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The Market Minute: IPO Deal Volume Reaches A New High In H1 2021

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The second quarter of 2021 is behind us, with a record first half of the year in terms of proceeds raised from traditional initial public offerings.

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By all measures, things aren’t slowing down. The IPO market is on pace to have a record year, according to Matt Kennedy, a senior strategist at IPO research firm Renaissance Capital. According to the firm, IPO proceeds have reached $80 billion so far this year, already surpassing the $78.2 billion raised in all of last year. 

That’s not including SPACs or direct listings. 

“I think low interest rates have pushed up valuations for growth companies and the hundreds of unicorns in the pipeline are looking to take advantage of that,” Kennedy said in an interview. “And I think right now we’re seeing companies that both benefited from the pandemic as well as companies that are pitching post-pandemic stories.” 

Deal sizes are also getting bigger. So far this year, there’s been a record number of IPOs that have raised $1 billion or more. Kennedy pointed to TuSimple’s IPO as an example of a company that was basically pre-revenue — it had about $2 million in revenue — but nevertheless had no problem raising more than a billion dollars through its IPO.

 “Companies are able to stay private for longer and grow to enormous sizes as private companies,” Kennedy said. “I know that 20 years ago you wouldn’t see a company IPO with a $10 billion valuation as a startup, a relatively new company or as a relatively early-stage tech company.”

Last year was a record year for Renaissance Capital’s IPO Index, which reflects the top 80 percent of newly public companies, based on full-market capitalization. And that means investors who have made money are continuing to look to the IPO market for returns. 

So far this year, there have been several high-profile IPOs for venture-backed companies, including buy now, pay later fintech company Affirm, dating app Bumble, and edtech company Coursera. Other high-profile startups with lots of name recognition, including stock trading app Robinhood and language-learning platform Duolingo, have also recently filed to go public in the second half of the year. 

The second quarter of 2021 was also the largest quarter in 20 years in terms of both IPO proceeds raised and deal count, according to Renaissance Capital. The health care sector — biotech in particular — led the pack, followed by tech, which had its most active quarter in 20 years, the firm said.

Earlier in the year, inflation concerns had investors worried that the Federal Reserve might change its policy, according to Louis Cordone, senior vice president of data strategy at AST. But after the Fed said that inflation wouldn’t change over the long term, “it’s like the summer of IPOs,” he said.

It’s both smaller companies and big-name companies that are going public this year, Cordone added, pointing to Duolingo and Krispy Kreme as examples of well-known companies to file paperwork for an IPO. 

“It’s not just kind of the small biotechnology and small technology growth companies that are trying this thing, there are big household names,” he said.

Liquidity is driving a lot of the activity, Cordone said, as there’s a lot of cash in the market looking for yield. Retail investors also “jumped in big” last year and into this year, meaning it’s not just institutional investors who are participating in the market. 

But inflation is still top of mind. 

“We’re just entering earnings period now, second quarter earnings, so investors are really trying to scrutinize earnings now for any signs of inflation,” Cordone said.

The IPO window can be boom-or-bust, so investors take advantage of the market while it’s hot, according to Kennedy.

“One reason we may be seeing so much activity is that companies are going public while they can because they know the window can close so quickly,” Kennedy said.

Illustration: Dom Guzman

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Source: https://news.crunchbase.com/news/the-market-minute-ipo-deal-volume-reaches-a-new-high-in-h1-2021/

Start Ups

Telehealth giant Amwell to acquire Portland healthtech startup Conversa

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National telehealth provider Amwell said it will acquire Portland, Ore.-based healthtech startup Conversa and SilverCloud Health.

Conversa, founded in 2014, sells platforms tailored to different medical conditions that allow medical teams to communicate with patients remotely. The company raised $8 million at the beginning of this year, after COVID-19 generated increased need for the service.

Conversa also helps medical providers automate text-based conversations and other administrative tasks before, during and after patients check in to medical care.

Amwell said it will use Conversa’s patient profiling and engagement tools to boost client experience and outcomes.

Murray Brozinksy, CEO of Conversa Health, said the deal will help “usher in the hybrid care delivery model of the future.”

Amwell said it paid approximately $320 million in stock and cash to acquire Conversa and SilverCloud, a digital platform that caters to mental healthcare. The transaction is expected to close at the end of the third quarter.

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Source: https://www.geekwire.com/2021/telehealth-giant-amwell-acquire-portland-healthtech-startup-conversa/

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Egyptian ride-sharing company Swvl plans to go public in a $1.5B SPAC merger

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Cairo and Dubai-based ride-sharing company Swvl plans to go public in a merger with special purpose acquisition company Queen’s Gambit Growth Capital, Swvl said Tuesday. The deal will see Swvl valued at roughly $1.5 billion.

Swvl was founded by Mostafa Kandil, Mahmoud Nouh and Ahmed Sabbah in 2017. The trio started the company as a bus-hailing service in Egypt and other ride-sharing services in emerging markets with fragmented public transportation.

Its services, mainly bus-hailing, enables users to make intra-state journeys by booking seats on buses running a fixed route. This is pocket-friendly for residents in these markets compared to single-rider options and helps reduce emissions (Swvl claims it has prevented over 240 million pounds of carbon emission since inception).

After its Egypt launch, Swvl expanded to Kenya, Pakistan, Jordan and Saudi Arabia. The company also moved its headquarters to Dubai as part of its strategy to become a global company.

Swvl offerings have expanded beyond bus-hailing services. Now, the company offers inter-city rides, car ride-sharing, and corporate services across the 10 cities it operates in across Africa and the Middle East.

Queen’s Gambit, the women-led SPAC in charge of the deal, raised $300 million in January and added $45 million via an underwriters’ overallotment option focusing on startups in clean energy, healthcare and mobility sectors.

The statement also mentions a group of investors — Agility, Luxor Capital and Zain Group — which will contribute $100 million through a private investment in public equity, or PIPE.

Per Crunchbase, Swvl has raised over $170 million. From an African perspective, Swvl features as one of the most venture-backed startups on the continent. The company has been touted to reach unicorn status in the past and will when this SPAC merger is completed.

The company will aptly trade under the ticker SWVL. The listing will make it the first Egyptian startup to go public outside Egypt and the second to go public after Fawry. It will also make the mobility company the largest African unicorn debut on any U.S.-listed exchange, beating Jumia’s debut of $1.1 billion on the NYSE. Swvl joins music-streaming platform Anghami as the second startup in the region to go public via a SPAC merger in the Middle East.

Swvl had annual gross revenue of $26 million in 2020, according to the statement, and the company expects its annual gross revenue to increase to $79 million this year and $1 billion by 2025 after expanding to 20 countries across five continents.

On why Queen’s Gambit picked Swvl for this deal, Victoria Grace, founder and CEO, said in a statement that the company fit the profile of what she was looking for: “a disruptive platform that solves complex challenges and empowers underserved populations.”

“Having established a leadership position in key emerging markets, we believe Swvl is ready to capitalize on a truly global market opportunity,” she added.

In May, TechCrunch wrote that SPACs didn’t target African startups for several reasons, including a lack of global appeal and private capital and market satisfaction. Judging by Grace’s comments, Swvl has that global appeal and is ready to venture into the public market despite being in operation for just four years.

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Source: https://techcrunch.com/2021/07/28/egyptian-ride-sharing-company-swvl-plans-to-go-public-in-a-1-5b-spac-merger/

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Microsoft acquires Seattle startup Suplari, which uses AI to analyze corporate spending

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Suplari co-founders Jeff Gerber, Brian White, and Nikesh Parekh. (Suplari Photo)

Microsoft has acquired Suplari, a Seattle startup that uses artificial intelligence to help companies understand and get a handle on their spending.

Founded in 2016, Suplari analyzes procurement and spending data flowing into various enterprise systems. It can provide recommendations for cost savings, risk exposure, and other efficiency gaps. The software serves as an alternative to compiling data in an app such as Excel or Tableau and having a team of analysts comb through the information themselves. Suplari manages more than $180 billion in spend across millions of transactions per month.

Microsoft said it will pair Suplari with Microsoft Dynamics 365 “to help customers maximize financial visibility by using AI to automate the analysis of current data and historical patterns from multiple data sources.”

“Today’s announcement also signals our continued commitment to enabling organizations to move beyond transactional financial management to proactive operations that enhance decision making, mitigate risks, and reduce supplier costs through our data-first approach,” Microsoft vice president Frank Weigel wrote in a blog post.

Terms of the deal were not disclosed. Suplari said its “Suplari Spend Intelligence Cloud” will continue to remain available for existing customers.

Suplari is among a bevy of startups using artificial intelligence and machine learning to automate manual processes involving tons of data, and provide recommendations based on the computer-aided number crunching. There are several companies in Seattle applying similar technology in various industries, such as AttunelyLexionSigma IQ, and others.

Suplari had raised $18 million to date, according to PitchBook. Investors include Amplify Partners, Madrona Venture Group, Shasta Ventures, Two Sigma Ventures, and Workday Ventures.

The company was co-founded by Jeff Gerber, Brian White, and Nikesh Parekh, Suplari’s CEO.

Parekh is a real estate technology veteran who previously held leadership positions at Market Leader and Trulia. Gerber is a long-time engineering leader who co-founded startups including iConclude (acquired by Opsware and later by HP) and helped lead Apptio’s machine learning and intelligent app development. White worked with Gerber at iConclude as an early employee and did stints at Amazon Web Services and Skytap.

Parekh said Microsoft and Suplari have had partnership discussions over the past several years.

“Given Microsoft’s AI, cloud and data investments, customers can expect that Suplari will continue to deliver more AI-driven, predictive & prescriptive insights and integrated workflows for finance, procurement, & supply chain teams,” he wrote in a blog post.

The deal is the latest in a string of IPOs, fundings, and acquisitions across the Seattle startup ecosystem. Earlier this week Seattle startup Algorithmia was acquired by DataRobot.

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Source: https://www.geekwire.com/2021/microsoft-acquires-seattle-startup-suplari-uses-ai-analyze-corporate-spending/

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Ex-Amazon and Glossier exec aims to help people live longer, healthier with new startup Modern Age

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Melissa Eamer, founder of Modern Age (Modern Age Photo)

Helping people live longer and healthier is personal for Melissa Eamer.

After her mother died at a relatively young age, the former chief operating officer of Glossier became curious about why some people age well and others decline quickly. She had a “lightbulb moment” after discovering the concept of subjective age.

That led to the creation of Modern Age, which is set to launch next year with software providing information and personalized assessment tools related to aging. It uses tech to offer a proactive and holistic approach to health as people age, incorporating telehealth and in-person services.

Subjective age is the idea that people have both a physical age and an age that they feel. Eamer, who spent nearly two decades at Amazon before joining Glossier in 2019, said research shows that those with a lower subjective age tend to live seven to eight years longer.

“That was really powerful, and it sort of resonated with what I had seen with my own family,” Eamer told GeekWire this week. “That’s really the inspiration behind Modern Age: Can you build a digital platform and an in-person treatment center that help people proactively manage all of this?”

The company’s software uses computer vision and machine learning to examine skin, hair and bone health. It can also gather information from FitBit devices or an Apple Watch about daily routines to build a digital record of a person’s health and match them with treatments.

The digital tools help users diagnose issues and navigate solutions to treat them. Along with the software, Modern Age also plans to launch in-person clinics. Eamer said the first would open in New York and expand after that.

Modern Age recently closed a $6 million seed funding round led by Juxtapose, a New York-based venture fund which creates business ideas and partners with experienced executives to fund and grow the business. It has backed other health startups such as care/of and Tend.

Eamer said Modern Age plans to launch in early 2022. Its target market is primarily women between the ages of 35 and 45, but men are impacted by similar aging effects as well.

Modern Age is at the intersection of healthcare in multiple markets, including skin, hair and bone health along with hormone, metabolic, ear and eye health. It also incorporates wellness with fitness, nutrition and community. All of this brings the total addressable market to $120 billion, but Eamer thinks that will rise.

The startup has countless competitors in the wellness and healthcare industry, but Eamer said Modern Age is unique with its mission to help people manage their aging process.

Modern Age employs 12 people and plans to hire its own team of medical professionals.

Eamer’s experiences at Glossier and Amazon, where she was most recently vice president on the Amazon Devices team, both prepared her to launch Modern Age, but in different ways.

Amazon created a strong sense of customer focus and taught her the importance of using technology to make customer experiences easier. At Glossier, Eamer said she recognized the importance of brand building.

Eamer said the effects of aging are at the forefront of customers’ minds, yet they feel they’re stuck and can’t do anything about it. In her research, only 1% of respondents said they don’t think of aging at all.

“There’s a real opportunity to help people take control of something they feel a little bit powerless about today,” Eamer said. “…We can really help people feel like they have a little bit more control over this journey. And that’s huge. That’s what gets me up in the morning and gets me super excited.”

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Source: https://www.geekwire.com/2021/ex-amazon-glossier-exec-aims-help-people-live-longer-healthier-new-startup-modern-age/

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