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Today — January 22nd 2020Your RSS feeds

Where top VCs are investing in adtech and martech

By Arman Tabatabai

Lately, the venture community’s relationship with advertising tech has been a rocky one.

Advertising is no longer the venture oasis it was in the past, with the flow of VC dollars in the space dropping dramatically in recent years. According to data from Crunchbase, adtech deal flow has fallen at a roughly 10% compounded annual growth rate over the last five years.

While subsectors like privacy or automation still manage to pull in funding, with an estimated 90%-plus of digital ad spend growth going to incumbent behemoths like Facebook and Google, the amount of high-growth opportunities in the adtech space seems to grow narrower by the week.

Despite these pains, funding for marketing technology has remained much more stable and healthy; over the last five years, deal flow in marketing tech has only dropped at a 3.5% compounded annual growth rate according to Crunchbase, with annual invested capital in the space hovering just under $2 billion.

Given the movement in the adtech and martech sectors, we wanted to try to gauge where opportunity still exists in the verticals and which startups may have the best chance at attracting venture funding today. We asked four leading VCs who work at firms spanning early to growth stages to share what’s exciting them most and where they see opportunity in marketing and advertising:

Several of the firms we spoke to (both included and not included in this survey) stated that they are not actively investing in advertising tech at present.

Yesterday — January 21st 2020Your RSS feeds

Corporate relocation startup Shyft raises $15M

By Anthony Ha

Shyft is announcing that it has raised $15 million in Series A funding to make the moving process less painful — specifically in the situations where your employer is paying for the move.

There other startups are looking to offer concierge-type services for regular moving — I used a service called Moved last year and liked it. But Shyft co-founder and CEO Alex Alpert (who’s spent years in the moving business) told me that there are no direct competitors focused on corporate relocation.

“Even at the highest levels, the process is totally jacked up,” Alpert said. “We saw an opportunity to partner with corporations and relocation management companies to build a customized, tech-driven experience with more choices, more flexibility and to be able to navigate the quoting process seamlessly.”

So when a company that uses Shyft decides to relocate you — whether you’re a new hire or just transferring to a new office — you should get an email prompting you to download the Shyft app, where you can chat with a “move coach” who guides you through the process.

You’ll also be able to catalog the items you want to move over a video call and get estimates from movers. And you’ll receive moving-related offers from companies like Airbnb, Wag, Common, Sonder and Home Chef.

And as Alpert noted, Shyft also partners with more traditional relocation companies like Graebel, rather than treating them as competitors.

Shyft screenshot

The company was originally called Crater and focused on building technology for creating accurate moving estimates via video. It changed its name and its business model back in 2018 (Alpert acknowledged, “It wasn’t a very popular pitch in the beginning: ‘Hey, we’re building estimation software for moving companies.'”) but the technology remains a crucial differentiator.

“Our technology is within 95% accurate at identifying volume and weight of the move,” he said. “When moving companies know the information is reliable, they can bid very aggressively.”

As result, Alpert said the employer benefits not just from having happier employees, but lower moving costs.

The new funding, meanwhile, was led by Inovia Capital, with participation from Blumberg Capital and FJ Labs.

“There’s a total misalignment between transactional relocation services and the many logistical, social, and lifestyle needs that come with moving to a new city,” Inovia Partner Todd Simpson said in a statement. “As businesses shift towards more distributed workforces and talent becomes accustomed to personalized experiences, the demand for a curated moving offering will continue to grow.”

Lame LPs, founder referenceability and the future of VC signaling

By Danny Crichton

I’m still going through some of the comments I received on last week’s articles about the heightened competition among VCs for the best (typically SaaS) venture deals. Some more notes on whether large funds investing in small rounds causes VC signaling risk in a moment, but first, a fun anecdote about how lame LPs (still) are.

Have thoughts about venture? Send them to me → danny@techcrunch.com

I was catching up with an ambitious founder of a VC firm this weekend, and we were talking about fundraising for VC firms, and, particularly, the process of connecting with limited partners. Like startup founders, investment firms typically submit fund proposal decks and data rooms to potential LPs, who are then supposed to evaluate said material and either move toward an investment, ask for more information or run the hell away.

Unlike VCs, however, LPs have apparently not caught on to the fact that access to this information is much more trackable than it was in the past. VCs now realize that their perusal of a deck on DocSend is being monitored by founders, and I have heard from more than one VC over the years that they have their executive assistants click through a deck in a deliberately slow fashion to make it look like they are putting more thought and attention into reading a founder’s fundraise deck than they really are.

LPs though have no such inkling that this is going on apparently. From the VC firm founder this weekend (paraphrasing), “What’s amazing is that I get asked for my data room, and then the potential LP will setup a time two weeks in the future to meet again. Fifteen minutes before our meeting, I get an email notification that they finally opened up the data room and started accessing its files.”

The best part is where the potential LP then waxes on about how much thought they put into their feedback to the VC.

Founder referenceability

As I explained last week, the paradox of big VC funds today is that they are actually doing more of the smaller startup fundraises as a way to secure access to later-stage deals.

So for many deals today, those later-stage cap tables are essentially locking out new investors, because there is already so much capital sitting around the cap table just salivating to double down.

That gets us straight to the paradox. In order to have access to later-stage rounds, you have to already be on the cap table, which means that you have to do the smaller, earlier-stage rounds. Suddenly, growth investors are coming back to early-stage rounds (including seed) just to have optionality on access to these startups and their fundraises.

One response I heard from a seed VC is that they focus on “founder referenceability.” What they mean by that is they use their existing portfolio founders as the key persuasion tool to convince new founders to take their term sheet over other (larger) competitors.

This particular seed investor argued (whether true or not) that they spend copious amounts of time in a concentrated manner with their portfolio companies, helping them with recruiting, business strategy, and customer development. That’s compared to larger firms, who have dozens (perhaps even hundreds) of seed investments and where founders can easily feel abandoned and without any support. “We win every time when founders talk to our portfolio companies,” was the general sentiment.

And yet. For founders living and dying by the ambiguity of their market, their product, their talent and their future, that imprimatur of a big-brand-name VC firm — even with paltry founder recommendations — is extremely hard to turn down. As a founder, do you want the VC who is going to work his or her ass off to help build your company, or the VC whose selection of your startup gives you (and likely your employees and your customers) the peace of mind that things are going really, really well?

The sense I get is that the viewpoint is shifting to the former from the latter, but the reality is that most founders can’t turn down the allure of the big name fund, even if they get an abundant set of glowing references about a lesser-known firm. Ultimately, that hard-working VC can help you with key hires and customers, but the reputation of a big firm will grease the wheel of every decision that gets made about your startup.

VC signaling

The other line of responses I got — including an extensive missive from a partner at a top 20 firm — is that VC signaling still limits the impact of a lot of the largest funds to invest earlier. Founders realize, the thinking goes, that taking money from a fund that can lead the next three rounds is bad, since if their investor doesn’t lead those rounds, it signals to other VCs that something is wrong with the company.

I increasingly feel VC signaling is a completely phantom pattern these days (disagree? Tell me your story → danny@techcrunch.com). Not only do I think that VCs increasingly ignore these types of signals, I think the VCs who hustle the most aggressively are targeting the early seed checks of other funds in particular and intercepting their best deals.

Why does this work? For one, large firms haven’t really figured out how to manage the information flows from hundreds of portfolio companies simultaneously, so they consistently miss the inflection points of their own startups — points that smart VCs with good noses for opportunity identity faster.

Second, there is indeed something about referenceability and founder abandonment — a number of founders have told me that they send out a multitude of tweaked investor updates that include more or less information based on the relationship they have with an investor. Often their lead investor is getting the least information — and doesn’t even realize it. It’s a subtle hack for handling what could otherwise be an awkward situation. It also helps to create FOMO around a round that is particularly exploited by startup angels eager to find the largest early uptick in their portfolio.

Third and finally, as with all good VC investors, seeing an investment with a fresh pair of eyes rather than through the cynical air of experience can often lead to radically different investment decisions. An incumbent investor may have heard all the data and promises from a founder for one, two, or three years, and fails to see the slight changes happening at the end, while a new investor without that background can make a new decision based on the best evidence in front of them today.

The lesson to me isn’t that investors suddenly decided to ignore signals. It is that with so much competition for startup cap tables, having the right numbers and a great product story and narrative will overcome any other VC signal, positive or negative. And for the VCs themselves, there’s nothing quite like snatching the best golden egg from a competitor’s nest while they are out flying around searching for the next great deal, which if they had looked a little closer, just happened to be right in front of them.

African fintech firm Flutterwave raises $35M, partners with Worldpay

By Jake Bright

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech venture announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to do finance in Africa.

Court rules Mike Rothenberg must fork over more than $31 million to settle SEC allegations

By Sarah Buhr

Mike Rothenberg, the once high-flying VC bent on bringing the party to Silicon Valley, must now pay a whopping $31.4 million to settle a California federal court ruling in favor of Security and Exchange Commission allegations.

TechCrunch deemed Rothenberg a “virtual Gatsby” back in 2016, when we first broke the news about the downfall of his venture capital firm, Rothenberg Ventures. It seemed he took it as a compliment, changing his Instagram handle to @virtualgatsby. Indeed, the name seemed appropriate for a man who seemingly lived a party-boy lifestyle and spent lavishly to woo startup founders — including going on Napa Valley wine tours, holding an annual “founder field day” where he rented the whole San Francisco Giants’ baseball stadium and spending unsparingly to executive produce a video for Coldplay.

But the party life came to a halt when top leadership jumped ship and the SEC started looking into the books. The SEC formally charged Rothenberg in August of 2018 for misappropriating millions of dollars of his investors’ capital and funneling that money into his own bank account. Rothenberg settled with the SEC at the time and, as part of the settlement, was barred from the brokerage and investment advisory business for five years.

Rothenberg was later caught up in several lawsuits, including one from Transcend VR for fraud and breach of contract, which ended in a settlement. Another suit between Rothenberg and his former CFO, David Haase, ended with Rothenberg being ordered to pay $166,000 in damages.

But there was more to come from the SEC, following a forensic audit in partnership with the firm Deloitte showing the misuse or misappropriation of $18.8 million in investor funding. Under that examination, Deloitte showed Rothenberg had used the money either personally, to float his flashy lifestyle, or for other extravagances, such as building a race car team and a virtual reality studio. Rothenberg has now been ordered to pay back the $18.8 million he took from investors, another $9 million in civil penalties, plus $3.7 million in interest.

Neither the SEC nor Rothenberg have responded for comment. It’s also important to note none of the charges so far have been criminal, but were handled in civil court, as the SEC does not handle criminal cases.

Through all of it, Rothenberg never admitted any guilt for his actions and it is important to note that, because of this he will be able to practice again after the bar is lifted in five years. He’s also made some decent early investments in startups like Robinhood, and many investor sources TechCrunch spoke to over the years seemed quite loyal to him as an investor, despite the charges, employee mass exodus and fund implosion that followed.

And it seems this saga is not over yet. Rothenberg told MarketWatch in a recent interview that he thought the ruling was, “historically excessive and vindictively punitive,” that he planned to appeal it and would be suing Silicon Valley Bank, which Rothenberg used to funnel several investments, over the matter.

Rothenberg Ventures already filed suit against Silicon Valley Bank in August of 2018, the same day the SEC filed formal charges against Rothenberg himself. In that suit, Rothenberg alleged negligence, fraud and deceit on the part of the bank and sought a trial before jury. Silicon Valley Bank said it would defend against the case at the time.

We’ve reached out to Silicon Valley Bank and are waiting to hear back. The real question is, if Rothenberg were to come back to investing in Silicon Valley, would anyone still trust him?

Before yesterdayYour RSS feeds

Catalyst Fund gets $15M from JP Morgan, UK Aid to back 30 EM fintech startups

By Jake Bright

The Catalyst Fund has gained $15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.

The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.

That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.

Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.

“We’re offering grants of up to $100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.

Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.

Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.

Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.

Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.

African fintech startups have dominated the accelerator’s startups, comprising 56% of the portfolio into 2019.

That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.

The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.

By several estimates, Africa is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale finance solutions on the continent.

Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech related startups on the continent.

This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.

For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation

“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.

This take aligns with JP Morgan’s 2019 announcement of a $125 million, philanthropic, five-year global commitment to improve financial health in the U.S. and globally.

More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $2.9 billion. It’ll be worth following if the company shifts any of its income-generating prowess to business and venture funding activities in Catalyst Fund markets like Nigeria, India and Mexico.

Compound’s Mike Dempsey on virtual influencers and AI characters

By Eric Peckham

In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.

Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:

  • virtual influencers: fictional characters with real-world social media accounts who build and engage with a mass following of fans.
  • virtual companions: AIs oriented toward one-to-one relationships, much like the tech depicted in the films “Her” and “Ex Machina.” They are personalized enough to engage us in entertaining discussions and respond to our behavior (in the physical world or within games) like a human would.

Part 1 of 3: the investor perspective

In a series of three interviews, I’m exploring the startup opportunities in both of these spaces in greater depth. First, Michael Dempsey, a partner at VC firm Compound who has blogged extensively about digital characters, avatars and animation, offers his perspective as an investor hunting for startup opportunities within these spaces.

Deep tech VCs on what they view as some of the most impactful young startups right now

By Connie Loizos

During this week’s Democratic debate, there was a lot of talk, unsurprisingly, about ensuring the future of this country’s children and grandchildren. Climate change was of particular interest to billionaire Tom Steyer, who said repeatedly that addressing it would be his top priority were he elected U.S. president.

As it happens, earlier the same day, we’d spent time on the phone with two venture capitalists who think of almost nothing else every day. The reason: they both invest in so-called deep tech, and they meet routinely with startups whose central focus is on making the world habitable for generations of people to come — as well as trying to produce outsize financial returns, of course.

The two VCs with whom we talked know each other well. Siraj Khaliq is a partner at the global venture firm Atomico, where he tries to find world-changing startups that are enabled by machine learning, AI, and computer vision. He has strong experience in the area, having cofounded The Climate Corporation back in 2006, a company that helps farmers optimize crop yield and that was acquired by Monsanto in 2013 for roughly $1 billion.

Seth Bannon is meanwhile a founding partner of Fifty Years, a nearly five-year-old, San Francisco-based seed-stage fund whose stated ambition is backing founders who want to solve the world’s biggest problems. The investors’ interests overlap so much that Khaliq is also one of Fifty Years’s investors.

From both, we wanted to know which companies or trends are capturing their imagination and, in some cases, their investment dollars. Following are excerpts from our extended conversation earlier this week. (We thought it was interesting; hopefully you will, too.)

TC: Seth, how would you describe what you’re looking to fund at your firm?

SB: There’s a Winston Churchill essay [penned nearly 100 years ago] called “Fifty Years Hence” that describes what we do. He predicts genomic engineering, synthetic biology, growing meat without animals, nuclear power, satellite telephony.  Churchill also notes that because tech changes so quickly that it’s important that technologists take a principled approach to their work. [Inspired by him] we’re backing founders who can make a ton of money while doing good and focusing on health, disease, the climate crisis . . .

TC: What does that mean exactly? Are you investing in software?

SB: We’re not so enthusiastic about pure software because it’s been so abstracted away that it’s become a commodity. High school students can now build an app, which is great, but it also means that competitive pressures are very high. There are a thousand funds focused on software seed investing. Fortunately, you can now launch a synthetic biology startup with seed funding, and that wasn’t possible 10 years ago. There are a lot of infrastructural advancements happening that makes [deep tech investing even with smaller checks] interesting.

TC: Siraj, you also invest exclusively on frontier, or deep tech, at Atomico . What’s your approach to funding startups?

SK: We do Series A [deals] onward and don’t do seed stage. We primarily focus on Europe. But there’s lot of common thinking between us and Seth. As a fund, we’re looking for big problems that change the world, sometimes at companies that won’t necessarily be big in five years but if you look out 10 years could be necessary for humanity. So we’re trying to anticipate all of these big trends and focus on three or four theses a year and talk as much as we can with academics and other experts to understand what’s going on. Founders then know we have an informed view.

Last year, we focused on synthetic biology, which is a becoming so broad a category that it’s time to start subdividing it. We were also doing AI-based drug discovery and quantum computing and we started to spend some time on energy as well. We also [continued an earlier focus on ] the future of manufacturing and industry. We see a number of trends that make [the latter] attractive, especially in Europe where manufacturing hasn’t yet been digitized.

TC: Seth, you mentioned synthetic biology infrastructure. Can you elaborate on what you’re seeing that’s interesting on this front?

SB: You’ve maybe heard of directed evolution, technology that allows biologists to use the power of evolution to get microbes or other biological machines to do what they want them to do that would have been impossible before. [Editor’s note: here, Bannon talked a bit about Frances Arnold, the Nobel Prize-winning chemist who was awarded the prize in 2018 for developing the technique.]

So we’re excited to back [related] startups. One, Solugen, enzymatically makes industrial chemicals [by combining genetically modified enzymes with organic compounds, like plant sugars]. Hydrogen peroxide is $6 billion dollar industry, and it’s currently made through a petroleum-based process in seven-football-field-long production plants that sometimes explode and kill people.

TC: Is this then akin to Zymergen, which develops molecules in order to create unique specialty materials?

SB: Zymergen mainly works as a kind of consultant to help companies engineer strains that they want. Solugen is a vertically integrated chemicals company, so it [creates its formulations], then sells directly into industry.

TC: How does this relate to new architectures?

SB: The way to think about it is that there’s a bunch of application-level companies, but as synthetic biology companies start to take off, there’s a bunch of emerging infrastructure layer companies. One of these is Ansa Biotechnologies, which has a fully enzymatic process or writing DNA. Like Twist, which went public, they make DNA using a chemical process [to sell to clients in the biotechnology industry. [Editor’s note: More on the competition in this emerging space here.]

Also, if you look at plant-based alternatives to meat, they’re more sustainable but also far more expensive than traditional beef. Why is that? Well plant-based chicken is more expensive because the processing infrastructure being used is more than 10 years behind real chicken processing, where you’ll see robot arms that cut up chicken so efficiently that it looks like a Tesla factory. [Alternative meat] companies are basically using these extruders built in the ’70s because the industry has been so small, and that’s because there’s been a lot of skepticism from the investment community in these companies. Or there was. The performance of Beyond Meat’s IPO ended it. Now there’s a rush of founders and dollars into that space, and whenever you have a space where the core infrastructure has been neglected, there’s opportunity. A former mechanical engineer with Boeing has started a company, Rebellyous Foods, to basically build the AWS for the plant-based food industry, for example. She’s using [the machines she’s building] to sell plant-based chicken nuggets [but that’s the longer-term plan].

TC: Siraj, You say last year you started to spend time on energy. What’s interesting to you as it relates to energy?

SK: There’s been some improvement in how we capture emissions, but [carbon emissions] are still very deleterious to our health and the planet’s health, and there are a few areas to think about [to address the problem]. Helping people measure and control their consumption is one approach, but also we think about how to produce new energy, which is a shift we [meaning mankind] need to undertake. The challenge [in making that shift] is often [capital expenditures]. It’s hard for venture investors to back companies that are [building nuclear reactors], which makes government grants the best choice for early innovation oftentimes. There is one company, Seaborg, that has figured out a clever reactor. It’s not a portfolio company but it’s [compelling].

SB: We also really like what Seaborg is doing. These [fourth generation] nuclear companies have a whole host of approaches that allow for smaller, safer reactors that you wouldn’t mind having in your backyard. But Siraj put his finger on it: as an early-stage deep tech investor, we have to consider the capital plan of a company, and if it needs to raise billions of dollars, early investors will get really diluted, so early-stage venture just isn’t the best fit.

TC: There are areas you like, though, because costs have fallen so much.

SB: Yes. Satellite telephony used to be one of those areas. Some of the satellites in space right now cost $350 million [to launch] and took three to four years to build, which would be really hard for any early-stage investor to fund, But now, a new generation of companies is building satellites for one-tenth of the cost in months, not years. That’s a game changer. They can iterate faster. They can build a better product. They don’t have to raise equity to build and launch either; they can raise from a debt financier, [from whom they can] borrow money and pay it back over time. That model isn’t available to a company like Uber or Lyft, because those companies can’t say, ‘X is going to cost us Y dollars and it will pay back Z over time.’

TC: What of concerns that all these cheap satellites are going to clog up the sky pretty quickly?

SB: It’s a real concern. Most [of today’s satellites] are low earth satellites, and the closer to the earth they are, the brighter they are; they reflect the sun more, the more satellites we’re seeing instead of stars. I do think it’s incumbent on all of these companies to think about how they are contributing to the future of humanity. But [when you can transmit more information from satellites], the stability of governments improves, too, so maybe the developed world needs to sacrifice a bit. I think that’s a reasonable tradeoff. If on the other hand, we’re putting up satellites to help people buy more crap . . .

TC: It’s like the argument for self-driving cars in a way. Life becomes more efficient, but they’ll require far more energy generation, for example. There are always second-order consequences.

SK: But think of how many how many people are killed in driving accidents, versus terrorist attacks. Humans have many great qualities, but being able to drive a lethal machine consistently isn’t one of them. So when we take that into perspective, it’s really important that we build autonomous vehicles. You [voice] a legitimate concern and often when there are step changes, there are discontinuities along the way that lead to side effects that aren’t great. That comes down to several things. FIrst, infastructure will have to keep up. We’ll also have to create regulations that don’t lead to the worst outcomes. One our investments, Lilium in Munich, has built an entirely electric air taxi service that’s built on vertical takeoff. It’s nimble. It’s quiet enough to operate in city environments.

On roads, cars are constrained by 2D terrain and buildings, but [in the air] if you can do dynamic air traffic control, it opens up far much efficient transport. If you can get from downtown London to Heathrow [airport] in five minutes versus 50 minutes in a Tesla, that’s far more energy efficient.

The paradox of 2020 VC is that the largest funds are doing the smallest rounds

By Danny Crichton

I talked yesterday about how VCs are just tired these days. Too many deals, too little time per deal, and constant hyper-competition with other VCs for the same equity.

One founder friend of mine noted to me last night that he has already received inbound requests from more than 90 investors over the past year about his next round — and he’s not even (presumably) fundraising. “I may have missed a few,” he deadpans, and really, how could one not?

All that frenetic activity though leads us to the paradox at the heart of 2020 venture capital: it’s the largest funds that are writing the earliest, smallest checks.

That’s a paradox because big funds need big rounds to invest in. A billion dollar fund can’t write eight hundred $1 million seed checks with dollars left over for management fees (well, they could, but that would be obnoxious and impossible to track). Instead, the usual pattern is that as a firm’s fund size grows, its managing partners increasingly move to later-stage rounds to be able to efficiently deploy that capital. So the $200 million fund that used to write $8 million series As transforms into a $1 billion fund writing $40 million series Bs and Cs.

That’s logical. Yet, the real logic is a bit more complicated. Namely, that everyone is raising huge funds.

As this week’s big VC report from the National Venture Capital Association made clear, 2019 was in many ways the year of the big fund (and SoftBank didn’t even raise!). 21 “mega-funds” launched last year (defined as raising more than $500 million), and that was actually below the numbers in 2018.

All that late-stage capital is scouring for late-stage deals, but there just aren’t that many deals to do. Sure, there are great companies and potentially great returns lying around, but there are also dozens of funds plotting to get access to that cap table, and valuation is one of the only levers these investors have to stand out from the fray.

This is the story of Plaid in many ways. The fintech data API layer, which Visa announced it is intending to acquire this past week for $5.3 billion, raised a $250 million series C in late 2018 from Index and Kleiner, all according to Crunchbase. Multiple VC sources have told me that “everyone” looked at the deal (everyone being the tired VCs if you will).

But as one VC who said “no” on the C round defended to me this week, the valuation last year was incredibly rich. The company had revenues in 2018 in the upper tens of millions or so I have been told, which coupled with its publicly-reported $2.65 billion series C valuation implies a revenue multiple somewhere in the 30-50x range — extremely pricey given the company’s on-going fight with banks to ensure it can maintain data access to its users’ accounts.

Jeff Kauflin at Forbes reported that the company’s revenues in 2019 are now in the lower three digits of millions, which means that Visa likely paid a similarly expensive multiple to acquire the company. Kleiner and Index doubled their money in a year or so, and no one should complain about that kind of IRR (particularly in growth investing), but if it weren’t for Visa and the beneficial alchemy of exit timing, all might have turned out very differently.

Worse that just expensive valuations, these later-stage rounds can become very proprietary and exclusive. From the sounds of it, Plaid ran a fairly open process for its series C round, which allowed a lot of firms to look at the deal, helping to drive the valuation up while limiting dilution for earlier investors and the founder. But that’s not the only way to handle it.

Increasingly, firms who invested early are also trying to invest later. That series A investor who put in $5 million also wants to put in the $50 million series B and the $250 million series C. After all, they have the capital, already know the company, have a relationship with the CEO, and can avoid a time-consuming fundraise in the process.

So for many deals today, those later-stage cap tables are essentially locking out new investors, because there is already so much capital sitting around the cap table just salivating to double down.

That gets us straight to the paradox. In order to have access to later-stage rounds, you have to already be on the cap table, which means that you have to do the smaller, earlier-stage rounds. Suddenly, growth investors are coming back to early-stage rounds (including seed) just to have optionality on access to these startups and their fundraises.

As one VC explained to me last week (paraphrasing), “What’s weird today is that you have firms like Sequoia who show up for seed rounds, but they don’t really care about … anything. Valuation, terms, etc. It’s all a play for those later-stage rounds.” I think that’s a bit of an exaggeration to be clear, but ultimately, those one million-dollar checks are essentially a rounding error for the largest funds. The real return is in the mega rounds down the road.

Does that mean seed funds will cease to exist? Certainly not, but it’s hard to make money and build a balanced, risk-adjusted portfolio when your competitors literally don’t care and consider the investment a marketing and access expense. As for founders — the times are still really, really good if you can check the right VC boxes.

We’ve gone Plaid #

By Alex Wilhelm

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

This week Danny and Alex were back together to riff over a the latest early-stage rounds, the latest on the late-stage front, and more. It was yet another stacked week, forcing us to pick and choose a bit.

Starting off, however, here’s the rounds that caught our eyes this past week:

Leaving the earlier stages and heading to the other end of the spectrum, we touched on Cloudinary passing the $60 million ARR mark, ExtraHop aiming for $100 million ARR mark in short order, and SiteMinder’s new $70 million round that gave it a $750 million valuation after crossing $70 million ARR last year.

Got all that? Like we said, it has been busy.

The two main stories this week on the show were the big Plaid deal, and what’s going on in the United States’s own venture market.

With Plaid, Visa spent more than $5 billion to acquire the financial data API service in one of the first blockbuster exits of the year, making some VCs at Spark Capital and other firms very happy.

Meanwhile, the U.S. venture capital landscape is changing rapidly as more and more regions outside of Silicon Valley bulk up on their startups. The Valley is barely a majority of VC dollars these days, while regions like the mid-Atlantic and the Southeast are raising their profiles quickly. We talk about that, plus the more than a dozen mega funds that launched last year.

Wrapping up, it appears that the venture capitalist classes are tired. Not that we feel too poorly for them, but it goes to show that there’s so much going on these days that no one is getting any rest. No matter how much money they have.

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

Funnel closes $47M Series B to prepare marketing data for better reporting and analysis

By Steve O'Hear

Funnel, the Stockholm-based startup that offers technology to help businesses prepare — or make “business-ready” — their marketing data for better reporting and analysis, has closed $47 million in Series B funding.

Leading the round is Eight Roads Ventures and F-Prime Capital, with participation from existing investors Balderton Capital, Oxx, Zobito and Industrifonden, in addition to Kreos Capital.

Funnel says it will use the injection of capital to accelerate its plans in the U.S., where the company is seeing “strong demand” from enterprises. It also will invest in its technical teams to further its vision of “creating a single source of truth of marketing, sales and other commerce data.”

Founded in 2014 by Fredrik Skantze and Per Made, who are also behind Facebook advertising tool Qwaya, Funnel set out to let marketers automate their online marketing data from multiple platforms in real time, so that they can more accurately analyse their online marketing spend.

Initially that included visualising the marketing data, but now the company has decided to focus solely on collecting the data from all of the disparate marketing channels, and cleaning it up and normalizing it so that it can be imported into popular business intelligence tools to be analysed.

“[We have] shifted away from visualising the marketing data to ‘just’ collecting and making it business-ready as we have seen that to be the real pain point for customers,” Funnel co-founder and CEO Fredrik Skantze tells TechCrunch.

“Visualisation is done well in existing business intelligence tools once the data is properly prepared. Automating the collection and preparation of the data has proven to be a very hard thing to do right and we wanted to make sure we were the best at this which we now confidently can say we are as we hear that again and again from customers.”

To that end, Skantze explains that Funnel has direct connections to tools like Tableau and Google Data Studio. The idea is that customers can instantly visualize the data in the tools they are already familiar with.

Since we last covered Funnel mid 2017, the overarching trend has been an explosive growth in digital marketing. Skantze says that in 2017, 39% of worldwide marketing spend was digital and mostly e-commerce, gaming and app companies that were putting the majority of their budgets online. Since then, forecasts have been repeatedly adjusted upwards, and in 2020, leading markets like the U.K. are now approaching 70% for digital marketing.

“That means the big brands are putting their big budgets online,” he says. “These brands are moving their marketing online because of the performance promise of digital marketing. But delivering on that performance promise requires being data-driven. This is a huge shift for these organizations that they are gradually coming to grips with as they are traditionally more branding focused. It requires creating new roles like marketing analytics, marketing technologists and putting in place a data infrastructure. This is complex.”

That, of course, plays nicely into the hands of Funnel, which is seeing enterprises far beyond e-commerce and apps utilise its wares. “We have spent the last year building out the enterprise readiness of our product and offering [features] like security certifications and enterprise features to be ready to take on these customers,” adds Skantze.

Meanwhile, during the last year, the Funnel team has grown from 73 to 140, and the company signed new office space for a total of 400 people across Stockholm and Boston, ready for further expansion.

Trucks VC general partner Reilly Brennan is coming to TC Sessions: Mobility

By Kirsten Korosec

The future of transportation industry is bursting at the seams with startups aiming to bring everything from flying cars and autonomous vehicles to delivery bots and even more efficient freight to roads.

One investor who is right at the center of this is Reilly Brennan, founding general partner of Trucks VC, a seed-stage venture capital fund for entrepreneurs changing the future of transportation.

TechCrunch is excited to announce that Brennan will join us on stage for TC Sessions: Mobility.

In case you missed last year’s event, TC Sessions: Mobility is a one-day conference that brings together the best and brightest engineers, investors, founders and technologists to talk about transportation and what is coming on the horizon. The event will be held May 14, 2020 in the California Theater in San Jose, Calif.

Brennan is known as much for his popular FoT newsletter as his investments, which include May Mobility, Nauto, nuTonomy, Joby Aviation, Skip and Roadster.

Stay tuned to see who we’ll announce next.

And … $250 Early-Bird tickets are now on sale — save $100 on tickets before prices go up on April 9; book today.

Students, you can grab your tickets for just $50 here.

VCs are just tired

By Danny Crichton

I was in SF last week and met with more than a dozen VCs over the course of two days. This was post the holidays, post their visits to the ski chalets in Tahoe and the island beaches, and in the smack dab of one of the most important fundraise periods of the year — the mid-to-late January to April stretch when all the backlog of startups from Q4 initiate their fundraises for the new year.

And the one constant refrain I heard over and over again across these conversations was just this: VCs are tired.

The reasons were similar if not perfectly overlapping. The biggest driver was the sheer flood of venture dollars targeting too few deals in the Valley these days. Consumer investing has become passé as exits disappear and the mobile wave crests (last year was the first year B2B investing overtook consumer investing in modern memory), forcing everyone to chase the same set of SaaS companies.

VCs described to me how the top deals start and close their fundraises in 48-72 hours. Several VCs groused that dozens of firms now descend like hawks on the unwitting but fortunate target startup, angling for a term sheet and willing to give up valuation and preferences left and right for any chance at the cap table. Earlier investors are just as desperate to own that equity, and no longer play any sort of honest broker role that they might have in the past.

Plus, the FOMO of the moment is more acute than ever — a VC at the end of the day might have already seen a dozen companies, but gets a late night intro to one last company — perhaps the company that could make or break their career. And so they will take that one last meeting, and then one more last meeting, hoping to find some meaningful edge against the competition.

And so VCs are running ragged around South Park, and increasingly, flying around the world scouring for any alpha wherever they can find it. Increasingly, it feels, they aren’t finding it though.

Firms are doing what they can. They are staffing up, trying to hire more raw talent in the hopes of finding that last undiscovered company. They scour their own portfolios and probe their founders, trying to find a tip to a deal that their competitor may have missed. They host dinner after dinner (sometimes multiple in one night — as I sometimes witness when I get an invitation to all of them as if I can be in more than one place at the same time), again, hoping to find some bit of magic.

Ironically, the “tired” line was something I used to hear from seed investors, who constantly had to churn through dozens of under-hearted startups to find the gold. Now, I’ve heard this language more and more from later-stage VCs, where the Excel spreadsheet drives the valuation more than a relationship with a founder — and everyone can read the gridiron of SaaS metrics.

All of this in some ways is good for startup founders (and their earliest investors) — higher markups are going to result in more resources with less dilution, and that’s always nice. The challenge is that relationships are being forged in the most intense of sale processes, and that means that founders may only have a short period of time to work with a partner before committing a board seat to that individual. Personalities are hard to judge in such a crucible.

As are the numbers. We’ve chatted a bit about reneged term sheets on Equity, but it’s a pattern that I hear whispered about more and more. Less due diligence is happening before the term sheet is signed (again, to beat out the rabid competition), and there is now more buyer’s remorse from VCs (and very occasionally founders) that can lead to a botched round along the way.

Lack of bandwidth, hyper-velocity, a pittance of sleep — all of these are intensifying the sensitivity of VC returns. Email a VC an hour before or after and it may well change the result of a fundraise. VCs once had a reputation for plodding and slow deliberation. That old normal is definitely dead right now, and in its place is a new, modern VC who is going to determine millions of dollars in a few minutes on a jet fuel of caffeine and ambition.

It’s the best and worst of times, and I can’t help but wonder what the results of the 2019 and 2020 vintage years are going to look like 8-10 years from now.

What we know (and don’t) about Goldman Sachs’ Africa VC investing

By Jake Bright

Goldman Sachs is investing in African tech companies. The venerable American investment bank and financial services firm has backed startups from Kenya to Nigeria and taken a significant stake in e-commerce venture Jumia, which listed on the NYSE in 2019.

Though Goldman declined to comment on its Africa VC activities for this article, the company has spoken to TechCrunch in the past about specific investments.

Goldman Sachs is one of the most enviable investment banking shops on Wall Street, generating $36 billion in net revenues in 2019, or roughly $1 million per employee. It’s the firm that always seems to come out on top, making money during the financial crisis while its competitors were hemorrhaging. For generations, MBAs from the world’s top business schools have clamored to work there, helping make it a professional incubator of sorts that has spun off alums into leadership positions in politics, VC and industry.

All that cache is why Goldman’s name popping up related to African tech got people’s attention, including mine, several years ago.

Venture Highway announces $78.6M second fund to invest in early-stage startups in India

By Manish Singh

Venture Highway, a VC firm in India founded by former Google executive Samir Sood, said on Thursday it has raised $78.6 million for its second fund as it looks to double down on investing in early-stage startups.

The firm, founded in 2015, has invested in more than two dozen startups to date, including social network ShareChat, which last year raised $100 million in a financing round led by Twitter; social commerce Meesho, which has since grown to be backed by Facebook and Prosus Ventures; and Lightspeed-backed OkCredit, which provides a bookkeeping app for small merchants.

Moving forward, Venture Highway aims to lead pre-seed and seed financing rounds and cut checks between $1 million to $1.5 million on each investment (up from its earlier investment range of $100,000 to $1 million), said Sood in an interview with TechCrunch.

Venture Highway counts Neeraj Arora, former business head of WhatsApp who played an instrumental role in selling the messaging app to Facebook, as a founding “anchor of LPs” and advisor. Arora and Sood worked together at Google more than a decade ago and helped the Silicon Valley giant explore merger and acquisition deals in Asia and other regions.

Samir Sood, the founder of Venture Highway

The VC firm said it has already made a number of investments through its second fund. Some of those deals include investments in OkCredit, mobile esports platform MPL, Gurgaon-based supply chain SaaS platform O4S, social commerce startup WMall, online rental platform CityFurnish, community platform MyScoot and online gasoline delivery platform MyPetrolPump.

As apparent from the aforementioned names, Venture Highway focuses on investing in startups that are using technology to address problems that have not been previously tackled.

Last year Venture Highway also participated in a funding round of Marsplay, a New Delhi-based startup that operates a social app where influencers showcase beauty and apparel content to sell to consumers.

“It’s very rare to have investors who keep their calm, get into an entrepreneurial mindset and help founders achieve their dreams. Throughout the journey, Venture Highway has been extremely helpful, emotionally available (super important to founders) and very resourceful,” said Misbah Ashraf, 26-year-old co-founder and chief executive of Marsplay, in an interview with TechCrunch.

There is no “theme” or category that Venture Highway is particularly interested in, said Sood. “As long as there is a tech layer; and the startup is doing something where we or our network of LPs, advisors and investors can add value, we are open to discussions,” he said.

This is the first time Venture Highway has raised money from LPs. The firm’s first fund was bankrolled by Sood and Arora.

Dozens of local and international VC funds are today active in India, where startups raised a record $14.5 billion last year. But a significant number of them focus on late-stage deals.

Wipro Ventures announces $150M Fund II to invest in enterprise startups

By Manish Singh

Wipro Ventures, the investment arm of one of India’s largest IT companies by market capitalization, said on Thursday it has raised $150 million for its second fund as it looks to invest in more enterprise startups and venture capitalist funds.

As with its $100 million maiden fund in 2015, Wipro Ventures will use its second fund to invest in early and mid-stage startups worldwide that are building enterprise solutions in cybersecurity, analytics, cloud infrastructure, test automation and AI, said Biplab Adhya and Venu Pemmaraju, managing partners at Wipro Ventures, in an interview with TechCrunch.

Through its maiden fund, Wipro Ventures invested in 16 startups and five VC funds. Adhya said two of its portfolio startups — including Demisto, which sold to Palo Alto for $560 million — have seen an exit, while others are showing good signs.

“We are pleased with the traction these startups are showing and the value we have added to Wipro, and we look forward to continuing this journey,” he said.

Adhya said Wipro Ventures looks to be a long-term investor in a startup. In addition to often participating in a startup’s follow-on financial rounds, it tends to stay with a startup until its IPO, he said.

Of the 16 startups Wipro Ventures has invested in to date, 11 are based in the U.S., four in Israel and one in India. Adhya said geography tends not to play a crucial role when investing in a startup, and he is open to ideas from anywhere in the world.

A corporate giant showing interest in picking stake in private equity firms is not a new phenomenon. Leaving aside the American giants such as Google, Microsoft and Facebook, all of which operate investment arms, Indian IT giants have also been at it for years.

HCL and Infosys, two other IT giants in India, have also invested in — or outright acquired — dozens of startups in recent years. A 2017 CB Insights report showed that Wipro and Infosys, which runs Innovation Fund, alone had invested in 28 firms and acquired eight startups.

Adhya said Wipro Ventures is now investing in six to eight startups each year.

One of the benefits of taking money from a corporate giant is sometimes getting access to their other customers. And that appears to be true of Wipro. More than 100 of Wipro’s global customers have deployed solutions from its portfolio startups, Adhya said.

In a statement, Rishi Bhargava, a founder of Demisto, explained the benefit. “Within the first year of our partnership, Wipro and Demisto were working together on dozens of Fortune 1000 opportunities and closing a majority of them.

“It’s exciting to see Wipro Ventures continue to enhance the startup ecosystem with new capital while helping companies boost their bottom line,” he added.

Joby Aviation raises $590 million led by Toyota to launch an electric air taxi service

By Darrell Etherington

Joby Aviation has raised a $590 million Series C round of funding, including $394 million from lead investor Toyota Motor Corporation, the company announced today. Joby is in the process of developing an electric air taxi service, which will make use of in-house developed electric vertical take-off and landing (eVTOL) aircraft that will in part benefit from strategic partner Toyota’s vehicle manufacturing experience.

This brings the total number of funding in Joby Aviation to $720 million, and its list of investors includes Intel Capital, JetBlue Technology Ventures, Toyota AI Ventures and more. Alongside this new round of funding, Joby gains a new board member: Toyota Motor Corporation EVP Shigeki Tomoyama.

Founded in 2009, Joby Aviation is based in Santa Cruz, California. The company was founded by JoeBen Bevirt, who also founded consumer photo and electronics accessory maker Joby. Its proprietary aircraft is a piloted eVTOL, which can fly at up to 200 miles per hour for a total distance of over 150 miles on a single charge. Because it uses an electric drivetrain and multi rotor design, Joby Aviation says it’s “100 times quieter than conventional aircraft during takeoff and landing, and near-silent when flying overhead.”

These benefits make eVTOL craft prime candidates for developing urban aerial transportation networks, and a number of companies, including Joby as well as China’s EHang, Airbus and more are all working on this type of craft for use in this kind of city-based short-hop transit for both people and cargo.

The sizeable investment made by Toyota in this round is a considerable bet for the automaker on the future of air transportation. In a press release detailing the round, Toyota President and CEO Akio Toyoda indicated that the company is serious about eVTOLs and air transport in general.

“Air transportation has been a long-term goal for Toyota, and while we continue our work in the automobile business, this agreement sets our sights to the sky,” Toyoda is quoted as saying. “As we take up the challenge of air transportation together with Joby, an innovator in the emerging eVTOL space, we tap the potential to revolutionize future transportation and life. Through this new and exciting endeavor, we hope to deliver freedom of movement and enjoyment to customers everywhere, on land, and now, in the sky.”

Joby Aviation believes that it can achieve significant cost benefits vs. traditional helicopters for short aerial flights, eventually lowering costs through maximizing utilization and fuel savings to the point where it can be “accessible to everyone.” To date, Joby has completed sub-scale testing on its aircraft design, and begun full flight tests of production prototypes, along with beginning the certification process for its aircraft with the Federal Aviation Administration (FAA) at the end of 2018.

Collaborative Fund just hired a former top Goldman Sachs investor to do later-stage deals

By Connie Loizos

Collaborative Fund emerged on the scene nearly 10 years ago to fund seed-stage and, as time passed, early-stage startups, many of them in New York, where the firm is based.

Apparently, the firm has ambitions to do more later-stage investing, too. It just brought aboard Ian Friedman, former co-head of Goldman Sachs Investment Partners, Venture Capital & Growth Equity, as a general partner.

We spoke yesterday with Friedman, a Canadian who graduated from the University of Western Ontario before heading to sunny LA to work for the Boston Consulting Group. After that, he moved to Bain Capital in Boston, followed by a stint at Stanford to get his MBA, where he was recruited by Goldman to work in New York, where he still lives.

Customer data platform ActionIQ raises $32M

By Anthony Ha

ActionIQ co-founder and CEO Tasso Argyros knows that there are plenty of companies promising to help businesses use their customer data to deliver personalized experiences — as he put it, “The space has gotten very, very hot over the last couple of years.”

But in the face of growing competition, ActionIQ (founded in 2014 and headquartered in New York) has attracted some impressive customers like The New York Times, Conde Nast, American Eagle Outfitters, Vera Bradley and Pandora Media, as well as high-profile investors like Sequoia Capital and Andreessen Horowitz.

Today, it’s announcing that it has raised $32 million in Series C funding.

“At this point, we believe we are four to five years ahead of the market,” Argyros told me. “[Customer data platforms are] very hot, you see people really jumping into it, but nobody really has a product.”

He attributed the rise of these platforms to the growth in customer acquisition costs: “Everybody’s switched their focus from ‘How do we acquire more customers?’ to ‘How do you grow lifetime value?'”

The key, Argyros said, is “delivering personalized experiences at scale.” So if you’re a business trying to understand which customers need to be convinced to stick around, which customers are ready to upgrade to a paid subscription and so on, you need a platform like ActionIQ: “What’s common about all these questions is that they’re all data questions.”

He described ActionIQ’s approach as “product-first,” creating self-serve tools for enterprises rather than relying on consulting or IT services, and he said the product is designed to “drive intelligent actions activated through any channel.”

Argyros contrasted this approach with the large marketing clouds, where he said that stitching together products from various acquisitions has led to “a huge data gap between what marketing clouds promise and what they can actually deliver.” And he said other customer data platforms are limited to bringing the data together — but “just putting customer data in one place, that doesn’t mean business can use the customer data to drive value.”

March Capital Partners led the round, with participation from Cisco Ventures, as well as previous investors Sequoia, Andreessen and FirstMark Capital. Meredith Finn, a partner at March, is joining ActionIQ’s board of directors.

“From my professional experience at Salesforce and Twitter, when it comes to building a relationship with your customers, data is everything,” Finn said in a statement. “ActionIQ took a data-first approach from day one in contrast to many vendors that are now scrambling to address their data gaps by duct taping data infrastructure to their existing point solutions. … The potential of such a platform is limitless, and spans well beyond traditional marketing channels to other areas of customer interactions including web and mobile app experiences, customer support, and sales.”

ActionIQ has now raised a total of $75 million in funding. And while the Series C isn’t significantly larger that the $30 million that ActionIQ raise din 2017, Argyros said the company didn’t need to raise a huge round this time around, because it’s already built out the core product.

“A lot of dollars were invested heavily in the product way before the demand was there,” he said. “The Series B was pretty significant because there was so much upfront product investment. … Most of these funds are going towards expanding the business in sales and marketing.”

Zinier raises $90M to automate field service management

By Manish Singh

Zinier, a startup that is bringing automation to the field service management realm, announced today that it has raised $90 million in fresh funding as it looks to tackle new categories and court more clients.

The San Francisco-based startup said its $90 million Series C financing round was led by ICONIQ Capital and saw participation from Tiger Global Management, and existing investors Accel, Founders Fund, Qualcomm Ventures, Nokia-backed NGP Capital, and France-based Newfund Capital.

The new financing round pushed the five year-old startup’s total raise to $120 million, and valued it above $500 million, one of its investors told TechCrunch. Zinier co-founder and chief executive Arka Dhar declined to comment on the valuation.

Zinier is helping the electricity and telecom industries automate their field services, a job that has typically innovated slowly and relied on legacy systems and manual processes, Dhar told TechCrunch in an interview.

“Field service means everything that happens from work of origination, their scheduling and dispatching, matching the right person with the right task at the right location, and at the end, verifying the task. It’s a complex, manual and disparate system. It typically sees 20% of our client’s expenses. We are optimizing these processes with AI to help these clients become more efficient and save money,” said Dhar.

Dhar declined to reveal all the major Zinier’s clients, but said some of the biggest players in the electricity and telecoms businesses work with the startup. 40% of the startup’s clients today are based in the U.S., 40% is in Latin America, and the rest is in Asia Pacific. The startup said it works with Black & Veatch and Car-Sa, and maintains strategic partnerships with system integrators such as Capgemini and Tata Consultancy Services.

Until two years ago, Zinier focused on the telecom industry, but has since expanded to serve energy and utility spaces. The fresh fund would help the startup double down its efforts in non-telecom industries, Dhar said.

A number of players are working on the field service management space. Major giants such as Salesforce and Microsoft own stakes in firms that operate in this industry and also offer their own products. ServiceMax was earlier acquired by GE Digital for $915 million. Without calling names, Dhar cautioned that some of its competitors are merely digitizing the pen and paper logs, and are not really optimizing the process.

“It is critical for companies to optimize this costly and complex part of their business, and Zinier has the platform-based technology and team to take on this global, multi-industry market. We are excited to partner with Zinier and support them in their mission of changing the paradigm on field service work on a global scale,” said Will Griffith, Partner at ICONIQ Capital.

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