3 BIG STORIES

1. LinkSquare Secures The Bag

LinkSquares is one of the fastest growing legal technology companies. Last week, they announced a $100M Series C funding round at an $800M valuation. 

So, what do they do? Contract management. LinkSquares enables companies to draft, review, and approve contracts at lightning speed — then uses AI to collect insights from contracts.

LinkSquares did $20M in ARR last year and expects to grow ARR by over 150% in 2022 with top clients like DraftKings and Wayfair.

Alan’s Angle: Two of the main industries that I am incredibly bullish on in the current VC landscape are LegalTech and PropTech. 

Why? Three reasons: 

1. Massive, archaic businesses that have historically required significant manpower and time – Gartner expects that tech spend by law firms alone will increase 3 fold by 2025!!!
2. Many contracts are recurring, which provides foresight into future revenue/earnings. 
3. If successful, SaaS companies lead to cash coming in quickly after launch. 

Also, it is important to note how reasonable this funding round is if the company can successfully grow ARR by 150% as they project. This would leave them with $50M ARR (at the end of ‘22) at a $800M valuation. 

I have seen a lot worse than trading at 16x forward ARR. All I need is a few mill, and I would love to invest in LinkSquares Series D 😉 . 

2. The Sociopathic Grandpa

Pictured: Warren Buffett (Left) & Peter Thiel (Right)

Peter Thiel, multi-billionaire tech founder and VC, gave a controversial speech at The Bitcoin Conference last week with some harsh words targeted at Warren Buffett. 

Thiel called Buffett “Bitcoin’s Enemy #1” and “the sociopathic grandpa from Omaha.” Yikes.

The legendary Dan Primack from Axios shared this on Thiel’s comments regarding Buffett: 

“Sure it was all childish. And agist. But it also was a reminder of the sharp lines drawn around web3. Believers and nonbelievers can’t both be right, and there will be financial consequences for whichever side is wrong.” 

I disagree with Dan. Why? 

Alan’s Angle: Because the success or failure of believers and non-believers is not directly correlated. 

First, regarding Thiel’s thoughts, What ever happened to respect? Regardless of how you feel about Buffett, the proof is in the pudding. He is the greatest investor of all time and has inspired a generation of investors to be patient and long-term focused, both in investing and in their lives. Simply put, the Oracle of Omaha is a legend. 

Second. I disagree with this last line from Primack’s thoughts on the matter pretty strongly (“there will be financial consequences for whichever side is wrong”) — it is not as if non-believers are placing a direct bet on the failure of Web3. 

In many ways, non-believers are sticking to the status quo. There is still tons of money to be made outside of crypto land.  The massive risk and reward is squarely on the believers. 

Food for thought: What if Web3 is big but not massive? What if Bitcoin hits $100K and not $1M (@CathieWood)? Change does not always come as quickly — and is not always as extreme — as we might think. 

3. NFL = Fanatical Investors

Last month, we covered how Fanatics, a sports merchandising & tech company, raised $1.5B at a $27B valuation. A few days ago, Fanatics shared that the NFL was the lead investor in the deal, investing $320M. 

Other major investors in the deal included the MLB, NHL, MLBPA, NFLPA, and Brooklyn Nets Owner Joe Tsai. Additionally, Fanatics shared that they are on track to doing ~$5B in business this year. 

There is a serious lesson for founders here…

Alan’s Angle: If you get your key stakeholders to invest, it is extremely difficult to lose. 

Fanatics’ business model relies on having the rights to selling league licensed merchandise, cards, tickets, etc. Therefore, by having the sports leagues locked in as investors, they are virtually guaranteeing a strong working relationship and access to these rights. 

I do think that founders should be looking for similar situations with their venture by securing investments from key stakeholders – but not at all costs! At times, stakeholders can look to take advantage of their leverage, something we saw play out with sports data provider SportsRadar. 

SportsRadar decided to forgo continuing to work with the NFL due to “a five fold increasing in fees” and “irrational” unit economics in order to be the exclusive data provider for the NFL. 

GeniusSports, a competitor of SportsRadar, was willing to pay the price tag as well as receive a significant investment from the NFL that now has them as their largest shareholder. 

The upside of having a key stakeholder like the NFL on your side is massive, but in my eyes, the risk is greater. SportsRadar can continue to focus on the other sports leagues as an independent entity will Genius Sports will always have the NFL to answer to.

CHART OF THE DAY

Q1 ‘22 Funding Reaches $143.9B Globally

• Global VC funding reached ~$144B in Q1, representing a 19% decrease Q/Q.  
• At the same time, $144B in Q1 ‘22 represents a ~7% increase to ‘21 and 140% to Q1 ‘20.
• Interestingly, while dollars invested decreased year over year, the number of deals increased by ~900.

Source: CB Insights

RECENT ROUNDS

Nudge Security

What They Do: Cyber Security startup focused on human behavior

Amount Raised: $7M seed round

Lead Investors: Ballistic Ventures

The Rundown: One of the weakest links that hackers consistently target is human error when handling proprietary data and software.

Nudge is focused on making human interaction a key asset in the cyber security protection by sending “nudges” – AKA notifications/reminders — to employees at companies when a point of sensitivity arises without disrupting efficiency of employees. 

Learn More: Press Release & Company Website

Wisewell

What They Do: Next generation in-home water filter

Amount Raised: $2M pre-seed round

Lead Investors: BECO Capital

The Rundown: Wisewell is looking to create solutions to the water quality issues in the US through the creation of the only reverse osmosis water filter on the market. Wisewell also has an app that allows users to track the quality of the water they’re drinking, as well as the effectiveness of the filter. 

One problem? Price. Wisewell’s product is $699 with a $180 a year subscription. Pretty expensive compared to a Brita. 

Learn More: Press Release & Company Website

Conceive

What They Do: Digital health platform on a mission to transform fertility. 

Amount Raised: $3.7M seed round

Lead Investors: Kindred Ventures

The Rundown: One out of six women struggle to conceive and Conceive is looking to change this. Conceive has a team of experts who you can consult with regarding best practices, as well as offering one-on-one coaching and a community group of 8-10 who you can interact with while on your conception journey. 

During their beta, 54% of users became pregnant, 36% of users discovered new diagnoses, and 90% of users felt supported during the process. 

Learn More: Press Release & Company Website

Brilliant Planet

What They Do: Using algae to capture & remove carbon from the environment. 

Amount Raised: $12M Series A

Lead Investors: Union Square Ventures & Toyota Ventures

The Rundown: Brilliant Planet has developed a system that uses microalgae to remove carbon from the environment. The company recently finished a 4 year trial in a 3 hectare research facility in Morocco. 

Using these funds, Brilliant Planet will be looking to build a 30 hectare commercial facility in hopes of scaling their promising technology to combat global warming.   

Learn More: Press Release & Company Website

Clockwork

What They Do: Financial forecasting for SMBs

Amount Raised: $2M seed round

Lead Investors: Underscore VC

The Rundown: Clockwork is looking to provide various financial services for businesses with 20 or less employees, like automated accounting and financial forecasting. 

Simply put, Clockwork is looking to give startups data they need without having to hire an in-house accountant or CFO

Learn More: Press Release & Company Website