2021 is shaping up to be the year of SPACs! The above graph (from SPACInsider) illustrates the dramatic rise of SPAC IPOs, with the YTD deal count for 2021 already quickly approaching 2020’s total.
SPAC critics argue that they’re being used to take lower-quality companies public, and point to the fact that SPACs have historically underperformed traditional IPOs. And it’s true that the recent SPAC boom has led to companies with no revenue (e.g. Nikola, Lordstown Motor Corp, Virgin Galactic) going public.
However, it’s worth noting that the world of SPACs isn’t completely lawless territory. There are public disclosures required before a SPAC IPO (primarily the S-4 filing, which is similar to an S-1), and it typically takes ~4-6 months to complete the process. We’ve also seen a number of high-quality companies elect to go public via SPAC recently, including Opendoor, Hims & Hers, SoFi, and 23andMe.
If you’re interested in learning more about how SPACs work and the pros & cons vs. a traditional IPO or direct listing, we recommend checking out John Luttig’s overview!
📹 Instagram launches Live Rooms. If you’re one of the brave souls who’s gone live on IG, you’ll know that you can only invite one person to stream with you. That changed this week, as Instagram upped the limit to four creators per broadcast (which allows for collabs, talk shows, podcasts, and interviews). Instagram’s head of product for creators, Kristin George, said that “collab culture is the future”- adding more contributors has been the #1 request from creators as Live usage soars post-COVID.
🎵 Square acquires Tidal for $297M. Jay-Z’s music app Tidal has found an unlikely new home - Square! CEO Jack Dorsey explained on Twitter that Square aims to reinvent artist monetization, similar to what the company has done for SMBs (Square Sellers) and individuals (Cash App). According to Dorsey, this may include “new listening experiences to bring fans closer together, simple integrations for merch sales, modern collaboration tools, and new complementary revenue streams.”
Square also announced the launch of its own bank to offer expanded business loans, deposit products, and more! However, the stock ended the week down 10%, due to: (1) investor confusion around the Tidal acquisition; and (2) market volatility that hit growth stocks.
🛍️ Klarna raises mega-round. “Buy now, pay later” startup Klarna announced a $1B round at a $31B valuation, making it the most valuable private company in Europe! Klarna’s valuation tripled in just six months 😲. Similar to competitor Affirm, Klarna customers access the product through a “Buy with Klarna” button on merchant partner sites, or they can use the Klarna app to pay at any retailer. The company is headquartered in Sweden - only ~10% of its 90M customers are in the U.S.
🛑 Okta buys Auth0. Identity and access management (IAM) company Okta acquired rival Auth0 for $6.5B (20% of Okta’s market cap!). Auth0 targets a slightly different market segment than Okta, allowing developers to add IAM functionality to their own products via API. Though Okta’s stock fell 10% on the news, CEO Todd McKinnon defended the price tag, noting that he paid a lower revenue multiple for Auth0.
📈 The IPO train keeps rolling! Another week, another slew of IPO updates:
Real estate company Compass released its S-1, showing a loss of $270M on $3.7B in revenue. Compass has ~20k agents and completed 145k transactions last year.
Mobile marketing/monetization company AppLovin also filed an S-1! The company’s platform reaches 410M users daily on mobile games.
Oscar Health started trading on the NYSE at $36/share. After a tough first few days, the stock ended the week at $31.
Despite the chronic and worsening Zoom fatigue that we’re all experiencing (too soon to call it a second pandemic?), Zoom itself continues to chug along! The company’s stock jumped 10% after Q4 earnings, beating revenue expectations with 370% YoY growth.
SMBs continue to be an area of growth, as most of these businesses weren’t using Zoom pre-pandemic. The company saw a ~500% YoY increase in customers with <10 employees, which concerns some investors looking towards post-COVID churn.
what we’re following 👀
Lenny Rachitsky shares lessons on content-driven growth from top startups.
Thingtesting on the rise of D2C ice cream & why it’s so hard to ship to your door.
The team at Heartcore Capital published an incredible report on the state of consumer tech over the past year & the trends they’re tracking. We’d highly recommend checking it out, lots of great data and insights here!
It’s been a wild week for non-fungible tokens (NFTs)! Grimes sold $6M of digital art and videos, Kings of Leon announced their new album will be released as an NFT, and TRON founder Justin Sun bid $2M to “own” Jack Dorsey’s first tweet.
We mapped out some of the companies in this space, focusing on two dimensions:
Ease of use - do you have to install Metamask and buy Ethereum to purchase an NFT, or can you easily create an account and pay via credit card?
Breadth of content - does the company operate an open marketplace where anyone can mint NFTs, or is the content restricted to certain categories/creators?
The first dimension is straightforward - accessibility enables more consumers to participate, which is a good thing for most consumer products! The second dimension is still up for debate - having a broader platform isn’t necessarily a good thing, as we’ve seen with vertical-specific startups stealing market share from eBay. Allowing anyone to mint and sell an NFT could create significant “noise” for buyers.
We expect some of the hype around NFTs to die down, for a few reasons:
The novelty of owning digital goods will wear off if there’s nothing to “do” with them (we saw this with CryptoKitties, even though it was somewhat interactive)
Many NFTs have no underlying value beyond the potential profit from speculative trading (similar to the ICO trend of 2017)
As more NFTs are minted, increased supply will drive prices down, giving artists less incentive to produce them (especially given gas fees required to mint them)
However, we think some use cases will stick around:
Games (or platforms with game-like mechanics) that keep consumers engaged and imbue tokens with value. Sorare is a great example - users buy digital trading cards for a fantasy soccer game (the engagement is impressive!), while Axie Infinity is like Neopets with NFTs. NBA Topshot currently allows users to display and trade their “moments,” but we could see them building similar gameplay.
Creators who offer followers a chance to support them by buying NFTs, potentially with the benefit of getting access to exclusive content. Owning an NFT will become a status symbol in the creator’s community, like special roles on Discord. Companies like Bitski, Foundation, and Zora (among others!) are showing early promise here, with drops selling out in minutes.
Songbird Therapy - Strategy & Ops (Remote, SF)
Alchemist Accelerator - Chief of Staff (Remote, SF)
SESO Labor - Growth Analyst (Remote, SF)
Divvy Homes - Strategic Partnerships Associate (SF)
Two Chairs - Ops Associate (SF)
OMERS Ventures - Associate (SF)*
StockX - Financial Analyst (Detroit)
Rockefeller Foundation - Innovative Finance Associate (NYC)
Prose - Product Analyst (NYC)*
*Requires 3+ years of experience.
Human Capital - Delta Fellowship (Remote) - $50k for student founders
Atom Finance - Finance Intern (Remote, NYC)
Kyte - Finance / Business Ops Intern (Remote)
June - MBA Summer Intern (Remote)
Box - Education Intern (Remote)
Pitchbook - Research Intern (Seattle)
Plastiq - MBA Partnerships and Strategy Intern (SF)
Uber - Marketing Intern (SF)
Silicon Valley Bank - SVB Capital Intern (Menlo Park)
M13 - MBA Investment Associate (LA)
Komodo - MBA Corp Dev Intern (NYC)
puppy of the week 🐶
Meet Cosmo, a one-year-old Lagotto Romagnolo (an Italian breed!) who lives in NYC.
Cosmo enjoys frolicking in the snow, playing with his stuffed animals (his alligator is his favorite), and watching other dogs run around at the park.
Follow him on Instagram @cosmoillagotto!
Hi! 👋 We’re Justine and Olivia Moore, identical twins and venture investors at CRV. Thanks for reading Accelerated. We’d love your feedback - feel free to tweet us @venturetwins or email us at email@example.com.