2021 — 199 Unicorns so far

By Keith Teare • Issue #26 • View online

2021 has seen 199 private valuations over $1 billion. The year has 7 months still to run. In response to this wealth creation angels, seed funds, venture funds, and growth-stage investors are changing the rules of the game.



This was not a slow news week. First. 199 unicorns minted in five months. The highest previous year, 2018, saw 178. IPOs are popping left and right. Even SPACs seem back on track. And the stock markets reached record all time highs in the past week.

The creation of wealth drives behavior. And in the field of venture capital that behavior is the subject of about 50% of this weeks newsletter.

As I have said before, to understand the venture capital value chain it is important to distinguish between three asset classes. Seed, Venture, and Growth.

Growth investing is undergoing the largest change. TPG, a private equity firm, was in the news this week concerning its potential to become a public company. This is a route already taken by its peers Blackstone and Carlyle Group.

In the seed asset class public offerings, albeit smaller, are also on the agenda, especially in Europe. Forward Partners, according to the Financial Times,

“…will include retail investors in an initial public offering that it plans to launch in the coming weeks, raising a total of £30m in new cash, according to people familiar with the company’s plans. The London-based company will join listed venture capitalists Draper Esprit and Augmentum, which have also opened recent fundraising rounds to retail investors, alongside other backers, using the PrimaryBid platform. ”

We also cover Y Combinator’s Geoff Ralston explaining what YC is, and Mark Suster’s piece about the seed through series A stage, “Taking Shots on Goal” in which he addresses “portfolio construction”.

Between those two, Benchmark Capital is covered by The Information in a piece explaining how early stage funds are providing strong competition to the Venture stage investors.

When you stand back the real key is that the growth of infrastructure is producing more wealth, faster, that at any point in history. This infrastructure includes the Internet itself, the smartphone ecosystem, data and machine intelligence and the blockchain. The rate of growth of early stage success stories can be enormous. Money, as always, flows to success. And the players all seek to position themselves for success.

My own startup, SignalRank Corp is a venturetech player in this space, focussed on how to find future unicorns early leveraging data and machine based algorithms while giving regular retail investors access to the wealth being created.

There has never been a better time to innovate in venture capital. All existing models will be challenged if they do not adapt.

More in this week’s video

Unicorn Frenzy

2021 is a unicorn frenzy

Unicorns are supposed to be rare beasts of fables and folktales, but in the current venture capital landscape, they’re abundant.

Just five months into 2021, there were 199 new companies that reached unicorn status (a private company with a $1+ billion valuation), eclipsing the 163 companies that reached unicorn status in all of 2020, according to Crunchbase data shared with Emerging Tech Brew. And it’s not just a pandemic rebound: That figure is higher than any full-year total over the last nine years.

Landscape lowdown

After a 2020 full of stagnation and uncertainty, the VC scene is making up for lost time and then some.

“Many of the concerns…that ground dealmaking to a halt have largely been alleviated in what many investors see as a new normal,” Joshua Chao, venture capital analyst at PitchBook told us. “We’re now seeing VCs invest in companies outside of their immediate networks and it’s just full steam ahead on dealmaking and fundraising.”

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The Venture Landscape

WSJ News Exclusive | TPG Is Evaluating a Public Listing

TPG, one of the last of the original private-equity giants to remain a closely held partnership, is evaluating a public listing, people familiar with the matter said.

The firm is considering a straightforward initial public offering and a merger with a special-purpose acquisition company, with the former being the most likely route, the people said. Such a deal could value the California-and-Texas firm at about $10 billion, some of the people said.

The process is still in its early stages and TPG may not opt to proceed with any deal.

TPG, with nearly $100 billion in assets under management, has flirted with an IPO multiple times, only to end up balking while rivals forged ahead. Blackstone Group Inc., BX -1.83%Apollo Global Management Inc., APO -0.34% KKR & Co. and Carlyle Group Inc. went public years ago, transforming businesses that have enjoyed rapid growth as the industry is flooded with assets.

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YC is CRISPR for Startups

Last week, we launched our Summer 2021 batch here at Y Combinator, the 33rd batch since our founding in 2005. We are now funding hundreds of companies each batch, and I’ve been reflecting on how we work with those companies during the batch and afterward, as they build their business.

Over the years, I’ve found that there is a common misapprehension about what we do at Y Combinator. People often believe that YC’s raison d’etre is Demo Day and fundraising — and that founders’ singular goal in applying to YC and completing our program is to increase their probability of executing a successful fundraise.

It is true that companies that complete YC’s core program have an easier time raising money from angel investors and venture capitalists. It is also certainly correct that raising capital is extremely important to early-stage startup companies as they finance their product development and the growth they plan and hope for.

But this begs an important question: why is it that YC companies have a better chance of fundraising success? Is it because YC is an effective filter: choosing only the best founders and companies? That is certainly one reason. However, there is more to this answer and it is fundamental to what we do. By joining YC, by going through our program, working with our group partners, and by becoming part of the YC community, each startup undergoes a subtle transformation into a company more likely to succeed. This is the real secret to YC’s success.

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Benchmark’s VC Model Strained by Newcomers, Supersize Rivals — The Information

In April of last year, Michael Grinich got a call most startup founders only dream about. Eric Vishria, a partner at Benchmark, one of the most prestigious VC firms, said he was interested in investing in Grinich’s then-two-year-old software startup, WorkOS, which helps other software startups sell their products to large companies. Grinich had a rare chance to join the firm’s portfolio of early bets, which previously included eBay, Twitter, Uber and Snap.

But Grinich had already received an investment offer from Lachy Groom, a former Stripe product manager who launched his first investment fund in early 2019. Groom asked to buy around 15% of WorkOS’s shares as part of his investment offer, which Benchmark said it wouldn’t match, according to people with direct knowledge of the deal. The firm usually wants to buy at least 20% of a company’s shares in order to generate big returns if the startup is able to go public or get acquired. Grinich picked the less-established Groom. …

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On Funding — Shots on Goal

Being great as a startup technology investor of course requires a lot of things to come together:

  1. You need to have strong insights into where technology markets are heading and where value in the future will be created and sustained
  2. You need be perfect with your market timing. Being too early is the same as being wrong. Being too late and you back an “also ran”
  3. You also need to be right about the team. If you know the right market and enter at this exact right time you can still miss WhatsApp, Instagram, Facebook, Stripe, etc.

I’ve definitely been wrong on market value. I’ve sometimes been right about the market value but too early. And I’ve been spot on with both but backed the 2nd, 3rd or 4th best player in a market.

In short: Access to great deals, ability to be invited to invest in these deals, ability to see where value in a market will be created and the luck to back the right team with the right market at the right time all matter.

When you first start your career as an investor (or when you first start writing angel checks) your main obsession is “getting into great deals.” You’re thinking about one bullet at a time. When you’ve been playing the game a bit longer or when you have responsibilities at the fund level you start thinking more about “portfolio construction.”

At Upfront we often talk about these as “shots on goal” (a fitting soccer analogy given the EURO 2020 tournament is on right now). What we discuss internally and what I discuss with my LPs is outlined as follows:

  • We back 36–38 Series Seed / Series A companies per fund (we have a separate Growth Fund)
  • Our median first check is $3.5 million, and we can write as little as $250k or as much as $15 million in our first check (we can follow on with $50 million + in follow-on rounds)
  • We build a portfolio that is diversified given the focus areas of our partners. We try to balance deals across (amongst other things): cyber-security, FinTech, computer vision, marketplaces, video games & gaming infrastructure, marketing automation, applied biology & healthcare systems, sustainability and eCommerce. We do other things, too. But these have been the major themes of our partners
  • We try to have a few “wild, ambitious plans” in every portfolio and a few more businesses that are a new model emerging in an existing sector (video-based online shopping, for example).

On Funding — Shots on Goal was originally published in Both Sides of the Table on Medium, where people are continuing the conversation by highlighting and responding to this story.

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London VC Forward Partners sees portfolio value rocket 49 per cent during pandemic — Private Equity Wire

London-based venture capital investors, Forward Partners, saw its Net Asset Value (NAV) increase by 48.5 per cent to reach GBP103 million during the 12 months to 31 March 2021.

The VC firm, which is focused on early-stage tech businesses across e-commerce, digital marketplaces and applied AI, has seen significant momentum in its portfolio during the pandemic, as trends moving trade and consumption online accelerated. That momentum has continued into the current financial year with the firm’s NAV growing by 18.9 per cent — including new investments — during the last quarter (Q1 FY21).

The main boost to NAV was driven by strong next-stage investor financing for several of Forward Partners’ portfolio companies, including a Series A round of GBP10 million and Series B round of over GBP30 million. Earlier stage start-ups in the portfolio have also seen financing through successful seed rounds.

Forward Partners has also been making substantial new investments of its own. It co-invested in a late-seed GBP3.5 million deal with Clustermarket, an online marketplace for medical equipment, people and data. Clustermarket is fast-growing, increasing users by around 30% per month. Forward Partners also invested in a business intelligence provider that uses applied AI to make advanced modelling and scenario forecasting technology more accessible. A large UK public sector health body is currently using its technology to model the impact of Covid-19 on patient waiting lists.

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VC will own 53% at exit

In April of last year, Michael Grinich got a call most startup founders only dream about. Eric Vishria, a partner at Benchmark, one of the most prestigious VC firms, said he was interested in investing in Grinich’s then-two-year-old software startup, WorkOS, which helps other software startups sell their products to large companies. Grinich had a rare chance to join the firm’s portfolio of early bets, which previously included eBay, Twitter, Uber and Snap.

But Grinich had already received an investment offer from Lachy Groom, a former Stripe product manager who launched his first investment fund in early 2019. Groom asked to buy around 15% of WorkOS’s shares as part of his investment offer, which Benchmark said it wouldn’t match, according to people with direct knowledge of the deal. The firm usually wants to buy at least 20% of a company’s shares in order to generate big returns if the startup is able to go public or get acquired. Grinich picked the less-established Groom.

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Tech founder ownership at exit

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 44% of Snapchat before it went public. Mark Zuckerberg owned 31% of Facebook, Sergey Brin and Larry Page owned 31% of Google, the founders of Eventbrite owned 34%, and Reed Hastings owned 24% of NetFlix. These are remarkable levels of CEO ownership upon going public/exit, but such high levels aren’t always the case. Glen Kelman of Redfin owned only 4%, the founder of Pandora owned only 2%, the Lyft founders owned 6% combined, and Peloton’s founder and CEO owned 6%. The point is the range of ownership at exit/IPO can be quite wide and is dependent on a number of factors, the primary of which are capital efficiency and the ability to command high valuations during fundraising.

The list below shows founder or CEO ownership of 160 tech companies at IPO. The median level of founder ownership shown is 14% while the average is 20%.

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Tim Berners-Lee and NFTs

What Tim Berners-Lee’s $5M NFT Sale Means for Web History | WIRED

SIR TIM BERNERS-LEE famously gave the source code to the World Wide Web away for free. But now he’s raised over $5.4 million by auctioning off an autographed copy as a non-fungible token, or NFT, in a sale through Sotheby’s.

Berners-Lee’s NFT joins eclectic company, including Jack Dorsey’s first tweet, a New York Times column, a Pringles flavor called “CryptoCrisp,” a lifetime coupon code to an online kratom retailer, a lease for a coliving space in San Francisco’s Mission District, a sexually explicit direct message allegedly from the disgraced actor Armie Hammer, and a 52-minute audio file of fart. But this most recent addition to the endless list of collectible NFTs is an artifact with an air of gravitas, a souvenir from a vaunted internet pioneer. Berners-Lee wrote the code while working at CERN in Switzerland in the early ’90s, creating what he called the “WorldWideWeb” from a NeXT computer. In addition to the copy of the code itself, the auction haul included a 30-minute animation depicting the code being written, a scalable graphics vector representing the full code, and a letter Berners-Lee wrote this year reflecting on what it was like to write the code. (Berners-Lee will donate the proceeds, but has not specified where he plans to direct the funds.)

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Tim Berners-Lee’s Web Source Code NFT Sells for $5.43 Million at Sotheby’s

In brief

  • Tim Berners-Lee turned the original code of his invention, the World Wide Web, into an NFT through a series of artwork.
  • The code itself remains open source, but the buyer will own its artistic representation.

World Wide Web inventor Tim Berners-Lee has auctioned off the 30-year-old source code of his invention as a non-fungible token (NFT) for $5.34 million at Sotheby’s.

NFTs are blockchain-based crypto tokens that prove ownership of a digital or physical asset. Berners-Lee has described NFTs as “the latest playful creations in this realm and the most appropriate means of ownership that exists.”

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Worldcoin for Universal Income

Worldcoin, the eye-scanning cryptocurrency project backed by Sam Altman and Reid Hoffman — Vox

Details are slowly emerging about a new startup, Worldcoin, that aims to launch a new cryptocurrency that it would distribute to people in exchange for their eye scans. The futuristic-sounding idea has attracted major supporters in Silicon Valley, including Y Combinator president Sam Altman, LinkedIn co-founder Reid Hoffman, and the venture capital firms Andreessen Horowitz and Day One Ventures.

But while information is still coming to light about Worldcoin, cryptography and privacy experts are already poking holes in its main premise.

Bloomberg uncovered the nascent startup’s plans, which seem to involve launching a cryptocurrency that everyone in the world could have a share in. The idea appears to be inspired by the concept of universal basic income, or direct, no-strings-attached payments to people, usually distributed by the government. And the startup wants to deliver this currency by building orb-shaped devices that convert scans of peoples’ eyes into unique numerical identifiers in order to make sure a person is a legitimate recipient of the payment and isn’t trying to sign up more than once. An online job posting for Worldcoin cited by Bloomberg noted the startup hoped to build “a dedicated hardware device ensuring both humanness and uniqueness of everybody signing up, while maintaining their privacy and the overall transparency of a permissionless blockchain.”

The company is already testing a prototype of its eye-scanning device in several cities (volunteers are being paid primarily in bitcoin for now) and has at least $25 million in funding, according to Bloomberg. The company’s leaders seem to think its biometric-data tracking device would prevent a person from registering for multiple Worldcoin payments. Overall, the startup wants to power a new cryptocurrency that the entire globe can access, and which could be disbursed to almost anyone — although they would apparently have to agree to let Worldcoin scan their irises.


Sam Altman’s Worldcoin Will Give Free Crypto for Eyeball Scans — Bloomberg

Sam Altman has a new startup that intends to give a special type of cryptocurrency to every person on earth. But first, it wants to scan everybody’s eyeballs.

Altman, the former head of the Silicon Valley business incubator Y Combinator, is one of three founders of the company Worldcoin. Among the many parts of its plan, Worldcoin has designed an orb-shaped device that would scan a person’s iris to construct a unique personal identifier.

The company is backed by Andreessen Horowitz, the venture capital arm of Coinbase Global Inc., LinkedIn founder Reid Hoffman and Day One Ventures. It recently raised about $25 million from investors.

Altman, 36, said in an interview that he conceived the idea in late 2019. The intention was to use cryptocurrency to spread money around equitably, inspired by the trendy economic theory known as universal basic income. Altman was the first investor in Worldcoin but said he has no role in day-to-day operations and mainly serves as an adviser to the company when needed.

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Comparing the Carbon Footprint of Gold and Bitcoin

Digital assets are deceiving in that they appear to generate out of thin air but the carbon footprint of bitcoin has real world impacts.

The post Comparing the Carbon Footprint of Gold and Bitcoin appeared first on Visual Capitalist.

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Big Tech Fights Back

Facebook hits $1 trillion market cap after federal court dismisses FTC antitrust complaint — CNN

A federal court has dismissed the Federal Trade Commission’s antitrust complaint against Facebook, saying the agency had failed to provide evidence for its claim that the social media giant holds a monopoly in social networking.

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Facebook just became a trillion-dollar company — Protocol — The people, power and politics of tech

What techlash?

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Judge’s Facebook Ruling Embarrasses FTC, States — The Information

Lawyers at the Federal Trade Commission have egg on their faces after a federal judge ruled the agency, in its antitrust case against Facebook, hadn’t made the case the company had a monopoly. Even more embarrassing was the judge’s outright dismissal of a case filed by a group of 40 states. The …

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Actually, the Antitrust Case Against Facebook Is Very Much Alive | WIRED

A judge dealt the Federal Trade Commission a setback this week in its quest to break the company up — but also provided a roadmap for how to proceed.

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Facebook Still Isn’t a Monopoly. A Federal Judge just told us what I’ve… | by Lance Ulanoff | Jun, 2021 | OneZero

A few years ago, after one of the first fireworks-filled Capitol Hill hearings on big tech, I wrote that lawmakers who should know better appeared to have forgotten the definition of a monopoly.

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Tech’s New Growth Industry: Antitrust Inquiries

The role of big tech companies in creating jobs is often underappreciated. And we’re not just talking about software engineering jobs or chefs in fancy campus cafeterias. Given the proliferating number of tech-focused antitrust inquiries, particularly in Europe, it’s a good bet a lot of jobs are being created at European regulatory agencies and law firms dealing with those agencies. On Friday, for instance, came a report that the U.K.’s antitrust authority was investigating Amazon and Google about whether they are cracking down enough on fake reviews.

The same authority is also scrutinizing Apple and Google’s mobile ecosystems. The European Commission, meanwhile, is investigating Google’s ad tech business, Amazon’s Prime program, Facebook’s collection of ad data, and Apple’s Apple Pay. It is separately pursuing lawsuits against Apple on its app store, Amazon on how it treats sellers and Google’s Google Shopping business. And then there are the inquiries underway in individual countries. Germany, for instance, is scrutinizing Google’s market power. And this list, compiled with the help of my London colleague Mark Di Stefano, is doubtless missing a few entries.

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Amazon Seeks Recusal of FTC Chairwoman Lina Khan in Antitrust Investigations of Company — WSJ

Amazon.com filed the recusal request with the Federal Trade Commission citing Chairwoman Lina Khan’s extensive past criticisms of the company.

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Federal Trade Commission expands antitrust powers in Chair Lina Khan’s first open proceeding — The Verge

In an open meeting on Thursday, the Federal Trade Commission passed a pair of pivotal measures expanding its power to regulate anti-competitive business practices, setting the stage for a more aggressive enforcement approach from the embattled agency.

Announced last week, Thursday’s proceeding is the first open business meeting of the commission in more than 20 years, as commission proceedings have traditionally been closed to the public. Chair Lina Khan plans to hold public meetings on a monthly basis going forward.

The meeting paved the way for an aggressive antitrust approach from the agency, with three separate measures expanding the commission’s power to prosecute anti-competitive business practices.


In the most aggressive effort, the commission voted to rescind a 2015 “Statement of Enforcement Principles” that restricted the FTC Act’s prescriptions on “unfair methods of competition” to explicit violations of existing antitrust law (specifically the Sherman and Clayton Acts). The vote proceeded along party lines, passing 3–2 with Democrats in the majority.


Startup of the Week

What you need to know about Africa’s tech startups — World Economic Forum

Technology startups and the venture capital ecosystem that transforms ideas and fledgling companies into disruptive businesses are growing globally — a phenomenon that the

Boston Consulting Group (BCG) explores in a recent report on the expansion and maturation of African tech startups. According to the authors, Africa enjoys a fertile environment for tech entrepreneurs due to the continent’s youthful and growing population, rising internet penetration, and the application of emerging technologies that have the potential to improve access to healthcare, financial services, education, and energy. As such, the research paper focuses on the meteoric growth of tech startups throughout the continent, persistent challenges and structural barriers stymying these firms’ further growth, and policy recommendations to overcome these obstacles and develop Africa’s innovation hubs.

Securing venture capital funding, according to BCG, is an important milestone for startups and is an important step that enables them to scale and develop novel products. In the study, BCG found that the number of African tech startups accomplishing this significant step experienced exponential growth between 2015 and 2020. In fact, over that time period, growth in the volume of African tech startups receiving financial backing was nearly six times faster than the global average (Figure 1).

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Tweet of the Week

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