I don’t have a startup and I am not a private equity investor, but in the future I would like to do both. Is it difficult for a startup to attract investors if the startup’s founder and/or team lacks a college degree? Or is a lack of higher education irrelevant to investors if the business is pretty solid? If higher education is necessary, is something like community college or an associates degree enough?
This morning, while checking the latest price for shares of recent IPO Poshmark, I noticed that they were down from their first-day results. The company’s pricing was more than strong, and its first trading results were nearly comical.
After setting a $ 35 to $ 39 per-share IPO price range, Poshmark sold shares in its IPO at $ 42 apiece. Then it opened at $ 97.50. Such was the exuberance of the stock market regarding the the used goods marketplace’s debut.
But today it’s worth a more modest $ 76.30 — for this piece we’re using all Yahoo Finance data, and all current prices are those from yesterday’s close ahead of the start of today’s trading — which sparked a question: How many recent tech IPOs are also down from their opening price?
So The Exchange, ever at your service, raced around to collect the data. And what did we find? Most hot tech IPOs have held onto their gains, and many have actually run up the score in the ensuing weeks.
Lemonade is a great example. It first targeted a $ 23 to $ 26 per-share IPO price. That rose to $ 26 to $ 28 per share, then it priced at $ 29 per share. It opened at $ 50.06 per share, closing the day worth $ 69.41.
And today? A single Lemonade share will set you back $ 145.21. The company is now worth $ 8.22 billion, despite only posting Q3 revenues of $ 17.8 million, a decline from the year-ago period (for more on why that is, and why it isn’t as bad as you might initially think, read this.)
Analysts anticipate that Lemonade will post revenues of $ 18.91 million in Q4 2020, again via Yahoo Finance, putting the company on an annualized run rate of 109x. For a business running with net margins of -173.6% in its most recent quarter. And that’s after Lemonade announced a large share sale!
All this is to say that the fiery optimism fueling dazzling IPO debuts has the potential to keep pushing them higher. Which you can view as troubling, if you are a boring index funder like myself, enticing, if you are a founder looking to go public in the near-future, and potentially irksome if you are a VC annoyed when upside leaks to parties other than yourself.
This brings us to our data set. Below, I’ve collated a host of recent IPOs, their opens and their current prices. Only one has shed value.
And then we reexamined eight 2020 offerings that you will recall so we could run the same exercise. The results were not what I expected and indicate a stock market — let alone an IPO market — sufficiently inflated to warrant the whispered moniker of bubble.
Let’s have some fun.
Up, and then up some more
iSTOX, a digital securities platform that wants to make private equity investment more accessible, has added new investors from Japan to its Series A round, bringing its total to $ 50 million. Two of its new backers are the government-owned Development Bank of Japan and JIC Venture Growth Investments, the venture capital arm of Japan Investment Corporation, a state-backed investment fund.
Other participants included Juroku Bank and Mobile Internet Capital, along with returning investors Singapore Exchange, Tokai Tokyo Financial Holdings and Hanwha Asset Management.
Founded in 2017 and owned by blockchain infrastructure firm ICHX, iSTOX’s goal is to open private capital opportunities, including startups, hedge funds and private debt, that are usually limited to a small group of high-net-worth individuals to more institutional and accredited investors. (It also serves accredited investors outside of Singapore, as long as they meet the country’s standards by holding the equivalent amount in assets and income.) iSTOX’s allows users to make investments as small as SGD $ 100 (about USD $ 75.50) and says it is able to keep fees low by using blockchain technology for smart contracts and to hold digital securities, which makes the issuance process more effective and less costly.
iSTOX’s Series A round was first announced in September 2019, when the company said it had raised an undisclosed amount from Thai investment bank Kiatnakin Phatra Financial Group while participating in the Monetary Authority of Singapore (MAS) FinTech Regulatory Sandbox. The Singaporean government has been especially supportive of blockchain technology, launching initiatives to commercialize its use in fintech, data security, logistics and other sectors.
iSTOX completed the sandbox program in February 2020, and was approved by the MAS for the issuance, custody and trading of digitized securities. The new funding will be used for geographical expansion, including in China, where it already has an agreement in the city of Chongqing, and Europe and and Australia, where it is currently working on issuance deals. iSTOX also plans to add new investment products, including private issuances that investors can subscribe to in “bite-size portions.”
In a press statement, iSTOX chief commercial officer Oi Yee Choo said, “Capital markets are transforming rapidly because of advancements in technology. The regulator MAS and our institutional investors have been far-sighted and progressive, and they support the change wholeheartedly.”
The company is among several Asia-based fintech platforms that want to democratize the process of investing. For retail investors, there are apps like Bibit, Syfe, Stashaway, Kristal.ai and Grab Financial’s investment products.
Since iSTOX works with accredited and institutional investors, however, its most direct competitors include the recently-launched DBS Digital Exchange, which is also based in Singapore. iSTOX’s advantage is that it offers more kinds of assets. Right now, it facilitates the issuance of funds and bonds, but this year, it will start issuing private equity and structured products as well. The company’s securities are also fully digitized, which means they are created on the blockchain, instead of being recorded on the blockchain after they are issued, which means iSTOX is able to offer faster settlement times.
The competition to gobble up the European market among food delivery companies is getting more fierce day by day. The online food delivery marketplace is becoming a very lucrative industry and is set to grow to a whopping $ 200 billion by 2025.
A few days back Delivery Hero, a Berlin-based food delivery company raised €1.25B by issuing new shares to institutional investors. Just Eat TakeAway, on the other hand, is making some crucial investments to strengthen its position in the market.
Raised €149M at $ 7B valuation
In a recent move, Deliveroo, a London-based food delivery platform that allows users to order food from local restaurants, secured an additional $ 180M (approx €149M) in a Series H funding round, valuing the business at over $ 7B (approx €5.7B). This brings the total funding raised by Diliveroo to €1.5B.
The round was led by existing investors — Durable Capital Partners LP and Fidelity Management & Research Company LLC. This funding round comes as Deliveroo is set to hold an initial public offering in the coming months, most probably in April.
Develop new tech tools
The online food delivery company will use the funding to further invest in expanding delivery-only kitchen sites, allowing more restaurants to take orders from their websites, and increasing the on-demand grocery deliveries and subscription services.
Will Shu, founder, and CEO of Deliveroo said: “This investment will help us to continue to innovate, in developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers, bringing them the food they love from more restaurants than ever before.”
Helped local restaurants during COVID
During the COVID-19 pandemic, Deliveroo claims to have helped local restaurants by reducing onboarding fees, developing new services such as Table Service, as well as charging 0% commission on Pick Up orders. Notably, the company also supported the NHS throughout the pandemic, delivering hundreds of thousands of free meals.
Expansion in 2021
Following strong growth in 2020, the company plans to expand its services into around 100 new towns and cities across the UK IN 2021. The cities and towns include – Yeovil, Bangor (Northern Ireland), East Kilbride, King’s Lynn, Scarborough, Llanelli, and Exmouth.
As per the company’s claims, it has been profitable for over six months at the operating level in 2020.
Furthermore, the company partnered with major supermarket brands including Waitrose, Sainsbury’s, Morrisons, Aldi,and Carrefour to grow its on-demand grocery offering amid the pandemic.
Over 46,000 restaurants joined the platform in 2020, and the company now works with more than 140,000 restaurant partners globally.
Also, Deliveroo will also be expanding its reach in around 150 of the areas it currently operates in, such as Glasgow and the home counties.
Carlo Mocci, Chief Business Officer UKI, Deliveroo says: With further lockdown measures now in place across the UK, we want to do everything possible to help households get the food they need and want and play our role to make sure families across the country have a wide selection of amazing food, drinks, and household products to order in as little as 30 minutes.”