Booming IPO market, funding to female founders drops, and the carbon footprint of crypto
Welcome to Nº 17 of In The Money, your weekly newsletter on keeping up with all things finance, tech, and startups. As always, this week’s newsletter is filled with all the financy things. This week two women are breaking the boys’ SPAC club. While 2020, was a record-breaking year for VC funding, the amount of capital allocated to solo female founders decreased – breaking a decade of progress. London is poised for a busy IPO year; Trustpilot went public this week, while Deliveroo’s IPO is set to be the biggest in London in over a decade. In other IPO news, Robinhood filed for listings and WeWork is going public through a SPAC. You can now buy a Tesla with Bitcoins, but what is the real environmental impact of cryptocurrencies? This and much more. Hope you enjoy this edition.
Breaking the boys’ SPAC club 💪
There are 528 active SPACs, however, only 17 of those, or 3.2% have a female chair or CEO, according to SPAC Track. Last Friday, Phyllis Newhouse and Isabelle Friedman joined the fray when their Athena Technology Acquisition Corp., raised $250 million in its IPO on the New York Stock Exchange. Isabelle Freidheim is serving as Athena’s chair and Phyllis Newhouse as its chief executive, Athena is also the only SPAC listed on the NYSE with a Black female CEO. Newhouse became the first black woman to ring the opening bell. Phyllis Newhouse has a 22-year career in the military. A little over a year ago, Newhouse, also the founder of cybersecurity firm Xtreme Solutions met Isabelle Freidheim, the cofounder of Starwood VC and also Magnifi, a personal finance search engine, through the Women’s Presidents Organization. They got to talking about what was then only the beginning of the SPAC boom. Together they identified an opportunity.
To understand more about SPACS you can read a deep dive in a previous edition of ITM here. Athena has not yet decided on its acquisition target (special acquisition companies have two years to identify and buy a target). Freidheim and Newhouse are primarily looking within their respective industries—fintech and cybersecurity, but also along within direct-to-consumer. They plan to tap into their powerful network of women to source deal flow. They have connections within the Women’s Presidents Organization and also EY’s Entrepreneur of the Year, of which Newhouse was a recipient for her work building the Georgia-based Xtreme Solutions. Within these organizations, the two have access to thousands of female founders and CEOs. There is, however, skepticism around the recent surge in SPACs, which the duo is aware of. They know they’re joining around 400 other SPACs, that are searching for an acquisition target. They also know that the number of blank-check IPOs in the first quarter of 2021, which is 274, has already surpassed the total 248 listings during the whole year 2020. Finally, they’ve seen the ups and the downs of the SPAC market so far. Six months after a deal is announced median returns for SPACs amount to losses of more than 10%.
Funding to solo female founders dropped in 2020… 📉
US startups overall raised a record $143 billion in 2020, of which only $3.2 billion went to startups founded by solo female founders, representing a drop of 22% from the year before. According to Crunchbase data, venture dollars invested in sole female founders in 2020 represented 2.4% of overall venture funding, down from 3.4% in 2019. The new percentage again mirrors percentages earlier in the decade – a step back in the decade of progress. The drop in funding to sole female founders was particularly pronounced in the later-stage rounds. Seed and earlier stage funding were down just slightly from last year. It’s not entirely clear how much of the drop in funding to female startup founders in the US can be attributed to the pandemic. Why the outbreak would have a disproportionate effect on female startup founders is not clear either. The pandemic, however, did impact women in the workforce more severely than men.
In 2020, 10 companies with at least one female founder joined the Crunchbase Private Unicorn Board, which is a list of private companies valued at or above $1 billion. So far in 2021, 6 new female-founded companies have joined the board.
… And in CEE female founder received only 1% of the capital 🤦♀️
Female-founded startups received just 1% of the capital available in Central and Eastern Europe (CEE) in 2020, according to a new report from community platform European Women in VC, growth-stage fund Experior VC and early-stage VC Unconventional Ventures. Despite a year that saw European startups raise a record amount of funding, the amount of funding going to all-female founding teams in CEE dropped from a high of 4.1% in 2018 to just 1% in 2020. To put that figure in context, roughly 13% of the region’s startups are female-founded. And yet, female-founded companies outperformed their male peers by 96% in terms of revenue generated per € of investment. That is, despite receiving less funding, diverse teams do a whole lot more with the money.
According to the report, a major barrier to better gender parity in the tech sector is a lack of diversity in the VC industry. The report found that in the CEE region 90% of capital is managed by male general partners, and 93% of all partners at VC firms are men. You can read the full report here.
Women winning this week 💸
Ellevest hits $1 billion AUM
When Sallie Krawcheck founded Ellevest, the women’s-focused investment platform five years ago skeptics were saying “this is gonna fail”. In a Forbes, exclusively interview she told, about the milestone Ellevest just hit, $1 billion in assets under management (AUM). Ellevest has 123,000 clients with an average account size of $8,000. While the typical user is a woman in her 30’s who is also saving money in a 401(k) at work, but Ellevest has investors ranging from 18 years old to 106 years old. Krawcheck, a longtime Wall Street executive for more than a decade, she ran Sanford C. Bernstein, Smith Barney, Citi Wealth Management and Merrill Lynch. Read and learn more about Krawcheck in an earlier edition of ITM here.
Women investing in women
BBG Ventures is a firm dedicated to backing consumer startups with at least one woman on their founding teams. Eight years and 76 investments later, Susan Lyne and Nisha Dua have proven early doubters wrong. As the latest proof point for their investment thesis, the managers tell in an interview with Forbes that their firm, BBG Ventures has closed its third fund, for $50 million.
Deliveroo set to be London’s biggest IPO 📦
Food delivery company Deliveroo’s IPO is set to be London’s biggest stock market listing since commodities giant Glencore went public in May 2011. On Monday Deliveroo sat a price range of between £3.90 and £4.60 per share for its blockbuster IPO. That values the company up to £8.8 billion or $12.2 billion. Its first day of trading is expected to take place on April 7, according to its IPO prospectus. The Amazon-backed food delivery firm is held as a sign that the City of London can still attract major IPOs even following the UK’s exit from the European Union. A big win for the UK after Brexit as it aims to lure more high-growth tech companies. Overall, Amazon stands to gain the most from the IPO. The tech giant will hold an 11.5% stake or 209,720,160 shares in Deliveroo after the IPO that will be worth around £1 billion depending on the pricing. Amazon currently holds 15.8% but it plans to sell 23,302,240 shares. Deliveroo has benefited from the closure of restaurants for anything other than takeaways during the pandemic and revenues have soared accordingly. Its gross transaction value, which measures the total value of orders received rose 64.3% in 2020 to 4.1 billion pounds. However, it faces the question of whether that momentum will continue after the pandemic restrictions are eased and if it will be enough to turn the business towards profit after it posted a loss of £223.7 million ($308.93 million) last year.
A UK government-backed review urges reforms to London’s listing regime, including the ability to list dual-class shares (see definition below) like those pioneered by Google and Facebook. Currently, firms are unable to do so on the premium segment of London’s stock market. This prevents companies from being eligible for inclusion in benchmarks like the FTSE 100. Deliveroo has opted for a dual-class share structure that gives CEO and founder Will Shu enhanced voting rights. Shu will get 20 votes per share while other investors are entitled to only one.
Dual-class stock is the issuing of various types of shares by a single company. A dual-class stock structure can for example consist of Class A and Class B shares. These classes of shares can differ, based on distinct voting rights and dividend payments. When multiple share classes are typically issued, one share class is offered to the general public, while the other is offered to company founders, executives, and family. The class offered to the general public has limited or no voting rights, while the class available to founders and executives has more voting power and often provides for majority control of the company. Well-known companies, such as Facebook and Warren Buffett's Berkshire Hathaway, have dual-class stock structures. Supporters say the structure allows the people who founded and who currently run the company to think long-term. On the other hand, dual-class structures are controversial because they do not allow public shareholders a say in running the company and distribute risk unequally.
A busy year for London IPOs 🇬🇧
In what is shaping up to be a busy year for London, Trustpilot became the latest tech stock to list in the city. Trustpilot surged in its stock market debut on Tuesday. Shares of the Danish consumer review company jumped as much as 16% from the offer price of £2.65 to $3.65, which gave the company a valuation of £1.1 billion. The IPO raised about £473 million in total. Existing investors sold 161 million shares and the company itself issued 17.6 million shares. Trustpilot’s listing came a day after Deliveroo set a price range for its anticipated IPO.
Instagram for kids 👶
A version of the popular photo-sharing app for children under 13 is in the works, confirmed Head of Instagram Adam Mosseri. The Facebook-owned company knows a lot of kids want to use Instagram, Mosseri said. Instagram’s current policy bars children under 13 from using the platform. “Part of the solution is to create a version of Instagram for young people or kids where parents have transparency or control,” Mosseri told BuzzFeed News. “Increasingly kids are asking their parents if they can join apps that help them keep up with their friends,” Joe Osborne, a Facebook spokesperson said in an email to The Verge.
Microsoft to buy Discord ❓
According to Bloomberg, Microsoft is in discussions with Discord to acquire the gaming-focused chat software for more than $10 billion. VentureBeat reported earlier the same day that Discord was exploring a $10 billion-plus sale after multiple potential buyers expressed interest and that it had signed an exclusive acquisition discussion with one party. Bloomberg’s sources say the deal isn’t imminent, one person saying Discord would be more likely to take itself public than seek an acquisition. Bloomberg names Epic Games and Amazon as companies that have also had discussions with Discord. Discord has about 140 million monthly users and made $130 million in revenue last year, The Wall Street Journal recently reported, that the company is not yet profitable. After its latest funding round in December, its last valuation was $7 billion. Discord’s software is free for most users, but the company makes money through $9.99 monthly subscriptions that offer more premium features such as higher resolution screen sharing, extra sticker packs, and larger upload limits.
Prince Harry is now a Techie 👑
The Duke of Sussex has joined Silicon Valley startup BetterUp as its chief impact officer, the company announced (you can read the company’s statement here). BetterUp is a startup that provides coaching and mental health services. Harry joins the company just weeks after he and Meghan, Duchess of Sussex, gave a bombshell interview to Oprah Winfrey that detailed their decision to leave the UK and step back from roles in the royal family. The couple also addressed the strain that royal life had on their mental health. At BetterUp, Harry is expected to have input into product strategy decisions and charitable contributions and advocate publicly on topics related to mental health. The prince expanded on his reasons for joining BetterUp in the company’s statement linked above, saying he recognized a "shared passion" for helping people. "What caught my attention about BetterUp was that the company's mission to unlock the potential in people everywhere necessitates innovation, impact, and integrity. Their team has been delivering on that work for years," Harry said. Harry also said he had personally benefited from coaching from BetterUp.
Snapchat’s TikTok clone 📱
In last week’s ITM we learned that YouTube launched a TikTok clone in the US. This week we got to know that Snapchat is working on its take on TikTok’s popular Stitch and Duet features. Snapchat has been spotted working on a Duet-like feature called “Remix,” designed for replying to Snaps. The feature will allow users to create new content using their friends’ Snaps, a “remix.” Users reply to a friend’s story with a remixed Snap by recording their own Snap alongside the original as it plays, much like a TikTok Duet.
Robinhood files confidentially for IPO 🔔
Robinhood has confidentially filed for an initial public offering to the Securities and Exchange Commission, the company said on Tuesday. Confidential submissions allow companies to submit materials for the SEC’s review before filing a public prospectus. The Robinhood IPO is expected to be one of this year’s largest and most contentious listings in the US. The company’s listing could come as soon as in the next few months. Robinhood chose Nasdaq for its listing. The stock trading app’s zero-commission model and easy-to-use interface have made it a favorite among retail investors who have piled into the stock market while stuck at home during the pandemic. The company stirred controversy with its decision in January to restrict trading in “meme stocks” such as GameStop (you can read about the whole GameStop frenzy in ITM). Vlad Tenev, Robinhood’s CEO, was summoned to Capitol Hill and grilled by US lawmakers, who expressed concerns that the company was encouraging the “gamification” of US equity trading. In regulatory filings in February Robinhood also revealed that the SEC, several state regulatory authorities, and the Financial Industry Regulatory Authority were investigating the company over its options trading process, as well as several outages in March 2020. In the filing, Robinhood said it was in talks with Finra, Wall Street’s self-regulatory arm, about a potential resolution to the investigation, and that it expected to pay a fine as part of any settlement.
WeWork is going public through a SPAC 🏢
In other IPO news. As the pandemic shut down its co-working spaces globally, WeWork lost $3.2bn last year, the office provider revealed in a pitch for $1 billion in new investment and a stock market listing. The documents shown to prospective investors showed that losses narrowed from $3.5 billion in 2019, as WeWork slashed capital expenditure from $2.2 billion in 2019 to just $49 million. The documents are known as “Project Windmill” show that WeWork is aiming to go public at a valuation of $9 billion including debt, through a merger with a special purpose acquisition company or SPAC (you can read more about what a SPAC is in a previous ITM). WeWork is in discussions with BowX Acquisition Corp, which raised $420 million in August. BowX has former basketball star Shaquille O’Neal as an adviser and is run by Vivek Ranadivé, the founder of the California-based software group Tibco. The now proposed listing for WeWork is at a much-reduced valuation from the one it was chasing in its canceled initial public offering two years ago. The listing through a SPAC is also a sign of how sharply SPACs have changed investor appetite for businesses that once struggled to go public.
The 59-meter wide and almost 400-meter long container ship (which is almost as long as the Empire State Building is tall) stuck in Egypt's Suez Canal has sparked some hilarious memes. But in more serious terms, the Suez Canal is a vital trade passageway for as much as 12% of the world’s seaborne trade, and the massive cargo ship Ever Given complete blockage is costing $400 million an hour.
You can now buy a Tesla with Bitcoins 🚗
On Tuesday, Tesla CEO Elon Musk announced that it is now possible to buy Tesla vehicles in the US with Bitcoin. Musk tweeted “You can now buy a Tesla with Bitcoin.” Last month Tesla revealed that it had bought $1.5 billion worth of Bitcoin and that it would soon start accepting the world’s most popular cryptocurrency as a form of payment. A support page on Tesla’s website explains how customers can pay using digital currency. The company’s electric vehicles typically cost between $37,990 and $124,000. People outside the US will be able to buy a Tesla with Bitcoin “later this year,” Musk said.
The carbon footprint of crypto ♻️
Bitcoin miners are expected to consume roughly 130 Terawatt-hours of energy (TWh), which is roughly 0.6% of global electricity consumption, according to the University of Cambridge’s Bitcoin electricity consumption index. Bitcoin has a carbon footprint comparable to that of New Zealand, producing 36.95 megatons of CO2 annually. The cryptocurrency consumes more electricity than the entire annual energy consumption of the Netherlands, Cambridge University researchers say. It’s impossible to say how many people use bitcoin every month, but CoinMetrics data indicates more than 1 million Bitcoin addresses are active, daily. Note that Bitcoin is only one cryptocurrency, although it is the world’s most popular cryptocurrency.
If you want to learn more about the energy consumption of crypto, and in particular crypto art I highly recommend reading this article on why “cryptocurrencies and NFTs are an absolute disaster for so many more reasons than the ecological.”
Investors distance themselves from Dispo ✋
David Dobrik, YouTube star and cofounder of photo-sharing app Dispo, is getting dropped by sponsors and investors over accusations of sexual harassment directed at his "Vlog Squad." Last Tuesday, Business Insider published an investigation into the Vlog Squad that involved accusations of misconduct and an accusation of rape against one member. Soon after, sponsors including HelloFresh, DoorDash, and Dollar Shave Club pulled their support. On Sunday, Dobrik announced he would leave Dispo and step down from its board. Later the same day, Spark Capital, the venture capital firm that led Dispo's Series A, said it would "sever all ties" with the company. Seven Seven Six, another investor, said it would donate any profits made from Dispo to organizations supporting survivors of sexual assault.
The episode is prompting reflection over investments in high-flying influencers and blind spots in the male-dominated VC-startup ecosystem.
Chrissy Teigen quits Twitter 🙅♀️
Chrissy Teigen once called the mayor of Twitter, quit the social media platform on Wednesday. In a series of now-deleted tweets, Teigen said Twitter “no longer serves me as positively as it serves me negatively, and I think that’s the right time to call something.” The model and media personality had 13.7 million followers on the platform. She was famously blocked by former President Trump and was one of a handful of accounts followed by the official POTUS account when President Biden took office. Twitter even promoted her as its unofficial mayor, when she did a “behind the tweets” video segment in 2019 where she gave some backstory about several of her higher-profile tweets.
Teigen has been the target of abuse and ongoing harassment both on and off of Twitter. Pizzagate conspiracy theorists baselessly claimed Teigen and her husband, singer John Legend were part of the nonexistent pedophile ring supposedly run out of a Washington, DC pizzeria. Last July, after ongoing harassment by AQnon, Teigen said she deleted thousands of tweets and blocked more than a million Twitter accounts. This is a very bad look for Twitter, which despite all of its efforts to reduce harassment on its platform, was unable to protect a woman of color, and arguably one of its best-known personalities from being harassed.
Big Tech CEOs on Capitol Hill 🏛
On Thursday CEOs of Facebook, Twitter, and Google, Mark Zuckerberg, Jack Dorsey, and Sundar Pichai respectively appeared at a hearing held by the House Energy and Commerce Committee about how disinformation spreads across their platforms. Democratic lawmakers accused the chief executives of allowing disinformation to run rampant on their platforms reflecting their frustration about the spread of extremism, conspiracy theories, and falsehoods online in the aftermath of the riot at the Capitol on January 6 this year. While, Republican lawmakers were focused on the decisions by the platforms to ban right-wing figures, including former President Donald J. Trump, for inciting violence. Twitter CEO Jack Dorsey got called out by Rep. Kathleen Rice for tweeting during the congressional hearing. Dorsey, with his tweet, was likely expressing frustration with the format of the hearing, which saw the CEOs forced to boil down their answers to complicated questions into simple “yes” or “no” answers or be cut off from responding. Dorsey’s tweet was a Twitter poll with just one question: “?” that had only two answers to choose between: either a “Yes” or “No.”
At the session, the federal law, Section 230 of the Communications Decency Act was also under review. When the most consequential law governing speech on the internet was created in 1996, Google didn’t exist, and Mark Zuckerberg was 11 years old. Section 230 has helped Facebook, YouTube, Twitter, and countless other internet companies flourish. Section 230 shields websites from liability for content created by their users. It permits internet companies to moderate their sites without being legally liable for everything they host.
This week in the stock market 💹
The week started with The Dow ending Monday positive even as shares of the component’s companies JPMorgan Chase, and Goldman Sachs lagged. Last week we saw bank stocks gain as interest yields rose (in the previous edition of ITM we explained why). This week Treasury yields pulled back, especially on the long end of the curve. As such, bank stocks, industrials, and other cyclical shares underperformed, while technology shares outperformed. Tech stocks rebounded after another week of declines last week, giving Nasdaq a boost of more than 1% on Monday. One of the winners on Nasdaq was Tesla, which saw its shares rally by more than 6% on Monday after Ark Invest (ITM has featured Ark’s founder and CEO, Cathie Wood as Woman of the week) issued a new, even more, bullish price target on shares of the electric car-maker. Ark said in a report released last weekend it anticipates that Tesla's stock could reach $3,000 per share by 2025. That is more than quadruple from its current share price of around $694. According to Ark, there is an about 50% chance that Tesla achieves fully autonomous driving within the next five years.
On Tuesday US stocks fell in a slide led by shares of companies with the most to lose if there are any hiccups in the global economic reopening from the pandemic. The S&P 500 declined 0.8%, pressured by industrials and materials. The Dow fell 0.9%, while the tech-heavy Nasdaq slid 1.1%. Travel and retail stocks sold off amid fresh Covid restrictions globally. Shares of Carnival and Norwegian cruise lines slumped more than 7% each. American Airlines and United Airlines also dropped both more than 6%. Brick-and-mortar retailer Gap slid almost 8%. The slide continued on Wednesday with the S&P 500 falling 0.6%, while Nasdaq dropped 2%. Apple, Facebook, and Netflix all slid more than 2%, while Tesla fell 4.8%. Also, The Dow, despite being in positive territory for most of the day, dipped into the red in the final seconds of the session. The Dow’s afternoon weakness came as airlines and cruise operators continued their fall. Norwegian Cruise Line dropped 4.9%, while Royal Caribbean and Carnival fell 1.9% and 2.8%, respectively. Further pressure on equities came as bond yields continued to decline from recent highs. The 10-year Treasury yield dipped 3 basis points to 1.61%, falling for a third day after hitting a 14-month high last week. On Thursday US stocks staged a comeback. The S&P 500 closed 0.5% up, The Dow gained 0.6%, and Nasdaq also gained 0.1% as some major technology stocks reserved losses. The rebound was led by stocks that are tied to a successful economic reopening such as airlines and cruise line operators. American Airlines and United gained more than 4% each, while Norwegian Cruise Line and Carnival both rose by over 2%.
Woman of the Week
Eileen Burbidge
Eileen Burbidge, is a founding partner of Passion Capital, an early-stage venture capital fund, based in London.
Burbidge was born and grew up in the midwestern part of the US. In an interview with Forbes she told “I was conscious about being so visibly different and that made a big difference for me because growing up, I thought that was what I had to overcome, and I never thought about my gender being any kind of limiting factor. Being a woman never really crossed my mind until I was in the workplace and when I was asked about it.” Burbidge’s parents encouraged her to study computer science at university and graduated from the University of Illinois at Urbana-Champaign with a BSc Engineering degree in computer science in 1993.
“Try not to think of oneself as a woman in tech, business or whatever it is, think of yourself as just in tech or in business. Just by being in tech, you have a right to be there. You are not a woman in tech, a Chinese person in tech, or an American in tech. You have all the opportunity to make the most of being a playmaker in your industry, so make the most of it and try not to think about how it would be framed on a demographic level.”
After graduating, Burbidge spent 10 years in Silicon Valley. She started her career at Verizon as an Engineering Associate, from where she moved to Apple to work as a Market Development Manager. She then spent some years at Sun Microsystems, Openwave Systems, 12 Entrepreneuring, Embedded Internet Solution, and PalmSource in various business and market development roles. In 2004 she moved to the UK to work at Skype as a Director of Product. After Skype, she moved to Yahoo! also working with products, before launching her early-stage venture capital firm Passion Capital in 2008. On behalf of Passion Capital, she serves as a non-executive director on a number of fast-growing startups, that Passion has invested in, including Monzo Bank, Digital Shadows, Tide, Butternut Box, Prowler. io and Focal Point Positioning, among others. Earlier this year Passion Capital announced it is opening up eligible investors to invest in its latest £45 million pre-seed fund. The first European VC todo so. Via the equity crowdfunding platform Seedrs, Passion hoped to raise at least £350,000 from investors. On Thursday this week Seedrs tweeted the target was already met into overfunding. The minimum investment for funds on Seedrs is usually £100. How it works is that Passion has already raised the fund, its third. Via Seedrs, Passion’s partners are effectively selling the £350,000 which they underwrote as part of the fundraising process.
Burbidge is one of the best-connected women in UK tech and her expertise is widely sought. She has been dubbed as the "Queen of British VCs" by Fortune. In 2015 she was appointed as the UK Treasury’s Special Envoy for FinTech appointed by the Chancellor. In June 2015 she was also appointed Member of the Order of the British Empire (MBE) for services to business. In 2020, Burbidge was added to Computer Weekly's Most Influential Women in UK Tech Hall of Fame. During the coronavirus crisis, she has helped advise the Treasury on the formation and structure of its Future Fund, a bailout fund for UK startups.
Thank you so much for reading this week’s newsletter. I would love to hear your feedback and please share this with a few friends you think would find this interesting. Have a lovely weekend 💜
I’m Marianne, an early-stage VC based in Stockholm. You can reach me by replying to this email, or find me on Twitter or LinkedIn.