🍋 Down Round Season

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Good Morning! You gotta feel for First Republic Bank, another victim of the 21st-century style bank run, where tweets are turning banks into penny stocks. JP Morgan will buy First Republic's assets and take over all deposits, regulators announced this morning.

Meanwhile, economists say the real estate market is experiencing a frustrating stalemate, with eager buyers clamoring for available properties, but scarce sellers and slim inventory keeping the market at a standstill.

Last week was a tale of two tech earnings. While Big Tech is doing well, smaller companies reliant on ads got burned. And Wall Street is still searching for clarity and certainty, anxiously awaiting this week's Fed meeting and jobs report to shed light on the current economic climate. But hey, at least it’s May, and spritz season has officially sprung.

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1. Story of the Day: Down Round Summer

The startup world is experiencing a turbulent storm, and unfortunately, it seems the forecast is only predicting more dark clouds. With layoffs, plummeting venture capital investments, and even the collapse of Silicon Valley Bank, the economic woes have hit the industry hard. Investment bankers are warning that this downturn in funding is the worst we've seen in the last two decades.

In desperation, many venture-backed companies are resorting to the dreaded "down round," where they are forced to raise funds at a lower valuation than what they had initially secured. Down rounds are dreaded by both founders and investors alike, as it results in devastating losses for startup founders and employees. But the implications are not just financial - down rounds can also damage morale and lead to legal headaches for venture capitalists and their investors.

While some companies have been able to delay raising money on unfavorable terms by cutting costs and taking on debt, these tactics can only last so long. Shockingly, over 400 unicorn startups - valued at $1 billion or more - haven't raised new funding since 2021, and most of them are unprofitable. This is a worrying sign for an industry that relies heavily on funding and rapid growth.

Takeaway: Down rounds can be a gut-wrenching experience for any startup. However, in today's cut-throat world of venture capital investing, they may actually be a blessing in disguise, and provide an opportunity for startups to prove their mettle and emerge stronger than ever before. Despite the gloom and doom of the economic climate, these companies are still able to secure crucial funding when so many others are left out in the cold.

2. Markets Rundown

Stocks closed higher on Big Tech earnings boost.

Movers & Shakers

• (+) Charter Communications ($CHTR) +8% after the telecommunications company beat earnings.

• (–) Snapchat ($SNAP) -17% after poor earnings and missing revenue expectations.

• (–) First Republic ($FRC) -43% after sources say the most likely resolution is for the bank to be taken into receivership by FDIC.

Private Dealmaking

• Pinecone, a memory platform for generative AI, raised $100 million

• Clara, a spend management software provider, raised $60 million

• Energy Dome, a battery tech startup, raised $44 million

• Woodoo, a composite materials maker, raised $31 million

• Luup, a micro-mobility startup, raised $30 million

• 4.screen, a driver interaction platform, raised $23 million

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3. Top Reads

• Why are EVs so much heavier than gas vehicles? (Axios)

• Is AI a waste of time? (Atlantic)

• Will a chatbot write the next ‘Succession’? (NYT)

• How Apple is increasing its presence in India (YF)

• Being a big bank has become a big problem (BB)

• Retirees priced out of Florida are flocking to Alabama (WSJ)

• The job market is slowing down for high-wage earners (Axios)

• The boss wants to make you more efficient (WSJ)

• The 401(k) generation enters a retirement minefield (Axios)

4. Book of the Day: The Go-Giver

The Go-Giver tells the story of an ambitious young man named Joe who yearns for success. Joe is a true go-getter, though sometimes he feels as if the harder and faster he works, the further away his goals seem to be. Desperate to land a key sale at the end of a bad quarter, he seeks advice from the enigmatic Pindar, a legendary consultant referred to by his many devotees sim­ply as the Chairman.

Over the next week, Pindar introduces Joe to a series of “go-givers”: a restaurateur, a CEO, a financial adviser, a real estate broker, and the “Connector” who brought them all together. Pindar’s friends teach Joe the Five Laws of Stratospheric Success and help him open himself up to the power of giving.

Joe learns that changing his focus from getting to giving—putting others’ interests first and continually adding value to their lives—ultimately leads to unexpected returns.

Imparted with wit and grace, The Go-Giver is a classic bestseller that brings to life the old proverb “Give and you shall receive.”

“Most people just laugh when they hear that the secret to success is giving. . . Then again, most people are nowhere near as successful as they wish they were.”

5. Short Squeez Picks

• The status trap

• Master the 3 basics of critical thinking

• The fastest way to get rich is to go slow

• 40 ways to let go and feel less pain

• I cloned myself with AI and fooled my bank and family

6. Daily Visual: Exxon's Cost Focus Fuels Record Quarter

Q1 Net Income Attributable to ExxonMobil

_{Source: Axios}

7. Daily Acumen

“If you don’t have nice things, they can mean a great deal to you. When you do have them, they mean nothing.

To me, the unhappiest people in the world are those in the watering places, the international watering places, the south coast of France and Newport and Palm Springs and Palm Beach. Going to parties every night, playing golf every afternoon, then bridge. Drinking too much, talking too much, thinking too little. Retired. No purpose.

While I know, there are those who would totally disagree and say, ‘If I could just be a millionaire, that would be the most wonderful thing. If I could just not have to work every day ... If I could be out fishing or hunting or playing golf or traveling, that would be the most wonderful life in the world.

They don’t know life. Because what makes life mean something is purpose. A goal. The battle. The struggle. Even if you don’t win it.”

Source: Market Sentiment

8. Memes of the Day

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