Showing off their best impressions of Deadpool, the animals survived for weeks without organs, only to regrow everything and go about their business.
Source: Wired
Olo, the New York-based fintech startup that provides order processing software to restaurants, shared its initial IPO price range this morning. The company’s debut comes ahead of the expected IPO of Toast, a Boston-based unicorn with a similar market remit.
Targeting $16 to $18 per share, Olo could raise as much as $372.6 million in its public offering.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
Unlike most companies going public in recent quarters that we’ve tracked, Olo has a history of growth and profitability, making its impending pricing all the more interesting. It’s unknown if Toast is profitable, but as most venture-backed IPO aren’t, we’re presuming it isn’t.
This morning, we’re doing our usual work: parsing the company’s pricing interval to get a valuation range for Olo. We’ll calculate both simple and fully-diluted pricing and then do some quick work on its revenue scale to come to grips with its total scale.
Are investors willing to pay more for profits? And, if so, how much? This is a niche question, as most IPOs look a bit more like Coursera than Olo, but it’s still worth answering.
If you’d like to follow along, you can read the new S-1 filing here. Our first look at Olo is here, and its fundraising history is here, per Crunchbase.
The company is targeting $16 to $18 per share with an expected sale of 18 million shares. The company is also reserving 2.7 million shares for its underwriters. At the upper-end of its range, not counting shares reserved for its bankers, Olo could raise $324 million in its debut.
Per the company, its total number of Class A and B shares outstanding after its IPO would come to 142,012,926, or what we calculate to be 144,712,926 shares, including its underwriters’ option. Using the latter as we tend to look for valuation extremes, Olo would be worth $2.32 billion to $2.60 billion.
But what about its fully-diluted valuation? Adding in shares that are currently tied to un-exercised but vested stock options brings Olo to around 188,085,714 shares. Add in the underwriters’ option and the total rises to 190,785,714 shares.
Using the latter figure, at $16 and $18 per share Olo could be worth $3.05 billion to $3.43 billion on a fully-diluted basis.
Let’s find out! Digging back into Olo’s growth, we can see a business with rapidly expanding software incomes. And the same software revenues are improving in quality over time. From 2019 to 2020, for example, Olo’s “platform” revenues — a mix of subscription and transaction top-line from software — grew from $45.1 million to $92.8 million. Over the same time, the company’s platform revenue saw its gross margin improve from 73.6% to 84.6%.
Source: TechCrunch
There are so many ways to secure capital for your startup beyond traditional venture capital, from crowdfunding to debt financings to revenue-share agreements. But is all money created equal if you are on route to becoming a billion-dollar business? Dr. Astrid Scholz, the co-founder of Zebras Unite, Sydney Thomas, a principal at Precursor Ventures, and Brian Brackeen, the founding partner of Lightship Capital, joined us as TC Sessions: Justice to discuss alternative pathways to funding, and if the democratization of capital is a facade.
Scholz is currently building out Zebras Unite, a founder-led cooperative that is focused on making startups more sustainable, ethical and inclusive. During the panel, she mentioned that the capital arm of Zebras Unite could have been a traditional fund, but the organization ultimately decided to pursue more creative alternatives, such as the Future Economy Lab. This lab, which focuses on helping founders find financing instruments that fit their sectors, took place in Montreal with a focus on climate tech.
Scholz shared why she went for this route, versus a traditional fund:
In the big scheme of things, [VC] really is just a tiny drop in the large capital pool of capital that’s out there. And then on the other extreme, you have bank loans. That may or may not be accessible to startup founders, especially if they’re from certain demographics in this country. Of course we have a massive racial wealth gap and access to capital.
To me, that sounds just like two flavors of capital: vanilla and chocolate. It’s not interesting, if that was an ice cream store, it was not interesting. At Zebras Unite, we’re looking to increase the diversity of capital, as well as the diversity of managers of capital. So we’re very interested in revenue based financing mechanisms. We’re very interested in non-dilutive early stage forms of support to entrepreneurs who don’t have friends and family wealth. We were looking at new sort of character-based lending instruments and a bunch of blended approaches, so there’s more room on the capital spectrum to color in, beyond the two ends of the spectrum. (Timestamp: 3:52)
Now, venture capital isn’t the devil, and in a market as hot as right now it’s clear that there is a huge demand to back great ideas. The problem starts when you look at which ideas get backed versus which don’t, and underrepresented founders lose out at a disproportionately higher rate than white founders.
Standards help everyone get on the same page, and in venture, any clarity around how one investor cuts checks versus another can help curb signaling risk and help set expectations on early-stage founders. Lightship Capital uses traditional venture capital but applies it in a way Brackeen thinks is more inclusive to founders.
Oftentimes, VCs talk about designing your product for your customer, but then they don’t design themselves around the customer. They completely ignore what they tell people to do. And so we’re designed for the underrepresented founders. And for us, that’s women, minorities, lgbtq, plus disabled. And so the capital path for that founder is different from the white male Zuckerberg founder. Oftentimes, a Series A is very, very difficult, so we bridge that. We’ll write a smaller check – half a million dollars first – and then we’ll reserve $1.5 million so they can go out and get a Series A done. And so to do that, we don’t require board seats and things of that nature, we do require strong collaboration. (Timestamp: 7:03)
Thomas noted that Indie.VC, an alternative financing program that was aimed at slow-growth, bootstrapped founders, shutting down this past week could be a lesson for founders who look to finance their companies from the plethora of programs out there.
They were at the frontiers of building access to new capital. I think one of the things that we saw when we would talk to founders who were considering Indie.vc capital versus our capital was, ‘does the investor that you would like after you get that Indie.vc funding, if you decide to go to a more traditional VC firm? Can they actually even do revenue based financing investments, some people actually legitimately can’t because of the regulatory limits of their fund.(Timestamp: 16:28)
She went on to explain how this isn’t simply a one-off problem that could happen with. Precursor founding partner Charles Hudson penned a post, months ago, about the messiness in early-stage cap tables.
I don’t want to say it’s unfair, but you have to make a pretty final decision, pretty early on in what type of company you want to build. And I don’t think that allows for a lot of the flexibility that is the reality of building a startup. When you pivot like five to 10 to 20 to 30 times before you finally get to something that, you know, matters. And so how do we also allow for more flexibility between multiple different types of revenue structures? I just don’t think that exists right now. (Timestamp: 17:12)
Brackeen added that his form loves non-dilutive financing before, and after, they are nicest. Pitch competitions might help a startup launch, but it won’t help founders get from stage to stage. This banter basically answers the question that I set early on: is all capital created equal in the eyes of investors? A cap table filled with different types of financing structures and notes, as Thomas mentions, could lead to your next check investor declining to invest based on a semantic versus a lack of believing in your vision. One side effect we see here is recapitalizations, an event where startups restructure their entire cap table to squeeze out old investors, bring on new ones and shift the way equity and debt is managed.
Scholz chimed in about how startups should think about capital limitations, but also other corporate structures that could shape the trajectory of a startup.
I think that point about founders basically getting locked into a corporate structure and an investment strategy before they even really know what they’re building or how it’s selling is just so important. I always joke, you know, like 99 out of 100, corporate lawyers will tell you to incorporate as a Delaware C. [But] that may or may not be the right answer. There may be a good reason to become a cooperative, and incorporating as a Delaware C will make your life very difficult. (Timestamp: 17:46)
The conversation turned into a broader discussion on if venture capital will be as relevant as it is today, five years from now. While Scholz said that she doesn’t even think venture is that important today, the two venture capitalists on the panel – Brackeen and Thomas – were good sports about the future of the asset class they have bet their careers on.
Thomas: The IPOs just keep on coming, and they keep getting bigger. It’s crazy. I think that there is recreating an immense amount of wealth, and that we need to be thoughtful, we need to be careful. And we need to be just considerate of that fact. And so I plan to be in venture for the next ten years. But I Ithink, to Astrid’s point, we are not the only ones on the island. We are connected to all of these other different capital structures, and different communities. But my bet is still here. (Timestamp 25:14)
Brackeen: Capital will continue to play a large role in capitalism, because the two are hand in hand. And venture capital is a version of that. Watch what we do. To see billions of dollars go into these geographies, these communities, these groups, the value creation is outrageous. Morgan Stanley, and others say that racism and sexism cost this country somewhere between $4 trillion and $16 trillion in kind of untapped value. So venture capital can be a key lever in opening that faucet. (Timestamp: 25:52)
You can read the entire transcript here.
Source: TechCrunch
It was only a matter of time before someone married the nascent nootropic supplements for brain health to the snack bar craze that continues to attract dollars and exits.
That time is apparently now, as Rob Dyrdek, the MTV-famous celebrity, pro-skater and entrepreneur, and Chris Bernard announce a new investment in the company they co-founded, Mindright, alongside celebrity investors including Joe Jonas, Travis Barker, and The Profit’s Marcus Lemonis.
“When we started down the path of condition-specific food and beverage… we started doing a lot of research into the nootropics and adaptogens space,” said co-founder Bernard. Working with a food scientist who did not want to be named (which isn’t sketchy at all), Dyrdek and Bernard were introduced to several companies producing Ashwagandha, which the two had settled on as the new key ingredient in their snack bars.
Along with ginseng and cordyceps mushrooms, the company has a trifecta of new (and old) supplements that have taken the nutraceutical world by storm.
Bernard had initially approached the Dyrdek Machine group about another product, but the company was too far along and not something that Dyrdek felt passionate about backing. The story changed when Bernard returned with plans for this nootropic nosh.
“[Bernard] brought back the concept of the path of what’s evolved from functional foods and probiotics and collagen and sort of the mental health and adaptogen and the supplement world and said here’s how to merge these,” Dyrdek said of Bernard’s second pitch. “It was a home-run for us. Our process is supporting a solopreneur where we help shape and build the company together and provide the outsourced resources. We fund the development of the idea to go to the capital markets.”
So far, Dyrdek and his team have made 15 investments in consumer and entertainment businesses, and five of those business have since been acquired.
Most deals from Dyrdek Machine follow a similar trajectory. The firm becomes a co-founder and shares common stock and then negotiate a preferred equity investment for the capital infusion. Typically those deals will range from $250,000 to $500,000.
“We co-found it and we share that common share class and our first money is preferred and pick a valuation that balances out the deal,” Dyrdek said. “How much equity do we want to develop it with you is what we negotiate with that initial capital.”
Portrait of Rob Dyrdek, founder of Dyrdek Machine
Dyrdek describes his investment firm as founder-driven and market agnostic. “We want a well-rounded, multi-dimensional founder and then we look at the market and how do we evolve it into something that has a larger, broader appeal,” Dyrdek said. “Rather than chasing down nootropics, we found that ‘good mood’ was the important thing to the consumer base. That’s why we drove ‘Good mood superfood.’”
Bernard’s faith in Dyrdek’s ability to move the business forward has been proven in the evolution of other companies in the firm’s portfolio. Dyrdek pointed to Outstanding Foods, another investment, which he said had recently closed a $10 million round at a $100 million valuation. Another startup in the portfolio, Momentous, a supplement manufacturer, also closed on a big round recently after raising $5 million in 2019, Dyrdek said.
For Mindright, Dyrdek’s involvement brought in other celebrity names once they tried the product. The company counts Joe Jonas and Travis Barker among its seed investors.
“They were excited to get involved in this because they believed in what we took the time to create,” Bernard said.
Source: TechCrunch
With the latest investment, Porsche now owns 24% of the Croatian firm.
Source: CNET
Scott split from the Amazon founder and CEO in 2019.
Source: CNET
After garnering SEC approval last week, the video game purchase is nearing the finish line.
Source: CNET
Are you having issues when attempting to create or join a Google Meet video call? Here’s how to handle some of the most common ones so you can get connected.
Source: Digital trends
Get out from under that oppressive annual percentage interest rate.
Source: CNET
Which collaboration tool is best for your needs? Our comparison of these two great workspaces addresses pricing, features, app integration, storage, and more.
Source: Digital trends