Pre-Money: Mar 4th, 2024

KPIs

The week’s top performance indicators

Dots & Lines

The week’s top takeaways

• Eyes on Klarna to clear the IPO bar: Swedish buy-now, pay-later (BNPL) provider Klarna is a name that comes up a lot in conversations about top IPO candidates. Europe’s top private company is leaner after a challenging 2022 featuring layoffs and markdowns of more than 80% of its private market price. Klarna generated $2.2B of revenue and narrowed its net losses to $250M in ‘23, while facilitating purchases for more than 150,000 customers. Reportedly, its AI support chatbot outperforms its human predecessors, and will save the company $40M this year. U.S. competitor Affirm saw its stock almost double over the past year, which is one more factor boosting Klarna’s confidence as it navigates its way to a Q3 public offering and targets a price in the $20B range. A strong IPO for Klarna would provide an energy boost to the fintech ecosystem.

• Stripe may lengthen its stay in private markets: Another fintech titan on the IPO watchlist, payment provider Stripe, may follow a different path. It’s said to be profitable with billions of dollars of revenue, boasts a growing product suite serving more than 200,000 merchants, and facilitates more than $1T of commerce. A darling of Pre-IPO investors, the company announced a tender offer to provide liquidity for employees. The tender will transact at a $65B price point, 30% above last year’s Series I fundraise. More significantly, it’s a signal that Stripe is not on a path to going public anytime soon, prompting Axios to question if it will ever happen. Could the company that transformed credit card processing for small merchants be the one to chart an innovative path to liquidity while staying private?

• Your very own C-3PO: When everyone’s favorite protocol droid made his appearance 46 years ago in Star Wars, viewers understood the anthropomorphic robot as fantasy. But with today’s tech, it’s uncannily possible that a market for humanoid robots could emerge. That optimism fueled last week’s $675M raise by Figure.ai, whose robots are reportedly completing basic factory tasks, though at a fraction of human speeds. Other companies, like Boston Dynamics and Tesla, are building humanoid robots as well. The anatomical and physical aspects are admittedly a complex undertaking probably requiring many more years. But once that is accomplished, adding a wireless “brain” that can aggregate all the Internet’s data and provide a way to process basic instructions seems trivial. Figure is partnering with OpenAI to create that “walking talking robot,” which would have myriad uses across business and consumer. And the market could yield some outstanding venture opportunities as it develops.

• AI enters its lawsuit phase: Artificial Intelligence has taken up all the oxygen in the fundraising world for the past year or more. But the most valuable asset right now for AI companies may not be capital as much as great lawyers. This week, the SEC announced it was probing OpenAI, continuing the post-mortem on what investor commitments were made prior to and during the November ouster of CEO Sam Altman. Meantime, the EU decided to take a closer look at Microsoft’s $16M investment into French AI startup Mistral. And Elon Musk sued OpenAI, claiming in a broadly mocked filing that the company breached its founding agreement and principles to serve the common interest by pursuing private profit goals. Last, India’s IT Ministry mandated that companies get its permission before launching new AI models. Most innovations require not just great tech, but strong counsel to navigate complex global regulatory and legal codes. Such battles put startups, who can’t afford the steep legal and lobbying costs, at a distinct disadvantage.

Deal Points

A few items of interest

• EquityMultiple offers vetted, cash-flowing real estate opportunities in asset classes like multifamily, self-storage, and last-mile industrial.**

• The Qatar Investment Authority (QIA) announced an additional $1B commitment to venture capital at Web Summit, accentuating the recent tilt toward the Gulf as a leading capital provider

• Venture funding to startups with black founders fell to $705M, less than one half of a percent of total funds raised last year, retracing to levels not seen since 2016

• In another sign of the times, service providers that help startups wind down smoothly see a growing total addressable market (TAM), and are getting funded

• Thrasio, an Amazon aggregator that raised billions in venture, filed for bankruptcy, in a reversal of the pandemic trend away from retail

• Journalism juggernaut Financial Times started a venture arm to pursue media opportunities, and announced its first investment

• Alternative Asset giant Blackstone will acquire Rover, the Seattle pet-sitting marketplace that was incubated, venture-backed and went public in a 2021 SPAC, for $2.3B, as PE continues its push into software

• Cox Enterprises, owner of Cox Communications, Kelley Blue Book and countless other brands, added OpenGov to its holdings at a reported $1.8B price, another sign of the impending return of M+A

• Stock trading app WeBull is going public via SPAC, announcing a merger with SK Growth Opportunities (SKGR.O) at a $7.3B price

• Glean, a Palo Alto-based AI Work Assistant, raised $200M at a $2.2B valuation in a Series D led by Kleiner Perkins and Lightspeed

• Oishii, a vertical farming company based in Jersey City, NJ, raised $134 in a Series B led by NTT of Japan

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