Silicon Valley Billion Greenback Unicorn Bets Positioned Throughout Pandemic
Public and private markets are racing through the pandemic, and many of the erupting IPOs and newly enriched startups are racing beyond that – in the cloud. The software boom of 2020 found an unlikely and gruesome tailwind in Covid-19, and there was talk of Wall Street and Silicon Valley.
DocuSign, Zoom Video Communications, Fastly and Cloudflare as well as e-commerce enablers like Etsy and Shopify have accelerated the accelerating wave of digitization to stock market profits of at least 160% since mid-March. Many players in the private market also made impressive profits as their tech business strategies went from emboldened to indispensable literally overnight.
“If you’re not online, you are out of business,” said Andrew Bialecki, founder and CEO of marketing automation platform Klaviyo, who increased their valuation of $ 800 million following a $ 200 million Series C funding in November Increased to over $ 4 billion.
In a robust year for venture capital investment, Klaviyo and dozens of others brought digitization tailwind to unicorn realm. The third quarter of 2020 was the second-strongest quarter for venture capital investments in U.S. companies, according to CB Insights. And the fourth quarter has not disappointed us either. Of over 100 companies that achieved a valuation of over $ 1 billion this year, 28 achieved unicorn status in October and November alone.
MessageBird, the nine-year-old Dutch cloud platform that makes it easy for companies like Uber, SAP, and Lufthansa to communicate in Southeast Asia, Europe, and Latin America, more than tripled its valuation to $ 3 billion when it entered a Series C round worth $ 200 million recorded October.
Unqork, a NYC-based no-code software platform, also launched a Mega Series C in October, increasing the valuation of the three-year start-up to $ 2 billion.
Even already highly valued companies like Faire, the online wholesale market that achieved unicorn status in 2019, have made money. By October, the three-year company had more than doubled its valuation following the completion of a Sequoia-led Series E funding round. Another 2019 unicorn, Calm raised its valuation to $ 2.2 billion as the pandemic progressed, likely driven by increased corporate interest in mental health apps amid the global health crisis. According to CB Insights, mental health startups saw an increase in VC deals in Q1 and Q2 2020.
Each new unicorn in the pandemic has capitalized on the newfound urgency of online integrations, but most saw the growing need for digital tools long before the health crisis brought customers and investors to their network. Robert Vis founded MessageBird almost a decade ago, and for him, the latest universal hub for online was simply part of an ongoing development.
“We believe our business is at the forefront of something that will take a very, very long time to fundamentally change. If you think about it, 80% of the world is still hardware rather than software,” Vis told CNBC in a recent interview.
MessageBird is often characterized as the international, younger answer to the US powerhouse Twilio, another work-from-home stock game with an impressive streak since the markets’ lows in March. In an interview with Jim Cramer on Mad Money earlier this month, Jeff Lawson, CEO of Twilio, said of his platform, “The trends in our society are already digitizing these processes, streamlining them with this technology and turning so many interactions into digital These trends have all been accelerated by Covid. “
Lawson estimates the pandemic has accelerated the process by six years.
“Six years sounds about right,” said Vis.
For already profitable unicorns like Klaviyo and Faire in the e-commerce space, the move from bricks to clicks was well underway before the pandemic, but Klaviyo has still seen tremendous customer growth over the past 10 months as a retailer opted for online integration tools Survival.
“Between March and the end of the year, the number of customers and brands built on Klaviyo doubled,” CEO Andrew Bialecki told CNBC this week. Venture capitalist Ping Li led Accel’s investment in Klaviyo’s Series C round and joined the company’s board of directors earlier this year. In doing so, he adds the marketing technology unicorn to a VC portfolio known for investing in Spotify, Slack, Etsy, and Facebook. He relies on retailers who stick to guided marketing software to increase sales.
“If you look at the trends behind e-commerce, they are very long-lived and have been around for a long time,” said Li. Li’s most famous unicorn investment to date: Cloudera.
Peak demand for digitization
Unqork is riding a slightly different wave of digitization. The three-year company helps financial services, insurance, healthcare and government agencies create custom software without using a single line of code. “No-code” software is part of another long-running trend towards digital. Forrester Research found that 84% of organizations have already started using low-code software (limited coding required) and no-code software. Unqork has Goldman Sachs, Liberty Mutual and the City of New York among its clients, and Deloitte, KPMG, EY and Accenture have all teamed up with the startup.
“The demand for digital transformation in legacy companies has peaked,” says Laela Sturdy, general partner of Alphabet’s independent growth fund CapitalG and board member at Unqork. In the past, building custom complex software was an expensive process, but that’s changing. “We’re suddenly seeing more pressure from these companies’ C-suites,” she said.
Unqork founder and CEO Gary Hoberman is no stranger to the demands and pressures of the C-suite. Previously, he was Global Chief Information Officer at MetLife. Sturdy’s own track record confirms their bet. Since joining CapitalG in 2013, she has had nine unicorns in her portfolio. Two of the best-known: the voice app Duolingo, whose rating doubled during the pandemic, and the $ 10 billion robot process automation company, UiPath, which recently confidentially filed for an IPO.
Even insurance is riding on the technical tailwind of the pandemic. Hippo, an AI-powered home insurance start-up, closed a mega funding round in July and attributed its 60% year-over-year revenue growth to widespread coronavirus lockdowns. In the public markets, Insurtech Lemonade went public in the same month as Hippos Raise. The stock is up 69% since its NYSE debut.
The wave of digitization is likely to increase further on the way to 2021. From pure cloud games like the $ 1 billion Cato networks to the $ 3 billion Platform as a Service (PaaS) MessageBird, the onslaught of tech unicorns is picking up speed rather than slowing down during the pandemic.