Late Stage Mature Pre IPO Unicorns - PreIPOSwap.com
December 6, 2018

Research

The key to any good investing is high quality research.  We provide our members with breaking news and alerts about impending investment opportunities in the Pre-IPO space, by company:

Rubrik

Rubrik an emerging leader in cloud architecture

https://cloudian.com/rubrik/

https://www.globenewswire.com/news-release/2020/05/11/2031238/0/en/Rubrik-Ushers-in-New-Era-of-the-Data-Forward-Enterprise-at-FORWARD-Digital-Summit.html

https://www.globenewswire.com/news-release/2020/11/19/2130433/0/en/Rubrik-s-Pioneering-Cloud-Data-Management-Platform-Gets-Major-Update-with-Near-Instant-Recovery-Times-for-Enterprise-Workloads-and-Smart-Cloud-Cost-Optimization.html

https://techcrunch.com/2019/01/15/data-management-startup-rubrik-gets-261m-at-a-3-1b-valuation-as-it-moves-into-security-and-compliance/

https://craft.co/rubrik

Description

Rubrik is a tech startup company founded in 2014. Rubrik is based in Palo Alto. One of Rubrik’s co-founders Bipul Sinha currently serves as CEO. [1] that specializes in cloud-based data management software [2]. As part of this software Rubrik also offers backup and protection services through its cloud system to ensure that data is secure. Rubrik views in house physical data management infrastructure as ‘legacy systems’ [2].  A ‘legacy system’ is simply defined to be “an outdated system and/or hardware that is still in use.” [3] Thus, Rubrik transitions clients from the physical infrastructure to a cloud-based system. Rubrik offers several products including a concept known as “Rubrik build” in which the client can construct custom data automation and integration processes on the cloud platform [2].

Strategic Growth

Over the years Rubrik has experienced growth in several aspects of its business. Rubrik was named the “2020 Gartner Peer Insights Customer’s Choice for Data Center Backup and Recovery solutions.” [4] Strategically Rubrik has gained various partnerships and has made a few acquisitions. One of Rubrik’s partners is Arrow a technology solutions company ]4 with sales revenue of $29B in 2019. [5] Rubrik has made a few acquisitions with its most recent acquisition being Igneous Software Systems, a data management firm based in Seattle, which occurred less than a month ago. [6]. Despite Igneous running into financial troubles, Rubrik’s management sees value in Igneous’ UDMAAS technology. This technology is an unstructured data management technology that has the ability to potentially manage trillions of files and structure these unstructured data files [6]. Rubrik management intends to integrate the UDMAAS technology into Rubrik’s cloud platform. [6]

Financial Growth
Rubrik has also experienced growth from a financial perspective. Rubrik predicts $600M in revenue for the 2020 fiscal year which ends for Rubrik on January 31. Rubrik used revenues from the first month of 2020 to carry out an annualized run-rate prediction. [7]. Rubrik’s valuation has grown exponentially from $44.2M in 2015 to $3.3B after its latest round of funding in 2019 [1]. In 2019, Rubrik raised $261B at a rate which nearly tripled the value of the company from $1.3B to $3.3B. [8]. Rubrik raised funding from the following venture capital firms in its latest round of funding:  Lightspeed Venture Partners, Khosla Ventures, Greylock Partners, Bain Capital Partners, IVP (Institutional Venture Partners).

Challenges
With growth comes new challenges which Rubrik has faced. Rubrik faces fierce competition in a $48B data management market with prominent competitors including Dell Technologies EMC, CommVault Systems, and Veritas.[8] Additionally, Rubrik faces a lawsuit filed by Actifio regarding patent infringement. The litigation was initially announced 6 months ago with no new updates. [9]

Conclusion
Rubrik is a disruptor in the data space and with its rapid growth and challenges is an interest company to watch for 2021.

Articles for Further Reading (and used in part to create this post)
[1] (Craft) : craft.co/rubrik (and supplemental tabs)
[2] (Rubrik) : www.rubrik.com/en/why-rubrik
[3]: (talend): www.talend.com/resources/what-is-legacy-system/
[4]: (arrow-1): www.arrow.com/ecs/na/products/rubrik/
[5]: (arrow-2): www.arrow.com/en/about-arrow/overview

[6]: (blocksfiles1): blocksandfiles.com/2020/12/17/rubrik-acquires-igneous-assets/
[7]: (blocksfiles2): blocksandfiles.com/2020/02/22/rubrik-cla…0m-revenue-run-rate/
[8]: (Forbes): https://www.forbes.com/sites/petercohan/2019/02/07/rubrik-raises-261m-triples-valuation-aiming-at-48b-data-protection-market/?sh=68b1117e5637’
[9] (Cisio): www.prnewswire.com/news-releases/actifio…ubrik-301085531.html

Impossible Foods

https://www.bloomberg.com/news/articles/2020-05-02/beyond-meat-s-4-billion-rival-is-said-in-fresh-funding-talks 

https://techcrunch.com/2020/03/16/impossible-foods-confirms-500-million-fundraising-has-raised-1-3-billion-in-total/

https://www.crunchbase.com/organization/impossible-foods

Impossible Foods Raises Another $200M 

https://www.reuters.com/article/us-impossible-foods-strategy-idUSKBN29B1A5?edition-redirect=in

Description

Impossible Foods is an alternative food startup that produces plant-based meat products [1]. Impossible Foods is based in Redwood California and was founded by Pat Brown M.D., P.H.D. who currently serves as CEO for the firm. [2] Impossible Foods released its first alternative burger in 2016 after 5 years of R & D. [2]

About the Founder

Pat Brown received his Bachelors and PhD from the University of Chicago in Biochemistry. Dr. Brown also received an M.D. with a specialization in pediatrics from the University of Chicago. He earned his residency at Chicago Children’s Memorial Hospital in pediatrics. [3]. After completing his PhD Dr. Brown accepted a position as professor of biochemistry at Stanford University. During his time as professor, Dr. Brown helped develop a groundbreaking technology known as “DNA microarrays”.[3] DNA microarrays help to identify whether a specific gene of an individual is mutated or not. The term microarray is used because DNA micorarrays are able to look at several hundreds of regions of a gene where the mutation may lie at once as opposed to traditional technology that could only look at one or two regions [4].  One immediate application of this technology is being able to catch more cases of cancer caused by mutated genes very early on. [4] Many forms of cancer have a lower mortality rate when caught early on which highlights the importance of this technology.

Impossible Foods Classification and Technology

It may confuse the reader as to why a food production firm is lumped into research with other tech companies from the Silicon Valley area. This section will argue that the placement is justified and that in fact Impossible foods is a tech startup in its own right. In the previous section, the founder’s qualifications were highlighted as well as his research experience with gene expression and mutations. When Dr. Brown decided to start Impossible Foods, he did not forget about his previous background and used that background to develop Impossible Foods alternative meat. The technology rests on the discovery made by Impossible Foods of heme’s role. Heme is a molecule found in animals (and the human body). Heme is a molecule that is rich in iron. The heme found in blood “grabs the oxygen from your lungs and carries it around your body.” [6]. More important to Impossible Foods was the discovery that heme is what “makes meat taste like meat” and causes human’s to crave meat. [6] The taste of heme is both present in the raw and cooked forms of meat. With this observation, Dr. Brown and his employees decided that heme needed to be present the alternative meat product offered by Impossible Foods. Since clearly the group could not used heme found in meat, the group turned to plants that naturally have heme. Soy, a plant that is already used by other companies to create alternative products such as dairy and cheese proved to be a viable option. Soy heme is found in the root nodules of the soy plant [6]. The root nodule is the location where bacteria engage in the process of nitrogen fixation. [7] Nitrogen fixation is the process where bacteria convert atmospheric nitrogen into nitrogen compounds which the host absorbs and uses for its growth. [8] If the story stopped here, the classification of Impossible Foods as a tech startup would still be inaccurate. While Impossible Foods located soy heme in the root nodules of the plant, that is not the heme that is found in alternative meat products offered by Impossible Foods. The heme found in meat products offered by heme is produced by yeast. [6]. In particular the DNA  from soy heme is extracted and inserted into yeasts. These yeasts then engage in the process of fermentation to produce heme. [6]. The process of yeasts engaging in fermentation to produce a product is not an entirely novel idea. Fermentation is used to produce wines and certain types of cheeses, as well as other products. However, the process pioneered by Impossible Foods was novel and involved the genetic engineering of foods. The process was a technological process that was started by scratch and developed to produce the meat product today. This engineering element is what classifies Impossible Foods as a tech firm.

Industry Metrics

The plant-based meat industry as a whole is poised for growth. At the moment alternative meat accounts for 2% of packaged meat sales, however alternative meat sales rose by 11% in 2020 compared to traditional packaged meat rising only by 2%. [2] Some predict that the alternative meat industry will have a net worth of $85B in 2030 and that consumption of traditional meat will drop by 33% in 2040.]

Financial Growth

Despite the fact alternative meat only has a 2% market share of packaged meat [2], Impossible Foods has seen tremendous financial growth and success since the launch of the Impossible Burger in 2016. Impossible Foods revenue in 2019 was $130.1M [9] with a predicted revenue of $151.5M in 2020 [10]. In 2019 Impossible Foods partnered with Burger King to create a join product dubbed “Impossible Whopper” which provided tremendous distribution to the Impossible Burger [2]. That same year Impossible Foods faced a massive shortage of the Impossible Burger which was solved by entering another partnership with a manufacturer who was able to produce a much greater quantity of the Impossible Burger [2]. In March 2020 the Impossible Burger could be found in 150 retail grocery stores. As of August 2020, the Impossible Burger could be found in 8000 grocery stores over 50X that of March 2020. [11] In the beginning of 2020, Impossible Foods unveiled its new product the “Impossible Sausage”. As of 2020, Impossible Sausage could be ordered in 22,000 restaurants.

Recent Funding Rounds and Investors

Additionally, Impossible Foods has gotten attention from a diverse group of investors. In March 2020 Impossible Foods raised $500M in funding. [11] In It’s most recent round of funding, Impossible Foods raised another $200M in funding [12] for a total capital raising of $1.5B [11]. Impossible Foods is currently valued at $4B [12]. Asset management firm Coatue led Impossible Food’s most recent Series G $200M funding. XN, Mirae Asset Global and Temasek also invested in Impossible Funds during this Series G funding round. XN is a new NYC startup hedge fund that was launch July 2020 with initial raising of $1BN. [13]  Temasek is a noteworthy investor as it is an asset management firm based in Singapore. [14] Apart from traditional institutional investors, famous individual celebrities have invested in Impossible Foods such as Jay-Z, Katy Perry, and Serena Williams, among others. [11]

Challenges

Despite these successes, Impossible Foods has it’s challenges. Impossible Foods’ biggest competitor is Beyond Meat who had a revenue of $298M in 2019, over double that of Impossible Foods. [9]. Household names such as Cargill, Kellogg’s, Hormel, and Neste have either entered or are soon to enter the alternative meat and dairy market after seeing the recent growth of the market. [9] These brands which a far more substantial R & D budget and global distribution capabilities will prove to be tough competitors to Impossible Foods in the future. Apart from increasing competition, Impossible Foods faces other challenges. The alterative meat market as a whole is still a niche market due to the price point of the product compared to regular meat. In Hong Kong a 12 ounce package of Impossible Beef sells for HK $89.9 ($11.60 USD) while regular beef sells for roughly half that price point. [15]. While Impossible Food plans to lower it’s price point [15] it is still far from accessible for the every day consumer.

Conclusion

Impossible Foods is an interesting food tech startup company that is a disruptor in the traditional packaged meat market. The company raised $700B in 2020 and it will be interesting to see if Impossible Foods does more capital raising in 2021.

Articles for Further Reading (and were used in part to construct this post)

[1] (if-1): www.impossiblefoods.com/
[2] (bus.ofbus.): www.businessofbusiness.com/articles/impo…industry-trend-data/
[3] (if-patbrown): impossiblefoods.com/company/ourteam/patbrown
[4] (NHGRI): www.genome.gov/about-genomics/fact-sheet…icroarray-Technology
[5] (if-science): faq.impossiblefoods.com/hc/en-us/article…nd-Impossible-Foods-

[6] (if-heme): impossiblefoods.com/heme
[7] (sciencedirect): www.sciencedirect.com/topics/biochemistr…-biology/root-nodule
[8] (Britannica): www.britannica.com/science/nitrogen-fixation
[9] (WhatComp): whatcompetitors.com/beyondmeat/#Who_is_B…s_Biggest_Competitor
[10] (Growjo): growjo.com/company/Impossible_Foods

[11]: (if-growth): impossiblefoods.com/media/news-releases/…to-accelerate-growth
[12]: (axios): www.axios.com/impossible-foods-series-g-…58-f1cb04583e58.html
[13]: (FT): www.ft.com/content/915caafc-6ccb-4fbf-a4d3-af5130d8a898
[14]: (Temasek): www.temasek.com.sg/en/index
[15] (CX Tech): www.caixinglobal.com/2021-01-11/impossib…eaper-101649231.html

Eat Just

goodmeat.co, a new digital platform focused on educating consumers about the importance of this method of meat production as worldwide demand for animal protein continues to grow.

Josh Tetrick/CEO interview: JUST Egg InterviewJUST / EXCLUSIVE-Plant-based egg maker JUST sees profit next year, then will look at IPO | Nasdaq: IPO Plans

JUST, Michael Foods Partner to Put Plant-Based Eggs on More Foodservice Menus: Michael Foods Partnership

JUST & European Food Manufacturer Emsland Group Partner to Scale Plant-Based JUST Egg:
Emsland Partnership

JUST Egg Reports Q1 2020 Retail Sales Surge and Piqued Consumer Interest: Q1 2020 Sales

JUST gains new partners to bring JUST Egg to Asia, Latin America and Europe: Global Partners

https://www.bloomberg.com/news/articles/2020-10-22/eat-just-maker-of-plant-based-eggs-eyes-2-billion-valuation

Profits before IPO for plant-based egg producer Eat Just  https://www.youtube.com/watch?v=nlyDgLTj9pc&ab_channel=CNBCInternationalTV 

Description

Eat JUST is a San Francisco based alternative protein company that was founded in 2011 by Josh Tetrick and Josh Balk. Currently Tetrick serves as CEO [1]. A major arm of Eat JUST is JUST egg a plant-based egg that “scrambles and tastes just like eggs”. [2]

Technology

JUST egg uses a key ingredient known as the mung bean. The mung bean is a protein containing legume that JUST discovered scrambles like eggs. [2]. JUST egg also contains turmeric as spice and coloring agent. [2]

Market Potential

Currently, the global chicken egg market is valued at $238B across various industry categories. The biggest industries are the retail egg industry which  is valued at $122B, the egg ingredients industry which is valued at $73.2B, and the egg food service industry which is valued at $49B. [3] Thus, there certainly exists market potential for JUST egg. One major challenge is that JUST egg’s application as an ingredient in baked goods is limited, which significantly hampers the market potential JUST egg can enter currently. [3].

Firm Growth

Despite these challenges, JUST egg is continuing to grow. Eat Just has just announced in the past week that Dicos, a major Chinese fast-food chain, has partnered with Eat Just to add the JUST egg product to the menu in over 500+ locations. [4] If the trial goes well, there is potential for even greater reach for JUST egg as Dicos currently has 2600 locations. [4] This announcement comes 3 months after JUST egg  had announced a partnership with Proterra Investment Partners Asia to develop JUST egg’s first factory in Asia which will be located in Singapore. [5]  Eat JUST also received regulatory approval in Singapore for its cultured chicken product. The product requires animal cell culture technology which essentially grows the cells in meat in-house as opposed to slaughtering an animal [6].Eat JUST has gotten attention from investors. Eat JUST has raised more than $300 million from investors with notable investors being venture capital firm Khosla Ventures and entrepreneur Li Ka-Shing [5]. The firm is currently valued at $1.2B [5].

Challenges

Despite this, Eat JUST faces challenges. Zero egg and Le Papondu are notable competitors in the alternative egg space [7].  While Le Papondu is only in the very early stages as a company, Le Papondu’s egg is different from Eat JUST in the fact that the product comes in a shell and looks like an egg. On the other hand, JUST egg comes as a liquid form in a bottle. Thus, Le Papondu could have a competitive advantage that starts to threaten JUST egg in the next few years.Another challenge that JUST egg and generally the alternative food industry at large faces is pricing. The cost to produce a JUST egg is 18 cents, over double that of a regular egg which costs only 8.2 cents to produce. [3] While the management of JUST egg has plans through operational efficiencies and outsourcing to lower that cost, it is a hurdle that JUST egg will face for several years to come.

Additionally, JUST egg is still at an operating loss. Firm management hopes to start turning a profit by end of 2021. [3]

Conclusion

JUST egg is a disruptor in the traditional egg market that is up and coming. While not profitable yet, the firm is experiencing rapid growth and hoping to turn a profit by end of 2021. At that point the firm plans to do an IPO [3] which will be an interesting event to watch for investors.

Articles for Further Reading (and in part used to create this post)

[1] (CNBC): www.cnbc.com/2020/06/16/eat-just-disruptor-50.html
[2] (JUST): www.ju.st/products/just-egg
[3] (Food Navigator): www.foodnavigator-usa.com/Article/2020/0…nd-of-2021-mulls-IPO
[4] (CISION): www.prnewswire.com/news-releases/eat-bey…ement-301208490.html
[5] (TechCrunch): techcrunch.com/2020/10/20/eat-just-partn…DZ6WAdo7okv0vEI3gYBr
[6] (businesswire): www.businesswire.com/news/home/202012010…al-for-Cultured-Meat
[7] (thebeet): thebeet.com/french-startup-creates-a-sup…an-egg-with-a-shell/

Grab

https://www.crunchbase.com/organization/grabtaxi

Grab Secures $200M From Stic Investments

Description

Grab is a Singaporean app company founded In 2012 by Anthony Tran and Tan Hooi Ling [2]. Currently Tran serves as CEO [1]. Grab offers a wide variety of products through its app such as taxi services, delivery of restaurant meals, and groceries as well as purchasing tickets and booking hotels [3].

Industry Growth

The e-commerce app industry has seen rapid growth. While certain aspects such as ride-sharing have declined due to the pandemic, other areas such as delivery of groceries and meals has seen rapid growth. Market research from Google, Temasek , and Bain & Co. indicates that in the largest economies in Southeast Asia (Grab’s geographical reach) 33% of current e-commerce customers started only after the pandemic [1]. What is more striking is the retention level of these new customers. Over 90% of these new customers indicated that they intend to continue using e-commerce platforms even after the pandemic subsides. [2] The same research predicts the online commerce industry in the area to amount to $1.2T by 2025. Currently online transactions amount to $620B [1].

Firm Growth and Financing

One advantage Grab has is that certain arms of the business have continued to perform well during the pandemic. One arm of Grab that has done so is Grab Financial. Grab Financial was founded in 2017 and offers online financial services such as banking and wealth management. [4]. Grab Financial’s revenue grew 40% in 2020. Despite this growth, Grab Financial is still not a profitable venture yet. However, investors feel confident in the future of Grab Financial. Grab Financial just had a capital raise of $300M valuing the arm of Grab at $3B. [4]. Hanwha Asset Management was the lead investor on this most recent round of financing. Venture capital firms GGV and Flourish Ventures also participated. [4].With regards to Grab itself the company has undergone 31 rounds of financing and has raised $10.1B [5].  As of Jun 2020, Grab was valued at $14.9B [6]. Observe that the valuation is only 1.5X the cap raise, something a potential investor should note and look into.

Competition and Regulation While Grab faces competitors such as Didi Chuxing, Gett, and iCarsClub [7], Grab is a very solid force in the Singaporean market (and associated areas). As a result Grab has faced attention from regulators looking to prevent monopolistic control. In 2018 Uber and Grab engaged in a merger that soon was picked up by regulators. In September 2018, the Competition and Consumer Commission of Singapore ruled that the Uber-Grab deal had too much market as is (the unregulated merger gave Grab an 80% market share in Singapore), and thus the Commission put in place a series of restrictions and regulations to reduce Grab’s market share. [8]. Grab also paid a $6.4M fine for the merger. Uber appealed the decision by the commission in late 2020. Uber lost the appeal just a few days ago and as a result will have to pay an additional $6.58M penalty, the costs that the CCCS incurred to process and review the appeal. [8].

Potential Merger or Acquisition

This however has not hindered Grab from pursuing other merges and acquisitions. As of December 2020, Grab has announced potential plans to merge or acquire Gojek. Gojek has a similar business model to Grab of ride-sharing and grocery deliveries via an app. Gojek’s main current market is Indonesia. Additionally, Gojek is currently valued at $10B [9]. It remains to be seen how regulators will respond to the potential deal and what will be the impact of the deal.

Conclusion

With a potential merger or acquisition soon to come and growth due to COVID, Grab is an interesting company to watch. Additionally, as part of the Grab-Uber agreement Grab must have an IPO by March 2023 or pay Uber $2.26B in fines [9]. It will be interesting to see how all these
developments play out in the next few years.

Articles for Further Reading (and in part used to create this post)

[1]: (Reuters): www.reuters.com/article/us-singapore-ban…elight-idUSKBN28V09K
[2]: (Crunchbase-1): www.crunchbase.com/organization/grabtaxi
[3]: (Grab): www.grab.com/sg/
[4]: (FT): www.ft.com/content/e5143de1-b7f8-4410-898f-b4f9bdec823d
[5]: (Crunchbase-2): www.crunchbase.com/organization/grabtaxi/company_financials

[6]: (CNBC): www.cnbc.com/2020/06/16/grab-disruptor-50.html
[7]: (Craft): craft.co/grab/competitors
[8]: (StraitsTimes): www.straitstimes.com/singapore/transport…ith-grab-deemed-anti
[9]: [CNA]: www.channelnewsasia.com/news/commentary/…e-incentive-13890132

23andMe

https://www.23andme.com/ 

https://www.crunchbase.com/organization/23andme

https://techcrunch.com/2020/12/29/23andme-raises-82-5-million-in-new-funding/ 

Description

23andMe is a DNA testing firm that was founded by Anne Wojcicki, Paul Cusenza, and Linda Avey in 2006. The firm is based in Mountain View, California. Currently Wojcicki serves as CEO of 23andMe. [1]

Technology

The tests require a spit or mouth swab sample to be mailed to the company. A chip is then used to examine the positions where DNA between individuals is different. Each unique position is known as a single nucleotide polymorphism. [2]. There are about 600,000 of these that are compared in a DNA test and can provide information about ancestors, geographical regions of descent and physical traits such as hair color.

Market Performance

The market demand for DNA tests has been volatile. The number of  at-home DNA tests ordered in 2018 was approximately 13M, the total number of tests that had been ordered before that point. That surge in growth dropped in 2019 which saw an industry growth rate of 20% [3]. The Global Genetic Testing market research report predicts a CAGR of 11.85% in the period 2021 – 2028 with a terminal value of $585.81B. [4] However, potential increased standardization efforts and regulation could be a hamper on companies in the space [4].

Competitive Advatage

23andMe’s competitive advantage lies in the fact that it is the only company cleared by the FDA for health tests. [1]

Challenges

However, with that clearance has come greater scrutiny of the company. Particularly, in 23andMe’s cancer tests which doctors argue only looks at a select number of mutations that could lead to cancer and thus deem the tests “misleading.” Another recent development is the potential for these companies to hand over DNA data to the FBI. This raises privacy concerns which could have a detrimental effect on 23andMe’s growth. In terms of competition, 23andMe’s major competitor is Ancestry and the two dominate the American consumer DNA test space [2].  Financially, 23andMe took a hit in 2020 and was forced to lay off 14% of its workers at the start of the year.

Financing

In terms of funding 23AndMe has had 15 funding rounds and has had a cumulative cap raise of $868.6M [5]. As of the beginning of 2020 the company was value at $2.5B [3]. The most recent lead investors are venture capital firms Pegasus Tech Ventures and Sequoia Capital. [5]

Conclusion

23AndMe is at the center of a dynamic gene testing industry that has proved to be volatile over the past few years. It remains to be seen whether the industry will grow rapidly or slow down due to regulations. 23AndMe will be an interesting company to watch this year.

Articles for further reading (and used in part to construct this post)

[1] (Forbes): www.forbes.com/profile/anne-wojcicki/?sh=3d5dddf25b9f
[2] (MITReview): www.technologyreview.com/2019/02/11/1034…-home-ancestry-test/
[3]. (yahoo finance): finance.yahoo.com/news/oncehot-dna-testi…ouble-115817212.html
[4] (PharmiWeb): www.pharmiweb.com/press-release/2021-01-…028-23andme-inc-abbo
[5] (Crunchbase): www.crunchbase.com/organization/23andme/company_financials

 

Coursera

Description

Coursera is an online higher – education platform based in Mountain View, California [1]. The firm was founded in 2012 by Daphne Koller and Andrew Ng who at the time were computer science professors at Stanford. [2]

Popular Courses

Coursera’s most popular courses in 2020 varied across many disciplines. Coursera’s #1 course in 2020 was “The Science of Well-Being” offered by Laurie Santos, a professor at Yale University. Coursera’s #2 course was “Covid-19 Contract Tracing” offered by John Hopkins University. A surge in coding skills was also seen in 2020 with the courses “Machine Learning” and “Programming for Everybody” came in 3rd and 4th. [6]

Shifting Leadership

Unlike most startups neither founder is currently CEO. In 2014 Richard Levin was named as CEO [3]. Previously Levin had served as president of Yale University for 20 years. [4]. 3 years later, in 2017 leadership changed hands again and Jeff Maggioncalda was named CEO. Prior to being named CEO, Jeff built a fin-tech firm known as Financial Engines. [3]s This shifting leadership can be seen as a positive in the fact that fresh perspectives are brough into the company but also a negative as there is increased instability within the company. Often new leadership requires new processes and methods for carrying out tasks.

Market Potential

In terms of market potential, while it is hard to determine a concrete number as the higher education market is so large, Maggioncalda has estimated the market to have a total valuation of $2T. [2] Due to the COVID pandemic an unprecedented amount of growth has occurred in the online higher education space with an approximate 400% growth rate in enrollments in 2020 year over year. [2] While there is certainly a chance for good growth in 2021 the space, there is also a possibility that the online higher education bubble may burst as vaccinations start rolling out and education shifts back in person. Certainly, the market is going to be extremely volatile in the next few years and interesting to watch.

Competitors and Partnerships

In terms of competition Coursera currently leads the space with an estimate revenue of $170M. [1]. It’s top 3 competitors are Udemi, Lynda and edX with Udemi being the closest. Udemi has an estimated revenue of $100M. [1] Continued growth for any of these companies rests on making key partnerships with top colleges, and companies around the world. With regards to key partnerships last month Coursera partnered with ImmixGroup to assist in online education for existing federal workers looking to learn hard technical skills [5]. Such a partnership may prove to be a competitive advantage that Coursera has against its competitors.

Funding

Coursera’s most recent funding round occurred in July 2020 with a cap raise of $130M. Venture capital firms NEA, Kleiner Perkins, and G- Squared were the major investors in this round with NEA leading. This round valued Coursera at $2.5B. To date Coursera has raised $464M. [2]

Conclusion

Coursera is a key player in an extremely volatile market that has experienced record growth in the past year. No doubt Coursera will be an interesting company to watch if it follows through and pursues an IPO in 2021.

Articles for Further Reading (and used in part to create this post)

[1]: (What Competitor): whatcompetitors.com/coursera-competitors-alternatives/
[2]: (Forbes): www.forbes.com/sites/susanadams/2020/07/…ion/?sh=5e9bc38b688f
[3] (EdSurge): www.edsurge.com/news/2017-06-13-new-ceo-…l-tech-not-higher-ed
[4] (Coursera): blog.coursera.org/leadership/
[5] (MeriTalk): www.meritalk.com/articles/coursera-servi…to-gsa-mas-contract/
[6] (FastCompany): www.fastcompany.com/90584981/what-course…es-reveal-about-2020

 

Robinhood

Description

Robinhood is a Silicon Valley tech startup company founded in 2013 by Stanford graduates Vladimir Tenev and Baiju Bhatt. [1] According to its’ website Robinhood is a commission free trading app that allows users to easily trade equity stocks, options, commodities such as gold, and cryptocurrency. [2]

Firm Name

The name for the app has an interesting backstory and is named after the character Robinhood who is found in tales and legends. [1] Robinhood was an outlaw who would steal money from those who were rich or who earned their money through false means and would give that money to the poor. [3]  In some sense the app has promoted itself as the app against Wall Street and for the “common man”.

Revenue Generation

As a potential investor, you might be wondering how exactly Robinhood generates revenue. After all, it was just mentioned that Robinhood was a trading app that charges no commission. It turns out that Robinhood generates most of its revenue in a manner that quite ironic to the name f the company. 70% of Robinhood’s revenue comes “payment to order flow.” [1]. In other words, Robinhood gets most of its revenue from selling customer data to Wall Street quant trading prop shops such as Citadel, Two Sigma, and SIG. These shops then test their algorithms on this data in order to turn a profit. Additionally, these firms pay Robinhood more money for data on more risky, volatile trades such as those on options compared to equities. [1] In fact, Robinhood is paid over triple for data regarding options compared to equities, and as a result markets its customers to trade options.

Market and Firm Growth

The market for online trading firms has grown rapidly in the past couple of quarters due to COVID. Many of those struggling financially are looking to the stock market to “make it rich” with an initial investment of government stimulus money [1]. Additionally, there are those who are genuinely bored and have decided to play the markets. Others who are interested in strategy games related to money no longer can enter casinos due to COVID and thus have turned to the markets [1].Robinhood has seen tremendous growth due to the market factors mentioned above as well as the unique qualities found its in platform. Robinhood’s trading volume rose 139% in Q2 2020 compared to Q1 2020. TD Ameritrade saw a 76% trading volume rise with E-Trade and Schwab seeing a 56% and 24% trading volume rise. [1] Robinhood is projected to hit $700M in revenue, a 250% increase from 2019. [1]

Competitors

Apart from the 3 traditional brokers mentioned above, Robinhood does have a some other competitors namely TradeStation, MooMoo, M1 Finance and others. [7]. That being said, Robinhood does currently lead its space.

Challenges Overview

While Robinhood is not struggling with competition, the firm faces several challenges from regulators and negative PR. One issue lies in the fact that inexperienced investors are allowe to trade options and other products. In a complaint filed by Massachusetts regulators a month ago, 68% of Robinhood option traders were alleged to have limited to no trading experience. [6]

Options Description

Options are complex products known as financial ‘derivatives’. In other words, the option itself is a piece of paper that has no value but is derived from an asset or stock tied to the option. [4]. The most popular types of options are call options which allow a buyer to buy a specific stock at a certain price by a certain date, while put options allow a seller to sell a specific stock at a certain price by a certain date. The option itself will cost a premium. [4] Pricing an option is even more complex than properly understanding the derivative. Even a simplified European option (which restricts redemption to the final date and has many other assumptions to simplify computations), requires the normal distribution function in the final answer. [5]. The derivation for the Black Scholes Model option pricing model [5] requires concepts from graduate level mathematics and physics such as Brownian motion and stochastic calculus.

Tragic Suicide

The controversy with Robinhood letting inexperienced investors perform option trades rose to new heights when Alex Kearns, a Chicago college student, took his own life after believing he had lost $730,000 in the market due to his equity and put option trades. In reality, he had misunderstood the metrics and actually had a net gain of $16,000 in his account. [8] The tragic event put Robinhood under increased scrutiny and negative PR with many demanding that Robinhood not be allowed to let inexperienced investors deal with complicated trades and topics.

SEC Fines

The scrutiny has only continued to grow. Recently Robinhood paid the SEC $65M in fines due to improper disclosure. Robinhood has hired two high profile regulators Anthony Cavallaro and Josh Drobnyk to help the firm with its legal challenges. [9]

Funding

Despite these challenges, Robinhood raised $660M in its latest funding round which was held during September 2020. Several venture capital firms were involved in the latest funding round including Andreessen Horowitz, Sequoia, Ribbit Capital, 9Yards Capital, and D1 Capital Partners. [10]. To date Robinhood has raised $2.2B [11] and is currently valued at $11.7B [9].

Conclusion

Robinhood is a disruptor of the traditional brokerage market and has seen both rapid growth and increasing interest from regulators. With both these sides to the Robinhood coin, it is an interesting firm to watch for 2021.

Articles for Further Reading (and in part used to create this post)

[1] (Forbes): www.forbes.com/sites/jeffkauflin/2020/08…hem/?sh=3362d7eb268d
[2] (Robinhood): robinhood.com/us/en/
[3] (BGRH): www.boldoutlaw.com/robbeg/robin-hood-beginners.html
[4] (Options): www.investopedia.com/terms/o/option.asp
[5] (BSM): www.investopedia.com/terms/o/option.asp
[6] (InvestmentNews): www.investmentnews.com/robinhood-accused…tts-regulator-200482

[7] (Benzinga): www.benzinga.com/money/robinhood-alternatives/
[8] (NBC-Chicago): www.nbcchicago.com/news/local/naperville…ance-on-app/2292583/
[9] (yahoofinance): finance.yahoo.com/news/robinhood-hires-e…-help-130000535.html
[10] (coindesk): www.coindesk.com/robinhood-660m-extended…ding-round-valuation
[11] (crunchbase): www.crunchbase.com/organization/robinhood

 

DataRobot

Description

DataRobot is a startup that uses Artificial Intelligence to develop and validate predictive and quantitative data models. High profile financial services clients of DataRobot includes US Bank and PNC. [1]. The startup is based in Boston and was found in 2012 by Jeremy Achin and Thomas DeGodoy. [2] Currently Achin leads as CEO. [3]

Market Potential and Demand

The market potential for this industry is limitless. Predictive models are used in almost every industry in a wide variety of applications. The demand for data scientists has seen 37% annual growth in recent years while the demand for artificial intelligence specialists has seen 74% annual growth in recent years. [4]. The first metric reveals that the need for analytical models and data analysis is growing while the second metric reveals that the artificial intelligence industry is booming as well. No doubt with COVID the demand for tech and software solutions has continued to accelerate.

Competitive Advantages

DataRobot currently realizes $100M annually in revenue. [5]. One of the specific reasons Data Robot performed well this year to a special feature of its software that relates to model drift. Model drift is the inaccuracy In model predictions due to the fact that new data doesn’t behave the same way as the model an original AI model was built off of.[5] For sake of illustration, a very basic model will be constructed. Suppose a linear model has two variables X, Y where X is the price of a product and Y is the demand. Let the two points used in the training data be (1, 3) and (2, 6). Clearly the model that would be regressed is Y = 3*X. Now suppose a recession occurs and a data point in the recession data set is (1, 1). However, the old model would predict a demand of 3 units given a price of $1. As you can see there is now an inaccuracy in the predicted model. Such an issue occurred with the COVID pandemic as data behaved differently than in previous quarters. [5] Thus, DataRobot’s AI service gained more clients who wanted to use their model drift software to update old models taking this new data into account. On top of this feature, DataRobot to date has 5 acquisitions: Paxata, ParallelM, Cursor, Nexosis, and Nutonian to gain more AI/data/software technology to disrupt the space faster than other startups in the market. [2]

Competitors

The AI startup scene is hot right now and as such DataRobot has many competitors including Domino Data Labs, Scale AI, DefinedCrowd, Noodle.ai, and Algorithmia. [3] With a business that built around the underlying software that each company offers, research and development is key to seeing which companies come out on top and which companies go bankrupt in coming years.

Funding

DataRobot has also gotten attention from investors. In December 2020, DataRobot led its most recent funding round raising $50M with a valuation at $2.8B. Interestingly the investors participating were not traditional venture capital firms or hedge funds but instead were the investment arms of tech companies namely Snowflake Ventures, Salesforce Ventures, and Hewlett Packard Enterprises. [2]  This was an extension of a funding round from November 2020 in which DataRobot had raised $270M with a valuation at $2.7B. [6] To date DataRobot has had a total cap raise of $750.6M. [2]DataRobot is at the center of an industry that is booming. DataRobot currently has a strong performance, and it’s future performance will be tied to its software and machine learning development efforts. As such the future of DataRobot is highly variable and as such makes it an interesting company to watch in the next few years.

Articles for Further Reading (and used in part to create this post)

[1] (DataRobot): www.datarobot.com/
[2] (CrunchBase): www.crunchbase.com/organization/datarobot
[3] (Forbes): www.forbes.com/sites/jilliandonfro/2019/…ion/?sh=7eaa36e73e65
[4] (Ladders): www.theladders.com/career-advice/emerging-jobs-2020
[5] (WSJ): www.wsj.com/articles/enterprise-tech-sta…vc-deals-11610743277
[6] (VB): venturebeat.com/2020/12/09/datarobot-rai…erprise-ai-adoption/

 

Calm

 

Description

Calm is a meditation and sleep app startup. [1] Calm is currently based in San Francisco and was founded in 2012 by Alex Tew and Michael Acton Smith. Calm’s leadership structure is unique, because both co-founders serve as co-CEO [3] while generally only one of the founders would serve as CEO.

Business Model

Calm offers several courses on the app regarding meditation entitled “X days of Calm” where X can vary depending on the program period chosen by the user. Additionally, there are various sessions, some guided and some self-based that provided various exercises and activities to help with sleep and meditation. Calm also has social media communities on all the major platforms which can be accessed through the app. [4] Calm premium which contains almost all of Calm’s courses and exercises costs $15/month, $70/year or $400 for lifetime access. [5]

Market Potential

Currently, market potential is rising rapidly for sleep and meditation apps. The COVID pandemic has left many anxious, hopeless, and restless. 32% of American adults in a recent survey stated that they have difficulty sleeping at least 3 days a week, and 14% of American adults surveyed stated that they have difficulty sleeping at least 5 days a week. 33% of American adults surveyed in the 18 – 29 age group, the same demographic that would most likely use apps, stated that they felt high distress during the COVID pandemic. [6] That being said, once vaccines start to roll out and COVID comes under control, these numbers will start to fall, potentially even falling rapidly which could lead to the sleep and meditation app bubble bursting. The market could be extremely volatile in the next couple of years.

Firm Growth

During this pandemic period, not only has the market potential risen has risen during the pandemic period, but Calm has experience growth. While Calm has only released a handful of financial metrics, it is known that Calm’s total number of downloads as of December 2020 had risen 150% from February 2019 (100 million vs. 40 million), and Calm’s total number of paying users had risen 300% (4 million vs. 1 million) in the same period. [7]

Competition

Calm’s major competitor in the space is Headspace. Both apps are close with each other in terms of competition and quality. Many articles that compare Headspace and Calm can be found online. [5] Like Calm, Headspace is also in the Pre IPO stage. [8]. Other competitors in the space include Chopra, Sattva, and Yogi Approved. [9]

Funding

In its latest funding round, Calm raised $75M at a valuation of $2B. Venture capital firms Lightspeed capital and Insight Partners participated along with private equity firm TPG and individual investors including Salesforce CEO Mark Benioff. [7] To date Calm has had a total cap raise of $218M. [2]

Conclusion

Calm is at the center of a highly volatile market. With Calm and it’s major competitor both potentially pursuing an IPO soon, the sleep and meditation app space will be no doubt an interesting space to watch.

Articles for Further Reading (and in part used to create this post)

[1]: (Calm-home): www.calm.com/blog/about
[2]: (Crunchbase): www.crunchbase.com/organization/calm-com
[3]: (alex-tew): blog.calm.com/alex-tew
[4]: (OMPG): onemindpsyberguide.org/expert-review/calm-professional-review/
[5]: (healthline-1) www.healthline.com/health/headspace-vs-calm#costs

[6]: (Pew) www.pewresearch.org/fact-tank/2020/03/30…istress-than-others/
[7]: (tech crunch): techcrunch.com/2020/12/08/calm-raises-75m-more-at-2b-valuation/
[8] (equity zen): equityzen.com/company/headspace/
[9]: (healthline-2): https://www.healthline.com/health/meditation-online#guided-meditation

 

Chime

Description

Chime is a San Francisco based startup founded in 2013 [1] by Chris Britt and Ryan King. Britt currently serves as CEO, while King serves as CTO. [2] The main product of the startup is the Chime app, a mobile banking app with no minimum balance requirement or monthly fees. [3]

Market Demand

The market demand for online banking apps has risen greatly in the past year. One reason is rather straightforward, given the pandemic people are shifting many of their activities to online and attempting to limit in person interactions. However, there is another more nuanced reason that demand is growing. Digital banks were able to process government stimulus payments and back pay for workers quicker than traditional banks which led to positive word of mouth. [4]

Profitability

While based off the above one can assume Chime did well in this year, no specifics were provided. [4] However, as of September 2020 Chime’s management indicated that the firm was profitable. [6]

Competition

Chime does have competitors in the mobile app banking space. Current and Varo are two of Chime’s competitors that also have performed extremely well in the past year. Varo doubled its number of customers over the past year rising from 1 million accounts by end of 2019 to 2 million accounts by end of 2020. Current doubled its number of customers in the period June 2020 to November 2020 and its revenue rose five-fold in 2020. [4]

Hacking Scandal

With Chime and its competitors doing well, mistakes can prove costly for Chime. Chime has had issues with accounts being hacked. CBS Chicago wrote an account of a man who mysteriously lost $1200 from his account. Chime returned the money and stated there was an error but denied that accounts had been hacked. CBS Chicago indicates that the issue is more widespread, with more complains regarding accounts being hacked on Chime’s BBB page, along with comments Chime has made in social media [5] . Given that this story was released today, it is still developing and if substantial could mean that Chime will slip compared to its competitors.

Funding

In Chime’s latest funding round in September 2020, Chime raised $485M to put it at valuation of $14.5B. 18 months ago Chime’s valuation was $1.5B, just slightly 10% more than its current valuation. Several firms were investors including Coatue, Whale Rock Capital, and DST Global. [6].  To date, Chime has had a total cap raise of $1.5B [1].

Conclusion

Chime is the center of the mobile app banking market which is rapidly expanding. However, Chime faces competition and internal security challenges. With these opposing forces, Chime is an interesting company to watch as it is potentially set to make an IPO soon.

Articles for Further Reading (and in part used to create this post)

[1] (crunchbase): www.crunchbase.com/organization/chime-2
[2] (chime-1): www.chime.com/about-us/
[3] (chime-2): www.chime.com/online-banking/
[4] (reuters): www.reuters.com/article/usa-banks-stimul…posits-idUSL4N2JG2KX
[5] (CBS Chicago): chicago.cbslocal.com/2021/01/18/furlough…t-it-freaked-me-out/
[6] (CNBC): www.cnbc.com/2020/09/18/chime-is-now-wor…nsumer-fintech-.html

Discord

Scopely

Sofi

Druva

 

Bumble

 

Lacework

 

Top Research

PitchBook_2019_Private_Equity_Outlook

IPOs 2016 Statistics

RIP IPO Tech Crunch

Our own research hosted @ preiposwap.com

McCahery-Vermeulen2012_Article_PrivateEquityRegulationACompar

institutionalization-cryptoassets KPMG – The institutionalization of Crypto Assets

3Q_2018_PitchBook_NVCA_Venture_Monitor

sob2018q2-2018 State of Blockchain by CoinDesk Q2 2018

2017-report-economic-well-being-us-households-201805

IPOs 2016 Statistics

thinking the unthinkable – might there be no way out for Britain?
project Armageddon – the final report  tim_morgan_report_007
Dr Tim Morgan Global Head of Research

Investor Sentiment in Pre IPO Market (EU)

Research Sources

Fed Publications

Sites we read (We are not recommending that you do, too)

Zero Hedge — Seeking Alpha — Law360 — CoinDesk — Naked Capitalism

Articles with an ROI focus

http://fortune.com/2014/06/05/meet-the-uber-rich/ 

https://techcrunch.com/2017/03/06/jay-z-launches-arrive-to-fund-startups-offer-branding-support-and-more/ 

https://www.forbes.com/sites/alejandrocremades/2018/08/05/top-50-angel-investors-based-on-investment-volume-and-successful-exits/

https://www.forbes.com/sites/alejandrocremades/2018/07/18/top-10-venture-capital-investors-that-every-entrepreneur-should-be-pitching-right-now/

https://www.cnbc.com/2014/06/06/uber-makes-early-investors-rich.html

https://www.cnet.com/news/uber-lyft-ipos-to-mint-next-batch-of-bay-area-millionaires/

What is an IPO

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/invfables/ipo.htm

Top Sources for Pre IPO research (Free)

https://techcrunch.com/