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Yesterday — July 2nd 2020Your RSS feeds

Project M acquires punk rock satire site The Hard Times

By Anthony Ha

Matt Saincome knows that compared to many of the startup acquisitions that we write about on TechCrunch, selling a website for a little over $1 million (mostly cash, with a little stock) isn’t a huge deal.

“But in the world of punk comedy media? Whoo boy!” he said.

Saincome is happy to poke fun at himself — he is the co-founder and CEO of a satirical punk news website, after all — but he also sounded genuinely proud of what he’s built with The Hard Times. He never raised outside funding, and while there have been acquisition offers in the past, he was always afraid that they might threaten the site’s voice.

“I had always been the financial backstop,” Saincome told me. Still, at a certain point, “That started to become irresponsible.”

So he’s happy that there will be a bit of a financial windfall (not to mention health care and benefits) for himself, his co-founder and editor in chief Bill Conway and their editorial staff, plus a pay bump for freelancers. He also suggested that the acquisition will allow The Hard Times to invest more seriously in its editorial strategy, for example by building out its podcast network.

“If you like The Hard Times, it’s just going to be The Hard Times on steroids,” he said. “It’s very much the same direction, but better and secured.”

The acquiring company is Project M Group, a digital media and e-commerce company founded in 2016 that has also acquired Revolver Magazine and Inked Magazine.

Here’s how founder and CEO Enrique Abeyta laid out the Project M model: “We go out and acquire existing media properties with an audience, and we reinvigorate or relaunch or put some capital behind them to grow those audiences. Then we tie that into a vertically integrated e-commerce platform.”

After all, it’s no secret that many online publishers have struggled to make the digital advertising model work. And given Revolver’s focus on heavy metal and rock, and Inked’s focus on tattoos, there are some natural commerce opportunities — for example, if you’re reading an article about Metallica, you might also want to buy a Metallica T-shirt.

At the same time, Abeyta emphasized the importance of authenticity in the publications that Project M acquires, and he said that post-acquisition, they don’t become any more corporate.

“I’m a tattooed, mohawked guy running this company out of my house in Cave Creek, Arizona,” he said. “We’re the least corporate thing on Planet Earth … Our whole vibe when we partner with these entrepreneurs is, we want to work with the entrepreneur and the brand.”

So the entire Hard Times team, including Saincome, will remain involved. At the same time, the site’s old parent company will continue to own and operate the related gaming and technology site Hard Drive.

Saincome said he’ll also continue running OutVoice, a separate startup building freelancer payment tools. In fact, one of the results of the deal is that all of Project M’s publications will be using OutVoice.

“My role at Hard Times is going to be the visionary, brand-builder sort of guy,” he said. That should free up a lot of his time and energy from worrying about day to day business concerns, and he promised, “I’m going to take that energy and pump it back right into OutVoice .”

Lemonade and Accolade open sharply higher as public markets rally

By Alex Wilhelm

Despite today’s bucket of plus-and-minus economic data, stocks are heading higher in regular trading. And among the shares rising the most are today’s two venture-backed IPOs: Lemonade and Accolade.

TechCrunch wrote this morning that the firms’ aggressive IPO pricing arcs boded well for the IPO market itself, that investors were willing to price growth-y shares of unprofitable companies with vigor, which could help other companies looking at the public markets get off the sidelines.

Then the two companies opened sharply higher, and at the current moment stand as follows (Data via Yahoo Finance):

  • Lemonade: $61.62 per share, up $32.62 or 112.48%
  • Accolade: $34.39 per share, up $12.39 or 56.32%

Yep those are big numbers.

Expect the regular round of complaints that the firms were mispriced (maybe) and could have charged more from their equity in their public debuts (again, maybe). But for the two companies, it’s still a lovely day. Pricing above range and then seeing public investors frantically bid your equity higher is much better than the alternatives.

How the companies will fare when they report earnings (Q3 is upon us, making Q2’s earnings cycle just around the bend) will help settle their real valuations. But, for today at least, Lemonade and Accolade have done their yet-private brethren a solid by going up and not down.

High-flying IPOs for Lemonade and Accolade may encourage other unicorns to go public

By Alex Wilhelm

If you’d predicted in late March and early April that Q3 would kick off with a wide-open IPO market and receptive investors, I doubt anyone would have believed you. If you suggested that valuations would look pretty good as well, you might even have been laughed at.

And yet, here we are.


The Exchange is a daily look at startups and the private markets for Extra Crunch subscribers; use code EXCHANGE to get full access and take 25% off your subscription.


Yesterday Lemonade and Accolade priced above their expected ranges, with Lemonade pricing above its raised range and Accolade selling more shares than expected. It’s hard to read the moves as anything other than the market demanding growth-oriented equities and not worrying too much about profitability.

Or more precisely: it’s the golden moment to go public for unprofitable unicorns seeking liquidity but worried about defending their private-market valuations. This sentiment is backed up by Agora’s solid pricing and explosive debut in recent days.

How long this public market moment will last is not clear. With the United States recording 50,000 new COVID-19 cases in a single day yesterday and the national economy beginning to slow once again, perhaps the window is short. Perhaps not — we were wrong before about the IPO market in 2020, so let’s not get too hasty to make more predictions — but it is clear that Q4 2019 wasn’t the only time when unicorns might have been able to attract the prices they wanted.

This morning let’s briefly go over the final pricing for Lemonade and Accolade, and give them new revenue multiples ahead of their first days as trading entities. We need to start their public life knowing how they were valued ahead of their debut so that we can better understand the next set of companies that are bold enough to get off their backside and go public.

Roll out the welcome mat

We’ve abused every possible IPO metaphor in recent weeks. Open windows. Warm waters. But without cliché, we can state that IPOs are performing very well in recent weeks, with IPO Boutique reporting this morning that 17 of the last 27 IPOs have priced above the range that they first set.

OurPeople, the team communication and engagement platform, raises $2M

By Steve O'Hear

OurPeople, the U.K. startup that’s built a team communication and engagement platform for desk-less workers, has raised $2 million in Series A funding.

Leading the round is Alpine Meridian, an investment firm that specialises in digital media, e-commerce and healthcare, and entrepreneur Robert Neveu, who also joins OurPeople as managing partner. It brings total funding to $3 million.

Founded in 2016 by Ross McCaw, Bristol-based OurPeople offers a secure mobile platform to let businesses communicate digitally with employees, ensuring teams can stay connected. The startup primarily works in industries with large numbers of desk-less workers, such as fitness and leisure. Clients currently include West Ham United Foundation, Virgin Active UK, Paulton’s Park and Serco Leisure.

McCaw — who used to be a part-time lifeguard and swim teacher — previously founded CoursePro to improve the way swim lessons were administered in the U.K. and other countries. At the time the company was fully acquired by Jonas Software in 2014, over a million swimmers had enrolled. After the success of CoursePro, he spotted another opportunity and launched OurPeople.

“I saw first-hand how companies struggled to communicate with their employees,” says McCaw. “Specifically their remote, desk-less team members who, more often than not, do not have access to a company email but who are the people with the most direct exposure to their customers”.

What really stood out was how many of the trainers were not engaging with company news and announcements. “This was bad for both the company and them. I looked at a number of other sectors and saw that this was a wider issue amongst many industries with high numbers of desk-less workers”.

McCaw describes the OurPeople solution as a “highly-sophisticated yet simple to use” messaging service that ensures the right people in an organisation receive the information they need when they need it. He reckons it’s this targeted nature and being mobile-first that sets the communication platform apart from competitors.

“Generally our competitors come in one of two categories: the workplace social network or the consumer-style workplace chat groups. Both, in our opinion, create too much noise and chatter. They are not targeted enough,” says McCaw.

“Employees want to see content that is relevant to them and incredibly quick to read or watch. The employer, on the other hand, wants to know that the communication has been seen and acknowledged. To achieve this we have a ‘tagging’ system so that only the people that absolutely need to see that message receive it”.

Furthermore, the OurPeople founder says the platform is different because the startup is not attempting to create a workplace social network “where vital information can get lost in all the typical noise”.

“OurPeople is about crucial, relevant information at the right time that engages those hard to reach employees and won’t slow them down as they carry out their customer-facing duties. We make internal communications, especially with remote and desk-less colleagues, effective and efficient”.

Student-led accelerator Envision is shaking up which startups get funded

By Alex Wilhelm

Meet Envision, a new startup accelerator. The group, built and run by a collection of students and recent graduates, just closed the application process for its first cohort of startups.

Its goal isn’t merely to find some companies and give them a boost, however. According to Annabel Strauss and Eliana Berger, two co-founders of Envision, it’s to shake up the diversity stats that we’ve all come to know.

“We started Envision because we believe in a future where womxn, Black, and Latinx founders receive more than 3% and 1% of venture funding, respectively,” they said in an email. “As a team of students, we wanted to take matters into our own hands to help founders succeed — it’s our mission to support entrepreneurs early in their journeys, and amplify voices that are often underestimated.”

According to its own data, Envision attracted 190 applications, far above its initial, stretch-goal of 100. From its nearly 200 submissions, the group intends to select 15 entrants. According to Strauss and Berger, their initial goal was to winnow it to just 10. But, the pair told TechCrunch in an interview, they doubled the starting cohort size based on the strength of applications.

Envision will provide an eight-week curriculum and around $10,000 in equity-free capital to companies taking part (the group is still closing on part of the capital it needs, but appears to be making quick progress based on numbers shared with TechCrunch).

Each of the eight weeks that Envision lasts will feature a theme, 1:1 mentorship, office hours with startup veterans and, at the end, a blitz of investor-focused mentorship, and an invite-only demo day. The core of the Envision accelerator rotates around the mentors and other helpers it has accreted since coming into existence in early June.

Envision, run by 11 college students and recent graduates, quickly picked up enough startup veterans to run its program (names like Ryan Hoover, Arlan Hamilton, Alexia Tsotsis), and seemingly ample corporate support. In an email this morning, Envision told TechCrunch that Soma Capital, Underscore VC, Breyer Capital, Grasshopper Bank and Lerer Hippeau have joined as sponsors. Indeed, looking at Envision’s partner page reads a bit like a who’s who of Silicon Valley and startup names that you know.

Talking to Envision I was slightly surprised how many students are involved in venture capital today. The Envision team is a good example of the trend. Strauss is involved with Rough Draft Ventures, for example, which is “powered” by General Catalyst. Quinn Litherland from the Envision team is also part of the Rough Draft crew. Contrary Capital, which TechCrunch covered this morning and focuses on student founders, is represented by Timi Dayo-Kayode, James Rogers, Eliana Berger, and Gefen Skolnick on the team. The list goes on, with Danielle Lomax, Angel Onuoha, and Kim Patel all involved, and active in the VC world.

For Strauss, Berger and the rest of the Envision team the pressure is now on to select intelligently from their 190 applications, and provide maximum boost to their first cohort. If the program goes well, and the demo day it has planned in two months proves useful to both startups and investors alike, I don’t see why Envision wouldn’t stage another class down the road. Though of course, it might want to follow in the footsteps of Y Combinator, TechStars and 500 Startups at that point and take an equity stake in the companies it works with.

Envision says in large letters at the top of its website that it is “helping diverse founders build their companies.” If the group succeeds in meeting that mark, it will be an implicit critique of the old-fashioned venture capital world that has historically not invested in diverse founders.

If a dozen college students and recent grads can spin up an accelerator in a few weeks, get nearly 200 applications, and select a diverse cohort to support, then what’s everyone else’s excuse.

Point to launch new challenger bank with rewards on debit card purchases

By Romain Dillet

Meet Point, a new challenger bank in the U.S. that has been available as a private beta for the past year. Today, the company is announcing new fundraising — later this month, the company is launching a major new version of its service and opening its doors to everyone. There’s a waitlist for now.

Point is a consumer banking app combined with a debit card. The company wants to reproduce the experience of credit cards but with debit cards, thanks to rewards and a point-based system. There’s no credit check when you sign up.

The startup raised a $10.5 million Series A funding round led by Valar Ventures with Y Combinator, Kindred Ventures, Finventure Studio and business angels also participating. Valar Ventures has backed several high-profile fintech startups, such as N26, TransferWise and Stash.

As a user, you get many features you’d expect from a challenger bank. The debit card is tightly integrated with the app, which means that you can receive notifications every time you make a transaction and manage your card from the app. You don’t pay any foreign transaction fees for international transactions — the company uses Mastercard’s exchange rate for those transactions.

In addition to your physical Point card, you can access a virtual card from the app. Point has partnered with Radius Bank for the banking infrastructure, an FDIC-insured bank.

When it comes to points, every transaction lets you earn points. You get 2X points on groceries and dining and 5X points on subscriptions, such as Spotify and Netflix. It then works like a cash-back system; you can redeem points for dollars and they’ll appear on your checking account — each point is worth $0.01.

The company uses Plaid to link your Point account with a third-party bank account. You can then move money from your existing account to your Point account and top up your account with payment apps, such as Venmo, Cash App and PayPal.

Points’ biggest competitor is probably Chime, the challenger bank that has attracted 8 million customers. Chime doesn’t currently offer rewards. Let’s see if Point can convince customers who have yet to try out a challenger bank that Point is a better option.

Update: An earlier version of this story mistakenly said that the new version was launching today. It will be live later this month.

Image Credits: Point

Match Group completes separation from IAC, new board includes Wendi Murdoch and Ryan Reynolds

By Anthony Ha

IAC and Match Group announced that they have completed a “full separation.”

Previously, Match Group (which owns Tinder, Hinge, OkCupid, PlentyOfFish and Match itself) was a publicly traded company, with digital holding company IAC as its majority shareholder. Last year, the companies announced a plan that would see IAC’s ownership of Match distributed to IAC’s shareholders — a plan that is complete as of this morning.

The separation also involves a leadership change, with Mark Stein and Gregg Winiarski stepping down from the Match Group board. The company has four new board members: ExecOnline CEO Stephen Bailey, the NBA’s executive president for digital media Melissa Brenner, investor and entrepreneur Wendi Murdoch and actor Ryan Reynolds (also an owner of Aviation American Gin and Mint Mobile).

“Most millennials and Gen Z can’t remember what dating was like before the advent of Tinder, OkCupid and Hinge,” Reynolds said in a statement. “These brands have enormous responsibility and opportunities to affect societies, all while embracing new technologies and remaining at the forefront of pop culture. I’m ready to roll up my sleeves and work with the team on their future growth and success.”

Shar Dubey will continue to serve as Match Group’s CEO, a position she took at the beginning of this year, while Joey Levin remains a both IAC’s CEO and Match Group’s executive chairman.

“This is just the largest transaction at the core of our strategy throughout these 25 years,” said IAC Chairman Barry Diller in a statement. “Be opportunistic, be balance sheet conservative, build up enterprises and when they deserve independence let them have it. Be a conglomerate and an anti-conglomerate, a business model that has been unique to us.”

Portfolio companies of startup studio eFounders have raised $148M this year

By Romain Dillet

European startup studio eFounders has looked back at the first half of 2020 to share some metrics about its portfolio companies. The startup studio that is focused on building software-as-a-service enterprise startups has now launched 25 companies in total. Those startups have raised $148 million in 2020 alone.

You may remember that the portfolio of eFounders reached a total valuation of $1 billion late last year. After those new funding rounds, the consolidated valuation of eFounders companies is now at $1.5 billion.

And because we’re talking about SaaS, the monthly recurring revenue has also doubled year over year compared to the first half of 2019. Overall, those companies now generate around $10 million in monthly recurring revenue.

Of course, some companies are doing better than others. In particular, Front and Aircall have raised $59 million and $65 million respectively. Back when I wrote about those stories, Front said its valuation had quadrupled compared to its previous funding round, while Aircall said it had done more than 3x on the valuation.

Slite, Bonjour, Folk, Cycle and Equify have also raised smaller funding rounds. Yousign, an e-signature startup, has also experienced an important growth bump with demand exploding.

eFounders seems particularly well-positioned for the current situation. Due to lockdowns around the world, many companies have been looking at tools that help them work remotely and work more efficiently. “We build the future of work,” eFounders writes on its website.

“The changes that were naturally, but slowly, occurring in companies for a decade have accelerated in a matter of months. We’ve certainly gained a few years of digitalisation in the space of a quarter,” eFounders co-founder Thibaud Elziere said in a statement.

If you’re not familiar with eFounders, the company first comes up with an idea for a new company and hires a founding team. The core team works alongside the founders for a year or two to define product-market fit, and eFounders keeps a stake in those startups.

After that initial launch, portfolio companies usually raise a seed round, which helps them build a solid team. eFounders can switch their focus and start working on new startups.

Before yesterdayYour RSS feeds

Agora starts life as a public company by more than doubling to $50 a share

By Alex Wilhelm

Shares of Agora, a China and U.S.-based “real-time engagement” API company, soared today after it went public.

Yesterday Agora priced 17.5 million shares at $20 apiece, up from its target range of $16 to $18 per share. The firm raised $350 in its debut, or around 10 times its Q1 2020 revenue and is now amply capitalized and has runway for effectively forever, given its modest cash consumption as an ongoing concern.

But while the debut was a success, seeing Agora’s share price rise as quickly as it did was not universally popular. Regular critic of the traditional IPO process Bill Gurley — a venture capitalist, so someone with a stake in this particular gambit — weighed in:

Pretty amazing that there is a financial exercise on this planet involving hundreds of millions of dollars where its OK to not even get to 50% of the actual end result. The process is so rigged/broken at this point. They missed by more than the original guess. #marketpricing pic.twitter.com/MqmmYRw3ZM

Bill Gurley (@bgurley) June 26, 2020

Let me translate. Gurley is irked — rightly, to at least some degree — that as Agora opened at $45 per share, the company’s IPO was awfully priced. By that we mean that the company should have sold its IPO shares not at $20, but at $45, the value at which the market quickly repriced them.

As $45 is more than twice $20, its bankers “missed by more than [their] original guess.” Given the number of shares the company sold, the mis-pricing could be worth up to $437.5 million!

There’s merit to this argument, but it’s not as complete a slam dunk as it might appear. Chat with CEOs of public companies and they will tell you about how important it is to have steady, stable, long-term shareholders of their equity. Those you might, say, meet on a roadshow and get to invest in your IPO shares.

Those groups — the long-term investors that tech folks claim to love so dearly — are likely a bit more price conscious than the momentum traders eager to find upside in recent debuts. That is, folks more likely to hold onto shares for a shorter period of time.

So, if you want long-term shareholders, you may have to price you IPO under the price the market may initially bear once trading begins.

 

Still, holy shit $20 per share is not close to $45. Gurley has a point.

The future

Change may be coming. The Agora news rotates back to what the NYSE, an American exchange, is doing. Namely trying to come up with a way to let companies direct list (to just start trading, sans pricing or raising new capital), and raise capital. This gets rid of the issues that Gurley highlighted above. At least in theory.

Obviously, if that model becomes possible and long-term investors are willing to pay for shares in a slightly different manner, the new method will be far superior than the old for companies that are great. What sort of companies get burned from first-day pops the most? I reckon it’s the most attractive, or hyped companies.

The companies that would make the most attractive IPOs would use the new method, leaving — what? The detritus to go out the old-fashioned way? Signaling issues abound!

Anyway, it was a zany first day for Agora.

Indian edtech giant Byju’s in talks to acquire Doubtnut for more than $125M

By Manish Singh

Byju’s is in advanced stages of talks to acquire Doubtnut, a two-year-old education learning app, as the Indian edtech giant looks to expand its reach in smaller cities and towns in the world’s second largest internet market.

Three sources familiar with the matter told TechCrunch that the acquisition offer from nine-year-old Byju’s values the younger startup between $125 million to $150 million. The talks haven’t finalized yet and its terms could change or the deal could fall apart, the sources said.

A separate source familiar with the matter told TechCrunch that Facebook-backed Unacademy also held preliminary talks with Doubtnut but they are no longer engaging while some investors have suggested the startup to remain independent.

Byju’s and Unacademy declined to comment. One of Doubtnut’s founders did not respond to a text message sent to them Friday afternoon.

The sudden interest in Doubtnut comes as the two-year-old New Delhi-based startup’s app has attracted millions of new users in recent months, most of whom live in smaller cities and towns across India.

Byju’s, which has over 55 million registered users, has a better hold on urban Indian cities. The startup sees Doubtnut as a way to expand its reach in tier 2 and tier 3 Indian markets and tackle the online learning opportunities in a more comprehensive way.

Doubtnut, which has raised $18.5 million to date including $15 million in its Series A financing round earlier this year, allows students from sixth grade to high-school solve and understand math and science problems in local languages. Doubtnut app enables students to take a picture of the problem, and uses machine learning and image recognition to deliver the answers through short-videos.

A student can take a picture of the problem, and share it with Doubtnut through its app, website, or WhatsApp and get a short video that shows the answer and walks them through the procedure to tackle it.

In late January, Doubtnut said it had amassed over 13 million monthly active users across its website, app, YouTube, and WhatsApp channels. More than 85% of its users at the time came from outside of the top 10 cities in India, the startup said in a statement then.

YC-backed Tango Builder wants to use aerospace engineering to build a house

By Danny Crichton

Housing has been constructed for millennia, and while clearly our modern abodes are ever so slightly better than the elk tents we used to live in, the construction techniques behind housing today haven’t progressed all that much. What has progressed are prices — it’s more expensive than ever to build a modern unit, and that’s just for housing — head over to commercial real estate and the numbers don’t look much better.

For Martin Diz and his team, that’s a problem. Diz is not exactly a lifelong builder — in fact, he was building proverbial rockets as an aerospace engineering PhD researcher several years ago. As he was talking to his roommate back then, who was studying structural engineering, he realized that some of the techniques that his roommate’s field was trying to pioneer had already been discovered by the aerospace folks decades ago.

His roommate was trying to simulate an earthquake to model how the tremors would affect objects like a table inside a building. As Diz recalled, he said “Hey dude, did you know that in aerospace engineering, we did the same thing for the space station 50 years ago? … I learned this in grad school, you know, in our basic course because it’s a very old technique.”

Diz is legitimately a nice chap, and totally not the kind of aerospace engineer who goes around talking about how aerospace solved everything a century ago (okay, maybe just a tad of that). But the interaction and followup conversation got him thinking about what aerospace as a field had solved, and whether some of those techniques could be used in other domains.

Diz and his roommate kept talking over the years, and eventually, the two formed Tango Builder. Tango’s main premise is to bring more sophisticated engineering techniques to construction, improving performance and quality while lowering costs. It’s part of the current YC batch, and previously raised a small seed round, which included participation from Tracy Young, co-founder and CEO of PlanGrid.

The two, plus one employee, have already worked on a handful of projects, with some early promising results. Tango helped to design a hospital for COVID-19 patients in Ecuador that saw total savings of $1 million by lowering structural costs by a third. They consulted on the creation of a justice center in Mexico, and were able to reduce the required steel in the project by 40%. And they used their platform to optimize wall thickness in a masonry home to bring total cost down by 15%. All numbers are reported by the company and have not been independently verified.

A look at Tango’s masonry home project. Photo from Tango Builder.

A look at Tango’s masonry home project. Photo from Tango Builder.

There is a heavy focus on structural integrity (as there should be in construction), but Tango particularly shines around seismic modeling. While earthquakes are perhaps most pronounced in places like California and Mexico, both of which suffered major tremors this past week, earthquakes are a lingering threat throughout the world, and buildings need to be designed to handle them even if they are rare.

Diz and his team want to give designers better tools to model what happens in different scenarios while understanding the trade-offs of various building materials and designs. “You’re building with steel stock, but it’s much more expensive now, so it’s up to the user or the owner to decide which of the paths he wants to take,” he said. Safety is always important, but how much steel do you place in a building that might see an earthquake once a century? That’s what Tango wants to help answer.

Beyond improving structural modeling, Tango’s big ambition is to find additional efficiencies in the construction process by helping everyone involved with construction work together through a better workflow. “Each person has benefits from the platform, the architect will get the approvals … faster, the engineer can focus on the creative side of things, the contractor” can bid earlier knowing what design is coming, Diz explained. Saving time in all these processes ultimately translates directly to a project’s bottom line.

It’s very early days of course, with just Diz, his co-founder Juan Aleman, and one employee “working extremely hard.” The hope though is that melding some aerospace engineering techniques with a much more robust and technical platform will help push construction to better quality while saving costs as well. After all, aerospace did all this a century ago.

Agora’s above-range IPO pricing underscores a welcoming IPO market

By Alex Wilhelm

In a move that highlights how open the American IPO window may be at the moment, China-based Agora priced its public offering at $20 per share last night, ahead of its $16 to $18 proposed price range.

At $20 per share, the 17.5 million shares sold in its debut raised $350 million, a huge haul for a company that reported around 10% of that figure in Q1 2020 revenue. Provided that your humble servant is doing his Class A to ADS share conversion calculations correctly, Agora is worth about $2.0 billion at its IPO price.

Agora raised well over $100 million while a private company, backed by GGV Capital, Coatue and others, according to Crunchbase data.


The Exchange is a daily look at startups and the private markets for Extra Crunch subscribers; use code EXCHANGE to get full access and take 25% off your subscription.


Agora is an API-powered company that allows customers to embed real-time video and voice abilities in their applications; appropriately, the company’s ticker symbol in America will be “API.”

With an annual run rate of $142.2 million, a $2 billion valuation gives Agora a run-rate multiple of around 14x. That’s rich, but not stratospheric. Perhaps Agora wasn’t able to command a higher multiple due to its sub-70% margins (68.8% in Q1)?

Agora’s financials make its IPO pricing a neat puzzle, so let’s pull apart the good and the bad to better understand why the market was willing to pay than the company anticipated.

After that short exercise, we’ll make note of the current IPO climate, inclusive of what we learn from Agora. (Spoiler for unicorns out there: things look good.)

The good, the bad, the odd

We can’t calculate Agora’s enterprise value with confidence until we get updated filings. But taking into account the company’s pre-IPO cash and liabilities, its implied enterprise value/run rate is something around 13x. (That figure will dip if the company’s shares don’t rise after its debut, as its cash position rises from its share sale; more on enterprise values here.)

Oscar’s health insurance platform nabs another $225 million

By Jonathan Shieber

The direct-to-consumer health insurer Oscar has raised another $225 million in its latest, late-stage round of funding as its vision of tech-enabled healthcare services to drive down consumer costs becomes more and more of a reality.

In an effort to prevent a patient’s potential exposure to the novel coronavirus, COVID-19, most healthcare practices are seeing patients remotely via virtual consultations, and more patients are embracing digital health services voluntarily, which reduces costs for insurers and potentially provides better access to basic healthcare needs. Indeed, Oscar now has a $2 billion revenue base to point to and now a fresh pile of cash from which to draw.

“Transforming the health insurance experience requires the creation of personalized, affordable experiences at scale,” said Mario Schlosser, the co-founder and chief executive of Oscar.

Oscar’s insurance customers have the distinction of being among the most active users of telemedicine among all insurance providers in the U.S., according to the company. Around 30% of patients with insurance plans from the company have used telemedical services, versus only 10% of the country as a whole.

The new late-stage funding for Oscar includes new investors Baillie Gifford and Coatue, two late-stage investor that typically come in before a public offering. Other previous investors, including Alphabet, General Catalyst, Khosla Ventures, Lakestar and Thrive Capital, also participated in the round.

With the new funding, Oscar was able to shrug off the latest criticisms and controversies that swirled around the company and its relationship with White House official Jared Kushner as the president prepared its response to the COVID-19 epidemic.

As the Atlantic reported, engineers at Oscar spent days building a standalone website that would ask Americans to self report their symptoms and, if at risk, direct them to a COVID-19 test location. The project was scrapped within days of its creation, according to the same report.

The company now offers its services in 15 states and 29 U.S. cities, with more than 420,000 members in individual, Medicare Advantage and small group products, the company said.

As Oscar gets more ballast on its balance sheet, it may be readying itself for a public offering. The insurer wouldn’t be the first new startup to test public investor appetite for new listings. Lemonade, which provides personal and home insurance, has already filed to go public.

Oscar’s investors and executives may be watching closely to see how that listing performs. Despite its anemic target, the public market response could signal that more startups in the insurance space could make lemonade from frothy market conditions — even as employment numbers and the broader national economy continue to suffer from pandemic-induced economic shocks.

Karat launches a credit card for online creators

By Anthony Ha

Karat is a new startup promising to build better banking products for the creators who make a living on YouTube, Instagram, Twitch and other online platforms. Today it’s unveiling its first product — the Karat Black Card.

The startup, which was part of accelerator Y Combinator’s Winter 2020 batch, is also announcing that it has raised $4.6 million in seed funding from Twitch co-founder Kevin Lin, SignalFire, YC, CRV and Coatue.

Co-founder and co-CEO Eric Wei knows the creator world well, thanks to his time as product manager for Instagram Live. (His co-founder Will Kim was previously an investor with seed fund Lucky Capital.) Wei told me that although many creators have significant incomes, banks rarely understand their business or offer them good terms when they need capital.

“Traditional banks care a lot about FICO [credit scores],” he said. “A lot of YouTubers, when they’re blowing up, they don’t have time to think: Let me make sure my FICO is awesome as well.”

At the same time, he argued that creators have become suspicious of potentially scammy financial offers, to the point that if you were to attend a pre-COVID VidCon and tried to give out $3,000, “The good creators will not take it, even if you tell them there are no strings behind it.”

Karat team

Karat co-founders Will Kim and Eric Wei

With the Karat Black Card, the startup is giving creators a credit card that they can use for their business-related expenses. When creators are approved, they receive a $250 bonus that can be applied to any future purchases of electronics or equipment. The card also comes with custom designs, 2% to 5% cashback on purchases and even offers advances on sponsorship payments.

Underlying it, Wei said Karat has developed an underwriting model that works for creators. Instead of looking at credit scores, Karat focuses on the size of a creator’s following, their current revenue and whether or not they’re “business savvy.”

“It’s not just the number of followers you have, but what platforms,” Wei added. “I would rather have 100,000 subscribers on YouTube than 1 million on TikTok, because on TikTok, it’s all algorithmically driven.”

Karat has already provided the card to an initial group of creators, including TheRussianBadger, TierZoo and Nas Daily. Wei said the model is working so far, with no defaults.

For now, the card is aimed at professional, full-time creators who have at least 100,000 followers. Wei estimated that that’s a potential customer base of 1 million creators. Eventually, he wants to provide those creators with more than a black card.

“We’re building a vertical financial and biz ops experience,” he said. “People in earlier stages, we do want to get to them eventually, but only after we feel like we’ve developed enough of an underwriting model.”

Lemonade targets down-round pricing in impending IPO

By Alex Wilhelm

Earlier today, insurtech unicorn Lemonade filed an S-1/A, providing context into how the former startup may price its IPO and what the company may be worth when it begins to trade.

According to its new filing, Lemonade expects its IPO to price at $23 to $26 per share. As the company intends to sell 11 million shares in its debut, the rental and home insurance-focused unicorn would raise between $253 million and $286 million at those prices.

Counting an additional 1.65 million shares that it will make available to its underwriting banks, the company’s fundraise grows to $291 million to $328.9 million. Including shares offered to underwriters, Lemonade’s implied valuation given its IPO price range runs from $1.30 billion to $1.47 billion.

That’s the news. Now, is that expected valuation interval strong, and, if not, what might it portend for other insurtech startups? Let’s talk about it.

Not great, not terrible

TechCrunch is speaking with the CEOs of Hippo (homeowner’s insurance) and Root (car insurance) later today, so we’ll get their notes in quick order regarding how Lemonade’s IPO is shaping up, and if they are surprised by its pricing targets.

But even without external commentary, the pricing range that Lemonade is at least initially targeting is not terribly impressive. That said, it’s stronger than I anticipated.

As the IPO market warms, Accolade targets billion-dollar debut

By Alex Wilhelm

As the IPO market heats up, one offering slipped beneath our radar. This morning, then, we’ll catch up on Accolade’s initial public offering and what its proposed pricing may tell us about the state of the IPO market.


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Catching everyone back up, Accolade sells its service to employers who in turn offer it to their employees; the company’s tech provides a portal for individuals to “better understand, navigate and utilize the health care system and their workplace benefits,” Accolade states in its S-1 filings.

The firm goes on to point out that the U.S. health care system is complex, which puts “significant strain on consumers.” Correct. Its solution? To help “consumers make better, data-driven health care and benefits-related decisions” through its service by selling a “platform to support and influence consumer decision-making that is built on a foundation of mission-driven people and purpose-built technology.”

Yeah.

Regardless of that verbiage, Accolade’s business has proven sufficiently attractive to allow the firm to file to go public in late February, around when Procore filed. Both companies delayed their offerings, but Procore raised more private capital, a $150 million round that values it at around $5 billion. Accolade, to our knowledge, did not raise more funds. So, its IPO is back on and today we have its pricing interval.

Let’s unpack its pricing range, write some notes on its recent financial results and try to figure out how ambitious Accolade is being in terms of its expected valuation as it counts down to trading publicly.

Accolade’s S-1/A

According to Accolade’s June 24th S-1/A, the company expects a $19 to $21 per-share IPO price range. The company intends to sell 8.75 million shares in its debut, not counting a 1,312,500 share greenshoe option offered to its underwriters. Discounting the extra shares, Accolade would raise between $166.3 million to $183.8 million in its debut; inclusive of greenshoe shares, the total fundraise grows to a range of $191.2 million to $211.3 million.

Atmos wants to make building a house a one-click effort

By Danny Crichton

Homebuilding is not for the faint of heart, particularly those who want to build something custom. Selecting the right architect and designer, the myriad of contractors, the complexity of building codes and siting, the regulatory approvals from local authorities. It’s a full-time job — and you don’t even have a roof built over your head.

Atmos wants to massively simplify homebuilding, and in the process, democratize customization to more and more homeowners.

The startup, which is in the current Y Combinator batch, wants to take both the big decisions and the sundries of construction and combine them onto one platform where selecting a design and moving forward is as simple as clicking through a Shopify shopping cart.

It’s a vision that has already piqued the attention of investors. The company disclosed that it has already raised $2 million according to CEO and co-founder Nick Donahue from Sam Altman, former YC president and now head of OpenAI, and Adam Nash, former president and CEO of Wealthfront, along with a bunch of other angels.

It’s also a vision that is a radical turn from where Atmos was before, which was centered in virtual reality.

Donahue comes from a line of homebuilders — his father built home subdivisions as a profession — but his interests initially turned toward the virtual. He dropped out of college after realizing process engineering wasn’t all that exciting (who can blame him?) and headed out to the Valley, where he built projects like “a Burning Man art installation and [an] open-source VR headset.” That headset attracted the attention of angels, who funded its development.

The concept at the heart of the headset was around what the team dubbed the “spatial web.” Donahue explained that the idea was that “the concept of the web would one day flow from the 2D into the 3D and that physical spaces would function more like websites.” The headset he was developing would act as a sort of “browser” to navigate these spaces.

Of course, the limitations around VR hit his company as much as the rest of the industry, including limits on computation performance to build these 3D environments and the lack of scaling in the sector so far.

The thinking around changing physical spaces though got Donahue pondering about what the future of the home would look like. “We think the next kind of wave of this is going to be an introduction to compute,” he said, arguing that “every home will have like a brain to it.” Homes will be digital, controllable, and customizable, and that will revolutionize the definition of the home that has remained stagnant for generations.

The big vision for Atmos going forward then is to capture that trend, but for today at least, the company is focused on making housing customization easier.

To use the platform, a user inputs the location for a new home and a floorplan for the site, and Atmos will find builders that best match the plan and coordinate the rest of the tasks to get the home built. It’s targeting homes in the $400,000-800,000 range, and its focus cities are Raleigh-Durham, Charlotte, Atlanta, Denver, and Austin.

It’s very much early stages for the company — Donahue says that the company has its first few projects underway in the Raleigh-Durham area and is working to partner and scale up with larger homebuilders.

Photo by KentWeakley via Getty Images.

Will it work? That’s the big question with anything that touches construction. Customization is great — everyone loves to have their own pad — but the traditional challenge for construction is that the only way to bring down the cost of housing is to make it as uniform as possible. That’s why you get “cookie-cutter” subdivisions and rows of identical apartment buildings — the sameness allows a builder to find scale: work crews can move from one lot to the next in synchronicity saving labor costs and time while building materials can be bought in bulk to save costs.

With better technology and some controls, Atmos might be able to find synergies between its customers, particularly if it gets market penetration in individual cities. Yet, I find the longer-term vision ultimately more compelling for the company: redefining the home may not have made much sense three months ago, but as more people work from home and connect with virtual worlds, how should our homes be redesigned to accommodate these activities? If Atmos can find an answer, it is sitting on a gold mine.

Atmos team pic (minus two). Photo via Atmos.

In addition to Altman and Nash, Mark Goldberg, JLL Spark, Shrug Capital, Daniel Gross’ Pioneer, Venture Hacks, Yuri Sagalov, Brian Norgard and others participated in the company’s angel/seed round.

Hopin raises $40M Series A as its virtual events business accelerates

By Alex Wilhelm

This morning Hopin, a London-based startup building virtual events technology, announced that it has raised a $40 million Series A led by IVP. According to the company, Salesforce’s corporate venture arm Salesforce Ventures also took part in the round, as did a number of its prior investors, including Slack’s venture capital group the Slack Fund, European venture groups Seedcamp and Northzone, and US-based Accel.

The round comes after Hopin had raised relatively modest capital before, including a $6.5 million round in February of this year.

Hopin is busy scaling. The company has seen its employee base grow from eight to sixty this year, and targets 200 by the end of 2020, according to CEO Johnny Boufarhat. The firm is staffing up as usage of its technology expands, with the “number of monthly attendees of events” hosted using its technology growing from 16,000 in March — when COVID-19 lockdowns were accelerating — to 175,000 in May, according to the company.

That’s the sort of growth that venture capitalists flock to, checkbooks in hand. Even better, Hopin’s current marketing costs are around zero, as there’s simply more groups that want to host events on the company’s platform than it can handle.

Why does a virtual event technology provider have a bottleneck? “Hopin is a venue,” Boufarhat told TechCrunch in an interview, meaning that its customers need support to make sure things go well when they use the software. If a piece of business technology hiccups for a few minutes, Boufarhat explained, citing CRM as an example, it’s not the end of the world. If a Hopin instance has issues, he explained, 1,000 people could be impacted, causing them to judge both the hosting group and his company.

Hopin’s technology allows events to recreate the traditional in-person conference, online. This includes features that allow hosts to have digital equivalents of real-world event locations and activities, like expo centers, various stages, and networking capabilities. This mirroring of an IRL get-together, online, could make digital events more attractive to attendees who have become accustomed to a certain method of congregating.

A history of growth

Hopin first raised money in October of 2019, during a period of rapid expansion. According to Boufarhat, his startup was seeing about 60% growth, month-to-month. At that time the company was operating with reduced entry, only accepting a portion of market demand. After the October round was complete, the business kept growing, allowing it to collect more data on its product and how it was used.

That information led to its February, 2020 Seed round. Back then the company was seeing revenue scale roughly along with expenses, allowing it to be “nearly profitable” during the period, according to its CEO. For venture capitalists, seeing a company with more demand than it can handle grow, while also not losing much — if any — money is attractive.

Hopin’s quick round in early 2020 then was not a surprise. The same confluence of factors, including usage growth and revenue expansion, are also what came together for its most-recent Series A.

COVID-19 was an accelerant for Hopin, it appears. As the pandemic spread, the company realized that companies were going to switch from in-person events to webinars, which, in its view, aren’t great. So, it moved to make Hopin more available, earlier, than planned.

Now with more money than it has had to-date, Hopin can likely accelerate its hiring, and onboard more clients than before. That means more virtual events, and more revenue for the company. It will be interesting to see how the company’s gross margins shape up over time, and what percent of the events that it helps host recur. If the margins are good, and events periodic, the firm could argue for a SaaS multiple long-term.

Ahead

Looking towards the future, it will be interesting to see how the company approaches the realm of digital worlds, and if there’s space in its current model for more VR-style experiences. And there are other questions in the distance, including what happens when a vaccine is eventually found for COVID-19? Do events go back to normal, or do they wind up splitting the IRL-online divide, giving Hopin and similar companies a place in conferences for good?

Firms like Teeoh and even Eventbrite also want a piece the virtual event market, so Hopin won’t have a walkover. That said, there’s little indication yet that virtual event hosting will be a single-winner category. Given the sheer TAM of the events world, there’s probably room for several.

How quickly Hopin raises again should give us our next signal regarding the pace of its growth. More when we have it.

Connect Ventures outs $80M third fund to back ‘product-led’ seed-stage founders

By Steve O'Hear

Connect Ventures, the London-based seed-stage VC that was an early investor in Citymapper and Typeform — and more recently backed scaling startups such as Curve and TrueLayer — is announcing a new $80 million fund to continue investing in “product-led” founders.

Backing the new fund is a combination of existing and new LPs including Top Tier Capital Partners, Isomer Capital, the U.K. taxpayer’s British Patient Capital, De Agostini, Big Society Capital, Draper Esprit and Korelya Capital. Connect’s last fund, raised in 2016, was around $62 million based on today’s exchange rate, so this is a slightly larger amount of deployable capital.

Launched back in 2012 when there was still a very limited supply of institutional capital at seed-stage in Europe (and when seed cheques were often called Series A!), Connect Ventures is pan-European and invests in B2B and consumer software categories including SaaS, fintech, digital health and “future of work”.

Running throughout the firm’s investment thesis is a product focus, with the belief that “product-led, software entrepreneurs” are the kinds of founders most likely to transform the way we live and work at scale.

You can see this digital product bent throughout a lot of its portfolio companies. For example, as B2B SaaS companies go, Typeform is about as product-focused as they come. More obviously, consumer fintech plays such as finance app Emma, and all-your-cards-in-one app Curve, also live and die by their respective apps — a theme that will continue going forward with this third fund.

“We’re interested in building long term relationships with founders who have the obsession and focus required to build product-led companies, and the ambition to build category leaders,” says Sitar Teli, general partner at Connect Ventures, in a statement.

One other notable thing about Connect Ventures is that it has always and continues to do fewer deals per year than many seed-stage firms — so-called “conviction investing”, as it is often referred to today. In other words, the opposite to a spray ‘n’ pray approach that favours diversification. That means not only placing bigger (and therefore riskier) bets in a smaller number of early-stage companies, but also throwing more support behind those investments, including taking a board seat, in a bid to help tip the scales towards success.

“We’ve intentionally created a low volume, high conviction, high support investment firm to back these founders,” adds Teli. “That’s why we’ll be targeting the same curated number of seed investments with this fund, using the larger fund size to provide the right capital and support on our journey together”.

On that note, Connect says it has already started deploying this fund with recent investments. They include BSit (the subscription-based childcare and babysitting platform), Oyster (the distributed talent enablement platform), and, as already mentioned, fintech Emma.

Alongside Teli, Connect Ventures’ two other general partners are Pietro Bezza and Rory Stirling (see TechCrunch’s previous coverage of Stirling’s recruitment). The firm has backed over 50 startups to date.

France’s api.video raises $5.5M to make it easier for developers to add video features

By Steve O'Hear

Api.video, a “developer-first” video platform that makes it easier for websites and apps to video features, has raised $5.5 million, in a seed round led by London venture capital firm Blossom Capital. Also participating is Kima Ventures and a number of angel investors.

Previous backers include Octave Klaba (founder of OVH), Eduardo Ronzano (founder of KelDoc), Thibaud Elzière (founder of Fotolia), Nicolas Steegmann (founder of Stupeflix), Julien Romanetto & Frédéric Montagnon (co-founders of Teads) Florian Douetteau (founder of Dataiku) and Michaël Benabou and Dominique Romano (Veepee).

Founded in 2019 by Cédric Montet, the former founder and CEO of Libcast’s live streaming and on-demand SaaS video platform, api.video aims to do a lot of the heavy lifting required to incorporate modern video functionality into websites and mobile apps, and in turn help grow the market for what it calls “transactional video communications”.

“This could include video reviews filmed by holidaymakers uploaded to the likes of airbnb; clips posted to peer-learning, educational sites that help explain complex parts of a curriculum; or audiovisual contents in collaborative platforms that are usually text-oriented,” explains the French company.

To make this possible, api.video’s platform promises to abstract the multi-step processes of modern online video into a a single API that offers transcoding, hosting, delivery and analytics. Or, put simply, the startup wants to become the Twilio for video.

“Most apps and websites today are based around sharing text and images, because video – until now – has simply been too complex to implement,” Montet tells me. “Whether it’s for hotel reviews, dating sites, e-learning, collaborative and customer service platforms or online marketplaces, video offers the ability to convey depth beyond what text and images can”.

However, the problem that many companies, particularly those that don’t have video at the core of the business, have held back from introducing such features due to complexity and despite increasing demand from audiences.

“Api.video solves these problems by not only enabling developers within any company, of any size and type, to unlock the potential of video with only a few lines of code. But it offers a complete end-to-end solution with a transparent pricing plan and a single bill,” explains Montet.

The result is that developers can build transactional video communications “at scale,” he says, regardless of the systems their companies use or the type of content they need.

To that end, Montet says the funding from Blossom Capital and Kima Ventures will be used to grow the api.video team internationally and to “penetrate new markets”.

“We’re also looking to hire the best talent to achieve our tech goals of ultra-low latency streaming and building a global EDGE Infrastructure. We’ll add open-source plugins for popular platforms, such as WordPress, e-learning environments and collaborative platforms. We aim to keep providing an excellent documentation and native SDK in the most popular languages to help our users to integrate video without hassle”.

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