The first woman to lead a Wall Street bank, NFTs, and Japan’s hottest IPO
Welcome to Nº 14 of In The Money and Happy Women’s History Month! The month started off with Jane Fraser breaking Wall Street’s glass ceiling when she took over as CEO of Citigroup, making her the first woman to run a major Wall Street bank. In previous ITM editions, we’ve learned of efforts to increase board diversity in public companies. A report released this week revealed that 49% of private company boards are all-male. This week we got great news from European unicorns. We also saw Japan’s biggest IPO this year – a gaming company founded by twin sisters. Lately, you haven’t been able to open any media outlet without seeing something about NFTs. In this edition, we demystify NFTs or non-fungible tokens. Last, but certainly not least, I’m super excited to feature a true role model in the venture capital industry, Arlan Hamilton as Woman of the Week. I hope you enjoy this edition.
The first woman to lead a Wall Street Bank 🏦
Warning: This is news that makes me want to jump and scream with joy. On Monday, Jane Fraser took over as CEO of Citigroup, the third-biggest bank in the US. With that Fraser, became the first woman to run a major US bank, shattering Wall Street’s glass ceiling. ITM previously featured Fraser as Woman of the Week, you can read the issue here.
Fraser now finds herself simultaneously in the most and least enviable position in finance at the helm of the $2.3 trillion giant. She is taking over a bank that accidentally wired $900 million to hedge funds, among other missteps, and now has to win over regulators and convince investors that it can be repaired. Citigroup stock is up 28% since September when Fraser was named as the successor to CEO Michael Corbat.
Third ever Black woman to be a Fortune 500 CEO
In a previous edition of ITM, we learned that Rosalind Brewer was announced as the next CEO of Walgreens, making her the second Black female to ever run a Fortune 500 company. As a matter of fact, for the past four years, no company on the Fortune 500 had been led by a Black female CEO. Only one Black female executive, former Xerox chief Ursula Burns, had ever held such a job in the Fortune 500’s history. This year the number is in rapid succession. On Thursday last week, the retirement and investment manager TIAA named Thasunda Brown Duckett, current CEO of Chase Consumer Banking, its next CEO. The appointment of Duckett's makes her the third-ever Black woman to be a Fortune 500 CEO.
The leadership of Fortune 500 companies (Fortune 500 which is a list of the 500 largest American businesses) provides a snapshot of who is at the top of corporate America. A group in which women, and especially women of color, have long been underrepresented. Currently, there are 40 female CEOs running America’s largest businesses, and 41 when Duckett starts her new role on May 1.
TIAA (Teachers Insurance and Annuity Association of America), is number 81 on the Fortune list (while the Fortune 500 is mostly made up of public companies, selected private companies are also included). Number 81 makes Duckett's appointment even more notable. Most of the women currently leading Fortune 500 companies are concentrated in the bottom half of the list, that is they are overseeing companies that are smaller by revenue. Both Black women serving as Fortune 500 CEOs, Duckett and Brewer, will be in the Fortune 100 (Walgreens is ranked as number 19).
49% of private company boards are all-male 🤦♀️
In last week’s ITM we learned that only one of the 20 biggest IPOs in the US in 2020 went public with an all-male board. The all-male boards are slowly disappearing among public companies. In the S&P 500, no companies now have boards with zero women, while there are still a few in the Fortune 500.
However, among private companies, the all-male boards persist. Diversity data for privately held companies are sparse, as they aren’t required to disclose their board membership. According to a new report by Crunchbase and the organization Him for Her, 49% of private companies that have raised at least $100 million in funding don't have any women on their boards. Further, 81% of these companies don't have a woman of color on their board.
These companies are the ones on their way to the public markets, where scrutiny of board demographics is tougher. Over the past year, stakeholders crucial to the transition from private to public began taking a stand against non-diverse boards. Goldman Sachs has announced it won’t take companies public if they don’t have at least one "diverse" board member. And at the end of last year, Nasdaq proposed board diversity requirements for all companies listed on its stock exchange (you can read more about it in a previous edition of ITM). These kinds of measures have the potential to push companies to diversify their boards earlier, instead of waiting until they face the scrutiny of public investors. However, they are not enough. Measuring the number of companies with "at least one" female board member holds businesses accountable to the bare minimum. Only 18% of the 359 companies studied had more than one woman on their boards.
Him for Her estimates that at the current pace, it will take five years to eliminate the 49% of all-male boards. And that number doesn't account for the time required to reach gender and racial parity across all board seats more broadly.
Here are the key findings of the study:
In 2020, 49% of companies did not have a woman on the board, an improvement from 60% a year earlier;
Women held 11% of board seats, up from 7%;
Only 3% of board seats were held by women of color, compared with an estimated 18% held by men of color; and
81% of companies don’t have a woman of color on the board at all;
Executives and investors compose 75% of director seats (down from 80%), of which 8% are held by women (up from less than 5%); and
Women directors remain most likely to hold an independent seat on the board: Their share of those seats remains relatively unchanged at 20% (from 19%).
Mary Meeker’s $2 billion fund 💸
Bond, the growth-stage firm that spun out of the Kleiner Perkins Digital Growth Fund in late 2018 and headed by famed former investment banker Mary Meeker is closing a second fund with $2 billion. This is suggested by a new SEC filing that says the amount has not yet been raised. Investment firms sometimes file their paperwork at the final stages of their fundraising. Bond’s first fund with $1.25 billion in 2019.
From 2010 to 2018, Meeker was a partner at VC giant Kleiner Perkins. She is known for bets on Instacart, Slack, Square, Airbnb, as well as Facebook and Twitter. Each spring, Meeker captivates Silicon Valley with her famous Internet Trends report, in which she details her tech predictions in 200 data-laden slides (you can read the Internet Trends 2019 here).
Klarna becomes Europe’s most valuable startup 💳
Klarna, the Swedish fintech company has raised $1 billion in new funding at a post-money valuation of $31 billion. The round makes Klarna Europe’s most valuable startup and the second most valuable fintech globally.
Post-money valuation= pre-money valuation + new money raised. So post-money valuation is the valuation a company had before the latest funding round plus the money raised in this funding round.
Backers of this round are a combination of new and existing investors. Klarna has been backed by Sequoia since 2010, while more recent investors include Permira, Visa, Atomico, Atn Group, Silver Lake, Northzone. Klarna claims that the latest round was four times oversubscribed. The oversubscription is likely prompted by rumors of Klarna eyeing to go public and the current appetite for public tech stocks in general. In addition to confirming the new fundraise Klarna also announced that the company will pledge 1% of the capital raised to a newly created initiative that focuses on “key sustainability challenges around the world”. An initiative that will be formally launched on April 22 on World Earth Day.
Klarna, founded in 2005, was an early mover in the now booming buy-now-pay-later (BNPL) sector. The company has been built on a concept of giving consumers a way to buy things online without having to pay for them upfront, and without resorting to a credit card. On the BNPL front, Klarna is active in over 17 countries and has over 250,000 retail partners such as Macy’s, H&M, IKEA, ASOS, Peloton, Nike, and AliExpress. Building on this, Klarna is hoping to foster an even bigger financial relationship with its users as a fully-fledged challenger bank. It already has some licensed banking services, such as savings and current accounts, in Sweden and Germany. The company reported revenue increases of 40%, to $1 billion, in 2020. However, losses also accelerated 50% due to expansion costs, with the net loss coming in at $109 million.
Some had been expecting the company to go public through a merger with a SPAC (you can read more about what SPACs are in a previous ITM edition). However, this was ruled out by Sebastian Siemiatkowski, Klarna’s cofounder and CEO as Siemiatkowski confirmed the company was instead considering a direct listing.
In other EU unicorn news 🦄
On Thursday online events platform Hopin said it had raised $400 million at a $5.65 billion valuation (see post-money valuation above). The new valuation is more than double what it was worth in an investment round just four months ago. The London-based start-up was founded less than two years ago. It has seen demand for its software soar in the coronavirus pandemic, as it rushed to onboard users to its service when events started getting canceled due to the pandemic.
Hopin’s platform lets conference hosts run their events digitally. It’s now looking to expand its range of products. Recently it acquired video streaming service StreamYard and mobile app development firm Topi. Last month Hopin launched its own mobile app.
Vestiaire Collective becomes a unicorn 🦄
The French luxury group Kering has invested in Vestiaire Collective, Europe’s biggest platform for high-end second-hand clothes and handbags. A bet from Kering’s side that the resale market will be a way to win over younger, more environmentally-conscious consumers. Kering, which owns Gucci and Balenciaga acquired a 5% stake in the Paris-based start-up, which was valued at over $1 billion (and as such reached unicorn status) in a €178 million fundraising round announced on Monday. Other new investors included US investment firm Tiger Global Management, while previous backers such as Bpifrance and Eurazeo Group put more money in.
Vestiaire Collective was started nearly a decade ago by Fanny Moizant, Sophie Hersan, Alexandre Cognard, Christian Jorge, Henrique Fernandes and Sebastien Fabre in Paris. The luxury resale site has grown to be a leading player in the secondhand fashion world thanks to its commitment to authenticity and community component. It also allows members to interact with each other to ask questions and negotiate prices. The idea to start the site came to Moizant during the 2009 recession when she noticed cash-strapped fashion bloggers increasingly selling last season's fashion. At the time, there wasn't a trusted online site that could guarantee a shopper that the Hermès or Chanel handbag in her shopping cart was real. So, to save those at risk of purchasing a fake, Moizant launched the online resale site out of her apartment in Paris. To learn more about Vestiaire collective and Moizant and Hersan I recommend reading this 2019 Forbes interview with them.
For a publicly-traded comparable to Vestiaire Collective, one could look at The RealReal (ticker: REAL) which is trading on Nasdaq. The RealReal is an online and brick-and-mortar marketplace for authenticated luxury consignment. The RealReal was founded in 2011 by Julie Wainwright. On June 28, 2019, The RealReal went public and is one of the now (after Bumble’s IPO) 22 US-based female-founded companies that have gone public.
DeliverIPO 🦄
The food-delivery group, Deliveroo is targeting a $10 billion valuation for its initial public offering. The IPO would make for the valuable new listing in London for several years. If the London-based company completes the float at that valuation, it would give the company a market capitalization of more than £7 billion. In a private financing in January Deliveroo was valued at about $7 billion.
The pandemic supercharged demand for food delivery services as lockdowns closed restaurants. DoorDash (the US food delivery service that Deliveroo closely resembles) reached a $60 billion valuation in its IPO in New York in December. Just Eat, Deliveroo’s closest EU-based rival is currently valued at £10.1 billion on the FTSE 100.
Speaking on unicorns, did you know that Aileen Lee, founder of Cowboy Ventures was the one who coined the term? Watch the interview with her on Emily Chang’s 10 year Bloomberg TV anniversary show 👇
Square is now a bank 🏦
On Tuesday Square announced that the company had officially launched its banking operations. Shares jumped as much as 7% after the news and closed up 4.6% for the day. Square’s bank will offer FDIC-insured deposit accounts and loans to small businesses, that have historically used Square for payment processing.
The company had been working on launching a bank for more than four years. It received regulatory approval last March. While the bank is only for the merchant side, for now, the move signals Square CEO Jack Dorsey’s broader ambition of making the company a one-stop-shop for finance. Square is also known for building products internally. For example, Cash App started as a smaller internal project, and now makes up roughly half of Square’s gross profit.
On Thursday Square also announced that it had agreed to buy a majority stake in Tidal, a music streaming service owned by rapper Jay Z, for $297 million in cash and stock. In last week’s ITM we learned that Jay-Z had sold a 50% stake of his Champagne brand to LVMH and that he is an early investor in Oatly which is planning to go public.
NFTs, what are those 🖼
The latest hype in Silicon Valley is NFTs or non-fungible tokens. I’m still in the process of really understanding them, so let’s try to demystify them together.
In October 2020, Miami-based art collector Pablo Rodriguez-Fraile spent around $67,000 on a 10-second video by artist Beeple that he could have watched for free online. Last week, he sold it for $6.6 million on the online art marketplace Nifty Gateway. Meanwhile, Linkin Park’s Mike Shinoda recently sold clips of a song via an online marketplace, Zora. Also, more than 200,000 people recently waited hours for the chance to buy one of just 10,631 packs of digital NBA moments on Dapper Labs’ NBA Top Shot. So, what is happening here?
NFTs or non-fungible tokens are digital assets that represent a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate. Essentially NFTs can be anything digital, including art, videos, music, gifs, games, text, memes, and code. NFTs are blockchain-based records that uniquely represent pieces of media. They contain highly trustworthy documentation of their history and origin. Further, they can have code attached to do almost anything (one popular feature is code that ensures that the original creator receives royalties from secondary sales). NFTs are secured by the same technology that enabled Bitcoin to be owned by hundreds of millions of people around the world and represent almost trillion dollars of value. Blockchain is a technology that allows the items to be publicly authenticated as one-of-a-kind, unlike traditional online objects which can be endlessly reproduced.
The now sudden hype around NFTs is hardly an overstatement. Non-fungible tokens have been around for two years. According to Cointelegraph, during the second half of last year, $9 million worth of NFT goods were sold. While during a 24-hour window earlier last week $60 million worth of digital goods were sold.
One of the main benefits of owning a digital collectible versus a physical collectible is that each NFT contains unique information that makes it distinct from any other NFT and easily verifiable. This makes the creation of fake collectibles pointless because each item can be traced back to the original issuer. Unlike cryptocurrencies, NFTs cannot be directly exchanged with one another. Because no two NFTs are identical. Somewhere I read the comparison to festival tickets. Each ticket contains specific information including the purchaser’s name, the date of the event, and the venue. Data that makes it impossible for the festival tickets to be traded with one another.
OK, so why would someone want to buy something that they can watch for free online? “You can go in the Louvre and take a picture of the Mona Lisa and you can have it there, but it doesn’t have any value because it doesn’t have the provenance or the history of the work,” Rodriguez-Fraile, who first bought the Beeple piece which he then sold for $6.6 million, said in an interview with Reuters.
And why are they blowing up right now? First, the pandemic has forced everyone online, which makes for an easy entry point. Platforms like Top Shot and Nifty Gateway make it to sign up and you don’t need to have a crypto wallet. You can just use your credit card. But the two are outliers. For the majority of NFT platforms, you need to have an Ethereum wallet. This means that you first need to purchase ETH from an exchange like Coinbase and send it to a non-custodial address that consists of a long string of numbers and letters to get started.
According to an article by VC firm, Andreesen Horowitz NFTs can accelerate the trend of creators monetizing directly with their fans. They believe social platforms will continue to be useful for building audiences, but creators can rely more on other methods such as NFTs and cryptos to make money.
Earlier this week American rock band Kings of Leon announced they’ll offer their latest album, “When You See Yourself,” in the form of an NFT. It is among the first bands to do so. The band is offering its album with vinyl and digital download for a token priced at $50. It’ll be released Friday on the platform YellowHeart and is open for two weeks. After the two-week period, no more will be made.
Japan’s hottest IPO 🔔
The mobile games studio, Coly made the strongest market debut of any Japanese IPO so far this year. The company, founded by 32-year-old twin sisters Anna and Mizuki Nakajima, makes mobile games targeted to women. Instead of playing to win, the games' story, characters, and fantasy worlds are the appeal. The thrill comes from the story and players’ attachments to their favorite characters. The genre of game is called otome, which is Japanese for "maiden." As of Tuesday, each sister's 33.75% stake in Coly was worth 15.2 billion yen or $141.5 million after they took their seven-year-old company public last Friday.
Coly’s success and its 32-year-old executives stand out in both global gaming and Japanese business. Almost 75% of its 200 employees are women. They’ve scored two big hits with serial storylines that have kept fans, also mostly women, coming back. The market for otome games is around 80 billion yen, according to the company’s estimates.
Buffet’s letter 💌
Warren Buffett, the legendary 90-year-old “Oracle of Omaha,” remains a firm believer in the American dream, as he in his annual shareholder letter wrote to “never bet against America.” “In its brief 232 years of existence ... there has been no incubator for unleashing human potential like America,” the chairman and CEO of Berkshire Hathaway wrote. Buffett shared a fact in the letter to illustrate Berkshire’s American credentials: the conglomerate owns the biggest amount of US assets (property, plant, and equipment or PPE) by value than any other company in the country.
Furthermore, the letter revealed that Berkshire bought back another near $9 billion of its own stock in the fourth quarter of 2020. The firm’s total repurchases were $24.7 billion last year, making 2020 a record year for buybacks. Buffett also recently took a sizable position in Chevron, a classic value play, while also added position in Verizon. Apple still ranks as the conglomerate’s biggest common stock investment. You can read the full Buffett’s annual shareholder letter here.
EU wants to end the gender pay gap 🇪🇺
The European Commission wants to end pay differences due to gender-based discrimination in the EU. It is planning to present binding rules where the idea is to give employees access to pay information broken down by type of work and employees’ gender. This is to empower workers and force employers to redress pay differences for comparable jobs. Binding rules on pay transparency were one of the flagship policies announced by Commission President Ursula von der Leyen, who is the first woman at the helm of the EU.
Women’s progress in the workplace reversed 🔙
According to an analysis by PwC of developed countries, women’s progress in the workplace is set to reverse due to the coronavirus pandemic. PwC said that the pandemic was set to push the progress towards gender equality in the workplace back to 2017 levels. For its annual Women in Work Index, PwC analyzed women’s economic empowerment, across 33 member countries of the Organisation for Economic Co-operation and Development. The index measures women’s participation in the labor market and equality according to a weighted average in five categories.
It found that the gender equality index is expected to fall 2 points between 2019 and 2021, below the overall average score of 62 points in 2017. PwC also projected that in order to undo the pandemic’s damage to women’s position in the workplace by 2030, progress towards gender equality needs to be twice as fast as it was in the previous decade.
Losing women from the workforce not only reverses progress towards gender equality but also affects economic growth. In the ranking of the 33 countries, Iceland and Sweden retained their place as the top-performing countries for women’s progress in the workplace. New Zealand moved into third place, thanks to progress in closing its gender pay gap.
In fact, the analysis showed that boosting women’s employment within the OECD to match the rate in Sweden would increase gross domestic product (GDP) by $6 trillion a year across this group of countries. Closing the gender pay gap would add $2 trillion to the OECD’s GDP each year. You can read the full report here.
Glass Ceiling Index 🏆
Ahead of International Women's Day this year, women are still lagging behind their male counterparts in senior positions, making up on average only a third of managers across the OECD. The Economist Glass Ceiling Index, or GCI, combines data on higher education, labor-force participation, pay, child-care costs, maternity and paternity rights, business-school applications, and representation in senior jobs to create a ranking of 29 OECD countries. The best OECD countries to be a working woman are:
Sweden
Iceland
Finland
Norway
France
Down, down, down 📉
Following last week’s fall in tech stocks (in last week’s ITM we explained the market and economic cycles), US stocks fell for a third straight session on Thursday as investors continued to dump tech shares amid fears about rising interest rates. The weakness came even after a better-than-expected weekly jobless claim. In his speech on Thursday, the Federal Reserve Chair Jerome Powell failed to reassure investors that the central bank would keep surging bond yields and inflation expectations in check.
On Thursday The S&P 500 closed down 1.3% after dropping 2.5% at its session low. The Dow Jones Industrial Average slid 345.95 points or 1.1%. The Nasdaq Composite fell 2.1%, led by Tesla shares that dropped nearly 5%. With Thursday’s losses, the tech-heavy Nasdaq turned negative on the year, with a 1.3% loss.
Woman of the Week
Arlan Hamilton
Arlan Hamilton is an investor and the founder and managing partner of Backstage Capital.
Prior to her career in venture capital, Hamilton founded and published the indie magazine Interlude. Prior to founding Interlude, she served as tour manager to Atlantic Records recording artist Janine. She worked her way up on the production side of live concerts and tours, something which had been a lifelong dream of hers. She started paying attention to some of the celebrities who were also investing, such as Ashton Kutcher. She got curious about what was going on. Her original idea was that she was going to start her own company. While researching, she came across statistics, that more than 90 % of venture funding and angel funding went to white men in six cities in the US. She realized so many people were left out. She had found her calling.
Arlan Hamilton built her venture capital fund, Backstage Capital from the ground up, while homeless and living on food stamps. An initial angel investor, Susan Kimberling, saw her grit and gave her first check of $25,000, which then led to Backstage Capital being founded in 2015. Backstage Capital invests in "underestimated founders", which are defined by the fund as women, people of color, and members of the LGBTQ community. The investment thesis being “if they are doing so much with so little, what happens when we give them more?” Backstage Capital closed its first $5 million fund at the end of 2016. To date, Backstage Capital has raised more than $15 million and has invested in more than 170 startups.
“I think the figures speak for themselves: less than .2% of all early-stage venture funding goes to Black women, while we make up approx 8% of the U.S. population and are one of the fastest-growing entrepreneur segments in the country”
In 2018 Arlan co-founded Backstage Studio, four accelerator programs for underestimated founders in Detroit, Los Angeles, Philadelphia, and London. In 2019 Hamilton announced that she was fundraising for a second fund to invest in black female founders., targeting $36 million in commitments. In May 2020, Hamilton released her first book from Penguin Random House titled It's About Damn Time. The book is based on her personal journey into entrepreneurship and venture capital. Part memoir, part how-to for people who are generally underestimated in society.
This Bloomberg Studio 1.0 interview by Emily Chang with Arlan Hamilton is a must-watch. Hamilton has also been included on the 2018 Fortune 40 Under 40 list. In 2019 Hamilton was listed by Business Insider as one of the 23 most powerful LGBTQ+ people in tech. Hamilton is also the host of the Your First Million Podcast. My personal favorite podcast episode ever is with Sophia Bendz, Partner at Cherry Ventures.
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 and Happy International Women’s Day on March 8th 💜
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.