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How Much is Barstool Sports Worth?

Barstool SportsCheddarBuzzfeedFanDuel

Michael Wenner   November 08, 2019

Saturdays Are For The Buyouts

In 2003 a print publication founded by David Portnoy called Barstool Sports began offering gambling advertisements and fantasy sports projections. Over the years, it has evolved into a full blown media powerhouse beyond sports, known for everything from its pizza reviews to its podcast empire.

Barstool is now the sixth-most popular podcast publisher in the U.S. ahead of juggernauts such as ESPN and NBC News. With a reach that most media companies would die for, Barstool sees more than 66 million monthly unique users with 46% of them in the coveted 18-34 age demographic. Barstool counts nearly 2 million followers on Twitter and more than 7 million followers on Instagram among its “Stoolies.”

(via PodTrace)

In 2016 Barstool hired Erika Nardini, who was previously the Chief Marketing Officer of AOL, as its CEO. Before being hired, she was “hugely passionate about the site for a long time.” Prior to AOL, she had senior positions at Microsoft, Yahoo!, Fidelity and Demand Media, where she oversaw media management for corporations such as Volkswagen, Goodyear and Royal Caribbean.

Dave Portnoy and Erika Nardini

Nardini believes Barstool can be a $100 million revenue company in 2020. Speaking about Barstool’s reach, Nardini said “Brands are finding that if they want to reach an 18-34 year-old and move product, we are an exceptionally good bet.” With only 55% of the company’s revenue coming from ads, they’ve found ways to monetize just about everything. They offer “Rough N Rowdy” pay-per-view fights, various subscriptions and enough merchandise to match any major sports team.

Portnoy discusses the Chernin investment

In 2016, Portnoy sold 51% of Barstool to The Chernin Group “for about $10 million.” A couple years later in 2018, Chernin invested another $15 million in Barstool, reportedly valuing the company at $100 million. The Chernin Group’s CEO Peter Chernin, who is on the board of American Express and was previously on the boards of Twitter, Pandora, DirecTV and E-Trade, liked what he saw. Other notable companies he has invested in include Cameo, The PLL, The Athletic and most recently, Food52.

Peter Chernin (CBS News/Getty Images)

So where does Barstool go from here? Like any valuable media property, Portnoy and Chernin will likely want to cash out, given the right price. But who would be interested in acquiring them and how much would it cost?

Last week, we got a taste of who the most likely acquirer would be, when news broke saying Barstool was in “advanced stages” to sell the company to a gambling operator. If it’s a gambling operator, there’s two likely companies that would be interested in Barstool. Paddy Power Betfair, which acquired FanDuel for $465 million, is one likely suitor. The other likely suitor could be DraftKings, which tried to merge with FanDuel but was blocked by the FTC because the combined company would’ve held 90% market share.


So why would a gambling operator want to buy Barstool so badly? Barstool’s recently launched Barstool Bets would naturally be a good fit for a gambling operator. They could also leverage Barstool’s vast reach to gain more gamblers. With the Supreme Court ruling last year that sports betting can be regulated at the state level, sports betting is likely to see exponential growth over the next few years.

That leaves one question. What would it cost to acquire Barstool? Bleacher Report sold for between $175 million and $200 million on $40 million in revenues. Cheddar sold for $200 million while it was on pace for $50 million in revenues. Refinery29, which is said to have $100 million in revenue, just got acquired for around $400 million. Having a hot media property does not automatically equate to a big payday though, as BuzzFeed and Vice found out.

Acquisitions in the Digital Media Space (via Sara Fischer/Axios)

With a media empire that has a diehard following, it’s worth keeping an eye on Barstool to see what route Portnoy and Chernin go with should they decide they’re ready to get paid.

Funding Rounds We're Watching

USD, CAD, doesn't matter, it's still a unicorn. Coveo, "the pioneers of cloud-based AI-powered search and recommendations," has closed a $227 million CAD, or $172 million USD, funding round. The round now gives the Canadian company a valuation "well above $1 billion, Canadian or U.S. dollars," according to CEO Louis Tetu. Coveo has seen its valuation soar, as it previously raised money at a post-money valuation of about $370 million. Coveo has about 500 customers and has seen its subscription revenue grow 55% year-over-year.

From delivering food to protecting data. Nightfall, which uses machine learning to identify sensitive data and then protect it, has come out of stealth with $20.3 million in funding. The company, which is co-founded by the former lead engineer of Uber Eats, scans services such as Slack, GitHub and AWS for sensitive data and then classifies and protects it. As part of the funding round, the former CEO of cybersecurity giant Symantec will join Nightfall's board of directors. Nightfall’s CEO Isaac Madan said the "lack of any products on the market" to deal with potential data leaks across multiple applications inspired them to build Nightfall

It doesn't get more niche than this. Boulevard, which is a business management platform for salons and spas, has raised $11 million in a series A round. The company, which has about 50 employees and is processing over $100 million in payments for customers, will use the funds to expand headcount across all departments. Boulevard says its software has helped customers increase service booked, retail revenue and tips, while decreasing no-shows or late cancellations. While this may appear to be a limited market, think again, barbershops and salons are a $315 billion industry in the U.S. composed of 3 million businesses and 4 million independent aestheticians. 

"You see my self-driving 1992 Honda Civic?" Ghost Locomotion, which is creating a way to retrofit cars with a kit that will enable cars to drive autonomously on highways, has come out of stealth with $63.7 million in funding. The company, which has quietly been working on this since 2017, says it will deliver the kits by 2020. According to the company's co-founder and CEO John Hayes, who was a founder of Pure Storage, Ghost Locomotion is focusing on highways, rather than urban areas like its competitors. "It didn’t seem like anyone was actually trying to solve driving on the highways," said Hayes.

You knew someone would do this. FirstVet, which is a digital veterinary clinic offering video meetings between you, your animal and a local veterinarian, has raised €18.5 million, or just over $20 million, in Series B funding. The Swedish company will use the funds to expand, particularly to the U.S., Germany and France, and develop the product and introduce new features. FirstVet, which currently operates in just five markets, already has more than 200,000 users consulting with 150 veterinarians. The company's goal is pretty simple according to its CEO and co-founder, who said "Our main objective is to be the natural first point of contact for pet owners."

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The $75 Billion Startup You've Never Heard Of

Michael Wenner   November 02, 2019

Fall is in the air. This week was...interesting. Twitter banned political ads, Google bought Fitbit and Halloween is over. Goodbye Pumpkin Spice and Hello Peppermint Mocha. (Too soon?)

The U.S. vs. TikTok

Illustration: Aïda Amer/Axios

Have you heard of ByteDance? Most likely not, but we bet you've heard of TikTok. ByteDance, a Chinese internet technology company, is the company behind America's new favorite video sharing app TikTok.

ByteDance has a version of TikTok, called Douyin, that's used in mainland China. The two are the same but are run on separate servers to meet Chinese regulations. Across ByteDance’s portfolio of apps, the company has 1.5 billion monthly active users, with almost half of them using one of their apps daily.

ByteDance, which was founded in 2016, is now the world’s most valuable startup. The company is reportedly valued at $75 billion with backers such as Softbank, KKR and General Atlantic. Un-like some recent unicorns, the ByteDance is financially sound. ByteDance, which is reported to have booked revenues of $7.2 billion in 2018, revised its 2019 revenue target upwards from $14 billion to just under $17 billion.  For reference Facebook, Twitter and Snap Inc. reported revenues of $55 billion $3 billion, and $1.2 billion in 2018.

Revenue in Billions


The company books the majority of its revenues in China but is aggressively entering the U.S. market. TikTok is their biggest opportunity in the U.S. so it makes sense they’re getting aggressive across the Pacific. TikTok even recently moved into WhatsApp’s former office in Mountain View. If that’s not enough, they’ve hired more than two dozen former Facebook employees since 2018 by offering salaries up to 20% higher. It’s not just Facebook employees they want, though, as they’ve also poached employees from Snap, Hulu, YouTube, Apple and Amazon.


However, it’s not all smooth-sailing for ByteDance’s TikTok in the U.S. The company has repeatedly seen critics warn the company could be passing along the data it collects to the Chinese Government, something it would have to comply with by Chinese law. Just this week, Senators Chuck Schumer and Tom Cotton sent a letter to the Director of National Intelligence to assess if the app could pose “national security risks” to the U.S. The letter said “Security experts have voiced concerns that China’s vague patchwork of intelligence, national security, and cybersecurity laws compel Chinese companies to support and cooperate with intelligence work controlled by the Chinese Communist Party.” Sure enough, on Friday, The U.S. Government formally launched a review of ByteDance.

The US is looking into Bytedance and its ties to the PRC. Source: Alex Wong/Getty Images.

If they needed any proof as to how ByteDance bows to the Chinese government, they wouldn’t have to search too deep. The company is receiving criticism for censoring videos of the Hong Kong protests, as well as other topics the Chinese government deems sensitive, such as Tiananmen Square and Tibetan Independence. Facebook CEO Mark Zuckerberg, used the news to take a swipe at the company saying “While our services like WhatsApp are used by pro-testers and activists everywhere due to strong encryption and privacy protections, on TikTok, the Chinese app growing quickly around the world, mentions of these protests are censored, even in the U.S. Is that the internet we want?”

With an astronomical valuation and an app that is taking the world by storm, ByteDance is a company to keep an eye on as it inevitably approaches an IPO. Some of the biggest questions will be if it can maintain its valuation and if the Chinese government will loosen its grip on the company to be successful in the U.S.

TikTok Facts:


  • According to a new Morning Consult survey, TikTok is more popular today among U.S. teens than Facebook
  • The app hit 1 billion downloads in February. It reportedly has more than 100 million U.S. downloads.
  • It provides endless mind-numbing entertainment. See here and here.


What Else Happened This Week


We've got a new unicorn! Scopely, "a leading interactive entertainment and mobile games company," has landed $200 million in funding at a valuation of $1.7 billion. Scopely, which recently passed $1 billion in lifetime revenue, will use the funds to accelerate its development and acquisition of new games. The company has raised capital at an increasing annual rate from 2016-2018, with rounds of $55 million, $60 million and $100 million preceding this round. Most of the round was funded by NewView, a recent spin-off from NEA, which has an impressive list of prior investments.

Robinhood will have some competition in the UK. Freetrade, another broker offering commission-free stock trading, has received $15 million in series A funding. Freetrade has more than 50,000 customers, will use the funds to further growth and development, with eyes on the rest of Europe in 2020. The company says it will also be the first to offer the ability to purchase U.K. and European "fractional" shares. Just a couple of months ago, Robinhood received a license to operate as a broker in the U.K., although the company hasn't said when it will launch there.

Everyone wants in on fintech. Walmart has teamed up with Green Dot to create a fintech accelerator that will focus on retail and consumer financial services. The accelerator, named Tailfin Labs, will be majority-owned by WalMart. Daniel Eckert, SVP of Walmart Services and Digital Acceleration, said "The next big thing in retail is the integration of FinTech and retail tech." The two companies are no strangers to each other, with the two having a payments partnership since 2006.

This will be a very large market. With the Internet of Things market projected to grow threefold by 2023, it's going to have to be a lot easier for companies to create these IoT gadgets. Particle hopes to do just that. The company, which calls itself "the only all-in-one IoT platform on the market," has just raised $40 million in a Series C round. The company provides everything from IoT hardware to connectivity to IoT apps. The company has the largest IoT developer community in the world and its devices are deployed in 170 countries.

EquityZen In The News


Team EZ getting Spooky!





That's all for this week. 26 days until Thanksgiving. 52 days until Christmas. #JustSaying.

Love,

EquityZen
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WeWork's Rough 8 Weeks, Explained.

weworkcaspermicrosoft

Michael Wenner   October 25, 2019

WeWork, A Timeline (of the Last Two Months...)

It’s been an eventful two months for The We Company, parent of shared workspace company WeWork. Everything was going smoothly until they filed the S-1 for their highly-anticipated IPO in August.

After the filing, questions about everything from its valuation to corporate governance immediately came into question. The company, which was destined to become one of the biggest IPOs, quickly found itself on the defensive. Everything began to go downhill pretty quickly.

In the middle of September, the company decided to postpone its IPO, saying “The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year.” The company’s largest investor, SoftBank, even supported the delay.

One week later the company had its fall guy. Co-founder and CEO Adam Neumann stepped down as CEO of the company. In a statement, Neumann said “While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive.” As time went on, additional details came out about Neumann that raised eyebrows. It was revealed he once said he wanted to live forever and become the world’s first trillionaire.




With Neumann gone, The We Company began cleaning house. They divested three companies, a SaaS SEO marketing platform, an office management platform and a service used to organize group meetings. The company even put its private jet up for sale, citing poor optics. With Neumann gone, so was his inner circle, as the company let go 20 of his close long-time friends and family.

With its valuation and reputation continuing to take hits daily, The We Company formally withdrew its S-1 to go public on September 30. The newly appointed co-CEOs said “We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong.” They didn’t shut the door on an IPO in the future, though, saying “We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”

With Neumann gone and the IPO on the shelf, one piece of business remained; where to get the money to continue operations as the company was about to run out of cash. Naturally, SoftBank was the white knight, taking an 80% stake in the company. The deal included a $3B tender offer for existing shareholders’ stock, an accelerated equity injection of $1.5B and $5B of new debt.

The SoftBank bailout landed Neumann an exit package worth close to $1.7 billion, while 4,000 employees, or nearly 30% of its global workforce, will be laid off. We can now sit back and watch to see if SoftBank can turn around the company and put its IPO back on track to vindicate the employees who are not too happy at the moment.

And Everything Else...


Will there be 174 more similar IPOs? Casper, the direct-to-consumer mattress company, is reportedly working with Morgan Stanley and Goldman Sachs on an IPO. The company's valuation could exceed the $1.1 billion valuation it received in its latest funding round in March. The company's 2018 revenue exceeded $400 million while reporting a $64 million loss. Casper faces plenty of competition, with a report showing there may be as many as 175 companies selling mattresses in a box, with it being difficult to differentiate between products.


Microsoft is opening its wallet to move your data. For the second time in six weeks, Microsoft has acquired a company that makes it easier to move data to their cloud-based services. Microsoft acquired Movere, which helps IT administrators migrate data to services such as Microsoft Azure, to make "migration an easier process for our customers." This week, Microsoft ironically acquired Mover, which "will help make it easier than ever for customers to migrate files to Microsoft 365." Terms of both deals were not disclosed.


Wait, what? In possibly the most unusual story you'll see relating to Silicon Valley, a former child star of the show "The Wonder Years" is embroiled in a lawsuit with Mithril Capital, a venture fund owned by Peter Thiel. Crystal McKellar is accused of anonymously mailing letters to the fund's clients accusing the fund of lying about the fees it was charging, trying to poach clients and telling clients the fund was under SEC investigation. She allegedly deleted nearly 2,000 text messages sent from her work phone from the time she left to when she gave it back to the company.

They sell better experiences than Fyre Festival. Pollen, formerly known as Verve, has raised $60 million to expand its influencer-based experiences marketplace. The members-only platform, which refers to members as "Ambassadors," essentially leverages high-profile social media influencers to move tickets for experiences and events. Pollen, which has sold 1 million experiences since being founded in 2014, takes a cut on the sale of each ticket. Co-founder and CEO Callum Negus-Fancey believes influencers are the "billboards of new media." One of the company’s investors, who was an early investor in Spotify, believes "Pollen can become one of the most culturally significant companies for Gen Z." If he's correct, this may be a company to keep an eye on with Gen Z representing one-third of the world's population.


Have a spooky week. And don' forget to follow us on Twitter for the best Pre-IPO memes around.

Love,

EquityZen

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