Was Snowflake’s IPO mispriced or just misunderstood?


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. 

Ready? Let’s talk money, startups and spicy IPO rumors.

Was Snowflake’s IPO mispriced or just misunderstood?

With an ocean of neat stuff to get through below, we’ll be quick today on our thought bubble focused on Snowflake’s IPO. Up front it was a huge success as a fundraising event for the data-focused unicorn.

At issue is the mismatch between the company’s final IPO price of $120 and where it opened, which was around $245 per share. The usual forces were out on Twitter arguing that billions were left on the table, with commentary on the question of a mispriced IPO even reaching our friends at CNBC.

A good question given the controversy is how the company itself felt about its IPO price given that it was the party that, theoretically, left a few billion on some metaphorical table. As it turns out, the CEO does not give a shit.

Alex Konrad at Forbes — a good chap, follow him on Twitter here — caught up with Snowflake CEO Frank Slootman about the matter. He called the “chatter” that his company left money on the table “nonsense,” adding that he could have priced higher but that he “wanted to bring along the group of investors that [Snowflake] wanted, and [he] didn’t want to push them past the point where they really started to squeal.”

So Slootman found a new, higher price at which to value his company during its debut. He got the investors he wanted. He got Berkshire and Salesforce in on the deal. And the company roared out of the gate. What an awful, terrible, no-good, mess of an IPO.

Adding to the mix, I was chatting with a few SaaS VCs earlier this week, and they largely didn’t buy into the money-left-on-the-table argument, as presuming that a whole block of shares could be sold at the opening trade price is silly. Are IPOs perfect? Hell no. Are bankers out for their own good? Yes. But that doesn’t mean that Snowflake screwed up.

Market Notes

No time to waste at all, let’s get into it:

  • Lots of IPOs this week, and everyone did well. Snowflake was explosive while JFrog was merely amazing. Sumo Logic and Unity had more modest debuts, but good results all the same. Notes from JFrog and Sumo execs in a moment.
  • Disrupt was a big damn deal this week, with tech’s famous and its up and coming leaders showing up to chatter with TechCrunch about what’s going on today, and what’s going on tomorrow. You can catch up on the sessions here, which I recommend. But I wanted to take a moment and thank the TechCrunch sales, partnership, and events teams. They killed it and get 0.1% of the love that they deserve. Thank you.
  • Why is Snowflake special? This tweet by GGV’s Jeff Richards has the story in one chart.
  • What are the hottest categories for SaaS startups in 2020? We got you.
  • There’s a new VC metric in town for startups to follow. Folks will recall the infamous T2D3 model, where startups should triple twice, and then double three times. That five-year plan got most companies to $100M in ARR. Now Shasta Ventures’ Issac Roth has a new model for contention, what he’s calling “C170R,” and according to a piece from his firm, he reckons it could be the “new post-COVID SaaS standard.” (We spoke with Roth about API-focused startups the other day.)
  • So what is it? Per his own notes: “If a startup entering COVID season with $2-20M in revenue is on track for 170% of their 2019 revenue AND is aligned with the new normal of remote, they will be able to raise new capital on good terms and are set up for future venture success.” He goes to note that there’s less of a need to double or treble this year.
  • Our thought bubble: If this catches on, a lot more SaaS startups would prove eligible for new rounds than we’d thought. And as Shasta is all-in on SaaS, perhaps this metric is a welcome mat of sorts. I wonder what portion of VCs agree with Shasta’s new model?
  • And, closing, our dive into no-code and low-code startups continues.

Various and Sundry

Again, there’s so much to get to that there is no space to waste words. Onward:

  • Chime raised an ocean of capital, which is notable for a few reasons. First, a new $14.5B valuation, which is up a zillion percent from their early 2019 round, and up around 3x from its late 2019 round. And it claims real EBITDA profitability. And with the company claiming it will be IPO ready in 12 months I am hype about the company. Because not every company that manages a big fintech valuation is in great shape.
  • I got on the phone with the CEO and CFO of JFrog after their IPO this week to chat about the offering. The pair looked at every IPO that happened during COVID, they said, to try to get their company to a “fair price,” adding that from here out the market will decide what’s the right number. The CEO Shlomi Ben Haim also made a fun allusion to a tweet comparing JFrog’s opening valuation to the price that Microsoft paid for GitHub. I think that this is the tweet.
  • JFrog’s pricing came on the back of it making money, i.e. real GAAP net income in its most recent quarter. According to JFrog’s CFO Jacob Shulman “investors were impressed with the numbers,” and were also impressed by its “efficient market model” that allowed it find “viral adoption inside the enterprise.”
  • That last phrase sounds to us like efficient sales and marketing spend.
  • Moving to Sumo Logic, which also went out this week (S-1 notes here). I caught up with the company’s CTO Christian Beedgen.
  • Beedgen, I just want to say, is a delight to chat with. But more on topic, the company’s IPO went well and I wanted to dig into more of the nitty-gritty of the market that Sumo is seeing. After Beedgen walked me through how he views his company’s TAM ($50 billion) and market dynamics (not winner-takes-all), I asked about sales friction amongst enterprise customers that Slack had mentioned in its most recent earnings report. Beedgen said:
  • “I don’t see that as a systemic problem personally. […] I think people in economies are very flexible, and you know the new normal is what it is now. And you know these other guys on the other side [of the phone], these businesses they also need to continue to run their stuff and so they’re gonna continue to figure out how we can help. And they will find us, we will find them. I really don’t see that as a systemic problem.”
  • So, good news for enterprise startups everywhere!
  • Wix launched a non-VC fund that looks a bit like a VC fund. Called Wix Capital, the group will “invest in technology innovators that are focused on the future of the web and that look to accelerate how businesses operate in today’s evolving digital landscape,” per the company.
  • Wix is a big public shop these days, with elements of low and no-code to its core. (The Exchange talked to the company not too long ago.)
  • And, finally my friends, I call this the Peloton Effect, and am going to write about it if I can find the time.

I am chatting with a Unity exec this evening, but too late to make it into this newsletter. Perhaps next week. Hugs until then, and stay safe.

Alex

Unity Software has strong opening, gaining 31% after pricing above its raised range


This post is by Jonathan Shieber from Fundings & Exits – TechCrunch

Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.

On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.

Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.

Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .

TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.

According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.

Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.

Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value  and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.

That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.

Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.

One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:

Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.

We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”

Looking at our own gaming levels in 2020 compared to 2019, that checks out.

This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .

Amid layoffs and allegations of fraud, the FBI has arrested NS8’s CEO following its $100+ million summer financing


This post is by Jonathan Shieber from Fundings & Exits – TechCrunch

The tagline from today’s announcement from the United States Attorney’s office for the Southern District of New York says it all: “Adam Rogas Allegedly Raised $123 Million from Investors Using Financial Statements that Showed Tens of Millions of Dollars of Revenue and Assets that Did Not Exist”.

Rogas, the co-founder and former chief executive and chief financial officer and board member of the Las Vegas-based fraud prevention company, NS8, was arrested by the Federal Bureau of Investigation and charged in Manhattan court with securities fraud, fraud in the offer of sale of securities, and wire fraud earlier today.

Last week, the company laid off hundreds of staff as reports of an investigation by the Securities and Exchange Commission surfaced, according to a report in Forbes.

“This is a rapidly evolving situation,” Lightspeed Ventures told Forbes in a statement. “We are shocked by the news and have taken steps to inform our LPs. It would be premature to comment further at this time.” Lightspeed Ventures helped lead NS8’s $123 million Series A this June. Other investors include Edison Partners, Lytical Ventures, Sorenson Ventures, Arbor Ventures, Hillcrest Venture Partners, Blu Venture Investors, and Bloomberg Beta, per Crunchbase data.

The allegations are, indeed, shocking.

“As alleged, Adam Rogas was the proverbial fox guarding the henhouse,” said Audrey Strauss, the acting U.S. Attorney for the Southern District of New York, in a statement. “While raising over $100 million from investors for his fraud prevention company, Rogas himself allegedly was engaging in a brazen fraud.  Today’s arrest of Rogas ensures that he will be held accountable for his alleged scheme.”

Allegedly, while Rogas was in control of the bank accounts and spreadsheets that detailed its transactions with customers, he cooked the books to show millions in transactions that did not exist.

From January 2019 through February 2020, the FBI alleges that somewhere between 40 percent and 95 percent of the purported total assets on NS8’s balance sheet were fictitious, according to the statement. Over the same period bank Rogas altered bank statements to reflect $40 million in revenue that simply were not there, according to the Justice Department’s allegations.

On the back of that fake financial data, NS8 was able to raise over $120 million from some top tier investment firms including Lightspeed Venture Partners and AXA Ventures. 

Rogas managed to hoodwink not just the investment firms, but the auditors who were conducting due diligence on their behalf. After the round was completed, NS8 did a secondary offering which let Rogas cash out of $17.5 million through personal sales and through a company he controlled, according to the statement from the DOJ.

“It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself, but today that’s exactly what we allege Adam Rogas did. Rogas allegedly raised millions of dollars from investors based on fictitious financial affirmations, and in the end, walked away with nearly $17.5 million worth of that money,” said FBI Assistant Director William F. Sweeney Jr. “Within our complex financial crimes branch, securities fraud cases remain among our top priorities. We’ve seen far too many examples of unscrupulous actors engaging in this type of criminal activity, and we continue to work diligently to weed out this behavior whenever and wherever we find it.”

Chime adds $485M at a $14.5B valuation, claims EBITDA profitability


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

In the midst of IPO week we have to add another name to our future debuts’ list, namely Chime, which announced a huge new round of capital today. The $485 million Series F values the consumer fintech giant at $14.5 billion, a huge figure given that Chime was most recently worth $5.8 billion after raising $700 million last December.

Even more stark is the company’s $1.5 billion valuation set in early 2019. From $1.5 billion to $14.5 billion in less than two years is quite a run for any startup. Powering the latest round there were a host of familiar names, including Tiger, ICONIQ and General Atlantic, along with Dragoneer and DST Global. Names I’m less familiar with like Whale Rock Capital and Access Technology Ventures also took part.

Tucked inside a CNBC article that broke the story was news that Chime is now EBITDA profitable and could be “IPO-ready” in its CEO’s eyes in around a year’s time.

TechCrunch reached out to Chime for clarification on the EBITDA point, asking if the figure is adjusted or not, as many EBTIDA metrics remove the cost of share-based compensation given to their employees. According to Chime, the metric is “true EBITDA,” to which we award an extra five points. In response to a growth question, Chime said that its “transaction and top-line” has tripled compared to the year ago period.

The Chime round and news of its nascent, non-GAAP profitability comes on the heels of a grip of reports on the financial health of a number of European neobanks, or challenger banks as they are often called. The numbers showed huge growth, and steep losses. If Chime’s numbers hold up when we get its eventual S-1 — start your countdowns — it will be among the healthiest of the startups in its cohort in financial terms, we reckon.

Finally, the company is trying to paint itself as something of a software company, and not a fintech company. This is a move to attract better revenue multiples when it comes time to defend its new $14.5 billion valuation. Software companies have flat-out bonkers multiples these days, as evinced by the blockbuster Snowflake debut.

Here’s how Chime thinks of itself, via CNBC:

“We’re more like a consumer software company than a bank,” Britt said. “It’s more a transaction-based, processing-based business model that is highly predictable, highly recurring and highly profitable.”

The key phrases there are “software company” and “highly predictable, highly recurring and highly profitable.” In effect Chime will argue that interchange revenues should fit under the SaaS umbrella given their regularity. Investors will decide how to view that pitch. If it works, maybe fintechs are more valuable than expected. And those fintechs with obvious SaaS components, like Acorns, could be sitting pretty when it comes to making the fintech v. SaaS argument.

Regardless, it’s another huge round for Chime, which makes it a good day for the highly-valued fintech sector.

It’s game on as Unity begins trading


This post is by Jonathan Shieber from Fundings & Exits – TechCrunch

Unity Software, which sells a game development toolkit primarily for mobile phone app developers, raised $1.3 billion in its initial public offering.

The company, which will begin trading today with the ticker symbol “U”, priced its shares at the top end of its expected range, selling 25 million shares at $52 per share.

The company’s final IPO price came in far ahead of what Unity initially anticipated. The company initially expected to price its public offering between $34 and $42 per share, later raising its offering to $44 and $48 per share.

The public offering values the company at around $13.7 billion, a good step-up from its final private valuation of around $6 billion.

For Unity, the journey to the public markets has been long. The company was founded and as a business that creates software for developers to make and manage their games. In that sense, the company is more like an Adobe or an Autodesk, than a game studio like Activision Blizzard or King.com.

As TechCrunch explained in an earlier story profiling Unity and its public offering:

Users import digital assets (often from Autodesk’s Maya) and add logic to guide each asset’s behavior, character interactions, physics, lighting and countless other factors that create fully interactive games. Creators then export the final product to one or more of the 20 platforms Unity supports, such as Apple iOS and Google Android, Xbox and Playstation, Oculus Quest and Microsoft HoloLens, etc.

The company organizes its business into two areas: tools for content creation and tools for managing and monetizing content. In actuality, the revenue from the managing and monetizing content actually outstrips the revenue the company makes from content creation.

The Unity public offering will be the first big test of investor appetite for this new approach to game development and the business-to-business tools that enable the new wave of gaming.

And it’s important to note (as we do here) that Unity doesn’t generate a lot of revenue off of its position as arguably the most popular game development platform. In fact, Unity has been pretty bad at monetizing the game development engine. It’s the ancillary services for in-game advertising, player matchmaking and other features that have made Unity the bulk of its money.

And there’s still the company’s biggest competitor, Epic Games, waiting in the wings. Here again, the analysis from TechCrunch’s previous reporting is helpful.

[Unity] also will want to benefit from comparisons to Epic Games, given [Epic] was just valued at $17 billion and has much greater public name recognition and hype.

To accomplish this, Unity seems to be underplaying the significance of its advertising business (adtech companies trade at much lower revenue multiples). In the past, Unity referred to its operations in three divisions: Create, Operate and Monetize. At the start of August, the SVP and VP leading the Monetize business switched titles to SVP and VP of Operate Solutions, respectively, and then Unity reported the monetization business as a subset of its Operate division in the S-1.

Consolidating Operate and Monetize into one reporting segment obscures specifics about how much revenue the ads business and the live services portfolio each contribute. As noted above, this segment appears to be dominated by ad revenue which means anywhere from 30% to 50% of Unity’s overall revenue is from ads. That should reduce the revenue multiple public investors are willing to value Unity at relative to recent and upcoming SaaS IPOs.

There isn’t a publicly-traded game engine company to directly benchmark Unity against, nor a roster of equity research analysts at big banks who have expertise in gaming infrastructure. Adobe and Autodesk appear to be relevant businesses to benchmark Unity against with regard to the nature of the non-advertising components of the business and Unity’s stated vision. Compared to Unity, those companies have lower growth rates and generate operating profits though; more recent public listings of SaaS companies like Zscaler and Cloudflare are likely to be valuation comps by investors to the extent they focus on its subscription and usage-based revenue streams since their revenue growth and margins are closer to Unity’s.

Both Epic and Unity are moving to meet each other, Epic by moving downstream, and Unity by moving to higher end applications. And both companies are looking beyond core gaming at other applications as well.

As companies like Facebook, Microsoft, Niantic and others evolve their augmented and virtual reality ecosystems, Epic and Unity may find new worlds to conquer. If public markets can find the cash.

3 VCs discuss the state of SaaS investing in 2020


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Yesterday during Disrupt 2020 I sat down with three investors who know the SaaS startup market very well, hoping to get my head around how hot things are today. Coming on the heels of the epic Snowflake IPO (more to come on that in this weekend’s newsletter), it was a great time for a chat.


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


I’ve boiled our 40-minute discussion down to my favorite parts, getting you the goods in quick fashion.

What follows are notes on:

  • how fast the SaaS investing market is today
  • why Snowflake priced where it did and what that tells us about today’s market
  • how SaaS companies are seeing different growth results based on their sales motion
  • why some private-market SaaS multiples can get so high
  • which software sectors are accelerating
  • and what I learned about international SaaS.

There are more things to pull out later, like the investors’ thoughts regarding diversity in their part of the venture world and SaaS startups, but I want to give that topic its own space.

So, into today’s SaaS market with an eye on the future, guided by commentary from Canaan’s Maha Ibrahim, Andreessen Horowitz’s David Ulevitch and Bessemer’s Mary D’Onofrio.

Inside SaaS

To help us get through a good bit of the written word without slowing down, I’ll introduce an idea, share a quote and provide a little commentary. This should be good fun.

Startups to Watch: Finch, Grin, Zuper, ShoppingGives


This post is by Christine Hall from Crunchbase News

Crunchbase News typically covers larger funding rounds, however we think these startups are worth highlighting for their interesting approaches despite their smaller raises.

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Finch

Finch’s investor app and card

Investing in the stock market or in mutual funds can be difficult for someone who has never invested before.

This week, Finch, a New York-based fintech startup that integrates the benefits of investing and the flexibility of checking into an all-in-one account, announced a $1.8 million seed round to launch its platform. The round was led by Mendoza Ventures with participation from Barclays, Techstars Investors and Draper Frontier.

Finch is targeting millennials, of which not even 1 out of 5 have an investment account. As a result, they are losing out, founder Neel Ganu told Crunchbase News. Finch is helping users earn returns by automatically investing their checking balance into a portfolio designed to match their unique risk profile.

“Putting money to work is hard,” he said. “We want to make this simpler, keep people’s money within reach and flip the way it works today by empowering people to invest.”

There is no minimum amount for the account and no hidden fees. Once the investment account makes returns, those can be used to pay for items, Ganu added.

The new funding will go toward getting the product ready for launch in October. Finch is live in beta with 200 people using it so far, but there are more than 4,500 people on the waitlist, Ganu said.

Grin

Grin Scope scan

You might recall my story from last week about LightForce Orthodontics, which secured a $14 million Series B round of funding for its 3D-printed braces system.

This week, Grin announced a $4.3 million seed round to launch its digital orthodontic platform. It includes an app and an FDA-approved Grin Scope medical device that is designed to retract the cheeks in order to allow a full view of a patient’s mouth. The platform provides remote monitoring tools in partnership with local doctors.

The launch coincides with a strategic distribution deal with the 3M Oral Care Solutions Division (NYSE: MMM), which will be the first nationwide distributor of Grin Scopes.

The seed funding will be invested in developing disruptive technology that would allow for real telehealth in the dental-orthodontics space, CEO Adam Schulhof, DMD, said via email. Grin’s team doubled in the last year, and its plan is to invest in engineering resources to add functionality and tools for its doctor network and to bring new orthodontists onboard.

“Grin is investing to allow orthodontists to serve even more patients per practice to expand the offering to more people around the country,” he said “This means going beyond regular video chats and the EMR systems that we’ve grown accustomed to and leveraging bleeding-edge advances including incorporating the latest in image processing techniques.”

Here’s what else is on my radar

Zuper

Zuper, a Seattle-based intelligent workforce and customer management platform, said it raised $1.1 million in seed funding and appointed former Microsoft product leader Anand Subbaraj as CEO. Prime Venture Partners led the round with participation from Gunderson Dettemer and Gemba Capital.

With the new capital, Zuper will continue to invest in platform innovations, as well as sales and marketing to fuel aggressive growth and expansion in North America and other regions. It will also invest in talent and is hiring across all functions in the U.S. and India.

ShoppingGives

If you are making returns from your investments in Finch, you might consider using them over on ShoppingGives, a social impact commerce platform. The Chicago-based startup raised $5.5 million in seed funding led by Caffeinated Capital and a group of investors that includes Tuesday Capital, SciFi VC, Background Capital, Red Dog Capital and 20VC.

ShoppingGives enables customers to support their favorite causes by creating a donation funded by the retailer with each purchase. On the retailer side, ShoppingGives helps them integrate cause-related campaigns across marketing channels while managing regulations, reporting and donations.

Product photos courtesy of Finch and Grin
Illustration: Dom Guzman

Schools are closing their doors, but Opendoor isn’t


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week Natasha Mascarenhas, Danny Crichton and myself hosted a live taping at Disrupt for a digital reception. It was good fun, though of course we’re looking forward to bringing the live show back to the conference next year, vaccine allowing.

Thankfully we had Chris Gates behind the scenes tweaking the dials, Alexandra Ames fitting us into the program and some folks to watch live.

What did we talk about? All of this (and some very, very bad jokes):

And then we tried to play a game that may or may not make it into the final cut. Either way, it was great to have Equity back at Disrupt. More to come. Hugs from us!

Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Demand Sage raises $3M to make sales and marketing data more accessible


This post is by Anthony Ha from Fundings & Exits – TechCrunch

Demand Sage, a new startup from the founders of recently-acquired mobile analytics company Localytics, announced this morning that it has raised $3 million in seed funding led by Eniac Ventures and Underscore VC.

When I spoke to CEO Raj Aggarwal, CTO Henry Cipolla and CPO Randy Dailey back in February, they outlined a vision to make it easier for marketers to get the data and insights they need, initially by automatically generating Google Sheets reports using data from HubSpot.

More recently, Demand Sage has been expanding into sales data.

“From our solid base with marketers we noticed sales leaders pulling us in to help them too,” Aggarwal told me via email. “We’ve been able to give them visibility they didn’t have, in areas such as where deals are getting stuck and which activities actually drive revenue. It makes sense since there is a ton of overlap between the sales and marketing functions, especially in SMBs. ”

Aggarwal also said that Demand Sage has expanded its product lineup beyond pre-built report templates by introducing a no-code “Report Builder,” and by testing out an insights tools that could, for example, help salespeople determine which deals need their attention.

In a statement, Vinayak Ranade, CEO of Demand Sage customer Drafted, said, “With every sales and marketing tool I’ve used, eventually you give up and export data to a spreadsheet to dig into the numbers,” whereas with Demand Sage, it’s “like having a Google Sheets power-user that automatically makes the spreadsheets that you really want to see.”

As for how the business has fared during the pandemic, Aggarwal said, “Demand has really jumped. Companies need more cost-effective solutions and greater flexibility as business models shift.”

Which 5 cloud startup categories are the hottest?


This post is curated by Keith Teare. It was written by Alex Wilhelm. The original is [linked here]

Hello from the midst of Disrupt 2020: after this short piece for you I am wrapping my prep for a panel with investors from Bessemer, a16z and Canaan about the future of SaaS. Luckily, The Exchange this morning is on a very similar topic.


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


Today we’re parsing some data that Bessemer and Forbes shared regarding their yearly Cloud 100 list. It’s a grouping of private cloud and SaaS companies, giving us a good look into valuation trends over time and also where the most valuable startups are focusing their efforts.

The data show a changing focus from the biggest and most impressive private SaaS and cloud companies. And the valuation trends show how growing private valuations could limit future returns, given historical results.

Of course, modern cloud valuations make it hard to be bearish on SaaS revenue multiples, but all the same, how much higher can they go? Every startup looks cheap when money is cheap. Let’s get into the numbers.

A changing sector focus

The Cloud 100 cycles companies in and out as time passes. As the list is focused on private companies, cloud and SaaS firms that sell to another company or go public leave the cohort. And new companies join, keeping the total group at precisely 100 companies.

Here are the top five sectors those 100 companies are focused on, in order of popularity:

Which 5 cloud startup categories are the hottest?


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Hello from the midst of Disrupt 2020: after this short piece for you I am wrapping my prep for a panel with investors from Bessemer, a16z and Canaan about the future of SaaS. Luckily, The Exchange this morning is on a very similar topic.


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


Today we’re parsing some data that Bessemer and Forbes shared regarding their yearly Cloud 100 list. It’s a grouping of private cloud and SaaS companies, giving us a good look into valuation trends over time and also where the most valuable startups are focusing their efforts.

The data show a changing focus from the biggest and most impressive private SaaS and cloud companies. And the valuation trends show how growing private valuations could limit future returns, given historical results.

Of course, modern cloud valuations make it hard to be bearish on SaaS revenue multiples, but all the same, how much higher can they go? Every startup looks cheap when money is cheap. Let’s get into the numbers.

A changing sector focus

The Cloud 100 cycles companies in and out as time passes. As the list is focused on private companies, cloud and SaaS firms that sell to another company, or go public leave the cohort. And new companies join, keeping the total group at precisely 100 companies.

And here are the top five sectors those 100 companies are focused on, in order of popularity:

Tonal Lands $110M, Investors Include Steph Curry and Bobby Wagner


This post is by Sophia Kunthara from Crunchbase News

Connected fitness startup Tonal has raised $110 million in a new round of funding, the company announced Thursday, bringing in several high-profile athletes as investors.

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L Catterton, which led Tonal’s $45 million Series C in April 2019, returned to invest in the round, which included new investors Delta-v Capital, Mousse Partners and the Amazon Alexa Fund. Several high-profile athletes also invested in the Series D round, including the Golden State Warriors’ Stephen Curry, the Seattle Seahawks’ Bobby Wagner, the LA Clippers’ Paul George, and professional golfer Michelle Wie.

Tonal is a smart home gym designed for strength training. It offers digital weights that can replicate up to 200 pounds of resistance and uses artificial intelligence to help train users to strength train properly.

“The really powerful thing about strength training is that there’s a lot you can do with it,” CEO Aly Orady said in an interview with Crunchbase News, noting it can be used for weight loss, building muscle, etc.

With the new funding, the company plans to invest in marketing, brand awareness and scaling its infrastructure, along with creating better content for the Tonal system, he said.

Brand awareness of Tonal has spread a lot by word-of-mouth, Orady said, with many coaches and trainers in the NBA bubble in Orlando requesting Tonal. He estimates about half the teams in the bubble are using Tonal to train players.

Golden State Warriors player Steph Curry bought Tonal off the company’s website using a pseudonym around two years ago, Orady noted. But after the COVID-19 pandemic took hold, he began using it to train at home, and wanted to invest in the company.

Founded in 2015, the company has seen demand increase during the pandemic, as many gyms have temporarily closed and people have opted to work out at home. Tonal has seen its sales increase 12 times compared to last year’s figures, according to a statement from the company.

As part of its marketing strategy, Tonal has established a retail presence in 15 markets across the U.S. because, as Orady put it, “it’s something that people need to touch.”

More than 20 professional athletes have invested in the company, including Serena Williams, Klay Thompson and Tony Gonzalez. The San Antonio Spurs’ Rudy Gay and the Minnesota Vikings’ Kyle Rudolph have also recently joined Tonal as investors.

Based in San Francisco, the company has offices in  Los Angeles, Toronto and Taiwan.

Image Credit: Li-Anne Dias

New Startup Competition MilkLaunch Aims To Innovate New York’s Dairy Industry


This post is by Christine Hall from Crunchbase News

New York’s dairy industry is looking for the next big thing in milk products. The New York Dairy Promotion Order Advisory Board partnered with corporate innovation consultancy VentureFuel on MilkLaunch, a new startup competition focusing on accelerating product innovation for milk in the state.

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Product innovation takes into account what a consumer will buy. Within that, VentureFuel founder Fred Schonenberg has identified two big trends: personalization, or finding unique flavor combinations for dietary or global palates, and functional beverages–meaning those that are enriched and fortified, not just with vitamins, but to improve mood or specific functions.

One of the goals of the new program is to activate “would-be” dairy entrepreneurs to bring forward innovative ideas for new milk products, he told Crunchbase News.

“One of the great things going for New York is how diverse it is,” Schonenberg said. “You can bring cultures, flavors and tastes from home, mash that up, mix it with milk and bring it to the U.S. market.”

Entrepreneurs must have submitted an application for MilkLaunch by Sept. 15. The four finalists chosen will each get a $15,000 stipend and will compete for a grand prize. They also have the opportunity to collaborate with entrepreneurial mentors and top food scientists from Cornell University’s Food Processing Development Laboratory and Sensory Evaluation Program to improve their product’s safety, quality, labeling and product marketing practices, Schonenberg said.

“We are building something to help products get to market,” he added. “This isn’t about innovation theater, it is more about: Can we take these companies, accelerate them, go to market and make an impact on the industry?”

Dairy innovation

What might be a little-known fact for those outside the Empire State is that the dairy industry is the “largest single segment of New York’s agricultural industry.” In fact, it is home to approximately 4,000 dairy farmers, many in the category of small, family-run farms.

“Most big cities used to have small dairies around them, but now they don’t as land has become more expensive. Many people don’t think of New York as an agricultural state, but it is one of the top 10 or five states for agriculture production,” said David Anderson, Ph.D., professor and extension economist for livestock and food product marketing in the Department of Agricultural Economics at Texas A&M University, in an interview.

“Last year was bad for smaller dairy farmers, many of whom went out of production, forced out by low prices,” he added. “If they can foster some new innovation that builds on processing capacity, it may enable them to stay in business and get higher prices for milk.”

Here are some of the dairy trends that have become popular in recent years, according to Anderson:

  • Greek yogurt, such as Chobani, which strains out more water and whey to make it thicker;
  • Ultra-filtered milk products, such as Fairlife, which produces milk with less lactose and sugar and more protein than regular milk; and
  • Whey, a by-product of cheese-making, which has a lot of protein and is used to create high-protein drinks.

“Whey used to be worthless, something that they would throw down the drain,” Anderson said. “As fitness became more important, people started using whey in a lot of high-protein drinks, which has expanded the demand for dairy products, not necessarily just drinking milk.”

Other competitions

Renske Lynde is seeing similar innovation challenges. She is a general partner at 1st Course Capital, a firm that invests in entrepreneurs transforming the food system.

“Dairy is an old industry and is being forced to innovate,” Lynde said. “This is all showing that there are attempts to figure out how to innovate. However, adopting and innovation is a challenge.”

MilkLaunch isn’t the only competition promoting this type of innovation. Real California Milk Snackcelerator—also put on by VentureFuel, but in partnership with the California Milk Advisory Board—seeks to find new snack formulations for consumers.

Others include the National Dairy Council’s New Product Competition and Rabobank’s  FoodBytes program, a series of events that connect food industry leaders and investors with startup companies focused on food, agribusiness and technology.

Rise of plant-based ‘milks,’ other beverages

Investors have been active in backing both dairy and plant-based products for some time. Venture and seed backers have put capital into at least 54 companies over the past three years,  making dairy or dairy-alternative products, per an analysis of Crunchbase data.

We’ve compiled a list of startups here.

Companies on our funded startup list collectively raised approximately $2.5 billion to date. However, looking at only VC-backed startups paints a limited picture. For example, Impossible Foods raised about half of that total alone. In addition, companies, such as Oatly, producing oat milk, do not appear to be venture- or seed-funded or have not raised any VC-backed capital in the last three years.

Dairy-centric types of innovation competitions are a reaction to a rise in market share by plant-based and other beverage companies that have come on the market and sustainability concerns related to the dairy industry.

Per capita consumption of drinking milk actually started declining more than 40 years ago, according to estimates from the U.S. Department of Agriculture. The number has steadily decreased from 247 pounds per person per year in 1975, to 141 pounds in 2019.

“It started a long time ago when there was an explosion in all kinds of drinks, giving people more choices, even bottled water,” Anderson said. “It’s really a much bigger picture than just the plant-based alternatives. Another trend that works against fluid milk consumption is how we live: we don’t eat cereal as much anymore because we can’t eat it on the way to work. Plus, kids drink a lot of milk at school, but that is not happening this year.”

Although fluid milk is on the decline, consumption of foods made by milk are experiencing the opposite. For example, cheese—with the exception of the cottage variety—yogurt and butter consumption are all growing.

Anderson attributes more pizzas and sandwiches being eaten for the rise in cheese use, while the elimination of trans fats in many foods, including butter, helped regain its popularity. People are even switching back to whole milk versus skim, especially in the organic milk varieties, he said.

Sustainability concern

In addition to falling consumption, dairy farmers have come under fire over sustainability concerns. Even plant-based drinks are not immune from similar criticism.

Two years ago, Emily Cassidy, who at the time was sustainability science manager at the California Academy of Sciences, explored the water and carbon footprint needed to make soy, almond and cow milk, as well as compared protein sources. She found that cow’s milk used more water and had a more significant carbon footprint than both the almond and soy, but the soy had more protein than the almond beverage.

Despite the sustainability challenges, Lynde said there are ways in which the dairy industry can be sustainable and promote health using innovation, such as robotics and milking equipment.

“From my perspective, the production method is ‘not the cow, but the how,’” Lynde said.

Illustration: Li-Anne Dias

Infarm Lands $170M To Grow Urban Farming Network as VCs Pour Billions Into Agtech Space


This post is by Marlize van Romburgh from Crunchbase News

Berlin-based urban farming network Infarm said Thursday that it has raised $170 million in Series C funding that it will use for infrastructure, R&D and hiring.

The latest funding, which represents the first close of a $200 million round, was led by impact investing firm LGT Lightstone and brings Infarm’s total equity and debt financing raised to date to $300 million. Hanaco, Bonnier, Haniel and Latitude also joined the round, as did existing Infarm backers Atomico, TriplePoint Capital, Mons Capital and Astanor Ventures.

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Infarm’s latest funding comes as venture investment in agricultural technology heats up. Venture capitalists have poured $4 billion into startups operating in the burgeoning agtech space in each of the past two years, a recent Crunchbase News analysis found. Through mid-August 2020, $2.6 billion had already been invested in the sector this year, putting 2020 on track to beat the previous two years.

Infarm was founded in 2013 by Osnat Michaeli and brothers Erez and Guy Galonska. It said Thursday that it wants to build out the largest urban vertical farming network in the world, scaling to 5 million square feet in farming facilities in Europe, North America and Asia by 2025. 

Its vertical farms are centrally located in urban areas, in facilities like supermarkets, distribution centers and restaurants that place food production and consumption closer together. The facilities are also hooked up with cloud-connected smart devices that monitor plant health and resource consumption.

“The coronavirus pandemic has put a global spotlight on the urgent agricultural and ecological challenges of our time,” Infarm CEO Erez Galonska said in a statement. “At Infarm, we believe there’s a better, healthier way to feed our cities: increasing access to fresh, pure, sustainable produce, grown as close as possible to people.”

The company claims that because its facilities are centrally located and tech-enhanced, they’re vastly more efficient than the traditional farmland approach, using 99.5 percent less space than soil-based agriculture, 95 percent less water, 90 percent less transport, and no chemical pesticides. It has set a goal to reach zero-emission food production next year, but says that already 90 percent of its electricity usage comes from renewable sources.

“We are big believers in vertical farming as we see the traditional industry going through (much needed) rapid disruption these days,” Pasha Romanovski, co-founding partner of Hanaco Ventures, said in a statement. “We were deeply impressed by Infarm’s founders and management, with their ability to move fast and execute. What is extremely appealing about Infarm is their innovative and modular approach, using cutting edge technology that unlocks added value throughout the supply chain, benefiting both the retailers and end-customers. We see a massive demand in the market for sustainable, environment-friendly, and healthy food– and Infarm has just the right team in place to make this happen.” 

Here’s a video Infarm produced of its facility in a Kroger in Seattle last year:

Illustration: Dom Guzman

Understanding Startup Stock Options


This post is by Y Combinator from Y Combinator

Benjamin Beltzer is an early engineer at Berbix (S18), a startup building identity verification and fraud deterrence as a service. He previously founded his own company and worked at both Apple and other startups.

Ben wrote a great resource on understanding and evaluating stock options. With his permission, we’ve shared an excerpt from his piece covering the basics. If you want to learn more about stock options — including valuing them, questions to ask your employer and more. Read the full article on his Medium.

Find Ben on Twitter @benbeltzer7, and work with him at Berbix.


Disclaimer: This is not legal or tax advice. Consult your own professionals before making any decisions.

If you’ve recently received stock options at a startup, are thinking about joining a startup, or are currently negotiating an offer, you’ve come to the right place. Equity can be a huge incentive for joining a startup early, but knowing when to exercise your options, how to get paid out, how much you’ll make, and how much you’ll get taxed is not at all obvious. It’s important to have a solid understanding of how options work, because the way you use them can have huge financial consequences.

What is a Stock Option?

A stock option is a contract that gives you the right, but not obligation, to buy a stock at an agreed-upon price and date. The price at which you can purchase the stock is called the exercise price, or strike price. So if your employer grants you 100 options, you do not own 100 shares. Rather, you have the option to buy 100 shares at the aforementioned strike price. Doing so is called exercising your option.

Most startups give employees Incentive Stock Options (ISOs), though some use Non-qualified Stock Options (NSOs). For this post we’ll assume that we’re only dealing with ISOs, but you can read about the difference here.

Understanding the Equity Component of an Offer

There are a few key components to an equity offer that you should always look for.

  • Number of Options. The number of shares you have the right to purchase.
  • Percentage Ownership. Your percentage ownership of the company’s total outstanding equity, assuming that you exercise all of your options. This is calculated as (number of options) / (total outstanding shares issued by the company).
  • Strike Price. The per-share price that you pay to exercise your options.
  • Vesting Schedule. Typically your equity grant will be subject to vesting, which means that you don’t receive all your options right away, but that you’ll receive them over time. A typical vesting schedule is four years with a one-year cliff. This means that if you leave the company within your first year, you’ll walk away with nothing. If you stay, 1/4th of your shares will vest on your one-year anniversary, after which 1/48th of your shares will vest monthly. There are plenty of other vesting schedules too. Some companies have a five-year vest with a six month cliff. At Amazon, 5% of your shares vest after year one, 15% after year two, then 40% after years three and four.
  • Post-Termination Exercise (PTE) Window. If you leave your job, you’ll often have just 90 days to decide if you want to exercise your options. Once those 90 days are up you forfeit all your options, causing many employees to find themselves in “golden handcuffs”. Luckily, some companies like Pinterest and Asana are starting to do 5, 7, or 10 year PTE windows. Be aware, though, that even if your PTE window is more than 90 days, your ISOs will convert into NSOs after 90 days.

When should I exercise my options?

Exercising your options can be expensive, so deciding when to exercise is going to depend on your personal financial situation. However, it’s important to understand all possibilities and the enormous tax implications that come with each one. After explaining each scenario, I’ll go through a set of examples.

Exercising one year before IPO

One of the best times to exercise your options is one year before the IPO, as described by Wealthfront here. If you exercise your options one year before selling and your grant date was at least two years prior to the date you sell, you’ll only have to pay long term capital gains tax on your profit, rather than the much higher typical income tax rate.

If the fair market value (determined by the most recent 409a valuation) of your company’s shares has risen above your strike price, you may also have to pay Alternative Minimum Tax (AMT) at the time you exercise your options. The federal AMT rate is 28% of the spread between the fair market value of your shares and the value of your shares at your strike price.

The problem preventing many people from using this approach is that it often requires fronting a significant amount of cash to exercise your options. If that’s the case, you can wait until after the IPO to exercise your options.

Exercising and Selling Post-IPO

If you can’t afford to exercise your stock options, but your company has already gone public, you can arrange a cashless exercise. In a cashless exercise, your employer or a brokerage firm will give you a loan to exercise the options, then sell the stock at market price immediately. You then use the proceeds from the sale to repay the loan. This is quite common at startups where employees can’t afford to exercise their options. Typically the mechanics of the process of receiving the loan, selling the stock, and repaying the loan is hidden from the employee, and he or she will simply receive the proceeds after the whole transaction is complete. The downside to this approach is that your gain from selling the stock will be taxed as ordinary income because you’ve held the stock for less than a year.

Early Exercising

Many startups allow their employees to exercise their options before they’ve vested, which is referred to as early exercising. Early exercising is a good idea when you either have high confidence that the company will have a successful exit or the total cost to exercise is affordable. This approach has 2 major advantages:


Read the Ben’s full article Medium.

Join Accel’s Andrew Braccia and Sonali De Rycker for a live Q&A on September 22 at 2 pm EDT/11 am PDT


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

In the midst of Disrupt 2020, we’re busy keeping tabs on all the panels, chats, demos and battling startups, but we’re also prepping for what comes next. Next Tuesday, the Extra Crunch Live series of Q&As with founders and investors resumes, this time with guests Andrew Braccia and Sonali De Rycker from Accel.

If you are just catching up to Extra Crunch Live, we’ve been hosting live discussions since the early COVID-19 days here in the United States with folks like Mark Cuban, Plaid founder Zach Perret and Sequoia’s Roelof Botha taking part.

The Accel chat is going to be interesting for a few reasons, one of which is that Braccia is the opposite of loud — TechCrunch has noted his general reticence to public comment in prior reporting. But Braccia was early money into Slack, which means he’ll have good perspective into the direct listing market, the IPO market writ large, SaaS and the remote-work boom. We’ll make sure to get the latest.

De Rycker is a bit more active in the public sphere and has lead deals into companies like Sennder (which recently did a deal with Uber), Shift Technology and Avito, which sold to Naspers for north of $1 billion last year. As you can tell from that string of deals, De Rycker will be able to give us a working dig into what’s up in the European startup scene.

And as De Rycker worked as an investment banker before VC, we’ll see what she has to say regarding today’s M&A and IPO climes.

All in all, it’s going to be a good time that I am looking forward to hosting. Login details follow for Extra Crunch folks, and you can snag a cheap trial here if you need access.

Until then, enjoy Disrupt and we’ll see you on Tuesday. Don’t forget to bring your best questions, and we might get to one of them!

Details

Go public now while software valuations make no sense, Part II


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

On August 5th, TechCrunch wrote that startups should “go public while software valuations make no sense.” What came next was a happy coincidence. Just a few weeks after that post, Unity, JFrog, Asana, Snowflake and Sumo Logic all filed to go public.

Today we’re seeing some data from those debuts, most notably the incredibly strong pricing runs from both JFrog and Snowflake. But even more, Snowflake just opened at either $245 or $269.50, depending on your data source. Regardless, the company’s stock is currently worth $276.2 per share, some 130% higher than its IPO price. Which, as we noted earlier, was already pretty high, given the company’s most recent revenue results.

Adding to the Snowflake example, JFrog opened worth around $71.30 today, sharply higher than its above-an-already-raised-range IPO price of $44. That’s wild! JFrog is now worth around $7 billion, despite having posted revenue in its last quarter of just $36.4 million.

The message from today’s debuts appears to be that valuations are unmoored from old rules — for the moment, that is — and thus companies that can post 100% growth or greater have little in the way of a cap on their upper limit.

Our takeaway: Go public now.

Adding to the good news is that some of the valuations we’ve understood less than others are holding up. First-day pop-and-drop today’s market isn’t. For example, Lemonade is still up about 50% from its IPO price, and OneMedical is up 100% from its own. So, software valuations are so wild that even software-adjacent companies are benefiting!

This is excellent news for a great number of unicorns. The good times are still here, amazingly, while the economy is still pretty bad and the election looms. All those old rules about having successive quarters of profitability and not going public during more turbulent years is, for now, bullshit.

Normalcy will re-emerge at some point. Things will eventually quiet down. But not yet, so get that S-1 out and take advantage of the good times while they last.

Zwift Raises $450M for Connected Fitness


This post is by Joanna Glasner from Crunchbase News

A photo of a cyclist using Zwift

Long Beach, California-based Zwift, operator of an online fitness platform that provides indoor riding and running workouts immersed in virtual worlds, announced Wednesday that it has raised $450 million in a Series C round led by KKR.

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The investment will go toward accelerating the development of the company’s core software platform and bring Zwift-designed hardware to market. Currently, users of the company’s platform interact, train and compete together by pairing an exercise bike or treadmill to the Zwift app, to power their in-game avatars.

The mega-sized funding round comes as the connected fitness space remains red-hot. Shares of rival Peloton have more than tripled since the company made its public market debut nearly a year ago, with the New York company now maintaining a market valuation of close to $25 billion, and Apple on Tuesday unveiled a subscription fitness service.

Photo: Courtesy of Zwift

Unity raises IPO price range after JFrog, Snowflake target steep debut valuations


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

On the heels of two IPOs pricing above raised ranges, Unity boosted the value of its own impending debut this morning. The well-known unicorn is currently set to begin trading this Friday, pricing after the bell Thursday.

If that happens, the gaming platform company expects to be worth between $44 and $48 per share, up from its preceding $34 to $42 per-share IPO price range that it initially set.

Unity raising its price range for its IPO is not a surprise, given that software companies have been on a strong run lately. Just last night developer-focused software concern JFrog and data-focused cloud operation Snowflake each priced their public debuts above raised price intervals.

There’s plenty of demand for growth-oriented software equities on today’s public markets. And Unity has what investors are generally looking for inside that sector: greater than 40% revenue growth, gross margins in the high-70s to low-80s, and falling losses in both percent-of-revenue and gross dollar terms.

At $48 per share, Unity would sell $1.20 billion in stock, and be valued at around $12.6 billion. Given its most recent quarter’s revenue ($184.3 million) and annualized run-rate ($737.4 million), Unity is valued at around 17.1x revenues. (You can make that multiple larger by using a trailing revenue metric instead of an annualized run-rate statistic, or lower it by using a forward revenue estimate.)

We’ll have a better feel for how hot the public markets are later today when Snowflake and JFrog start, but Unity’s upward pricing bodes well for all three firms. Unity investors are set to do well, regardless of its final price. The company last raised $125 million in mid-2019 at a valuation of around $6.0 billion. Earlier shareholders will do even better in the transaction.

Sumo Logic is also expected to debut this week. More on that IPO here, if you are so inclined.

JFrog and Snowflake’s aggressive IPO pricing point to strong demand for cloud shares


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

After raising their IPO price ranges, both JFrog and Snowflake priced above their refreshed intervals last night. At their final IPO prices, the two debuts are aggressively valued, showing continued optimism amongst public investors that cloud shares are an attractive bet, even if their growth is financed through a history of steep losses, as in the case of Snowflake .


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


The JFrog IPO pricing is notable because it shows how much public investors are willing to pay for 50% growth and recent profits from a SaaS company. And Snowflake’s pricing is noteworthy for showing the value of huge growth and improving economics.

This morning we’ll explore the two companies’ final values, compare those results to their initial IPO price ranges and calculate their current revenue multiples based on last-quarter’s annual run rates. This is going to be fun.

Later today we’ll have updates on how they open to trade. For now, let’s get into the math and valuation nuance you and I both need to understand just where the public market is today as so many unicorns are either en route towards an IPO, or are standing just outside the pool with a single hoof dipped to check the temperature.

Price this, you filthy animal

JFrog priced its IPO at $44 per share, above its raised range of $39 to $41 per share and comically higher than its first price interval of $33 to $37 per share. Indeed, the company’s final IPO price was 33.3% higher than the lowend of its first proposed pricing range.

Though I doubt anyone expected the company to go for so little as $33 per share, JFrog’s pricing run shows strong demand even before it began to float.