Startups Weekly - With Asana, JFrog, Palantir, Snowflake, Sumo and Unity, we're in peak season for tech IPOs

Saturday, August 29, 2020 • By Eric Eldon

Pandemic numbers are looking better, it’s still a couple months before US elections, and a growing line of tech companies have already ventured out into public markets successfully this summer. Hard to imagine conditions beating the present any time soon, whether you’re traditionally banked, going with a direct listing or getting inside a SPAC vehicle.

We covered the frenzy this week with an eye towards what other startups can learn about the way these companies have arrived at this point. Here are the headlines for each, from Asana to Unity.

But first, consider this special episode of our Equity podcast from Wednesday where the team reviews the news. And for a faster(ish) read, Extra Crunch subscribers should also check out Alex Wilhelm’s “super-long roundup” of the companies.

The IPOs:

As losses expand, Asana is confident it has the ticket for a successful public listing

Palantir and the great revenue mystery
The bullish case for Palantir’s direct listing (EC)
Leaked S-1 says Palantir would fight an order demanding its encryption keys
Palantir’s S-1 alludes to controversial work with ICE as a risk factor for its business

Unpacking the Sumo Logic S-1 filing (EC)

A quick peek at Snowflake’s IPO filing
Industry experts say it’s full speed ahead as Snowflake files S-1

Unity’s IPO numbers look pretty … unreal?
Sequoia strikes gold with Unity’s IPO filing

Regarding that last one, EC member should be sure to check out our popular deep dive from last year detailing how Unity came to be a leading gaming engine.

Finally, here’s one last EC headline, to get you ready for what is sure to be another week of official S-1s, leaked filing information, rumors of imminent IPO dates, controversies over methods of going public, etc.:

SaaS stocks survive earnings, keeping the market warm for software startups, exits

Image Credits: Nigel Sussman

You don't know SPACs

Special purpose acquisition companies are an older model of financial vehicle used to take companies public, that has become a hot trend in recent years as more tech startups try to figure out liquidity events. Here’s Connie Loizos, who put together a long list of questions and answers about SPACs, concluding that the trend is here for the long-term:

[One] investment banker says he’s seeing less interest from VCs in sponsoring SPACs and more interest from them in selling their portfolio companies to a SPAC. As he notes, “Most venture firms are typically a little earlier stage investors and are private market investors, but there’s an uptick of interest across the board, from PE firms, hedge funds, long-only mutual funds.”

That might change if [A* SPAC founder] Kevin Hartz has anything to do with it. “We’re actually out in the Valley, speaking with all the funds and just looking to educate the venture funds,” he says. “We’ve had a lot of requests in. We think we’re going to convert [famed VC] Bill Gurley from being a direct listings champion to the SPAC champion very soon.”

In the meantime, asked if his SPAC has a specific target in mind already, Hartz says it does not. He also takes issue with the word “target.”

Says Hartz, “We prefer ‘partner company.’” A target, he adds, “sounds like we’re trying to assassinate somebody.”

Image Credits: Getty Images

How to grow your startup for long term success webinar

Inside the nearly 200 companies of Y Combinator's Summer 2020 demo day

After YC’s first remote-only demo day this spring, the seed-stage venture firm switched from recorded pitches to live ones. The TechCrunch team was on-hand to cover the 192 presentations over Monday and Tuesday this week. We’ve written up these two handy guides to help you find your newest competitors, employers or maybe investment:

The 98 companies from Y Combinator’s Summer 2020 Demo Day 1
The 94 companies from Y Combinator’s Summer 2020 Demo Day 2

The staff also picked out their dozen or so favorites from each day, for Extra Crunch subscribers:

Our 11 favorite companies from Y Combinator’s S20 Demo Day: Part 1
Our 12 favorite startups from Y Combinator’s S20 Demo Day: Part 2

(Check out this special demo day edition of Equity for a free audio rundown.)

One company wasn’t in the mix — a startup called Trove, that provides internal compensation SaaS tools, and has just raised a huge new round from Andreessen Horowitz. Natasha Mascarenhas has more.

Inside the nearly 200 companies of Y Combinator's Summer 2020 demo day image

Image Credits: Dougal Waters / Getty Images (Image has been modified)

What investors are saying about startup cities in 2020: Chicago edition

Cities around the world have developed strong tech scenes, but these startup hubs are at the center of potential disruption from pandemic problems plus the possibilities of remote work. We’re surveying investors around the world about what’s next for their home bases. This week, Matt Burns checks in with top Chicago investors about the tech future of the biggest Midwestern city. Here’s Constance Freedman of proptech-oriented fund Moderne Ventures, who is investing in the middle of all these changes:

World-class startups still need world-class feeders, so I don’t expect expansion to reach all that far, but perhaps density or proximity to work becomes less important for those who work there. This may give more cities a change to rise, including Chicago.

So what does this mean for Chicago startup ecosystem? I think Chicago is poised to come out well. The city is affordable to begin with … like 50% more affordable than the West or East Coast hubs. If I live in Chicago I can afford space, I can enjoy my city and I have good transportation if I want to bail out of the city and move to the suburbs. Chicago has a strong ecosystem of universities and capital that can sustain it and may become more appealing to those (tech people and investors) who moved out to go to the coasts in the first place and now realize they don’t need to be there. As people migrate to live where they really want to live, with the lifestyle they want to have, near family they want to be with, they begin to look for more local opportunities and that may bring some great talent back to Chicago and other markets outside of the coasts.

Chicago has long been known for banking, real estate, health care and insurance. I think these sectors and others are poised to do well. The largest opportunity for us (and any major city) is how to close the education gap, which leads to closing the income gap and from there — the sky is the limit!

Meanwhile, Mike Butcher is working on surveys across Europe, and would like to hear from you if you are an investor in Paris or Warsaw.

What investors are saying about startup cities in 2020: Chicago edition image

Around TechCrunch (Disrupt Time)

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Meet the Disrupt 2020 ‘TC10’

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Carbon Health’s Eren Bali and Color’s Othman Laraki will join us at Disrupt 2020

Black founders can get tactical advice at Disrupt

Five real reasons to attend Disrupt 2020 online

Hear from experienced edtech investors on the market’s overnight boom at Disrupt 2020

Startup Alley exhibitors: Register for VC-led Fundraising & Hiring Best Practices webinar

Here’s how you can get a second shot at Startup Battlefield

Two weeks left on early-bird pricing for TC Sessions: Mobility 2020

Grab your student discount pass for TC Sessions: Mobility 2020

Register for our last pitch-off next week on September 2

Extra Crunch discount now available for military, nonprofits and government employees

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Five proven ways to attract and hire more diverse talent

Will automation eliminate data science positions?

Eduardo Saverin on the ‘world of innovation past Silicon Valley’

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#EquityPod

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This is the fourth episode of the week, pushing our production calendar to the test. Happily, we’ve managed to hold it together amidst the news deluge that the last few days have brought. It was a good week for our scheduling change, with the main episode of the show coming to you on Thursday afternoon versus Friday morning.

Change is good.

But unchanging this time around was our hosting lineup, with Natasha Mascarenhas and Danny Crichton and myself yammering with Chris Gates on the mix. Here’s what we got into:

The CEO of TikTok is out, bids are swirling and who will wind up owning a piece of all of TikTok’s global operations is not clear. Walmart is in the mix, apparently, which feels very 2020.
The New York Stock Exchange has gotten approval from the SEC for a new type of direct listing, one in which the company going public can sell a bloc of shares during the normal price discovery process. This means that all the banker-faff of setting a price and roadshowing to various investor groups could be going the way of the buffalo.
About time, maybe? That was our take after reading this Bill Gurley note and the latest SEC news.
But while the direct listing world is getting more interesting, the SPAC world is taking flight. Desktop Metal is going public via a SPAC which is all sorts of fascinating. A younger, Boston-based unicorn going public in this manner is eye catching!
And then two funding rounds, the first from Finix, which can’t stop adding to its Series B. And Mural, which raised the largest Series B we can recall.