Archives: Media Mentions

There is still some rotation left in the US markets: Santosh Rao

September 9, 2020

I do not think that we are done with the market and there is no recession. It is kind of disconnected and does not need to carry over to other countries. It is more specific to the US. The US markets after pulling back will consolidate and go back up.

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Judges, more details announced for Summerfest Tech pitch competition

August 5, 2020

Representatives from some of the largest venture capital funds in the Midwest and the U.S. have been assembled to judge Startup Wisconsin Pitch at Summerfest Tech in September.

The judges selected for the competition are Rashaun Williams, general partner at Manhattan Venture Partners; Allison Weil of Chicago’s Hyde Park Venture Partners; Craig Schedler of Northwestern Mutual Future Ventures, the venture arm of Milwaukee-based Northwestern Mutual, and Girish Ramachandra of Wipfli and Hyde Park Angels in Chicago.

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IPOs Are Soaring. What That Means for the Broader Market.

June 15, 2020

Santosh Rao, head of research at Manhattan Venture Partners, which focuses on pre-IPO companies, says the recent flurry shows pent-up demand for new offerings. He thinks that the appetite is likely to remain strong for enterprise software firms like Databricks, Datastax, and Palantir, which he says could come public in the next 12 to 18 months.

One note of caution: Rao warns that the IPO market tends to shut down when the VIX —a measure of market volatility—goes north of 20 or 30. On Thursday, the indicator spiked above 40 for the first time since late April.

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There is definitely a demand shock from coronavirus outbreak: Santosh Rao

March 13, 2020

It is just starting to get worse as Trump is now addressing the coronavirus situation. We do not have New York in full-fledged lockdown yet, but it looks like it is on its way there and the markets are reeling with uncertainty.
There is definitely a demand shock. There is a lot of news flow also and WHO has announced that it is a pandemic even though we knew that it was there. The market took another leg down. There is so much cross-current.

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Small pre-holiday moves on Wall Street

February 18, 2020

“One of the big fears is we don’t know how bad the China coronavirus effects are. Is it going to be beyond China, the impact? So we don’t know that at this point. Every time it looks like it is contained, we get more news that it’s not. So I think that’s what’s causing some confusion there and that could be one of the reasons why the bond market is doing so well because people are saying we don’t want to take the risk.”

A Reuters poll of economists predicts the world’s second-biggest economy will slow to its weakest quarterly growth since the financial crisis over a decade ago.

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Coronavirus is ruining the wedding industry: bridal boutique owner

February 18, 2020

Coronavirus is infecting businesses.

It’s not just the wedding industry at risk. Electronics supply could be hit as well, including iPhone production.

“It’s everything: consoles, laptops, phones,” Santosh Rao, head of research at Manhattan Venture Partners, told Marketplace.

TV production could be next, Rao adds, as well as video game releases, since China supplies a significant amount of game development.

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The impact of coronavirus is being felt across the global economy

February 13, 2020

It’s been a month since China announced the death of the first victim of the new coronavirus. The outbreak has since infected more than 44,000 people and spread far beyond China.

Federal Reserve Chairman Jay Powell told lawmakers on Capitol Hill this week that he’ll be watching for the virus’s impact on the U.S. economy.

Santosh Rao, head of research at Manhattan Venture Partners, said coronavirus has the potential to disrupt the electronics supply chain.

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Wall Street Breakfast: Trade Comes Back Into Focus

February 7, 2020

Planning to list on the NYSE today under ticker “CSPR,” Casper has priced its initial public stock offering at $12 a share, down from an earlier range of $17 to $19. That values the company at around $500M, down from the $705M it valued itself at last week, and a significant hit for the mattress company that once prided itself as a unicorn. “The days of growth at any cost are over,” said Santosh Rao, who researches IPOs for Manhattan Venture Research. “You either have to be profitable, or take a haircut.”

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Casper IPO reflects investor sentiment toward money-losing companies

February 6, 2020

“The days of growth at any cost are over,” said  Santosh Rao, who researches IPOs for Manhattan Venture Research. “You either have to be profitable, or take a haircut.”

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Turo Adds Another $30M To Series E

February 5, 2020

The new round of funding brings Turo’s total funding to $500 million, and adds Manhattan Venture Partners and Allen & Co as investors in the company. Through Manhattan Venture Partners, Fitzgerald, 2 Chainz, NBA players Victor Oladipo, Langston Galloway, and Thad Young, and NFL players Dee Ford, Tyrod Taylor, Malcolm Jenkins, and Clint McDonald are now shareholders in the company.

Manhattan Venture Partners is somewhat known for bringing a celebrity touch to private company funding rounds. The VC firm has an “All-Star Fund,” that helps celebrities and athletes invest in private companies.

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Stripe ripe for stock market listing, says US-based analyst

February 4, 2020

Stripe, the online payments company founded by Limerick brothers Patrick and John Collison, is “ripe for an initial public offering (IPO),” according to Manhattan Venture Research in New York.

While the fast-growing company has repeatedly said it has no plans to seek a market listing, Santosh Rao, head of research at Manhattan, notes that the fintech space “has been buzzing with activity”, with consolidation the name of the game.

In Manhattan’s recent Venture Bytes monthly report, Mr Rao highlights a number of fintech-focused “megadeals” that have taken place over the past 12 months. These include Fis’s $43 billion (€39 billion) deal for Worldpay, Fiserv’s £22 billion (€26 billion) acquisition of First Data, and Global Payments $21.5 billion purchase of TSYS.

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The fall of WeWork was a jolt to venture capital—how that could change VC investing

January 22, 2020

When news broke in September that SoftBank-backed WeWork was pulling its doomed IPO, a chill ran across the capital markets.

Mere days before, entertainment and talent agency Endeavor had also pulled its IPO. In December, following disappointing growth, SoftBank sold back its nearly 50% stake in late-stage dog-walking startup Wag Labs to the company. And according to reports, pizza startup Zume was in talks with SoftBank to raise another funding round in late 2019, but the deal fell apart in December (the company subsequently laid off hundreds of workers in January).

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New stocks are red hot to start 2020 with IPO ETF tripling the return of the market

January 22, 2020

IPO watchers expect the 2020 market to be front-half loaded due to a big second-half event: the presidential elections.

“In an election year, IPO issuance is traditionally strong in the first two quarters, slow in the third quarter, then picks up in the end of the fourth quarter,” said Santosh Rao, head of research at Manhattan Venture Research.

“My best guess is the biggest names will try to come out well before the election,” he said.

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Hedge fund puts $550m into technology stock option financing

January 14, 2020

Privately held start-ups have typically not been keen to see employees enter contracts backed by their shares and options. But Andrea Walne, a partner at Manhattan Venture Partners, said with more than a dozen groups now offering financing tied to start-up stocks and options, she hoped a marketplace would develop.  “Companies have been leaning far too much on their inability to provide financial and tax advice as a cop out to supporting employees with their stock options,” Mrs Walne said.

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Phase I of Sino-US Trade trade pact a done deal, Phase II likely after the elections: Santosh Rao

January 13, 2020

Santosh Rao of Manhattan Venture Partners, says both China and the US need the trade deal and it will be a step in the right direction for the global economy. In an interview with ETNOW, he said nothing can derail the US markets in 2020 unless a huge macro event takes place.

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What does the ‘WeWork effect’ mean for IPOs in 2020?

December 31, 2019

Stripe surpassed Airbnb as the most valuable private company in 2019 thanks to a valuation of $35 billion as of a September 2019 funding round. The company sits in the hot intersection of payments and software, working with companies such as Lyft, Uber and Glossier on payment processing, payouts to contractors and card issuing. E-commerce sales are picking up, and Stripe “does the back end for those kinds of businesses,” riding the rising tide of the online economy, said Santosh Rao, head of research and a partner at Manhattan Venture Partners.

The company has been expanding geographically and adding new enterprise capabilities as it goes up against companies such as PayPal Holdings Inc. PYPL, -0.31% , Square Inc. SQ, +1.20% and Adyen NV ADYEN, +0.00% . Though co-founder John Collison told CNBC earlier this year that the company had “no plans” for an immediate IPO, the company still cracks Rao’s short list. A Stripe spokesman reiterated in an email that there are “no plans” for the company to go public.

There are two other fintech names on Rao’s list: Klarna, which powers installment-payment options and nabbed a $1.4 billion valuation on the private market back in 2014, and Toast, which makes payments products for restaurants and fetched a $2.7 billion private valuation in early 2019.

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Uber and other unicorns flopped on Wall Street this year. Will IPOs rebound in 2020?

December 16, 2019

Investors are also betting that food delivery service Postmates, trading app Robinhood and mattress seller Casper could make waves if they debut on Wall Street.

“2020 could be a good year for the IPO market. There is a tremendous pipeline. IPOs are not broken but the bar has changed. Before there was no bar,” said Santosh Rao, head of research at Manhattan Venture Partners, in an interview with CNN Business.

“Investors are now more demanding and want sustainable business models,” he added.

Rao is bullish on the prospects for Airbnb and Postmates if they go public next year. He’s also keeping a close eye on Postmates rival DoorDash, payments company Stripe, Big Data giant Palantir and Chinese ridesharing firm Didi.

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Several unicorns flopped in 2019, will IPOs rebound next year?

December 16, 2019

Stakeholders are also confident that Postmates, a food delivery company and mattress seller Casper are in an excellent position to hit the ground running if they make it to Wall Street.

“2020 could be a good year for the IPO market. There is a tremendous pipeline. IPOs are not broken, but the bar has changed. Before there was no bar. Investors are now more demanding and want sustainable business models,” Santosh Rao, head of research at Manhattan Venture Partners, told CNN in an interview.

According to Rao, the stocks of Airbnb and Postmates are likely to maintain a bullish position, if they go public in 2020. DoorDash, a close rival of Postmates is also on Mr Rao’s radar as he remains confident that it will also be one of the listings to look out for in the coming year.

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Snap Inc. Shares Close Up 44% In Stock Market Debut

December 16, 2019

Alibaba raised $21.8 billion in its initial offering, but that total rose to $25 billion after underwriters also sold the so-called green shoe, extra shares companies make available at IPO time. Snap offered its underwriters the option to purchase up to an additional 30 million shares in its green shoe, and will disclose at a later date if they were sold.

Despite the share pop, Santosh Rao, head of research at Manhattan Venture Partners, said the sentiment from investors has been largely negative due to Snap’s expensive valuation compared with its revenue. The app launched in 2011, but generated no revenue until 2015. While advertising efforts have ramped up since, with total revenue reaching $404.5 million in 2016, .

Still, Snapchat is the first major venture-backed technology IPO of 2017, after the number of such offerings plummeted in 2016, and investors wanted to get in on it, he said.

“I think people just want to get in and say, ‘Hey, what’s the worst that can happen?,’” Rao said.

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In the months following listings, the stocks of leading companies languished

December 13, 2019

In the absence of easy access to state markets, however, some companies are debating whether to revert for fresh financing to private market investors because many risk capital and private equity investors are looking for deals.

Rashaun Williams, the general partner of the All-Star Fund at Manhattan Venture Partners, said that the private sector market currently receives trillions of dollars in dry powder to further support private companies.

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Uber, other unicorns flopped on Wall Street

December 13, 2019

Investors are also betting that food delivery service Postmates, trading app Robinhood and mattress seller Casper could make waves if they debut on Wall Street.

“2020 could be a good year for the IPO market. There is a tremendous pipeline. IPOs are not broken but the bar has changed. Before there was no bar,” said Santosh Rao, head of research at Manhattan Venture Partners, in an interview with CNN Business.

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Shelved 2019 US listings create a crowded field for next year

December 10, 2019

But in the absence of easy access to public markets, some companies are debating whether to go back to private market investors for fresh funding, given that many venture capital and private equity investors are searching for deals. “The private market is currently flushed with trillions of dollars of dry powder to continue funding private companies,” said Rashaun Williams, general partner of the All-Star Fund at Manhattan Venture Partners.

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Swelling U.S. IPO backlog points to crowded 2020 field

December 10, 2019

“The private market is currently flushed with trillions of dollars of dry powder to continue funding private companies,” said Rashaun Williams, general partner of the All-Star Fund at Manhattan Venture Partners.

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As Lyft IPO nears, traders wonder whether the numbers match the hype

December 3, 2019

Have the fundamentals improved that much in a few months? Santosh Rao, who evaluates IPOs at Manhattan Venture Partners, says the improvements have been only marginal. “Fundamentals did pick up in the fourth quarter. They are getting more efficient with the drivers and the incentives. But there is a little bit of hype too. You see the squeeze, demand is way above supply.”

Like many on the Street, Rao is trying to justify the nose-bleed prices Lyft is likely to command.

The biggest problem are the huge losses. The company had $2.2 billion in revenue last year with losses of $911 million.

And this is where the Wall Street guys really get into “magical thinking.” Rao explained the reasoning: “Revenues grew 100 percent in 2018, but losses only grew about 40 percent. In that sense, the margins are improving. The sequential progression is improving.”

Rao doesn‘t know when Lyft will make money, but he insists they have bought themselves a lot of time. “The cash burn was $350 million in 2018, but they have $2 billion in the bank, and they are going to raise another $2.5 billion or so in the IPO. So they have a little room. $4.5 billion divided by $350 million implies they have 10 years.”

When pressed on all this “magical thinking,” Rao admits, “A lot of investors just want growth at any price.”

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Lyft steering smoother ride to profitability by 2021 than Uber: analysts

November 28, 2019

Lyft and Uber have two distinct business models that will impact the way forward, industry experts said. Lyft is focusing on ride-hailing in North America, whereas Uber is a global company with several businesses including food delivery and services for truck drivers.

“Lyft has a clear, defined path to profitability,” Santosh Rao, head of research at Manhattan Venture Partners, said in an interview.

Uber, on the other hand, has “too many moving parts,” he said, adding that the ride-hailing business is profitable but the other ventures are weighing Uber down.

Even so, Rao said he thinks both companies will reach their profitability goals around 2021.

“As long as there is a path to profitability, a few months here and there does not matter,” he said.

Fourth-quarter earnings will be key for Lyft since stock compensation and IPO lockup period expenses will be behind them, Rao said. While Lyft’s lockup period expired Aug. 19, Uber’s ended Nov. 6.

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