FIGS Tops Off Banner Week for SoCal IPOs

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

In what is partly a reflection of the area's red-hot tech scene and also this year's sizzling IPO market, FIGS, seller of fashionable scrubs, became the latest Southern California company to do what is very much in fashion these days: go public.

FIGS shares closed Thursday on the New York Stock Exchange at $30.02 a share, a hefty premium to the $22 listing price.


FIGS' IPO came just a day after another Santa Monica-based ZipRecruiter debuted via direct listing on the NYSE.

Meanwhile, Fifth Wall, a proptech-focused VC, had its third SPAC debut on the NYSE Thursday. Officially called Fifth Wall Acquisition Corp. III, the offering raised $275 million.

It was a banner week for Southern California startups.

While many investors have eschewed money-losing direct-to-consumer brands in recent years, FIGS was able to turn a $50 million profit last year. It also grew net revenues from $17.6 million to $263.1 million from 2017 to 2020, according to regulatory filings.

"The firm's business model appears to be working extremely well, generating both high growth and profits, an unusual combination in pre-IPO companies," Donovan Jones wrote in an analyst note recommending the stock. "Free cash flow for the trailing twelve months was an enviable $37 million."

Co-CEO and co-founder Heather Hasson previously started an upscale handbag company. She got the idea for FIGS over a decade ago after she had coffee with a friend who was a nurse practitioner and was incredulous to see her spending 16-hour days wearing uncomfortable scrubs. Hasson later teamed with co-CEO and co-founder Trina Spear, who was previously an associate at the Blackstone Group, to offer healthcare workers a better alternative.

ZipRecruiter, which was founded in 2010, chose a direct listing because it is the rare startup that did not need to raise capital.

"We have more cash in the bank right now than we've ever raised in primary capital in our company's history," CEO Ian Siegel bragged to Crunchbase News.

The company's thriftiness has proven a windfall for its founders who were able to retain most of their shares in the company, but it left some investors marveling what could have been.

Jim Adelman, co-founder of Bonfire Ventures & Rincon Venture Partners, said he offered the founders a term sheet in 2011 but they elected to go the bootstrap route instead.

"That investment would be worth $400M today," Adelman tweeted. "Sigh."

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Here's How Much Tech Companies Made From LA Unified School District During the Pandemic

Sarah Favot

Favot is an award-winning journalist and adjunct instructor at USC's Annenberg School for Communication and Journalism. She previously was an investigative and data reporter at national education news site The 74 and local news site LA School Report. She's also worked at the Los Angeles Daily News. She was a Livingston Award finalist in 2011 and holds a Master's degree in journalism from Boston University and BA from the University of Windsor in Ontario, Canada.

In the early days of the pandemic, there was a mad dash to get technology and broadband internet service into students' homes. About 1 in 3 Los Angeles Unified School District families didn't have a desktop or laptop computer or high-speed internet, according to an April 2020 study by USC Annenberg.

To improve tech access and to make other COVID-related purchases, the Board of Education granted authority to then-Superintendent Austin Beutner to spend "any dollar amount necessary" to respond to the crisis. In 13 months, the district spent $390.5 million.

Over the course of the 13 months of data, the single largest purchase — $51.3 million — went to SummerBio, a Silicon Valley COVID testing company.

All told, $227.6 million went to tech companies or 58% of the district's total spending in that time frame.

The spending went to tech companies like Apple, T-Mobile, Verizon and a COVID testing company, records obtained by dot.LA through a Public Records Act request show.

Los Angeles school district spending from March 2020 through April 2021 show that money was spent on line items from iPads and broadband to food for students and families, and masks and sanitizing supplies for schools.

In March 2020 alone, 94% of the $72.3 million the district spent using emergency funds went to tech companies.

"It took a procurement team working around the clock to scour the globe and find devices and a technology team to make sure the devices had the proper software installed and every student was connected to the internet," Beutner said in May 2020.

It also began purchasing COVID-19 supplies, including 100,000 N95 masks and 300,000 surgical masks, for $2.4 million, and food for the district's "Grab n Go" meal program, like $450,000 on cases of chicken tenders and drumsticks.

John Rogers, an education professor at UCLA, said the district took decisive action to get necessary technology into student's hands.

"It was a herculean task to shift in-person instruction to remote learning in a district that serves many families who previously did not own a computing device or had regular access to the internet," he said. "Many other districts around the county lagged behind LAUSD in their efforts to provide a baseline of access to learning."

Here are the total amounts large tech companies were paid:

Apple

$51.3 million

Apple was paid virtually the same amount as SummerBio in total, just $9,000 less. It is unclear from the data exactly how many iPads and other devices were purchased and distributed, as a $37.8 million purchase for iPads doesn't list a quantity of items.

Arey Jones

$49.2 million

San Diego-based Arey Jones, which has relationships with Microsoft, Google, Intel, HP and other companies, is a conduit for school districts to procure technology equipment and software. LAUSD purchased Dell, Samsung and HP Chromebooks, monitors and iPad integration services and cases. In March 2020 alone, the company received $22 million.

CDW Government, LLC

$8.6 million

LAUSD purchased 1,000 video conferencing bars from CDW Government, LLC, a technology provider for state and local governments, for $8.5 million.

Amazon

$2.0 million

As online learning extended beyond the few weeks that many were expecting, it became clear that some households had multiple students and adults working at home. Headphones were a solution to help students block out the noise of a busy home to focus on their studies. About a month into the pandemic, LAUSD purchased 131,000 pairs of headphones for $1.9 million.

Mergent

$8.1 million

In December, the district spent $8.1 million for 490,000 headphones, enough for a pair for every student.

Edgenuity

$6.7 million

LAUSD opened up summer school to all students for enrichment courses, like guitar lessons and language classes, in addition to classes where students can make up credits. About 100,000 or about a quarter of the district's students enrolled in summer school. The district paid for a platform called Edgenuity for credit recovery for 30,000 high school courses and 40,000 middle school courses, according to the data. It's a software program that the district has used for years. The district also used the program as classes turned online and continues to use it in its online independent study program.

Verizon

$6.1 million

The district agreed to pay Verizon up to $4.6 million in March 2020 for mobile broadband services and devices. It later paid another $1.5 million for additional service and devices.

IVCi

$4.3 million

Audio visual company IVCi sold 5,000 video conferencing bars for $4.3 million.

T-Mobile

$3.7 million

The first purchase the district made was to increase its contract with T-Mobile for mobile broadband and devices by $500,000 to $750,000. In March 2020, it paid a total of $2.4 million and later made an additional $1.3 million payment.

Discovery

$3.1 million

The district purchased a districtwide licensing agreement.

Reading Horizons

$3 million

The district bought a license for the training and curriculum tool software for teachers teaching science.

Rosetta Stone

$3 million

The district bought licenses for 100,000 students from the language software company.

Microsoft

$2.3 million

The district described this purchase as "various applications." Microsoft developed an app called the Daily Pass that must be scanned for each student and staff that enters a campus. That contract was for gratuitous services.

Nearpod

$2 million

The district purchased a license for the instructional platform for teachers.

Crayon Software Experts

$1.7 million

LAUSD paid Crayon Software Experts, a software asset management managed services company, for Microsoft Power Apps licenses to implement its COVID vaccination program.

IXL Learning

$1.7 million

The district bought site licenses for 300,000 students from the integrated learning platform that supports personalized learning in math, English language arts, science, social studies and Spanish.

Blackboard

$1.2 million

The district purchased a districtwide enterprise license for the online learning platform for additional teacher to student notification functions.

Zoom

$1 million

The tool that many of us became familiar with during the pandemic, the district spent about a half million on software licenses for 66,500 employees, 500,000 students and 2,000 others.

Newsela

$995,000

Elementary schools purchased licenses for Newsela, a literacy-focused startup with content in English and Spanish.

Renaissance Learning

$995,000

The district bought licenses for Renaissance Learning, a math and reading software.

Edpuzzle

$730,000

LAUSD bought a districtwide license for Edpuzzle, which teachers can use to make interactive videos.

HopSkipDrive

$500,000

Pasadena start-up HopSkipDrive, an ridesharing company for students, was paid $500,000 to take students to and from COVID-19 testing sites.

Hollywood Crews, Studios Reach Tentative Deal to Avoid a Strike

Harrison Weber

Do you know something we should know about L.A. tech or venture capital? Reach out securely via Signal: +1 917 434 4978.

Harrison is dot.LA's senior finance reporter. They previously worked for Gizmodo, Fast Company, VentureBeat and Flipboard. Find them on Twitter: @harrisonweber. Send tips on L.A. deals to harrison@dot.la. Pronouns: they/them.

It appears the show will go on.

The union representing Hollywood production crews announced it has struck a tentative deal with the alliance representing major studios and giants in tech.

The move averts what would have been the first walkout for Hollywood crews since World War II as well as the union's first national strike since it was formed more than a century ago. However, union members must still decide on whether to ratify the agreement in an upcoming vote. In the meantime, all work will "continue without interruption," the union said.

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Q&A: Bobacino CEO Darian Ahler Makes His Case for Food Automation

Decerry Donato
Decerry Donato is an editorial intern at dot.LA. She received her bachelor’s degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, Decerry can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

After a year and a half of the pandemic, the robots have arrived—at least in restaurants.

A new report from market research firm Global Industry Analysts (GIA) found that the global food automation market grew to $9.7 billion in 2020, spurred in part by a desire to offer customers contactless service. The GIA researchers projected the market would swell to $13.6 billion by 2026.

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