What's Next for Midas Touch | VCs Pile Into 15-Minute Grocery Delivery| Gaming Startups Raise $16.6B

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The sector raised more than $5 billion in 2021, according to data compiled from Crunchbase, and minted four unicorns, including Istanbul-based Getir, valued at $7.5 billion, and Berlin-based Flink, valued at $3.85 billion. The category has attracted adjacent players including food delivery (DoorDash and UberEats) and prompted earlier grocery delivery startups to pick up their pace (Instacart).  As this newsletter has mentioned before, these companies went from being a one-off to an incredibly strong category in a matter of months. 

The similarities: This explosive growth mirrors the early battle for ridesharing market share in both good and negative ways. One such way is the potential for multiple category leaders. Larry Aschebrook, a managing partner at growth equity firm G Squared — which has backed multiple startups in the space including JOKR and Gorillas — tells Midas Touch that the total addressable market here is huge and large enough to support multiple successful players across different geographies. The U.S. market alone is large enough to support multiple winners itself, he adds. G Squared previously backed both Lyft and Uber for the same reason and was arguably correct.

Ralf Wenzel, the cofounder and CEO of Berlin-based JOKR echoes this statement. “There is an opportunity for few players to succeed,” he tells Midas Touch. “It will not be in the hundreds, it will not be in the thousands, but maybe in the tens or twenties. There will be a handful of players that succeed and become profitable, all of them with a certain angle and a focus on a specific demographic of customer.” It’s like Trader Joes and Whole Foods, two health food grocery chains that have built and sustained their own customer bases while working side by side in the same localities, he adds by way of comparison.

These 15-minute grocery delivery companies also come with the same growing pains ridesharing companies experienced in early days, like the aforementioned critics in congested cities and millions in capital just to launch. The latter, however, is proving surmountable, Aschebrook points out. “It does take a lot of capital to get to a good place where you can start to get warehouse and unit economics that work, but these businesses are growing at rates that are unprecedented,” he says. “Some of those metrics are starting to be met.” 

The differences: 15-minute grocery delivery is indeed similar to ridesharing 10 years ago, but the market is held to a different standard, Aschebrook says. Unlike Uber and Lyft, startups won’t be enabled to burn cash for the next decade. “It’s a different chapter in the same book,” he says. “To get it to some type of meaningful scale, you need to show the unit economics that it can be a profitable business and a long term sustainable business.”

For Wenzel’s JOKR, he says that is already starting to happen. “We expect the business to turn profitable over the next few years,” he says. “Depending on the country we are in, the company can turn an EBITDA profit in a three to five-year horizon very easily. We are very happy with the progress we have made. We started the company 10 months ago and we have been growing into a significant revenue-producing business.” Time will tell.

— Becca Szkutak

Carlyle's bountiful quarter

The Carlyle Group revealed its fourth-quarter earnings on Thursday, becoming the second major private equity firm to report stellar results for the final stretch of a frenzied year. 

One highlight was $902.8 million in distributable earnings, a new firm record and up 281% from the same period in 2020. Another was net income of $647.6 million, up 25% year-over-year. A third was that its corporate private equity portfolio appreciated by 6% in the quarter, taking year-over-year growth to 41%. A fourth was that Carlyle grew its total assets under management by 22% during the course of 2021, reaching $301 million. The biggest contributor to that growth was the firm's credit business, which grew by 31% during 2021—a sign that, like rivals Blackstone, KKR and Apollo Global Management, Carlyle sees the credit sector as a prime area for future growth. 

Carlyle continued that expansion of its credit business with a deal this week. On Wednesday, it revealed plans to buy the triple-net lease business of iStar for about $3 billion, gaining a portfolio of leases for some 18.3 million square feet across industrial, office and entertainment properties. Carlyle global credit head Mark Jenkins said in a statement that the deal "jump starts our real estate credit strategy." 

—Kevin Dowd

— The crypto data specialists at Dune Analytics raised a meme-tastic $69,420,000 in venture funding at a $1 billion valuation, with Coatue leading the round. Unfortunately for any Frank Herbert or Timothee Chalamet fans, Atreides Management is not a co-investor. 

— Chargebee, which operates a platform for managing subscriptions and recurring billing, raised $250 million at a $3.5 billion valuation in a round co-led by Tiger Global and Sequoia. That’s up from a $1.4 billion valuation the startup attained last April.

—  Corporate credit card startup Ramp is rumored to have raised $200 million in what would be its fourth funding round in the last year. If true, this would bring the fintech’s funding in the last 12 months to $765 million since February last year and $810 million in total. 

— FTX raised $400 million at a $32 billion valuation in a round that included Tiger Global, Temasek and Insight Partners, among others. This raise makes FTX the fifth largest fintech decacorn.

After four years of inconsistent growth, gaming got a huge cash influx in 2021. The sector saw $16.6 billion invested through 831 deals last year, according to data from Crunchbase. That’s up nearly 2.5x over the $6.7 billion invested through 684 deals in 2020.