Category: U.S. Securities and Exchange Commission

June 5, 2019 Off

Social Capital reincarnated

By Jill T Frey

Nine months ago, the once high-flying venture capital fund Social Capital made the bold decision to stop accepting outside capital and operate as a family office, in essence.

The co-founder of the outfit, brazen billionaire and early Facebook executive Chamath Palihapitiya, pledged to upend his investment strategy and make fewer but much larger investments as a means to improve his returns. Naturally, a near-complete exodus of Social Capital’s venture capitalists followed.

Today, the firm’s three founders, Palihapitiya, Mamoon Hamid and Ted Maidenberg, have gone their separate ways. Palihapitiya is rewriting the Social Capital playbook, Hamid is busy reinvigorating Kleiner Perkins and Maidenberg is building on top of the data-driven strategy and proprietary software dubbed “Magic 8-Ball” he built at Social Capital, with a new firm called Tribe Capital.

Quietly, Tribe Capital’s co-founders, Maidenberg and former Social Capital partners Arjun Sethi and Jonathan Hsu, have deployed millions of dollars in Read the rest

May 31, 2019 Off

Slack narrows losses, displays healthy revenue growth

By Jill T Frey

Workplace messaging powerhouse Slack filed an amended S-1 with the U.S. Securities and Exchange Commission on Friday weeks ahead of a direct listing expected June 20.

In the document, Slack included an updated look at its path to profitability, posting first-quarter revenues of $134.8 million on losses of $31.8 million. Slack’s Q1 revenues represent a 67% increase from the same period last year when the company lost $24.8 million on $80.9 million in revenue.

For the fiscal year ending January 31, 2019, the company reported losses of $138.9 million on revenue of $400.6 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million the year prior.

Slack is in the process of completing the final steps necessary for its direct listing on The New York Stock Exchange, where it will trade under the ticker symbol “WORK.” A direct listing is an alternative approach to the stock … Read the rest

May 18, 2019 Off

Startups Weekly: There’s an alternative to raising VC and it’s called revenue-based financing

By Jill T Frey

Revenue-based financing is on the rise, at least according to Lighter Capital, a firm that doles out entrepreneur-friendly debt capital.

What exactly is RBF you ask? It’s a relatively new form of funding for tech companies that are posting monthly recurring revenue. Here’s how Lighter Capital, which completed 500 RBF deals in 2018, explains it: “It’s an alternative funding model that mixes some aspects of debt and equity. Most RBF is technically structured as a loan. However, RBF investors’ returns are tied directly to the startup’s performance, which is more like equity.”

Source: Lighter Capital

What’s the appeal? As I said, RBFs are essentially dressed up debt rounds. Founders who opt for RBFs as opposed to venture capital deals hold on to all their equity and they don’t get stuck on the VC hamster wheel, the process in which you are forced to continually accept VC while losing more … Read the rest

May 16, 2019 Off

Openfinance opens up US trading of third-party digital assets

By Jill T Frey

Openfinance, the secondary market for trading digital alternative assets, announced it will be opening up trading of third-party digital securities to US Investors, making it the first trading platform to do so.

The company already supported the trading of third-party digital securities (securities that have been migrated onto the blockchain that are now traded on Openfinance’s blockchain-based platform) in Europe, but was unable to provide the same capability in the US due to minimum holding periods for new tokenized securities required by US regulators.

Now that the holding periods are up for two of the first security token assets traded on Openfinance — Blockchain Capital’s BCAP security token and SPiCE VC’s SPiCE token — both accredited and non-accredited investors in the US will now be able to access and trade both securities through the Openfinance network.

The BCAP and SPiCE tokens are the first of several digital securities that … Read the rest

May 8, 2019 Off

Slack to live-stream pitch to shareholders on Monday ahead of direct listing

By Jill T Frey

Slack, the ubiquitous workplace messaging tool, will make its pitch to prospective shareholders on Monday at an invite-only event in New York City, the company confirmed in a blog post on Wednesday. Slack stock is expected to begin trading on the New York Stock Exchange as soon as next month.

Slack, which is pursuing a direct listing, will live stream Monday’s Investor Day on its website.

An alternative to an initial public offering, direct listings allow businesses to forgo issuing new shares and instead sell directly to the market existing shares held by insiders, employees and investors. Slack, like Spotify, has been able to bypass the traditional roadshow process expected of an IPO-ready business, as well as some of the exorbitant Wall Street fees.

Spotify, if you remember, similarly live streamed an event that is typically for investors eyes only. If Slack’s event is anything like the music streaming giant’s, … Read the rest

May 4, 2019 Off

Startups Weekly: Will the Seattle tech scene ever reach its full potential?

By Jill T Frey

Greetings from Seattle, the land of Amazon, Microsoft, two of the world’s richest men and some startups.

I’m always surprised the Seattle startup ecosystem hasn’t grown to compete with the likes of Silicon Valley — or at least Boston and New York City — since the dot-com boom. Today, it’s the strongest it’s has been due to the successes of companies like the newly minted unicorn Outreach, trucking business Convoy and, of course, the dog walking startup Rover. But the city still lags behind, failing to adopt the culture of entrepreneurship that defines San Francisco.

I spent a lot of time wondering why it hasn’t reached its full potential. Is it because Microsoft and Amazon pay their employees so well they don’t have the same urge to build something from the ground up? Is it a lack of access to capital? Is the city not attracting top talent? If you … Read the rest

May 2, 2019 Off

Africa Roundup: Jumia’s IPO, DHL launches Africa e-Shop, Cathay’s $168M VC fund, ConnectMed acquired

By Jill T Frey

The biggest news in a month of weighty African headlines was Jumia listing on the New York Stock Exchange.

After filing SEC IPO docs in March, the Pan-African e-commerce company’s shares began trading on the NYSE April 12, opening at $14.50 under ticker symbol JMIA. Jumia stock rose north of 70 percent on its first day of trading and started this week at $46.

With the public listing, Jumia became the first startup from Africa to list on a major global exchange. The IPO raised over $200 million for the internet venture.

The listing created another milestone for Jumia.  In 2016 the company became the first African startup unicorn, achieving a $1 billion valuation after a funding round that included Goldman Sachs and MTN.

Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries—from consumer retail to travel bookings.… Read the rest

April 27, 2019 Off

Elon Musk, SEC agree to guidelines on Twitter use

By Jill T Frey

Tesla,  Elon Musk and the U.S. Securities and Exchange Commission reached an agreement Friday that will give the CEO freedom to use Twitter —within certain limitations — without fear of being held in contempt for violating an earlier court order.

Musk can tweet as he wishes except when it’s about certain events or financial milestones. In those cases, Musk must seek pre-approval from a securities lawyer, according to the agreement filed with Manhattan federal court.

U.S. District Judge Alison Nathan, the presiding judge on this matter, must still approve the deal. Nathan had given the SEC and Musk two weeks to work out their differences and come to a resolution.

Musk must seek pre-approval if his tweets include:

  • any information about the company’s financial condition or guidance, potential or proposed mergers, acquisitions or joint ventures,
  • production numbers or sales or delivery number (actual, forecasted, or projected),
  • new or proposed business
Read the rest