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Did unicorns like Lyft and Uber wait too long?
It was several years ago, at a tech conference in Laguna Beach, Calif., that the venture capitalist Bill Gurley issued one of what would become repeated warnings that startups were staying private too long. Comparing companies that refuse to go public to undergrads whose college careers extend several years past the point that they should, Gurley suggested they should be embarrassed, not proud, for keeping their shares in private hands. “Until you get liquid, you really haven’t accomplished anything,” Gurley said.
Whether Gurley was referring to Uber at the time, only he knows. Though his firm, Benchmark, eventually forced out Travis Kalanick, the co-founder and longtime CEO of Uber, the tipping point was seemingly not Kalanick’s determination to keep Uber privately held as long as possible, but rather an investigation into sexual harassment investigations and the employee misconduct that was discovered in the process.
Either way, it’s looking increasingly like Gurley had a point. As you may have noticed if you care anything about the public markets, they took a nosedive today. In fact, they fell to a new low for the year this afternoon, a reaction in part to the Federal Reserve’s decision earlier today to raise its benchmark overnight lending rate for the fourth time in 2018.
The Fed also signaled minimal rate hikes for next year — forecasting two rate hikes instead of three — but investors were apparently hoping for even better news.
It’s hard to blame them for seeking out more of a silver lining, given everything else that’s going on. Tech stocks are getting battered, with the FANG companies (Facebook, Apple, Netflix and Google) down meaningfully from their share prices of six months ago. (Amazon has held up the best.)
The economy of China — the U.S.’s third largest export partner and its largest import partner — is slowing sharply, which is expected to have an impact on the U.S. and world economies. Add trade tensions into the mix, a sprinkling of uncertainty about regulations, a splash of a possible government shutdown and the growing prospect that Donald Trump will be impeached, and you start to appreciate why the market is finally going off the rails.
Despite so much uncertainty, Uber, Lyft, Slack and now Pinterest, among many others, are racing to become publicly traded at long last. According to Dealogic data quoted in today’s WSJ, 38 unicorn companies went public this year, and more are expected to test the market in 2019. Their venture backers will tell you it’s because the markets recognize a strong growth company when they see it, and that each is finally positioned well to tell their story, aided by some dazzling metrics. Yet it seems just as likely that they see the window, which flew open this year, starting to swing back in the other direction. And if this month is any indicator, it could be hard to pry it open again, at least in the first quarter or two.
“The market is basically closed between now, and the start of a new year is always slow because companies don’t start roadshows [until the markets re-open],” says Kathleen Smith, a principal of Renaissance Capital and the manager of its IPO exchange-traded fund. Pre-IPO companies like Uber are also waiting on their audits to close before they put any numbers in a public document, she notes. But it could be far from smooth sailing after that, suggests Smith. “In normal times, late January and February and March become very active, but we aren’t in a typical market. I can predict from other times that we’ve seen a bear market like this that it will have an impact on IPO activity.”
It’s all part of a vicious cycle, Smith suggests. As public market shareholders begin to feel less affluent and more risk averse, they start redeeming their public market shares. That leaves fund managers who might otherwise gamble on new issuers with less capital to invest, and less flexibility. “Investors are just not going to want to take on any risk positions when market has [taken a turn for the worse],” says Smith.
Put another way, if the markets are as crummy early next year as looks to be the case, it’s too bad, too sad for unicorn companies. “They made the choice to stay private and get capital,” says Smith. “I’ve stated many times that they should be getting while the getting is good. The pain can happen if money dries up, and it will dry up when the public market dries up.”
That doesn’t mean tech’s favorite unicorn companies are doomed, of course, especially those that can show strong fundamentals. For her part, Smith notes that what often happens in a downturn is that offerings get heavily discounted. “Valuations will be chopped if the companies want investors to participate. They’ll have to be sure to make money.”
Even if they don’t get the rich prices that ambitious bankers might pitch them (or that their VCs assigned them before that), they can always grow into the valuations their investors want to see. One need look no further than Facebook to remember why a bumpy offering doesn’t mean all that much longer term.
“Just because a stock crashes below its IPO price isn’t a sign of a bubble,” says Pivotal Research analyst Brian Wieser. “You also have to keep in mind the dynamic of companies going public,” he says. “You expect IPOs to be overvalued. Investors in these companies are necessarily selling to the greatest fool.”
Still, there may be fewer fools willing to buy what they are selling than there might have been this year or last, and if those numbers really change, today’s unicorns will look like tomorrow’s donkeys. They’re certainly going to face more scrutiny than they might have had they moved sooner.
“Maybe we’ll roar into 2019 and all will be well,” says Lise Buyer, the founder of Class V Group, an advisory firm for IPOs. “But to the extent that investors will be more selective, they’ll look at path to profitability, and they’ll look at the valuations these companies took when they were private.” Then they’ll do their own math, suggests Buyer.
If the market is truly shifting, public market shareholders “won’t care what valuations companies achieved when they were private,” says Buyer. “They’ll only be willing to pay what they are willing to pay.”
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Report: Pinterest may go public as soon as April
Pinterest may follow Lyft and Uber to the public markets in the first half of 2019, according to a report from The Wall Street Journal.
The visual search engine and shopping tool is expected to tap underwriters in January and complete an initial public offering as soon as April. The company was valued at just over $12 billion with its last private fundraise, a $150 million round in mid-2017, and is on pace to bring in $700 million in revenue this year.
The company, founded in 2008 by Ben Silbermann (pictured), is also in talks to secure a $500 million credit line, per the report, not an uncommon move for a pre-IPO giant like Pinterest.
To date, the company has raised nearly $1.5 billion from key stakeholders such as Bessemer Venture Partners, Andreessen Horowitz, FirstMark Capital, Fidelity and SV Angel.
Pinterest recently reached 250 million monthly active users, up from 200 million in 2017.
This year, it launched several new features to make it easier for passive Pinterest users to actually buy products on the platform, and introduced the “following” tab, where users could view only the content from brands and people they follow. It also added the Pinterest Propel program as part of an effort to create more local content for its users, and implemented full-screen video ads to beef up its advertising options — an area where it competes directly with Facebook and Google.
2019 is poised to be a banner year for venture-backed IPOs. Both Uber and Lyft are in IPO registration, filing privately to go public within hours of each other earlier this month, and Slack, too, has reportedly hired Goldman Sachs to lead its 2019 float.
Pinterest declined to comment.
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Contentful raises $33.5M for its headless CMS platform
Contentful, a Berlin- and San Francisco-based startup that provides content management infrastructure for companies like Spotify, Nike, Lyft and others, today announced that it has raised a $33.5 million Series D funding round led by Sapphire Ventures, with participation from OMERS Ventures and Salesforce Ventures, as well as existing investors General Catalyst, Benchmark, Balderton Capital and Hercules. In total, the company has now raised $78.3 million.
It’s been less than a year since the company raised its Series C round and, as Contentful co-founder and CEO Sascha Konietzke told me, the company didn’t really need to raise right now. “We had just raised our last round about a year ago. We still had plenty of cash in our bank account and we didn’t need to raise as of now,” said Konietzke. “But we saw a lot of economic uncertainty, so we thought it might be a good moment in time to recharge. And at the same time, we already had some interesting conversations ongoing with Sapphire [formerly SAP Ventures] and Salesforce. So we saw the opportunity to add more funding and also start getting into a tight relationship with both of these players.”
The original plan for Contentful was to focus almost explicitly on mobile. As it turns out, though, the company’s customers also wanted to use the service to handle its web-based applications and these days, Contentful happily supports both. “What we’re seeing is that everything is becoming an application,” he told me. “We started with native mobile application, but even the websites nowadays are often an application.”
In its early days, Contentful focused only on developers. Now, however, that’s changing, and having these connections to large enterprise players like SAP and Salesforce surely isn’t going to hurt the company as it looks to bring on larger enterprise accounts.
Currently, the company’s focus is very much on Europe and North America, which account for about 80 percent of its customers. For now, Contentful plans to continue to focus on these regions, though it obviously supports customers anywhere in the world.
Contentful only exists as a hosted platform. As of now, the company doesn’t have any plans for offering a self-hosted version, though Konietzke noted that he does occasionally get requests for this.
What the company is planning to do in the near future, though, is to enable more integrations with existing enterprise tools. “Customers are asking for deeper integrations into their enterprise stack,” Konietzke said. “And that’s what we’re beginning to focus on and where we’re building a lot of capabilities around that.” In addition, support for GraphQL and an expanded rich text editing experience is coming up. The company also recently launched a new editing experience.
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New York’s Taxi and Limousine Commission approves minimum wage rules for app-based drivers
The New York City Taxi and Limousine Commission has approved new rules designed to provide a minimum hourly wage of $17.22 (after expenses) for drivers who work with app-based services like Uber, Lyft, Via and Juno.
Fast Company reports that the rules try to deliver that wage by requiring drivers be paid according to a formula that incorporates mileage, time and utilization rate (the average percentage of time drivers have passengers in their cars). They also call for a higher payment when drivers have to take passengers far outside the city (to compensate for them for the return trip).
A proposed bonus payment for drivers offering Uber Pool and other shared-ride options appears to have been removed from the rules.
The Independent Drivers Guild, a labor organization that advocates for drivers, has been advocating for these changes, and it praised the TLC vote in a press release.
“Today we brought desperately needed relief to 80,000 working families,” said IDG founder Jim Conigliaro, Jr. “All workers deserve the protection of a fair, livable wage and we are proud to be setting the new bar for contractor workers’ rights in America. We are thankful to the Mayor, Commissioner [Meera] Joshi and the Taxi and Limousine Commission, City Council Member Brad Lander and all of the city officials who listened to and stood up for drivers.”
And The New York Taxi Workers Alliance issued a statement from Executive Director Bhairavi Desai:
It’s the first real attempt anywhere to stop app driver pay cuts, which is an Uber and Lyft business practice at the heart of poverty wages … Ultimately, the TLC needs to regulate Uber and Lyft passenger rates, guarantee that app drivers get 80 percent of those rates, and regulate the yellow/green meter to charge the same minimum rates, so drivers across the industry can earn a raise.
Uber and Lyft, meanwhile, criticized the decision, though with careful wording emphasizing that the companies aren’t opposed to ensuring that drivers receive a living wage.
“Uber supports efforts to ensure that full-time drivers in NYC – whether driving with taxi, limo or Uber – are able to make a living wage, without harming outer borough riders who have been ignored by yellow taxi and underserved by mass transit,” said Uber Director of Public Affairs Jason Post in a statement. “The TLC’s implementation of the City Council’s legislation to increase driver earnings will lead to higher than necessary fare increases for riders while missing an opportunity to deal with congestion in Manhattan’s central business district.”
Post argued that the rules do not account for the bonuses and other incentive payments that Uber and other companies might make. He criticized the TLC for adopting “an industry-wide utilization rate that does not hold bases accountable for keeping cars full with paying passengers.”
And here’s the statement from Lyft:
Lyft believes all drivers should earn a livable wage and we are committed to helping drivers reach their goals. Unfortunately, the TLC’s proposed pay rules will undermine competition by allowing certain companies to pay drivers lower wages, and disincentive drivers from giving rides to and from areas outside Manhattan. These rules would be a step backward for New Yorkers, and we urge the TLC to reconsider them.
Specifically Lyft says that companies would be able to essentially pay drivers less by claiming a higher utilization rate than the industry average. It also says that it will be nearly impossible to implement the higher out-of-town payment rates in the 30-day window before the new rules take effect.
Update: You can read the new Driver Income and Transparency Rules here.
“Convenience costs, and going forward, that cost will no longer be borne by the driver,” said TLC Chair Meera Joshi in a statement. “Today’s rules will raise driver earnings by on average $10,000 a year and require companies to be completely transparent on how they calculate pay and car leasing costs.”
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Lyft’s pink-wheeled shareable bikes will be available to rent soon
Lyft has finally given us a glimpse of its forthcoming line of shareable bikes, which the ridesharing company says will be available to rent within its mobile app in select cities “soon.”
The news comes as the $15 billion company announces the final close of its acquisition of Motivate, the New York City-based mobility startup that owns a number of bike-rental services, like Citi Bike, Ford GoBike, Divvy, Blue Bikes and Capital Bikeshare. The transaction was reportedly worth some $250 million.
Lyft brought in $600 million in fresh funding in June from backers Fidelity Research & Management, AllianceBernstein, Baillie Gifford, KKR, CapitalG, Rakuten and others.
Now that its bike deal is complete, Lyft becomes the largest bike service provider in the U.S. That’s a big leap forward for a company that hopes to have the largest dockless bike fleet in the world — outside of China, of course, where companies like Mobike have deployed millions of bikes.
As part of the deal, Lyft will invest $100 million in New York’s Citi Bike, tripling the number of bikes available to 40,000 by 2023.
Lyft launched its first fleet of scooters earlier this year in Denver, hot off the heels of scooter-mania, which saw companies like Bird and Lime garner billion-dollar valuations and complete launches all over the world.
The company says the scooters have been a success thus far. In Denver, for example, 15 percent of Lyft rides in 2018 were taken on scooters. The company has also made scooters available to rent within its app in Santa Monica and Washington, DC — a list that will undoubtedly swell in 2019.
Here’s hoping Lyft’s bike wheels are actually pink. If not, I will be gravely disappointed.
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Teamable, the Tinder for hiring, raises $5M and acquires Simppler
Teamable, a provider of hiring software that leverages employees’ social networks, has brought in $5 million from new investor Foundation Capital and existing backers True Ventures and SaaStr Fund.
The startup also announced its acquisition of Simppler‘s referral recommendation engine and matchmaking recruiting software. Teamable’s co-founder and chief executive officer Laura Bilazarian declined to disclose the terms of the deal but said none of the $5 million investment was used to finance the transaction.
According to Crunchbase, Simppler had raised $3.2 million in equity funding from Foundation Capital, Greylock, Vertex Ventures and others. The company, which is akin to Teamable, creates a referral platform using existing employee networks; it was founded by Vipul Sharma in 2013. Sharma previously ran machine learning at Eventbrite and, according to his LinkedIn profile, he’s been an engineering director at Indeed for the past year.
Sharma and the Simppler team will not be joining Teamable .
Using Gmail, Facebook, GitHub and other social media platforms, Teamable aggregates its employees’ contacts to connect recruiters with a more focused set of potential candidates. Companies using Teamable, including Spotify and Lyft, then facilitate a warm introduction between a candidate and the employee in their network. The startup says its social recruiting algorithms lead to more efficient and diverse hiring practices.
“I don’t think candidates love the way recruiting is done,” Bilazarian told TechCrunch. “They are throwing applications over a wall and not hearing back. And I don’t think companies love the way recruiting is done because people are just making guesses based off a job description and they aren’t getting the right applicants.”
“Instead of few people at a company spamming the entire world, you have people who really understand the company reaching out to you,” she added. “Teamable is very precise. It’s reach out to five people to get a hire versus reach out to 200 just to get one response.”
The Foundation-led investment brings Teamable’s total equity funding to date to $10 million, including last year’s $5 million Series A. Bilazarian says the 50-person company is cash flow positive with 200 customers. With offices in San Francisco and Yerevan, Armenia, Teamable will use the capital to expand its team and recruiting platform.
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Venture capital investment in US companies to hit $100B in 2018
So many new unicorns valued at $1 billion-plus, countless $100 million venture financings, an explosion of giant funds — it’s no surprise 2018 is shaping up to be a banner year for venture capital investment in U.S.-based companies.
There are more than 2.5 months remaining in 2018 and already U.S. companies have raised $84.1 billion — more than all of 2017 — across 6,583 VC deals as of Sept. 30, 2018, according to data from PitchBook’s 3Q Venture Monitor.
Last year, companies raised $82 billion across more than 9,000 deals in what was similarly an impressive year for the industry. Many questioned whether the trend would — or could — continue this year, and oh, boy has it. VC investment has sprinted past decade-highs and shows no signs of slowing down.
Why the uptick? Fewer companies are raising money, but round sizes are swelling. Unicorns, for example, were responsible for about 25 percent of the capital dispersed in 2018. Those companies, which include Slack, Stripe and Lyft, have raised $19.2 billion so far this year — a record amount — up from $17.4 billion in 2017. There were 39 deals for unicorn companies valuing $7.96 billion in the third quarter of 2018 alone.
Some other interesting takeaways from PitchBook’s report on the U.S. venture ecosystem:
- Nearly $28 billion was invested into early-stage startups in 2018, with median deal size increasing 25 percent to $7 million last quarter.
- Ten funds have raised more than $500 million this year and another five, including Lightspeed Venture Partners and Index Ventures, have closed on more than $1 billion.
- Companies based on the West Coast were responsible for 54.7 percent of deal value in 3Q but other regions are catching up: New England (12 percent), the Mid-Atlantic (20 percent) and The Great Lakes (5 percent).
- Investment in U.S. pharma and biotech has reached a new high of $14 billion already in 2018.
- Corporate venture capital activity is heating up. This year, CVCs invested $39.3 billion in U.S. startups, more than double the $15.2 billion invested in 2013.
- VC-backed companies are exiting via buyouts more than ever.
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Lime is pissed at San Francisco for denying it an e-scooter permit, claims ‘unlawful bias’
Lime is waging a war against the San Francisco Municipal Transporation Agency (SFMTA), claiming that the organization acted with “unlawful bias” and “sought to punish Lime” when it chose not to award the e-scooter and dockless bike startup a permit to operate in San Francisco last month.
Lime has sent an appeal to the SFMTA, requesting an “unbiased hearing officer” reevaluate its application to participate in the city’s 12-month pilot program for e-scooter providers. The SFMTA, however, says they are “confident” they picked the right companies in Scoot and Skip.
“After a thorough, fair and transparent review process, we are confident we selected the strongest applicants to participate in the one-year scooter pilot,” a spokesperson for SFMTA said in a statement provided to TechCrunch. “Scoot and Skip demonstrated the highest level of commitment to our city’s values of prioritizing public safety, promoting equity and ensuring accountability. Lime’s appeal will go to an independent hearing officer for further consideration.”
San Francisco’s permit process came as a result of Lime and its competitors, Bird and Spin, deploying their scooters without permission in the city this March. As part of a new city law, which went into effect in June, scooter startups are not able to operate in San Francisco without a permit.
Lyft, Skip, Spin, Lime, Scoot, ofo, Razor, CycleHop, USSCooter and Ridecell all applied for said permit in June.
Lime thinks the selection process was unfair and that because it deployed scooters in the city without asking permission — the Uber model of expansion — SFMTA intentionally rejected its application despite its qualifications.
“The SFMTA ignored the fact that Scoot’s price is twice that of other applicants, including Lime, and that Scoot declined to offer any discounted cash payment option to low-income users, as required by law,” Lime wrote in a statement today. “SFMTA inexplicably avoided inclusion of these factors as evaluation criteria and instead deemed Scoot “satisfactory” because they ‘agreed to comply.’”
When Lime learned of its rejection on Aug. 30, CEO Toby Sun said he was disappointed and planned to appeal the decision.
San Franciscans deserve an equitable and transparent process when it comes to transportation and mobility. Instead, the SFMTA has selected inexperienced scooter operators that plan to learn on the job, at the expense of the public good … The SFMTA’s handling of the dockless bike and scooter share programs has lacked transparency from the beginning. We call on the Mayor’s Office and Board of Supervisors to hold the SFMTA accountable for a flawed permitting process. As a San Francisco-based company, this is where we live and work. We want to serve this community.”
Though Lime wasn’t able to successfully sway San Francisco authorities, it was given permission to operate in Santa Monica last month alongside Bird, Lyft and JUMP Bikes.
E-scooters are expected to return to the streets of San Francisco on Oct. 15.
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Lyft hits 1 billion rides a couple of months after Uber hit 10 billion trips
Today marks a big milestone for Lyft — one billion rides. That’s a milestone Uber hit in December 2015. Uber has since grown to 10 billion trips completed — including Eats deliveries — as of this past July. Uber, of course, had a bit of head start given it launched in 2009 while Lyft first launched in 2012.
This milestone for Lyft comes about a year after it announced it was completing one million rides a day. To celebrate it, Lyft employees are surprising 3,500 drives with a free tank of gas.
Earlier this month, Lyft officially entered the scooter sharing space when it launched electric scooters in Denver, Colo. Lyft has since deployed its scooters in Santa Monica, Calif. as part of the city’s pilot program. Lyft’s entrance into scooters came close after its acquisition of bike-share company Motivate. We’ll be watching closely to see how Lyft’s additional modes of transportation impacts number of trips completed.
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The top 10 startups from Y Combinator’s Demo Day S18 Day 2
Fifty-nine startups took the stage at Y Combinator’s Demo Day 2, and among the highlights were a company that helps developers manage in-app subscriptions; a service that lets you create animojis from real photos; and a surplus medical equipment-reselling platform. Oh… and there was also a company that’s developed an entirely new kind of life form using e coli bacteria. So yeah, that’s happening.
Based on some investor buzz and what caught TechCrunch’s eye, these are our top picks from the second day of Y Combinator’s presentations.
You can find the full list of companies that presented on Day 1 here, and our top picks from Day 1 here.
64-x
With a founding team including some of the leading luminaries in the field of biologically inspired engineering (including George Church, Pamela Silver and Jeffrey Way from Harvard’s Wyss Institute), 64-x is engineering organisms to function in otherwise inaccessible environments. Chief executive Alexis Rovner, herself a post-doctoral fellow at the Wyss Institute, and chief operating officer Ryan Gallagher, a former BCG Consultant, are looking to commercialize research from the Institute around accelerating and expanding the ability to produce functionalized proteins and sequence-defined polymers with diverse chemistries. Basically they’ve engineered a new life form that they want to use for novel kinds of bio-manufacturing.
Why we liked it: These geniuses invented a new life form.
CB Therapeutics
Sher Butt, a former lab directory at Steep Hill, saw that cannabinoids were as close to a miracle cure for pain, epilepsy and other chronic conditions as medicine was going to get. But plant-based cannabinoids were costly and produced inconsistent results. Alongside Jacob Vogan, Butt realized that biosynthesizing cannabinoids would reduce production costs by a factor of 10 and boost production 24 times current yields. With a deep experience commercializing drugs for Novartis and as the founder of the cannabis testing company SB Labs, Butt and his technical co-founder are uniquely positioned to bring this new therapy to market.
Why we liked it: Using manufacturing processes to make industrial quantities of what looks like nature’s best painkiller at scale is not a bad idea.
RevenueCat
RevenueCat helps developers manage their in-app subscriptions. It offers an API that developers can use to support in-app subscriptions on iOS and Android, which means they don’t have to worry about all the nuances, bugs and updates on each platform.
The API also allows developers to bring all the data about their subscription business together in one place. It might be on to something, though it isn’t clear how big that something is quite yet. The nine-month-old company says it’s currently seeing $350,000 in transaction volume every month; it’s making some undisclosed percentage of money off that amount.
Read more about RevenueCat here.
Why we liked it: Write code. Release app. Use RevenueCat. Get paid. That sounds like a good formula for a pretty compelling business.
Ajaib
Indonesia is a country in transition, with a growing class of individuals with assets to invest yet who, financially, don’t meet the bar set by many wealth managers. Enter Ajaib, a newly minted startup with the very bold ambition of becoming the “Ant Financial of wealth management for Indonesia.” Why the comparison? Because China was in the same boat not long ago — a country whose middle class had little access to wealth management advice. With the founding of Ant Financial nearly four years ago, that changed. In fact, Ant now boasts more than 400 million users.
China is home to nearly 1.4 billion, compared with Indonesia, whose population of 261 million is tiny in comparison. Still, if its plans work out to charge 1.4 percent for every dollar managed, with an estimated $370 billion in savings in the country to chase after, it could be facing a meaningful opportunity in its backyard if it gains some momentum.
Why we liked it: If Ajaib’s wealth management plans (to charge 1.4 percent for every dollar it manages) work out — and with a total market of $370 billion in savings in Indonesia — the company could be facing a meaningful opportunity in its backyard.
Grin
The scooter craze is hitting Latin America and Grin is greasing the wheels. The Mexico City-based company was launched by co-founder Sergio Romo after he and his partner realized they weren’t going to be able to get a cut of the big “birds” on the scooter block in the U.S. (as Axios reported). Romo and his co-founder have already lined up a slew of investors for what may be the hottest new deal in Latin America. Backers include Sinai Ventures, Liquid2 Ventures, 500 Startups, Monashees and Base10 Partners.
Why we liked it: Scooters are so 2018. But there’s a lot of money to be made in mobility, and as the challenge from Bird and Lime to Uber and Lyft in hyperlocal transit has revealed, there’s no dominant player that’s taken over the market… yet.
Emojer
Creating animated emojis made from real photos, Emojer just might be the most fun you can have with a camera. The company’s software uses deep learning algorithms to detect body parts and guides users in creating their own avatars with just a simple photo take from a mobile phone. It’s replacing deep Photoshop expertise and animation skills with a super simple interface. The avatars look very similar to Elf Yourself, a popular site that let you paste your friends’ faces on dancing Christmas elves goes viral every year at Christmastime. Founders have PhDs in machine learning and computer vision.
Why we liked it: As the company’s chief executive said, Snap was for sexting, and Facebook was hot or not, so who says the next big consumer platform couldn’t be the Trojan horse of easily generated selfiemojis (akin to Elf Yourself)?
Osh’s Affordable Pharmaceuticals
Osh’s Affordable Pharmaceuticals is a public benefit corporation connecting doctors and patients with sources of low-cost, compounded pharmaceuticals. The company is looking to decrease barriers to entry for drugs for rare diseases. Three weeks ago the company introduced a drug to treat Wilson’s Disease. There was no access to the drug that treats the disease before in Brazil, India or Canada. It slashes the cost of drugs from $30,000 a month to $120 per month. The company estimates it has a total addressable market of $17 billion. “Generic drug pricing is a crisis, people are dying because they can’t get access to the medicine they need,” says chief executive Alex Oshmyansky. Osh’s might have a solution.
Why we liked it: Selling lower-cost medications for rare diseases in countries that previously hadn’t had access to them is a good business that’s good for the world.
Medinas Health
Tackling a $75 billion problem of healthcare waste, Medinas Health is giving hospitals an easy way to resell their used supplies. The company has already raised $1 million for its marketplace to help healthcare organizations buy and sell equipment. With a seed round led by Ashton Kutcher and Guy Oseary’s Sound Ventures, and General Catalyst’s Rough Draft Ventures fund, the company is also working to lower costs for cash-strapped rural healthcare centers.
Why we liked it: Finding uses for hospital equipment that’s been lying fallow in corners is a big business. A $75 billion business if Medinas’ estimates are correct. Add helping cut costs for rural medical facilities and Medinas is a business we can get behind.
And Comfort
Plus-size women have limited clothing options even at the largest retailers like Nordstrom and Macy’s. While a majority of American women fall into the plus-size clothing category, 100 million women are constrained to shopping for a very small percentage of options. And Comfort wants to solve the supply problem. To do this, the founders, two former Harvard classmates, are building a direct-to-consumer fashion brand with stylish, minimalist offerings for plus-size women, including tunic shirts and an apron dress. It’s very early days for the brand, but since launching in recent weeks, they’ve seen $25,000 in sales.
Why we liked it: This direct-to-consumer fashion brand is bringing higher quality, better-designed clothing options to a market that’s underserved and growing quickly. What’s not to like?
ShopWith
Influencers of the world are uniting on mobile app, ShopWith, which allows shoppers to browse virtual storefronts and aisles alongside their favorite fashion and beauty creators and YouTubers. Users can see exactly what products those influencers have featured and can buy them without ever leaving the app. It’s a free download and hours of commercially consumptive fun.
It’s like the QVC model, but for GenZ shoppers whose buying habits are influenced by social video content on YouTube, Instagram and Snapchat. The company revealed that one beauty influencer made $10,000 within five hours using the ShopWith platform. The founders are former product managers with experience building social commerce products at Facebook and Amazon.
Why we liked it: The QVC for GenZ not only has a nice ring to it, it’s a recipe for making cash registers hum. A mobile-first, influencer-based shopping company is something that we’d definitely not call an impulse purchase.
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