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As several marketplace unicorns prepare IPOs, a VC digs into the data

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The end of 2020 will be marked by a series of high-profile consumer technology IPOs. Among the companies on file are several marketplace businesses including home rental giant Airbnb, food delivery service DoorDash, grocery delivery company Instacart and the online shopping platform Wish.

Poshmark, a social commerce platform in which Menlo Ventures invested early, has also filed to go public. While the public market will soon assign value to these marketplace businesses, the dominance of these businesses underscores the strength of the marketplace business model. It’s interesting then, to dig into the numbers to understand the state of marketplace businesses today.

What to make of 2020?

Typically, we’d spend most of our time analyzing the most recent data. But, it will surprise no one that 2020 is an outlier. Thankfully, we don’t need to throw the data out. There are some interesting insights. The pandemic impacted businesses broadly, some boomed while others went bust. How the marketplace category fared varied from business to business, depending on the category.

The large public marketplaces continued to perform. If we look at the top 20 publicly traded marketplaces, we see that their combined market cap increased ~63% in 2020. This growth rate is lower than the ~99% growth of the 20 public SaaS leaders.

Not surprisingly companies like the video meeting platform Zoom and Shopify, a commerce platform that allows anyone to set up an online store and sell their products, benefitted from new dynamics introduced by the pandemic.

If we look at the top 20 publicly traded marketplaces, we see that their combined market cap increased ~63% in 2020.

Similarly, some of the largest public marketplaces, like Amazon, Etsy and Delivery Hero were boosted by changes in consumer behavior including spikes in online shopping and delivery.

Acquisition efficiencies increased with increased demand from consumers and merchants that resulted in favorable growth plus EBITDA pairing.

Take Etsy as an example: In the last quarter, it grew at a whopping 128% YoY compared to 32% the year before with EBITDA margin of 30% versus 15% from the year before.

But where some marketplace categories were propelled by COVID-19 tailwinds, categories like travel and fitness struggled against the headwinds created by the pandemic. This is where we saw some exciting innovation from startups — which tend to be more nimble than their public counterparts — adapted to the new normal. Take Classpass, which was originally conceived as a platform to connect gym goers with the right studio/fitness classes.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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InSight’s heat probe has failed on Mars. Is the mission a failure?

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For two years now, NASA’s InSight probe has sat on the surface of Mars, attempting to dig 5 meters (16 feet) deep in order to install the lander’s heat probe. The instrument was going to effectively take the planet’s temperature and tell scientists more about the internal thermal activity and geology of Mars. 

InSight never even got close to realizing that goal. On January 14, NASA announced that it was ending all attempts to place the heat probe underground. Affectionately referred to as “the mole,” the probe is designed to dig underground with a hammering action. But after the first month of its mission, it  was unable to burrow more than 14 inches into the ground before getting stuck. NASA has been working since to come up with some kind of solution, including using InSight’s robotic arm to pin the mole down with added weight to help it loosen up some dirt and get back to burrowing.

It never really worked. The Martian dirt has proved to be unexpectedly prone to clumping up, diminishing the sort of friction the mole needs to spike its way deeper and deeper. Ground crews came up with a last-ditch effort recently to use InSight’s arm to scoop some soil onto the probe to tether it down and provide more friction. After attempting 500 hammer strokes on January 9, the team soon realized there was no progress to be had. 

It’s discouraging news, given that NASA just recently decided to extend InSight’s mission to December 2022. During that time, there won’t be much of a role for the heat probe. Bruce Banerdt, the InSight principal investigator, says that the planet’s temperature could still be measured at the surface and a few inches below the surface using some of the instruments on InSight that still work. “This will allow us to determine the thermal conductivity of the near surface, which might vary with season due to changing atmospheric pressure,” he says.

An illustration of how InSight’s mole was supposed to be deployed on Mars.
DLR

And while the mole was unable to accomplish what was expected, it’s not accurate to see this as a failure. “We have encountered new soil properties that have never before been encountered on Mars, with a thick, crusty surface layer that decreases its volume substantially when crushed,” says Banerdt. “We do not yet understand everything we have seen, but geologists will be poring over this data for years to come, using it to tease out clues to the history of the Martian environment at this location.”

InSight will continue on with some of its other investigations, especially the measurement of seismic activity on Mars. It turns out the Red Planet is rocked by quakes all the time.

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Fintech startups and unicorns had a stellar Q4 2020

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The fourth quarter of 2020 was as busy as you imagined, with super late-stage startups reaching new valuation thresholds at a record pace, and total venture capital funding in the United States recording its second-best result of all time.

That’s according to data released recently by CB Insights, which complements our look back at 2020’s venture capital year in America from yesterday.

At the time, we noted that American startups raised an average of $428 million each day last year, a sum that helps illustrate how rapid the private markets moved during the odd period.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


But a peek at aggregate results for the world’s largest VC market provides only part of the picture. We need to narrow our lens and peer more deeply into standout categories to understand how the U.S. venture capital market managed to post its biggest year ever in terms of dollars invested, despite seeing deal volume slip for a second consecutive year.

This morning, we’re scraping data together to better understand.

First, we want to how unicorns performed in Q4 2020. This column noted in late December that it felt like unicorn creation was rapid in the quarter; how did that hold up?

And then we’ll take a look dig into PitchBook data concerning the fintech sector, a huge recipient of venture capital time, attention and money.

Fintech’s 2020 is a good perspective to view both the year and its wild final quarter. So this morning, as America itself resets, let’s take a moment to understand last year just a little bit better as we get into this new one.

Unicorns

One of the most curious things about the unicorn era is the rising bet it represents. I’ve written about this before so I will be brief: Nearly every quarter, the number of unicorns — private companies worth $1 billion or more — goes up.

The private market is able to create more unicorns than it has been historically able to exit them.

Some of these companies exit, sometimes in group fashion. But, quarter after quarter, the number of unexited unicorns rises. This means that the bet on expected future liquidity from venture capitalists and other private investors keeps ratcheting higher.

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MIT develops method for lab-grown plants that eventually lead to alternatives to forestry and farming

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Researchers at MIT have developed a new method for growing plant tissues in a lab – sort of like how companies and researchers are approaching lab-grown meat. The process would be able to produce wood and fibre in a lab environment, and researchers have already demonstrated how it works in concept by growing simple structures using cells harvested from zinnia leaves.

This work is still in its very early stages, but the potential applications of lab-grown plant material are significant, and include possibilities in both agriculture and in ruction materials. While traditional agricultural is much less ecologically damaging when compared to animal farming, it can still have a significant impact and cost, and it takes a lot of resources to maintain. Not to mention that even small environmental changes can have a significant effect on crop yield.

Forestry, meanwhile, has much more obvious negative environmental impacts. If the work of these researchers can eventually be used to create a way to produce lab-grown wood for use in construction and fabrication, in a way that’s scalable and efficient, then there’s tremendous potential in terms of reducing the impact of forestry globally. Eventually, the team even theorizes you could coax the growth of plant-based materials into specific target shapes, so you could also do some of the manufacturing in the lab, by growing a wood table directly for instance.

There’s still a long way to go from what the researchers have achieved. They’ve only grown materials on a very small scale, and will look to figure out ways to grow plant-based materials with different final properties as one challenge. They’ll also need to overcome significant barriers when it comes to scaling efficiencies, but they are working on solutions that could address some of these difficulties.

Lab-grown meat is still in its infancy, and lab-grown plant material is even more nascent. But it has tremendous potential, even if it takes a long time to get there.

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