Hi, everyone!
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Top News in the A.M.
Expa, a three-year-old, New York- and San Francisco-based startup studio, is taking the wraps off a new, six-month program for startups that provides them $500,000 in backing, office space, and mentoring. The outfit also just revealed to the New York Times that it has itself raised $100 million from investors. More here.
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IPO Pros Expect Window to Open in Q2
Earlier today, Renaissance Capital, the IPO research firm, published a new report about the first quarter of this year, and it didn’t paint a pretty picture.
For starters, it noted the U.S. IPO market hit the lowest levels in the first quarter since the financial crisis of late 2008. It noted that not a single deal priced outside of the health care sector (which we’d flagged in this recent story). It also noted that of the eight deals that managed to price and collectively raise $700,000 million, the companies’ performance was largely propped up by their venture backers, who bought shares during and after the IPO.
There is, however, a silver lining. Echoing a conversation we’d had last week with another IPO expert — IPOScoop founder John Fitzgibbon — Renaissance Capital Principal Kathleen Smith tells us that a handful of pre-IPO companies could soon inject new life into the torpid IPO market. We talked this morning; our chat has been edited for length.
Renaissance’s new report notes that healthcare IPOs have averaged a return of 20 percent so far in 2016, but it adds that that’s thanks to “substantial buying by their existing shareholders.” Is that a bad thing?
It doesn’t mean they aren’t doing well, but it means there’s concern about their liquidity. Their tradable float is small — even smaller than their deal size would suggest.
That’s not a brand new trend, though. Haven’t health care investors long bought up shares to keep the price of their portfolio companies from dropping until the stock becomes more liquid?
It has long helped to get the deals done. But we’ve seen the percentages increase quite a bit. It used to be that [VCs] would [buy up] 15 percent of the [IPO and post-IPO] shares; now it’s more like 40 percent, and I’d say it began ticking up over the last 24 months. In one recent deal, [for the gene editing company] Editas, insiders bought 67 percent of the float.
The goal in going public is to establish a valuation publicly that either helps other companies to understand them and perhaps buy them at that accepted valuation, or to raise more money down the road, which most [biotech companies] need to do, even though most [generate] capital from the IPO.
In the meantime, there were no tech IPOs in the first quarter. How worried should private tech investors be?
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New Fundings
Asana, an eight-year-old, New York-based collaboration software startup cofounded by Facebook cofounder Dustin Moskovitz, has raised $50 million in Series C funding led by Y Combinator President Sam Altman. Other backers include Moskovitz, Asana cofounder Justin Rosenstein, 8VC, Facebook CEO Mark Zuckerberg and his wife Priscilla Chan, Zappos CEO Tony Hsieh (via VTF Capital), Groupon co-founder Andrew Mason, Elevation Partners founder Roger McNamee, and Quora CEO Adam D’Angelo. Fortune has more here.
Branch, a year-old, San Francisco, and Nairobi, Kenya-based mobile-first digital bank for developing markets, has raised $9.2 million in Series A funding from Andreessen Horowitz, as well as seed investors Khosla Impact and 8VC. Forbes has more here.
CockroachDB, a 1.5-year-old, New York-based open-database company that aims to keep the applications of its enterprise customers up and running, even when their data centers and cloud infrastructure suddenly go offline, has raised $20 million in Series A1 funding. The capital comes from Index Ventures and earlier investors Benchmark and GV (formerly Google Ventures). More here.
Frichti, a nearly year-old, Paris, France-based food production and delivery company, has raised $13.4 million from Idinvest, earlier investor Alven Capital, and numerous angel investors. TechCrunch has more here.
Invoca, a nearly eight-year-old, Santa Barbara, Ca.-based call intelligence platform, has raised $30 million in Series D funding led by Morgan Stanley Alternative Investment Partners, with participation from earlier backers Accel Partners, Upfront Ventures, Rincon Venture Partners, Salesforce Ventures and Stepstone. The company has now raised just north of $60 million altogether. TechCrunch has more here.
MapD, a 2.5-year-old, San Francisco-based big data analytics platform, has raised $10 million in Series A funding led by Vanedge Capital, with participation from Verizon Ventures, Nvidia Corporation and GV. Venture Capital Dispatch has more here.
Planday, a 2.5-year-old, Copenhagen-based workforce management software company, has raised $14 million in Series B funding led by Idinvest, with participation from SEB Private Equity, existing backer Creandum, and Booking.com co-founder Arthur Kosten. TechCrunch has more here.
Spotify, the nine-year-old, Stockholm, Sweden-based streaming music service, has raised $1 billion in convertible debt from TPG, Dragoneer, and clients of Goldman Sachs. The WSJ has the story here.
Wanliyun Medical Information Technology, a seven-year-old, Beijing, China-based medical imaging company, has raised roughly $35 million in funding from the business juggernaut Alibaba. TechCrunch has more here.
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New Funds
MIT has announced the creation of a Bitcoin Development Fund to cover the salaries, travel and work costs of three leading developers of the Bitcoin Core project. Silicon Angle has much more here.
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Exits
Ebay is acquiring Cargigi, a six-year-old, Irvine, Ca.-based company that provides advertising and marketing services on a number of popular free classified websites like Craigslist. Deal terms weren’t disclosed, though eBay described the acquisition as small. TechCrunch has more here.
Foxconn said earlier today that it’s paying close to 389 billion yen (around $3.5 billion) for a 66 percent stake in Sharp, which is a lot less than the $6.2 billion fee that Sharp announced one month ago. TechCrunch has the story here.
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People
Cyan Banister, a renowned angel investor and startup founder, has joined 11-year-old Founders Fund. She’s the firm’s first female investing partner. More here.
How much Yahoo CEO Marissa Mayer may make if she gets fired.
Meanwhile, Google CEO Sundar Pichai was paid $100.5 million for his first year at the helm. More here.
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Jobs
First Round Capital is looking for a special projects lead to help design and execute initiatives intended to help its entrepreneurs (and other people it would like to pull into its orbit). The job is in San Francisco.
XL Catlin, a global insurance company, is looking for a venture analyst to join its venture arm. The job is in Menlo Park, Ca.
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Data
Venture-capital firms are raising money at the highest rate in more than 15 years, according to Dow Jones VentureSource. More here.
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Essential Reads
Nearly a week after being silenced because the internet taught her to be racist, Microsoft’s artificial intelligence bot “Tay” briefly returned to Twitter early today, whereon she went on a spam tirade and then quickly fell silent again. More here.
Eight things Chinese money is buying in America right now.
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Detours
Unlocked iPhone worthless after FBI spills glass of water on it.
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Retail Therapy