This issue was a big hit last week, so I’m bringing it back. I’ve rounded up a few of my favorite headlines from the past week. Read on so you don’t miss a beat.
Part of being an educated investor comes from keeping an eye on what’s happening around you.
In the world of startup investing, it’s about spotting trends early on, uncovering budding business sectors, and learning from the moves and deals big money are making.
Here’s a glimpse of what went down this week:
- Kustomer Acquired by Facebook to Better Serve Business Users
- MedTech Marriage Streamlines Backends with AI
- Amazon, Apple, and Sony Set Sights on Podcasting
- SaaS Customer Service Unicorn Acquired by Vista Equity Partners
- End of Year IPO Surge
- $350 Million Round for Self-Driving Trucks Startup
- The Boardroom Bets on Natural Personal Care Brand
I break each of these stories down for you and add some of my personal commentary along the way in my latest edition of Angel Insights.
Kustomer Acquired by Facebook to Better Serve Business Users
Today, there are around 175 million people whose main online presence is their Facebook page.
Many of them also operate on other Facebook-run apps like Whatsapp and Instagram, forgoing a traditional website.
These are quick, easy to set up—and best of all—free.
Facebook recognizes this and is taking steps to serve their entrepreneurially-minded users with better tools and services.
The acquisition of Kustomer is the latest example of this.
Kustomer helps businesses achieve an “omnichannel presence,” unifying data from multiple sources and allowing companies to service customers through a single timeline.
This deal—going down for around $1 billion, according to close sources—marks the biggest event in Facebook’s foray into the customer services industry.
It aims to make a cheap and convenient option for businesses into a powerful and desirable one.
Critics have expressed antitrust concerns, citing this as yet another example of Facebook buying up and neutralizing a competitor. Nevertheless, Facebook (and many happy small business owners) believe this is the right move.
MedTech Marriage Streamlines Backends with AI
Proving that big things can happen anywhere—not just in Silicon Valley—Minnesota-based Verata Health just found a suitor that pegs it at a whopping $1.5 billion valuation.
The AI-charged MedTech platform tackles the “prior authorization” problem in the healthcare industry.
In layman’s terms, Verata plugs into a healthcare business’ tech stack to collect and manage patient details quickly and easily (bye-bye fax machines).
The buyer, Olive, looks to gain a foothold in the Twin Cities and expand its current AI offerings aimed at the Medical sector.
Olive is a success story in its own right. Having raised over $385 million of capital this year, it is now valued at $1.5 billion.
The new pair tested their collaborative abilities and found that working together, they could reduce turnaround time by as much as 80%—which could save health care providers billions of dollars.
Amazon, Apple, and Sony Set Sights on Podcasting
Wondery is the world’s largest independent podcast publisher. It’s home to some of the biggest podcasts around.
Just this week, news broke that Amazon is considering a big buy-up of Wondery, which could see the network valued at $300 million. This would be the biggest podcast deal of all time.
Turns out, Amazon isn’t the only company with its sights set on podcasting, both Apple and Sony were in contention to close the deal with Wondery.
And just last year, Spotify acquired major podcast player Gimlet Media for $200 million.
Gimlet and Wondery show the potential that independent podcast networks have as the industry enters into a new era.
We can expect huge corporations like Amazon, Apple, and Sony to continue to push into this market.
SaaS Customer Service Unicorn Acquired by Vista Equity Partners
Gainsight is another startup that is serving businesses.
This “customer success technology” gives businesses a powerful cloud-based platform for carrying out customer services.
These services include product experience, revenue optimization, customer experience, and customer data.
Carving out success with customers and investors alike, the San Francisco-based startup earned $150 million in private investments.
This caught the eye of Vista Equity Partners, sparking an acquisition that values Gainsight at around $1.1 billion.
What’s even more exciting, there are already IPO-whispers. Gainsight’s founder and CEO, Nick Mehta, said that he and the team at Vista Capital have already begun testing the waters with bankers for an IPO in the near future.
End of Year IPO Surge
As we come to the end of the year, several huge IPOs are still in the works.
This week new info rolled in that gives us a clearer picture of what these soon-to-be-public companies have to offer.
Everyone’s favorite rental app, Airbnb, plans to go public this month for an incredible $35 billion valuation.
After a strong 2019 that saw gross booking revenue up 29%, the company took a dip in 2020 as travel and rentals dropped dramatically.
Luckily, over the past few months forecasts have improved.
Airbnb thinned out its workforce, cut execs’ salaries, and the founders went totally without pay. In July, August, and September, the number of nights booked was only down 28% (year-over-year), a big improvement from the triple-digit declines earlier this year.
It seems like a 2020 IPO—while not originally in the company’s plans—is the right move. The capital injection will help Airbnb ride out the storm and coast into its recovery stage.
The pandemic had the opposite effect on delivery startups like DoorDash.
In 2019, DoorDash placed 263 million orders. In just the first nine months of 2020, it placed more than twice that many orders. Over the same period, revenue increased by 224%.
Today it holds the highest share of the market against competitors like Uber Eats, Grubhub, and Postmates.
For its NYSE offering, DoorDash could be setting its valuation as high as $32 billion.
Gaming phenomenon Roblox is going public and it’s likely to happen before the end of the year.
The entertainment platform had an incredible breakout year…
It raised a $150 million round.
It clocked in 22.2 billion hours of engagement in the first nine months of the year, up from 10 million last year.
Over the same period, active users were up 82% and revenue up 68%.
Third-quarter revenue is up 91% since last year, standing at $242 million.
In addition to its IPO, Roblox has some huge stuff coming down the pipeline, like an upcoming China launch in cooperation with its partner and part-owner Tencent Holdings.
For the offering, Roblox is reportedly seeking a valuation of about $8 billion.
$350 Million Round for Self-Driving Trucks Startup
TuSimple was one of the first companies to tackle self-driving trucks.
Coming out of China, the startup has set its roots in San Diego and Tucson.
It is now developing a commercial-ready fully-autonomous driving solution that could change the shipping industry.
TuSimple just finished a $350 million funding round. Investors included Goodyear, Union Pacific, Kroger, and Volkswagen.
The company’s success and its wide range of partners and investors seem to give it an edge against competitors like Aurora, Kodiak, and Waymo.
The Boardroom Bets on Natural Personal Care Brand
By far the biggest news in our neck of the woods is our investment in a natural personal care startup.
The company makes a liquor-based deodorant that kills bacteria and keeps armpits fresh without irritating skin like other natural products.
Since 2017, this startup has tripled growth each year, bringing it up to $1 million in 2020.
The team just partnered with a major marketing firm that will help to grow the customer base through viral marketing.
Down the road, the direct-to-consumer brand plans on expanding into its untapped business-to-business channel.
We chose this company as our next investment because the product is great, the numbers are right, and—above all—the timing is right.
Natural personal care products are growing fast right now.
And within the natural deodorant space, recent acquisitions point toward a great potential outcome for us.
Native and Schmidt’s Naturals each make natural deodorant and were acquired by huge brands Procter & Gamble and Unilever, respectively. Each company was bought for over $100 million.
The founders of our latest startup deal built their company from the group up with an acquisition in mind. Though it’s too early to say, they are aiming for a potential acquisition just a few years down the line.