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Startups Weekly: There’s an alternative to raising VC and it’s called revenue-based financing

Published May 18, 2019

Revenue-based financing is on the rise, at least according to Lighter Capital, a firm that doles out entrepreneur-friendly debt capital.

What exactly is RBF you ask? It’s a relatively new form of funding for tech companies that are posting monthly recurring revenue. Here’s how Lighter Capital, which completed 500 RBF deals in 2018, explains it: “It’s an alternative funding model that mixes some aspects of debt and equity. Most RBF is technically structured as a loan. However, RBF investors’ returns are tied directly to the startup’s performance, which is more like equity.”

Source: Lighter Capital

What’s the appeal? As I said, RBFs are essentially dressed up debt rounds. Founders who opt for RBFs as opposed to venture capital deals hold on to all their equity and they don’t get stuck on the VC hamster wheel, the process in which you are forced to continually accept VC while losing more and more equity as a means of pleasing your investors.

RBFs, however, are better than traditional debt rounds because the investors are more incentivized to help the companies they invest in because they are receiving a certain portion of that business’s monthly revenues, typically 1% to 9%. Eventually, as is explained thoroughly in Lighter Capital’s newest RBF report, monthly payments come to an end, usually 1.3 to 2.5X the amount of the original financing, a multiple referred to as the “cap.” Three to five years down the line, any unpaid amount of said cap is due back to the investor. When all is said in done, ideally, the startup has grown with the support of the capital and hasn’t lost any equity.

At this point, they could opt to raise additional revenue-based capital, they could turn to venture capital or they could tap a tech bank to help them get to the next step. The idea is RBF is easier on the founder and it allows them optionality, something that is often lost when companies turn to VCs.

IPO corner, rapid-fire edition

Slack’s direct listing will be on June 20th. Get excited.

China’s Luckin Coffee raised $650 million in upsized U.S. IPO

Crowdstrike, a cybersecurity unicorn, dropped its S-1.

Freelance marketplace Fiverr has filed to go public on the NYSE.

Plus, I had a long and comprehensive conversation with Zoom CEO Eric Yuan this week about the company’s closely watched IPO. You can read the full transcript here.

Second Chances

Silicon Valley entrepreneur Hosain Rahman, the man behind Jawbone, has managed to raise $65.4 million for his new company, according to an SEC filing. The paperwork, coincidentally or otherwise, was processed while most of the world’s attention was focused on Uber’s IPO. Jawbone, if you remember, produced wireless speakers and Bluetooth earpieces, and went kaput in 2017 after burning up $1 billion in venture funding over the course of 10 years. Ouch.

More startup capital

Funds!

On the heels of enterprise startup UiPath raising at a $7 billion valuation, the startup’s biggest investor is announcing a new fund to double down on making more investments in Europe. VC firm Accel has closed a $575 million fund — money that it plans to use to back startups in Europe and Israel, investing primarily at the Series A stage in a range of between $5 million and $15 million, reports TechCrunch’s Ingrid Lunden. Plus, take a closer look at Contrary Capital. Part accelerator, part VC fund, Contrary writes small checks to student entrepreneurs and recent college dropouts.

Extra Crunch

Our paying subscribers are in for a treat this week. Our in-house venture capital expert Danny Crichton wrote down some thoughts on Uber and Lyft’s investment bankers. Here’s a snippet: “Startup CEOs heading to the public markets have a love/hate relationship with their investment bankers. On one hand, they are helpful in introducing a company to a wide range of asset managers who will hopefully hold their company’s stock for the long term, reducing price volatility and by extension, employee churn. On the other hand, they are flagrantly expensive, costing millions of dollars in underwriting fees and related expenses…”

Read the full story here and sign up for Extra Crunch here.

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about the notable venture rounds of the week, CrowdStrike’s IPO and more of this week’s headlines.

Want more TechCrunch newsletters? Sign up here.

GetYourGuide picks up $484M, passes 25M tickets sold through its tourism activity app

Published May 16, 2019

As we swing into the summer tourist season, a company poised to capitalise on that has raised a huge round of funding. GetYourGuide — a Berlin startup that has built a popular marketplace for people to discover and book sightseeing tours, tickets for attractions and other experiences around the world — is today announcing that it has picked up $484 million, a Series E round of funding that will catapult its valuation above the $1 billion mark.

The funding is a milestone for a couple of reasons. GetYourGuide says it is the highest-ever round of funding for a company in the area of “travel experiences” (tours and other activities) — a market estimated to be worth $150 billion this year and rising to $183 billion in 2020. And this Series E is also one of the biggest-ever growth rounds for any European startup, period.

The company has now sold 25 million tickets for tours, attractions and other experiences, with a current catalog of some 50,000 experiences on offer. That’s a sign of strong growth: in 2017 it sold 10 million tickets, and its last reported catalog number was 35,000. It will be using the funding to build more of its own “Originals” tour experiences — which have now passed the 40,000 tickets sold mark — as well as to build up more activities in Asia and the U.S., two fast-growing markets for the startup.

The funding is being led by SoftBank, via its Vision Fund, with Temasek, Lakestar, Heartcore Capital (formerly Sunstone Capital) and Swisscanto Invest among others also participating. (Swisscanto is part of Zürcher Kantonalbank: GetYourGuide was originally founded in Zurich, where the founders had studied, and it still runs some R&D operations there.) The company has now raised well over $600 million.

It’s notable how SoftBank — which is on the hunt for interesting opportunities to invest its $100 billion superfund — has been stepping up a gear in Germany to tap into some of the bigger tech players that have emerged out of that market, which today is the biggest in Europe. Other big plays have included €460 million into Auto1 and €900 million into payments provider Wirecard. Other companies it has backed, such as hotel company Oyo out of India, are using its funding to break into Europe (and buy German companies in the process).

There had been reports over the last several months that GetYouGuide was in the process of raising anywhere between $300 million and more than $500 million. In late April, we were told by sources that the round hadn’t yet closed, and that numbers published in the media up to then had been inaccurate, even as we nailed down that SoftBank was indeed involved in the round.

The valuation in this round is not being disclosed, but CEO Johannes Reck (who co-founded the app with Martin Sieber, Pascal Mathis, Tobias Rein and Tao Tao) said in an interview with TechCrunch that it was definitely “now a unicorn” — meaning that its valuation had passed the $1 billion mark. For additional context, the rumor last month was that GetYourGuide’s valuation was up to €1.6 billion ($1.78 billion), but I have not been able to get firm confirmation of that number.

From hip replacements to hipsters

GetYourGuide’s growth — and investor interest in it — has closely followed the rise of new platforms like Airbnb that have changed the face of how we travel, and what we do when we get somewhere. We have moved far beyond the days of visiting a travel agent that books everything, from flight to hotel to all your activities, as you sit on the other side of a desk from her or him. Now with the tap of a finger or the click of a mouse, we have thousands of choices.

Within that, GetYourGuide thinks that it has jumped on an interesting opportunity to rethink the activity aspect of tourism. Tour packages and other highly organized travel experiences are often associated with older people, or those with families — essentially people who need more predictability when they are not at home.

Reck noted that the earliest users of GetYourGuide in 2010 were precisely those people — or at least those who were more inclined to use digital platforms to begin with: the demographic, he said, was 40-50 year olds, most likely travelling with family.

That is one thing that has really started to change, in no small part because of GetYourGuide itself. Making the experience of booking experiences mobile-friendly, GetYourGuide has played into the culture of doing and showing, which has propelled the rise of social media.

“They want to do things, to have something to post on Instagram,” he said. The average age of a GetYourGuide user now, he said, is 25-40.

This has even evolved into what GetYourGuide provides to users. “At some point, staff in Asia had the idea of crafting a ‘GetYourGuide Instagram Tour of Bali.’ That really took off, and now this is the number-one tour booked in the region.” It has since expanded the concept to 50 destinations.

Not by coincidence, today the company is also announcing that Ameet Ranadive is joining as the company’s first chief product officer. Ranadive comes from Instagram, where he led the Well-being product team (the company’s health and safety team). He’d also been VP and GM of Revenue Product at Twitter. Nils Chrestin is also coming on as CFO, having recently been at Rocket Internet-incubated Global Fashion Group.

That has also led GetYourGuide to conclude it has a ways to go to continue developing its model and scope further, expanding into longer sightseeing excursions, beyond one or two-hour tours into day trips and even overnight experiences.

As it continues to play around with some of these offerings, it’s also increasingly taking a more direct role in the branding and the provision of the content. Initially, all tickets and tours were posted on GetYourGuide by third parties. Now, GetYourGuide is building more of what Reck calls “Originals” — which it might develop in partnership with others but ultimately handles as its own first-party content. (That Instagram tour was one of those Originals.)

It’s worth noting that others are closing in on the same “experiences” model that forms the core of GetYourGuide’s business: Airbnb, to diversify how it makes revenues and to extend its touchpoints with guests beyond basic accommodation bookings, has also started to sell experiences. Meanwhile, daily deals pioneer Groupon has also positioned itself as a destination for purchasing “experiences” as a way to offset declines in other areas of its business. Similarly, travel portals that sell plane tickets regularly default to pushing more activities on you.

Reck pointed out that the area of business where GetYourGuide is active is becoming increasingly attractive to these players as other aspects of the travel industry become increasingly commoditised. Indeed, you can visit dozens of sites to compare pricing on plane tickets, and if you are flexible, pick up even more of a bargain at the last minute. And the rise of multiple Airbnb-style platforms offering private accommodation has made competition among those supplying those platforms — as well as hotels — increasingly fierce.

All of that leaves experiences — for now at least — as the place where these companies can differentiate themselves from the pack. Reck believes that focusing on this, however, means you just do it much better than companies that have added experiences on to a platform that is not a native destination for discovering or buying that kind of content or product. (That doesn’t mean there aren’t others natively tackling “experiences” from the world of startups. Klook is one also funded by SoftBank.)

“Consumers, especially millennials, are spending an increasing portion of their disposable income on travel experiences. We believe GetYourGuide is leading this seismic shift by consolidating the fragmented global supply base of tour operators and modernizing access for travelers globally,” said Ted Fike, partner at SoftBank Investment Advisers, in a statement. “This combination creates powerful network effects for their business that is fueling their strong growth. We are excited to partner with their passionate and talented leadership team.” Fike is joining the board with this round.

Market map: the 200+ innovative startups transforming affordable housing

Published May 13, 2019

Daniel Wu
Contributor

Dan Wu is a privacy counsel and legal engineer at Immuta. He holds a JD from Harvard University, and is a PhD candidate for Social Policy and Sociology at The Harvard Kennedy School.

Reducing Construction Costs

This is one of the top three challenges developers face, exacerbated by rising building material costs and labor shortages.

India’s Locus raises $22 million to expand its logistics management business

Published May 13, 2019

Locus, an Indian startup that uses AI to help businesses map out their logistics, has raised $22 million in Series B funding to expand its operations in international markets.

The financing round for the four-year-old startup was led by Falcon Edge Capital and Tiger Global. Existing investors Exfinity Venture Partners and Blume Ventures also participated in the round. The startup has raised $29 million to date, Nishith Rastogi, co-founder and CEO of Locus, told TechCrunch in an interview.

Locus works with companies that operate in FMCG, logistics and e-commerce spaces. Some of its clients include Tata Group companies, Myntra, BigBasket, Lenskart and Bluedart. It helps these clients automate their logistics workload — tasks such as planning, organizing, transporting and tracking of inventories, and finding the best path to reach a destination — that have traditionally required intensive human labor.

“Say a Lenskart representative is visiting a house or an office to offer an eye checkup, and suddenly two more people there are interested in getting their eyes checked. The representative could attend these two new potential clients, or wrap things up with the first client and take care of his or her next appointment,” said Rastogi.

Locus looks at a client’s past data, identifies patterns and automates these kind of decisions on a large scale. In an example shared earlier with TechCrunch, Rastogi talked about how Locus had built a scanner for e-commerce companies for measuring products.

Rastogi said he will use the fresh capital to develop products and expand Locus in Southeast Asian and North American markets. The startup says half of its 110-person workforce is outside of India. Half of the IP it has built and the revenue it generates comes from its team outside of India.

He said the startup has spent the recent quarters studying these international markets, and has secured some anchor clients to expand the business. Locus is operationally profitable already and any additional capital goes into expanding its business, he added.

The logistics market in India has long been riddled with challenges. A growing number of startups, including BlackBuck — which raised $150 million last week — have emerged in recent years to tackle these problems.

The new funding also illustrates Tiger Global’s new strategy for the Indian market. The VC fund, which has invested in B2C businesses Flipkart and Ola in India, has made a number of investments in B2B startups in recent months. Last month, it invested $90 million in agritech supply chain startup Ninjacart, and weeks later, it gave cloud-based solutions provider Zenoti $50 million. It also participated in customer marketing service ClearTap’s $26 million round.

Some reassuring data for those worried unicorns are wrecking the Bay Area

Published April 27, 2019

Joanna Glasner
Contributor

Headquarters ≠ headcount

Just because a company is based in Northern California doesn’t mean most workers are there also. Headquarters, our survey shows, does not always translate into headcount.

“Headquarters location can often be the wrong benchmark to use to identify where employees are located,” said Steve Cadigan, founder of Cadigan Talent Ventures, a Silicon Valley-based talent consultancy. That’s particularly the case for large tech companies.

Among the largest technology employers in Northern California, Crunchbase News found most have fewer than 25 percent of their full-time employees working in the city where they’re headquartered. We lay out the details for 10 of the most valuable regional tech companies in the chart below.

With the exception of Intel, all of these companies have a double-digit percentage of employees at headquarters, so it’s not as if they’re leaving town. However, if you’re a new hire at Silicon Valley’s most valuable companies, it appears chances are greater that you’ll be based outside of headquarters.

Tesla, meanwhile, is somewhat of a unique case. The company is based in Palo Alto, but doesn’t crack the city’s list of top 10 employers. In nearby Fremont, Calif., however, Tesla is the largest city employer, with roughly 10,000 reportedly working at its auto plant there.(Tesla has about 49,000 employees globally.)

Unicorns flock to San Fran, workers less so

High-valuation private and recently public tech companies can also be pretty dispersed.

Although they tend to have a larger percentage of employees at headquarters than more-established technology giants, the unicorn crowd does like to spread its wings.

Take Uber, the poster child for this trend. Although based in San Francisco, the ride-hailing giant has fewer than one-fourth of its employees there. Out of a global workforce of around 22,300, only about 5,000 are SF-based.

It’s unclear if that kind of breakdown is typical. We had trouble assembling similar geographic employee counts at other Bay Area unicorns, mainly because cities break out numbers only for their 10 largest employers. The lion’s share of regional unicorns are San Francisco-based, and of them only Uber made the Top 10.

That said, there is another, rougher methodology for assessing who works at headquarters: job postings. At a number of the most valuable Bay Area-based unicorns — including Airbnb, Juul, Lime, Instacart, Stripe and the now-public Lyft — a high number of open positions are far from the home office. And as we wrote last year, private companies have been actively seeking out cities to set up secondary hubs.

Even for earlier-stage startups, it’s not uncommon to set up headquarters in the San Francisco area for access to financing and networking, while doing the bulk of hiring in another location, Cadigan said. The evolution of collaborative work tools has also enabled more companies to add staff working remotely or in secondary offices.

Plus, of course, unicorn startups tend to be national or global in focus, and that necessitates hiring where their customers are located.

Take our jobs, please

As we wrap up, it’s worth bringing up how unusual it once was for denizens of a metro area to oppose a big influx of high-skill jobs. In the past couple of years, however, these attitudes have become more common. Witness Queens residents’ mixed reactions to Amazon’s HQ2 plans. And in San Francisco, a potential surge of newly minted IPO millionaires is causing some consternation among locals, along with jubilation among the realtor crowd.

Just as college towns retain room for new students by graduating older ones, however, it seems reasonable that sustaining Northern California’s strength as a startup hub requires locating jobs out-of-area as companies scale. That could be good news for other cities, including Austin, Phoenix, Nashville, Portland and others, which have emerged as popular secondary locations for fast-growing unicorns.

That said, we’re not predicting near-term contraction in Bay Area tech employment, particularly of the startup variety. The region’s massive entrepreneurial and venture ecosystem keeps on producing valuable newcomers well-capitalized to keep hiring.

Methodology

We looked only at employment at company headquarters (except for Apple) . Companies on the list may have additional employees based in other Northern California cities. For Apple, we included all Silicon Valley employees, per estimates by the Silicon Valley Business Journal.

Numbers are rounded to the nearest hundred for the largest employers. Most of the data is for full-time employees only. Large tech employers hire predominantly full-time for staff positions, so part-time, whether included or not, is expected to reflect only a very small percentage of employment.

Cities list their 10 largest employers in annual reports. We used either the annual reports themselves or data excerpted in Wikipedia, using calendar year 2017 or 2018.

Startups Weekly: All these startups are raising big rounds

Published April 27, 2019

TechCrunch’s Connie Loizos published some interesting stats on seed and Series A financings this week, courtesy of data collected by Wing Venture Capital. In short, seed is the new Series A and Series A is the new Series B. Sure, we’ve been saying that for a while, but Wing has some clean data to back up those claims.

Years ago, a Series A round was roughly $5 million and a startup at that stage wasn’t expected to be generating revenue just yet, something typically expected upon raising a Series B. Now, those rounds have swelled to $15 million, according to deal data from the top 21 VC firms. And VCs are expecting the startups to be making money off their customers.

“Again, for the old gangsters of the industry, that’s a big shift from 2010, when just 15 percent of seed-stage companies that raised Series A rounds were already making some money,” Connie writes.

As for seed, in 2018, the average startup raised a total of $5.6 million prior to raising a Series A, up from $1.3 million in 2010.

Now on to IPO updates, then a closer look at all the companies raising big rounds. Want more TechCrunch newsletters? Sign up here. Contact me at kate.clark@techcrunch.com or @KateClarkTweets.

IPO corner

Slack: The workplace communication software provider dropped its S-1 on Friday ahead of a direct listing. That’s when companies sell existing shares directly to the market, allowing them to skip the roadshow and minimize the astronomical fees typically associated with an initial public offering. Here’s the TLDR on financials: Slack reported revenues of $400.6 million in the fiscal year ending January 31, 2019, on losses of $138.9 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million for the year before. Slack’s losses are shrinking (slowly), while its revenues expand (quickly). It’s not profitable yet, but is that surprising?

Zoom was the Slack we thought Slack was all along.

— alex (PVD) (@alex) April 26, 2019

Uber: The ride-hail giant is fast approaching its IPO, expected as soon as next week. On Friday, the company established an IPO price range of $44 to $50 per share to raise between $7.9 billion and $9 billion at a valuation of approximately $84 billion, significantly lower than the $100 billion previously reported estimations. The most likely outcome is Uber will price above range and all the latest estimates will be way off course. Best to sit back and see how Uber plays it. Oh, and PayPal said it would make a $500 million investment in the company in a private placement, as part of an extension of the partnership between the two.

There are a lot of fascinating companies raising colossal rounds, so I thought I’d dive a bit deeper than I normally do. Bear with me.

Carbon: The poster child for 3D printing has authorized the sale of $300 million in Series E shares, according to a Delaware stock filing uncovered by PitchBook. If Carbon raises the full amount, it could reach a valuation of $2.5 billion. Using its proprietary Digital Light Synthesis technology, the business has brought 3D-printing technology to manufacturing, building high-tech sports equipment, a line of custom sneakers for Adidas and more. It was valued at $1.7 billion by venture capitalists with a $200 million Series D in 2018.

Canoo: The electric vehicle startup formerly known as Evelozcity is on the hunt for $200 million in new capital. Backed by a clutch of private individuals and family offices from China, Germany and Taiwan, the company is hoping to line up the new capital from some more recognizable names as it finalizes supply deals with vendors, according to reporting from TechCrunch’s Jonathan Shieber. The company intends to make its vehicles available through a subscription-based model and currently has 400 employees. Canoo was founded in 2017 after Stefan Krause, a former executive at BMW and Deutsche Bank, and another former BMW executive, Ulrich Kranz, exited Faraday Future amid that company’s struggles.

Starry: The Boston-based wireless broadband internet startup has authorized the sale of Series D shares worth up to $125 million, according to a Delaware stock filing. If Starry closes the full authorized raise it will hold a post-money valuation of $870 million. A spokesperson for the company confirmed it had already raised new capital, but disputed the numbers. The company has already raised more than $160 million from investors, including FirstMark Capital and IAC. The company most recently closed a $100 million Series C this past July.

Selina & Sonder: The Airbnb competitor Sonder is in the process of closing a financing worth roughly $200 million at a $1 billion valuation, reports The Wall Street Journal. Investors including Greylock Partners, Spark Capital and Structure Capital are likely to participate. Sonder is four years old but didn’t emerge from stealth until 2018. The startup, which turns homes into hotels, quickly attracted more than $100 million in venture funding. Meanwhile, another hospitality business called Selina has raised $100 million at an $850 million valuation. The company, backed by Access Industries, Grupo Wiese and Colony Latam Partners, builds living/co-working/activity spaces across the world for digital nomads.

Fresh funds: Mary Meeker has made history with the close of her new fund, Bond Capital, the largest VC fund founded and led by a female investor to date. Bond has $1.25 billion in committed capital. If you remember, Meeker ditched Kleiner Perkins last fall and brought the firm’s entire growth team with her. Kleiner said it was a peaceful split that would allow the firm to focus more on its early-stage efforts, leaving the growth investing to Bond. Fortune, however, reported this week that a power struggle of sorts between Meeker and Mamoon Hamid, who joined recently to reenergize the early-stage side of things, was a larger cause of her exit.

Plus, SOSV, a multi-stage venture firm that was founded as the personal investment vehicle of entrepreneur Sean O’Sullivan after his company went public in 1994, has raised $218 million for its third fund. The vehicle has a $250 million target that SOSV expects to meet. Already, the fund is substantially larger than the firm’s previous vehicle, which closed with $150 million.

A grocery delivery startup crumbles: Honestbee, the online grocery delivery service in Asia, is nearly out of money and trying to offload its business. Despite looking impressive from the outside, the company is currently in crisis mode due to a cash crunch — there’s a lot happening right now. TechCrunch’s Jon Russell dives in deep here.

Extra Crunch: “When it comes to working with journalists, so many people are, frankly, idiots. I have seen reporters yank stories because founders are assholes, play unfairly, or have PR firms that use ridiculous pressure tactics when they have already committed to a story.” Sign up for Extra Crunch for a full list of PR don’ts. Here are some other EC pieces to hit the wire this week:

Equity: If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about Kleiner Perkins, Chinese IPOs and Slack & Uber’s upcoming exits.

Why your CSO, not your CMO, should pitch your security startup

Published April 26, 2019

Whenever a security startup lands on my desk, I have one question: Who’s the chief security officer (CSO) and when can I get time with them?

Having a chief security officer is as relevant today as a chief marketing officer (CMO) or chief revenue boss. Just as you need to make sure your offering looks good and the money keeps rolling in, you need to show what your security posture looks like.

Even for non-security startups, having someone at the helm is just as important — not least given the constant security threats that all companies face today, they will become a necessary part of interacting with the media. Regardless of whether your company builds gadgets or processes massive amounts of customer data, security has to be at the front of mind. It’s no good simply saying that you “take your privacy and security seriously.” You have to demonstrate it.

A CSO has several roles and they will wear many hats. Depending on the kind of company you have, they will work to bolster your company’s internal processes and policies on keeping not only your corporate data safe but also the data of your customers. They also will be consulted on security practices of your app or product or service to make sure you’re complying with consumer-expected privacy expectations — and not the overbearing and all-embracing industry standards of vacuuming up as much data as there is.

But for the average security startup, a CSO should also act as the point-person for all technical matters associated with their company’s product or service. A CSO can be an evangelist for the infosec professional who can speak to their company’s offering — and to reporters, like me.

In my view, no startup of any size — especially a security startup — should be without a CSO.

The reality is about 95 percent of the world’s wealthiest companies don’t have one. Facebook hasn’t had someone running the security shop since August. It may be a coincidence that the social networking giant has faced breach after exposure after leak after scandal, and it shows — the company is running around headless without a direction of where to go.

Mejuri raises $23M Series B to serve women buying jewelry for themselves

Published April 25, 2019

New Enterprise Associates, the 42-year-old venture capital firm, has invested in the $23 million Series B round for Mejuri, a startup capturing millennial women’s penchant for affordable and treat yo’ self type of jewelry rather than diamonds and precious stones for special occasions.

It’s the latest instance of startups drawing investor interest with their direct-to-customer retail model. Based in Toronto and Buenos Aires, four-year-old Mejuri designs, makes and sells jewelry directly to women online and through offline showrooms, bypassing middle-person costs. Besides striving for reasonable prices, Mejuri also wants to upend an entrenched practice in its industry.

Traditional jewelry, the startup points out, targets men for gifting and makes higher markups acceptable. With its D2C play, Mejuri believes it’s putting the purchasing decision back with women; indeed, it found 75 percent of its customers are buying for themselves. Its team of 120 employees is constantly on the watch for trends and consumer feedback, a strategy made possible by its online presence of more than 422,000 Instagram followers. Instead of releasing large batches of seasonal pieces, Mejuri adapts the so-called “drop” model that introduces only a small quantity of products each week, which allows it to timely translate customer sentiments into designs.

Photo source: Mejuri

Another enabling factor is the company’s female-led team: 80 percent of the staff are women, headed by founder Noura Sakkijha, a third-generation jeweler and a former industrial engineer who scored the company’s latest capital when she was seven months pregnant with two twins.

“Mejuri’s mission really hits home for me,” said NEA partner Vanessa Larco in a statement. “I noticed a shift in trends when none of my friends wanted to go to any of the traditional fine jewelry companies to purchase jewelry anymore, and I realized a lot of those big brands were in trouble.”

Natalie Massenet, founder of Net-a-Porter and partner at Imaginary, another venture fund that participated in Mejuri’s Series B, said the startup is set to “disrupt” the jewelry industry through supply chain standards that modern consumers demand, “like sourcing from conflict-free and socially responsible diamond suppliers and maintaining affordable prices to serve a consumer who is buying for herself and her friends.”

The user-centric focus has brought customer loyalty to Mejuri. The startup claims that 30 percent of its monthly transactions come from returning shoppers, and 70,000 customers are on the waitlist for its products. It’s accumulated a total of 20 million visitors to its website and released 1,500 designs since launch. Revenues have quadrupled year-over-year for the fourth consecutive year, and the company, one of TechCrunch’s favorite picks from 500 Startups’ Batch 15 Demo Day three years ago, said it’s on track to achieve the same level of traction in 2019.

The new proceeds bring Mejuri’s total funds raised to more than $29 million to date. Others in the new funding round include follow-on backers Felix Capital, BDC Capital, Incite Ventures and Dash Ventures. The company plans to spend its latest financial injection on offline expansion, overseas growth and investment in branding and customer experience.

Singapore’s SalesWhale raises $5.3M to bring AI to sales and marketing teams

Published April 23, 2019

SalesWhale, a Singapore-based startup that uses AI to help marketers and salespeople generate leads, has announced a Series A round worth $5.3 million.

The investment is led by Monk’s Hill Ventures — the Southeast Asia-focused firm that led SalesWhale’s seed round in 2017 — with participation from existing backers GREE Ventures, Wavemaker Partners and Y Combinator. That’s right, SalesWhale is one a select few Southeast Asian startups to have been through YC, it graduated back in summer 2016.

SalesWhale — which calls itself “a conversational email marketing platform” — uses AI-powered “bots” to handle email. In this case, its digital workforce is trained for sales leads. That means both covering the menial parts of arranging meetings and coordination, and the more proactive side of engaging old and new leads.

Back when we last wrote about the startup in 2017, it had just half a dozen staff. Fast-forward two years and that number has grown to 28, CEO Gabriel Lim explained in an interview. The company is going after more growth with this Series A money, and Lim expects headcount to jump past 70; SalesWhale is deliberating opening an office in California. That location would be primarily to encourage new business and increase communication and support for existing clients, most of whom are located in the U.S., according to Lim. Other hires will be tasked with increasing integration with third-party platforms, and particularly sales and enterprise services.

The past two years have also seen SalesWhale switch gears and go from targeting startups as customers, to working with mid-market and enterprise firms. SalesWhale’s “hundreds” of customers include recruiter Randstad, educational company General Assembly and enterprise service business Unit4. As it has added greater complexity to its service, so the income has jumped from an initial $39-$99 per seat all those years ago to more than $1,000 per month for enterprise customers.

SalesWhale’s founding team (left to right): Venus Wong, Ethan Lee and Gabriel Lim

While AI is a (genuine) threat to many human jobs, SalesWhale sits on the opposite side of that problem in that it actually helps human employees get more work done. That’s to say that SalesWhale’s service can get stuck into a pile (or spreadsheet) of leads that human staff don’t have time for, begin reaching out, qualifying leads and sending them on to living and breathing colleagues to take forward.

“A lot of potential leads aren’t touched” by existing human teams, Lim reflected.

But when SalesWhale reps do get involved, they are often not recognized as the bots they are.

“Customers are often so convinced they are chatting with a human — who is sending collateral, PDFs and arranging meetings — that they’ll say things like ‘I’d love to come by and visit someday,’ ” Lim joked in an interview.

“Indeed, a lot of times, sales team refer to [SalesWale-powered] sales assistant like they are a real human colleague,” he added.

Startups Weekly: Zoom CEO says its stock price is ‘too high’

Published April 20, 2019

When Zoom hit the public markets Thursday, its IPO pop, a whopping 81 percent, floored everyone, including its own chief executive officer, Eric Yuan.

Yuan became a billionaire this week when his video conferencing business went public. He told Bloomberg that he actually wished his stock hadn’t soared quite so high. I’m guessing his modesty and laser focus attracted Wall Street to his stock; well, that, and the fact that his business is actually profitable. He is, this week proved, not your average tech CEO.

I chatted with him briefly on listing day. Here’s what he had to say.

“I think the future is so bright and the stock price will follow our execution. Our philosophy remains the same even now that we’ve become a public company. The philosophy, first of all, is you have to focus on execution, but how do you do that? For me as a CEO, my number one role is to make sure Zoom customers are happy. Our market is growing and if our customers are happy they are going to pay for our service. I don’t think anything will change after the IPO. We will probably have a much better brand because we are a public company now, it’s a new milestone.”

“The dream is coming true,” he added.

For the most part, it sounded like Yuan just wants to get back to work.

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IPO corner

You thought I was done with IPO talk? No, definitely not:

Pinterest completed its IPO this week too! Here’s the TLDR: Pinterest popped 25 percent on its debut Thursday and is currently trading up 28 percent. Not bad, Pinterest, not bad.
Fastly, a startup I’d admittedly never heard of until this week, filed its S-1 and displayed a nice path to profitability. That means the parade of tech IPOs is far from over.
Uber… Surprisingly, no Uber IPO news this week. Sit tight, more is surely coming.

$1B for self-driving cars

While I’m on the subject of Uber, the company’s autonomous vehicles unit did, in fact, raise $1 billion, a piece of news that had been previously reported but was confirmed this week. With funding from Toyota, Denso and SoftBank’s Vision Fund, Uber will spin-out its self-driving car unit, called Uber’s Advanced Technologies Group. The deal values ATG at $7.25 billion.

Robots!

The TechCrunch staff traveled to Berkeley this week for a day-long conference on robotics and artificial intelligence. The highlight? Boston Dynamics CEO Marc Raibert debuted the production version of their buzzworthy electric robot. As we noted last year, the company plans to produce around 100 models of the robot in 2019. Raibert said the company is aiming to start production in July or August. There are robots coming off the assembly line now, but they are betas being used for testing, and the company is still doing redesigns. Pricing details will be announced this summer.

#TCRobotics pic.twitter.com/Vf4kUWH0fR

— Lucas Matney (@lucasmtny) April 19, 2019

Digital health investment is down

Despite notable rounds for digital health businesses like Ro, known for its direct-to-consumer erectile dysfunction medications, investment in the digital health space is actually down, reports TechCrunch’s Jonathan Shieber. Venture investors, private equity and corporations funneled $2 billion into digital health startups in the first quarter of 2019, down 19 percent from the nearly $2.5 billion invested a year ago. There were also 38 fewer deals done in the first quarter this year than last year, when investors backed 187 early-stage digital health companies, according to data from Mercom Capital Group.

Startup capital

Byton loses co-founder and former CEO, reported $500M Series C to close this summer
Lyric raises $160M from VCs, Airbnb
Brex, the credit card for startups, raises $100M debt round
Ro, a D2C online pharmacy, reaches $500M valuation
Logistics startup Zencargo gets $20M to take on the business of freight forwarding
Co-Star raises $5M to bring its astrology app to Android
Y Combinator grad Fuzzbuzz lands $2.7M seed round to deliver fuzzing as a service

Extra Crunch

Hundreds of billions of dollars in venture capital went into tech startups last year, topping off huge growth this decade. VCs are reviewing more pitch decks than ever, as more people build companies and try to get a slice of the funding opportunities. So how do you do that in such a competitive landscape? Storytelling. Read contributor’s Russ Heddleston’s latest for Extra Crunch: Data tells us that investors love a good story.

Plus: The different playbook of D2C brands

And finally, for the first of a new series on VC-backed exits aptly called The Exit. TechCrunch’s Lucas Matney spoke to Bessemer Venture Partners’ Adam Fisher about Dynamic Yield’s $300M exit to McDonald’s.

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about rounds for Brex, Ro and Kindbody, plus special guest Danny Crichton joined us to discuss the latest in the chip and sensor world.