmaking and valuations remains roughly in line with recent history.
The Q1 2020 edition of the PitchBook-NVCA Venture Monitor, produced in partnership with Silicon Valley Bank and Carta, takes a close look at this current state of limbo, offering up a bounty of numbers, charts and analysis to help readers make sense of what these unprecedented times will mean for startups and VC investors. |
|
|
|
|
|
 |
| Tomato-picking robots are one way automation could reshape the food industry. (Sompong Sriphet/EyeEm/Getty Images) |
|
|
|
Late last year, Zume was reportedly in talks to raise new VC funding at a $4 billion valuation. In the less than six months since, it's been busy cutting jobs, as mentioned above. As Eliza Haverstock writes, the shift makes for the latest development in an ongoing conversation at the intersection of food and robotics.
Zume, of course, is far from the only company hit hard by the coronavirus. Some struggling companies backed by private equity could now have access to a new lending program from the US Federal Reserve. But as Adam Lewis writes, critics are worried the program could be ripe for exploitation. |
|
|
|
|
|
 |
| (Isabel Pavia/Moment/Getty Images) |
|
|
|
PitchBook's analysts were busy this week churning out detailed breakdowns of what the coronavirus and its many ripple effects will mean for the private markets.
The deadly outbreak has exposed clear cracks in healthcare systems around the world. For startups in the space, it's an opportunity to use tech to shape the future of pandemic response.
Major European economies have been hammered by shutdowns and other restrictions. For VC investors in the region coming off years of steady growth, it could be the beginning of a newly frugal ecosystem.
Private equity firms in Europe are preparing for major changes of their own. Their new reality could include fewer deals, declining valuations and a potential wave of defaulting portfolio companies. |
|
|
|
|
|
 |
| (bruce burkhardt/The Image Bank/Getty Images) |
|
|
|
Verizon made a play this week to capitalize on the rapid rise of remote work, agreeing to buy videoconferencing startup BlueJeans Network in a deal reportedly worth less than $500 million. That's a notable dip from the $728 million valuation BlueJeans attained in 2015 with its final round of VC funding, according to PitchBook data.
The idea, it would seem, is to give the telecom giant a chance to compete with Zoom, which is quickly establishing itself as the industry standard. While Zoom's name promises a certain degree of speed and efficiency, BlueJeans goes in a different direction, reminding users of one of the best parts of working from home: You get to wear whatever you want. |
|
|
|
|
|
Recommended reads
A motivational speaker named Steve Maraboli wants you to think he is "the most quoted man alive." Reality is a bit murkier. [Gizmodo]
In India, the rise of a Hindu vigilante shows how the world's biggest democracy has also become the world's biggest experiment in social-media-fueled terror. [Wired]
Agents, actors, producers and everyone else in Hollywood are busy trying to figure out what the coronavirus will mean for the future of movies. [Vulture]
With concerts canceled for the foreseeable future, superstar producers are turning to Instagram as a unique new forum for live music. [The Wall Street Journal]
Central bankers are turning to previously unimaginable measures in their ongoing battle against the coronavirus. [The Guardian]
A growing chorus of tech luminaries—including Bill Gurley, Mark Cuban and Chamath Palihapitiya—are taking aim at bailouts. [Protocol]
Even when fears about the pandemic begin to fade, the American workplace may never be the same. [Recode]
Thrust onto the front lines of a global war against the coronavirus, many low-income workers have begun lobbying for improved conditions and pay. History offers a precedent suggesting they may get their way. [The Atlantic]
In December, around 100 tourists in New Zealand saw proof of a sobering fact: Sometimes, when you visit an active volcano, it erupts. [Outside] |
|
|
|
|
|
Quote of the week
"It's a complete abomination."
—Nate Koppikar, a partner at Orso Partners, speaking to Bloomberg about hedge funds in the US attempting to claim federal bailout money as small businesses |
|
|
|
|
|
The Weekend Pitch is produced by editor Kevin Dowd.
Were you forwarded this newsletter? Sign up at pitchbook.com/subscribe. |
|
|
|
|
|
|
|
|
Since yesterday, the PitchBook Platform added:
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
