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The Daily Pitch: VC

July 2, 2021

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Today's Top Stories

Robinhood's growth rockets, with help from dogecoin

(Justin Sullivan/Getty Images)

Robinhood has filed IPO documents showing steep growth in crypto trading and a heavy reliance on order-flow payments.

The stock-trading app maker lost $1.4 billion in the first quarter of 2021, and revenue grew 309% year-over-year to $522 million. The large loss was due to a $1.5 billion fair-value adjustment to convertible notes and warrants that were used to raise emergency funding during the GameStop saga.

Payment for order flow, the controversial practice of selling trade orders to market makers, and similar practices accounted for 81% of Robinhood's revenue in Q1. Options trading alone brought in nearly $198 million.

Cryptocurrencies represented 14% of the assets held by clients, or $11.6 billion as of March 31. Revenue from the segment rocketed from 4% to 17% between Q4 2020 and Q1 2021. More than a third of that cryptocurrency revenue came from dogecoin trading.

Monthly active users stood at 17.7 million in Q1, more than double the number for the same period last year. Those customers will have a shot at buying into the offering: Robinhood is reserving 20% to 35% of its IPO shares for retail customers.

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Exploring a surging buyouts market

(phokin/Getty Images)

Over the past few years, private equity investors have struggled to find bargains as buyout multiples continue to rise. And a few industries in particular have seen prices skyrocket during the COVID-19 pandemic, with others taking a hit.

Our latest analyst note breaks down how pricing multiples vary by sector. Among the takeaways:

To win auctions in the IT, B2C and healthcare sectors, investors have offered buyout multiples north of 20 times. But that trend may be short-lived if interest rates eventually jump across Europe and the US due to inflationary pressures.

In the past decade, buyout multiples in the healthcare sector have jumped around 50%, with healthcare tech companies surging in value during the pandemic due to the rise of telemedicine.

IT continues to remain the most expensive industry to invest in when measured by buyout multiples, with the median EV/EBITDA multiple peaking last year at around 20x.

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Our top 8 articles of June

(Courtesy of Ginkgo Bioworks)

Wall Street wins signal the start of a synthetic biology revolution

Foodtech deals surge on VC 'exuberance' even as lockdowns lift

Cybersecurity startups near record funding as hacks take spotlight

Middle-market private equity firms show appetite for restaurant rebound

Psychedelic IPOs build momentum as Atai Life Sciences goes public

Europe's unicorn herd grows bigger and faster in 2021

Opaque private equity is marketing to retail investors despite pushback

Andreessen Horowitz launches crypto arms race as check sizes swell

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Recommended Reads

Stephen Normandin was an Amazon package delivery driver for nearly four years. Then one day he was fired by a machine. [Bloomberg]

Last year, workers in Los Angeles were hired to sew protective masks and hospital gowns during the pandemic. But after an outbreak infected hundreds and killed several, they were left wondering who was protecting them. [The Cut]

Did the pandemic change how we tip? [The Atlantic]

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	SoftBank funnels $200M into Latin American crypto exchange
	Edtech startup Paper books $100M
	Karat Financial banks $26M
	Osmind secures $15M Series A for neuropsych platform

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VC Deals

SoftBank funnels $200M into Latin American crypto exchange

SoftBank's Latin America Fund has invested $200 million in Mercado Bitcoin, the São Paolo-based developer of a cryptocurrency exchange platform. The Series B values 2TM Group, Mercado Bitcoin's parent company, at $2.1 billion. The startup raised a Series A in January.

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Edtech startup Paper books $100M

Paper has raised a $100 million Series C led by IVP. The Montreal-based company is the developer of a personalized tutoring platform for K-12 students across the US and Canada. Paper provides homework help, writing feedback and study support in four languages across 200-plus academic subjects. IVP general partner Tom Loverro has joined the company's board.

Additional Investors:

Birchmere Ventures, BDC Capital, Bullpen Capital, Framework Venture Partners, Reach Capital, Salesforce Ventures, ETW

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Karat Financial banks $26M

Karat Financial, the Los Angeles-based developer of a banking system for the creator economy, has raised $15 million in debt financing and $11 million in Series A funding. The round was led by Union Square Ventures, with support from GGV Capital, SignalFire and several angel investors. Karat, which was co-founded by a former Instagram product manager, targets creators, influencers and other freelancers—many of whom earn more than six figures a year but are denied credit and access to traditional financial services.

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Osmind secures $15M Series A for neuropsych platform

Osmind, a developer of digital infrastructure for neuropsychiatry clinicians and researchers, has raised $15 million in Series A financing. The round was led by Future Ventures and joined by other investors including General Catalyst, Tiger Global, Offline Ventures, and Yahoo co-founder Jerry Yang's AME Cloud Ventures. The funding will be used to further develop and expand Osmind's electronic health record and research platform.

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