11 big things: One giant leap for startup-kind - Yahoo Finance

11 big things: One giant leap for startup-kind - Yahoo Finance


11 big things: One giant leap for startup-kind - Yahoo Finance

Posted: 29 Feb 2020 10:13 PM PST

Saturday was one of my favorite random days on the calendar. Well, one out of every four calendars. It was Feb. 29, the extra day gifted by our quadrennial leap year, a day to ponder the Earth's orbit, the vagaries of timekeeping, and how strange it is that a normal February is only 28 days in the first place. 


So leaps were already on my mind this week. And then a high-tech hardware startup turned into a unicorn with a new nine-figure funding, representing a lofty step-up in valuation. Which got me thinking: What are some of the other largest leaps into unicorn territory in recent startup history? 


Unicorns may not be able to fly, but they can leap. And that's one of 11 things you need to know from the past week:


 

(z_wei/iStock/Getty Images Plus) 1. Stepping up SambaNova Systems, which makes computer chips for the internet of things, just raised $250 million in Series C funding at a $2.5 billion valuation, according to regulatory filings reviewed by PitchBook. My colleague James Thorne had

the exclusive story this week. The investment in SambaNova makes the startup a unicorn, and it represents a valuation step-up of 2.8x the amount generated by its previous round of VC. 


It's an impressive multiple, one that could augur big things for SambaNova as the sorts of smart devices that comprise the IoT continue to proliferate. But it doesn't hold a candle to other recent massive valuation step-ups achieved by startups that have made their own leaps to unicorn status.


 


Since the start of 2010, no startup has logged a bigger step-up multiple on its first round of unicorn funding than Dropbox, according to PitchBook data. In October 2008, during the financial crisis, the file-hosting specialist raised $6 million at a $25 million post-money valuation. It waited three years to raise its next round, a stretch during which the company's user base exploded to more than 50 million, according to Forbes. In 2011, Dropbox brought in $250 million in funding at a $4 billion post-money valuation, making for a 150x leap. 


(A quick note, for those of you already questioning that math: All step-ups referenced here are calculated using the post-money valuation of a company's last non-unicorn round and the pre-money valuation of its first unicorn round. All valuations and round amounts are according to PitchBook data unless otherwise specified.)


More recently, there was Bitmain, a startup that makes computer chips and other products used in bitcoin mining. The Chinese company capitalized on the crypto craze to achieve a 117x valuation step-up in 2018, when it raised cash at a reported $12 billion valuation. 


Many of the decade's biggest step-ups into unicorn territory came from companies that created explosively popular apps. Almost two years before being acquired by Facebook, messaging specialist WhatsApp raised venture funding at a valuation of more than $1.6 billion, a 39x multiple on its prior round. Niantic, which is the developer of Pokémon Go, raised $200 million at a $2.9 billion valuation in 2017 to fund future augmented reality games, marking a 25.7x step-up. Bytedance, the Chinese internet colossus behind TikTok, attained a 22x step-up in 2017. 


Explosive valuation growth isn't necessarily a sign of good things to come. Viddy was once a red-hot mobile video startup, posting a 30.3x valuation increase when it leaped to unicorn status in 2012. Two years later, Viddy sold for a reported $20 million, and it shut down entirely not long after that. 


Some of the other biggest step-ups of the 2010s came from startups that are now powerhouses in their respective industries. Airbnb notched a 17.7x valuation increase in 2011, when it crossed the $1 billion mark for the first time. Fintech startup Plaid, which agreed in January to sell itself to Visa

for $5.3 billion, debuted as a unicorn with a $2.65 billion valuation in 2018, a 10.7x step-up. And it is probably little surprise that Uber factors in, reaching an almost even 10x multiple on its first unicorn funding, in 2013. 


While we're on the subject of leaps, there's one more name I want to mention: Magic Leap, the maker of high-powered augmented reality headsets. In February 2014, the Florida-based company raised VC at a $101.3 million valuation. Eight months later, it collected a massive $542 million round at a $1.54 billion valuation, a 9.9x step-up for its first foray into unicorn territory.


And with that, our leap year festivities come to an end. See you all in 2024. 2. Trendy PE funds Private equity continues to embrace two types of funds—those used to acquire tech companies and those used to buy stakes in other firms—like never before. Thoma Bravo, one of PE's pioneers of tech investing, is seeking $14 billion for its next flagship fund, plus another $4 billion split across a mid-market and a small-cap fund, according to a report from Buyouts. Meanwhile, Dyal Capital Partners, one of the dominant names in the growing field of GP stakes investing, is targeting at least $9 billion for a new vehicle, according to Bloomberg, less than three months after closing a prior $9 billion-plus effort.  3. IPO plans DoorDash has filed confidentially for an IPO, a long-awaited step for the food delivery startup that's believed to carry a current $13 billion valuation. UiPath, a maker of automation software valued last year at $7 billion, could go public as soon as 2021, Bloomberg reported this week. And GFL Environmental, a Canadian waste management company with PE backing, has filed again for an IPO, about four months after shelving plans for a debut amid a tepid reception from investors. 4. Fintech fanatics A recent crush of fintech dealmaking continued with two major moves in the early part of the week. In a notable exit for several VC and PE backers, Intuit agreed to pay some $7.1 billion to acquire Credit Karma, combining two major names in taxes and consumer credit. In Europe, meanwhile, digital banking startup Revolut reportedly raised $500 million at a $5.5 billion valuation, matching the reported valuation attained by rival Klarna in August. 5. Inhale, exhale  If it's not already there, Juul Labs is shaping up to be the startup world's next big cautionary tale. The latest setback was news that a group of 39 states has launched an investigation into the vaping company's marketing practices, with Connecticut attorney general William Tong saying he and his colleagues "are prepared to take strong action." Elsewhere in inhalation, marijuana delivery startup Eaze closed a $35 million round this week, a much-needed infusion for the cash-strapped company.


 

Juul CEO K.C. Crosthwaite testifies before Congress in February. (Drew Angerer/Getty Images) 6. Deals on wheels Pony.ai is unfortunately not a company working on mimicking the equine mind, but rather an autonomous driving startup that raised $462 million this week at a $3 billion valuation. The majority of the funding came from Toyota, the latest link between traditional automaking powerhouses and a new generation of self-driving upstarts. Another wheel-powered startup, Singapore's Grab, announced more than $850 million in new funding this week to power its ridehailing, food delivery and other services.  7. What goes up German industrial giant Thyssenkrupp picked a winner this week in the auction for its sought-after elevator division, opting to sell the unit to a consortium led by Advent International and Cinven for €17.2 billion (about $18.9 billion). The bidding had drawn a number of other private equity heavyweights, including Blackstone, The Carlyle Group and Canada Pension Plan Investment Board. 8. Building blocks Roblox is the developer of a massive multiplayer video game that also offers the building blocks for players to create games of their own; this week, the company raised $150 million in VC at a $4 billion valuation, according to PitchBook data. Graphcore, which makes semiconductors that are the basis of various machine learning and AI applications, banked

$150 million in funding. And Karius, a company that searches the human genome for insights that could be the foundation for future treatments, announced a $165 million Series B this week led by SoftBank's second Vision Fund.  9. Pumping iron A wave of imitators has cropped up in the wake of Peloton's push to prominence, with names like Tonal and Mirror also raising VC to fund tech-powered, in-home fitness products. A startup called Tempo joined the club this week, banking $17.5 million for its fitness system, which combines weightlifting with a 42-inch touchscreen display and connected fitness classes. 10. A Salesforce spree Salesforce agreed this week to pay $1.33 billion for Vlocity, a former Salesforce Ventures portfolio company that builds software on top of the Salesforce platform. It was the latest big-ticket acquisition for the SaaS pioneer. Salesforce finalized a $15.7 billion takeover of Tableau Software and a $1.35 billion acquisition of ClickSoftware Technologies in the second half of 2019, a year after shelling out a reported $6.5 billion for MuleSoft.  11. A Texas toast What a week for the artisanal alcohol brands of Central Texas. On Monday, a startup called Austin Cocktails (which is just what it sounds like) registered just over $2.5 million in new funding with the SEC. On Tuesday, another business called Austin Eastciders (which is also just what it sounds like) submitted an SEC filing indicating $5.7 million in new funding. Bottoms up!

Why You Should Focus On Your Return On Investment In Your Startup - Forbes

Posted: 29 Feb 2020 04:10 PM PST

No matter how many customers a small business has, if it's not making a profit, it's a failing business. The business of building startups, on the other hand, doesn't always prioritize profitability. In fact, many startups get acquired or go public years later without having ever made a profit. This grow-big approach is not viable for self-funded startups unless they're making enough money they can use to continuously fuel growth.

Regardless of how you choose to build your venture, generating a positive return on investment in your startup is the guiding metric for every business. From experience researching, interviewing and working with hundreds of entrepreneurs, I found that founders who don't take the time since the beginning to analyze how and when they will be able to return their initial investment and make money even if it is years later, quit the moment they face a significant hurdle even if it is just weeks after taking their product to market.

Calculating and understanding your key metrics shows you what it will take financially to turn your idea into a profitable startup. Your investment allows you to plan your execution and the next stages around your resources. For instance, if you realize your funds will only allow you to launch a product and run the startup for one year under conservative assumptions such as not generating any revenue, you know you need to start fundraising as soon you go to market.

Over the years, I found that most self-funded entrepreneurs focus on putting together just the required funds to take the product to market. Once it's live, they're cash strapped. There is a reason most funding rounds are expected to last startups 12 to 18 months or longer. My advice for bootstrapped founders is to allocate enough cash to launch a product and operate the startup for at least 12 months plus 50%.

This 50% is what I call a pivot fund. Since most startups end up changing their business model or product in one way or another, the pivot fund should be used for unexpected changes in direction. If Groupon didn't pivot from a fundraising site to its current business model, it wouldn't have become one of the fastest startups to have ever reached a billion dollar valuation.

Focusing on your startup ROI forces you to build products that are more likely to generate a positive ROI. If you find it impossible to bootstrap your startup, your ROI could be building a fundable startup. In other words, launching a product that people use and that attracts investors. In this case, the question you need to answer is: what will it take to de-risk my startup and prove its potential?

Every milestone, department and initiative, big or small, should start by defining the expected return and the investment required to achieve this return. For instance, as simple as interviewing potential users should begin with an end goal in mind like clearly defining the ideal buyer and how your investment in time and money will help you accomplish this goal and by when.

When you start evaluating all of your decisions around an ROI, you unintentionally start eliminating the decisions, steps and ideas that will not take you where you need to go. And you don't need to be a finance expert to do this.

Start by defining your ideal expected return and then figure out the investment required to reach it. If your investment is insufficient, break down the return into smaller achievable milestones. At the end of the day, your realized return should be higher than the investment for the milestone even if it takes time to reach the results, as long as the output is eventually higher than the input. And if it's not, this is where your pivot fund contributes to future investment, which should have a higher probability of success as you will be making decisions based on data from a failed investment.

When you set your expected return for each investment, consider dividing it into three mini-goals: expected return, good return, and exceptional return. Your expected return is what your analysis shows you could accomplish with high certainty. For instance, chances are, if you invest in a prototype and show it to enough people, you will be able to uncover key insights about their needs and expectations.

With a prototype, you may also be able to pre-sell your product and generate enough revenue to fund the next product development stage. This is an example of a good return. And finally, with the same investment, you might also be able to raise the first funding round if this is what you consider an exceptional return.

This approach allows you to focus on capturing the simplest and most realistic return on investment. It also pushes you to try to realize higher returns with the same investment until you learn you need to make further investments to achieve those higher returns.

In conclusion, know your numbers. Even though startups at the idea stage can be unpredictable, remember that progress is the sum of small steps forward. When you focus on a few steps at a time, you can confidently measure your progress and the required investment.

The Weekly Notable Startup Funding Report: 3/2/20 - AlleyWatch

Posted: 29 Feb 2020 02:56 PM PST

Air

$6.0M - Seed

Brooklyn-based Air is the whiteboard for your team's images and videos. Founded by Shane Hegde and Tyler Strand in 2017, Air has now raised a total of $7.5M in total equity funding and is backed by investors that include Lerer Hippeau, Advancit Capital, WndrCo, Red Sea Ventures, and Todd Jackson.

Anagram

$9.1M - Series A

Santa Monica-based Anagram designs an online insurance and billing automation platform that helps ancillary healthcare providers. Founded by Brett Plotzker, Jeremy Bluvol, and Kam Kudla in 2014, Anagram has now raised a total of $14.9M in total equity funding and is backed by investors that include FundersClub, Tom Williams, Cantos, Rogue Venture Partners, and Hack VC.

Eaze

$35.0M - Series D

San Francisco-based Eaze is an online marketplace and technology platform that helps provide legal access to cannabis through safe and convenient delivery. Founded by Keith McCarty and Roie Edery in 2014, Eaze has now raised a total of $202.5M in total equity funding and is backed by investors that include 500 Startups, Slow Ventures, FJ Labs, Great Oaks Venture Capital, and Winklevoss capital.

Flock Freight

$50.0M - Series B

Solana Beach-based Flock Freight is a business-to-business freight shipping company. Founded by Oren Zaslansky in 2015, Flock Freight has now raised a total of $70.5M in total equity funding and is backed by investors that include Foundation Capital, SignalFire, TenOneTen Ventures, GV, and Karmel Capital.

Ripcord

$45.0M - Series B

Hayward-based Ripcord is the robotics digitization company, combining hardware and software robotics via an integrated SaaS offering. Founded by Alex Fielding, Kevin Hall, and Kim Lembo in 2014, Ripcord has now raised a total of $104.5M in total equity funding and is backed by investors that include CDK Global, Silicon Valley Bank, Lux Capital, Baidu Ventures, and GV.

HeadSpin

$60.0M - Series C

Palo Alto-based HeadSpin is the world's first Connected Intelligence Platform. Founded by Brien Colwell and Manish Lachwani in 2015, HeadSpin has now raised a total of $80.0M in total equity funding and is backed by investors that include Battery Ventures, Tiger Global Management, Dell Technologies Capital, Palo Alto Networks, and GGV Capital.

HealthJoy

$30.0M - Series C

Chicago-based HealthJoy is a benefits experience platform helping employees make smart healthcare decisions with personalized guidance and AI technology. Founded by Doug Morse-Schindler and Justin Holland in 2014, HealthJoy has now raised a total of $48.5M in total equity funding and is backed by investors that include GoHealth, Relativity, Chicago Ventures, U.S. Venture Partners (USVP), and EPIC Ventures.

Roblox

$150.0M - Series G

San Mateo-based Roblox is an online entertainment platform that helps power the imaginations of people around the world. Founded by David Baszucki in 2006, Roblox has now raised a total of $335.7M in total equity funding and is backed by investors that include Tencent Holdings, Andreessen Horowitz, Tiger Global Management, Index Ventures, and Temasek Holdings.

Karius

$165.0M - Series B

Redwood City-based Karius provides genomic insights for infectious diseases to enable clinicians to make life-saving treatment decisions. Founded by Mickey Kertesz, Steve Quake, and Tim Blauwkamp in 2014, Karius has now raised a total of $229.0M in total equity funding and is backed by investors that include Tencent Holdings, General Catalyst, Khosla Ventures, Lightspeed Venture Partners, and SoftBank Vision Fund.

K Health

$48.0M - Series C

New York-based K Health develops a mobile app that uses AI to deliver personalized primary care better, faster, and cheaper. Founded by Adam Singolda, Allon Bloch, Israel Roth, and Ran Shaul in 2016, K Health has now raised a total of $97.3M in total equity funding and is backed by investors that include Lerer Hippeau, Bessemer Venture Partners, Anthem, Primary Venture Partners, and Comcast Ventures.

Molekule

$58.0M - Series C

San Francisco-based Molekule is a San Francisco-based science and clean air company that has developed a fundamentally new approach to cleaning air. Founded by Dilip Goswami, Jaya Rao, and Yogi Goswami in 2014, Molekule has now raised a total of $96.4M in total equity funding and is backed by investors that include Foundry Group, Uncork Capital, TransLink Capital, Foxconn Technology Group, and Crosslink Capital.

Plume Design

$60.0M - Series D

Palo Alto-based Plume is the creator of a Consumer Experience Management Platform for the curation and delivery of new Smart Home Services rapidly at scale. Founded by Adam Hotchkiss, Aman Singla, Fahri Diner, and Sri Nathan in 2015, Plume Design has now raised a total of $127.4M in total equity funding and is backed by investors that include Charter Communications, Spark Capital, Comcast, Qualcomm, and Samsung Ventures.

Pony.ai

$462.0M - Series B

Fremont-based Pony.ai is a startup that builds full-stack autonomous driving solutions. Founded by James Peng and Tiancheng Lou in 2016, Pony.ai has now raised a total of $726.0M in total equity funding and is backed by investors that include Toyota Motor Corporation, Eight Roads Ventures, Sequoia Capital, IDG Capital, KUNLUN.

Process Street

$12.0M - Series A

San Francisco-based Process Street is a SaaS platform that allows teams create, track, and optimize business process workflows. Founded by Cameron McKay and Vinay Patankar in 2014, Process Street has now raised a total of $13.4M in total equity funding and is backed by investors that include Atlassian, Salesforce Ventures, Accel, Blackbird Ventures, AngelPad.

ServiceMax

$80.0M - Venture

Pleasanton-based ServiceMax is the provider of Field Service Management Software for equipment manufacturers and service providers. Founded by Athani Krishnaprasad, Hari Subramanian, and Neil Barua in 2007, ServiceMax has now raised a total of $284.0M in total equity funding and is backed by investors that include Salesforce Ventures, PTC, Silver Lake Partners, Mayfield Fund, and Trinity Ventures.

Denver startup looks to use prisoner artwork to help inmates after release - The Denver Channel

Posted: 29 Feb 2020 05:07 PM PST

DENVER — A Denver-based startup is hoping to launch a platform to help people behind bars sell their artwork.

Many people know about Etsy, where people can sell handcrafted goods online. So, think of the idea being pitched by Buck Adams as Etsy for prison inmates.

"It is a web-based platform, an e-commerce platform that we're building to showcase and sell art that has been done by those who are incarcerated," Adams said.

He came up with the idea for Art for Redemption during his own time in prison for an assault.

"Through my process of going through the system, I saw a lot of human ingenuity, creativity, and a lot of talent being placed into different arts and crafts," he said.

Art programs are popular behind bars as a way for prisoners to be productive creatively.

"Seeing those guys sit in their cells, and they were just drawing for eight hours a day, and they became really good at what they did," Adams added.

Adams thought -- why not try to find an avenue to sell this artwork and help prisoners put themselves in a better position for when they leave?

He said inmates would get 60% of the money and would be put toward things such as restitution or child support. Adams said it could put inmates on a better path.

"I know some of the guys that when I was in, we talked about it, and they're like, 'well, if you can do it, it could change lives in here.' I can change how we do things," he said.

Adams says they worked with the Colorado Department of Corrections to get a pilot program launched. He hopes to have the platform live later this year.

Andreessen Horowitz has backed Run The World, a startup with a timely offering: live online events - TechCrunch

Posted: 27 Feb 2020 01:24 PM PST

Every day, there's another event-related cancellation owing to concern around coronavirus. Just today Microsoft announced it will not have a presence at the Game Developers Conference in mid-March "out of an abundance of caution." Facebook also said today that it is canceling its annual F8 conference scheduled for May over coronavirus-outbreak concerns.

The last is a particularly big deal. F8 is by far the largest event that Facebook hosts every year, so it's little wonder that it plans to host part of the event online.

Likely, Facebook will use its own tech toward this end. But there is a new option for other companies that are right now second-guessing their event plans, and that's Run The World, a year-old, 18-person company that's based in Mountain View, Calif., and has small teams both in China and Taiwan.

What it's doing: smooshing together every functionality that a conference organizer might need in a time of a pandemic. Think video conferencing, ticketing, interactivity and networking.

Who's backing it: Andreessen Horowitz largely, though the company — which has raised $4.3 million in seed funding — also counts as investors GSR Ventures, Pear Ventures, 122 West Ventures, Unanimous Capital, and angel investors like Kevin Weil, the VP of product at the Facebook subsidiary Calibra; Patreon co-founder Sam Yam; and Jetblue Airways Chairman Joel Peterson.

Who started Run The World: Xiaoyin Qu, who is CEO of the company and previously led products for both Facebook and Instagram ("basically anything to do with entertainment influencers and creators," she says of part of her time at Facebook).

She dropped out Stanford's MBA program after a year to start the company last year with Xuan Jiang, a former colleague who was a technical lead for Facebook events, ads and stories. (Jiang does have a master's degree — one in computer science from the Georgia Institute of Technology.)

We talked with Qu yesterday after learning about the company from Connie Chan, the general partner who led the deal for a16z.

Qu says the impetus for the startup ties to her mother, a doctor in China who focuses on meningitis and traveled to a conference in Chicago in late 2018 where she made a connection with a Dubai-based physician who was able to share with her some rare, valuable insight into his own work around meningitis.

That might not seem so exceptional to those who travel regularly, but it was enough of an ordeal for Qu's mother — who had to secure a visa; take off two weeks around the event, including for travel days; and spent a fortune on airfare and accommodations — that it was the first major trip she'd taken in 35 years.

As Qu half-joked, "It isn't like at Stanford, where there are events held regularly that [local] doctors can even walk over to."

Indeed, like a lot of founders who solve a pain point for themselves or someone they love, Qu wanted to create a platform where her mother could meet and have meaningful work connections with people regularly, and this would mean remotely, through digitized events.

Turns out, her timing is pretty good. Though numerous startups have launched live online events businesses in the past (many of them since shuttered), you can bet many more organizers are thinking about exactly the type of platform that Run The World is fine-tuning right now.

Though publicly launched just four months ago, it has already hosted dozens of events and has hundreds in the pipeline, says Qu. One of its customers is Wuhan2020, a large open-source community with more than 3,000 developers who will be using the platform as part of a long-distance hackathon that hopes to produce tech solutions for those affected by coronavirus in Wuhan.

Qu also points to an elephant conservation reserve in Laos that was recently able to raise $30,000 from donors in 15 countries across two weeks through a conference it organized on the platform. The reserve had a constrained budget, but being able to bring together a distributed audience (beyond just wealthy donors) for nearly zero overhead (no venue, no catering), turned it into a major success for the organization.

Smaller events are finding the platform, too. In just one instance, a dating coach who specializes in working with engineers recently held a workshop. Just 40 people showed up, says Qu, but this individual was able to make $1,300 from the event.

Run The World keeps the cost structure simple, taking 25% of ticket sales in exchange for what it provides organizers, from the templates they create, to ticket sales, to payment processing (via Stripe), streaming, enabling social interactions throughout the event, and helping organizers follow up with attendees afterward.

Indeed, beyond enabling organizers to reach a wider audience at perhaps a more accessible price point, a big advantage conferred by online events is the potential for more effective networking, insists Qu. For example, rather than walk into a physical space where it's sometimes hard to know who to talk with about what, Run The World asks every event attendee to create a video profile akin to an Instagram story that can help inform other attendees about who they are.

It also organizes related "cocktail parties" where it can match attendees for several minutes at a time.

Naturally, there are also downsides to streamed live events as the world was reminded last year, when a gunman filmed his mass murder of dozens of people in Christchurch, New Zealand on Facebook Live.

One could also imagine that those video profiles could attract unwanted attention to some attendees who might rather just watch an event.

These are certainly facets of the business about which Qu and Jiang are well aware. While the plan is to keep adding new features (including, potentially, to use LinkedIn to validate attendees' identities), Qu notes that another way to ensure the quality of the events on the platform remains high — and that attendees feel safe — is to steer clear of most free events.

"When organizers are recruiting their own people and curating a community" of paid attendees who they know or can ostensibly learn more about, it keeps things above the level, she suggests, noting that paid attendees also show up in far greater numbers.

As Run The World scales, she concedes, "we'll need to figure out new ways."

Certainly, the lessons learned at Facebook and Instagram should help as the business picks up momentum and creates more structure around its offerings. Besides, Qu adds, "The ideal event to me isn't one with 2 million people. I'd rather we hosted 2 million events with 50 people."

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