Is it still an opportunity if the pricing is nuts?

This post originally started as an exercise to structure my thoughts on current private tech company valuations. Between Deliveroo’s brutal IPO experience on the London market and Clubhouse’s hold-my-beer financing rounds, do valuations even have a purpose?

Take, for example, some of the recent investing activity around kids financial services:

  • Greenlight, Current and Step (US-based) are each raising multi-hundred million dollar rounds at $1-$2b valuations.
  • Vybe just raised a seed round to launch a challenger bank for teens in France
  • A few months ago GoHenry (UK) raised $40m

On the surface it looks like ‘fintech startup y raises quadrillion dollars at 25x revenue multiple’. However amidst the favourable financing fervour lurk the occasional truly large market opportunities. Kids (<13), young teens (<16) and kidtech are one of those spaces:

  • Under-16s are now ~40% of all new internet users every year
  • Kids and young teens are now major consumers of games and videos
  • Digital privacy laws designed for these audiences (COPPA, GDPR-K, AADC) mean that existing adult solutions can’t easily be scaled down
  • Major technology platforms have materially ignore the audience (too difficult, limited ROI)

The idea that ten years from now virtually all minors will a) have a digital wallet (probably parentally controlled) and b) receive only digital allowance seems entirely plausible. It may even be legally mandated. Roblox won’t be the only company built on kids’ digital suffrage.

Giant opportunities remain, even in times of madness (but make sure you hold preference shares). Final final words to the perennially wise Jason Lemkin:

(I’m not an investor in any of the companies mentioned)

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