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How well do Robinhood’s financials stack up against incumbent online brokerages? While we wait for the seven-year-old company’s long-planned IPO, Alex Wilhelm examined Morgan Stanley’s big $13 billion purchase of E-Trade for fresh data comparison points. Robinhood has 10 million accounts — twice what E-Trade has — but it also appears to make much less money per user and has far fewer assets under management, as he covered for Extra Crunch. So while its fee-free approach has destroyed a key revenue stream for competitors, it still has to grow its own “order-flow” business into its private-market valuation.

One solution is to make the platform stickier via social features. On the same day as the E-Trade deal announcement, Robinhood launched a new Profiles feature to encourage users to share stock tips. Josh Constine explored the offering and where it is headed on TechCrunch, concluding that “Profiles and lists, and then eventually more social features, could get Robinhood’s users trading more so there’s more order flow to sell and more reason for them to buy subscriptions.”

Alex also took a look at a new report on fintech funding, which found last year was a peak overall — but skewed towards later-stage companies. Certainly, the wealth management segment is looking mature.

But the category is massive, with many more incumbents left to disrupt. What are fintech investors looking for? Check out our popular investor survey on this topic from November.

How your startup can use TikTok for growth You know that TikTok is where the cool kids are these days, but maybe… how do I say… it is not the social media platform you know best when it comes to growth. So Geneviève Patterson and Hannah Donovan, founders of TikTok-oriented video editing app TRASH, have published a two-part guide to help you figure it out. The first part, freely available on TechCrunch, walks you through how to increase your authority ranking in the TikTok algorithm, its review process, and pointers for making your own content. The second part, for Extra Crunch subscribers, goes deep on how TikTok decides whose content gets featured more (and less). Fifth Wall’s Brendan Wallace: the proptech sector is hot despite WeWork

“Our mandate is any technology that can be strategic to the real estate industry,” the prolific investor told Connie Loizos in an extended interview for Extra Crunch this week. While WeWork may have depressed some investor interest, plenty of models are working great across various segments — so he and his partners are raising more funds. One of the hottest sectors, perhaps surprisingly, is in sustainable buildings. As Wallace details, public pressure, large-tenant pressure, large-investor pressure and new metro requirements have removed any choice that the industry has in the matter:

Make no mistake; we are front-and-center to what is happening in the real estate industry and the collision with technology, and this is the single-most-important thing that has happened to the real estate industry in the last five decades. The real estate industry is going to have to go carbon-neutral and that is brand-new.

Is this sector also your focus? Be sure to check out our survey of investors in construction robotics from last week to find out some of the latest opportunities, plus our overview survey of real estate and prop tech investors from November.

The future of manufacturing and warehouse robotics

Ahead of our big robotics conference at UC Berkeley in early March, we have been producing a whole series of surveys on robotics verticals. This week, our resident financial analyst Arman Tabatabai teamed up with our hardware editor turned conference organizer, Brian Heater, to do a series of interviews with VCs who are focused on warehouse and manufacturing robotics. Investors include:

• Rohit Sharma, True Ventures
• Ajay Agarwal, Bain Capital Ventures
• Rick Prostko, Comcast Ventures
• Fatima Husain, Comcast Ventures
• Shahin Farshchi, Lux Capital
• Cyril Ebersweiler, SOSV & HAX
• Kelly Coyne, Grit Ventures

Read more here.

Tell TechCrunch about gaming startups and remote work

Our media columnist Eric Peckham wants to feature your advice in two upcoming articles. If you have relevant expertise, click the links below and share your opinions.

• What are the best cities for gaming startups and how should gaming entrepreneurs compare which city is right for them?
• Have you helped lead a startup whose team is split 8-10 time zones apart between offices in Europe/Israel and the West Coast of the US? What tips do you have for others navigating this challenge?

Across the week

Do AI startups have worse economics than SaaS shops? (EC)

Elon Musk says all advanced AI development should be regulated, including at Tesla (TC)

SpaceX alumni are helping build LA’s startup ecosystem (EC)

Dear Sophie: I need the latest details on the new H-1B registration process (TC)

Tracking China’s astounding venture capital slowdown (EC)

The rise of the winged pink unicorn (TC)

Voodoo Games thrives by upending conventional product design (EC)

Ex-YC partner Daniel Gross rethinks the accelerator (TC)

How companies are working around Apple’s ban on vaping apps (EC)

Rippling starts billboard battle with Gusto (TC)

#Equitypod

This week was a fun combination of early-stage and late-stage news, with companies as young as seed stage and as old as PE-worthy joining our list of topics.

Danny and Alex were back on hand to chat once again. Just in case you missed it, they had some fun talking Tesla yesterday, and there are new Equity videos on YouTube. Enjoy!

This week the team argued about org-chart companies, debt raises, some of the items mentioned above, and much more. Details here.

Financial services startups raised less money in 2019 than they did in 2018 as VC firms looked to back late stage firms and focused on developing markets, a new report has revealed.

According to research firm CB Insights’ annual report published this week, fintech startups across the world raised $33.9 billion* in total last year across 1,912 deals*, down from $40.8 billion they picked up by participating in 2,049 deals the year before.

It’s a comprehensive report, which we recommend you read in full here (your email is required to access it), but below are some of the key takeaways.

• Early stage startups struggled to attract money: Per the report, financing for startups looking to close Seed or Series A dropped to a five-year low in 2019. On the flip side, money pouring into Series B or beyond startups was at record five-year high.

  Early-stage deals dropped to a 12-quarter low as deal share globally shifts to mid- and late-stages (CB Insights)

• Emerging and frontier markets were at the centre stage of the most of the action: South America, Africa, Australia, and Southeast Asia all topped their annual highs last year.
• Asia outpaced Europe in the second half of last year on both number of deals and bulk of capital raised. In Q3, European startups raised $1.6 billion through 95 deals, compared to $1.8 billion amassed by Asian startups across 157 deals. In Q4, a similar story was at play: European startups participated in 100 rounds to raise $1.2 billion, compared to $2.14 billion* raised by Asian startups across 125 deals*.
• Emergence of 24 new fintech unicorns in 2019: 8 fintech startups including Next Insurance, Bight Health, Flywire, High Radius, Ripple, and Figure attained the unicorn status in Q4 2019, and 16 others made it to the list throughout the rest of the last year.

  The fintech market globally today has 67 unicorns as of earlier this month (CB Insights)

• Insurtech sector, or startups such as Lemonade, Hippo, Next, Wefox, Bright Health that are offering insurance services, got a major boost last year. They raised 6.2 billion last year, up from $3.2 billion in 2018.
• Startups building solutions such as invoicing and taxing services and payroll and payments solutions for small and medium businesses also received the nod of VCs. In the U.S. alone, where more than 140 startups are operating in the space, raised $4 billion. In many more markets, such startups are beginning to emerge. In India, for instance Open and NiYo are building neo-banks for small businesses and they both raised money last year.
• Nearly 50% of all funding to fintech startups was concentrated in 83-mega rounds (those of size $100 million or above.): According to the research firm, 2019 was a record year for such rounds across the globe, except in Europe.

  2019 saw 83 mega-rounds totaling $17.2B, a record year in every market except Europe

• Funding of Germany-based startups reached an annual high: 65 deals in 2019 resulted in $1.79 billion raise, compared to 56 deals and raise of $757 million in 2018, and 66 deals and $622 million raise in 2017.
• Financial startups in Southeast Asia (SEA) raised $993 million across 124 rounds in 2019 in what was their best year.

*CB Insights report includes a $666 million financing round of Paytm . It was incorrectly reported by some news outlets and the $666 million raise was part of the $1 billion round the Indian startup had revealed weeks prior. We have adjusted the data accordingly.

Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.

The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times  published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank  Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.

A new research study from Acquire Market Research with title Global 'Telephony/VOIP Software Market' Research (2015-2020) and Future Forecast ...

Tyler Haney, the founder and chief executive of activewear label Outdoor Voices, has stepped down, according to the Business of Fashion.

We’ve reached out to Haney directly, as well as board members from the venture firms that have backed the company, including General Catalyst and Forerunner Ventures, and we hope to update this story accordingly.

According to BoF, the transition follows a previously unreported capital injection from Outdoor Voices’ investors at a lower valuation than previous rounds. It says the company tried raising new funding late last year but “had difficulty.”

It cites mismanagement as one overriding reason that Nike and Under Armour veteran Pamela Catlett joined the company a year ago as president but left months later.

Retail legend Mickey Drexler, formerly of J.Crew fame — who was named chairman of Outdoor Voices’ board in the summer of 2017 as part of a $9 million convertible debt round led by Drexler’s family office — also resigned his position last year, though he maintained a director’s seat.

According to BoF, operational challenges aside, Outdoor Voices has had trouble replicating the kind of excitement that met its earliest offerings, including flattering, color-blocked athleisure wear, like leggings, sports bras, tees and tanks.

The company has since rolled out an exercise dress that has gained traction with some consumers, but newer offerings meant to extend the brand’s reach, including solidly colored hoodies and terrycloth jogging pants that are less distinguishable from other offerings in the market, have apparently failed to boost sales.

Indeed, according to the BoF report, the brand was losing up to $2 million per month last year on annual sales of around $40 million.

The BoF story doesn’t mention the company’s brick-and-mortar locations and how they factor into the company’s narrative. But certainly, as with a growing number of direct-to-consumer brands that have been encouraged by their backers to open real-world locations, they’ve become a major cost center for the outfit. Outdoor Voices now has 11 locations around the U.S., including in Austin, LA, Soho in New York, Boston, Nashville, Chicago and Washington, D.C.

Even with (at least) $64 million in funding that Outdoor Voices has raised from investors over the years, it’s also going head-to-head with very powerful, very entrenched and endurably popular brands, including Nike and Adidas. While Outdoor Voices is still in the fight, the shoe and apparel giants have vanquished plenty of upstarts over the years.

What happens next to Haney — a former track athlete from Boulder who first launched the business with a Parsons School of Design classmate — isn’t yet clear. Still, she isn’t going far, reportedly. BoF says she still owns 10% of Outdoor Voices and will remain engaged with the company in some capacity.

Featured above, left to right, Emily Weiss of Glossier and Tyler Haney of Outdoor Voices at a 2017 Disrupt event.

A few days ago, Andreessen Horowitz’s Martin Casado and Matt Bornstein published an interesting piece digging into the world of artificial intelligence (AI) startups, and, more specifically, how those companies perform as businesses. Core to the argument presented is that while founders and investors are wagering “that AI businesses will resemble traditional software companies,” the well-known venture firm is “not so sure.”

Given that TechCrunch cares a lot about startup business fundamentals, the notion that one oft-discussed and well-funded category of venture-backed startup might sport materially less attractive economics than we expected captured our attention.

The Andreessen Horowitz (a16z) perspective is straightforward, arguing that AI-focused companies have lesser gross margins than software companies due to cloud compute and human-input costs, endure issues stemming from “edge-cases” and enjoy less product differentiation from competing companies when compared to software concerns. Today, we’re drilling into the gross margin point, as it’s something inherently numerical that we can get other, informed market participants to weigh in on.

If a16z is correct about AI startups having slimmer gross margins than SaaS companies, they should — all other things held equal — be worth less per dollar of revenue generated; or in simpler terms, they should trade at a revenue multiple discount to SaaS companies, leaving the latter category of technology company still atop the valuation hierarchy.

This matters, given the amount of capital that AI-focused startups have raised.

Is a16z correct about AI gross margins? I wanted to find out. So this week I spoke to a number of investors from firms that have made AI-focused bets to get a handle on their views. Read the full a16z piece, mind. It’s interesting and worth your time.

Today we’re hearing from Rohit Sharma of True Ventures, Jeremy Kaufmann of Scale Venture Partners, Nick Washburn of Intel Capital and Ben Blume of Atomico. We’ll start with a digest of their responses to our questions, with their unedited notes at the end.

AI economics and optimism

We asked our group of venture investors (selected with the help of research from TechCrunch’s Arman Tabatabai) three questions. The first dealt with margins themselves, the second dealt with resulting valuations and, finally, we asked about their current optimism interval regarding AI-focused companies.

DSP Concepts — a startup whose Audio Weaver software is used by companies as varied as Tesla, Porsche, GoPro and Braun Audio — is announcing that it has raised $14.5 million in Series B funding.

The startup goal, as explained to me by CEO Chin Beckmann and CTO Paul Beckmann (yep, they’re a husband-and-wife founding team), is to create the standard framework that companies use to develop their audio processing software.

To that end, Chin told me they were “picky about who we wanted on the B round, we wanted it to represent the support and endorsement of the industry.”

So the round was led by Taiwania Capital, but it also includes investments from the strategic arms of DSP Concepts’ industry partners — BMW i Ventures (which led the Series A), the Sony Innovation Growth Fund by Innovation Growth Ventures, MediaTek Ventures, Porsche Ventures and the ARM IoT Fund.

Paul said Audio Weaver started out as the “secret weapon” of the Beckmanns’ consulting business, which he could use to “whip out” the results of an audio engineering project. At a certain point, consulting customers started asking him, “Hey, how about you teach me how to use that?,” so they decided to launch a startup focused on the Audio Weaver platform.

Paul described the software as a “graphical block diagram editor.” Basically, it provides a way for audio engineers to combine and customize different software modules for audio processing.

“Audio is still in the Stone Ages compared to other industries,” he said. “Suppose you’re building a product with a touchscreen — are you going write the graphics from scratch or use a framework like Qt?”

Similarly, he suggested that while many audio engineers are still “down in the weeds writing code,” they can take advantage of Audio Weaver’s graphical interface to piece everything together, as well as the company’s “hundreds of different modules — pre-written, pre-tested, pre-optimized functions to build up your system.”

For example, Paul said that by using the Audio Weaver platform, DSP Concepts engineers could test out “hundreds of ideas” for algorithms for reducing wind noise in the footage captured by GoPro cameras, then ultimately “hand the algorithms over to GoPro,” whose team could them plug the algorithms into their software and modify it themselves.

The Beckmanns said the company also works closely with chip manufacturers to ensure that audio software will work properly on any device powered by a given chipset.

Other modules include TalkTo, which is designed to give voice assistants like Alexa “super-hearing,” so that they can still isolate voice commands and cancel out all the other noise in loud environments, even rock concerts. (You can watch a TalkTo demo in the video below.)

DSP Concepts has now raised more than $25 million in total funding.

 

The measure (A-229) would direct the Board of Public Utilities to require telecommunications companies that offer Voice over Internet Protocol (VoIP) ...

Voice over Internet Protocol (VoIP) is considered as the most efficient way to communicate across the globe. With the internet as a signal, it uses digital ...

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

This week was a fun combination of early-stage and late-stage news, with companies as young as seed stage and as old as PE-worthy joining our list of topics.

Danny and Alex were back on hand to chat once again. Just in case you missed it, they had some fun talking Tesla yesterday, and there are new Equity videos on YouTube. Enjoy!

Here’s what the team argued about this week:

• HungryPanda raises $20 million from 83North and Felix Capital. With a focus on Chinese food, Chinese language users and Chinese payment options like Alipay, it’s a neat play. According to TechCrunch, the service is live in 31 cities in the U.K., Italy, France, Australia, New Zealand and the U.S and is targeting $200 million in GMV by early Summer.
• The Org raises $8.5 million, ChartHop raises $5 million. Hailing from two different product perspectives, these two org chart-focused companies both raised capital Thursday morning. That made them interesting to Alex as they formed yet another startup cluster, and Danny was transfixed by their differing starting points as businesses, positing that they will possibly move closer to each other over time.
• DigitalOcean’s $100 million debt raise. The round — an addition of capital to a nearly profitable, SMB-focused cloud infra provider — split our hosts, with one leaning more toward a PE-exit and the other an IPO. Whether it can drive margins in the smaller-spend cloud customer segment will be critical to watch in the coming months.
• (For more on venture debt writ large, head here.)
• And finally, the E-Trade sale to Morgan Stanley, and what it might mean for Robinhood’s valuation. As Danny points out, the startup has found a good business in selling the order flow of its customers. Alex weighed in that the company has more revenue scaling to do before it grows into its last private valuation. So long as the market stays good, however, Robinhood is probably in good shape.

Equity is nearly three years old, and we have some neat stuff coming up that you haven’t heard about yet. Stay tuned, and thank you for sticking with us for so long.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Robotics and automation tools are now foundational parts of warehouses and manufacturing facilities around the world. Unlike many other robotics and AI use cases, the technology has moved well beyond the theoretical into practice and is used by small suppliers and large companies like Amazon and Walmart.

There’s no doubt that automation will transform every step of the supply chain, from manufacturing to fulfillment to shipping and logistics. The only question is how long such a revolution will take.

There’s still plenty of market left to transform and lots of room for new players to redefine different verticals, even with many of the existing leaders having already staked their claim. Naturally, VCs are plenty eager to invest millions in the technology. In 2019 alone, manufacturing, machinery and automation saw roughly 800-900 venture-backed fundraising rounds, according to data from Pitchbook and Crunchbase, close to two-thirds of which were still early-stage (pre-seed to Series B) investments.

With our 2020 Robotics+AI sessions event less than two weeks away, we’ve decided to perform temperature checks across some of the hottest robotics sub-verticals to see which trends are coming down the pipe and where checks are actually being written. Just as we did with construction robotics last week, this time, we asked seven leading VCs who actively invest in manufacturing automation robotics to share what’s exciting them most and where they see opportunities in the sector:

• Rohit Sharma, True Ventures
• Ajay Agarwal, Bain Capital Ventures
• Rick Prostko, Comcast Ventures
• Fatima Husain, Comcast Ventures
• Shahin Farshchi, Lux Capital
• Cyril Ebersweiler, SOSV & HAX
• Kelly Coyne, Grit Ventures

TC Sessions: Robotics + AI 2020

Rohit Sharma, True Ventures

Which trends are you most excited about in manufacturing/warehouse automation robotics from an investing perspective?