Set to begin Thursday night and continue the next three days, the NFL Draft—one of the most hyped sports events in the world—shares many themes with the startup industry, as established entities flush with cash take calculated risks on some of the brightest prospects in their field.
Is that a stretch? Perhaps. But it's good enough reason for us to have a little draft-related fun of our own. So welcome to the 2017 PitchBook Startup Draft. The methodology is pretty straightforward: Pick the 10 startups that will grow their total valuations the most over the next five years.
Five members of our editorial team went through and picked their top 10. (It's perhaps more of a "big board" than a mock draft, as more than one person could choose each company.) Check out the results in the chart below and be sure to scroll down to read their analysis supporting their picks.
It's pretty clear that ridehailing companies are our quarterbacks—potentially overvalued, but still the biggest game-changers in the industry. Uber has obviously had some serious issues leading up to the draft, but if the goal is to identify the startup that will maximize value, Kalanick's headstart is hard to overlook. Risky? Sure, but who knows how much the recent turmoil will affect long-term user behavior (or even be remembered). SpaceX and Houzz are my “sleepers” and Samumed is as under the radar as a rumored $12 billion startup can get. Airbnb is probably going to end up being the one that got away…
Senior Financial Writer
First, I'd have to take Airbnb. After watching the company's moves over the past half year —launching new features, aggressive stated outlook for the future—it's not a stretch, in my opinion, to say that the company is able to handle all travel needs, end-to-end, within five years. Next for me would be Lyft. After the recent turmoil at Uber, I believe that Lyft steps up in a big way and starts to slowly gain market share. Third? Ant Financial. Although the company is already valued quite highly (a round last April was rumored to have been raised at a $60 billion valuation), it seems plausible that Ant Financial could grow into an even larger financial giant, servicing the seemingly ever-growing Chinese market.
Senior Financial Writer
Probably the biggest theme in this list is a confidence that valuations of Chinese tech companies will continue to skyrocket. Ant Financial, Didi Chuxing, Xiaomi and Toutiao already own massive shares of their respective markets, and there’s still plenty of room to grow. Overall, I stuck with companies that have already reached a significant valuation—it seems a better bet that a company already worth $5 billion could increase that figure by $10 billion than gambling on a relatively unknown startup to leap several rungs on the ladder. A lack of faith in Uber is largely responsible for Lyft’s lofty position, while Quanergy and Zipline seem well positioned to become leaders in industries that are still very much emerging.
If you are building a team of VC-backed companies, I can’t think of a better foundation that Airbnb. The company is valued at $31 billion and profitable. I imagine that current investors are licking their lips waiting for it to IPO. The rest of the picks really round things out, capturing the high growth of WeWork, the enterprise focus of Slack and the entertainment/emerging tech of Spotify and Magic Leap. It also has coffee, and everyone needs some coffee in their lives.
Never underestimate the public’s willingness to bet on football. DraftKings was valued at $1 billion in its latest funding round last month, and there’s no reason to think the daily fantasy sports app will see revenue decline as professional sports leagues soften their respective stances on gambling. Assuming the merger with FanDuel agreed to last November receives antitrust approval, that growth potential should only increase. Also, it seemed wise to take late gambles on Uber and SpaceX. If Uber CEO Travis Kalanick can push through what seems like a weekly onslaught of bad headlines, the ridehailing company is still poised to grow aggressively. As for SpaceX? Well, with the way President Donald Trump is downsizing the EPA and doing nothing to combat global climate change, it seems prudent to think a company that plans to travel to Mars by 2025, with a CEO (Elon Musk) hoping to colonize the planet, might increase in value.