The 10 best VC and PE transactions of 2020
A lot can happen in 12 months. You just have to ask Airbnb.
In early 2020, the company was gearing up for a long-awaited IPO after more than a decade as a venture-backed sweetheart. Then COVID-19 happened. By May, Airbnb laid off a quarter of its workforce and raised billions in new debt and equity at a much reduced valuation.
But he was able to survive and then prosper. Regardless of the pandemic – in December, Airbnb went public nonetheless. On its first day of trading, its valuation at one point surpassed $ 100 billion, a figure even the biggest optimist might have found it hard to believe in 2019.
It was that kind of year for venture capital and private equity, a crazy year full of huge ups and downs, scandals, sports and lots of PSPCs. In total, thousands of different deals were made in the private markets in 2020. Here are 10 of the deals that mattered the most:
Best of the IPO wave: Snowflake
Despite record IPOs at the end of the year DoorDash and Airbnb, a cloud data company Snowflake was the dark horse of the 2020 IPO, emerging from relative obscurity to surprise investors and industry watchers. By venture capitalist standards, the Silicon Valley newcomer was quite young and may have applied prematurely to go public.
But all of those reserves were put aside when it exploded onto the scene in mid-September, closing its first day worth around $ 70 billion. As of February, Snowflake was privately valued at $ 12.4 billion, according to data from PitchBook. At the time of this writing, its market cap stands at almost $ 100 billion.
With the extra time at home, some novice retail investors have taken advantage of their 40s by buying and trading stocks with Robin Hood, a New Age brokerage platform meant to make investing fun and engaging rather than the anachronistic yelling and screaming in Wall Street trading rooms. Investors seized on the growing enthusiasm for retail investing and wrote Robinhood checks totaling nearly $ 1.27 billion this year, more than half of its total fundraising since its inception seven years ago. .
On the cusp of an IPO that could value it at $ 20 billion (against its last private valuation of $ 11.7 billion), Robinhood has more than 3 million new users on its platform this year. But he also had several hiccups in 2020, including a $ 65 million settlement with the SEC for allegedly deceptive clients about how he makes his money, with a complaint from Massachusetts claiming he had manipulated inexperienced investors, a reported hack compromising user accounts and platform crashes earlier in the year.
SPAC attack: Nikola
Electric vehicle manufacturer Nicolas went public after merging with a blank check company VectoIQ, triggering a chain reaction of deals that brought the booming battery-powered auto industry to public markets.
Nikola was valued at $ 3.3 billion in the deal, but investors raised its share price to push its market cap to a high of $ 34 billion in June. It was not to last. Short seller Hindenburg Research accused the company of fraud in September. And an agreement with which Nikola made DG was subsequently scaled back, leaving the startup no way to produce its mainstream pickup truck. Nikola’s market cap is now around $ 6.6 billion, as of this writing.
Despite the drama, Nikola’s SPAC deal showed government markets hungry for pre-revenue auto tech companies. There have been at least a dozen SPAC mergers in space this year, a list that includes Canou, Hyliion, Fisker and Lordstown Engines.
Successful flop: Quibi
Quibi, we barely knew you. Longtime Hollywood mogul Jeffrey Katzenberg’s video streaming startup raised $ 750 million in early March, bringing its total to $ 1.75 billion in just two years.
The company’s assumption centered on a market of on-the-go viewers who wanted premium shows in small chunks. When the trips turned into staying at home, Quibi’s hugely ambitious plan began to show cracks.
The platform was launched in April and officially closed in December after Katzenberg and CEO Meg Whitman decided they were out of options. Rather than trying to get by, Quibi reportedly chose to hand over $ 350 million to shareholders, a group that included major entertainment studios like Warner Bros. and 21st century fox, as good as Ali Baba and Pegasus Technology Companies.
Case of the year that wasn’t: TikTok
Now, TIC Tac had to be in the hands of Oracle and Walmart. But it looks like we’ll end 2020 without a firm answer as to whether ByteDance, the Chinese parent of TikTok, will get the green light to sell the app.
The Trump administration allowed the Dec. 4 deadline to expire after being extended several times. Since August, after President Trump ordered ByteDance to sell TikTok or face a ban, questions and intrigue have swirled around who would buy the thriving social video app and how a deal could possibly be finalized in the initial period of 45 days. Nearly five months after Trump’s executive order, details of the sale remain unclear. And an ongoing legal battle over Trump’s pressure for the ban is likely to extend into 2021.
PSPC meets sport
In 2020, PSPCs were everywhere. And private equity firms have continued to show growing interest in professional sports. These two trends intersected in August, when RedBird Capital Partners teamed up with famed baseball executive Billy Beane to form a SPAC with the intention of purchasing a stake in a professional sports team. It didn’t take long for them to find a top target. The Wall Street Journal reported in October that SPAC was in talks to merge with Fenway Sports Group, owners of the Boston Red Sox and Liverpool Football Club, in a possible $ 8 billion deal.
The record SPAC deal from a buyout baron
The PSPC boom of the year peaked in September, when a blank check company backed by The Gorès group founder Alec Gores has agreed to acquire United Wholesale Mortgages in a $ 16.1 billion deal. It was the biggest reverse merger with a SPAC ever, and it was also a sign of the ridiculous profitability of some blank check mergers for the executives involved: According to a Bloomberg report, Gores realized an initial investment of $ 25,000 in PSPC. into $ 80 million. With such profit potential, it’s no wonder investors are flocking to the space.
Patience pays for Providence in Microsoft’s exit
Thirteen years between an initial investment and an exit is a long time for a private equity firm. But the wait was worth it Providence Equity Partners, which agreed last September to sell its stake in ZeniMax Media, the parent of the video game developer Bethesda Softworks, To Microsoft for $ 7.5 billion, one of many large investments this year in the video game industry. Providence has recorded a six-fold comeback on its exit from Bethesda, which is the source of famous headlines like “Fallout,” a reminder that typical PE investment schedules aren’t always set in stone.
Roark bets big on donuts and coffee
Inspire brands, a restaurant franchise conglomerate backed by Capital of Roark, has spent billions in recent years buying brands like Arby’s, Buffalo Wild Wings and Sonic. But its biggest contract to date came this month, when Inspire closed its $ 11.3 billion acquisition of Dunkin brands, the parent company of breakfast chain Dunkin ‘and ice cream chain Baskin-Robbins, bringing the company into private equity—Bain Capital, The Carlyle Group and Thomas H. Lee Partners he owned it from 2006 to 2011.
Now Inspire and Roark are betting Dunkin ‘will be able to weather the remaining months of the pandemic before continuing to gain market share as independent cafes struggle to stay afloat.
Blackstone buys Ancestry.com for $ 4.7 billion
The largest private equity firm can now play a role in helping you learn more about your family history. In August, black stone agreed to acquire a majority stake in Ancestry.com, a provider of genetic testing services, Silver Lake, GIC, Spectrum equity and others in a deal that values the company at around $ 4.7 billion, including debt.
The buyout immediately raised privacy concerns, given Ancestry’s mine of highly personal data about its customers. However, Blackstone said he would not have direct access to users’ DNA or other aspects of their family history.
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