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How Do VCs View Founder Pay?
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By Marc Vartabedian, WSJ Pro
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Good day. Last week, we asked what makes decentralized finance attractive to investors and how much of the success of DeFi startups is linked to the adoption of cryptocurrencies.
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“Fundamentally someone has to be using cryptocurrency somewhere for DeFi to be useful or worth anything, so some measure of adoption is required,” Initialized Capital General Partner Brett Gibson said. But DeFi can still be useful without widespread consumer adoption because there is demand from professional traders and consumer-facing services can use DeFi, Mr. Gibson said.
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Many smaller investors see crypto as a counter to power-holding traditional financial organizations, said Jim Preissler, managing partner, blockchain-focused investment bank Tritaurian Capital. “DeFi and crypto, having little or no centralized authority, is seen as a way to circumvent this issue, even though it may create a whole new set of investor protection risks.”
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Scott Stanford, co-founder and partner of Acme Capital, said that similar to how transportation, media and communications saw tech disruption, DeFi will transform finance. “Opportunities abound for the venture-backed disrupters, as well as innovative and nimble incumbents, that prevail in piercing the regulatory, competitive and adoption headwinds,” Mr. Stanford said.
This week’s question: Are venture investors making any deal or strategy adjustments due to changes in how founders are compensated?
Please email responses to marc.vartabedian@wsj.com.
And now on to the news ...
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Adam Neumann, with arm raised, celebrates with others during an event on the sidelines of WeWork’s trading debut. PHOTO: ANGUS MORDANT/BLOOMBERG NEWS
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Trading debut. WeWork Inc. shares rose on their first day of trading Thursday, capping a journey to a listing that included the implosion of its initial public offering in 2019 and the ouster of its co-founder and chief executive, Adam Neumann, The Wall Street Journal reports. The shared-office company went public through a combination with BowX Acquisition Corp., a special-purpose acquisition company. Shares closed 13.5% higher at $11.78 Thursday.
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In 2019, WeWork’s IPO fell apart as the company faced questions about its corporate governance and how much it was worth. Now the entity that is making its debut on the New York Stock Exchange has undergone a refresh under Chief Executive Sandeep Mathrani. It has closed locations, renegotiated leases and cut thousands of jobs to reduce expenses during the Covid-19 pandemic.
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The deal with BowX Acquisition earlier this year gave WeWork a roughly $8 billion equity value. The combination provides WeWork with cash proceeds of about $1.3 billion, the companies said.
Related: Adam Neumann Resurfaces to Celebrate WeWork’s Public Listing
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7%
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The increase in existing-home sales in September from the prior month, according to the National Association of Realtors. (WSJ)
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Crypto Exchange FTX Reaches $25 Billion Valuation
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Cryptocurrency exchange FTX reached a valuation of $25 billion in a new funding round that includes heavyweights from traditional finance, such as the Ontario Teachers’ Pension Plan and funds managed by BlackRock Inc., WSJ reports. FTX Trading Ltd., the exchange’s parent company, said on Thursday that it had raised just over $420 million in the new round. The news came three months after FTX closed a previous round at a valuation of $18 billion. Singapore’s sovereign-wealth fund Temasek Holdings Pte. Ltd. joined the new funding round, along with Silicon Valley venture-capital firms Sequoia Capital—an existing investor in
FTX—and IVP. Other investors included New York-based Tiger Global Management and Iconiq Growth, an affiliate of Iconiq Capital LLC, which has managed money for Mark Zuckerberg and other tech billionaires.
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Plaid Pushes Into Payments Business After Scuttled Visa Deal
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Financial-technology startup Plaid Inc. is making a move into the payments business, less than a year after an antitrust lawsuit scuttled its high-price sale to Visa Inc., WSJ reports. Plaid makes software that allows banks and other fintech companies to plug into their users’ financial accounts, with their permission, and access their financial data to look up account balances or authenticate personal financial details. Plaid unveiled a new program Thursday that will use the software to make it easier and cheaper for consumers and businesses to make digital payments funded by their bank accounts.
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Vista Prepares Pitch for Next Big Software Fund
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Robert Smith, founder of Vista Equity Partners, shown in 2018.
PHOTO: LUCY NICHOLSON/REUTERS
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Vista Equity Partners plans to join the growing list of private-equity firms pitching large funds focused on technology deals. The firm aims to soon open a virtual data room for its next big flagship buyout fund to allow prospective investors access to documents related to the offering, according to a letter sent to investors that was viewed by WSJ Pro Private Equity.
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Funds
Patron, a new early-stage venture firm focusing on games, consumer and Web 3, launched a $90 million fund to lead and co-lead seed investments globally.
Sports tech and entertainment investor Drive by DraftKings launched its first venture fund with $60 million in commitments. The firm’s portfolio includes Cardless, Elite HRV, Evaluate.Market, Guidesly, Just Women's Sports, Muxy, Papaya Gaming, PickUp, StreamLayer, Tappp, Toya, VidMob and Whoop.
People
Austin, Texas-based Next Coast Ventures named Julie Dodd as venture partner. She most recently served as chief operating officer, chief services officer and general manager at Ultimate Software.
Growth equity firm Edison Partners promoted Gregg Michaelson to general partner, Jennifer Lee to partner and Joe Giquinto to chief financial officer. Before joining Edison, Mr. Michaelson was chief executive of Linkwell Health. Ms. Lee joined the firm in 2016 and was previously at ForgeRock. Mr. Giquinto has been with Edison Partners since 2008.
Menlo Ventures promoted Croom Beatty to partner and Grace Ge to principal. Prior to Menlo, Mr. Beatty was at Payoneer and Susquehanna Growth Equity. Ms. Ge joined Menlo two years ago from RRE Ventures.
Battery Ventures hired Bill Binch as operating partner. He was previously chief revenue officer at Pendo.
Exits
FlixMobility GmbH, a Munich-based company that offers intermodal transportation services, agreed to buy Greyhound, the largest intercity bus operator in the U.S., from FirstGroup PLC in a deal valued at $172 million, the Wall Street Journal reported. Earlier this year, FlixMobility closed a $650 million Series G equity and debt round, valuing the company at $3 billion, from investors including Canyon Partners, General Atlantic, Permira, TCV, HV Capital, BlackRock Inc., Baillie Gifford and Silver Lake.
Salsify Inc., which helps brands manage and improve online customer experiences, acquired Australia-based SKUvantage, which helps retailers, distributors and manufacturers deliver digital product content to buyers, for an undisclosed amount. Salsify is backed by investors including Warburg Pincus, Venrock, Matrix Partners, Greenspring Associates, Underscore VC and North Bridge Venture Partners.
sunday, an Atlanta-based restaurant payment app, acquired contactless payment provider CHK PLZ for an undisclosed sum. Atlanta-based sunday recently raised $100 million in Series A funding from Coatue Management, DST Global and others.
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HT Aero, a China-based electric aircraft startup, raised $500 million in Series A funding. Lead investors IDG Capital, 5Y Capital and XPeng Inc. were joined by Sequoia Capital China, Eastern Bell Capital, GGV Capital, GL Ventures and Yunfeng Capital in the round.
Saama Technologies Inc., a Campbell, Calif., cloud-based healthcare technology company, secured up to $430 million in new funding. Carlyle Group led the investment, and will take a majority stake in Saama. Additional investors in the round included Amgen Ventures, Intermountain Ventures, Merck Global Health Innovation Fund, McKesson Ventures, Northpond Ventures, Pfizer Ventures and Population Health Partners.
VideoAmp Inc., a Los Angeles-based media measurement software developer, scored a $275 million Series F round at a $1.4 billion valuation from The Spruce House Partnership, D1 Capital Partners, Tiger Global Management, EPIQ Capital Group and Ankona Capital.
Rippling, an employee data and operations management platform, snagged a $250 million investment, valuing the company at $6.5 billion. Sequoia Capital Global Equities and Global Growth led the funding, which saw participation from Greenoaks Capital Partners and others.
360Learning, a Paris-based corporate education and collaborative learning startup, landed a $200 million growth investment led by Sumeru Equity Partners, SoftBank Vision Fund 2 and Silver Lake Waterman.
Proportunity Ltd., a London-based provider of loans to home buyers, scored a $150 million equity and debt round from VentureFriends, Kibo Ventures, Anthemis, Entrepreneur First and Amro Partners.
Candy Digital, a New York-based startup that is building an NFT ecosystem for Major League Baseball, completed a $100 million Series A round, valuing the company at $1.5 billion. Insight Partners and SoftBank Vision Fund 2 co-led the round, which saw participation from Connect Ventures, New Enterprise Associates, Will Ventures, Gaingels and others.
Rossum, a London- and Prague-based business communication automation startup, snagged $100 million in Series A funding from General Catalyst, LocalGlobe, Seedcamp and others.
ReCode Therapeutics, a Menlo Park, Calif.- and Dallas-based genetic medicines startup, closed an $80 million Series B round co-led by Pfizer Ventures and EcoR1 Capital. New investors Sanofi Ventures, funds managed by Tekla Capital Management, Superstring Capital and NS Investment also participated in the funding, along with previous backers OrbiMed, Vida Ventures, MPM Capital, Colt Ventures, Hunt Technology Ventures and Osage University Partners. Rana Al-Hallaq, partner at Pfizer Ventures, joined the board.
Jupiter, a San Mateo, Calif.-based climate analytics startup, nabbed a $54 million Series C round. Co-led by Clearvision Ventures and MPower Partners, the investment included support from DCVC, Energize Ventures, Ignition Partners, MS&AD Ventures and QBE Ventures.
Honeycomb, a San Francisco-based observability platform for engineering teams, collected $50 million in Series C financing. Insight Partners led the round, which included contributions from Scale Venture Partners, Headline, Storm Ventures, Industry Ventures and NextWorld Capital.
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A woman passed Didi’s headquarters in Beijing earlier this year. PHOTO: NG HAN GUAN/ASSOCIATED PRESS
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