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Real-time database platform SingleStore raises $80M more, now at a $940M valuation
Organizations are swimming in data these days, and so solutions to help manage and use that data in more efficient ways will continue to see a lot of attention and business. In the latest development, SingleStore — which provides a platform to enterprises to help them integrate, monitor and query their data as a single entity, regardless of whether that data is stored in multiple repositories — is announcing another $80 million in funding, money that it will be using to continue investing in its platform, hiring more talent and overall business expansion. Sources close to the company tell us that the company’s valuation has grown to $940 million.
The round, a Series F, is being led by Insight Partners, with new investor Hewlett Packard Enterprise, and previous backers Khosla Ventures, Dell Technologies Capital, Rev IV, Glynn Capital and GV (formerly Google Ventures) also participating. The startup has to date raised $264 million, including most recently an $80 million Series E last December, just on the heels of rebranding from MemSQL.
The fact that there are three major strategic investors in this Series F — HPE, Dell and Google — may say something about the traction that SingleStore is seeing, but so too do its numbers: 300%+ increase in new customer acquisition for its cloud service and 150%+ year-over-year growth in cloud.
Raj Verma, SingleStore’s CEO, said in an interview that its cloud revenues have grown by 150% year over year and now account for some 40% of all revenues (up from 10% a year ago). New customer numbers, meanwhile, have grown by over 300%.
“The flywheel is now turning around,” Verma said. “We didn’t need this money. We’ve barely touched our Series E. But I think there has been a general sentiment among our board and management that we are now ready for the prime time. We think SingleStore is one of the best-kept secrets in the database market. Now we want to aggressively be an option for people looking for a platform for intensive data applications or if they want to consolidate databases to one from three, five or seven repositories. We are where the world is going: real-time insights.”
With database management and the need for more efficient and cost-effective tools to manage that becoming an ever-growing priority — one that definitely got a fillip in the last 18 months with COVID-19 pushing people into more remote working environments. That means SingleStore is not without competitors, with others in the same space, including Amazon, Microsoft, Snowflake, PostgreSQL, MySQL, Redis and more. Others like Firebolt are tackling the challenges of handing large, disparate data repositories from another angle. (Some of these, I should point out, are also partners: SingleStore works with data stored on AWS, Microsoft Azure, Google Cloud Platform and Red Hat, and Verma describes those who do compute work as “not database companies; they are using their database capabilities for consumption for cloud compute.”)
But the company has carved a place for itself with enterprises and has thousands now on its books, including GE, IEX Cloud, Go Guardian, Palo Alto Networks, EOG Resources and SiriusXM + Pandora.
“SingleStore’s first-of-a-kind cloud database is unmatched in speed, scale, and simplicity by anything in the market,” said Lonne Jaffe, managing director at Insight Partners, in a statement. “SingleStore’s differentiated technology allows customers to unify real-time transactions and analytics in a single database.” Vinod Khosla from Khosla Ventures added that “SingleStore is able to reduce data sprawl, run anywhere, and run faster with a single database, replacing legacy databases with the modern cloud.”
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SingleStore, formerly MemSQL, raises $80M to integrate and leverage companies’ disparate data silos
While the enterprise world likes to talk about “big data”, that term belies the real state of how data exists for many organizations: the truth of the matter is that it’s often very fragmented, living in different places and on different systems, making the concept of analysing and using it in a single, effective way a huge challenge.
Today, one of the big up-and-coming startups that has built a platform to get around that predicament is announcing a significant round of funding, a sign of the demand for its services and its success so far in executing on that.
SingleStore, which provides a SQL-based platform to help enterprises manage, parse and use data that lives in silos across multiple cloud and on-premise environments — a key piece of work needed to run applications in risk, fraud prevention, customer user experience, real-time reporting and real-time insights, fast dashboards, data warehouse augmentation, modernization for data warehouses and data architectures and faster insights — has picked up $80 million in funding, a Series E round that brings in new strategic investors alongside its existing list of backers.
The round is being led by Insight Partners, with new backers Dell Technologies Capital, Hercules Capital; and previous backers Accel, Anchorage, Glynn Capital, GV (formerly Google Ventures) and Rev IV also participating.
Alongside the investment, SingleStore is formally announcing a new partnership with analytics powerhouse SAS. I say “formally” because they two have been working together already and it’s resulted in “tremendous uptake,” CEO Raj Verma said in an interview over email.
Verma added that the round came out of inbound interest, not its own fundraising efforts, and as such, it brings the total amount of cash it has on hand to $140 million. The gives the startup money to play with not only to invest in hiring, R&D and business development, but potentially also M&A, given that the market right now seems to be in a period of consolidation.
Verma said the valuation is a “significant upround” compared to its Series D in 2018 but didn’t disclose the figure. PitchBook notes that at the time it was valued at $270 million post-money.
When I last spoke with the startup in May of this year — when it announced a debt facility of $50 million — it was not called SingleStore; it was MemSQL. The company rebranded at the end of October to the new name, but Verma said that the change was a long time in the planning.
“The name change is one of the first conversations I had when I got here,” he said about when he joined the company in 2019 (he’s been there for about 16 months). “The [former] name didn’t exactly flow off the tongue and we found that it no longer suited us, we found ourselves in a tiny shoebox of an offering, in saying our name is MemSQL we were telling our prospects to think of us as in-memory and SQL. SQL we didn’t have a problem with but we had outgrown in-memory years ago. That was really only 5% of our current revenues.”
He also mentioned the hang up many have with in-memory database implementations: they tend to be expensive. “So this implied high TCO, which couldn’t have been further from the truth,” he said. “Typically we are ⅕-⅛ the cost of what a competitive product would be to implement. We were doing ourselves a disservice with prospects and buyers.”
The company liked the name SingleStore because it is based a conceptual idea of its proprietary technology. “We wanted a name that could be a verb. Down the road we hope that when someone asks large enterprises what they do with their data, they will say that they ‘SingleStore It!’ That is the vision. The north star is that we can do all types of data without workload segmentation,” he said.
That effort is being done at a time when there is more competition than ever before in the space. Others also providing tools to manage and run analytics and other work on big data sets include Amazon, Microsoft, Snowflake, PostgreSQL, MySQL and more.
SingleStore is not disclosing any metrics on its growth at the moment but says it has thousands of enterprise customers. Some of the more recent names it’s disclosed include GE, IEX Cloud, Go Guardian, Palo Alto Networks, EOG Resources, SiriusXM + Pandora, with partners including Infosys, HCL and NextGen.
“As industry after industry reinvents itself using software, there will be accelerating market demand for predictive applications that can only be powered by fast, scalable, cloud-native database systems like SingleStore’s,” said Lonne Jaffe, managing director at Insight Partners, in a statement. “Insight Partners has spent the past 25 years helping transformational software companies rapidly scale-up, and we’re looking forward to working with Raj and his management team as they bring SingleStore’s highly differentiated technology to customers and partners across the world.”
“Across industries, SAS is running some of the most demanding and sophisticated machine learning workloads in the world to help organizations make the best decisions. SAS continues to innovate in AI and advanced analytics, and we partner with companies like SingleStore that share our curiosity about how data and analytics can help organizations reimagine their businesses and change the world,” said Oliver Schabenberger, COO and CTO at SAS, added. “Our engineering teams are integrating SingleStore’s scalable SQL-based database platform with the massively parallel analytics engine SAS Viya. We are excited to work with SingleStore to improve performance, reduce cost, and enable our customers to be at the forefront of analytics and decisioning.”
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New GV partner Terri Burns has a simple investment thesis: Gen Z
In 2015, then-Twitter product manager Terri Burns penned a piece about staying optimistic despite the sexism and racism that exists expansively within tech. “America has broke my heart countless times, but I believe that technology can be a tool to mend some of the woes of the world and produce tools to better humanity,” she wrote.
“It’s hard to continue to believe this when the industry holding this power takes so little interest in the basic rights of women and people of color. I actively choose to remain hopeful under the belief that myself and many of the incredible people also working toward equality and justice in technology and in America will make a difference.”
Burns left Twitter in 2017 to join GV, formerly known as Google Ventures. Her hope has now been met with recognition. GV has promoted Terri Burns to partner, making her the first Black woman to hold that role — and the youngest ever. Making history comes with its own set of pressures and spotlight, but Burns seems focused on simply finding a new place to put her optimism and hope: Gen Z.
Read on for a Q&A with Burns about her investment thesis, role change and plans as partner.
TechCrunch: Before you were in venture, you held product roles at Venmo and Twitter. When did you know that computer science was the right field for you?
Terri Burns: I grew up in Southern California, in Long Beach. And I think I’ve always just been a really curious kid. For me, I always spent a ton of time just asking questions and I always liked science. But, I actually did not have any interest in computer science until college.
I went to NYU and I remember thinking my freshman year, major-wise, that I’m not entirely sure what it is that I want to do. By chance, I happened to apply to this program called Google BOLD. It was a week-long program for people that are a little bit too young for a full-time internship. There we just talked about all the opportunities at Google that were not engineering.
It’s funny, I grew up in California, but growing in Long Beach, I didn’t know anything about Silicon Valley whatsoever. College was really the first time I had an introduction to Silicon Valley, to technology, to entrepreneurship, to Google. Even though [Google BOLD] was a nontechnical program, I was “I want to know what this coding thing is about.” So my sophomore year, when I went back to campus, I took my first computer science class. And that was the beginning.
What’s the most effective way to get on your radar without knowing you prior? Any anecdotes for how out of network founders grabbed your attention?
Yes! In fact, I met Suraya Shivji, the CEO of HAGS, through Twitter. I knew people who were buzzing about the company on Twitter, and I proactively reached out to her to do a virtual coffee. Social media, networking events and warm intros are pretty good paths. For what it’s worth, I read every cold email I receive as well; I’m just not able to respond to all of them!
What kind of companies will you always take a meeting with?
Mobile consumer and consumer in general is definitely what my background is in, and so I’ll always have a natural inclination
in consumer. I recognize that that’s broad, but I think software consumer companies are ones that I know and I understand. So that’s something I’m always going to lean into. One of the things that I really love about GV is that we are a generalist firm, which has also been a theme for me personally and something that I definitely want to uphold as an investor. Some other things that I’m interested in [are] fintech on the enterprise side and [ … ] enterprise collaboration tools.
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Nym Health raises $16.5 million for its auditable machine learning tools for automating hospital billing
A little less than two years after raising its seed round, the Israeli-based Nym Health has added another $16.5 million to its cash haul so it can roll out its technology developing auditable machine learning tools for automating hospital billing.
The new financing came from investors, including GV (the investment arm of Google previously known as Google Ventures), and will be used by the company to expand its technology development and sales and marketing efforts across the U.S.
Billing has been a huge problem for healthcare systems in the U.S., thanks to complicated coding that needs to be entered to ensure insurance providers pay for the services medical professionals give to patients.
Nym claims to have solved the problem by developing technologies that can convert medical charts and electronic medical records from physician’s consultations into proper billing codes automatically. The company uses natural language processing and taxonomies that were specifically developed to understand clinical language to determine the optimal charge for each procedure, examination and diagnostic conducted for a patient, according to Nym.
The company was founded in 2018 by two former members of Israel’s 8200 cybersecurity unit of the army. Adam Rimon and Amihai Neiderman both wanted to work on something together and Neiderman was set on doing something in the medical space involving natural language processing. Rimon had just finished a doctorate in computational linguistics, so the move into charting and medical coding seemed natural.
“Because of our approach we can generate full audit trails,” said Neiderman. “We can explain how we understood everything in patient charts.”
Having automated processes that are also auditable is important for healthcare providers in case they need to provide justification to insurance companies for the services they performed.
Nym’s software can’t address fraud if physicians are padding their bills with services they didn’t offer, but it can provide an audit and justification for the services that a hospital coded for — and potentially wring more money for hospitals that lose out thanks to improperly coded bills. “On the medical decision-making we never intervene. We assume that the physician is trying to do their best and they’re sticking to the protocol,” said Neiderman.
Interest in developing better billing systems for healthcare is high among venture investors, considering that coding related denials of payment can cost hospitals $15 billion, according to Nym. It’s a service that brought attention not just from GV, but Bessemer Venture Partners, Dynamic Loop Capital, Lightspeed, Tiger Global, and angel investors including Zach Weinberg and Nat Turner from Flatiron Health.
“Inaccurate coding is bad for everybody,” says Ben Robbins, a venture partner at GV.
Nym charges between $1 and $4 per chart it analyzes, and is already working with around 40 medical providers in the U.S., according to the company.
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How to negotiate term sheets with strategic investors
Alex Gold is co-founder of Myia, an intelligent health platform employing novel biometric data to predict and prevent costly medical events. Previously, Alex was Venture Partner at BCG Digital Ventures and a co-founder of Traction, a marketplace of digital marketing experts.
Three years ago, I met with a founder who had raised a massive seed round at a valuation that was at least five times the market rate. I asked what firm made the investment.
She said it was not a traditional venture firm, but rather a strategic investor that not only had no ties to her space but also had no prior investment experience. The strategic investor, she said, was looking to “get their hands dirty” and “get in on the ground floor.”
Over the next 2 years, I kept a close eye on the founder. Although she had enough capital to pivot her business focus multiple times, she seemed to be at odds, serving the needs of her strategic investor and her customer base.
Ultimately, when the business needed more capital to survive, the strategic investor didn’t agree with the founder’s focus, opted not to prop it up, and the business had to shut down.
Sadly, this is not an uncommon story as examples abound of strategic investors influencing startup direction and management decisions to the point of harm for the startup. Corporate strategics, not to be confused with dedicated funds focused on financial returns like a traditional venture investor like Google Ventures, often care less about return on investment, and more about a startup’s focus, and sector specificity. If corporate imperatives change, the strategic may cease to be the right partner or could push the startup in a challenging direction.
And yet, fortunately, as the disruptive power of technology is being unleashed on nearly every major industry, strategic investors are now getting smarter, both in terms of how they invest and how they partner with entrepreneurs.
From making strong acquisitive plays (i.e. GM’s purchase of Cruise Automation or Toyota’s early-stage investment in Uber) to building dedicated funds, to executing commercial agreements in tandem with capital investment, strategics are getting savvier, and by extension, becoming better partners. In some instances, they may be the best partner.
Negotiating a term sheet with a strategic investor necessitates a different set of considerations. Namely: the preference for a strategic to facilitate commercial milestones for the startup, a cautious approach to avoid the “over-valuation” trap, an acute focus on information rights, and the limitation of non-compete provisions.
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Slack aims to be the most important software company in the world, says CEO
Slack this morning disclosed estimated preliminary financial results for the first quarter of 2019 ahead of a direct listing planned for June 20.
Citing an addition of paid customers, the workplace messaging service posted revenues of about $134 million, up 66% from $81 million in the first quarter of 2018. Losses from operations increased from $26 million in Q1 2018 to roughly $39 million this year.
In addition to filing updated paperwork, the Slack executive team gathered on Monday to make a final pitch to potential shareholders, emphasizing its goal of replacing email within enterprises across the world.
“People deserve to do the best work of their lives,” Slack co-founder and chief executive officer Stewart Butterfield said in a video released alongside a live stream of its investor day event. “This desire of feeling aligned with your team, of removing confusion, of getting clarity; the desire for support in doing the best work of your life, that’s universal, that’s deeply human. It appeals to people with all kinds of roles, in all kinds of industries, at all scales of organization and all cultures.”
“We believe that whoever is able to unlock that potential for people … is going to be the most important software company in the world. We aim to be that company,” he added.”
Slack, valued at more than $7 billion with its last round of venture capital funding, plans to list on the NYSE under the ticker symbol “SK.”
The business filed to go public in April as other well-known tech companies were finalizing their initial public offerings. Following Uber’s disastrous IPO last week, public and private market investors alike will be keeping a close-eye on Slack’s stock market performance, which may determine Wall Street’s future appetite for Silicon Valley’s unicorns.
Though some of the recent tech IPOs performed famously, like Zoom, Uber and Lyft’s performance has served as a cautionary tale for going out in poor market conditions with lofty valuations. Uber began trading last week at below its IPO price of $45 and is today down significantly at just $36 per share. Lyft, for its part, is selling for $47.5 apiece today after pricing at $72 per share in March.
Slack isn’t losing billions per year like Uber, but it’s also not as close to profitability as expected. In the year ending January 31, 2019, Slack posted a net loss of $138.9 million and revenue of $400.6 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million for the year ending January 31, 2018. In its S-1, the company attributed its losses to scaling the business and capitalizing on its market opportunity.
Workplace messaging startup Slack said Monday, February 4, 2019 it had filed a confidential registration for an initial public offering, becoming the latest of a group of richly valued tech enterprises to look to Wall Street. (Photo by Eric BARADAT / AFP) (Photo credit should read ERIC BARADAT/AFP/Getty Images)
Slack currently boasts more than 10 million daily active users across more than 600,000 organizations — 88,000 on the paid plan and 550,000 on the free plan.
Slack has been able to bypass the traditional roadshow process expected of an IPO-ready business, opting for a path to Wall Street popularized by Spotify in 2018. The company plans to complete in mid-June a direct listing, which allows companies to forgo issuing new shares and instead sell directly to the market existing shares held by insiders, employees and investors. The date, however, is subject to change.
Slack has previously raised a total of $1.2 billion in funding from investors, including Accel, Andreessen Horowitz, Social Capital, SoftBank, Google Ventures and Kleiner Perkins.
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Slack to live-stream pitch to shareholders on Monday ahead of direct listing
Slack, the ubiquitous workplace messaging tool, will make its pitch to prospective shareholders on Monday at an invite-only event in New York City, the company confirmed in a blog post on Wednesday. Slack stock is expected to begin trading on the New York Stock Exchange as soon as next month.
Slack, which is pursuing a direct listing, will live stream Monday’s Investor Day on its website.
An alternative to an initial public offering, direct listings allow businesses to forgo issuing new shares and instead sell directly to the market existing shares held by insiders, employees and investors. Slack, like Spotify, has been able to bypass the traditional roadshow process expected of an IPO-ready business, as well as some of the exorbitant Wall Street fees.
Spotify, if you remember, similarly live streamed an event that is typically for investors eyes only. If Slack’s event is anything like the music streaming giant’s, Slack co-founder and chief executive officer Stewart Butterfield will speak to the company’s greater mission alongside several other executives.
Slack unveiled documents for a public listing two weeks ago. In its SEC filing, the company disclosed a net loss of $138.9 million and revenue of $400.6 million in the fiscal year ending January 31, 2019. That’s compared to a loss of $140.1 million on revenue of $220.5 million for the year before.
Additionally, the company said it reached 10 million daily active users earlier this year across more than 600,000 organizations.
Slack has previously raised a total of $1.2 billion in funding from investors, including Accel, Andreessen Horowitz, Social Capital, SoftBank, Google Ventures and Kleiner Perkins.
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As concerns over medical device security rise, MedCrypt raises $5.3 million
As medical devices move to networked technologies, securing those devices becomes increasingly important.
Regulators, seemingly late to the threat that unsecured medical devices posed, only began requiring protections for medical devices like pacemakers and insulin pumps two years ago, and since then new technology companies have leapt into the breach to begin providing security services for the healthcare industry.
Most recently, MedCrypt, a graduate from the most recent batch of Y Combinator companies, raised $5.3 million in a new round of funding, from investors led by Section 32, the investment firm founded by former Google Ventures partner Bill Maris.
Joining Maris’ firm were previous investors Eniac Ventures and Y Combinator itself.
“Internet-connected medical technology is entering the market at light speed, calling for devices to be secure by design, which leads to a heightened level of patient safety at all times,” said MedCrypt chief executive Mike Kijewski in a statement.
Securing patient data has been a longtime requirement for health technology companies, but both patient records and hospital networks are dangerously vulnerable to cyberattacks.
In 2018, more than 6 million patient records in the U.S. were exposed thanks to network intrusions and cyberattacks, according to the publication Health IT Security. And those were just in the 10 largest security breaches.
The healthcare industry has only managed to achieve 72% compliance with the HIPAA Security Rule for protecting patient data, according to an April report from CynergisTek.
Investors have recognized the problem and are investing more into companies focused on the healthcare market specifically. MedCrypt’s competition for these security dollars include companies like Medigate, which raised $15 million earlier this year.
While Medigate focuses on network security, MedCrypt is focused on securing devices themselves. Both security functions are critical, according to investors.
“With regulators appropriately taking a hard look at medical device security and the sheer growth in the number of devices being added to already complex clinical networks,” there is a significant opportunity for companies tackling medical device security, according to a statement from Dr. Jonathan Root, who has led several IT-enabled healthcare investments for USVP.
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China is funding the future of American biotech
Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine.
It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing financing for over 300 US-based companies, per Pitchbook. That’s the story at Viela Bio, a Maryland-based company exploring treatments for inflammation and autoimmune diseases, which raised a $250 million Series A led by three Chinese firms.
Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment.
As Chinese investors continue to shift their strategies towards life science and biotech, China is emphatically positioning itself to be a leader in medical investing with a growing influence on the world’s future major health institutions.
Chinese VCs seek healthy returns
We like to talk about things we can interact with or be entertained by. And so as nine-figure checks flow in and out of China with stunning regularity, we fixate on the internet giants, the gaming leaders or the latest media platform backed by Tencent or Alibaba.
However, if we follow the money, it’s clear that the top venture firms in China have actually been turning their focus towards the country’s deficient health system.
A clear leader in China’s strategy shift has been Sequoia Capital China, one of the country’s most heralded venture firms tied to multiple billion-dollar IPOs just this year.
Historically, Sequoia didn’t have much interest in the medical sector. Health was one of the firm’s smallest investment categories, and it participated in only three health-related deals from 2015-16, making up just 4% of its total investing activity.
Recently, however, life sciences have piqued Sequoia’s fascination, confirms a spokesperson with the firm. Sequoia dove into six health-related deals in 2017 and has already participated in 14 in 2018 so far. The firm now sits among the most active health investors in China and the medical sector has become its second biggest investment area, with life science and biotech companies accounting for nearly 30% of its investing activity in recent years.
Health-related investment data for 2015-18 compiled from Pitchbook, Crunchbase, and SEC Edgar
There’s no shortage of areas in need of transformation within Chinese medical care, and a wide range of strategies are being employed by China’s VCs. While some investors hope to address influenza, others are focused on innovative treatments for hypertension, diabetes and other chronic diseases.
For instance, according to the Chinese Journal of Cancer, in 2015, 36% of world’s lung cancer diagnoses came from China, yet the country’s cancer survival rate was 17% below the global average. Sequoia has set its sights on tackling China’s high rate of cancer and its low survival rate, with roughly 70% of its deals in the past two years focusing on cancer detection and treatment.
That is driven in part by investments like the firm’s $90 million Series A investment into Shanghai-based JW Therapeutics, a company developing innovative immunotherapy cancer treatments. The company is a quintessential example of how Chinese VCs are building the country’s next set of health startups using their international footprints and learnings from across the globe.
Founded as a joint-venture offshoot between US-based Juno Therapeutics and China’s WuXi AppTec, JW benefits from Juno’s experience as a top developer of cancer immunotherapy drugs, as well as WuXi’s expertise as one of the world’s leading contract research organizations, focusing on all aspects of the drug R&D and development cycle.
Specifically, JW is focused on the next-generation of cell-based immunotherapy cancer treatments using chimeric antigen receptor T-cell (CAR-T) technologies. (Yeah…I know…) For the WebMD warriors and the rest of us with a medical background that stopped at tenth-grade chemistry, CAR-T essentially looks to attack cancer cells by utilizing the body’s own immune system.
Past waves of biotech startups often focused on other immunologic treatments that used genetically-modified antibodies created in animals. The antibodies would effectively act as “police,” identifying and attaching to “bad guy” targets in order to turn off or quiet down malignant cells. CAR-T looks instead to modify the body’s native immune cells to attack and kill the bad guys directly.
Chinese VCs are investing in a wide range of innovative life science and biotech startups. (Photo by Eugeneonline via Getty Images)
The international and interdisciplinary pedigree of China’s new medical leaders not only applies to the organizations themselves but also to those running the show.
At the helm of JW sits James Li. In a past life, the co-founder and CEO held stints as an executive heading up operations in China for the world’s biggest biopharmaceutical companies including Amgen and Merck. Li was also once a partner at the Silicon Valley brand-name investor, Kleiner Perkins.
JW embodies the benefits that can come from importing insights and expertise, a practice that will come to define the companies leading the medical future as the country’s smartest capital increasingly finds its way overseas.
GV and Founders Fund look to keep the Valley competitive
Despite heavy investment by China’s leading VCs, Silicon Valley is doubling down in the US health sector. (AFP PHOTO / POOL / JASON LEE)
Innovation in medicine transcends borders. Sickness and death are unfortunately universal, and groundbreaking discoveries in one country can save lives in the rest.
The boom in China’s life science industry has left valuations lofty and cross-border investment and import regulations in China have improved.
As such, Chinese venture firms are now increasingly searching for innovation abroad, looking to capitalize on expanding opportunities in the more mature US medical industry that can offer innovative technologies and advanced processes that can be brought back to the East.
In April, Qiming Venture Partners, another Chinese venture titan, closed a $120 million fund focused on early-stage US healthcare. Qiming has been ramping up its participation in the medical space, investing in 24 companies over the 2017-18 period.
New firms diving into the space hasn’t frightened the Bay Area’s notable investors, who have doubled down in the US medical space alongside their Chinese counterparts.
Partner directories for America’s most influential firms are increasingly populated with former doctors and medically-versed VCs who can find the best medical startups and have a growing influence on the flow of venture dollars in the US.
At the top of the list is Krishna Yeshwant, the GV (formerly Google Ventures) general partner leading the firm’s aggressive push into the medical industry.
Krishna Yeshwant (GV) at TechCrunch Disrupt NY 2017
A doctor by trade, Yeshwant’s interest runs the gamut of the medical spectrum, leading investments focusing on anything from real-time patient care insights to antibody and therapeutic technologies for cancer and neurodegenerative disorders.
Per data from Pitchbook and Crunchbase, Krishna has been GV’s most active partner over the past two years, participating in deals that total over a billion dollars in aggregate funding.
Backed by the efforts of Yeshwant and select others, the medical industry has become one of the most prominent investment areas for Google’s venture capital arm, driving roughly 30% of its investments in 2017 compared to just under 15% in 2015.
GV’s affinity for medical-investing has found renewed life, but life science is also part of the firm’s DNA. Like many brand-name Valley investors, GV founder Bill Maris has long held a passion for the health startups. After leaving GV in 2016, Maris launched his own fund, Section 32, focused specifically on biotech, healthcare and life sciences.
In the same vein, life science and health investing has been part of the lifeblood for some major US funds including Founders Fund, which has consistently dedicated over 25% of its deployed capital to the space since at least 2015.
The tides may be changing, however, as the recent expansion of oversight for the Committee on Foreign Investment in the United States (CFIUS) may severely impact the flow of Chinese capital into areas of the US health sector.
Under its extended purview, CFIUS will review – and possibly block – any investment or transaction involving a foreign entity related to the production, design or testing of technology that falls under a list of 27 critical industries, including biotech research and development.
The true implications of the expanded rules will depend on how aggressively and how often CFIUS exercises its power. But a lengthy review process and the threat of regulatory blocks may significantly increase the burden on Chinese investors, effectively shutting off the Chinese money spigot.
Regardless of CFIUS, while China’s active presence in the US health markets hasn’t deterred Valley mainstays, with a severely broken health system and an improved investment environment backed by government support, China’s commitment to medical innovation is only getting stronger.
VCs target a disastrous health system
Deficiencies in China’s health sector has historically led to troublesome outcomes. Now the government is jump-starting investment through supportive policy. (Photo by Alexander Tessmer / EyeEm via Getty Images)
They say successful startups identify real problems that need solving. Marred with inefficiencies, poor results, and compounding consumer frustration, China’s health industry has many.
Outside of a wealthy few, citizens are forced to make often lengthy treks to overcrowded and understaffed hospitals in urban centers. Reception areas exist only in concept, as any open space is quickly filled by hordes of the concerned, sick, and fearful settling in for wait times that can last multiple days.
If and when patients are finally seen, they are frequently met by overworked or inexperienced medical staff, rushing to get people in and out in hopes of servicing the endless line behind them.
Historically, when patients were diagnosed, treatment options were limited and ineffective, as import laws and affordability issues made many globally approved drugs unavailable.
As one would assume, poor detection and treatment have led to problematic outcomes. Heart disease, stroke, diabetes and chronic lung disease accounts for 80% of deaths in China, according to a recent report from the World Bank.
Recurring issues of misconduct, deception and dishonesty have amplified the population’s mounting frustration.
After past cases of widespread sickness caused by improperly handled vaccinations, China’s vaccine crisis reached a breaking point earlier this year. It was revealed that 250,000 children had been given defective and fallacious rabies vaccinations, a fact that inspectors had discovered months prior and swept under the rug.
Fracturing public trust around medical treatment has serious, potentially destabilizing effects. And with deficiencies permeating nearly all aspects of China’s health and medical infrastructure, there is a gaping set of opportunities for disruptive change.
In response to these issues, China’s government placed more emphasis on the search for medical innovation by rolling out policies that improve the chances of success for health startups, while reducing costs and risk for investors.
Billions of public investment flooded into the life science sector, and easier approval processes for patents, research grants, and generic drugs, suddenly made the prospect of building a life science or biotech company in China less daunting.
For Chinese venture capitalists, on top of financial incentives and a higher-growth local medical sector, loosening of drug import laws opened up opportunities to improve China’s medical system through innovation abroad.
Liquidity has also improved due to swelling global interest in healthcare. Plus, the Hong Kong Stock Exchange recently announced changes to allow the listing of pre-revenue biotech companies.
The changes implemented across China’s major institutions have effectively provided Chinese health investors with a much broader opportunity set, faster growth companies, faster liquidity, and increased certainty, all at lower cost.
However, while the structural and regulatory changes in China’s healthcare system has led to more medical startups with more growth, it hasn’t necessarily driven quality.
US and Western investors haven’t taken the same cross-border approach as their peers in Beijing. From talking with those in the industry, the laxity of the Chinese system, and others, have made many US investors weary of investing in life science companies overseas.
And with the Valley similarly stepping up its focus on startups that sprout from the strong American university system, bubbling valuations have started to raise concern.
But with China dedicating more and more billions across the globe, the country is determined to patch the massive holes in its medical system and establish itself as the next leader in international health innovation.
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Carmera, the mapping startup for autonomous vehicles, raises $20 million
Autonomous vehicles need more than a brain to operate safely in a world filled with obstacles. They need maps. Or more specifically, self-driving vehicles need maps that constantly refresh and can deliver important information — like that sudden lane closure due to construction or a double-parked vehicle — so they can take the safest and most efficient route possible.
This specific need has provided an opening for startups in what once looked like a locked-up mapping market dominated by a few giants.
Carmera, a New York-based mapping and data analytics startup, is one of them. The company, which came out of stealth two years ago, has now raised $20 million in a Series B funding round led by GV, formerly known as Google Ventures. Carmera previously raised $6.5 million.
The company announced the funding raise Thursday along with a few other updates, including a new feature on its autonomous mapping product and a partnership with New York City. The capital will be used to hire more talent and expand.
“We’ll be doing the most aggressive hiring we’ve ever done this next year,” Carmera co-founder and CEO Ro Gupta told TechCrunch, adding that the company will mostly focus on building out its New York and Seattle offices. Carmera, which has about 25 employees, plans to have more than 50 by the end of next year.
“The money also allows us to be more prospective than simply reacting to customer needs,” Gupta added.
In other words, Carmera can move into new markets where it suspects there will be a need in the future, not just wait for a call from their customers. One of those customers is Voyage, the autonomous driving startup that currently operates self-driving cars in retirement communities.
Carmera has an interesting business model, and one that’s likely attractive to investors looking for startups with a present-day revenue stream. The company describes itself as a street intelligence platform for autonomy. Its main product is the Carmera autonomous map, a high-definition map for autonomous vehicle customers like automakers, suppliers and robotaxis.
The twist here is that the company uses data gleaned from its other product — a fleet-monitoring service used by commercial customers with vehicles driven by humans — to keep those AV maps fresh. The fleet product is a telematics and video monitoring service used by professional fleets that want to manage risk with their vehicles and drivers.
These fleets of camera-equipped human-driven vehicles deliver new information to the autonomous map as they go about their daily business in cities. Carmera calls this a “pro-sourcing” swarm.
The startup has now added a real-time events and change-management engine to its autonomous map that Gupta contends is a major leap forward because it not only provides more detailed information to self-driving vehicles, it gives these driverless vehicles a suggested path.
In some mapping products, there’s generally a base map and then a dynamic overlay. The problem, Gupta explains, is that when things change, like a lane closure, the dynamic map only flags it, leaving it up to the vehicle to figure out what to do next.
“That works fine when humans are driving, it just doesn’t go far enough for AVs,” Gupta said. “What they need to know is how do I path plan around it?”
Carmera’s real-time events and change-management feature
The map will detect a change in milliseconds, classify it within seconds and then validate and redraw the base map within minutes, according to Carmera. The company is giving companies deploying autonomous vehicles API access to this data at every stage.
Carmera also has a “site intelligence product,” a jargon term that means the company provides spatial data and street analytics (like how pedestrians move within a particular intersection) to urban planners.
Carmera announced Thursday it will begin sharing data such as historical pedestrian analytics and real-time construction detection with New York City’s Department of Transportation. Carmera will get access to key city data sets in return. The partnership with NYC DOT follows an earlier-data sharing initiative with the Downtown Brooklyn Partnership.
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