A busy week for tech companies as the FANG (Facebook, Amazon, Netflix, and Google) stocks announced earnings, the Federal Reserve left interest rates unchanged, and Apple supplier Foxconn chooses Wisconsin for U.S. expansion. We cut to the chase and bring you our weekly pick of news items impacting the innovation ecosystem.
Time for some ICYMI:
Redfin’s Identity Crisis
This morning, Redfin, the real estate tech company, priced above the range at $15/share and started trading on Nasdaq. According to a recent Fenwick & West report, the Seattle-based company has become one of 27 companies (15 lifescience and 12 tech) to go public so far this year. With a strong debut, the company’s stock performance will be watched closely in its opening days, the way in which investors categorize the company has been more contentious — is Redfin a tech company or a real estate brokerage? According to the S-1, Redfin considers itself a technology-powered residential real estate brokerage. Potential investors expressed confusion during the roadshow, unsure how to value the company like a real estate brokerage or a tech company. Leading up to an IPO it is critical that investors understand your company’s business model.
The takeaway: Tenor has worked with several tech companies over the years leading up to an IPO. As tech plays an increased role in a company’s operations and model, the lines are beginning to blur. Now more than ever, it’s important to communicate a clear market position and business model which will allow investors to understand the company and value it appropriately.
Fintech Feeding Frenzy
This week, CB Insights released a 60-page Q2’17 Global Fintech Report, detailing global financial technology investment trends, top deals, active investors, and corporate activity in the sector. This quarter did not disappoint with $5.2 billion invested in 251 fintech deals, on pace to rise 19% from 2016. Corporate investors and their venture arms see the strategic opportunity investing in this sector as they participated in 31% of deals globally vs. 29% in the same quarter last year.
The takeaway: While there’s significant capital being invested in the space, this industry isn’t for the inexperienced investor. There’s an abundance of regulation. Governments at all levels have taken an increasing interest in the financial services industry, post the global financial crisis.
Corporates Eye AI
In today’s Wall Street Journal, Steve Norton reports that in the first half of 2017, global corporate venture capital arms, mostly the big tech giants, have invested $1.8 billion in AI companies. This exceeds the $1.77 billion invested in all of 2016. He reports that Intel Capital and GV, formerly Google Ventures, have been the most active corporate VCs in AI since 2012. CB Insights tracks AI investments, which are focused in a range of areas, including cybersecurity, the Internet of Things and analytics.
This week on CNBC, analyst James Wang of ARK explains how Google and Alphabet have evolved from a search and advertising company to placing even more importance in becoming an AI company.
The takeaway: As these corporate investments lead to products and services in a few years, one thing is certain, expect big changes to what’s possible for business.
Have a good weekend!