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Why Atlanta could face startup hub growing pains
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| (Julia Midkiff/PitchBook News) |
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Atlanta has emerged as a budding startup hub with a list of newly minted unicorns. Now, entrepreneurs in the region might have to grapple with challenges like retaining talent and sourcing bigger funding checks.
- The city's allure has even attracted the likes of home rental giant Airbnb, which recently decided to locate its East Coast engineering hub there.
- "Talent wars will heat up as more VC money flows into Atlanta," said Jeff Diana, chief people officer at meeting scheduling startup, Calendly.
- "Atlanta-based companies that have potential to be global market leaders still have difficulty sourcing big checks from local investors," said Mark Buffington, co-founder and managing partner at Panoramic Ventures.
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Why many large unicorns are choosing direct listings over SPACs
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| (twomeows/Getty Images) |
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Some of the biggest VC-backed companies are already showing significant interest this year in going public via direct listings. Cryptocurrency specialist Coinbase and game developer Roblox have filed for such debuts, while data software providers Databricks and UiPath have raised massive financing rounds—which could clear the way for them to choose this option.
Our latest analyst note explores why companies valued at more than $5 billion might pick a direct listing over a SPAC merger, and why a wider range of businesses could pursue this path to the public markets. Among the takeaways:
- A direct listing, combined with a large private funding round, can allow large unicorns to select the specific pricing and investors they want.
- This approach can be especially attractive for companies that have above-market revenue growth or operate in a popular industry, which can drive significant investor demand.
- Regulatory changes may help level the playing field between traditional IPOs and direct listings.
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The changing investor landscape under COVID-19
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A common sentiment in today's PE market is that COVID-19 will have a big impact on the market—not only on near-term deal flow, but on what types of buyers will be making those deals.
RSM's just-released report, The changing investor landscape under COVID-19, explores that landscape through the lens of PE buyers, corporate acquirers, family offices and Canadian pension plans, all of which have capital to put to use. But they all bring different motivations to the market. Time-sensitive PE funds are on the clock to deploy money, while investors with more permanent capital, like family offices and Canadian pension plans, can be just as selective as they were pre-COVID.
To download the report, click here. |
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L Catterton strikes $4.8B deal for Birkenstock
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| Birkenstock sandals have been around since the 18th century. Now, they'll be owned by private equity. (Sean Gallup/Getty Images) |
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L Catterton, a private equity firm that backs several popular consumer brands, has agreed to acquire sandal maker Birkenstock. The deal values the German company at roughly €4 billion (about $4.8 billion), Reuters reported.
- Financière Agache, a family office run by LVMH CEO Bernard Arnault, will also invest in the deal. Arnault and LVMH—the parent of Louis Vuitton and dozens of other luxury brands—helped form L Catterton back in 2016.
- Founded in 1774, Birkenstock has gained popularity in recent years from younger customers embracing the sandal's bulky look. The company posted €721.5 million of revenue in the fiscal year through September 2019.
- UK-based private equity firms CVC Capital Partners and Permira had showed interest in acquiring the business, according to prior reports. But L Catterton won out over CVC because of its experience with family-owned consumer brands and its track record in Asia, Bloomberg reported.
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How AI and machine learning has soared to record heights
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The $50 billion threshold defined both global VC investment and exit activity in artificial intelligence and machine learning in 2020. Venture funding surpassed it with a record $52.1 billion, and exit value nearly reached it with a new annual high of $49.6 billion.
The AI and machine learning market is expected to top $111 billion in end user spending in 2021, according to our new installment of Emerging Tech Research, en route to hitting $203 billion in 2024. Other highlights from the report include:
- Q4's $16.5 billion in capital invested set a record for quarterly VC funding in AI and ML.
- The healthcare, consumer, enterprise IT and autonomous vehicles segments led the way in 2020, with each raising over $5 billion.
- Multiple trends are converging to drive activity in autonomous robotics, including the booming demand for automation due to COVID-19.
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UK seeks to bridge funding gap to retain fintech crown
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| (Peter Dazeley/Getty Images) |
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The UK could lose its status as Europe's leading fintech hub if it doesn't respond to growing competition and regulatory uncertainty caused by Brexit, according to a government report.
- The report, written by former Worldpay CEO Ron Kalifa, recommends a fintech growth fund to address a £2 billion (about $2.8 billion) funding gap for UK startups.
- More than half of VC fintech investment in Europe has historically gone to the UK, but other countries are catching up.
- The UK has developed some of the world's most valuable fintech startups but cannot rest on its laurels. "The next powerhouses will not be created by accident," Kalifa said.
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The business model of pro sports leagues has remained largely unchanged for decades. Now, in the form of Athletes Unlimited, a grand experiment is underway. [Sports Illustrated]
A science writer makes the case that Elon Musk should perhaps reconsider his vision of Mars as the potential future home of humanity. [The Atlantic]
Some prominent tech companies have shied away from military contracts. But for other startups, the Pentagon remains the perfect customer. [The New York Times] |
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Since yesterday, the PitchBook Platform added:
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2
VC valuations
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217
People
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53
Companies
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3
Funds
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2017 Vintage Global Buyout Funds
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Stripe looking for new funds at $100B+ valuation
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| An upcoming funding round for fintech company Stripe could value it at more than $100 billion, Barron's reported. The company may reportedly raise between $1 billion and $5 billion. San Francisco-based Stripe was valued at $35 billion in April 2020. |
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Drone specialist Skydio valued over $1B in new round
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| Skydio raised a new funding round that values the drone maker at over $1 billion. The Redwood City, Calif.-based company was valued at $423 million in deal last year, according to PitchBook data. In its newest round, Skydio said it raised $170 million in a Series D led by return investor Andreessen Horowitz. Other investors in the deal included Linse Capital, Next47, and IVP. |
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Anchorage banks $80M Series C
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| Anchorage has raised $80 million in a round led by GIC, with participation from Andreessen Horowitz, Blockchain Capital, Lux and Indico, according to a company post on Medium. The fintech company, which became the first federally chartered digital asset bank in January, helps institutions manage digital assets. Anchorage was valued at $140 million in 2019, according to PitchBook data. |
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Torch lights up with $25M
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| Torch has raised a $25 million Series B led by Obvious Ventures. The San Francisco-based company is the provider of a professional training and coaching platform for managers and leaders in the workplace. Torch was valued at $43.5 million in 2019, according to PitchBook data. |
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ByteDance agrees to $92M US privacy settlement
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| TikTok owner ByteDance has offered to pay $92 million to settle a class-action lawsuit that accused the company of illegally harvesting user data on teenagers, according to reports. The settlement was proposed in the US District Court for the Northern District of Illinois and reportedly still needs court approval. ByteDance denied the allegations and said it proposed the settlement to avoid further litigation, The Wall Street Journal reported. |
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Robinhood aims to settle FINRA probe
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| Robinhood has plans to pay a fine to settle a probe into its options trading practices and the outages it suffered last March, according to an SEC filing. Two units of the online brokerage company are in talks with FINRA for a settlement, which would include charges that Robinhood violated FINRA rules, a fine and restitution to customers. The company expects a fine of at least $26.6 million. Robinhood is the subject of other investigations by the SEC and state regulatory agencies. |
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SoftBank-backed Full Truck Alliance confidentially files for IPO
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| Chinese freight company Full Truck Alliance has filed confidentially for a US IPO that could raise $1 billion, Bloomberg reported. The company, whose Chinese name is Manbang, operates a marketplace to match truckers and shippers that is similar to platforms from US-based Uber Freight and Convoy. Full Truck Alliance raised $1.7 billion in November and has received backing from SoftBank, Tencent and Alphabet's CapitalG. |
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Cigna's Evernorth to buy MDLive
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| Cigna unit Evernorth has agreed to buy telehealth provider MDLive in a deal expected to close in Q2. Financial terms were not disclosed. Last year, the Florida-based company was valued at $1 billion, according to PitchBook data. It has raised funding from investors including Sixth Street, Cigna Ventures and Industry Ventures. |
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Aurora buys lidar startup OURS
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| Aurora Innovation has purchased OURS Technology, a developer of light detection and ranging technology. The company makes what it calls lidar-on-a chip, a device that combines all the necessary components of lidar technology. OURS was valued at $16 million with a venture round in 2017, according to PitchBook data. |
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"Although the annual median PE deal size dipped slightly in 2020, the trend of a larger European PE transaction environment came marauding back in the second half of the year. The average European PE deal size hit a new annual zenith after collapsing in H1 2020, increasing to €248.9 million—a 22.3% YoY increase from 2019."
Source: PitchBook's 2020 Annual European PE Breakdown |
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