ESO's Monthly Start-Up

December 2024

The 12 Days of Venture Capital

Happy Holiday Season to all!

2024 had its share of ups and downs. Overall, the startup landscape exits the year with optimism due to a mass of AI funding, a handful of successful tech IPOs, and a more robust pre-IPO liquidity market. Most everyone, including Goldman Sachs, is predicting an up year for VC in 2025.

This issue of ESO’s Monthly Start-Up marks our 2 year anniversary! We appreciate everyone who has joined us on this journey. You make this all possible, and we truly enjoy sharing our thoughts with you each month. Thank you!

In the holiday spirit, we will continue what we now consider a tradition: The 12 Days of Venture Capital (2 is a tradition right?).

Enjoy!

12 Startups Eyeing 2025 IPOs.

Last year, we named 12 companies that hoped to IPO in 2024. 3 of them exited: Reddit, Rubrik, and Ibotta, and 4 remain on the list this year (denoted by *).

Our list of IPO hopefuls for 2025: Cerebras, Chime, CoreWeave, Hinge Health, Klarna*, MNTN, Netskope, Omada Health, SeatGeek*, Service Titan*, ShipBob, and Turo* 

11 US Startups Acquired for more than $1B

Exit pathways for startups began to open up in 2024, most notably for the following companies who were acquired for more than $1B - signs that there is appetite for late stage ventures looking for an exit.

2024 >$1B M&As: Aiolos Bio, Bridge, Carmot Therapeutics, HI-Bio, Inhibrx, Kate Therapeutics, Own Company, Nerio Therapeutics, OpenGov, Profundbio, Tabular

10 US Startups raised $1B+ funding rounds.

VC funding technically is on pace to be down or flat compared to 2023, but a select group of companies had no trouble raising money.

Anduril, Anthropic, CoreWeave, Epic Games, OpenAI, Safe Superintelligence, Scale AI, Waymo, xAI, and Xaira Therapeutics all raised rounds exceeding $1B in funding.

$99.8K - $99.8k set a new All Time High for Bitcoin.

We were hoping it would reach $100K, but a new infusion of bullish sentiment about crypto has been fed by president-elect Trump’s pro-crypto stance. Beyond the presidency, Crypto investors poured money into a PAC that backed pro-crypto politicians in their respective races. There is a lot of optimism about 2025, and crypto is back in vogue, at the forefront of that bullish sentiment. Crazy stat of the day: at the time of writing this, there are 124 coins with a market cap above $1B…

8 Major company tenders offers (more on this later).

Canva, Coreweave, Databricks, Figma, OpenAI, Rippling, SpaceX, and Stripe all hosted company sponsored liquidity events for their shareholders. Notably, most of these companies held these tenders to provide liquidity for long time shareholders. Offering liquidity to employees allows the company to make their people happy while maintaining the ability to go public on their on terms.

7 2024 Tech IPOs

Astera Labs (ALAB), Ibotta (IBTA), Pony.ai (PONY), Reddit (RDDT), Rubrik (RBRK), Tempus AI (TEM), and WeRide (WRD) all IPO’ed in 2024. 5 of the 7 stocks are currently trading above their IPO price. This should be a great sign for any prospective IPOs in 2025.

$6.6B raised by OpenAI

We’ve talked about OpenAI ad nauseam, but we had to mention the LARGEST VENTURE CAPITAL ROUND EVER one final time.

$5B raised by xAI

This raise may not have taken the top spot (or even xAI’s top raise to date), but it is still a massive amount of capital and helps to showcase just how much money has flowed into AI projects this year

$4B raised by Anthropic

Ditto on Anthropic. Just huge numbers across the board for AI

3 US Venture Funds raised over $3B in 2024

A16z Growth, ARCH Venture Fund XIII, and General Catalyst Group XII are all 2024 funds exceeding the $3B mark. 4 others raised funds over $1B, but we already had the number 7 covered.

2 Rate Cuts

Last year, our number 8 was 80% chance of a rate cut in 2024. That turned out to be spot on and we saw 2 rate cuts this year. A third seems likely but still up in the air as we approach the December Fed meetings. FWIW the markets are pricing in a quarter percentage point cut.

$1B+ of secondary market sales in 2024

We don’t yet have Q4 data, but as of October 2024, Caplight estimates that private company secondary sales have exceeded the $1B mark (up 29% YoY). This market is yet another way employees of startups can get liquid.

Why this matters: Overall there are 3 main themes here:
1) AI: duh.
2) Optimism: There is optimism about more IPOs in 2025. Crypto stands to benefit heavily from the new administration. Finally, projected less antitrust issues and strong US-first policies should be positive for investors.
3) Pre-IPO Liquidity: The increase of company sponsored tenders and the rise of the private secondary market offer increasingly viable liquidity solutions to employees that can’t wait for the IPO to cash in.

At ESO, we’re thankful for 2024 and excited to see how things play out in the new year. Happy Holidays!

Tips of the trade

A section where we provide helpful tips for anyone with stock options or shares at private companies.

Tender Offers at Startups: A Quick Guide

What is a Tender Offer?
A tender offer is a liquidity event where a company or investor offers to buy shares from employees and investors. It allows stakeholders to sell some or all of their equity for cash before an IPO or acquisition. This can be a great way for employees to unlock the value of their equity while the company remains private.

How Does It Work?
Tender offers typically occur in late-stage startups. The company announces an offer, setting the price per share, total shares they plan to buy, and eligibility requirements. Employees and investors can accept or decline the offer during a set time window. If accepted, shares are sold, and participants receive cash based on the offer price.

What Should You Consider?

  • Valuation: Review the offer price to ensure it’s fair. Typically a Tender Offer represents the best possible price you can get at that time, but it is worth checking the Secondary Market.

  • Taxes: Selling shares may trigger capital gains taxes—know your obligations before proceeding.

  • Future Growth: If you believe the company’s valuation will grow significantly, holding onto your shares may provide more upside in the long run.

  • Liquidity Needs: Consider your immediate financial priorities and balance them against potential future gains.

Tender offers are a valuable opportunity, but they aren’t the only option. Reach out to ESO Fund to explore tailored solutions for your equity needs.

Funding your option exercise can be expensive and a require a large capital outlay. Feel free to reach out to us to discuss your options for partnering with ESO to exercise your options risk-free.

The ESO Fund does not provide legal, financial, or tax advice.

Public Multiples Check-in: "Yesterday's Price is not Today's Price"

November was a big month for the markets, with the S&P and DJIA climbing 5.73% and 7.54%, respectively. This marked their best monthly performance this year. The Nasdaq also was up this month, closing at 6.21% higher. As such, all sectors that we track saw their forward multiples expand in November relative to this time last year. Cryptocurrency saw the largest expansion, largely due to the pro-crypto stance of Trump and many of his constituents.

Why this matters: Investors currently have a couple of reasons they are bullish in the market right now, largely being driven by Donald Trump securing the Presidency. Trump historically has favored the stock market, tax cuts, and deregulation, which all should be positive for the markets overall. Additionally, the US economy has continued to expand through the 3rd quarter, and the Fed is poised for more rate cuts as we get into next year.

November's Top Ten:

  1. Over the next six years, Microsoft plans to allocate $10 billion to CoreWeave, a startup specializing in cloud computing for artificial intelligence infrastructure. This investment is designed to strengthen Microsoft's AI capabilities and secure the resources required for operating complex AI systems.

  2.  According to CNBC, Perplexity AI is nearing the completion of a $500 million funding round, which will value the company at $9 billion. The round is being led by Institutional Venture Partners.

  3. Databricks is nearing the completion of a funding round worth several billion dollars, valuing the company at $55 billion. This investment aims to allow employees to cash out. Already one of the most valuable private startups in Silicon Valley, Databricks has been considered a potential candidate for an IPO. However, according to a source speaking with CNBC, this latest round of funding will likely delay its public offering plans.

  4. Primary care provider Forward has unexpectedly announced the closure of its operations, shutting down locations and canceling upcoming appointments. Launched in 2016, Forward operated as a tech-enabled, cash-based primary care service that did not accept insurance. TechCrunch reported that the company had raised $657 million and reached a $1 billion valuation in 2021.

  5. Canva has appointed Kelly Steckelberg, former finance head at Zoom, as its new Chief Financial Officer. With annualized revenue of around $2.5 billion and 220 million monthly users, Canva is seen as a strong candidate for an upcoming IPO in the venture-backed tech sector.

  6. ServiceTitan is set to be one of the few "unicorns" to go public in 2024, with an IPO roadshow expected to begin soon. The company previously accepted a challenging antidilution term in its Series H funding round led by TPG, and much of the motivation for going public now is to minimize the impact of this provision and avoid excessive dilution.

  7. Ramp, a startup offering business card and expense management software, is reportedly exploring the sale of shares held by employees and other stakeholders at a valuation of $11 billion, according to sources familiar with the deal. This price represents a 35% increase over Ramp’s highest valuation in 2022 and signals the company's recovery after a down round 15 months ago.

  8. Cerebral, a telehealth company, has agreed to pay a fine exceeding $3.6 million after being accused of attempting to boost prescriptions of Adderall and other controlled substances. The Department of Justice and the Drug Enforcement Administration claimed that the company exploited telehealth regulations to increase stimulant prescriptions in order to enhance patient retention and revenue.

  9. Scott Cutler announced he will step down as CEO of StockX on December 31, 2024. The company’s Board of Directors has selected Greg Schwartz, co-founder, president, and COO, to take over as the next CEO.

  10. Bitcoin is back! The cryptocurrency hit its all time high this month, reaching $99,834.81.

Why this matters: We have reached the end of the year! While still somewhat lackluster in terms of VC performance, we are starting to see more indications that there are some positive tailwinds going into 2025.

Startups that are still hiring!

Open positions are per the company's website.

About ESO Fund

ESO Fund empowers startup employees to turn their stock options into reality. Since our inception in 2012, we've been dedicated to providing risk-free funding for the exercise of stock options, ensuring that individuals can seize the opportunities embedded in their equity.

Our mission is simple: to make equity compensation accessible and understandable. Through our innovative solutions, we've assisted countless individuals at 650+ companies in realizing the full value of their stock options, contributing to the success stories of numerous startup employees.

For more information on ESO Fund and how we can help fund your option exercise, please refer to our website at www.esofund.com!