Part of the reason names like Uber, Lyft and Slack were able to attain such sky-high private valuations and become so well-known is that they stayed private for so darn long. These days, the world of VC is just about drowning in dry powder, so companies don't need to go public to raise massive amounts of new capital. Industry-watchers wondered if this was a new norm—if the future would be one of startups waiting a decade or more before conducting IPOs.
Maybe that will be the case. But some startups are still sprinting to Wall Street. The rapid rise of a Chinese company that wants to take on Starbucks is one of 10 things you need to know from the past week:
1. Instant coffeeLuckin Coffee is an ambitious coffee company from Beijing that was founded less than two years ago. But the startup has reportedly already raised hundreds of millions in funding and reached a unicorn valuation. And now, it's gone public: On Thursday, Luckin priced its IPO on the NASDAQ at $17 per share, raising an initial $561 million and establishing a reported valuation of more than $4 billion. The stock popped nearly 20% in its first day of trading, closing Friday at $20.38.
In the quickness of its journey to the public markets, Luckin is very different from many of the other unicorns planning IPOs in the first half of 2019. But in other ways it's quite similar, including the fact that the company is losing a whole lot of money: Luckin reported a net loss of $241.3 million in 2018 and a loss of $82.2 million in 1Q 2019, compared to respective revenues of $125.3 million and $71.3 million.
Some of those losses are surely due to rapid growth. Luckin had already opened 2,370 stores as of March 31, with plans for more aggressive expansion this year. Other losses are likely thanks to a business model that relies on heavy discounts to bring in new customers. But being so far in the red certainly isn't driving away investors.
The company is often pitched as a would-be challenger to Starbucks. Both companies sell coffee, and since Starbucks sells more of it in China than anyone else, I suppose it makes sense for Luckin to set its sights on the top dog. But the businesses have a few obvious differences. While part of Starbucks' appeal is the ambience—the cozy seating and the mood lighting and the dulcet tones of adult alternative rock—Luckin is much more of a grab-and-go operator, emphasizing its delivery offerings and cashier-less stores.
That may change as the company matures. And the fact that it still has so much maturing to do is surely part of the reason for its appeal—and for that Friday stock bump.
A business like Uber had already been around for so long and lived so many lives that, by the time it went public earlier this month, it was reasonable to wonder how much of its growth public investors had already missed out on. Luckin is still largely a blank slate, and that means investors can still imagine whatever future they desire.