Month: September 2019

‘The Cheap Money Era’: 2019’s IPOs Have Delivered Some Harsh Lessons to Venture Capital

September 30, 2019

Indeed, those like Aggarwal believe many of these unicorns were “given a little bit of a free hand.” She maintains investors are going to be keeping a closer eye on private companies’ business plans and losses—and Santosh Rao, head of research at Manhattan Venture Partners, suggests that, especially after Uber’s and Lyft’s “hype and then bust,” investors have become very cautious. “Now they’re reading the fine print, they’re not just looking at the revenues,” he says.

“I think [private investors are] going to realize that there’s not going to be that big bump that you get at the IPO, there’s no guarantee,” Rao says. “Because some people come in late, either they should have a very long time horizon, or they think they’re going to get a big pop at the IPO, … but I think now you’ll see that the incremental investor in the later rounds will be more cautious, will know that the exits may not be rewarding, or the upside may be limited when they go out, so they’ll have to either wait or make sure that the company has a solid business model [and] that it can withstand the scrutiny of the public market that is going to be very intense.”

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Investors push back on IPOs with high valuations, murky path to profitability

September 27, 2019

“The valuations are broken,” Santosh Rao, Managing Partner at IPO research firm Manhattan Venture Research told me. “What are the bankers thinking? Private valuations are way out of sync with what the public is willing to pay.”

The other major issue that is resurfacing: lack of profitability. Peloton, for example, lost $296 million on $915 million in revenues. It’s not clear how many years it will take to become profitable, part of a long string of companies that are very good at burning cash but not great at generating profits any time in the near future.

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Fitness startup Peloton’s shares fall 7% in market debut

September 27, 2019

Investors and experts tracking recent IPOs said several startups thinking of going public in the next 12-18 months would be extremely wary of the recent backlash against loss-making firms and may end up staying private longer.

“Companies will start prioritizing what the market is telling them they’re worth in the secondary market,” said Andrea Lamari Walne, a Silicon Valley-based partner at merchant bank Manhattan Venture Partners.

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Fitness startup Peloton’s shares fall 7% in market debut

September 27, 2019

“Companies will start prioritizing what the market is telling them they’re worth in the secondary market,” said Andrea Lamari Walne, a Silicon Valley-based partner at merchant bank Manhattan Venture Partners.

In secondary markets, investors buy and sell shares of a private company among themselves.

“Companies are taking a very hard look at secondary transactions as an indicator of the possible performance leading into whatever form of public company they’re going to be,” she added.

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Investors push back on IPOs with high valuations, murky path to profitability

September 26, 2019

“The valuations are broken,” Santosh Rao, Managing Partner at IPO research firm Manhattan Venture Research told me. “What are the bankers thinking? Private valuations are way out of sync with what the public is willing to pay.”

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Can WeWork survive?

September 25, 2019

Investors, rivals, and even many employees are applauding Neumann’s departure, and many would certainly agree with the latter part of the former CEO’s quote. “Enough of this ‘saving the world business,’” says Santosh Rao, who covers pre-IPO startups as head of research at Manhattan Venture Partners—making reference to Neumann’s stated ambition that We’s mission has been to elevate the world’s consciousness. “Investors are saying, ‘Show me the money.’”

But ousting Neumann doesn’t fix We’s troubles. The company has $1.3 billion in long-term debt (as of June 30, 2019) and $47 billion in lease obligations over the next 15 years. As of August, it had $2.5 billion in cash. Its IPO prospectus revealed that the company loses a dollar for every dollar it makes.

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NOTEBOOK – One Good Read:Can WeWork survive?

September 25, 2019

WeWork CEO Adam Neumann is out and Fast Company asks, “Can WeWork Survive?” Neumann, who remains non-executive chairman and We’s largest individual shareholder, told employees in an all-staff memo Tuesday that “our business has never been stronger, but since the announcement of our IPO, too much of the focus has been placed on me.” Neumann’s departure was welcomed among Investors, rivals and many employees. “Enough of this ‘saving the world business,’” says Santosh Rao, who covers pre-IPO startups as head of research at Manhattan Venture Partners — making reference to Neumann’s stated ambition that We’s mission has been to elevate the world’s consciousness. “Investors are saying, ‘Show me the money.’”

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WeWork’s CEO drama has one industry insider calling it an ‘Elon Musk situation’

September 24, 2019

“Startups deserve to have the visionary on board,” Santosh Rao, head of research at Manhattan Venture Partners, told Business Insider on Tuesday. “But this is a weird situation. He will be there but he’s not going to run the company.”

“It’s almost like an Elon Musk situation,” he continued. “The company runs on his charisma and vision, so I think this is a good middle ground.”

Earlier this month, Manhattan Venture Partners, an investment firm and research shop that focuses on later stage, Pre-IPO companies, initiated coverage on WeWork shortly after its IPO documents were filed with US regulators. In its report, Rao said WeWork was worth about $28 billion, about half of the company’s originally targeted value.

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2019 is an IPO bonanza: Investors going bananas over cloud companies going public

September 23, 2019

“This has been the year when cloud-based companies and on-demand services came of age,” Santosh Rao, head of research at Manhattan Venture Partners, told Fortune.

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Manhattan Venture Partners speaks to TIMES NOW on Indo-US relationship.

September 23, 2019

PM has done a great job: Santosh Rao, Partner & Head of Research, Manhattan Venture Partners tells TIMES NOW on Indo-US relationship.

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Airbnb says it will go public next year

September 23, 2019

Airbnb is also pulling in more money from its tourism business, with more than 40,000 tours and “experiences” booked in over 1,000 cities.

All of this travel has led to over $100 billion in economic impact across 30 countries, the company said.

This growth hasn’t come without controversy, and Airbnb’s success will depend on its ability to continue to thread the needle between government regulation over the company’s impact on housing prices and the creation of vacant apartments and homes that are only investment properties that increase Airbnb’s housing stock.

The company’s imminent public offering is good news for investors like Andreessen Horowitz, Manhattan Venture Partners, Sequoia Capital, TCV, Firstmark and Altimeter Capital, which have collectively invested roughly $4.4 billion into the company, according to Crunchbase.

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Impossible Foods will make its grocery store debut in California

September 23, 2019

Andrea Lamari Walne of Manhattan Venture Partners, which owns $15 million worth of Impossible shares, says she’s never seen such skyrocketing popularity among investors. She believes Impossible Foods has a brighter future over its rivals.

“Impossible is showing they’re clearly a stronger bet over Beyond Meat, because of consumer demand and their growth trajectory,” said Walne.

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It’s official: Airbnb to go public in 2020

September 23, 2019

The exact size of Airbnb’s IPO is unknown, given that it has raised at least $4.4 billion coming into it and was last valued at $31 billion in 2017, a figure likely far higher today. But it’s a reasonable guess that the public offering will be a big one. It won’t be as big as that of Uber Technologies Inc., which floated on a valuation of $82.4 billion earlier this year, but it will certainly be up there.

Whatever the number, the winners will be Airbnb’s investors, which include Andreessen Horowitz, Manhattan Venture Partners, Sequoia Capital, TCV, Firstmark and Altimeter Capital.

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Why Amazon is ‘going all out’ to find new talent at its job fairs, according to one analyst

September 18, 2019

“30,000 is a big number, but Amazon needs a lot of people,” Santosh Rao, Head of Research at Manhattan Venture Partners, told Yahoo Finance’s The Ticker this week.

Amazon has more than 650,000 employees worldwide, with the number likely to rise. This spring, Amazon posted the first job openings for its Northern Virginia location. The company aims to fill 400 positions there by the end of the year, with 25,000 people expected to be employed in the next 12 years.

“They’re going all out, being proactive, preemptive you could say, ahead of the holiday season,” Rao said. “But more than that, to establish their business in the new verticals.”

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Uber, Lyft per-driver costs in California could jump 30% under gig work law

September 17, 2019

Santosh Rao, head of research at Manhattan Venture Partners, said if costs go up for Uber and Lyft and the ride-hailing companies have to pay for employee benefits, they will hire fewer drivers but those drivers will work longer hours.

Flexibility is key with gig economy companies, Rao added, since otherwise it might as well be a traditional job.

“It’s not about economic stability. It’s about flexibility with economic incentives,” Rao said in an interview. “People like flexibility.”

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WeWork and Saudi Aramco Pose Big Tests for JPMorgan’s Resurgent Underwriting Business

September 13, 2019

“There is a public relations situation that needs to be managed; the last thing [JPMorgan] wants is to be called greedy and a mercenary,” says Santosh Rao, head of research at Manhattan Venture Partners, a boutique merchant bank focused on pre-IPO companies. “But they will definitely make it work, because the stakes are very high and there is the chance of repeat business.”

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New Venture Studio Aims To Put DraftKings In The Driver’s Seat For Sports Tech Innovation

September 13, 2019

DraftKings tabbed their former Chief Marketing Officer, Janet Holian and veteran venture capitalist and athlete/celebrity investment adviser, Rashaun Williams to spearhead the new venture. Williams, who manages a $300 million-dollar fund for Manhattan Venture Partners and who was also an integral part in hip hop legend, Nas’ Queensbridge Venture Partners has been amassing a massive network of current and former athletes interested in tech and venture capital for a number of years. As he puts it, “DraftKings and I were running on two parallel tracks, me on the athlete network side and of course DraftKings being one of the biggest and most successful sports tech companies of all time. We ended up meeting during NBA All-Star Weekend in February and came to the realization that 1+1=5, which is how DRIVE was born.”

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The startups that hack your devices, WeWon’t, and Goldman Sachs ruffles feathers

September 9, 2019

Graham Rapier talked to Santosh Rao, head of research at Manhattan Venture Partners, who explained why he thought WeWork’s original valuation was way too high.

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A venture-capital insider dishes on why WeWork’s original valuation was way too high

September 9, 2019

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Boston Tech Watch: DraftKings Drives, The Engine Revs, NuTonomy Swaps

September 3, 2019

DraftKings says it has launched a sports tech matchmaking venture and athlete-entrepreneur network both under the brand DRIVE. While DraftKings says the venture itself doesn’t plan on investing in the sports tech startups, it plans to match early stage companies with its network of current and former athletes and other investors. The venture is “partially owned” by DraftKings and has funding from General Catalyst, Accomplice, and Boston Seed. Janet Holian, a sports tech veteran and DraftKing’s former marketing head, is co-founding DRIVE with venture investor Rashaun Williams. Holian will be CEO and Williams will be president of DRIVE.

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DraftKings spinoff aims to make Boston a ‘Title Town’ for sports tech

September 3, 2019

Janet Holian and Rashaun Williams sure hope so. They have joined forces to launch a new venture here called Drive by DraftKings that aims to build a support system for sports tech entrepreneurs as well as pro athletes interested in investing and working in the field.

Drive’s launch, unveiled Thursday, has been in the works for months. DraftKings, the Boston-based tech company best known for its fantasy sports competitions, had wanted to launch a “venture studio” to foster the next generation of sports tech firms. Holian stepped down as chief marketing officer at DraftKings, which employs more than 700 people in Boston, to help make that happen. Holian connected with Williams, an Atlanta-based venture capitalist and DraftKings investor who also coaches pro athletes about investing and entrepreneurship. Together, they decided to fold his work into this new venture, offering classes and other kinds of support to athletes and startups.

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DraftKings announces new initiative aimed at sports startups, athletes

September 3, 2019

Williams said that the impetus to create Drive came from DraftKings’ interest in supporting budding sports technology firms and building a support network of sorts.

“They kept thinking, ‘What can we do to foster this community and build this community here in Boston,’” Williams said. Williams, who has previously acted as a “coach” for athletes and entertainers looking to make investments, also indicated that Drive could provide opportunities to athletes who might otherwise be locked into sports-adjacent careers.

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DraftKings Announces Initiative That Is Aiming To Be An Ecosystem For The Sports Technology Intersection

September 3, 2019

“The DRIVE Athlete Network puts athletes at the center of everything we do, providing them with rare, real-world opportunities to embed with leading VC firms and cutting-edge tech companies,” said Rashaun Williams, DRIVE co-founder and president. “DRIVE fills a resource gap for current and former professional athletes, who despite their wealth and public fame, are often stuck on the outside looking in at the tech companies revolutionizing their own sports.”

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DraftKings bets on sports tech firms and athletes’ off-field careers with new venture

September 3, 2019

The venture, called “Drive” launched Thursday at DraftKings’ headquarters in Boston. It will consist of an athlete network, complete with internships and residency programs designed to boost their business acumen. It will also feature the Drive Venture Studio which will provide sports tech entrepreneurs with access to key figures and executives across the U.S. sports landscape. Former DraftKings executive Janet Holian and venture capitalist Rashaun Williams co-founded the initiative, which counts venture firms Boston Seed, Accomplice, General Catalyst and DraftKings itself as financial backers.

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Proust Goes Tech With Andrea Walne, Partner At Manhattan Venture Partners

September 3, 2019

It’s not about pontificating on Twitter or in secret slack groups all day, says Andrea Walne, a partner at Manhattan Ventures Partner. Instead, in order to score deals and meet the right people, she’s found success in a casual iMessage group chat. And, of course, meeting people in real life.

Walne is the newest partner at Manhattan Venture Partners, coming from a background as a founder and operator in the startup world. She has a soft spot for supply chain, and doesn’t mind when her friends laugh at that nerdy tidbit.

For this Proust Goes Tech, we catch up with Walne and learn about why she doesn’t mind ignoring Slack sometimes, how slow walkers make her miserable, and which book is in her top three favorite business books of all time.

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