tY Combinator, the genesis for many of the companies that have shaped Silicon Valley including Airbnb, PagerDuty and Stripe, has minted another 200 some graduates. Half of those companies made their pitch to investors today during Day 1 of Y Combinator’s Summer 2019 Demo Day event and we’re here to tell you which startups are on the fast-track to the unicorn club.
Eighty-four startups presented (read the full run-through of every company plus some early analysis here) and after chatting with investors, batch founders and of course, debating amongst ourselves, we’ve nailed down the 11 most promising startups to present during Day 1. We’ll be back Tuesday with our second round of top picks.
Does the traditional VC financing model make sense for all companies? Absolutely not. VC Josh Kopelman makes the analogy of jet fuel vs. motorcycle fuel. VCs sell jet fuel which works well for jets; motorcycles are more common but need a different type of fuel.
A new wave of Revenue-Based Investors are emerging who are using creative investing structures with some of the upside of traditional VC, but some of the downside protection of debt. I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital.
I believe that Revenue-Based Investing (“RBI”) VCs are on the forefront of what will become a major segment of the venture ecosystem. Though RBI will displace some traditional equity VC, its much bigger impact will be to expand the pool of capital available for early-stage entrepreneurs.
This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.com and @dteten. This is part of an ongoing series on Revenue-Based Investing VC that will hit on:
RBI structures have been used for …Read More
Uncork Capital, the now 15-year-old, early-stage venture firm formerly known as SoftTech VC, has closed up two new pools of committed capital totaling $200 million: $100 million for its sixth early-stage fund, and $100 million for an “opportunity” fund so it can stuff a little more capital into those of its portfolio companies that start to break away from the pack.
The firm had closed its first opportunity fund with $50 million in mid 2016. It closed its fifth early-stage fund at the same time with $100 million.
We talked on Friday with Uncork founder Jeff Clavier about the firm, which is currently writing first checks that range from $750,000 to $2 million. He told us that as with Uncork’s most recent set of funds, the idea is to invest in roughly 35 companies across three years, taking 10 percent ownership on average, and up to 12 percent of a portfolio company when it is the lead investor.
Clavier also said that while fully half of the fund will go into startups that sell cloud software to businesses, Uncork plans to invest roughly 10 percent of the fund in consumer marketplaces; roughly 10 percent in hardware; roughly 20 percent in so-called frontier tech — whether it be augmented reality or virtual reality or space of robotics or blockchain-related deals; and roughly 10 percent in bioinformatics and synthetic biology.
That last area of interest is brand new to Uncork, so we asked if the firm — which counts Stephanie Palmeri and Andy McLoughlin as partners — was perhaps planning to hire a biotech investor. Clavier said that isn’t, that instead it will rely on external resources to help with due diligence and to learn along the way. “In the same way that I looked at 30 investments in space …Read More
Singapore-based budget hotel booking startup RedDoorz is tiny in comparison to fast-growing giant Oyo. But it is holding its ground and winning the trust of an ever growing number of investors.
On Monday, the four-year-old startup announced it has raised $70 million in Series C round, less than five months after it closed its $45 million Series B. The new round, which is ongoing, was led by Asia Partners and saw participation from new investors Rakuten Capital and Mirae Asset-Naver Asia Growth Fund.
The startup, which has raised $140 million to date, was seeing “tremendous interest from investors, so it is decided to do a back-to-back rounds,” said Amit Saberwal, founder and CEO of RedDoorz, in an interview with TechCrunch.
Regardless, the new funds will help RedDoorz fight SoftBank-backed Oyo, which is already aggressively expanding to new markets. Oyo currently operates in more than 80 nations.
RedDoorz operates a marketplace of “two-star, three-star and below” budget hotels, selling access to rooms to people. Currently it has 1,400 hotels on its network, said Saberwal.
The startup operates in 80 cities across Indonesia, Singapore, the Philippines and Vietnam, and plans to use the new capital to expand its network in its existing markets, said Saberwal. At least for the next one year, RedDoorz has no plans to expand beyond the four markets where it currently operates, he said.
“Anything in the accommodation is our playground. We have all kinds of properties. We have three-star hotels, some hostels, so we will continue to go deeper and wider moving forward,” he said.
More to follow shortly…Read More
SoftBank has a plant to loan up to $20 billion to its employees, including CEO Masayoshi Son, for the purposes of having that capital re-invested in SoftBank’s own Vision venture fund, according to a new report from the Wall Street Journal. That’s a highly unusual move that could be risky in terms of how much exposure SoftBank Group has on the whole in terms of its startup bets, but the upside is that it can potentially fill out as much as a fifth of its newly announced second Vision Fund’s total target raise of $108 billion from a highly aligned investor pool.
SoftBank revealed its plans for its second Vision Fund last month, including $38 billion from SoftBank itself, as well as commitments from Apple, Microsoft and more. The company also took a similar approach to its original Vision Fund, WSJ reports, with stakes from employees provided with loans totalling $8 billion of that $100 billion commitment.
The potential pay-off is big, provided the fund has some solid winners that achieve liquidation events that provide big returns that employees can then use to pay off the original loans, walking away with profit. That’s definitely a risk, however, especially in the current global economic client. As WSJ notes, the Uber shares that Vision Fund I acquired are now worth less than what SoftBank originally paid for them according to sources, and SoftBank bet WeWork looks poised to be another company whose IPO might not make that much, if any, money for later stage investors.Read More
Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about the differences between raising cash from angels and traditional venture capitalists. Before that, I summarized DoorDash’s acquisition of Caviar.
It’s Friday morning and I don’t want to dig into another IPO prospectus. The startups don’t care though, they’re in a mad dash to get to the public markets, reporters be damned.
This week, three billion-dollar venture-backed “unicorns” unveiled S-1 filings, the paperwork necessary to complete an IPO. First came WeWork, the $47 billion co-working giant beloved by SoftBank. Then came Cloudflare, a business that provides web security and denial-of-service protection for websites. Then this morning, after we all thought it was time for a breather, “teledentistry” company SmileDirectClub made its filing public.
There’s plenty to read on each of these high-profile IPOs; here’s a quick reading list:
On to other things…
Meet the startups in Y Combinator’s summer batch
As you may know, YC summer demo days are next week. A whopping 176 companies are expected to present and we’ll be there reporting live, as usual. In preparation, we’ve been …
Upfront Ventures, the 23-year-old, LA-based venture capital firm, is gearing up for far more deal-making.
In addition to filing paperwork with the SEC this summer to raise its third growth-stage investment fund (it is also investing a $400 million early-stage fund and probably announcing another soon), the firm just added two new general partners to its lineup of investors.
One of them, Michael Carney, joined Upfront as a principal in 2015 after working as an editor at the news site PandoDaily, and, before that, working as an investor and analyst at a boutique merchant bank called Worldvest.
The firm’s second new general partner is Aditi Maliwal, who has also circled in and out of investing before, including stints as an associate with Crosslink Capital and, more recently, spending several years with Google, where Maliwal worked in corporate development before becoming a product manager.
We talked with both this week to congratulate them, as well as to learn more about what they’ll be shopping for — and from where.
For her part, Maliwal, who begins work at Upfront next month, says the idea is for her to eventually open a San Francisco office, though for now, she’ll be operating from the Bay Area out of a space that’s yet to be determined and spending every Monday or every other Monday down in LA with the rest of the team.
She got to know Upfront through another general partner, Kara Nortman, who joined Upfront in 2014 and who Maliwal would continue to see at events, as well as on the occasional trip to LA to see extended family. Maliwal also says she would observe on her trips that the “ecosystem in LA has really grown from 2014 to where it is today. I think the Bay Area continues to see how …Read More
Cedric Dussud, Michael Nason, Ahmed Elsamadisi and Matthew Star (pictured above, in order) spent the summer sharing a house in San Francisco, cooking meals together and building Narrator, a startup with ambitions of becoming a universal data model fit for any company.
Narrator is one of more than 100 startups graduating next week from Y Combinator, the San Francisco accelerator program. Put simply, the company provides data-science-as-a-service to its customers: fellow startups.
“We provide the equivalent of a data team for the price of an analyst,” explains Narrator co-founder and director of engineering Star. “Within the first month, our clients get an infinitely scalable data system.”
Led by chief executive officer Elsamadisi, a former senior data engineer at WeWork, the Narrator founding team is made up entirely of alums of the co-working giant. The building blocks of Narrator’s subscription-based data modeling tool were developed during Elsamadisi’s WeWork tenure, where he was tasked with making sense of the company’s disorganized trove of data.
As an early addition to WeWork’s data team, Elsamadisi spent two years bringing WeWork’s data to one place, scaling the team to 40 people and ultimately creating a functional data model the soon-to-be-public company could use to streamline operations. Then in 2017, Elsamadisi had an a-ha moment. The system he created at WeWork could be applied to any data stream, he thought.
“All companies are fundamentally the same when it comes to the kinds of data they want to understand about their business,” Narrator’s Dussud tells TechCrunch. “Every startup wants to know what’s my monthly recurring revenue, why are my customers churning or whatever the case may be. The only reason they have to go hire a data team and hire a business analyst is because the way that their data is structured is specific to that …Read More
Headquartered in Shenzhen, Transsion is a top-seller of smartphones in Africa that recently confirmed its imminent IPO. In 2019 it opened and financed Future Hub, an incubator and seed fund for African startups.
Wapi Capital is the venture fund of Kenyan fintech startup Wapi Pay — a Nairobi-based company that facilitates digital payments between African and Asia via mobile money or bank accounts.
Starting in September 2019, Transsion Future Hub will work with Wapi Capital to select early-stage African fintech companies for equity-based investments of up to $100,000, Transsion Future Hub Senior Investor Laura Li told TechCrunch via email.
Wapi Capital won’t contribute funds to Future Hub’s Africa investments, but will help determine the viability and scale of the startups, including due diligence and deal flow, according to Wapi Pay co-founder Eddie Ndichu.
Wapi Pay and Transsion Future Hub will consider ventures from all 54 African countries; interested startups can reach out directly to either organization, Ndichu and Li confirmed.
The Wapi Capital fintech partnership is not Transsion’s sole VC activity in Africa. Though an exact fund size hasn’t been disclosed, the Transsion Future Hub will also make startup investments on the continent in adtech, fintech, e-commerce, logistics and media and entertainment, according to Li.
Future Hub’s existing portfolio includes Africa-focused browser company Phoenix, content aggregator Scoop and music service Boomplay.
Wapi Capital adds to the list of African-located and run venture funds — which have been growing in recent years — according to a 2018 study by TechCrunch and Crunchbase. Wapi Capital will …Read More
Croatia has not exactly been known for a huge startup scene in the past, and probably the most famous tech company out of there in recent years has been Rimac Automobili, the startup out of Zagreb that created an electric supercar to rival anything Porsche might make. But the technical talent in the country remains high, as is the way with many Eastern European countries, which have a long and deep heritage of engineering and science going back to the bad old Soviet days.
Croatia is about to get a shot in the arm, however, with the arrival of a home-grown dedicated VC fund, Fil Rouge Capital, which plans to invest in young entrepreneurs, startups and scale-up companies, as well as establishing a local entrepreneurial ecosystem in Croatia.
The fund is fully operational as of last month, having received funding commitments of more than €42 million ($46.6 million), demonstrating a strong interest of investors in the growing startup economy there.
Stevica Kuharski, of the firm, says: “Startups need to be given an opportunity, and opportunities are precisely what Fil Rouge Capital brings to Croatia. Startup founders, whose projects are in very early, early and growth stages now have a place to go to for mentoring and financial support.”
He says Fil Rouge will invest in a variety of sectors, including software, fintech, marketplace, manufacturing, hardware, IOT and logistics.
The fund aims to run over the next four and a half years until the end of 2023, and plans to invest in up to 250 companies operating in Croatia through its three investment stages: “The Startup School” for super-early-stage companies; “The Accelerator Program” for companies that are still early but already up and running; and more full-blown institutional funding-ready companies requiring capital up to €1.5 million.Read More