Pre-Money: Apr 1st, 2024

Unsafe SAFEs, new GameStop, fraud has consequences & more

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The Vibe

The week’s most important happenings

The industry took a breath and a holiday after the prior week’s action, and is heating back up as spring arrives. Here’s what’s front and center:

  • The new GameStop?

  • Venture for all

  • The IPO spigot opens wider

  • AI’s unruly valuations

  • Fraud still doesn’t pay

  • Why SAFEs are problematic

  • and more…


The week’s top performance indicators

Based on publicly available data from Thompson Reuters, NASDAQ, CNN Business & other third-party sources.


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Dots & Lines

The week’s top takeaways

  • The next meme stonk may have arrived: Social media platform Truth Social’s parent went public by merging with the Digital World Acquisition Corporation SPAC last week. Trump Media & Technology Group, listed as $DJT on Nasdaq, rose more than 50% from the opening and closed the day up 16%. The stock boasts a market cap of more than $6.6B, close to what Reddit ($RDDT) is worth, despite much weaker metrics. It reported $4.1M in 2023 revenues while losing $58M, and has fewer than 500,000 active users, so its valuation is largely driven by sentiment. Namely, that its eponymous majority owner is worth betting on. Like what transpired with GameStop, fans may continue to bid it up beyond what anyone trying to value it on fundamentals can endure. It’s already one of the most expensive stocks to short given the low supply.

  • The IPO flow is still low: It’s easy to think that since the seal has been broken, with positive debuts from Reddit, Astera Labs, and others, offerings should be coming in droves right now. However, today’s market has a high bar for new offerings, Accel partner Rich Wong suggested in a recent interview. Companies need to demonstrate “real” - i.e. $200M+ - revenues, 40% or higher growth rates and to be profitable - or within spitting distance of it - in order to entice public market investors. In his estimation, less than one fifth of the unicorns crowned in this cycle will measure up. So the IPO deluge may still be a ways off.

  • Venture for the everyday investor: As interest in private markets has grown over the past few years, a common refrain is the challenges individual investors face investing into venture-backed private companies, be it due to exclusivity, high minimums or accreditation issues. This week, Destiny (D/XYZ) Tech100, an exchange-listed fund holding positions in unicorns like SpaceX, Klarna, Stripe and more, launched on NYSE. Critics were quick to jump on the product structure’s capital efficiency and price. But the stock lets anyone with a brokerage account get exposure to venture capital at a buy-in price below $25 and expenses in the 2.5% range. It’s imperfect, but something investors should hope to see more of as private and public grow more connected.


Smart Humans explores venture capital

Slava Rubin talks with Republic’s Kendrick Nguyen about the last few years in venture, revisiting his predictions and the massive opportunities that lie ahead.

Deal Points

A few items of interest

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Founder beware: SAFE dilution is not trivial for larger pre-seeds, per Carta

The Forecast

Looking ahead to this week

During the week of April 1st, look out for:

  • Earnings from Blackberry ($BB) and Paychex ($PAYX) highlight a slow week

  • March US Auto Sales on Tuesday

  • March employment data on Friday

  • Will Rubrik be the next venture-backed IPO?

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