Venture Vision: The SpaceX-Factor (Morgan Stanley Research - April 2024) PDF

M April 9, 2024 01:00 PM GMT Thematics Global Foundation Morgan Stanley & Co. International plc+...

M April 9, 2024 01:00 PM GMT Thematics Global Foundation Morgan Stanley & Co. International plc+ Edward Stanley Equity Strategist Venture Vision: The SpaceX- [email protected] Matias Ovrum +44 20 7425-0840 Equity Strategist Factor [email protected] Morgan Stanley & Co. LLC +44 20 7425-9902 Adam Jonas, CFA SpaceX is the second largest Unicorn and implicitly a top-50 Equity Analyst [email protected] +1 212 761-1726 company by listed market cap. Other than the AI grouping of Sean K Corley companies, SpaceX is the best performing >$10bn private Research Associate [email protected] +1 212 761-9518 company over the past 3 funding rounds, even as markets have Our Venture Vision weeklies look at (1) early- recalibrated from 2021 highs. stage cross-theme funding patterns ; (2) If you have found our work helpful or thought-provoking on Venture, Tech Diffusion, relative valuations between themes ; (3) public Longevity & Decarbonisation or any other themes please take 2 minutes to vote in versus private valuations; (4) the resulting the ongoing II survey. anomalies within certain themes. Please let us know if you would like our excel database of >45,000 VC deals categorised by theme, country, value and date. We also send this file as a weekly distribution if you would like to receive it regularly. See here for our global market synopsis. See here for our longer analysis on the See here for the team's full report: While SpaceX's last primary funding round was state of the VC market, particularly as it relates completed at a c$140bn valuation - according to notice.co and Pitchbook - we have to non-US Venture and innovation acceleration. since seen transactions at implied valuations of $170bn and $180bn in secondary markets before pulling back again modestly in recent weeks. Exhibit 1: SpaceX price per share in secondary transactions Source: notice.co SpaceX has barely seen a correction in primary or secondary markets. The below Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, is an analysis which shows the positive or negative alpha investors would have investors should be aware that the firm may have a conflict of achieved at each primary investment round had they simply invested in the S&P500 interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley instead of the private company in question. AI companies, unsurprisingly, have Research as only a single factor in making their investment generated meaningful alpha vs S&P500 by participating in recent funding rounds. decision. For analyst certification and other important disclosures, However, other than the AI grouping, SpaceX is the best performing private refer to the Disclosure Section, located at the end of this decacorn over the past 3 funding rounds as markets have recalibrated since 2021 report. highs. += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. M Global Foundation Exhibit 2: Venture returns by raise/stage at which investment was made – Red shows negative alpha to an equivalent investment made in the S&P500, white = positive alpha vs S&P500 Source: Pitchbook, Morgan Stanley Research While SpaceX all began with market-leading launch capability, Starlink will likely be the primary driver of SpaceX's growth and profitability. Starlink is estimated to currently account for ~60% of total company revenue, which our team projects will increase to over 70% of total company revenue by 2035. They estimate that Starlink revenue will grow at a ~27% CAGR between 2023 and 2035, while Launch revenue will grow at an ~18% CAGR over the same period. They also estimate that Starlink will drive an increasingly greater portion of the total company's free cash flow, which is assumed to be reinvested into the Starlink business. They estimate that SpaceX will become free cash flow positive in 2028, at which point ~54% of the company's free cash flow will be derived from Starlink. Exhibit 3: (1) Forecast revenue of SpaceX; (2) Forecast FCF/Sales of SpaceX Source: Morgan Stanley Research SpaceX has reached a valuation of $180 billion based on an ongoing secondary sale of insider stock, which would place SpaceX's valuation above the likes of Intel (~ $171bn), Uber (~$159bn), Pfizer (~$154bn), Boeing (~$113bn), and other near-mega cap names. SpaceX's valuation has climbed throughout a series of equity offerings during the past two decades. In 2002, the company was valued around $27 million. A tender offer in July 2023 put SpaceX's valuation near $150 billion. An ongoing tender offer (started in December 2023) raised SpaceX's valuation to $180 billion. 2 M Global Foundation Exhibit 4: SpaceX's Private Valuation Would Place it in The Top 50 Most Valuable S&P 500 firms by Market Capitalization Source: FactSet, Morgan Stanley Research. Notes: (1) Market Capitalization as of April 3rd, 2024, per FactSet; (2) SpaceX market valuation as of ongoing tender offer proposal To help investors think about how to value SpaceX, our global team provides a framework that uses Price/Sales to Growth multiples of public comps to generate hypothetical equity values. The selected S&P 500 companies (ex. financials/ insurance) with 1) >$100bn market cap and 2) >10% annualized revenue growth from 2023 to 2026. They then used each company's Price/Sales to Growth multiple, ranking the group from lowest to highest, and applied each comp's multiple to SpaceX’s 2024 revenue (MSe) and 2023-2026 revenue growth (MSe) to produce an implied equity value. Exhibit 5: Valuation Comps Table Source: FactSet, Morgan Stanley Research. Notes: 1) SpaceX shown at its most recent implied market valuation ($180 billion) based on a tender offer launched in December 2023; 2) Excludes Financials/Insurance companies; 3) Non-SpaceX market valuations and revenue growth sourced from FactSet as of April 3, 2024. SpaceX has raised ~$9bn in primary equity offerings to date. According to Elon Musk, the company will not require additional funding to finance Starship, Starlink, and other programs (as of April 2023). In recent years, SpaceX has conducted tender offers 1-2 times per year, but the company has not tapped the primary markets since its most recent round in July 2022. Morgan Stanley Research 3 M Global Foundation Exhibit 6: Primary Equity Offerings to Date Source: SEC, Morgan Stanley Research SpaceX is backed by over 200 investors. According to a Nasdaq article from August 2023, Elon Musk owns 42% of the company and a majority of votes. Notable venture capital firms who have funded SpaceX include Sequoia Capital, Andreessen Horowitz, and Founders Fund. Other prominent investors include Alphabet (Google Ventures) and Fidelity Investments. Exhibit 7: SpaceX Investors Source: Dealroom, Morgan Stanley Research SpaceX at a glance: Our team forecasts SpaceX FY24 revenues of approximately $13bn, up ~54% YoY. Starlink has 2.6 million subscribers (March '24), growing near 25k subs per week. SpaceX is profitable (according to SpaceX, the company turned a profit in 1Q23). SpaceX launches payloads for roughly 5-10x lower than the cost of most of its competitors ($/Kg). SpaceX launched nearly 1 rocket every 3 days in 2023. In March 2024, SpaceX launched 3 rockets within the span of 24 hours. By the end of FY24, SpaceX’s satellites will account for ~60% of all functioning satellites in orbit. 4 M Global Foundation Around 90% of the earth’s surface currently does not have cell service. Around 2.7bn people do not have internet access. SpaceX is the only private launch contractor to send astronauts to the International Space Station (ISS). SpaceX is a critical partner in NASA’s Artemis mission to return astronauts to the moon for the first time since 1972. SpaceX has over 13,000 employees (September 2023). December 2023 tender offer valued SpaceX at $180bn, up from $150bn in summer of 2023. Most recent valuation puts SpaceX equity value just under 10x our team's FY25 revenue forecast. See below for more detail on: Largest Deals of the Week Fintech VC weekly summary Layoff activity from global start-ups Public/Private Valuation Estimates Performance relative to public asset classes See here for our longer analysis on the state of the VC market, particularly as it relates to non-US Venture and innovation acceleration. Morgan Stanley Research 5 M Global Foundation A Long-Run Perspective Exhibit 8: Cross-asset annual returns performance (and YTD 2024) – Red outlines indicate asset classes with negative performance YoY 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Global US Real Global US Real US Real US Fixed Small Cap US US Fixed US Real Small Cap US Global US Venture US Venture EM Equity EM Equity EM Equity US Venture US Venture US Venture US Venture US Venture US Venture US Venture US Venture US Venture US Venture Commodity Estate Commodity Estate Estate Income Equity Income Estate Equity Commodity 163% 63.13% 34% 39.38% 78.51% 48.82% 25.11% 23.19% 55.82% 8.52% 53.66% 67.91% 23.15% 55.44% 11.63% 21.08% 11.51% 23.90% 37.96% 42.12% 5.24% 26.85% 7.84% 27.73% 21.31% 13.75% US Real US Fixed Global US Real Small Cap US US Real Large Cap US Small Cap US Large Cap US Large Cap US Large Cap US EM Equity Global Fixed EM Equity EM Equity EM Equity US Venture Global Fixed US High Yield US High Yield US Venture Large Cap US US High Yield EM Equity Estate Income Commodity Estate Equity Estate Cash 0.99% Equity Equity Equity Cash 4.35 Equity Equity 63.70% 22.37% 55.82% 25.55% 32.17% 27.37% 4.39% 58.21% 4.98% 20.67% Equity 1.38% 17.13% 37.28% 12.75% 9.19% 17.50% 19.63% 38.82% 15.02% 31.49% 19.96% 28.71% 24.73% 9.11% DM ex-U.S. US Fixed Small Cap US US Fixed Small Cap US DM ex-U.S. US Real DM ex-U.S. DM ex-U.S. Large Cap US Large Cap US US Fixed Large Cap US DM ex-U.S. US Fixed Small Cap US Large Cap US Global Small Cap US DM ex-U.S. US Venture EM Equity Global Fixed EM Equity US High Yield Equity Income Equity Income Equity Equity Estate Equity Equity Cash -3% Equity Equity Income Equity Equity Income Equity Equity Commodity Equity Equity 54.73% 18.88% 4.36% 18.23% -10.98% 23.67% 10.86% 5.62% 10.26% 47.25% 20.38% 15.35% 25.17% 12.44% 32.39% 13.69% 0.55% 11.96% 24.21% 0.01% 25.52% 18.40% 27.1% 16.35% 4.49% Small Cap US US Real Small Cap US DM ex-U.S. Small Cap US US Real Global DM ex-U.S. DM ex-U.S. US Fixed Global Large Cap US DM ex-U.S. US Real DM ex-U.S. DM ex-U.S. Global Global Fixed US High Yield US Real Global Fixed US High Yield US Venture US High Yield EM Equity Equity Estate Equity Equity Equity Estate Commodity Equity Equity Income Cash 0.14% Commodity Equity Equity Estate Equity Equity Commodity 4.02% 5.09% Estate 2.82% 11.03% -26.16% 2.39% -2.08% 18.31% 19.77% 40.69% 18.33% 14.47% 18.37% 37.13% 16.70% 16.41% 21.02% 5.97% 11.40% 21.83% 22.49% 26.09% -15.34% 13.01% 4.35% Large Cap US DM ex-U.S. Large Cap US Large Cap US Global DM ex-U.S. Small Cap US US Real Small Cap US US Real Small Cap US US Fixed US Fixed Global Fixed Global Fixed US Venture US High Yield Large Cap US US High Yield Small Cap US EM Equity Global Fixed Global Fixed EM Equity Equity Cash 0.66% Cash -0.52% Equity Equity Equity Commodity Equity Equity Estate Equity Estate Equity Income Income 0.74% 12.54% -32.6% 15.12% Equity 2.11% 7.44% Equity 4.89% 11.19% -2.15% 10.11% 2.59% 19.64% 39.42% 4.91% 15.79% 11.10% 33.67% 16.35% -0.79% 14.65% 21.19% 14.82% -15.76% 8.53% Global Small Cap US US Fixed Small Cap US Small Cap US Large Cap US DM ex-U.S. Large Cap US DM ex-U.S. US Real Small Cap US US High Yield US High Yield US High Yield US Venture US High Yield Cash - Large Cap US US Real US High Yield US Real Global Fixed EM Equity DM ex-U.S. Global Fixed Commodity Cash -4.13% Equity Income Equity Equity Equity Equity Equity Equity Estate Equity -5.69% -1.37% 28.97% 12.42% 11.85% 0.11% Equity 16% Estate 3.67% 2.45% Estate 4.06% 10.51% 18.44% Equity 7.59% -16.25% 18.06% 4.55% 6.97% -33.79% 27.17% 15.06% -3.04% -4.38% 12.62% 7.03% 1.69% Small Cap US Large Cap US Global Large Cap US Small Cap US Small Cap US US Real US Real US Fixed Large Cap US US Real EM Equity EM Equity US High Yield US High Yield US Venture Large Cap US US Venture US High Yield Cash - DM ex-U.S. US High Yield US High Yield Global Fixed Equity Equity Commodity Equity Equity Cash 0.03% Equity Estate Estate Income Equity Cash 0.22% Estate 6.28% -4.82% -6.16% 11.13% 2.74% 8.45% Equity 5.49% 11.06% 15.81% 0.03% Equity 2.75% 14.32% 5.28% 5.72% -8.46% 28.68% -36.60% 26.47% -4.18% -4.41% 10.36% -5.63% 7.51% -19.44% Large Cap US Large Cap US DM ex-U.S. Global Large Cap US US Fixed Large Cap US Global US Real US Fixed US Fixed US Fixed Small Cap US US Fixed US High Yield Global Fixed US High Yield DM ex-U.S. EM Equity - US High Yield US High Yield US High Yield EM Equity EM Equity US High Yield Equity Equity Equity Commodity Equity Income Equity Commodity Estate Income Income Income Equity Income Cash -0.03% 2.39% 8.16% 1.87% Equity 8.95% 2.19% -4.47% 7.5% 7.11% -20.56% 5.21% -0.74% -12.66% -10.53% -15.80% 22.70% 10.88% 2.43% -37% 18.70% -6.46% 4.21% -2.02% 2.65% -11.01% 8.72% DM ex-U.S. DM ex-U.S. Small Cap US Global US Fixed Small Cap US DM ex-U.S. US Fixed DM ex-U.S. US Fixed Global Global US Fixed Small Cap US US Fixed Global Fixed Global Fixed Global Fixed EM Equity Global Fixed Global Fixed Global Fixed Cash - US High Yield Cash 0.81% Equity Equity Equity Commodity Cash 1.79% Income Equity Equity Income Equity Income Commodity Commodity Income Equity Income 19.36% 7.53% 4.09% -2.6% -3.09% -6.02% 1.49% 1.48% 4.91% -14.13% -17.83% -20.48% 7.60% 4.33% -1.57% -43.56% 6.54% -12.21% 3.54% -13.0% 5.40% -1.54% -21.56% -1.57% US Fixed Global Large Cap US US Fixed US Fixed US Real US Fixed Global DM ex-U.S. DM ex-U.S. Global US Real US Venture US Venture Cash - Global Fixed Global Fixed EM Equity US Venture Global Fixed EM Equity Global Fixed Income Commodity Equity Income Income Cash 0.98% Estate Income Commodity Cash 0.03% Equity Cash 0.89% Equity Commodity Estate Cash 0.95% -25.5% -5.07% 1.85% 4.95% -3.08% -14.92% 0.36% 5.09% -2.54% -2.76% -2.54% -20.11% -22.10% 4.10% 4.34% -48.21% 5.93% -13.40% -4.32% -14.09% -3.50% -26.25% Global US Real Global Global Global Global Global US Real Global Global Fixed EM Equity US Venture US Venture Cash - Global Fixed - EM Equity EM Equity EM Equity Cash - Global Fixed US Venture US Real Estate Cash 1.28% Commodity Estate Cash -0.07% Cash 0.07% Commodity Commodity Commodity Commodity Cash 0.32% Commodity Estate Commodity -5.63% -31.80% -21.3% -47.13% 0.29% 8.65% -53.33% -18.42% -14.57% 0.83% -7.05% -54.88% -5.00% -2.70% -7.39% -1.10% -9.60% -17.30% -24.70% 0.70% -9.04% -10.58% Source: Morgan Stanley Research, Callan Institute, Bloomberg 6 M Global Foundation Largest Deals of Last Week Exhibit 9: Largest VC Deals of the Week Latest Latest Date Company Amount ($m) Round Country Up/Down Round Valaution ($m) EV/Sales 1/4/2024 Zunyuan Supermarket 529 3rd Round China 3/4/2024 Obsidian Therapeutics 161 3rd Round US 500 Up Round 3/4/2024 Elcogen 152 4th Round Estonia 4/4/2024 Pigment 145 6th Round France 1/4/2024 ImmPACT Bio 140 2nd Round US 3/4/2024 Alterome Therapeutics 132 3rd Round US 362 Up Round 3/4/2024 Diagonal Therapeutics 128 1st Round US 2/4/2024 Hailo 120 6th Round Israel 1200 Up Round 4/4/2024 Aerospike 114 6th Round US 5/4/2024 Varda Space Industries 90 5th Round US All other deals with valuation detail 5/4/2024 Ummeed Housing Finance 70 6th Round India 300 2/4/2024 Miach Orthopaedics 60 3rd Round US 107 Flat Round 2/4/2024 actnano 40 4th Round US 225 2/4/2024 Seso 26 3rd Round US 196 Flat Round 2/4/2024 Modal 25 2nd Round US 100 Up Round 1/4/2024 PowerML 25 1st Round US 124.83 2/4/2024 EarliTec Diagnostics 22 2nd Round US 54 Down Round 2/4/2024 Ollie 21 6th Round US 200 Flat Round 2/4/2024 Read AI 21 2nd Round US 120 Up Round 1/4/2024 PreciseDx 21 2nd Round US 55.72 Up Round 2/4/2024 Burnbot 20 2nd Round US 80 Up Round 1/4/2024 TerraClear 15 4th Round US 98.31 Flat Round 1/4/2024 ZBiotics 14 3rd Round US 64 Flat Round 1/4/2024 Tender Food 10 3rd Round US 28 Down Round 2/4/2024 TechGrid 9 1st Round US 29 4/4/2024 Jumboking 9 Angel India 52.47 Up Round 3/4/2024 Zeus Network (Taiwan) 8 2nd Round Taiwan 100 2/4/2024 LUCKY F*CK 8 2nd Round US 40 Up Round 3/4/2024 Home From College 7 1st Round US 28.5 2/4/2024 Supply Wisdom 6 3rd Round US 26.15 Down Round 4/4/2024 Dynocardia 6 3rd Round US 75.86 2/4/2024 Bitlayer 5 1st Round Singapore 80 Source: Third-party data from Finsmes, Techcrunch, Livemint and press reports in Reuters and Yahoo (press reports are not confirmed and the companies have not commented), Pitchbook, Refinitiv Eikon, Morgan Stanley Research Morgan Stanley Research 7 M Global Foundation Exhibit 10: Largest PE Deals of the Week Deal Date Company Deal Size (Mn) Investors Company Description HQ Location 4/4/2024 AssuredPartners 4,620.00 Operator of a mid-market insurance brokerage firm Orlando, FL 4/4/2024 Alterra Mountain 2,486.00 Operator of a mountain resort and adventure company Denver, CO 3/4/2024 Russell Investments Group 1,207.00 Provider of asset management services intended to serve Seattle, WA 1/4/2024 EPIC Y-Grade Pipeline 1,105.00 A seven-hundred-mile-long natural gas liquids pipeline US 1/4/2024 Imprivata 1,102.00 Developer of authentication, identity and access software Waltham, MA 3/4/2024 Interstate Waste Services 905.00 Provider of solid waste management services Teaneck, NJ 2/4/2024 Paradigm Outcomes 800.00 Provider of medical case management services Walnut Creek, CA 3/4/2024 Aster GCC 650.00 Al-Sayer Operator of healthcare agencies Dubai, UAE 3/4/2024 Suntex Marinas 600.00 Operator of coastal and inland marine properties Dallas, TX 1/4/2024 Vallen 525.00 Distributer of indirect industrial supplies Belmont, NC 3/4/2024 Nexity 478.16 Bridgepoint Advisers Provider of residential property management services France 2/4/2024 Hines 437.20 PAG 2.3 million square feet two warehouses and a distribution center Nagoya, Japan 3/4/2024 Riddell 400.00 BC Partners Lending Corporation BDC Manufacturer of protective athletic equipment Des Plaines, IL 1/4/2024 Highridge Medical 375.00 H.I.G. Capital Provider of spinal healthcare services Warsaw, IN 2/4/2024 PATCO Products 362.00 Kingswood Capital Management Manufacturer of emulsifier products Dolton, IL 3/4/2024 Riddell 275.00 Manufacturer of protective athletic equipment Des Plaines, IL 1/4/2024 Motive 201.17 Lumine Group Operator of the managed operation Espoo, Finland 4/4/2024 Heinz Hänggi 175.00 One Equity Partners Manufacturer of stamped and formed parts Bettlach, Switzerland 2/4/2024 State Street HCL Services 172.50 State Street Provider of business operations services New Delhi, India 3/4/2024 Potters Industries 160.00 Manufacturer of engineered glass materials Malvern, PA Source: Third-party data from Finsmes, Techcrunch, Livemint and press reports in Reuters and Yahoo (press reports are not confirmed and the companies have not commented), Pitchbook, Refinitiv Eikon, Morgan Stanley Research Exhibit 11: Largest M&A Deals of the Week Deal Date Company Deal Size (Mn) Investors Company Description HQ Location 2/4/2024 Future Electronics 3,800.00 WT Microelectronics Distributor of electronic components Pointe-Claire, Canada 1/4/2024 Callon Petroleum 2,000.00 APA Engages in the production of crude oil, natural gas, and NGLs Houston, TX 1/4/2024 PTx Trimble 2,000.00 AGCO Operator of an agribusiness technology company Westminster, CO 3/4/2024 ProfoundBio 1,800.00 Genmab Developer of novel targeted therapeutics Seattle, WA 2/4/2024 Cobham Aerospace Comm. 1,100.00 Thales Group Manufacturer of radio management, antennas, lights and clocks Paris, France 3/4/2024 Daseke 1,100.00 TFI International Daseke Inc provides transportation and logistics solutions Addison, TX 2/4/2024 Telia Denmark 910.83 Norlys Provider of telecommunication services Copenhagen, Denmark 3/4/2024 Telia Company 910.60 Norlys Energy Trading Provider of mobile, broadband, cloud- and ICT services Denmark 1/4/2024 CSI Compressco 854.00 Kodiak Gas Services Provider of services and equipment for natural gas and oil production The Woodlands, TX 3/4/2024 Lucas Meyer Cosmetics 810.00 Clariant International Manufacturer of ingredients Quebec, Canada 1/4/2024 Stanley Infrastructure 760.00 Epiroc Manufacturer of hydraulic tools and excavator attachments Milwaukie, OR 2/4/2024 Behr-Hella Thermocontrol 652.19 Auo Operator of climate control and thermal management company Lippstadt, Germany 1/4/2024 Fincare Business Services 531.00 AU Small Finance Bank Operator of a microfinance institution in India Bengaluru, India 1/4/2024 American National Bankshares 444.00 Atlantic Union Bank American National Bankshares Inc is a one-bank holding company Roanoke, VA 1/4/2024 Horizon Telcom 385.00 Shentel Provider of advanced broadband infrastructure services Columbus, OH 1/4/2024 CapStar Bank 320.00 Old National Bank CapStar Financial Holdings Inc is a bank holding company Nashville, TN 5/4/2024 SEA Electric 300.00 Exro Technologies Operator of a global automotive technology company Torrance, CA 1/4/2024 Acclarent 280.00 Integra Lifesciences Developer of medical devices Irvine, CA 2/4/2024 Antares Homes 199.30 Landsea Holdings Operator of family-owned homebuilder Arlington, TX 3/4/2024 RSA Insurance 146.07 Admiral Group Provider of home and pet insurance services London, UK Source: Third-party data from Finsmes, Techcrunch, Livemint and press reports in Refinitiv Eikon and Yahoo (press reports are not confirmed and the companies have not commented), Pitchbook, Refinitiv Eikon, Morgan Stanley Research 8 M Global Foundation Fintech & Crypto Weekly Given the importance of Fintech as a standalone VC segment, each week we will flag a number of the bigger events and raises in the Fintech space. If Fintech VC is of specific interest, please sign up to our team's weekly Fintech Radar product: FINTECH RADAR - GIULIA MIOTTO & KERRY SHAW The Fintech Radar (7 Apr 2024) #1 Nuvei to be taken private by Advent International: This week (1st April), Canada-based payments processor Nuvei announced a definitive agreement to be taken private by PE firm Advent International at $34 per share, which represents a premium of ~56% over Nuvei's unaffected close price of $21.76 (as of 15th March). The all cash transaction has support of major shareholders including Chairman/ CEO Philip Fayer, Novacap Management Inc., and CDPQ, which will remain shareholders and are expected to indirectly own or control approximately 24%, 18% and 12%, respectively, of the resulting private company. Philip Fayer will continue to lead the company post acquisition. The $34 per share deal represents an enterprise value of c. $6.3bn, implying c. 12.7x CY24 EV/adjusted EBITDA (using VisibleAlpha consensus data). In FY23, Nuvei processed >$200bn in total volume and generated c. $1.2bn in net revenue. #2 Brim Financial raises $85m in Series C funding: This week (3rd April), Canada- based Credit-Card-as-a-Service provider Brim Financial has announced the closing of an $85m Series C funding round. Led by EDC Investments, this latest funding round includes backers such as Vistara Growth, White Owl Group, Epic Ventures, and Zions Bank. The company indicates that this will be used to finance its US expansion strategy. Brim's platform enables financial institutions, fintechs, and other brands (e.g. airlines) to launch and manage their own credit card offerings. #3 Scayl raises $108m to lend to other European fintechs: This week (3rd April), Sweden-based debt financing platform Scayl announced in a release to press outlets that it has raised $108m, which will be used to lend to other fintechs. Scayl provides a platform for fintechs lenders to access debt funding from banks. Founded in 2023, the company claims to have interest from more than 100 fintech lenders, with demand exceeding €1bn. Unless otherwise indicated, the news reports referenced above have not been confirmed. Morgan Stanley Research 9 M Global Foundation Adoption Curve Analysis Exhibit 12: Rates of technology diffusion into adjacent sectors measured in years Electricity Breakthroughs, Catalysts & Adoption by Industry 100 Creation of the 1st Commercial 90 Lightbulb Power Plant: 80 Pearl Street 70 Station 60 50 40 30 20 10 0 0 10 20 30 40 50 60 Printing Fabr. Metals Non-Electric Machinery Electric Machinery Transport equipment Rubber Leather Textiles Stone, clay, glass Food Lumber Paper Primary Metals Chemicals Petrol/Coal Average Internet Catalysts, Consumer Adoption & Internet Speed 100 Creation of iPhone launched 100 Internet 80 80 60 60 40 40 20 20 0 0 0 10 20 30 40 50 60 Internet Users Smartphone Adoption Ebook Reader Retail Market Online Penetration Grocery Market Online Penetration Luxury transactions % Online Apparel retail % transactions online Gambling Digital Customer Service Music Download Music Streaming Crypto Retail Trading Podcast Social Media Netflix Roblox Insurance Contracts Average Internet speed (Mbit/s) Artificial Intelligence Training Intensity, Catalysts & Consumer Adoption 100 10 petaFLOPs ChatGPT 1E+13 90 training data launched 1E+12 80 passed 1E+11 GPT4 Trained 1E+10 70 1E+09 60 100000000 50 10000000 40 1000000 30 100000 10000 20 ChatGPT 1000 10 Stable Diffusion 100 Midjourney 0 10 0 10 20 30 40 50 60 Source: Morgan Stanley Research, OurWorldinData, OpenAI 10 M Global Foundation The State of Venture in Charts Exhibit 13: Rule of 40 group performance S&P500 Nasdaq100 NASDAQ COMPOSITE Rule of 40 Stocks 400 350 300 250 200 150 100 50 0 Jan 19 Jan 22 Jan 24 Jan 18 Jan 20 Jan 21 Jan 23 Oct 18 Oct 19 Oct 20 Oct 21 Oct 22 Oct 23 Jul 18 Jul 19 Jul 20 Jul 21 Jul 22 Jul 23 Apr 18 Apr 19 Apr 20 Apr 21 Apr 22 Apr 23 Apr 24 Source: Refinitiv Eikon, Morgan Stanley Research Exhibit 14: Unicorn Hunter group performance Multi-unicorn Hunters Unicorn Hunters S&P 320 270 220 170 120 70 Jul 18 Jul 19 Jul 20 Jul 21 Jul 22 Jul 23 Jan 18 Oct 18 Jan 19 Oct 19 Jan 20 Oct 20 Jan 21 Oct 21 Jan 22 Oct 22 Jan 23 Oct 23 Jan 24 Apr 18 Apr 19 Apr 20 Apr 21 Apr 22 Apr 23 Apr 24 Source: Refinitiv Eikon, Morgan Stanley Research Morgan Stanley Research 11 M Global Foundation Exhibit 15: Lay-offs and employees made redundant Exhibit 16: Employees per lay-off Employees laid off Lay offs 700 90000 300 600 80000 250 70000 500 60000 200 400 50000 150 40000 300 30000 100 200 20000 50 100 10000 - - 0 Dec-21 Dec-20 Dec-22 Mar-20 Jun-20 Sep-20 Mar-21 Jun-21 Mar-22 Jun-22 Sep-21 Sep-22 May-20 May-21 May-22 Jan-21 Jan-22 Jan-23 Nov-20 Nov-21 Nov-22 Jul-20 Jul-21 Jul-22 Mar-20 Mar-21 Mar-22 Sep-20 Sep-21 Sep-22 Source: Layoffs.fyi, Morgan Stanley Research Source: Layoffs.fyi, Morgan Stanley Research Exhibit 17: Average change in value for VC-backed companies & % of Up/Flat/Down rounds for VC-backed companies Average change in value Down rounds (absolute) % of Up/Flat/Down rounds 180 Up Flat Down 30.00% 100% 160 25.00% 90% 140 20.00% 80% 120 70% 15.00% 100 60% 10.00% 80 50% 5.00% 60 40% 0.00% 30% 40 Jan-21 Jan-22 Jan-23 Jan-24 Oct-20 Apr-21 Jul-21 Oct-21 Apr-22 Jul-22 Oct-22 Apr-23 Jul-23 Oct-23 -5.00% 20% 20 -10.00% Holding average Mark- 10% Up/Mark-Down 0 0% Apr-21 Apr-22 Apr-23 Jan-21 Jan-22 Jan-23 Jan-24 Jul-21 Jul-22 Jul-23 Oct-20 Oct-21 Oct-22 Oct-23 -15.00% Apr-21 Apr-22 Apr-23 Jan-21 Jan-22 Jan-23 Jan-24 Jul-21 Jul-22 Jul-23 Oct-20 Oct-21 Oct-22 Oct-23 Total portfolio -20.00% appreciation/depreciation Source: Zanbato, Morgan Stanley Research 12 M Global Foundation Exhibit 18: Average up/down round per round (vs average of Exhibit 19: Deal up/down round skew June 22 vs June 21 ups and downs) 250% Jun 21 Average +ve Average -ve Average 70% 200% Up/Down % Since Prior Round Jun 22 60% 50% 150% 40% 30% 100% 20% 10% 50% 0% Jan 21 Jan 22 Jan 23 Jan 24 Jul 21 Jul 22 Jul 23 -10% 0% -20% 0.00 50.00 100.00 150.00 200.00 -30% -50% -40% Source: Zanbato, Morgan Stanley Research -100% Funding rounds ranked by up/down round Source: Zanbato, Morgan Stanley Research Exhibit 20: VC post-money valuation YoY versus US 10-year Exhibit 21: Europe VC total capital raised versus inverted US yield YoY