January 2024 Top 10

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ESO Fund's top 10 events affecting the private markets for the month of January 2024.

January's Top Ten:

  1. Following in the footsteps of companies such as Canva, Stripe, and SpaceX, Databricks is giving some employees the chance to cash out. The company, which was valued last year at $43 billion, has lined up investors to buy some early staffer’s stock. Only employees who have been granted stock options, largely those who joined before 2019, would be eligible for the tender offer, the company told employees.
  2. Carta has exited the secondary trading business after a prominent startup customer complained that it was misusing information. The exit comes as the company was trying to evolve into a “private stock market for companies”, so its unclear at this time what impact the exit will have on the company’s valuation.
  3. Neuralink hit a milestone this past month after announcing that the first human has received a brain implant from the company. The company got Food and Drug Administration approval for the trial last May, saying it wanted to enlist people ages 22 and above who are living with quadriplegia due to a spinal cord injury or ALS.
  4. Cybersecurity startups Snyk and Cato are both preparing for potential 2024 IPOs. Snyk ranks among the top-valued cybersecurity unicorns with a valuation of $7.4 billion as of a late 2022 funding round. Meanwhile, SASE vendor Cato Networks disclosed that its valuation surpassed $3 billion in connection with its $238 million funding round in September 2023. For the cybersecurity industry, it’s been more than two years since a pure-play security vendor went public, even as numerous publicly traded cybersecurity vendors have been taken private.
  5. Several Tiger Global Management employees focused on raising capital have taken buyout offers after the firm has struggled to raise money for its latest venture capital fund. As of the second quarter of 2023, a $12.7 billion fund that Tiger started making investments from in October 2021 had a paper loss of 18%, and is currently bottom quartile of funds that started that year.
  6. Flexport is raising $260 million from e-commerce software giant Shopify, one of its biggest shareholders, according to two people with direct knowledge, giving the struggling logistics startup more breathing room after it burned through cash last year. The company has had three rounds of major layoffs since December 2022 with the most recent 15% cut as of this past month.
  7. Expense management startup Brex, which was valued at $12.3 billion two years ago, laid off 282 people, or about 20% of its staff during January. The company has stated that the reduction in force will put the company on a path to profitability.
  8. Vetamer Capital, an investor in public and private tech companies started by a Lone Pine Capital veteran just three years ago with $350 million to invest, has shut down its public-equities hedge fund and returned capital to investors. The hedge fund struggled to perform in the negative fintech landscape.
  9. TikTok is looking to up its e-commerce business as it starts to increase seller’s fees. Commission from sellers is increasing from 2% to 8%, in addition to charging 30 cents per transaction. TikTok shop debuted in September of last year and has already established a $3 billion run rate in the US since its debut.
  10. Open AI is being stingy with its offers to publishers, and may make it difficult for the company to strike deals. According to the Information, OpenAI has offered some media firms for as little as $1 million annually to license their news articles for use in training its large language models.

Why this matters: While they aren’t at the same level as they were last year, layoffs are still very much an issue, especially for VC-backed companies looking to preserve capital and avoid a down round. As we move into this next year, we continue to see weaker companies struggle in the face of continued constrained access to capital.

For more insights from ESO Fund check out our newsletter ESO's Monthly Start-Up which lands in your inbox the first Tuesday of every month.

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