Uber, the most hotly anticipated initial public offering (IPO) since Facebook in 2012, went public Friday on the New York Stock Exchange. The ride-hailing (among other things) company priced its offering for institutional investors at $45 per share (for an $82.4 billion valuation). It was originally seeking between $44 and $50 per share. But the stock debuted at $42, thanks in part to the markets being spooked by tariffs and a possible trade war with China.
As loyal readers of the Fix and Early Investing already know, the real winners in Uber’s IPO are the big venture capital firms, investment banks and rich investors who invested in Uber while it was a private company.
Amazon founder and CEO Jeff Bezos, for example, invested $3 million of his own money in Uber fairly early on. That $3 million investment is now worth an estimated $400 million (CBS). That’s a 13,233% gain! And that’s the beauty of investing in startups. It’s one of the only places in the markets where you can get that kind of return.
Fortunately for us, startup investing is no longer a rich man’s game. Crowdfunding has been a game changer for both investors and startups.
Startups love it because they don’t have to give up control of their company to raise much-needed capital to grow.
And investors love it because the quality of startups using crowdfunding has never been better. Some of the best private investments available today are raising money through crowdfunding.
Even better, you don’t need a lot of money to invest. For as little as $50, you can now invest in some of the best startups around.
As far as Uber goes, it probably won’t be the most successful IPO in 2019. Beyond Meat may have already locked up those honors. Beyond Meat priced its listing at $25 per share for institutional investors. It began trading at $46. And as of this writing, it’s trading at $67.94. That’s more than a 100% gain for institutional investors. And they got in just before the IPO! Imagine what the early investors would have made.
Now to the News Fix!
Cannabis
Fighting for retail equality in Florida: If there’s one thing that drives people nuts, it’s the idea that they’re being forced to play by a different set of rules than someone else is. That’s exactly why Curaleaf and Surterra have filed complaints with Florida in an effort to open more medical marijuana dispensaries (Sun-Sentinel).
Here’s the backstory. Florida wants to limit the number of medical dispensaries a company can run to 35. It’s a pretty arbitrary number. And the state tried to implement the limit after many companies had already started opening dispensaries.
Trulieve sued the state, claiming the limits were unfair. Trulieve settled the case and was allowed to keep its existing locations and build an additional 35. Now Curaleaf and Surterra want the same deal.
That seems fair to the Fix. Artificially suppressing access to medical marijuana makes no sense. The market will solve most problems given the opportunity. Hopefully Florida will recognize this and do the right thing.
Medical marijuana industry in Oklahoma shows growth: Medical marijuana sales in Oklahoma topped $18 million for the first time last month. And sales have increased for seven straight months. Medical marijuana sales in Oklahoma began in October (AP via NewsOn6).
Illinois is on the clock: Illinois Gov. J.B. Pritzker believes he has reached a deal with key legislators that will allow the state to legalize recreational marijuana (AP via WLS-TV). There are just two problems. The state legislature adjourns at the end of May. It will return for a veto session in November, but that’s it. And the legislation doesn’t necessarily have the votes to pass yet. Discussions about the bill are just beginning (Belleville News-Democrat).
Startups
Boston named one of the best cities for startups: Startup Genome just released its rankings for the best cities in the world to launch tech startups. The Fix is leading with the Boston angle of this story in honor of Early Investing Co-Founder and Boston native Andy Gordon. The biggest head-scratcher in these rankings is the fact that Silicon Valley has achieved city status. Here are the top five in order: Silicon Valley, New York, London (tied), Beijing (tied) and Boston (Curbed Boston).
Congress eyes fintech and artificial intelligence: The House of Representatives is creating a pair of task forces to address issues concerning fintech firms and artificial intelligence (Bloomberg Law). It’s true that there are many legal and regulatory concerns regarding both that need to be addressed. It’s also true that Congress isn’t very good at looking into these issues. The Fix is not expecting good things from these task forces.
Crypto
Markets soaring: While a possible trade war with China has dampened the stock markets, the crypto markets have been taking off. Bitcoin is trading at more than $6,340 as of this writing. That’s up 9% from this time last week. And other coins are following suit.
Binance hack not affecting markets: Binance, the world’s largest crypto exchange by volume, was hacked earlier this week. Hackers stole multifactor authentication codes and more than $40 million in bitcoin. Binance has been very transparent about the hack, which happened to its “hot wallet.” Trading has continued on Binance. But the exchange has temporarily suspended deposits and withdrawals. Thankfully, no users will lose money as a result of the hack (Wired).
Most exchanges, including Binance, store the bulk of their assets in cold storage. Cold storage isn’t connected to the internet, making it extremely difficult to hack and steal.
Hot wallets are where exchanges store crypto so it can be traded. They’re less secure by nature because they’re connected to the internet. Exchanges keep a limited amount of assets in their hot wallets to provide liquidity.
Exchanges are big hacking targets. And as long as crypto has been around, people have been trying to hack it (kind of like bank robberies). But (good) exchanges are continuously improving their security. And the hacks are happening less frequently.
More importantly, the markets barely flinched as a result of the hack. Bitcoin continued to rise, as did other cryptocurrencies. That’s a sign that the crypto markets are maturing. Just a year ago, this news would have caused crypto prices to tank. But it’s a whole new crypto world now.
And we’re just happy to be living in it.
That’s your News Fix.
Have a great weekend!
Vin Narayanan
Senior Managing Editor, Early Investing