This discussion with Madwire Co-CEO JB Kellogg includes all sorts of interesting nuances, including DIFM vs. DIY. Read on. Sramana Mitra: Let’s start at the very beginning of your journey. Where are...
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In a move that highlights how open the American IPO window may be at the moment, China-based Agora priced its public offering at $20 per share last night, ahead of its $16 to $18 proposed price range. (Update: As noted here, the company has a second HQ in California.)
At $20 per share, the 17.5 million shares sold in its debut raised $350 million, a huge haul for a company that reported around 10% of that figure in Q1 2020 revenue. Provided that your humble servant is doing his Class A to ADS share conversion calculations correctly, Agora is worth about $2 billion at its IPO price.
Agora raised well over $100 million while a private company, backed by GGV Capital, Coatue and others, according to Crunchbase data.
The Exchange is a daily look at startups and the private markets for Extra Crunch subscribers; use code EXCHANGE to get full access and take 25% off your subscription.
Agora is an API-powered company that allows customers to embed real-time video and voice abilities in their applications; appropriately, the company’s ticker symbol in America will be “API.”
With an annual run rate of $142.2 million, a $2 billion valuation gives Agora a run-rate multiple of around 14x. That’s rich, but not stratospheric. Perhaps Agora wasn’t able to command a higher multiple due to its sub-70% margins (68.8% in Q1)?
Agora’s financials make its IPO pricing a neat puzzle, so let’s pull apart the good and the bad to better understand why the market was willing to pay more than the company anticipated.
After that short exercise, we’ll make note of the current IPO climate, inclusive of what we learn from Agora. (Spoiler for unicorns out there: Things look good.)
We can’t calculate Agora’s enterprise value with confidence until we get updated filings. But taking into account the company’s pre-IPO cash and liabilities, its implied enterprise value/run rate is something around 13x. (That figure will dip if the company’s shares don’t rise after its debut, as its cash position rises from its share sale; more on enterprise values here.)
The direct-to-consumer health insurer Oscar has raised another $225 million in its latest, late-stage round of funding as its vision of tech-enabled healthcare services to drive down consumer costs becomes more and more of a reality.
In an effort to prevent a patient’s potential exposure to the novel coronavirus, COVID-19, most healthcare practices are seeing patients remotely via virtual consultations, and more patients are embracing digital health services voluntarily, which reduces costs for insurers and potentially provides better access to basic healthcare needs. Indeed, Oscar now has a $2 billion revenue base to point to and now a fresh pile of cash from which to draw.
“Transforming the health insurance experience requires the creation of personalized, affordable experiences at scale,” said Mario Schlosser, the co-founder and chief executive of Oscar.
Oscar’s insurance customers have the distinction of being among the most active users of telemedicine among all insurance providers in the U.S., according to the company. Around 30% of patients with insurance plans from the company have used telemedical services, versus only 10% of the country as a whole.
The new late-stage funding for Oscar includes new investors Baillie Gifford and Coatue, two late-stage investor that typically come in before a public offering. Other previous investors, including Alphabet, General Catalyst, Khosla Ventures, Lakestar and Thrive Capital, also participated in the round.
With the new funding, Oscar was able to shrug off the latest criticisms and controversies that swirled around the company and its relationship with White House official Jared Kushner as the president prepared its response to the COVID-19 epidemic.
As the Atlantic reported, engineers at Oscar spent days building a standalone website that would ask Americans to self report their symptoms and, if at risk, direct them to a COVID-19 test location. The project was scrapped within days of its creation, according to the same report.
The company now offers its services in 15 states and 29 U.S. cities, with more than 420,000 members in individual, Medicare Advantage and small group products, the company said.
As Oscar gets more ballast on its balance sheet, it may be readying itself for a public offering. The insurer wouldn’t be the first new startup to test public investor appetite for new listings. Lemonade, which provides personal and home insurance, has already filed to go public.
Oscar’s investors and executives may be watching closely to see how that listing performs. Despite its anemic target, the public market response could signal that more startups in the insurance space could make lemonade from frothy market conditions — even as employment numbers and the broader national economy continue to suffer from pandemic-induced economic shocks.
In case you missed it, you can listen to the recording here: 491st 1Mby1M Roundtable June 25, 2020: With Deborah Quazzo, GSV Ventures
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Sramana Mitra: Talk to me about your go-to market strategy. What has worked? What turned out to be the repeatable customer acquisition strategy? Rich Waldron: For a long time, we were relying on...
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Salt Lake City’s Spiff has announced a $10 million round of funding to expand the sales and marketing efforts for its service that automates commission payments for sales people.
Some of the biggest names in startup tech are using the service to pay their sales force, including Brex, Workfront, Algolia and the publicly traded startup Qualys.
The idea at Spiff is to create a new software category around sales compensation management, and it’s gotten buy-in from investors at Norwest Venture Partners, Next World Ventures and Epic Ventures. Seed investors, including Kickstart Album Ventures, Pipeline Capital and Peterson Ventures, returned to invest in the company as well.
“Commissions are a major cause of anxiety for teams who don’t understand or trust their incentive plan and many waste hours every month correcting mistakes or arguing with finance, which hits bottom lines,” said Spiff chief executive, Jeron Paul. “Norwest’s investment will help us automate commission calculations so sales teams have one less thing to worry about in these challenging times.”
Paul, a serial entrepreneur whose most recent business, Capshare, was sold to Solium in 2017, has spent the better part of his professional career developing services businesses for enterprises.
“The world of sales compensation software is long overdue for a revamp,” said Sean Jacobsohn, partner at Norwest Venture Partners, in a statement. “With 85 percent of companies still calculating sales commissions manually in Google Sheets or Excel, I’m excited to partner with Spiff to help transform the way people think about sales compensation and provide sales teams with a deeper level of visibility into their commissions.”
During this week’s roundtable, we had as our guest Deborah Quazzo, Managing Partner at GSV Ventures, a fund focused on Online Education ventures. This is a very good discussion on patterns of success...
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Karat is a new startup promising to build better banking products for the creators who make a living on YouTube, Instagram, Twitch and other online platforms. Today it’s unveiling its first product — the Karat Black Card.
The startup, which was part of accelerator Y Combinator’s Winter 2020 batch, is also announcing that it has raised $4.6 million in seed funding from Twitch co-founder Kevin Lin, SignalFire, YC, CRV and Coatue.
Co-founder and co-CEO Eric Wei knows the creator world well, thanks to his time as product manager for Instagram Live. (His co-founder Will Kim was previously an investor with seed fund Lucky Capital.) Wei told me that although many creators have significant incomes, banks rarely understand their business or offer them good terms when they need capital.
“Traditional banks care a lot about FICO [credit scores],” he said. “A lot of YouTubers, when they’re blowing up, they don’t have time to think: Let me make sure my FICO is awesome as well.”
At the same time, he argued that creators have become suspicious of potentially scammy financial offers, to the point that if you were to attend a pre-COVID VidCon and tried to give out $3,000, “The good creators will not take it, even if you tell them there are no strings behind it.”
Karat co-founders Will Kim and Eric Wei
With the Karat Black Card, the startup is giving creators a credit card that they can use for their business-related expenses. When creators are approved, they receive a $250 bonus that can be applied to any future purchases of electronics or equipment. The card also comes with custom designs, 2% to 5% cash back on purchases and it even offers advances on sponsorship payments.
Underlying it, Wei said Karat has developed an underwriting model that works for creators. Instead of looking at credit scores, Karat focuses on the size of a creator’s following, their current revenue and whether or not they’re “business savvy.”
“It’s not just the number of followers you have, but what platforms,” Wei added. “I would rather have 100,000 subscribers on YouTube than 1 million on TikTok, because on TikTok, it’s all algorithmically driven.”
Karat has already provided the card to an initial group of creators, including TheRussianBadger, TierZoo and Nas Daily. Wei said the model is working so far, with no defaults.
For now, the card is aimed at professional, full-time creators who have at least 100,000 followers. Wei estimated that that’s a potential customer base of 1 million creators. Eventually, he wants to provide those creators with more than a black card.
“We’re building a vertical financial and biz ops experience,” he said. “People in earlier stages, we do want to get to them eventually, but only after we feel like we’ve developed enough of an underwriting model.”
Earlier today, insurtech unicorn Lemonade filed an S-1/A, providing context into how the former startup may price its IPO and what the company may be worth when it begins to trade.
According to its new filing, Lemonade expects its IPO to price at $23 to $26 per share. As the company intends to sell 11 million shares in its debut, the rental and home insurance-focused unicorn would raise between $253 million and $286 million at those prices.
Counting an additional 1.65 million shares that it will make available to its underwriting banks, the company’s fundraise grows to $291 million to $328.9 million. Including shares offered to underwriters, Lemonade’s implied valuation given its IPO price range runs from $1.30 billion to $1.47 billion.
That’s the news. Now, is that expected valuation interval strong, and, if not, what might it portend for other insurtech startups? Let’s talk about it.
TechCrunch is speaking with the CEOs of Hippo (homeowner’s insurance) and Root (car insurance) later today, so we’ll get their notes in quick order regarding how Lemonade’s IPO is shaping up, and if they are surprised by its pricing targets.
But even without external commentary, the pricing range that Lemonade is at least initially targeting is not terribly impressive. That said, it’s stronger than I anticipated.
If you are a venture capitalist, I strongly encourage you to join the Valence Funding Network to provide Black founders with direct access to VCs. Iâve joined along with a number of my peers.
Kobie Fuller at Upfront Ventures started Valence in the fall of 2019. Valence launched our beta platform to provide a digital home for Black talent to connect, access opportunities, and aggregate their power. Valence exists to change the dynamic where Black founders receive a disproportionately low amount of venture funding (today â just 1 percent).
Kobeâs quote in the press release kind of says it all:
âFor years, Black entrepreneurs have been told that Silicon Valley is a meritocracy, but at the same time most havenât had access to the top networks, the warm introductions, and the mentorship that underpin lasting success in tech. Valence is upending this completely by bringing the top VCs to Valence to compete for the best Black founders.â said Valence CoFounder and General Partner at Upfront Ventures, Kobie Fuller. âWe want to even the playing field with the goal of exponentially growing the number of Black-owned startups that get funded.â
The 27 VC firms who are inaugural members of the Funding Network have a cumulative $60 Billion+ under management and now have direct access to Valenceâs membership base of ~8,000 and growing Black professionals.
One of thing Iâve committed to is the âBoost featureâ which allows any member on the network to request a 30 minute meeting with me to pitch what they are doing. Iâll honor all the Boost requests and, at the minimum, provide constructive feedback and any introductions to my network that I think would be helpful.
If you are a Black professional, I encourage you to join the Valence community. And, if you are a VC, please join also and engage as part fo the Valence Funding Network.
Today’s 491st FREE online 1Mby1M Roundtable For Entrepreneurs is starting NOW, on Thursday, June 25, at 8 a.m. PDT/11 a.m. EDT/5 p.m. CEST/8:30 p.m. India IST. Click here to join. PASSWORD:...
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Today’s 491st FREE online 1Mby1M Roundtable For Entrepreneurs is starting in 30 minutes, on Thursday, June 25 at 8 a.m. PDT/11 a.m. EDT/5 p.m. CEST/8:30 p.m. India IST. Click here to join....
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Sramana Mitra: By the time you raised money, what did you have? Rich Waldron: We raised a $2.2 million round in December of 2014. That was the first institutional check. Prior to that, we had some...
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According to a MarketsandMarkets report, the global Human Capital Management (HCM) market is expected to grow from $17.6 billion in 2020 to $24.3 billion by 2025 at a CAGR of 6.7%. Paylocity (Nasdaq:...
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Sramana Mitra: Let’s talk about geography. You talked about this bus tour being the catalyst to founding this firm. Talk about what is your philosophy on location. Tony Olivito: For us, it’s the...
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AI startup 7bridges has raised $3.4 million in seed funding after being backed by venture capital investors such as LocalGlobe and Crane Venture Partners.Â
The London-based firm has designed an LEO ("Logistics Engine Optimization") platform suitable for all kinds of businesses, from retail through to manufacturing and health tech.Â
Artificial intelligence is playing an ever-increasing role in businesses' operations, with analysts at Infoholic Research suggesting the AI logistics market will be worth $6.5 billion by 2023.Â
Check out their pitch deck below:Â
European seed investor Connect Ventures has raised $80 million for its third fund to invest in early-stage tech startups across the continent.
The venture capital firm is perhaps best known for its early investment into Citymapper, the London-headquartered transport app that helps people calculate journeys by public transit, taxi, bike, and other methods of transport.
Connect's fundraise news comes after peer early-stage investors in Europe including Hoxton Ventures and Fly Ventures also closed new funds, suggesting capital remains available to growing tech startups even as a pandemic-induced recession bites.
Sitar Teli, a partner at Connect Ventures, said the firm has historically invested on product-oriented companies. That will continue into the third fund, which will zoom in on digital health, consumer, enterprise software, and fintech.
Asked how the pandemic was influencing the firm's thinking, she said: "It's definitely accelerating trends. Part of the job of a VC is to try and predict what technology does to society. We have this thesis of what will happen, and part of it is timing, like you'll think something will happen in the next few years ... What we've seen with COVID-19 is that some of those times are really being brought forward. So instead of something happening in five years, it's happening in a year."
One example, perhaps, is Connect's investment in Fiit, which provides virtual fitness classes through an app.
"They grew 100% in April," said Teli. "We're going to get to see whether these were permanent shifts in behavior, or whether they were temporary shifts and people actually want to go back to the gym."
Not everything is influenced by COVID-19. Connect has made two investments so far out of its new fund since lockdown, and neither are correlated to the coronavirus. "We're pretty much on pace, and it hasn't really slowed us down or sped us up," Teli said.
She added that Connect is pretty select about where it allocates its funding, with partners only doing two to three deals per year. "The core strategy is ... build the portfolio of 25 to 30 companies where we think those founders have a real shot at building a really compelling product-centric business starting in Europe."
Backers of Connect's new fund include Top Tier Capital Partners, Isomer Capital, and British Patient Capital. The latter is managed by the state-funded British Business Bank, which has stepped in to provide funding to UK venture capitalists after the EU's European Investment Fund cooled off following the UK voted to leave the union in 2016.
Connect Ventures has experienced some change in 2020 as one of its managing partners, Bill Earner, left in January and transitioned into a venture partner role. Teli says the fund changed its approach, and Earner felt it no longer made sense to stick around. His startup board seats will transfer to other partners at Connect Ventures.
AI startup 7bridges has raised $3.4 million in seed funding after being backed by major VCs such as LocalGlobe and Crane Venture Partners.Â
The London-based firm has designed an LEO ("Logistics Engine Optimization") platform suitable for all kinds of businesses, from retail through to manufacturing and healthcare.Â
Artificial intelligence is playing an ever-increasing role in businesses' operations, with analysts at Infoholic Research suggesting the AI logistics market will be worth $6.5 billion by 2023.Â
7bridges says its platform "transforms outdated, rules-based logistics processes ... into agile and automated systems that continuously adapt to change".Â
Philip Ashton, co-founder and CEO of 7bridges, said: "Customer expectations of deliveries have fundamentally shifted over the past few years, in terms of both speed and sustainability.
"While this dramatically increases the costs and complexity of the logistics category, it has created an opportunity to gain an enormous competitive advantage."
Scott Sage, partner at Crane Venture Partners, added: "Like many other industries, from banking to construction, supply chains are becoming rapidly digitised across the economy. This creates an incredibly important opportunity for disruption.
"We're always on the lookout for passionate founders who have experienced the problem they're working to fix, and are proud to be working alongside the 7bridges team - there's no substitute for their level of expertise."
George Henry, partner at LocalGlobe, said: "COVID-19 has highlighted the importance of logistics resilience, for large businesses and SMBs alike. 7bridges is offering a unique AI-powered solution for building scalable, adaptive logistics systems - so that organisations can continue to fulfil their customers' orders whatever the future holds.
"We're excited to be part of the 7bridges journey, as the team leads the way in logistics evolution."
Good morning! This is the tech news you need to know this Thursday.
Leaked emails obtained by Business Insider reveal that Tesla knew its Model S battery had a design flaw that could lead to break downs and fires, but it sold the cars anyway. This revelation comes as Tesla is dealing with customer complaints of manufacturing defects in its new Model Y crossover vehicles, including loose seatbelts and back seats.Google is revamping its privacy policies and says it will now auto-delete search and location data by default for new users. Google will now auto-delete certain data after 18 months. The Defense Department on Wednesday published a list of Chinese companies that operate in the US and have been linked to the Chinese military. The president has the authority to impose sanctions against any of the companies listed, which include telecommunications giant Huawei, and Hikvision, which was blacklisted by the US in October 2019.Mark Zuckerberg this week addressed a group of top-ranking executives from agency holding companies and advertisers including Anheuser-Busch InBev, Dentsu Aegis Network, and Omnicom Media Group. The companies are part of the client council, a small-knit group of marketing heavyweights from brands and ad agencies who work closely with Facebook on product features and other feedback.Amazon engineers built an internal wiki page that suggests alternatives to unconsciously racist terms like 'brown bags,' 'cake walk,' and 'master/slave'. The movement is the latest example of employee-driven change at Amazon aimed at fostering a more inclusive work environment. Apple may be the target of a new antitrust probe from the Department of Justice over its controversial App Store policies, according to Politico. The probe would come after the European Commission just announced two probes into Apple, one of which will examine how it runs its App Store.Mark Zuckerberg's former mentor has invested in privacy app Jumbo, which helps you mass delete old social media posts. Roger McNamee was previousy an adviser to Facebook but is now one of its fiercest critics, and has now backed an app that would let you wipe and control your Facebook data in a more granular way.A black man from Michigan was wrongly arrested after a faulty facial recognition match, according to the New York Times. Robert Julian-Borchak Williams was arrested after a facial recognition system wrongly matched his photo with surveillance footage of a shoplifter.The number of US enterprise software startups expanding to Europe has collapsed 60% in the wake of the UK's Brexit vote, according to a survey by Frontline Ventures. Although Brexit primarily impacts the UK, the research suggests some US founders were "spooked" by the vote out of expanding to the continent at all.Apple has acquired a startup aimed at helping businesses manage employees' Macs and iPads. The buy pushes Apple into the mobile device management industry, at a time where a vast number of employees are working remotely. The price of the acquisition was not disclosed.Have an Amazon Alexa device? Now you can hear 10 Things in Tech each morning. Just search for "Business Insider" in your Alexa's flash briefing settings.
You can also subscribe to this newsletter here â just tick "10 Things in Tech You Need to Know.
In 2016, a small majority of voters in Britain opted to leave its political and economic partnership with the European Union, cutting off trade and travel links which had been in place for decades in the process.
One curious side-effect in the years since is a dropoff in fast-growing US enterprise software companies moving to the UK, and Europe more generally.
FrontlineX, a San Francisco and London-based VC fund, has surveyed some 175 companies about their previous and potential expansions to Europe with data across a 15-year period.
The fund's findings indicate that that the number of US software-as-a-service startups expanding to Europe has dropped by 50% following Britain's vote to leave the European Union in 2016, which can be seen in the below chart.Â
Frontline's report implies that the UK was likely the first country of choice for US software firms looking to expand to Europe. With the nation now synonymous with Brexit, founders appear to be backing away from any expansion onto the continent.
Frontline's research also found that while fewer companies were moving to the continent, those that already have had doubled down on hiring. You can see the figures below:
"This highlights a worrying dichotomy: companies that were already in Europe weren't much affected by Brexit; those that had not yet landed allowed themselves to be badly affected by postponing indefinitely," the report said. "What should have been a temporary blip in landings became a prolonged drop. It's likely that CEOs in the US, reading Brexit headlines from afar got spooked and stayed spooked."
It's a big loss for fast-growing software companies and for European cities.
Frontline's research estimates that well-run enterprise software companies should derive between 25-35% of their global revenue from Europe by the time they go public. Frontline cites examples ranging from Dropbox, Zendesk, Slack, and Cloudflare to demonstrate this. That's a huge amount of lost potential revenue for the companies that don't expand.
"Our research shows that US companies make a lot of mistakes before expanding to Europe," Stephen McIntyre, partner at Frontline Ventures, told Business Insider. "There has been a real Brexit impact in recent years and we expect a short-to-medium term contraction in new expansion due to COVID-19."
Many of those mistakes are avoidable, with the most pressing consideration being the first senior hire a company makes in Europe, with Frontline's research suggesting that 50% of companies get this wrong. The fund's research suggested that general managers hired in Europe often leave less than two years after joining.Â
Despite Brexit uncertainty, London remains the premier destination for US software companies expanding to Europe, with McIntyre citing the city's deep availability of technical talent.
Dublin and Amsterdam are resoundingly the next two most popular choices and have made small gains into London's massive lead in the wake of the Brexit vote.Â
These three cities maintain considerable leads over European capitals like Berlin, Paris, and Lisbon. 15 years ago 50% of US expansions to Europe started with London, Dublin, or Amsterdam. As of 2019 that figure is 80%.Â
"The impact of COVID-19 could see a slowdown in expansion in the short term, but one benefit may be improvements in workforce distribution and remote working practices," McIntyre added. "Getting engineering talent in San Francisco is already a choke point for businesses and we see a lot of product and engineering team expansions into Europe."
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