In recent years, the U.S. has seen more renters than at any point since at least 1965, according to a Pew Research Center analysis of Census Bureau housing data.
Competition for renters is fierce and property managers are turning to technology to get a leg up.
To meet that demand, Seattle-based Knock – one startup that has developed tools to give property management companies a competitive edge – has raised $20 million in a growth funding round led by Fifth Wall Ventures.
Existing backers Madrona Venture Group, Lead Edge Capital, Second Avenue Partners and Seven Peaks Ventures also participated in the financing, which brings the company’s total capital raised to $47 million.
Demetri Themelis and Tom Petry co-founded Knock in 2014 after renting “in super competitive markets” such as New York City, San Francisco and Seattle.
“After meeting with property management companies, it was eye-opening to learn about the total gap across their tech stacks,” Themelis recalled.
Knock’s goal is to provide CRM tools to modernize front office operations for these companies so they can do things like offer virtual tours and communicate with renters via text, email or social media from “a single conversation screen.” For renters, it offers an easier way to communicate and engage with landlords.
“Apartment buildings, like almost every customer-driven business, compete with each other by attracting, converting and retaining customers,” Themelis said. “For property management companies, these customers are renters.”
The startup — which operates as a SaaS business — has seen an uptick in growth, quadrupling its revenue over the past two years. Its software is used by hundreds of the largest property management companies across the United States and Canada and has more than 1.5 million apartment units using the platform. Starwood Capital Group, ZRS, FPI and Cushman & Wakefield (formerly Pinnacle) are among its users.
As Petry explains it, Knock serves as the sales inbox (chat, SMS, phone, email), sales calendar and CRM systems, all in one.
“We also automate certain sales tasks like outreach and appointment scheduling, while also surfacing which sales opportunities need the most attention at any given time, for both new leases as well as renewals,” he said.
Image Credit: Knock
The company, Themelis said, was well-prepared for the impact of the COVID-19 pandemic.
“Our software supports property management companies, which operate high-density apartment buildings that people live and work in,” he told TechCrunch. “You can’t just ‘shut them down,’ which has made multifamily resilient and even grow in comparison to retail and industrial real estate.”
For example, when lockdowns went into effect, in-person property tours declined by an estimated 80% in a matter of weeks.
Knock did things like help property managers transition to a centralized and remote leasing model so remote agents could work across a large portfolio of properties rather than in a single on-site leasing office, noted Petry.
It also helped them adopt self-guided, virtual and live video-based leasing tools, so prospective renters could tour properties in person on their own or virtually.
“This transformation and modernization became a huge tailwind for our business in 2020,” Petry said. “Not only did we have a record year in terms of new customers, revenue growth and revenue retention, but our customers outperformed market averages for occupancy and rent growth as well.”
Looking ahead, the company says it will be using its new capital to (naturally!) hire across product, engineering, sales, marketing, customer success, finance and human resources divisions. It expects to grow headcount by 40% to 50% before year-end. It also plans to expand its product portfolio to include AI communications, fraud prevention, applicant screening and leasing, and intelligent forecasting.
Fifth Wall partner Vik Chawla, who is joining Knock’s board of directors, pointed out that the macroeconomic environment is driving institutional capital into multifamily real estate at an accelerated pace. This makes Knock’s offering even more timely in its importance, in the firm’s view.
The startup, he believes, outshines its competitors in terms of quality of product, technical prowess and functionality.
“The Knock team has accomplished so much in just a short period of time by attracting very high quality product design and engineering talent to ameliorate a nuanced pain point in the tenant acquisition process,” Chawla told TechCrunch.
In terms of fitting with its investment thesis, Chawla said companies like Knock can both benefit from Fifth Wall’s global corporate strategic partners “and simultaneously serve as a key offering which we can share with real estate industry leaders in different countries as a potential solution for their local markets.”
Indian conglomerate Tata Group has reached an agreement to acquire a majority stake in grocery delivery startup BigBasket, a source familiar with the matter told TechCrunch.
The salt-to-software giant is buying over 60% stake in BigBasket, valuing the Indian startup between $1.8 billion to $2 billion, the source said, requesting anonymity as the deal is still private. BigBasket has raised more than $750 million prior to the deal with Tata.
Indian news network ET Now reported on Tuesday that the two firms were in advanced talks, signals of which began to emerge in local media two quarters ago. Two BigBasket co-founders and Tata Group did not respond to a request for comment.
Chinese internet giant Alibaba, which owns nearly 30% stake in BigBasket, and a handful of other investors are getting a near complete exit from the startup as part of the deal with Tata Group, the source said. New Delhi introduced restrictions last year that made it difficult for Chinese investors to write checks to Indian firms.
The move comes as Mumbai-headquartered Tata Group, which reported a revenue of $113 billion in 2019 and operates several popular brands such as Jaguar Land Rover and tea maker Tetley, looks to expand to more consumer businesses and works to develop a so-called super app in the world’s second-largest internet market.
Bangalore-headquartered BigBasket, which competes with SoftBank-backed Grofers and Reliance’s JioMart, operates in over two dozen cities in India and turned profitable months into the coronavirus pandemic as sales skyrocketed on the platform.
BigBasket and Grofers’s userbases skyrocketed by as much as 80% last year, analysts at Citi Bank estimated in recent note, adding that JioMart, run by India’s richest man Mukesh Ambani, had already started to pose serious competition.
In a recent note to clients, Bank of America analysts estimated that the online grocery delivery market could be worth $12 billion in India by 2023.
“Competition is high in the sector with large verticals like BigBasket/Grofers and horizontal like Amazon/Flipkart trying to convert the unorganized market to organized one. Till recently the No 1 player in the space was BigBasket, with it hitting $1 billion annualized GMV & selling over 300,000 orders every day. Reliance Industries also threw its hat with the company launching its JioMart app in May-20 across 200 cites,” they wrote.
The expansion of Reliance Industries, one of India’s largest industrial houses, in e-commerce last year may have prompted Tata Group to accelerate its digital efforts. Ambani raised more than $26 billion for his telecom and retail empires Jio Platforms and Reliance Retail last year from a roster of marquee investors including Facebook and Google.
Tata Group was working to expand to several consumer-facing digital services as early as 2016, but a boardroom coup put all those plans on the back burner, The Information reported in December.
Five-year-old “slow dating” app Once has been acquired by the Dating Group, one of the largest companies in the dating world, for $18 million in cash and stock. Dating Group has 73 million registered users across a range of portfolio apps, including Dating.com.
Clémentine Lalande, co-founder and CEO of Once, will continue leading the company under a two-year agreement. Fellow co-founder Jean Meyer retained a stake in the company after departing two years ago.
Once has 9 million users on its platform, while the startup also garnered a further 1 million from a spin-out app it later launched called Pickable.
Once is a dating app that uses matching algorithms to deliver just one match per day to each user. It pitched itself as an alternative to the frenetically paced apps such as Tinder and Bumble. Indeed, Bumble revealed last week that two in five people of those it surveyed are taking longer to get to know someone as a result of pandemic lockdowns. And 38% Bumble users admit that it had made them want something more serious. So Once had a ready market.
Each pair on the Once app has 24 hours of each other’s attention and can continue chatting if they “like” each other. The AI looks at the account’s info, dating preferences and previous history in order to find the best possible match. Users can also rate each particular profile to let the AI better understand their taste.
In a statement, Lalande said: “I am thrilled to join the Dating Group today, both because of their proven focus on post-swiping dating alternatives, and to leverage the huge synergies between Once and Dating Group. In such a concentrated and competitive market having a large partner will allow us to augment our reach and accelerate geographical expansion”.
Bill Alena, chief investment officer at Dating Group said: “We strongly believe in the concept of AI and making quality matches. We see a huge potential in integrating Once into our portfolio. We’re excited to have Clémentine join Dating Group, she and her team have built a fascinating product and with this acquisition, Dating Group expands deeper into the Western European market.”
Dating Group has offices in seven countries and a team of more than 500 professionals, with more than 73 million registered users across the entire portfolio. Its brands include Dating.com, DateMyAge, Dil Mil, Cherish, Tubit, AnastasiaDate and ChinaLove.
A string of recent events in China’s payments industry suggests the duopoly comprising Ant Group and Tencent may be getting a shakeup.
Following the abrupt call-off of Ant’s public sale and a government directive to reform the firm’s business, the Chinese authorities sent another message this week signaling its plan to curb concentration in the flourishing digital payments industry.
The set of draft rules, designed to regulate non-bank payments and released by the People’s Bank of China (PBOC) this week, said any non-bank payments processor with over one-third of the non-bank payments market or two companies with a combined half of the market could be subject to regulatory warnings from the anti-monopoly authority under the State Council.
Meanwhile, a single non-bank payments provider with over one half of the digital payments market or two companies with a combined two-thirds of the market could be investigated for whether they constitute a monopoly.
The difference between the two rules is nuanced here, with the second stipulation focusing on digital payments as opposed to non-bank payments in the first.
Furthermore, the rules did not specify how authorities measure an organization’s market share, say, whether the judgment is based on an entity’s total transaction value, its transaction volume, or other metrics.
Alipay processed over half of China’s third-party payments transactions in the first quarter of 2020, according to market researcher iResearch, while Tencent handled nearly 40% of the payments in the same period.
As China heightens scrutiny over its payments giants, it’s also opening up the financial market to international players. In December, Goldman Sachs moved to take full ownership of its Chinese joint venture. This month, PayPal became the first foreign company with 100% control of a payments business in China after it bought out the remaining stake in its local payments partner Guofubao.
Industry experts told TechCrunch that PayPal won’t likely go after the domestic payments giants but may instead explore opportunities in cross-border payments, a market with established players like XTransfer, which was founded by a team of Ant veterans.
Ant and Tencent also face competition from other Chinese internet firms. Companies ranging from food delivery platform Meituan, e-commerce platforms Pinduoduo and JD.com, to TikTok’s parent firm ByteDance have introduced their own e-wallets, though none of them have posed an imminent threat to Alipay or WeChat Pay.
The comprehensive proposal from PBOC also defines how payments processors handle customer data. Non-bank payments services are to store certain user information and transaction history and cooperate with relevant authorities on data checks. Companies are also required to obtain user consent and make clear to customers how their data are collected and used, a rule that reflects China’s broader effort to clamp down on unscrupulous data collection.
eSports “total solutions provider” VSPN (Versus Programming Network) has closed a $60 million Series B+ funding round, joined by Prospect Avenue Capital (PAC), Guotai Junan International and Nan Fung Group.
VSPN facilitates esports competitions in China, which is a massive industry and has expanded into related areas such as esports venues. It is the principal tournament organizer and broadcaster for a number of top competitions, partnering with more than 70% of China’s eSports tournaments.
The “B+” funding round comes only three months after the company raised around $100 million in a Series B funding round, led by Tencent Holdings.
This funding round will, among other things, be used to branch out VSPN’s overseas esports services.
Dino Ying, Founder, and CEO of VSPN said in a statement: “The esports industry is through its nascent phase and is entering a new era. In this coming year, we at VSPN look forward to showcasing diversified esports products and content… and we are counting the days until the pandemic is over.”
Ming Liao, the co-founder of PAC, commented: “As a one-of-its-kind company in the capital market, VSPN is renowned for its financial management; these credentials will be strong foundations for VSPN’s future development.”
Xuan Zhao, Head of Private Equity at Guotai Junan International said: “We at Guotai Junan International are very optimistic of VSPN’s sharp market insight as well as their team’s exceptional business model.”
Meng Gao, Managing Director at Nan Fung Group’s CEO’s Office said: “Nan Fung is honored to be a part of this round of investment for VSPN in strengthening their current business model and promoting the rapid development of emerging services and the esports streaming ecosystem.”
Indian stock exchanges approved the $3.4 billion deal between retail giants Reliance Retail and Future Group on late Wednesday in yet another setback for Amazon, which has invested over $6.5 billion in the world’s second largest internet market and sought to block the aforementioned deal.
The Bombay Stock Exchange said in a notification that it had spoken with India’s markets regulator, the Securities and Exchange Board of India (SEBI), and had no objection or adverse observation on the deal.
Wednesday’s notification is the latest setback for Amazon, which had written to SEBI and Indian antitrust watchdog to block the multi-billion deal between Future Group and Reliance Retail, the two largest retail chains in India. Last year, India’s antitrust group gave a go ahead to the deal to the Indian firms.
“We hereby advise that we have no adverse observations with limited reference to those matters having a bearing on listing/de-listing/continuous listing requirements within the provisions of Listing Agreement, so as to enable the company to file the scheme with Hon’ble NCLT [National Company Law Tribunal],” the notification read. SEBI has advised Future to share various aspects of its ongoing litigation with Amazon to NCLT, whose approval for the deal is pending.
Amazon bought 49% stake in one of Future’s unlisted firms in 2019 in a deal that was valued at over $100 million. As part of the deal, Future could not have sold assets to rivals, Amazon has said in court filings.
Things changed last year after the coronavirus pandemic starved the Indian firm of cash, Future Group chief executive and founder Kishore Biyani said at a recent virtual conference. In August, Future Group said that it had reached an agreement with Ambani’s Reliance Industries, which runs India’s largest retail chain, to sell its retail, wholesale, logistics and warehousing businesses for $3.4 billion.
Amazon later protested the deal by reaching an arbitrator in Singapore and asked the court to block the deal between the Indian retail giants. Amazon secured emergency relief from the arbitration court in Singapore in late October that temporarily halted Future Group from going ahead with the sale.
The two estranged partners also fought at the Delhi High Court last year, which in a rare glimmer of hope for the American giant rejected Future’s plea for an ad-interim injunction to restrain Amazon from writing to regulators and other authorities to raise concerns over — and halt — the deal between the two Indian giants.
An Amazon spokesperson told TechCrunch that the firm will continue to pursue legal remedies. “The letters issued by BSE & NSE clearly state that the comments of SEBI on the ‘draft scheme of arrangement’ (proposed transaction) are subject to the outcome of the ongoing Arbitration and any other legal proceedings. We will continue to pursue our legal remedies to enforce our rights,” the spokesperson said.
At stake is India’s retail market that is estimated to balloon to $1.3 trillion by 2025, up from $700 billion in 2019, according to consultancy firm BCG and local trade group Retailers’ Association India. Online shopping accounts for about 3% of all retail in India.
Alibaba’s billionaire founder resurfaced as he spoke to 100 rural teachers through a video, three months after his last public appearance in October, sending the e-commerce firm’s shares up more than 8% in Hong Kong.
The video was first posted on a news portal backed by the government of Zhejiang, the eastern province where Alibaba is headquartered, and the clip was verified by an Alibaba spokesperson.
Speculations swirled around Ma’s whereabouts after media reported in December that he skipped the taping of a TV program he created. Ma, known for his love for the limelight, has seen his e-commerce empire Alibaba and fintech giant Ant Group increasingly in the crosshairs of the Chinese authorities in recent months.
Ma last appeared publicly at a conference where he castigated China’s financial regulatory system in front of a room of high-ranked officials. His controversial remark, according to reports, prompted the Chinese regulator to abruptly halt Ant’s initial public offering, which would have been the biggest public share sale of all time.
Ant has since been working on corporate restructuring and regulatory compliance under the directions of the government. Alibaba, China’s largest e-commerce platform, also came under scrutiny as market regulators opened an investigation into its alleged monopolistic practices.
Some argue that the recent clampdown on Jack Ma’s internet empire signals Beijing’s growing unease with the super-rich and private-sector power brokers.
“Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States. And just like their American counterparts, the Chinese giants sometimes bully smaller competitors and kill innovation,” wrote Li Yuan for the New York Times.
“You don’t have to be a member of the Communist Party to see reasons to rein them in.”
In the 50-second video, Ma talked directly into the camera against what appears to be decorative paintings depicting a water town typical of Zhejiang. An art history book is shown amid a stack of books, alongside a vase of fresh flowers and a ceramic figurine of a stout, reclining man, looking relaxed and content.
Ma addressed the 100 teachers receiving the Jack Ma Rural Teachers Award, which was set up by the Jack Ma Foundation to identify outstanding rural teachers every year. The video also briefly shows Ma visiting a rural boarding school in Zhejiang on January 10. The award ceremony was moved online this year due to the pandemic, Ma told the teachers.
When Ma announced his retirement plan, he pledged to return to his teaching roots and devote more time to education philanthropy, though the founder still holds considerable sway over Alibaba. The legendary billionaire began his career as an English teacher in Hangzhou, and on Weibo, China’s Twitter equivalent, he nicknames himself the “ambassador for rural teachers.”
Many VCs historically avoided placing bets on hit-driven mobile gaming content in favor of clearer platform opportunities, but as more success stories pop up, the economics overturned conventional wisdom with new business models. As more accessible infrastructure allowed young studios to become more ambitious, venture money began pouring into the gaming ecosystem.
After tackling topics including how investors are looking at opportunities in social gaming, infrastructure bets and the moonshots of AR/VR, I asked a group of VCs about their approach to mobile content investing and whether new platforms were changing perspectives about opportunities in mobile-first and desktop-first experiences.
While desktop gaming has evolved dramatically in the past few years as new business models and platforms take hold, to some degree, mobile has been hampered. Investors I chatted with openly worried that some of mobile’s opportunities were being hamstrung by Apple’s App Store.
“We are definitely fearful of Apple’s ability to completely disrupt/affect the growth of a game,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch. “We do not foresee that changing any time in the near future despite the outcry from companies such as Epic and others.”
All the while, another central focus seems to be the ever-evolving push toward cross-platform gaming, which is getting further bolstered by new technologies. One area of interest for investors: migrating the ambition of desktop titles to mobile and finding ways to build cross-platform experiences that feel fulfilling on devices that are so differently abled performance-wise.
Madrona’s Hope Cochran, who previously served as CFO of Candy Crush maker King, said mobile still has plenty of untapped opportunities. “When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale.”
Responses have been edited for length and clarity. We spoke with:
Does it ever get any easier to bet on a gaming content play? What do you look for?
Hope Cochran: I feel like there are a couple different sectors in gaming. There’s the actual studios that are developing games and they have several approaches. Are they developing a brand new game, are they reimagining a game from 25 years ago and reskinning it, which is a big trend right now, or are they taking IP that is really trendy right now and trying to create a game around it? There are different ways to predict which ones of those might make it, but then there’s also the infrastructure behind gaming and then there’s also identifying trends and which games or studios are embracing those. Those are some of the ways I try to parse it out and figure out which ones I think are going to rise to the top of the list.
Daniel Li: There’s this single-player narrative versus multiplayer metaverse and I think people are more comfortable on the metaverse stuff because if you’re building a social network and seeing good early traction, those things don’t typically just disappear. Then if you are betting more on individual studios producing games, I think the other thing is we’re seeing more and more VCs pop up that are just totally games-focused or devoting a portion of the portfolio to games. And for them it’s okay to have a hits-driven portfolio.
There seems to be more innovation happening on PC/console in terms of business models and distribution, do you think mobile feels less experimental these days? Why or why not?
Hope Cochran: Mobile is still trying to push the technology forward, the important element of being cross-platform is difficult. When you have a AAA game, bringing it to mobile is challenging and yet it opens up an entire universe of scale. The metrics are also very different for mobile though.
Daniel Li: It seems like the big monetization innovation that has happened over the last couple of years has been the “battle pass” type of subscription where you can unlock more content by playing. Obviously that’s gone over to mobile, but it doesn’t feel like mobile has had some sort of new monetization unlock. The other thing that’s happened on desktop is the success of the “pay $10 or $20 or $20 for this indie game” type of thing, and it feels like that’s not going to happen on mobile because of the price points that people are used to paying.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity
Monday Tuesday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and make sure to check out last week’s two episodes, covering all the news sans e-commerce, and then all the e-commerce news.
We’re here on a Tuesday due to an American holiday, but that short break did not mean that the world’s news volume slowed down in the slightest. Here’s the rundown:
And that’s that for today, we are back in short order on Thursday afternoon!
K Health, the virtual healthcare provider that uses machine learning to lower the cost of care by providing the bulk of the company’s health assessments, is launching new tools for childcare on the heels of raising cash that values the company at $1.5 billion.
The $132 million round raised in December will help the company expand and help pay for upgrades including an integration with most electronic health records — an integration that’s expected by the second quarter.
Throughout 2020 K Health has leveraged its position operating at the intersection of machine learning and consumer healthcare to raised $222 million in a single year.
This appetite from investors shows how large the opportunity is in consumer healthcare as companies look to use technology to make care more affordable.
For K Health, that means a monthly subscription to its service of $9 for unlimited access to the service and physicians on the platform, as well as a $19 per-month virtual mental health offering and a $19 fee for a one-time urgent care consultation.
To patients and investors the pitch is that the data K Health has managed to acquire through partnerships with organizations like the Israel health maintenance organization Maccabi Healthcare Services, which gave up decades of anonymized data on patients and health outcomes to train K Health’s predictive algorithm, can assess patients and aid the in diagnoses for the company’s doctors.
In theory that means the company’s service essentially acts as a virtual primary care physician, holding a wealth of patient information that, when taken together, might be able to spot underlying medical conditions faster or provide a more holistic view into patient care.
For pharmaceutical companies that could mean insights into population health that could be potentially profitable avenues for drug discovery.
In practice, patients get what they pay for.
The company’s mental health offering uses medical doctors who are not licensed psychiatrists to perform their evaluations and assessments, according to one provider on the platform, which can lead to interactions with untrained physicians that can cause more harm than good.
While company chief executive Allon Bloch is likely correct in his assessment that most services can be performed remotely (Bloch puts the figure at 90%), they should be performed remotely by professionals who have the necessary training.
There are limits to how much heavy lifting an algorithm or a generalist should do when it comes to healthcare, and it appears that K Health wants to push those limits.
“Drug referrals, acute issues, prevention issues, most of those can be done remotely,” Bloch said. “There’s an opportunity to do much better and potentially cheaper.
K Health has already seen hundreds of thousands of patients either through its urgent care offering or its subscription service and generated tens of millions in revenue in 2020, according to Bloch. He declined to disclose how many patients used the urgent care service vs. the monthly subscription offering.
Telemedicine companies, like other companies providing services remotely, have thrived during the pandemic. Teladoc and Amwell, two of the early pioneers in virtual medicine have seen their share prices soar. Companies like Hims, that provide prescriptions for elective conditions that aren’t necessarily covered by health, special purpose acquisition companies at valuations of $1.6 billion.
Backing K Health are a group of investors led by GGV Capital and Valor Equity Partners. Kaiser Permanente’s pension fund and the investment offices of the owners of 3G Capital (the Brazilian investment firm that owns Burger King and Kraft Heinz), along with 14W, Max Ventures, Pico Partners, Marcy Venture Partners, Primary Venture Partners and BoxGroup, also participated in the round.
Organizations working with the company include Maccabi Healthcare; the Mayo Clinic, which is investigating virtual care models with the company; and Anthem, which has white labeled the K Health service and provides it to some of the insurer’s millions of members.
Bustle Digital Group — owner of Bustle, Inverse, Input, Mic and other titles — could eventually join the ranks of startups going public via a special purpose acquisition company (SPAC).
During an interview about the state of BDG and the digital media industry at the end of 2020, founder and CEO Bryan Goldberg laid out ambitious goals for the next few years.
“Where do I want to see the company in three years? I want to see three things: I want to be public, I want to see us driving a lot of profits and I want it to be a lot bigger, because we’ve consolidated a lot of other publications,” he said.
He added that those goals connect, because by going public, BDG can raise “hundreds of millions dollars,” which Goldberg wants to use to “buy a lot of media companies.”
That might seem like bluster after a year in which many digital media companies (including BDG) had to make serious cuts. But Goldberg said that the company would be profitable in 2020, with revenue that’s “a little bit under $100 million.” And it won’t be the first digital media company to take a similar route — Group Nine created a SPAC that went public last week.
“I want to prove that we can be highly profitable,” he said. “A lot of startups don’t have that goal. A lot of VCs tell their startups: Don’t worry about profits, don’t worry about losing money. I don’t believe in that.”
In addition to his plans to go public, Goldberg also discussed how acquisitions have helped Bustle’s business, his joint venture to purchase W Magazine and digital media’s “overcapitalization” problem. You can read our full conversation, edited for length and clarity, below.
TechCrunch: The last time I caught up with someone at BDG, it was with [the company’s president Jason Wagenheim] and that was when you guys were dealing with the initial fallout [from the pandemic]. Now we’re a lot further into whatever this new world is, so what is your sense of where BDG is now, versus where it was in the early days of the pandemic?
Bryan Goldberg: It might be the craziest, most eventful six months for many of us in our lives. And certainly, for those of us in this industry, the difference between April and October, it’s really hard to fathom, it’s complete night and day. April was a very frightening time for everyone, personally and professionally across the country, across the world.
From an advertising standpoint, it was a really scary time, because we have clients across every industry, and every industry was impacted differently. We have clients who were greatly impacted — theme parks, car makers, hotel companies, airlines — and then we had clients who were not as badly affected, such as a lot of CPG clients, who everybody depended upon so much during the pandemic.
There was a huge pause in our business in in March, April and May. For a lot of clients, tossing advertising was a sort of knee-jerk reaction to the sudden shock of COVID, and so we saw a huge negative impact in our second quarter. What we started to see in the third quarter, and especially now in the fourth quarter, is now that the shock of COVID is behind us, the macro trends that were catalyzed by COVID are now moving into the forefront.
The story of media is no longer about the shock of COVID. The story of media is now about all of the changes to our world, and changes to our industry that were brought about as a consequence of COVID.
The good news for our company, and the good news for other digital media companies, is it looks like the future is being accelerated. It looks like people are watching less television, and so advertisers are moving their budgets into digital faster than they would have had it not been for COVID. Even things like live sports, [their] TV ratings are way down. And a lot of advertisers are saying, “Is there efficacy anymore in cable television or broadcast television?” And the magazine industry was heavily impaired, simply because magazines are a physical medium, and people didn’t want to pass around magazines or read magazines at the dentist’s office, so we probably saw some print budget move into digital as well.
Industry analysts now are going to take up their estimates of what digital revenue is going to look like in 2021, 2022 and beyond. I also think we’ve seen a world in which a lot of brand advertisers are starting to think about what happens when they start to spend beyond Facebook and Google. For most of the last three years, there’s been so much talk about the duopoly, the idea that Facebook and Google are going to eat almost every last dollar of advertising. What we’ve seen in the last three months is advertisers saying that this needs to be the moment in which they learn how to deploy advertising spend digitally beyond Facebook or Google.
No, it doesn’t mean they’re all pulling out of Facebook — Facebook and Google are doing just fine. But there are still tens of billions of dollars that need to be deployed outside of Facebook and Google. And you’re seeing winners such as Snapchat, Pinterest. Both had incredibly strong earnings. They’re benefiting from the same thing that benefits Bustle Digital Group and a lot of other digital media players who aren’t Facebook and Google, which is you’re seeing big ad spenders finally deciding that now’s the time to find other ways to deploy advertising spend.
I think those are the two big trends: Dollars moving to digital out of TV faster than we thought, and major advertisers using now as a time to find other channels beyond Facebook and Google.
So when you look at how that is impacting Bustle’s business, has it returned to pre-COVID levels?
For us, when we reflect upon the year 2020, we see that we had a great first quarter, we see that we’re having an incredible fourth quarter, and we have a big, epic crater in the second and third quarters. So when we look at the year, we basically have to say to ourselves, if it were not for that crater in the second and third quarters, what would this year have looked like? We would have had revenue well in excess of $100 million. Now, we’re gonna have revenue a little bit under $100 million.
But when we think about how we prepare for 2021 and set goals for 2021, we have to set goals for 2021 as though COVID had never happened, we have to set goals for 2021 without using Q2 and Q3 as a sort of excuse for lowering expectations. Because the fourth quarter, the quarter we’re currently in, has exceeded our wildest expectations.
People sort of sat up and took notice of the company because you had a pretty aggressive acquisition strategy. I imagine that strategy had to change a little bit in 2020. To what extent do you feel that ambition is something that you can pick up again?
So to be clear, not only do we feel great about our strategy, our strategy was critical in helping our company survive and ultimately thrive in the wake of the virus. You know, we made two acquisitions [in 2019] — in the science and technology category, we bought Inverse, which is a science and technology publication, and then Josh Topolsky launched a tech-and-gadget publication for us called Input Magazine that’s growing very quickly.
It’s critical that we had that strategy, because no single advertiser category has performed better for us in 2020 than tech — we more than tripled our revenue from technology clients this year, because technology has thrived through COVID. Had we not had an acquisition strategy, had we not diversified into tech media publishing, we certainly would not have had the outcome we had in 2020. That’s just the reality.
Categories like beauty, fashion, retail were very hard hit. Those have traditionally been our bread and butter, and they’re going to be great again, in 2021. But this spring, beauty companies weren’t doing so well, because people weren’t leaving the house. So the strategy worked, in part, because we diversified the categories in which we created content, which allowed us to diversify the advertiser base. And we’re gonna continue full speed ahead in 2021.
Now, you know, we did six acquisitions in 2019. I don’t know if we’ll do six acquisitions in 2021. But I want to do a lot more than one acquisition in 2021.
Samsung Electronics vice chairman Jay Y. Lee is back in prison following a retrial of his 2017 conviction in a bribery case that helped lead to the downfall of former South Korean president Park Guen-hye. The Seoul High Court sentenced Lee to 30 months on Monday.
Lee was originally convicted of bribery in 2017 and sentenced to five years, but was released in 2018 after the sentence was reduced and suspended on appeal. In August 2019, however, South Korea’s Supreme Court overturned the appeals court, ruling that it was too lenient, and ordered the case to be retried.
Lee was expected to become chairman of Samsung after the death of his father, Lee Kun-hee, in October 2020. He has served as the chaebol’s de facto leader since his father suffered a stroke in 2014. With Lee’s sentencing today, it is unclear who will take over his responsibilities at Samsung.
Charges against Lee included bribing Park to gain support for deals that would have helped Lee inherit control of Samsung from his father. The illegal payments played a major role in the corruption scandal that led to Park’s impeachment, arrest and 25-year prison sentence.
The bribery case is separate from another one Lee is involved in, over alleged accounting fraud and stock manipulation. Hearings in that case begun in October.
TechCrunch has contacted Samsung for comment.
Group Nine Media revealed last month that it was forming a SPAC (short for special purpose acquisition corporation) in order to raise money for acquisitions.
The company has now moved forward with those plans, announcing last night that it had priced the SPAC’s IPO at $10 per unit, to raise a total of $200 million. It’s now trading on Nasdaq under the ticker symbol GNACU; as of 2:53 p.m. Eastern shares were up 6.55%. (Eventually, the Class A common stock will be listed as GNAC and warrants will be listed separately as GNACW.) The offering is expected to close on January 20.
The acquisition corporation, like Group Nine itself, is led by CEO Ben Lerer (pictured above). Imagination Capital Partner Richard D. Parsons and Reddit Chief Operating Officer Jen Wong are also on the board of directors.
Group Nine was formed in 2016 with backing from Discovery, merging Thrillist, NowThis, The Dodo and Seeker. It subsequently acquired PopSugar, with co-founder Brian Sugar becoming president of both Group Nine and now Group Nine Acquisition Corp.
SPACs, also known as blank-check corporations, have become an increasingly popular way for companies to raise money from the public markets. In its initial filing, Group Nine said it would use the funding “for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination.”
Only a few weeks after its SPAC IPO, Porch today announced that it has made four acquisitions, worth a total of $122 million. The most important here is probably the acquisition of Homeowners of America for $100 million, which gets Porch deeper into the home insurance space. In addition, Porch is also acquiring mover marketing and data platform V12 for $22 million, as well as home inspection service Palm-Tech and iRoofing, a SaaS application for roofing contractors. Porch did not disclose the acquisition prices for the latter two companies.
You may still think of Porch as a marketplace for home improvement and repair services — and that’s what it started out as when it launched about seven years ago. Yet while it still offers those services, a couple of years after its 2013 launch, the company pivoted to building what it now calls a “vertical software platform for the home.” Through a number of acquisitions, the Porch Group now includes Porch.com, as well as services like HireAHelper, Inspection Support Network for home inspectors, Kandela for providing services around moving and an insurance broker in the form of the Elite Insurance Group. In some form or another, Porch’s tools are now used — either directly or indirectly — by two-thirds of U.S. homebuyers every month.
As Porch founder and CEO Matt Ehrlichman told me, he had originally planned to take his company public through a traditional IPO. He noted that going the increasingly popular SPAC route, though, allowed him to push his timeline up by a year, which in turn now enables the company to make the acquisitions it announced today.
“In total, we had a $323 million fundraise that allows us now to not only be a public company with public currency, but to be very well capitalized. And picking up that year allows us to be able to go and pursue acquisitions that we think make really good fits for Porch,” Ehrlichman told me. While Porch’s guidance for its 2021 revenue was previously $120 million, it’s now updating that guidance to $170 million based on these acquisitions. That would mean Porch would grow its revenue by about 134% year-over-year between 2020 and 2021.
As the company had previously laid out in its public documents, the plan for 2021 was always to get deeper into insurance. Indeed, as Ehrlichman noted, Porch these days tends to think of itself as a vertical software company that layers insurtech on top of its services in order to be able to create a recurring revenue stream. And because Porch offers such a wide range of services already, its customer acquisition costs are essentially zero for these services.
Porch was already a licensed insurance brokerage. With Homeowners of America, it is acquiring a company that is both an insurance carrier as well as a managing general agent..
“We’re able to capture all of the economic value from the consumer as we help them get insurance set up with their new home and we can really control that experience to delight them. As we wrap all the technology we’ve invested in around that experience we can make it super simple and instant to be able to get the right insurance at the right price for your new home. And because we have all of this data about the home that nobody else has — from the inspection we know if the roof is old, we know if the hot water system is gonna break soon and all the appliances — we know all of this data and so it just gives us a really big advantage in insurance.”
Data, indeed, is what a lot of these acquisitions are about. Because Porch knows so much about so many customers, it is able to provide the companies it acquires with access to relevant data, which in turn helps them offer additional services and make smarter decisions.
Homeowners of America is currently operating in six states (Texas, Arizona, North Carolina, South Carolina, Virginia and Georgia) and licensed in 31. It has a network of more than 800 agencies so far and Porch expects to expand the company’s network and geographic reach in the coming months. “Because we have [customer acquisition cost]-free demand all across the country, one of the opportunities for us is simply just to expand that across the nation,” Ehrlichman explained.
As for V12, Porch’s focus is on that company’s mover marketing and data platform. The acquisition should help it reach its medium-term goal of building a $200 million revenue stream in this area. V12 offers services across multiple verticals, though, including in the automotive space, and will continue to do so. The platform’s overall focus is to help brands identify the right time to reach out to a given consumer — maybe before they decide to buy a new car or move. With Porch’s existing data layered on top of V12’s existing capabilities, the company expects that it will be able to expand these features and it will also allow Porch to not offer mover marketing but what Ehrlichman called “pro-mover” services, as well.
“V12 anchors what we call our marketing software division. A key focus of that is mover marketing. That’s where it’s going to have, long term, tremendous differentiation. But there are a number of other things that they’re working on that are going to have really nice growth vectors, and they’ll continue to push those,” said Ehrlichman.
As for the two smaller acquisitions of iRoofing and Palm-Tech, these are more akin to some of the previous acquisitions the company made in the contractor and inspection verticals. Like with those previous acquisitions, the plan is to help them grow faster, in part through integrating them into the overall Porch group’s family of products.
“Our business is and continues to be highly recurring or reoccurring in nature,” said Porch CFO Marty Heimbigner. “Nearly all of our revenues, including that of these new acquisitions, is consistent and predictable. This repeat revenue is also high margin with less than 20% cost of revenue and is expected to grow more than 30% per year on our platform. So, we believe these deals are highly accretive for our shareholders.”
Grab Financial Group said today it has raised more than $300 million in Series A funding, led by South Korean firm Hanhwa Asset Management, with participation from K3 Ventures, GGV Capital, Arbor Ventures and Flourish Ventures.
The Financial Times reports that the funding values Grab Financial, a subsidiary of ride-hailing and delivery giant Grab, at $3 billion. Both K3 Ventures and GGV Capital were early investors in Grab, which was founded in 2012.
Back in February 2020, Grab announced it had raised $856 million in funding to grow its payment and financial services. That news came during speculation that Grab and Gojek, one of it top rivals, were finally getting closer to a merger after lengthy discussions.
But the Grab-Gojek talks stalled, and Gojek is now reportedly in talks to merge with Indonesia e-commerce platform Tokopedia instead. According to Bloomberg, the combined company would be worth $18 billion, making it a more formidable rival to Grab.
In its funding announcement, Grab Financial Group said its total revenues grew more than 40% in 2020, compared to 2019. This driven by strong consumer adoption of services like AutoInvest, an investment platform that allows users to invest small amounts of money at a time through the Grab app and insurance products. Grab Financial announced the launch of several financial products for consumers and SMEs in August 2020.
Usagea of digital financial services by consumers and SMEs in Southeast Asia increased during the COVID-19 pandemic. According to a report published by Google, Temasek and Bain & Company in November, usage of banking apps and online payments, remittances, insurance products and robo-advisor investment platforms all grew in 2020, and the region’s financial services market may be reach $60 billion in revenue by 2025.
A consortium between Grab-Singtel was also among several firms awarded a full digital-banking license by the Monetary Authority of Singapore in December 2020.
In a press statement, Hanhwa Asset Management chief executive officer Yong Hyun Kim said, “We expect GFG to continue its expontential growth on the back of an innovative business model which supports the changing broader lifestyle of consumers, as well as its highly synergistic relationship with Grab, the largest Southeast Asian unicorn.”
Fresh off the announcement of more than $500 million in new capital across two new funds, Seattle-based Madrona Venture Group has announced that they’re adding Anu Sharma and Daniel Li to the team’s list of Partners.
The firm, which in recent years has paid particularly close attention to enterprise software bets, invests heavily in the early-stage Pacific Northwest startup scene.
Both Li and Sharma are stepping into the Partner role after some time at the firm. Li has been with Madrona for five years while Sharma joined the team in 2020. Prior to joining Madrona, Sharma led product management teams at Amazon Web Services, worked as a software developer at Oracle and had a stint in VC as an associate at SoftBank China & India. Li previously worked at the Boston Consulting Group.
I got the chance to catch up with Li who notes that the promotion won’t necessarily mean a big shift in his day-to-day responsibilities — “At Madrona, you’re not promoted until you’re working in the next role anyway,” he says — but that he appreciates “how much trust the firm places in junior investors.”
Asked about leveling up his venture career during a time when public and private markets seem particularly flush with cash, Li acknowledges some looming challenges.
“On one hand, it’s just been an amazing five years to join venture capital because things have just been up and to the right with lots of things that work; it’s just a super exciting time,” Li says. “On the other hand, from a macro perspective, you know that there’s more capital flowing into VC as an asset class than ever before. And just from that pure macro perspective, you know that that means returns are going to be lower in the next 10 years as valuations are higher.”
Nevertheless, Li is plenty bullish on internet companies claiming larger swaths of the global GDP and hopes to invest specifically in “low code platforms, next-gen productivity, and online communities,” Madrona notes in their announcement, while Sharma plans to continue looking at to “distributed systems, data infrastructure, machine learning, and security.”
TechCrunch recently talked to Li and his Madrona colleague Hope Cochran about some of the top trends in social gaming and how investors were approaching new opportunities across the gaming industry.
Weezy — an on-demand supermarket that delivers groceries in fast times such as 15 minutes — has raised $20 million in a Series A funding led by New York-based venture capital fund Left Lane Capital. Also participating were UK-based fund DN Capital, earlier investors Heartcore Capital and angel investors, notably Chris Muhr, the Groupon founder.
Although the company hasn’t made mention of a later US launch, the presence of US investors would tend to suggest that. Weezy is reminiscent of Kozmo, the on-demand groceries business from the dotcom boom of the late ’90s. However, it differs from Postmates in that it doesn’t do pickups.
The cash injection will be used to expand its grocery delivery service across London and the broader UK, and open two fulfillment centers across London. Some 40 more UK sites are planned by the end of 2021 and it plans to add 50 new employees in the next 4 months.
Launched in July 2020, Weezy uses its own delivery people on pedal cycles or electric mopeds to deliver goods in less than 15 minutes on average. As well as working with wholesalers, it also sources groceries from independent bakers, butchers and markets.
It has pushed at an open door during the pandemic. In Q2 2020 half a million new shoppers joined the grocery delivery sector, which is now worth £14.3bn in the UK, according to research.
Kristof Van Beveren, Co-founder and CEO of Weezy, said in a statement: “People are no longer happy to wait around for deliveries, and there is strong demand for a more efficient service.”
Weezy’s co-founders are Kristof Van Beveren and Alec Dent. Van Beveren is formerly from the consumer goods world at Procter & Gamble and McKinsey & Company, while Dent headed up operations at UK startup Drover and business development at BlaBlaCar.
Harley Miller, managing partner, Left Lane Capital, commented: “Weezy’s founding team have the right balance of drive, experience and temperament to lead in e-commerce innovation
and convenience within the UK grocery market and beyond.”
Nenad Marovac, founder and managing partner, DN Capital, said: “Even before the pandemic, interest in online grocery shopping was on the rise. The first time I ordered from Weezy, my delivery arrived in seven minutes and I was hooked.”
We last polled our network of investors on the topic of gaming infrastructure startups back in May just as it was becoming clear what pandemic opportunities were in store for gaming startups.
Accel’s Amit Kumar told us at the time that “social and interactivity layers spanning across these games” were poised to be the big winners, highlighting his firm’s investments in startups like Discord and Mayhem. In December, Discord announced it was raising at a valuation of $7 billion and this month Pokémon Go creator Niantic announced it was buying Mayhem.
Following my story this week digging into investor sentiment around evolved opportunities in social gaming, I dug into gaming tools and rising platforms and pinged a handful of VCs to hear their thoughts on that market.
The broader market moves of the past several months have defied expectations with startups in the gaming world picking up substantial steam as well. This week, Roblox announced it had raised at a $29.5 billion valuation — up from $4 billion in February of last year. Game makers across the board, including Roblox, have been acquiring gaming infrastructure startups as of late.
I talked to investors about what they wanted to see more of in the space.
“We’d love to see more innovation around gaming infrastructure, which has the potential to democratize game development and allow clever indies to compete with Riot and Epic,” Bessemer’s Ethan Kurzweil and Sakib Dadi told TechCrunch.
They highlighted numerous areas for new opportunity including specialized engines, next-gen content creation platforms, and tools to port desktop experiences to mobile. The VCs we chatted with were also intrigued by latent opportunities presented by major platforms’ adopting of cloud gaming tech. The overall trend was one promoting accessibility, a desire to provide more casual experiences for platforms that may have typically catered to “hardcore” audiences.
It was also apparent from conversations that Roblox is significantly shaping investor attitudes toward the potential growth opportunities and pitfalls in the entire gaming industry, with VCs who didn’t get in on Roblox eager to dissect its success and bet on an adjacent player or one that could follow a similar recipe for success.
Responses have been edited for length and clarity. We spoke with:
Cloud game-streaming networks are exciting but don’t seem like a sure bet quite yet, how do you feel about them?
DL: I think the real story behind cloud gaming is “play anywhere” and the cross-platform nature of it. Gaming is just different than Netflix, it’s not like you want to have an endless library of content. When I’m playing a game, I want to play Overwatch all the time and I don’t need to have access to 1,000 other games. I think the approach that the cloud companies have taken has been more around the thinking of, what do we have and what can we build for gamers with it? More so than what do gamers want and what can we give them? It’s definitely trended toward that direction with things like giving away two free games per month, but really I think the thing that will be exciting in the longer term for cloud gaming is to play your game anywhere and play with your friends anywhere.
If users embrace desktop-class cloud gaming on mobile and there’s a broader cross-platform unification, does that spell trouble for today’s mobile gaming industry?
DL: The audiences between a Candy Crush and a Warzone are probably a little different, though I like to play both. So maybe it gets into eating some people’s lunch but I don’t think it’s anything where the number one problem for a Candy Crush is people hopping over to play desktop Call of Duty.
Are there any clear infrastructure gaps where you’d like to see new startups rise up and fill the void?
DL: Honestly just tools for building games, like next-gen Roblox Studio, next-gen Unity and Unreal type stuff — I’ve seen a couple interesting companies there. I think we’ve seen a few smaller companies focused on making sure that a network is safe for children, but I feel like a lot of the infrastructure stuff is really driven by what type of new content is coming out. So as the social games became really popular, securing that and making sure that the chats were safe became really important.
HC: I would love to see something built for helping games that were created for the triple-A environment to port over better to mobile environments. Every time I work with a gaming company on that, they seem to have to rebuild the game so it’d be really interesting to see something like that really helps them adopt to the mobile form.
MadeiraMadeira, the Brazilian answer to Wayfair or Ikea, is now worth $1 billion after raising $190 million in late stage financing from investors led by SoftBank’s Latin American investment fund and the Brazilian public and private investment firm, Dynamo.
An online marketplace specializing in home products, MadeiraMadeira offers roughly 300,000 products so customers can build furnish, renovate and decorate their homes.
Founded in 2009 by Daniel Scandian, Marcelo Scandian and Robson Privado, the company has seen huge tailwinds come from the shift to online shopping in Brazil as a result of the global COVID-19 pandemic.
With stores closed, online shopping in Brazil surged. As Daniel Scandian noted, before the pandemic ecommerce penetration in Brazil was at roughly 7%, that number ballooned to 17% at the height of the pandemic in Brazil and has now stabilized at around 10%.
Combining third party sales with private labeled goods and its own shipping and logistics facilities has meant that MadeiraMadeira can take the best practices from several online retailers and home furnishing stores, Scandian said.
There are more than 10,000 sellers on the MadeiraMadeira platform and roughly 2.5 million stock keeping units. In recent years the company has added showrooms to its mix of retail facilities, where customers can check out merchandise, but complete their orders online.
“That’s the way we can tackle the offline market with a digital mindset,” Scandian said.
Money from the most recent financing will be used to invest in expanding its logistics capabilities with the addition of new warehouse facilities to expand on its existing ten locations. The company also intends to add same day delivery and the expansion of its private label services.
The new capital, likely the last round before a potential public offering, included previous investors like Flybridge and Monashees along with public-focused investment firms Velt, Brasil Capital and Lakewood.
Early investors like Monashees, Kaszek, Fundo Avila, Endeavour Catalyst and angel backers like Niraj Shah, the founder of Wayfair, and Build.com founder Christian Friedland were instrumental to MadeiraMadeira’s early success, Scandian said.
Based in Curitiba, MadeiraMadeira has over 1300 employees, with the majority of them focused on technology, logistics and product development.
“With this new investment, we are raising our commitment to MadeiraMadeira’s long-term value creation vision as the company consolidates its position as the leader in Latin America’s home goods market. Since our initial investment, MadeiraMadeira’s management team has delivered everything they’ve promised, and our faith in them continues to grow,” said Paulo Passoni, Managing Investment Partner to SoftBank Latin America fund.
Roblox is now one of the world’s most valuable private companies in the world after a monster Series H raise brings the social gaming platform a stratospheric $29.5 billion valuation. The company won’t be private for long, though.
The $520 million raise led by Altimeter Capital and Dragoneer Investment Group is a significant cash influx for Roblox, which had previously raised just over $335 million from investors according to Crunchbase. The Investment Group of Santa Barbara, Warner Music Group, and a number of current investors, also participated in this round.
In February of 2020, the company closed a $150 million Series G led by Andreessen Horowitz which valued the company at $4 billion.
The gaming startup has initially planned an IPO in 2020, but after the major first day pops of DoorDash and Airbnb, the company leadership reconsidered their timeline, according to a report in Axios. Those major say-one share price pops left significant money on the table for the companies selling those shares, an outcome Roblox is likely looking to avoid. Today, the company also announced that it plans to enter the public markets via a direct listing.
Roblox’s 7x valuation multiple signals just how feverish public and private markets are for tech stocks. The valuation also highlights how investors foresee the company benefiting from pandemic trends which pushed more users online and towards social gaming platforms. In a 2019 prospectus, the company shared that it had 17.6 million users, now Roblox claims to have 31 million daily active users on its platform.