If one were to make a movie about the year 2021, “Rollercoaster 2021” would be an appropriate title. The year feels to me like it has flashed by in a blur. It has certainly had its challenges for people and businesses alike as we have all tried to navigate our way through the fallout of the COVID-19 pandemic that is still making its presence felt around the world.
New President, New Agenda.
The new year started with a new president in the White House. The new policy agenda included a focus on combating climate change. This has created some interesting opportunities for startups and investors alike, associated with the $1.2 trillion Infrastructure Investment and Jobs Act (also known as the Infrastructure Bill). Startups in the field of climate action and sustainability have the opportunity to benefit from an unprecedented level of financing and commitment to such initiatives, a summary of which can be found in this White House Climate Crisis response issued in November 2021. There seems to be general acceptance (finally) from governments around the world and here at home that one of the biggest challenges facing the world right now is the climate crisis.
There are some startup sectors that could benefit greatly from the billions potentially on offer. Strong sector prospects include climate tech, climate resiliency, agricultural tech, water treatment, electric vehicles, power generation, cybersecurity, smart infrastructure, and connectivity among others.
The Pandemic Continues
On the downside of 2021 was the continued impact of COVID-19 on people and businesses. Thankfully, a strong vaccination rollout is helping us find a “new normal”, whatever that might mean. But one of the challenges this has highlighted is that poorer countries have been left behind. Boosting vaccination rates for those nations is an important focus for 2022 and beyond.
At Propel(x), we are proud to be doing our part by helping finance Aegis Life, whose innovative DNA vaccines are now in Phase I of clinical trials. DNA based vaccines have the potential to significantly reduce the cost of vaccines and improve access for poorer nations.
Macro Trends remained Positive. Mostly.
Despite some fierce headwinds, the strong performance of the US economy in 2021 was welcome news. Growth in US Real GDP expected to reach 5.6% by year’s end, according to this OECD forecast. Industry commentators expect this high growth rate to settle down in 2022 although still remaining positive. Rounding out the macro financial metrics is the topic of Interest Rates, which remained at historic lows in 2021. However, the Fed has recently signaled that interest rate rises could be on the agenda soon, which could have impacts across the economy.
The Rise and Rise of Alternatives
2021 turned out to be a record year for some alternative investments, notably Private Equity. Industry analyst PitchBook in their Q3 2021 US PE Breakdown reports a record-setting year, where the nine months to the end of Q3 2021 (9/30/21) had already beat the dealmaking activity of 2019’s annual record. With concerns around public stocks that may be overpriced and low yields on traditional investments such as cash deposits or bonds, ambitious investors are attracted to the potential returns from private equity and venture capital as an asset class.
Platforms to the Rescue
At Propel(x), we are more excited than ever about the potential opportunities for Venture Capital and Angel Investing because we live and breathe startups and see their potential every day. We regularly hear pitches from smart entrepreneurs with great ideas for innovations that could change human and animal lives for the better, while delivering potentially strong financial returns.
For years, high quality private equity deals have been restricted to the realm of the ultra-wealthy, or high net worth individuals. These opportunities are now accessible to accredited investors through investing platforms such as Propel(x). Additionally, by utilizing a Special Purpose Vehicle (SPV), accredited investors can now invest as little as $5,000 in a startup via syndicate investing. For those who may not know, we launched our new SPV offerings in 2021 (more on that below).
Out with 70/30, in with with 60/30/10
Improved access to quality private equity deals means that new perspectives on portfolio structure and asset allocation are emerging. People are reconsidering the old-school approach of a 70 / 30 portfolio, with 70% of an investor’s funds in equities and 30% in bonds or fixed-income investments. Investors can now reallocate their portfolios to a more modern strategy of 60 / 30 / 10 (or similar). This new approach means allocating 60% to equities, 30% to bonds, and 10% to alternatives. I use 10% illustratively here – the percentages may vary by client goals and objectives , but the key idea is that alternatives could be an integral part of every portfolio, in some percentage, now that they are available and accessible via platforms like Propel(x).
2021 at Propel(x)
Through all the ups and downs of Rollercoaster 2021, we at Propel(x) continued to work hard on our platform. For example, our member investors asked for an in-app funds transfer feature, and we made that happen. We care about our users and new features on our platform are driven by user demand. So if you have a demand for a new feature on Propel(x), please make it!
A key development this year was the launch of a new fintech vertical that sees us expanding beyond our Deep Tech origins. We have a trusted network in the fintech ecosystem and with the support of our strategic partner and investor Franklin Templeton, we hosted several high profile fintech company financings, including: Cover Financial (Series B1), Bambu (Series B), a well-known pre-IPO company that cannot be named here (Series E), Rellevate (Series Seed), among others.
Another big initiative was the launch of our own SPV management unit out of Connecticut. As you may know, Propel(x) is one of the few platforms that enables flexible investment minimums. Our users range from some of the world’s biggest family offices to ordinary accredited investors looking to explore venture capital investing. Bigger investors (typically investing a few hundred thousand to a few million dollars) can invest ‘Direct’ on Propel(x), while ordinary accredited individuals may invest via ‘Syndicate’ using check sizes as small as $5,000 per investment. While we have offered SPV investments for a while, in 2021, we decided to bring this function in-house with a goal to increase transparency, efficiency, accuracy, and compliance, while providing responsive customer service.
As with many of our businesses, our new SPV management unit has a scientific twist – it is called Planck (short for Planck Fund Management Corporation – quite a mouthful, you will agree).
To finish off the round-up for 2021, here are some success stories we saw on the Propel(x) platform this year:
- Immusoft closed a collaboration deal with Takeda worth upto $900M. Immusoft raised financing on Propel(x) in 2016. Immusoft was one of our earliest companies, and a classic deeptech startup which took a while to mature, but when the results come in, they come in big! The entire deal is based on milestone payments. Milestones need to be met before investors will have an exit. Therefore there is still risk for investors before they see any returns.
- Cornami, which was published on Propel(x) in 2019, closed its Series C, led by the Soft Bank Vision Fund, bringing its total funding raised to over $80M.
- Avails Medical won the CarbX grant for upto $17M based on milestones. Propel(x) users had participated in the Series B round of Avails Medical financing led by Omron Ventures in 2021.
- Aperio Technologies closed its Series A round of financing led by National Grid Partners. Propel(x) users had invested in Aperio’s Seed round in 2019 and then again in Series A in 2021.
- Hayden AI successfully closed its oversubscribed Series A round of $20M led by TYH Ventures with participation from Autotech Ventures, Propel(x) investors and others.
- WRM Software closed multiple contracts (including a 7-figure contract) with leading utilities across the country. WRM Software had raised Seed financing on Propel(x) a year ago in December 2020.
- Earlier this year, Propel(x) received a shout out from Sputnik ATX Accelerator for being the #1 female-led venture capital investor in the U.S. (based on Crunchbase data)
With that, as they say in the movies, “That’s a wrap, folks.” Thank you for your time and thank you for being part of the Propel(x) community in 2021. I look forward to continuing to engage with you in 2022. As always, if I or anyone at Propel(x) can help you in your angel investing journey, please feel free to reach out to us. Happy Holidays!