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Robinhood’s stock drops 8% in its first day’s trading

By Alex Wilhelm

Robinhood priced its public offering at $38 per share last night, the low end of its IPO range. The company was worth around $32 billion at that price.

But once the U.S. consumer investing and trading app began to allow investors to trade its shares, they went down sharply, off more than 10% in the first hours of its life as a floating stock. Robinhood recovered some in later trading, but closed the day worth $34.82 per share, off 8.37%, per Yahoo Finance.

The company sold 55,000,000 shares in its IPO, generating gross proceeds of $2.1 billion, though that figure may rise if its underwriting banks purchase their available options. Regardless, the company is now well-capitalized to chart its future according to its own wishes.

So, why did the stock go down? Given the hungry furor we’ve seen around many big-brand, consumer-facing tech companies in the last year, you might be surprised that Robinhood didn’t close the day up 80%, or something similar. After all, DoorDash and Airbnb had huge debuts.

Thinking out loud, a few things could be at play:

  • Robinhood made a big chunk of its IPO available to its own users. Or, in practice, Robinhood curtailed early retail demand by offering its investors and traders shares at the same price and level of access that big investors were given. It’s a neat idea. But by doing so, Robinhood may have lowered unserved retail interest in its shares, perhaps reshaping its early supply/demand curve.
  • Or maybe the company’s warnings that its trading volumes could decline in Q2 2021 scared off some bulls.

Regardless, in the stonk and meme-stock era, Robinhood’s somewhat downward debut is a bit of a puzzler. More as the company’s stock finds its footing and we dig more deeply into investor sentiment regarding its future performance.

We have more coming on the company’s debut, including notes from an interview with the company’s CFO about its IPO coming tomorrow morning on Extra Crunch

Shares of protein discovery platform Absci pop in market debut

By Emma Betuel

Absci Corp., a Vancouver company behind a multi-faceted drug development platform, went public on Thursday. It’s another sign of snowballing interest in new approaches to drug development – a traditionally risky business. 

Absci focuses on speeding drug development in the preclinical stages. The company has developed and acquired a handful of tools that can predict drug candidates, identify potential therapeutic targets, and test therapeutic proteins on billions of cells and identify which ones are worth pursuing. 

“We are offering a fully-integrated end-to-end solution for pharmaceutical drug development,” Absci founder Sean McClain tells TechCrunch. “Think of this as the Google index search for protein drug discovery and biomanufacturing.” 

The IPO was initially priced at $16 per share, with a pre-money valuation of about $1.5 billion, per S-1 filings. The company is offering 12.5 million shares of common stock, with plans to raise $200 million. However, Absci stock has already ballooned to $21 per share as of writing. Common stock is trading under the ticker “ABSI.” 

The company has elected to go public now, McClain says, to increase the company’s ability to attract and retain new talent. “As we continue to rapidly grow and scale, we need access to the best talent, and the IPO gives us amazing visibility for talent acquisition and retention,” says McClain.

Absci was founded in 2011 with a focus on manufacturing proteins in E.Coli. By 2018, the company had launched its first commercial product called SoluPro – a biogeneered E.Coli system that can build complex proteins. In 2019, the company scaled this process up by implementing a “protein printing” platform.

Since its founding Absci has grown to 170 employees and raised $230 million – the most recent influx was a $125 million crossover financing round closed in June 2020 led by Casdin Capital and Redmile Group. But this year, two major acquisitions have rounded out Absci’s offerings from protein manufacturing and testing to AI-enabled drug development. 

In January 2021, Absci acquired Denovium, a company using deep learning AI to categorize and predict the behavior of proteins. Denovium’s “engine” had been trained on more than 100 million proteins. In June, the company also acquired Totient, a biotech company that analyzes the immune system’s response to certain diseases. At the time of Totient’s acquisition, the company had already reconstructed 4,500 antibodies gleaned from immune system data from 50,000 patients. 

Absci already had protein manufacturing, evaluation and screening capabilities, but the Totient acquisition allowed it to identify potential targets for new drugs. The Denovium acquisition added an AI-based engine to aid in protein discovery. 

“What we’re doing is now feeding [our own data] into deep learning models and so that is why we acquired Denovium. Prior to Totient we were doing drug discovery and cell line development. This [acquisition] allows us to go fully integrated where we can now do target discovery as well,” McClain says. 

These two acquisitions place Absci into a particularly active niche in the drug development world. 

To start with, there’s been some noteworthy fiscal interest in developing new approaches to drug development, even after decades of low returns on drug R&D. In the first half of 2021, Evaluate reported that new drug developers raised about $9 billion in IPOs on Western exchanges. This is despite the fact that drug development is traditionally high risk. R&D returns for biopharmaceuticals hit a record low of 1.6 percent in 2019, and have rebounded to only about 2.5 percent, a Deloitte 2021 report notes. 

Within the world of drug development, we’ve seen AI play an increasingly large role. That same Deloitte report notes that “most biopharma companies are attempting to integrate AI into drug discovery, and development processes.” And, drug discovery projects received the greatest amount of AI investment dollars in 2020, according to Stanford University’s Artificial Intelligence Index annual report

More recently, the outlook on the use of AI in drug development has been bolstered by companies that have moved a candidate through the stages of pre-clinical development. 

In June, Insilico Medicine, a Hong Kong-based startup, announced that it had brought an A.I-identified drug candidate for idiopathic pulmonary fibrosis through the preclinical testing stages – a feat that helped close a $255 million Series C round. Founder Alexander Zharaonkov told TechCrunch the PI drug would begin a clinical trial on the drug late this year or early next year. 

With a hand in AI and in protein manufacturing, Absci has already positioned itself in a crowded, but hype-filled space. But going forward, the company will still have to work out the details of its business model.  

Absci is pursuing a partnership business model with drug manufacturers. This means that the company doesn’t have plans to run clinical trials of its own. Rather, it expects to earn revenue through “milestone payments” (conditional upon reaching certain stages of the drug development process) or, if drugs are approved, royalties on sales. 

This does offer some advantages, says McClain. The company is able to sidestep the risk of drug candidates failing after millions of R&D cash is poured into testing and can invest in developing “hundreds” of drug candidates at once. 

At this point, Absci does have nine currently “active programs” with drugmakers. The company’s cell line manufacturing platforms are in use in drug testing programs at eight biopharma companies, including Merck, Astellas, and Alpha Cancer technologies (the rest are undisclosed). Five of these projects are in the preclinical stage, one is in Phase 1 clinical trials, one is in a Phase 3 clinical trial, and the last is focused on animal health, per the company’s S-1 filing. 

One company, Astellas, is currently using Absci’s discovery platforms. But McClain notes that Absci has only just rolled out its drug discovery capabilities this year. 

However, none of these partners have formally licensed any of Absci’s platforms for clinical or commercial use. McClain notes that the nine active programs have milestones and royalty “potentials” associated with them. 

The company does have some ground to make up when it comes to profitability. So far this year, Absci has generated about $4.8 million in total revenue – up from about $2.1 million in 2019. Still, the costs have remained high, and S-1 filings note that the company has incurred net losses in the past two years. In 2019, the company reported $6.6 million in net losses in 2019 and $14.4 million in net losses in 2020. 

The company’s S-1 chalks up these losses to expenditures related to cost of research and development, establishing an intellectual property portfolio, hiring personnel, raising capital and providing support for these activities. 

Absci has recently completed the construction of a 77,000 square foot facility, notes McClain. So going forward the company does foresee the potential to increase the scale of its operations. 

In the immediate future, the company plans to use money raised from the IPO to grow the number of programs using Absci’s technology, invest in R&D and continue to refine the company’s new AI-based products. 

 

Allocate banks $5M to open up venture capital fund access

By Christine Hall

The world of venture capital investing is a relatively small one, and relationship-based to boot. Family offices and accredited investors are eager to get involved in high-quality funds, but face hurdles like access to fund managers.

Enter Allocate. The company, founded by Samir Kaji and Hana Yang in February 2021, is developing an approach to venture capital fund investing that provides a way for investors of any size to participate.

On Thursday, the San Francisco-based company announced it raised $5 million in seed funding from a group of backers including Urban Innovation Fund, Tusk Venture Partners, Basis Set Ventures, Liquid2 Ventures, Fika Ventures, Ulu Ventures and Anthemis Group.

The pair met as Kauffman Fellows, both with backgrounds in financial services. By the time they met, Yang was working in the nonprofit world, and said they began talking about the friction between the nonprofit and venture capital worlds. Then Yang joined Kaji at First Republic Bank to work together and continue the conversation.

Kaji, citing a Boston Consulting Group report, estimated there are between 8,000 and 11,000 global family offices and nearly 17 million accredited investors that currently control some $42 trillion in assets.

They saw the issue as it related to supply and demand: On the supply side, there are a finite number of institutional investors, “all with their dance cards full,” Kaji told TechCrunch. Fund managers want to get at that nontraditional endowment money and are looking at family offices, but finding those individuals is a challenge.

Meanwhile, on the demand side, family offices have trouble accessing venture capital firms — they don’t know where to look to find managers, don’t have time to cultivate those relationships or can’t make the traditional $1 million commitments.

As a result, Kaji and Yang decided to start Allocate as a way to usher in the next era of venture capital by creating a way for retail investors of any size or background to invest in funds and for managers to find family offices.

Allocate’s platform curates venture fund products for wealth advisors, family offices and qualified individual investors based on their investment objectives, and any pre- and post-investment transactions and reporting activities are completed on the platform.

The company sets up its own feeder vehicles that aggregate investor capital so that there are lower minimum investments and that capital can easily be managed by fund managers. It then charges a fee, on an annual basis, on investments made.

Currently, investors can choose the funds they want to invest in, but Kaji said Allocate will eventually also offer products that will be like funds of funds, where investments go into a pot that will be invested by a fund manager.

The company is pre-revenue and said it will use the new funding to build out its product and make some key hires over the next year as it gears up for a formal software product launch at the end of the year. It is already attracting a waitlist of several hundred fund managers and investors.

“With the market the way it is, the number of accredited investors is expected to grow by 50% by 2025,” Raji said. “There is a huge opportunity to unlock the market and have people participate.”

Jordan Nof, co-founder and managing partner at Tusk Ventures, agrees. He sees a lot of economic growth taking place outside the public market, and opportunities present themselves for someone to capitalize on.

Due to the access issue between fund managers and potential investors, there are trillions of dollars sitting on the sidelines, he told TechCrunch. With Allocate, Nof saw a way to bridge the two parties with tools for both sides to make sound decisions and further evolve venture capital.

“I have known Samir for quite some time, and he and his team understand this problem set and they have a vision of what the venture capital future looks like,” he added. “This is a cottage industry even though VC is responsible for impacting the largest of technology companies, which have taken VC, yet it is a still super fragmented industry that has no transparency. Allocate is the next transition of a true platform that enables family offices and high-net worth individuals access.”

 

Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

By Mike Butcher

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

Robinhood targets IPO valuation up to $35B amid warning that crypto incomes are slipping

By Alex Wilhelm

Robinhood released an S-1/A filing detailing its first IPO price range this morning. The company first filed to go public in early July after raising billions earlier in the year.

The well-known U.S. consumer fintech giant intends to sell shares in its public market debut at a price between $38 and $42 per share. Robinhood is selling 52,375,000 in its IPO, worth $2.0 billion to $2.2 billion. Another 2,625,000 are being offered by existing shareholders, while its underwriting banks have the option to purchase a further 5,500,000 shares in the transaction.

All told, Robinhood could see shares trade hands worth just over $2.5 billion in its IPO at the top end of its initial price range.


The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


We want to know Robinhood’s simple and diluted IPO valuation ranges, and we want to dig into the company’s newly released preliminary Q2 2021 results. Then we’ll do some fun math to better understand just how rich, or not, Robinhood’s current price range seems to be. From there, we’ll discuss whether we expect to see Robinhood raise its price range before it debuts.

Sound good? Let’s get into it.

What’s Robinhood worth?

We’ll start by calculating a few valuation marks for Robinhood to help put its $38 to $42 per-share IPO price range into context.

First, Robinhood’s post-IPO simple share count is expected to be 835,675,280, not including shares reserved for possible underwriter purchase. That share count values Robinhood at $31.8 billion at $38 per share and $35.1 billion at $42 per share. Those figures rise by $209 million and $231 million, respectively, if we count the 5.5 million shares that its banks may purchase as part of the IPO.

But what folks will want to chat on Twitter about the company’s fully diluted valuation. At the midpoint of its price range, Robinhood is worth more than $38 billion when shares tied up in vested RSUs and options are counted. That figure lands around $40 billion at the top end of Robinhood’s price range.

Robinhood would therefore be worth $35 billion, calculated using a simple share count, or as much as $40 billion if more equity is counted. Both numbers are fucking huge and indicate that Robinhood’s ascent in the last 18 months from breakout unicorn to category-defining upstart is about to be embraced by the public market, provided that it prices at least in range.

How do those prices feel, given our read of today’s market dynamics?

How is Robinhood doing?

Equity Monday: Zoom buys Five9 as Robinhood sets IPO price range

By Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

It was a big damn morning, so we had to cut some stuff. Here’s what we got into:

  • Stocks and cryptos are off this morning, as inflation and COVID-19 concerns rise.
  • Zoom is buying Five9. The deal is not super expensive, nor is it cheap. But given the huge percentage of Zoom’s market cap that it represents, it’s a serious wager from the video conferencing startup.
  • Carlyle is buying LiveU for around $400 million. TechCrunch broke this news. The deal shows that private equity is interested in startups that aren’t unicorns.
  • Robinhood dropped a new SEC filing this morning! That means we have a price range and valuation target to play with. More from TechCrunch on the matter shortly.
  • From India: A huge round for Lenskart, and a big Series A for GlobalBees.
  • And we covered this round from Nigeria. A smaller transaction, but one that could prove to be quite neat, we reckon.

Ok! Chat Wednesday!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

The Next Covid-19 Battle Will Be About Vaccinating Kids

By Maryn McKenna
Pfizer and Moderna are midway through clinical trials, and the public health system is well versed in delivering childhood shots. The challenge? Politics.

Access to Birth Control Lets More Girls Finish High School

By Kasra Zarei
A new study finds that making contraceptives and reproductive care accessible through a state-funded program in Colorado reduced the dropout rate for young women.

Covid Protections Kept Other Viruses at Bay. Now They’re Back

By Maryn McKenna
When we masked and stayed home, we were shielded from winter viruses. As we get back to normal, some will resurge—and our immune systems may not be prepared.

A Global Smart-City Competition Highlights China’s Rise in AI

By Khari Johnson
Chinese entrants swept all five categories, featuring technologies to improve civic life. But the advances could also be tools for surveillance.

Investors’ thirst for growth could bode well for SentinelOne’s IPO

By Alex Wilhelm

Turning the page from the early-stage venture capital market to the super late-stage exit market, this morning we’re talking about endpoint security company SentinelOne’s IPO in the context of Sprinklr’s own. We’ll have more on the public offering market later today when Doximity and Confluent price their respective IPOs after the close of trading.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


SentinelOne’s IPO, expected to price on June 29 and trade June 30, is a fascinating debut. Why? Because the company sports a combination of rapid growth and expanding losses that make it a good heat-check for the IPO market. Its debut will allow us to answer whether public investors still value growth above all else. And this week, the company gave us an early dataset regarding its market value in the form of an IPO price range. This means we can do some unpacking and thinking.

A reminder regarding why we dwell on the exit market for unicorns: We care because the value of late-stage startups when they reach a liquidity point helps set valuation comps for myriad smaller startups. Furthermore, the level of public-market enthusiasm for loss-making, growth-focused companies will determine the scale of returns for many a venture capitalist, founder, and early employee.

So, let’s talk about SentinelOne’s cybersecurity IPO price range; Sprinklr’s social-media software debut will play foil.

The price of growth

It can make good sense to pay up for a quickly growing company’s shares. This is why you may hear of a startup raising an early-stage round at a very high revenue multiple.

Why put a $50 million price tag on a startup that just crossed the $1 million annual recurring revenue (ARR) threshold? If it’s growing sufficiently quickly, the math can pencil out. If that startup was growing at 300% per year, say, the revenue multiple that you paid in the round valuing the startup at $50 million would fall sharply over the next year, at which point other investors would probably scramble to put more capital into the firm at a higher price.

Bingo! You just got a markup on your initial investment, and the company has found someone else to lead their next round at a higher price, giving it even more capital to keep its growth game going and make your early investment appear prescient. See? Venture capital is easy.1

The same general idea applies to companies going public. Growth matters, and the more rapidly a company is adding revenue, the more money it will be worth because investors can anticipate its future scale (within reason). Some companies that sport quick growth can have other issues that impact their value. Extensive debt, for example, a history of uneven growth, or deteriorating economics could come into play. Or simply very high losses.

Viva Republica, developer of Korean financial super app Toss, raises $410M at a $7.4B valuation

By Catherine Shu

Viva Republica, the Seoul-based fintech company behind Toss, a super app with more than 40 financial services, announced today it has raised $410 million at a post-money valuation of $7.4 billion. The new funding was led by Alkeon Capital, an American investment firm, and included participation from new investors like Korea Development Bank, and returning backers Altos Ventures and Greyhound Capital.

The company plans to launch Toss Bank, a neobank, in September 2021, which it describes as “the final key component” of its super app strategy. It will also use the funding to continue its expansion in overseas markets, including Vietnam, where Toss launched last year.

Viva Republica, which hit unicorn status in 2018, has now raised more than $940 million in equity funding.

Founder and chief executive officer SG Lee told TechCrunch that Toss Bank will focus on lending, and also offer savings accounts with competitive interest rates.

“A lot of challenger banks and neobanks are focusing on the banking experience, such as cards, so their main revenue source is interchange fees,” he said. “Toss is quite different because we already cover all that. We cover P2P payment, money transfer, cards and all sorts of services. So we are focusing on loans, unsecured loans, mortgages, all sorts of loans. We are going to use this vehicle to give the most competitive interest rates to users, and Toss Bank will not have a separate app, since we have super app strategy.”

Toss founder SG Lee

Toss founder SG Lee

One of the reasons Toss Bank is focusing on loans is because if someone has a middling credit score, many South Korean banks will only offer them loans at subprime interest rates, Lee said. Toss Bank will be able to offer better rates because its risk-scoring model leverages data from its millions of users.

Toss now claims a total of 20 million users (or more than a third of South Korea’s 51.7 population) and of that amount, 11 million are monthly active users.

The app launched as a Venmo-like peer-to-peer money transfer platform in 2015, before adding more services. Now its users can turn to the app for almost all of their financial needs.

For example, they can check their balances at different banks and credit cards on a dashboard. Merchants can use Toss Payments to send and receive online payments and manage their business finances. Other features include budgeting tools, bill payments, a credit score tracker and insurance plans. Lee said more than 20% of bank accounts and credit cards in South Korea are already registered on Toss.

As a financial super app, Toss Bank will be able to supplement information from South Korea’s main credit rating agencies with its own data about user transactions: for example, where do they spend money, how often do they spend, their cash flow and balances.

Lee added that one of South Korea’s leading credit bureaus, KCB (Korea Credit Bureau), backtested Toss’ engine with data from over two million users, and it turned out to be 150% better in terms of differential power analysis and 30% lower in delinquency rates. “This is the first engine that counts this asset-related data, and no machine-learning technologies have been used in credit evaluation” in South Korea, he said. “I think Toss Bank is really well-positioned to disrupt the whole loan market.”

In March, Toss also launched an investment service called Toss Securities, designed to make stock trading accessible to new investors who shy away from traditional brokerages. Over the past three months, it has signed up more than 3.5 million users.

Viva Republica launched Toss in Vietnam, its first international market, in 2020, and the app now has services like no-fee money transfers, debit cards and a financial dashboard through a partnership with CIMB bank. Toss currently claims more than three million monthly active users in Vietnam and says it adds more than 500,000 active users every month. Toss is planning to enter other Southeast Asian markets, too.

Toss hasn’t finalized a timeline, but it is targeting Malaysia for its next market by the end of this year. “The product that we built for Vietnam is actually quite scalable across all Southeast Asia markets, so it’s a matter of time,” Lee said. “But we want to focus on the Vietnam market because it’s scaling increasingly fast and we have to cover the growth.”

As for the possibility of holding an initial public offering or finding another exit opportunity, Lee said the company is still finalizing its plans. “As an Asian company, reaching a $7.4 billion valuation is pretty high, and I think at some point we will face not being able to do more fundraising in the private market. So we’re targeting to raise once more by the end of this year or early next year for over $300 million. That will be our last private fundraising, and then we’re thinking a timeline of three years, and we are reviewing not only for a Korean listing but also a U.S. listing.”

 

Cannabis and digital health startup Sanity Group closes $44.2M Series A led by Redalpine

By Mike Butcher

Berlin-based cannabis and digital health start-up Sanity Group has closed a $44.2M Series A financing round led by Swiss VC Redalpine along with US-based Navy Capital and SOJE Capital. GMPVC also participated in the round. This appears to be the largest round of cannabis funding in Europe to date and brings total investment in Sanity Group to $73M.

The new capital will be used to expand the Group’s medical division in Europe as well as a EU-GMP-compliant research and production facility near Frankfurt.

Previous investors include HV Capital, TQ Ventures, Atlantic Food Labs, Cherry Ventures, Bitburger Ventures, and SevenVentures. In addition, Sanity Group has attracted celebrity angels including music producers will.i.am, Scooter Braun, and actress Alyssa Milano.

Sanity’s cannabis-based platform is for mental health and chronic pain management, allowing the tracking of cannabis-based therapy digitally with a medical device. This tells customers how much of the active ingredient (THC, CBD or other cannabinoids) is being administered. This is then registered in a therapy diary.

Finn Age Hänsel, founder and managing director of Sanity Group said: “A round of this magnitude shows that cannabis is increasingly moving into the mainstream of investor awareness, and represents an important milestone in our business expansion on our way to becoming Europe’s leading cannabis company.”

Over an interview, he added: “So we are fully legal and operated in Germany. We are just about to enter the Czech Republic and Poland. The UK is one of the biggest markets we want to enter going forward because, as you might know, the whole area of medical cannabis is slowly but surely opening all over Europe, with Germany being the largest market, about 80% of all the cannabis cannabinoid-based therapies today. But actually, the UK being the number two, which is a super attractive market for us but we look further into the Czech Republic and Poland, because those are the markets that have opened up from a regulatory perspective, at the most, over the last two years, and then France will open up next year, but that’s basically one after the other.”

Sean Stiefel, CEO at Navy Capital said: “The European cannabis market faces exciting developments in the coming months. Compared to the North American market, Europe is now where we were in the U.S. about four years ago. We want to bring our expertise and experience to the table. For our first investment in Europe, it was important for us to find a team that understands the market and has real industry experts in its ranks.”

How to identify unicorn founders when they’re still early-stage

By Ram Iyer
Johan Brenner Contributor
Johan Brenner, general partner at Creandum, early backer of iZettle, Klarna, Trade Republic, Vivino, Neo4J and many more.

As an early-stage VC, you spend time with hundreds of fantastic startups, trying to identify potential winners by thinking about market size, business model and competition. Nevertheless, deep down you know that in the long run, it all comes down to the team and the founder(s).

When we look at the most successful companies in our portfolio, their amazing performance is in large part thanks to the founders. However, even after 20 years in the industry, I have to admit that analyzing the team is still the most challenging part of the job. How do you evaluate a young first-time entrepreneur of an early-stage company with little traction?

The best founders are humble and well aware of their weaknesses and limitations as well as the potential challenges for their startup.

At Creandum, in the past 18 years, we have been fortunate to work with some of Europe’s most successful startup founders such as Daniel Ek from Spotify, Sebastian Siemiatkowski from Klarna, Johannes Schildt from Kry, Jacob de Geer and Magnus Nilsson from iZettle, Emil Eifrem from Neo4J, Christian Hecker from Trade Republic and many more.

After a while, we realized that these incredible entrepreneurs all share some fundamental characteristics. They all have lots of energy, work hard, show patience, perseverance and resilience. But on top of that, all these unicorn founders share five key traits that, as an investor, you should look for when you back them at an early stage.

They know what they don’t know

Many people expect a typical startup founder to be very confident and have a strong sales mentality. While they should definitely live up to those expectations, the best founders are also humble and well aware of their weaknesses and limitations as well as the potential challenges for their startup.

They keep wanting to learn, improve and grow the business beyond what average people have the energy and drive to manage.

AI cybersecurity provider SentinelOne files for $100M IPO

By Carly Page

SentinelOne, a late-stage security startup that helps organizations secure their data using AI and machine learning, has filed for an IPO on the New York Stock Exchange (NYSE).

In an S-1 filing on Thursday, the security company revealed that for the three months ending April 30, its revenues increased by 108% year-on-year to $37.4 million and its customer base grew to 4,700, up from 2,700 a year prior. Despite this pandemic-fueled growth, SentinelOne’s net losses more than doubled from $26.6 million in 2020 to $62.6 million.

“We also expect our operating expenses to increase in the future as we continue to invest for our future growth, including expanding our research and development function to drive further development of our platform, expanding our sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations,” SentinelOne wrote in its filing.

The Mountain View-based company said it intends to list its Class A common stock using the ticker symbol “S” and that details about the price range and number of common shares to be put up for the IPO are yet to be determined. The S-1 filing also identifies Morgan Stanley, Goldman Sachs, Bank of America Securities, Barclays and Wells Fargo Securities as the lead underwriters.

SentinelOne raised $276 million in a funding round in November last year, tripling its $1 billion valuation from February 2020 to $3 billion. At the time, CEO and founder Tomer Weingarten told TechCrunch that an IPO “would be the next logical step” for the company.

SentinelOne, which was founded in 2013 and has raised a total of $696.5 million through eight rounds of funding, is looking to raise up to $100 million in its IPO, and said it’s intending to use the net proceeds to increase its visibility in the cybersecurity marketplace and for product development and other “general corporate processes.”

It added that “may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions, or businesses that complement our business.” The company’s sole acquisition so far took place back in February when it bought high-speed logging startup Scalyr for $155 million.

SentinelOne is going public during a period of heightened public interest in cybersecurity. There has been a wave of high-profile cyberattacks during the COVID-19 pandemic, with hackers taking advantage of widespread remote working necessitated as a result.

One of the biggest attacks saw Russian hackers breach the networks of IT company SolarWinds, enabling them to gain access to government agencies and corporations. SentinelOne’s endpoint protection solution was able to detect and stop the related malicious payload, protecting its customers.

“The world is full of criminals, state actors, and other hostile agents who seek to exfiltrate and exploit data to disrupt our way of life,” Weingarten said in SentinelOne’s SEC filing. “Our mission is to keep the world running by protecting and securing the core pillars of modern infrastructure: data and the systems that store, process, and share information. This is an endless mission as attackers evolve rapidly in their quest to disrupt operations, breach data, turn profit, and inflict damage.”

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