Founders Fund backs Royal, a music marketplace planning to sell song rights as NFTs

Founders Fund and Paradigm are leading an investment in a platform that’s aiming to wed music rights with NFTs, allowing user to buy shares of songs through the company’s marketplace, earning royalties as the music they’ve invested in gains popularity.

The venture, called Royal, is led by Justin Blau, an EDM artist who performs under the name 3LAU, and JD Ross, a co-founder of home-buying startup Opendoor. Blau has been one of the more active and visible figures in the NFT community, launching a number of upstart efforts aimed at exploring how musicians can monetize their work through crypto markets. Blau says that as Covid cut off his ability to tour, he dug into NFTs full-time, aiming to find a way to flip the power dynamics on “platforms that were extracting all the value from creators.

Back in March, weeks before many would first hear about NFTs following the $69 million Beeple sale at Christies, Blau set his own record, selling a batch of custom songs and custom artwork for a collective $11.7 million worth of cryptocurrency.

Royal’s investment announcement comes just as a broader bull run for the NFT market seems to reach a fever pitch with investors dumping hundreds of million of dollars worth of cryptocurrencies into community NFT projects like CryptoPunks and Bored Apes. While visual artists interested in putting their digital works on the blockchain have seen a number of platforms spring up and mature in recent months to simplify the process of monetizing their art, there have been fewer efforts focused on musicians.

Paradigm and Founders Fund are leading a $16 million seed round in Royal, with participation from Atomic — where Ross was recently a General Partner. Ross’s fellow Opendoor co-founder Keith Rabois led the deal for Founders Fund.

The company isn’t sharing an awful lot about their launch or product plans, including when the platform will actually begin selling fractionalized assets, but it seems pretty clear the company will be heavily leveraging Blau’s music and position inside the music industry to bring early fans/investors to the platform. Users can sign-up for early access on the site currently.

As NFT startups chase more complex ownership splits that aim to help creators share their success with fans, there’s plenty of speculation taking off around how regulators will eventually treat them. While the ICO boom of 2017 led to plenty of founders receiving SEC letters alleging securities fraud, entrepreneurs in this wave seem to be working a little harder to avoid that outcome. Blau says that the startup’s team is working closely with legal counsel to ensure the startup is staying fully compliant.

The company’s bigger challenge may be ensuring that democratizing access to buying up music rights actually benefits the fans of those artists or creates new fans for them, given the wide landscape of crypto speculators looking to diversify. That said, Blau notes there’s plenty of room for improvement among the current ownership spread of music royalties, largely spread among labels, private equity groups and hedge funds.

“A true fan might want to own something way earlier than a speculator would even get wind of it,”Blau says. “Democratizing access to asset classes is a huge part of crypto’s future.”

#blockchain, #business, #co-founder, #companies, #cryptocurrency, #cryptopunks, #founders-fund, #keith-rabois, #musicians, #opendoor, #paradigm, #startup-company, #tc, #u-s-securities-and-exchange-commission

Ramp raises $300M at a $3.9B valuation, makes its first acquisition

Less than five months after raising $115 million, spend management startup Ramp announced today it has raised $300 million in a Series C round of funding that values the company at $3.9 billion.

That’s more than double the $1.6 billion that New York-based Ramp was valued at in April at the time of its Series B.

Founders Fund led the latest round, which brings the fintech’s total equity and debt raised to date to over $625 million since its March 2019 inception. Redpoint Ventures, Thrive Capital, D1 Capital Partners, Spark Capital, Coatue Management, Iconiq, Altimeter, Stripe, Lux Capital, A* Partners, Definition Capital and other existing backers participated in the financing. Founders Fund also led Ramp’s $15 million Series A in February 2020.

It’s been a good year for Ramp, which first launched its corporate card in August of 2019. Since the beginning of 2021, the company says it has seen its number of cardholders on its platform increase by 5x, with more than 2,000 businesses currently using Ramp as their “primary spend management solution.” The transaction volume on its corporate cards has tripled since April, when its last raise was announced. And, impressively, Ramp has seen its transaction volume increase year over year by 1,000%, according to CEO and co-founder Eric Glyman. Given the company’s business model (it makes money mostly off interchange fees), Ramp also saw its revenue increase by the same amount during that time frame.

A wide range of customers use Ramp from startups/unicorns such as Ro, DoNotPay, Better, ClickUp and Applied Intuition to established businesses like Bristol Hospice, Walther Farms, Douglas Elliman and Planned Parenthood. 

“The pace of growth in the business has been a lot faster than people expected and so that’s a big part of what’s underpinning this new investment and valuation,” Glyman told TechCrunch. “Even in August, we’re experiencing what is shaping up to be the fastest percentage growth all year, if not ever.”  

Indeed, such big growth numbers are more commonly seen in the very early stages of a company, and tend to lessen over time as a company matures. 

Says Founders Fund’s Keith Rabois: “As the company has grown, I’ve continued to invest heavily because it’s rare to find a business with a growth rate that is actually increasing as it gets larger. Typically growth slows as a company scales, but demand for Ramp’s product is only accelerating as the team builds awareness and strengthens their product offering.”

Ramp also today announced its acquisition of Buyer, a “negotiation-as-a-service” platform that claims to save its clients an average of 27.3% on big-ticket purchases, such as annual software contracts. 

With the addition of the 10-person Buyer team, Glyman said Ramp will be able to offer its customers a “customized and proactive approach” to savings on large purchases.

“There are more B2B growth SaaS companies than ever before, and they’re better at charging than they’ve ever been,” he noted. “Buyer is viewed as the leader of a generation of startups that are trying to flip the tables and actually help customers negotiate rates down. Very large companies might have procurement departments to negotiate rates, but for those who don’t, Buyer is very skilled at identifying what new contracts are coming up and negotiating them down.”

It has saved its customers about 27% on SaaS contracts. 

“We’re looking forward to adding those figures to the savings we’ve helped businesses incorporate,” Glyman said.

The buy follows a partnership that was forged earlier this year before Ramp realized that it could “be even stronger by having them fully as a part of the Ramp team, and and really build out even further.”

Over time, Ramp  intends to expand its product offering as a result of the acquisition. By combining Buyer’s team with benchmarking spend data from millions of transactions on its platform, Ramp says it wants to help its customers negotiate the best rate on “anything that can be purchased with a card, from travel to software — with the goal of shifting purchasing power back into the hands of buyers.”

Image Credits: Ramp

Other ways Ramp helps its customers save include offering 1.5% cash back “on everything,” helping them identify ways to spend less, such as identifying and canceling duplicitous subscriptions and identifying redundancies in licenses. It also shows companies when better pricing is available. One example of this is letting them know they can save 20% by switching to an annual rate, as opposed to monthly. It also has helped customers save by getting rid of software like Concur, Expensify or Bill.com by helping them manage their expenses. Ramp claims that its customers on average save 3.3% annually by switching their corporate card spending to Ramp.

Earlier this year, the company added merchant blocking to its corporate credit card, which Glyman says has probably become one of the company’s most used features since adoption.

Looking ahead, the company plans to use its new capital to speed up the development of its finance automation platform. It’s also going to naturally continue to hire, adding to its nearly 150-person team. For context, Ramp started the year with 65, people and employed about 100 at the time of its April raise.

“Hiring is going to be the biggest use of our capital,” Glyman told TechCrunch. 

The startup is also going to invest heavily in product development, including expansion into broader B2B payments, and marketing and awareness. It’s also going to look for more acquisition targets.

While Ramp currently makes money mostly by interchange fees, Glyman told me previously that the two-year-old startup thinks of itself as a SaaS operator.

“Our long-term strategy is to develop great software,” he said.

No doubt the spend management space is heating up. Last week, Brex announced it was acquiring one-year-old Weav for $50 million in its first significant acquisition. Founded in 2017, San Francisco-based Brex earlier this year was valued at $7.4 billion after raising a $425 million Series D led by Tiger Global. It is more focused on earlier-stage startups, whereas Ramp tends to serve larger, more established companies.

#eric-glyman, #expense-management, #finance, #fintech, #founders-fund, #funding, #fundings-exits, #keith-rabois, #ma, #ramp, #recent-funding, #spend-management, #startup, #startups, #venture-capital

ZFellows offers $10k to stop what you’re doing for a week and work on a side project

There is massive VC overcapitalization for Series A and later companies, and probably for seed as well. But there is a massive gap in the market to financially underwrite promising founders and guide them out of their current employers or schools.

Cory Levy, who has been a long-time angel investor and startup tinkerer, launched First Text last year as an experiment to see what would happen if all communication barriers between founders and VCs were removed by substituting the formal pitch presentation with text messages. With one click on the website, you are texting Cory (“I have a First Text iPhone” he told me), and through him, you can connect with a panoply of VC and founder mentors like Keith Rabois at Founders Fund and Chris Farmer at SignalFire. The service hosts regular office hours and other get-to-know-you events.

Levy is a believer of the model, since he got his start the same way. Almost a decade ago, Levy tweeted at Rabois to fund his startup — a tweet that led to an investment and Rabois’ continued involvement in Levy’s startup experiments.

“I think there is still this barrier and friction that comes from talking with a venture capitalist on Sand Hill Road,” Levy said. It’s one thing to lower the barrier to chat with a VC though, but another to actually just get started in the first place

So Levy’s latest experiment is something called ZFellows. It’s essentially a one-week sabbatical program that offers $10,000 in (optional) equity investment (at a $1 billion cap… so very, very cheap money) to promising potential founders who want to explore a project outside the hustle and bustle of school or work. Levy said that “a handful of my friends are in school or working at companies and they have ideas and are working on stuff on the side” but they often say something like “I am going to quit Google and work on it.” Levy says ZFellows is designed to allow people to take “a calculated risk” to explore a project before committing to it full-time.

The application is open now and closes January 15th, with 10 fellows selected shortly thereafter. The application has eight short questions, plus name and email. Levy will select fellows with the guidance of the program’s mentors.

Levy said that he was inspired by the early batches of Y Combinator, whose cohorts were small and people found that mentorship was worth more than the cash offered by the accelerator. Mentors in the program include Naval Ravikant of AngelList fame, Lucy Guo from Scale AI, and Dylan Field of Figma. Levy wants to “fast-track technical tinkerers into the world of Silicon Valley.”

Cory Levy of First Text and ZFellows. Photo via Cory Levy.

The program is all-virtual, and will have a daily 10-minute standup meeting in the morning and an hour-long office hours and speaker talks program in the evening.

Levy says that ZFellows, like First Text itself, is a long-term experiment to see whether lowering barriers to VC improves the speed of inception of new startups. “Two years from now, hopefully a couple of people have moved forward” with their projects, Levy said. He empathized that no participant is expected to quit their company or school the day after the program, and that the conversations that start there might take months or years to mature. Right now, he intends to only do one batch — if it’s a success, Levy says other batches could be initiated.

So far, there have been some early successes at least with First Text itself. George Sivulka, the founder of Hebbia which I profiled this past October, used First Text to connect with Levy, and he synced up with Ann Miura-Ko at an office hours event. A few months later, Miura-Ko led the $1.1 million pre-seed round into Hebbia, with Levy participating as an angel. Levy also pointed to Vise AI, which we covered last year, as another company that he met by text before introducing to Rabois, who invested in the company’s seed round before Sequoia invested a combined $59.5 million this year across its Series A and B rounds.

It may seem simple, but sometimes the most important changes in venture and startups more generally have come from lowering that last bit of friction to action.

#cory-levy, #george-sivulka, #hebbia, #keith-rabois, #naval-ravikant, #venture-capital

Startup cynicism and Substack, or Clubhouse, or Miami, or …

If you build it, they will come, but they sure as hell are going to complain about everything until they do.

There were millions of bets made in the tech industry last year. Some of those bets involved actual venture capital dollars. Others involved individual decisions on where to live: do you bet on the future of San Francisco or do you want to partake in the growth of some other startup hub? Are you going to launch this new feature in your product or improve one of your existing ones? Do you switch jobs or stay and double down?

Yet, for all those bets, just three seem to have achieved a collective and hysterical frenzy in the industry as we close out this year: a bet on the future of media, a bet on the future of (audio) media, and a bet on the future of one of America’s greatest cities.

Substack, Clubhouse, and Miami as a major tech hub are compelling bets. They are early bets, in the sense that most of the work to actually realize each of their dreams remains to be done. All three are bets of optimism: Substack believes it can rebuild journalism. Clubhouse believes it can reinvent radio with the right interactivity and build a unique social platform. And Miami is a bet that you can take a top global city without a massive startup ecosystem and agglomerate the talent necessary to compete with San Francisco, New York and Boston.

Yet, that optimism is not broadly endorsed by the tech commentariat, who see threats, failures, and barriers from every angle.

I wish I could say it’s just the ennui of an industry in flux given the pandemic and constant cavalcade of chaos and bad news that’s hit us this year. That cynicism, though, has gotten deeper and more entrenched over the past few years even before coronavirus was a trending topic, even as more startups than ever are getting funding (and at better valuations!), even as more startups than ever are exiting, and those exits are collectively larger than ever as we saw earlier this month.

Insecurity is the fabric that runs through most of these bleak analyses. That’s particularly prominent with Substack, which sits at the nexus of insecurity in tech and insecurity in media. The criticism from tech folks seems to basically boil down to “it’s just an email service!” Its simplicity is threatening, since it seems to intimate that anyone could have built a Substack, really anytime in the last decade.

Indeed, they could. Substack is simple in its original product conception, which is a DNA it happens to share with a lot of other successful consumer startups. It is (or perhaps better to say now, was) just email. It’s Stripe + a CMS editor + an email delivery service. A janky version could be written in a day by most competent engineers. And yet. No one else built Substack, and that’s where the insecurity starts in the startup world.

From the media perspective, it’s of course been brutal the last few years in newsrooms and across publishing, so understandably, the level of cynicism in the press is already high (and journalists aren’t exactly optimistic types to begin with). Yet, most of the criticism here basically boils down to “why hasn’t Substack completely stopped the bloodletting of my industry in the short few years it’s been around?”

Maybe they will, but give the folks some god damn time to build. The fact that a young startup is even considered to have the potential to completely rebuild an industry is precisely what makes Substack (and other adjacent startups in its space) such a compelling bet. Substack, today, cannot re-employ tens of thousands of laid-off journalists, or fix the inequality in news coverage or industry demographics, or end the plight of “fake news.” But what about a decade from now if they keep growing on this trajectory and stay focused on building?

The cynicism of immediate perfection is one of the strange dynamics of startups in 2020. There is this expectation that a startup, with one or a few founders and a couple of employees, is somehow going to build a perfect product on day one that mitigates any potential problem even before it becomes one. Maybe these startups are just getting popularized too early, and the people who understand early product are getting subsumed by the wider masses who don’t understand the evolution of products?

This pattern is obvious in the case of Clubhouse, the drama aspects we have mostly managed to avoid at TechCrunch. It’s a new social platform, with new social dynamics. No one understands what it’s going to become in the next few years. Not Paul Davison (who might, even so, have a dream of where he wants to take it), not Clubhouse’s investors, and certainly not its users. This past week, Clubhouse hosted a live Lion King musical event with thousands of participants. Who had that on their bingo board?

Are there problems with Substack and Clubhouse? For sure. But as early companies, they have the obligation to explore the terrain of what they are building, find the key features that compel users to these platforms, and ultimately find their growth formula. There will be problems — trust and safety chief among them, particularly given the nature of user-contributed content. No startup has ever been founded, however, that didn’t uncover problems along its journey. The key question we must ask is whether these companies have the leadership to fix them as they continue building. My sense — and hypothetical bet — is yes.

Talking about leadership, that leads us to Francis Suarez, the mayor of Miami, whose single tweet offering to help has sparked the most absurd kerfuffle of San Francisco lovers and vitriolic pessimists the world over right now.

Keith Rabois and a few other VCs and founders are trailblazing a trail from San Francisco to Miami, linking up with the local industry to try to build something new and better than what existed before. It’s a bet on a place — an optimistic one — that the power of startups and tech can migrate outside of its central hubs.

What’s strange is that the cynicism around Miami here seems even less warranted than it did a decade ago. While San Francisco and distantly New York and Boston remain the clear hubs of tech startups in the U.S., cities like Salt Lake, Seattle, Portland, Chicago, Austin, Denver, Philadelphia and more have started to score some serious points. Is it really so hard to believe that Miami, a metro region of 5.5 million and one of the largest regional economies in the United States, might actually succeed as well? Maybe it literally just required a few major VCs to show up to catalyze the revolution.

Nothing got built by cynicism. “You can’t do it!” has never created a company, except perhaps to trigger a founder to start something in revolt at the fusillade of negativity.

It takes time though to build. It takes time to take an early product and grow it. It takes time to build a startup ecosystem and expand it into something self-sustaining. Perhaps most importantly, it takes extraordinary effort and hard work, and not just from singular individuals but a whole team and community of people to succeed. The future is malleable — and bets do pay off. So we all need to stop asking what’s the problem and pointing out flaws, and perhaps ask, what future are we building toward? What’s the bet I’m willing to back?

#clubhouse, #keith-rabois, #miami, #startups, #substack, #tc, #venture-capital

Seed funding tips and tricks from Uncork Capital founder Jeff Clavier

Angel funding, seed investing and generally focusing on earlier stage investing is a huge business in the world of startups these days — it helps investors get in early to the most promising companies, and (because of the smaller size of the checks) allows for even the less prolific to spread their bets.

There was a time when it was immensely difficult for a founder to get a first check, not least because there were fewer people writing them. However, Jeff Clavier was an exception to that rule.

As the founder of Uncork Capital (formerly known as SoftTech VC), he has been in the business of angel and seed investing for 16 years, popularizing the opportunity and highlighting the need for more support at this stage — well before it was cool. You could say he was early to early stage.

Clavier said that at the end of 2019, it was estimated that there were more than 1,000 firms focusing on seed investing in the market, but by the end of this year, there will be about 2,000. “Don’t ask me whether it makes any sense because when I started 16 years ago, I didn’t think would be a big deal,” he said. “But certainly that creates a bit of a conundrum for founders to try and understand.”

As of now, Clavier has made nearly 230 investments and counting.

TechCrunch Early Stage, our virtual conference highlighting that stage of startup life, was the perfect venue to hear from him on all things seed investing and building startups today. Below are some highlights, a link to the video and a pitch deck he put together for the chat. Questions were edited for space and clarity.

Not all VCs are created equal (so know who you are pitching)

First thing to understand is that not all VCs are created equal. There are a bunch of different firms, tons of them out there, and you as a founder need to understand what are the specifics of your pitch opportunity, how to match with the right firm, and to figure out what stage of “early” you happen to be.

Startups can be super early, or mid-stage, which is typically what we refer to as pre-seed. Then there’s the seed stage, where you have developed a product, with a demo. And there is post-seed, where you have product but are not quite ready to raise a Series A. So who are the firms that can actually be the right fit for me at those different stages? The qualification part of the targeting is really important. Especially in a COVID environment when you can’t spend the same kind of time with each other.

It’s useful for founders to try and understand investors better, maybe asking a couple of questions like, “When is the last time you made a brand new investment at seed stage?” And “How has your investment process changed as a result of COVID?”

For investors, you want to understand how you’re going to evolve your process to cope with the fact that you don’t spend time with those founders face-to-face. Some firms are still struggling with that.

At Uncork, we’re now past the point of portfolio triage that we had in the first few weeks of of the pandemic. What was surprising to me was the speed and velocity at which some deals actually.

Find an investment lead

#consumer-hardware, #crm, #entrepreneur, #entrepreneurship, #extra-crunch, #fundraising, #jeff-clavier, #keith-rabois, #private-equity, #seed-round, #startups, #tc, #techcrunch-early-stage, #venture-capital

Trillions are at stake in the retirement wars, and Vise nets $14.5M from Sequoia to manage it

The retirement wars are heating up.

As millions of baby boomers leave their jobs in the coming years and transition into retirement, there is a huge competition for who will manage their savings. On one hand are traditional wealth managers, firms like Edward Jones, who either employ full-time human financial advisors or empower independent contractors to help clients plan through their finances. On the other side has been the rise of “roboadvisors” like Wealthfront that use algorithms and simple financial products like ETFs to advise people at lower cost.

VCs have been bullish on roboadvisors — startups like Wealthfront and Personal Capital have each raised more than $200 million according to Crunchbase — but there has been less investment activity trying to help the financial advisors themselves. After all, aren’t all these folks supposed to be automated away by algorithms?

Vise (from “advise”) is taking a bit of a contrarian bet: its founders Samir Vasavada and Runik Mehrotra believe that humans — augmented with the right AI tools — can prove even more adept at handling the financial affairs of their clients than an app.

The company debuted at TechCrunch Disrupt SF last year, and we wrote up an in-depth profile of its journey from self-funded startup to our stage. Well, according to the founders, it just so happens they met Sequoia at the firm’s Disrupt happy hour, and one thing led to another and Vise is now announcing a $14.5 million Series A term sheet led by Sequoia partner Shaun Maguire.

Previous investors including Keith Rabois through Founders Fund and Ben Ling at Bling Capital filled out the round, and the startup’s total fundraise haul is now at $16 million.

For the founders, the main goal for Vise has been to build a new product using the best practices from the AI and machine learning worlds and converge on a platform that helps independent financial advisors come up with their own ideas to communicate to clients. “Our big thesis was, we want to think about things that are different in this industry — we don’t want to build a product that’s the same as how every other product has been built in the space,” Vasavada said. “We want to build a radically different product, and the way in which we do that is bringing in a diverse team.” That’s included everyone from product folks at notable Silicon Valley companies, AI researchers, and financial services experts.

Vise’s platform. Photo courtesy of Vise.

Financial advisors already rely on a suite of software from CRMs to investment analysis platforms to perform their jobs, but those tools have rarely been integrated into one place. That’s made the existing market for software here quite fragmented. “Number one is it’s too bloated. There’s just too many tools and they don’t do enough and don’t provide much value add. It’s expensive. It’s hard to manage. And the most important thing is it is not at all personalized to the advisor or personalized to the client,” Vasavada said.

Instead, Vise aims to be a one-stop shop for all the needs in the daily workflow of an investment advisor. That includes determining different investment options in a clean interface, personalizing those options for individual clients, and even helping guide investment advisors through the talking points on why certain investment decisions make sense compared to others given a client’s context.

Vise founders Runik Mehrotra (L) and Samir Vasavada (R). Photo via Vise.

In their views, Vasavada and Mehrotra see the wealth advisory market dividing into several buckets, with independent wealth advisors who target $500,000 to $2 million in assets per client as the sweet spot for Vise. Those customers have more specific needs and require more personalization than clients with less assets and so are ill-served by roboadvisors, while at the same time, major institutional players find them too small to handle given the fee structures they have at their scale.

Ultimately, Vise is a pure B2B play, and the founders want to maintain that focus into the future. They believe that wealth advisors have special knowledge of their clients needs and the relationships to match, which Vise can’t compete with.

In addition to Sequoia, Founders Fund, and Bling, Human Capital, Lachy Groom, Steve Chen, and Jon Xu joined the round according to the company.

#ben-ling, #bling-capital, #finance, #founders-fund, #funding, #fundings-exits, #keith-rabois, #personal-capital, #sequoia-capital, #startups, #vise-ai, #wealthfront