Lucid, Rivian, Tesla vs GM and Ford
Rivian lost $580m last quarter but is valued at $124 billion. Ford’s 2021 revenue will be over $120 billion and it is worth only 60% of Rivian. Now, is Apple about to join the party? Read on to see why it makes sense.
- Apple, Rivian, Lucid and Tesla vs Ford and GM
- 20% Interest? (thx to Loic Le Meur)
- Venture Capital — Wow!
- Web 3, Crypto and the Metaverse
- Startup of the Week
- Tweet of the Week
Are we in a bubble? Or are we at the start of a revolution in the auto business? I start this week with a table and two charts. They show that Rivian (lost $580m last quarter) and Lucid (lost $520m last quarter) are worth more than GM ($102bn revenue — forward-looking 12 months and Ford ($140 bn revenue — forward-looking 12 months). Tesla ($52 bn in forward-looking 12-month revenue) is valued at over $1 trillion. As a multiple of revenue, Tesla gets 20 x; Ford only 0.6 x and GM 0.9x.
On the face of it, this makes no sense. However, when growth is factored in, Ford and GM are both declining and Tesla is growing annually at 30%. Lucid and Rivian have infinite growth because they are starting with zero revenue. Lucis has 17,000 pre-orders of a fabulous car with an average price of around $140,000, so about $2.4 bn of revenue and great profit margins. Rivian has pre-orders from Amazon for about 50,000 vehicles with an average price of $75,000, so about $3.75 bn. If we use those numbers as a basis then Rivian’s $124 bn market cap is 33 x its sales expectation based on current pre-orders and Lucid’s $72 bn market cap is 30 x its pre-order value.
Rivian and Lucid will have far higher annual growth than Tesla and so the higher multiple is justified.
So, no, this is not a bubble. It is how the stock market tries to distinguish between the past and the future. The future, because of growth, is always priced higher than the present, or the past.
And this is why venture capital is always focused on future growth potential, not current performance. That fact often gets lost in all the talk about “traction”. Traction is simply a snapshot of current performance. For it to have value it is necessary to believe that growth will continue for the foreseeable future and result in a significant market share of a large opportunity set.
Apple is going to play in the auto market, with what seems to be a fully autonomous vehicle. Rumors say 2025 is the year it will debut. About 70 million cars are sold new each year. That number has been flat to down over recent years. But the share taken by EVs is up and accelerating. Investors assume that by 2030 or so the vast majority of new cars sold will be EVs and that many will come from new manufacturers. If they are right then 70 million x $40,000 average price is a $2.8 trillion annual revenue opportunity by 2030. Buying the winners in that market today is entirely rational. Of course, if they are not winners the opposite is true. And the gross margins on those vehicles will be far better than Ford or GM’s current crop.
Tiger Global’s new $8.8 bn fund or Insight Partners $20 bn are, along with the others, racing to own this future potential today. The companies they invest in are discovered by seed fund managers, sometimes called Micro-VC, and angel investors. These funds can produce enormous returns for their investors if they can pick the future winners early. The entire value chain of angels -> seed funds -> venture funds and -> growth funds exists prior to a Lucid or a Rivian becoming a public company.
It’s an exciting time to be in Silicon Valley as the pace of change accelerates and the size of the reward does too.
Apple, Rivian, Lucid and, Tesla vs Ford and GM
Apple is currently determined to ship an electric car that can drive its passengers around within the next four years, according to reporting from Bloomberg. The latest report emphasizes both the features and pacing set by current leadership over the project at Apple. Apple’s so-called Project Titan effort to bring an electric car to market […]
- Lucid CEO Peter Rawlinson said there’s a long runway for the EV start-up’s stock and market cap to surpass traditional automakers and be valued more like industry leader Tesla.
- Lucid’s market value blew past Ford on Tuesday to $89.9 billion following a 24% runup in the EV start-up’s stock price.
- Rawlinson, a former Tesla executive, regularly compares Lucid to his former employer in terms of in-house technologies and overall development of electric vehicles.
Rivian’s blockbuster initial public offering last week pushed the total exit value for U.S. public-market listings this year beyond an unprecedented $1 trillion marker, a record that more than doubles 2020 levels, according to data compiled by PitchBook.
The PitchBook data includes traditional IPOs as well as direct listings and special purpose acquisition vehicles, noting that 17% of this year’s collated valuation figure came from SPACs.
The $1 trillion figure helps quantify just how hospitable the public markets have been to new entrants and builds a greater opportunity set of equities for investors to trade. However, it’s also a data point that may help bolster the case for those who are concerned that some of the recent IPOs epitomize a dislocation between valuation and fundamentals.
Late-stage growth — both among private companies and newly public ones — represents a pocket of froth, according to Dipanjan “DJ” Deb, the CEO of Francisco Partners, a tech-oriented buyout firm.
“Many of the unicorns today are actually disrupting the world and deserve their valuations,” Deb said in an interview for CNBC’s Delivering Alpha Newsletter. “But probably 70–80% of them will have some sort of day of reckoning. They’re not all going to disrupt the world, and people are conflating growth and quality in late stages of a bull market.”
20% Interest? (thx to Loic Le Meur)
Last month, Terra unveiled their latest project, Anchor, an easy-to-use savings platform that could prove to be a game-changer in the DeFi space. While other decentralized lending providers have attracted arbitrageurs and traders seeking to maximize their yields, Anchor has uniquely targeted the use case of saving.
Venture Capital — Wow!
The world’s top 50 venture capital fundraisers continue to rack up commitments for new vehicles, pushing their piles of dry powder to new heights. Here, we present this year’s VCJ 50, our ranking of the industry’s biggest capital raisers over the past five years.
New records were set in a huge quarter for global & US funding, exits, valuations, and more.
Following a record-breaking Q2 in the world of venture, investments to startups worldwide continued to climb to new highs in Q3’21.
In our State Of Venture Q3’21 Report, we dig into global investment trends to spotlight takeaways like:
- Another global funding record, up 105% year-over-year
- The 5+ US metros with billion-dollar quarters
- The highest-valued new unicorns of Q3’21, and the sector driving 1 in 3 new unicorn births
- Which investor is doing 1.5 deals a day, and other top-ranked firms
- The sector reaching nearly $100B in total funding in 2021
- Which companies are exiting at billion-dollar valuations — and SPAC data galore
- Asian tech hubs driving the biggest deals — including 195% YoY funding growth for one country
- And much more
Below, check out just a few highlights from our 263-page, data-driven State Of Venture Q3’21 Report. For deeper insights, all the record figures, and a boatload of private market data, download the full report.
- (Bloomberg) — Chase Coleman is the name most Wall Street professionals associate with Tiger Global Management, the investment firm known for its hot hand in internet startups and early bets on China.
But it’s a lesser-known leader, Scott Shleifer, who’s burnishing his own brand as head of Tiger’s booming venture-capital business, where assets have more than tripled to $65 billion in just a year and now account for almost two-thirds of the firm’s total.
His unit recently took a big step toward hitting a $10 billion target for its biggest venture fund on record. Yet Shleifer, even with his growing prominence at the firm, recognizes that things can go very wrong, very fast.
“We are humble and hungry, and we know that we could screw this up before lunch,” Shleifer, 44, said in July, after Coleman, 46, introduced him during a presentation to some of the firm’s top clients.
Tiger has overcome several challenges over its two decades, including losses stemming from the 2008 financial crisis. Coleman and his team regrouped by returning to their tech roots and vowing to avoid industries where politics or macro events could interfere. The firm successfully weathered the pandemic, ranking as the world’s top-earning hedge fund last year, while raising and investing billions of dollars for its venture arm.
Balderton Capital has raised a $600m fund focused on early-stage companies, its second fund of 2021.
The venture capital firm, which has typically invested more at the Series A stage has been a huge backer of fintech firms including Nutmeg, ComplyAdvantage, GoCardless and Revolut and has seen 13 of its portfolio companies achieve unicorn status this year.
The new fund will be sector agnostic but Rob Moffat, a partner at Balderton, told AltFi he expects fintech to continue to be an important theme in the early stage fund with crypto becoming more important.
“Fintech has historically been one of our biggest investment areas, 15–20 per cent of our investments. I expect it to remain so,” he said.
“Crypto I expect to grow, we have made two crypto investments already this year and are in the process on one more,” added.
“Balderton Capital is a very different firm than it was 12 months ago. We have not only launched two new funds but have grown and strengthened our team. We have entered a new era in which we will be able to operate at a different pace and with a broader view of when we can support founders” said Bernard Liautaud, Managing Partner at Balderton Capital added.
Just over four years ago, I wrote an article for Forbes about the rise of platform as a differentiator for venture funds.
In the article, I mentioned the VC Platform Summit, then in its second year, where about 50 platform leaders came together to collaborate and exchange ideas about how to support founders. Now, that community has over 1,000 members.
This illustrates just how quickly platform shifted from a nice-to-have to a must-have for funds. VC is no longer about wining and dining founders and then just writing a check. And it’s no surprise — capital is becoming more and more of a commodity, and as a result, competition for deals has never been fiercer.
LPs who are evaluating funds to invest in should be asking about platform strategy, because at the end of the day, the funds that are truly exceptional partners to their founders are going to come out on top.
It’s not enough for a fund just to have a platform to provide founders with resources — it has to be strategic
Having an effective platform is more than just offering ad-hoc help with marketing or fundraising. It means creating a supportive environment to help founders grow their businesses.
Web 3, Crypto and the Metaverse
It’s possible you have, in recent months, seen people writing with excitement (or curiosity, or consternation) about “Web3”. The term imagines the transition of many internet services to a model built around cryptographic tokens, such that ownership and/or control of those services might be divided between their token-holders, a group that might include their users. The tokens would also have exchange value, so, as a user, you could always: cash out ?
Ethereum is the locus of most of this work — hey, who named that client library web3.js, anyway? — so it’s not unreasonable to read “Web3” as “Ethereum-powered internet”.
This message was emailed to the Media Lab committee. The assumed audience is subscribers who know roughly what Web3 is supposed to be, but aren’t sure what to think about it. (Here’s more about assumed audiences.)
If you are already convinced that Web3 is the appropriate next step for the world’s internetworked computer systems: this post is not for you. Go forth!
Instead, this is for people still sort of … cautiously curious?
Cards on the table: I am not merely a skeptic, but a full-fledged enemy of Web3. I hope my animosity can’t be instantly dismissed: “He’s a hater; he’s old; he doesn’t understand the technology.” I am, in fact, old — 41! — but, as mitigating evidence: I write science fiction; am deeply curious about the future(s) of the internet; and even produced a well-received NFT project.
If money is the lifeblood of business, the inflows and outflows of revenue and expenses are like the heartbeat of a company. And while tracking and managing these financial operations are critical to keeping a business healthy, the tools that exist today are incredibly antiquated. Meanwhile, payment complexity is increasing as businesses become more global and seek to add new payment methods every day.
To keep up, many of the largest companies have invested in home grown solutions and rely on an army of engineers and operations specialists. Companies like Airbnb and Uber have teams of 200+ simply to keep track of their real-time financial health, both cash on hand as well as payables/receivables.
Worse yet, breakdowns in these payment operations can have massive consequences. Last year, Matt Levine famously wrote about the payments debacle where Citibank wired $900M to a hedge fund — by mistake. The cause? A set of email approvals and legacy software that didn’t catch the error. And this isn’t an isolated instance — companies spend millions of dollars per year on audits and many more on fines and lost revenue for not tracking payments correctly.
Companies need (and deserve) better software to manage day-to-day finance workflows and make CFOs more strategic. We believe that “financial operations” (FinOps) is an emerging software category with a massive opportunity to rethink the way businesses manage their money by streamlining, automating, and optimizing existing work while giving the entire organization a real-time view of a business’s financial health.
Payins, Payouts — What’s so complex about payments?
At its core, there are two money movement workflows, the majority of which are manual today.
- Payouts send money outside of the business, including sending money via bank wires and ACH to pay vendor invoices or make disbursements to customers, generating invoices, creating transaction logs, managing pooling vs. custody account flows, and reconciling to the accounting systems/ERP.
- Payins bring money into the business by accepting and adding different payment methods; orchestrating and optimizing payment routes and authorization rates; identifying cases of fraud and failure; allowing for rewards, gift cards, and payment splitting; and reconciling to the accounting systems/ERP.
As blockchain technology rapidly gains the attention of a mass audience, the conversation is still centered solely around technical topics related to the scalability of a network — transactions per second, latency, and throughput, for example. To successfully build consumer-scale experiences, however, developers must think beyond performance metrics and consider the human factor: Accessibility — … Read More
The post Blockchain Networks and the Human Factor: How to Know Whether They’re Accessible appeared first on Future.
But who would have predicted that NFTs and DAOs would join forces one day? Well, this is exactly what happened. This collaboration introduced the voting tools to allow individuals to influence organizations through a crowd-sourced basis. One of such platforms is DAOLaunch, which has enabled NFTs and DAOs to work together through their feature DVC-NFT.
DVC-NFT and other NFTs utilities
This Decentralized Venture Capital had brought innovation into the users’ lives. One of the most distinctive selling points is the unique feature known as DVC-NFT. This feature helps users mint Decentralized Venture Capital NFTs. More so, DAOLaunch allows users to vote and record investment performance on the blockchain while negotiating improved investment terms.
Through DVC-NFT, individuals can establish their own token index portfolio as an NFT and deposit their seed tokens in the contract. The platform also allows users to lend their VC portfolio on the NFT market to start-ups looking to perform IBO (Initial Buy Back Offering). To better understand, the IBO is used for the platform revenue to enhance the price of the most voted initiative. The DAOLaunch platform will purchase the project’s tokens and burn them automatically.
DAOLaunch offers a one-of-a-kind opportunity for users to trade or lend their VC portfolio and earn funds or interest without losing ownership. Users can earn even when the token is locked with DVC-NFT by trading or lending the DVC-NFT itself. Moreover, DAOLaunch also provides fresh pfp designs every session.
After a good 15-ish–year run, most technology watchers agree that we are nearing the end of Web 2.0, and that the dawn of Web 3.0 — aka the metaverse, depending on whose positioning you prefer — is upon us.
This transition is taking place against a complicated backdrop featuring no fewer than three simultaneously developing but fundamentally distinct trends:
- First is the rise of crypto, which is leveraging technical and economic breakthroughs to make it finally possible to put memory, assets and ownership natively on the web.
- Second is the seeming imminence of the experiential web via augmented and virtual reality. As many see it, this set of technologies will have a profound effect on our relationship with digital spaces and communities.
- Last is a cultural revolution — long brewing among the younger generations but accelerated and disseminated by the Covid-19 pandemic, which forced great swaths of people to work and socialize in purely digital spaces. People are now rapidly coming to value their digital lives, communities and spaces every bit as much as their physical ones.
Things didn’t have to play out this way — that is to say, none of these trends is the direct result of any of the others — yet here we are. Let’s use this moment to take stock.
Everybody is getting in on it now. Satya Nadella promises the Enterprise Metaverse, Tim Sweeney and the team at Epic are supposedly the building blocks of the Metaverse. Facebook is now just Meta — …
Fred Ehrsam is behind $2.5bn fund Paradigm One, to which investors jockeyed to commit money.
Cryptocurrencies are booming, and a three-year-old investment firm has raised the largest new venture capital fund in history to keep the party going.
Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang have finished raising $2.5bn this month for Paradigm One, their first venture capital fund. Investors jockeyed to commit money to the fund, allowing them to raise twice the amount they initially targeted.
“It is probably small relative to where we’re going in 10 years,” Ehrsam told the Financial Times at Paradigm’s sparse headquarters in downtown San Francisco, where plastic wrap covered new office equipment.
Paradigm’s eye-popping fundraise could stoke fears about a bubble in cryptocurrencies, especially in the niche corners of decentralised finance where the firm has made its name. Earlier this year, VC firm Andreessen Horowitz also raised twice as much as it had hoped for a new cryptocurrency fund, bringing in $2.2bn, which at the time it said was the “largest crypto fund ever raised”.
More than any other investors, both firms have staked their fortunes on an expanding ecosystem of applications based on ethereum, a digital ledger that allows programmers to write contracts automatically executing functions such as money transfers.
Startup of the Week
Introducing the Icelandverse
The Icelandverse is unlike any other open-world experience with “-verse” in name, because it’s real. Plus, you don’t need a funny-looking VR