The Weekend Pitch: What You Need to Know From the Past Week
Instacart, Uber, Coupang, and Deliveroo are just some of the big names making big delivery news in this roundup from PitchBook, a Morningstar company.
The Weekend Pitch is produced by editor Kevin Dowd, an editor at PitchBook, a Morningstar company.
It can be dizzying to think about the vast range of ways in which the pandemic has transformed society. One of the most prominent examples is the boom in delivery services of all kinds. Consumers still want to buy groceries, get meals from restaurants, and shop for clothes, tech products, and other doohickeys galore. They just want to do it without leaving their homes.
As is so often the case, this burst in consumer interest has led to a flood of venture capital deals. That flood may have reached a new high-water mark last week, as various delivery companies across four continents combined to raise nearly $1 billion in new funding and set the stage for at least two high-profile public debuts.
Instacart, Uber (UBER), Coupang, and Deliveroo are just some of the big names making big delivery news, which is one of 10 things you need to know from the past week:
1) Special Deliveries
Since the onset of the pandemic about a year ago, Instacart had already raised more than $500 million in venture funding and more than doubled its valuation. But that still wasn't enough for the grocery delivery giant, which hauled in $265 million more last week at a $39.0 billion valuation, a huge uptick from the $17.7 billion valuation it landed just five months ago.
Speculation continues to mount that Instacart is on the brink of going public. After this recent fundraising flurry, however, it's hard to imagine that raising new capital will be a motivation for an IPO. Perhaps a more likely scenario is that the San Francisco-based company opts for a direct listing as an alternative path to liquidity, following in the footsteps of Roblox, UiPath, and Databricks, three other unicorns that have recently raised major new rounds at huge valuation step-ups in advance of potential direct listings.
Deliverr, another Bay Area delivery startup, closed a mega-round of its own. It brought in $170 million in combined debt and equity funding. Instead of food, the company focuses on e-commerce, and it seems to have set its sights on challenging an industry titan. A press release announcing the new round promised to deliver a "Prime-like customer experience" to its clients.
Autonomous delivery options have made fresh headlines, too. Last week Uber spun out the delivery robot unit of Postmates, which Uber acquired last year. Dubbed Serve Robotics, the unit is building robots that deliver a range of goods to city-dwellers, having already piloted its offerings in Los Angeles.
That covers North America. In South America, Brazil's Loggi reportedly raised BRL 1.15 billion (around $200 million) in new funding at a valuation of some $2 billion to finance its array of delivery offerings, ranging from a courier service to grocery deliveries. Loggi's most recent venture round had been a $150 million investment from 2019 that included participation from SoftBank.
The grocery delivery deals were flying even thicker on the other side of the Atlantic Ocean. The Czech Republic's Rohlik banked EUR 190 million (about $226 million) to aid in its global expansion. Germany's Flink raised a hefty $52 million seed round for its grocery delivery services just six weeks after its official launch, according to a TechCrunch report. And Dutch competitor Crisp landed EUR 30 million for its own grocery delivery service, which relies on electric delivery vehicles and aims to generate minimal food waste.
Perhaps the biggest player in Europe's food delivery market is the aptly named Deliveroo, a U.K.-based company that had previously raised well over $1 billion, according to PitchBook data. Its contribution to the week's news was announcing plans for an IPO in London, one that could value the company at $10 billion. Deliveroo also plans to pioneer a new policy in London that allows companies to go public with a dual-class share structure, which allows insiders to maintain more voting power.
South Korea's e-commerce and delivery powerhouse Coupang, which has already raised billions in funding from SoftBank and a whole host of other backers, revealed that it plans to offer 120 million shares at $27 to $30 apiece in its upcoming IPO in the United States. This midpoint pricing would raise $3.4 billion--almost the same amount as DoorDash's (DASH) IPO proceeds last December.
And that was all just from the past seven days. The rest of 2021 has been studded with other significant deals in the space. India's Zomato raised $250 million at a $5.4 billion valuation. Jüsto raised $65 million for grocery deliveries in Mexico and Latin America. Good Eggs, a U.S.-based grocery delivery startup, banked $100 million. In Finland, Wolt pulled in $530 million for food delivery. Uber agreed to pay $1.1 billion for alcohol delivery startup Drizly.
The list goes on and on. It's unclear if the global enthusiasm for all things delivery will continue once the pandemic recedes. But investors are betting that it will.
2) Space SPACs
The interest SPACs are displaying in space startups continues to be out of this world. Rocket Lab, which specializes in building and launching small rockets to carry satellites into orbit, agreed to go public last week by merging with a SPAC at a valuation of $4.1 billion. Spire Global, which collects and analyzes data gathered by its network of satellites, inked a SPAC deal of its own that will value the combined company at $1.6 billion. Both companies count Bessemer Venture Partners among their venture capital backers.
3) Viva Las Vegas
Thirteen years after consummating an ill-fated acquisition of Caesars Entertainment, Apollo Global Management (APO) is making a new investment in Sin City. The firm agreed to pay $2.25 billion to purchase The Venetian Resort and Sands Expo and Convention Center, which is currently owned by Las Vegas Sands (LVS), the gambling and entertainment company formed by recently deceased Las Vegas power player Sheldon Adelson. As part of the deal, real estate investor Vici Properties will pay $4 billion for The Venetian's land and then lease the assets back to Apollo.
4) Viva Retail
That wasn't the only notable move Apollo made last week. The firm also agreed to acquire arts-and-crafts retailer Michaels (MIK) in a $3.3 billion deal, the sort of multi-billion-dollar investment in retail that has lately grown less common in private equity. But perhaps retail is making a comeback: In other news, Insight Partners made a $500 million minority investment to support the spinout of Saks Fifth Avenue's e-commerce business into a new standalone company that will assume the simpler name of Saks.
5) Fintech Meets Hip-Hop
Klarna, a Swedish provider of point-of-sale loans, raised $1 billion in new funding at a $31 billion valuation, nearly tripling the $10.65 billion valuation it garnered just six months ago. Snoop Dogg is among Klarna's existing backers. And Square (SQ), another budding financial technology giant, lined up an eyebrow-raising acquisition: The company agreed to pay $297 million for Tidal, which is backed by Jay-Z, prompting immediate speculation about why a payments company is buying a music streaming service. Jay-Z will also join Square's board.
6) Flying Taxis
Lilium, a German company developing electric air taxis, is in talks to go public by merging with a SPAC, Bloomberg reported. The deal would mark the latest overlap between futuristic mobility and blank-check companies. Another German company with very similar aims, Volocopter, opted to raise new capital in the private market, bringing in EUR 200 million (about $238 million) for a Series D.
7) Teaming Up
Clearlake Capital is based in Santa Monica, California. TA Associates is headquartered in Boston. But 3,000 miles of distance hasn't stopped the two private equity firms from doing a little collaborating. Bloomberg reported last week that the two are considering a sale of jointly owned portfolio company DigiCert that could value the cybersecurity provider at some $8 billion. And Clearlake and TA Associates also joined forces to acquire a majority stake in data integrity specialist Precisely from Centerbridge Partners in a secondary buyout reportedly worth $3.5 billion.
8) Hippo and Hopin
Hippo, a developer of home insurance technology, became one of the latest venture-capital-backed unicorns to line up plans to merge with a SPAC, signing an agreement last week that will value the combined company at $5 billion. A similarly named but very different startup was also in the news, as U.K.-based virtual events specialist Hopin hauled in $400 million at a $5.65 billion valuation, continuing a meteoric rise over the past 12 months.
The idea of securely identifying and authenticating users was at the heart of a $6.5 billion merger that was lined up last week, as publicly traded Okta (OKTA) agreed to acquire venture-backed rival Auth0. The deal looks like a win for Auth0 investors such as Trinity Ventures, K9 Ventures, and Bessemer Venture Partners, considering the company's previous peak private valuation was $1.9 billion. But investors in Okta aren't so enthused: Between Monday and Friday, the company's share price sank nearly 20%.
It's not every day you see substances like DMT, MDMA, ketamine, and psilocybin prominently featured on the website of a venture-backed unicorn. But that is the case for Atai Life Sciences, a biotech company developing ways to use psychedelic compounds (as well as other substances) to treat mental health issues. It raised $157 million last week at a reported $2 billion valuation. Atai counts Apeiron Investment Group and Peter Thiel's Thiel Capital among its major backers.
View the full list online.
The Fund Spectrum
On a 10-year horizon, private equity funds have posted the best internal rate of return of any private market strategy, with venture capital, real estate, and secondaries following closely behind. On a more immediate timeline, though, the picture shifts--private equity and venture capital remain at the top of the heap, but real estate and secondaries have encountered significant struggles.
PitchBook's latest Global Fund Performance Report has much more, presenting the full picture of how IRRs compare across various investment horizons and private market strategies.
PitchBook analysts Wylie Fernyhough and Rebecca Springer took a close look at one particular segment of private-market fundraising: first-time funds from private equity firms. There exists a narrative that these debut vehicles tend to outperform funds from more established managers. What does the data say?
The final quarter of 2020 was a record-setting one for venture capital valuations in the U.S. The median early-stage valuation spiked to $35 million, while at the late stages that figure reached $120 million, another all-time high.
What drove the industry to such largesse? And did the trend continue across specific sectors such as enterprise tech, consumer tech, and pharmaceuticals? PitchBook's latest US VC Valuations Report dives deep into the numbers.
The past year has been marked by several cities attaining new prominence as budding hubs for the venture capital industry. One example is Atlanta. This week, my colleague Priyamvada Mathur explored why that emergence means Georgia's capital could be in line for some growing pains.
Startup Name of the Week
Papaya Global, a provider of payroll software, raised $100 million this week at a roughly $1 billion valuation in a round led by GreenOaks Capital Partners. In the company's honor, a few global facts about the humble papaya, courtesy of that infallible catalog of our age, Wikipedia:
1) India is the world's leading papaya producer.
2) The papaya originates from the American tropics.
3) Raw, unripe papaya can be poisonous.
4) Papaya plants come in three different sexes.
5) Green papaya is common in Southeast Asian cuisine.
A closer look at Clubhouse's connections to Andreessen Horowitz--and at whether the app can scale beyond the world of influencers and venture capitalists. (Bloomberg)
The world of corporate merchandise has reversed course in recent decades. Now, for everyone from Supreme to McDonald's, scarcity is the name of the game. (Marker)
The very name of Carbon County in Wyoming should tell you something about the region's pride in its coal-powered past. But now, clean energy is coming. [The New York Times]
Speculation is rampant on Reddit about what company Bill Ackman's SPAC is going to acquire. And Ackman is paying attention. [Institutional Investor]
Intelsat has pitched its comeback from bankruptcy as a private equity success story. One longtime lawyer active in the satellite sector isn't so sure. (Via Satellite)
The race to build a permanent artificial heart has been ongoing for decades. Could a company called Bivacor be on the brink of a breakthrough? (The New Yorker)
Changes could be afoot at McKinsey after the powerful consulting group decided to part ways with its CEO. (Forbes)
For now, the horrors of COVID-19 are still all too real. Already, though, museums across the U.S. are taking steps to preserve totems of these strange times. (The Wall Street Journal)
Quote of the Week
"I wanted to ensure that this is valid, that this is the future. I was taking a stand for our future of creative liberation."
--Tim Kang, a 27-year-old digital art collector, speaking to Bloomberg about a recent $777,777.77 purchase and the stunning boom in interest around art powered by non-fungible tokens, or NFTs.
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Kevin Dowd does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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