The fees investment banks charge to underwrite IPOs can gobble several points from a public company’s gross proceeds, but new competition is giving some firms a chance to hold on to more of that sweet debut money.
This week, Nubank paid just 1.6% of the $2.6 billion it raised to its underwriters. As Bloomberg reported, “among 490 IPOs in the U.S. so far this year, only three paid a smaller percentage.”
In this morning’s edition of The Exchange, Anna Heim and Alex Wilhelm compared Nubank’s savings to DoorDash, which didn’t set aside any shares for underwriters in its November 2020 IPO.
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They found several contributing factors, including increased global competition, a desire to attract more retail investors and, yes, SPACs.
This is indubitably “good news for startups” as stock exchanges in different time zones offer more places where startups can list (or double-list) their shares, write Alex and Anna.
“Could it also be a sign of some of the changes we are planning to track in 2022?”
I’ll be off on Tuesday, December 21, but we’ll return with a very comprehensive newsletter on Friday, December 24. Thanks very much for reading, and have a great week.
Walter Thompson
Senior Editor, TC+
@yourprotagonist
Dear Sophie: How to maneuver the latest travel bans, H-1B alternatives
Image Credits: Bryce Durbin/TC
Dear Sophie,
The 2021 H-1B lottery process has been quite a rollercoaster!
We sponsored several people in this year’s lottery. One of our registrants was selected in the first round in March, but none were selected in the second round in July.
We just found out another of our registrants was selected in November; however, he’s from South Africa and restricted from traveling to the U.S. due to omicron.
What should we do? Any suggestions for what to do about our other prospective hires who didn’t get selected?
— Eager Employer
A few questions about the impending Reddit IPO
Image Credits: Nigel Sussman (opens in a new window)
Founded 16 years ago, Reddit has raised $1.3 billion, boosting the company to a $10 billion valuation. This week, the user-generated community revealed that it had filed confidentially to go public.
“You know what that means,” wrote Alex Wilhelm. “It’s time to ask questions.”
While he awaits its S-1 with a sharpened scalpel, Alex shared initial questions about the social hub’s operations, specifically:
“We’re curious about content moderation costs, product expansion, the company’s revenue mix, how frequently governments come up in the filing, and what the unicorn has to say about crypto.”
How to build a better rocket company [Video]
Image Credits: Chairat Netsawai (opens in a new window) / Getty Images
In “New Kids on the Launch Block,” a panel at TC Sessions: Space 2021, Darrell Etherington spoke to three rocket makers to learn more about the factors making commercial space launches less expensive and more competitive:
- Lauren Lyons, COO, Firefly Aerospace
- Benjamin Lyon, Chief Engineer & EVP Engineering, Astra
- Max Haot, founder and CEO, Launcher
“One common theme that quickly emerged was that vertical integration is a key driver of success in the rocket business is driving down costs, especially with smaller capacity launch vehicles,” writes Darrell.
It’s time for investors to redefine how we evaluate digital health startups
Image Credits: Viaframe (opens in a new window) / Getty Images
A report by RockHealth.org found that 2021 has been the best fundraising year to date for digital health startups.
Fueled in large part by an explosion in demand for mental health services and the expansion of telehealth during the pandemic, more investors are hunting for founders who can creditably lower costs and create efficiencies in a notoriously ramshackle industry.
Regardless, “proving out a financially substantiated ROI case requires a combination of time and data, and digital health is no exception,” writes Alyssa Jaffee, a partner at digital health-focused VC firm 7wireVentures.
Bold visions and solid fundamentals are driving investor interest in space [Video]
Image Credits: Roscosmos Press Office (opens in a new window) / Getty Images
The space industry is seeing unprecedented levels of private investment — and exits — as several companies scale up their operations.
In a TC Sessions: Space 2021 panel titled “Backing the Brightest,” Darrell Etherington reviewed activity over the last year and looked ahead to 2022 with three investors:
- Tess Hatch, partner, Bessemer Venture Partners
- Shaun Maguire, partner, Sequoia
- Lisa Rich, managing partner, Hemisphere Ventures
Ample’s John de Souza on the merits of B2B, company culture and investors who get it
Image Credits: Bryce Durbin
Launching a startup is inherently risky, but scaling up a company to succeed where others have failed spectacularly is a very bold move.
San Francisco-based Ample is partnering with companies that manage EV fleets to swap its modular battery packs in and out of their vehicles.
“Fourteen years ago, Better Place raised nearly a billion dollars to do what Ample’s doing, and it ended up declaring bankruptcy,” reports Rebecca Bellan.
In an extended interview with co-founder John de Souza, she asked about the company’s go-to-market strategy, its culture and why he’s certain Ample will succeed where others did not.
“The economics and operations work very well because you don’t need a large number at a single station to break even. With a small fleet, you’d have it at max 20 cars and it will break even. That’s what makes it so attractive. You don’t need to deploy the stations until you have a customer.”
