All About Misunderstood Markets And Defensibility

The Total Addressable Market (TAM) is important to differentiate between the global market for companies and investors alike. Silicon Valley has a strong view on TAM. To be taken seriously, your TAM needs to be $10B+, to generate real excitement, your TAM needs to be $100B+. This goes some of the way towards explaining the increased investment in digital health and real estate. Both have humongous TAMs, both real estate and digital health, depending on how your quantify them are measured in trillions. But, despite their apparent size, when you really cut them down to size, something comes to light about the overall market. 

While U.S. real estate asset prices are worth trillions, there are $100B in real estate agent commissions a year. Of those, the majority of agent relationships are created from first degree connections (friends, family, colleagues). So, of the “up for grabs” agent market, if you absolutely nailed a new real estate brokerage model, you are talking about maybe a $10B market, of which getting 20-30% would be a great feat. 

RedFin, with their discount brokerage model took 15 years to get to 1-2% market share across several U.S. cities. So despite the headline figures, maybe that vertical SaaS player with a seemingly small TAM of $6B, but clear GTM and high margins, looks more attractive. TAMs can be quite deceptive. 

But TAMs alone don’t explain why Vertical SaaS has done so well and we have yet to see a real estate tech or health care tech $10B+ winner. The incentive systems are so well baked in health care and real estate. Try seeing a cash list at your local hospital. Or, buying a home directly, without an agent. Both will put you directly into the teeth of the system. And you will see it squirm at first, then reject you and if you continue to push, it will bite you. 

These deeply ingrained incentive systems and regulatory capture create the false sense that the TAMs are really up for grabs. PCP to specialist networks look like they should be run more efficiently, but then you learn about the strong ties among members. Real estate agent and mortgage brokers too have close relationships. Laws have banned passing of referral bonuses, but that doesn’t stop dinners, sports tickets and gift giving that skirts the system. 

Spending time in real estate and more recently in fast-growing consumer fintech (Earnin), the absence of these built-in systematic biases was refreshing. It reminded me of the thrill of the blue ocean, of green field. While the challenge of creating a new category of product is immense, I’d argue, it’s far easier than the challenge of working through the systematic entrenchment in health care and real estate. 

While I am not altogether bearish, we are still waiting for the breakout in either health or real estate. In health, I’m bullish on direct primary care models and virtual care. They’ve shown real promise in reducing costs for patients. I’m bullish on risk models that are finally, at a glacial pace, changing incentives in the system. 

In real estate, the buy before your sell models are brilliant. These are definitely the highest NPS experiences in real estate. These companies abstract complexity in the way great software does. Their models are also very attractive, seller commission + buyer commission + mortgage + bridge loan. The economics add up quick. 

As the classic saying goes, as a startup can you figure out distribution before the incumbent figures out innovation. In spaces with systematic lock-up, incentive misalignment and regulatory capture - the incumbents can not innovate at all, but change the system around them to either harm your ability to distribution and advantage their ability to respond. 

As with most things, there is no black or white answer to how to approach these spaces, we live in the grey. We exist in the fuzziness and volatility of the new economic marketplace. We remain stuck inside the wall of investment information available. The best we can do is analyze, re-compute and keep our opinions ever-changing as the dynamics in these spaces come to light.

Financial News Now - Economy Update

The financial world has been turned upside down recently and things are changing daily. It's hard to stay on top of the latest economic developments and investing trends. Here are the Frugal Finance news stories you need to know now:

Treasury Secretary Janet Yellen has put lawmakers on notice: the U.S. is running out of money fast. That’s right, the money printer might turn off temporarily due to out of control spending in the last two decades (not just from Trump or Biden). Unless, of course, Congress raises the debt ceiling. Yellen has said that if Congress fails to raise or abolish the debt ceiling by mid-October, the U.S. will default on its debt for the first time in history. Yellen also indicated that such this potential event would be a catastrophe for the American economy. A default could have unprecedented consequences for the U.S. Domestically, it could cause the suspension of “Social Security benefits, child tax credits, and paycheck for the military.” Internationally, it could jeopardize the U.S. dollar currency and credit status, which recently was downgraded globally for the first time in history. 

Conservatives insist that they will oppose raising the debt ceiling or suspending it. To make matters worse, a default could coincide with a government shutdown if Congress fails to act quickly. Interest rates rose, sending stocks plummeting yesterday in response to some of the fears. The past several weeks have been stressful on Capitol Hill, as the Democrats have pushed to pass short-term funding and raise the debt ceiling whilst advancing President Joe Biden’s aggressive $3.5 trillion social infrastructure plan. Political opponents recently averted disaster by passing legislation to prevent a temporary government shutdown, with a few hours left to spare on the deadline! But that doesn't mean another potential government shutdown isn't on the horizon, especially with the partisan split bigger than ever before.

Last Tuesday was red Tuesday in the markets. The Nasdaq and Russell 2000 both gave up more than 2%. The S&P 500 sank 2.04% and the Dow dropped 1.63%. All but one sector closed deep in the red. Energy was the lone duckling to register a gain. $XLE gained 0.34%, but $XLK dipped 2.9% and $XLC collapsed 2.44%. The 10-year yield reached its highest level since June, extending the sell-off in tech. To make matters worse, Treasury Secretary Janet Yellen warned that the U.S. government will run out of cash unless Congress raises the debt ceiling. United Natural Foods had a day – shares spiked 27% to 3-year highs after exceeding earnings expectations. Here’s the full report. $LCID recovered its intraday losses in after hours, spiking 6.6% on the news that its first production car began production today. Deliveries will begin next month. The FAANG gang got hit hard – $FB fumbled 3.7%, $AAPL fell 2.4%, $AMZN descended 2.6%, $NFLX shrank 1.5%, and $GOOG gave up 3.8%. $GOGO went 37.6%, $DATS drove 26.7% higher, and $CEI climbed 18.4%.

Global investors grapple with sustainable investing, a labor shortage, and the insistence of employees to work remotely. This summer, we surveyed hundreds of LPs, GPs and service providers about their sustainable investment practices, gathering insights on an increasingly important topic to many in the private markets. We are breaking down the data by respondent type and region to determine what is driving investment decisions. This year's writeup includes a new section that separates VCs' responses from the broader category of general partners. Report topics include: What motivates sustainability efforts for LPs, GPs and others. How investors measure their strategies' impact. The biggest challenges when it comes to pursuing sustainable investing. The effects of the world's current social and political landscape.

VCs bet on the technologically unproven field of quantum computing. IonQ, a quantum computing company, is set to close a reverse merger with a blank-check company and begin trading on the NYSE today at a market capitalization of about $2 billion. Tech giants including Google and IBM, as well as startups like IonQ, Rigetti Computing, and PsiQuantum, are all competing to make the most powerful and reliable quantum machine. While a fully functional quantum machine is still a long way off, venture capitalist interest in the nascent technology is at an all-time high. Investors are betting that some real-life applications will emerge within the next five years, but most quantum computer hardware companies will still need significant capital infusions.

Planning to pursue infrastructure work long term? Private equity investors committed to growing their portfolio companies' government work may benefit from splitting their commercial and federal divisions. With the possibility of new federal infrastructure contracts ahead, now may be the right time to learn the advantages and best practices. Many good reasons exist to consider a split, including the different buyers, client journeys, communications and buying processes, decision-making, audit scrutiny, reporting requirements, and cost structures, to name several. Further, building separate commercial and federal divisions will create broader and deeper resources in both camps, which can be a go-to-market differentiator.

Shares in VC-backed biotech startup Oxford Nanopore jumped as much as 47% in its first day of trading on the London Stock Exchange, following an IPO that valued the company at £3.4 billion (about $4.6 billion). Oxford Nanopore specializes in DNA and RNA sequencing. It made a name for itself during the pandemic, developing COVID-19 testing kits. Its investors include IP Group, Tencent and Temasek. The company, which was valued at £2.2 billion with its last private funding round, is the eighth VC-backed UK startup in the biotech and pharma space to go public this year and the largest by market cap, according to new data. Oxford Nanopore sold 122.4 million new and existing shares at 425 pence apiece, raising £524 million in the offering. IP Group said the IPO generated £84 million for the investor, which will retain a 10.3% stake in the company.

America’s leading producer of memory chips handed investors a small surprise in earnings today. However, the surprise coincided with a forecast that booming demand wouldn’t continue into the next quarter. Micron Technologies reported EPS of $2.42 (analysts expected $2.34). The company also booked revenue of $8.27 billion, a small beat (analysts expected $8.21 billion.)  Revenue was up 36.5% YoY. Those figures should inspire confidence among investors. Unfortunately, there was one big hazard that dampened the otherwise solid quarter. The company’s guidance for the coming quarter suggested that Micron’s best days are behind it (at least, for the next few quarters.) The company expects revenue to be $7.65 billion next quarter, which is a far cry from the $8.49 billion that analysts expected. The company’s EPS guidance was also lower. Micron anticipates non-GAAP EPS of $2.10 next quarter (analysts expected $2.48.) The company’s Q4 2021 earnings coincided with the release of full-year earnings, which can be read here. All-in-all, Micron’s FY 2021 revenue was $27.71 billion, with this quarter being its best by a sizable margin. $MU stock fell over 6% on the news. Other chipmakers fell in sympathy with Micron, including $WDC, $AMD, and $STX.

Pfizer, Moderna, and J&J have become the undisputed winners of the COVID-19 vaccine race. That’s why pharma giant Sanofi is dumping its COVID-19 vaccine candidate to refocus its efforts. Sanofi’s mRNA COVID vaccine flexed a strong performance in its study. According to Fierce Biotech, “between 91% and 100% of participants had a fourfold or greater increase in neutralizing antibody levels over baseline.” In other words, it was pretty effective. However, it might not be as effective at competing with existing vaccine candidates by the time it’s ready for market (late 2022.) Because Sanofi’s vaccine would be extremely late to market, the pharma company is instead focusing on COVID boosters and moving on to greener pastures in the vaccine space. The company says that the next stop for its mRNA platform is a quadrivalent flu vaccine. Sanofi is already one of the leaders in the flu vaccine space, so this move makes a lot of sense. According to a press release issued today, the company plans to initiate clinical studies for its flu vaccine in 2022. Sanofi’s high hopes for mRNA kicked off in August with its acquisition of Translate Bio. The company paid $3.2 billion with the intention of building mRNA vaccines to address “current and future infectious diseases.”

Amazon announced its latest slate of new products this morning, and guess what? THERE’S A ROBOT. Amazon closed up its fall product release today with some fancy gadgets to kick off the 2021 holiday season. Among the gadgets announced include a smart thermostat, the Echo Show 15, a new partnership with Disney, Amazon Glow, a fitness tracker, the Ring security drone, and Astro: Amazon’s new home robot. Astro the Robot moves independently, has eyes and a body, and features Alex’s voice assistant capabilities to control smart home devices — it even acts as a guard dog (or should we say, a guard bot?). Amazon’s robot costs $999.99, but its official release date is TBD.

A suits versus retail traders saga continues as Citadel and Robinhood executives vehemently deny Citadel’s role in pressuring Robinhood (and other brokers) to halt stock trading during January’s MemeStock Madness. A number of ongoing class action lawsuits are starting to surface additional details about January’s stonk madness with Gamestop and AMC. Robinhood responded, saying that the ongoing suits convey “a false narrative of collusion” between Robinhood and Citadel. Citadel’s Ken Griffin unleashed a slew of Tweets on Monday denying the firm’s role in requesting Robinhood to halt trading. The lawsuit’s plaintiffs allege that Citadel’s tremendous short position on $GME shares prompted the firm to pressure Robinhood to halt MemeStock trading for retail investors. Although top officials at Robinhood.com and Citadel had “numerous communications with each other that indicate that Citadel applied pressure on Robinhood,” Robinhood emphasizes “We will work vigorously to continue correcting the record with the facts.” In an internal discussion at Robinhood on January 27, Robinhood’s brokerage arm president said “you wouldn't believe the convo we had with Citadel. total mess”. Meanwhile, Citadel claims “Conspiracy theorists and plaintiffs’ lawyers are trying to concoct an absurd story from regular-way communications among Citadel Securities and the brokers who handle orders for retail investors.” So who actually has their story straight?

Bitfinex, one of the crypto world’s biggest (and most controversial) crypto exchanges, is once again in the news it is truly something alright. The exchange reportedly paid $23.7 million in transaction fees to deposit $100,000 on the blockchain. Oops. The British Virgin Islands-based exchange deposited $100,000 in Tether ($USDT.X), the stablecoin pegged to the dollar, to the decentralized exchange DeversiFi yesterday. Due to some error, the network charged the transaction a whopping $23.7 million as a gas fee. While DeversiFi called it “erroneously high” in a tweet, others took digs. The issue is pretty big since blockchain transactions are supposedly irreversible. To make things even more suspicious and weird, Tether and Bitfinex share common owners and executives. DeversiFi and Bitfinex are also closely linked. This is not the first time that Bitfinex is in the news for odd behavior. Earlier this year, customers lost nearly 119,756 BTC (more than $60 million) from the cryptocurrency exchange.

The S&P 500 and Dow Jones both bounced from yesterday’s dip. Where do we go from here? That’s anyone’s guess. The Nasdaq fell 0.24% to its lowest price since July and the Russell 2000 dipped 0.20%. Utilities bounced the hardest, increasing 0.91%. Consumer staples and healthcare also improved. $BNB.X was the only major large-cap coin in the green today, up 7%. Bitcoin and Ethereum traded marginally lower. Warby Parker went public today by way of the New York Stock Exchange. $WRBY opened at $54.05 and closed at $54.49, giving the eyewear company a valuation of over $6 billion. More on this below. Natural gas futures reversed 7.16%, falling from seven-year highs set yesterday. The U.S. is on thin ice — as the United States runs out of money, Treasury Secretary Janet Yellen warns of potentially “catastrophic” consequences for the U.S. economy. Read the full story below. $RGC ripped 33.8%, $PALT popped 60.1%, and $OMG.X gained 15%.

How The Grinch Stole Supply Before Christmas How The Grinch Stole Supply Before Christmas. Good evening, everyone. Another Thursday has passed us by! It’s only one more day till the weekend!! Every major index ended the day red. The Dow dove 1.6% and the S&P 500 slipped 1.2%. Not a single sector registered a gain. Industrials got whooped the worst, falling 2.05%. That’s one way to end the worst month for stocks since March! Bitcoin and Ethereum were the only ones to catch a bid. $BTC.X bopped 4.20% and $ETH.X increased 4%. Cotton futures closed at ten-year highs, sugar futures soared to four-year highs, and natural gas retook seven-year highs. Initial unemployment claims for the previous week totaled 362,000. According to Dow Jones, economists expected a total of 335,000. That sucks. The Delta variant, as well as raw material shortages, have likely slowed growth in the third quarter. The third quarter’s GDP is expected to grow at a rate of less than 5%. Oh, and a worldwide manufacturing slump has companies scrambling before the holidays. More on this below. $QTUM.X climbed 12.2%, $PALT ripped 26%, and $OPRX hopped 14%.

A Supply-Strapped Holiday Season? A Supply-Strapped Holiday Season? About a month ago, COVID lockdowns throughout Vietnam (a mega manufacturing hub for major US brands) posed serious issues for companies adapting to post-COVID demand. Now, they’re getting worse. In August, Abercrombie & Fitch CEO Scott Lipesky said “We are working through an extended closure of factories in Southern Vietnam.” Urban Outfitters CEO Richard Hayne shared the sentiment, saying that “We have a lot of product there, and we’re trying to get it in” regarding huge swaths of supply stuck in Vietnam mid-lockdown. As it turns out, August was an omen of bad things to come. After Trump’s anti-China tariffs, companies sought factories in other locations. Vietnam was one of them. Some companies like Gap, Lululemon, and Nike manufacture anywhere between 31-50% of their products in Vietnam now. But with the supply chain in flux, U.S. businesses are rethinking their manufacturing presence in the country. Nike lost out on 100 million pairs of shoes due to Delta variant-related lockdowns in Vietnam. Lululemon has started shipping goods on airplanes to keep up with demand. And Bed Bath and Beyond’s own pre-holiday earnings served as a warning for the rest of U.S. retail: expect supply-chain issues this holiday season. Despite increased demand, $BBBY sales plunged 26% through August and the company lowered its full-year revenue projections due to wildly expensive inventory shipping costs. $BBBY and $NKE aren’t the only losers, either. Retail stores fell in sympathy with the Vietnam-related concerns, including $KSS (-11%), $M (-8%), $JWN (-8%), $ANF (-7%), $GPS (-7%), $DBI (-6%), $AEO (-5%), and $TJX (-5%). So did the Grinch steal supply?

There are many multimillion-dollar paintings collected by Bezos, Andreesen, and Leonardo DiCaprio. In fact, the finance bros at Deloitte projects the real art world (not NFT junk) to grow in value by 58% through 2026. That’s a whole lotta fun coupons! Why the rare “Double Down Alert” on art: J Pow aint printing Picassos, so art can cover your ASSets Contemporary Art returns 23.2% when inflation’s > 3%. Literally 0.01 correlation to stonks. Early investors returned 32% in 2020 with a Banksy exit using this art investing platform (splash). So what the heck are you waiting for?

Lordstown Is Selling (Not What You Think) Lordstown Is Selling (Not What You Think) Featured Image EV company Lordstown Motors is reportedly looking to sell its Ohio plant to Foxconn, the company that makes iPhones. The reported acquisition comes at a time when Lordstown is scaling up production of its electric pickup truck, Endurance. The company is also strapped for cash and looking to tap additional funding. However, a sale of its 6.2 million square foot plant would make a lot of sense. Lordstown uses just 30% of the plant, according to Reuters. Foxconn’s sudden jump into EVs is no surprise. Foxconn announced in May that it would build EVs for Fisker, an electric vehicle company. The Taiwan-based company has been looking for a place to call home for its EV ambitions in the U.S. Foxconn crashed out of a heavily-politicized tech manufacturing deal with the state of Wisconsin, which involved a $10 billion factory, earlier this year. Now, it might pick up steam in neighboring Ohio. Lordstown has been embroiled in controversy for months. In March, the company was accused of misrepresenting the number of preorders booked for its electric pickup truck. Hindenburg Research, which had previously gone after Nikola Motor, indicated that “the company’s orders appear largely fictitious.” That prompted an investigation into the Lordstown, which resulted in its CEO and CFO resigning. Lordstown is 10%-owned by Workhorse, the company that failed to secure a contract from the United States Postal Service for new delivery vehicles. In February, USPS awarded the contract to a defense contractor that makes military gear, concrete mixers, and firetrucks. Notably, it has never built a production EV before, just small runs of EVs. $RIDE ripped 8.4% today.

Lucid Preps for Delivery Speaking of EVs… Lucid is rolling vehicles off its assembly line with ambitions to begin deliveries next month. The company’s first vehicle, a luxury EV sedan called Lucid Air, starts at $77,400 (before tax credits.) We featured Lucid in the Rip last month after the company’s Lucid Air Dream Edition R, an ultra-limited-edition run of the vehicle, received an EPA-certified 520-mile range on a single charge. That made Lucid’s first vehicle the first electric car to breach 500 miles, pretty impressive! The Lucid Air has four editions, which have ranges varying from 406 miles to 520 miles. The company has booked over 11,000 reservations, which might not sound that impressive, especially when you consider that Ford has already received 120,000 preorders for its F-150 Lightning. But Tesla had just 12,000 reservations for its high-end sedan, the Model S, in 2012. Lucid is no Tesla (at least, not yet), although the company’s got a solid foundation for its first vehicle. But who knows where Lucid is headed from here. The company is valued at $41 billion as of this writing and went public via the Churchill Capital IV SPAC earlier this year. $LCID stock closed down 3.4% today.

TikTok is the latest to jump into the NFT rush. Today, the video-sharing social networking site launched a non-fungible token (NFT) collection that will see its top content creators partner with top NFT creators. TikTok fans will be able to buy their favorite ‘moments,’ and the platform has even created its own digital auction for the sale. According to the announcement, TikTok Top Moments will feature six “culturally significant TikTok videos.” Lil Nas X, an American rapper, will be the first creator to launch one-of-one/limited-edition TikTok NFTs with artist Rudy Willingham. TikTok will sell their NFTs on Oct. 6. The videos will also be presented at the Museum of the Moving Image in New York from Oct. 1 through Nov.5 in a collection entitled ‘Infinite Duets: Co-Creating on TikTok.’ TikTok’s NFTs will be minted on Immutable X, a layer-2 scaling solution that runs on the Ethereum blockchain, but this isn’t the first time TikTok has entered the crypto space. Last month, the company partnered with the cryptocurrency music service Audius.

Philip Morris International and Altria, two tobacco giants, have been made to stop the sale of their heated tobacco device, IQOS. The company’s IQOS tobacco device supposedly violated a patent owned by R.J. Reynolds, a rival in the tobacco space. IQOS is a heated tobacco product, which was marketed as a “safer” alternative to smoking cigarettes. The U.S. Food and Drug Administration said in its 2020 marketing authorization press release that using IQOS [reduced] “exposure to harmful chemicals,” but were still “not safe.” IQOS, which was sold by Philip Morris and licensed for sale by Altria in the US was an effort by the two tobacco giants to shift away from traditional tobacco products. IQOS didn’t make up a significant sum of their sales. However, IQOS was an attempt at reinvention for Big Tobacco, which has been in need of change. Unfortunately, change hasn’t come easy. Take Altria’s 2018 investment in Juul, which gave it a 35% stake in the leading e-cigarette company. Juul’s edge in the market was its flavored products, which were banned not that long after the acquisition due to accusations that it was targeting minors. Although, the company’s sales supposedly recovered after the ban. Altria ($MO) fell 6.6% and Philip Morris ($PM) fell 4.7% after the news broke and big tobacco takes another financial gut punch.

Warby Parker’s IPO via direct listing was a win for the eyewear company as its share price skyrocketed 36% above its reference price in $WRBY’s trading debut. $WRBY closed the day at $54.53 per share, +36% above its $40 reference price. By market close, Warby Parker’s valuation shot to about $6.8 billion — over twice the company’s $3 billion valuation from its last funding round. Warby Parker was founded over a decade ago as one of the first hallmark brands to provide one-stop eye check-up and eye-wear sales at most of its brick-and-mortar locations. The company is also one of the first direct-to-consumer prescription eyewear brands offering both online and in-person services. Not too shabby. We SEE you, $WRBY.

Gaming Technologies, Inc. (OTCQB: GMGT), a global leader in end-to-end gaming solutions, has added celebrity chef Gordon Ramsey to its rock-star lineup of brand ambassadors. Its current roster of premier partnerships includes Playboy and boxing champion Saul ‘Cannelo’ Alvarez.

Binance Coin ($BNB.X), the fifth-largest cryptocurrency by market cap, soared nearly 10% today. The move came on the heels of Binance Coin’s quarterly burn event. Every quarter, Binance buys back a large amount of $BNB.X to burn (coin burning permanently removes coins from the network.) With a reduced supply, tokens that remain in circulation theoretically become more valuable due to scarcity. In turn, that pushes prices up. Because the burn is tomorrow,  investors bought $BNB.X today in anticipation. Binance burned $390 million worth of $BNB.X in Q2 2021. Binance Coin was initially developed as a utility token that provided Binance users a discount on trading fees. Since it was launched in 2017, Binance Coin has become the native token of the Binance Chain and Binance Smart Chain. The latter has become one of the most active DeFi blockchains in the world.  Due to its many use cases, experts believe Binance Coin is worth keeping in the portfolio.

Dollar Tree is soon to be a Dollar Fifty Tree. This story hits close to home as the home of frugality and saving money. The discount dollar store retailer that previously only sold products for $1 or less just announced that it would be raising prices. The announcement coincided with an increase to the company’s share buyback program. The retailer (which historically sold items for a dollar or less) said that it would start selling certain items for “$1.25 to $1.50” to help pay for higher freight and wage costs. Dollar Tree’s price hike comes amidst a flurry of problems afflicting retail chains: inflation, supply chain woes, and a shortage of employees. Dollar Tree is also leaning into selling higher-priced $3-5 items, which are part of the Dollar Tree Plus collection. Dollar Tree Plus products are already in 340 stores and will be in over 1,500 by the end of 2022. On the news of the buybacks and price hike today, $DLTR rose 16.5%. Maybe money does grow on trees. Dollar tree shareholders are pumped but Dollar Tree customers not so much.

Dealmaking activity has rebounded in the France and Benelux region this year. From exits to fundraising, our latest report breaks it all down. Sweden's financial watchdog is looking into whether EQT violated disclosure regulations in a $2.7 billion share sale. The France and Benelux region has seen a huge rebound this year, as private capital activity is on track to surpass previous annual bests. In only two quarters, PE dealmaking virtually reached pre-pandemic levels, while records have been broken in the region on the VC side. Let's examines the PE and VC markets in France, Belgium, the Netherlands and Luxembourg, breaking down trends across deals, exits, fundraising and sectors. Key highlights include: Activity in Europe's second-largest PE ecosystem reached €87.6 billion in the first half of the year, marking a year-over-year increase of 55.2%. Swelling VC deal sizes put the region on the path to new heights. Fundraising activity had a robust start to the year for both PE and VC investors.

Sweden's financial watchdog is investigating whether one of Europe's largest PE firms violated regulations concerning the disclosure of insider information. EQT is facing a probe into whether it failed to publicize in a timely manner that former and existing partners were selling shares in the firm totaling $2.7 billion. The public offering allowed senior executives to exit some of their stock earlier than planned under a lock-up agreement that was supposed to last until late 2022. Financial regulator Finansinspektionen said that it decided to open an investigation over the "postponed publication of inside information" after being notified of the move by EQT on the same day as the share sale. After being contacted to justify the delay, EQT said in a statement that the firm "has handled the information correctly" and "looks forward to a continued positive and constructive dialogue with the Authority." Partners including chairperson Conni Jonsson and CEO Christian Sinding sold approximately 6% of the firm's issued share capital for 370 Swedish kronor (about $42.75) apiece. The partners said in a press release that they would commit to reinvesting 50% of the proceeds into EQT vehicles over the next fund cycle.

What's driving record capital in genetic medicine? Genetic medicine has attracted record-breaking capital in biotech, with roughly $150 billion invested since 2013. Gene editing enables scientists to precisely tackle the genetic root causes of diseases. Such an approach can be "one and done" and thus avoid the chronicity of the current standard of care. Rapid advancements in this field are creating a robust product pipeline and attracting record capital. But despite all the enthusiasm, companies should tread cautiously with this technology.

Investors are consistently allocating larger amounts of capital to startups that go on to exit successfully—a trend especially distinct with later-stage financing. Our recent analyst note is the third in our series breaking down venture returns by round. In this new installment, we've refined our approach to enable richer analysis of the flow of capital. The data suggests a clear relationship between capital raised and the success or failure of a company. The earliest stages, especially Series A, show asymmetrically high returns compared with later-stage deals. The attractive VC fund returns of the past few years have accelerated the increase in capital allocated to venture investing.

Swedish electric vehicle maker Polestar has agreed to go public through a merger with US blank-check company Gores Guggenheim. The combined company, which will be listed on Nasdaq, will have a valuation of around $20 billion. The deal includes approximately $800 million of cash from the SPAC, which is backed by PE investor Alec Gores and Guggenheim Capital, and a $250 million PIPE investment which will be used to invest in the production of new models and its international expansion. Polestar was set up 4 years ago by automotive giants Volvo Cars and Zhejiang Geely. In April, it raised $550 million from investors including Chongqing Chengxing Equity Investment Fund Partnership, I Cube Capital and Zibo City Government. Polestar is not the only European electric vehicle-related company that has sought to go public via a US SPAC. In June, Barcelona-based EV charger maker Wallbox announced plans to merge with Kensington Capital Acquisition Corp., valuing it at around $1.5 billion including debt. Earlier this year, Quell Acquisition Corp. agreed to combine with German electric aircraft maker Lilium at a $3.3 billion valuation.

Towns from Maine to Washington are still seeing fallout from ongoing closures of the US-Canada border. As China doubles down on banning crypto transactions, NFT marketplaces are using clever workarounds. Never before in history have so many people been under the gaze of so many strangers. One writer muses about what the internet has become, and what happens when the experience of celebrity becomes universal. How to prepare for the future of healthcare investing Are you prepared for the unique challenges facing private equity investors in the current healthcare landscape? At this year's HPE New York 2021 conference, an elite faculty of PE leaders will explore the most pressing challenges facing buyers and sellers.

Momenta, a Chinese startup developing autonomous driving technologies, has received a $300 million investment from General Motors. The company's other backers include Toyota, Dailmer, Tencent and Temasek. Emerge has emerged and raised a $130 million Series B co-led by 9Yards Capital, Spruce House Investment Management and Tiger Global. The Arizona-based company offers a logistics management platform for freight operations. Sternum has raised a $27 million Series B led by Spark Capital. The Tel Aviv-based company offers a platform to secure Internet of Things devices. Intelinair has raised $20 million from investors including Regulator Group and Scientia Ventures. The company offers a crop intelligence platform to help growers make data-based decisions. Intelinair was valued at $41.25 million in 2018, according to recent data. Windpoint Partners-backed Nelson Global Products has acquired Tru-Flex, a designer and manufacturer of hoses and exhaust products for vehicles and industrial use. Daiwa PI Partners has acquired Y International, a Tokyo-based ecommerce retailer of bikes, accessories, maintenance services and more. Daiwa PI bought the business from private equity firm The Riverside Company.

Our analysts will explore the records set throughout the first half of the year, despite lingering uncertainty around COVID-19 and macroeconomic volatility. Key statistics include: VCs completed €47.1 billion worth of transactions in H1 2021, signaling that the VC dealmaking environment has never been stronger. European PE posted its second-highest quarterly dealmaking total on record, thanks—in part—to growing vaccination rates and strong debt markets for leveraged buyouts.

The Augmedix (OTCQX: AUGX) platform, powered by artificial intelligence technology and expert human assistants, converts natural clinician-patient conversation into medical documentation. They provide live support, including referrals, orders, and reminders, so clinicians can focus on what matters most: patient care.

The Evergrande crisis, stagnant prices, investors cashing out are all signs of a real estate downturn and exposing the Chinese economy's dependence on property. This huge hit has impacted all markets, economies, investors, and even local businesses. 

There are new financial news stories and tech articles coming out every hour, so stay tuned to Frugal Finance for more breaking developments!

Frugal Financial News For The Now

There's always so much going on in the world of investing and the new economy. It can be hard to stay up to date with all the latest developments for businesses and investors, especially with all the inflation, disrupted supply chains, and employee scarcity many are facing. Here are the Frugal Finance news stories you need to know now:

Stocks ticked higher overall, despite a rocky week rumbled by fears that China's Evergrande could cause global turmoil if it can't pay its soaring $300 billion debt. And you thought your credit card bill was high! Last week, markets wobbled as Chinese property giant Evergrande missed an $83 million payment — and it’s just the tip of a $300 billion debt iceberg. Investors fear that Evergrande's collapse could cause a Lehman-esque global stock slump, and throw local markets into turmoil. If Evergrande defaults, its financial partners, including HSBC, BlackRock, and UBS, could lose big money. Investors are watching to see if Evergrande will come up with the cash during its 30-day grace period — or miss more payments. 

The US Treasury’s borrowing is limited by a “debt ceiling.” If it needs more cash, it asks Congress to raise the cap. Now, the US needs a higher ceiling to cover trillions worth of Covid expenses, but Congress can’t agree on a limit. If a deal doesn't happen, the US could default on its debts for the first time. Analysts say there’s a 20% chance of default, which could wipe out as many as 6 million jobs and $15 trillion in wealth.

Agtech fundraising continued its upward growth in Q2 of 2021. The Covid-19 pandemic caused a surge in funding for agtech startups addressing vulnerabilities in supply chains. Now extreme weather events are highlighting new challenges and driving investment in soil sensors, weather prediction services and aerial imagery that help growers mitigate the effects of climate change. A Q2 installment of Emerging Tech Research on agtech includes spotlights on private companies such as Benson Hill, Semios and CropX. The report also tracks major industry trends, covering funding records, exits, and developments in areas like insect farming and agriculture drones.

Boston's VC ecosystem is thriving. The Boston Massachusetts venture capital ecosystem is often grouped with Silicon Valley's, but the two could not be more different. Boston, home to world-class universities like Harvard and MIT, is fueled by life sciences. Since 2007, pharma and biotech startups have raised more capital than their software counterparts every year, sometimes by a 3-to-1 margin. But Boston's growing tech scene is a juggernaut in its own right with a thriving technology development scene. Boston's software startups are predominantly B2B-related, including hundreds of cybersecurity, network management, robotics, and AI-powered software companies. Boston and adjacent cities like Cambridge, Waltham, and Arlington MA are already enjoying a record year for venture capital, having surpassed their previous year's record for funding.

Fantasy soccer startup Sorare just hit a mind-blowing $4.3 billion valuation. SoftBank has led a $680 million Series B for Sorare, valuing the French fantasy soccer specialist at $4.3 billion. It's the largest-ever Series B in Europe, according to reports. Sorare offers a blockchain-based platform to let users trade digital sports cards. With the new funding, the startup plans to team up with the top 20 soccer leagues worldwide and expand to include other sports. The round is the second-largest deal in VC gaming this year, behind Epic Games' $1 billion funding round in April. Sorare has 600,000 registered users on its platform and has licensed players from over 180 soccer organizations. Atomico, D1 Capital, Eurazeo and other backers participated in the round, as did existing investors Benchmark, Accel and Headline.

Private equity companies were recently rethinking sports investing strategy after fans, teams cry foul In August, CVC Capital Partners agreed in principle to acquire a minority stake in Spain's La Liga soccer league, but not every team is happy about it. Private equity's push into professional sports investing initially appeared to be a slam dunk. But investors have recently faced increasing pushback from players and fans as they attempt to establish themselves in the elite world of pro sports team and league ownership. In August, Real Madrid filed suit against CVC Capital Partners and Spain's La Liga after the firm struck a deal to acquire a 10% stake in the league's commercial activities for around €2.7 billion (about $3.2 billion). The All Blacks rugby team and New Zealand Rugby Players Association have voiced opposition to a deal that would see Silver Lake buy a minority stake in the league. With the PE industry becoming more active in fighting a negative public perception, executives must now ask whether pursuing professional sports investments is worth the possible reputation implications. Interestingly enough, Hollywood stars Ryan Reynolds and Rob McElhenney somewhat recently bought 100% of a smaller Welsh football club the Red Dragons and have had excellent public relations results and approved by fans.

Private funds might have to give up a bigger share of their profits In the US, Democratic lawmakers have floated a proposal that could not only increase tax rates on so-called carried-interest profits but also extend the length of time general partners must hold an asset before they can benefit from a favorable tax rate. Carried interest is the cut (typically 20%) that GPs get on the money returned to investors after a liquidity event. In principle, it gives managers incentives in a way that benefits limited partner investors like pensions and endowments. Alongside the management fee, a 2% annual fee on capital managed by a fund, carried interest is an important component of the "2 and 20" fee structure that underpins private funds. It also represents a lot of potential tax revenue. Under the current system, carried interest earned is treated as capital gains. This means managers typically only pay a federal tax rate of 23.8%, which comprises the 20% net capital gains tax plus a 3.8% net investment income tax, instead of the 40.8% top rate. This is provided that the fund has held onto an asset for more than three years (until the Tax Cuts and Jobs Act of 2017, that threshold was one year). This rarely poses a challenge for the private equity asset class, where typically the holding extends well beyond three years. But some Democratic lawmakers want to extend that to five years. What's more, that holding period may need to be even longer than five years for the manager to qualify for the preferential tax treatment. Cécile Beurrier, a tax lawyer with Debevoise & Plimpton, explains that under the proposals in the US, the clock won't start ticking until the fund is fully deployed. "This is a very important nuance in the context of a fund that lasts eight to 10 years, because usually in the first couple of years the fund is in ramp-up mode, so it usually is not substantially invested until the end of the investment period of maybe three to five years." This is a problem for fund managers, especially when it comes to investments made during this ramp-up period. 

According to recent financial data, US buyout firm holding periods have been getting shorter. The median time has fallen from 6.2 years in 2014 to 4.9 years so far in 2021. For venture capital in the US, meanwhile, median holding periods—dated from the first VC round—have risen from 4.8 years to 5.5 years in the same period. But even if holding periods were to trend downward in the coming years, many investments could still likely fall outside preferential tax treatment. What's more, it could influence when managers decide to exit a startup company.

Private equity and politics potentially prohibit profits. Politicians on both sides of the Atlantic who have long argued that the government should carve a larger slice out of private equity and venture capital profits could be closer to getting their way. The end result could not only eat into private equity profits but could even undermine an important tool for aligning the interests of fund managers and their investors. Some 27% of venture capital, corporate venture capital and private equity firms lost a partner or key recruit in 2021.

From 2010 to 2020, the median late-stage valuation of VC-backed companies tripled in the four most active hubs across the US: New York, Boston, Los Angeles and the San Francisco Bay Area. That increase is significantly higher than the next six most active US VC areas, indicating that factors such as an ecosystem's cost of living, employee compensation, commercial real estate prices and availability of talent have a major influence on deal size and valuation metrics.

India has produced 41 unicorns to date—including edtech giant Byju's and ridehailing company Ola, which is reportedly planning to raise $1 billion in its upcoming IPO. More than 40% of the companies on that list were minted in 2021 alone, according to new data. And, in light of the Chinese government's heavy-handed approach to private enterprises, investors' excitement around India is unlikely to abate soon.

Did you know that 28% of transgender respondents in a recent survey said they had postponed medical care in order to avoid discrimination? The LGBTQ community represents a largely underserved segment of the US population. This inequity can be attributed to several factors, including unequal care opportunities, fear of discrimination and lack of insurance coverage. Our latest installment of Emerging Tech Research delves into the growing LGBTQ-focused healthtech sector and highlights emerging startups that provide gender-affirming treatments, mental healthcare and family-building services for these individuals.

The logistics specialist Transfix is expected to go public soon via SPAC. Transfix, an online platform that connects freight shippers with truck drivers, has agreed to go public via SPAC at an enterprise valuation of $1.1 billion. The blank-check company is sponsored by G Squared, a late-stage firm and primaries and secondaries investor that had previously backed the New York-based logistics specialist. G Squared managing partner Larry Aschebrook told media outlets earlier this year that the firm intended to take a portfolio company public via its SPAC. G Squared is one of a number of venture firms that have formed blank-check companies with the goal of targeting an existing investment. While this may seem like a conflict of interest, these deals are not prohibited if specific guidelines are met. SPAC deals where a firm is involved on both sides of the transaction have the potential to be very lucrative because the proceeds from selling the private company and the "promote" for managing the SPAC are both realized by the firm. The first such transaction to be cleared by regulators was SmartRent, which went public last month via a SPAC sponsored by Fifth Wall, a property tech-focused VC firm that had previously invested in the company via one of its funds.

Why are investment firms scooping up life insurers as well-established companies leave the industry in droves? Here's the history. With "no technology and no experience," Chinese real estate developers are being forced to enter other markets in the face of high costs and low profits for builders. In big steps for accessible footwear, Nike designers have made it halfway to a completely hands-free shoe.

Last quarter, Bed Bath & Beyond's sales of bathroom and home organization products surpassed pre-pandemic levels, doubling from last year. Cue: BB & B raised its annual sales expectations, and expanded its DoorDash partnership to offer more delivery. We’ll see if the bedding icon saw a back-to-college boost when it reports quarterly earnings Thursday. Fashion vs. #Flation means consumer spending surged this spring when shoppers “revenge spent” on new outfits and plane tickets after a couch-bound year. While boosted unemployment benefits have ended, $300 / month child tax credits are now getting doled out. Experts expect spending to keep rising, but prices are also continuing to rise. We’ll see if "revenge spending" has continued when inflation-adjusted consumer spending numbers drop soon.

The Wall Street Journal got its hands on some juicy Facebook-internal docs, and the bad headlines have been snowballing. Controversies include: a secret Facebook moderation program that exempts celebs from usual posting restrictions, and a test initiative that pushed positive news stories about Facebook.com to users. The latest shocking revelation: The Facebook Company has extensive internal research showing that Instagram is toxic for teens. Criticism of social media's impact on mental health has been building for years, amplified by documentaries like The Social Dilemma and vocal lawmakers. What's notable about Facebook is the scale of the problem. Facebook researchers consistently found that Insta is harmful for a significant percentage of users — especially young girls. 32% of teen girls said that when they felt bad about their bodies, Instagram made them feel worse. 6% of American users who reported suicidal thoughts traced those desires to Instagram. For British users, it was 13%. +178%: Suicide deaths for children ages 10 to 14 nearly tripled from 2007 to 2017, when social media saw mass adoption. The paradox is that the most problematic social app features also seem to drive the most engagement — along with profits and stock prices. Last quarter, FB's revenue soared, and profit nearly doubled to $9.5 billion. Snap and TikTok are also experiencing strong growth, largely thanks to young users who are growing up with these apps: 40%+ of Instagram users are 22 and younger. Snap reaches 90% of US 13- to 24-year-olds. And 60% of TikTok users are between the ages of 16 and 24. Despite all the bad PR, social companies' revenue engines are thriving. Extensive regulations exist to protect our physical health like the FDA for food and drugs, and the NHTSA for driving. But we don't have many guardrails to protect mental health. If social giants start seeing regulatory and public criticism hit their balance sheets, an inflection point could force change. Already, lawmakers are pressing Facebook to abandon its plan to launch Instagram for kids.

Universal Music shares soared 40% last Tuesday after going public, as the $53 billion music giant competes to make a soundtrack for the digital economy. Mine: Ford partnered with "urban mining" company Redwood Materials to recycle its EV batteries from cars like the Mustang Mach-E. IRL: Amazon reportedly plans to open physical department stores that feature QR codes, touch screens, and techy dressing rooms. The goal: end "retail ghosting."

Robinhood's IPO Access has already seen the launch of 7 IPOs with 556,180 investors joining in on initial public offering investment share purchases. Robinhood customers have been getting their hands on company shares purchased at the IPO price, and HOOD investors have profited powerfully! When they introduced IPO Access, we wanted to give our customers the opportunity to invest in companies that go public. And we want to invite you to discover some of those upcoming IPOs as well. Check out the IPOs currently in flight with IPO Access on Robinhood.com or the Robinhood mobile app.

IPOs can be risky and speculative investments, and may not be appropriate for every investor. See our full risk disclosure here. Customers will be required to have sufficient cash in their account to cover the 120% buying power hold in order to place a Conditional Offer to Buy (COB). There is no guarantee that requests for IPO shares will be fulfilled. All IPO requests are subject to availability – requests are filled randomly the morning of the company’s IPO. Learn more about our allocation process here. No offer to buy the IPO shares can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to notice of its acceptance given after the effective date. All investments involve risk and loss of principal is possible. Past performance is not a guarantee of future results. This is not a recommendation of a security or investment strategy. Robinhood Financial LLC is a registered broker dealer (member SIPC). Robinhood Securities, LLC provides brokerage clearing services (member SIPC). Robinhood Crypto, LLC provides cryptocurrency trading. All are subsidiaries of Robinhood Markets, Inc. ("Robinhood"). 

Speaking of Robinhood, they now have an option to grow your cryptocurrency investments even greater. Crypto recurring investments are here! Sit back and watch your coins stack up, commission-free. Starting today, you can buy your favorite coins (or fractions of them) automatically, on a schedule you choose, with as little as $1. It is a great way to grow your crypto holdings over time while reducing your exposure to market volatility. You simply create a recurring investment with these steps. 

Here’s how it works: Make sure your Robinhood mobile application is updated to the latest version in your Apple App Store or Google Play store. Choose a crypto coin you want to buy in the app—bitcoin, ethereum, dogecoin, litecoin, and more Tap Market order and select Recurring investment Set an amount, customize your schedule, and choose a payment method You’re set! You can edit or cancel your recurring investment at any time, and you’ll always be notified before your next order is placed. Learn more about recurring investments in our Help Center. 

Want Robinhood cryptocurrency wallets? Well you are now in luck! As of a few days ago, you can start joining the crypto wallets waitlist. With wallets, you’ll be able to send your coins to your other crypto wallets and receive supported cryptocurrencies into your Robinhood Crypto account. Be one of the first to get access! Here’s how HOOD is saying it works: Join the waitlist. Secure your spot in line with a couple taps Invite friends and move up the list. Jump the list by half for every friend that you successfully invite to Robinhood. Learn more Take a look behind the scenes. A handful of Robinhood customers will get an early peek at what they're building, and they will share their thoughts on our blog they are committed to making crypto more accessible and easier to use for everyone. Learn more about wallets and join the waiting list to secure your spot in line.

You can simplify your audit preparation with Vanta. Vanta is the easy way to get SOC 2, HIPAA or ISO 27001 compliant. More than 1,500 fast-growing companies trust Vanta to automate their security monitoring and prepare for compliance audits—in weeks instead of months. Vanta helps restore trust in internet businesses by giving startups an easy-to-use toolkit to improve—and prove—their security. Simply connect your tools to Vanta, fix the gaps on your customized dashboard and then work with a Vanta-trained Certified Public Accountant to complete your audit.

The number of female founders in asset management hasn't changed much in the past 30 years. Värde Partners co-founder Marcia Page wants to fix that. For 100-year-old Betty Reid Soskin, being the oldest active ranger in the US National Park Service is only the latest chapter. As the trial for disgraced Theranos founder Elizabeth Holmes continues, "Bad Blood" author John Carreyrou discusses Holmes' defense strategies and the likelihood that he'll be called as a witness. Why more startup CEOs are moonlighting as VC investors. It's no secret that bitcoin isn't environmentally friendly. A look at how some sustainable alternatives are aiming to challenge the cryptocurrency's dominance. When Apple's offices reopen, the company expects its employees to be at their desks at least three days per week. That policy is creating an unexpected battle within the tech giant. Google is in a similar situation with requiring hybrid work or requisite back to office policies.

"We are seeing venture capital firms increase total cash compensation across the board, most notably among associates and managing general partners, indicating VCs are willing to pay a premium to recruit and retain top talent." 

—Jody Thelander, founder and CEO of compensation data provider J.Thelander Consulting.

Keep reading more Frugal Finance blog posts and news articles to stay updated on top financial stories, remote working, or stock market trends worldwide!

Financial News Stories And Market Updates

There are always new developments occurring in the venture capital, startup, private equity, stock market, crypto, and retail investing sectors. Here is the Frugal Finance news you need to know now:

Microsoft is splurging $60 billion on its own shares, and it’s not the only company doing share buybacks. Last week, Microsoft's board approved a plan to buy back as much as $60B of the company's own stock — the software giant's largest share repurchase program ever. Stock buybacks are kind of like gifts to shareholders: by reabsorbing their own shares, companies can potentially improve their stock prices by reducing the number of available shares. When shares outstanding decrease, investors' ownership in the company pie can increase. Think: owning 1 share out of 10 total, vs. owning 1 out of 5. Microsoft shares are already sitting near records, and have soared 38% this year. But it's also sitting on a $130 billion cash reserves pile, so it has money to spend. 

Corporations have different options when it comes to spending extra money. They can invest it back into the business like hiring, R&D, building factories, etc — or, they can return value to shareholders through dividends and stock buybacks. Microsoft has used its massive cash reserves to fund acquisitions, boost dividends, and do buybacks. Many companies flush with excess cash are doubling down on buybacks, too. Spending on buybacks increased much faster than capital expenditures on buildings and equipment in the first half of 2021. S&P 500 companies spent more on buybacks than on capital expenditures in the first half 2021. Share repurchases hit $370 billion, up about 30% from the first half of 2020. For example: Lowe's, which thrived on the DIY boom from Covid-19 lockdowns, spent $6 billion on share repurchases — compared with barely $850 million on capital expenditures. Target, another corona-conomy thriver, recently announced $15 billion in buybacks. 

The Big Buyback relates to the Big Shortage. Many US businesses are cash-rich, thanks to low interest rates on debt and strong earnings fueled by economic recovery. The problem: supply and labor shortages are limiting how much companies can invest back into their businesses. But the Big Buyback, which could be contributing to soaring stock prices, could hit speed bumps ahead: Democratic senators just proposed a 2% tax on corporate buybacks to help fund the $3.5 trillion US budget bill.

With around 65% of US adults fully vaccinated and Delta variant cases surging, President Biden hoped to start distributing Pfizer booster shots this week. But on Friday, scientists overwhelmingly advised the FDA not to recommend boosters for the general public — only for people 65 and older, and those at high risk. Third shots are already controversial since many countries still don’t have first shots. The FDA’s final decision on boosters is expected this week, and it usually follows scientists’ counsel. 

Google just completed a 3.9K mile-long undersea internet cable between the US and Europe. Since 98% of global web traffic flows through undersea cables, e-giants like Facebook, Amazon, Microsoft, and Huawei have been paying top dollar for bandwidth on shared cables. But Google’s cable is Google-exclusive, and can handle more traffic than all existing cables combined. As the cloud computing boom continues, internet giants will either compete to buy more bandwidth — or to build it.

Instead of BYOB, Lennar and KB Home help you build-your-own-home. The housing market has been #thriving since millions of Americans ditched city-living for pandemic-friendly suburbia. Demand is still sky high, with housing inventory sitting at 40-year lows. But last month, home sales dropped for the first time in over a year. We’ll see if homes are still booming when Lennar and KB Home, two of America’s largest home-builders, drop earnings this week. 

As eager foodies return to indoor dining, restaurants are having a hard time keeping up with demand. Supply chain and labor shortages have forced some eateries to trim menu items and shorten hours. And many small restaurant owners have seen a surge in operating costs due to rising prices (#din-flation). Last quarter, Cracker Barrel and Olive Garden-owner Darden Restaurants said sales were almost back to pre-pandemic levels. We’ll see if the rebound continued when they serve up quarterly earnings.

The DevOps ecosystem keeps expanding The rapid pace of digital transformation has increased pressure on companies to improve front-end customer software and automate internal processes. And to harness the potential of the cloud, a growing cohort of DevOps startups are creating digital products to help enterprises build software and IT infrastructure. Our latest installment of Emerging Tech Research includes analysis of why enterprises are investing more aggressively in DevOps, and details on emerging opportunities in the space. Key takeaways include: Venture funding for global DevOps startups hit $4 billion in the second quarter of 2021—including a $1 billion Series C for MessageBird, which offers a cloud communication platform. Exit activity was relatively stable in terms of deal count, but deal value was dominated by the IPOs of robotic process automation specialist UiPath and Confluent, which provides a data and application integration platform. Our analysts believe the market for container management software is maturing, but faces rapid disruptions as new technologies emerge.

SoftBank is doubling down on LatAm after first fund tops its expectations. COO Marcelo Claure leads SoftBank's Latin America funds. SoftBank isn't known for identifying opportunities ahead of other venture capitalists. But its strategy in Latin America is a notable exception. The Japanese conglomerate started investing in the region before other top-tier VCs recognized the massive opportunity it holds. After realizing a net IRR of 85% on its first LatAm fund, SoftBank has launched a second vehicle dedicated to the region. Valuation step-ups on notable SoftBank investments in Latin America range from 1.5x on Colombia's Rappi to 8.4x on Brazil-based VTEX, according to new data.

US PE middle-market dealmaking remains red-hot Despite several macroeconomic headwinds, middle-market PE dealmaking in the US has continued its unprecedented run, supported by continued economic recovery and significant capital availability. In thelatest US private equity Middle Market Report, SRS Acquiom and Baker Tilly, analysts break down the middle-market environment during Q2 2021. A few key takeaways: Add-ons continued their trend of more than a decade and increased as a share of PE deals. Middle-market PE firms sought to add on mid-sized aggregators and pursue transformational mergers and acquisitions to scale up platforms, diversify and expand along the value chain, or incorporate ESG values. Even as exits to strategics lagged, attractive valuations and investor confidence led to healthy exit activity in the middle market, especially in sponsor-to-sponsor deals. Middle-market fundraising set off at a rapid clip in the first half of 2021. Buyout firms benefited from LPs' robust appetite for private markets exposure and the unprecedented deal making activity that allowed firms to deploy capital and return to fundraising at a breakneck pace.

500 Startups recently rebranded as 500 Global and expands strategy to later-stage companies. 500 Startups, a venture capital firm and accelerator that has made hundreds of small bets in seed and early stage companies since its founding a decade ago, is rebranding as 500 Global and expanding beyond its roots with a new $140 million flagship fund that will target later-stage businesses. The latest fund is the firm's largest vehicle to date. It brings the firm's total assets under management to $1.8 billion. The new strategy will allow the firm to invest in successful portfolio companies as they mature, lead later-stage rounds and offer co-investment opportunities to limited partners. In addition to its flagship funds, 500 Global manages regional funds in countries like South Korea, Thailand and Vietnam. The firm's portfolio includes 33 unicorns, including Australia-based Canva, worth $40 billion, and Singapore's Grab, which has announced plans to go public via a SPAC at a nearly $40 billion valuation.

ON Partners places top PE executives in 2021 Named to the "Private Equity Recruiting Power 75" ranking of the most prominent executive search firms serving the sector, ON Partners brings deep experience in the growth, venture and private equity space. ON has partnered with hundreds of PE clients to build leadership and board teams, contributing to the firm's overall 89.3% growth over a three-year period. This year alone, the ON executive search team has placed senior executives with both funds and PE-backed organizations, including BetterCloud, Marlin Equity Partners, Nexa, OpenKey, ParkMobile and Realwear, among others.

Antin seeks a $4.9B valuation in Paris IPO. Antin Infrastructure Partners is set to join a growing club of public PE firms when it launches its IPO on Euronext Paris later this month with a valuation that could reach €4.1 billion (about $4.9 billion). The Paris-based firm would raise at least €550 million in the offering, based on its target range of €20 to €24 per share. Trading is expected to begin Sept. 24. Antin would follow major European private equity investors that have gone public in recent years, including the UK's Bridgepoint, Sweden's EQT and fellow French firm Tikehau Capital. The surge comes as firms seek to tap into a growing appetite among retail investors for PE stocks—and those that have already gone public are performing well.

Invention to impact Internet-of-things satellite startup Swarm Technologies operates a ground station network and a global constellation of 120 "sandwich-sized" space satellites. SpaceX is in the process of acquiring the NSF-funded company. Swarm Technologies (NSF-1758752) is one of hundreds of deep tech startups funded annually by the NSF, a governmental agency that accelerates discoveries into the marketplace. Each startup can receive up to $2 million to support translational research and development. By annually investing roughly $200 million in startups, NSF helps teams navigate the earliest stages of technology translation. In the past five years, these companies have gone on to raise billions in follow-on capital, and the portfolio has had 100-plus exits.

Advent, GIC are now teaming up in $5.6B bid to bag UK tea brands. Advent International has joined with GIC in a £4 billion bid (about $5.6 billion) to buy PG Tips, Lipton and other tea brands from Unilever, Sky News reported. The Anglo-Dutch consumer goods giant began exploring a sale of the business in early 2020. The unit is said to have previously attracted interest from PE suitors including Cinven and the Abu Dhabi Investment Authority, as well as The Carlyle Group, Clayton Dubilier & Rice and KKR. If a deal goes ahead, it won't be the first time Unilever has sold to PE. In 2017, for example, KKR acquired its margarine and spreads division for around $8 billion. It also wouldn't be the first time PE has invested in tea, with London-based Zetland Capital buying the UK's Typhoo in July. GIC, which has been an LP in at least four Advent funds, has a history of teaming up with the firm. Earlier this month, the pair made a joint offer to buy Swedish Orphan Biovitrum in a deal valuing the Stockholm-listed pharmaceuticals company at 69.4 billion Swedish kronor, or around USD $8.1 billion.

Brilliant Earth Group, Inc. (BRLT) is now on IPO Access on Roinhood. Brilliant Earth Group, Inc. (BRLT) plans to go public. You can now find BRLT in the IPO Access list and review the prospectus. Argo Blockchain plc. (ARBK) also plans to go public. You can now find ARBK in the IPO Access list and review the prospectus on the Robinhood.com website or mobile app. Cue Health Inc. (HLTH) plans to go public soon. You can now find HLTH in the IPO Access list and review the prospectus if you would like to invest in shares during this company's initial public offering.

IPOs can be risky and speculative investments, and may not be appropriate for every investor. See our full risk disclosure here. There is no guarantee that requests for IPO shares will be fulfilled. All IPO requests are subject to availability – requests are filled randomly the morning of ARBK's IPO. Learn more about our allocation process here. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. No offer to buy the IPO shares can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to notice of its acceptance given after the effective date. This is not a recommendation for the issuer, the IPO shares, or your participation in this IPO. All investments involve risk and loss of principal is possible. Robinhood Financial LLC is a registered broker dealer (member SIPC). Robinhood Securities, LLC provides brokerage clearing services (member SIPC). Robinhood Crypto, LLC provides cryptocurrency trading. All are subsidiaries of Robinhood Markets, Inc. ("Robinhood").

Robinhood regularly reaches out to its users to make sure that your information for tax reporting purposes is accurate. Please confirm your tax status by accepting the required agreement within the app—this should only take a few minutes. You may be prompted to update your app before you can complete the certification process. You should also see a card that says “Confirm your tax status” on your app home screen until you accept the agreement. Confirm tax status Why do I have to do this? We’re legally required to ask customers to certify their tax status to ensure we provide them with the appropriate tax treatment. You’ll need to accept a W-9 or W-9 equivalent to certify your tax status for Robinhood investing compliance with the IRS or other applicable government tax regulation agency.

A look at how startup founders are using record-high valuations to cash out of their companies earlier. Why even giant vessels can't solve the shipping crisis. Amazon has become ubiquitous in markets across the board. Its next target? Healthcare. It costs between $600 and $800 for Iceland's new Orca carbon capture plant to suck 1 ton of carbon dioxide from the air, but that's just the beginning. Robinhood is seeking to attract more novice investors as it turns to college campuses to recruit younger customers. It's a large and growing portion of HOOD's market share. Shares in Chinese cosmetic surgery companies are falling as investors guess the industry will be the next to see regulation. And Elon Musk's Spacex just completed the first completely civilian manned space launch in history after a 3 day trip returned safely. This means big things for space tourism and future opportunities with Spacex, Virgin Galactic, and Blue Origin in the battle of the billionaires.

Design startup Canva notched a $40B valuation, making it the world’s most valuable female-founded and female-led startup. Hike: House Democrats proposed a $2.9 trillion tax hike for high earners and big businesses to pay for President Biden’s $3.5 trillion social agenda. Rivian became the first to bring a fully electric pickup truck to the consumer market, beating Tesla, Ford, and GM — who merely unveiled prototypes.

Keep reading more Frugal Finance news bulletins to learn more about what's going on in the world of money.

Financial News You Need To Know Now

There is always a lot going on in the world of investing. Here is the Frugal Finance news that you need to know now:

How do early-stage VC deals drive inordinately high returns? Investors are consistently allocating larger amounts of capital to startups that go on to exit successfully—a trend especially distinct with later-stage financing. Our latest analyst note is the third in our series breaking down venture returns by round. In this new installment, we've refined our approach to enable richer analysis of the flow of capital. Key takeaways include: The data suggests a clear relationship between capital raised and the success or failure of a company. The earliest stages, especially Series A, show asymmetrically high returns compared with later-stage deals. The attractive VC fund returns of the past few years have accelerated the increase in capital allocated to venture investing.

U.S. VC valuations reach unprecedented levels 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. Our US 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.

VC fund returns for last year reached an astonishing 30.4%, much higher than their three-year mark and almost double the 2020 full-year returns for any other private strategy. PE and funds of funds also posted strong numbers, as covered in our Global Fund Performance Report. The story wasn't as rosy, however, for strategies like private debt, real estate and real assets.

We are visualizing a standout year for female founders. In the first half of 2021, female-founded startups in the US raised $25 billion in venture funding, more than in any full year on record. But a deeper look at the data highlights stubborn realities for female founders. Data journalist Jordan Rubio teamed up with James Thorne and Priyamvada Mathur to create this visual analysis, which illuminates some surprising trends.

Emerging ESG standards has put powerful pressure on private equity to adapt. ESG standards have been defined by an alphabet soup of industry groups. As limited PE partners increasingly prioritize sustainable investing, fund managers are finding that simply having an ESG policy isn't enough. Andrew Woodman examines the push to set global standards—and the challenge of quantifying ethical investing.

Ansarada has partnered with Mergermarket to analyze the impact of digital technology across every stage of the deal lifecycle—from deal strategy, marketing and preparation to due diligence, negotiation, closing and post-deal integration. After interviewing more than 100 global dealmakers, Ansarada has broken down the current trends across end-to-end M&A dealmaking practices in its report, 21 trends the modern dealmaker needs to know. A must-read for anyone wanting to improve and streamline their deal processes through innovation and automation.

Venture Global: Join the revolution VCs and PEs have never been busier, and with Venture Global, the world has never been smaller. Ensure you have an edge in dealmaking and investment decisions with a solution that enables you to hire anyone, anywhere. Elements Global Services is leading the revolution in human resources infrastructure, and the Venture Global program simplifies your global expansion. It delivers speed-to-market in more than 135 countries via its cloud-based technology to guarantee your global growth fully complies with local laws and payroll needs.

Early investors in the SPAC boom may be sitting on high returns, but late arrivals are not faring as well. Investors are facing a backlash as some question the efficacy of sustainable investing and whether it is only slowing down real change. Many tobacco companies are trying to rebrand for a smoke-free future, but can the public trust them? And are smokeless options like nicotine gum or lozenges safe long-term?

ProbablyMonsters recently hauled in a $200 million video game developer. ProbablyMonsters has raised a $200 million Series A led by LKCM Headwater Investments. Founded in 2016, the Bellevue, Washington based company plans to use the funding in part to support its goal of ensuring long-lasting, sustainable careers for those in game development. View round View similar company Carbon Robotics banks $27 million Carbon Robotics has raised a $27 million Series B led by Anthos Capital. The Seattle-based company is the developer of an autonomous robot designed to help farmers eradicate weeds and unwanted plants through thermal energy. Carbon Robotics was valued at $29 million in 2019, according to recent financial data. Additional Investors: Bolt Innovation Group, Fuse, Ignition Partners, Liquid 2 Ventures, Voyager Capital View round View similar company Plantible cooks up $21.5 million in new funding Plantible has raised a $21.5 million in Series A funding.

A guide to understanding the decentralized future of finance "What is DeFi?" It's one of the most common questions in fintech this year. And our new research has all of the information you need to get started. DeFi, short for decentralized finance, uses blockchain technology to execute financial services without an intermediary—and the space has exploded over the past 12 months. Click to see this and many other diagrams in our DeFi Primer One common metric used to measure the growth of this space is total value locked (TVL), which measures the amount of crypto committed to DeFi smart contracts for conducting financial services. Over the last year, TVL has grown from $2 billion to $108 billion and peaked at over $150 billion in May. Investors are also extremely bullish, pouring in around $2 billion into DeFi protocols during the first half of 2021. Still, DeFi is nascent, and the high frequency of hacks and scams makes this space seem like the Wild West. Many of the protocols are still too complicated for use by everyday consumers, and it's also likely that new regulations will reign in some of the DeFi activities. DeFi is an esoteric market loaded with jargon and technical complexity, but we sought to simplify the space in our latest research, which includes: a market map of the DeFi ecosystem, covering segments such as yield farming, DEXs, and derivatives. a breakdown of DeFi blockchain platforms, types of projects, key risks, and our market outlook. data on record-breaking VC investment in decentralized finance, and other metrics we track like TVL and gas fees.

Greater China VC activity soars, but uncertainty looms This past week, we initiated research coverage of the Chinese private markets with the launch of our inaugural Greater China Venture Report. This report encompasses China, Hong Kong, Macau, and Taiwan, and it's available in both English and simplified Chinese. Capital availability and VC investment within Greater China have drastically increased since 2015, as disruptive startups aim to take advantage of building new businesses for a region served by the world's most populous country and second-largest economy. Likewise, institutional capital has followed as investors continue to raise new VC funds to satiate the region's entrepreneurial appetite. For many foreign VCs, investing in Chinese startups represents both a paradigm shift from Western companies, given the sheer operational scale and speed of the region's innovation economy, as well as an opportunity to invest in first-in-class startups in a rapidly growing market. Some highlights from the report: After a pandemic-mired 2020, the region's VC investment reached $56 billion in H1 across 2,366 deals—both on pace for YoY growth. Nondomestic investors participated in nearly 25% of deals Many investors are attracted by the region's rapidly expanding middle class, accelerated mobile adoption, multinational corporation penetration, and high-tech initiatives from economic development councils. VC exits have soared in recent years. H1 notched $137.5 billion in exit value across 99 exits, with annual exit value on pace to shatter records fueled by 19 billion-dollar-plus public offerings. 

Recent scrutiny and new legislation from Chinese regulators could dampen some of the fervor going forward. Strong investing momentum has been met with strict regulations in recent months surrounding overseas listings and education & tutoring companies. Time will tell what impact recent changes will have; for now, the current environment is generating sufficient deal making and exit activity to continue powering Greater China's venture industry.

We're running out of superlatives to describe the European VC market. Through H1, valuations reached record highs at each quarter and across all financing stages, according to our latest European VC Valuations Report: The increased presence of nontraditional investors continues to drive this unprecedented pricing environment. The aggregate value and quantity of European unicorns is skyrocketing to new heights. Across all quartiles, exit valuations are also pacing well above last year's figures. How high have the numbers gotten? How sustainable is this financial frenzy?

Deal-level performance on a capital-weighted basis Does raising more capital make the average startup more successful? Are venture investors getting better at identifying "winners" earlier? When a VC-backed company exits, how much bigger are Series A returns compared to Series B through F? These are the types of questions raised in our latest research into deal-level performance—a dataset we continue to develop in our ongoing coverage. What the new data shows: Across all stages, but especially the late stage, companies that raised larger amounts of capital had higher rates of successful exits. Series B returns were closer to Series C+ figures than Series A returns.

Extreme weather events are drastically impacting growers and leading to ripple effects throughout the global food system. Perhaps it's no wonder, then, that VCs are continuing to pour money into ag-tech, particularly companies producing agriculture biochemicals that mitigate environmental harms and build resiliency in crops, according to our new client-only research: Insect farming is also booming, as the industry's reduced costs and environmental impact make it attractive to both companies and consumers. Investment into predictive weather analytics tools has already eclipsed 2020's total by 70%, as startups leverage satellite mapping, AI, and machine learning technologies. Agriculture drones are gaining use in imagery analytics and tasks like seeding and spraying.

Mental health apps. Gut health. Sleep tech. There are several consumer-focused opportunities emerging in the world of healthtech, and Q2 marked another huge quarter for capital invested ($3.5 billion), according to our latest client-only research: Ten mega-deals in Q2 accounted for ~60% of that deal value and they've driven this year's median deal valuation to twice that of 2020. Roughly $1.7 billion in exit value across 10 transactions has exit activity on pace for new annual records in both value and count. VCs have been increasingly targeting the tech that helps improve sleep quality, as a growing amount of people track their sleep habits.

AI & machine learning analyst Brendan Burke weighs in on Databricks' $1.6 billion funding round at a $38 billion valuation: "Databricks' 1.3x valuation step-up in seven months is justified by 41.1% ARR growth in 2021 to $600 million as of August 31. "The company is achieving rapid growth at scale and has continued to develop new open-source projects, recently announcing Delta Sharing: a data collaboration protocol in partnership with Microsoft Azure, Google, and Amazon Web Services, along with other leading database vendors. "This Series H is led by Morgan Stanley's Counterpoint Global mutual fund, demonstrating the appeal of the company to crossover investors. "Databricks' management claims that the round does not push back its public listing timeline and the company may consider a direct listing or IPO."

Our insights and data featured in the press: Public investor enthusiasm for electric vehicles is high. That's one key reason why Rivian's IPO is worth watching. Greater China VC has had a rollercoaster year, but consumer businesses still have some important tailwinds. What returns are reasonable to expect from investing in pro sports teams? How does that compare to other options? Index Ventures is funding startups faster than ever with no signs of slowing.

The prolific pandemic puppy boom fetches deals in Silicon Valley. The pandemic drove a banner year for pet adoptions, and the funding has followed, with pet-related startups snatching up more than $1.1 billion in venture capital so far in 2021. But don't call it a blip, writes James Thorne. Investors see a bright future for startups focused on our profitable pets.

How solo VCs are changing the venture investing game. A new breed of venture capitalist has emerged in the past several years: the solo VC. These investors do far more than angel and seed deals, writes Marina Temkin. They raise nine-figure funds, invest across stages, and even lead rounds—and they do it with a speed that traditional firms may find hard to match.

Wall Street wins signal the start of a synthetic biology revolution. After a decade of innovation, synthetic biology companies are notching big breakthroughs. James Thorne and Marina Temkin spoke with VCs about the promising future they foresee—and why one investor believes these developments represent "the most important technological revolution of our time."

Hackers, remote workers spur record PE deals in cybersecurity. Private equity buyouts are booming in cybersecurity as the already fast-growing industry responds to a surge in remote work, coupled with increasingly sophisticated cyberattacks. Ryan Prete breaks down the data behind the record-setting spike in cybersec breaches.

Investors are raising climate tech funds at a torrid pace. Midway through 2021, investors had closed as many climate-focused funds as they'd raised in the previous five years combined, a frenzy that underscores tech's crucial role in tackling climate change. Priyamvada Mathur explores this new wave of deal-making amid trends including the push for net-zero emissions and the staggering rise in extreme weather disasters.

Typically opaque PE pursues retail investors despite pushback. It's been more than a year since federal officials announced policies meant to crack open private equity funds to retail investors for the first time. Along the way, dueling views on the potential risks and returns have sparked fierce debate over whether the asset class has delivered on its promises. Adam Lewis covers the clashing views and shares a breakdown of PE fund returns by strategy. 

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