ApeVue Q1 Review

ApeVue Q1 Review & Weekly Update: April 7th, 2023

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ApeVue 50 Index Performance YTD 2023:

AV50: -4.34%

AV50: Data 4.70%‍

AV50: Financial -9.48%

AV50: Entertainment -21.61%

AV50: Blockchain 0.97%

AV50: Food -9.71%

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Q1 Review:

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Q1 2023 was a tumultuous three month period. With inflation raging, FED rate increases continuing, and a global banking crisis unfolding, there was no shortage of headlines. Continuing a trend from 2022, large private companies saw a need to shift from pure growth to a focus more on cost cutting and speeding up timelines to achieve profitability.  This was not exclusive to private companies, as the public tech sector saw giants such as Alphabet, Meta, Amazon and Microsoft cut excess spending and enact massive layoff rounds.

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Notable Startup Layoffs in Q1 ‘23:
Amplitude - 99 employees, 13% of workforce

Bolt - 200 employees, 25% of workforce

Roofstock - 27% of workforce

TikTok (Bytedance) - unclear

Carbon Health - unclear

Flexport - 640 employees, 20% of workforce

Anchorage Digital - 75 employees, 25% of workforce
Klaviyo - 140 employees

GoPuff - 100 employees, 2% of workforce

Outreach - 70 employees, 7% of workforce

Gong - 80 employees, 7% of workforce

Talkdesk - unclear

Chainalysis - 44 employees, 5% of workforce

Cerebral - 15% of it’s workforce, 285 employees

Convoy - Closing Atlanta office, unknown how many employees laid off

Impossible Foods - 20% of staff, 100 employees

Swiggy - 380 employees

Carta - 10% of staff, ~200 employees

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SVB Goes Under:

The failure of Silicon Valley Bank (SVB) in March shook the venture community and many startups who relied on the firm for their banking services. While depositors have been made whole by the FDIC, and the firm now having been purchased by First Citizens, the sudden end to an ally to the startup ecosystem looked like it would have a profound impact on private companies of all sizes. Given that the bank catered to startup customers, we provided an analysis of the ApeVue50, an index referencing the 50 most active private unicorn-sized “startup” companies in the secondary market.

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Downround? Debt? What’s next for raising capital:

According to Crunchbase, primary round venture funding globally fell 54% YoY in Q1 when compared to Q1 ‘22.

With higher borrowing costs, the option of debt financing to raise capital has become much more difficult option. As such, many large companies such as Stripe, who needed a large capital influx to cover expiring employee RSU’s for tax purposes, have taken down-rounds. Smaller companies with high burn rates, previously could just raise a higher valuation round when they needed more cash to continue operating - this is no longer the case. While there is no “correct” solution here in the short term, more companies will continue to cut costs and look to demonstrate strong financial performance and growth at a steady rate to alleviate investor worries and keep capital coming in (and burn low). Venture Capital fund raising has also reportedly slowed, as investors turn to more liquid and less risky investment options.

Rumored Upcoming IPO’s:

• Instacart
• Reddit
• Klaviyo
• Rippling
• Gusto
• Databricks

News:

Scopely to be acquired by Savvy Games:

Scopely, the Culver City California based mobile games publisher, will be acquired by Savvy Games Group, a gaming and esports company owned by Saudi Arabia's Public Investment Fund. The price? $4.9 billion.

Scopely is known for its hit mobile games like Star Trek: Fleet Command, Stumble Guys, Scrabble Go, and Yahtzee With Buddies. Scopely will operate autonomously under Savvy and benefit from its financial backing to grow franchises, unlock new player audiences, and collaborate with talent and studios through strategic partnerships and acquisitions.

ApeVue has observed a series of recent offer indications in Scopely, mostly in the $40 to $50 per share range. The transaction, one of the largest gaming acquisitions in history, will still need to be approved by regulators, but puts the Saudi Arabia PIF on track to continue its expansion into the gaming world.

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Klaviyo hires bankers to IPO later this year:

Klaviyo, a Boston-based marketing automation startup, is reportedly preparing to go public later this year according to a report from The Wall Street Journal. With more than $775 million raised in funding to date, Klaviyo's public debut could pave the way for other tech companies hesitant to go public under the current economic conditions.

Klaviyo recently followed laid off 140 employees - this move could be an attempt to streamline costs ahead of the potential IPO, making the company more appealing to cautious investors. The firm reportedly has nearly $600 million in annual recurring revenue (ARR) and is profitable, though the specifics of its profitability remain unclear.

https://www.wsj.com/articles/klaviyo-hires-bankers-plans-for-late-2023-ipo-ae7d0a21

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Instacart Internal Valuation Jump:

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After a 409a valuation cut just a few months ago, Instacart, the popular grocery delivery startup, has reportedly increased its internal valuation by roughly 18% to $12 billion, according to a report by The Information. This new valuation is based on employee stock issuance and comes after several valuation cuts in the previous year from its 2021 high of $39 billion.

After delaying its planned 2022 IPO, Instacart seems to be positioning itself for long-term success. In an internal announcement, the company revealed that it processed $29 billion in sales last year and generated over $100 million in adjusted earnings in Q4. And to not miss out on the AI "wave", the company has recently implemented an AI shopping assistant which can help customers with requests from it's nearly 75,000 partner network stores.

ApeVue has recently observed institutional activity in the $30 to $40 price per share range, and expects to see increased activity as the company prepares for IPO.

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Eat Just vs. Impossible Foods

Impossible Foods and Eat Just, Inc. are two companies that specialize in producing plant-based alternatives to traditional animal-based foods. Although both firms are working towards the same goal of providing ethical and sustainable food options, they approach it from different angles.

The most popular product from Impossible Foods is their plant-based burger, which has the taste and texture of real beef due to the presence of heme, an ingredient that gives it its unique flavor. In contrast, Eat Just offers a plant-based egg substitute made from mung beans, as well as other vegan products like mayo and salad dressings.

Despite their efforts, Impossible Foods and Eat Just have both struggled to gain market share in the face of traditional meat and dairy producers, who dominate the industry. The firms are down 65.3% and 72.67% respectively since ApeVue began tracking them, and have underperformed the ApeVue 50 and ApeVue 50 Food subsector on an all-time basis. (12/31/2020 - Present)

This year, Eat Just laid off 18% of their employees to help achieve profitability, with Impossible Foods doing the same (16% of workforce) in 2022 despite seeing a 50% increase in dollar sales growth in retail. Although it's main competitor, Beyond Meat, has struggled in public markets, Impossible Foods is rumored to IPO in 2024.

Will plant-based alternatives experience positive growth in both profitability and market share, or will these firms continue to struggle going forward?

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Brex Expands into Travel Expense Management

Brex has seen plenty of media attention in recent weeks. As SVB began to show cracks and investors raced to pull their deposits, Brex was on the other side of the spectrum. CNBC reported that Brex had "opened thousands of new accounts totaling billions of dollars in inflows".

Prior to the announcement by the FDIC that SVB depositors would be fully protected, Brex CEO looked to raise over a billion dollars to help startups make payroll that were affected by the collapse of SVB.

The fintech unicorn was most recently valued at $12.3B in its Series D-2 round, and has a current ApeVue composite price of roughly $16 per share, with significantly more sell indications than bid.

Having made immense progress in tackling business credit cards in recent years, Brex has now announced that is expanding into the travel expense space. Looking to take on well known expense management firms such as SAP Concur, Brex hopes to become a one-stop-shop, allowing companies to control credit, cash management, and expense reporting under one platform.

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For all inquires, please reach out to our team at contact@apevue.com