Welcome to the seventh edition of In The Money. I can’t even begin to tell you how excited I am to send out this newsletter to you every week. This week I struck a conversation with a couple of women who had never invested in their lives. This is the reason for me to do what I do. I hope to inspire women, and men to start investing because it does not have to be difficult nor boring. Therefore this week’s edition is filled with all kinds of financy things – from Investing 101, to SPACS (what the heck are those?), from fundraising tips to a Woman of the Week whose career is literally out of this world. I hope you enjoy reading it as much as I enjoy putting it together.
Black and Latina women lost ALL 🤦♀️ THE 🤦♀️ JOBS 🤦♀️
In recent decades working women were making gradual gains. The pandemic quickly changed that story. According to new data released last week, the US economy experienced a net job loss of 140,000 signaling that the economic recovery from the pandemic is backtracking. A deeper look into the data reveals a shocking gender gap: Women - Black, and Latina women, in particular, accounted for all the job losses, losing 156,000 jobs, while men gained 16,000. The painful reality is that Blacks and Latina women lost jobs in December, while White women made significant gains. Keep in mind that these are net numbers, which can mask some of the underlying churns in the labor market. Of course, men lost jobs in December, too — but when taken together as a group, they came out ahead, whereas women fell behind.
Women were more likely than men to work part-time, partly because of caregiving responsibilities. And even among full-time workers, women earned on average only 0.81 dollars for every dollar of their male peers.
Gender and AI
Ashwini Asokan is the founder and CEO of Mad Street Den, an artificial intelligence (AI) start-up. In an interview with the Financial Times she talks about her unconventional journey into tech from being a trained classical dancer and how being fed up with being the only woman in the room, she enforced a 50-50 gender policy at her company – a radical path in the male-dominated tech industry.
“This whole thing that the pipeline [of women] does not exist is ridiculous”
You need to look beyond formal qualifications (degrees, grades, and titles), she says. Today, half of Mad Street Den’s 300 employees are women, also on the management level. The company is backed by Sequoia and Falcon Edge Capital. Asokan credits diversity, for the company coming up with inclusive products.
A gender diversity problem exists in AI - only 12% of leading researchers are women. The evidence shows that this lack of diversity bakes into the AI tools developed. For example, AI recruiting tools that disproportionately advantage male candidates, vision systems that do not recognize women, and speech processing tools that are not optimized for female voices.
One notable incident was the Apple Card. A tech entrepreneur, David Heinemeier Hansson, tweeted that the Apple Card’s algorithms discriminated against his wife. He was given 20 times the credit limit she got. Later also Apple co-founder Steve Wozniak said that he can borrow ten times as much as his wife on their Apple Cards. Apple responded that the algorithm they were using had been vetted for potential bias by a third party. However, it didn’t even use gender as an input.
Investing 101 💸
Earlier this week I had a casual conversation with two women working in a non-finance related business. Suddenly one of them started wondering what she would do with her paychecks. According to herself, she is “bad at saving”. I suggested she would invest the money. In that way, she would not need to worry about spending the money on something unnecessary and she would most likely earn more money. She then shrugged and told me she did not know anything about “that stuff”, therefore she could not do it.
Cases like this are the reason why I do what I do. And I’ll be honest with you, growing up I never thought I would be working in finance, nevertheless that I would think it would be fun. Unconsciously I had this idea that money and investing were for men. How could I not – everything that I saw or heard about investing, in movies, newspapers, books were always jobs done by men. Almost accidentally I ended up discovering venture capital and then finance more broadly during my years at university. I too learned the basics of investing from scratch. And let me tell you, it does not have to be boring or hard. Start small. Start now. There are plenty of resources out there on how to get started, and below you’ll find one. Essentially what I wanted to say is that this newsletter is my way of trying to make finance and business more fun and comprehensive. Because I firmly believe investing is for all.
Allison Barr Allen Co-founder and COO at Fast shared a presentation that she held on Investing 101. In her presentation, she covers How to get started, Common terminology what’s the difference between stocks, bonds, mutual funds, ETFs. Access the presentation, here. I also highly recommend following Allison on Twitter – she shares a lot of general investing wisdom.
That’s so $POSH 🔔
Poshmark, the internet marketplace for second-hand clothing, shoes, and accessories began trading on Thursday. The shares popped more than 130% on the opening and ended the day up more than 141%. The day before Poshmark priced its IPO at $42 a share, giving it a valuation of more than $3 billion. The stock began trading at $97.50 per share. It was valued at nearly $600 million in its last round, Series D in November 2017. Poshmark was founded in 2011, by Manish Chandra and co-founder, and SVP of New Markets Tracy Sun.
Online marketplaces for secondhand goods have grown in popularity in recent years. For example, the luxury consignment site TheRealReal went public in June 2019, and the virtual thrift store ThredUp, which filed confidentially to go public last year.
Poshmark is going public at a time when the 2021 IPO market is heating up. Shares of payments company Affirm skyrocketed nearly 100% in its market debut on Wednesday. Pet supply retailer Petco Health and Wellness, and online gaming company Playtika also went public on Thursday.
The biggest unicorn in Europe 🦄
Online payments company Checkout.com has become Europe’s highest valued privately-held tech company. The London based company secured a $15 billion valuation at its Series C round. The company has almost tripled its valuation since June when it raised $150 million at a $5.5 billion valuation. Just two years ago the company was worth less than $1 billion. The dramatic rise over the past year is partly a result of the boom in online payments triggered by the coronavirus lockdown. The company said its transaction volumes increased by 250% year-on-year.
Payment Canceled ❌
A year ago, Visa announced that it planned on acquiring Plaid in a deal worth $5.3 billion. Plaid’s platform lets users connect their bank accounts to finance apps and transfer money. The San Francisco based start-up had raised $310 million in funding. Both Visa and Mastercard invested in Plaid’s $250 million Series C round in 2018.
On Wednesday Visa ended its acquisition efforts after the Department of Justice (DOJ) filed an antitrust lawsuit on grounds that it would limit competition in the payments industry. The DOJ pointed out Visa’s acquisition could eliminate a nascent competitive threat. The department argued that there was potential for the deal to extend a Visa “monopoly” on debit transactions and that it “must be stopped.”
Now, Plaid is more likely to go public via a traditional initial public offering, a special purpose acquisition vehicle (more on what a SPAC is below), or a direct listing instead.
What the SPAC? 🤷🏻♀️
You may have seen the abbreviation SPAC, read or heard about them, but what exactly are they? SPAC is a special purpose acquisition company which is a company with no commercial operations. It is formed solely to raise capital through an initial public offering for the purpose of acquiring another already existing company.
SPACs are usually formed by investors with expertise in a particular industry. When creating the SPAC, the founders may already have an acquisition target in mind. However, they don’t identify the target to avoid the disclosures necessary during the IPO process. This is why SPACs are also called blank check companies. This means that IPO investors do not know what company they are ultimately investing in. The funds that are raised in the IPO is placed in an interest-bearing trust account and cannot be paid out other than to complete an acquisition or return the money to the investors if the SPAC is liquidated. Generally, a SPAC has two years to complete an acquisition or face liquidation. If and when the SPAC makes an acquisition it is listed on the stock exchange.
So, why do a SPAC instead of a normal IPO process? Essentially the SPAC offers more flexibility. It’s an attractive option especially for owners of smaller companies. Consider a business owner who contemplates selling their business. One alternative is to sell to a private equity fund. Private equity funds, however, usually offer lower valuations than public listings. But the process of an IPO is very expensive and time-consuming. So, by selling to a SPAC the business owner can add up to 20% to the sale price compared to a typical private equity deal. Also, being acquired by a SPAC offers the business owner essentially a faster IPO process under the guidance of an experienced partner.
SPACs have been around for decades but in recent years they have emerged as the busiest sector of the IPO market. In 2020 there were 248 blank-check companies that went public which is more than half the number of all IPOs that year. SPACs raised $82.3 billion, which is nearly 50% of the $167.4 billion raised by the entire IPO market in 2020.
Venture stories 👩💻
From fundraising to how to break into VC. Here is some amazing content that Women in VC have shared this week.
Sophia Bendz shared her best tips for early-stage founders on raising a Series A.
Annalise Dragic shared 7 tips for European Female Founders fundraising right now.
Thea Knobel shared a guide to breaking into Venture Capital.
Woman of the Week
Gwynne Shotwell
Gwynne Shotwell is the president and COO of SpaceX, the space exploration company founded by Elon Musk. In 2019, I was at the Harvard Women in Business conference where Gwynne Shotwell gave an inspiring speech about her career – it’s literally out of this world.
Shotwell received with honors, a Bachelor of Science and a Master of Science in Mechanical Engineering and Applied Mathematics from Northwestern University, respectively. Upon graduation, she originally planned to work in the automotive industry and started in Chrysler Corporation's management training program. However, she longed for a more hands-on role and she began working at the El Segundo research center of The Aerospace Corporation in 1988. There she did technical work on military space research and development contracts. She dreamed of building and putting together a spacecraft and joined Microcosm Inc as director of the space systems division.
In 2002, Shotwell joined SpaceX as vice president of business development. She was the 11th employee of SpaceX which had been founded the same year. Today, Shotwell is responsible for day-to-day operations and managing all customer and strategic relations. SpaceX has grown from a futuristic idea of enabling people to travel and live on other planets to a company with over 6,000 employees and a valuation of $46 billion. In December 2010, SpaceX became the first private company to successfully launch, orbit, and recover a spacecraft. In May 2020, the company sent astronauts to the International Space Station for the first time as part of a multibillion-dollar contract with NASA.
Shotwell is listed as the 49th most powerful woman in the world 2020 by Forbes. She is also included in Time magazine's 100 Most Influential People of 2020.
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 💜