Four companies that have had pretty substantial rounds announced in the last couple weeks, or I guess three that have been announced officially and one that's still in discussion. This is Bass Power, Hadrien, BAR Atomics, and Arabore. Starting with Bass Power. This is a company that was founded by Michael Dell's son, Zack Dell. Bass Power is raising a billion dollar Series D at a $1.13 billion valuation.
That round is being led by Ribbit, Addition, Baylor, Equity Partners, and several other groups. I think we're also seeing previous investors in there like Alimter and CO2 as well, including Thrive, A6Z, Lightseed, and others. Another big deal that was announced this week was Hadrien. Hadrien is a defense tech company. We've covered a number of defense tech companies in the show previously, but they're raising about $1.4 billion. And I believe this is done at an eight billion dollar valuation. This round was led by JP Morgan Strategic Investment Group and other co-leads include WCM Investment Management, Washington Harbor Partners, Veilor Equity 137, and Bailey Gford. And then another nuclear startup that's raising capital is Veor Atomics. That's different from Veor Equity Partners. Sequoia is leading a billion dollar funding round in nuclear startup Veil Atomic. That's at a $6 billion valuation. And the company's also lined up a $200 million credit facility.
A few years ago, you wouldn't have think Shawn Magguire and Sequoia would lead a round in a nuclear startup, one, you know, one that has the manufacturing requirements that they have to do. That's essentially pre-revenue. They really haven't generated any revenue yet. They're still currently in R&D and doing demonstration and pre-production. And but their investment thesis is there's an AI, you know, power crunch coming that the traditional power grids just can't keep up with the requirements of these frontier AI models and the multi-gigawatt power that it requires. They could be selling to utilities, but I think they're actually choosing to sell to companies directly, like just direct collocated power and thermal energy. They're attracting a lot of the A+ names like Sequoia and Point 72, but doing it with very, very unusual strategy. It's also really this is a very big step up from where they were just a few months ago. I think just in April of this year, they had a $2 billion valuation. Now they're at six. So that's a pretty, you know, that's a pretty fast turnaround. And Hadrien too, they did a $1.6 billion valuation earlier this year, right around Christmas, I think. And you know they're also you said eight billion valuation. So they're basically up 4x, 5x from seven months ago and their lead investor JP Morgan said but they've also got Founders Fund and Lux Capital and A16 and Ultimter. So you know they're attracting a lot of venture capital into the space that just hasn't happened before at really big stepups for companies that don't really have a lot of revenue yet. But obviously this AI power crunch thesis is real.
Sort of a shifting storylines about what venture capital is financing. A lot of these companies are very capital intensive, significant amounts of money going into them before they start generating revenue. You know, maybe the exception there is Hadrien, which is a defense tech company and probably does have contracts lined up. And now I don't know whether this is a reaction to sort of AI and a feeling that like physical bits are less likely to be disrupted by AI but we're seeing really, really large, you know, capex spend in AI data center infrastructure, energy infrastructure, defense tech, hardware manufacturing, all across the board. These are really capex intensive companies, places you didn't necessarily used to see a lot of venture jumping into. Maybe more private equity investors were putting money into sort of these types of capex expenditures and you know leveraging debt, but now we're really seeing a ton of, you know, venture capital going almost I would say the majority of it going into capex intensive businesses.
Hard things are not hard anymore I guess. It's become, you know, the combination of big markets, big TAMs, maybe just the fact that AI and AI powered robotics is a combination of software and hardware now. That is, you know, that is unusual. So you know maybe the VCs feel more comfortable with it and then you got some, you got successes with, you know, SpaceX being the perfect example now of a hardware company animated by software that's had big returns and generated wins and so you get the herd stampede. It'll be great to see. I'm curious to see how this all, how this will all play out. Like that seems to be where nuclear, defense tech, robotics, AI powered in those categories that just weren't financable even 5 years ago. It's amazing, I think, for the industry in the category, but it'll be interesting to see how it all plays out. These valuations can hold up.
Well, one of the four companies that's raising a big mega round right now is a software company, I guess, and this is a company that is being founded and run by Palmer Luckey called Arabore. Arabore for you Tolkien nerds and fans out there. That's the Misty Mountain where the dragon Smaug from The Hobbit hoards all of his loot. Palmer's running two companies at the same time. Does this seem like another entrepreneur we know? Ahmad, how many people are running multiple multi-billion dollar companies at the same time?
That is, well, that's a short list. Elon Musk and Jack Dorsey. And I'm not sure there's anyone else on that list.
Jeff Bezos. Jeff Bezos now. Well, is he still at Amazon or is he totally out of Amazon? He's on to...
He's not at Amazon, but he is raising for both Blue Origin and his new physical, the Prometheus as well. You're correct. Yes.
But I think in the past we've sort of seen a lot of these techs like Silicon Valley Bank be involved in helping bank the money that's being raised for these equity rounds, but they were also involved in venture debt. I think there's a whole new, you know, class of companies that are also trying to provide debt as we were just talking about all these capex intensive businesses. I guess one thing about capital intensive businesses is you can borrow to build out that capex if it's physical infrastructure that gets, you know, depreciated over a couple years or so. I wonder if that's where a lot of, you know, this bank Arabore is headed is, hey, we're seeing a lot of these companies spend on capex. Maybe they need debt, not just equity capital to finance those buildouts.
What's interesting about Arabore too is they are a bank and so they have their banking license now. They just got it from the OCC and that enables them to offer FDIC insurance and take consumer deposits. So I guess that's good. But to see them at an 8 billion valuation, that's basically 80 times their ARR. Like you just, you would never see a bank trade like that. You didn't see Silicon Valley Bank was trading at 15, 20 times earnings. Even Mercury, which is a banking provider, you know, their valuation is south of 8 billion and they're probably 350 to 400 million ARR. The growth in the multiple here seem startling even though you're, I think you're right. They've identified a need. They're going straight at that product and that capital that they're pulling in for these capex businesses is going to go and I'm sure provide a really healthy return. But just a step up in valuation and the valuation itself just seems to be a surprise. I guess what they're specializing in is these like, you know, AI loans or GPU chip loans for these advanced manufacturers. So if they know how to underwrite that, I guess that's the market they're targeting.
Yeah. Well, again, I think we're seeing a whole different, you know, type of financing that's happened in the last couple years now where, you know, mega rounds of capital being spent on significant hardware, infrastructure, capex intensive buildouts and a fair amount of debt, you know, not just equity that's going into these companies as well.
All right, our last story for today is going to be about an acquisition of over $2 billion. But although that sounds great, maybe it's not always so great. Airtable is a company that's being bought by Bending Spoons for 2.25 billion and hold your breath. That's not such a great story. The valuation of Airtable was upwards of 11 billion back around 5 years ago in the ZIRP era. It was even set at maybe $4 billion in secondary trading that was happening up until just a few weeks ago, right?
But the overall value here is only 1.29 billion I guess in purchase enterprise value. There's another billion dollars in cash on the book. So it's really an equity value of 2.25 billion.
Yeah, that's enough to pay back a minimum 1x for some of Airtable's later stage investors. Some of the early stage investors still made pretty good money, but everybody after the Series C deal, I think, is only getting 1x back. Is that a great story, Aman, or just like an okay story?
It's a, I think it's a good story. I think it's, that's a good story. Well, here it is. It depends on, to your point, it depends on when you invested. So, the exit value is let's call it 2.25 billion. There's a billion dollars in cash and then 1.25 billion in the equity value. So the enterprise value, the consideration is 2.25 billion. If you're in the A round, you did great. They were the first seed round and A rounds are way in the money. They did another round in 2018, $152 million round. That's in the money. Series C was 1.1 billion. That's in the money. The Series D is going to be a little bit underwater. You may not get all your return, but really the ones, the only people who should be upset are those who invested in the E at 11.8 billion. So that's just one guy who invested that round, lost, you know, lost some money. Actually, it's not just one guy. It's a whole bunch of companies that invested.
That's a lot of guys. It's, you know, it's Tiger. Oh my god. Wait a second. It's Benchmark. It's Iconic. H Dallas Semitummit Tribe. Oh my goodness. Yeah. So they had a lot of people who were along. Green Oaks. There's a lot of people who are going to take a pretty...
No, wait a second. Those folks are still getting 1x back on their money. It's not like they lost money, although they certainly didn't get much of a return on their capital.
Yes, I think you're technically right. I think by the time you divvy up all the proceeds, anyone at that, they, if the exit value is 2.25 billion, they raised around 1.8 to 2 billion overall. There may be some debt in there. So, I think all the preferred investors will just about get covered even if you were at that E round. But the early guys made money. The founders, I think, made money. You know, one thing that you have to, it wasn't clear from the acquisition announcement, but I think what they did was they spun off their AI-ish business Hyperagent into a new entity.
Correct. And the CEO will keep control of that and maybe that's going to be, you know, maybe that's valuable someday and that equity piece could compensate these investors with a little bit of a kicker down the line. I think it's okay. You know, back in 2021, the market was overvalued. We know that it was overpriced. Anyone who invested in that environment, that's a 1x back with maybe a kicker down the line, I think it's okay. Like move on. Silver Lake and Thrive and all these guys, they're never going to make that 11 billion number again. And so to get the money to cash out, redeploy into other investments, I think it's an okay outcome. And I think, you know, in the case of Airtable, the founders did fine. The one thing I was a little surprised about is that there wasn't more of a competitive offer. So, Bending Spoons, which will be our, that'll be our valuation corner today. They acquired the company for the 2.25 billion consideration. I'm a little surprised there wasn't like more of a private equity offer or somebody else who wanted to pay up a little bit more. The company is 480 million in ARR growing 20% a year, profitable, and yet only got about a 3x multiple in terms of the takeout. That seems a little bit on the low side, and I'm, you know, a little surprised it wasn't a richer valuation. But that aside, I think it's an okay outcome for, you know, a company that is essentially in that SaaS pre-AI category, which is a tough, tough place to be.
Yeah. I just wonder how durable those cash flows are. 450, 480 million, 20% growth. Sounds pretty good, profitable company, but I just wonder if that growth rate might collapse and whether that revenue might collapse over the next couple years or so. SaaS shutters after Airtable's humbling sale to Italian Grim Reaper Bending Spoons. The expectation is that a lot of software companies that are at least not shifting over to AI utilization or having agentic usage, the multiples on that revenue is collapsing pretty hard and likely to collapse even further. There may be a few companies that figure out how to, you know, re-accelerate growth in an AI era, but certainly feels like a lot of SaaS multiples are just, you know, never going to come back to what they were before.
Yeah, I think that's fair. It's a little bit of a negative headline, but the graveyard of SaaS companies is highly populated and growing, and there will be a lot more companies that end up getting taken out at, you know, whether it's Bending Spoons or someone else. 2x multiple, 3x multiple, probably going to have to cash flow. The increasing pressure in that space means you're going to have to get to profitability. Airtable was profitable but I want to say only 20 to 30% EBITDA margins and it feels like for a company like that it should be a lot higher than that. It should be, you know, 50% plus if you manage the company to a more mature growth stage. Which I think Bending Spoons will, that's probably what'll happen to it. I don't think you need that many developers and that many people to run a business like that. So, it's going to trade on at a multiple of three, four, five times revenue only if they cash flow at 50% EBITDA margins and so now you're talking about a, you know, 10x or 12x profits multiple. That's probably the fate of a lot of these SaaS companies. I agree.
I just wonder if we're going through a pretty significant transition in how people are thinking about structuring deals. Like if we look at the differences between private equity and venture capital, private equity historically has just been equity ownership. Maybe there's some, you know, terms and structure in there but generally speaking it's mostly been minority equity ownership. If you look at private equity there's a lot of usage of debt. There's a lot of control structure. Yes. Sometimes there's even single owners, you know, who are providing, you know, a majority of that capital. I wonder if we're going to start seeing some of that not just for the terms of acquisition but actually the financing terms for these companies where there is more structure, there is more ownership of cash flows not necessarily just ownership of equity.
It makes sense that there would. Your point about the durability of cash flows is a good one. If that's really in question it is hard to finance that with debt but I think some amount of leverage is, if they end up restructuring these companies and taking a lot of the cost out to make it more profitable that puts debt on the table. I think that's inevitable. You know, similar, Bending Spoons can operate and do what they did because they're trading at 10 times revenues right now. So, they'll buy somebody at three times revenues all day and if they can lever it up and manage the costs and that seems like, you know, that seems like the best path forward if you're an AI SaaS company.
Don't you think though like there's a role for like where the debt is functioning as a way to pay for hard capex that has a value over time and some cost of revenue is coming from the operating cost, you know, plus depreciation cost of maintaining that infrastructure capex and then some amount of revenue is coming from margins and cash flows and maybe that's the equity component that gets paid back but now I'm just not an equity passive equity owner I actually want a share of that cash flow that's in excess of the maintenance and operating budget to maintain, you know, the debt service and the operating cost of that, you know, capex.
Yeah, I can see that. It's not applicable to Airtable which is all software and very little in terms of hardware. But if you do have GPUs, if you have systems or factories or robots that have some kind of durable value, that's easier to finance that debt because you can, as long as those things have a useful life of four, five, six years or more. You can see how that's going to be better financed by debt, especially in this environment. I think that makes a ton of sense, would you say? I think that is the right bit of structure these hardware intensive businesses with a layer of debt and then equity on top.
But also is I think a way to hedge sort of your risk about when and whether that company gets their liquidity event instead of just depending upon, you know, future acquisition value whether that's, you know, an IPO or an M&A sale you might just say well hey I want a piece of the cash flows at least the portion that's contributing to, you know, operating profit. I want that payback, you know, as soon as possible, you know, take some of my risk off the table if I can at least get my, you know, my principal back in terms of like almost dividend style cash flow payments.
I think that makes sense. That's how private equity firms typically do it. It makes sense that that model will apply to these latest stage SaaS companies.
