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PitchBook
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The Weekend Pitch |
June 14, 2020 
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I wrote last Sunday about the IPO market beginning to heat back up after several months of a coronavirus-induced chill. The temperature only grew hotter in recent days, with a quartet of highly valued unicorns either revealing or hinting at plans to go public in the weeks and months to come.
One of those companies is a longtime Silicon Valley staple that first achieved a $1 billion valuation way back in 2011. Another wasn't even founded until 2015. But soon, it seems, their paths are set to converge on Wall Street.
Welcome to The Weekend Pitch. I'm Kevin Dowd, and you can reach me at weekend@pitchbook.com. This year's IPO slate still has a very long way to go to match 2019's bumper crop. But the potential big-name listings are beginning to pile up, which is one of eight things you need to know from the past week: |
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| Peter Thiel and Palantir appear to be nearing a long-awaited IPO. (Stephanie Keith/Getty Images) |
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1. Unicorns on parade
The news began last weekend, when Airbnb CEO Brian Chesky told Bloomberg that the company hadn't ruled out an IPO this year. Airbnb announced last September that it would go public in 2020, but many expected a crash in customer demand during the coronavirus crisis to alter those plans. Chesky isn't guaranteeing a public debut, but the fact that he's talking about it may indicate how quickly the company's business has bounced back as lockdowns continue to lift.
Insurance startup Lemonade kept things going on Monday, when it filed a prospectus with the SEC for a public offering on the NYSE. Founded just five years ago on the idea of using tech to reimagine property and casualty insurance, Lemonade has already banked nearly $500 million in VC, reaching a $2.1 billion valuation last year, according to PitchBook data.
On Tuesday, reports emerged that Snowflake had filed confidentially for an IPO, barely four months after the data warehousing startup ascended to a $12.4 billion valuation. That latest news continued a string of remarkable growth: Snowflake's VC-backed valuation today is nearly 25 times higher than it was just three years ago, according to PitchBook data.
And on Thursday, Bloomberg reported that data-mining pioneer Palantir Technologies is planning to confidentially file for an IPO in the coming weeks and could go public by the fall. Co-founded by Peter Thiel in 2004, Palantir went on to raise huge sums of VC over the ensuing decade-plus, peaking at a $20.3 billion valuation in 2016, according to PitchBook data. In more recent years, though, that fundraising pace has slowed down, and much of the Palantir conversation has centered on when and if the company might go public.
Now, we might finally have an answer.
After Uber, Lyft, Pinterest, Zoom Video Communications and several other unicorns went public during the spring and summer of 2019, leading to a record-breaking year for VC-backed exit activity, there was a thought that those companies who stayed on the sidelines may have missed their chance to debut under friendly conditions. But friendly conditions seem to be back. Airbnb, Palantir and the rest have surely been taking note of a string of successful IPOs in the past two weeks, as well as several companies opting to increase the size of their listings after encountering healthy amounts of investor demand.
Expecting a repeat of last year's frenzy would be silly. But it looks increasingly likely that the pandemic won't have the depressive effect on the IPO market that many had feared.
2. Delivery deals
Not every well-known unicorn, though, is choosing a public offering as a route to raise cash. Instacart opted instead this week to raise $225 million in new venture funding, taking its valuation up to $13.7 billion, a 74% valuation step-up from its prior round, according to PitchBook data. DoorDash, another food-delivery company whose business has boomed during the pandemic, is in the midst of raising a new equity round that could come at a $15 billion-plus valuation, The Wall Street Journal reported.
3. Grabbing Grubhub
Last month, Uber seemed on the verge of acquiring Grubhub in a bid to achieve dominance in the US food-delivery market. But this week, Grubhub chose a different buyer, announcing plans to sell itself to Europe's Just Eat Takeaway.com in a deal that was initially pegged at $7.3 billion. Speaking to CNBC on Thursday, Grubhub CEO Matt Maloney refuted talk that concerns about antitrust regulators had driven his company and Uber apart.
4. Sports stakes
Private equity investors continued this week to display a growing appetite for pro sports. Josh Harris and David Blitzer—executives at Apollo Global Management and Blackstone, respectively—are reportedly in talks to acquire the New York Mets, the potential next step in building out their pro-sports empire in the US Northeast. Bain Capital, meanwhile, is reportedly negotiating a possible deal to pay €3 billion (about $3.4 billion) for a 25% stake in Serie A, the top professional soccer league in Italy. |
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| The Mets aren't playing games right now, but the franchise itself is very much in play. (Mike Stobe/Getty Images) |
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5. Founder exits
Two high-profile entrepreneurs recently departed the companies they founded in two very different ways. Reddit co-founder Alexis Ohanian stepped down from the company's board late last week, asking to be replaced by a new black director; this week, Reddit named Michael Seibel, the CEO of Y Combinator, as his replacement. Audrey Gelman, meanwhile, reportedly stepped down as CEO of The Wing, a co-working startup for women, amid protests by staff over the company's treatment of some minority employees.
6. Facebook's ventures
Facebook is no stranger to investing: Acquisitions of Instagram and WhatsApp have been critical in establishing its place as an international social-media power. Now, the company seems to be in the midst of building out a corporate venture unit, with Axios reporting this week that Facebook has begun making hires for a new multimillion-dollar fund that will operate from within its experimental apps division.
7. Pandemic woes
In the latest deal undone by pandemic concerns, shopping-mall operator Simon Property Group walked away this week from a deal to acquire rival Taubman for $3.6 billion. In another branch of retail, Apollo Global Management is reportedly suing mattress-maker Serta Simmons Bedding and fellow private equity firm Advent International over a planned deal to restructure Serta's debt. And the parent company of Chuck E. Cheese, which is owned by Apollo, is said to be in talks to raise new capital from its lenders to avoid filing for bankruptcy.
8. Latest listings
Other significant IPOs were in the works this week in addition to all the unicorns mentioned above. Used-car seller Vroom raised nearly $468 million in its listing on Tuesday and saw its stock more than double in value during its first day trading. That same day, private equity-backed business analytics specialist Dun & Bradstreet filed for an IPO on the NYSE that Reuters reported could raise $1 billion.
View the full list online |
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| (PASIEKA/Getty Images) |
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Many startups and investors are changing their ways in an effort to adapt to this current moment of societal upheaval.
For startups eyeing an exit, the process of pitching themselves to Wall Street has gone from the board room to the Zoom room. Leah Hodgson explored this week whether the virtual IPO roadshow could become the new industry standard.
Earlier in the week, James Thorne took a closer look at two new funds, one headline-grabbing resignation, and ongoing efforts by VC firms to grapple with their own lack of diversity.
On top of everything else, the US is also struggling to combat an unprecedented spike in unemployment. Some startups, writes Eliza Haverstock, are trying to do their part by offering services for free to those currently without work. |
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| Lock it down (Westend61/Getty Images) |
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During the first quarter of the year, startups in the information security sector hauled in a near-record total of venture funding, led by a handful of mega-deals. As a preview version of PitchBook's latest piece of in-depth Emerging Tech Research demonstrates, that's just one sign of the shifts the pandemic is causing in the infosec industry.
Our analyst team also turned their attention this week to the latest available returns data from private-market funds. A lag in reporting means the numbers are only current as of the end of September. But even before the coronavirus crisis began to materialize, performance for many private fund strategies was already beginning to slip. |
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| (WIN-Initiative/Getty Images) |
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This week, we're not talking about ramen or fettuccine, not chow mein or udon. We're not talking about possible names for Barilla's corporate venture arm. But we are talking about noodles. More specifically, about Noodle Partners, a New York-based edtech startup that announced on Tuesday a $16 million Series B led by the ValueAct Spring Fund.
The company's services are focused on helping universities and other institutions build better online learning programs. Which seems to make it apparent that the noodle in question is not a long string of dough, but rather that metaphorical noodle that resides inside your skull: the brain. |
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Recommended reads
The collapse of the CDO market helped bring down the global economy in 2008. Now, the CLO market could be on the verge of a similar catastrophe. [The Atlantic]
And, as a response, a case that any such fears of a looming catastrophe are overblown. [Notes on the Crises]
A Q&A with the CEO of Tinder on the pursuit of love during a pandemic. [The Verge]
Workers around the world are wondering when they will return to the office. What if the answer is "never"? [The New York Times]
An in-depth look at the recent uprising in Hong Kong, and what could be next for the once-cautious city as Beijing tightens its grip. [The Guardian]
Meet Bret Arsenault, a race-car driver and information security specialist who might be the most interesting man at Microsoft. [Protocol]
To fight the boredom of a society still largely on pause, more and more individual investors are scratching their gambling itch on the stock market. [The Wall Street Journal]
At the Apollo Theater, even amid a pandemic, the show must go on. [Vulture]
The coronavirus crisis brought many things to a grinding halt. Thanks in part to a rare degree of foresight, a massive new wind farm in Sweden wasn't one of them. [Bloomberg] |
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Quote of the week
"There's no way in hell I want to be part of that story."
—An unnamed private equity executive, speaking to Axios about whether firms might reassess their LP relationships with police unions |
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The Weekend Pitch is produced by editor Kevin Dowd.
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