Joseph “Joe” Montana, co-founder of iMFL and retired National Football League (NFL) quarterback, speaks during an interview in San Francisco, California, U.S. on Tuesday, April 30, 2013.
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Joe Montana won his first Super Bowl as an NFL quarterback in 1982. Almost four decades later, he’s about to get his first IPO as a venture capitalist.
Montana, who led the San Francisco 49ers to four Super Bowl victories and was inducted into the National Football League Hall of Fame in 2000, has spent the past six years investing in start-ups through his firm, Liquid 2 Ventures. He started with a $28 million fund, and is now closing his third fund that’s almost three times bigger.
One of Liquid 2’s first investments was announced in July 2015, when a code repository called GitLab raised a $1.5 million seed round after going through the Y Combinator incubator program. GitLab’s valuation at the time was around $12 million, and other participants in the financing included Khosla Ventures and Ashton Kutcher.
On Thursday, GitLab is set to debut on the Nasdaq with a market cap of almost $10 billion, based on a $69 share price, the high end of its range. Montana’s initial $100,000 investment, along with some follow-on funding, is worth about $42 million at that price.
“We’re all pretty pumped,” Montana, 65, said in an interview this week, while vacationing in Italy. “This is going to be a monster for us.”
Joe Montana #16 of the San Francisco 49ers celebrates after they scored against the Cincinnati Bengals during Super Bowl XVI on January 24, 1982 at the Silverdome in Pontiac, Michigan. The Niners won the Super Bowl 26 -21.
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While famous athletes dabbling in start-ups has become a trend in Silicon Valley — from NBA stars Stephen Curry and Andre Iguodala to tennis legend Serena Williams — Montana jumped into the game much earlier. Prior to Liquid 2, Montana was involved with a firm called HRJ, which was founded by ex-49ers stars Harris Barton and Ronnie Lott.
HRJ, which invested in other funds rather than directly into companies, collapsed in 2009 and was sued for allegedly failing to meet its financial commitments.
But rather than return to the sport that brought him fame in an executive role or as a broadcaster, like so many fellow all-star quarterbacks, Montana stuck with investing. This time he took much a different route.
Convinced by Ron Conway
Ron Conway, the Silicon Valley super angel known for lucrative bets on Google, Facebook and Airbnb, started showing Montana around the world of early-stage investing, primarily through Y Combinator. Montana, along with a growing crop of seed investors and celebrities, would attended Y Combinator Demo Days, where entrepreneurs show slides of their companies with growth that’s always up and to the right.
“We were trying to see what their secret sauce was and who they looked at and what they were really looking for in early-stage companies,” Montana said referring to Conway and his team. “He started taking us there, and we started doing a handful of investments here and there, and then he talked me into starting a fund.”
In 2015, Conway was speaking to the latest group of founders in the Y Combinator program, and he invited Montana to attend the event. That’s where Montana met GitLab CEO Sid Sijbrandij, a Dutch entrepreneur who had turned an open-source project for helping developers collaborate on code into a company that was packaging the software and selling it to businesses.
“We got together, and said, ‘hey this is a special guy,'” Montana said. “We committed that night.”
GitLab had just come out of Y Combinator. In his presentation at Demo Day that March, Sijbrandij told the audience that his company had 10 employees along with 800 contributors working on the open-source project. GitLab was on pace for annual sales of $1 million, he said, and paying customers included Apple, Cisco, Disney and Microsoft.
GitLab CEO Sid Sijbrandij at company event in London
GitLab
GitLab now employs over 1,350 people in more than 65 countries, according to its prospectus. As it prepares to hit the public market on Thursday, GitLab’s annualized revenue is over $230 million. Sales in the second quarter jumped 69% to $58.1 million
However, because GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, the company recorded a net loss of $40.2 million in the latest quarter. Much of the marketing budget is focused on expanding its DevOps (the combination of software development and IT operations) user base.
“To drive new customer growth, we intend to continue investing in sales and marketing, with a focus on replacing DIY DevOps within larger organizations,” the company said in the prospectus.
‘Still listening to pitches’
For Montana, GitLab marks his firm’s first IPO, though he said “we have 12 or 13 more unicorns in the portfolio,” referring to start-ups valued at $1 billion or more. They include Anduril, the defense technology company led by by Oculus co-founder Palmer Luckey, and autonomous vehicle testing start-up Applied Intuition.
Montana has three other partners in the firm: Mike Miller, who co-founded Cloudant and sold it to IBM; Michael Ma, who sold a start-up to Google and became a product manager there; and Nate Montana, Joe’s son, who previously worked at Twitter.
Montana said he’s involved in the fund on a day-to-day basis and attends the partner meetings every Tuesday. He said his partners, who are more experienced in technology, handle much of the technical diligence and sourcing of deals, while he focuses on helping portfolios with connections in his network.
“Until the pandemic, I was still speaking around the country,” Montana said, adding that he didn’t start taking a salary until the third fund. “I was out speaking to companies like SAP, Amex, Visa and a lot of large corporations, like large insurance firms down to Burger King.”
Specific to GitLab, Montana said he connected Sijbrandij early on with a senior executive at Visa, when the company was looking to do a deal with the payment processor.
“I’m still listening to pitches, I go to pitches and do all that,” Montana said. “But my time is better spent now helping with connecting these companies as they mature.”
Elon Musk’s AI company, xAI, has raised $10 billion from investors that puts the company’s post-money valuation at $200 billion, sources told CNBC’s David Faber.
The valuation for Musk’s AI company is the latest example of skyrocketing valuations for companies that develop foundational AI models. Earlier this month, Anthropic raised $13 billion at a $183 billion valuation. OpenAI, the largest company in the industry, held a secondary share sale that valued it at $500 billion.
The fundraising comes weeks after Musk raised $10 billion in debt and equity at what was believed to be a roughly $150 billion valuation, according to Faber. Last December, xAI raised $6 billion to fund its artificial intelligence development.
However, xAI’s Grok service is widely believed to lag behind Anthropic’s Claude and OpenAI’s GPT models in terms of capabilities and number of users.
Musk said in May that he wants to buy a million AI chips, Faber said. Much of the proceeds of this round of funding could go to building data centers filled with Nvidia and AMD AI chips called GPUs that are needed to develop next-generation AI, as well as to hire expensive talent. The company is currently building a large cluster of AI computers in Memphis, Tennessee.
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Pattern Group, one of the leading resellers on Amazon, took the plunge into the public markets on Friday, and saw its stock slip in its Nasdaq debut.
Trading under the ticker “PTRN,” the stock opened at $13.50 after the company sold shares at $14 in its IPO, the middle of the expected range. Pattern’s offering raised $300 million, with half the proceeds going to investors, and valued the company at about $2.5 billion.
The Utah-based company was founded by husband and wife duo David Wright and Melanie Alder in 2013 as iServe Products before changing its name to Pattern in 2019. Pattern currently ranks as the No. 2 Amazon seller in the U.S., based on the number of customer reviews, according to research firm Marketplace Pulse.
The company describes itself as an “ecommerce accelerator” that helps more than 200 brands optimize their sales on online marketplaces like Amazon, Walmart, Target and TikTok Shop. It sells tens of thousands of products across categories ranging from health and wellness, consumer electronics, as well as beauty and personal care. Some of its brand partners include Nestle, Panasonic and Skechers.
The tech IPO market has roared back to life in recent months after an extended dry spell. Ticket reseller StubHub debuted on the New York Stock Exchange on Wednesday, though its stock dropped in its first two days of trading. Online lender Klarna and Gemini, the crypto firm founded by Cameron and Tyler Wiklevoss, started trading last week. Peter Thiel-backed cryptocurrency exchangeBullish, design software company Figma and stablecoin issuer Circle have also recently hit the market.
In the second quarter, Pattern reported revenue growth of 39% from a year earlier to $598.2 million. The company recorded net income of $16.4 million in the second quarter, compared with $11.3 million a year earlier. Operating income came in at $30.1 million for the period versus $23.1 million in the same period last year.
The company competes with millions of merchants who hawk their wares on Amazon’s sprawling marketplace, where third-party vendors now account for more than half of all goods sold on the site. Pattern said 94% of its 2024 revenue came from consumer product sales on Amazon, with a “substantial majority” in the U.S.
Pattern isn’t the first Amazon seller to pursue an IPO. Pharmapacks, once the top U.S. Amazon seller, eyed going public via a special purpose acquisition company in 2021, before nixing those plans and filing for bankruptcy a year later.
Pattern is hitting the market at a time of major global trade uncertainty, a factor it acknowledged in its prospectus. President Donald Trump‘s tariff threats against trade partners have, for the past five months, sent shockwaves through markets and shaken businesses globally.
“There is significant uncertainty as to the potential actions of the U.S. government with respect to international trade policy and the impact of tariffs, particularly with respect to trade between the United States and China,” Pattern wrote in the filing.
Pattern said the tariffs and trade tensions between the U.S. and China could negatively impact demand for its products, or harm its ability “to sell brand partner products at prices consumers are willing to pay.”
CEO David Wright told CNBC in an interview on Friday that the company was trying to hold its offering “a few months ago,” but delayed because of the tariffs, which were first announced in April. Klarna and StubHub put their IPOs on hold after the market plummeted on Trump’s initial announcement.
But the company’s top risk, according to its prospectus, is its reliance on Amazon and what can happen if the ecommerce giant makes significant alterations.
Pattern said that should Amazon restrict its ability to sell products, terminate the relationship or see any big changes due to litigation or regulation, it “could adversely affect our continued growth, financial condition and results of operations.”
Wright said the Amazon challenge is unavoidable.
“No matter what you’re doing in this space, you’re going to be playing with them,” Wright said. As for Amazon suspending certain brands and sellers, “so long as you stay within the line, they’ve been a great partner for us,” he said.
Apple CEO Tim Cook said price hikes on the newest iPhone models aren’t tied to President Donald Trump’s sweeping tariff plans.
“There’s no increase for tariffs in the prices to be totally clear,” Cook told CNBC’s Jim Cramer from Apple’s Fifth Avenue store location in New York City, as the latest iPhone model launched in stores worldwide.
Earlier this month, Apple increased the price of its iPhone 17 Pro model by $100, while maintaining the prices of its entry-level phones. It also introduced an Air model that replaced the Plus at steeper price point.
Many analysts had widely anticipated price hikes despite Cook’s attempts to dodge tariffs.
To circumvent the levies, Apple has pivoted its supply chain to import iPhones to the U.S. from lower tariff countries, such as India and Vietnam. Apple has historically produced a majority of its products in China.
Cook has also made public appearances with Trump as the company commits at least $600 billion toward bolstering U.S. manufacturing and supporting suppliers.
During the June quarter, Cook revealed that the company took an $800-million hit from costs tied to tariffs.
At the same time, Apple faces questions about its slow AI rollout, as well as rising competition in international markets such as China.
“We have AI everywhere in the phone,” Cook told CNBC on Friday. “We just don’t call it” that.