VC funding at an all-time high, stock markets hit new records, and the crypto market tops $2 trillion
Welcome to Nº 19 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. Last week we learned that deal-making had its strongest start of the year. This week we learn that venture funding also reaches an all-time high, and the stock market keeps breaking new records. At the same time, there are significantly more billionaires than last year. Coinbase released some big numbers ahead of its direct listing next week. Clubhouse, Facebook, and TikTok announce new features. Canva raises fresh funding. And of course, some SPAC and crypto news. This and much more. I hope you enjoy this week’s edition.
VC funding at ATH 💸
Global venture funding hit an all-time high (ATH) last quarter, marking it the first single quarter to reach above $100 billion, according to Crunchbase. In the first quarter of 2021, global venture investments reached $125 billion, representing a 50% increase quarter over quarter and a whopping 94% increase year over year. Not only has there been an investment boom, but new unicorn startups (a unicorn is a private company valued at $1 billion or more) were created at a record rapid pace in the first quarter, with an average of close to two new unicorns per working day, well above all previous quarter counts. After more than a year of a global pandemic, the S&P 500 is also at an all-time high. Private companies have more avenues to go public, including via special purpose acquisition companies, or SPACs, a trend that took off in 2020. And following a year of pandemic-led growth for many technology startups, the acquisition markets are stronger than ever (in last week’s ITM we learned M&A activity had its strongest start of the year in many decades).
Late-stage funding and technology growth (private equity into venture-backed companies) grew the most in the first quarter of 2021, with a 56% quarter over quarter and more than doubled, 122% year over year. Sectors that led for investments include health care, financial services, transportation, and commerce, and shopping. Sectors that saw the biggest increase year over year were administrative services, lending and sales, and marketing.
Top Workplaces for Women 2021 🔝
Elpha is the community dedicated to accelerating the careers of women in tech with 35K+ members. Women come to Elpha for access to our daily conversations with experts, insider job opportunities, events, resources, and a lot of women having authentic conversations and making friends. Myself, I’m a member since a couple of years back and I’ve gotten so much value out of the community, learning and connecting with brilliant women worldwide.
Last week, Elpha released the Top Workplaces for Women 2021 report, and it was covered by Axios as an exclusive. Elpha interviewed thousands of its members about how likely they'd be to recommend their workplaces to other women. From their responses and commentary, Elpha launched the report with the top takeaways and insights about what matters to women in tech in the workplace. Internal networking opportunities are the most important attribute for women-friendly workplaces. Other important factors include the ability to see women in positions of power, to see other women succeed internally, and paid paternity leave. You can read the full insights from the report here, and the top 10 most women-friendly workplaces (as voted by the Elpha community) here.
There are 36% more female billionaires 🤑
328 women (of 2,755 billionaires in total) made the Forbes’ 2021 list of the World’s Billionaires, up more than 36% (up from 241) from the previous year. This year’s list included a new world’s youngest self-made woman billionaire, 31-year-old Bumble co-founder Whitney Wolfe Herd who took her matchmaking company public in February, becoming the youngest female CEO in the US to ring the opening bell. Wolfe Herd, who is worth $1.3 billion, is one of the 63 women who joined the list for the first time this year. As a group, the women on the list are worth $1.53 trillion, a nearly 60% increase from the previous year. Collectively they added $570.7 billion to their wealth.
The number of billionaires on Forbes’ 35th annual list of the world’s wealthiest exploded to an unprecedented 2,755, up 660 from a year ago. A staggering 86% of them are richer than a year ago. Jeff Bezos is the world’s richest for the fourth year in a row, being worth $177 billion. Elon Musk rocketed into second place with $151 billion. Altogether the billionaires are worth $13.1 trillion, up from $8 trillion in 2020.
Coinbase’s big numbers 🔔
In preparation for its direct listing on the Nasdaq next week, cryptocurrency exchange Coinbase announced on Tuesday its first-quarter revenues which climbed about nine-fold from last year. An increase was driven by a historic rally in the price of Bitcoin. Revenue in the first quarter jumped to about $1.8 billion from $190.6 million in the same quarter a year earlier (the results announced were preliminary and unaudited), while net income grew to between $730 million and $800 million from $31.9 million a year ago. Coinbase said it has 56 million verified users. Coinbase is poised to become the latest tech company to make its public market debut with a massive valuation, capitalizing on continued growth in the sector despite broader economic struggles caused by the pandemic. The private market has valued the company at $68 billion, a number that swells to around $100 billion when taking into account fully diluted shares. Coinbase is unique because its valuation mirrors the trajectory of the top cryptocurrencies. In the past year, Bitcoin is up about 700%, while Ethereum has rallied more than 1,100%.
The direct listing is set for April 14. The company plans to register nearly 115 million shares of Class A common stock, which will trade under ticker COIN. In a direct listing, the issuing company forgoes selling new stock (like it would do in a traditional IPO) and instead allows existing stakeholders to sell their shares to new investors. While the company today is heavily reliant on attracting users, who store and trade the two major cryptocurrencies, the company is betting on the development of a larger ecosystem of crypto-related assets in the coming years. You can read the full press release and the first quarter results here.
More evidence on the crypto boom being more than just hype was shared by Robinhood on Thursday. The trading app company revealed in a blog post that in the first quarter of 2021, 9.5 million of its customers traded crypto via its platform, up big time from the 1.7 million customers who traded crypto in the 2020 fourth quarter. Robinhood Crypto currently offers seven tradeable coins: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin.
Pinterest + VSCO = True ❓
According to the New York Times, Pinterest has held talks to buy VSCO. The discussions are ongoing, but a deal price couldn’t be learned. Pinterest has a market capitalization (share price times the number of shares outstanding) of about $49 billion, while VSCO has raised $90 million in funding and was last valued at $550 million. The people familiar with the matter cautioned that an acquisition may not materialize, the people cautioned. Both Pinterest and VSCO, are part of a group of tech companies that are highly focused on digital images and visual editing. They rely less on social networking features. Pinterest is a digital pinboard site that went public in 2019. It lets users discover and save images to inspire creative projects such as home renovations, weddings, and meals. VSCO (which stands for Visual Supply Company) is a 10-year-old start-up, that makes an app for editing and sharing images and videos. It is popular among Gen Z.
Clubhouse’s busy week 🎙
The one-year-old social audio app, Clubhouse, announced it will now allow users to send money, a tip, to their favorite creators on the platform. In a blog post, the startup announced the new monetization feature, Clubhouse Payments, as “the first of many features that allow creators to get paid directly on Clubhouse.” It will work so that a user can send a payment in Clubhouse by going to the profile of the creator to whom they want to give money. If the creator has the feature enabled, the user will be able to enter an amount by tapping “Send Money” on their profile. It’s like a Clubhouse-branded version of Venmo (see below for Facebook’s announcement for its version of Venmo).
According to a report from Bloomberg, Clubhouse is planning new funding round, which would give the start-up a valuation of $4 billion. In January, the social audio platform raised $100 million in funding led by Andreessen Horowitz, the VC giant valuing the app at $1 billion at the time. As it seems, the new round would quadruple the net worth of the company. Bloomberg noted that it’s not clear at the moment how much money the company wants to raise. This means that the terms of the deal and final valuation could change. Clubhouse is facing heated competition from tech companies who are trying to integrate live audio into their platforms. Twitter‘s Spaces feature is already available to many users. And in last week’s ITM we learned about other tech giants rolling out their versions of Clubhouse, including Spotify, LinkedIn, Discord, and Slack.
Bloomberg also reported later this week that Twitter held discussions with Clubhouse about purchasing the app for around $4 billion. As mentioned earlier, Twitter has already launched and continues to build its own social audio feature, Spaces, but apparently, it’s discussed outright acquiring Clubhouse, too. Reportedly the conversations between the two companies have stalled, and it’s unclear why. It’s also unclear whether Twitter or Clubhouse approached the other first, which could speak something about the competition in the social audio space. It is possible that the number for Clubhouse's possible valuation connected to new fundraising came out of these Twitter discussions, or that Clubhouse is shopping that figure around.
Facebook’s payments features 💵
Facebook is testing a new QR code feature and payment links for use with Facebook Pay to make it easier for people in the US to send or request money from one another. The QR code, a feature similar to Venmo’s QR codes will allow a user to scan a friend’s code with their smartphone’s camera to send or request money. The sharable payment links will let you publish your payment address outside of Facebook itself. The addition was first spotted on Monday by MacRumors, which noted a new “Scan” button in the Facebook Pay carousel at the top of the screen. Only US users are able to send payments through Messenger at this time. Users who want to be able to send and receive money in Messenger have to be at least 18 years old and will have to have a Visa or Mastercard debit card, a PayPal account, in order to use the payments feature. The preferred currency also needs to be set to US dollars in the app.
Facebook first launched its Facebook Pay service in November 2019, as a single payment system that extends across the company’s apps. Currently, Facebook Pay powers the payments experience across a number of commerce, donations, and tipping focused areas in Facebook, such as Facebook Marketplace, Facebook Shop, Buy on Instagram. And other activities like buying Stars to support gaming Creators, buying tickets to live events, making donations to causes, and more. Users can also send money to friends on Messenger through a built-in button.
Leaked 👀
In other (not so good) news from Facebook, a leaker announced last week that they are offering information on more than 500 million Facebook users, including phone numbers and other data virtually for free. In some cases, details include full name, location, birthday, email addresses, phone number, and relationship status. Facebook's initial response was simply that the data was previously reported on in 2019 and that the company patched the underlying vulnerability in August of that year. However, the data, which first appeared on the criminal dark web in 2019, came from a breach that Facebook did not disclose in any significant detail at the time. It only fully acknowledged the breach on Tuesday evening in a blog post attributed to product management director Mike Clark.
Just days after the news about the Facebook leak, on Thursday LinkedIn also confirmed that information scraped from around 500 million of its user profiles is part of a database posted for sale on a website popular with hackers.
Plaid’s fresh funding 💳
Plaid, the startup unicorn that helps connect consumers’ bank accounts to financial applications, announced on Wednesday that it has raised $425 million in a Series D. The new funding values the company at around $13.4 billion. Plaid, which was a takeover target from consumer credit giant Visa (covered in ITM here), but the deal fell through in January due to regulatory scrutiny. This seems to have been a good thing for Plaid as the company had a stellar 2020 and seems to be worth far more than what Visa had agreed to pay. The new funding confirms the sentiment.
Privacy coins 💎
The encrypted communications app Signal announced that it is rolling out the ability for some of its users to send money to one another within its encrypted communications network. To do so, it has integrated support for the cryptocurrency MobileCoin, a form of digital cash designed to work efficiently on mobile devices while protecting users' privacy and even their anonymity. The payment feature will initially only be available to users in the UK, and only on iOS and Android. Unlike payment features integrated into other messaging apps like WhatsApp or iMessage, which typically link a user's bank account, Signal wants to provide a way to send money in a way that no one else than the sender and recipient can observe or track.
Financial institutions routinely sell their users' private transaction data to marketing firms and advertisers or hand it over to law enforcement. To avoid this, Bitcoin wouldn't do the trick, either. As with many cryptocurrencies, its protections against fraud and counterfeiting are based on a public, distributed accounting ledger, blockchain, that can in many cases reveal who sent money to whom. Therefore, Signal looked to privacy-preserving cryptocurrency, or "privacy coins," that both circumvent banks and are specially designed to protect users' identities and the details of their payments on a blockchain.
Canva raises more 💰
Sydney, Australia-based Canva announced on Tuesday it had raised $71 million in new funding at a $15 billion valuation. The new funding comes less than a year after securing a $6 billion valuation. Amid a pandemic usage boost, design unicorn Canva has as such more than doubled the valuation for its design software tools. The company, which says it remains profitable, also announced that its business has passed $500 million in annualized revenue, up 130% from the previous year. With the new funding, cofounder and CEO Melanie Perkins (who was featured as the Woman of the Week in a previous edition of ITM), as well co-founder and COO (and Perkins’ husband) Cliff Obrecht, both became billionaires. According to Forbes estimates, each owned about 15% of Canva prior to the investment, with minimal dilution from the new raise. At a $15 billion valuation, the couple each would hold stakes worth about $2 billion. (Forbes applies a 10% discount to private company valuations.) Not that they plan to keep it that way. In an interview with Forbes, Obrecht says the couple is already looking into launching a foundation to contribute heavily to causes like climate change and global wealth inequality. “It’s not our vibe to hoard money. What motivates us is building a product that people love. And the wealth that produces, we want to give back to the world,” Obrecht said.
YouTube sees most user growth 📹
During the pandemic, YouTube has seen the most significant user growth of any social media app among American users the Pew Research Center reported on Wednesday. The Google-owned video service saw usage grow from 73% among US adults in 2019 to 81% in 2021. You can read more about YouTube’s CEO, Susan Wojcicki in the Woman of the Week feature later in this edition of ITM). YouTube’s popularity is especially high among 18- to 29-year-olds, with 95% of them saying they use the service. Of that same age group, 71% said they use Instagram, 70% said they use Facebook and 65% said they use Snapchat. YouTube’s growth was followed most closely by Reddit, which saw its usage grow from 11% in 2019 to 18% in 2021. Facebook usage remains high among Americans, with 69% of US adults saying they visit the social network. However, that figure has remained relatively flat over the past five years. The report also included TikTok and Nextdoor for the first time. 21% of Americans use TikTok and 13% use Nextdoor.
TikTok adds accessibility 📲
TikTok this week announced increased accessibility features with a new feature designed to make its app accessible to people who are hard of hearing or deaf. On Tuesday the company debuted auto-captions, a feature that, when enabled, will automatically transcribe the speech from a video so viewers can read what’s being said in the video as an alternative to listening. Initially, auto-captions will support American English and Japanese, with additional languages coming in the next months. To use auto-captions, the creator will select the option after they’ve either uploaded or recorded a video and they can then edit the text that’s generated in order to correct any mistakes before publishing the video. Though largely designed for accessibility purposes, auto-captions can also help those who want to watch TikTok videos without the sound, or for those watching videos where they’re not fluent in the language being spoken. The auto-captions tool can be turned on and off by the viewer meaning you don’t have to see the video captions if you don’t want to.
Grab a SPAC 🤝
Grab, south-east Asia’s most valuable start-up is set for the largest merger between a private business and a blank cheque company in a deal that will value the startup at about $35 billion. According to Financial Times, Singapore-based Grab, which offers ride-hailing and financial services, could finalize an agreement to list in New York via one of Altimeter Capital’s SPACS as soon as this week. Grab would merge with the fund Altimeter Growth 1, which raised $450 million last year and whose share price has risen 25% since it listed. The deal is seen as a crucial first test for unicorns in south-east Asia that are preparing to go public this year. Founded in 2012, Grab offers access to a regional consumer market of more than 655 million people across countries including Indonesia, Thailand, and Vietnam. Through the deal, Grab will raise about $2.5 billion through what is called a private investment in public equity (PIPE), a type of financing often raised in conjunction with a SPAC. It involves selling shares of a public company in a private arrangement with investors. Of that, close to $1.2bn will be funded by Altimeter. The figures could still change depending on talks with investors. If the deal goes through (the merger needs to be approved by Grab’s board), it will be the biggest such deal globally.
Altimeter is a Silicon Valley-based firm that manages more than $15 billion in public and private tech investments. The firm has raised a total of $850m for two SPACs, has been involved in PIPE investments that raise additional capital for blank-cheque targets, including deals for the UK used-car site Cazoo (which’s SPAC was reported in last week’s ITM) and online lender SoFi. Unprofitable Grab has to date raised $12 billion putting its private valuation at more than $16 billion.
LG cuts smartphones 🙅♀️
LG Electronics, the Korean conglomerate, once the world's third-largest mobile phone maker, failed to find a buyer for its loss-making business said on Monday that it has decided to terminate the company's loss-making smartphone business. The company’s board approved the company's suggestion to kill the unit, which posted more than 5 trillion won ($4.4 billion) of operating losses over the last six years. "With the termination of the mobile communications business, our sales could decline in the short term, but we expect it will improve our business portfolio and financial structure in the mid-and long-term," LG said in a regulatory filing announcing the move. The decision will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence.
Crypto market tops $2 trillion 💹
The value of the cryptocurrency market topped $2 trillion for the first time on Monday. The milestone was driven by a rally in Ether, the second-largest digital coin. As retail and institutional investors have been piling into the space, in just over two months, the market capitalization of the cryptocurrency market has doubled. Bitcoin, the largest digital currency, accounts for over 50% of the entire cryptocurrency market capitalization. This year alone Bitcoin has rallied over 100%. Last month, it hit a record high of above $61,000. But the latest boost in the cryptocurrency market has been driven by Ether, the digital coin that powers the Ethereum blockchain. Bitcoin also runs on blockchain which is a public ledger of activity and a way for transactions to take place using the cryptocurrency. However, the Ethereum blockchain is more like a software platform that allows developers to build apps on top of it and users can then spend ether on these apps.
A week of records in the stock market 📈
This week started off with stocks rallying to record highs on Monday after last Friday’s blowout jobs report which showed signs of economic rebound gaining momentum amid accelerated vaccine rollout. The US Labor Department reported that nonfarm payrolls increased by 916,000 in March, the highest since August 2020, while the unemployment rate fell to 6%. The Dow rose 1.1%, to close at 33,527.19, passing its previous record of 33,171.37 hit on March 9. The S&P 500 added 1.4%, to end at 4,077.91, also a new record. The Nasdaq surged or 1.7%, to close at 13,705.59. Most markets were closed in Europe in observance of Easter Monday. After hitting record highs, US stocks fell on Tuesday as the rally driven by signs of strong economic rebound took a pause. The Dow dipped 0.3%, The S&P 500 fell 0.1% and Nasdaq closed 0.1% lower. Bond yields also continued to fall from recent highs, easing fears of rising inflation. The 10-year Treasury yield dropped 7 basis points to 1.65% on Tuesday. On Wednesday, the market was back to hitting record highs as a late-day pop in the S&P 500 pushed it to 4,079.95, a new closing high. The Dow Jones Industrial Average rose 0.1%. But the tech-heavy Nasdaq Composite dipped 0.1% even as big tech stocks outperformed. Amazon, Apple, and Alphabet all added more than 1%, and Facebook jumped 2.2%. Record highs reached across the Atlantic on Thursday when European stocks reached record highs, buoyed by optimism in Britain over easing lockdown restrictions. The European STOXX index of leading 600 companies rose 0.3%, hitting a new high of 436.66 points, and London’s FTSE 100 index was up 0.2%. Wall Street was also set to reach fresh highs on Thursday with e-mini futures (see definition on futures below) on the S&P 500 rising 0.25% after rising to a record high, and Nasdaq futures up 0.7%. During the trading session on Thursday, the major averages continued their rise bolstered by gains in technology stocks. Dow gained 57 points, helped by an almost 2% gain in Apple’s stock. The S&P 500 climbed 0.42% and closed at a record high for the second day in a row. The Nasdaq Composite was the relative outperformer, gaining more than 1% as Amazon, Netflix, Microsoft, and Google-parent Alphabet all closed higher.
Definition
Futures are derivative financial contracts (a derivative means that the security has a value that is reliant upon or derived from, an underlying asset or group of assets) that obligate the parties to transact an underlying asset at a predetermined future date (as the name suggests, *in the future*) and price. That is, the buyer must purchase, or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date. Underlying assets include physical commodities, such as oil, wheat, or gold, and other financial instruments. The futures contracts detail the quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. Futures are used for hedging
(hedging is a risk management strategy to offset losses in investments by taking an opposite position in a related asset) the price movement of the underlying asset or trade speculation on price movements. In the case above the underlying asset are the S&P 500 and Nasdaq indices.
Woman of the Week
Susan Wojcicki
Susan Wojcicki is the CEO of YouTube.
Wojcicki was born in California to an educator mother and a father who was a physics professor at Stanford University. She has two sisters, Janet a Ph.D., anthropologist and epidemiologist, and Anne, founder of 23andMe. Susan attended Gunn High School in Palo Alto. At age 11 Wojcicki's first business was selling spice ropes door-to-door at age 11. As a humanities major in college, she took her first computer science class as a senior. She studied history and literature at Harvard University and graduated with honors in 1990. Originally her plan was to get a Ph.D. in economics and pursuing a career in academia but changed her plans when she discovered her interest in technology. She also received her Master of Science in economics from the University of California, Santa Cruz, and a Master of Business Administration from the UCLA Anderson School of Management.
Wojcicki worked in marketing at Intel Corporation in Santa Clara, California, and was a management consultant at Bain & Company and R.B. Webber & Company, before September 1998 (the same month that Google was incorporated) when Google’s founders Larry Page and Sergey Brin set up an office in Wojcicki's garage in Menlo Park. In 1999 she became Google's first marketing manager 1999. At Google, she worked on the initial viral marketing programs, as well as the first Google Doodles. She also took part in the development of successful contributions to Google such as Google Images and Google Books. In 2003, Wojcicki helped lead the development of Google's advertising product, AdSense, serving as its first product manager. Her efforts were awarded the Google Founders' Award. She rose to become Google's senior vice president of Advertising & Commerce and oversaw the company's advertising and analytic products.
“Whether it's salary or a promotion or a job, I think it's important for women to ask for what they think they deserve.”
At the time YouTube, then a small start-up, was successfully competing with Google's Google Video service, which was overseen by Wojcicki. Her response was to propose the purchase of YouTube. Wojcicki handled two of Google's largest acquisitions: the $1.65 billion purchase of YouTube in 2006 and the $3.1 billion purchase of DoubleClick in 2007. In February 2014, Wojcicki became the CEO of YouTube. In the time Wojcicki has been CEO of YouTube, the company has reached 2 billion logged-in users a month, 20 million paid subscribers, and the fact that users are watching one billion hours a day. Since taking on the role of CEO, YouTube's percentage of female employees has risen from 24% to nearly 30% (a number from 2017). During her tenure, YouTube has also tightened its policy on videos it regards as potentially violating its policies on hate speech and violent extremism. Wojcicki has emphasized educational content as a priority for YouTube, and in July 2018, she announced the initiative YouTube Learning, which invests in grants and promotion to support education focused creator content.
Wojcicki is also a Director of Salesforce, which she joined in 2014. She also serves on the board of Room to Read, an organization that focuses on literacy and gender equality in education, and is a board member of UCLA Anderson School of Management. In 2015, Wojcicki was named to Time's 100 most influential people and described in an issue of Time as “the most powerful woman on the internet.” She ranks as No. 18 on Fortune’s most powerful women in the world 2020 list and as No. 13 on Forbes.
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.