The only thing constant in the world of investing is change. Here are some investing insights and noteworthy news in the financial sector:
Stocks fell for the week after the Fed suggested it's leaning toward rolling back its easy money policy. Over the weekend, a judge ruled that Prop 22 is unconstitutional. Prop 22: the ballot measure passed by CA voters that classifies gig drivers as independent contractors. This puts a huge strain on ride-sharing companies like Uber and Lyft along with other gig economy businesses in the state of California.
VC's rise, real estate's fall and more 2021 fundraising trends Through the year ending June 30, more than 2,100 funds raised about $1 trillion, down in both total capital and count from the 12 months prior—no surprise when factoring in the market impact of the pandemic. Yet money is still flowing, and fundraising isn't down across the board. Some strategies have appeared in the new environment, while others were met with more skepticism. VC saw a modest increase in its private capital raised, but it accounts for an ever-increasing share of fundraising overall, reaching 16% of capital raised and 47% of fund count in 2021. Real estate fundraising has plummeted more than 60% year-over-year, as LPs hit pause amid uncertainty about post-pandemic property trends. Median follow-on funds in 2021 have measured 60% larger than their predecessors, according to a spotlight on step-ups featured in the report.
Today marks the 10-year anniversary of Tim Cook becoming Apple's CEO, replacing founder Steve Jobs. Jobs was a creative visionary who pioneered the revolution from the PC to mobile era. Cook has been more of an operational magician. But how has the tech giant changed under his reign? A big part of it is Cook's ability to scale. #s: 70 million iPhones sold in 2011, vs. an estimated 245 million in 2021. Since 2011, the number of App Store apps has more than quadrupled to 2 million mobile applications today. Top-selling smartphone: In 2011, it was the Samsung Galaxy SII — the iPhone 4 ranked 4th. In 2021, the top-four sellers are all iPhones. Value: In 2011, Apple hit a $337 billion market cap, surpassing Exxon to become Earth's most valuable company. Today, it's worth $2.5 trillion — still the most valuable. Products: In 2011, Apple unveiled the new iPod touch and iPod nano (#RIP). In Cook-era 2015 we got Apple Watch, followed closely by AirPods. Tim Cooking in the kitchen, AKA Tim Apple. iPhone is still the core of Apple, and brings in more than half its sales. But Apple's biggest shifts under Cook have been scaling services and elevating privacy. Services: In 2011, Services consisted mainly of iTunes, App Store, and iCloud. Now, Apple's self-feeding ecosystem has expanded to include TV streaming, fitness, games, and even a services bundle, launched last year. Privacy: Apple has become a leader in privacy — from Face ID to the latest iOS upgrade, which lets users decide whether to let apps track them for ads. But it's recently received unprecedented backlash over a new anti-child pornography measure. Through the App Store and its consumer-friendly devices, Apple has also contributed to the growth of other tech giants.
Tech has taken over the market and the global economy in many respects. When Jobs was CEO, the top five most valuable companies in the Fortune 500 were: Exxon, Apple, Microsoft, Chevron, and Berkshire Hathaway. Now, the top five most valuable companies are all tech: Apple, Microsoft, Amazon, Google, and Facebook — and they make up 23% of the S&P 500's total value. Tech companies have contributed to an explosion of wealth. Think: jobs, apps, and soaring stock prices you hear in the news. But their immense scale and power has raised concerns among lawmakers and consumers, leading to growing antitrust measures around the world today.
The cost of coffee beans has jumped 43% so far this year. An unusual frost in Brazil — the world’s #1 coffee producer — is contributing to soaring java prices. Companies know that consumers hate paying extra for the same products. Now, some java giants may consider "swapflation" to deal with rising costs. AKA: swapping out popular arabica beans for cheaper, but less premium, robusta beans. We could see it in other products, too.
To help the economy, the Fed has added trillions to the money supply through bond-buying sprees. That brought us near-zero interest rates during the pandemic, which helped boost spending. Think lower rates for mortgages, credit cards, and business loans. But as the US economy recovers and prices continue to rise with high inflation, the central bank is considering pulling back on its economy-supporting policy later this year.
Sports-betting data provider selects IPO in latest blow for blank-check deals Dallas Mavericks owner Mark Cuban, right, and Washington Wizards owner Ted Leonsis are among the investors in Sportradar. Sportradar has filed for an IPO just months after nixing a $10 billion deal to go public via SPAC. The Switzerland-based sports-betting data provider had agreed to make its public debut via a blank-check company backed by Los Angeles Dodgers co-owner Todd Boehly, but the deal fell apart in June. Now Sportradar, which is backed by a high-profile group that includes Mark Cuban and Michael Jordan, will list on the Nasdaq via a traditional IPO. Investors have recently shied away from blank-check IPOs after the strategy surged in 2020 and early 2021, with Q2 experiencing a significant drop in the deal type, according to recent data.
Retailers like Gap and Nordstrom boosted online sales last year during a shift to e-commerce, even though total sales slumped due to the retailpocalypse. As we leave behind pandemic PJs and return to stores for "going out" fits, clothing retailers have a shopportunity to boost sales online and IRL. We’ll see how that's panning out when Gap, Nordstrom, Abercrombie, and Urban Outfitters report earnings this week. Dollar stores are on a roll... but it's not toilet paper. Last year, Dollar Tree and Dollar General thrived as we stockpiled TP, detergent, and $2 Cool Whip. But sales slumped last quarter, failing to keep pace with last year’s panic purchasing. Still, the dollar dynasties are doing better than they were pre-pandemic. We’ll see if they can keep the good times rolling — even without TP — when they report earnings on Thursday.
Staying competitive in a record-hot market Global venture capital activity has hit a record high. In today's competitive market, top VCs leverage new tools to shorten the time to term sheet: Don't start from scratch. Get up to speed in hours, not days, by leveraging the work of other investors. VCs share their expert calls via Tegus, so you become an expert on your own time. Learn alongside founders. Leading VCs use diligence as an opportunity to engage founders in the learning process. Invite founders to join your expert calls to gain insight on their business while also sharing market knowledge. Stretch diligence dollars further. Tegus offers calls at-cost, with no upfront costs or minimums.
Pakistan's Airlift raises $85 million as it's led by two solo capitalists. Airlift, the operator of an ultrafast shopping delivery service, has raised an $85 million Series B, the largest round ever scored by a Pakistani startup. The company currently offers ecommerce services in eight cities in Pakistan but plans to expand into international markets in the coming months. The round was co-led by two solo capitalists, Harry Stebbings of 20VC and Josh Buckley from Buckley Ventures, and was joined by a long list of high-profile individual investors, including former Y Combinator president Sam Altman, Twitter co-founder Biz Stone, and Bastian Lehmann, CEO of Postmates. Founded in 2019, Airlift was originally a ridesharing service using air-conditioned buses and vans in Pakistan. But due to the pandemic, the startup pivoted to 30-minute deliveries of groceries and essential items. With its focus on developing markets in Asia and Africa, Airlift has the potential to reach profitability faster than similar companies in developed markets, Buckley said in a statement.
While impact investing is commanding more attention and capital than ever, it hasn't been easy for LPs and GPs with specific categories of impact in mind to find each other. Adopting the Impact Reporting and Investing Standards framework, recent data discovers which asset classes, global regions and specific impact categories are closing the most impact-focused funds and luring the most capital commitments to the space. Key insights include: We estimate there is $286 billion in assets under management targeting impact funds as of Dec. 31, and new data on the space going back as far as 1984. Energy is a perennial target of impact funds, as it can absorb a large number of investment dollars, while the biodiversity and ecosystems sector garners infrequent attention. Climate-focused impact investments are backed largely by North America-based funds, while a focus on education is more often found in funds outside of North America and Europe.
An overhaul of hiring and promotion practices in corporate America may be in order before low-wage workers agree to return to the workforce. Their demand? A career path. Private equity firms are turning to wealthy individuals who are willing to invest in loans for midsized companies that banks are refusing to touch. Googling is about to get a lot easier with a new AI-based language model that will take into account context, audio, video and more.
Record levels of dry powder and a fierce influx of nontraditional investors into the venture ecosystem have buoyed VC-backed company valuations to record heights in the second quarter of this year. The latest U.S. VC Valuations Report examines how startup valuations across the venture lifecycle and sectors have changed in 2021. Key takeaways include: Early-stage pre-money valuations notched records in Q2, with a median and average of $50 million and $105.4 million, respectively. At the late stage, the median and average valuations hit $160 million and $882.4 million, respectively, representing a sharp increase from values recorded in previous years. The value growth is partly driven by investor willingness to write increasingly larger checks to pre-IPO companies. Exit valuations grew at a decade-record rate, with median acquisition and public listings step-ups of 2.2x and 1.7x, respectively, from their last private market values.
Private equity buyouts in cybersecurity are hitting new records as a fast-growing industry responds to a surge in remote working and increasingly sophisticated cyberattacks. A recent data study revealed cybersecurity deals have swelled in terms of deal value over the past six quarters, and have spiked in 2021 thanks to a handful of blockbuster pacts. Announced in April, Thoma Bravo's $12.3 billion acquisition of Proofpoint set a record for the largest cybersecurity buyout ever, and was larger than all cybersecurity buyouts in the third and fourth quarters of 2020 combined. Factoring in the Proofpoint buyout and the $900 million acquisition of ExtraHop by Bain Capital and Crosspoint Capital Partners in June—both of which have been agreed to but not yet completed—cybersecurity buyouts have already reached $23 billion combined in 2021. More deals are expected soon.
NetSuite and ContinuServe join forces to deliver carveouts at deal speed ContinuServe uses NetSuite technology to deliver carveouts in a new solution that brings the leading cloud-based enterprise resource planning solution together with a premier business process outsourcing provider. ContinuServe acquires NetSuite on behalf of the client and drives the technology carveout using proprietary tools to stand up a functional enterprise class NetSuite solution faster than comparable solutions. Once the business is operational, ContinuServe seamlessly transitions ownership of the system without a need for reimplementation or data migration, reducing risk and financial strain on both the private equity firm and the carveout. NetSuite's preconfigured industry-specific ERP solution is the leading cloud-native solution and the No. 1 solution for carveouts. To learn more about this new solution and how it drives value, download this compelling white paper.
A group of prominent women VCs in Europe is calling for more capital to go to female-led vehicles to help support female-founded startups. Despite a record amount of capital invested this year, European female founders have received only 0.7% of the total funding. A recent report put out by European Women in VC found that a major block to gender parity for women-led startups is the lack of female general partners in European firms. The group is aiming to have at least 30% of the available LP and funds-of-funds capital go to women-led vehicles within the next five years.
More and more startups are choosing to play it safe and slow by rejecting their highest VC offers in favor of lower-priced deals. What the pandemic's unexpected tidal wave of entrepreneurial activity could mean for the economy. Electric car batteries don't last forever, and it's time to plan how to handle the waste. A new investigation into Tesla's Autopilot feature may force the EV giant to stop “rounding up” in its marketing. Facebook launched a Sims-like VR office that opens the door to a metaverse future (not just for work). US lawmakers are calling for a TikTok block after China took a stake in TikTok's sister company.
Elon's SpaceX is hiring a “Spaceport Mixologist" to whip up space-themed cocktails at its Texas rocket factory. We'll wait along with other retail investors for the "International Space Station Mixologist" position to open if the $450,000 space flight is covered. On the flip side, Virgin Orbit is getting ready to grow as well!
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