USA Largest Funding Rounds in 2019

Only one USA company raised U$S 1 Bn. in just one funding round in 2019.

There are four main sectors that are attracting funding: FinTech, PropTech, InsurTech or InsureTech and Automation. All are seeing particular traction at the late stage, where checks are largest.

Fintech And Banking

Lot of startups decided to become a bank, and lots of venture capitalist decided to write a check to those startups.

Much of the funding went to “neobanks”, banking focused startups and mobile payments focused startups.

PropTech – Real Estate And Property Management –

Besides of WeWork´s implosion and its ill-fated IPO, other trendlines for the real estate startup sphere this year have been pretty positive, specially less capital-intensive areas of “PropTech” .

Insurance

Insurance is a startup sector that’s been growing steadily for a few years now. Three to five years ago a huge wave of seed-stage insurance startups were launched, and now they’re seeking ever-larger later-stage rounds. Corporate venture arms of established insurance companies are also active in the space, contributing to rising valuations.

Automation

Automation is getting technology to do something that used to require a human and automation software developers are securing rising sums of venture capital.

The 24 largest funding rounds of 2019 totalized U$S 10.092.- millions.

12. Automation Anywhere U$S 290 M

https://www.automationanywhere.com/

Industry: Automation

11. Wish U$S 300 M

https://www.wish.com/

Industry: E-Commerce

11. Reddit U$S 300 M

https://www.reddit.com/

Industry: Social

11. Opendoor $300.0M

https://www.opendoor.com/

Industry: PropTech

11. Affirm U$S 300 M

https://www.affirm.com/

Industry: Fintech

11. Carta $300.0M

https://www.carta.com

Industry: Fintech

11. Impossible Foods U$S 300 M

https://impossiblefoods.com/

Industry: FoodTech

11. KnowBe4 U$S 300 M

https://www.knowbe4.com/

Industry: Security

11. Automattic U$S 300 M

https://www.automattic.com/

Industry: Web Development

11. Samsara U$S 300 M

https://www.samsara.com/

Industry: IOT

11. RigUp U$S 300 M

https://www.rigup.com/

Industry: Marketplace

10. Vacasa U$S 319 M

https://www.vacasa.com/

Industry: PropTech

9. Root Insurance U$S 350 M

https://www.joinroot.com/

Industry: InsureTech

8. Compass U$S 370 M

https://www.compass.com/

Industry: PropTech

7. Databricks $400.0M

https://www.databricks.com/

Industry: Analytics

7. Convoy U$S 400 M

https://www.convoy.com/

Industry: Logistics

7. CloudKitchens U$S 400 M

https://www.cloudkitchens.com/

Industry: PropTech

6. PAX Labs U$S 420 M

https://www.pax.com/

Industry: Cannabis

5. Clover Health U$S 500 M

https://www.cloverhealth.com

Industry: InsureTech

5. Chime U$S 500 M

https://www.chimebank.com

Industry: FinTech

4. UiPath U$S 568 M

https://www.uipath.com/

Industry: Automation

3. Bright Health U$S 635 M

https://brighthealthplan.com/

Industry: InsureTech

2. Nuro U$S 940 M

https://nuro.ai/

Industry: Autonomous Vehicles

1. Flexport U$S 1 Bn.

https://www.flexport.com/

Industry: Logistics

A Useful Funding Tool for Less Segregated and Diverse Communities

Communities with a mixed ethnic background and more diversity are likely to come up with new ideas. According to a study by the Yale School of Management, having people in a community with different backgrounds is beneficial for Venture Capital (VC) firms as it leads to economic development and innovation.

In various countries around the globe, communities, universities, and businesses are pursuing diversification. Apart from the immediate benefit of getting fairness, having multiple points of view and diversity of experience is very useful for the overall performance of these sectors.

Effect of VC on Integrated Communities

The study also revealed that VC investment is more beneficial for ethnically integrated communities as compared to segregated communities. The effect of VC on the integrated communities was 30 percent higher as compared to segregated ones, especially in terms of creating more wealth, jobs, entrepreneurship opportunities, and facilitating innovative activities. The startup businesses create more value and job opportunities that eventually lead to economic growth.

In a diverse community, you get to interact with people having diverse backgrounds, which leads to getting access to more resources and information as compared to segregated communities. In the past, studies have shown that economic vitality is enhanced as a result of social interaction within a community.

Implications of Social Interaction for Venture Capital

The purpose of the study in question was to identify whether a social structure is vital for economic development or not. The VC was the focus of this study, given the fact that it is a useful financial tool for high growth businesses.

It was revealed that such relationships have significant implications when it comes to VC investments. VC investors put their money in new businesses that are in the close vicinity. They tend to rely on professional relationships and friendships for leads and information that cannot be received via cold calls or internet search.

VC investments were compared to aggregate income, employment, new businesses, and a number of patents. It was found that VC performed much better in less segregated and diverse areas, resulting in more patents, more jobs, and created more value.

Social interaction has benefited various communities. One of the many factors that led to high level of innovation in the United States is the increasing number of immigrants that bring diverse culture. When they interact with one another, it creates room for transferring valuable information and ideas, which leads to better economic outcomes. Besides, when people from different ethnic backgrounds live close to one another, it brings about healthy relationships and effective interactions that is favorable for the wider economy.

Diversity Leads to Innovative Thinking

Diversity is also very useful to promote innovative thinking that leads to success in the venture capital market. Any sector that does not have diversity or mixed race is very limited in innovative mindset and thought process. This results in similar thinking with not many innovative ideas. In addition to that, there is gender bias in the VC sector that restricts the overall growth prospects. It is a widely known fact that female founders represent the rapidly growing entrepreneurial group in the United States and their firm’s experience growth 1.5 times faster than the average growth rate in the market.

Providing Solution to Promote Innovative Decision Making

Despite the lack of diversity, it is quite likely that change is taking place gradually. An increasing number of entrepreneurs with diverse background are entering into the market. They are focused on providing a solution to the problem and make a profit in the process.

It has become really important to promote diversity in the communities and in societies at large so as to promote economic development and prosperity. Not only will it be beneficial for the venture capital industry, but it is also going to help the masses in getting equal opportunities in every sector.

The venture capital market has also derived benefits from diverse communities in terms of innovative thinking and plethora of useful information. To continue moving in the right direction, countries around the globe should embrace diversity in order to have successful businesses and create more job opportunities that will eventually bring economic prosperity in the long run.

Hong Kong Government and Venture Capital

In the past few years, a growing trend of government involvement to boost entrepreneurship and innovation has been observed around the world. For example, key developments in the IT sector have risen from government funded R&D (Research and Development).

The Hong Kong government has also contributed a lot in this regard, especially via Venture Capital (VC) investments.

The ex-financial secretary of the Hong Kong Special Administrative Region, Antony Leung, said in a speech in 2002 that their strategic position provides outstanding opportunities, and VCs in the country have ideally been placed to take these opportunities.

Development of VC in Hong Kong

Venture Capital investments started in the 90s with the change in attitude of the Hong Kong’s government, as various reforms were made to the policies of the country toward IT development and innovation. Today, Hong Kong is considered one of the largest VC centers in Asia.

The government of Hong Kong has always been aware of the opportunities created by VCs. This is why a number of initiatives were taken by the government to further enhance the growth and development in the sector. Some of them have been mentioned below.

VC Financing System

The financing system was formed by the government of Hong Kong to offer supplementary loans with a low rate of interest to VCs that are non-governmental and to provide guarantees for these loans.

Direct Investment by the Government – Innovation and Technology Commission (ITC)

The government formed ITC in 2000 in order to make Hong Kong the knowledgeable and world-class economy. Another reason was to harmonize the creation and implementation of policies related to IT and innovation and to make sure there is synergy among them. ITC formulated different programs over the years, including the Innovation and Technology Fund (ITF), the Applied Research Fund (ARF), and Small Entrepreneur Research Assistance Program (SERAP). Moreover, it also contributed toward the development of IT infrastructure and human capital by introducing programs like the Hong Kong Science and Technology Parks Corporation (HKSTPC), the Hong Kong Productivity Council (HKPC), New Technology Training Scheme, Internship Program and more.

Provision of Legal Support

The government extended their efforts for the development of VC in the country by envisioning legislations as guarantees for the VC sector. Hong Kong has its own VC laws and does its best to stay compatible with Chinese laws related to VC. Some of the measures taken include Small and Medium Enterprise (SME) Promotional Law, wherein, the government of China issued a number of opinions to guide and support the economic development of private and entrepreneurial businesses by introducing preferential measures for SME development; and Provisional Measures for the VC Enterprises Administration to make way for fund raising opportunities and to set forth several investors by offering a legal ground for VC firms to raise capital in a private manner.

Adoption of Preferential Taxation Treatment

The VC firms in the Hong Kong were weak in raising capital due to their high risk nature coupled with low success rate. This is why the government formed a preferential taxation treatment by providing exemptions and reductions to back the VC development. A number of steps were taken in this regard, including Profits Tax Exemption for Offshore Funds that helped in bringing new offshore capital to the country, and Avoidance of Double Taxation between China and Hong Kong that decreased rate of tax on passive income, such as, royalties, interest payment, capital gains, and dividends for strengthening Hong Kong as the gateway of foreign investment into Mainland China.

Although, the government of Hong Kong took a large number of initiatives in the region, yet, they were criticized by some specialists who believed that the government could do more to support and improve VC industry. They are of the opinion that the government has kept its focus on later stage startups and businesses while ignoring the startups that are in their early stages, which caused lack of governance. Also, a very small proportion of that money was being invested in Hong Kong.

Current Status of the VC Industry in Hong Kong

In 2016, the Hong Kong Chief Executive, Leung Chun-Ying, announced HK$2 billion worth of capital in his policy address in order to boost the inflow of money in IT and innovation. It was the Innovation and Technology Venture Fund that aims to encourage increased funding from private VC in IT startups via a matching process. According to the Vice President of the Hong Kong Business Angel Network and managing director of Radiant Venture Capital, Duncan Chiu, the fund was issued to provide backing to early stage companies that struggle to raise capital for their business.

To conclude, Hong Kong is known to have the largest population of VC professionals in the region that manage more than 30 percent of the capital, and the government has been making a continuous effort to further strengthen the VC industry for the betterment of the overall Hong Kong economy.

Value Investment

Value investment strategy is one of the strategies used in the stock market, where investors look for the companies that have the ability to generate returns at a reasonable level during a sustained holding period. In other words, a value investor tries to find a company that is undervalued by the market, but it has a potential to show an increase in its share value once the market rectifies the error of valuing that firm. So, it allows an investor to buy a well performing share at a cheaper price.

How to Screen for a Value Stock?

Value investors are not concerned with the factors that usually cause price fluctuation in the market. For them, the factors that would impact a stock price are oil prices, inflation reports, wars, and hikes in the Federal rates. This is the reason why they look for stocks with strong dividends, earnings, cash flow, and book value, because value investing is not just about purchasing an undervalued stock, it is about purchasing a good stock that is undervalued. However, just having the strong fundamentals doesn’t necessarily mean it will be a value stock investment opportunity, because a company with strong and consistent earnings growth, attractive cash-flows, decent dividends, and a minimal amount of debt might represent a growth investment, and so, value investors won’t be interested in it.

An investor must keep three questions in mind when he seeks a high value stock:

How is the cash-flow position of a company?
If the company is generating profit from its key operations?
What are the future prospects in terms of growth potential?

Quantitative Aspects

How to assess a good value stock? (Just some RATIOS)

High Dividend Yield – The stock with an ability to generate high dividend yield, is considered a good value stock. However, a comparison should be made in the same industry.
Low P/E Ratio – It is a comparison between a share price and the earnings generated by each share. Paying less for more profit will be a good indication of a good value stock.
Low Price to Book Ratio – The lower this ratio is, the better it would be, as it shows how much will be left after the liquidation.
PEG Ratio – Value investing doesn’t simply means investing in low Price to earning stocks. Another largely accepted metric for finding out the intrinsic value of a company is PEG ratio, which is calculated by dividing the P/E ratio of a stock with its projected earnings growth rate over the years. It measures how cheap a stock can be while keeping in mind the growth of its earnings. Therefore, a PEG ratio of less than 1 means a company is undervalued.
Net-Net Method – According to this method, if a company trades at 67 percent of its current assets, an investor doesn’t have to adopt any other measure of worth, because it depicts that a buyer is getting all the non-current and intangible assets free of cost. But, there are only a few companies that are trading this low.

Qualitative Aspects

Value stocks can be found in any industry, including finance, energy, and even TECHNOLOGY. Yet, they are mostly commonly located in industries that have recently been hit by a difficult time, for example, the cyclical nature of auto industry give rise to a period of undervaluation of companies like General Motors and Ford.

Warren Buffett, one of the most astute investors of all time, learned the art of trading from Benjamin Graham, who was the father of value investing. Buffett has always emphasized that buying a good company at a fair price is far better than buying a fair company at a good price, which is true. Value investing is not about purchasing stocks at a bargain price and hoping for the best, nor is it about making quick money on a market trend. The main idea behind it is to invest in companies with strong business models.

It is important to have a long term strategy with value investing. The investors shouldn’t get faltered by short term market features, such as volatility or daily price fluctuations, because a good firm will not lose its worth even on a bad day. Although, value investment strategy is dependent on a stern screening process, yet, it has a potential to generate reasonable returns in the long run.

Basic Investment Strategies

Deciding on a suitable strategy to fuel your investment plan is based on various factors, including the risk appetite, the time span of an investment, and financial goals. Some investors stick to one particular strategy, while others use several strategies over a period of time. Although, investors usually have their own style that forms the basis of their decisions, yet, there are some basic investment strategies that can be employed to achieve your financial objectives.

Define Your Goals – Defining a goal is the first thing every investor should do. You cannot go about investing in the market haphazardly without having any plan in mind, or else you would end up losing all your money. Always devise a sound trading plan and define your financial goals. It allows you to identify which financial instrument is most suitable for you and enables you to take timely decisions.

Diversify – Investing is a broad term that can be intimidating for newbies as it involves a wide variety of investment vehicles and hundreds of strategies. However, it can be managed if you devise a flexible and effective plan. Today, investors have more investment options than were available to an average investor ten years ago. Having a few stocks in your portfolio might cost you more in the beginning, but it will be beneficial in the long run, because one of your investments might only generate 5 percent profit, while the other one gives you a 100 percent return five years later.

Monitor Your Investments – Investing in the same stock forever is never a wise option. Even the blue chip companies can turn out to be a failure, because the old perception of buying and holding the stock forever doesn’t work in today’s world with such an effervescent economy. Therefore, monitor your investments and take timely decisions to avoid losses.

Start Investing Early – The sooner you start, the better. This is certainly true when it comes to investing in the financial market. If you keep your money invested for a longer period of time, it will have more potential to grow. Patience is the key! If only you learn to practice patience and adhere to a long term investing strategy, you would definitely experience financial success and secure reasonable returns.

Turn Discretionary Income into Your Investment – It is important for you to not confuse your needs with wants. The president of the U.S. Retirement Strategy for Transamerica Retirement Solutions, Stig Nybo, once said that phone bills, cable TV packages, and other automatic services eventually become necessities, which doesn’t let the would-be investor jump out of it. He further said that you should question the things that have become the norm, but they might not be necessities.

Adhere to a Cash-flow Plan – It is an essential element that should become a part of your investment plan. Reinvest your money every month during your employment years and stick to a strict cash-flow plan, while making reevaluations as life progresses. This will definitely help you go a long way and enable you to achieve your financial goals.

Separate Emotions from Financial Decisions – Emotions play a major role in your investment decisions. But, it is very important to separate emotions from your short as well as long term financial objectives. Emotional involvement tampers with your judgment and performance. Just because everyone is talking about hot stocks, doesn’t necessarily mean it is going to be a good investment. Always analyze the trends and pay close attention to market news and events, as it allows you to take rational decisions in the long run.

Assess Your Tolerance for Risk – Whenever you invest in the market, ask yourself one simple question, “How much can I take and sleep at night if the value of my investment drops by 10 percent or 50 percent?” If a huge decline is going to hit you hard, you should consider investing the major portion of your funds in safe investments, such as, bonds or utilities.

However, bear in mind that it takes some time to be able to understand the gist of these strategies. Being a newbie, you might initially experience a high risk of loss if you follow one of these strategies. Therefore, observe patience and perseverance, because you will eventually get there.