Industry News Update – Week of 12/18/2017:

Last week, Spotify's valuation rose to $19 billion after a series of private trades. This latest valuation is $3 billion higher than Spotify's last valuation that occurred in late September in a previous series of similar private trades.

Target bought Shipt, a grocery delivery startup, for $550 million to offer same-day grocery delivery to compete with Amazon's acquisition of Whole Foods.

Airbnb plans to provide virtual reality previews (360 photos and 3D scans) of its’ rental listings to assist users in finding suitable lodging accommodations.

SpaceX is getting closer to having a fully reusable rocket as the company recently launched a reused Dragon on top of a reused Falcon 9.

The news articles and links presented below are available for your reference.

AIRBNB

“Airbnb Wants To Offer Virtual Reality Previews Of Rental Spots"

SHIPT

"Target Is Acquiring Instacart Competitor Shipt For $550 Million To Fight Back Against Amazon"

SPACEX

"Spacex Launches A Reused Dragon Atop A Reused Falcon 9 For The First Time"

SPOTIFY

"Spotify's Valuation Has Jumped As High As $19 Billion In Advance Of A US IPO, Sources Say"

Industry News Update – Week of 12/11/2017

Shazam is in talks with Apple to be acquired for $400 million. Apple’s Music would utilize Shazam to generate subscribers through Shazam’s music recognition referrals.

Spotify and Tencent are buying minority equity stakes in one another to benefit from the growth of music in their respective markets.

Uber will need to wait until April 2018 to appeal Transport for London’s decision to ban its ride sharing service. The decision is significant as London is one of Uber’s largest municipal markets.

The news articles and links presented below are available for your reference.

SHAZAM

“Sources: Apple is Acquiring Music Recognition App Shazam"

SPOTIFY

“Spotify and Tencent Music Will Make Financial Investments in Each Other: Here's Why"

UBER

"Uber Will Have to Wait Until April 2018 to Appeal the Loss of its London Licence”

 

 

 

Industry News Update – Week of 12/4/2017

Last week, Xiaomi held discussions with investment banks to go public next year in Hong Kong with a $50 billion valuation.

WeWork and Dropbox acquired companies to enhance their products. WeWork bought Meetup, an online portal that allows people that have similar interests to join groups, to increase the scope of its product to allow people outside of work to connect. Dropbox acquired Verst, a website publisher, to further develop its product offering.

Softbank made a tender offer to buy Uber's shares at a $48 billion valuation which represents a 30% discount to the last round.

The news articles and links presented below are available for your reference.

DROPBOX

“Dropbox Acquires Verst Team, Publishing Platform Will Shut Down on Dec. 21"

UBER

“SoftBank Is Said to Offer to Buy Uber Shares at a Steep Discount"

WEWORK

"WeWork Buys Meetup to Bring People Together Outside of Work”

Xiaomi

"Xiaomi Seeks Valuation of at Least $50 Billion in IPO"

Industry News Update – Week of 11/27/2017

Last week, Lyft was raising an additional $500 million as an extension of its most recent funding round and received permits from California’s Department of Motor Vehicles to test its self-driving vehicles. Lyft was procuring an additional $500 million as part of its Series H funding round which has already raised $1 billion from Google. Following this funding round, the company’s valuation is expected to increase to $11.5 billion. Lyft also received approval from California’s Department of Motor Vehicles to test its autonomous vehicles on the public roads in the state of California.

Uber failed to disclose a massive data breach that occurred in October 2016 that presented two hackers with personal information on 57 million accounts such as the passenger’s name, email address and mobile phone numbers. The company paid these two hackers $100,000 to hide this data breach. Following the launch of a federal investigation from the New York attorney general, Uber fired its Chief Security Officer and Deputy.

Instacart workers in several cities have gone on strike to oppose their low hourly wages which in some cases have been as low as $1 per hour. These workers want Instacart to revise their compensation structure to address larger orders and make tipping more apparent.

The news articles and links presented below are available for your reference.

INSTACART

“Instacart Workers are Striking Over Wages Reportedly as Low as $1 an Hour"

LYFT

“Lyft Raising Additional $500 Million on Top of Recent $1 Billion Round”

“Lyft Gets Approval to Test Self-driving Cars on Public Roads in California”

UBER

"Uber Paid Hackers $100,000 to Keep Secret a Massive Data Breach In 2016”

Industry News Update – Week of 11/20/2017

Last week, Airbnb, Lyft and Spotify acquired several companies to enhance their platform offerings in the adtech, mobile development, and music development fields. Airbnb purchased AdBasis, a digital advertising analysis company, to test and optimize its ads on its platform. The company also acquired Accomable, a platform that helps to connect lodging to people with disabilities, to increase the number of wheelchair-accessible listings and to provide comprehensive listings for people with disabilities. Lyft bought Kamcord, a mobile game streaming company, to enhance its passenger pickup and driver features. Spotify acquired Soundtrap, a collaborative recording platform, to allow its artists to create music using Soundtrap's toolkit.

Pinterest released its Pincodes feature that scans QR-codes as an extension its Lens feature to allow users to browse through similar products. This feature is expected to be used on packaging and ads to increase customers’ awareness of the products available for purchase on Pinterest.

Buzzfeed revealed that the company's expected 2017 revenue target of $350 million will likely be missed by 15% to 20%. The expected revenue decline along with increased expenses due to expansion has resulted in speculation that Buzzfeed's IPO could be postponed until after 2018.

Uber intends to purchase 24,000 self-driving cars from Volvo to compete with Lyft in the autonomous vehicle sector.

The news articles and links presented below are available for your reference.

AIRBNB

"Airbnb is Buying a Startup That Offered Similar Home Rental Services for Disabled Travelers"

“Airbnb Acquires Ad Tech Startup Adbasis"

BUZZFEED

"Buzzfeed Unlikely to go Public Next Year as Revenue Falls up to 20% Short of Forecast, Report Says"

LYFT

“Lyft Acquihires the Kamcord Team for Engineering Talent"

PINTEREST

"Pinterest Launches Colorful Pincodes That Link to Fashion and Food Boards"

SPOTIFY

"Spotify Acquires Online Music Studio Soundtrap as it Goes After Creators"

UBER

"Uber Set to Buy Self-Driving Cars from Volvo, Rivaling Lyft's Fleet"

Industry News Update – Week of 11/13/2017

Last week, Lyft announced plans to initiate its international expansion by launching its services in Toronto in December 2017.

Musical.ly was acquired by Bytedance, Chinese company that operates Toutiao (news outlet and social media platform), for a purchase price between $800 million and $1 billion.

SpaceX’s Merlin engine caused a massive explosion during a test flight. The company launched a failure investigation and plans to continue its upcoming launches.

Uber’s board has reached an agreement on the terms of Softbank’s upcoming $10 billion investment.

A few weeks ago, Uber released a credit card for Millennials to track their points which can be used to pay for rides. Credit card subscribers can obtain a select percentage back from their purchases that can be converted to points. Users can obtain a $100 sign up bonus for spending $500 during their first 90 days.

The news articles and links presented below are available for your reference.

LYFT

“Lyft’s First Market Outside the U.S. Will be Canada With a December Launch in Toronto”

Musical.ly

“China’s Toutiao is Buying Musical.ly in a Deal Worth $800M-$1B"

SPACEX

"SpaceX Rocket Engine Explodes During Test at Texas Facility"

UBER

"Uber Board Strikes Agreement to Pave the Way for SoftBank Investment"

"Uber's New Credit Card Targets Millennials"

Industry News Update – Week of 11/6/2017

Last week, Didi Chuxing announced plans to construct a vast charging network for electric cars as roughly 260,000 out of Didi Chuxing’s 21 million drivers use electric cars. The company anticipates that its electric vehicle fleet will increase to 1 million by 2020. Didi Chuxing could expect significant business from the Chinese public in the future from this project because the Chinese government stated plans in September 2017 to eventually ban gasoline-fueled cars to combat widespread air pollution.

Grab reached a major milestone on October 26, 2017 by surpassing 1 billion overall rides.

As of November 1 2017, Robinhood surpassed 3 million overall users, reached $100 billion in cumulative transaction volume and saved its users $1 billion in overall trading fees. The company also launched Robinhood for Web, an online platform with extensive research capabilities and stock discovery tools.

Stripe has launched a feature within its Atlas platform to assist in the allocation of stock equity among founders by drafting the legal paperwork. By default, this new feature reserves 20% of the company’s stock pool to its early employees and investors but can be easily modified to include complex equity structures such as vesting periods.

DIDI CHUXING

"The World's Biggest Ride Company is Building an EV Charging Network to Cover China"

GRAB

“Uber Rival Grab Crosses 1 billion Rides in Southeast Asia"

Robinhood

"Robinhood Stock Trading Comes to Web with Finance News for its 3M users"

STRIPE

“$9 Billion Startup Stripe is Automating the Complicated Process of Doling Out Stock to Company Cofounders"

Industry News Update – Week of 10/30/2017

Last week, Forescout’s IPO raised $161 million and the company was valued at $806 million. Forescout’s shares closed at $23.50 on its first day of trading which represents a 6.82% increase compared to its original share price.

Delphi purchased nuTonomy, autonomous vehicle startup, for $450 million to further develop and deploy its self-driving technology.

Grab hired Theo Vassilakis as its new CTO after its VP of Engineering quit this past summer. Vassilakis previously worked at Google as an Engineering Director and held various software development roles at Microsoft.

Uber was sued by three employees who claimed that they were underpaid due to their race and gender.

The news articles and links presented below are available for your reference.

GRAB

"Uber Rival Grab Finally Fills its CTO-sized Hole with Former Googler"

FORESCOUT

“This Security 'Unicorn' Raised $116 Million in an IPO Priced Below Its Last Valuation”

NUTONOMY

"Delphi Buys Self-Driving Car Startup NuTonomy for $450 Million"

UBER

“Uber Sued For Alleged Racial, Gender Discrimination"

Industry News Update – Week of 10/23/2017

Last week, MongoDB's IPO raised $192 million and the company was valued at $1.18 billion. MongoDB’s shares closed at $32.07 on its first day of trading which represents a 34% increase compared to its original share price.

Stitch Fix, San Francisco-based clothing subscription company, filed for its IPO and plans to be listed on NASDAQ with "SFIX" as its ticker. This upcoming deal is being underwritten by Goldman Sachs and J.P. Morgan.

Lyft raised $1 billion from Google to further develop its autonomous vehicle technology. The post-money valuation of the round was $11 billion.

Grab raised $700 million in debt to increase the number of drivers on its platform by buying vehicles for its drivers to lease.

WeWork bought Flatiron School, a platform that offers coding classes, to allows its members to enhance their coding skills and further develop their resumes.

The news articles and links presented below are available for your reference.

GRAB

"Grab Raises $700M in Debt to Add More Drivers to its Ride-hailing Service in Southeast Asia”

LYFT

“Alphabet Leads a $1 Billion Investment in Lyft”

MONGODB

"MongoDB Finishes up 34% in Database IPO”

STITCHFIX

“Stitch Fix, With Nearly $1 Billion In Sales, Files For An IPO"

WEWORK

“WeWork Acquires Flatiron School"

 

Industry News Update – Week of 10/16/2017

Last week, HelloFresh, a Berlin-based meal kit delivery service, announced its intent to raise $353 million in its IPO on the Frankfurt Stock Exchange and is expected to be valued at $1.8 billion when the company goes public later this month.

The Information reported Spotify’s mid-year financials on October 12th 2017. The company earned $2.2 billion in revenue during the first half of the year and is expected to earn $4.9 billion in 2017. The company's losses were between 100 million to 200 million euros in the first half of 2017.

Spotify also launched a real-time music-streaming and audience analytics mobile app for its music artists called Spotify for Artists. This app will allow music artists to view the number of streams of their new singles and albums in real-time and obtain critical information about their audience such as gender, location, age and more.

Lyft reached a major milestone on October 11, 2017 by surpassing 500 million overall rides.

SpaceX successfully launched two Falcon 9 rockets in 3 days. The company launched the SES-11/EchoStar 105, a satellite intended to provide HD and Ultra HD television service across US, and the 10 Iridium NEXT satellites, satellites intended to provide broadband to remote regions across the world,  into orbit. So far, the company has completed 15 launches in 2017.

The news articles and links presented below are available for your reference.

HELLOFRESH

"Blue Apron Competitor HelloFresh planning to Raise up to $353 Million in IPO"

LYFT

“Lyft has Now Delivered Half a Billion Rides"

SPACEX

"SpaceX Successfully Launches 2nd Rocket in 3 days"

SPOTIFY

“Spotify Launches an App for Artists With Real-time Streaming Data, Audience Demographics"

“Spotify Records Surging Revenues, Continued Losses in First Half of 2017"

Industry News Update – Week of 10/9/2017

Last week, Ola, the India-based ride hailing company, received $2 billion in a funding round led by Softbank and Tencent. The use of proceeds is primarily for the purpose of further development of Ola’s electric vehicle technology. The post-money valuation of the round was $3.8 billion.

Shazam disclosed its 2016 financials in which the company increased its revenue by 14.5% to £40.3m ($53.7m) in 2016. The company reduced its net loss from £16.7m ($22.2m) in 2015 to £3.7m ($4.9m) in 2016.

Stripe launched its new Elements feature which allows companies to create a tailored checkout process. This new feature is intended to reduce shopping cart abandonment by enhancing the checkout procedures.

Airbnb partnered up with WeWork to allow business travelers to easily reserve a WeWork location in order to solicit more business from business travelers.

The news articles and links presented below are available for your reference.

AIRBNB

"Airbnb Will Offer Business Travelers Spots at WeWork Locations"

OLA

“Cab Aggregator Ola Raises $2 Billion from Tencent, Softbank"

SHAZAM

"Financials Reveal Shazam Narrowed its Losses to £3.7m in 2016"

STRIPE

"Elements, Stripe’s New Check-out Toolkit, Aims to Boost E-commerce Sales Completions"

Industry News Update – Week of 10/2/2017

Last week, Roku's IPO raised $219 million and the shares were priced at $14. Roku's shares opened at $15.78 and closed at $23.50 on its first day of trading which represents a 68% increase compared to its original share price.

Meituan-Dianping raised $3 billion to increase its offline retail offerings such as an offline store where customers can purchase grocery items using the company’s app. This push in the offline retail market will help the company compete with Alibaba’s brick-and-mortar stores. As a result of this funding round, the company's valuation rose to $28 billion.

Uber's CEO planned to meet with the Transport for London commissioner this upcoming Tuesday (10/3/2017) to discuss the company's license withdrawal.

Spotify's valuation rose to $16 billion after a series of private trades. This latest valuation is $3 billion higher than Spotify's last valuation that occurred in June in a previous series of similar private trades.

TaskRabbit was acquired by IKEA for an undisclosed price to assist customers in assembling their IKEA furniture. IKEA hopes to compete with Amazon which has bolstered its home installation offerings. Following the acquisition, TaskRabbit will operate as an independent subsidiary of IKEA.

The news articles and links presented below are available for your reference.

MEITUAN-DIANPING

"Tencent-Backed Meituan Close To $3 Billion-Plus Funding"

“China's Meituan-Dianping Aims To Raise Up To $5 Billion From Tencent, Others: Source”

ROKU

“Roku Closes Up 68% In Stock Market Debut"

SPOTIFY

"Spotify Is Now Valued At $16 Billion — And It Could Be Worth A Lot More When It Goes Public"

TASKRABBIT

"IKEA’s Latest Acquisition Will Help Assemble Your Ikea Furniture"

UBER

"Uber CEO To Meet London Transport Chief After License Loss"

Industry News Update – Week of 9/25/2017:

Last week, Uber’s operating license was withdrawn by the City of London after London officials cited Uber’s failure to address serious crime and perform thorough driver background checks. Uber’s new CEO drafted an open letter to the London officials that addresses outstanding issues and mistakes the company has made to advocate Uber’s petition asking for a reversal of its license withdrawal. London is a large market for Uber as the city represents roughly 5% of Uber’s userbase.

In its ongoing lawsuit with Uber, Waymo is asking for $2.6 billion from Uber for the theft of its autonomous vehicle design files. The trial is expected to start on October 10th 2017.

Didi Chuxing invested $200 million in Renrenche.com, used cars company, to provide Didi’s mobile app users with access to second-hand vehicles. 

SpaceX has officially named its low-cost satellite Internet network ‘Starlink’ and is actively hiring skilled professionals for this project.

Pinterest is beta-testing its new Sections feature which allows users to divide their boards into various subcategories. This new feature is intended to assist Pinterest users organize their pins.  For example, a user with a board composed of recipes can places their pins in the Salad, Soups, Dessert and Pasta categories.

The news articles and links presented below are available for your reference.

DIDI CHUXING

“China’s Used Car Deals Speed Up As Didi Chuxing Invests $200M In Renrenche.com”

PINTEREST

"Pinterest’s New Sections Feature Begins Beta testing, Public Launch in ‘Weeks’”

SPACEX

“SpaceX Might Name its Satellite Broadband Internet Service ‘Starlink’”

UBER

"Uber Tries Compromise With London Regulators”

“Uber CEO Apologizes for “Mistakes” After London License Blow”

“Waymo Wants $2.6 billion From Uber for a Single Trade Secret”

Industry News Update – Week of 9/18/2017

Last week, SoFi's CEO announced he is resigning at the end of 2017 following his participation in and lack of supervising several instances of sexual harassment between managers and female colleagues in an ongoing lawsuit. The lawsuit was brought up by an employee who claims that he was terminated from the company for reporting these sexual harassment occurrences.

On September 14th 2017, Pinterest reached 200 million monthly active users which represents a 14.3% increase when compared to the 175 million monthly active users in April 2017.

Slack's valuation rose to $5.1 billion after the company raised $250 million in a funding round led by Softbank. The company released its cross-organization teams feature which allows team members of different departments to work with one another within the company's platform. The company also has surpassed 6 million daily active users and generated more $200 million in annual recurring revenue.

Magic Leap is raising more than $500 million to further develop its prototype. After this funding round, the company's valuation is expected to rise to $6 billion. The product is expected to be priced between $1,500 and $2,000.

Lyft is in discussions with Alphabet to raise $1 billion to further develop its autonomous vehicle technology.

The news articles and links presented below are available for your reference.

LYFT

“Alphabet Reportedly Considers a $1 Billion Lyft Investment”

MAGIC LEAP

"Magic Leap is About to Land Another $500 Million to Build its Competitor to Microsoft HoloLens"

PINTEREST

“Pinterest Crosses 200 Million Monthly Active Users"

SLACK

"With More Than 6M Daily Users, Slack Opens up Cross-organization Teams"

“Slack is Officially Worth $5.1 Billion After Raising a Monster $250 Million Round”

SOFI

"SoFi Board Says C.E.O. Is Out Immediately Amid Sexual Harassment Scandal"

Industry News Update – Week of 9/11/2017

Last week, it was announced that Uber is under FBI investigation for using its Hell program to track Lyft drivers’ activities such as pricing, availability and dual-app usage.

23andMe is raising $200 million from Sequoia and Fidelity to enhance its genetic research and create new products. The company’s valuation is expected to increase to $1.7 billion.

Spotify and Hulu have teamed up to offer their services as a bundle to students for $4.99 per month.

Magic Leap partnered with Berkeley Labs to release a research paper that discusses using advanced metamaterials that redirect light to create digital lightfields. This research will assist Magic Leap in developing its upcoming product.

The news articles and links presented below are available for your reference.

23ANDME

"23andMe is Raising About $200 Million, Led by Sequoia"

MAGIC LEAP

“ Berkeley and Magic Leap Worked Together to Develop a New Metamaterial”

SPOTIFY

“Spotify, Hulu Team up for Low-priced $4.99 Student Plan"

UBER

"FBI Will Investigate Uber's Use Of 'Hell' Software To Surveil Lyft Drivers"

Women Breaking Barriers: Rainmaker Securities CCO, Amy Boyet

Amy Boyet serves as the CCO at Rainmaker Securities, a FINRA-registered broker-dealer offering clients diversified investment opportunities in private securities. She brings a wealth of executive experience to her role, having worked formerly as the COO of Electio Investments; the COO of Pulse Therapeutics, Inc.; and a principal for BioGenerator. She has a strong background in science which lends itself to her meticulous eye for compliance, as well as to her ability to examine technology company offerings. She holds both an MBA and an MS in cellular and molecular biology.

Ms. Boyet graciously agreed to a 30-minute interview in June 2017, which has been edited for length and clarity.

INTERVIEW QUESTIONS

[OnlineEducation.com] Can you tell me a little bit about your career history? How did you move from earning your master’s of science in biology to working in finance and later as a VC?

[Ms. Boyet] I’ve always been interested in science. I graduated high school at 16 and got a biology degree from Culver-Stockton College and a chemistry minor. I thought I wanted to go to medical school because there wasn’t a lot of education about potential careers in science where I grew up, a small suburb right outside of St. Louis. I ended up not getting into medical school, which was fine because medicine isn’t actually a good fit for my personality. I earned a master’s in molecular biology right after finishing my bachelor’s program. After working in molecular biology in research, I realized that I don’t really love everything about science; I don’t like sitting at the bench designing experiments. I wanted to find other applications for data.

I worked with brilliant PhDs at Wash U. I ran a lab for seven or eight years in flow cytometry, which is using light to identify different cell populations, sorting and isolating them. I did that while I was getting my MBA, and Wash U pays for half of your tuition if you’re employed there. So, I got my MBA, focusing more on entrepreneurship than finance, and worked in the Office of Technology Transfer. I learned about negotiating contracts, working with big corporations, perfecting intellectual property, researching intellectual property, and working with attorneys to create a patent. And I hate to say it, but university-developed technologies are really hard to commercialize because it’s not just the discovery; there’s so much that goes into the commercial development of an idea that may or may not fit into some big corporation’s patent portfolio. To create start-ups out of university research is very difficult.

From there, I moved into my first role as a principal at BioGenerator, a non-profit created in St. Louis by John McDonnell, formerly of McDonnell-Douglas-Boeing. He noted that the scientific talent was leaving St. Louis, so he created an ecosystem of entrepreneurial technology and life science companies. That was our mission. So I spent three years learning due diligence, working with investments, having the support of the community, and sitting in high-level board meetings.

Then I wanted to strike out on my own. In 2008—awful timing—I joined a medical device startup here in St. Louis as chief operating officer. As a member of management, I went out and raised the first round of funding, and you know what, I realized I really enjoyed the finance piece. My family was surprised I was stepping away from my biology background, but I wasn’t really. I was still working in technology.

I left the biomedical start-up and joined Electio Investments and worked on the early conceptual phases of creating a financial vehicle offering a mutual fund approach to private investment in early-stage companies. So you can write a check for $50,000, and diversify it into 5-10 companies. It’s a novel approach to mitigate some risk in that early stage environment through diversification.

Eventually I met Glen Anderson, the President of Rainmaker, and it made sense to work in compliance considering my personality. It’s pretty OCD work and I use my science and due diligence background to examine our technology offerings. We do a lot with fintech, AI, novel materials, plant and ag-science, medical devices, and solar; since I’ve had the training and framework of a scientist, I’m able to understand the science behind these offerings.

[OnlineEducation.com] I want to ask about your experience as a principal at BioGenerator. What are some of the factors that you evaluated in deciding which companies to fund?

[Ms. Boyet] We used a diligence package as a base for local VCs and other investors starting their own diligence process. I helped put together these reports, evaluating the likelihood that we could get together money to get a specific company to their next milestone, where they could raise capital outside of us.

The other item that we always looked at was job creation. It had to create jobs here in St. Louis, and I think it really contributed to the entrepreneurial explosion. This city now ranks high in desirability for Millennials because of the entrepreneurial community and resources.

[OnlineEducation.com] How different is it working, for example, in your previous role as the principal at BioGenerator, and now working in private securities?

[Ms. Boyet] To me, working in private securities is really a continuation. I look at solid legal documents to ensure that a company is suitable for an investor. For example, if we look through the documentation and find outrageous fees, we’re not going to approve investments in that offering on our platform. With BioGenerator, it was a similar process: looking at companies and business plans, trying to be proactive. I helped to diagnose issues and help the companies understand the milestones necessary to procure funding. I brought that experience over as a broker-dealer, where again, I’m doing diligence as if I were a principal help companies and investors.

I’ve got a good toolbox; I’ve looked at hundreds and hundreds of offerings, and I think that’s part of the key of getting into finance—building up that experience, having some war wounds. In a broker-dealer world, you get those quickly.

[OnlineEducation.com] What are some of the most common problem areas when you’re running compliance checks or using the diligence checklist?

[Ms. Boyet] I have some common issues with these firms, and it really depends on the stage they’re at in their development. The number one problem area is definitely pro forma projections. It’s very rare that a company’s financials are conservative, so that’s usually where I find issues. Some of these are so early stage that assessing a valuation can be difficult. Those are probably the two biggest areas.

Part of what I do now is investor protection, making sure conflicts of interest are disclosed, banking fees, and other factors. We do our best to promote best market practices.

[OnlineEducation.com] What are the demographics like in the industry? Do you work with a lot of men and women?

[Ms. Boyet] It is mainly men. Definitely.

[OnlineEducation.com] I’m not surprised. There’s a lot of research showing the gender disparity among VCs and in finance. In your former experience as a principal or now in your current role, have you ever had any situations where you think things would have been different had you been a man?

Well, I’ve always chosen my jobs not by what they pay, but by the experience I’m going to obtain. I’ve been very strategic in joining groups where I have a good mentor, and so thankfully, I’ve worked for a lot of men that have been staunch advocates for an equal seat at the table. I show up; I know my stuff; I’m prepared—overly prepared; I crank out copious amounts of work. I think because I’m qualified for what I do and am very meticulous in my work, I’ve always had an advocate. There’s always been a culture of respect in the places I’ve worked.

Actually, in academic science, I would say that I saw a lot more sexism than what I’ve seen in finance. Ultimately, I’m now a chief compliance officer, so everyone has to get approval from me that activities do not violate FINRA or SEC Rules; my bosses are very supportive. Ultimately in my role I deliver difficult news all the time, but I try to do it really nicely and help people with next steps.

[OnlineEducation.com] You mentioned that there’s more sexism in science. Can you elaborate on that? Is it mainly with publications or finding mentors?

[Ms. Boyet] Yes, in academic science, that would probably be the experience of many of my friends who publish. In certain situations, the lead author credit is given to someone who didn’t do as much work. Of course, this is hearsay and their opinion, but it’s not an isolated complaint. Certain specialties for MDs, for example, still have an “old boys’ club” in place, but I think things are changing. They can’t afford to have a culture which results in lawsuits.

[OnlineEducation.com] Of the top 100 venture firms, around only 7 percent of the partners are women. Why do you think that there is this long-standing gender disparity?

[Ms. Boyet] Well, the hours are not exactly fun. I’m a single mom. I have a three-and-a-half year old son I co-parent with his dad. It’s a wonderful experience, but it’s difficult to achieve a work-life balance with these hours. This works for me because I’m a virtual employee and I have a lot of flexibility. But the traditional model of going to the office, sitting from 8:00 am to 5:00 pm, going out after work sometimes for business dinners, travel, is how business usually works. This is a “belly-to-belly business;” you don’t get deals done over the phone. You need to be there in person and that can be hard to balance for anyone.

[OnlineEducation.com] In addition to the challenging hours and any family-related commitments, can you think of any other unique challenges that women face as VCs or working in private securities?

[Ms. Boyet] I think some members of the older generation can be difficult with their memories of a time when it was appropriate to speak disparagingly of women, the martini lunches and an “old boys club” women weren’t invited to. That generation is leaving the workforce.

[OnlineEducation.com] I learned that a majority of VC funds go to companies that are either started or owned by men. Do you think that is strictly because there are more companies being started by men, or do you think that there are some other factors at play?

[Ms. Boyet] We have an offering on our platform right now with Arria, an artificial intelligence company. The CEO is Sharon Daniels and they’re doing great. I do see more women having roles in senior management, even in the tech companies. If you’re qualified, you’re qualified. If you have the experience and you’re the best person for the job, that’s what investors are looking for.

I’ve also made choices to work with people who aren’t assholes, and I don’t come from a typical Wall Street background; I come from science, so I may have a different approach to finance compared to a lot of my colleagues who have worked as research analysts or lived in New York or San Francisco. I’d never had a corporate job; I’d always worked in non-profits, and then I went straight into banking.

[OnlineEducation.com] Was that a challenging leap or did it just feel natural for you?

[Ms. Boyet] I want to be challenged at work; I found finance to be very interesting. There are various financial vehicles you can construct to create a return for investors, who then support that whole entrepreneurial ecosystem.

[OnlineEducation.com] Do you have any advice for women who are aspiring to join high leadership or work as VCs?

[Ms. Boyet] I would say find good mentors! Find someone who’s willing to help you down the career path and open up their network. Have lunch every once in awhile to bounce your ideas off of them because they’ve got the experience. Anytime you’re trying to learn something new, find someone who already knows something about it and you’re going to get to the heart of what you really need to learn much faster. You can’t look up everything online; you need to find someone who can help you.

Industry News Update – Week of 9/5/2017

Last week, Dara Khosrowshahi accepted the role of Uber's CEO and plans to take the company public within the next 18 to 36 months.

SpaceX successfully completed the testing of its Falcon Heavy's first stage cores (boosters that contain 27 Merlin engines intended to thrust the rocket upward). The first Falcon Heavy's launch is expected to happen in November 2017.

Magic Leap recently filed for a patent that details its latest prototype. The new prototype is a pair of glasses with several cameras that is connected to an external unit attached to the user's belt. The product will project digital light fields into the user’s eye and allow users to interact with 3D figures in the real world.

Coupang received a 300 billion won ($267.26 million) loan from Goldman Sachs.

The news articles and links presented below are available for your reference.

"Coupang Receives W$30B Loan From Goldman Sachs"

MAGIC LEAP

“Latest Magic Leap Patent Shows Off Prototype AR Glasses Design"

SPACEX

"SpaceX has Completed Testing on the First Stage Cores for its Falcon Heavy Rocket"

UBER

“Uber's New CEO Promises Change to Culture and Board, Signals IPO Plans"

Industry News Update – Week of 8/28/2017

Last week, Uber offered Dara Khosrowshahi, the current CEO of Expedia, its CEO position. Prior to working at Expedia for 12 years, Khosrowshahi spent 7 years at IAC as the company's CFO. He received his Bachelor's degree from Brown University in Electrical and Electronics Engineering.

Spotify renewed its long-term licensing contract with Warner. Spotify now has long-term licensing contracts with Sony, Universal and Warner. Signing long-term licensing contracts with these major record labels is essential to support the business model in providing stability around access to Spotify’s content.

WeWork received $4.4 billion ($3 billion in new funding and $1.4 billion investments in WeWork China, WeWork Japan and WeWork Pacific) from Softbank to expand its presence in Asia.

The news articles and links presented below are available for your reference.

SPOTIFY

"Spotify Closes Final Label Deal in Preparation to go Public”

UBER

“Uber Picks Expedia's Dara Khosrowshahi as New CEO”

WEWORK

"WeWork Just Raised Another $4.4 billion From SoftBank”

News Update – Week of 8/21/2017

Last week, Bloom Energy and PowerSecure obtained one of the largest fuel cell contracts from Equinix to install 37-megawatt fuel cells at 12 data centers.

Flipkart launched the Flipkart Global platform which will allow its products to be sold to 190 international countries.

Prosper released its second quarter financials which revealed that the company became cash flow positive in Q2 2017. Prosper generated $775 million in loan originations which represents a 74% increase year on year, and the company's transaction revenue increased to $35.4 million which represents a 84% increase year on year. The company's revenue increased marginally to $30.5 million which is a 12% increase compared to Q2 2016 and the company's net loss increase to $41.4 million which represents a 16% increase compared to Q2 2016.

Uber is in talks to raise between $1 billion and $1.5 billion from SoftBank Group Corp, Didi Chuxing, Dragoneer Investment Group and General Atlantic at last year’s valuation. The amount of funding raised will depend on the outcome of the Benchmark lawsuit since the new investors want to become board seat members. A second part of deal will allow investors to buy between $2 billion to $10 billion worth of Uber shares.

The news articles and links presented below are available for your reference.

BLOOM ENERGY

"Bloom Energy and PowerSecure Land Country’s Biggest Fuel Cell Deployment to Date"

FLIPKART

“ Flipkart Rolls Out Global Selling Programme for its Vendors”

PROSPER

"Prosper Reports Strong Second Quarter Growth; Closes $500 Million Securitization Transaction"

UBER

“Uber’s Possible $12 Billion Deal Hangs on Outcome of Courtroom Brawl"

RAINMAKER SECURITIES THOUGHT LEADERSHIP SERIES: INVESTMENT IN PRE-IPO UNICORNS VIA THE SECONDARY MARKET

Saeid Hamedanchi, is a registered representative of Rainmaker Securities, LLC, a FINRA/SIPC registered broker-dealer. He can be contacted at shamedanchi@rainmakersecurities.com.

Traditionally, investors seeking exposure to corporate securities gain such exposure through investments in publicly traded companies, where transaction execution is standardized and liquid markets exist. In the past, the universe of investment opportunities traded on public exchanges has been broad enough where investors have been able to find a full spectrum of risk/ reward opportunities that match their portfolio strategies.

However, the investment universe has undergone a sea of change since the Great Recession. A low interest rate environment, combined with a collapse of equity prices, led capital that was formerly invested exclusively in the public sphere to seek opportunities for yield in private securities. The result has been that companies that have reached a developmental milestone where listing their securities on a public exchange was their only path to raise sufficient capital for growth could now access large pools of investment capital without the necessity of a public listing. Consequently, given the regulatory overheads associated with being a public company, along with talent retention challenges that surface once employees can freely trade their equity compensation, many companies that in a prior era would be publicly listed, have chosen to remain private. Evidencing this trend, on inception, the Wilshire 5000 Index tracked 5,000 constituent securities; however, as of the date of this publication, the Wilshire 5000 Index now comprises only 3,465 constituents.

A corollary result is that investors seeking equity investments in many of the world’s fastest-growing technology companies cannot use the public secondary market to participate. In reaction, the private equity secondary market has been experiencing rapid growth. Like the public equity secondary market, investors are buying already issued stock in companies. However, because private companies are not publicly traded, the mechanisms by which to transact, the pricing environment and the amount of information available to investors are not standardized.

THE UNICORN CLUB

The seminal event in the growth of the private secondary market was the trading marketplace that developed around the first ‘unicorn’ prior to its public listing – that unicorn was Facebook.

In the subsequent five years since Facebook’s IPO, the ‘unicorn club’, which comprises all venture capital-backed private companies which have been valued in their last venture financing round at a valuation of US$1 billion or more, has grown from one member (Facebook) to 197 members as of the date of this publication, according to CB Insights. These companies have collectively raised a staggering US$127 billion via private venture capital funding rounds, with well-publicized mega rounds by the likes of Airbnb (US$3.9 billion in total), Didi Chuxing (US$8.5 billion in total) and Uber (US$12.5 billion in total), according to Venture Beat.

Importantly, this means there are 197 leading companies, comprising a diverse array of disruptive technologies, holding dominant positions in their respective verticals and/or geographies, with proven business models and rapid revenue growth that cannot be transacted via a public exchange.

These leading companies cover a broad variety of industries such as ride-sharing, home-sharing, office-sharing, space exploration, cloud computing, artificial intelligence, financial technology, mobile computing and others. Consequently, the secondary market for shares in unicorns is booming. According to recent estimates, the market value of secondary share transactions involving the unicorn club was US$35 billion in 2016 compared with US$11 billion in 2011, according to SharesPost.

INVESTMENT CASE

According to the Cambridge Associates Growth Equity Index, funds that employ late-stage venture investing strategies have produced 10.57% and 14.3% returns for the past 10 and 25-year periods respectively, versus 6.95% and 9.17% for the S&P 500 index respectively. Several unicorns have turned into household names, dominating new markets that didn’t even exist 10 years ago. A sample case in point is the ride-sharing market. Ride-sharing companies have raised approximately US$25 billion since 2010 and enjoy a combined market capitalization of US$120 billion and the estimated size of the ride-sharing market is expected to reach US$600 billion, according to NASDAQ. Five ridesharing companies dominate the global marketplace and they are expanding rapidly in major geographies including the US, Asia and Europe. The rapid growth is due to offering innovative and disruptive technology focused on providing high customer satisfaction and competitive pricing, leading consumers to opt out of traditional transport services (such as taxis) and even car ownership. This value case has fueled the rapid growth of ride-sharing companies around the globe.

INVESTMENT CONSIDERATIONS

Key considerations of investing in late-stage companies via the private secondary market are:

Investor benefits:

  • Invest in mature companies with proven business models and well-funded business plans.
  • Get exposure to the equity earlier in the company’s growth cycle.
  • Shorter expected holding period versus investing as an early-stage venture investor.
  • Higher likelihood of allocation of IPO shares in a public listing.

Seller motivations:

  • For employee shareholders, allows the employee to obtain the benefits of paper wealth, ahead of a traditional liquidity event, such as an IPO or company sale. Approximately 84% of secondary sellers are current or former employees, according to NASDAQ.
  • For institutional shareholders, allows for portfolio diversification and earlier redemption by limited partners.

Issuer motivations:

  • Secondary sale liquidity programs can improve the ability of the company to attract, retain and reward top talent by allowing their employees some limited liquidity. This can allow them to compete with other private and public companies with similar programs.
  • A broader investor base can be advantageous leading up to a public listing.
  • Provides the opportunity to attract strategic investors outside of a formal funding round.

Challenges:

  • The secondary market is illiquid compared to its public counterpart. Brokerages that specialize in the secondary market match buyers and sellers and create a market in the shares; however, the depth and transparency of the market is typically limited.
  • Transfer of shares must be approved by the company, which may or may not be granted if liquidity is sought at a future date that is prior to a traditional liquidity event.

COMMON TRANSACTION STRUCTURES

The two most common structures for transacting in late-stage secondary shares are:

  1. Direct method: In this method, investors purchase shares from the selling shareholders by getting the approval of the company to transact in their shares. Brokers organize/ match buy and sell orders. After that, the seller notifies the company of the proposed sale and once approval is granted, then the seller and investor sign a purchase agreement. The buyer then funds the transaction. As a final step, the company updates their share ledger and transfers the shares to the buyer, providing the buyer proof of ownership, closing the trade.
  2. SPV method: In this method, the broker identifies a group of matching trades in the same security and then creates an SPV (offshore or onshore) to take custody of the shares. An offering memorandum is prepared and investors subscribe and send funds to the SPV. Once all the funds are received, the SPV informs the company to allow the SPV to transact as a single buyer. Once the company approves the transfer, the SPV purchases the shares from the selling shareholder(s), and the company updates its share ledger and provides the SPV proof of ownership, closing the trade.

The two common structures have the following advantages and disadvantages:

  1.  Direct method: In the direct method, because the shareholder has a direct relationship with the company, the investor has the less counterparty risk, versus an SPV trade, where the investor is subject to a third party to handle the funds and securities. The shareholder may also receive preferred treatment vis-a-vis an IPO allocation. However, because a direct transfer requires notice to the company in any future private sale, liquidity options can be more limited versus an SPV transaction.
  2. SPV method: Because the investor holds a limited partnership (LP) interest in an SPV, as opposed to the underlying shares directly, in most cases the LP interest can be sold without approval of the company. This conveys the advantage that liquidity may be gained prior to a company liquidity event, by a sale of the LP interest to a new buyer. The disadvantage of the SPV method is that the shareholder holds an indirect relationship to the sharers, so the investor must rely on a third party to manage their holdings, and the position doesn’t hold benefits such as preferential treatment for an IPO allocation.

CONCLUSION

Investing in unicorns is likely to be a higher beta strategy than investing in a broad equity strategy such as the S&P 500 Index. Additionally, because secondary markets in unicorn shares are non-standardized in terms of execution and available data, and markets are opaque in nature, transacting is more complicated, and liquidity options are fewer versus transacting in the public equity marketplace. However, investing in unicorn shares can be a powerful alpha in a well-diversified portfolio. Many unicorn companies dominate their respective markets, with proven revenue models, extraordinary revenue growth and correspondingly strong value creation.

DISCLOSURES

Private equity involves risk-sharing between investors, entrepreneurs and company management. Also, from our analysis, many verticals are in Shariah permissible business activities such as office-sharing, ride-sharing, home-sharing, information technology and mobile computing, among others.

Shariah compliant investing requires that certain financial ratios are tested to ensure that the companies are compliant with Islamic investing principles. In the global public equity markets, companies are required to disclose their financial statements to regulators and the investing public in a transparent manner. However, in private equity secondary markets, due to a lack of disclosure requirements, conducting ratio analysis can be very challenging. However, based on our research, we believe that most unicorns do not use a high amount of leverage, and so on this metric, would likely be compliant. However, we are not in a position to attest to Shariah compliance for many unicorns because of a lack of required financial information. We believe that investors should do their own analysis to determine which of these companies are indeed Shariah compliant.