The world of business, finance, economics, startups, venture capital, private equity, cryptocurrencies, and retail investing are always in flux. Here is the recent Frugal Finance necessary news knowledge you need to know now:
Labor Day is over, and spooky season has begun (hopefully not spooky for your portfolio though!). Home Depot sold out of an early drop of Halloween decorations, Starbucks dropped the Pumpkin Spice Latte and Pumpkin Cream Cold Brew Coffee early this year, and we're already hearing murmurs of a turkey shortage already. Stocks notched new records last week, as tech gains lifted the broader market. The S&P 500 index, which broadly tracks the US stock market, has clinched 50+ fresh highs in 2021.
The biggest news in the M&A space was Mailchimp. Mailchimp was acquired for one of the largest amounts in history at $12 billion by Intuit.
It had recently expanded from a bootstrapped startup focused on email marketing to a full-fledged digital marketing service provider with mixed results from users and agencies. Here is their recent press release on the acquisition:
My partner Dan Kurzius and I founded Mailchimp nearly 20 years ago. We’ll never forget the early days in a tiny office we rented on the west side of Atlanta. I sketched logo after logo before finally deciding that the monkey with a mail carrier hat struck just the right tone, while Dan sat next to me writing code and talking with customers. We both come from entrepreneurial families. Dan’s dad owned a bakery, and my mom was a small business owner who ran a hair salon out of our family kitchen. From the very beginning, we always wanted to empower small businesses to grow. It’s in our DNA, and it became our mission with Mailchimp. For a long time, we focused on doing one thing extremely well: email marketing. Customers started asking us to sprinkle the Mailchimp magic on other channels, and we did. Along the way, we built an amazing team and innovated fast to meet your needs, eventually building an all-in-one marketing platform for small businesses. Today, I’m excited to share that we’re accelerating this evolution by joining forces with Intuit. Read the press release here. Since day one, setting our customers up for success has been our top priority, and we’re confident that our acquisition by Intuit will advance that mission and secure the legacy of support for small businesses that we’ve built over the last 20 years. Like Mailchimp, understanding small businesses is embedded in Intuit’s DNA, which affirms my belief that this is the right next step for Mailchimp, our employees, and importantly, our customers. Intuit is a mission-driven global financial technology platform, and you might already use some of their products – like TurboTax and QuickBooks – that enable small and mid-sized businesses to prosper. Combining our marketing platform with Intuit’s AI-driven expert platform will allow us to create products and services that solve our customers’ biggest challenges, so you can thrive. Together with Intuit, we’ll deliver an innovative small business growth engine powered by marketing automation, customer relationship management, accounting and compliance, payments and expense, and e-commerce solutions, creating a single source of truth for your business. We’ll also be able to offer more personalized support and onboarding, expand our international footprint, and scale our teams to innovate faster and deliver the solutions you want and need. While our ownership will change once the transaction closes, which we expect to happen prior to the end of Intuit’s second quarter fiscal 2022, our platform will stay Mailchimp through and through: the same user-friendly products and tools, the same resources and support, and the same brand you know and love. In fact, our goal is for all of these things to get even better as part of Intuit. And, in the meantime, you’ll have the customer experience you’ve come to expect from Mailchimp – including your monthly plan and 24/7 access to our award-winning support team. We know that our customers and partners expect consistency and continuity as much as they expect new features and functionality, and we’re committed to meeting your needs as we move forward together with Intuit. We’ll keep you updated as things progress. Thanks for trusting us to help you grow your business. At our core, Mailchimp will always be the humble little monkey that I sketched in those early days, and our mission to empower the underdog will always be our north star.
The bummer August jobs report was from expiring unemployment money and Delta’s dent. August job numbers were as disappointing as a Fyre Festival sandwich. The US economy added only 235,000 jobs, the lowest gain since January — economists were expecting 720,000 new hires. The unemployment rate dipped to 5.2% from 5.4% in July — still higher than pre-pandemic. The labor force participation rate — aka: the percentage of 16+ year olds that are working or actively looking for work — stayed at 61.7%, well below 63.3% pre-pandemic. It’s not that there aren’t enough jobs. There are record highs of about 10 million US job openings. Still, 8.4 million Americans are unemployed. A few reasons why workers aren't returning include:
1. Covid fears are keeping workers home as Delta surges, especially in customer-facing jobs. Leisure and hospitality jobs (think: waiters), which have been the primary driver of job growth this year, actually lost workers last month.
2. Childcare needs: Delta uncertainty has forced dozens of US school districts to postpone their return to IRL classrooms. That could slow job growth among parents — especially women, who’ve shouldered a larger share of pandemic childcare duties.
3. Boosted unemployment benefits: The extra $300 per week in enhanced unemployment benefits are set to expire nationwide this week. Half of US states already cut off boosted payments earlier this summer. And they've seen about the same job growth as states that didn't. It's still too early to know how the nationwide cut-off will affect job growth.
4. Favorable labor market: Jobs are plentiful, and wages are rising faster-than-expected as companies from CVS to Walmart hike pay and benefits to attract workers. People are becoming choosier about jobs they take, which can mean sitting out longer.
In August, the number of people who said they couldn't work for a pandemic-related reason jumped by a whopping 400,000, for a total of 5.5 million. The United States is seeing approximately 150,000 new Covid cases per day as the Delta variant spreads. It’s raising concerns that economic recovery could stall. The August jobs report could also cloud policy for the Fed, which is weighing when to reign in its economy-boosting policy.
Data privacy and antitrust troubles are piling up globally for tech giants. Facebook-owned WhatsApp was fined $270 million for privacy violations last week as part of Europe’s GDPR crackdown. Meanwhile: South Korea passed the first law in the world that dents Google and Apple's app store payments dominance, setting a precedent other countries could follow.
Extreme climate events — like CA’s wildfires and Hurricane Ida — are diminishing global water supply by contaminating reservoirs. The number of people with limited water is expected to more than double by 2025 to 1.8 billion. Now, companies that use water for everything from making cookies to cooling data centers are making moves: Procter & Gamble is donating money to protect water supplies, and Nestlé plans to conserve more water than it uses by 2025.
The “buy now, pay later” biz is booming, as younger shoppers skip credit cards. BNPL giant Klarna hit a $46B valuation in June, and Square bought Afterpay last month for a whopping $29B. Now, BNPL company Affirm is partnering with Amazon to allow 'Zon shoppers to pay in installments. We’ll see if BNPL’s growth — which took off when money was tight last year — is still strong when Affirm reports earnings on Thursday.
Rival grill manufacturers Traeger and Weber went public this summer as the pandemic fueled outdoor activities, including a BBQ boom. One in four grills on Earth are Weber's, but Traeger’s sales have been growing faster. Shares of both grill giants are up about 20% since listing. We’ll see if sales are still sizzling when Traeger serves up earnings on Thursday.
The NFT market is booming big time. From Simone Biles to Shawn Mendes, sports stars and celebs are embracing non-fungible tokens to unlock the next opportunity in the fan economy. While some self-proclaimed experts say that now 18% of Americans know what NFTs are and 22% know someone who has bought one, the numbers are still probably much lower than that in reality.
Hurricane Ida is impacting consumers and businesses across industries, from oil and gas to insurance. What will Hurricane Larry bring to the United States mainland? Meanwhile Apple is continuing its wallet takeover with a virtual driver’s license — and digital keys are next.
SoftBank's portfolio companies are performing well on Wall Street right now. SoftBank's first Vision Fund is approaching its fifth birthday and growing up fast. A robust IPO market has enabled a steady stream of exits from the Japanese firm's portfolio—from DoorDash to DiDi Global. Our latest analyst note delves into the Vision Funds' recent performance, and includes a proprietary index that assesses the post-IPO record of the firm's portfolio companies.
The Vision Funds' US-listed public holdings have performed well on a market cap-weighted basis. However, a small number of companies are responsible for the bulk of that growth. The first Vision Fund has a fund life of 12 to 14 years, so the gains will likely continue to accrue for many years. But that also means the firm will need to shift its focus from venture investing to managing public companies. Vision Fund 2 has again increased in size, now totaling $40 billion. Fully funded by the company and CEO Masayoshi Son, SoftBank now has a larger interest in Vision Fund 2 than it did in the original $98 billion Vision Fund.
VCs are increasingly trying to position themselves as socially responsible investors by funding businesses that benefit society—while steering clear of companies that are considered harmful. Likely part of this trend, fintechs have started catering to workers with low credit scores by offering earned wage access products, an alternative to traditional payday lending. EWA allows workers to receive all or some of their earnings before scheduled paydays. Startups in the EWA space have raised $1.13 billion in debt and equity so far this year, surpassing total funding collected by the companies in the sector from 2015 to 2020, according to recent data. Last month, LendUp, a payday lending platform backed by QED Investor, GV and PayPal Ventures, reportedly stopped originating payday loans out of ethical considerations. Although QED declined to comment on LendUp, the firm's managing partner and co-founder Nigel Morris said in a separate interview, "We are very excited about earned wage access." QED invested in five EWA companies around the world.
InCloudCounsel has outlined key side letter terms, highlighted some of the challenges in complying with those terms and assessed the potential operational impact for GPs. While these are just a handful of the most important provisions commonly found in side letters, GPs often deal with thousands of individual obligations to multiple LPs across multiple funds all at the same time. How are you staying on top of it all?
LPs are increasingly investing in the venture market to get a share of the outsized returns within that asset class while satiating the growing capital demands by VCs. Hamilton Lane managing partner Miguel Luiña joins the latest episode of "In Visible Capital" to share his perspectives from leading the firm's efforts and advising LPs on allocations to venture capital and growth equity. Highlights include: The challenges facing emerging fund managers in a competitive space dominated by established players What kind of institutions are increasing their allocation to venture capital As startups continue to stay private for longer periods, secondaries should present strong growth opportunities in the coming years.
I don’t know how many people have told me that raising capital is about relationships. This is indeed true and shouldn't be news to investors or businesses. In the majority of cases, no investor (regardless of the form they take) is going to invest without feeling they have a genuine relationship with the team they are allocating to. The real question most GPs need to ask themselves, “Am I forming real relationships?”
MJ Hudson has published Parts II & III of the latest edition of its Private Equity Fund Terms Research. Now in its sixth edition, the Research provides both LPs and GPs with an enhanced understanding of the current strengths and weaknesses of the fundamental economic, alignment and governance terms impacting private equity fund commitments. It includes comparisons with previously published research and discusses the factors driving change. It relates to buyout funds, venture funds, growth funds, and turnaround funds.
Hope is not a strategy for financial success. About 65% of business owners don't have a succession plan. With corporate valuations exceeding pre-pandemic highs, now is the time to consider your next move—whether that's selling your business or keeping it in the family. By implementing a succession plan with a trusted network of advisers, you can ensure the continuation of your vision and values far into the future. Gain access to a succession planning insights to learn:
- Ways to maximize your company's value
- How to avoid the most common mistakes in valuing your business
- Key considerations when crafting your succession plan
Libraries can purchase print books in bulk from sellers of their choice, with the right to lend them to readers free of charge. That same doctrine, however, doesn't apply to e-books. Rising mortgage rates, the continued popularity of the suburbs, and what else to expect in the 2022 housing market. New research on the 47 largest clothing companies shows that there's no such thing as sustainable fashion. It's all fast fashion and it's all falling apart.
Measuring the effects of specialization strategies in U.S. private equity funds is challenging. Specialization has been a defining theme among US PE firms for over two decades. Firms and funds have focused on geography, sector and investment type, such as buyout or growth equity vehicles. Regardless of performance, many allocators appreciate the additional control this approach allows in portfolio construction and management. But the question remains: Does specialization, particularly by sector, lead to outperformance? Our latest analyst note explores this question. Takeaways include: Buyout fund performance for generalist, targeted and specialist vehicles shows no clear out-performance trends among the three types over time based on public market equivalents. Metrics such as IRR also support the conclusion that no single style reigns supreme. A regression analysis illustrates that while there is no linear relationship between sector concentration and performance, funds that were classified into the targeted group had slightly lower average PMEs and IRRs than both generalist and specialist funds.
What's driving private equity's march on VC? Private equity firms now participate in more than half of all venture deals by value, a share that has risen sharply in recent years. In five charts, we break down how nontraditional investors like PE firms became such a force in VC. The risk-reward spectrum of late-stage VC is now squarely in the wheelhouse of PE investors and traditional asset managers. Pre-IPO rounds can be hugely lucrative. They're also a preferred method of securing an allocation in the subsequent IPO. Growth equity funds have boomed alongside VC fundraising, a venture capital industry trend that shows no signs of slowing.
Experience and relationships matter Navigating the pandemic has highlighted the value of strong relationships and the importance of experience when it comes to underwriting and portfolio management, say Twin Brook Capital Partners' Drew Guyette, Tim Schifer and Tony Maggiore, who recently shared their thoughts on takeaways from the past 18 months and their expectations for the future.
Apax, Warburg are set to pick up Dutch T-Mobile unit in $6B deal. Apax Partners and Warburg Pincus have agreed to buy T-Mobile Netherlands from Germany's Deutsche Telekom and Sweden's Tele2. The deal, which gives the mobile network operator an enterprise valuation of €5.1 billion (about $6 billion), coincides with Deutsche Telekom agreeing to boost its stake in T-Mobile US by 5.3% via a share-swap deal with SoftBank. Deutsche Telekom will issue 225 million new shares to SoftBank at €20 apiece, in exchange for about 45 million T-Mobile US shares at around $118 apiece. The transaction will make SoftBank the second-largest private shareholder of Deutsche Telekom, with 4.5% ownership. Deutsche Telekom also plans to use the proceeds of the T-Mobile NL sale to buy another 20 million T-Mobile US shares from SoftBank. T-Mobile NL, which holds a 42% share of the Dutch mobile market, previously acquired fixed-line internet business Thuis in 2016 and formed a strategic partnership with KKR-backed Open Dutch Fiber earlier this year.
Silicon Valley is pushing for a bigger role in the defense industry, but rank-and-file workers are skeptical. After lagging behind longtime rival AstraZeneca in the race to develop a COVID-19 vaccine, UK pharma group GSK is now watching its shares sell to an activist fund that promises a management shakeup. Regulators are struggling to keep up as crypto's rapid move into banking leaves customers and financial markets vulnerable. The pandemic has resulted in a surge of tech that some companies are using to monitor employees' online activity. Is workplace surveillance here to stay? The Bay Area beats all other regions of America when it comes to artificial intelligence research and investment activity, but such an over concentration could prove to be a weakness in the long run. Recruiters have learned to develop savvy solutions when looking for top tech talent—including a hybrid recruiting-investment model.
Japanese biotech Spiber landed a $312 million PE giant The Carlyle Group's Japanese arm has led a 34.4 billion yen minority investment into Japan-based Spiber and joined the company's board. Fidelity Investments and Baillie Gifford also participated in the round of fundraising, which valued Spiber at 135 billion yen. The company makes animal-free synthetic proteins that are used to create fabrics and other materials.
US PE emerging fund managers post mixed results this year overall. LPs have increasingly turned to emerging fund managers in hopes of finding investors who are hungry to outperform their respective benchmarks. But our latest analyst note paints a more nuanced picture of what LPs should expect when they look to private equity's lesser-established players. Among the takeaways: US PE emerging fund managers have not consistently outperformed established managers, especially in their second vintage. The most variation in performance is typically found in debut funds. Specialist emerging fund managers have outperformed generalists since the global financial crisis. At each stage from their debut fund to a fourth vehicle, about one-third of emerging managers don't raise the subsequent fund—often due to portfolio losses or personnel turnover.
Flo raises millions of dollars as the new femtech frenzy continues. Flo, the creator of a period-tracking app, has secured $50 million in a round co-led by VNV Global and Target Global, valuing the London-based company at $800 million. Flo is part of a new generation of startups that have launched affordable and sophisticated female-focused digital tools—attracting mainstream investors to the burgeoning femtech industry. 2021 is a landmark year for femtech startups, with global VC funding crossing the $1 billion mark for the first time, according to recent data. Investment isn't skyrocketing in comparison to the broader health and fitness sector, however, and investor diversity is still a concern.
LexisNexis Legal & Professional in coordination with iCrowdNewswire, today announced the launch of Nexis Newswire, one of the only distribution services in the industry to use paid advertising to drive traffic to news releases. Nexis Newswire enables targeted distribution to 11 million websites globally, as well as key social channels and Internet of Things (IoT) devices such as Google Assistant and Amazon Alexa. The news release distribution service leverages the Google Ads network, so issuers can leverage unparalleled targeting to reach their specific audiences—and access unrivaled reporting that tracks real opens and clicks, not just opportunities to see. “Our customers are always looking for new, effective ways to reach their target audiences—and stay ahead of their competition,” explained Chasity Johnson, Director of Product Management at LexisNexis. “Nexis Newswire is shaking up the established newswire industry with a modern approach that delivers more.” According to Johnson the addition of Nexis Newswire completes LexisNexis’s portfolio of media intelligence solutions, giving customers a comprehensive package that supports data-driven decision-making and fulfills customer needs. Hector Botero, iCrowdNewswire President, shared, “Posting releases on website sub-domains where traffic is minimal can be an effective strategy for search engine optimization, but it delivers news only to a fraction of the right audience. With Nexis Newswire, on the other hand, users can take full advantage of the digital space with paid advertising on premium websites and distribution on voice devices to reach more people and drive more targeted traffic to news releases.” Distribute and Boost News Releases Nexis Newswire helps public relations and communications professionals: Amplify reach. Nexis Newswire uses “push technology” to publish banner ads on premium websites chosen by the issuer. By providing access to all 11 million websites in the Google Ads network worldwide, including specialty industry and niche sites, customers can target the outlets that will provide maximum ROI to their business. Target the right audience. The Nexis Newswire advertising-based distribution model offers unparalleled targeting to reach specific audiences. Issuers can target any country, state, city, and zip or postal code worldwide, as well as multiple regional or global markets for any campaign. Seamlessly and accurately translate. Google estimates that 50% of global searches are performed in languages other than English. Nexis Newswire distribution includes translation of every release into eight languages to provide unequaled global and multicultural reach. Rapidly track and report success. Nexis Newswire offers ad-driven report analytics with accurate views and click-through reports. Reporting tracks opens and reach, not just opportunities to see, allowing users to report on ROI more accurately. Complete Suite of Insight-Driven Solutions Nexis Newswire is the latest addition to the LexisNexis Media Intelligence suite, which comprises media monitoring, social analytics and news curation tools to fuel insight-driven communication and business strategies. The suite also includes: Nexis Newsdesk, an all-in-one media monitoring and analytics solution that enables insight discovery for brand messaging, reputation management, executive positioning, competitive intelligence and more. Nexis Media Intelligence Research and Analytics, which brings together media metrics and human expertise for custom media analysis and newsletter curation. Nexis Social Analytics, powered by Talkwalker, offers global, real-time monitoring, along with image and text analytics. Nexis Media Contacts Solution, a media database and communications platform powered by Agility PR Solutions. About LexisNexis Legal & Professional LexisNexis Legal & Professional is a leading global provider of legal, regulatory and business information and analytics that helps customers increase productivity, improve decision-making and outcomes, and advance the rule of law around the world. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis and Nexis services. LexisNexis Legal & Professional, which serves customers in more than 160 countries with 10,400 employees worldwide, is part of RELX, a global provider of information-based analytics and decision tools for professional and business customers.
The iCrowdNewswire service was powered by Google Launched in 2015 by a team of senior executives with deep industry experience, iCrowdNewswire entered into a relationship with Google in 2017 to implement more technology innovations than any other newswire in the industry including using Google’s state of the art advertising driven geographic and demographic targeting, artificial intelligence translations and Google analytics. iCrowdNewswire is also the only newswire with news channels available on over 4 billion voice devices through Google Assistant and Amazon Alexa. Since its inception iCrowdNewswire has distributed in excess of 250,000 releases.
Jeff Rosenblum, the founding partner of digital marketing agency Questus, has a unique perspective on the industry. His agency’s fortunes rose in the Dot-Com Era. But they survived the crash and came out stronger on the other side with lessons learned that guide their work to this day with companies like Apple, Suzuki, General Mills, and more. He knows that most companies waste the vast majority of their marketing dollars as they try to make something stick. His approach: combine creativity and data to create targeted marketing that benefits brands and empowers audiences. We talk about
- Competing as a small firm against the world’s biggest marketing agencies
- Turning customers into evangelists
- Using the Fair Price Matrix to always get paid what you deserve and when you should say no thanks to a prospective customer.
How much longer can this private equity bull market run? Over the past 18 months, the US has faced a pandemic, fires, hurricanes, and political unrest, yet public and private market M&A activity remains strong. According to recent study data, Q1 2021 saw robust middle-market activity, with deal count and value exceeding pre-pandemic levels. Also in Q1, US PE firms notched the second-highest quarterly deal value figure on record. For 10 years, Abacus Finance Group has been a cash flow senior debt lender to the private equity asset class. The Abacus team has committed to over $2.5 billion in loans across nearly 90 portfolio companies in the lower middle market.
VCs are clamoring for Latin American digital transformation opportunities at an unprecedented pace. Investors have already deployed at least $8.8 billion into the region this year, which is more than the capital invested in 2019 and 2020 combined, according to recent data. Opportunities in Latin America are massive because whole sectors, such as proptech, are available for disruption. Brazil's Nuvemshop, also known by its Spanish name Tiendanube, is one of the latest startups to achieve unicorn status.
PE and VC dominate global fund performance With COVID-19 upending the global economy, 2020 proved to be an unprecedented year for private market investors. But private equity and venture capital fund performance thrived nonetheless, according to our latest Global Fund Performance Report, which cites data through Q4 2020 and the early part of 2021. A few highlights from the findings: Private equity funds recorded a rolling one-year horizon IRR of 17.7% in 2020, PE's second highest in the past decade, which outpaced the S&P 500 and helped the strategy avoid the collapse it endured during the global financial crisis. Venture capital funds peaked in Q4 2020, reaching a record quarterly horizon IRR of 14.9%. The strategy continued that momentum into the new year, with a preliminary quarterly IRR of 13.3% in Q1. The strong returns were driven in large part by a healthy exit environment, as venture capitalists looked to capitalize on frothy valuations. Bogged down by office closures, real estate funds trailed other private alternative asset classes and the broader public markets, continuing two-plus years of under-performance. But investment in warehouses and data centers provides cause for optimism as people work and shop from home.
Changes in technology are already affecting the game of golf, making it crucial to educate both golfers and operators about those innovations. PGA of America has released "The Continuing Evolution of the Golf Course," a brief but comprehensive guide to a range of new technologies. Some of these are borrowed from other walks of life. Agtech innovations were developed with farmers and crops in mind, but golf courses can benefit from them just as much. CRM technology, drones, benchmarking tools—even weather technology—are all being tailored to the needs of golfers and operators around the US. A total of 4 pages of infographics visualize the innovations taking place. The game of golf isn't changing, but technology is helping improve it in myriad ways.
There are 5 operational due diligence hot spots for identifying hidden value and risk. Multiples grow while due diligence windows shorten. At the same time, there is more to consider with newly exposed risks and opportunities that were not on the radar 18 months ago. These five operational due diligence areas are becoming more critical in today's private equity environment: Daily management Sourcing & inventory strategies Site leadership capabilities Labor management best practices for capital expenditure and automation.
The French government's push to bolster the country's startup ecosystem, coupled with unexpected tailwinds caused by the pandemic, have created a boom in venture capital activity—yet France still lags behind other major economies in the region. French startups are on track for a funding record this year, with €4.6 billion (about $5.4 billion) in total raised through June 30, nearly 70% of 2020's annual figure. But France is trailing its neighbors, as VC investments in the UK and Germany soared even higher in just six months. The French government is seeking to promote more late-stage capital in the country, as it works to narrow the gap between France and its peers.
Out of the public eye, top venture capital and private equity firms are lagging behind in boardroom diversity. Will crypto companies' efforts to lure massive sports fanbases into their investor base play out? More and more funds are jumping on the sustainability train, but sometimes the rebranding is in name only. Cybersecurity company Snyk has raised $530 million, $300 million of which came from new capital, the remainder from secondary offerings. Sands Capital and Tiger Global co-led the Series F, which valued Snyk at $8.5 billion, up from about $2.6 billion last year. Boston-based Snyk's developer security platform is used by customers including Google and Salesforce.
Silicon Valley's go-go venture capital system has gone on trial in a packed, fifth-floor courtroom in downtown San Jose. In federal court, lawyers for the US government have begun pressing fraud charges against Elizabeth Holmes, founder of Theranos, the failed blood-test startup that for many symbolizes the danger of funding bold dreams without proper due diligence and board oversight. Theranos trial puts Silicon Valley investors in the spotlight: Where are they now? Opening arguments in the Holmes trial, which is expected to last at least a few months, suggest that much of the evidence will center on the risk investors agreed to take and whether Holmes fooled them into enabling a scandal of historic significance. Theranos dissolved in 2018, the same year Holmes and her former business and romantic partner Sunny Balwani were indicted. Prosecutors say Holmes hoodwinked investors into funding her failing technology with an estimated $800 million-plus. Her lawyer responded in court that she didn't set out to deceive people—rather that she mistakenly believed the testing device would succeed, and that her "failure is not a crime." Whether Holmes is guilty will be up to a jury of five women and seven men. Part of their deliberations will be about how transparent Holmes was in financial projections and on the struggles of its signature device, Edison. Balwani will be tried separately later on. The list of potential witnesses in the Holmes case numbers more than 200 people, including famous Theranos backers like Henry Kissinger, Rupert Murdoch and James Mattis. While Holmes is the current target of the prosecution, the trial figures to shine a light on the people who piled onto the Theranos cap table and cheered on Holmes. Their vantage points and their ability to understand the risks of their bets will be picked apart. So where are those investors now? And what strategy or funding style have they deployed in the aftermath of the Theranos scandal?
A guide for selecting a provider Fairness opinions are playing an increasingly important role in M&A and related corporate transactions as a critical means of support for board decision-making. As a result, the number and type of financial opinion providers have expanded to include a range of investment banks, independent business appraisers, accounting firms and consulting firms. Sorting through these providers is only one challenge in selecting a fairness opinion provider. Varying levels of experience and expertise and potential conflicts of interest make it imperative to conduct thorough due diligence. Stout's guide provides boards of directors, corporate committees and other fiduciaries with a road map for selecting a fairness opinion provider, including: How to assess capabilities, experience and resources, Questions to ask providers, and Best practices for engaging a provider.
"Over the last three years, there has been a change in investor focus away from 'Can we make money on this asset?' to 'Is this asset also creating social value in the world?'" —Jason Lee, co-founder and CEO of DailyPay, a provider of on-demand cash services that lets workers access their wages in real time. With its excessive interest rates and debt traps, traditional payday lending has been widely criticized as predatory. But in recent years, new fintech startups have arrived on the scene, challenging payday lenders with their earned wage access products and ESG agendas. In an effort to position themselves as socially responsible investors, many venture capitalists are taking the bait.
SoftBank's Vision Funds have seen an increasing number of exits in recent quarters. The first vehicle, which is now nearly five years old and has a fund life of 12 to 14 years, is no exception. While that still leaves plenty of time for the firm to further cultivate its gains, it will also need to shift its focus to managing its portfolio of public companies. There is a proprietary index that assesses the post-IPO record of SoftBank's portfolio companies. The Vision Funds' US-listed public holdings have performed well on a market cap-weighted basis. However, a small number of its investments are responsible for driving that growth, including 10X Genomics, Guardant Health and Vir. How are the Japanese conglomerate's other publicly traded companies faring?
That in 2016, when the term "femtech" was coined, global annual VC funding for such startups barely cracked $500 million? Capital investment for femtech startups has now crossed the $1 billion mark for the first time, according to recent data. Several factors have propelled new growth opportunities in the space, including increased representation of women in the VC industry, rising awareness and acceptance of women's health issues, and continued success of the direct-to-consumer model.
From a favorable risk-reward spectrum to lucrative pre-IPO rounds, venture returns have become highly appealing to non-venture investors. Private equity firms are participating in more than half of all US venture capital deals by value, up from 36.9% just two years ago, according to new data. Growth-focused firms Insight Partners, General Atlantic and OrbiMed are among the most active leaders in the race to grab a piece of tomorrow's public companies.
Though many restaurants have reopened with the easing of pandemic restrictions, many are still struggling to hire staff. Meet six people in the Bay Area who decided to quit the industry for good. A look at how Pinterest is using new tech to fight racist algorithms. Eight leaders from firms like Bain Capital, Thoma Bravo and The Carlyle Group on what successful private equity shops have in common. Employers may view remote work as a way to save money by cutting pay, but some employees argue that their work has the same value no matter where they're doing it. As sports betting becomes increasingly legal in the US, more Americans are betting more money than ever. But it may be the local bookies who have the advantage this NFL season. How one Australian startup is beating China in the race to make solar panels cheaper and more efficient.
The ESG boom: “ethical investing” has taken off – but what does it actually mean? ABC, easy as ESG? Socially responsible investing, aka ESG (or environmental, social and governance) investing, has boomed recently. ESG criteria — like a company’s enviro-impact, board diversity, and/or exec compensation — is used by some firms and investors to evaluate companies for funds or personal portfolios. S&P Global, Bloomberg, and Moody’s are a few of the companies that rate and measure ESG performance. Spell it out… Like with most stock purchases on public markets, people aren’t directly funding ESG-conscious companies when they buy their stock. But investors gain voting rights that could help companies make better decisions. Increasingly, people are using their values and ethics to guide investment choices — especially Millennials.
Is it 10X time? Investors contributed $51 billion to sustainable funds in 2020, compared to less than $5 billion five years ago. About 85% of Millennial investors say they believe in sustainable investing, according to a 2019 report. $285 billion: How much ESG funds grew last year — nearly double their 2019 value. Lean in to green… This month, the SEC said it may require companies to report climate-risk info along with their annual earnings. Think: emissions metrics and progress toward climate goals. In recent years, companies have been doubling down on ESG initiatives — especially environmental ones. Big Tech companies are the largest allocations for most ESG funds. Amazon pledged to become carbon neutral by 2040, Microsoft committed to become carbon-negative by 2030, and Google bought enough wind and solar energy in 2019 to power 500 million European homes.
The next step in ESG expansion is validation. Many aspects of ESG investing still aren't well-defined. Dozens of sources share company ESG scores, but many use different criteria that can be tough for companies to measure. It can also be hard to measure ESG investing’s impact: One study found that increasing ESG investment didn't lead companies to reduce pollution, or improve workplace safety or board diversity. The next step is having clearer, standardized criteria to assess ESG investments — and keep companies accountable.
Shots in the hot seat... Last week, President Biden ordered companies with 100+ employees to require employee vaccinations or weekly testing. Amazon praised the move, while Nike and Target questioned America’s ability to meet the requirement. Some smaller employers and Republican politicians criticized the mandate as costly overreach. Meanwhile, others like United Airlines and Tyson have already passed vax mandates. We’ll see how companies approach implementation. Prime cap and gown. Amazon offered to pay full college tuition at select schools for 750K+ employees, in a push to attract workers in a tight labor market. The US has a record 10.9M job openings, but 8.4 million Americans are still unemployed. Walmart and Target began offering college tuition perks earlier this summer, Uber and Lyft debuted huge bonuses to attract drivers, Chipotle and McDonald’s raised wages, and some big banks even offered employees free Pelotons. It is TBD if the perks will work.
Apple is expected to drop the iPhone 13 very soon and other new tech goodies at its big launch event. iPhone sales consistently make up over half of the Fruit's total, but they fell in 2019 and 2020. This year, iPhone sales soared as the new 5G-enabled iPhone 12 fueled a sweet upgrade cycle — but they’ve slowed quarter to quarter. We’ll see if the iPhone 13 has the specs to rev up demand and increase Apple stock prices. Here comes the sun… energy. Solar energy powers 3% of the US electric grid, but Biden wants it to power nearly half by 2050 — which would require solar infrastructure to double each of the next four years, and again by 2030. It’s potentially brilliant news for solar battery makers like Tesla and Panasonic, and solar panel producers like First Solar and JinkoSolar, the world’s largest panel-maker. JinkoSolar’s earnings this Wednesday could shed light on momentum in the solar biz.
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Another business news story day, another Zucking. Facebook partnered with Ray-Ban to launch “Stories,” smart Ray-Ban glasses that shoot videos, play music, and aren’t FB-branded. But who owns the video content it shoots and the facial recognition software applied to everyone in the video that may or may not know they are being filmed? B-Day: El Salvador became the first country to adopt Bitcoin as a national currency. It's the first big coin experiment, and the stakes are high. Blood: The trial of Elizabeth Holmes, disgraced founder of blood-testing startup Theranos, kicked off last week— “fake it till you make it” culture is also getting heat in the media news.
