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UAE startups. Construction tech investors. A note to unicorn employees.

Unicorn common stock? Good luck.

Hi there,

Fred Wilson's 2017 predictions are a fun read (see The Blurb). They're historically about 50% right per Fred so don't take them as gospel, but they're interesting, cover a lot of ground, and are thought-provoking.

Fred also sees old-school corporations doing more M&A this year which we'd shown in yesterday's newsletter is already happening.

But one of his predictions is that there will be more tech IPOs in 2017 than there were in 2000.

While it's not as bold, prescient, or fun to take the other side of this prediction, there is zero chance of this happening.

Why?

  • Public markets are more discerning, i.e. cr@p companies can't go public as easily
  • Being public is way "less fun" than it was in 2000
  • The access to private capital that exists now from hedge funds, mutual funds, etc didn't exist in 2000 and so serves as an alternative to going public
Of course, there is some fatigue setting in with those later-stage private capital sources as we detailed in our Tech IPO Pipeline Report and this decreased interest from them should be a tailwind for the 2017 IPO market.



So yes, it will definitely be a better year for tech IPOs.

It couldn't get much worse than 2016.

So that's not much of a call. But reaching 2000 levels, no chance.

But if Fred is right about IPOs, he will be happy to know that this will bring lots of corporate VCs into the VC game :)


Startup Emirates

We mapped the 32 most well-funded tech startups in the United Arab Emirates that have raised funding since 2013. E-commerce company Noon, which raised $1B in funding in November 2016, sits at the top of the list.




The power law of nuclear warheads?

Thankfully, Russia and the US are friendly now.




Construction zone

We look at the most active investors in the construction tech space since 2012 and see that accelerators take the top two spots. 500 Accelerator and Y Combinator have both invested in 6 construction tech companies.




Guns are not a problem in the USA

It's these motherf'n toddlers.




Keep an eye out

With CES just a day away, we put together a list of 10 key companies to watch. To access the full list of exhibitors at the show, check out the public collection, CES 2017 Startups, on the CB Insights platform.

Anova, maker of an automated sous vide cooker, featured below.




Unicorn employees — beware

Scott Belsky (@scottbelsky), entrepreneur and venture partner at Benchmark, recently penned a great post (see the Blurb) talking about the things to look for when evaluating your unicorn company job offer and options. It is worth a read.



And the questions you need to ask are complicated as you'll see in Scott's post. And unless you are very senior, it is unlikely you can get all the data and answers from the company.

To give you a sense for how complicated the stock option puzzle is for a unicorn, we took a look at enhanced valuation data on CB Insights where we dig into state filings. 

Let's take 23andMe for example.

Their profile (screenshot below) highlights a senior liquidation preference and some of the summary terms we pull from the filings.  



It's when you dig into the filings tab that you realize how complicated the structure really is. Here is 23andMe's most recent Certificate of Incorporation (COI) from June 2016. We have 8 of them starting with one in May 2007. 

Section 6 on Restrictions and Limitations where they detail the protective provisions was a 1/2 page in their first COI from May 2007. In the recent filing, you'll see it's a good bit longer.

This is the case for most unicorns and in some sense, it makes sense given how much capital they've raised. The problem as you read these docs beyond their utter and insane complexity is where employees fall in the pecking order. Hint: the bottom.

Go read Scott's post if you're thinking of working at a unicorn and if a big part of your calculus is the equity.

BTW, Scott will be at The Innovation Summit talking about product, design, and customer experience. It will be good. Watch his talk on the livestream here

Notes: We're working on a way for startup employees to get access to these docs so they can make better informed decisions.



The Industry Standard

CB Insights data is the most trusted by those in the industry and the media. A few recent hits.

Forbes. Jill Richmond (@jillrichmond77) on increasing investor interest in the femtech space with a reference to CB Insights investment data.

Business Insider. Biz Carson (@bizcarson) writes about the tech startups that are IPO candidates to watch in 2017 and refers to the CB Insights 2017 Tech IPO Report.

Times of Israel. Shoshanna Solomon discusses fintech startup Behalf and cites CB Insights global funding data.

I love you.


Anand
@asanwal

P.S. The Innovation Summit is sold out. Don't miss the Future of Fintech at Lincoln Center — June 26 to 28, 2017.

P.P.S. You won't be on the beach in Santa Barbara like the rest of us, but you can still watch The Innovation Summit livestream.

Geographic Spotlight


Silicon Valley doesn't have a monopoly on innovation. Here's a look at startups, emerging industries, and deals elsewhere in the US and the world.


New York City is home to 15 unicorns, including Infor, developers of enterprise business software; WeWork, provider of work spaces; and BuzzFeed, a social news and entertainment company. The Empire State has also produced Etsy, an e-commerce site, and OnDeck Capital, a fintech platform, both of which went public at valuations over $1B. There were over 12 deals to VC-backed companies in NYC in the last year. Here are 5 of the largest.
  • Infor raised a third $2.5B tranche in equity.
  • WeWork raised $690M in Series F funding.
  • Oscar Health, a health insurance provider, raised a $400M Series C round.
  • BuzzFeed raised a $200M Series G round.
  • Flatiron Health, a healthcare technology company, raised a $175M Series C round.

The most well-funded tech startups in the UAE in one infographic

All of the companies in our infographic are based in the Emirate of Dubai. Collectively, these companies have raised approximately $2.3B. See the map.
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The most active investors in construction tech

After some rocky years, 2015 and 2016 have seen sustained investor interest in construction tech. Read about it.
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The companies to look out for at CES 2017

We used the CB Insights database to help you determine the companies to check out at CES. See the list.
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The Blurb

A curated mix of articles on private companies, venture capital, emerging industries, and innovation.

Don't get trampled. Scott Belsky (@scottbelsky) believes that employees (and founders of acquihire/acquisition targets) don't understand how the capital structure of later-stage private companies can impact the true valuation of their compensation and outcome.
Positive Slope

What's going to happen? Fred Wilson (@fredwilson) discusses his predictions for 2017, from AI to ad tech to the IPO market, and more.
AVC


Gift for Twitter. Anil Dash (@anildash) digs into five ways to save Twitter.
Startup Grind


2017. Albert Wenger (@albertwenger) shares two principles that he believes apply equally well to startups and politics.
Continuations

Honesty. Charlie O'Donnell (@ceonyc) on VC feedback and approaching situations with honesty.
This is Going to be Big
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