2021 - 199 Unicorns So Far

Unicorns are supposed to be rare beasts of fables and folktales, but in the current venture capital landscape, they’re abundant.

Just five months into 2021, there were 199 new companies that reached unicorn status (a private company with a $1+ billion valuation), eclipsing the 163 companies that reached unicorn status in all of 2020, according to Crunchbase data shared with Emerging Tech Brew. And it’s not just a pandemic rebound: That figure is higher than any full-year total over the last nine years. 

After a 2020 full of stagnation and uncertainty, the VC scene is making up for lost time and then some. 

“Many of the concerns…that ground dealmaking to a halt have largely been alleviated in what many investors see as a new normal,” Joshua Chao, venture capital analyst at PitchBook told us. “We’re now seeing VCs invest in companies outside of their immediate networks and it’s just full steam ahead on dealmaking and fundraising.” 

TPG, one of the last of the original private-equity giants to remain a closely held partnership, is evaluating a public listing, people familiar with the matter said.

The firm is considering a straightforward initial public offering and a merger with a special-purpose acquisition company, with the former being the most likely route, the people said. Such a deal could value the California-and-Texas firm at about $10 billion, some of the people said.

The process is still in its early stages and TPG may not opt to proceed with any deal.

TPG, with nearly $100 billion in assets under management, has flirted with an IPO multiple times, only to end up balking while rivals forged ahead. Blackstone Group Inc., BX -1.83%Apollo Global Management Inc., APO -0.34% KKR & Co. and Carlyle Group Inc. went public years ago, transforming businesses that have enjoyed rapid growth as the industry is flooded with assets.

In April of last year, Michael Grinich got a call most startup founders only dream about. Eric Vishria, a partner at Benchmark, one of the most prestigious VC firms, said he was interested in investing in Grinich’s then-two-year-old software startup, WorkOS, which helps other software startups sell their products to large companies. Grinich had a rare chance to join the firm’s portfolio of early bets, which previously included eBay, Twitter, Uber and Snap.

But Grinich had already received an investment offer from Lachy Groom, a former Stripe product manager who launched his first investment fund in early 2019. Groom asked to buy around 15% of WorkOS’s shares as part of his investment offer, which Benchmark said it wouldn’t match, according to people with direct knowledge of the deal. The firm usually wants to buy at least 20% of a company’s shares in order to generate big returns if the startup is able to go public or get acquired. Grinich picked the less-established Groom. …

On Funding — Shots on Goal

Being great as a startup technology investor of course requires a lot of things to come together:

I’ve definitely been wrong on market value. I’ve sometimes been right about the market value but too early. And I’ve been spot on with both but backed the 2nd, 3rd or 4th best player in a market.

In short: Access to great deals, ability to be invited to invest in these deals, ability to see where value in a market will be created and the luck to back the right team with the right market at the right time all matter.

When you first start your career as an investor (or when you first start writing angel checks) your main obsession is “getting into great deals.” You’re thinking about one bullet at a time. When you’ve been playing the game a bit longer or when you have responsibilities at the fund level you start thinking more about “portfolio construction.”

At Upfront we often talk about these as “shots on goal” (a fitting soccer analogy given the EURO 2020 tournament is on right now). What we discuss internally and what I discuss with my LPs is outlined as follows:

On Funding — Shots on Goal was originally published in Both Sides of the Table on Medium, where people are continuing the conversation by highlighting and responding to this story.

In April of last year, Michael Grinich got a call most startup founders only dream about. Eric Vishria, a partner at Benchmark, one of the most prestigious VC firms, said he was interested in investing in Grinich’s then-two-year-old software startup, WorkOS, which helps other software startups sell their products to large companies. Grinich had a rare chance to join the firm’s portfolio of early bets, which previously included eBay, Twitter, Uber and Snap.

But Grinich had already received an investment offer from Lachy Groom, a former Stripe product manager who launched his first investment fund in early 2019. Groom asked to buy around 15% of WorkOS’s shares as part of his investment offer, which Benchmark said it wouldn’t match, according to people with direct knowledge of the deal. The firm usually wants to buy at least 20% of a company’s shares in order to generate big returns if the startup is able to go public or get acquired. Grinich picked the less-established Groom.

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 44% of Snapchat before it went public. Mark Zuckerberg owned 31% of Facebook, Sergey Brin and Larry Page owned 31% of Google, the founders of Eventbrite owned 34%, and Reed Hastings owned 24% of NetFlix. These are remarkable levels of CEO ownership upon going public/exit, but such high levels aren’t always the case. Glen Kelman of Redfin owned only 4%, the founder of Pandora owned only 2%, the Lyft founders owned 6% combined, and Peloton’s founder and CEO owned 6%. The point is the range of ownership at exit/IPO can be quite wide and is dependent on a number of factors, the primary of which are capital efficiency and the ability to command high valuations during fundraising.

The list below shows founder or CEO ownership of 160 tech companies at IPO. The median level of founder ownership shown is 14% while the average is 20%.

SIR TIM BERNERS-LEE famously gave the source code to the World Wide Web away for free. But now he’s raised over $5.4 million by auctioning off an autographed copy as a  non-fungible token, or NFT, in a sale through Sotheby’s.

Berners-Lee’s NFT joins eclectic company, including Jack Dorsey’s first tweet, a New York Times column, a Pringles flavor called “CryptoCrisp,” a lifetime coupon code to an online kratom retailer, a lease for a coliving space in San Francisco’s Mission District, a sexually explicit direct message allegedly from the disgraced actor Armie Hammer, and a 52-minute audio file of fart. But this most recent addition to the endless list of collectible NFTs is an artifact with an air of gravitas, a souvenir from a vaunted internet pioneer. Berners-Lee wrote the code while working at CERN in Switzerland in the early ’90s, creating what he called the “WorldWideWeb” from a NeXT computer. In addition to the copy of the code itself, the auction haul included a 30-minute animation depicting the code being written, a scalable graphics vector representing the full code, and a letter Berners-Lee wrote this year reflecting on what it was like to write the code. (Berners-Lee will donate the proceeds, but has not specified where he plans to direct the funds.)

Details are slowly emerging about a new startup, Worldcoin, that aims to launch a new cryptocurrency that it would distribute to people in exchange for their eye scans. The futuristic-sounding idea has attracted major supporters in Silicon Valley, including Y Combinator president Sam Altman, LinkedIn co-founder Reid Hoffman, and the venture capital firms Andreessen Horowitz and Day One Ventures.

But while information is still coming to light about Worldcoin, cryptography and privacy experts are already poking holes in its main premise.

Bloomberg uncovered the nascent startup’s plans, which seem to involve launching a cryptocurrency that everyone in the world could have a share in. The idea appears to be inspired by the concept of universal basic income, or direct, no-strings-attached payments to people, usually distributed by the government. And the startup wants to deliver this currency by building orb-shaped devices that convert scans of peoples’ eyes into unique numerical identifiers in order to make sure a person is a legitimate recipient of the payment and isn’t trying to sign up more than once. An online job posting for Worldcoin cited by Bloomberg noted the startup hoped to build “a dedicated hardware device ensuring both humanness and uniqueness of everybody signing up, while maintaining their privacy and the overall transparency of a permissionless blockchain.”

The company is already testing a prototype of its eye-scanning device in several cities (volunteers are being paid primarily in bitcoin for now) and has at least $25 million in funding, according to Bloomberg. The company’s leaders seem to think its biometric-data tracking device would prevent a person from registering for multiple Worldcoin payments. Overall, the startup wants to power a new cryptocurrency that the entire globe can access, and which could be disbursed to almost anyone — although they would apparently have to agree to let Worldcoin scan their irises.

Sam Altman has a new startup that intends to give a special type of cryptocurrency to every person on earth. But first, it wants to scan everybody’s eyeballs.

Altman, the former head of the Silicon Valley business incubator Y Combinator, is one of three founders of the company Worldcoin. Among the many parts of its plan, Worldcoin has designed an orb-shaped device that would scan a person’s iris to construct a unique personal identifier.

The company is backed by Andreessen Horowitz, the venture capital arm of Coinbase Global Inc., LinkedIn founder Reid Hoffman and Day One Ventures. It recently raised about $25 million from investors.

Altman, 36, said in an interview that he conceived the idea in late 2019. The intention was to use cryptocurrency to spread money around equitably, inspired by the trendy economic theory known as universal basic income. Altman was the first investor in Worldcoin but said he has no role in day-to-day operations and mainly serves as an adviser to the company when needed.

Digital assets are deceiving in that they appear to generate out of thin air but the carbon footprint of bitcoin has real world impacts.

The post Comparing the Carbon Footprint of Gold and Bitcoin appeared first on Visual Capitalist.

A federal court has dismissed the Federal Trade Commission’s antitrust complaint against Facebook, saying the agency had failed to provide evidence for its claim that the social media giant holds a monopoly in social networking.

What techlash?

Lawyers at the Federal Trade Commission have egg on their faces after a federal judge ruled the agency, in its antitrust case against Facebook, hadn’t made the case the company had a monopoly. Even more embarrassing was the judge’s outright dismissal of a case filed by a group of 40 states. The …

A judge dealt the Federal Trade Commission a setback this week in its quest to break the company up—but also provided a roadmap for how to proceed.

A few years ago, after one of the first fireworks-filled Capitol Hill hearings on big tech, I wrote that lawmakers who should know better appeared to have forgotten the definition of a monopoly.

The role of big tech companies in creating jobs is often underappreciated. And we’re not just talking about software engineering jobs or chefs in fancy campus cafeterias. Given the proliferating number of tech-focused antitrust inquiries, particularly in Europe, it’s a good bet a lot of jobs are being created at European regulatory agencies and law firms dealing with those agencies. On Friday, for instance, came a report that the U.K.’s antitrust authority was investigating Amazon and Google about whether they are cracking down enough on fake reviews.

The same authority is also scrutinizing Apple and Google’s mobile ecosystems. The European Commission, meanwhile, is investigating Google’s ad tech business, Amazon’s Prime program, Facebook’s collection of ad data, and Apple’s Apple Pay. It is separately pursuing lawsuits against Apple on its app store, Amazon on how it treats sellers and Google’s Google Shopping business. And then there are the inquiries underway in individual countries. Germany, for instance, is scrutinizing Google’s market power. And this list, compiled with the help of my London colleague Mark Di Stefano, is doubtless missing a few entries.

Amazon.com filed the recusal request with the Federal Trade Commission citing Chairwoman Lina Khan’s extensive past criticisms of the company.

In an open meeting on Thursday, the Federal Trade Commission passed a pair of pivotal measures expanding its power to regulate anti-competitive business practices, setting the stage for a more aggressive enforcement approach from the embattled agency.

Announced last week, Thursday’s proceeding is the first open business meeting of the commission in more than 20 years, as commission proceedings have traditionally been closed to the public. Chair Lina Khan plans to hold public meetings on a monthly basis going forward.

The meeting paved the way for an aggressive antitrust approach from the agency, with three separate measures expanding the commission’s power to prosecute anti-competitive business practices.

In the most aggressive effort, the commission voted to rescind a 2015 “Statement of Enforcement Principles” that restricted the FTC Act’s prescriptions on “unfair methods of competition” to explicit violations of existing antitrust law (specifically the Sherman and Clayton Acts). The vote proceeded along party lines, passing 3-2 with Democrats in the majority.

What you need to know about Africa’s tech startups  World Economic Forum

Technology startups and the venture capital ecosystem that transforms ideas and fledgling companies into disruptive businesses are growing globally—a phenomenon that the 

Boston Consulting Group (BCG) explores in a recent report on the expansion and maturation of African tech startups. According to the authors, Africa enjoys a fertile environment for tech entrepreneurs due to the continent’s youthful and growing population, rising internet penetration, and the application of emerging technologies that have the potential to improve access to healthcare, financial services, education, and energy. As such, the research paper focuses on the meteoric growth of tech startups throughout the continent, persistent challenges and structural barriers stymying these firms’ further growth, and policy recommendations to overcome these obstacles and develop Africa’s innovation hubs.

Securing venture capital funding, according to BCG, is an important milestone for startups and is an important step that enables them to scale and develop novel products. In the study, BCG found that the number of African tech startups accomplishing this significant step experienced exponential growth between 2015 and 2020. In fact, over that time period, growth in the volume of African tech startups receiving financial backing was nearly six times faster than the global average (Figure 1).