Why Palantir may regret its S-1 fighting words

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The Daily Pitch: VC

August 31, 2020

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Today's Top Stories

Memo to Palantir: Be careful what you wish for

Palantir CEO Alex Karp (Drew Angerer/Getty Images)

Filing papers for a proposed new stock listing can be a bit of a double-edged sword for private companies seeking to go public.

That is a risk that Palantir Technologies, the data-mining specialist whose co-founders include CEO Alex Karp and venture capitalist Peter Thiel, seemed willing to embrace—with gusto—when it filed for a direct stock listing last week.

Theatrical S-1 filings have long featured a bit of storytelling bravura, but they sometimes end up looking laughable or ironic, especially later on as a company matures—or doesn't (see WeWork).

Now it's Palantir's turn, and the company is about to find out whether it made sense to call attention to its superiority complex.

In a letter accompanying the filing, Karp paints Palantir as the alter-ego of Silicon Valley. Palantir, he wrote, only does business with "the world's most vital" institutions whose work is critical to society as we know it. In the annals of S-1 chest-beating statements, this one stands apart.

Many startups go off on lofty, even cringeworthy, tangents in making their case to investors. They usually don't use the moment to settle scores or make enemies. But Palantir did just that.

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Despite insurtech's slow start to 2020, its potential is undiminished

Health and life insurtech startups drove the bulk of H1 2020's venture activity in the sector, which amounted to $1.9 billion in total across 168 deals. However, both capital invested and deal count showed a marked decline year-over-year, down 39% and 20%, respectively.

Yet there is still strong potential for startups in insurtech, according to our latest Q2 Emerging Tech Research, as a growing class of venture-backed companies are seizing opportunities to disrupt the industry. Key takeaways from the report include:

From 2014 through 2019, the compound annual growth rate of yearly VC insurtech investments soared nearly 60%

The pandemic has accelerated the shift to digital insurance sales, which had been slow to change in an industry that is traditionally behind the curve when it comes to digital transformation

Insurance underwriting technology is still in the early stages of development, but insurance APIs and platforms are becoming more prevalent

If you have any questions or feedback about the research, we'd love to hear from you: analystresearch@pitchbook.com

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More coronavirus news: Continuing coverage from PitchBook

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A message from Configure Partners

Configure Partners releases Q2 2020 Sponsor Finance Report

The credit market for middle-market borrowers has shifted notably in the midst of COVID-19 disruption. Recent transaction activity and hundreds of discussions with lenders reveal a credit market that is open, but thin. Borrowers that were not negatively impacted by COVID have been able to access credit on terms that are comparable to pre-COVID levels.

The asset-based lending market in particular is back to pre-COVID levels. Similarly, borrowers that can demonstrate recovery from COVID have also seen increased appetite, albeit at higher pricing and lower leverage levels than pre-COVID. On the other hand, borrowers in sectors that have not yet bottomed out are generally struggling to source non-dilutive capital.

Configure's Sponsor Finance Report details additional observations: click here to read.

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GoodRx files for IPO, shows off profitability

GoodRx registered for an initial public offering on Friday, capping off a banner week that saw Amwell, Asana, Snowflake and Palantir all file to go public.

The startup has been profitable since at least 2016, according to the filing. Revenue grew some 48% year-over-year in the first half of 2020 to $257 million. Last year, it posted a $66 million profit on $388 million in revenue.

The Santa Monica-based company operates a search platform to find discounts on prescription drugs at local pharmacies. When a customer uses a GoodRx coupon code at a pharmacy, the startup is paid a fee by the pharmacy benefit manager.

GoodRx was last valued at a reported $2.8 billion in 2018 after Silver Lake acquired a stake in the company, giving it a 37% ownership. Francisco Partners and Spectrum Equity own around 25% and 16%, respectively, according to the filing.

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Centricus, Triller join list of TikTok suitors

(Mario Tama/Getty Images)

Centricus is reportedly partnering with video app provider Triller in a bid to buy TikTok's assets, according to Bloomberg. However, a TikTok spokesperson denied that the two companies had submitted an offer, Reuters reported.

The London-based private equity firm submitted a $20 billion proposal to TikTok owner ByteDance for the video-sharing app's assets in the US, Australia, New Zealand and India, the Bloomberg report said. Centricus reportedly would team with Triller, which would have a minority stake in the joint entity.

Centricus' potential offer follows news of Walmart joining forces with Microsoft in its pursuit of TikTok's business in the US, Canada, Australia and New Zealand. That proposal is said to be the front-runner in a growing race for the video app. Oracle is also reportedly vying for TikTok with General Atlantic and Sequoia as its partners.

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Our top articles of the summer

The Seattle Kraken's flag flew atop the Space Needle to celebrate the announced name of the city's expansion NHL team on July 23.
(Abbie Parr/Getty Images)

Don't miss our most popular content of the past three months:

PE power play: TPG's Bonderman, local investors bet on Seattle hockey

Asana, Snowflake lead tech company rush to public markets in landmark day

TikTok strikes back at Facebook as big tech faces lawmaker scrutiny

Run-DMC's Darryl McDaniels walks into healthtech investing

RedBird Capital teams with Billy Beane on sports SPAC

Black founders say VC responses on race could affect future connections

Facing crisis, venture capitalists follow a new script

Farmers seek help from startups after food supply chain disruption

Funds, recruiting and support: VCs address diversity and inequality

NBA standout Spencer Dinwiddie has a VC-fueled vision for the future of stardom

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Coming soon: The newest issue of our magazine

The next edition of the quarterly PitchBook Private Market PlayBook will be released in October, featuring articles on private equity's growing interest in pro sports, the rise of SPACs, Q&As with our analysts and much more.

If you'd like to start receiving the magazine or want your copy mailed to a different address, sign up here:

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Recommended Reads

Early research indicates that ESG funds are outperforming traditional assets during the pandemic. Is this the beginning of impact investing's moment? [The New York Times]

In the US, migrant workers have long been a staple of agriculture and other industries. Now, the trend is carrying over into education—sometimes with troubling results. [Oxford American]

From interviews with more than two dozen former Uighur and Kazakh detainees, a chronicle of life inside China's detention camps in Xinjiang. [BuzzFeed News]

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	The Daily Benchmark
	2015 Vintage Global Debt Funds
	VC Deals
	ProteanTecs gets $45M
	Shopmonkey drives home $25M
	Exits & IPOs
	SoftBank to sell $14B in wireless unit stock
	Surf Air raises $200M for when it goes public

The Daily Benchmark

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VC Deals

ProteanTecs gets $45M

ProteanTecs has raised $45 million in a round led by Koch Disruptive Technologies, with participation from Valor Equity Partners and Atreides Management. The Israeli company develops a cloud-based analytics platform to monitor the health and performance of electronics. ProteanTecs was valued at $94 million in April 2019, according to PitchBook data.

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Shopmonkey drives home $25M

Automotive software startup Shopmonkey has raised a $25 million Series B led by Bessemer Venture Partners, with Index Ventures, E.ventures and I2BF participating. The San Jose-based company, which provides a platform for auto repair shops, said its customers have shown increased interest in digitization amid the pandemic. In connection with the deal, Bessemer partner Byron Deeter will join Shopmonkey's board of directors.

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Exits & IPOs

SoftBank to sell $14B in wireless unit stock

SoftBank has announced plans to sell up to 1.03 trillion shares of SoftBank Corp, its telecom unit, that are currently worth around $14 billion. The company has already sold or monetized 96% of its 4.5 trillion yen (about $43 billion) asset sale program announced in March, which aims to shore up the company's balance sheet and stock price. SoftBank said it was necessary to expand the program, citing uncertainty around the COVID-19 pandemic.

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Surf Air raises $200M for when it goes public

Surf Air, which offers membership-based private air services, has received a $200 million investment commitment from Global Emerging Markets, according to Bloomberg. The funding is reportedly tied to the Los Angeles-based company's plan to go public via a SPAC merger or direct listing. Surf Air is backed by Anthem Venture Partners, NEA, Base Ventures and others.

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