Founder’s Weekly #1
News about Etsy, MongoDB, and WeCommerce. Articles from Ben Carlson and Visual Capitalist. Tweets from Shopify, The Trade Desk, and Virgin Galactic
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Public Company News
Etsy plans to acquire Elo7, the “Etsy of Brazil”.
Excerpt from the article
Josh Silverman, Etsy, Inc. CEO, commented, "Elo7 is the 'Etsy of Brazil,' with a purpose and business model similar to our own. Following our recent agreement to purchase Depop, we're excited to bring another unique marketplace into the Etsy family. This transaction will establish a foothold for us in Latin America, an underpenetrated ecommerce region where Etsy currently does not have a meaningful customer base. We look forward to welcoming Elo7's talented leadership team and employees to the Etsy family.”
Other Transaction Details
In the near term, Elo7's current run rate for GMS and revenue is expected to be neutral to Etsy's top-line results and modestly dilutive to adjusted EBITDA margin. The transaction is currently expected to close during the third quarter of 2021, subject to satisfaction of customary closing conditions.
My takeaway
As a shareholder of Etsy, I’m a fan of this acquisition. Etsy is paying $217 million in cash for Elo7 which connects 1.9 million active buyers and 56,000 active sellers and helps Etsy “establish a foothold” in Latin America where they currently do not have a meaningful customer base. Ecommerce is growing fast in Latin America but penetration is still under 10%.
MongoDB Atlas Celebrates Five Years of Innovation in Data.
Excerpt from the article
Our goal was not only to become a cloud-native database, but also to provide developers with a superior platform so they could change the world with data — and employ all the cloud’s potential to do it. As a managed service, Atlas would free developers from the overhead of managing MongoDB themselves. By making data portable across the biggest public clouds, such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure, it would free data from vendor lock-in. Developers and engineering teams could match the right cloud to the right workload in a few clicks and a few minutes without writing or rewriting code.
Atlas has transformed MongoDB into a cloud-first company: Atlas’s revenue is growing at 73 percent a year and currently accounts for more than half of MongoDB’s revenue.
My Takeaway
Atlas has been a wonderful example of how a company can transition open-sourced software into a managed services business very profitably all while under the looming threat of Amazon Web Services.
WeCommerce Announces $30 Million Bought Deal Financing
Excerpt from the article
Underwriters have agreed to purchase, in aggregate, 2,500,000 common shares (the “Shares”) of WeCommerce, at a price of $12.00 per Share (the “Offering Price”) and offer them to the public by way of short form prospectus for total gross proceeds of approximately $30 million (the “Offering”).”
The Company also announced that two significant shareholders of the Company, Tiny Capital Ltd. (“Tiny”) and Freemark Partners Holding Company (“Freemark”) (together, the "Private Sale Purchasers") have agreed to enter into a private sale agreement with Ben Moore currently CEO of the Company’s subsidiary, Pixel Union Design Ltd. to purchase from Moore an aggregate of 41,667 Shares at the same price per Share as the Offering Price (the "Concurrent Private Sale").
Tiny is a company of which Andrew Wilkinson (Chairman of the Company) holds an approximate 80% controlling interest and Chris Sparling (CEO of the Company) holds an approximate 20% minority (non-controlling) interest. Freemark is a long standing significant shareholder of the Company. Upon closing of the Concurrent Private Sale but without giving effect to the Offering, Wilkinson, Freemark and Ben Moore will control approximately 32%, 12% and 3% of shares outstanding. No commission or other fee will be paid in connection with the Concurrent Private Sale.
The net proceeds from the Offering will be used by the Company to fund strategic acquisitions and for general corporate purposes. The Company will not receive any proceeds from the Concurrent Private Sale.
My takeaway
I’ve never heard about a “Bought Deal” until now, but from what I’ve read, this deal seems like a good way for the company to raise some cash for acquisitions and insiders upped their stake to 32%, 12%, and 3% of shares outstanding. As a shareholder, I love that kind of alignment.
Other Top Reads
Telehealth use falls from pandemic highs: “Despite the buzz about telehealth and massive investment in virtual care, the use of telehealth is beginning to taper off, declining as much as 37% from peak-pandemic highs in some states, according to Trilliant Health's report. Trilliant Health's analysis found that during the pandemic telehealth was primarily used for behavioral health, especially by commercially insured women between the ages of 20-49….Given these trends, hospitals and health systems should be partnering with telehealth providers not building capabilities internally”.
Predicting Inflation is Hard: “We’ve never conducted an economic experiment of this magnitude before. No one knows how all of these trillions of dollars are going to impact the trends that were underway before the pandemic when it comes to demographics, interest rates, prices, spending, supply and demand.”
Who are the Dividend Aristocrats in 2021?
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Next Deep Dive
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Hi Austin , could you please share more on
"I’ve never heard about a “Bought Deal” until now, but from what I’ve read, this deal seems like a good way for the company to raise some cash for acquisitions "
why do you think this deal is good for business ?
Thanks
Thanks Austin !