💰 Tencent’s $120B investment gain


March 11, 2021

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On March 11, 2020, the World Health Organization declared the coronavirus a pandemic. But the seriousness didn’t sink in for many until the NBA suspended its season and actor Tom Hanks announced he had the virus.

Like most people, we can hardly believe it’s been one year on.

The big idea
search engine

Neeva — led by Google vets — raises $40m to build an ad-free search engine

Sridhar Ramaswamy spent 15 years building Google’s ad division. Vivek Raghunathan spent about a dozen monetizing Google Search and YouTube. The guys are Google legends…

… And competitors, too.

Their startup Neeva — fresh off a $40m Series B — is building a subscription-based, ad-free search engine from the ground up.

This time around, they’re focused on 3 things…

… Privacy, privacy, and — no, not privacy — a better user experience.

Ramaswamy believes ad-supported search pushes relevant results down the page and pressures companies to value profit over privacy.

So for $5 to $10 a month, Neeva offers ad-free search across the web and connected accounts, and promises to prioritize site users’ trust.

The funding comes at the right time

Recent studies have shown sentiment toward ad tracking is less than ideal.

A 2019 Pew survey found:

  • 72% of people believe their online movements are tracked by advertisers
  • 81% feel they have little to no control over what data companies collect
  • 81% think the risks of data collection outweigh the benefits

Ramaswamy has also pushed for more competition in the search space, where Google holds a mildly impressive 92% market share.

Google just made a big announcement…

saying that it wouldn’t build new tools for individualized tracking once it halts support for 3rd-party cookies next year, citing the Pew study in its decision process.

And Neeva isn’t alone in privacy-focused search. DuckDuckGo has raised $13m and is averaging ~100m daily search queries (Google does an absurd 5B+ searches a day).

Sure, Neeva going after Goliath Google is ambitious. But if anyone is going to make a dent in the search game, the people who spent their careers building Google probably have the best shot.

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Snippets
  • SoftBank hits the bank: Masayoshi Son’s conglomerate is set to receive $16B when South Korean ecommerce company Coupang Inc. goes public. SoftBank has a 35% stake in the firm.
  • All growed up: Roblox went public on Wednesday via a direct listing and is now valued at $38B. CEO and founder David Baszucki is worth 4.6 billion frickin’ dollars.
  • LinkedIn China hits pause: The Microsoft-owned platform — which has 52m users in mainland China — is pausing sign-ups there while it reviews compliance with local laws.
  • Apple’s new office: The company has plans to open a 300k+-square-foot lab in Munich as part of a broader $1.2B investment in Germany. Once completed, it’ll be the largest of its kind in Europe.
  • Buzzin’: Buzzfeed is in talks to go public (via a SPAC). This news drops just as the media firm cut 47 staffers from recently acquired HuffPost.
  • New unicorn sighting: Aqua Security — a Boston and Tel Aviv-based cloud security company — raised $135m in Series E funding at a $1B valuation.
  • Via goes all-in on services: The mobility company — last valued at $2.25B — is acquiring transportation planning startup Remix in a $100m deal. Remix serves 350 local governments in 22 countries.
  • French revolution: A lobby representing many French entrepreneurs and VCs is filing a complaint against Apple, alleging iOS 14 privacy flaws.
  • GameStop: It went up, then down and… we don’t care anymore.
Midstays, you say?
hotel rooms

Meet Cosi, a short-term stay rental startup that just raised €20m

“Full stack” is typically used to describe a software engineer who can do everything (e.g., back end, front end).

Now the term has made its way into the real estate industry… thanks to Cosi, a Berlin-based short-term rental startup. The company offers 1+ month stays (“midstays”) in furnished apartments equipped with the latest in smart-home technology.

Less than 2 years after their pre-launch seed round, TechCrunch reports that Cosi has raised a €20m Series A led by Soravia, a leading European real estate group.

The pandemic has upended travel

But Cosi’s business doesn’t rely on vacationers or business travelers, instead catering to:

  • People relocating, many of whom need short-term housing while looking for permanent space.
  • People renovating their homes, who need a place to stay for 3 to 6 months.
  • Digital nomads, whose numbers are rising during the pandemic.
  • Travelers, who prefer apartments (for novelty and additional space).

With demand up from these groups, there’s also a boatload of space hanging around in unoccupied rental properties and empty offices (somewhat ironically, most of this real estate is not on boats).

Thriving, not just surviving

Similar to Airbnb, Cosi has found that 1- to 2-month rentals are a growing segment of travel.

Here are key stats for the startup:

  • 90% occupancy: For comparison, average hotel occupancy rates are in the mid-60s (this is a pre-pandemic stat).
  • It’s cash-flow positive: In comparison, Airbnb is still cash-flow negative.
  • 2k+ units: Cosi has signed long-term leases with 750 units that are ready to go (and another 1.5k units are in the pipeline).

Cosi CEO Christian Gaiser tells TechCrunch that “you can win big” in real estate even during a pandemic. True for stocks, and now apparently true for short-term housing.

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Gainz
cash

Tencent’s investment gain in 2020 was comically high: +$120B

In the subreddit r/WallStreetBets, a popular term for when an investment goes up is “tendies” — as in chicken tenders.

Why? Well, the answer to that is less important than this fun fact: Tencent — the ~$800B Chinese tech giant — posted tendies of $120B in 2020 on its investment portfolio.

Tencent’s claim to fame is the superapp WeChat

The app has been likened to a combination of Uber, Twitter, DoorDash, Venmo, and WhatsApp in one.

But the company is also one of the “world’s biggest and savviest tech investors,” according to The Information:

Highlights for Tencent include:

  • ~1.2k portfolio companies (100 public, 1.1k private)
  • Gain of $120B in 2020 was 6x the company’s profit for the year
  • A total spend of $80B to build these stakes, now worth $280B
  • At one time, it owned 5% of Tesla (it’s down to ~0.5% now, but the company made billions on the bet)
  • It’s a very active game investor, including a big stake in Fortnite publisher Epic Games

Its biggest gains in 2020 include…

… Meituan (Chinese delivery app), Pinduoduo (Chinese social app), Sea (Southeast Asia superapp), and Snap (US social app).

One caveat: These are unrealized gains as Tencent has not sold the stakes… but if they do, there will be no amount of breadcrumbs in the world to make that amount of tendies.

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Tweets of the day

One year ago today (March 11, 2020), pandemic fears turned into crystal clear reality for most Americans.

Here are some tweets from that day:

The World Health Organization (WHO) declares a pandemic

Source: Twitter / @WHO

The NBA suspends its season

Source: Twitter / @wojespn

Tom Hanks (and his wife Rita) test positive for coronavirus

Source: Twitter / @tomhanks

US stocks enter a bear market on pandemic fears

Source: Twitter / @Reuters

On the next day, the US government implemented a travel ban

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