We realize SVC is arriving comically late today. (We almost hate to send it and draw attention to this fact.) It’s been one of those days.:)
Hope you a great weekend, everyone. See you back here Monday.
Top News in the P.M.
Alphabet”s Waymo unit is seeking a preliminary injunction against Uber over self-driving car technology. TechCrunch has more here.
The SEC has denied a bid to list a bitcoin-tied exchange-traded fund, citing the risk of fraud and a lack of regulation among the world’s bitcoin markets. As CoinDesk reports, the decision caps a years-long quest by bitcoin investors Cameron and Tyler Winklevoss, who first sought to list the ETF in mid-2013. The value of bitcoin has fallen 18 percent on the news, says Bloomberg.
The Case for Tenured Voting
It’s hard to get too worked up about unequal voting rights, which are seen by public market investors as giving founders too much control, while viewed by founders as necessary to protect their companies from short-term shareholders. The reality is that only a minority of companies can command these terms, most famously Google, Facebook, Zynga, Groupon and now Snap. The majority of other startups have far less leverage.
Still, the controversial structure seems to be growing more common. According to Dealogic, 27 of 174 U.S. IPOs in 2015 featured a dual-class structure. In 2014, 36 IPOs used the structure out of a total of 292 U.S. IPOs.
Why it matters: Research published last year by Institutional Shareholder Services suggests that companies with unequal voting rights underperform non-controlled companies over a one-year, five-year and 10-year period. Now Snap has taken the structure to an unprecedented extreme, even writing in its IPO paperwork that, “to our knowledge, no other company has completed an initial public offering of non-voting stock on a U.S. stock exchange.”
It’s too soon to know how Snap will fare. While its shares soared 44 percent on the day of its IPO last Thursday, they’ve since fallen about 16 percent, helped along by a growing chorus of skeptical analysts. The trend has some worried, though, including SEC Commissioner Kara Stein, who publicly raised questions yesterday about the rights of investors, and who suggested the SEC “focus on how some innovations may prove detrimental to investors.”
One alternative the SEC might discuss is tenured voting, a structure that was lightly used decades ago, halted by regulators in the 1980s, and of growing interest again to a small number of Silicon Valley denizens who argue it’s a lot better than what tech companies have come up with.
It works much like you’d guess based on the word “tenure.” The longer an investor hangs on to his or her shares, the more voting control he or she amasses. The idea is to protect founders from activist investors, while also giving public market shareholders some say.
It’s immediately easy to see the appeal. Carl Bass long served as Autodesk’s CEO and had to wrestle with activist investors last year. Somewhat unsurprisingly, he told us recently that he’d “like to see tenured voting, where there’s a premium based on how long you own the shares.” It makes sense to Bass that “one person who has owned a million shares for one year has less voting power than another person who has owned a million shares for two years.”
Managing partner Scott Kupor of Andreessen Horowitz is also a fan of the idea, saying that as “part of broader capital markets reform to better align the long-term interests of shareholders and management teams, tenure-based voting would be far more amenable as a solution than the more blunt-force application of dual stock.”
The challenge, says Steven Davidoff Solomon, a professor at the UC Berkeley School of Law, is that “it takes time and you need a first mover.”
Datebox, a 1.5-year-old, Oklahoma City, Ok.-based e-commerce company that organizes dating ideas and products for couples, has raised $2.6 million in seed funding from Oklahoma Seed Capital Fund, SeedStep Angels and other angel investors. More here.
DraftKings, the six-year-old, Boston-based daily fantasy sports site that agreed in November to merge with competitor FanDuel, has closed a funding round led by Los Angeles Dodgers part owner Todd Boehly’s Eldridge Industries. Bloomberg reports the Series E1 round is for more than $100 million. More here.
Job Today, a 1.5-year-old, Luxembourg-based job finder app, has raised $35 million in Series B funding led by Accel Partners, with participation from media investors including Astremedia (Spain), Channel 4 (U.K.), and German broadcaster RTL Germany. TechCrunch has more here.
Marketing Evolution, a 16-year-old, New York-based company focused on marketing measurement and optimization, has raised $4 million in funding from Zetta Venture Partners. More here.
Odilo, a five-year-old, Madrid, Spain-based digital content company, has raised €6 million ($6.4 million) in funding from earlier investors Active Venture Partners, Inveready, Kibo Ventures and JME Venture Capital. More here.
Viva Republica, the 3.5-year-old, Seoul-based company behind the Korean financial services app Toss, has raised $48 million in Series C funding led by Goodwater Capital, which also led the company’s Series B round. Other participants in the round include payment giant PayPal, Bessemer Venture Partners, Altos Ventures and Partech Ventures. The company has now raised $76 million to date. TechCrunch has more here.
Waitr, a three-year-old, Lafayette, La.-based food delivery startup, has raised an undisclosed amount of funding from New Orleans Saints quarterback Drew Brees. TechCrunch has more here.
Wazoku, a four-year-old, London-based maker of workflow management software that aims to encourage organizations to draw on ideas from employees and suppliers alike, has raised £2.3 million ($2.8 million) in debt and equity funding from Barclays, Cambridge Angels and Fig. More here.
Verizon Ventures and the digital agency R/GA just announced a new program called the Verizon Media Tech Venture Studio. It’s a 14-week program for up to 10 companies that will each receive $100,000 in funding and work out of Verizon’s new “open innovation” space in New York City. The companies says they’re looking for startups in areas like content creation and personalization, virtual reality and augmented reality, artificial intelligence, content distribution, interactive advertising and e-sports. More here.
On the heels of acquiring data science community Kaggle, Google just launched a machine learning competition of its own for startups. The competition is being run in partnership with seven venture capital firms — Sequoia Capital, KPCB, GV, Data Collective, Emergence Capital, Andreessen Horowitz and Greylock — and two of them, Data Collective and Emergence Capital, plan to contribute $500,000 each to the winning startup. More here.
Cloudera, the big-data company backed by Intel Corp., is working with Morgan Stanley, JPMorgan Chase & Co. and Bank of America Corp. on its IPO, reports Bloomberg, which says the company has already filed confidentially with the SEC. More here.
Tocagen, a 10-year-old, San Diego-based clinical-stage company focused on gene therapy for cancer, has announced plans to raise $86 million in an IPO. FierceBiotech has more here.
The feud between Oculus and ZeniMax Media continues, this time with the CTO of Oculus, John Carmack, suing his former employer for $22.5 million that he claims is still owed to him.
We told you yesterday about a birthday party for Dropbox CEO Drew Houston. What we, erm, didn’t know yesterday (and Houston and company may not have immediately known, either) was the party’s title: “Babes and Balls.” Quel scandale.
Phil Schwarz, Tinder’s former CMO, has joined the Chicago-based seed-stage venture firm Corazon as a principal. Corazon recently closed a $40 million fund. The firm was cofounded by serial entrepreneur Sam Yagan, who cofounded SparkNotes and OKCupid, as well as served as CEO of Match Group.
#Angels, a two-year-old investment collective founded for six female executives who at Twitter, is looking to hire a part-time investment principal. The job is in San Francisco.
SoundCloud reportedly needs some $$ and now.
Radioactive boars have taken over Fukushima.
New proof that daylight savings is dumb, dangerous and costly.
Ah, yes, we know the feeling.
So we’re not the only weirdos who love station wagons.