Welcome to the edition Nº 10 of In The Money 🎉 Your weekly newsletter on keeping up with the financial markets. This week’s newsletter includes amazing news for female founders as well as women investors - several female-led public listings, and women who are raising their own funds to invest in female founders. I firmly believe that as we are seeing more women in investment decisions making positions, we will see more venture capital flowing into female founders. This, in turn, will build and shift more wealth to groups that have historically missed out on the huge wealth creation opportunities. Ultimately, this will benefit societies a large.
In the past week, we also got big news from Amazon, reports on an Apple car in the making, and Alphabet’s (Google’s parent company) better than expected earnings. We also take a look at the sequel to last week’s GameStop saga. I hope you enjoy this week’s edition.
Honest IPO 🔔
Last Friday, Bloomberg reported that The Honest Co. the consumer goods company co-founded by actress Jessica Alba had file confidentially with the Securities and Exchange Commission for IPO. The company is seeking a valuation of about $2 billion. Founded in 2012, Honest sells products such as diapers, prenatal vitamins, hand sanitizer, skin moisturizer, and shampoo that it claims are clean. The products are sold online and in 32,000 retail locations.
Honest has to date raised $503 million in funding, according to Crunchbase. L Catterton, the private-equity firm, invested $200 million for a minority stake in 2018. However, the company has previously run into trouble: In 2016, The Wall Street Journal reported that its laundry detergent contained significant amounts of sodium lauryl sulfate, something Honest had pledged to avoid. And, in 2017, Honest recalled bottles of its organic baby powder over concerns it could cause eye or skin infection.
In 2016 Honest was said to be planning an IPO but didn’t go through with it. Brian Lee, Honest’s former CEO and a co-founder has also reportedly discussed taking the company public since 2014. The now possible IPO comes after Honest was up for sale last fall. The company was seeking a $1 billion valuation, the New York Times reported at the time.
SPAC that 🧬
Genetics testing and genome research company 23andMe which is led by co-founder Anne Wojcicki is set to go public via a merger with special purpose acquisition corporation (SPAC, we explored what SPACs are in this newsletter) VG Acquisition Corp, a vehicle set up by Richard Branson and his company Virgin Group. At close of the transaction23andMe is expected to have $984 million in cash available to spend on product development, hires, and other growth strategies. The company will be valued at around $3.5 billion.
Founded in 2006, 23andMe has raised a total of just under $900 million to date, including an $85 million Series F round announced last December. The company was one of the first to debut at-home genetic testing for individual consumers. It provides kits that people can use to find out more about their own DNA, and what it says about their potential health issues and ancestry.
More recently, the company has turned its massive genomic data store into an opt-in genetic research resource that is used for the discovery of future therapies and treatments. Furthermore, it also monetizes through aggregated and anonymized sharing of the data it collects with third-parties.
The deal will include $25 million each invested into the private investment in public equity (PIPE) transaction that accompanies the merger from Wojcicki and from Richard Bransons. The merger is expected to close in the second quarter of this year, and the resulting company will be listed on the NYSE under the ticker “ME.”
Diversify Capital 💸
Acrew Capital, the firm led by founding partner Theresia Gouw (read and learn more about Gouw in this week’s Woman of the Week profile), is raising a new fund called Diversify Capital that will attempt to open the door to a more diverse universe of limited partners (LPs). LPs are the investors who invest in the venture capital funds that, in turn, invest in startups. The new fund will target LPs from underrepresented backgrounds and will invest in growth-stage companies looking to IPO.
“I don’t think this opportunity generally exists. Think about the top growth funds in the Valley—do you know who their LPs are? Is there ever any talk about who they’re inviting to participate? The answer is typically something that’s very closely held,” said Gouw in an interview with Fortune.
Women, people of color, and allies in Silicon Valley have for years been working to diversify who receives venture capital funding. Lack of diversity on cap tables (cap tables show the people who hold equity in a startup) prevents women and people of color from sharing in the significant wealth built in Silicon Valley. The equity-management tool Carta began in 2018 to study who holds startup equity, finding that the vast majority was owned by white men. That study primarily looked at equity earned through founding companies and through employee stock options. Acrew is instead targeting equity among investors.
In the past half-decade, women have launched more funds of their own, however, their progress as investors has often been made in early-stage funding. In the early-stage rounds, the check sizes are smaller, the risk is higher, and the potential for a financial return is farther off. Acrew is aiming to increase the representation of women on cap tables in later-stage rounds when companies are about one to three years out from an IPO - the kinds of investments that are likely to build wealth for investors.
Other great news for female founders 🤩
Jesse Draper’s venture capital fund, Halogen Ventures that invests in early-stage consumer technology startups with a female in the founding team, has closed a second fund at $21 million.
In 2015, Draper launched Halogen Ventures after she recognized that startups with female founders were a highly undervalued investment opportunity. Since, Halogen has invested in over 60 female-founded companies, done ten exits, which has given Halogen a distinct edge and proven track record at assessing consumer behavior and identifying industry trends.
Research has shown that for every dollar invested, businesses founded by women generate revenue almost two times higher than those founded by men. Women-owned businesses would therefore be a “safer” bet for investors and financial backers, yet only 13% of venture capital go to startups with women on the founding team.
And another one 💥
Elizabeth Weil, a former Twitter executive, operating partner at Andreessen Horowitz, and partner at secondary firm 137 Ventures just closed her first fund of about $42 million. The firm, Scribble Ventures was founded in March 2020 by Weil, Annelies Gamble, and Weil’s husband, Kevin. Scribble looks to write relatively small initial checks into early-stage startups at the pre-seed, seed, and occasionally Series A rounds. It had made 18 investments made so far in companies like BeyondHQ, Nearby, the local business-boosting startup led by former Slack COO April Underwood, and Certn, a background-check startup that raised about $22 million in November.
Alphabet 🔤
On Tuesday Alphabet, the parent company of Google reported fourth-quarter earnings that surpassed analysts’ expectations and showed a strong return to growth in its core advertising business.
Here’s how the company did:
Earnings: $22.30 per share, adjusted, vs. $15.90 per share as expected by analysts
Revenue: $56.90 billion, vs. $53.13 billion as expected by analysts
Google Cloud: $3.83 billion, vs. $3.81 billion as expected by analysts
YouTube ads: $6.89 billion, vs. $6.11 billion as expected by analysts
Traffic acquisition costs (TAC): $10.47 billion, vs. $9.32 billion as expected by analysts
Alphabet’s revenue grew 23% on an annualized basis in the quarter. That’s stronger growth than last year’s Q4, which shows Google’s advertising business is recovering well after a big slowdown in Q2 of last year. Alphabet shares rose nearly 8% in extended trading on Tuesday after the company.
Bye Bye Bezos 👋
Amazon dropped two major news in its 2020 fourth quarter on Tuesday.
The big news was that its founder and CEO Jeff Bezos will leave his post in Q3 this year. Andy Jassy, the company’s top cloud executive will be taking over the position as CEO. Bezos will transition to executive chairman of Amazon’s board.
Jeff Bezos founded Amazon in 1994, a company that started out as an online bookstore and since then grown into a mega-retailer with global reach in different categories from gadgets to groceries to streaming. Amazon surpassed a $1 trillion market cap in January of last year and is now worth more than $1.6 trillion. Jassy joined Amazon in 1997 and has led Amazon’s Web Services cloud team since its inception. AWS continues to drive much of Amazon’s profit.
The other big, but not as big news was that Amazon posted its first $100 billion quarter (just like Apple did last week, only Amazon’s revenue was slightly bigger). AWS, under Jassy, reported 28% revenue growth for the fourth quarter. About 52% of Amazon’s operating income was attributed to AWS as of October 2020. Shares of Amazon were up about 1% in extended trading Tuesday on the back of this news. The company’s stock is up nearly 70% in the last 12 months.
Apple Car 🚗
After years of speculation, Apple is close to finalizing a deal with Hyundai-Kia to manufacture an Apple-branded autonomous electric vehicle at the Kia assembly plant in West Point, Georgia. The so-called “Apple Car,” which is being developed by a team at Apple, is tentatively scheduled to go into production in 2024.
Sources told CNBC no agreement has yet been reached between the two companies. They also stressed that Apple may ultimately decide to partner with another automaker separately or in addition to working with Hyundai. Apple shares rose more than 2% after hours on the news.
Everything he tweets turns into gold
It seems like every time Elon Musk mentions a certain company, crypto asset, or literally anything else, this asset will skyrocket in value. The meme cryptocurrency, Dogecoin is only the latest in a long list. After the tweet below, Dogecoin surged more than 50%.
“The best time to buy a stock is a few months before Elon Musk tweets about it; the best time to sell it is the day after he tweets,” Matt Levine wrote in a recent piece of his newsletter Money Stuff
Game Stop(ped) ✋
Last week’s newsletter was mostly all about the GameStop frenzy and I told that I’d get back with an update this week. Earlier this week the momentum collapsed, with the Gamestop stock dropping 60% on Tuesday having lost more than 70% of its value since Friday. One of the Redditors who started this, Keith Gill, AKA DeepF------Value, posted on Tuesday that he is still not selling his shares despite suffering a $13 million loss that day. On Wednesday, GameStop shares gained slightly after a volatile day of trading, still unable to recoup its dramatic losses from earlier in the week. Shares closed up 2.7% at $92.41 per share, which is more than $230 per share below where the stock closed on Friday. On Thursday GameStop shares tanked again, and the stock traded lower by more than 42%, bringing the video-game retailer’s losses for the week to more than 83%. The shares closed at $53.5 per share.
Robinhood and other retail trading apps continue to limit buying of a collection of stocks pursued by the Reddit thread. Over the past week, Robinhood has raised a total of $3.4 billion in emergency funding. The large injection of capital comes mostly from existing investors. Brokerage firms like Robinhood need to send cash every day to the Depository Trust Company to make sure enough collateral exists to back up customer trades in the two days it takes them to settle. Late on Thursday, Robinhood removed the temporary trading restrictions on all stocks including GameStop.
Simultaneously, Robinhood hit record downloads. On Friday, the app reached about 1 million downloads in a single day. By comparison, over the month of December, Robinhood was downloaded by 800,000 new users combined.
U.S. Treasury Secretary Janet Yellen called for a meeting of key financial regulators this week to discuss market volatility that has been driven by retail trading in GameStop and other stocks, “whether recent activities are consistent with investor protection and fair and efficient markets.”
UK banks silent on race diversity data 🤦♀️
The world’s biggest banks pledged to improve diversity within their predominantly white ranks last year, after the death of George Floyd in police custody in the United States in May which sparked global protests about racism. Already then, many UK based banks had signed the UK’s Business in the Community Race At Work Charter, which was launched in 2018 and obliges employers to collect and publish staff diversity data. A Reuters review of 14 top banks, most of whom signed the charter over a year ago, found that eight had not yet published any UK ethnic diversity data, while three others disclosed limited information, and only three published detailed figures.
Morgan Stanley, JP Morgan, Goldman Sachs, Deutsche Bank, Credit Suisse, and Bank of America all said they collected diversity data but declined to disclose it. Citi and Societe Generale, which have not signed the charter, also did not provide data. Citi said it was collecting and intended to publish data while Societe Generale said it was unable to collect this data under French law. Some banks said their disclosures were contingent on staff voluntarily declaring their ethnicity and that not enough people had done so yet.
FTSE 100 Companies Have No Black Leaders 0️⃣
The number of Black executives leading the UK’s blue-chip companies has fallen to zero for the first time in six years. There are no Black chairs, chief executive officers, or chief financial officers at any company in the UK’s benchmark FTSE 100 stock index. Only 10 of the 297 leaders in these three roles have ethnic minority backgrounds. The FTSE 100 Index lost its only Black CEO, Arnold Donald when cruise-ship operator Carnival Plc slipped out of the benchmark gauge in June following a quarterly rebalancing.
Woman of the Week
Theresia Gouw
Theresia Gouw is a venture capital investor and an entrepreneur. Gouw was named one of the 40 most influential minds in tech by Time Magazine in 2013. She has also been recognized seven times on the Forbes Midas List (Forbes Midas List is a list of the top investors) as one of the "world's smartest tech investors".
Gouw is a first-generation immigrant and a passionate supporter of educational causes and increasing diversity in the tech industry. She earned a Bachelor of Science in Engineering from Brown University, graduating magna cum laude, and an MBA from Stanford Graduate School of Business.
Gouw began her career at Bain & Company. She left Bain to become the founding, Vice President of Business Development & Sales of Release software, a startup she founded together with business school classmates. It was a venture-backed company that provided SaaS to enable digital rights management and payment technologies for the software industry.
After Release Software, Gouw joined Accel Partners, where she spent 15 years and became the firm's first female partner. Some of the successful investments she led while at Accel included real estate site Trulia and cybersecurity firm Imperva.
In 2014 Gouw struck out on her own and co-founded venture capital firm Aspect Ventures with Jennifer Fonstad. Gouw and Fonstad worked together early in their careers both at Bain & Company and at Release Software. In its first year, Aspect Ventures made several Series A and seed investments funded by Gouw and Fonstad’s personal capital. In May 2015, Aspect raised its first $150 million funds, which included outside capital from Limited Partners (LPs).
In 2019 the two women parted ways, and Gouw launched Acrew Capital, an early-stage venture capital firm focusing on software and security technology. Since 2019, Acrew has been chipping away at the static funding ecosystem. With an investment team that is 88% female or person of color, and 63% underrepresented minorities, Acrew has generated a portfolio worth $100 billion in market value and returned $2 billion-plus to its investors. Here’s Gouw on CNBC talking about Acrew’s new Diversify Capital Fund (mentioned earlier in this newsletter). Diversify Capital Fund aims to bring a diverse network of equity partners to pre-IPO companies, giving women and people of color “seats” on tech’s historically white, male-dominated capitalization tables before initial public offerings are completed. Melinda Gates has been a backer of both Aspect Ventures and Acrew Capital.
Thank you so much for reading this week’s newsletter. I would love to hear your feedback and please share this with a few friends you think would find this interesting. Have a lovely weekend 💜
I’m Marianne, an early-stage VC based in Stockholm. You can reach me by replying to this email, or find me on Twitter or LinkedIn.