Secondary Thoughts #30

Mindset

“…the line between public and private markets continues to blur.”


Thankful / Optimistic

// In trying to find a silver lining in 2020 I’ve simply settled on I’m grateful for what I have. Family, friends, health, opportunity. But, this messed up year has also shoved me forward to a mindset of optimism and excitement. This mindset was brought to the fore by Dan Primack and Howard Lindzon this week who both took stock of the past and compared it to where we are now. Primack wrote about the innovation over the past ten years and the technologies that are currently helping during these times. In a similar vein, Lindzon also took a positive spin and wrote about the markets and their evolution over the past 150+ years. Lindzon talks of the past, present, and future and his excitement “for the opportunities ahead.”

You can kind of feel the momentum building. You can see the increase in velocity as investors across the board are parlaying their capital into new businesses and technologies. But, for now, what you can’t see is the value of the new businesses and technologies entrepreneurs have just started. The Wall St. Journal touched on this where they wrote about how the pandemic has destroyed jobs but also created an influx of entrepreneurs. It will be interesting to see what is built during this time. In five to ten years, there will be similar pieces written to Primack and Lindzon where people will look back to 2020 as a time when transformational ideas, technologies, and businesses were born.


Exchange to Know

// I’ve written about the Dream Exchange before but I wanted to highlight it again because I think both the idea and their mission are important and relevant to these times. When you think about the entrepreneurs and businesses mentioned above, you want them to succeed. But, they need help as they grow. The Dream Exchange is one way that could facilitate this growth by providing easier access to capital.

The Dream Exchange is the first minority owned stock exchange. It was founded by Joe Cecala who helped create Archipelago, one of the first ECNs for electronic stock trading in the U.S. which was later bought by the NYSE and is the electronic infrastructure used by them today. Cecala also helped draft HR 2899 The Main Street Growth Act. According to the company, “this legislation, once passed, will allow for the creation of a new type of stock exchange called a ‘Venture Exchange.’ Once created, Venture Exchanges will expand the capital market to private companies, providing liquidity to small businesses and investors.”

When talking about markets, exchanges, and platforms, it’s not just about late-stage pre-IPO. There also is, and will be, opportunity for investors to invest in attractive and profitable small businesses that need access to early-stage capital.


Future of Alternatives

// Anthony Pompliano put out a really good and relevant podcast with Michael Weisz from YieldStreet. Perhaps Weisz was preaching to (my) choir, but I found myself nodding throughout the whole conversation. Weisz and YieldStreet are mainly focused on credit but he succinctly lays out the current landscape and the potential opportunity in alternative investments. It’s another model and a change in mindset that should be heeded.

A couple of highlights from my Bitcast clips:

  • Current market dynamics and future of alts. “I think we’re going to see 30% to 40% of people’s overall portfolio in alts over the next five years.”


Information Arb

// Jamin Ball of Redpoint Ventures talks SaaS valuations with Rob Koyfman of Koyfin. An interesting and informative conversation where Ball compares and contrasts valuations between public and private companies with the backdrop of Koyfman’s technical tools and analysis.


Company to Know

// An “under the radar” late-stage company, Cato Networks, raised $130M at a $1B valuation led by Lightspeed Venture Partners with participation from new investor Coatue and other investors. TechCrunch explains

  • “Cato Networks has spent the last five years building a cloud-based wide area network that lets individuals connect to network resources regardless of where they are. When the pandemic hit, and many businesses shifted to work from home, it was the perfect moment for technology like this….(The company) stands out in the crowded SD-WAN space because of its unique approach to the market that combines security, mobility, and SD-WAN via its all-in-one, secure access service edge (SASE) platform. Research firm Gartner predicts that 40 percent of companies will look to adopt SASE for their cloud-based networking postures by 2024.”

Cato just raised $77M in April of this year (also led by Lightspeed) where it was reported that the company showed a 220 percent increase in bookings “and a very strong first quarter of 2020.”


Trends to Know

// Scientific American revealed their Top 10 Emerging Technologies of 2020.

Three that stood out to me:


Private & Public News From the Week

Been a busy last couple of days, more articles on Pipeline.

// Private

  • Five Takeaways From Airbnb’s IPO filing (FT)

  • Airbnb ‘Probably Looking to Capitalize on Reopening Trend’: EquityZen (YahooFinance)

  • The Future of the Long Term Stock Exchange (Bloomberg)

  • Quid Raises $320M to Loan Money to Startup Employees Using Their Equity As Collateral (TechCrunch)

  • Scooter Startup Bird Discusses Going Public Via SPAC (Bloomberg)

  • Relativity Space Raising $500M at $2B Valuation From Tiger and Others (CNBC)

  • Enterprise AI Platform DataRobot Lands $270M At $2.7B Valuation (Crunchbase)

  • Addepar Raises $117M in Series E Funding (PRNewswire)

  • Roblox Sells $1.2B of Virtual Currency As It Heads For IPO (FT)

  • Affirm’s IPO Filing Reveals Nearly A Third Of Its Revenue Comes From Peloton (Crunchbase)

  • Wish Files to Go Public With $1.75B in 2020 Revenue Thus Far (TechCrunch)

  • Largest Crypto Investment Manager Tops $10B in Assets (Reuters)

// Public

  • Masayoshi Son Says He’s Hoarding Cash to Prepare For ‘Worst Case Scenario’ (CNBC)

  • How SPACs Became Wall Street’s Money Tree (Forbes)

  • Amazon Pilot Lifts Stock Exchanges Into the Cloud (Reuters)

  • Morgan Stanley Says Go Risk-On and ‘Trust the Recovery’ in 2021 (Bloomberg)

  • UK Revisits IPO Rules to Entice Tech Founders (PitchBook)


// Thanks. Be back in two weeks.



This newsletter is created and authored by Bryce Tolman and is published and provided for informational purposes only. The information in the newsletter constitutes the Author’s own opinions. None of the information contained in the newsletter constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Author is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the newsletter may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.