In many an IPO, Apple’s App Store gets the “catastrophic events” treatment

Few education technology companies have broken into the mainstream quite like Duolingo. 

Founded in 2011, the language learning app based out of Pittsburgh doesn’t connect users with a human teacher, but instead, prompts users to complete online courses with a cutely designed cartoon owl. It’s use of gamification—encouraging users to wrack up scores by attending lessons daily, for instance—has been part of the winning formula in helping bolster business during the pandemic. 

Locked up at home and eager to try new online activities, users boosted Duolingo’s revenue by 129% to $161.7 million in 2020. And in an even more positive sign for the business model’s viability, losses as a percent of the company’s overall topline fell from 19% in 2019 to around 8% of revenue in 2020.

As the great debate around Apple’s 30% cut on in-app transactions rages on however, it’s worth noting how such an IPO prospectus gets to the heart of the debate. On one side, proponents argue that some business would not even exist without the App Store. On the other, app developers contend that 30% is far too high and is an outdated rule from when Apple only had 500 or so offerings on the marketplace over a decade ago. Game company Epic is famously battling the tech giant over the issue.

While Duolingo’s founders have not publicly spoken out about Apple’s fees, its impact on the business—both good and bad—is apparent. Nestled in the risks section of its filing, Duolingo notes that it derived 51% of its revenue in 2020 from the Apple App Store and 19% from the Google Play Store. Meaning while it does have a website, users appear to prefer using their cellphones.

But Apple and Google also represent a significant cost. While some companies have reportedly been able to negotiate potentially lower fees with Apple (ahem Amazon), Duolingo notes that it pays Apple and Google “a meaningful share (generally 30%) of the revenue we receive from transactions processed through in-app payment systems.” And pointing to another major nit developers have had with Apple, Duolingo’s prospectus warns that the tech giant can be mercurial with its policies: “Each platform provider has broad discretion to make changes to its operating systems or payment services or change the manner in which their mobile operating systems function and to change and interpret its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.”

Similarly, gaming startup Roblox for instance noted that about 35% of its revenue came from the app store in 2020 in its IPO filing earlier this year. As did e-commerce startup Wish in 2020, reporting “we rely on the Apple App Store and the Google Play Store to offer and promote our app. If we are unable to maintain a good relationship with such platform providers… our business will suffer.”

It seems obvious now that so many consumers use services through their phones. But it’s also alarming that it’s taken just about a decade for the Apple and Google App Stores to become listed as a potential threat in more consumer-facing tech IPOs alongside the more typical risks of “catastrophic events” and “government regulation.” And that certainly says something.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

Jessica Mathews compiled the IPOs section of the newsletter.

VENTURE DEALS

- 4G Clinical, a randomization and trial supply management company, raised about $230 million. Goldman Sachs Asset Management led the round. 

- Gympass, a New York City-based startup with flexible gym passes, raised $220 million funding valuing it at $2.2 billion. Investors include SoftBank, General Atlantic, Moore Capital, Kaszek, and Valor.

- ShipBob, a Chicago-based logistics fulfillment startup, raised $200 million in funding, making it a unicorn. Bain Capital Ventures led the round and was joined by investors including SoftBank, Menlo Ventures, Hyde Park Venture Partners, Hyde Park Angels, and Silicon Valley Bank.

- SHINE Medical Technologies, a Janesville, Wis.-based maker of medical tracers, raised $150 million Series in Series C-5 funding. Koch Disruptive Technologies led the round and was joined by investors including Fidelity Management & Research Company and Baillie Gifford.

- Visier, a Canada-based HR software startup, raised $125 million in Series E funding valuing it at $1 billion. Goldman Sachs Asset Management was the investor.

- Side, a San Francisco-based real estate tech startup for agents and independent brokerages, raised over $50 million, valuing it at $2.5 billion. Tiger Global Management led the round and was joined by investors including ICONIQ Capital and D1 Capital Partners.

- Tapcart, a Santa Monica, Calif.-based way for Shopify-based brands to launch mobile apps, raised $50 million in Series B funding. Left Lane Capital led the round and was joined by investors including Shopify, SignalFire, Greycroft, Act One Ventures, and Amplify LA.

- TOCA Football, a Costa Mesa, Calif.-based soccer entertainment company, raised $40 million in Series E funding. WestRiver Group, RNS TOCA Partners, and D2 Futbol Investors led the round and were joined by investors including Jared Smith (co-founder or Qualtrics). 

- Wellthy, a New York City-based site for finding healthcare, raised $35 million in Series B funding. Rethink Impact led the round and was joined by investors including Hearst, Polaris Partners, and Eldridge.

- Bowery Valuation, a New York City-based commercial real estate appraisal startup, raised $35 million in Series B funding. The Growth Equity business within Goldman Sachs Asset Management led the round and were joined by investors including Capital One Ventures, Builders VC, Fika Ventures, Navitas Capital, Camber Creek, Nine Four Ventures, Greenspring Associates, and Alpaca VC. 

- WeMaintain, a Paris and London-based property tech company, raised €30 million in Series B funding. Eurazeo, Red River West, BPIFrance Digital Ventures, and Swiss Immo Lab are among the investors.

- Babson Diagnostics, an Austin-based medical technology company, raised $31 million in Series B funding. Emerald Development Managers led the round and was joined by investors including Siemens Healthineers, Prism Ventures, and Lago Consulting Group.

- Zencity, a Tel Aviv-based community insights and analytics provider for state and local governments, raised $30 million from TLV Partners, Vertex Ventures Israel, Salesforce Ventures, M12, and Canaan Partners Israel.

- BreezoMeter, an Israel-based air quality data provider, raised $30 million in Series C funding. Fortissimo Capital led the round and was joined by investors including Entrée Capital, JumpSpeed Ventures, Launchpad Digital Health, AxessVentures, and Eurazeo.

- Pathpoint, a San Francisco-based insurance-focused startup, raised $30 million in Series A funding. Caffeinated Capital led the round and was joined by investors including SciFi VC, Founders Fund, and Chubb. 

- Hospital IQ, a Newton, Mass.-based provider of hospital operations and communications software, raised $25 million in Series C funding. Baxter Ventures and Health Velocity Capital led the round and were joined by investors including Pierpoint Capital and Allscripts. 

- Local Kitchen, a San Francisco-based company takeout and delivery brand, raised $25 million in Series A funding. General Catalyst led the round and were joined by investors including Human Capital, Pear VC, Fifth Wall, and Penny Jar Capital.

- Floward, a Kuwait City-based gift and flower delivery startup, raised £19.8 million ($27.5 million) in Series B funding. STV led the round and was joined by investors including Impact46.  

- Wonderflow, an Amsterdam-based analytics company, raised $20 million in Series B funding. Klass Capital led the round and was joined by investors including P101, ITALIA 500 (Azimut Group) and Jan Bennink.

- Harness Wealth, a New York City-based fintech startup focused on tech investors, employees, and founders, raised $15 million in Series A funding. Jackson Square Ventures led the round and was joined by investors including Bain Capital, Torch Capital, Activant, GingerBread Capital, FJ Labs, i2BF Ventures, First Minute Capital, Liquid2 Ventures and Alleycorp.

- Infinite Cooling, a Somerville, Mass.-based cooling startup focused on reducing water consumption, raised $12.3 million in Series A funding. Material Impact led the round.

- Young Platform, an Italy-based cryptocurrency trading platform, raised €3.5 million ($4 million) in Series A funding. United Ventures SGA led the round and was joined by investors including Ithaca Investments, Accel scout Luca Ascani, Max Ciociola, and Pietro Invernizzi.

- Stayflexi, a San Francisco-based property tech software maker, raised $1.6 million in seed funding. Investors included Y Combinator, Agya Ventures, BlueField Capital, Asymmetry Ventures, and Good News Ventures.

- Prelude, a San Francisco-based maker of hiring software, raised $1.2 million in seed funding. Fuel Capital, Jack Altman, Sam Altman, and Elad Gil invested.

PRIVATE EQUITY

- Invus Opportunities invested $200 million in ClearScore, a U.K.-based credit marketplace.

- TPG invested over $100 million in EIS, a provider of tech to insurers. Financial terms weren't disclosed.

- EQT agreed to acquire PRO Unlimited Global Solutions, a San Francisco-based contingent workforce management solution, from Harvest Partners and Investcorp. Financial terms weren't disclosed.

- Angeles Equity Partners acquired Xanitos, aprovider of environmental services to hospitals. Financial terms weren't disclosed.  

- Audax Private Equity acquired S.J. Electro Systems, a Detroit Lakes, Mich.-based provider of products to the water and wastewater industry. Financial terms weren't disclosed.

- BlockTower Capital acquired Gamma Point Capital, an investment manager specializing in market neutral strategies.

- Fencing Supply Group, backed by The Sterling Group, acquired Fence Supply, a Sunnyvale, Texas-based fencing and building material distributor. Financial terms weren't disclosed.

- Partners Group agreed to acquire a controlling stake in Dimension Renewable Energy, an Atlanta-based solar and battery storage company. Financial terms weren't disclosed.

- Swander Pace Capital formed Triple Crown Holdings alongside T-Bev to acquire clean-label food ingredients. Financial terms weren't disclosed.

- York Capital Management acquired AMC Health, a New York City-based telehealth and remote patient monitoring services provider. Financial terms weren't disclosed.

EXITS

- RLDatix agreed to acquire Allocate Software, a U.K.-based maker of medical software, from Vista Equity Partners and Hg. Bloomberg values the deal at around $1.3 billion.

- TSG Consumer Partners agreed to acquire a majority stake in Rough Country, a Dyersburg, Tenn.-based seller of truck accessories, from Gridiron Capital. Financial terms weren't disclosed.

- CVC Capital Partners agreed to acquire Rayner, a U.K.-based ophthalmology business, from Phoenix Equity Partners. Financial terms weren't disclosed.

OTHERS

- JFrog (NASDAQ: FROG) agreed to acquire Vdoo Connected Trust, an Israel-based cybersecurity company, in a cash and stock-based deal valuing it at $300 million. Vdoo investors have included Celesta Capital, GGV Capital, and Qumra Capital.

IPOS

- Auto Store, a Norwegian warehouse robotics company, is weighing an IPO that could value it at $10 billion, per Bloomberg.

- Instructure Holdings, a Salt Lake City, Ut.-based education technology company, filed for an initial public offering. Private equity firm Thoma Bravo backs the firm.

- Paycor HCM, a Cincinnati, Oh.-based human capital management software company, filed for an initial public offering. Apax Partners backs the firm.

PEOPLE

- Bessemer Venture Partners, a San Francisco-based venture investor, promoted Anant Vidur Puri to partner.

- Crosspoint Capital Partners, a private equity investment firm focused on cybersecurity and software, named Samir Kapuria as a managing director.

F+FS

- Accel, a Palo Alto, Calif.-based venture investor, raised three funds totalling about $3.1 billion. It raised $650 million for its 15th early-stage fund, $650 million for an early-stage European and Israeli fund, and $1.8 billion for a growth stage fund.