Annual Letter ~ 2021
Partners and Friends,
We feel slightly disappointed to be greeting you all again under a new variation of the same backdrop as last year. At this point, it's hard to tell what's more tedious--the pandemic or the conversations around it. Since we can't do much to alleviate the former, we'll do our part to end the latter and just say, once again, that we're grateful to have reached the new year together.
For those being inundated with annual letters, here's the scoreboard: The Meyer Keith portfolio has a total multiple on invested capital of 3x, with 50% of invested capital returned to our investors so far, via six acquisitions and IPOs. Thirteen positions still remain active/unrealized. We're staying conservative in how we mark our book, so while the relative values of our unrealized positions are significantly higher than where we're marking them, we only use their most recent primary equity pricing for our marks. That's our preference, as it keeps us grounded as investors. In our view, marking up your own book is tantamount to swimming naked--it feels invigorating until the tide goes out.
While venture investing is about the furthest distance you can travel from value investing, we still believe every deal we do is just that--a deal. 2021 tested the limits of this perspective, and we're as proud of the deals we did this year as the deals we did not do. In a moment when capital is a commodity and competition for deals is extreme, it's clear to us that common sense is uncommon, due diligence and pace is unfashionable and, as founders and investors compete for attention on the open mic of social media, the only thing that's underestimated seems to be listening.
As Warren Buffett likes to say, you do opportunities when they come along and doing nothing is often the right thing to do. That's easier said than done when everyone seems to be getting rich doing just the opposite. Nevertheless, we're proud that we followed that guidance. We added only five new direct investments to our core portfolio in 2021--Knack, Pawp, Plum, Chipper and Flossy--all of which are led by incredible teams and are growing fast. We believe that their products are the right fit for their markets and we are comfortable underwriting their growth projections since we view them as totally achievable. Of note, Plum is our first entry into the Indian market and Chipper brings us into Africa. We expect these two companies to perform exceptionally well over the next decade and, in turn, we believe they will act as central nodes of talent and tremendous generators of future startups.
Since we only did five new deals in 2021, you may be wondering what exactly we spent our time doing this year. In short, Charles and I went to work designing our own roadmap for what we want Meyer Keith to become. As the largest shareholders in our deals, we have a vested interest in serving investors for the long haul. Over the next few months, we will introduce our new venture platform to you. We've designed it with intrinsic hedges in a time of extreme valuations and increased risks, using a network structure that is conducive to surfacing and supporting exceptional companies and achieving the outperformance that we expect. To close out, the portfolio is performing well and marked conservatively, our loss ratio remains negligible and we have large anticipated exits in the coming year. We're extremely proud of our moderation in a moment of excess. As always, please do not hesitate to reach out to discuss ideas and opportunities. Good conversations will always be undervalued to us. Best, Alex & Charles
Knack is an online tutoring platform, enabling higher education institutions to supplement existing academic support services and create a more personalized, equitable, and accessible support experience for every student at scale: from freshman through senior year. Its goal is to empower campuses with 21st century technology that transforms academic support services into high-impact, skill-building interactions to reach historically underserved students on campus.
Pawp is a digital health clinic and telehealth platform for pet owners and their pets that connects them with veterinary professionals.
Plum is a group health insurance platform aiming to provide accessible and affordable health insurance to millions of Indians. Despite having the second largest population in the world, India is also one of the countries with lowest health insurance penetration. The need for a platform to help employers and insurers alike manage demand for health insurance has become critical. Plum is delivering the solution.
Chipper is a P2P money transfer application serving over 3 million Africans. Chipper provides cross border remittances, crypto and equity trading, merchant checkout services and bill pay. The financial services opportunity in Africa is immense. While more than half of the world’s population growth will be in Africa by 2050, the continent remains the most expensive place in the world to send money. Over 1 billion Africans still struggle to access quality and affordable financial services. Chipper is serving them.
Flossy is a technology-enabled alternative to dental insurance that connects patients to high-quality dentists and provides them with transparent, upfront pricing.
Portfolio Companies in the News
Carbon Health added to its firepower in pursuit of becoming the US's largest primary care provider. In July, the firm raised $350m in a Series D round led by Blackstone.
After being held as the best kept secret in our portfolio, Digisure graduated from stealth mode in August, when it closed a $13m round of financing to modernize insurance for mobility marketplaces across the US and Europe.
In October, Ayenda raised $10m to scale its hospitality management platform for independent hotel operators across Colombia, Peru and Mexico. Ayenda began the year with 280 hotels under management and expects to grow that significantly over the coming year. With 70% of Latin American hotels owned independently, the market in front of Ayenda is huge.
Honor Home Care joined the unicorn club in October, when it raised $370m to acquire one of the largest traditional home care providers in the US and UK, Home Instead. Home Instead had famously rebuffed acquisition offers from buyers for years, so their belief in Honor is a huge acknowledgment of the company's vision.
In November, Chipper Cash raised $150m at a ~$2b valuation, in a round led by crypto exchange heavyweight FTX. This is a 3x increase from the valuation Meyer Keith invested at in May.
Meyer Keith's first ever investment, Drizly, was acquired by Uber for $1.1b in stock and cash. Congrats to Cory, Justin, Nick, Joe and everyone who worked so hard in pursuit of this massive outcome. Well done on bringing this ship to port.
On June 30th, Xometry went public on the Nasdaq at $44 per share, raising $304m, before soaring 64%. The stock price has found some temperance since then, with an attractive valuation of $2.4b or about 6x next year's revenue. Meyer Keith remains long and strong in our position. Congrats to Drura, Randy and Laurence for their tremendous work and vision in digitizing the manufacturing backbone of the world's economy.