Dear Startup Investor,
We’d like to provide you with an update on the companies from our first pre-IPO fund in 2014.
Some of these companies may be targeted in our new pre-IPO fund, which is still open for investment.
If you haven’t reviewed this opportunity yet, you can do so here.
Lyft: Now Valued at $5.5 Billion
Lyft is a ridesharing company in competition with Uber.
Startup Investor members got Lyft shares in our last pre-IPO fund recommendation from 2014. Since then, Lyft has shown impressive growth. If there are shares available, it is likely that Lyft will be included in the new fund as well.
Whether you own Lyft shares or not, ridesharing is a very important space to pay attention to.
It’s looking more and more like Lyft, Uber, Tesla and Google (among others) will be duking it out to be top dog when it comes to fleets of self-driving cars.
In terms of growth, Lyft is doing well. The company completed 11 million rides in March 2016, up from 7 million a month in October 2015, according to Bloomberg. You rarely see that pace of growth in a company valued in the billions.
And last month, the company’s president, John Zimmer, posted a 14-page manifesto about Lyft’s vision for the future. Here’s an excerpt from the piece, titled “The Third Transportation Revolution”:
| Next time you walk outside, pay really close attention to the space around you. Look at how much land is devoted to cars – and nothing else. How much space parked cars take up lining both sides of the street, and how much of our cities go unused covered by parking lots.
It becomes obvious we’ve built our communities entirely around cars. And for the most part, we’ve built them for cars that aren’t even moving. The average vehicle is used only 4% of the time and parked the other 96%. |
Lyft is talking about a future where self-driving cars are the norm and personal car ownership is a luxury. In such a scenario, the parking problem in most cities would disappear. Car insurance would get a lot cheaper. It would be one of the biggest changes to American life in decades.
Lyft sees itself as the catalyst for this change. And it’s making big moves to position itself for the shift.
Partnership With GM
In July, Lyft scored a $500 million investment from GM. It goes along with a partnership aimed squarely at the self-driving rideshare market.
Zimmer explains in this excerpt from his manifesto:
Autonomous vehicle fleets will quickly become widespread and will account for the majority of Lyft rides within five years.
Last January, Lyft announced a partnership with General Motors to launch an on-demand network of autonomous vehicles. If you live in San Francisco or Phoenix, you may have seen these cars on the road, and within five years a fully autonomous fleet of cars will provide the majority of Lyft rides across the country.
It’s a bold vision. We feel Lyft is well-positioned to own a big piece of the driverless taxi/rideshare market.
Spotify: $8.5 Billion Valuation
The music-streaming company Spotify now has 100 million users. A full 40 million pay to listen to Spotify’s music offerings.
And now comes the really exciting news…
Spotify is readying itself for an IPO expected to take place next year.
The latest piece of evidence?
Co-founder Martin Lorentzon just announced that he’s stepping down as chairman. He’s being replaced by Chief Executive Daniel Ek.
Almost every finance job posting on the site is for New York, a solid clue that an IPO is not far off.
Besides these new financial hires, the company has been hiring people with backgrounds in radio and music television to supplement its strong algorithmic capabilities.
Last year, Spotify reported a jump in royalty and distribution fees, along with surging revenue. Like many companies preparing for an IPO, its rapid growth has not yet been turned into a profitable enterprise.
When our pre-IPO fund acquired shares in Spotify, it was valued at approximately $4 billion. In just one year, it has increased its worth by $4.5 billion.
Instacart: $2 Billion Valuation (as of Last Fundraise)
Last February, Instacart made a brilliant marketing move.
It stepped up its partnership with Whole Foods, becoming the chain’s exclusive delivery partner. The two started to work together back in 2014. Since then, Instacart has established a presence in more than 25 markets through its Whole Foods partnership.
To refresh your memory, Instacart, founded in 2012, lets customers order their groceries via smartphone and gets them delivered to their homes for a reasonable fee.
Not coincidentally, Instacart’s “sales handled” began its precipitous climb at around the same time. Here’s a look…
Instacart CEO Apoorva Mehta says his company will be “cash flow positive” in the next 12 months – meaning that it will take in more money than it spends.
We believe Instacart is just barely scraping the surface of a growing and potentially vast market.
Grocery sales total $700 billion annually, but only about 2% of them occur online. The U.S. is behind Europe and most developed countries, but it will catch up.
And as it does, Instacart is positioning itself to reap the benefits.
More Portfolio News
- “Pinterest is poised to become a major social commerce platform”
- “Watch out, Waze: INRIX’s new Traffic app is coming for you”
- “Bonobos Opens Its First Boutique in Philly”
- “More details on Instacart-Whole Foods deal”
Good investing,
Andy Gordon and Adam Sharp
Startup Investor Portfolio
