Why isn’t Robinhood a verb yet?

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week Natasha MascarenhasDanny Crichton and your humble servant gathered to chat through a host of rounds and venture capital news for your enjoyment. As a programming note, I am off next week effectively, so look for Natasha to lead on Equity Monday and then both her and Danny to rock the Thursday show. I will miss everyone.

But onto the show itself, here’s what we got into:

Bon voyage for a week, please stay safe and don’t forget to register to vote.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#chime, #equity-podcast, #fundings-exits, #recent-funding, #robinhood, #startups, #venture-capital, #willow, #zoom

0

As tech stocks dip, is insurtech startup Root targeting an IPO?

During the week’s news cycle one particular bit of reporting slipped under our radar: Root Insurance is tipped by Reuters to be prepping an IPO that could value the neo-insurance provider at around $6 billion.

Coming after two 2020 insurtech IPOs, Root’s steps towards the public markets are not surprising. But they are good news all the same for a number of insurance startups that have raised lots of capital and will eventually need to prepare their own debuts if they don’t find a larger corporate home.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Programming note: The Exchange column is off starting tomorrow through next week. The newsletter will go out as always on Saturdays. I’m taking a week to sit and do nothing.

The Root IPO will also help clarify Lemonade’s own public offering and ensuing valuation. Lemonade’s debut brought a strong price to the rental-focused insurance provider, leading to a more buoyant attitude towards the valuation of its class of startups. More precisely, the public price assigned to Lemonade when it floated was, no bullshit, very bullish.

If Root can repeat the feat it would cast a warm light on the yet-private players in its niche that will have their eyes pinned to the flotation. Names like MetroMile and Hippo could be next if Root’s IPO goes well.

But, first, does Root make sense at a $6 billion valuation? We can do a little digging on that this morning, using Lemonade’s present-day valuation to get a handle on the figure. Let’s go!

Root’s valuation in a Lemonade world

Before we get into the numbers, bear in mind that we’re going to compare apples and oranges today, and that we’ll have to use some dated numbers as well. That said, we can still get somewhere about what Root could be worth. So, roll with me but don’t take every number as engraved onto an obelisk.

Back in July of this year, in the wake of the Lemonade IPO and Hippo’s latest funding round, a $150 million investment at a $1.5 billion post-money valuation, we started to do some math. Lemonade’s valuation was much richer than Hippos’ when you look at their multiples, which got us thinking about private and public neo-insurance provider valuations: why was Lemonade worth so much more than its peers per dollar of written premium?

To better understand the situation, we dug up some 2019 data on the dollar value of gross written premium Hippo and Lemonade wrote and found new valuation multiples for them based on those numbers. Lemonade was worth 28.4x its Q1 annualized gross written premium, while Hippo was worth just 5.6x its own.

Then we also found Root and MetroMile gross written premium numbers for 2019, which allowed us to calculate their own effective valuations (albeit using dated numbers).

As before when we found that Hippo’s private valuation looked light compared to Lemonade’s public valuation when we contrasted their valuation/gross written premium multiple, we discovered that MetroMile and Root also looked cheap. Very cheap.

#finance, #fundings-exits, #hippo, #insurtech, #lemonade, #metromile, #root-insurance, #startups, #tc, #the-exchange

0

Rephrase.ai raises $1.5M to use synthetic media for personalized sales pitches

Bangalore-based Rephrase.ai has an ambitious vision for reshaping how movies and videos are made.

CEO Ashray Malhotra laid it out for me yesterday, saying that his co-founder Nisheeth Lahoti “came up with this concept — he wants to build an engine that can take any script as input and create a professional movie,” no filming required.

But Rephrase.ai is starting with what Malhotra said is a more “short-term, monetizable” goal: Offering technology that makes it easy to create personalized sales videos.

The startup was part of the Techstars Bangalore program in 2019 and is announcing today that it has raised $1.5 million in seed funding led by Lightspeed Venture Partners and AV8 Ventures.

Malhotra demonstrated the technology for me, showing me how a salesperson can select a model, a background and a voice, and enter text that the model will recite. They can then export that video for use in a variety of sales tools.

This is valuable for, he said, because sending personalized video messages in sales emails can lead to “an insane increase” in clickthrough rates. But creating all those videos can be a huge chore, if not downright impossible.

And while there are plenty of other startups working on synthetic media, Malhotra said Rephrase.ai is set apart by the 18 months the team spent developing technology that can take 10 minutes of footage and “predict how the lip movements of the person would have been if you’d shot them [saying any phrase] in an actual studio.”

You can see the results for yourself in the video above. Personally, I was impressed by the lip movements but disconcerted by the fact that Rephrase.ai customers can pair any model with any voice, leading to some strange combinations that feel more like badly dubbed movie than an effective sales pitch.

When I brought this up, Malhotra replied that some clients will want to take the time “perfecting it out, finding the right voices, the right costumes, the right personality of the actors,” while other clients might be fine spending less time to create something a little less convincing.

It’s also worth noting that Rephrase.ai has several policies designed to prevent the creation of deceptive deepfakes: Presenters can control who has the authority to create videos using their faces, the platform is only open to authorized businesses and videos are created from scratch, rather than transferring someone’s face onto an existing person.

Malhotra said Rephrase.ai is currently talking to a number of potential customers, but those discussions are in early stages. He also suggested that the technology could expand fairly quickly into areas like chatbots and education.

“I think it’s going to open a whole new world of creativity,” he said. “When you and I want to express something, we’re most likely to write a text document, but as a viewer, we want to see a video. They’ve been disconnected because video creation is really difficult.”

#av8-ventures, #funding, #fundings-exits, #lightspeed-venture-partners, #startups, #synthetic-media

0

NUVIA raises $240M from Mithril to make climate-ready enterprise chips

Climate change is on everyone’s minds these days, what with the outer Bay Area on fire, orange skies above San Francisco, and a hurricane season that is bearing down on the East Coast with alacrity (and that’s just the United States in the past two weeks).

A major — and growing — source of those emissions is data centers, the cloud infrastructure that powers most of our devices and experiences. That’s led to some novel ideas, such as Microsoft’s underwater data center Project Natick, which just came back to the surface for testing a bit more than a week ago.

Yet, for all the fun experiments, there is a bit more of an obvious solution: just make the chips more energy efficient.

That’s the thesis of NUVIA, which was founded by three ex-Apple chip designers who led the design of the “A” series chip line for the company’s iPhones and iPads for years. Those chips are wicked fast within a very tight energy envelope, and NUVIA’s premise is essentially what happens when you take those sorts of energy constraints (and the experience of its chip design team) and apply them to the data center.

We did a deep profile of the company last year when it announced its $53 million Series A, so definitely read that to understand the founding story and the company’s mission. Now about one year later, it’s coming back to us with news of a whole bunch of more funding.

NUVIA announced today that it has closed on a $240 million Series B round led by Mithril Capital, with a bunch of others involved listed below.

Since we last chatted with the company, we now have a bit more detail of what it’s working on. It has two products under development, a system-on-chip (SoC) unit dubbed “Orion” and a CPU core dubbed “Phoenix.” The company previewed a bit of Phoenix’s performance last month, although as with most chip companies, it is almost certainly too early to make any long-term predictions about how the technology will settle in with existing and future chips coming to the market.

NUVIA’s view is that chips are limited to about 250-300 watts of power given the cooling and power constraints of most data centers. As more cores become common pre chip, each core is going to have to make do with less power availability while maintaining performance. NUVIA’s tech is trying to solve that problem, lowering total cost of ownership for data center operators while also improving overall energy efficiency.

There’s a lot more work to be done of course, so expect to see more product announcements and previews from the company as it gets its technology further finalized. With $240 million more dollars in the bank though, it certainly has the resources to make some progress.

Shortly after we chatted with the company last year, Apple sued company founder and CEO Gerald Williams III for breach of contract, with the company arguing that its former chip designer was trying to poach employees for his nascent startup. Williams counter-sued earlier this year, and the two parties are now in the discovery phase of their lawsuit, which remains ongoing.

In addition to lead Mithril, the round was done “in partnership with” the founders of semiconductor giant Marvell (Sehat Sutardja and Weili Dai), funds managed by BlackRock, Fidelity, and Temasek, plus Atlantic Bridge and Redline Capital along with Series A investors Capricorn Investment Group, Dell Technologies Capital, Mayfield, Nepenthe LLC, and WRVI Capital.

#apple, #chips, #data-center, #enterprise, #funding, #fundings-exits, #hardware, #nuvia, #semiconductors, #startups

0

E-commerce platform Whitebox raises $18M

Whitebox, a startup that manages e-commerce logistics and fulfillment for a variety for brands, has raised $18 million in Series B funding.

While discussing the new funding, CEO Marcus Startzel repeated a point he made after Whitebox raised its $5 million Series A last year — that the startup is differentiated by combining tools for managing e-commerce listings across a variety of marketplaces with the ability to store and ship products from its own warehouse spaces across the United States.

“We really saw an opportunity for a platform that could both sell stuff and move stuff,” Startzel said.

However, he suggested that more recently, “The thing that really shined for us through this period has been third layer of that platform, which is our decisioning layer.” That’s the layer that allows brands to use data to answer questions like, “Should I fulfill this big wholesale order or hold inventory for the marketplaces? Should I inbound a bunch of stuff into Amazon, or do I keep it here in my Whitebox warehouses to potentially fulfill wholesale orders?”

And of course, this is happening as e-commerce has become increasingly important during the pandemic. Startzel suggested that initially, Whitebox’s ideal customer was a “challenger brand” whose business was mostly coming from Shopify, and who needed help as it expanded to Amazon and other marketplaces. But increasingly, the startup is also working with more traditional customers.

“Twenty-five years ago, if you wanted to buy a bottle of ketchup, you had to go to a store and discover a bottle of ketchup as you walked down the condiment aisle,” Startzel said. “Today, the store brands can no longer count on foot traffic, and they’re beginning to recognize how important it is on to be on e-commerce.”

As a result, Whitebox said it saw 40% quarter-over-quarter revenue growth in the first three months of 2020, followed by 78% growth in Q2. And its direct-to-consumer shipments grew 300% over the first half of the year.

Startzel also said that the company took “a very aggressive and conservative approach” to managing its fulfillment facilities during this period — aggressive in the sense that it wanted to ensure that there was no disruption in shipments, conservative in its efforts to make sure the facilities were safe.

The Series B was led by Alan Taetle of Noro-Moseley Partners, with participation from TDF Ventures, TCP Venture Capital’s Propel Baltimore Fund, Merkle global chairman David Williams and Millennial Media co-founder Chris Brandenburg.

“Whitebox remains a leader in this extremely busy and competitive space, and is uniquely positioned to see continued growth,” Taetle said in a statement. “The team has built a technology platform that not only expands the tools and insights that brands need to manage their sales and fulfillment processes from top to bottom, but also powers the larger e-commerce economy by eliminating marketplace complexities. Our investment signifies our confidence in Whitebox and the capabilities that we know the company can bring to the table for new and current customers.”

Startzel said the company will use the new funding to expand its sales and marketing teams, continue developing its technology platform and build out its fulfillment centers — it currently has centers in Baltimore (where Whitebox is headquartered), Las Vegas and Memphis, with plans to expand in the Midwest next year.

#ecommerce, #funding, #fundings-exits, #marcus-startzel, #noro-moseley-partners, #startups, #whitebox

0

Airship acquires SMS commerce company ReplyBuy

Airship is announcing that it has acquired mobile commerce startup ReplyBuy.

The startup (which was a finalist at TechCrunch’s 1st and Future competition in 2016) works with customers like entertainment venues and professional and college sports teams to send messages and sell tickets to fans via SMS. It raised $4 million in funding from Sand Hill Angels, Kosinski Ventures, SEAG Ventures, Enspire Capital, MRTNZ Ventures and others, according to Crunchbase.

Airship, meanwhile, has been expanding its platform beyond push notifications to cover customer communication across SMS, email, mobile wallets and more. But CEO Brett Caine said this is the first time the company is moving into commerce.

While sports and concerts tickets might not be a booming market right now, Caine suggested that the company is actually seeing increased purchasing activity “in and around the Airship platform” as businesses try to drive more in-app purchases. He also suggested that both the COVID-19 pandemic and increased restrictions on mobile data collection and ad targeting are going to “accelerate direct-to-consumer motion by large brands.”

Airship isn’t disclosing the deal price, but Caine said the seven-person ReplyBuy team will be joining the company, with CEO Brandon O’Halloran becoming Airship’s general manager of commerce and CTO Anthony Saia leading the commerce engineering team.

“Nobody directly connects more brands to mobile consumers than Airship,” O’Halloran said in a statement. “Joining Airship offers ReplyBuy the opportunity to serve the global market with a more comprehensive solution across more industries, and provide more valuable mobile customer experiences.”

Caine added, “These are really key roles, demonstrating the importance, in our view, of extending commerce to the customer engagement experience.”

He also said that Airship will continue to support ReplyBuy as a standalone product, while also integrating and extending its capabilities to other areas of the Airship platform.

“This one-to-one commerce at scale is a key part of the ReplyBuy solution,” he said. “We’re going to bring it into all the digital channels that Airship powers [to create] a seamless, fast, easy experience around commerce.”

#advertising-tech, #airship, #ecommerce, #enterprise, #fundings-exits, #mobile, #replybuy, #startups

0

Valar triples down on Petal, leading $55M Series C round into the credit card disruptor

Sometimes raising venture capital can be as simple as talking to your existing investor and having them wire over another check.

When we last caught up with Petal in January 2019, the startup was hot off its $30 million Series B round and was accelerating its mission to take on the world of credit cards. Petal’s core differentiation is that it looks at the cash flow of potential borrowers rather than traditional credit scores to assess creditworthiness, helping to identify underbanked users who have the ability to be trusted with a credit card, but lack the formal statistics to prove it.

Well, a lot has happened since then. COVID-19 hit, and along the way, the traditional credit score has been rent asunder as millions lost their jobs, had their hours cut back, and changed life circumstances. At the same time, federal stimulus relief in the form of direct payments to taxpayers actually led some credit scores to increase during the pandemic. All of this is to say that underwriting based on prospective cash flow has been a bit more attuned to reality rather than credit scores based on retrospective history.

Now, the New York City-headquartered startup is expanding, and netted a $55 million dollar Series C round led by Valar again, who not only led the company’s Series B, but also its $13 million Series A round back in 2018. This Series C round closed in April just after the COVID-19 pandemic got fully underway and is officially being announced today.

Valar, one of the many vehicles in the Peter Thiel capital universe, has staked its claim in the fintech world, backing companies like Even, Stash, N26, BlockFi, Point Card, and Taxfix. I asked Petal CEO Jason Gross his thoughts on why he took capital from his existing investors two more times, and his line was “if you’ve heard the expression, ‘if it ain’t broke don’t fix it.’” He continued, “Our view has been that if we already have a really great working relationship, and a lot of support and a dynamic that’s been successful in the boardroom, there’s no reason to necessarily change that.”

Gross said that the company’s model has allowed it to handle the storm of changes that have been underway this year. “It’s allowing us to make credit accessible at a period of time when legacy institutions — traditional banks and so on — are being forced to to pull back,” he said. “We’ve been able to continue to accurately understand what’s going on with the financial circumstances of our customers and applicants” allowing the company to “lean in” this year.

He noted the company has brought on “tens of thousands of customers” since the last time TechCrunch chatted with the company.

Petal has slightly tweaked the cosmetic design of the card. Photo via Petal.

Outside of fundraising and customer growth, the company has been busy. It launched a second office in Richmond, Virginia last year. It “has a really strong, kind of vibrant and emerging technology scene. It is the largest concentration of colleges in Virginia, and it also is a financial-services-heavy location,” Gross explained. Conveniently, it also shares the same time zone as NYC.

Back last September, the company raised $300 million from Jeffries as a debt facility to finance its credit card, and in February, it recruited Kaustav Das as its new chief risk officer. Das came from small business loan platform Kabbage, which was sold to American Express earlier this year following the heavy economic blow from the pandemic to small businesses across the country.

Petal is now about 100 employees, and the company has been operating entirely remotely since March. Gross says his goal for the next two years is to onboard “hundred of thousands of new customers.”

In addition to Valar, a huge miscellany of funds participated in the round, including “Rosecliff Ventures, Afore Capital, RiverPark Ventures, Great Oaks Venture Capital, GR Capital, Nelstone Ventures, Abstract Ventures, Ride Ventures, Gramercy Fund, Adventure Collective, Starta Ventures, and NFL star Kelvin Beachum, Jr.” The company has now raised about $100 million of equity capital all together.

#credit-cards, #finance, #fintech, #funding, #fundings-exits, #new-york-city, #petal, #startups, #valar-ventures

0

Snyk acquires DeepCode to boost its code review smarts

Switzerland-based machine learning code review startup DeepCode — which bills itself as ‘Grammarly for coders’ — has been acquired by Snyk, a post-unicorn valuation cybersecurity startup which is focused on helping developers secure their code.

Financial terms of the deal have not been disclosed. But the ‘big code’ parsing startup had only raised around $5.2M since being founded back in 2016, per CrunchBase — mostly recently closing a $4M seed round from investors including Earlybird, 3VC and btov Partners last year.

DeepCode CEO and co-founder Boris Paskalev confirmed the whole team is “eagerly” joining Snyk to continue what he couched as “the mission of making semantic AI-driven code analysis available for every developer on the planet”.

“DeepCode as a company will continue to exist (fully owned by Snyk), we will keep and plan to grow the Zurich office and tap into the amazing talent pool here and we will continue supporting and expanding the cutting-edge product offering for the global development community,” Paskalev told TechCrunch.

Asked whether DeepCode’s product will continue to exist as a standalone in the future or whether full assimilation into Snyk’s platform will include closing down the code-review bot it currently offers developers he said no decision has yet been taken.

“We are still to evaluate that in details but the main goal is to maintain/expand the benefits that we offer to all developers and specifically to grow the open-source adoption and engagement,” he said, adding: “Initially clearly nothing will change and the DeepCode product will remain as a standalone product.”

“Both companies have a very clear vision and passion for developer-first and helping developers and security teams to further reduce risk and become more productive,” Paskalev added.

In a statement announcing the acquisition Snyk said it will be integrating DeepCode’s technology into its Cloud Native Application Security platform — going on to tout the benefits of bolting on its AI engine which it said would enable developers to “more quickly identify vulnerabilities”.

“DeepCode’s AI engine will help Snyk both increase speed and ensure a new level of accuracy in finding and fixing vulnerabilities, while constantly learning from the Snyk vulnerability database to become smarter,” wrote CEO Peter McKay. “It will enable an even faster integration for developers, testing for issues while they develop rather than as an additional step. And it will further increase the accuracy of our results, almost eliminating the need to waste time chasing down false positives.”

Among the features that have impressed Snyk about DeepCode, McKay lauded code scanning that’s “10-50x faster than alternatives”; and what he described as an “exceptional developer UX” — which allows for “high precision semantic code analysis in real-time” because scanning is carried out at the IDE and git level.

In its own blog post about the acquisition of the ETH Zurich spin-off, the university writes that the AI startup’s “decisive advantage” is that ‘it has developed the first AI system that can learn from billions of program codes quickly, enabling AI-​based detection of security and reliability code issues”.

“DeepCode is an excellent example of a modern AI system that can learn from data, program codes in this case, yet remain transparent and interpretable for humans,” it adds.

The university research work underpinning DeepCode dates back to 2013 — when its co-founders were figuring out how to combine data-​driven machine learning methods with semantic static code analysis methods based on symbolic reasoning, per the blog post.

DeepCode’s tech currently reaches more than 4M contributing developers, with more than 100,000 repositories subscribed to its service.

#code-review, #cybersecurity, #deepcode, #developer, #eth-zurich, #europe, #fundings-exits, #machine-learning, #snyk, #startups

0

WeWork sells majority stake in Chinese entity, seeks localization

Four years after its foray into the Chinese market followed by rapid and cash-hemorrhaging expansion, WeWork decided to wind down its involvement in the country.

WeWork’s Chinese unit has secured a $200 million investment led by Shanghai-based equity firm Trustbridge Partners, which first backed WeWork China in its Series B round in 2018, the American co-working giant announced. What the release didn’t emphasize is that the latest financing effectively makes Trustbridge Partners the controlling shareholder, leaving WeWork with a minority stake in its Chinese entity.

The investment marks WeWork China’s transition from a subsidiary of a multinational into a Chinese-owned company — with a globally recognized brand, sort of like franchising.

WeWork China will continue its close cooperation with WeWork’s global headquarters to “ensure the consistency of the WeWork brand and satisfication of global members and employees,” a spokesperson said in a statement to TechCrunch.

Other changes are already underway, though. There have been layoffs as part of the sale and “many things remain uncertain,” said the person with knowledge of the matter. WeWork China declined to comment on the matter.

WeWork arrived in China at the height of the country’s co-working boom. Its brand, service and chic design have long attracted well-financed startups and open-minded big corps. Since 2016, more than 100 WeWork spaces have sprung up across 12 cities in China, including dozens it acquired from local rival Naked Hub. It now claims 65,000 members in the country.

It’s also launched a range of initiatives in China, including an on-demand service for customers who don’t want to commit to long-term leases, which could help drive in more revenue.

Globally, WeWork serves 612,000 members in 843 offices across 38 countries. China accounts for roughly one-eight of its locations, down from a share of one-sixth in 2018.

WeWork China is not only competing with cheaper, home-grown alternatives — both private and government-subsidized — but also dealing with a weakening economy in COVID-19 times and uncertain U.S.-China relations. Relinquishing operational control in a cash-burning market seems logical, given all the troubles it already faces back home.

Ahead of its planned initial public offering, which was later postponed, WeWork said trade policy uncertainty could have an adverse impact on its business. It also highlighted China, a lower-priced market, as a drag on its profit margin.

Following the investment, Trustbridge Partners will launch an extensive localization makeover for WeWork China, from “decision-making and management, product and business, through to operations and productivity,” said the WeWork China representative. The new owner will also seek partnerships with local communities, real estate firms and Chinese enterprises during the process.

WeWork China gets a new boss as a result of the sale. Michael Jiang, ann operating partner at Trustbridge Partners, will serve as the acting chief executive. Jiang was previously a senior vice presidnet at Meituan, China’s food delivery and on-demand services giant.

#asia, #china, #fundings-exits, #wework, #wework-china

0

Selling a startup can come with an emotional cost

Every founder dreams of building a substantial company. For those who make it through the myriad challenges, it typically results in an exit. If it’s through an acquisition, that can mean cashing in your equity, paying back investors and rewarding long-time employees, but it also usually results in a loss of power and a substantially reduced role.

Some founders hang around for a while before leaving after an agreed-upon time period, while others depart right away because there is simply no role left for them. However it plays out, being acquired can be an emotional shock: The company you spent years building is no longer under your control,

We spoke to a couple of startup founders who went through this experience to learn what the acquisition process was like, and how it feels to give up something after pouring your heart and soul into building it.

Knowing when it’s time to sell

There has to be some impetus to think about selling: Perhaps you’ve reached a point where growth stalls, or where you need to raise a substantial amount of cash to take you to the next level.

For Tracy Young, co-founder and former CEO at PlanGrid, the forcing event was reaching a point where she needed to raise funds to continue.

After growing a company that helped digitize building plans into a $100 million business, Young ended up selling it to Autodesk for $875 million in 2018. It was a substantial exit, but Young said it was more of a practical matter because the path to further growth was going to be an arduous one.

“When we got the offer from Autodesk, literally we would have had to execute flawlessly and the world had to stay good for the next three years for us to have the same outcome,” she said at a panel on exiting at TechCrunch Disrupt last week.

“As CEO, [my] job is to choose the best path forward for all stakeholders of the company — for our investors, for our team members, for our customers — and that was the path we chose.”

For Rami Essaid, who founded bot mitigation platform Distil Networks in 2011, slowing growth encouraged him to consider an exit. The company had reached around $25 million run rate, but a lack of momentum meant that shifting to a broader product portfolio would have been too heavy a lift.

#autodesk, #distil-networks, #enterprise, #entrepreneurship, #exit, #fundings-exits, #imperva, #ma, #plangrid, #saas, #security, #startups, #tc, #tracy-young

0

Kard raises another $3.5 million for its challenger bank for teens

French startup Kard has added $3.5 million (€3 million) to its seed round. The company already raised the same amount last year, which means that Kard has raised $7 million (€6 million) in total for its seed round.

Founders Future is leading the round, with Laurence Krieger, Michael Vaughan, Jon Oringer and Iris Mittenaere also participating.

Kard is building a challenger bank specifically designed for teenagers. When you create an account, you receive your own IBAN and a Mastercard debit card. You can block and unblock the card, you receive instant transaction notifications and you can send and receive money with other Kard users.

For the past year, the service has been completely free and 50,000 teenagers signed up. Starting today, Kard is switching to paid subscriptions for new users. Each family has to pay €4.99 per month or €49.90 per year to create a family account. After that, you can create as many account as you want — if you have two, three or four children, it still costs €4.99 per month.

With today’s change, Kard is also adding some additional features. Parents can download the Kard app and manage allowances from the app. You can schedule weekly or monthly transfers, block your child’s card and send money instantly by pairing a card with the app.

As for teenagers, Kard users now get a virtual card for online payments. As a Kard user, your smartphone is insured against screen damage (up to €100). There are now three different card designs as well — black, silver or pink.

The startup says that Apple Pay and Google Pay are on the roadmap, as well as money pots. There will be some personalized discounts in the app as well, which could open up a new revenue stream.

Kard competes with PixPay, Xaalys, Vybe, but also Revolut Junior, Lydia and services from traditional banks. Let’s see how the new pricing strategy affects Kard’s growth going forward.

#challenger-bank, #europe, #finance, #fundings-exits, #kard, #neobank, #startups

0

Palantir publishes 2020 revenue guidance of $1.05B, will trade starting Sept 30th

It’s been a long road for Palantir as it has submitted amendment after amendment with the SEC related to its S-1 filing over the past two months. But after weeks of back and forth, it’s official: Palantir’s S-1 has been marked effective, which means that it has been accepted by the SEC and its target market the NYSE and should be ready to go as the company heads toward a public direct listing.

The company will begin trading on Wednesday, September 30th, under the ticker PLTR. Palantir originally had planned to start trading today, but moved the date back to the 29th a few filings ago, and finally ended up with the 30th. It is not floating new stock, although the company effectively raised “IPO money” back in July of about $1 billion from the private markets.

Palantir yesterday also offered revenue guidance to fill out the rest of its calendar year. The company estimated it would target roughly $1.05 billion in revenue for 2020, with non-GAAP operating income (excluding stock-based compensation and some other major line items) of $116-126 million. It expects its head count to remain roughly flat, growing just 4%.

Palantir had revenue of $595 million in 2018 and $743 million in 2019 according to its S-1 filing. If it hits its new target revenue, that would be a growth rate of 41% from last year, an acceleration from the roughly 25% growth rate in the previous year. The company’s Q3 revenue is estimated to reach $278-280 million with a growth rate of 46-47%, according to the company’s projections. So it seems to be accelerating every so slightly in the back half of this year as customers presumably start ramping up their IT purchases following the global pandemic.

While we have talked extensively about Palantir’s woes on governance, the reality behind the company is reasonably decent: it’s a quick if not rapid growth company, predominantly in software rather than services, with a growing customer base including both government and enterprise customers. The company has very recently started to talk more about its Apollo product, which has helped it cut sales times and make more of its product self-service, or at least, reduced-service.

For comparison though, check out Snowflake, which is also in the data infrastructure space although a bit lower in the stack and just went public last week. In most of 2018 (the company has a Feb 1 fiscal calendar), the company generated $97 million in revenue, and then grew to an astonishing $265 million for most of 2019. Snowflake had a net loss of 131% of revenue, compared to Palantir, which had a net loss of 78% of revenue last year.

Snowflake was considered one of the best IPOs of the year, given its high net dollar retention rate, extremely rapid growth, and huge market size waiting to be tapped. Palantir is a much larger company in terms of revenues, but growing significantly slower, but with a bit better cash flow position, particularly in the last two years as it has made its operations much more efficient.

We’ll have to wait a week to see how the markets react. For now though, it looks like Palantir has gotten out of its own way and can finally start trading.

#finance, #fundings-exits, #ipo, #palantir-technologies

0

How Robinhood and Chime raised $2B+ in the last year

Last night Robinhood, the American fintech unicorn that provides free securities trading services to consumers via an app, announced that it raised an additional $460 million in its previously-known Series G. That round is now worth $660 million at an $11.7 billion post-money valuation.

A little over a month ago Robinhood announced that it had raised a $200 million Series G, bringing its valuation to $11.2 billion at the time.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


The company previously raised a two-part Series F this year, worth $600 million, bringing its total capital raised to well north of the $1 billion mark for the year.

But Robinhood is not alone in posting such epic fundraising numbers.

American neobank Chime rode the pandemic-induced general savings-and-investing boom, raising a $485 million Series F a few days ago. That round came less than a year after Chime had raised a mammoth Series E last December.

Two different American fintech giants each raised more than $1 billion in under a year. That’s quite the feat. This morning as a refresher for us both, we’re going over what we know about recent growth from each company, as those metrics should help us understand why the two former startups are worth so damn much money.

Growth

We begin with Chime, which raised back in December of 2019. Around that time there were a grip of stories written about the company that included estimates of its revenue scale in the year:

The CNBC number was the last to be reported, meaning that was probably the most accurate. But each included lots of growth. The $200 million revenue figure was still a quadrupling compared to Chime’s 2018 result, according to the same Forbes story.

#chime, #finance, #fintech, #fundings-exits, #robinhood, #startups, #the-exchange

0

Endel raises $5M to create personalized ‘sound environments’ that improve productivity and sleep

The pitch for Berlin-based Endel is pretty straightforward, according to its co-founder and CEO Oleg Stavitsky.

“The way I usually describe Endel is: This is a technology that is built to help you focus, relax and sleep,” Stavitsky told me. “Of course, the way we do that is a little more complicated than that.”

The startup is announcing today that it has raised $5 million in Series A funding led by Kevin Rose of True Ventures, with participation from SleepScore Ventures, Techstars Ventures (Endel was part of the Techstars Music Accelerator), Impulse Ventures, Plus 8 Equity Partners, Waverley Capital, Amazon Alexa Fund, Target Global and various angel investors.

Stavitsky said that the team prevously worked together on children’s app company Bubl. After selling Bubl, Stavitsky said they began to explore the opportunities around sound — after all, he noticed the growth of playlists designed to help with things like sleep and focus, as well as the growth in mindfulness apps.

“When we started, we said, ‘Let’s just build this machine that can generate ambient music,’” he recalled. But he said that as the team did more research, they realized, “It has to be personalized. It cannot just be one song or one playlist or one soundscape. It really depends on the space you’re in.”

So that’s essentially what Endel has built. The startup says its Endel Pacific technology creates “sound environments” designed for your needs — whether that’s focusing, sleeping, relaxing or just when you’re on-the-go. Those environments are shaped, in part, by things like the time of day and the weather, as well as the user’s heart rate and motion.

Endel ecosystem

Image Credits: Endel

Rose said he was excited by “this idea of the closed loop system that uses real-time feedback to manipulate and change the body in a very positive way.” And he emphasized that Endel is “backed by science.”

Stavitsky said Endel’s approach draws a several areas of science, including research around circadian rhythms (so that it complements where you are in your daily sleep cycle), the pentatonic scale (so that its sounds are pleasant) and sound masking (so that you’re less likely to hear anything distracting).

The company is working with partners to do more to validate the science behind its approach, but it says it’s already applied the experience sampling method developed by psychologist Mihaly Csikszentmihalyi (who developed and wrote the book on the concept of flow) to show that its sound environments can lead to a 6.3x increase in concentration and a 3.6x decrease in anxiety.

I tried it out myself, listening to Endel’s mix of soothing music and white noise as I working yesterday (including, of course, as I was writing this post). I won’t claim that I felt a dramatic increase in energy or focus, but as time went on, I noticed was working for a longer period of time than I normally do without getting distracted.

Oleg Stavitsky

Endel CEO Oleg Stavitsky

The startup has released apps for iOS, Apple Watch, macOS, Amazon Alexa, and Android, and it has been downloaded nearly 2 million times. A subscription costs $29.99 per year.

Stavitsky said Endel is also building a significant business around partnerships, for example by working with Japan’s ANA Airlines to feature its technology on planes, and there are supposedly deals with automakers and smart speaker manufacturers as well.

The startup has also signed a deal with Warner Music to algorithmically create songs and albums. Stavitsky said he’s hoping to do more work with musicians, so that when they release new music, there can be a traditional album but also “a functional, adaptive album that is available to you as a soundscape when you have to work, when you want to go to sleep.”

“The big vision is to ultimately go beyond sound,” he added — starting with an Apple TV app due later this year that incorporates video.

Endel has now raised a total of $7.1 million.

#apps, #endel, #funding, #fundings-exits, #health, #kevin-rose, #mobile, #oleg-stavitsky, #startups, #tc, #true-ventures

0

Singapore-based Syfe, a robo-advisor with a human touch, raises $18.6 million led by Valar Ventures

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Syfe, a Singapore-based startup that wants to make investing more accessible in Asia, announced today that it has closed a SGD $25.2 million (USD $18.6 million) Series A led by Valar Ventures, a fintech-focused investment firm.

The round also included participation from Presight Capital and returning investor Unbound, which led Syfe’s seed funding last year.

Founded in 2017 by chief executive officer Dhruv Arora, Syfe launched in July 2019. Like “robo-advisors” Robinhood, Acorns and Stash, Syfe’s goal is to make investing more accessible. There is no minimum amount required to start investing and its all-inclusive pricing structure ranges from .4% to .65% per year.

Syfe serves customers based in 23 countries, but currently only actively markets it services in Singapore, where it is licensed under the Monetary Authority of Singapore. Part of its new funding will be used to expand into new Asian countries. The startup hasn’t disclosed its exact user numbers, but says the number of its customers and assets under management have increased tenfold since the beginning of the year, and almost half of its new clients were referred by existing users.

Other Valar Ventures portfolio companies include TransferWise, Xero and digital bank N26. In a statement about Syfe, founding partner Andrew McCormack said, “The potential of Asia as a region, with a fast-growing number of mass-affluent consumers aiming to grow their wealth, combined with the pedigree of the team and strong traction, makes Syfe a very compelling opportunity.”

Before starting Syfe, Arora was an investment banker at UBS Investment Bank in Hong Kong before serving as vice president of product and growth at Grofers, one of India’s largest online grocery delivery services. While at UBS, Arora worked with exchange-traded funds, or ETFs.

“I could see how a lot of institutions and some ultra-high-net worth individuals who are clients of the bank were using the product, and I thought it was a great tool for individuals, too,” Arora told TechCrunch. “But what I realized was that people are actually not very aware of how to use ETFs.”

In many Asian countries, people prefer to put their money away in bank accounts or invest in real estate. As interest rates and property prices stagnate, however, consumers are looking for other ways to invest. Syfe currently offers three investment products. The first is a global diversified portfolio with a mix of stocks, bonds and ETFs that is automatically managed according to each investor’s chosen risk level. The second is a REIT portfolio based on the Singapore Exchange’s iEdge S-REIT Leaders Index. Finally, Syfe’s Equity100 portfolio consists of ETFs that include stocks from more than 1,500 companies around the world.

Other Asia-focused “robo-advisor” services include Stashaway and Kristal.ai, and Grab Financial also recently announced a “micro-investment” product. Arora acknowledges that in the future, there may be more entrants to the space. Right now, however, Syfe’s main competitor is the mindset that banks are still the best way to save money, he added. Part of Syfe’s work is consumer education, because “it was culturally ingrained in a lot of us, myself included, to keep your money in the bank.”

Syfe differentiates with a team of financial advisors, including former employees of Goldman Sachs, Citibank and Morgan Stanley, who are on hand for user consultations. Arora said most Syfe users talk to advisors when they first join the platform, and about 20% of them continue using the service. Questions have included if people should use a credit card to invest, which Arora said advisors dissuade them from doing because of high interest rates.

“We definitely want to be a tech-first platform, but we understand there is a value, especially as you deal with some of the older audiences who are in their 50s and 60s, who are still adapting to these technologies,” he said. “They need to know that you know there is somebody out there to look after their products.”

While Syfe’s average user is aged between 30 to 45, one growing bracket is people in their 50s who are motivated to save for retirement, or want to create a supplement to their pension plan. Users typically start with an initial investment of about SGD $10,000 (about USD $7,340), and about four out of five users regularly top up that amount.

Some users have tried other investment products, like investment-linked insurance plans, but for many, Arora says Syfe is their first introduction to investing in stocks, bonds and ETFs.

“We’ve realized that a fair number of them are quite well-to-do professionals in their field, in their mid- to late 30s, who amassed a significant amount of wealth but never really had a chance to invest, or the right advice on how to invest,” said Arora. “I think this has been one of the biggest revelations for us and it made us realize we should have a human touch in our platform.”

The platform manages its products with a mix of an investment team and algorithms that help avoid human bias, said Arora. Syfe’s algorithms take into account growth versus value, the market cap of a stock, volatility and sector momentum. To balance risk, it also analyzes how individual assets correlate with other assets in the same portfolio.

Arora said Syfe is currently in advanced talks with regulators in several countries and expects to be in at least two new markets by the end of next year. It also plans to double the size of its team and create more consumer financial products.

During COVID-19, Arora said Syfe’s portfolios experienced significantly lower corrections than indexes like the S&P, so only a few users withdrew their money. In fact, many invested more.

“I feel people have been rethinking their finances and the future,” he said. “As banks cut interest rates across the world, including in Singapore, many of them have started looking at other options.”

#apps, #asia, #finance, #fintech, #fundings-exits, #investing, #robo-advisor, #singapore, #southeast-asia, #startups, #syfe, #tc

0

TransferWise reports accelerating revenue growth to 70% in its March, 2020 fiscal year

TransferWise, a European fintech unicorn, announced the financial results of its fiscal year ending March, 2020.

The company posted strong growth, continued profit and new customer records. TransferWise was most recently valued at $5 billion during a secondary sale worth $319 million in July of this year.

On the results front, we can compare the company’s March 2020 year to its March 2019 year, the results of which we also have available. Here are the nuts and bolts, picking from the provided metrics to share the most material:

  • TransferWise fiscal 2020 revenue: £302.6 million, up 70% from its fiscal 2019 result of £179 million. That’s a venture-level revenue result from a mature company that is self-powering.
  • TransferWise grew more quickly in its March 2020 year than in its March 2019 year, when it managed a slower 53% growth rate per the company. Accelerating revenue growth at this scale is very valuable.
  • TransferWise managed a fourth year of consecutive profitability, generating £21.3 million in “net profit after tax” for the March 2020 fiscal year. The company first started generating profit “since 2017” per its own release, which we presume means the year ending March 2017.
  • The company reported that it now has 8 million worldwide customers, up from 6 million in the preceding fiscal year. That’s 33% growth.
  • The pace at which business customers sign up for TransferWise appeared to include slower growth, moving from 10,000 per month in the March 2019 year to “over 10,000” in its most recent release.
  • TransferWise processed £42 billion in “cross currency transfers,” or around 63% of its total processing volume of £67 billion.

Instead of merely shouting at this point that TransferWise should go public, as it is providing granular data on its performance we’re already somewhat sated. More notes on gross margins would be good, for example, but this level of transparency is still welcome.

Turning to future growth, TransferWise stated in a release that APAC is the company’s “fastest growing region.” Its U.S. business was worth around a fourth of its March 2020 year’s revenue. Europe was just over half for the same period.

The company’s ability to pay for its own growth means that it has not raised money for some time. Indeed, the last equity round that we have on the company is its November, 2017 investment. That capital was $280 million raised at a $1.3 billion pre-money valuation in a deal led by Merian Global Investors and IVP. Since then the company has sold secondary shares from time to time.

That should lessen internal demands for a traditional liquidity event, but not quash them altogether. The unavoidable question is why not go public when the firm already reports so much public performance data. On the other hand, when a company needs no capital, it need not accept advice, either.

Regardless, TransferWise shows that fintech can make money after all.

#europe, #fundings-exits, #ivp, #startups, #tc, #transferwise

0

Despite a rough year for digital media, Blavity and The Shade Room are thriving

Last week at TechCrunch Disrupt, TechCrunch media and advertising reporter Anthony Ha sat down with Blavity CEO Morgan DeBaun and The Shade Room CEO Angelica Nwandu to chat about their respective media companies, 2020 in the media world and how they view a recent conversation inside of media to hire and retain more diverse workforces.

Blavity is a network of online publications focused on Black audiences across verticals like politics, travel and technology. To date, the company has raised $9.4 million, according to Crunchbase data.

The Shade Room is an Instagram-focused media company that publishes hourly updates on national news, celebrity updates and fashion. Focused on the Black perspective, The Shade Room has attracted more than 20 million followers on Instagram and comments on issues of importance during key national moments.

During her conversation with Ha, Nwandu said that during the Black Lives Matters protests, The Shade Room was akin to a Black CNN.

With both companies founded in 2014, both CEOs have kept their media startups alive during a particularly difficult period. In the last six years, many media brands have shuttered, sold, slimmed or slunk away to the ash heap of history.

#blavity, #fundings-exits, #media, #startups, #tc, #techcrunch-disrupt, #the-shade-room

0

Mirakl raises $300 million for its marketplace platform

French startup Mirakl has raised a $300 million funding round at a $1.5 billion valuation — the company is now a unicorn. Mirakl helps you launch and manage a marketplace on your e-commerce website. Many customers also rely on Mirakl-powered marketplaces for B2B transactions.

Permira Advisers is leading the round, with existing investors 83North, Bain Capital Ventures, Elaia Partners and Felix Capital also participating.

“We’ve closed this round in 43 days,” co-founder and U.S. CEO Adrien Nussenbaum told me. But the due diligence process has been intense. “[Permira Advisers] made 250 calls to clients, leads, partners and former employees.”

Many e-commerce companies rely on third-party sellers to increase their offering. Instead of having one seller selling to many customers, marketplaces let you sell products from many sellers to many customers. Mirakl has built a solution to manage the marketplace of your e-commerce platform.

300 companies have been working with Mirakl for their marketplace, such as Best Buy Canada, Carrefour, Darty and Office Depot. More recently, Mirakl has been increasingly working with B2B clients as well.

These industry-specific marketplaces can be used for procurement or bulk selling of parts. In this category, clients include Airbus Helicopters, Toyota Material Handling and Accor’s Astore. 60% of Mirakl’s marketplace are still consumer-facing marketplaces, but the company is adding as many B2B and B2C marketplaces these days.

“We’ve developed a lot of features that enable platform business models that go further than simple marketplaces,” co-founder and CEO Philippe Corrot told me. “For instance, we’ve invested in services — it lets our clients develop service platforms.”

In France, Conforama can upsell customers with different services when they buy some furniture for instance. Mirakl has also launched its own catalog manager so that you can merge listings, add information, etc.

The company is using artificial intelligence to do the heavy-lifting on this front. There are other AI-enabled features, such as fraud detection.

Given that Mirakl is a marketplace expert, it’s not surprising that the company has also created a sort of marketplace of marketplaces with Mirakl Connect.

“Mirakl Connect is a platform that is going to be the single entry point for everybody in the marketplace ecosystem, from sellers to operators and partners,” Corrot said.

For sellers, it’s quite obvious. You can create a company profile and promote products on multiple marketplaces at once. But the company is also starting to work with payment service providers, fulfillment companies, feed aggregators and other partners. The company wants to become a one-stop shop on marketplaces with those partners.

Overall, Mirakl-powered marketplaces have generated $1.2 billion in gross merchandise volume (GMV) during the first half of 2020. It represents a 111% year-over-year increase, despite the economic crisis.

With today’s funding round, the company plans to expand across all areas — same features, same business model, but with more resources. It plans to hire 500 engineers and scale its sales and customer success teams.

#ecommerce, #enterprise, #france-newsletter, #fundings-exits, #marketplace, #mirakl, #startups

0

Join Accel’s Andrew Braccia and Sonali De Rycker for a live Q&A today at 2 pm EDT/11 am PDT

Disrupt was just days ago, but the TechCrunch crew is continuing our regular series of public chats with leading founders and venture capitalists under the Extra Crunch Live banner.

Today, we’re excited to host Andrew Braccia and Sonali De Rycker from Accel. The pair of investors will join us for a live Q&A at 2 p.m. Eastern time today (11 a.m. Pacific, 8 p.m. CET). Links and details are down below.

As discussed last week when we announced the session, there’s a lot to get to. Braccia led Slack’s Series A, which means we’ll need to discuss remote work, the direct listing debate and modern SaaS stuff. And with De Rycker we’ll dig into what she’s seeing in Europe and how the two startup markets compare in today’s evolving markets.

(If you are just catching up to Extra Crunch Live, we’ve been hosting live discussions since the early COVID-19 days here in the United States with folks like Mark CubanPlaid founder Zach Perret and Sequoia’s Roelof Botha taking part.)

I’ve also been thinking about India (Accel raised a fifth India fund in 2019), which will be worth talking about a little bit even if neither of our guests primarily focuses on the country. And if we have time, it would even be good to get their feelings and reactions to the TikTok mess.

But, before we get into the more exotic areas of conversation we’ll power through the nuts-and-bolts stuff that founders want to know: How active Accel is today, what size checks it is currently writing, its sector focuses and the like. Given that we have a full hour if we want it, we’ll be able to cover a lot of ground.

Be sure to bring your own questions, and I’ll do my best to get to them as we chat.

It should prove to be a good, and, I hope, useful conversation that I am looking forward to hosting. Login details follow for Extra Crunch folks, and you can snag a cheap trial here if you need access.

(If you want to pre-submit a question, you can tweet it at me, but after the actual livestream kicks off I will no longer be checking Twitter. Get them in now, in other words.)

Details

0

How has Corsair Gaming posted such impressive pre-IPO numbers?

After the last few weeks of IPOs, you’d be forgiven if you missed Corsair Gaming’s own public offering.

The company is not our usual fare. Here at TechCrunch, we care a lot of about startups, usually technology startups, which often collect capital from private sources on their way to either the bin, an IPO, or a buyout.

Corsair is some of those things. It is a private company that builds technology products and it has raised some money while private. But from there it’s a slim list. The company was founded in 1994, making it more a mature business than a startup. And it sold a majority of itself to a private equity group in 2017, valued at $525 million at the time.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Fair enough. But flipping through the company’s S-1 filings this morning over coffee, I was impressed all the same and want to walk you through a few of the company’s numbers.

If you care about the impending public debuts of Asana (more here) and Palantir (more here) that we expect next week, Corsair will not provide much directional guidance. But its IPO will be a fascinating debut all the same.

Corsair has managed to stay in the gaming hardware world since I was in short pants, and, even better, has managed to turn the streaming boom into material profit. Its S-1 is an interesting document to read. So let’s get into it, because Corsair Gaming is expected to price later today and trade tomorrow morning.

A gaming giant

As with any private-equity-backed IPO, the company’s SEC filings are a mess of predecessor and successor companies, along with long sections that, once you boil them down, ensure that the private equity firm will retain control.

But once you parse the firm’s numbers, here’s the gist from the first six months of 2020:

#corsair-gaming, #fundings-exits, #gaming, #saas, #startups, #tc, #the-exchange

0

Morgan Beller, co-creator of the Libra digital currency, just joined the venture firm NFX

Morgan Beller, who is a co-creator of the proposed Libra digital currency, along with Facebook vice presidents David Marcus and Kevin Weil, has left the company to become a general partner with the venture firm NFX .

In a call yesterday, she said she first became acquainted with the San Francisco-based outfit five years ago when on a “tech trek” to Israel, she met its local partner, Gigi Levy-Weiss, and formed a friendship with him.

At the time, she was a young partner at Andreessen Horowitz, working on its deal team after graduating from Cornell as a statistics major.

A role working on corporate development and strategy at Medium would follow, then it was on to Facebook in 2017, where Beller began in corporate development and — intrigued by cryptocurrency tech — where she quickly began evangelizing to her bosses the importance of better understanding it.

As she half-jokingly explains it, “Crypto is a mental virus for which there is no cure. I was at a16z when they got infected with the crypto virus.” She eventually caught it herself, and by the time she joined Facebook, she says she “realized no one was thinking about that space full time, so I took it upon myself to [help the company] figure out its point of view.”

Indeed, a CNBC story about Beller last year reports that at one point, she was the sole person on a Facebook blockchain initiative —  meeting with those in the know, attending relevant events, and otherwise researching the technology. Bill Barhydt, the CEO of the digital wallet startup Abra, told the outlet of Beller:  “I give her a lot of credit for taking what seems like a very methodical, long-term approach to figuring this out.”

All that said, Beller notes that as a full-time investor with NFX, she will not be focused exclusively or even mainly on crypto. Her focus instead will be finding and helping to cultivate seed-stage startups that aim to grow so-called network effects businesses.

It’s the broad theme of NFX, a now 25-person outfit cofounded five years ago by serial entrepreneurs who have all seen their companies acquired, including Levy-Weiss (who cofounded the online travel site Lastminute.com, and the social casino game publisher Playtika); Pete Flint (cofounder of the home buyers’ site Trulia); and James Currier (of the social network Tickle).

Certainly, she will keep busy at the firm, she suggests. As part of getting to know the partners and their thinking better, she introduced them to one company that they have since funded.

The pace has generally picked up, Flint tells us, saying that during the second quarter of this year and the third, NFX has twice broken its own investing records both because of “incredible founders who are reacting to this opportunity” and growing awareness about NFX, which last year closed its second fund with $275 million.

Last month, for example, NFX led a seed round for Warmly, a nine-month-old, San Francisco-based startup whose product tracks individuals in a customer’s CRM system, then sends out a notification when one of his or her contacts changes jobs. It also led a round recently for Jupiter, a year-old, San Francisco-based grocery delivery startup.

Naturally, Beller’s new partners are full of praise for her. Flint says the firm began looking for a fourth partner two years ago and that it has “spoken with dozens of exceptional people” since then, but it “always came back to Morgan.”

As for why the 27-year-old is ready to leap back into VC, Beller says that her work across Facebook and Medium and a16z “made me realize my favorite parts of projects is that zero-to-one phase and that with investing, it’s zero-to-one all day” with a team she wanted to be part of.

Further, she adds, while at Facebook, she was helping scout out deals for the venture firm Spark Capital, so she’s already well-acquainted with the types of founders to which she gravitates. “They’re are all weird in the right ways, and they’re all maniacally obsessed with winning.”

As for how she launches her career as a general partner in a pandemic, she notes that she loves walking and that she’ll happy cover 20 miles a day if given the opportunity.

“If anyone wants to safely walk with me,” she suggests that she’d love it.  Says Beller, “I’m not worried about San Francisco longer term. I don’t think there’s a replacement for in-person meetings.”

#andreessen-horowitz, #cryptocurrencies, #facbook, #fundings-exits, #libra, #medium, #nfx, #novi, #recent-funding, #spark-capital, #startups, #tc, #venture-capital

0

Pure Watercraft ramps up its electric outboard motors with a $23M series A

Electric power only started making sense for land vehicles about ten years ago, but now the technology is ready to make the jump into the water. Pure Watercraft hopes that its electric outboard motor can replace a normal gas one for most boating needs under 50 HP — and it just raised $23.4M to hit the throttle.

Pure’s outboard works much like a traditional one, but runs on a suitcase-sized battery pack and is, of course, almost silent except for the sound of the turbulence. It’s pretty much a drop-in replacement for an outboard you’d use on a 10-20 foot boat meant for fishing or puttering around the lake, though the price tag looks a little different.

Founder and CEO Andy Rebele started the company in 2011, and it turns out they had shown up a bit early to the party. “The Model S had not yet been released; the plan of making boats electric was not really fundable,” he told me.

Rebele kept the company going with his own money and a bit of low-key funding in 2016, though he admits now that it was something of a leap of faith.

“You have to bet that this small market will become a big market,” he said. “We developed our entire battery pack architecture, and it took — it’s obvious at this point — millions of dollars to get where we are. But our investors are buying into a leader in the electrification of an entirely new sector of transportation that hasn’t gotten the same attention as cars and trucks.”

A boat with an electric outboard motor cruising on a lake.

Image Credits: Pure Watercraft

They haven’t been wasting time. Pure claims an energy density — how much power is packed into every kilogram — of 166 watt-hours per kilogram, meeting industry leader Tesla and beating plenty of other automotive battery makers. Users can easily add on a second pack or swap in a fresh one. The cells themselves are sourced from Panasonic, like Tesla’s and many others are, but assembling them into an efficient, robust, and in this case waterproof pack is something a company can still do better than its competition.

Having plenty of power is crucial for boats, since they use up so much of it to fight against the constant resistance of the water. The amount of power it takes to go a kilometer in a car is a fraction of what it takes to do so in a boat. Even boats designed for electric from the ground up, like those from Zin, face fundamental limits on their capabilities simply because of physics.

Rebele is aiming for the allure of simplicity. “The most popular outboard motor in the world is 40 horsepower,” he pointed out, and a replacement for that type of motor is exactly what Pure makes. “The mistake car companies made was saying, here’s the electric car market; it’s small, we tried it,” he said. Then Tesla came along with a great car that just happened to be electric.

It’s the same with boating, he suggested — sure, there are lots of different kinds of boats, and motors, and hull materials, and so on. But if Pure offers a motor that’s just as good or better than what powers a huge number of small boats, and just happens to be electric, it starts to sell itself.

Pure Watercraft's battery box.

Image Credits: Pure Watercraft

“We can’t count on people picking our product to save the world,” Rebele said. “The tipping point comes when you have a critical mass of people for whom a good selfish choice is to go electric.”

The benefits, after all, are easy to enumerate: It’s silent, which is great for fishing or social boating; It fills up for a buck or two at any outlet; It’s extremely low maintenance, having vastly fewer parts than a tiny gas engine; And of course it doesn’t spew fumes and particulates into the water and air like most of the depressingly dirty motors currently in use.

The only real advantage left to gas is initial cost and range. If you’re willing to spend some money for a better product, then cost isn’t as much of an issue. And if like most boaters you’re only going to ever go a few miles per trip, the range isn’t an issue. If you’re fishing or just cruising around a lake, it’ll last you all day. The people for whom electric isn’t an option will quickly realize that, while the others will find it increasingly hard to resist the idea.

Pure Watercraft's electric outboard motor lifted out of the water

Image Credits: Pure Watercraft

There’s still a good amount of sticker shock. A good new outboard in the 20-50 HP range runs a few thousand dollars to start, and marine gas costs add up quick; the Pure motor comes in a combo deal with the charger system and one battery pack for $16,500 (additional packs cost about $8,000). They’re working with some boat manufacturers to do complete boat deals for 30 grand or less, but it’s still firmly in the high end for the “outboard on a 2-6 person boat” crowd.

The $23.4 million A round, led by L37 and a number of individuals (including some Amazon execs and , is aimed squarely at spinning up production. After implementing the changes to the “beta” product they’ve been testing with, the first thousand Pure motors will be built in Seattle, where the company is based. The company has essentially finished R&D, so there’s little question of putting off customers for a few years while the product is engineered — and Rebele said they had no intent to build another for now.

“We make this product, at this power level, and that’s all,” he said. The company’s focus makes for good engineering and, hopefully, good margins. Pure should be shipping its motors in time for the 2021 boating season.

#electric-boats, #electric-vehicles, #funding, #fundings-exits, #gadgets, #hardware, #pure-watercraft, #recent-funding, #startups, #tc, #transportation

0

China’s electric carmaker WM Motor pulls in $1.47 billion Series D

Chinese electric vehicle startup WM Motor just pocketed an outsize investment to fuel growth in a competitive landscape increasingly coveted by foreign rival Tesla. The five-year-old company raised 10 billion yuan ($1.47 billion) in a Series D round, it announced on Tuesday, which will pay for research and development, branding, marketing and expansion of sales channel.

WM Motor, backed by Baidu and Tencent, is one of the highest funded EV startups in China alongside NIO, Xpeng and Li Auto, all of which have gone public in New York. With its latest capital boost, WM Motor could be gearing up for an initial public offering. As Bloomberg’s sources in July said, the company was weighing a listing on China’s Nasdaq-style STAR board as soon as this year.

Days before its funding news, WM Motor unveiled its key partners and suppliers: Qualcomm Snapdragon’s cockpit chips will power the startup’s in-cabin experience; Baidu’s Apollo autonomous driving system will give WM vehicles self-parking capability; Unisplendour, rooted in China’s Tsinghua University, will take care of the hardware side of autonomous driving; and lastly, integrated circuit company Sino IC Leasing will work on “car connectivity” for WM Motor, whatever that term entails.

It’s not uncommon to see the new generation of EV makers seeking external partnerships given their limited experience in manufacturing. WM Motor’s rival Xpeng similarly works with Blackberry, Desay EV and Nvidia to deliver its smart EVs.

WM Motor was founded by automotive veteran Freeman Shen, who previously held executive positions at Volvo, Fiat and Geely in China.

The startup recently announced an ambitious plan for the next 3-5 years to allocate 20 billion yuan ($2.95 billion) and 3,000 engineers to work on 5G-powered smart cockpits, Level-4 driving and other futuristic auto technologies. That’s a big chunk of the startup’s total raise, which is estimated to be north of $3 billion, based on Crunchbase data and its latest funding figure.

Regional governments are often seen rooting for companies partaking in China’s strategic industries such as semiconductors and electric cars. WM Motor’s latest round, for instance, is led by a state-owned investment platform and state-owned carmaker SAIC Motor, both based in Shanghai where the startup’s headquarters resides. The city is also home to Tesla’s Gigafactory where the American giant churns out made-in-China vehicles.

In July, the Chinese EV upstart delivered its 30,000th EX5 SUV vehicle, which comes at about $22,000 with state subsidy and features the likes of in-car video streaming and air purification. The company claimed that parents of young children account for nearly 70% of its customers.

#asia, #automotive, #china, #electric-vehicle, #ev, #funding, #fundings-exits, #wm-motor

0

The Peloton effect

During the most recent quarter, only a few earnings reports stood out from the rest. Zoom’s set of results were one of them, with the video-communications company showing enormous acceleration as the world replaced in-person contact with remote chat.

Another was Peloton’s earnings from the fourth quarter of its fiscal 2020, which it reported September 10th. The company’s revenue and profitability spiked as folks stuck at home turned to the connected fitness company’s wares.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Shares of Peloton have rallied around 4x since March, roughly the start of when the COVID-19 pandemic began to impact life in the United States, driving demand for the company’s at-home workout equipment. And in late June, athleisure company Lululemon bought Mirror, another connected fitness company aimed at the home market for around $500 million.

With Peloton’s 2019 IPO and its growth along with Mirror’s exit in 2020, connected fitness is demonstrably hot, and private-market investors are taking notice. A recent Tweet from fitness tech watcher Joe Vennare detailing a host of recent funding rounds raised by “digital fitness” companies made the point last week, piquing our curiosity at the same time.

Is there really some sort of Peloton effect driving private investment into lots of connected fitness startups? How hot is the more nascent side of connected fitness?

This morning let’s take a look through some recent funding rounds in the space to get a feel for what’s going on. (If you’re a VC who cares about the sector, feel free to email in your own notes, subject line “connected fitness” please.) We’ll then execute the same search for Q3 2019 and see how the data compares.

Hot Wheels

To start with the current market I pulled a Crunchbase query for all Q3 funding rounds for companies tagged as “fitness” and then filtered out the cruft to get a look at the most pertinent funding events.

Here’s what I came up for for Q3 2020, to date:

0

Illumina buying cancer-screening spinout Grail in blockbuster $8B biotech deal

Biotech has become one of the hottest areas of venture investment in recent years, as progress in machine learning, genetics, medical devices, and biology fuse together into new products for the gargantuan health industry.

Case in point: Grail, which began in 2016 as a spinoff from genetic sequencing giant Illumina and co-founded by longtime Google executive Jeff Huber (who was involved in the creation of the company’s experimental laboratory Google[x]), is now being spun back in to the tune of an $8 billion acquisition announced this morning.

Illumina originally invested $100 million in the spinout, and Grail would go on to raise more than a billion dollars in funding from prominent biotech firm ARCH, one of China’s top VCs Hillhouse Capital, among many others according to Crunchbase.

Grail’s technology was designed to use modern genetic sequencing tools coupled with data science to detect cancer earlier than other competing products on the market.

As we discussed on TechCrunch back in 2017 when the company raised $900 million, “while liquid biopsies to detect cancer aren’t anything new and GRAIL will have to compete with several other contenders both large and small, the technology to take a blood sample and detect the early, free-floating cancer DNA floating in your bloodstream is revolutionary in the industry and only made possible through new DNA sequencing machinery.”

Cancer screening is a $100 billion market and growing rapidly, particularly internationally as countries like China and India develop economically and more patients require active screening. Detecting cancer early is pivotal for reducing mortality risk, and so Grail’s promise was to offer the “holy grail” (couldn’t help myself) for saving these lives. According to the U.S. government, roughly 600,000 people will die this year from cancer, and it is a leading cause of death.

As part of the deal, Grail will receive $3.5 billion in cash, with another $4.5 billion earmarked for Illumina stock. The company set a deadline of December 20th for consummating the acquisition, at which point Illumina will begin offering Grail $35 million per month in cash payments until the deal closes. The two companies have signed a $315 million merger termination agreement as part of the deal.

The acquisition is subject to customary regulatory review.

#biotech, #fundings-exits, #google, #grail, #health, #illumina, #jeff-huber, #ma

0

In its 5th filing with the SEC, Palantir finally admits it is not a democracy

Palantir is not a democracy, and it really, really, really wants you to know that.

Palantir’s governance has been under an exacting lens from regulators the past few weeks as it prepares for a public direct listing on September 29th. In revision after revision of its S-1 filing to the SEC — now totaling eight including its draft registration statements — the company has had to continuously explain and re-explain what exactly it is trying to do to prevent retail investors from controlling the company.

Little surprise then that its 5th amended S-1 filing, published this morning, shows even more disclosures about the pitifully small governance control that retail investors will have upon the company’s public market debut.

In a newly added line, the company admits that “holders of our Class A common stock [i.e. the stock that will trade on NYSE starting September 29th] will hold approximately 3.4% of the voting power of our outstanding capital stock.”

“Voting power” is clearly very important to regulators — the term is now used 168 times in Palantir’s latest amended S-1 filing, up from just 58 in its original filing just a few weeks ago. In fact, take a look at this amazing chart on just how much Palantir has had to explain voting power to regulators over the past few weeks in filing after filing:

Indeed, just to prove how much voting power retail investors are giving up, the company published another column to its infamous founder-ownership table that I discussed at length on Friday. As part of the three-class voting share structure Palantir is using, its founders will retain outsized voting control of the company through what are known as Class F or founders shares, so long as they meet a minimal ownership threshold.

 

How unbalanced can that voting be? In the most extreme scenario according to Palantir’s newly updated table, its founders could control 68.099999% of the company’s vote while owning just 0.5% of the company’s shares.

In addition, the company has also added a new risk factor reminding owners of the company’s stock that Palantir can issue new stock at any time, and those newly issued shares will dilute retail investors even further in their voting rights relative to founders, who are offered a variable number of votes to ensure they maintain control of the company.

It gets worse though. Palantir has been promulgating this arcane mechanism over the last few amendments to the SEC that would allow its three founders — Alex Karp, Stephen Cohen, and Peter Thiel — to designate certain shares to be held outside of their “founder shares” and therefore increase their overall voting power. In its last amendment, the only founder to designate shares in this way was Peter Thiel, who designated a huge bulk of his shares (13.4% of Palantir) as excluded from the founders share calculation.

Now in its latest update, Palantir says that founders will be able to increase their votes essentially willy-nilly by designating any or all of their shares as “Stockholder Party Excluded Shares” which will be voted separately from their founder shares. And the right to do this will last from the company’s public debut all the way to “in the future.” In short, Palantir’s founders will hold 49.999999% control through their founder shares, plus the votes of any excluded shares, to be determined at any time. As of today, no shares have been designated as excluded according to the filing.

That leads to one of my new favorite admissions in this whole governance saga: Palantir won’t be able to tell anyone what their actual voting power is, even when they are just about to vote. From its newly amended filing:

In addition, it may be very difficult for our Class A common stockholders to determine from time to time, including in advance of a meeting of stockholders, their individual or aggregate voting power due to the unique features of our multi-class capital structure, such as the variable number of votes per share of our Class F common stock and the ability of our Founders who are then party to the Founder Voting Agreement to unilaterally adjust their total voting power, for example, by designating shares as Stockholder Party Excluded Shares, as described in more detail herein.

The complexity of Palantir’s three-class voting system means that no one basically knows what the hell is going on. “Unilaterally adjust their total voting power” is not a democracy, indeed.

There’s good news though! Palantir might actually add — I kid you not — another class of voting shares just to make all of this is even more complicated!

In another new disclosure this morning, the company writes that “In addition, in the future we could create a new class of equity securities with different economic or voting rights than existing classes” and explains how that could upend the voting for the company further.

I joked last week that “For a company vaunted for its clandestine government work and strong engineering culture, you can’t help but wonder if the government’s bureaucratic norms and paperwork pushing are starting to flood into the Shire.” Well, the complexity is only getting worse and worse and it doesn’t look good.

Tech companies, even those publicly traded, aren’t democracies. The two-class voting system most tech companies offer their founders and early investors are not democratic — some people get 1 vote per share while others get 10 votes per share. But it has become a norm whether we like it or not, and it’s directionally helped tech companies avoid the sort of hostile investor scenarios that have plagued other companies in the market.

Now, Palantir is stretching these notions to the extreme, trying to present as a shareholder-centered corporation when it is — let’s just admit it — an oligarchy of three.

It’s a bit like reading the People’s Republic of China constitution and finding this section in Chapter 2: “All citizens of the People’s Republic of China are equal before the law. The State respects and preserves human rights. … Citizens of the People’s Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration.” And you are like, what?

Words don’t mean anything when the votes and the system aren’t there.

#alex-karp, #direct-listing, #finance, #fundings-exits, #palantir, #peter-thiel, #stephen-cohen, #tc

0

Equity Monday: The TikTok mess, and a grip of neat European VC activity

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out last Friday’s episode.

What a busy morning. We had to cover TikTok . We had to talk VC rounds. So, this is what we got up to:

  • US tech stocks are poised to sell off further this morning.
  • The Oracle-TikTok-Walmart-ByteDance deal is either coming into focus, or a period of even less clarity. It’s hard to tell.
  • Nikola founder Trevor Milton is leaving the board of his own company in the wake of fraud allegations. Shares of the company are sharply lower in pre-market trading.
  • Turning to TikTok, this primer represents the best over-the-weekend roundup that we could find. But, of course, things are still breaking as we come to print.
  • Since recording, Oracle has said that “upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global.” And, President Trump said this morning that China has to give up control of TikTok or the deal is off. ByteDance has said that it will retain control. You figure that out.
  • But there was some good stuff to chat about. Including the super-neat Mobile Premier League round worth $90 million, growth news from EU-based Babbel, a new London-based Seed fund that got raised, and a Swedish healthtech Series B.
  • As you guessed from today’s title, it was fun to see such a concentration of EU VC activity.
  • Finally, will the Nikola mess discourage more SPACs from taking companies public? If the rest of the stock market wasn’t selling off, we would have said no. But today? Is the answer maybe?

Equity drops every Monday at 7:00 a.m. PT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#equity-podcast, #fundings-exits, #mobile-premier-league, #nikola, #startups, #tiktok

0

With $100M in funding, Playco is already a mobile gaming unicorn

Playco is a new mobile gaming startup created by Game Closure co-founder Michael Carter and Zynga co-founder Justin Waldron, as well as game producers Takeshi Otsuka and Teddy Cross.

Although the Tokyo-headquartered company is only announcing its existence today, it’s already a unicorn — it says it’s raised $100 million in Series A funding, at a valuation “just north of $1 billion.”

The round was led by Josh Buckley and Sequoia Capital, with participation from Sozo Ventures, Raymond Tonsing’s Caffeinated Capital, Keisuke Honda’s KSK Angel Fund, Taizo Son’s Mistletoe Singapore, Digital Garage, Will Smith’s Dreamers, Makers Fund and others.

Carter (Playco’s CEO) said the startup will be revealing its first games later this year. For now, he wants to talk about Playco’s vision: It’s trying to address the fact that “it’s very difficult to get two people into a single game in the App Store.” After all, downloading an app is a pretty big hurdle, especially compared to the early days of web and social gaming, when all you needed was a link.

“We’re going to bring that back,” Carter said — with Playco’s titles, sharing and playing a mobile game with your friend should be as simple as texting or calling them. “All it really takes is a hyperlink.”

He pointed to a number of technologies that can enable this “instant play” experience on mobile, including cloud gaming, HTML5 and platform-specific tools like Apple’s new App Clips. He claimed the team is “very good at this cutting edge technology” — and the company has created its own game engine — but he said technology is not the sole focus: “That’s just table stakes.”

Waldron (Playco’s president) argued that this represents the next big platform shift in gaming, and it will require “reinventing a lot of the most popular genres today” while also creating entirely new genres, in the same way that social gaming enabled new types of games.

“If you think about FarmVille, there were no farm games being advertised being in local console games store,” Waldron said. “They don’t market well; if you put up a poster for a farm game, no one wants to play.” But if your friends invite you by sending you some digital crops, then you absolutely want to play.

Carter added that enabling instant play also means that the games themselves have to be fairly straightforward, at least at first glance.

“Ultimately, as we build up the portfolio, we think about what makes the game accessible to anyone on the planet, any ethnicity, any language,” he said. “And the answer is: It has to be broadly appealing. That doesn’t mean we can’t build into it relatively interesting and deep features, but the initial impression has to be the right sort of experience that people can easily relate to.”

Carter also acknowledged that it’s unusual for a startup to raise so much money in its Series A (“It’s not your typical company, and it’s not your typical Series A”), but he said that being more ambitious with fundraising allowed Playco to quickly grow the team to 75 people.

“Bringing talented people together is the most important thing, and [thanks to the funding,] we haven’t had to make any really hard decisions,” he said.

As for how its games will make money, Waldron suggested that Playco will borrow from (but also potentially evolve) many of the existing business models in gaming.

“We don’t need to reinvent the wheel,” he said. “There’s going to be amazing things we can learn from my last company — we ended up inventing a lot of the ways these games are monetizing today … But these new technologies available today create new opportunities. The world has changed a lot since then, and I don’t think everything has caught up.”

#funding, #fundings-exits, #gaming, #josh-buckley, #justin-waldron, #michael-carter, #mobile, #playco, #sequoia-capital, #startups, #tc

0

Was Snowflake’s IPO mispriced or just misunderstood?

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. 

Ready? Let’s talk money, startups and spicy IPO rumors.

Was Snowflake’s IPO mispriced or just misunderstood?

With an ocean of neat stuff to get through below, we’ll be quick today on our thought bubble focused on Snowflake’s IPO. Up front it was a huge success as a fundraising event for the data-focused unicorn.

At issue is the mismatch between the company’s final IPO price of $120 and where it opened, which was around $245 per share. The usual forces were out on Twitter arguing that billions were left on the table, with commentary on the question of a mispriced IPO even reaching our friends at CNBC.

A good question given the controversy is how the company itself felt about its IPO price given that it was the party that, theoretically, left a few billion on some metaphorical table. As it turns out, the CEO does not give a shit.

Alex Konrad at Forbes — a good chap, follow him on Twitter here — caught up with Snowflake CEO Frank Slootman about the matter. He called the “chatter” that his company left money on the table “nonsense,” adding that he could have priced higher but that he “wanted to bring along the group of investors that [Snowflake] wanted, and [he] didn’t want to push them past the point where they really started to squeal.”

So Slootman found a new, higher price at which to value his company during its debut. He got the investors he wanted. He got Berkshire and Salesforce in on the deal. And the company roared out of the gate. What an awful, terrible, no-good, mess of an IPO.

Adding to the mix, I was chatting with a few SaaS VCs earlier this week, and they largely didn’t buy into the money-left-on-the-table argument, as presuming that a whole block of shares could be sold at the opening trade price is silly. Are IPOs perfect? Hell no. Are bankers out for their own good? Yes. But that doesn’t mean that Snowflake screwed up.

Market Notes

No time to waste at all, let’s get into it:

  • Lots of IPOs this week, and everyone did well. Snowflake was explosive while JFrog was merely amazing. Sumo Logic and Unity had more modest debuts, but good results all the same. Notes from JFrog and Sumo execs in a moment.
  • Disrupt was a big damn deal this week, with tech’s famous and its up and coming leaders showing up to chatter with TechCrunch about what’s going on today, and what’s going on tomorrow. You can catch up on the sessions here, which I recommend. But I wanted to take a moment and thank the TechCrunch sales, partnership, and events teams. They killed it and get 0.1% of the love that they deserve. Thank you.
  • Why is Snowflake special? This tweet by GGV’s Jeff Richards has the story in one chart.
  • What are the hottest categories for SaaS startups in 2020? We got you.
  • There’s a new VC metric in town for startups to follow. Folks will recall the infamous T2D3 model, where startups should triple twice, and then double three times. That five-year plan got most companies to $100M in ARR. Now Shasta Ventures’ Issac Roth has a new model for contention, what he’s calling “C170R,” and according to a piece from his firm, he reckons it could be the “new post-COVID SaaS standard.” (We spoke with Roth about API-focused startups the other day.)
  • So what is it? Per his own notes: “If a startup entering COVID season with $2-20M in revenue is on track for 170% of their 2019 revenue AND is aligned with the new normal of remote, they will be able to raise new capital on good terms and are set up for future venture success.” He goes to note that there’s less of a need to double or treble this year.
  • Our thought bubble: If this catches on, a lot more SaaS startups would prove eligible for new rounds than we’d thought. And as Shasta is all-in on SaaS, perhaps this metric is a welcome mat of sorts. I wonder what portion of VCs agree with Shasta’s new model?
  • And, closing, our dive into no-code and low-code startups continues.

Various and Sundry

Again, there’s so much to get to that there is no space to waste words. Onward:

  • Chime raised an ocean of capital, which is notable for a few reasons. First, a new $14.5B valuation, which is up a zillion percent from their early 2019 round, and up around 3x from its late 2019 round. And it claims real EBITDA profitability. And with the company claiming it will be IPO ready in 12 months I am hype about the company. Because not every company that manages a big fintech valuation is in great shape.
  • I got on the phone with the CEO and CFO of JFrog after their IPO this week to chat about the offering. The pair looked at every IPO that happened during COVID, they said, to try to get their company to a “fair price,” adding that from here out the market will decide what’s the right number. The CEO Shlomi Ben Haim also made a fun allusion to a tweet comparing JFrog’s opening valuation to the price that Microsoft paid for GitHub. I think that this is the tweet.
  • JFrog’s pricing came on the back of it making money, i.e. real GAAP net income in its most recent quarter. According to JFrog’s CFO Jacob Shulman “investors were impressed with the numbers,” and were also impressed by its “efficient market model” that allowed it find “viral adoption inside the enterprise.”
  • That last phrase sounds to us like efficient sales and marketing spend.
  • Moving to Sumo Logic, which also went out this week (S-1 notes here). I caught up with the company’s CTO Christian Beedgen.
  • Beedgen, I just want to say, is a delight to chat with. But more on topic, the company’s IPO went well and I wanted to dig into more of the nitty-gritty of the market that Sumo is seeing. After Beedgen walked me through how he views his company’s TAM ($50 billion) and market dynamics (not winner-takes-all), I asked about sales friction amongst enterprise customers that Slack had mentioned in its most recent earnings report. Beedgen said:
  • “I don’t see that as a systemic problem personally. […] I think people in economies are very flexible, and you know the new normal is what it is now. And you know these other guys on the other side [of the phone], these businesses they also need to continue to run their stuff and so they’re gonna continue to figure out how we can help. And they will find us, we will find them. I really don’t see that as a systemic problem.”
  • So, good news for enterprise startups everywhere!
  • Wix launched a non-VC fund that looks a bit like a VC fund. Called Wix Capital, the group will “invest in technology innovators that are focused on the future of the web and that look to accelerate how businesses operate in today’s evolving digital landscape,” per the company.
  • Wix is a big public shop these days, with elements of low and no-code to its core. (The Exchange talked to the company not too long ago.)
  • And, finally my friends, I call this the Peloton Effect, and am going to write about it if I can find the time.

I am chatting with a Unity exec this evening, but too late to make it into this newsletter. Perhaps next week. Hugs until then, and stay safe.

Alex

#fundings-exits, #startups

0

Unity Software has strong opening, gaining 31% after pricing above its raised range

Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.

On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.

Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.

Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .

TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.

According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.

Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.

Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value  and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.

That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.

Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.

One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:

Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.

We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”

Looking at our own gaming levels in 2020 compared to 2019, that checks out.

This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .

#asana, #fundings-exits, #jfrog, #mobile, #palantir, #startups, #tc, #unity-technologies

0

Amid layoffs and allegations of fraud, the FBI has arrested NS8’s CEO following its $100+ million summer financing

The tagline from today’s announcement from the United States Attorney’s office for the Southern District of New York says it all: “Adam Rogas Allegedly Raised $123 Million from Investors Using Financial Statements that Showed Tens of Millions of Dollars of Revenue and Assets that Did Not Exist”.

Rogas, the co-founder and former chief executive and chief financial officer and board member of the Las Vegas-based fraud prevention company, NS8, was arrested by the Federal Bureau of Investigation and charged in Manhattan court with securities fraud, fraud in the offer of sale of securities, and wire fraud earlier today.

Last week, the company laid off hundreds of staff as reports of an investigation by the Securities and Exchange Commission surfaced, according to a report in Forbes.

“This is a rapidly evolving situation,” Lightspeed Ventures told Forbes in a statement. “We are shocked by the news and have taken steps to inform our LPs. It would be premature to comment further at this time.” Lightspeed Ventures helped lead NS8’s $123 million Series A this June. Other investors include Edison Partners, Lytical Ventures, Sorenson Ventures, Arbor Ventures, Hillcrest Venture Partners, Blu Venture Investors, and Bloomberg Beta, per Crunchbase data.

The allegations are, indeed, shocking.

“As alleged, Adam Rogas was the proverbial fox guarding the henhouse,” said Audrey Strauss, the acting U.S. Attorney for the Southern District of New York, in a statement. “While raising over $100 million from investors for his fraud prevention company, Rogas himself allegedly was engaging in a brazen fraud.  Today’s arrest of Rogas ensures that he will be held accountable for his alleged scheme.”

Allegedly, while Rogas was in control of the bank accounts and spreadsheets that detailed its transactions with customers, he cooked the books to show millions in transactions that did not exist.

From January 2019 through February 2020, the FBI alleges that somewhere between 40 percent and 95 percent of the purported total assets on NS8’s balance sheet were fictitious, according to the statement. Over the same period bank Rogas altered bank statements to reflect $40 million in revenue that simply were not there, according to the Justice Department’s allegations.

On the back of that fake financial data, NS8 was able to raise over $120 million from some top tier investment firms including Lightspeed Venture Partners and AXA Ventures. 

Rogas managed to hoodwink not just the investment firms, but the auditors who were conducting due diligence on their behalf. After the round was completed, NS8 did a secondary offering which let Rogas cash out of $17.5 million through personal sales and through a company he controlled, according to the statement from the DOJ.

“It seems ironic that the co-founder of a company designed to prevent online fraud would engage in fraudulent activity himself, but today that’s exactly what we allege Adam Rogas did. Rogas allegedly raised millions of dollars from investors based on fictitious financial affirmations, and in the end, walked away with nearly $17.5 million worth of that money,” said FBI Assistant Director William F. Sweeney Jr. “Within our complex financial crimes branch, securities fraud cases remain among our top priorities. We’ve seen far too many examples of unscrupulous actors engaging in this type of criminal activity, and we continue to work diligently to weed out this behavior whenever and wherever we find it.”

#adam-rogas, #axa-ventures, #fundings-exits, #lightspeed, #ns8, #startups, #tc

0

Chime adds $485M at a $14.5B valuation, claims EBITDA profitability

In the midst of IPO week we have to add another name to our future debuts’ list, namely Chime, which announced a huge new round of capital today. The $485 million Series F values the consumer fintech giant at $14.5 billion, a huge figure given that Chime was most recently worth $5.8 billion after raising $700 million last December.

Even more stark is the company’s $1.5 billion valuation set in early 2019. From $1.5 billion to $14.5 billion in less than two years is quite a run for any startup. Powering the latest round there were a host of familiar names, including Tiger, ICONIQ and General Atlantic, along with Dragoneer and DST Global. Names I’m less familiar with like Whale Rock Capital and Access Technology Ventures also took part.

Tucked inside a CNBC article that broke the story was news that Chime is now EBITDA profitable and could be “IPO-ready” in its CEO’s eyes in around a year’s time.

TechCrunch reached out to Chime for clarification on the EBITDA point, asking if the figure is adjusted or not, as many EBTIDA metrics remove the cost of share-based compensation given to their employees. According to Chime, the metric is “true EBITDA,” to which we award an extra five points. In response to a growth question, Chime said that its “transaction and top-line” has tripled compared to the year ago period.

The Chime round and news of its nascent, non-GAAP profitability comes on the heels of a grip of reports on the financial health of a number of European neobanks, or challenger banks as they are often called. The numbers showed huge growth, and steep losses. If Chime’s numbers hold up when we get its eventual S-1 — start your countdowns — it will be among the healthiest of the startups in its cohort in financial terms, we reckon.

Finally, the company is trying to paint itself as something of a software company, and not a fintech company. This is a move to attract better revenue multiples when it comes time to defend its new $14.5 billion valuation. Software companies have flat-out bonkers multiples these days, as evinced by the blockbuster Snowflake debut.

Here’s how Chime thinks of itself, via CNBC:

“We’re more like a consumer software company than a bank,” Britt said. “It’s more a transaction-based, processing-based business model that is highly predictable, highly recurring and highly profitable.”

The key phrases there are “software company” and “highly predictable, highly recurring and highly profitable.” In effect Chime will argue that interchange revenues should fit under the SaaS umbrella given their regularity. Investors will decide how to view that pitch. If it works, maybe fintechs are more valuable than expected. And those fintechs with obvious SaaS components, like Acorns, could be sitting pretty when it comes to making the fintech v. SaaS argument.

Regardless, it’s another huge round for Chime, which makes it a good day for the highly-valued fintech sector.

#acorns, #chime, #finance, #fundings-exits, #startups, #tc

0

It’s game on as Unity begins trading

Unity Software, which sells a game development toolkit primarily for mobile phone app developers, raised $1.3 billion in its initial public offering.

The company, which will begin trading today with the ticker symbol “U”, priced its shares at the top end of its expected range, selling 25 million shares at $52 per share.

The company’s final IPO price came in far ahead of what Unity initially anticipated. The company initially expected to price its public offering between $34 and $42 per share, later raising its offering to $44 and $48 per share.

The public offering values the company at around $13.7 billion, a good step-up from its final private valuation of around $6 billion.

For Unity, the journey to the public markets has been long. The company was founded and as a business that creates software for developers to make and manage their games. In that sense, the company is more like an Adobe or an Autodesk, than a game studio like Activision Blizzard or King.com.

As TechCrunch explained in an earlier story profiling Unity and its public offering:

Users import digital assets (often from Autodesk’s Maya) and add logic to guide each asset’s behavior, character interactions, physics, lighting and countless other factors that create fully interactive games. Creators then export the final product to one or more of the 20 platforms Unity supports, such as Apple iOS and Google Android, Xbox and Playstation, Oculus Quest and Microsoft HoloLens, etc.

The company organizes its business into two areas: tools for content creation and tools for managing and monetizing content. In actuality, the revenue from the managing and monetizing content actually outstrips the revenue the company makes from content creation.

The Unity public offering will be the first big test of investor appetite for this new approach to game development and the business-to-business tools that enable the new wave of gaming.

And it’s important to note (as we do here) that Unity doesn’t generate a lot of revenue off of its position as arguably the most popular game development platform. In fact, Unity has been pretty bad at monetizing the game development engine. It’s the ancillary services for in-game advertising, player matchmaking and other features that have made Unity the bulk of its money.

And there’s still the company’s biggest competitor, Epic Games, waiting in the wings. Here again, the analysis from TechCrunch’s previous reporting is helpful.

[Unity] also will want to benefit from comparisons to Epic Games, given [Epic] was just valued at $17 billion and has much greater public name recognition and hype.

To accomplish this, Unity seems to be underplaying the significance of its advertising business (adtech companies trade at much lower revenue multiples). In the past, Unity referred to its operations in three divisions: Create, Operate and Monetize. At the start of August, the SVP and VP leading the Monetize business switched titles to SVP and VP of Operate Solutions, respectively, and then Unity reported the monetization business as a subset of its Operate division in the S-1.

Consolidating Operate and Monetize into one reporting segment obscures specifics about how much revenue the ads business and the live services portfolio each contribute. As noted above, this segment appears to be dominated by ad revenue which means anywhere from 30% to 50% of Unity’s overall revenue is from ads. That should reduce the revenue multiple public investors are willing to value Unity at relative to recent and upcoming SaaS IPOs.

There isn’t a publicly-traded game engine company to directly benchmark Unity against, nor a roster of equity research analysts at big banks who have expertise in gaming infrastructure. Adobe and Autodesk appear to be relevant businesses to benchmark Unity against with regard to the nature of the non-advertising components of the business and Unity’s stated vision. Compared to Unity, those companies have lower growth rates and generate operating profits though; more recent public listings of SaaS companies like Zscaler and Cloudflare are likely to be valuation comps by investors to the extent they focus on its subscription and usage-based revenue streams since their revenue growth and margins are closer to Unity’s.

Both Epic and Unity are moving to meet each other, Epic by moving downstream, and Unity by moving to higher end applications. And both companies are looking beyond core gaming at other applications as well.

As companies like Facebook, Microsoft, Niantic and others evolve their augmented and virtual reality ecosystems, Epic and Unity may find new worlds to conquer. If public markets can find the cash.

#epic, #fundings-exits, #startups, #tc, #unity

0