Friday! [Turns up the Beastie Boys.] Hope you have a most wonderful weekend, everyone.
Also, because some of you have asked, you can nab seats here for our next event, happening November 13. (We’ll be posting it this weekend on StrictlyVC’s site, too, so you don’t have to hunt for it.) We’ll have more about this third and last event of the year in the coming weeks; in the meantime, we’re happy to say that CNBC reporter Lora Kolodny is newly joining us as an interviewer.:)
Huge thanks again to NextWorld Capital, which is hosting the evening at its beautiful offices and gallery in San Francisco’s Jackson Square neighborhood and has generously played host twice before; thanks, too, to KCPR, the boutique public relations and strategy firm that works with both startups and venture firms and is also a returning sponsor. If you’re also interested in partnering with us, we’d love to talk with you.
More Monday!
Top News
WeWork tried to assuage nervous investors through numerous corporate governance changes it unveiled today in a new SEC filing that says, among other things, that CEO Adam Neuman will now agree to super voting stock with 10 votes per share (down from 20), and that he won’t sell more than 10 percent of his shares in the company in the second and third years after its public offering. WeWork has also scrapped a provision that would have seen Neumann’s cofounder and wife, Rebekeh, play a key role in choosing a successor as CEO if Neumann should die or become incapacitated in the next 10 years.
Still, to be on the safe side, evidently, Softbank Group Corp. reportedly now plans to buy at least $750 million of the shares in its impending IPO, or roughly 25 percent of the shares being offered, a “move that could allow the office-sharing company to shore up an offering that has been plagued by tepid investor demand,” says the WSJ. SoftBank is, of course, already WeWork’s biggest investor. Other notable tidbits: WeWork has chosen the Nasdaq for its offering, and no one seems to have a solid idea yet of where its shares will price, with Reuters reporting this morning that the company could be valued at $10 billion its IPO and the WSJ saying the public shares are expected to value the company at $15 billion to $20 billion.
In the meantime, $6 billion of senior secured credit facilities for WeWork that are contingent on the company pushing through an IPO have reportedly been changed to reduce lenders’ risk. Reuters has more here.
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Cloudflare Cofounder Michelle Zatlyn on Taking the Company Public Today
Shares of Cloudflare rose 20 percent today in its first day of trading on the public market, opening trading at $18 after it priced its IPO at $15 a share yesterday and holding steady through the day.
Put another way, the performance of the nine-year-old company — which provides cloud-based network services to enterprises — was relatively undramatic as these things go. That’s a good thing given that first-day “pops” often signal that a company has left money on the table. Indeed, Cloudflare had initially indicated that its shares would be priced between $10 and $12, before adjusting the price upward, which suggests its underwriters, led by Goldman Sachs, accurately gauged demand for the offering.
Of course, it was still a very big day for Cloudflare’s 1,069 employees and especially for Cloudflare’s founders Matthew Prince, its CEO, and Michelle Zatlyn, its COO. We talked with Zatlyn today in the hours after the duo rang the opening bell to ask about the experience, and how the IPO impacts the company going forward. Our chat has been edited lightly for length and clarity.
Did you get any sleep last night? I was so exhausted that I got a great night’s sleep, This whole process has been so incredible, so special. I didn’t know what to expect, and it’s been way better than I could have imagined. There are 150 of our teammates, early employees, family members, board members, champions and other friends here with us [in New York at the NYSE]. We also live-streamed [our debut] to our offices around the world so they could share this moment with us.
How are you feeling about today? The stock is up 20 percent. There’s always banter afterward about whether a listing was priced right, whether any money was left on the table. At this point, we’ve raised almost a billion dollars between today and all of the money we’ve raised from venture investors. We have a great team. We’re really happy. The markets are going to react how they react, but it’s part of our DNA to provide more value than we capture. We think that’s the way to build an enduring company.
You have a liquid currency now. Do you imagine Cloudflare might become more acquisitive as a public company? We’ve done some acquisitions on the smaller side and of course, we have a team that’s always looking at different opportunities. But we’re really engineering driven, and we think we have many products and service left to build, so we’ll continue to invest in our products and in R&D development, as well as in our customer relationships.
Retaining employees is a challenge that some newly public companies worry about. How will you address this in the coming days and months as lock-up periods expire? I’m so proud of where we are today and of our whole team, and we’re just getting started. [Matthew and I will] show up Monday morning and get back to work and so will our employees, because they want to make the company [an even greater business].
The company went public with a dual-class structure that gives not just management but all employees 10 times the voting rights of the shares sold to the public. Why?
Massive Fundings
Element AI, a three-year-old, Montreal-based company that has built a kind of AI systems integrator to help other companies develop and implement artificial intelligence solutions, has raised roughly $150 million in Series B funding from CDPQ, Gouvernement du Québec and earlier backers Data Collective, BDC, Hanwha Asset Management, and Real Ventures. TechCrunch has more here.
OKCredit, a two-year-old, Haryana, India-based bookkeeping company that simplifies credit account management for shop owners and their customers, has raised $67 million in Series B funding co-led by Lightspeed Venture Partners and Tiger Global. TechCrunch has more here.
Shape Security, a seven-year-old, Mountain View, Ca.-based bot and online fraud mitigation startup, has raised $51 million in new funding at a pre-money valuation of $1 billion. C5 Capital led the round, joined by earlier investors Kleiner Perkins, HPE, Norwest Ventures Partners, Focus Ventures, JetBlue Technology Ventures, Top Tier Capital Partners, and Epic Ventures. TechCrunch has more here.
Big-But-Not-Crazy-Big Fundings
Insilico Medicine, a five-year-old, Rockville, Md.-based AI-powered drug discovery startup, has raised $37 million in Series B funding led by Qiming Venture Partners. Other investors in the round include Eight Roads, F-Prime Capital,Lilly Asia Ventures, Sinovation Ventures, Baidu Ventures, Pavilion Capital, BOLD Capital Partners, and Juvenscence. FierceBiotech has more here.
Smaller Fundings
AmazingCo, a three-year-old, Melbourne, Australia-based experiences platform that connects visitors with outings like mystery picnics and wine tastings, just raised AU$5.1 million ($3.5 million) in Series A funding from Rampersand VC, Artesian and Macdoch Ventures, along with individual investors. StartupDaily has more here.
Middesk, a 10-month-old, San Francisco-based provider of corporate customer background checks, has raised $4 million in first-round funding led by Accel, with participation from Sequoia Capital. TechCrunch has more here.
Prevu, a four-year-old, New York-based home-buying platform that offers rebates on the 3 percent commission typically collected by a buyer’s agent (it says it can do this because it brings so much of the home-buying process online) , has raised $2 million in seed funding led by Corigin Ventures. Business Insider has more here.
Veo, a four-year-old, Copenhagen-based camera company that says it makes it possible to automatically record and video-edit what’s been filmed and which is focused for now on streaming amateur soccer games, has raised $6 million in Series A funding. Investors include Courtside.vc, Ventech Capital, and VC Seed Capital. TechCrunch has more here.
New Funds
Vertex Growth Fund, the sixth and newest member of Vertex Venture Holdings’ global network of venture funds, has raised $290 million in capital commitments for its inaugural fund, says the Straits Times. The new vehicle is anchored by Vertex Venture Holdings, the Singapore-based venture arm of investment firm Temasek Holdings, but it counts other limited partners as well, including an unnamed sovereign wealth fund; institutional investors, including Cathay Life Insurance; and family offices. More here.
IPOs
Madewell, J Crew’s fast-growing, 13-year-old denim brand, plans to split from its struggling parent company and hit the public market, reports CNN. The company will be called Madewell Group, though in a new SEC filing, it did not list an IPO price or say when it plans to go public.
Exits
Daily-deals company Groupon is pursuing an acquisition amid discontent among shareholders about the firm’s financial performance and stock price, reports the WSJ. More here. MoviePass’s all-you-can-watch movie theater membership always seemed too good to be true, and it basically was. After multiple price hikes, business model changes, and temporary shutdowns and despite raising a mountain of money less than a year ago, the company is calling it quits. More in TechCrunch.
People
Jack Abraham, the 33-year-old founder and managing partner of the venture-capital firm Atomic and a cofounder of the health startup Hims, wrote a response to a Quora question about net worth, saying he’s a self-made entrepreneur who’s on track to become a billionaire “by my mid to late 30s.” The response to the question has since been deleted from Quora. Abraham said in an emailed statement to Business Insider that he initially wrote the post to help explain the trade-offs that come with wealth.
Disney CEO Robert Iger has resigned from Apple’s board of directors as the two companies prepare to square off with rival streaming video services. As the New York Times notes, Apple’s growing Hollywood operation would have made it challenging for him to fully engage any longer in the role.
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Essential Reads
A congressional antitrust investigation into Amazon, Apple, Facebook and Google entered a new phase Friday, after lawmakers called on each of the tech giants to turn over a trove of sensitive documents, including top executives’ private communications. The Washington Post has more here.
Detours
Hillary Clinton reads her emails at an art show in Venice.
NBA player Spencer Dinwiddie is reportedly converting his NBA contract into a secured digital investment.
How dogs make us fall for them.
Some of the most astounding astronomy photos taken this year.