Headline Developments
SpaceX (private) has completed the world’s first all-civilian mission to space, sending four passengers into Earth’s orbit without any professionally trained astronauts. The mission lasted 72-hours, setting off on Wednesday last week and landing (below) on Saturday, 30 miles (48 km) east of the Kennedy Space Center in Florida (from where they launched). Other missions will follow, including private missions to the International Space Station (ISS) from next year (and eventually every six months) thanks to Axiom Space. That’ll set you back a modest $55m, unless you win a ticket on the upcoming Discovery reality-TV show “Who Wants to Be an Astronaut?”.
This coincides with news that NASA is preparing to award up to $400m to companies wishing to build their own space stations, as it seeks to expand beyond the ISS which is due to retire at the end of the decade and eventually burn up in the Earth’s atmosphere. According to NASA’s commercial spaceflight director Phil McAlister, the program has received roughly a dozen proposals so far, with 2-4 being selected to share in the $400m funding pool. When the program was announced there were ~50 expressions of interest from companies including SpaceX, Blue Origin, Boeing and Airbus (and startups like Axiom Space below).
Other Developments
Robinhood (HOOD) is planning to launch a crypto wallet next month, allowing users to send and receive digital currencies (Bitcoin, Ethereum and possible Dogecoin!), as well as trade them off the app. Following an initial test, the company expects all users to have access to their own wallets sometime in 2022. Such features will only become more widespread across the trading, digital bank and payments ecosystem, as crypto (and NFTs) become more widely accepted and adopted.
Binance (private) finds itself at the centre of an expanded US investigation which includes possible insider trading and market manipulation, according to reports. Binance is one of the world’s largest crypto exchanges, seeing billions of dollars of order flow every day - all beyond the reach of regulators. In this instance, the Commodity Futures Trading Commission (CFTC) is questioning whether Binance has exploited its position as an exchange to front-run client orders. This is the latest in a series of global regulatory concerns regarding Binance, most of which centres around the company operating without a proper license, but also expanding into money laundering (DOJ) and tax evasion (IRS).
This comes as Coinbase (COIN) abandoned the launch of their crypto lending program “Lend” following SEC scrutiny last week. According to the company, hundreds of thousands of people had signed up for the program which would have allowed Lend customers to earn 4% interest on their cryptocurrency holdings by lending tokens.
This isn’t to say Binance, Coinbase (and others) are acting improperly or illegally but shows that regulators (like the SEC) are doing their best to understand the various products and mechanisms today to ensure that, in future, consumers are protected and institutions are held accountable when further impropriety comes.
FedEx (FDX) has kicked off a collaboration with Kenworth and Peterbilt owner PACCAR (PCAR) and self-driving technology leader Aurora (private) to fit out and test automation within FedEx’s linehaul trucking operations. According to Rebecca Yeung (VP of Advanced Technology and Innovation at FedEx), the initiative “is an exciting, industry-first collaboration that will work towards enhancing the logistics industry through safer, more efficient transportation of goods”.
General Motor’s (GM) all-electric Cadillac Lyriq SUV sold out in a super impressive 10 minutes (although they didn’t specify numbers!). This is the first EV release for Cadillac, which is aiming to ditch combustion engines post 2030. Starting at US$59,990, the Lyriq will get over 300 miles (482kms) on a full charge (with a DC fast charge adding 76 miles / 100kms of range in 10min).
Quantumscape (QS), a leading developer of solid-state batteries for electric vehicles, has rallied over 15% this week after saying they had partnered with a large automaker to evaluate prototypes of its battery cells. The deal, according to Reuters, also includes the option for the automaker to purchase 10-megawatt (10,000 kW) hours worth of battery capacity from the pre-pilot production line. For reference, a “middle rung” EV like the Hyundai Kona has a battery capacity of ~64kWh. So the auto company here has the option to develop ~150 cars using the new battery technology.
Rolls-Royce (RR.L) completed a 15-minute maiden flight of the company’s first electric plane “Spirit of Innovation” - a collaboration with Daimler’s (DAI.DE) YASA and Electroflight (private). The plane is packed with a 400kw/6,000 cell battery pack which is, according to Rolls-Royce, the most power-dense battery ever created for a plane. This is the first step towards much larger ambitions, with the company teaming up with Italy’s Tecnam (private) and Norway’s WiderØe (private) to produce an all-electric passenger plane by 2026. At present, CO2 emissions from aviation account for ~2.8% of global emissions and it is hoped this, along with hydrogen and solar innovations across aviation, will contribute to rapid decarbonisation within the industry over the coming decade and beyond.
Brazilian airline GOL Linhas Aereas (GOLL4) is partnering with Irish aviation leasing company Avolon (private) to commercialise an electric Vertical Take-Off and Landing (eVTOL) ride-sharing platform in Brazil. GOL has committed to purchase or lease up to 250 Vertical Aerospace X4 eVTOL aircraft. This follows similar agreements in place between Azul (AZUL) and Lililum (QELL) for 220 eVTOLs in Brazil, and Embraer (ERJ) and Flapper (private) to have a fleet of 25 flying taxis across Latin America. According to Vertical Aerospace CEO Stephen Fitzpatrick “the VA-X4 is ideal for a city like Sao Paulo with a population of over 22 million people. Our eVTOLs will transform how we travel around high population density cities that are clogged with traffic by taking to the skies with zero-emission aircraft”.
New Listings
World-leading software development / IT ops (DevOps) platform GitLab (private) is all set to go public, with the company last valued at ~$6bn (following a secondary transaction earlier in the year). GitLab, which is most closely compared to Microsoft’s GitHub, saw revenues rise 87% in the past year to $152m (mostly SaaS), with Gross Margins maintained at ~88% and Net Loss coming in at $192m. They have an impressive 152% Dollar Based Net Retention rate. Enterprise SaaS peers in the 30-40% annual growth range are trading (per below) ~30x fwd P/S, with MongoDB (which had a killer recent earnings release) trading ~40x fwd P/S. However, given Asana’s ~60x P/S for 60% annual growth, it’s certainly probable we see the market ascribing a valuation for GitLab well north of $10bn (which would be 43x it’s current run-rate revenue).
A big week for a couple of new listed co’s, with POS platform Toast (TOST) and Salesforce competitor Freshworks (FRSH) soaring 65% and 36% respectively on their first day of trading. For Toast, that values the company at $33b - roughly 24x it’s annualised 1H sales (and well ahead of it’s latest private valuation of $5b). For Freshworks, an Indian founded disruptor in the CRM space, the current market cap values the company at ~$12b (~35x run-rate sales) vs Salesforce trailing P/S of ~10x.
M&A | Cap Raise | Earnings
Despite the Evergrande headwinds, investment in the startup space is only accelerating - and at a decent rate!
French startup Sorare (private), which has created an NFT-based fantasy football platform, has raised $680m, led by Softbank’s (9984.JP) Vision Fund 2, with additional funding from IVP, Bessemer, Accel and footballers Rio Ferdinand, Gerard Pique, Cesar Azpilicueta and Antoine Griezmann. It’s a bit like NBA Top Shots, however, users buy and bid for digital player cards which are registered as a unique token on the Ethereum blockchain. Those cards are then used to build fantasy football teams (with the value of cards moving in-line with the player’s performance). In a way it’s like buying shares in individual players. Importantly, Sorare has partnered with over 180 clubs around the world (including most of the famous European clubs….with more to follow around the world).
Dapper Labs (private), the team behind NBA Top Shot, has raised $250m, valuing the company at $7.6b. Coatue led the fund, with A16Z, Google Ventures and GIC (Singapore Investment Corp) also tagging along. As well as creating one of the most popular NFTs in the world (NBA Top Shot), Dapper also built the Flow blockchain (on which Top Shots is built). Dapper is also developing UFC digital collectables on Flow.
Global payments platform AirWallex (private) has raised a further $200m from a group of investors including Lone Pine, G Squared, ANZ, Salesforce and Sequoia, increasing the company’s valuation to $4b. The capital will enable further growth in the US, Europe and UK markets, and help with expansion into new markets like the Middle East, South America and South-East Asia. Airwallex acts as somewhat of a digital bank for business, allowing them to view balances, transfer and remit across multiple jurisdictions, currencies and platforms (i.e. PayPal, Shopify), seamlessly and at a significantly reduced rate than incumbent solutions (i.e. multinational banks).
Another French startup, Mirakl (private), which provides a leading B2B and B2C marketplace platform for organisations like ABB, Best Buy and Catch Group, has raised $555m from a group of investors including Silver Lake and Permira. Mirakl markets itself as the central cog within the e-commerce ecosystem, by connecting online stores with sellers and allowing anyone to invite sellers to their ecosystem.
Discord (private), a popular chat app for gamers, has raised $500m (at a $14.5b pre-money valuation) from investors including Dragoneer and Sony Interactive Entertainment (6758.JP). According to CEO Jason Citron the funding will help the company to expand, improve on it’s security and privacy features (leverging the recent Sentropy acquisition) and develop more product enhancements in the coming years.
Bloomberg has reported that Netflix (NFLX) is in talks to buy The Roald Dahl Story Company (private), nearly three years after signing a deal to produce a series of animated features based on the classic stories. That licensing deal alone cost Netflix over $1b, with the streaming giant looking to create a Marvel-esque universe of content based on Dahl’s titles Charlie and the Chocolate Factory, The BFG, Matilda, The Twits, The Witches, Fantastic Mr Fox and James and the Giant Peach.
Have a great week.
Charlie
LinkedIn or E-Mail (cnave@granitebaycap.com)
Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity. Any views expressed in this article are those of the author(s) and do not constitute financial advice.