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It’s the end of a short week, but instead of chatting a lot, we have a lot. But it’s all very fun, so let’s have a good time!
First, let’s talk about expensive four-legged beasts.
Trillion dollar horse?
The exchange began this week to dig into the venture capital market of the second quarter of 2021. Thanks to Anna’s help, our first piece turned out pretty good, I think. We’ll have a lot more soon. But the unicorn statistics really grabbed my neck. Consider:
- 136 unicorns were minted in the second quarter of 2021, an all-time record.
- As CB Insights notes, this is “almost six times the 23 unicorns born a year ago in Q2’20, and more than the 128 unicorns born in all of 2020”.
The result of this boom in the horned equestrian population is that there are now 750 unicorns in the world. When former TechCruncher and great guy Katie Roof tweeted this statistic, my first thought was shit, it means unicorns are worth more than $ 1 trillion.
I was far away The real figure is nearly $ 2.4 trillion (CB Insights data). Which is a terrifying number. By comparison, the world’s inexperienced unicorn population is worth almost exactly what Apple is worth today – $ 2.42 trillion, according to Yahoo Finance.
Maybe I’m overreacting to the amount of Unicorn stocks that are currently sitting largely frozen in the private markets. Especially when the unicorn exits are up. But are even today’s increased exit rates enough to erase that particular ledger over time? No I do not think so. Not if we mint 1.5 unicorns a day in the second quarter, count weekends and the like and the number of unicorns is constantly increasing.
I only wrote about one funding round this week – this R2C round, which was pretty interesting – mainly because I had a lot of other things to think about. But I’ve also seen my inbound rounds of venture capital slowing since I declared I wouldn’t cover rounds that didn’t include more detailed financial information.
It is not yet clear whether the pitch volume has decreased through the holiday week or whether I have put everyone off. But I use my incoming volume of funding rounds, both overall and on a sectoral basis, to assess what is going on. So we hope that (1) people will send me stuff and (2) they will do this and share a lot more information at the same time.
SPACs in space
Y Combinator is a nice unit. One of his most recent companies was Albedo, a startup hoping to build a network of low-orbit satellites that will take super-high-resolution photos of the planet. It’s hard to do as Natasha would say, but maybe possible thanks to off-the-shelf (sort of) satellite parts, in-orbit refueling, and a ton of other new things.
Albedo and his ilk are the reason I still attend Demo Day every year. I can see what might come up, and that’s very good, illustrative fun.
All in all, I was intrigued when two satellite imaging companies announced they were going public on SPACs this week. It turns out that they aren’t really competing with what Albedo wants to do as they offer lower resolution images. But they’re noteworthy … for other reasons.
Satellogic for this simply ornate series of charts (be sure to note the data in each chart):
And Planet for the following, namely a look at how the economics of satellite technology are weighted quite heavily towards the future:
The company’s long-term gross margin target is 80% to 85% (COGS of 15% to 20% per deck) but you can see how long it takes to get there. This is an interesting topic for the venture capital world.
Namely, that companies like Albedo will need a lot of time and money to build and scale their constellations. And I suppose to scale to the gross margins that software companies can achieve from their first day of sale.
This is one of the reasons why software products with a touch of sustained growth are chasing so much money; high margin recurring income is the business equivalent of a cheat code when it comes to creating value. Every investor wants to shovel money into it. Satellite technology, while damn critical in general, is simply more expensive and burns slower.
My question: is software so good at generating venture capital returns that other forms of startup work will be battling for attention and capital? Are you already?
Finally future. More precisely, the future of Future. I’m looking forward to the a16z release.
Since launch, I’ve checked several times a week, hoping to see what’s coming out of the collective mind of the venture capital society. I’m not just doing this because I’m a huge dweeb – I am! – but also because after all the hand-wringing I had to read that the media hated technology – no! – I was curious about what a cosmically well-funded venture group would build. It finally hired some great people.
It seems we are in between release cycles on the Future Blog. The last parts of the main content appeared almost a month ago, and the last entry is from June 25th. And this piece is just a note that promises more content in July.
Does it all feel a little flat? Given the budget, the promise, the failed domain, and the number of people in the a16z world, who should have something to say? Why not make more words appear? Let’s see what July brings.
Ok that’s enough for me for the week. Hugs and talk to you Monday morning in the capsule.