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.

Roblox to delay IPO until 2021

First Round Capital owns sizeable stake

Tom Paine

Roblox, the popular gaming platform for children, announced in a memo to employees yesterday that it would delay its planned IPO, previously scheduled for December, into next year, the Wall Street Journal reported.

First Round Capital was an early investor and owns 7% of Roblox shares, according to the S-1 filing released three weeks ago.

“Based on everything we have learned to date, we feel there is an opportunity to improve our specific process for employees, shareholders and future investors both big and small”, Roblox CEO David Baszucki said in the memo, which was viewed by the Journal.

The staggering post-IPO market receptions for both Airbnb and DoorDash this week led Roblox and its bankers to rethink pricing strategy for its IPO. In its first day of trading on Thursday, Airbnb shares more than doubled from their offering price and ended with a valuation over $100 billion.

Roblox’ platform, which lets user invent games, had already seen its user base soar before the pandemic, which further increased its popularity.

Roblox was valued at $4 billion in its latest round earlier this year.

First Round Capital invested multiple times in Roblox, dating back to its Series A in 2005 according CrunchBase.