Snowflake gave up its dual-class shares. Should you?

Snowflake announced earlier this month that it would give up its dual-class shareholder structure, a corporate governance setup that often gives founders and executives superior voting rights, typically involving 10 times as many votes for their own shares as others receive. The mechanism can enable founders to maintain control despite later dilution and may sometimes even grant ironclad control to an individual in perpetuity.

For many companies, these supervoting shares represent a highly powerful tool, allowing founders to have their cake and eat it, too — to go public and receive the advantages of being a public company while limiting the power of external shareholders to influence how they run the company once it floats.

Some founders and their investors argue that these preferred shares protect them from the short-term whims of the market, but the perspective isn’t universally accepted. Dual-class shares are a controversial governance structure, and some wonder if they are setting up an unfair playing field by allowing a cabal to wield outsized power.

Why would Snowflake give up such a powerful tool a mere six months after it went public? We decided to look at the notion of dual-class shares and why Snowflake may have been willing to let them go.

Snowflake’s decision

If one of the primary purposes of dual-class shares is to consolidate CEO power, then perhaps Snowflake felt they weren’t necessary, given the history of CEO-shuffling at the company. While Snowflake’s founders are still part of the organization, they hired Sutter Hill investor Mike Speiser to be their first CEO, followed by former Microsoft exec Bob Muglia before finally bringing in veteran CEO Frank Slootman to take their company public.

Without an all-powerful CEO founder in place, perhaps the company felt that supervoting shares weren’t necessary. Regardless, Snowflake CFO Mike Scarpelli framed the move as a decision that works for all parties when he announced that his company would abandon the special shares during its earnings call earlier this month.

“Today, we announced that on March 1st, 2021, our Class B shareholders in accordance with our governing documents converted all of our Class B common stock to Class A common stock, eliminating the dual-class structure of our common stock and ensuring that each share has an equal vote. We view this as operationally beneficial to the company and our shareholders,” Scarpelli said during the call.

#cloud, #costanoa-ventures, #dual-class-shares, #ec-cloud-and-enterprise-infrastructure, #entertainment, #fundings-exits, #madrona, #snowflake, #startups, #tc, #yext

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Snowflake latest enterprise company to feel Wall Street’s wrath after good quarter

Snowflake reported earnings this week, and the results look strong with revenue more than doubling year-over-year.

However, while the company’s fourth quarter revenue rose 117% to $190.5 million, it apparently wasn’t good enough for investors, who have sent the company’s stock tumbling since it reported Wednesday after the bell.

It was similar to the reaction that Salesforce received from Wall Street last week after it announced a positive earnings report. Snowflake’s stock closed down around 4% today, a recovery compared to its midday lows when it was off nearly 12%.

Why the declines? Wall Street’s reaction to earnings can lean more on what a company will do next more than its most recent results. But Snowflake’s guidance for its current quarter appeared strong as well, with a predicted $195 million to $200 million in revenue, numbers in line with analysts’ expectations.

Sounds good, right? Apparently being in line with analyst expectations isn’t good enough for investors for certain companies. You see, it didn’t exceed the stated expectations, so the results must be bad. I am not sure how meeting expectations is as good as a miss, but there you are.

It’s worth noting of course that tech stocks have taken a beating so far in 2021. And as my colleague Alex Wilhelm reported this morning, that trend only got worse this week. Consider that the tech-heavy Nasdaq is down 11.4% from its 52-week high, so perhaps investors are flogging everyone and Snowflake is merely caught up in the punishment.

Snowflake CEO Frank Slootman pointed out in the earnings call this week that Snowflake is well positioned, something proven by the fact that his company has removed the data limitations of on-prem infrastructure. The beauty of the cloud is limitless resources, and that forces the company to help customers manage consumption instead of usage, an evolution that works in Snowflake’s favor.

“The big change in paradigm is that historically in on-premise data centers, people have to manage capacity. And now they don’t manage capacity anymore, but they need to manage consumption. And that’s a new thing for — not for everybody but for most people — and people that are in the public cloud. I have gotten used to the notion of consumption obviously because it applies equally to the infrastructure clouds,” Slootman said in the earnings call.

Snowflake has to manage expectations, something that translated into a dozen customers paying $5 million or more per month to Snowflake. That’s a nice chunk of change by any measure. It’s also clear that while there is a clear tilt toward the cloud, the amount of data that has been moved there is still a small percentage of overall enterprise workloads, meaning there is lots of growth opportunity for Snowflake.

What’s more, Snowflake executives pointed out that there is a significant ramp up time for customers as they shift data into the Snowflake data lake, but before they push the consumption button. That means that as long as customers continue to move data onto Snowflake’s platform, they will pay more over time, even if it will take time for new clients to get started.

So why is Snowflake’s quarterly percentage growth not expanding? Well, as a company gets to the size of Snowflake, it gets harder to maintain those gaudy percentage growth numbers as the law of large numbers begins to kick in.

I’m not here to tell Wall Street investors how to do their job, anymore than I would expect them to tell me how to do mine. But when you look at the company’s overall financial picture, the amount of untapped cloud potential and the nature of Snowflake’s approach to billing, it’s hard not to be positive about this company’s outlook, regardless of the reaction of investors in the short term.

#cloud, #data-lakes, #earnings, #enterprise, #snowflake, #tc, #wall-street

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#Anzeige – Extra-Schub für Startups in der Data Cloud


Weiterentwicklungen und Innovationen im Big-Data-Umfeld finden mittlerweile vorwiegend in der Cloud statt. Eine ideale Basis für innovative Datenanwendungen bietet die Data Cloud von Snowflake, die nahezu unbegrenzte Skalierung, Parallelität und Leistung bietet. Gerade für junge Unternehmen ist das eine kostengünstige Option, da sie keine eigene IT-Infrastruktur aufbauen müssen und sich Spielraum für mögliches Wachstum offenhalten. Manchmal fehlt allerdings trotz allem ein wenig Unterstützung. Aus diesem Grund hat das Unternehmen eine Challenge gestartet, um vielversprechenden Startups einen Schub für die Weiterentwicklung ihrer Ideen zu bieten. 

Ideale Wachstumsbedingungen für Startups 

Die Data Cloud beseitigt viele der traditionellen Hindernisse, auf die Startups bei der Arbeit mit Daten stoßen und bietet ihnen die erforderlichen Ressourcen, um innovative datenintensive Anwendungen und Produkte zu entwickeln. Dank der umfassenden, integrierten Funktionalitäten der Plattform können sie sich ganz auf die Entwicklung ihrer Datenanwendungen konzentrieren, ohne sich um die Verwaltung einer komplexen Infrastruktur kümmern zu müssen. Die Plattform trennt die Bereiche Speicher, Rechenleistung und Dienste voneinander. Anwendungen können bei Bedarf hoch und runter skaliert werden, ohne dass eine kostspielige Überdimensionierung erforderlich ist. Hinzu kommen eine sekundengenaue Preisgestaltung, die native Unterstützung für semistrukturierte Daten und sicheres Data Sharing. 

Software-Teams in Hunderten von Startups und Unternehmen arbeiten bereits an Innovationen in der Data Cloud und erstellen Anwendungen für eine Vielzahl von Anwendungsfällen, darunter Marketing-Automatisierung, IoT, maschinelles Lernen, eingebettete Analysen und viele mehr. Gleichzeitig haben sie über den Snowflake Data Marketplace direkten, sicheren und kontrollierten Zugriff auf gemeinsam genutzte und zur Abfrage verfügbare Live-Daten aus einem Ökosystem von Geschäftspartnern und Kunden sowie potenziell Tausenden von Datenanbietern und Datendienstanbietern. Hier haben sie zudem die Möglichkeit, sich als Datenanbieter zu präsentieren und neue Einnahmequellen zu erschließen.

Welche Startups sind zur Teilnahme an der Startup Challenge berechtigt?

Um sich für die Startup Challenge zu qualifizieren, müssen die Kandidaten zwei grundlegende Anforderungen erfüllen: Snowflake muss zentraler Bestandteil ihrer Architektur für eine kundenorientierte Datenanwendung sein und ihre Finanzmittel müssen sich auf weniger als zwei Millionen US-Dollar belaufen. Bewertet werden sie anhand einer Reihe von Kriterien, darunter ihr Geschäftspotenzial, Innovationsgrad und die Nutzung der Fähigkeiten der Snowflake-Plattform für ihr Produkt. 

Bis zum 30. März 2021 müssen die Teilnehmer ein kurzes Demo-Video und eine Beschreibung der Anwendung online einreichen. Registrierte Teilnehmer können für die Dauer des Wettbewerbs auf ein erweitertes Testkonto mit 400 US-Dollar Guthaben zugreifen. Ende April benennt die hochkarätige Jury aus Benoit Dageville, Snowflake-Mitbegründer und President of Product, Denise Persson, Chief Marketing Officer von Snowflake, sowie den Risikokapitalinvestoren Mike Speiser von Sutter Hill Ventures und Carl Eschenbach von Sequoia Capital zehn Halbfinalisten. Von diesen erhalten drei Bewerber die Chance, beim Snowflake Summit im Sommer 2021 ihre Innovation vor Investoren und potenziellen Kunden zu präsentieren. Die Startups haben nicht nur die Chance auf Investitionsgelder von bis zu 250.000 US-Dollar, sondern erhalten auch Zugang zu Snowflake-Experten, die sie beim Anwendungsdesign beraten. 

Weitere Informationen zur Snowflake Startup Challenge findest du hier.

Foto (oben): Snowflake Startup Challenge

#aktuell, #anzeige, #snowflake, #snowflake-startup-challenge

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Tiger Global is raising a new $3.75 billion venture fund, one year after closing its last

According to a recent letter sent to its investors, Tiger Global Management, the New York-based investing powerhouse, is raising a new $3.75 billion venture fund called Tiger Private Investment Partners XIV that it expects to close in March.

The fund is Tiger Global’s 13th venture fund, despite its title — the partners might be superstitious — and it comes hot on the heels of the firm’s 12th venture fund, closed exactly a year ago, also with $3.75 billion in capital commitments.

A spokesperson for the firm declined to comment on the letter or Tiger Global’s broader fundraising strategy when reached this morning.

It’s a lot of capital to target, even amid a sea of enormous new venture vehicles. New Enterprise Associates closed its newest fund with $3.6 billion last year. Lightspeed Venture Partners soon after announced $4 billion across three funds. Andreessen Horowitz, the youngest of the three firms, announced in November it had closed a pair of funds totaling $4.5 billion.

At the same time, Tiger Global has seemingly has a strong case to potential limited partners. Last year alone, numerous of its portfolio companies either went public or was acquired.

Yatsen Holding, the nearly five-year-old parent company of China-based cosmetics giant Perfect Diary, went public in November and is now valued at $14 billion. (Tiger Global’s ownership stake didn’t merit a mention on the company’s regulatory filing.)

Tiger Global also quietly invested in the cloud-based data warehousing outfit Snowflake and, while again, it didn’t have a big enough stake to be included in the company’s S-1, even a tiny ownership percentage would be valuable, given that Snowflake is now valued at $85 billion.

And Tiger Global backed Root insurance, a nearly six-year-old, Columbus, Oh.-based insurance company that went public in November and currently boasts a market cap of $5.3 billion. Tiger owned 10.3% sailing into the offering.

As for M&A, Tiger Global saw at least three of its companies swallowed by bigger tech companies during 2020, including Postmates’s all-stock sale to Uber for $2.65 billion; Credit Karma’s $7 billion sale in cash and stock to Intuit; and the sale of Kustomer, which focused on customer service platforms and chatbots, for $1 billion to Facebook.

Tiger Global, whose roots are in hedge fund management, launched its private equity business in 2003, spearheaded by Chase Coleman, who’d previously worked for hedge-fund pioneer Julian Robertson at Tiger Management; Scott Shleifer, who joined the firm in 2002 after spending three years with the Blackstone Group; and, soon after, Lee Fixel, who joined the firm in 2006.

Shleifer focused on China; Fixel focused on India, and the rest of the firm’s support team (it now has 22 investing professionals on staff) helped find deals in Brazil and Russia  before beginning to focus more aggressively on opportunities in the U.S.

Every investing decision was eventually made by each of the three. Fixel left in 2019 to launch his own investment firm, Addition. Now Shleifer and Coleman are the firm’s sole decision-makers.

Whether the firm replaces Fixel is an open question. Tiger Global is known for grooming investors within its operations rather than hiring outsiders, so a new top lieutenant would almost surely come from its current team.

In the meantime, the firm’s private equity arm — which has written everything from Series A checks (Warby Parker) to checks in the multiple hundreds of millions of dollars — is currently managing assets of $30 million, compared with the $49 billion that Tiger Global is managing more broadly.

A year ago, Tiger Global, which employs 100 people altogether, was reportedly managing $36.2 billion in assets.

According to the outfit’s investor letter, the firm’s gross internal rate of return across its 12 previous funds is 32%, while its net IRR is 24%.

Tiger Global’s investors include a mix of sovereign wealth funds, foundations, endowments, pensions, and its own employees, who are collectively believed to be the firm’s biggest investors at this point.

Some of Tiger Global’s biggest wins to date have include a $200 million bet on the e-commerce giant JD.com that produced a $5 billion for the firm. According to the WSJ, it also cleared more than $1 billion on the Chinese online-services platform Meituan Dianping, which went public in 2018.

Tiger Global also reportedly reaped $3 billion from majority sale of India’s Flipkart to Walmart in 2018,  though the Indian government has more recently been trying to recover $1.9 billion from the firm, claiming it has outstanding tax dues on the sale of its share in the company.

Not last, Tiger Global owned nearly 20% of the connected fitness company Peloton at the time of its 2019 IPO (a deal that Fixel reportedly brought to the table, along with Flipkart).

Peloton, valued by private investors at $4 billion before doubling immediately in value as a publicly traded company, now boasts a market cap of $48.6 billion.

Tiger Global has invested its current fund in roughly 50 companies over the last 12 months. Among its newest bets is Blend, an eight-year-old, San Francisco-based digital lending platform that yesterday announced $300 million in Series G funding, including from Coatue, at a post-money valuation of $3.3 billion.

It also led the newly announced $450 million Series C round for Checkout.com, an eight-year-old, London-based online payments platform that is now valued at $15 billion. And it wrote a follow-on check to Cockroach Labs, the nearly six-year-old, New York-based distributed SQL database that just raised $160 million in Series E funding at a $2 billion valuation, just eight months after raising an $86.6 million Series D round.

Another of its newest, biggest bets centers on the online education platform Zuowebang, in China. Back in June, Tiger Global co-led a $750 million Series E round in the company.

Last month, it was back again, co-leading a $1.6 billion round in the distance-learning company.

Pictured: Scott Shleifer, managing director of Tiger Global Management LLC, right, speaks with an attendee during the UJA-Federation of New York Wall Street Dinner in New York, on Wednesday, Dec. 14, 2011. 

#chime, #credit-karma, #flipkart, #kustomer, #lee-fixel, #peloton, #postmates, #recent-funding, #snowflake, #startups, #sumo-logic, #tc, #tiger-global-management, #venture-capital

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Lacework lands $525M investment as revenue grows 300%

As the pandemic took hold in 2020, companies accelerated their move to cloud services. Lacework, the cloud security startup, was in the right place at the right time as customers looked for ways to secure their cloud native workloads. The company reported that revenue grew 300% year over year for the second straight year.

It was rewarded for that kind of performance with a $525 million Series D today. It did not share an exact valuation, only saying that it exceeded $1 billion, which you would expect on such a hefty investment. Sutter Hill and Altimeter Capital led the round with help from D1, Coatue, Dragoneer Investment Group, Liberty Global Ventures, Snowflake Ventures and Tiger Capital. The company has now raised close to $600 million.

Lacework CEO Dan Hubbard says one of the reasons for such widespread interest from investors is the breadth of the company’s security solution. “We enable companies to build securely in the cloud, and we span across multiple different categories of markets, which enable the customers to do that,” he said.

He says that encompasses a range of services including configuration and compliance, security for infrastructure as code, build time and runtime vulnerability scanning and runtime security for cloud native environments like Kubernetes and containers.

As the company has grown revenue, it has been adding employees quickly. It started the year with 92 employees and closed with over 200 with plans to double that by the end of this year. As he looks at hiring, Hubbard is aware of the need to build a diverse organization, but acknowledges that tech in general hasn’t done a great job so far.

He says they are working with the various teams inside the company to try and change that, while also working to support outside organizations that are helping educate under represented groups to get the skills they need and then building from that. “If you can help solve the problem at an earlier stage, then I think you’ve got a bigger opportunity [to have a base of people to hire] there,” he said.

The company was originally nurtured inside Sutter Hill and is built on top of the Snowflake platform. It reports that $20 million of today’s total comes from Snowflake’s new venture arm, which is putting some money into an early partner.

“We were an alpha Snowflake customer, and they were an alpha customer of ours. Our platform is built on top of the Snowflake data cloud and their new venture arm has also joined the round with an investment to further strengthen the partnership there,” Hubbard said.

As for Sutter Hill, investor Mike Speiser sees Lacework as one of his firm’s critical investments. “[Much] like Snowflake at a similar point in its evolution, Lacework is growing revenue at over 300% per year making Lacework one of Sutter Hill Ventures’ most important and promising portfolio companies,” he said in a statement.

#cloud, #cloud-native, #enterprise, #funding, #lacework, #recent-funding, #security, #snowflake, #startups, #sutter-hill-ventures, #tc

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Mozart Data lands $4M seed to provide out-of-the-box data stack

Mozart Data founders Peter Fishman and Dan Silberman have been friends for over 20 years, working at various startups, and even launching a hot sauce company together along the way. As technologists, they saw companies building a data stack over and over. They decided to provide one for them and Mozart Data was born.

The company graduated from the Y Combinator Summer 2020 cohort in August and announced a $4 million seed round today led by Craft Ventures and Array Ventures with participation from Coelius Capital, Jigsaw VC, Signia VC, Taurus VC and various angel investors.

In spite of the detour into hot sauce, the two founders were mostly involved in data over the years and they formed strong opinions about what a data stack should look like. “We wanted to bring the same stack that we’ve been building at all these different startups, and make it available more broadly,” Fishman told TechCrunch.

They see a modern data stack as one that has different databases, SaaS tools and data sources. They pull it together, process it and make it ready for whatever business intelligence tool you use. “We do all of the parts before the BI tool. So we extract and load the data. We manage a data warehouse for you under the hood in Snowflake, and we provide a layer for you to do transformations,” he said.

The service is aimed mostly at technical people who know some SQL like data analysts, data scientists and sales and marketing operations. They founded the company earlier this year with their own money, and joined Y Combinator in June. Today, they have about a dozen customers and six employees. They expect to add 10-12 more in the next year.

Fishman says they have mostly hired from their networks, but have begun looking outward as they make their next hires with a goal of building a diverse company. In fact, they have made offers to several diverse candidates, who didn’t ultimately take the job, but he believes if you start looking at the top of the funnel, you will get good results. “I think if you spend a lot of energy in terms of top of funnel recruiting, you end up getting a good, diverse set at the bottom,” he said.

The company has been able to start from scratch in the midst of a pandemic and add employees and customers because the founders had a good network to pitch the product to, but they understand that moving forward they will have to move outside of that. They plan to use their experience as users to drive their message.

“I think talking about some of the whys and the rationale is our strategy for adding value to customers […], it’s about basically how would we set up a data stack if we were at this type of startup,” he said.

#business-intelligence, #data, #developer, #enterprise, #funding, #mozart-data, #recent-funding, #snowflake, #startups, #tc, #y-combinator

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2020 IPO report card: Are tech’s newest public companies meeting expectations?

As the American election looms and the IPO cycle slows some, it’s a good time to review how well the public offerings we have seen thus far have performed.


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


Welcome to a Monday morning data rundown discussing how well the latest-stage startups that went public this year have performed after their first day. We’ll be awarding letter grades for post-IPO performance as well, because we can.

So, how did Snowflake do compared to Vroom, both stacked next to JFrog and One Medical? Let’s find out.

Ranking 2020’s IPOs

The fine folks at my former publication Crunchbase News have a running list of 2020 IPOs, which will help us not miss any names. Of course, we’re not going to include every possible deal; there have been some marginal debuts that we can leave behind.

But, the majors matter. So let’s get into them now:

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The highest valued company in Bessemer’s annual cloud report has defied convention by staying private

This year’s Bessemer Venture Partners’ annual Cloud 100 Benchmark report was published recently and my colleague Alex Wilhelm looked at some broad trends in the report, but digging into the data, I decided to concentrate on the Top 10 companies by valuation. I found that the top company has defied convention for a couple of reasons.

Bessemer looks at private companies. Once they go public, they lose interest, and that’s why certain startups go in and out of this list each year. As an example, Dropbox was the most highly valued company by far with a valuation in the $10 billion range for 2016 and 2017, the earliest data in the report. It went public in 2018 and therefore disappeared.

While that $10 billion benchmark remains a fairly good measure of a solidly valued cloud company, one company in particular blew away the field in terms of valuation, an outlier so huge, its value dwarfs even the mighty Snowflake, which was valued at over $12 billion before it went public earlier this month.

That company is Stripe, which has an other worldly valuation of $36 billion. Stripe began its ascent to the top of the charts in 2016 and 2017 when it sat behind Dropbox with a $6 billion valuation in 2016 and around $8 billion in 2017. By the time Dropbox left the chart in 2018, Stripe would have likely blown past it when its valuation soared to $20 billion. It zipped up to around $23 billion last year before taking another enormous leap to $36 billion this year.

Stripe remains an outlier not only for its enormous valuation, but also the fact that it hasn’t gone public yet. As TechCrunch’s Ingrid Lunden pointed out in article earlier this year, the company has remained quiet about its intentions, although there has been some speculation lately that an IPO could be coming.

What Stripe has done to earn that crazy valuation is to be the cloud payment API of choice for some of the largest companies on the Internet. Consider that Stripe’s customers include Amazon, Salesforce, Google and Shopify and it’s not hard to see why this company is valued as highly as it is.

Stripe came up with the idea of making it simple to incorporate a payments mechanism into your app or website, something that’s extremely time-consuming to do. Instead of building their own, developers tapped into Stripe’s ready-made variety and Stripe gets a little money every time someone bangs on the payment gateway.

When you’re talking about some of the biggest companies in the world being involved, and many others large and small, all of those payments running through Stripe’s systems add up to a hefty amount of revenue, and that revenue has led to this amazing valuation.

One other company, you might want to pay attention to here, is UIPath, the robotic process automation company, which was sitting just behind Snowflake with a valuation of over $10 billion. While it’s unclear if RPA, the technology that helps automate legacy workflows, will have the lasting power of a payments API, it certainly has come on strong the last couple of years.

Most of the companies in this report appear for a couple of years as they become unicorns, watch their values soar and eventually go public. Stripe up to this point has chosen not to do that, making it a highly unusual company.

#bessemer-venture-partners, #cloud, #dropbox, #enterprise, #saas, #snowflake, #stripe, #tc, #uipath, #valuations

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Snowflake More Than Doubles in Debut as Wall Street Embraces Tech IPOs

The data storage company is among several prominent start-ups going public this year as the tech industry thrives in the pandemic.

#company-reports, #data-storage, #initial-public-offerings, #snowflake, #software, #start-ups, #stocks-and-bonds, #venture-capital

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Unity raises IPO price range after JFrog, Snowflake target steep debut valuations

On the heels of two IPOs pricing above raised ranges, Unity boosted the value of its own impending debut this morning. The well-known unicorn is currently set to begin trading this Friday, pricing after the bell Thursday.

If that happens, the gaming platform company expects to be worth between $44 and $48 per share, up from its preceding $34 to $42 per-share IPO price range that it initially set.

Unity raising its price range for its IPO is not a surprise, given that software companies have been on a strong run lately. Just last night developer-focused software concern JFrog and data-focused cloud operation Snowflake each priced their public debuts above raised price intervals.

There’s plenty of demand for growth-oriented software equities on today’s public markets. And Unity has what investors are generally looking for inside that sector: greater than 40% revenue growth, gross margins in the high-70s to low-80s, and falling losses in both percent-of-revenue and gross dollar terms.

At $48 per share, Unity would sell $1.20 billion in stock, and be valued at around $12.6 billion. Given its most recent quarter’s revenue ($184.3 million) and annualized run-rate ($737.4 million), Unity is valued at around 17.1x revenues. (You can make that multiple larger by using a trailing revenue metric instead of an annualized run-rate statistic, or lower it by using a forward revenue estimate.)

We’ll have a better feel for how hot the public markets are later today when Snowflake and JFrog start, but Unity’s upward pricing bodes well for all three firms. Unity investors are set to do well, regardless of its final price. The company last raised $125 million in mid-2019 at a valuation of around $6.0 billion. Earlier shareholders will do even better in the transaction.

Sumo Logic is also expected to debut this week. More on that IPO here, if you are so inclined.

#fundings-exits, #jfrog, #snowflake, #startups, #tc, #unity

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JFrog and Snowflake’s aggressive IPO pricing point to strong demand for cloud shares

After raising their IPO price ranges, both JFrog and Snowflake priced above their refreshed intervals last night. At their final IPO prices, the two debuts are aggressively valued, showing continued optimism amongst public investors that cloud shares are an attractive bet, even if their growth is financed through a history of steep losses, as in the case of Snowflake .


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


The JFrog IPO pricing is notable because it shows how much public investors are willing to pay for 50% growth and recent profits from a SaaS company. And Snowflake’s pricing is noteworthy for showing the value of huge growth and improving economics.

This morning we’ll explore the two companies’ final values, compare those results to their initial IPO price ranges and calculate their current revenue multiples based on last-quarter’s annual run rates. This is going to be fun.

Later today we’ll have updates on how they open to trade. For now, let’s get into the math and valuation nuance you and I both need to understand just where the public market is today as so many unicorns are either en route towards an IPO, or are standing just outside the pool with a single hoof dipped to check the temperature.

Price this, you filthy animal

JFrog priced its IPO at $44 per share, above its raised range of $39 to $41 per share and comically higher than its first price interval of $33 to $37 per share. Indeed, the company’s final IPO price was 33.3% higher than the lowend of its first proposed pricing range.

Though I doubt anyone expected the company to go for so little as $33 per share, JFrog’s pricing run shows strong demand even before it began to float.

#fundings-exits, #ipo, #jfrog, #snowflake, #startups, #tc, #the-exchange

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What’s ahead in IPO land for JFrog, Snowflake, Sumo Logic and Unity

Welcome to Tuesday of TechCrunch Disrupt week. In a few hours, I’m hosting a panel about how startups can reach $100 million in annual recurring revenue (ARR) with the CEOs of Egnyte, GitLab and the President of Kaltura. It’s going to be a jam. Bring your questions!

Right now, however, let’s talk about some bigger companies, namely all the unicorns that are going public this week. We can set aside Corsair Gaming, Palantir and Asana, as they debut next week. This morning let’s get settled on what’s ahead for JFrog, Snowflake, Sumo Logic and Unity.


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


We explored the most recent pricing ranges for Snowflake and JFrog yesterday, helping set the stage. With both companies setting new, richer price targets for their debuts, the technology market looks hot. That’s good news for Sumo Logic and Unity, which should also begin trading this week.

Read on for your cheat sheet on all things upcoming from the realm of IPOs, and, in response to Twitter kerfuffle, notes on why Snowflake is seeing such investor demand despite a history of losses. It’s a good day to remind ourselves why some losses are very bad and others are pretty OK, given a certain set of circumstances.

Big-ass IPO week

After trading today we expect to see JFrog and Snowflake price their IPOs. As a quick reminder, this is what the two companies are expecting, starting with developer-focused service provider JFrog:

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Snowflake and JFrog raise IPO ranges as tech markets stay hot

What market selloff?

Despite last week’s market declines, two big IPOs are rolling ahead this week, with Snowflake and JFrog both boosting their IPO price ranges this morning. The jump in expected pricing means each IPO will likely raise more capital, valuing the firms more richly than their initial ranges made clear.

Snowflake’s first IPO range valued it comfortably north of $24 billion and its IPO detailed that both Berkshire Hathaway and Salesforce Ventures were going to pour capital into the big-data company. JFrog’s developer-derived profits and strong growth gave it a valuation of around $3 billion, far above its final private price.

Those figures are are now passé. This morning, let’s quickly calculate new valuations for both companies and dig into why they are managing to attract such strong investor demand.

JFrog and Snowflake’s new IPO price intervals

Starting with JFrog, the company’s preceding IPO price interval of $33 to $37 per share valued it between $2.92 billion to $3.28 billion, not counting equity reserved for its underwriting banks. The company is now targeting a $39 to $41 per-share price range, a steep gain from its preceding target.

JFrog still intends to sell eight million shares, giving the company a $312 million to $328 million gross raise, before counting other shares that are being sold by existing shareholders and reserved equity for underwriters.

#fundings-exits, #jfrog, #snowflake, #startups, #tc

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Warren Buffett invests in an unprofitable business

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

The whole crew was back, with Natasha Mascarenhas and Danny Crichton and myself chattering, and Chris Gates behind the scenes tweaking the dials as always. This week was a real team effort as we are heading into the maw of Disrupt — more here, see you there — but there was a lot of news all the same.

So, here’s what we got to:

We wrapped with whatever this is, which was at least good for a laugh. We are back next week at Disrupt, so see you all there!

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, #podcasts, #snowflake, #startups, #tc, #venture-capital, #warren-buffett

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Industry experts say it’s full speed ahead as Snowflake files S-1 to go public

When Snowflake filed its S-1 to go public yesterday, it wasn’t exactly a shock. The company which raised $1.4 billion had been valued at $12.4 billion in its last private raise in February. CEO Frank Slootman, who had taken over from Bob Muglia in May last year, didn’t hide the fact that going public was the end game.

When we spoke to him in February at the time of his mega $479 million raise, he was candid about the fact he wanted to take his company to the next level, and predicted it could happen as soon as this summer. In spite of the pandemic and the economic fallout from it, the company decided now was the time to go — as did 4 other companies yesterday including J Frog, Sumo Logic, Unity and Asana.

If you haven’t been following this company as it went through its massive private fund raising process, investors see a company taking a way to store massive amounts of data and moving it to the cloud. This concept is known as a cloud data warehouse as it it stores immense amounts of data.

While the Big 3 cloud companies all offer something similar, Snowflake has the advantage of working on any cloud, and at a time where data portability is highly valued, enables customers to shift data between clouds.

We spoke to several industry experts to get their thoughts on what this filing means for Snowflake, which after taking a blizzard of cash, has to now take a great idea and shift it into the public markets.

Pandemic? What pandemic?

Big market opportunities usually require big investments to build companies that last, that typically go public, and that’s why investors were willing to pile up the dollars to help Snowflake grow. Blake Murray, a research analyst at Canalys says the pandemic is actually working in the startup’s favor as more companies are shifting workloads to the cloud.

“We know that demand for cloud services is higher than ever during this pandemic, which is an obvious positive for Snowflake. Snowflake also services multi-cloud environments, which we see in increasing adoption. Considering the speed it is growing at and the demand for its services, an IPO should help Snowflake continue its momentum,” Murray told TechCrunch.

Leyla Seka, a partner at Operator Collective, who spent many years at Salesforce agrees that the pandemic is forcing many companies to move to the cloud faster than they might have previously. “COVID is a strange motivator for enterprise SaaS. It is speeding up adoption in a way I have never seen before,” she said.

It’s clear to Seka that we’ve moved quickly past the early cloud adopters, and it’s in the mainstream now where a company like Snowflake is primed to take advantage. “Keep in mind, I was at Salesforce for years telling businesses their data was safe in the cloud. So we certainly have crossed the chasm, so to speak and are now in a rapid adoption phase,” she said.

So much coopetition

The fact is Snowflake is in an odd position when it comes to the big cloud infrastructure vendors. It both competes with them on a product level, and as a company that stores massive amounts of data, it is also an excellent customer for all of them. It’s kind of a strange position to be in says Canalys’ Murray.

“Snowflake both relies on the infrastructure of cloud giants — AWS, Microsoft and Google — and competes with them. It will be important to keep an eye on the competitive dynamic even although Snowflake is a large customer for the giants,” he explained.

Forrester analyst Noel Yuhanna agrees, but says the IPO should help Snowflake take on these companies as they expand their own cloud data warehouse offerings. He added that in spite of that competition, Snowflake is holding its own against the big companies. In fact, he says that it’s the number one cloud data warehouse clients inquire about, other than Amazon RedShift. As he points out, Snowflake has some key advantages over the cloud vendors’ solutions.

“Based on Forrester Wave research that compared over a dozen vendors, Snowflake has been positioned as a Leader. Enterprises like Snowflake’s ease of use, low cost, scalability and performance capabilities. Unlike many cloud data warehouses, Snowflake can run on multiple clouds such as Amazon, Google or Azure, giving enterprises choices to choose their preferred provider.”

Show them more money

In spite of the vast sums of money the company has raised in the private market, it had decided to go public to get one final chunk of capital. Patrick Moorhead, founder and principal analyst at Moor Insight & Strategy says that if the company is going to succeed in the broader market, it needs to expand beyond pure cloud data warehousing, in spite of the huge opportunity there.

“Snowflake needs the funding as it needs to expand its product footprint to encompass more than just data warehousing. It should be focused less on niches and more on the entire data lifecycle including data ingest, engineering, database and AI,” Moorhead said.

Forrester’s Yuhanna agrees that Snowflake needs to look at new markets and the IPO will give it the the money to do that. “The IPO will help Snowflake expand it’s innovation path, especially to support new and emerging business use cases, and possibly look at new market opportunities such as expanding to on-premises to deliver hybrid-cloud capabilities,” he said.

It would make sense for the company to expand beyond its core offerings as it heads into the public markets, but the cloud data warehouse market is quite lucrative on its own. It’s a space that has required a considerable amount of investment to build a company, but as it heads towards its IPO, Snowflake is should be well positioned to be a successful company for years to come.

#cloud, #cloud-data-warehouse, #enterprise, #exit, #frank-slootman, #fundings-exits, #s-1, #saas, #snowflake, #startups, #tc

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Sutter Hill strikes ice-cold, $2.5B pre-market return with Snowflake’s IPO filing

Today is the day for huge VC returns.

We talked a bit about Sequoia’s coming huge win with the IPO of game engine Unity this morning. Now, Sequoia might actually have the second largest return among companies filing to go public with the SEC today.

Snowflake filed its S-1 this afternoon, and it looks like Sutter Hill is going to make bank. The long-time VC firm, which invests heavily in the enterprise space and generally keeps a lower media profile, is the big winner across the board here, coming out with an aggregate 20.3% stake in the data management platform, which was last privately valued at $12.4 billion earlier this year. At its last valuation, Sutter Hill’s full stake is worth $2.5 billion. My colleagues Ron Miller and Alex Wilhelm looked a bit of the financials of the IPO filing.

Sutter Hill has been intimately connected to Snowflake’s early buildout and success, providing a $5 million Series A funding back in 2012, the year of the company’s founding according to Crunchbase.

Now, there are some caveats on that number. Sutter Hill Ventures (aka “the fund”) owns roughly 55% of the firm’s total stake, with the balance owned by other entities owned by the firm’s management committee members. Michael Speiser, the firm’s partner who sits on Snowflake’s board, owns slightly more than 10% of Sutter Hill’s stake directly himself according to the SEC filing.

In addition to Sutter Hill, Sequoia also got a large slice of the data computing company: its growth fund is listed as having an 8.4% stake in the coming IPO. That makes for two Sequoia Growth IPOs today — a nice way to start the week this Monday afternoon.

Finally, Altimeter Capital, who did the Series C owns 14.8%, ICONIQ owns 13.8%, and Redpoint, who did the Series B, owns 9.0%.

To see the breakdown in returns, let’s start by taking a look at the company’s share price and carrying values for each of its rounds of capital:

On top of that, what’s interesting is that Snowflake broke down the share purchases by firm for the last four rounds (D through G-1) the company fundraised:

That level of detail actually allows us to grossly compare the multiples on invested capital for these firms.

Sutter Hill, despite owning large sections of the company early on, continued to buy up shares all the way through the Series G, investing an additional $140 million in the later-stage rounds of the company. Adding in the entirety of its $5 million Series A round and a bit from the Series B assuming pro rata, the firm is looking on the order of a 16x return (assuming the IPO price is at least as good as the last round price).

Outside Sutter Hill, Redpoint has the best multiple return profile, given that it only invested $60 million in these later-stage rounds while still maintaining a 9.0% ownership stake. Both Sutter Hill and Redpoint purchased roughly 20% of their overall stakes in these later-stage rounds. Doing some roughly calculating, Redpoint is looking at a return of about 12-13x.

Sequoia’s multiple on investment is capped a bit given that it only invested in the most recent funding rounds. Its 8.4% stake was purchased for nearly $272 million, all of which came in these late-stage rounds. At Snowflake’s last round valuation of $12.4 billion, Sequoia’s stake is valued at $1.04 billion — a return of slightly less than 4x. That’s very good for mezzanine capital, but nothing like the multiple that Sutter Hill or Redpoint got for investing early.

Doing the same back-of-the-envelope math and Altimeter is looking at a better than 6x return, and ICONIQ got 7x. As before, if the stock zooms up, those returns will look all the better (and of course, if the stock crashes, well…)

One final note: The pattern for these last four funding rounds is unusual for venture capital: Snowflake appears to have “spread the love around,” having multiple firms build up stakes in the startup over several rounds rather than having one definitive lead.

#altimeter-capital, #enterprise, #finance, #fundings-exits, #iconiq-capital, #ipo, #redpoint-ventures, #sequoia-capital, #snowflake, #sutter-hill-ventures

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A quick peek at Snowflake’s IPO filing

Snowflake filed to go public today joining a bushel of companies making their S-1 documents public today. TechCrunch has a longer digest of all the IPO filings coming soon, but we could not wait to get into the Snowflake numbers given the huge anticipation that the company has generated in recent quarters.

Why? Because the cloud data warehouse company has been on a fundraising tear in recent years, including a $450 million Series F in late 2018 and a $479 million Series G in February of this year. The latter round valued the mega-unicorn at around $12.5 billion. More on this later.

Snowflake is, then, one of the world’s most valuable former startups that is still private. Its public debut will make a splash. But what did its $1.4 billion in capital raised (Crunchbase data) build? Let’s take a peek at the numbers.

Growth

Even glancing at the Snowflake S-1 makes it clear what investors are excited about it when it comes to the big-data storage service: It’s growth. In its fiscal year ending January 31, 2019, for example, Snowflake had revenue of $96.7 million. A year later that number was $264.7 million, or growth of around 150% at scale.

More recently the company’s growth has remained impressive. In the six months ending July 31, 2019, Snowflake’s revenue was $104.0 million. A year later, those two quarters generated revenues of $242.0 million. That’s growth of 132.7% on a year-over-year basis. Impressive, and just the sort of top line expansion that private investors want to staple their wallet to.

So, lots of growth. But how high-quality is the revenue?

Margins

Let’s take a look at the company’s gross margins over different time periods. The data will help us better understand the company’s value, and its gross margin improvement, or impairment over time. Given Snowflake’s soaring valuation over time we are expecting to see improvements as time passes:

  • Fiscal year ending January 31, 2019: 46.5%
  • Fiscal year ending January 31, 2020: 56.0%
  • Six months ending July 31, 2019: 49.4%
  • Six months ending July 31, 2020: 61.6%

Et voilà ! Just like we expected, improving gross margins over time. Recall that the higher (stronger) a company’s gross margins are, the more if its revenue it gets to keep to cover its operating costs. Which is, notably, where the Snowflake story goes from super-exciting to slightly harrowing.

Let’s talk losses.

Losses

In no way does Snowflake’s operations pay for themselves. Indeed, the company is super unprofitable on both an operating, and net basis.

In its fiscal year ending January 31, 2019, Snowflake lost $178.0 million on a net basis. A year later the figure swelled to $348.5 million. In the six months ending July 31, 2019, the company’s net loss was $177.2 million. In the same two quarters of this year, it was slightly lower at $171.3 million.

And that’s why the company is probably trying to go public. Now that it can point to falling net losses as its revenues grow and its gross margins improve, you can chart a path to breakeven. And Snowflake’s operations are burning less cash over time. The pace was north of $50 million a quarter in the two three-month periods ending July 31, 2019, for example.

And even more, if we look inside the last two quarters, the most recent period (three months ending July 31, 2019) is larger than the one preceding it in revenue terms ($133.1 million vs. $108.8 million), and its net loss is smaller ($77.6 million vs. $93.6 million). This lowered the company’s net margin from -86% to -58%. Still bad! But far less bad in short order, which could cut worries about Snowflake’s enormous history of unprofitability at scale.

How we got here

Since Snowflake first appeared in 2012, its ability to take the idea of a data warehouse, a concept that has existed on prem for years, and move into a cloud context had great appeal — and it attracted great investment. Imagine taking virtually all your data and having it in a single place in the cloud.

The money train started slowly at first with $900,000 in seed money in February 2012, followed quickly by a $5 million Series A later that year. Within a few years investors would handing the company bundles of cash and the train would be the high speed variety, first with former Microsoft executive Bob Muglia leading the way, and more recently with former ServiceNow CEO Frank Slootman in charge.

By 2017 there were rapid fire rounds for big money: $105 million in 2017, $263 million in January 2018, $450 million in October 2018 and finally $479 million this past February. With each chunk of money came gaudier valuations with the most recent weighing in at an eye-popping $12.4 billion. That was triple the company’s $3.9 billion valuation in that October 2018 investment.

Telegraphing the inevitable

In February, Slootman did not shy away from the IPO question. Unlike so many startup CEOs, he actually embraced the idea of finally taking his company public, whenever the time was right, and apparently that would be now, pandemic or not.

He actually almost called the timing in a conversation with TechCrunch at the time of the $479 million round:

“I think the earliest that we could actually pull that trigger is probably early- to mid-summer timeframe. But whether we do that or not is a totally different question because we’re not in a hurry, and we’re not getting pressure from investors,” he said.

All money talk aside, at its core, what Snowflake offers is this ability to store vast amounts of data in the cloud without fear of locking yourself in to any particular cloud vendor. While all three cloud players have their own offerings in this space, Snowflake has the advantage of being a neutral vendor — and that has had great appeal to customers, who are concerned about vendor lock-in.

As Slootman told TechCrunch in February:

“One of the key distinguishing architectural aspects of Snowflake is that once you’re on our platform, it’s extremely easy to exchange data with other Snowflake users. That’s one of the key architectural underpinnings. So content strategy induces network effect which in turn causes more people, more data to land on the platform, and that serves our business model,” he said

So what?

When it rains it pours. Unity filed. JFrog filed. We still need to talk X-Peng. Corsair has filed as well. And there are still a host of companies that have filed privately, like Airbnb and DoorDash, that could drop a new filing at any moment. What an August!

#bob-muglia, #cloud-data-warehouses, #frank-slootman, #fundings-exits, #snowflake, #startups, #tc

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Wing, founded by veterans of Accel and Sequoia, rounds up $450 million for its third fund

Wing, an early-stage, Palo Alto, Ca.-based venture firm that was formed in 2013 by veteran VCs Peter Wagner and Gaurav Garg, has closed its third fund with $450 million in capital commitments. That’s substantially larger than the $300 million that the firm raised for its second fund — and it was raised entirely virtually, says Wagner.

What’s so interesting that investors agreed to back Wing through highly uncertain market conditions? A few things, seemingly, beginning with the team itself. Wagner previously spent more than 14 years as a partner with Accel, while Garg was a partner with Sequoia Capital for roughly a dozen years, and institutional investors like that kind of pedigree.

The duo has also slowly been building out their investment team, bringing in a younger partner, Zach Dewitt, in 2017 and more recently recruiting three other investing partners: Sara Choi, formerly of Google; Jake Flomenberg, formerly of Accel; and Aaref Hilaly, formerly of Sequoia.

Wing’s focus on startups that enable the “modern enterprise,” meaning workplaces built on data and powered by AI, is a particularly appealing pitch right now, too, as companies more quickly shift to remote work and cloud-based services.

Indeed, the firm has already seen a three of its portfolio companies acquired, including Aporeto’s $150 million sale to Palo Alto Networks last November, Shape Security’s December acquisition by F5 Networks for $1 billion, and sale of Cumulus Networks to Nvidia just last month, for undisclosed terms.

The icing on the cake, presumably: Wing is also a seed investor in Snowflake Computing and has participated in every round that the company has conducted since. Considering that Snowflake was valued at $12.4 billion when it closed a massive financing in February, that bet has to have Wing’s investors excited, especially with an IPO imminent. (Snowflake CEO Frank Slootman has suggested the company’s next fundraising event will be a public one.)

We talked with Wagner earlier today about raising the fund during lockdown conditions, an experience he called “interesting” but that, luckily for the firm, mostly meant talking with representatives from the university endowments, family offices, and fund of funds that were already backers of the firm. Though Wing has a handful of new backers, he added, it had gotten to know four of them in recent years, leaving just one whose relationship with the firm came together entirely over Zoom and other collaborative tools.

We asked whether Wing has made any investments of its own while the U.S. has largely sheltered in place.

He said of four deals in the pipeline currently — two for its last fund and its first two deals for its third fund —  it has backed just one founder who it hasn’t yet met in person. “You have to be very intentional, really exercise your listening skills, and communicate very clearly,” said Wagner of the process, adding that: “If a founder is coming from a network of people where you have a lot of relationships, that can add some level [of comfort], too.”

Given the renewed focus on diversity in Silicon Valley, both within the ranks of venture funds and within the funds’ respective portfolios, we also asked Wagner if Wing has backed any founders of color.

The firm — which writes checks as small as $200,000, has the flexibility to pour more than $20 million into a single startup, and only moves forward when the partnership votes unanimously to do so — has just one related seed investment in a genomics company focused on post-traumatic stress disorder, he said.

“We can do better,” said Wagner, who has separately joined dozens of other VCs in pledging to host “open office hours” for between one and four hours each week in an effort to form more relationships with students and founders of color.

“There are other things to be done, and frankly, we’re open to good ideas.”

#accel, #cumulus-networks, #sequoia, #snowflake, #tc, #venture-capital, #wing

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Former Tesla and Lyft exec Jon McNeill just launched a fund that plans to spin out its own companies

Lyft’s former COO Jon McNeill has had a fairly storied career as an operator.  A Northwestern University economics major who worked at Bain & Co. out of college, he went on to start and sell five companies before being introduced in 2015 to Elon Musk by Sheryl Sandberg and spending 2.5 years as Tesla’s president of global sales and service.

He was apparently so good at his job that Lyft’s investors asked him to join the car-share company to help it go public. There, he helped build up the company’s management team, got it through its public offering, then decamped last year roughly four months later.

At the time, the move left some shareholders scratching their heads. It also drove down the price of Lyft’s shares. Now, McNeill says he had too many ideas percolating to stay. He has so many, in fact, that he just cofounded a business that will launch other businesses.

It’s called Called DeltaV — an engineering term for a change in velocity — and the idea is to formulate startup ideas, get them up and running, then when when they’re at the Series B phase of life, seek outside funding while hanging on to roughly 80 percent of each company.

It’s a tall order, but McNeill thinks he has the team to do it.

Along with McNeill, DeltaV was founded by Karim Bousta, who spent eight years with GE before joining Symantec as a vice president, where McNeill lured him away to Tesla, then brought him to Lyft as its VP and head of operations. (Bousta more recently logged a quick five months as an operating partner with SoftBank Investment Advisors.)

DeltaV also counts as a cofounder Sami Shalabi, who spent nearly a dozen years as a top engineer at Google after it acquired a company he cofounded called Zingku; Michael Rossiter, a business operations exec who, like Bousta, worked with McNeill at both Tesla and Lyft; and Henry Vogel, who has cofounded a number of companies and was among the first partners at BCG Digital Ventures, the corporate investment firm. (Vogel was also McNeill’s roommate when the two were college freshmen.)

As important, McNeill also thinks DeltaV has the structure needed to pursue the founders’ collective vision of investing in fewer companies that they themselves start and grow. Specifically, the five have rounded up $40 million from a dozen investors — mostly family offices — for an evergreen fund. What that means: investors are committing to allow them to recycle capital, rather than aim to return it after a certain window of time. (Most traditional venture funds, for example, have a 10-year-long investment period.)

Evergreen funds have never gained much traction in the venture world, even while — or because —  they alleviate expensive management fees. Still, there are precedents for what DeltaV is trying to do and, in fact, McNeil volunteers that they largely inspired what the team has built. After spending time with as many accelerators, incubators, and startup studios that time would allow, McNeil says he walked away the most impressed with what two firms have created, and those are Sutter Hill Ventures in the Bay Area and Flagship Pioneering in Cambridge, Mass.

Both operate evergreen funds, and both of which have enviable track records. Since its 2000 founding, Flagship Pioneering has formed and spun out 75 companies and 22 of them have gone public since 2013 alone, McNeill notes. Meanwhile, Sutter Hilll, a much older outfit that also sources ideas internally, then tests them against the marketplace with the help of roughly 40 in-house engineers, has founded 50 companies, at least 18 of which have gone public. (Another, the cloud-based data warehouse company Snowflake, may be Sutter Hill’s next big win. It was valued at $12.4 billion when it most recently raised a round in February, and its CEO, Frank Slootman, suggested then that the company’s next financing event would likely be an IPO.)

We don’t know the ins and outs of how Flagship or Sutter Hill are structured, and it wasn’t McNeill’s place to tell us.

But for its part, DeltaV doesn’t collect fees. Instead, its investors own a stake of the company, alongside the founders.

Further, while evergreen funds often provide limited partners with the ability to exit or change their investment in the fund every four years or so, DeltaV doesn’t restrict them at all. Investors instead have board representation and will have a say in how much is recycled versus distributed, and can distribute or shares driven by their needs, without any set windows.

Whether the arrangement proves lucrative for everyone will take take years to know, of course. Our sense of things is that DeltaV itself aims to become a public company at some point.

In the meantime, it already has four startups in the works, including one that should be out of stealth mode by early summer and another that the firm hopes to introduce to the world this fall.

The first is a pricing and profit optimization service that aims to help e-commerce players better compete with Amazon. The other is an automotive service business. McNeill wouldn’t share more than that right now, though he adds that a separate idea — one that  revolved around the gig economy and the “future of work” — has been shelved for now, given the impacts of the coronavirus

It begs the question of why McNeill thinks right now is a good time to start DeltaV. He laughed when we asked about this earlier today. He said it was certainly a surprise. In fact, he and his cofounders firmed up their plans just in January and hit the fundraising trail roughly five weeks ago, just as the United States began to come apart at the seams.

But while it forced the team to change some of their priorities in terms of the companies that Delta V eventually hopes to launch, McNeill believes in the old adage that there’s no time to start a company like during a major downturn. As he told us on a call, “We’re actually accelerating a bit in terms of making much more forward progress,” particularly where it concerns the firm’s profit-optimization startup.

As McNeill explained it, he and his cofounders “want to make this a very long-term, durable business. We want to create dozens of companies over time.” They’re all operators who know a thing or two about repeatable processes, he added. Now, he said, they’ve just codified what they’ve been doing all along.

#google, #jon-mcneill, #lyft, #snowflake, #tc, #tesla, #venture-capital

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Startups are helping cloud infrastructure customers avoid vendor lock-in

For much of the history of enterprise technology, companies tended to buy from a single vendor because it made managing the entire affair much easier while giving them a “single throat to choke” when something went wrong. On the flip side, it also put customers at the mercy of said vendor — and it wasn’t always pretty.

As we move deeper into the cloud model, many IT pros are looking for more flexibility than they had in the past, avoiding the vendor lock-in from the previous generation of enterprise tech, and what being beholden to a single vendor could mean for the bottom line and their own flexibility.

This is something that comes up frequently in discussions about moving workloads from one cloud to another, and is sometimes referred to as a multi-cloud approach. Customers are loath to leave their workloads in the hands of one vendor again and repeat the mistakes of the past. They are looking to have the same flexibility on the infrastructure side that they are getting in the SaaS world, where companies tend to purchase best-of-breed from multiple vendors.

That means, they want the freedom to move workloads between clouds, but that’s not always as easy a prospect as it might seem, and it’s an area where startups could help lead the way.

What’s the problem?

What’s stopping customers from just moving data and applications between clouds? It turns out that there is a complex interlinking of public cloud APIs that help the applications and data work in tandem. If you want to pull out of one public cloud, it’s not a simple matter of just migrating to the next one.

#cloud, #cloud-infrastructure, #cloud-native, #egnyte, #enterprise, #extra-crunch, #frank-slootman, #snowflake, #startups, #tc, #vineet-jain

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