Raining IPOs 🌧️
Big bids, Apple happenings, and some signals.
Hi 👋, Tanvi here.
Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.
Sign up below for free. 👇
Let’s go ahead and get started:
Things to begin with ☕
1️⃣ Attacks worse than imagined—The embarrassing cyberattack on the US government from Russia sponsored sources is taking an ugly turn as officials scramble to gauge the extent of the breach and how many government agencies, portals, systems it truly influenced. Some reports even suggest that attackers may still have access to some systems undetected. IT vendors everywhere are being looked at with skepticism. To add fuel to the fire, office departing Trump is downplaying Russia’s role and is turning focus on China and the media for hyping up the attack, turning the mess into a political circus. Regardless, global governments are on the burner to figure out how to avoid similar catastrophes in the future.
2️⃣ Airline demand stays low—the pandemic beleaguered domestic airline industry continues to struggle to make a comeback, as demand for the month of November was down 51% compared to the same time last year. Markets were hoping that a holiday season, combined with easing consumer spending and free-time on hand would probably drive bored consumers to step out. However, on a month by month basis demand is slowly coming back, with November demand nearly 61% up from September this year.
3️⃣ Few states get some more funds—to help the individual states deal with the pandemic led economic devastation, the central government had rolled out a system that if the states implement certain reforms around the ease of doing business, their borrowing limit will be bumped up from 2% of the state GDP to 3%. Tamil Nadu, AP, Telangana, Karnataka and MP have been cleared to receive additional support under the clause. Total of ₹16,728 crores in loans will be disbursed.
Literally raining IPOs 🌧️
The number of high profile tech companies going public is driving the markets nuts. More than 30 companies with a $1 billion+ market cap went public so far in 2020—a record of EPIC proportions. In a recession year. In the middle of a pandemic!!
Stocks are doubling overnight, bankers are feasting on fees, retail investors continue to dance to the music, while prudent investors sound warnings to the markets of how things had been ugly in the past when greed was allowed to run free.
Here’s a quick look at some of the blockbuster bids coming up or done already:
Wish, an ecommerce platform where you bid on funky merch, went public last week. Unlike its peers, day 1 wasn’t as impressive with stock down 16% at open.
Dating giant Bumble will IPO next year. Docs have been submitted privately. Tinder has shown these businesses can be extremely lucrative and expectations are VERY high. More than 100 million people use the platform.
Coinbase which simplified consumer purchase of crypto in the western markets is set to ride the Bitcoin wave right into Wall Street. Docs have been submitted privately, and IPO is coming summer 2021.
UiPath, a robotic process automation company, will ride the cloud and no-code momentum to raise more than a billion at $15B+ estimated valuation
Second hand ecommerce marketplace, Poshmark, where people trade expensive fashion goods will try to catch the wind that has lifted other digital commerce platforms. The company claims profitability.
Among other names, Roblox (gaming), Robinhood (fintech) and then giants from India including Flipkart, Zomato, PayTM, PhonePe etc. are all coming online over the next 18 months. Then there’s been blockbusters like Bectors and Burger King India absolutely killing it lately. These two years are going to be absolutely bonkers.
Bottomline: while some investors may be too-quick to cite caution, there are several unique factors causing this boom. Firstly, interest rates are at an all time low. Secondly, tech startups over the last decade had delayed going public as much as possible, and many are running out of runway. Lastly, COVID’s impact in accelerating tech businesses fundamentally is irrefutable.
Closing lid on the pot ♨️
Zomato closed on its year-long raise that netted the company about $660 million round in fresh capital, boosting valuation to $3.9 billion, arming them with more fuel to play in the food delivery race.
To remind you, just last month had they scooped up a couple checks in the round at a $3.6 billion valuation. We’re thinking the valuation bump in such a short time was helped by the blockbuster IPO listing of DoorDash (US food delivery giant).
Literally every big name buyer piled in—Tiger Global, Kora, Luxor, Fidelity, D1 Capital, Baillie Gifford, Mirae Asset, and Steadview—you name it. Deepinder Goyal promises an IPO in 2021, but we don’t know yet if they’re planning to list in India or will be pulling off another Flipkart on the Indian retail investor.
Business-wise, things are clearly rosier than ever, despite mounting competition from cash-rich players. The company claims it will process 150 million orders in December, booking the highest ever monthly booking volume this month—up 25% from pre-COVID peaks.
Takeaway: the Indian food delivery market is pegged to grow to $12 billion by 2022, and dominance here holds the key to more last mile services in the near future. The game matters to literally every consumer-commerce platform that’s looking to build a lasting moat. Definitely going to be a tough race.
Apple not kidding ☝️
The riots in India set off alarms in Tim Cook’s quarters and Apple has responded with force and swiftness. The supplier of Apple, Wistron, who is running the India facility that was destroyed, was promptly asked to fire its India head over gross negligence in managing payroll systems. Wistron also highlighted its commitment to reevaluating operations and human resources systems to avoid such failures.
To remind you, the riots were basically caused because the facility hired like 7,000 people in the last 6 months, expanding its workforce nearly 5 times by working with staffing agencies. But management had no bandwidth to manage everyone. Soon things started falling through the cracks with systems not recording times properly, pay not being disbursed, overtime not recorded, no grievances heard etc. Most of the contractual workers faced the brunt.
In any case, Apple didn’t seem satisfied with the explanations and excuses, and the company has now frozen all new orders to Wistron.
For what it's worth, Apple has dealt with such issues in the past too, for example when backlash over poor worker practices in China forced the company to suspend contracts with another supplier Pegatron, so Apple is not really playing without a playbook.
Bottomline: it's important for Apple to deal with these issues appropriately as fast as possible for the sake of the billions the company has committed in India as well its ambitions to appeal to the emerging Indian consumer. Can’t afford a misstep this early in the game.
Also, we’re hoping other corporations look at these matters and take some learnings around better practices to manage blue collar workforce in the nation.
What else are we snackin’ 🍿
🤝 Boosting agritech title- Cisco has collaborated with the government to launch a competition with a prize money of 2 crore to find agri-tech startups with innovative solutions. The 'Cisco Agri Challenge' is being co-hosted by K Vijay Raghavan, Principal Scientific Adviser to the Government of India, while conceptualized and managed by an NGO.
🍎 More retail pain coming- Apple is planning to shutter around 53 retail stores in California and the ones in Greater London due to the worsening condition of the pandemic. Even as we make progress towards vaccines, the last lap of the virus’ assault is imagined to bring wider pain. More shutdowns could be coming.
Hit that 💚 if you liked today’s issue.
You can forward this email or share FC on social media by clicking the button below. Thanks and Ciao! 😀