First Round Capital sees successful SPAC merger, IPO

More than five years ago, First Round Capital announced it was leading a Series A investment round into a startup named Clover Health.

In announcing the investment, Partner Josh Kopelman said: “First Round is a seed stage firm, and our average initial investment has remained $500K–600K for the last 8+ years. Our $4M investment in Clover is the largest initial investment we’ve ever made in our decade-long history (In fact, it’s more than double our previous largest investment).”

“The unique nature of our investment here underscores exactly how unique we think Clover is. It deserves to break the mold in more ways than one. Its mission to improve health care and drive down medical costs is big, ambitious, and vital.”

Clover’s goal was to deliver a lower cost, improved Medicare Advantage experience for its members., relying on the use of data and analytics.

After testing its business model in some New Jersey counties, Clover now serves selected counties in Arizona, Georgia, Mississippi, New Jersey, Pennsylvania, South Carolina, Tennessee, and Texas..

Last week, Social Capital Hedosophia Holdings Corp. III , a SPAC, merged with Clover Health, forming a new public company under the Clover Health Investments Corp (NASDAQ:CVLOV) name.

Clover, which had raised $925 million from investors prior to its SPAC merger, is expected to gain $1.2 billion in cash through the merger. It ended Friday with a market cap near $7 billion.

Also, in late December another First Round portfolio company, Silicon Valley fintech lender Upstart (direct loans to consumers) went public. It jumped 47% on its first day of trading. As of Friday, Upstart had a market cap of $3.8 billion; First Round had owned 5.2% prior to the offering. Upstart also uses predictive data, in this case to assess the likelihood of loan repayment.

Next up is a big one for First Round: gaming platform Roblox. It delayed its IPO into 2021, and just did another pre-IPO investment at a valuation of $29.5 billion.

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