DoorDash, Honey, and 1Password serve as the backdrop for a conversation about how late-stage investor expectations will shift as direct listings become more popular, why themes matter in investing, and how bootstrapped companies can raise demand for secondary markets.
Top 3 Takeaways:
* Traditionally, investors look for an IPO “pop” to compensate for the risk of participating. As direct listings become more popular, the expectations for investors that invest in the round ahead of a direct listing will need to change.
* Theme matters in investing. Sometimes just being in the right theme at the right time can produce favorable outcomes. Currently, fintech is on fire.
* If companies can self-fund and become profitable without raising outside money, investor demand to get access will still remain and may increase the popularity of the secondary markets.
* [0:50] Is DoorDash a good candidate for a direct listing?
* [5:30] Companies that opt for direct listings may still need to raise outside capital to sustain their business, especially in the case of DoorDash.
* [6:09] Traditionally, investors are looking for an IPO “pop,” but expectations will have to change if direct listings become more popular. So, what type of return should late-stage investors expect?
* [11:30] Companies that approach a direct listing will need to build research support to inform the public markets. More on this in a future episode of Liquidity.
* [12:25] Paypal buys Honey for $4b. They had 17m MAUs ($235/user), WhatsApp had ~45M users, and Facebook generates $25-$30 per user per year.
* [15:00] Themes matter in investing, and fintech is currently on fire.
* [16:09] 1Password took outside money ($200M from Accel) after being self-funded for 14 years.
The Loup Ventures Liquidity podcast explores all things liquidity in the venture market, particularly late-stage financings, secondaries, exits, and IPOs. As early-stage venture capitalists and former public stock analysts, our experiences meet in the middle, and we share those insights on the Liquidity podcast through discussions between Loup partners and industry guests.