The SPAC and going ‘full stack’
Image: Protocol

The SPAC and going ‘full stack’

Protocol Pipeline

Hello and welcome to Pipeline. This week: The startup that could be this year's breakout company, why VC firms are launching SPACs and about that memo to a CircleUp board member who was "beyond counterproductive."

If you were forwarded this email, be sure to sign up here. If you're curious about the background of Pipeline and the work I do at Protocol, I was interviewed this week by Sar Haribhakti and even addressed the whole tech vs. media tension.


  • The memo to a board member that you have to read. CircleUp's CEO Ryan Caldbeck announced this week that he was stepping down after experiencing exhaustion and burnout. It was a raw and real blog post that I recommend everyone read in its entirety. But the part that has a lot of folks talking is his email to a board member described as "beyond counterproductive." I've heard from multiple sources that it refers to a partner at Collaborative Fund, which led CircleUp's series C and was featured in a bunch of articles, but is not listed on CircleUp's site as an investor and does not include CircleUp on its own portfolio pages. CircleUp and Collaborative Fund both did not respond to requests for comment (although one partner responded on Twitter that there are "two sides to every story"), but founders have already gone to the anonymous VC Guide rating site to post reviews.
  • Is Hopin this year's breakout tech company? Haystack's Semil Shah claimed the London-based events platform has gone from raising a seed round to a $2 billion pre-money valuation in 11 months and is doing tens of millions in revenue. Maybe that's why Zoom is finally getting serious about its online events business.
  • Investors' IPO wish list: Airbnb tops EquityBee's investors' list of companies they want to see go public, followed by SpaceX, Robinhood, Stripe and Impossible Foods. Rounding out the top 10 are Carta, Instacart, Coinbase, Databricks and Houzz.
  • Sequoia's Roelof Botha is joining the tech vs. media wars. Normally investors rail against ad-driven models, but Botha is now claiming The New York Times' subscription model traded balanced reporting for revenue predictability: "The newspaper's incentive is no longer truth seeking, but to build an echo chamber catering to the previously held beliefs of its existing audience."

Biz on Biz

Will VCs go 'full stack' with a SPAC?

We know how SoftBank can't resist playing around in the markets, so it was inevitable that SoftBank announced this week that it, too, will be launching a SPAC. It's joining everyone from Shaquille O'Neal to Paul Ryan in hopping on this year's biggest trend of taking companies public through a reverse merger rather than the traditional IPO process.

Venture firms are jumping into the fray, too — and are divided on whether they will take their own companies public.

  • Firms like Ribbit Capital, FirstMark, SoftBank and Lux Capital are all launching their own SPACs. And big players in venture like Peter Thiel and Reid Hoffman created new investment groups for SPACs.
  • SoftBank said it won't be eyeing its own companies, so maybe my previous prediction of WeWork to go public with a SPAC won't happen this year. But FirstMark said it's open to taking one of its own portfolio companies public if they're interested.
  • The firm had a front-row seat when its portfolio company DraftKings went public via SPAC in early 2020, and now has more of its entrepreneurs looking for that alternative path and wanting a trusted partner to do it, FirstMark's Rick Heitzmann told me. "If you look across the continuum, a lot of [portfolio] companies that will go public with a SPAC would like to go public with us and have FirstMark leading the round, no different than when we lead their growth private rounds," Heitzmann said.

One popular theory is that this could be a reaction to the public market moving in earlier in the private markets. Public market investment in private market startups has been growing for years, and we've seen Tiger and Fidelity pumping in cash to later-stage companies.

  • This in turn led to a "cram down," where later-stage VCs were only good for a few growth rounds before startups would start courting the bigger public market investors. Now, VCs are seeing the opportunity to go play in the public markets instead and capture some of those returns before the Fidelitys of the world move in.
  • But Heitzmann said his firm's decision isn't really in response to the public markets entering venture's turf, although he acknowledged that's been a big trend in keeping companies private longer. Instead, he thinks entrepreneurs have realized there could be a more controlled path to going public and that maybe being public is a natural part of the maturation of a company, not an event to be prolonged at all costs.

It's more likely that this will shatter the "stay private longer" meme that's dominated narratives in tech for the last decade.

  • "As companies were waiting longer to go public and raising bigger private rounds, there was suspicion of the public markets and the traditional IPO process was taken as broken," Heintzmann said.
  • That "stay private" orthodoxy is crumbling, wrote my colleague Shakeel Hashim. There's been a slight tightening in the availability of private market capital and the public markets are having an outstanding year with tech companies outperforming. That, combined with easier and potentially more founder-friendly ways, like a SPAC, to go public, could mean we'll see more companies choose to go public — although Shakeel doesn't think we'll see a "go public sooner" trend take its place.

Having a SPAC could be the next competitive advantage for firms. The industry has gone through trends such as being a platform like Andreessen Horowitz to adding on perks like pitch design.

  • Heitzmann had started calling FirstMark a "full-stack firm" as a bit of fun, but what surprised him is the level of interest from its founders, a VC's customers, which has vindicated the decision to launch the SPAC. "I think people want to have deep relationships, they want to have true partners," he said. "I think you're right, and other firms will follow us and try to emulate us, and it's probably harder than they think it is."
  • Reid Hoffman, who launched a SPAC alongside Mark Pincus, sees it as an opportunity to "venture at scale." He argued in a LinkedIn post that going public is really just the second inning for a startup, "yet once a company goes public, it's typical for its VC board members to roll off, leaving the CEO without someone to play an analogous role as an experienced partner," he wrote. "What's missing is a major financial investor with patient capital who will partner with the CEO for the long term (i.e. the next 10 years) to take the necessary risks to reinvent the business and capitalize on opportunities for innovation and growth." And that's where he thinks VCs like himself can play a role.

Then there's a fun hypothetical, as first posed by Chamath Palihapitiya: If venture firms keep launching SPACs, will we get to a place where there are multiple directors on a board, each with a SPAC for their firm, who want to take their portfolio company public?

  • It's unlikely we'd get to that point anytime soon, Heitzmann said, but he doesn't rule it out entirely. Instead, he imagines boards would deal with it like how they approach competing growth funds from investors.

That reality may not be quite as far off as he thinks, though, if having a SPAC does become the new competitive edge. Then we'll see the real SPAC battles begin.



Join MassChallenge Oct. 22, 2020, 5p.m. ET, for a live, virtual celebration of innovation featuring 200+ startups from their 2020 U.S. accelerator programs. The event will showcase the startups, feature industry-leading speakers on the transformative power of entrepreneurship, and MassChallenge will award up to $2M in equity-free cash prizes to top startups.

Register here.

Inside Track

  • "I have so many questions. Most of them are some variation of: What the hell is going on here?" Chamath Palihapitiya announced that he was taking Medicare insurance startup Clover Health public through another one of his SPAC deals that values Clover Health at $3.7 billion. It's a huge exit for its backers, but digging into the deal, health tech enthusiast Kevin O'Leary (not the "Shark Tank" one) questions whether it's all an episode of Silicon Valley.
  • If all the founders are fleeing SF, where are they actually going? OMERS Ventures' Michelle Killoran is seeing a lot of founders choose Canada or go entirely remote.
  • While most blog posts on fundraising for a fund are about all the tips and tricks, Charlie O'Donnell posted some "real talk on fundraising for a small fund" about what it's been like to raise, from the personal challenges of losing his mom to the challenges of having a still-maturing portfolio.
  • While all the focus is typically on the entrepreneurs themselves, there's a whole group of "loved ones never mentioned in pitch decks" who deserve recognition for their supporting roles in startup creation, too, writes Zopim Live Chat co-founder Julian Low Junliang.

Need to Know

  • Twilio bought Segment for $3.2 billion. Why pay that much? Protocol's Tom Krazit says it's all about the developers, and this deal is likely a harbinger for more to come. It also resulted in the best "how it started" meme on Twitter this week.
  • Vista Equity's Robert Smith has to pay $140 million to settle tax charges against him. It's still a better outcome than Robert Brockman, who reportedly evaded $2 billion in taxes and is now charged in the "largest-ever" tax fraud case.
  • Robinhood accounts were compromised in a hack. Around 2,000 accounts were affected, according to Bloomberg.
  • Coursera's co-founder is back with a new startup to change online education again. Daphne Koller's new company emerged from stealth this week, and I interviewed her on her plans to build a better alternative for classrooms than Zoom.
  • The Black Venture Institute wants to 5x the number of Black check writers in three years. A new program launched by BLCK VC with partners like Salesforce Ventures wants to train 300 investors to write checks.
  • Founders have their own TikTok-style hype houses now. A hacker house is nothing new, but new groups of entrepreneurs are copying the TikTok creator trend and moving into LA mansions or Tulum estates for self-described "Hype House meets Y Combinator."
  • From Protocol: Founders are finding new ways to grab investor attention, like Argyle, which raised $20 million entirely using Notion docs.
  • And your weekend reading: We're departing from tech this week, because as a native Atlantan, I can't stop thinking about ProPublica's story that goes inside the fall of the CDC.

Five Questions With...

Lead Edge Capital's Mitchell Green

An investor in Uber, Duo Security and Spotify, New York-based Green just closed a new $950 million fund from an extensive LP base.

What product or service are you totally, even irrationally, loyal to?

I am incredibly loyal to I probably use it hundreds of times per week. The software allows you to send an email using a particular protocol to a mailbox, which will boomerang it back to you to remind you when things need to be done. The service allows me to not let things fall through the cracks. For instance, if I ask someone in the office to complete a particular analysis by two days from now, I will also bcc Magically, two days later, the email will boomerang back to me, and I won't forget to follow up to make sure the task is done.

What's one startup or product that failed or was shut down that you wish were still here today?

I must say I really liked the interface and used it back in the day. Google is awesome, but in its heyday, AskJeeves was pretty awesome! I think some incarnation of it might still exist, but not like it was years ago!

What's your favorite piece of advice to give to first-time founders?

First, write handwritten thank you notes to people who help you. Everyone is inundated with hundreds of emails daily. But how many pieces of legitimate snail mail do you get? I don't think I get more than a few per week. If you write a handwritten thank you note, people remember it.

Second, managing a business is all about setting expectations. Ultimately, as you grow, your ability to forecast future progress and deliver on promises is a very important part of building trust with all constituencies (employees, investors, partners, customers, etc.). I've seen companies that set absurdly high targets (whether promising a customer an unrealistic deliverable, or setting an annual budget that is unreasonable). I have also seen companies that sandbag in the opposite direction, which sometimes results in not pushing hard enough. The best companies, however, are the ones that can accurately forecast, which builds credibility with all relevant parties and helps create a culture of simply doing what you said you would.

What do you think is the most significant change happening in venture capital right now?

The unbelievable pace/rapid acceleration of adoption of software in businesses of all sizes is staggering. Software is creating more efficiency across all businesses and allowing corporations to gain insights that were incredibly difficult before. We've seen growth in the use of software in everything from a local restaurant to the world's largest organizations.

What's the strangest way you've ever been pitched? And did it work?

I will flip the question and tell you a funny story about how we once pitched a company to take our money. The company we were chasing told us that they didn't want a term sheet because of some internal reasons. But nevertheless, we were quite keen on investing. Instead of bringing a term sheet to our meeting with them, we showed up at their office with a Publishers Clearing House-style oversized check. I think the management team all fell off their chairs when we presented them with it. Funny thing is that it worked! We ended up making a large investment into the company, which earned us an excellent return.



Join MassChallenge Oct. 22, 2020, 5p.m. ET, for a live, virtual celebration of innovation featuring 200+ startups from their 2020 U.S. accelerator programs. The event will showcase the startups, feature industry-leading speakers on the transformative power of entrepreneurship, and MassChallenge will award up to $2M in equity-free cash prizes to top startups.

Register here.

Thanks for reading this week's Protocol Pipeline. If you like what you're reading, sign up here to get it in your inbox. Send story tips and newsletter feedback to

Updated: This post was updated at 10:15 a.m. PT to include a tweet from a Collaborative Fund partner.
Recent Issues

VCs rethink the office