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Question of the Week: Will Space Go Mainstream?
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By Marc Vartabedian, WSJ Pro
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Good day. Last week, WSJ Pro Venture Capital asked if you were less likely to sell startup shares on a secondary exchange now that IPOs and SPACs are booming.
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Matt Murphy, a partner at Menlo Ventures, which has invested in Carta, a financial services company for startups, said it depends on a company’s focus. If a company is focused on providing some liquidity to employees and investors, selling shares on a secondary exchange such as CartaX is a good option. “Not all companies are ready or want to be public,” Mr. Murphy wrote. “With CartaX they can stay private longer while still making sure employees/investors have liquidity along the way.”
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Robert Ackerman Jr., managing director and founder of AllegisCyber Capital, said timing often makes the difference. “If you're not in need of liquidity, you play longball,” Mr. Ackerman said of waiting for a startup to reach an exit opportunity. But for those facing life events that create the need for cash, such as putting kids through college or a house remodel, “you're prepared to give up value to gain some liquidity,” on a secondary exchange, Mr. Ackerman said.
This week’s question: Will space startups become mainstream investor targets? Last year, investors saw $37.5 billion in exits of space startups, which accounted for 16% of the total exit value of such startups over the past decade.
Please email responses to marc.vartabedian@wsj.com.
And now on to the news...
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Vlad Tenev answers questions during a hearing on Thursday.Daniel Acker/Bloomberg News
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Robinhood Grilled. Robinhood Markets Inc. came under scrutiny at a Congressional hearing Thursday over the company’s decision to temporarily curb trading in some stocks, including GameStop Corp., on Jan. 28 amid extraordinary volatility, Paul Kiernan and Peter Rudegeair report for The Wall Street Journal.
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Committee Chairwoman Maxine Waters (D., Calif.) interrupted Robinhood Chief Executive Officer Vlad Tenev’s opening remarks to ask that he use his time “to talk directly to what happened Jan. 28 and your involvement in it.”
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Her request was unusual, as witnesses are allowed to make opening statements before taking questions from lawmakers. Mr. Tenev responded by apologizing to customers of the popular stock-trading app for the restrictions.
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“Despite the unprecedented market conditions in January, at the end of the day, what happened is unacceptable to us,” he said.
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$40.69
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GameStop shares declined $5.25, or 11%, to $40.69 Thursday, as lawmakers held a House Financial Services Committee hearing on what drove the rally in the retailer’s shares last month. Its shares reached a high of $483 in late January.
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States Push Internet Privacy Rules in Lieu of Federal Standards
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A growing mosaic of state-level internet privacy proposals in lieu of a nationwide framework could provide new protections for consumers and additional question marks for businesses, The Journal’s David Uberti reports. Lawmakers in Virginia are nearing passage of data protection legislation in a rapid-fire legislative session slated to conclude this month. Washington state officials are considering compromises over enforcement of a potential privacy law for the third time. States including New York, Minnesota, Oklahoma and Florida are pushing ahead with similar proposals.
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CFOs on the Hunt for Acquisitions Face High Prices, Competition
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Finance chiefs in pursuit of mergers and acquisitions are facing high asking prices and strong competition from other deal makers. Some are seizing the opportunity nonetheless, while others are holding off, CFO Journal’s Nina Trentmann reports. Executives so far this year have struck 1,270 deals involving U.S. companies, down from 1,665 during the same period in 2020, but spent more than three times as much on these acquisitions, according to Dealogic, a data provider. Buyers shelled out $321.16 billion on M&A involving U.S. targets through Tuesday, up from $103.06 billion a year ago, Dealogic said.
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NBA Star Russell Westbrook Leads Round in Fintech Firm Varo Bank
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Fintech firm Varo Bank has raised $63 million in its latest financing round, led by National Basketball Association star Russell Westbrook, Dow Jones Newswires reports. Mr. Westbrook, who currently plays for the Washington Wizards, will become an investor in the all-digital bank and advise the company on its programs focused on effecting positive change in communities of color and African-American communities. "Mr. Westbrook's engagement will build on Varo's commitment to bring premium, innovative banking products to everyone," Varo said in a statement. The NBA star's investment was made through his firm, Russell Westbrook Enterprises, which was advised by Jefferies LLC. The company said the new capital will be used to support its social impact mission and develop its product, including adding further credit, savings and transaction banking features.
Varo's other investors include Warburg Pincus LLC, The Rise Fund, Gallatin Point Capital LLC, HarbourVest Partners LLC and funds managed by BlackRock Inc.
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Chernova’s Take: Why the Megafund Party in Venture Will Roll On
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The dominance of megafunds is unlikely to abate any time soon in venture capital, concentrating more buying power in the hands of a few.
Global investors increasingly want exposure to private technology companies, and many have growing pools of capital dedicated to buying stakes in them.
Endowments, sovereign-wealth funds, family offices and pension funds often dedicate a target percentage of their assets to venture capital. Since their total assets have been growing because of a booming stock market, the dollar amount they can devote to venture capital has risen as well.
“Because LPs have to allocate more absolute dollars, it has enabled later-stage funds to get materially larger,” said Michael Kim, founder and managing partner at Cendana Capital, a fund-of-funds manager.
The rise of large funds is reshaping the venture industry. It is moving attention away from smaller, emerging funds, for example, as fewer first-time funds get raised and the amount of capital going to new small funds is on the decline. Large funds have also tended to pour larger sums into startups, and as a result have raised the price of entry for all investors.
Read the full article.
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Funds
Early-stage investor Alta Partners closed its Alta Partners NextGen Fund III LP fund with $275 million. Founded in 1996, San Francisco- and Denver-based Alta Partners focuses on curative therapeutics and technology-enabled healthcare services.
Boldstart Ventures closed a total of $230 million for its Boldstart Ventures V LP and Boldstart Opportunities II LP funds. In November 2019, the New York-based firm closed $112 million for its fourth flagship fund, and $45 million for its inaugural Opportunities fund. Recent Boldstart investments include data intelligence platform BigID and enterprise data exchange company Harbr.
Founded by Addie Lerner, a former investor from General Catalyst and General Atlantic, Avid Ventures has launched a $68 million debut fund to make Series A and Series B investments in the fintech, consumer internet and software sectors across North America, Europe and Israel. Limited partners include Schusterman Family Investments, the George Kaiser Family Foundation, Foundry Group, General Catalyst, 14W, Slow Ventures and LocalGlobe/Latitude. Avid Ventures Fund I LP’s initial portfolio includes Nova Credit, Alloy, The Wing, Nava and Staircase. Former Bessemer Venture Partners investor Tali Vogelstein is also a founding member of Avid’s team.
People
Anthony Lin has officially become managing partner and head of Intel Capital after temporarily replacing Wendell Brooks last August.
Avoro Ventures said Sara Nayeem joined the firm as a partner. She was previously a partner in the biopharma investment practice at New Enterprise Associates.
Nyca Partners promoted Jeremy Solomon to partner and Sol Lee to principal. Prior to joining the New York-based firm last year, Mr. Solomon was co-founder and chief financial officer of Heracles Inc. Ms. Lee was previously on the payments team at Uber.
Sapphire Sport named Chloe Steinberg as the firm’s newest partner, where she will focus on the health and wellness economy. She was previously at Equinox Group.
Exits
CrowdStrike Holdings Inc. will expand its extended detection and response capabilities with its plans to acquire Humio, a provider of cloud log management and observability technology, for about $400 million, mostly in cash. Last March, London-based Humio raised a $20 million Series B round from Dell Technologies Capital and Accel.
Customer service platform Dixa acquired Australian knowledge platform Elevio for an undisclosed amount. Copenhagen-based Dixa raised a $36 million Series B round last February from Notion Capital, Project A Ventures and SEED Capital.
Hodinkee Inc., a media and commerce company devoted to watches, acquired pre-owned luxury watch marketplace Crown & Caliber for an undisclosed sum. In December, New York-based Hodinkee raised a $40 million funding round from investors including TCG, LVMH Luxury Ventures, True Ventures, Future Shape and GV.
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Public.com, a New York-based investing and social-networking site where users are encouraged to learn from each other about investing and stocks, secured a $220 million Series D round, bringing the company’s valuation to $1.2 billion. Investors in the round included Accel, Greycroft, Lakestar Advisors, Intuition Capital, Tiger Global Management, The Chainsmokers’ Mantis VC, Will Smith’s Dreamers VC, Inspired Capital and Aglae Ventures.
Locus Robotics, a Wilmington, Mass.-based provider of autonomous mobile robots for fulfillment warehouses, landed $150 million in Series E funding, giving the company a $1 billion valuation. Tiger Global Management and BOND led the round, which included additional support from Scale Venture Partners and Prologis Ventures.
OutSystems, a Boston-based software development platform, scored $150 million in new funding led by Abdiel Capital Advisors and Tiger Global that values the company at $9.5 billion. Previous investors in the company include Goldman Sachs Group Inc. and KKR & Co. OutSystems was founded in 2001 in Lisbon.
Standard Cognition, a San Francisco-based autonomous retail checkout provider, raised $150 million in Series C funding led by SoftBank Vision Fund 2. New investors including SK Networks also participated in the round, along with existing backers CRV, EQT Ventures and TI Platform Management.
Blockchain.com, a London-based crypto wallet startup, closed a $120 million strategic financing round from Moore Strategic Ventures, Access Industries, Rovida Advisors, Lightspeed Venture Partners, GV, Lakestar, Eldridge and others.
Copado, a Chicago-based DevOps platform for Salesforce, completed a $96 million Series B round. Insight Partners and Salesforce Ventures co-led the round, which saw participation from Lead Edge Capital, ISAI Cap Venture and Perpetual Investors.
Red Canary, a Denver provider of SaaS-based security operations services, collected $81 million Series C funding. Lead investor Summit Partners was joined by Noro-Moseley Partners and Access Venture Partners in the round.
Professional Fighters League, a New York-based mixed martial arts league, picked up $65 million in new funding led by Ares Capital, Elysian Park Ventures, and Knighthead Capital.
Varo Bank NA, a San Francisco-based digital bank focused on underserved communities, landed a $63 million investment. Russell Westbrook Enterprises led the funding, with participation from Warburg Pincus, The Rise Fund, Gallatin Point Capital, HarbourVest Partners and funds managed by BlackRock.
Sentry, a San Francisco-based provider of error-tracking services that help software developers fix crashes, raised $60 million in Series D financing at a $1 billion valuation. Accel led the round, which included contributions from New Enterprise Associates and BOND.
vArmour, a Los Altos, Calif.-based cloud-security specialist, snagged $58 million in new funding. AllegisCyber Capital and NightDragon led the round, which included participation from Standard Chartered Ventures, Highland Capital Partners, Telstra, Redline Capital and EDBI.
Ally.io, a Bellevue, Wash.-based developer of goal-setting and business execution software, nabbed a $50 million Series C round. Greenoaks Capital led the investment, which included support from Tiger Global, Madrona Venture Group, Accel, Addition Ventures, Founders' Co-Op and Vulcan Capital.
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