- Pre-Money: Feb 5th, 2024
Pre-Money: Feb 5th, 2024
New computing platforms, founder v investor, AI safety threats & more
This issue brought to you by Verified Metrics, who is transforming how the world’s top private investors do diligence
The week’s most important happenings
Interest rates are staying put, but the market is on the move. Here’s what’s new:
Has the first new computing platform in decades just arrived?
Founder v. investor cont’d
The sector prying open the IPO window
Buy my venture fund, please
AI’s latest safety threats
Your next great investment isn’t a company - it's a software
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Dots & Lines
The week’s top takeaways
Biotech may pry the tech IPO window open: The technology startup ecosystem has waited nine quarters and counting for the IPO window to return. In recent weeks, biotech has warmed up, with two players coming out successfully, with two more soon to follow. Pundits are hopeful that software will follow, as it did in the last two IPO waves. Then again, biotech companies go public earlier in their life cycles when promise is high and traction still hazy, so it may not be a good comp. Stay tuned.
Tomorrow’s computing platform may be here: Apple launched its Vision Pro headset - which could define Tim Cook’s legacy - after a decade of planning. Apple’s Augmented Reality (AR) headset offers numerous advances over competing products, including more cameras, higher resolutions, face and hand tracking and more. The interface is intended for work and productivity functions as well as leisure and gaming, but without the need for a laptop or monitor. Think Minority Report’s UX, delivered in your ski goggles. With more than 600 spatial apps - in addition to a million compatible legacy apps - the device promises to open up use cases not yet dreamed up and expand computing much more deeply into the real world. The device’s white glove purchasing experience involves a high degree of customization in line with its $3,500 price point. Apple pre-sold 200,000 units prior to launch. It will take months or years before Vision Pro either gains enough traction to become the computing platform of the future, or alternatively to find its place in the dustbin of history alongside Google Glass and many others. If it’s the former, consider which apps and services will be made possible by the new platform, and keep in mind how many mobile innovations came on the heels of the iPhone. For now, observers can ideate on new apps, complain about the battery pack, or just enjoy the growing reports of sightings in the wild.
not a phone in sight
— patrick. (@imPatrickT)
Feb 3, 2024
This week in founder v. investor: Elon Musk, at last check the world’s richest human, continues to push the envelope of investor relations. Last week, a Delaware court invalidated his 2018 compensation plan - which netted him $56B - finding that the board did not provide adequate oversight to ensure the package’s fairness or to negotiate it on behalf of investors. It was the largest corporate compensation plan yet, and one that hinged on performance. In response, Musk denigrated Delaware, the venue of his and most companies’ incorporations, invoking a shareholder vote to move the company to Texas, where fiduciary standards are more flexible. Keep watching this generation’s most prolific founder arm-wrestle investors on behalf of the world’s founders and CEOs, just don’t assume the moves can be easily imitated.
Tech and AI safety concerns grow: Safety concerns about technology abound, and even the geriatric US Congress is getting hip to it. Last week, big tech CEOs from Snap, Meta, Discord and others went to Capitol Hill defending their practices relative to child sexual abuse material (CSAM). Each major platform is implicated but the issue has defied legislation. Then, artificial intelligence, which has already shown its ability to deceive in the electoral game, was used to social engineer $25M out of an unsuspecting Hong Kong company. The heist reportedly involved an AI-generated video call in which the defrauded CFO believed he was conferring with colleagues. These AI-generated fakes directed him to make the unusual payment, which he did. At some point, society depends on reliable defenses against varied forms of predation, and they are needed urgently right now. Space Force for Cyber time?
Smart Humans explores venture capital
In this episode, Slava Rubin talks with QED's Frank Rotman about spotting unicorns, building Capital One, and diversified alts investing.
A few items of interest
Private equity, a backup alternative to IPOs for startup exits, is still moving slow in buying software companies
The bar for Series A keeps going up, and in 2023 it took 80% gross margins and 6x annualized growth to reach it
Primary Ventures completed a strip sale of 30% of its Fund I to Stepstone, in what is becoming a prevalent approach in the growing drive for distributions among LPs
Redwood City-based Zum raised a $140M Series E on a $1.3B valuation to make school buses more energy-efficient and automated, led by GIC, Singapore’s sovereign wealth fund
Cybersecurity company Rubrik, which raised more than $1B from Microsoft and Lightspeed and is valued at $4B with revenues in the $600M range, is considering an IPO as soon as April, after it navigates a fraud investigation
Former venture darling 23 and Me has fallen dramatically facing layoffs, hacks and the fact that one use of the product is enough - its stock price is more than 95% below its all-time high
The US unit of Byju’s, the troubled Indian EdTech startup once valued at $22B, filed for bankruptcy
Alt Capital raised a $150M fund to invest in early stage startups, led by Jack Altman, Latice’s Chairman and former CEO, and brother to Sam, keeping the Altman family first in fundraising
Join 200+ investors, founders & studios at the Venture Studio Online Conference this Friday featuring Pioneer Square Labs, Juxtapose, Colab & more. Register for free.**
Investment firm Vint launched a new wine and spirits fund for accredited investors.**
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My biggest concern right now:
Liquidity markets are f***** for 2024.
IPO windows won’t open till H1 2025.
M&A is impossible. Plaid, iRobot, Figma, Wealthfront, GIPHY.
$1BN+ will take 18 months & be blocked.
Sub $1BN, it is too small for the acquirer to make the effort.
— Harry Stebbings (@HarryStebbings)
Jan 29, 2024
Looking ahead to this week
During the week of February 5th, look out for:
Carta’s year-end M&A data: acquisitions still few and far between
How'd we do with this week's issue?