Pre-Money: Feb 5th, 2024

KPIs

The week’s top performance indicators

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.

• 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?

Deal Points

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

  What metrics did it take to raise Series A in 2023? On average:

  6X annual rev growth
  80% gross margin

  — Garry Tan 陈嘉兴 — e/acc (@garrytan)
  Jan 31, 2024

• 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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