2020: S-1s, Hedge Funds, and Course Correction

Kashish Sharma
4 min readJan 15, 2020

Posted this piece on my weekly newsletter, Yet Another Newsletter. If you like what you read then subscribe to the email newsletter.

This newsletter marks the very first piece of 2020, yes I am late to the party. My plan earlier was to write every week and publish, which I absolutely underestimated how much of a commitment it may be. The hard-pressed deadline was, unfortunately, forcing me to aggregate facts and not dive deeper into topics that I may have wanted to indulge in and hence, I have now decided that while I’d contribute weekly to my research work, I will definitely try to publish content every 2 weeks.

January isn’t over yet but the start of 2020 seems very ying-yangy. But there’s still hope and I thought of penning down a few expectations of mine from the startup/VC world this year:

  • Wave of S-1s: DoorDash, Asana, Gitlab, Credit Karma, Airbnb (?)
    Casper, the direct-to-consumer (D2C) mattress company (or sleep-tech if you may), recently filed to go public on NYSE under the symbol ‘CSPR’. It has raised a total of $340 million in the private market from New Enterprise Associates (NEA), Target, IVP (Dropbox, Slack, Snap, Twitter). More on this soon.
  • Investments in overlooked sectors:
    I feel 2019 was a great year for coffee and in general a lot of D2C players. I am hoping 2020 will be more about fitness-tech models, sales-tech and maybe other antiquated industries (real-estate, industrial tech, etc).
    Lack of capital infusion in the aforementioned sectors over the past few years has led to un-encouraging sentiments, hence hindering new entrants to experiment and play the field. What should help in this mission? New avenues of liquidity opening up to nurture and increase the ‘seed’ pool, either in the form of more focussed VCs, ie — Builders.VC, or more domain focussed nano-funds and super-angels.
  • Policy changes, for better or for worse:
    We already ushered into 2020 with Uber, Lyft, and Postmates’ ruffle with California’s gig-economy law, but I am hoping that 2020 will entail some positively catalyzing changes in some parts of the world at least.
  • Hedge Funds scooping up VC deals:
    The Indian startup ecosystem has seen a renewal of faith from Hedge Funds in 2019 and 2020 could be equally or more interesting? Tiger Global already made a blockbuster debut with Byju’s for $200 million last week! Irrespective of market speculations, I am guessing that a lot of repeat founders will end up attracting Hedge Funds to come in even earlier than their usual late-stage rounds.

How 2020 has already not been the greatest so far:

  • New year, massive lay-offs: As some of the Softbank Unicorns are currently under-going an internal purge, I cannot imagine how 2020 must-have taken-off for thousands of employees globally. Zume (360 employees), Oyo (1,800 employees), Rappi (~6% of its staff to be laid-off), and GetAround (150 employees). Is this how businesses will continue to concede to a course correction in 2020?
  • Softbank reneging term sheets:
    Axios reported that Softbank has pulled few ‘mega-round’ term-sheets, insinuating that Vision Fund may be tightening its investment elasticity. My concern is for those Soonicorns who modeled their growth playbooks to get themselves into Softbank’s radar and may now feel stranded 😬

Substack is killing it!

(Substack allows writers like myself to host and run their email newsletters. It has raised a total of $17.4 million from A16Z, Funders Club, Y Combinator, and others)

Fun fact, at least 10% of the newsletter subscribers are ready to pay on Substack IF the publisher should ever decide to charge for their content.

Substack already has 50,000 paying subscribers (last reported figure). Publishers on the platform charge anywhere from $10-$30 per month for their content. To draw up some rough estimates, let’s take an average of $15 per month from a paying subscriber:

50,000 users * $15 per month = $750,000 per month *12 months = ~$9 million ARR

Substack’s revenue model you ask? It charges a 10% cut from the subscription revenue, that’s ~$900k to $1 million direct annual revenue, for a 4 member team. Other than powering newsletters, Substack had recently introduced Substack Audio for podcasters, so it’s technically incorrect to refer to it simply as a ‘newsletter platform’. Well done Andrew Chen for leading that $15.3 million round from Andreessen Horowitz earlier in 2019 👏

The ‘attention economy’ is narrowing in this golden age of digital-media and VCs have been paying close attention to what the masses are shifting towards. Consumers need to spend their time wisely, even if that means paying a few extra hundred dollars a year.

Surprisingly, Substack’s Top 12 Paid Publishers are reportedly earning an average of $160,000 a year. Well … I can at least count on 10% of you, my esteemed readers, to start paying if I ever decide to break out in this gig full-time 🙃



Kashish Sharma

CEO @ EquityList (AngelList India company) | Partner @Cloud_Capital