Sramana Mitra: What about inventory financing? Did you finance it all out of revenue or did you do some sort of bank financing? Sean Dawes: We did a combination of self-financing and bank financing....

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Revenue-based financing is on the rise, at least according to Lighter Capital, a firm that doles out entrepreneur-friendly debt capital.

What exactly is RBF you ask? It’s a relatively new form of funding for tech companies that are posting monthly recurring revenue. Here’s how Lighter Capital, which completed 500 RBF deals in 2018, explains it: “It’s an alternative funding model that mixes some aspects of debt and equity. Most RBF is technically structured as a loan. However, RBF investors’ returns are tied directly to the startup’s performance, which is more like equity.”

What’s the appeal? As I said, RBFs are essentially dressed up debt rounds. Founders who opt for RBFs as opposed to venture capital deals hold on to all their equity and they don’t get stuck on the VC hamster wheel, the process in which you are forced to continually accept VC while losing more and more equity as a means of pleasing your investors.

RBFs, however, are better than traditional debt rounds because the investors are more incentivized to help the companies they invest in because they are receiving a certain portion of that business’s monthly revenues, typically 1% to 9%. Eventually, as is explained thoroughly in Lighter Capital’s newest RBF report, monthly payments come to an end, usually 1.3 to 2.5X the amount of the original financing, a multiple referred to as the “cap.” Three to five years down the line, any unpaid amount of said cap is due back to the investor. When all is said in done, ideally, the startup has grown with the support of the capital and hasn’t lost any equity.

At this point, they could opt to raise additional revenue-based capital, they could turn to venture capital or they could tap a tech bank to help them get to the next step. The idea is RBF is easier on the founder and it allows them optionality, something that is often lost when companies turn to VCs.

IPO corner, rapid-fire edition

Slack’s direct listing will be on June 20th. Get excited.

China’s Luckin Coffee raised $650 million in upsized U.S. IPO

Crowdstrike, a cybersecurity unicorn, dropped its S-1.

Freelance marketplace Fiverr has filed to go public on the NYSE.

Plus, I had a long and comprehensive conversation with Zoom CEO Eric Yuan this week about the company’s closely watched IPO. You can read the full transcript here.

Second Chances

Silicon Valley entrepreneur Hosain Rahman, the man behind Jawbone, has managed to raise $65.4 million for his new company, according to an SEC filing. The paperwork, coincidentally or otherwise, was processed while most of the world’s attention was focused on Uber’s IPO. Jawbone, if you remember, produced wireless speakers and Bluetooth earpieces, and went kaput in 2017 after burning up $1 billion in venture funding over the course of 10 years. Ouch.

More startup capital

Funds!

On the heels of enterprise startup UiPath raising at a $7 billion valuation, the startup’s biggest investor is announcing a new fund to double down on making more investments in Europe. VC firm Accel has closed a $575 million fund — money that it plans to use to back startups in Europe and Israel, investing primarily at the Series A stage in a range of between $5 million and $15 million, reports TechCrunch’s Ingrid Lunden. Plus, take a closer look at Contrary Capital. Part accelerator, part VC fund, Contrary writes small checks to student entrepreneurs and recent college dropouts.

Extra Crunch

Our paying subscribers are in for a treat this week. Our in-house venture capital expert Danny Crichton wrote down some thoughts on Uber and Lyft’s investment bankers. Here’s a snippet: “Startup CEOs heading to the public markets have a love/hate relationship with their investment bankers. On one hand, they are helpful in introducing a company to a wide range of asset managers who will hopefully hold their company’s stock for the long term, reducing price volatility and by extension, employee churn. On the other hand, they are flagrantly expensive, costing millions of dollars in underwriting fees and related expenses…”

Read the full story here and sign up for Extra Crunch here.

#Equitypod

Want more TechCrunch newsletters? Sign up here.

Shares of Luckin Coffee jumped 20% in its first day of trading on the Nasdaq stock market.

After opening at $17.00, shares of the Chinese Starbucks competitor climbed as high as $25.96, or more than 50%, before settling back down to $20.38 at the market’s close. The company has a market cap north of $5 billion after its first day of trading.

The brick-and-mortar coffee chain has achieved major success in China by offering speedy delivery services to Chinese consumers. The company has nearly 2,400 stores compared to Starbucks’ 3,500, but it has plans to more than double that number by the end of the year as it seeks to become the country’s coffee king.

Luckin’s success doesn’t immediately seem to be thwarting the stock market success of Starbucks, which has had a glowing 2019. The company hit another all-time high Friday, closing out the day at $78.91, up more than 35% from a year ago, giving the Seattle company a market cap of nearly $96 billion.

Starbucks and Luckin Coffee may seem like mortal enemies, but their rivalry is more complicated than one might immediately think. Check out our Extra Crunch deep dive from earlier this week on the Xiamen-based company’s financials.

DNA Script has raised $38.5 million in new financing to commercialize a process that it claims is the first big leap forward in manufacturing genetic material.

The revolution in synthetic biology that’s reshaping industries from medicine to agriculture rests on three, equally important pillars.

They include: analytics — the ability to map the genome and understand the function of different genes; synthesis — the ability to manufacture DNA to achieve certain functions; and gene editing — the CRISPR-based technologies that allow for the addition or subtraction of genetic code.

New technologies have already been introduced to transform the analytics and editing of genomes, but little progress has been made over the past 50 years in the ways in which genetic material is manufactured. That’s exactly the problem that DNA Script is trying to solve.

Traditionally, making DNA involved the use of chemical compounds to synthesize (or write) DNA in chains that were limited to around 200 nucleotide bases. Those synthetic pieces of genetic code are then assembled to make a gene.

DNA Script’s technology holds the promise of making longer chains of nucleotides by mirroring the enzymatic process through which DNA is assembled within cells — with fewer errors and no chemical waste material. The enzymatic process can accelerate commercial applications in healthcare, chemical manufacturing and agriculture.

“Any technology that can make that faster is going to be very valuable,” says Christopher Voigt, a synthetic biologist at the Massachusetts Institute of Technology in Cambridge, told the journal Nature.

DNA Script isn’t the only company in the market that’s looking to make the leap forward in enzymatic DNA production. Nuclear, a startup working with Harvard University’s famed geneticist, George Church, and Ansa Bio, a startup affiliated with Jay Keasling’s Berkeley lab at the University of California, are also moving forward with the technology.

But the Paris-based company has achieved some milestones that would make its technology potentially the first to come to market with a commercially viable approach.

At least, that’s what new investors LSP and Bpifrance, through its Large Venture fund, are hoping. They’re joined by previous investors Illumina Ventures, M. Ventures, Sofinnova Partners, Kurma Partners and Idinvest Partners in backing the company’s latest funding.

The company said the money would be used to accelerate the development of its first products and establish a presence in the United States.

“As we announced earlier this year at the AGBT General Meeting, DNA Script was the first company to enzymatically synthesize a 200mer oligo de novo with an average coupling efficiency that rivals the best organic chemical processes in use today,”  said Thomas Ybert, chief executive and co-founder of DNA Script. “Our technology is now reliable enough for its first commercial applications, which we believe will deliver the promise of same-day results to researchers everywhere, with DNA synthesis that can be completed in just a few hours.”

In an age of online misinformation and clickbait, how do you know whether a publication is trustworthy?

Startup Credder is trying to solve this problem with reviews from both journalists and regular readers. These reviews are then aggregated into an overall credibility score (or rather, scores, since the journalist and reader ratings are calculated separately). So when you encounter an article from a new publication, you can check their scores on Credder to get a sense of how credible they are.

Co-founder and CEO Chase Palmieri compared the site to movie review aggregator Rotten Tomatoes. It makes sense, then, that he’s enlisted former Rotten Tomatoes CEO Patrick Lee to his advisory board, along with journalist Gabriel Snyder and former Xobni CEO Jeff Bonforte.

Palmieri plans to open Credder to the general public later this month, and he’s already raised $750,000 in funding from Founder Institute CEO Adeo Ressi, Ira Ehrenpreis, the law firm Orrick, Herrington & Sutcliffe, Steve Bennet and others.

Palmieri told me he started working full-time on the project back in 2016, with the goal of “giving news consumers a way to productively hold the news producers accountable,” and to “realign the financial incentives of online media, so it’s not just rewarding clicks and traffic metrics.” In other words, he wanted to create a landscape where publishing empty clickbait or heavily slanted propaganda might have actual consequences.

If Credder gets much traction, it will likely attract its share of trolls — it’s easy to imagine that the same kind of person who leaves a negative review of “Captain Marvel” without seeing the movie (this is a real issue that Rotten Tomatoes has had to face), would be just as happy to smear The New York Times or CNN as “fake news.” And even if a reviewer is offering honest, good-faith feedback, the review might be less influenced by the quality of a publication’s journalism and more by their personal baggage or political leanings.

Palmieri acknowledged the risk and pointed to several ways Credder is trying to mitigate it. For one thing, users can’t just write an overall review of The New York Times or The Wall Street Journal or TechCrunch. Instead, they’re reviewing specific articles, so hopefully they’re engaging with the substance and specifics of the story, rather than just venting their preexisting feelings. The scores assigned to publications and to journalists are only generated when there are enough article ratings to create an aggregated score.

In addition, Palmieri said the reviewers “are also being held accountable,” because users can upvote or downvote their comments. That affects how the reviews get weighted in the overall score, and in turn generates a rating for the reviewers.

“It will take time for the weight of your reviews to be meaningful, and there will be a visible track record,” he said.

While I appreciated Palmieri’s vision, I was also skeptical that a credibility score can actually influence readers’ opinions — maybe it will matter when you encounter a new publication, but everyone already has set ideas about who they trust and don’t trust.

When I brought this up, Palmieri replied, “What we see in today’s media landscape is the left-wing media attacks the right-wing media, and vice versa. We never get a sense of what our fellow news consumers feel. What’s more likely to change your perspective and make you question yourself? It’s going to a rating page [for] an article, pointing out a specific problem in that article.”

To be clear, Credder isn’t hosting articles itself, simply crawling the web and creating rating pages for articles, publications and writers. As for making money, Palmieri said he’s considered both a tipping system and an ad system where publications can pay to promote their stories.

TechCrunch readers can check it out early by visiting the Credder website and using the promo code “TCNEWS”.

Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch’s Kate Clark sat down with Eric Yuan, the founder and CEO of video communications startup Zoom, to go behind the curtain on the company’s recent IPO process and its path to the public markets.

Since hitting the trading desks just a few weeks ago, Zoom stock is up over 30%. But the Zoom’s path to becoming a Silicon Valley and Wall Street darling was anything but easy. Eric tells Kate how the company’s early focus on profitability, which is now helping drive the stock’s strong performance out of the gate, actually made it difficult to get VC money early on, and the company’s consistent focus on user experience led to organic growth across different customer bases.

Eric: I experienced the year 2000 dot com crash and the 2008 financial crisis, and it almost wiped out the company. I only got seed money from my friends, and also one or two VCs like AME Cloud Ventures and Qualcomm Ventures.

nd all other institutional VCs had no interest to invest in us. I was very paranoid and always thought “wow, we are not going to survive next week because we cannot raise the capital. And on the way, I thought we have to look into our own destiny. We wanted to be cash flow positive. We wanted to be profitable.

nd so by doing that, people thought I wasn’t as wise, because we’d probably be sacrificing growth, right? And a lot of other companies, they did very well and were not profitable because they focused on growth. And in the future they could be very, very profitable.

Eric and Kate also dive deeper into Zoom’s founding and Eric’s initial decision to leave WebEx to work on a better video communication solution. Eric also offers his take on what the future of video conferencing may look like in the next five to 10 years and gives advice to founders looking to build the next great company.

For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

Kate Clark: Well thanks for joining us Eric.

Eric Yuan: No problem, no problem.

Kate: Super excited to chat about Zoom’s historic IPO. Before we jump into questions, I’m just going to review some of the key events leading up to the IPO, just to give some context to any of the listeners on the call.

Shares of Fastly, the service that’s used by websites to ensure that they can load faster, have popped in its first hours of trading on the New York Stock Exchange.

The company, which priced its public offering at around $16 — the top of the estimated range for its public offering — have risen more than 50% since their debut on public markets to trade at $25.01.

It’s a sharp contrast to the public offering last week from Uber, which is only just now scratching back to its initial offering price after a week of trading underwater, and an indicator that there’s still some open space in the IPO window for companies to raise money on public markets, despite ongoing uncertainties stemming from the trade war with China.

Compared with other recent public offerings, Fastly’s balance sheet looks pretty okay. Its losses are narrowing (both on an absolute and per-share basis according to its public filing), but the company is paying more for its revenue.

San Francisco-based Fastly competes with companies that include Akamai, Amazon, Cisco and Verizon, providing data centers and a content-distribution service to deliver videos from companies like The New York Times, Ticketmaster, New Relic and Spotify.

Last year, the company reported revenues of $144.6 million and a net loss of $30.9 million, up from $104.9 million in revenue and $32.5 million in losses in the year ago period. Revenue was up more than 38% and losses narrowed by 5% over the course of the year.

The outcome is a nice win for Fastly investors, including August Capital, Iconiq Strategic Partners, O’Reilly AlphaTech Ventures and Amplify Partners, which backed the company with $219 million in funding over the eight years since Artur Bergman founded the business in 2011.

For entrepreneurs interested to meet and chat with Sramana Mitra in person, please join us for our bi-monthly and informal group meetups. If you are living in the San Francisco Bay Area or are just...

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It’s a busy time for Postmates . The logistics and delivery company is prepping for its IPO on the back of a fresh $100 million raise in February. However, founder and CEO Bastian Lehmann is still carving out some time from his schedule to join us at Disrupt San Francisco in October.

Before Postmates, Lehmann co-founded Curated.by, a real-time tweet curation platform based out of London. The German native founded Postmates in March 2011 and turned the brand into a household name.

The logistics and food delivery market is clearly growing, particularly when you look at the sheer amount of cash flowing into startups like Postmates ($678 million) and competitors DoorDash ($1.4 billion) and Deliveroo ($1.5 billion). That said, the business of on-demand delivery has its challenges. The fact that humans are delivering real-world products using actual transportation in the physical world creates a lot of opportunity for things to go wrong.

But Postmates has never played it safe.

The startup continues to iterate and experiment with new types of products and models. In 2017, Postmates took on a handful of new competitors with the launch of alcohol delivery. The company tried its hand at grocery delivery in a number of ways, including launching its own grocery delivery service, as well as partnerships with Instacart and Walmart.

The company has also continued to evolve its Postmates Unlimited product, a subscription that allows power-users to pay $9.99/month to skip the delivery fees.

Postmates even introduced its own autonomous delivery robot called Serve in December 2018.

But perhaps most impressive is the fact that Postmates was able to keep the product fresh while expanding… rapidly.

Seven months ago, Postmates was available in 550 cities across the country. Now the service is operational in 3,500 cities nationally, available to 70% of the people in the U.S., with more than 500K merchants on the platform.

We’re thrilled to sit down with Lehmann at Disrupt to discuss lessons learned and what happens next. Disrupt SF runs October 2 to October 4 at the Moscone Center in SF. Tickets are available here.

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Earlier this month, mobile payments platform Square (NYSE: SQ) announced its first quarter results. While the results outpaced market expectations, a lackluster first quarter outlook disappointed the...

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Sramana Mitra: I was commenting on your 10 to 11 years, but not just 10 to 11 years. Some companies are going 15 to 20 years and then finding exits like Lynda.com. When she had a unicorn exit, they...

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Health at Scale, a startup with founders who have both medical and engineering expertise, wants to bring machine learning to bear on healthcare treatment options to produce outcomes with better results and less aftercare. Today the company announced a $16 million Series A. Optum, which is part of the UnitedHealth Group, was the sole investor.

Today, when people look at treatment options, they may look at a particular surgeon or hospital, or simply what the insurance company will cover, but they typically lack the data to make truly informed decisions. This is true across every part of the healthcare system, particularly in the U.S. The company believes using machine learning, it can produce better results.

“We are a machine learning shop, and we focus on what I would describe as precision delivery. So in other words, we look at this question of how do we match patients to the right treatments, by the right providers, at the right time,” Zeeshan Syed, Health at Scale CEO told TechCrunch.

The founders see the current system as fundamentally flawed, and while they see their customers as insurance companies, hospital systems and self-insured employers, they say the tools they are putting into the system should help everyone in the loop get a better outcome.

The idea is to make treatment decisions more data-driven. While they aren’t sharing their data sources, they say they have information, from patients with a given condition, to doctors who treat that condition, to facilities where the treatment happens. By looking at a patient’s individual treatment needs and medical history, they believe they can do a better job of matching that person to the best doctor and hospital for the job. They say this will result in the fewest post-operative treatment requirements, whether that involves trips to the emergency room or time in a skilled nursing facility, all of which would end up adding significant additional cost.

If you’re thinking this is strictly about cost savings for these large institutions, Mohammed Saeed, who is the company’s chief medical officer and has an MD from Harvard and a PhD in electrical engineering from MIT, insists that isn’t the case. “From our perspective, it’s a win-win situation since we provide the best recommendations that have the patient interest at heart, but from a payer or provider perspective, when you have lower complication rates you have better outcomes and you lower your total cost of care long term,” he said.

The company says the solution is being used by large hospital systems and insurer customers, although it couldn’t share any. The founders also said it has studied the outcomes after using its software and the machine learning models have produced better outcomes, although it couldn’t provide the data to back that up at that point at this time.

The company was founded in 2015 and currently has 11 employees. It plans to use today’s funding to build out sales and marketing to bring the solution to a wider customer set.

I am very bullish about market opportunities that are large enough to build sizable businesses but not large enough such that VCs end up funding numerous competing companies. This case study shows...

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During this week’s roundtable, we had as our guest, Hernan Fernandez, Managing Partner at Angel Ventures Mexico. The firm invests in Mexico, Chile, Peru and Colombia. Excellent discussion on Latin...

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Tutor House, a U.K.-based startup that operates a marketplace to let parents find an online or in-person tutor for their children, has raised £2 million in funding.

Backing the round, the first for the young company, is Fuel Ventures, the London-based VC and startup builder set up by Mark Pearson of MyVoucherCodes fame. Fuel Ventures recently closed its third fund of £20 million to continue investing in early-stage B2B and B2C marketplaces, platforms and SaaS.

Founded by ex-teacher Alex Dyer in 2012 — and self-funded until now — Tutor House connects parents and families with tutors either in-person or online. The site enables families to search for tutors across an array of subjects and academic levels, and now claims to be the U.K.’s leading tutoring agency offering private home or remote tuition for all primary, GCSE, A-level and university subjects.

“The large number of teachers leaving their profession in addition to ever-increasing class sizes mean that the market for private tutoring has expanded significantly,” former psychology teacher and now Tutor House CEO Dyer tells me. “In order to improve the quality of each student’s academic experience, our tutors provide personalised learning plans that will help to boost grades and give learners the best chance of success.”

In addition, Dyer says that Tutor House is the only tutoring platform that interviews all tutors and ensures that they have a full DBS check before going live on the platform. “In an unregulated industry this is very important,” he adds. “We are dedicated to providing each and every student with the best level of service possible.”

Typical Tutor House customers fall into four groups. The first is hands-on parents who want the best for their child regardless of price. The second is parents who see education as important but may have to ask relatives for help with costs. The third is students who can’t access education in a mainstream school due to anxiety or other SEN-related issues. “These students often need to retake A-level or GCSE exams due to poor teaching/no teacher,” says Dyer. The final group is university students and adult learners who are investing in their future by taking learning into their own hands.

A classic marketplace play, Tutor House charges tutors a 20% commission fee for every booking. However, if a tutor books more than 20 hours a month, the commission is reduced. “We also offer A-level and pre-U retake courses, in addition to residential courses and homeschooling,” explains Dyer.

Meanwhile, Tutor House says it will use the investment from Fuel Ventures to expand into other countries, and to create a bespoke school in London for students who need intensive tutoring for exam retakes.