Industry News

YogaWorks IPO Can’t Get off the Mat; Debut Delayed

YogaWorks Planned to Raise $65 Million YogaWorks filed to trade on the Nasdaq under the symbol YOGA (surprise).
It would’ve been the first public yoga studio.
Great Hill intended to buy $10 million in shares and have a 70% ownership of the company.
The company gets revenue from one-month membership and paid-in-full six-month and annual membership.
The net loss for the quarter rose to $2.6 million in the first quarter 2017 from $1.5 million in 2016.
It also said in the filing that it is in late-stage negotiations to buy up to 14 more studios.
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Dote raises $7.2 million for its mobile shopping app

Dote raises $7.2 million for its mobile shopping app.
While consumers are increasingly turning to Amazon to buy everything from home goods to electronics, a newly launched app called Dote believes there’s an opportunity to compete with the e-commerce giant’s fashion business.
There are “brands that don’t want to put their stuff on Amazon because it degrades their brand,” claims founder and CEO Lauren Farleigh.
Part of the money was secured on Apple’s “Planet of the Apps” startup show.
“When we saw the engagement and session times for Dote and heard from users, we saw that it had created the ‘shopping as entertainment’ experience on smartphones for millennial and Gen Z women,” says Jeremy Liew, a partner at Lightspeed.
“We believe that young women are the early adopters of popular culture.” Dote users download the free app, then they are asked to select their favorite brands to be notified about sales and offers.
Users are shown curated trends, though there’s also a social component where they can show friends what they’re buying.
The company takes an undisclosed share of the transaction revenue when a brand’s products sell through the app.
Farleigh says this activity helps the company build data about consumption habits and that its algorithms can “determine what you’re most likely to buy.” The company is competing in what’s become a fast-growing category.
Farleigh says Dote will use its new funding for hiring at its San Francisco headquarters, as well as to expand its retail partnerships.

10 Ways to Preserve Cash as a Bootstrapped Startup

For bootstrapped startups (meaning ones without venture capital funding) running out of runway can be a serious problem that limits the decisions leadership can make.
Reduce operating costs by working remotely.
One way to alleviate these costs is by creating a company that employs remote workers.
Make frugality a company value.
Some states have recently created tax incentives to encourage innovation.
This can be a good short-term strategy to preserve cash while attracting top talent.
When possible, hire contractors instead of full-time employees.
Master organic search to reduce CAC.
However, the lower CAC is, the easier it is to make a profit and to, therefore, invest more in attracting new customers.
During the early days of Airbnb, the company was struggling.

Uber’s SVP of leadership and strategy says she hasn’t seen any toxicity

Uber’s SVP of leadership and strategy says she hasn’t seen any toxicity.
But Frei says since joining the company, she has not seen any toxicity.
“I read the newspapers and I thought there was no chance they were going to be the good guys,” Frei said about her perception prior to joining Uber.
I found a lot of people looking for the secret memo on how to behave and if you gave them the secret memo they behaved that way.
I didn’t find toxicity.” Swisher, of course, did not let Frei off the hook, referencing things like the greyballing, geofencing Apple, tricks around regulations and the Miami letter.
“I’m ashamed because I’m now a part of the company,” Frei said.
“I share that.” But Frei then went on to talk about redemption, and how that’s her favorite trait in the world.
Finally, the next CEO will need to understand that Uber is “an organization of 15,000 people who have been through a lot.” This is absolutely an inflection point for Uber, Frei said, recognizing the company has gone through one crisis after the other.
“Honestly in part because of the spotlight that’s on [Uber].” Frei, just a couple of months into her role at Uber, sees achieving success as getting to a point where drivers love driving for the company because they want to, not because they feel like they have to, she said.
Success will be when riders feel proud to use Uber and when shareholders are proud to be involved with the company, Frei said.

Links for July 20: Why startups could start flocking to other countries, the challenge facing the future of work, and more

Links for July 20: Why startups could start flocking to other countries, the challenge facing the future of work, and more.
The future economy can create wealth, but what about work?
As businesses become more like Blackstone and less like General Motors, the economy will generate more and more wealth—and, many worry, less work.
We argue that declining competition is partly responsible for this phenomenon.
Within manufacturing, we show that industry leaders invest and innovate more in response to exogenous changes in Chinese competition.
How land inequality increased productivity: Evidence from the French Revolution — Noel D. Johnson et al. Bad federal policy could be sending US startups abroad — Wired Politicians like to talk about small businesses being the lifeblood of the American economy.
But the truth is that it’s not small businesses but young businesses that are creating the most jobs.
It’s little wonder, then, that as the United States keeps these entrepreneurs in legal limbo, other countries, from France to Chile, are all too eager to take them in.
That bill died in the House of Representatives, but America’s neighbors up north took notice, piloting their own startup visa program that very year.
So far, 60 startups have launched in Canada using this visa.

YogaWorks IPO pulled on valuation concerns, not market conditions

YogaWorks IPO pulled on valuation concerns, not market conditions.
Warner Bros/Courtesy Everett Collection YogaWorks Inc. said Thursday that it was postponing its initial public offering citing “market conditions” through a spokesperson, but it’s not the market that is holding it back.
In fact, the IPO market is very healthy, with the second quarter marking its strongest three-month period in two years, according to a report from PricewaterhouseCoopers.
If the yoga studio chain had priced at the midpoint of its $12 to $14 range, it would have commanded a public market capitalization of $187 million.
Blue Apron became the worst-performing large IPO so far this year on July 18, when shares hit a record low some 36% below the issue price, according to Renaissance Capital.
On a smaller scale, software company Tintri Inc. slashed its price range twice to eventually price at $7 a share, giving it a market capitalization of $215 million, below its reported private valuation of $785 million.
SNAP, -0.20% which went public with a $19.7 billion market capitalization, above its last private valuation of $17.8 billion.
In comparison, food gene-editing company Calyxt Inc. CLXT, +18.21% which also has yet to turn a profit, made its market debut Thursday after slashing its valuation and saw its shares soar 12%.
Don’t miss: Investors’ worst fears about Blue Apron may be coming true as Amazon moves to meal kits The company, founded in 1987, would be the first yoga studio to go public in the U.S. and a test of whether Wall Street appreciates boutique fitness offerings as much as private-equity investors, which have been scooping up gyms.
It had a net loss of $9.4 million in 2016, wider than the $9.2 million loss recorded in 2015.

ZTO Sued Over ‘Untrue Statements’ in Biggest U.S. IPO in 2016

ZTO Sued Over ‘Untrue Statements’ in Biggest U.S. IPO in 2016.
Lawsuit was filed by retirement plan for Birmingham, Alabama City says ZTO inflated margins by omitting some business ZTO Express Inc., the Chinese delivery service that had the biggest U.S. initial public offering in 2016, was sued by an investor for allegedly inflating profit margins to exceed industry peers and lure investors. “By keeping the ‘network partners’ businesses off its own books, the company was able to exaggerate its profit margins to investors,” the retirement plan said in the complaint.
The suit also names Morgan Stanley and Goldman Sachs Group Inc., which led the Oct. 26 offering that raised $1.4 billion.
ZTO’s American depository shares are down about 20 percent from its IPO price of $19.50.
“We believe the claims are without merit and intend to defend ourselves vigorously,” she said in an email.
The press offices of Morgan Stanley and Goldman Sachs didn’t immediately respond to requests for comment.
The retirement plan said it relied on that statement and others by ZTO to make its investment, only to see the share price fall.
Individual defendants in the complaint include ZTO Chief Executive Officer Meisong Lai, Chief Financial Officer Jianmin “James” Guo, and board directors Jianfa Lai, Jilei Wang, Xiangliang Hu, Baixi Lan, Xing Liu, Zhen Wei.
— With assistance by Alex Barinka

Calyxt stock rises as it become Minnesota’s newest public company

The developer of agricultural gene-editing technology for food producers priced its initial public offering Wednesday evening after the stock market closed.
Calyxt priced 7 million shares at $8 per share and raised about $56 million.
Previous documents indicated the company would offer 6,060,606 shares.
The company started trading under the stock symbol CLXT when the market opened Thursday.
Shares of Calyxt priced at $8 per share and rose quickly to $10.41 per share in midday trading Thursday.
To mark the new offering Federico Tripodi, CEO of Calyxt, rang the opening bell at the Nasdaq exchange.
The company’s gene editing technology for agriculture, TALEN (Transcription Activator- Like Effector Nucleases), was developed at the University of Minnesota.
The company will use $25 million of the offering’s proceeds for research and development of Calyxt’s initial products including a high fiber wheat, a herbicide tolerant wheat variety and additional products.
This is the second Minnesota-based company to complete an initial public offering this year.
ASV shares are currently trading at $7.94 per share.

An unprofitable yoga chain is the latest failed IPO

An unprofitable yoga chain is the latest failed IPO.
Lululemon Athletica/Flickr This one didn’t even make it to market.
YogaWorks, a chain of 50 studios spread across six US metropolitan areas, pulled its initial public offering on Thursday, the day it was originally expected to price, citing market conditions.
The offering’s underwriters — led by Cowen, Stephens and Guggenheim — set a range of $10 to $12 a share in a regulatory filing on July 10.
A pricing at the top of the range would’ve marked a valuation of roughly $70 million.
It’s certainly an interesting rationale for pulling the deal, considering multiple US equity benchmarks closed at record highs on Wednesday.
Not to mention the CBOE Volatility Index — or VIX — which serves as a gauge for investor fear, is locked near its lowest levels on record.
While some might cite a difficult IPO environment that most recently saw meal kit maker Blue Apron limp to the finish line, it’s also possible potential investors just weren’t sold on the company at that valuation.
After all, the company is unprofitable at the moment, posting net losses in each of the last two years, as well as in the first quarter of 2017.
Blue Apron is also not the best basis for comparison, because its severely dented IPO price and subsequent weak trading was spurred by Amazon encroaching on its competitive territory through its blockbuster acquisition of Whole Foods.

Eric Mathews of Start Co on Building a Diverse Founder Ecosystem

Eric Mathews of Start Co on Building a Diverse Founder Ecosystem.
Eric Mathews is the CEO of Start Co, a venture development organization in Memphis, is an icon in the city and is dedicated to this long haul of building his community.
I am a champion for community and entrepreneurial change and have been working to build the startup ecosystem in Memphis for over a decade.
Can you tell us a little more about what Start Co. does?
Finally, we provide post-acceleration support for growing startups.
Four startups from our most recent cohort have raised over $1 million in funding.
Overall, Start Co.’s graduate companies have enabled over 250 jobs to be created in our community.
Over the following five years, that model can be scaled, and the final five years are the harvest time, when founders have exits and become the next generation of mentors and investors.
Recognizing the value of Start Co.’s action-oriented entrepreneurial training, the city partnered with us to launch Propel, a 12-week accelerator program focused on minority owned businesses.
The city is funding the initiative, and Start Co. is running it.

Kala Pharmaceuticals Announces Pricing of Initial Public Offering

Kala Pharmaceuticals Announces Pricing of Initial Public Offering.
WALTHAM, Mass.–(BUSINESS WIRE)–Kala Pharmaceuticals, Inc. (Kala), a biopharmaceutical company focused on the development and commercialization of two Phase 3 product candidates, KPI-121 1.0% for the treatment of inflammation and pain following ocular surgery and KPI-121 0.25% for the temporary relief of the signs and symptoms of dry eye disease using its proprietary mucus-penetrating particle (MPP) technology, announced that is has priced its initial public offering of 6,000,000 shares of its common stock at a public offering price of $15.00 per share, for aggregate gross proceeds of approximately $90,000,000 before underwriting discounts, commissions and estimated offering expenses.
All of the shares are being sold by Kala.
The common stock is expected to begin trading on The NASDAQ Global Select Market on July 20, 2017 under the trading symbol “KALA.”
The offering is expected to close on July 25, 2017, subject to customary closing conditions.
J.P. Morgan, BofA Merrill Lynch and Wells Fargo Securities are acting as joint bookrunners for the offering.
A registration statement relating to the shares of common stock being sold in this offering has been filed with the U.S. Securities and Exchange Commission and was declared effective on July 19, 2017.
The offering of these shares is being made only by means of a prospectus forming part of the effective registration statement relating to these shares.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of shares of Kala’s common stock in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.
About Kala Pharmaceuticals, Inc. Kala is a biopharmaceutical company focused on the development and commercialization of therapeutics using its proprietary MPP technology, with an initial focus on the treatment of eye diseases.

What’s in a name? Aussie founders weigh in on whether a startup’s name directly influences investment

Aussie founders weigh in on whether a startup’s name directly influences investment.
The research is based on a two-part study conducted by researchers from Stony Brook University, Drexel University, and Villanova University, who examined 131 crowdfunded projects and 1681 initial public offerings, reports Business Insider.
Uniqueness is only a virtue with early-stage investors, however, with the study finding that since very little is known about a startup in its early stages, unique names give the impression that there is something special about the company.
StartupSmart spoke to three uniquely-named Australian startups to find out how they chose their names, whether this affected their efforts to secure investment, and what entrepreneurs should know before settling on a brand.
“Startups can be covered by the same rules that we made up one night back in the music industry: avoid fancy and tricky combinations of letters and upper/lower case that nobody will spell right,” Ryan advises.
Ryan also emphasises the role branding plays in the perception of a startup, noting Corilla’s distinctively simple pencil on a bright yellow background has been instrumental in promoting brand recognition since the startup launched in 2014.
“People often come up to us at conferences and tell us that they love the logo, or walk up pointing, ‘you’re the ‘yellow pencil’!’.
“The most important thing is picking a name that you can move in to, that doesn’t tie you in to one thing.” Michael Jankie, co-founder and chief executive of PoweredLocal Michael Jankie, co-founder and chief executive of Melbourne-based social Wi-Fi startup PoweredLocal, advocates the virtues of generic names for startups, but admits that despite securing more than $500,000 in funding, the PoweredLocal name is still “one we struggle with”.
“I’m sure certain names appeal to different people, but when we named our company PoweredLocal, we did not necessarily think we would be doing just Wi-Fi, so we wanted it to be generic,” Jankie says.
With this in mind, Jankie advises startups should “pick a name relevant to your industry and speak to investors that are also relevant to your industry”.

Carrefour’s Brazil Unit Prices I.P.O. at Low End of Range

at Low End of Range.
RIO DE JANEIRO — The Carrefour Group, a French retailing giant, said on Wednesday that its Brazilian subsidiary had priced an initial public offering of stock at the bottom of its expected price range, a sign of the uncertainty plaguing Latin America’s largest economy.
The initial public offering of Atacadão, the parent company of Carrefour Brasil, is the biggest in Brazil in recent years, and it is the first since President Michel Temer was implicated in an continuing corruption investigation in May, unnerving investors.
While the pricing showed that investors remain cautious, that the offering was moving forward was seen as a benefit for a nation bedeviled by prolonged political and economic upheaval.
Including an overallotment of shares, Atacadão raised roughly $1.6 billion in the offering, which was priced at 15 reais a share, or $4.73, at the bottom of a previous range of 15 to 19 reais.
The market debut comes at a time when President Temer’s survival is very much in question.
As he is being investigated, economic reforms are moving slowly.
But Atacadão is the first on the Brazilian exchange since the airline company Azul’s offering in April.
The corruption accusations in May led to a market sell-off and prompted some companies to suspend their plans to go public.
Carrefour acquired Atacadão in Brazil in 2007.

TPG RE Finance Trust, Inc. Announces Pricing of its Initial Public Offering

TPG RE Finance Trust, Inc.
NEW YORK–(BUSINESS WIRE)–TPG RE Finance Trust, Inc. (“TRTX”) today announced the pricing of its initial public offering of 11,000,000 shares of its common stock at $20.00 per share.
TRTX has granted the underwriters a 30-day option to purchase up to an additional 1,650,000 shares of its common stock at the initial public offering price less the underwriting discount.
The offering is being made through an underwriting group led by BofA Merrill Lynch, Citigroup, Goldman Sachs & Co. LLC and Wells Fargo Securities, who are acting as joint book-running managers for the offering.
TPG Capital BD, LLC and JMP Securities are acting as co-managers.
The offering of these securities may be made only by means of a prospectus.
TRTX is externally managed and advised by TPG RE Finance Trust Management, L.P., an affiliate of TPG Global, LLC.
Cautionary Statement Regarding Forward-Looking Statements The information contained in this press release contains “forward‐looking statements.” These forward‐looking statements are subject to various risks and uncertainties, including, without limitation, statements relating to the performance of our investments and our financing needs and arrangements.
Forward‐looking statements are based on certain assumptions, discuss future expectations, describe existing or future plans and strategies, contain projections of results of operations, liquidity and/or financial condition or state other forward‐looking information.
We do not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

China And Others Are Funding Huge International Development Projects, But What Happens When They Fail?

China And Others Are Funding Huge International Development Projects, But What Happens When They Fail?.
Not long ago, few governments or companies would dream of building large-scale infrastructure in another country.
China is building new cities in Georgia, Egypt, Malaysia, and Sri Lanka; a German company built an entirely new town in China; an American company built a state of the art new city from scratch in South Korea; a developer from Abu Dhabi is building a new district in Belgrade; Japan is pumping hundreds of billions of dollars into rail lines, metro systems, bridges, and ports in places like India, Bangladesh, the Philippines, and Cambodia.
What’s more, as China advances across Asia and Africa with its Belt and Road initiative, a competitive dynamic has been established as other regional powers appear to be scurrying to land as many big ticket international infrastructure projects as they can — before China swipes them all up.
What happens when big dreams and solid plans are sabotaged by local competitors?
The government administration that signed the deals with China to fund and build the Hambantota projects got voted out of power in 2015 in exchange for rivals who ran on a platform of opposing such Chinese investment — claiming that it was riddled with corruption and didn’t favor Sri Lanka.
Working with a country that was fast becoming financially and politically bankrupt, China agreed to a debt-for-equity swap where the China Merchants shipping company would pay off $1.1 billion of Sri Lanka’s $8 billion worth of Chinese-owned debt in exchange for an 80% share of Hambantota port.
This deal, which has been largely interpreted as Sri Lanka selling itself out to China, provoked a huge amount of public outcry and discontent, which has occasionally boiled over into violent demonstrations, and is still not settled.
The A2 Highway Project When you bring up Chinese investment in Poland, you will almost invariably provoke a story of the ill-fated A2 highway project.
The Chinese firm halted work in protest; Poland sued.

As DC venture funding dollars go up, number of deals dips down

As DC venture funding dollars go up, number of deals dips down.
D.C. is posting big-money venture deals lately, but the Washington Post points out that doesn’t mean the number of companies getting funded is increasing.
Looking at deals for the second quarter of 2017 culled from Pitchbook investment data analyzed by the National Venture Capital Association, the Washington Post notes EverFi’s $190 million raise as the latest in a series of big venture raises that accounted for a big portion of the quarter’s total amount raised in the region.
And the $435 million total venture funding is strong compared with four years ago.
That’s a far cry from a few years ago, when the number of deals per quarter tended to come in above 60.” Framebridge’s $16.7 million Series B showed that companies are still getting funded.
And D.C. isn’t alone, as this latest quarterly report mirrors national trends.
But it’s worth watching to see if this gap has an impact on how companies approach funding, especially as we see startups continuing to seek new ways of raising capital.
Stephen Babcock is Market Editor for Baltimore and DC.
A graduate of Northeastern University, he moved to Baltimore following stints in New Orleans and Rio Arriba County, New Mexico.
His work has appeared in The New York Times, Baltimore Fishbowl, NOLA Defender, Times-Picayune and the Rio Grande Sun.

4 Lessons U.S. Entrepreneurs Can Learn From Latin American Startup Culture

Startup investments are on the rise in Latin America, and there’s now more capital available than ever before.
Startups in Latin America have to be extra scrappy to build their ventures, and many of these startups are proof that it can be quite advantageous to grow a business this way.
Whether it’s bootstrapping, hiring only when necessary or focusing on revenue first, there are plenty of lessons U.S. entrepreneurs can learn from Latin American startups.
Because there tends to be less later-stage funding available outside of the U.S, startups in regions like Latin America, whether they’re building products for the Latin American or U.S. market, must focus instead on generating revenue much earlier on to keep their companies alive.
This focus on real, sustainable growth forces a startup to build something that actually works and generates money.
At the same time, investors in Latin America are traditionally more risk-averse, therefore generating revenue is often the only way for startups to prove their concept or business model and raise VC funding.
They usually raise funding to battle their way into a new country, one at a time, and then hit a number of roadblocks due to language barriers, cultural differences or poor attempts at adapting their products for the local market.
Economic uncertainty is a part of life in Latin America, however, companies that can quickly adapt to market changes are the ones who find the most success when replicating their operations.
There is plenty of bilingual, top talent in Latin America what can work with U.S. companies in real-time, due to limited time zone restrictions.
And there are plenty of other startups like Alegra in Latin America.