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Startups Weekly: What the E-Trade deal says about Robinhood

12 hours 27 min ago

[Editor’s note: Want to get this weekly review of news that startups can use by email? Just subscribe here.] 

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:

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.

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.

Categories: Business News

Fintech startups raised $34B in 2019

13 hours 26 min ago

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.

Categories: Business News

Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million

2020, February 22 - 7:07am

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.

Categories: Business News

Report: Outdoor Voices founder Tyler Haney is stepping down as CEO as growth slows

2020, February 22 - 3:35am

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.

Categories: Business News

Do AI startups have worse economics than SaaS shops?

2020, February 22 - 3:17am

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.

Categories: Business News

DSP Concepts raises $14.5M for its Audio Weaver platform

2020, February 22 - 1:14am

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.

 

Categories: Business News

Equity is not always the answer

2020, February 21 - 11:02pm

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 PodcastsOvercastSpotify and all the casts.

Categories: Business News

Where top VCs are investing in manufacturing and warehouse robotics

2020, February 21 - 11:00pm

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:

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?

Categories: Business News

Volocopter extends Series C funding to $94M with backing from logistics giant DB Schenker and others

2020, February 21 - 10:32pm

Autonomous air mobility company Volocopter has added to the Series C funding round it announced in September 2019. The German electric vertical take-off and landing (eVTOL) aircraft maker announced €50 million ($54 million at today’s exchange rate) in funding at the time, and the C round has now grown to €87 million ($94 million) thanks to new lead investor DB Schenker, a German logistics company with operations all over the world.

This round also includes participation by Mitsui Sumitomo Insurance Group, as well as the venture arm of its parent MS&AD, along with TransLink Capital . Existing investors, including Lukasz Gadowski and btov, also participated in this round extension.

With this new funding, Volocopter brings its total raised to around $132 million, and it says it will use the newly acquired capital to help certify its VoloCity aircraft, its air taxi eVTOL designed to transport people, which is on track to become the company’s first-ever vehicle licensed for commercial operation. Meanwhile, Volocopter will also use the new funds to help continue development of a next-generation iteration of its VoloDrone, which is the cargo-carrying version of its aircraft. It aims to use VoloDrone to expand its market to include logistics, as well as construction, city infrastructure and agriculture.

Already, Volocopter has formed partnerships with companies including John Deere for pilots of its VoloDrone, but it says that a second-generation version of the vehicle will help it commercialize the drone. On the VoloCity side, the company recently flew a demonstration flight in Singapore, and then announced they’d be working with Grab on a feasibility study about air taxi services for potential deployment across Southeast Asia in key cities.

Alongside this round extension, Volocopter adds two advisory board members — Yifan Li from Geely Holding Group, which led the first tranche of this round closed in September, and DB Schenker CEO Jochen Thewes. Both of these are key strategic partners from investors who stand to benefit the company not only in terms of funding, but also in terms of supply-side and commercialization.

Categories: Business News

Tier Mobility, the European e-scooter rentals startup, adds another ~$40M to its Series B

2020, February 21 - 6:00pm

Tier, the European e-scooter rentals startup that operates in 55 cities across 11 countries, has topped up its funding for the second time in four months.

The Berlin-based company has extended its Series B round to over $100 million, up from $60 million disclosed in October. The additional capital is a mix of equity and debt financing provided by Moscow’s RTP Global, London’s Novator, and an unnamed U.S. debt fund. Part one of the Series B was co-led by Mubadala Capital and Goodwater Capital.

Tier says the additional funds will be invested in R&D in order to create further efficiency and for vehicle development. The so-called “micro-mobility” startup will also continue to strengthen its management team — the company recently recruited a new CCO and COO — and pursue M&A activities.

In addition, Tier says it will expand its vehicle fleet — perhaps with new micro-mobility product categories — in order to bring “sustainable mobility to more people and more cities across Europe”.

Meanwhile, in January, Tier quietly acquired U.K. startup Pushme Bikes, a manufacturer of replaceable batteries and other mobility-related hardware. The company was thought to be developing a network of battery change stations for “last mile” transport, which would seem to tie directly into Tier’s recent move to upgrade its scooter fleet with new scooters that use swappable batteries.

In a brief WhatsApp call with Tier co-founder and CEO Lawrence Leuschner, he framed the purchase of Pushme Bikes as an “acqui-hire” based on the team’s design and development expertise, which he said will give Tier a needed boost in its future hardware plans.

He also said that Tier’s move to swappable battery-based e-scooters has already seen 80% of its fleet replaced with scooters using swappable battery technology, which in turn is helping drive much better unit economics. That’s because the scooters no longer need to be taken off the streets and driven by van to a central location for charging and maintenance, only to be driven back several hours later. Instead, on-location maintenance where possible is carried out and dead batteries are simply swapped out and taken by cargo e-bike (pictured) to a central charging warehouse or, in some instances, nearby charging “hub”.

Noteworthy, unlike the majority of e-scooter rental companies, Tier shunned gig economy workers for charging from the get-go, preferring to use a centralised system in order to maintain quality of service. “The gig economy is dead [in relation to e-scooter rentals],” Leuschner says emphatically, noting that swappable battery tech means a centralised system makes even greater sense.

And in case you’re wondering what Tier did with its old e-scooters after replacing most of its fleet with newer hardware, Leuschner explained that the Okai manufactured devices are being re-sold directly to German consumers for private use via MyTier app. Perhaps that’s unsurprising given that the Tier CEO previously founded reBuy, a European market leader in used electronics.

Cue statement from Anton Inshutin, Partner at RTP Global: “We were impressed by the team’s meticulous focus on capital efficiency and enhancing operational excellence. They have managed to deliver class-leading unit economics, enabling them to expand profitably in the winter. We are very much looking forward to partnering with this impressive team that is unrivalled in its execution as the company continues to scale”.

Bird confirms acquisition of Berlin scooter rival Circ

Categories: Business News

EV fleet management gets another venture-backed contender as Electriphi raises $3.5 million

2020, February 21 - 1:41pm

Electriphi, a provider of charging management and fleet monitoring software for electric vehicles, has joined the scrum of startups looking to provide services to the growing number of electric vehicle fleets in the U.S.

The San Francisco-based company has just raised $3.5 million in seed funding from investors, including Wireframe Ventures, the Urban Innovation Fund and Blackhorn Ventures. Lemnos Labs and Acario Innovation also participated in the round.

Electriphi’s pitch has resonated with school districts. It counts the Twin Rivers Unified School District in Sacramento, Calif. as one of its benchmark customers.

“Twin Rivers Unified School District has the largest fleet of electric school buses in North America, and our ambition is to transition to a fully electric fleet in the coming years,” said Tim Shannon, transportation services director, Twin Rivers Unified School District, in a statement. “This is a significant undertaking, and we needed a trusted partner that could provide us state-of-the-art charging management and help us with data collection and monitoring.”

There are several companies pursuing this market — all with either a bit of a head start, significant corporate backers or more capital. Existing offerings from EVConnect, GreenLots, GreenFlux, AmplyPower all compete with Electriphi.

The company is betting that the experience of co-founder Muffi Ghadiali, a former senior director at ChargePoint who led hardware and software development for fast charging infrastructure, can sway customers. Joining Ghadiali is Sanjay Dayal, who previously worked at Agralogics, Tibco, Xamplify, Versata and Sybase

There’s also the sheer scale of the opportunity, which is likely to see multiple companies emerge as winners.

“There are millions of public and commercial fleet vehicles in the U.S. alone that we rely on daily for transportation, delivery and services,” said Paul Straub, managing partner, Wireframe Ventures. “Many of these are beginning to consider electrification and the opportunity is tremendous.”

Categories: Business News

At Tock, this restaurant group owner and former trader is building a Spotify for reservations

2020, February 21 - 1:22pm

Tock, a six-year-old, Chicago-based culinary reservation service, has never had the kind of brand-recognition that other companies in the space have enjoyed, from publicly traded OpenTable to Resy, the New York-based company that was founded in 2014 and acquired last year for undisclosed terms by American Express.

That’s because Tock has relatively quietly been supporting customers, many of them high-end restaurants like French Laundry that, with Tock’s encouragement, began selling prepaid “tickets” for meals years ago. These aren’t unlike buying tickets to a concert or NBA game, sometimes weeks or even many months in advance.

Yet the reach of Tock appears to be growing. Late last month, in an interview with this editor, founder Nick Kokonas said the platform has been processing $2 million a day in these pre-paid tickets. He insists that by rethinking the reservations process for higher-end spots, Tock has drastically reduced both wasted food and no shows. As he said during our sit-down, “If you think about it, if you’re going to buy a ticket to the Rose Bowl and see a game, and suddenly your dog gets sick and you’ve got to go to the vet, you do not call the Rose Bowl and say, ‘I’m really sorry, I can’t make it tonight. Give me my money back.’ ”

Tock has since announced a partnership with Chase, a partner of two years that just expanded its tie-up with Tock such that Chase Sapphire, Freedom and link cardholders will now have access to a dining page within the Chase mobile app that, driven by Tock, enables cardholders to browse, book and pay ahead for dining experiences at restaurants, bars, pop-ups and wineries. (It gives Tock, which says it already had 10 million users, another “30 million households at once,” said Kokonas.)

That bit of momentum begs the question of whether Tock — which is backed with $17 million from Origin Ventures, Valor Equity Partners and others — might go the Resy route and itself become part of a credit card giant. But Kokonas — a hyphenate who also co-owns a prominent restaurant group that includes the famed Alinea in Chicago — suggests he’s inclined to keep building the business for now. He has too many ideas of where to take it, including turning Tock into a kind of Spotify that recommends and customizes booking experiences for diners around the world.

More from our sit-down, at the Upfront Summit last month, follows, lightly edited for length and clarity. It was an interesting conversation, particularly for anyone fascinated with the evolution of the restaurant industry over the last 15 years and how tech is changing it.

TC: We’re both Greek Americans [and many Greeks used to open restaurants when they came to the U.S.]. My family had restaurants. Your father had a diner. But you didn’t jump into the restaurant business right away. 

NK: I had the usual where I started a derivatives trading firm right out of college because I was a philosophy major. That’s really important. I did that for 11 years, built that through about 100 employees. Then I met Grant Achatz, the chef who, if you want to learn more about him, check out Netflix’s “Chef’s Table” [or the documentary] “Spinning Plates.” He had tongue cancer and a very incredible outcome. He’s still 10 years cancer-free. But I met him when he was very young and he was the same kind of person who I would want to hire in my trading firm. It was more about backing a great person.

Grant was doing what I think we all try to do anytime we build anything. He was doing something that’s emotionally resonant with consumers [at the restaurant where he was working at the time]. So you would go in there and you’d have this incredible experience… I felt like I knew how to build businesses. I started investing in the internet 1996. And I just said to him ‘One day if you ever want to do something more than this, let me know.’ And he said, ‘Well, what kind of restaurant do you want to build?’ and I said, ‘How should I know? I’ve never built a restaurant before. But I want to make it great.’ And so, I knew nothing about it, and then a year to the day later of that conversation we opened Alinea.

TC: And…

NK: I remember on the first day I thought I was done. It was kind of like a film production, where you produce the film, and then people can watch it. But of course, with the restaurant, you’re making art every day that people consume. It’s one of the only art forms or forms of entertainment that’s consumable. I remember [Grant] just grabbed me by the tie that opening night and said, ‘Go over table 40 and make sure that [the wait staff is] doing it the right way.’ Sixteen years later I have six restaurants and about 300 employees between Chicago and New York. And what I learned when I actually started running the restaurant when Grant got sick was that no one else knew anything about running a restaurant, either. It’s one of those areas where tradition exceeds expertise, and the software for it was built in a way that looked like 1998.

TC: How so?

So in 2005, an OpenTable salesman would come literally with a briefcase and [with its legacy reservation system], say, ‘Look at this bad boy; I could leave it here for you today.’ And that’s kind of what they still do.

I came from a trading organization where we could process hundreds of thousands of transactions without a problem, yet in 2005 [when we opened Alinea], I couldn’t even know who my customers were; that was held from me [by OpenTable], and whenever I see opaque information, I see an arbitrage [opportunity].

[I wanted a way to] look up every single thing that you eat and what you liked and what you didn’t like and left on the table, and your wife or spouse likes to drink. We were doing that in a very real way [in house, but] we couldn’t share that information with our other restaurants. [That information was] siloed on purpose because of the business model of OpenTable and Booking.com. So I started building it for myself.

I remember [famed restaurateur] Danny Meyer telling me, ‘You’ll never sell a ticket to a restaurant,’ I thought of it 20 years ago. ‘It won’t work.’ But we process about $2 million a day now in pre-paid tickets [beginning with what I built in 2010] by myself with one programmer. It was a very rudimentary system, and we sold $562,000 of tickets in the first day.

TC: What is a ticket?

NK: There are three kinds of reservations that you make in the world. There are free reservations, like ordinary reservations. There are times when you have to put a deposit down, and there are times that you pre-pay. [Regarding the last], when you think about it, if you’re going to buy a ticket to the Rose Bowl and see a game and suddenly your dog gets sick and you’ve got to go to the vet, you do not call the Rose Bowl and say, ‘I’m really sorry, I can’t make it tonight. Give me my money back.’ They play the game without you.

With restaurants where demand exceeds supply by two or three times, there’s an opportunity to charge, like a movie or concert or some other form of entertainment. And that’s what was going through my head [at the start of Alinea] because we’re running 8% no show rates; we had [staff] answering the phone every day, disappointing people, telling people “no” when they wanted [ a reservation] at seven o’clock on a Saturday. It’s like walking into a sweater store and [asking] ‘Do you have a black cardigan?’ [and being told] ‘Nope, try again.’

I just knew that I needed to solve my own problem. And now we’ve got 100 employees building all sorts of different iterations of dynamic and variable pricing for time-slotted businesses. Pricing will be differentiated in real time.

TC: What is that sales process like [when it comes to your software and this ticket idea?] Do restaurants see it as a big gamble? Do they want to try it first for some period of time?

NK: Any time you’re ripping and replacing a system that’s been around for 20 or 30 years, you have some convincing to do. The crossing-the-chasm thing is real. The first couple of years, we’d add 15, 20 restaurants a month, and we had to learn, really quickly, that they were either really great and had high demand, or they were failing and willing to try anything. So you had to really learn to pick your the right customers when you were early in the process.

Now what’s happening is that we built out a system that is cloud based — we’re the only independent system left [of meaningful scale] — and we built it for enterprise. So we have 400 API endpoints. We can integrate with Salesforce. But we can also do specialty integrations with, you know, Vail Resorts, which is now a client of ours.

So all of that now is going laterally and we’re getting the halo effect. We spend very little on marketing to businesses. We spend an awful lot of money now [on] building out that consumer network, [which the Chase deal should help with meaningfully]. The cool part about that news is that every single one of those people in the largest rewards program in the country is going to get an account. So that’s how I get 30 million U.S. households all at once.

TC: What other ways are you sharing your customer data?

NK: One of the most important pieces of data within a restaurant group that we don’t share across, is that we want to know your preferences, your dietary restrictions, your spouse’s birthday — all those things. Those are for better hospitality. Now, for the next step we want you to give us that information. We already know your dining history — why is there no platform like Spotify or Netflix for restaurants that anticipates your needs, knows what you enjoy and suggests little nudges to you [like], ‘Hey, your anniversary is coming up in a little while — maybe you should book something now, and we’ve got these great five choices that are in your (playlist).’ So that mass personalization for the consumer is coming, that’s something that we’re building. You have to get to a point where you have enough of that data to do it well enough that it’s meaningful, but we’re there now.

TC: The restaurant industry is brutally competitive. Is there a chance that some of your restaurants maybe don’t want to be part of a suggested rotation alongside other restaurants?

NK: We don’t know. We haven’t done it yet.

You know, restaurants are incredibly myopic in the sense that I don’t care how good you are, they are concerned that, when I turn on bookings from March, I hope we have customers. It’s a really weird business that way. And what we’re going to be able to do is that because of some of the data and people indicating interest before the reservations are available, we get to show the restaurant the elasticity of their demand before they actually put those bookings on. That’s incredibly powerful because now, for the first time, they can know they can project out months into the future what their demand will look like.

TC: You’re working with restaurants and wineries and the like. What’s the vision? Are you going to be getting into other verticals within hospitality or beyond?

We’ve experimented with other verticals; we’re focused on hospitality. We’re in 30 countries organically already. It’s a huge, huge space. But you know, if I was left to my own devices and didn’t have people managing me, I’d already have dentists using it.

Categories: Business News

Here’s our pick of the top six startups from Pause Fest

2020, February 21 - 11:12am

We’ve been dropping into the Australian startup scene increasingly over the years as the ecosystem has been building at an increasingly faster pace, most notably at our own TechCrunch Battlefield Australia in 2017. Further evidence that the scene is growing has come recently in the shape of the Pause Fest conference in Melbourne. This event has gone from strength to strength in recent years and is fast becoming a must-attend for Aussie startups aiming for both national international attention.

I was able to drop in ‘virtually’ to interview a number of those showcased in the Startup Pitch Competition, so here’s a run-down of some of the stand-out companies.

Medinet Australia
Medinet Australia is a health tech startup aiming to make healthcare more convenient and accessible to Australians by allowing doctors to do consultations with patients via an app. Somewhat similar to apps like Babylon Health, Medinet’s telehealth app allows patients to obtain clinical advice from a GP remotely; access prescriptions and have medications delivered; access pathology results; directly email their medical certificate to their employer; and access specialist referrals along with upfront information about specialists such as their fees, waitlist, and patient experience. They’ve raised $3M in Angel financing and are looking for institutional funding in due course. Given Australia’s vast distances, Medinet is well-placed to capitalize on the shift of the population towards much more convenient telehealth apps. (1st Place Winner)

Everty
Everty allows companies to easily manage, monitor and monetize Electric Vehicle charging stations. But this isn’t about infrastructure. Instead, they link up workplaces and accounting systems to the EV charging network, thus making it more like a “Salesforce for EV charging”. It’s available for both commercial and home charging tracking. It’s also raised an Angel round and is poised to raise further funding. (2nd Place Winner)

AI On Spectrum
It’s a sad fact that people with Autism statistically tend to die younger, and unfortunately, the suicide rate is much higher for Autistic people. “Ai on Spectrum” takes an accessible approach in helping autistic kids and their families find supportive environments and feel empowered. The game encourages Autism sufferers to explore their emotional side and arms them with coping strategies when times get tough, applying AI and machine learning in the process to assist the user. (3rd Place Winner)

HiveKeeper
Professional bee-keepers need a fast, reliable, easy-to-use record keeper for their bees and this startup does just that. But it’s also developing a software+sensor technology to give beekeepers more accurate analytics, allowing them to get an early-warning about issues and problems. Their technology could even, in the future, be used to alert for coming bushfires by sensing the changed behavior of the bees. (Hacker Exchange Additional Winner)

Relectrify
Rechargeable batteries for things like cars can be re-used again, but the key to employing them is being able to extend their lives. Relectrify says its battery control software can unlock the full performance from every cell, increasing battery cycle life. It will also reduce storage costs by providing AC output without needing a battery inverter for both new and 2nd-life batteries. Its advanced battery management system combines power and electric monitoring to rapidly the check which are stronger cells and which are weaker making it possible to get as much as 30% more battery life, as well as deploying “2nd life storage”. So far, they have a project with Nissan and American Electric Power and have raised a Series A of $4.5M. (SingularityU Additional Winner)

Gabriel
Sadly, seniors and patients can contract bedsores if left too long. People can even die from bedsores. Furthermore, hospitals can end up in litigation over the issue. What’s needed is a technology that can prevent this, as well as predicting where on a patient’s body might be worst affected. That’s what Gabriel has come up with: using multi-modal technology to prevent and detect both falls and bedsores. Its passive monitoring technology is for the home or use in hospitals and consists of a resistive sheet with sensors connecting to a system which can understand the pressure on a bed. It has FDA approval, is patent-pending and is already working in some Hawaiin hospitals. It’s so far raised $2m in Angel and is now raising money.

Here’s a taste of Pause Fest:

Categories: Business News

How much should a startup spend on security?

2020, February 21 - 9:34am

One of the questions I frequently ask startup founders is how much they’re spending on security. Unsurprisingly, everyone has a different answer.

Startups and small companies are invariably faced with the prospect that they’re either not spending enough or are spending too much on something that’s hard to quantify in terms of value. It’s a tough sell to sink money into an effort to stop something that might one day happen, particularly for bootstrapped startups that must make every cent count — yet we’re told security is a crucial investment for a company’s future.

Sorry to break it to you, but there is no easy answer.

The reality is that each company is different and there is no single recommended dollar amount to spend. But it’s absolutely certain that some investment is required. We know because we see a lot of security incidents here at TechCrunch — hacks, breaches and especially data exposures, often a result of human error.

We spoke to three security experts — a head of security, a security entrepreneur and a cybersecurity fellow — to understand the questions facing startups.

Know and understand your threat model

Every company has a different threat model — by that, we mean identifying risks and possible ways of attack before they happen. Companies that store tons of user data may be a greater target than companies that don’t. Each firm needs to evaluate which kind of risks they face and identify weaknesses.

Categories: Business News

Network with CrunchMatch at TC Sessions: Mobility 2020

2020, February 21 - 8:20am

Got your sights set on attending TC Sessions: Mobility 2020 on May 14 in San Jose? Spend the day with 1,000 or more like-minded founders, makers and leaders across the startup ecosystem. It’s a day-long deep dive dedicated to current and evolving mobility and transportation tech. Think autonomous vehicles, micromobility, AI-based mobility applications, battery tech and so much more.

Hold up. Don’t have a ticket yet? Buy your early-bird pass and save $100.

In addition to taking in all the great speakers (more added every week), presentations, workshops and demos, you’ll want to meet people and build the relationships that foster startup success. Get ready for a radical network experience with CrunchMatch. TechCrunch’s free business-matching platform makes finding and connecting with the right people easier than ever. It’s both curated and automated, a potent combination that makes networking simple and productive. Hey needle, kiss that haystack goodbye.

Here’s how it works.

When CrunchMatch launches, we’ll email all registered attendees. Create a profile, identify your role and list your specific criteria, goals and interests. Whomever you want to meet — investors, founders or engineers specializing in autonomous cars or ride-hailing apps. The CrunchMatch algorithm kicks into gear and suggests matches and, subject to your approval, proposes meeting times and sends meeting requests.

CrunchMatch benefits everyone — founders looking for developers, investors in search of hot prospects, founders looking for marketing help — the list is endless, and the tool is free.

You have one programming-packed day to soak up everything this conference offers. Start strategizing now to make the most of your valuable time. CrunchMatch will help you cut through the crowd and network efficiently so that you have time to learn about the latest tech innovations and still connect with people who can help you reach the next level.

TC Sessions: Mobility 2020 takes place on May 14 in San Jose, Calif. Join, meet and learn from the industry’s mightiest minds, makers, innovators and investors. And let CrunchMatch make your time there much easier and more productive. Buy your early-bird ticket, and we’ll see you in San Jose!

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

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Categories: Business News

SpaceX alumni are helping build LA’s startup ecosystem

2020, February 21 - 7:42am

During the days when Snapchat’s popularity was booming, investors thought the company would become the anchor for a new Los Angeles technology scene.

Snapchat, they hoped, would spin-off entrepreneurs and angel investors who would reinvest in the local ecosystem and create new companies that would in turn foster more wealth, establishing LA as a hub for tech talent and venture dollars on par with New York and Boston.

In the ensuing years, Los Angeles and its entrepreneurial talent pool has captured more attention from local and national investors, but it’s not Snap that’s been the source for the next generation of local founders. Instead, several former SpaceX employees have launched a raft of new companies, capturing the imagination and dollars of some of the biggest names in venture capital.

“There was a buzz, but it doesn’t quite have the depth of bench of people that investors wanted it to become,” says one longtime VC based in the City of Angels. “It was a company in LA more than it was an LA company.” 

Perhaps the most successful SpaceX offshoot is Relativity Space, founded by Jordan Noone and Tim Ellis. Since Noone, a former SpaceX engineer, and Ellis, a former Blue Origin engineer, founded their company, the business has been (forgive the expression) a rocket ship. Over the past four years, Relativity href="https://techcrunch.com/2019/10/01/relativity-a-new-star-in-the-space-race-raises-160-million-for-its-3-d-printed-rockets/"> has raised $185.7 million, received special dispensations from NASA to test its rockets at a facility in Alabama, will launch vehicles from Cape Canaveral and has signed up an early customer in Momentus, which provides satellite tug services in orbit.

Categories: Business News

Shogun raises $10M to help e-commerce brands build faster websites

2020, February 21 - 7:08am

Amazon may have a market cap of more than $1 trillion, but Finbarr Taylor, CEO of Y Combinator-backed startup Shogun, said the e-commerce giant is “kind of dropping the ball.”

Specifically, he argued that the experience of shopping on Amazon — not what happens after you buy something, but browsing the website itself — is pretty bad, full of sponsored results and fake products.

“What we’re seeing happen is that all this vast wave of direct-to-consumer brands is nibbling around edges of Amazon and beating them on buying experience,” Taylor said.

Shogun was designed to support those brands. Taylor and his co-founder Nick Raushenbush created the first product in 2015, and they treated it as a side project at first. But Taylor said that by May 2017, “It ate up all of our free time and it was obviously much bigger than we expected,” so they quit their jobs (Taylor was working as a software engineer at Y Combinator) and devoted themselves to it full-time.

The company now has 11,000 customers, including MVMT, K-Swiss and Leesa. And today, Shogun is announcing that it has raised a $10 million Series A, led by Initialized Capital, with participation from VMG Partners and YC. (The startup has now raised a total of $12 million.)

The company’s first product, Page Builder, offers a drag-and-drop interface to make it easier for e-commerce brands to build their storefronts on Shopify, BigCommerce, Salesforce and Magento.

And there’s a new product, Shogun Frontend, which allows brands to create a web storefront that’s entirely customized while still using one of the big commerce platforms as their back end.

Taylor pitched this as part of a broader trend toward “headless commerce,” where the e-commerce front end and back end are handled separately. He suggested that this is a “mutually beneficial” split, as Shopify and its competitors are going “super deep” on building the infrastructure needed to operate a store online, while Shogun focuses on the actual experience of the customer visiting that store.

Meanwhile, website builders like Squarespace and Weebly (owned by Square) have introduced e-commerce features, but Taylor suggested that they’re still “not really a professional choice” for most e-commerce businesses.

As one of the key features of Shogun Frontend, Taylor pointed to the fact that it creates progressive web apps that should be as fast and smooth as a native app.

Brett Gibson, general partner at Initialized Capital and a Shogun board member, made a similar point in a statement:

For DTC brands competing against goliaths like Amazon, Shogun Frontend now gives them features and capabilities once only reserved for enterprise companies. And when it comes to speed, Shogun Frontend’s sub-second load time is the critical difference between retaining or losing a customer.

Taylor added that the company will be “continuing to invest in Page Builder too,” but he suggested that Frontend is “more of an enterprise offering” that can help Shogun’s biggest customers “future proof themselves.”

D2C companies deliver customer delight and simplicity

Categories: Business News

The rise of the winged pink unicorn

2020, February 21 - 3:33am
Claire Diaz-Ortiz Contributor Share on Twitter Claire Diaz-Ortiz is an angel investor and bestselling author of nine books that have been published in more than a dozen countries. An early employee at Twitter, she was called “The Woman Who Got the Pope on Twitter” by Wired and holds an MBA and other degrees from Stanford and Oxford. More posts by this contributor

Like most investors, I am a little too obsessed with unicorns.

But not just the Silicon Valley kind. As the mother of a five-year-old daughter, my interests also veer in a pink, sparkly direction. So it should not be all that surprising that I recently found myself in a dusty corner of the internet where die-hard unicorn fans go to spread their wings.

It was there, deep in the My Little Pony forums, that one question stopped me in my tracks: “is a male alicorn possible in the future?1

An alicorn, for those uninitiated to the mythological particulars, is the rare winged, female version of a traditional unicorn.

My Little Pony popularized the term, and the fan forum on which user “Green Precision” asked his question back in 2015 had some interesting answers to the particulars of this philosophical dilemma.

Shadow Stallion responded immediately, “I don’t think a male Alicorn will be possible in the future. Not because its [sic] not wanted or because its [sic] not genetically possible…but generally when male characters are introduced to a show where female characters are prominent, things get ugly.”

Malinter posited, “they probably do but given the female-to-male ratio of Equestria2 they are probably exceptionally rare. The real problem for a male alicorn is not that they exist but where is their place in the world? …Our male alicorn has some pretty big hoof prints to fill in while at the same time not make a trainwreck of established lore.”

Wind Chaser went straight from unconscious bias to conscious bias in their response: “aesthetically a male alicorn just wouldn’t look right, because their bodies are already naturally larger than females, thus the wings would cause an imbalance to the design.”

But it wasn’t all bad news.

“Until it’s proven otherwise, it’s safe to say that something like a male alicorn is possible,” responded Geek0zoid. Crysahis agreed. “Overall yes, I believe there could be a male alicorn it may just take a while to actually happen!”

It doesn’t take a PhD in philosophy from Stanford or the one lone female investing partner at Sequoia3 to posit that these same conversations were probably happening all over Sandhill Road in December of 2009, as male VCs discussed whether female unicorns could actually happen4.

As we move into 2020, though, we’re about to see a pink, winged stampede.

Just look at the recent trends. In 2019, more female-funded unicorns were born than ever before.5 And things are only looking up. (I’m looking at you, ClassPass!)

Public opinion agrees. Alongside TruePublic, where I am an advisor and angel investor, I ran a study asking if people believed we would see more female-led unicorns in the 2020s.6 At the time of this article, 68% of the 6,500 respondents said they believed we would see more, with 30% of women responding “many more” (as opposed to only 16% of men). Only 4% of women, but 9% of men, responded “no, not a chance.”7

Kaben Clauson, founder and CEO, says “to represent Gen Z, Millennials and Gen X, TruePublic needs a weighted sample of roughly one thousand Americans to represent that population of the USA.” This particular study already has 6,500 respondents, making it statistically significant.

In fact, female-founded and female co-founded companies are actually over-indexing for unicorn status despite a lack of investment dollars.

Shelby Porges, co-founder of The Billion Dollar Fund for Women, explains: “Recent tracking has shown that female-founded companies represent 4% of all unicorns. That’s astonishing considering that in the past couple of years, they have gotten only slightly more than 2% of all venture funding.” Porges, whose group has mobilized more than 80 venture funds to pledge to invest over a billion dollars into women-founded companies, continues, “It demonstrates why we say, ‘when you invest in women, you’re in good company.’ ”

Here are the three reasons I believe a herd of winged female unicorns (OK, alicorns) is coming down the pipeline in the 2020s:

1. Women invest in women at 3x the rate of men

New data reveals that women invest in women at nearly three times the rate that men do and with the (slow) rise in the number of female investing partners at VCV firms, we are poised to see more and more gender-balanced founding teams getting funding.8 Like one male GP at one of the world’s top VC funds said to me when discussing one of the few female partners at his firm, “she always brings us parenting companies.” It might be cringe-worthy if TechCrunch hadn’t declared 2020 “a big year for online childcare” and that same female partner weren’t about to make a big chunk of cash thanks to all the upcoming parenting alicorns she was smartly funding.

Sophia Bendz, a partner at Atomico who also leads the Atomico Angel Program, said, “I’m confident we’ll see more female unicorns in the next decade because there’s a growing wave of ambitious female founders building incredible products and services. There are also more women in VC now and I’ve seen first-hand the impact having female investment partners can have on increasing the amount of investment into female-led companies. The data shows that women invest in women at three times the rate as male investment partners.”

My study at TruePublic coincided with these findings. When asked if a female investor was more likely to invest in a female entrepreneur, 64% of people responded affirmatively (64% of these individuals were women and 63% were men).9

Jomayra Herrera agrees. An investor at Cowboy Ventures (which thanks to Aileen Lee coined the term “unicorn” in the first place), and a volunteer with AllRaise, a nonprofit promoting women in VC, she says: “As the venture industry continues to diversify, especially as it relates to gender and race/ethnicity, I am optimistic that we will see more female-led and people of color-led unicorns over the next decade. We know that diverse teams not only function better, but they are able to see areas of opportunities that more homogenous teams might miss. I think the next generation of investors are more likely to question conventional wisdom, forms of pattern recognition that may lead to bias, and other structural barriers that have historically left out promising entrepreneurs.”

Camila Farani is a well-known investor in Brazil. As founder of G2 Capital, former president of Gavea Angels and a personality on Brazil’s “Shark Tank,” she says “having diverse points of view at the table makes the decision clearer and more certain. People who think differently than you and have other visions of the market, sometimes can show you what you can’t see by yourself.”

She also reminds us not to forget the impact that angel investors can have. “The investments market is still made up mostly of men, but this landscape is changing gradually. It is interesting to see that angel investing is being the most common choice for women who want to make their first investments.”

This trend of investing more in women isn’t just limited to female investors. Susana Robles has spent two decades leading the charge to invest in women in Latin America and alongside Marta Cruz of NXTP Labs is co-founder of WeXchange, a platform that connects women entrepreneurs from Latin America and the Caribbean with mentors and investors.

As Robles says, “I think the world is finally waking up to the fact that there is serious research proving that startups with women co-founders win in all aspects: profitability, as well as greater social and environmental awareness. Investors should want to have this triple win.” She continues, “women tend to return money to investors faster than men, and at the same time, they obtain higher returns. Women are in charge of 64% of all global purchasing decisions on products and services, so having women on C-level positions increases the chance that a startup [will] be highly attractive to a massive market and become a unicorn.”

It also extends to the LPs in the funds. “I also think many investors in funds (mostly DFIs [development finance institutions] but not exclusively) have become more vocal in stating that they don’t want any more to invest in teams led by an all-white, all-male cast who choose startups with all-white, all-male founders.” Jennifer Neundorfer is the co-founder of Jane VC and an investor in Kinside, a parenting app that just raised a $3 million seed round. When describing her fund’s rationale for focusing on female founders, she drops the mic: “we’re going to invest in an under-looked asset class that is overperforming.” Boom.

2. Female founders are creating new billion-dollar markets

Another reason we’ll see more female-founded “alicorns” in the 2020s has everything to do with the new markets that female founders are creating. Hunter Walk of Homebrew was one of the initial seed investors in Winnie, an online marketplace for childcare that recently raised a $9 million Series A. At the time, he saw something that others investors didn’t. Winnie co-founder Sara Mauskopf explains, “Four years ago when we started Winnie, parenting and especially child care were not hot investment areas. This has been changing. It certainly helps that more investors are women and are in the thick of their child-bearing and rearing years.”

Part of what Walk says he recognized was the clear founder-market fit displayed by Mauskopf and her co-founder Annie Halsall. As Mauskopf says, “With Winnie, we saw an opportunity to solve the child-care crisis that other founders either did not recognize or did not care to solve. While everyone else was starting crypto and scooter companies, we were building the first-ever tech platform for $57 billion child care industry. Lack of access to quality child care disproportionately impacts women, so it shouldn’t be surprising that it took a female led team to capitalize on this opportunity.” Expanding on the concept of founder-market fit, Walk says, “I love to come away thinking, these are the absolute right founders to build this business.”10

Bendz, the Atomico partner who specializes in femtech and is also an avid angel investor, agrees. “Often I meet founders that you can tell are at the right place at the right time with the right mindset and the right team. It’s almost like all of the experiences they have had prior to launching a company have been preparing them to create that business at that time. These are the kind of founders who I know are in it for the long haul, and who are going to weather the ups and downs.” As a woman who uses the products and services she invests in, Bendz is also an example of investor-market fit, which I believe will open new markets in the decades to come.

Something else investors like Walk and Bendz believe in? Outsized opportunities. And the potential for outsized opportunities are especially ripe in untapped markets. The rise of femtech is yet another example of how the intuitive success of the concept of founder-market fit ultimately needed more female founders for certain markets to blossom. As Bendz explains, “Throughout a woman’s life there are many big events that have a big impact on our overall health — from childbirth to menopause. I know all women are tired of poor or non-existent solutions for women surrounding those life events, and that’s why we are seeing so many companies launching to better serve women’s needs. When you think about the fact that women have only had the right to vote and educate themselves for 100 years, it’s mind-blowing how long the world was operating with only 50% of the population in control. That’s reflected in the products and services we as a society have funded.”

Women’s consumer products are another area. Ornella Moraes is one of four female co-founders of Brazilian-led Sousmile, which recently raised a $6 million USD Series A led by Kaszek Ventures. “Our brand is a woman,” Moraes says of her dental beauty startup that retails throughout São Paulo. And so are the leaders of the company. At Sousmile, there are four female co-founders and two male co-founders. “More dentists in the world are women than men, so it’s been critical for our team to have more female founders,” she says. In this way, the rise of female founders and co-founders can completely change markets. “We believe this will fundamentally create a different type of product,” says Walk.

3. Emerging markets will take the lead

Finally, certain emerging markets pose a particular opportunity for female founders by over-indexing for both large IPOs and female founders. 2017 was the first year that more of the largest IPOs in the internet sector globally came from emerging markets. Nazar Yasin, founder of Rise Capital, which invests in emerging markets, says “This trend isn’t going away.” After all, most GDP growth comes from emerging markets, where most global internet users live. As he explains, “the future of market capitalization growth in the internet sector globally belongs to emerging markets.” And yet this type of innovation takes resilience. “If you’re a startup in one of these markets, it’s like trying to grow a plant in the desert.”11 In an environment that demands more daily resilience, there is a different appetite for risk and innovation. (I call this resilience innovation.)

Perhaps the easiest example of emerging market innovation fueled by resilience is fintech. Emerging markets and their often unstable economies boast a much higher number of frustratingly unbanked individuals. This brings about innovation. Hanna Schiuma, the Brazilian-born fintech founder of ElasBank, where I am an angel investor and advisor, explains how ubiquitous such fintech innovation is becoming.

“Soon all finance will be tailor-made and fintech will be common ground because all financial services will be technology-intensive.” She also argues that the nature of such an innovation allows the industry to become more innovative, and thus inclusive, which is exactly what is happening with her own women’s bank, launching in 2020. “That means great opportunities to better serve women’s financial needs to offer dedicated products, and to gather female talent to build those products from a diverse and innovative perspective.” Ultimately, “resilience is key for us to build that pool of talent and open the doors for gender balance and financial inclusion.”

Furthermore, data shows Africa and Latin America both beat global averages for percentages of startup female founders. Laura Stebbing is co-CEO of accelerateHER, a global community of leaders addressing the under-representation of women in tech through action. Raised in Southern Africa, Stebbing is passionate about Africa’s rise as a hub of female entrepreneurship.

“Africa has both the highest proportion of women founders at 26% [Latam comes in second]12 and a $42 billion funding gap. There’s clearly no lack of talent across Africa’s 54 countries, so for the investors, corporate executives, policy makers and established founders that aren’t moved by the moral arguments for gender parity, notice the enormous business opportunity. We will start to see a higher volume of resilient, scalable companies emerge as leaders build more diverse networks and ecosystems that support women to unlock their entrepreneurial potential.” Nathan Lustig, founder of Magma Partners, a VC firm in Latin America which invests in female founders above the regional average, explains, “investing in and empowering resilient women entrepreneurs is just good business, and is one of the biggest investment opportunities, especially in emerging markets.”

I believe Latin American can have an edge. I am a Silicon Valley-born investor now living in “Silicon Aires,” where I have been thrilled to see exciting numbers of female founders in Latin America. Susana Robles agrees, and says the reason is in part due to the nature of a committed ecosystem to support one another. “It’s the sheer need that forces you to collaborate.” An ecosystem like Silicon Valley doesn’t have the same need to do so. Of Latin America, Robles says, “In 10 years, we will have created a much more collaborative market than the developed ones.” And that collaboration is leading to great female founders. 2019, in fact, saw more funding going to female co-founders in Latin America than in Europe or the USA.13

This will lead to future alicorns. Ann Williams, COO of Creditas, a Brazilian fintech currently closing in on its own unicorn status, says “the conversion funnel for unicorns works just like any other selection process. We fill the top with a bunch of great women in supporting roles in emerging market startups, these women take their experiences and found rocking new companies. A percentage of these will convert to scaleups raising Series C and D rounds with valuations at $1 billion or higher. And voila! we get women-led unicorns.” She continues, “the odds are with us and I am sure the talent is too!”

Juliane Butty, startup head at Platzi and former regional manager of Seedstars, one of the leading accelerators and investors fostering female entrepreneurship in emerging markets, joins Williams. “We have definitely seen the rise of female founders and investors in emerging markets in the last decade. One supports the other. And we know that success breeds success.”

Perhaps My Little Pony fan Malinter said it best when he suggested how a male version of the alicorn could finally emerge in such a female-dominated space: “The simplest way they could probably add one in would be to make said alicorn the ruler of a neighboring nation.” In the same way, emerging markets may just hold the key for female unicorns.

No matter the region, Robles says “if we keep opening doors to women entrepreneurs who are as ambitious as men in growing their companies, we’ll begin to see many more unicorns with gender diversified teams.” Hanna Schiuma, the Elasbank founder who just might be building the next female-founded unicorn, agrees. “The alicorns are coming. And we’re ready to fly.”

2Equestria is of course where the My Little Ponies and their assorted unicorns, alicorns and friends all live.
3Go Jess Lee!
4Yes, Aileen Lee of Cowboy VC first invented the term in her 2013 TechCrunch piece, but we’re in a unicorn-fueled time machine, people.
8“Do Female Investors Support Female Entrepreneurs? An Empirical Analysis of Angel Investor Behavior,” Seth C. Oranburg, Duquesne University School of Law, Pittsburgh PA, USA and Mark Geiger, Duquesne University School of Business, Pittsburgh PA, USA
12Forthcoming research from TechCrunch/Crunchbase
13Forthcoming research from TechCrunch/Crunchbase

Categories: Business News

Leanplum raises another $27M, shakes up its executive ranks

2020, February 21 - 2:00am

Customer engagement platform Leanplum today announced that it has raised a $27 million extension to its 2017 $47 million Series D round. This additional funding was led by previous investors Norwest Venture Partners and Shasta Ventures. Kleiner Perkins, Canaan and Launchub also participated in this round, which the company says it will use to bolster its product development and go-to-market efforts. With this, Leanplum has now raised a total of $125 million.

Maybe just as importantly, Leanplum also announced a major shakeup of its executive ranks. The company appointed George Garrick as president and CEO, and Sheri Huston as chief financial officer. Co-founder and former CEO Momchil Kyurkchiev will step into the chief product officer role.

Garrick brings a wealth of experience with him, having been the CEO of companies like Flycast, Placeware, Wine.com and Tapjoy . Huston, too, comes into the role with a lot of industry experience as the former CFO at Comscore and LiquiBox. The company is also adding Dynamic Signal founder Russ Fradin to its board of directors.

The company describes the changes in its executive ranks as a “transition.”

“Many if not most startups at some point in their growth realize that a management transition makes sense as the requirements for the CEO evolve from starting and proving a company, to running and scaling it,” Garrick told us in a statement. “Leanplum’s board and founders agreed that such a transition would be appropriate as Leanplum accelerates its growth phase.”

This was echoed by Kyurkchiev: “George is the right leader for Leanplum. His strong management experience with companies at our stage and in our domain will be essential for Leanplum as we continue to drive growth and expand globally.”

Leanplum says about 2 billion people used apps and websites that use its services in 2019.

As for the new funding, the company says it was simply easier to extend its Series D, which has the same investors as the original D round. “The board felt it was easier and more appropriate to just extend the D round rather than move into the next letter. Also, we wanted to minimize ‘letter creep,’ ” Garrick said.

Categories: Business News

As Morgan Stanley buys E-Trade, Robinhood preps social trading

2020, February 21 - 1:04am

Before it was worth $7.6 billion, the original idea for Robinhood was a stock-trading social network. At my kitchen table in San Francisco in 2013, the founders envisioned an app for sharing hot tips to a feed complete with a leaderboard of whose predictions were most accurate. Once they had SEC approval, they pivoted toward the real money maker: letting people buy and sell stocks in the app, and pay to borrow cash to do so.

Now, seven years later, Robinhood is subtly taking the first steps back to its start. Today it’s launching Profiles. For now, they let users see analytics about their portfolio, like how concentrated they are in stocks versus options versus cryptocurrency, as well as across different business sectors. Complete with usernames and a photo, Profiles let you follow self-made or Robinhood-provided lists of stocks and other assets.

Profiles could give Robinhood’s customers the confidence to trade more, and create a sense of lock-in that stops them from straying to other brokerages that have dropped their per-trade fees to zero to match the startup, like Charles Schwab, Ameritrade and E-Trade, which was acquired for $13 billion today by Morgan Stanley, as reported by The Wall Street Journal.

The Profile features certainly sound helpful. They could reveal that your portfolio is too centered around tech, media and telecom stocks, or that you’re ignoring cryptocurrency or corporations from your home state. Lists also makes it easier to track specific business verticals, save stocks to buy when you have the cash or set aside some for deeper research. Robinhood pulls info from FactSet, Morningstar and other trusted sources to figure out which stocks and ETFs go into sector lists, or you can make and name your own. Profiles and lists begin to roll out to all users next week.

But what’s most interesting is how profiles lay the foundation for Robinhood as a social network. It’s easy to imagine letting users follow other accounts or lists they create. The original Robinhood app let users make predictions like “17% increase in Facebook share price over the next 11 weeks,” with comments to explain why. It showed users’ prediction accuracy, their average holding time for assets, a point score for smart foresight and community BUY or SELL ratings on stocks.

If Robinhood rebuilt some of these features, it might lessen the need for an expensive financial advisor or having enough cash to qualify for one with a different brokerage. Robinhood could let you crowdsource advice. “We understand the connotation of taking something from the rich and giving it to the poor. Robinhood is liberating information that’s locked up with professionals and giving it to the people,” Robinhood co-founder and co-CEO Vlad Tenev told me back in 2013.

Robinhood would certainly need to be careful about scammy tips going viral. Improper safeguards could lead to pump and dump schemes where those late to buy in get screwed when prices snap back to reality.

But embracing social could leverage some of its strongest assets: the youthfulness of its user base and the depth of connection to its users. The median age of a Robinhood customer is 30, and half say they’re first-time investors. Being able to turn to friends or experts within the app might convince them to pull the trigger on trades.

Most online brokerages are somewhat undifferentiated beyond differences in pricing, while their clunky, unstylized products don’t generate the same brand affinity as people have for Robinhood. Unsatisfied users could bail for a competitor at any time. Robinhood’s users are accustomed to social networking and the way it locks in users, because they don’t want to abandon their community.

When I asked Robinhood Profiles’ product manager Shanthi Shanmugam directly about whether this was the start of more social trading features, they suspiciously dodged the question, telling me, “When thinking about how to reflect who you are as an investor, we looked at how other apps represent you and it felt natural to leverage a design that felt more like a profile. When helping people group their investment ideas, it was easy to envision this as a playlist you might find on your favorite music app.”

That’s far from a denial. Offering social validation for trading could help Robinhood earn more from its customers despite their small total account balances. While Robinhood might have more than 10 million accounts versus E-Trade’s 5.2 million and Morgan Stanley’s 3 million, E-Trade’s average account size is $69,230 and Morgan Stanley’s is $900,000, while a survey found most of Robinhood’s held $1,000 to $5,000.

That all means that Robinhood earns less on interest sitting in users’ accounts than the old incumbents. But Robinhood earns the majority of its money on selling order flow and through its subscription Robinhood Gold feature that lets users pay monthly so they can borrow cash to trade with. 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.

“Democratizing access is about lowering fees, minimums and other barriers people face — like confidence. Profiles and lists make finance easier to understand and more familiar for people,” says Shanmugam. More social features built safely, more reassurance, more trading, more revenue. Robinhood has raised $910 million. But to outgun larger competitors like the newly assembled Morgan Stanley/E-Trade that’s matched its zero-fee pricing, Robinhood will have to win with product.

What the $13B E-Trade deal says about Robinhood’s valuation

Categories: Business News

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