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How 4 New Jersey pools turned into a startup that just raised $10M
As the oldest of 12 children, Bunim Laskin spent much of his teen years looking for ways to help keep his siblings entertained. Noticing that a neighbor’s pool was often empty, Laskin reached out to ask if his family could use her pool. To make it worth her while, he suggested that they could help cover her expenses for maintaining the pool.
Soon after, five other families had made the same arrangement with her and the pool owner had six families covering 25% of her expenses. This meant that the neighbor was actually making money off her pool. The arrangement sparked a business idea in Laskin’s mind. At the age of 20, he founded Swimply, a marketplace for homeowners to rent out their underutilized pools to local swimmers, with Asher Weinberger.
The Cedarhurst, New York-based company launched a beta in 2018, starting with four pools in the New Jersey area.
“We used Google Earth to find houses, and then knocked on 80 doors with a pool,” CEO Laskin recalls. “We got to 100 pools organically. Word of mouth really helped us grow.” The site was pretty bare bones, he admits, with potential customers only able to view photos of the pools and connect with the pool owner by phone.
That year, Swimply did around 400 reservations and raised $1.2 million from friends and family.
In 2019, Swimply launched what he describes as a “proper” website and app with an automated platform. It grew “four to five times” that year, again mostly organically. In an episode that aired in March 2020, the company appeared on Shark Tank but went home without a deal.
Then the COVID-19 pandemic hit. Swimply, Laskin said, pivoted right into the pandemic.
“We were the perfect solution for people when the world was falling on its head,” he said. The company restructured its offering to ensure that pool owners did not have to interact with guests. “It was the perfect, contact-free, self-serve experience to hang out and be with people you quarantined with.”
The CDC then came out to say that it was safe to swim because chlorine could help kill the virus, and that proved to be a big boon to its business.
“On one end, it was a way for people to have a normal day and on the other, it helped give owners a way to earn an income, at a time when many people were being affected financially,” Laskin told TechCrunch.
Business took off in 2020 with revenue growing 4,000% and now Swimply is announcing a $10 million Series A round. Norwest Venture Partners led the financing, which also included participation from Trust Ventures and a number of angel investors such as Poshmark founder and CEO Manish Chandra; Rob Chesnut, former general counsel and chief ethics officer at Airbnb; Ancestry.com CEO Deborah Liu and Michael Curtis.
Swimply is now operating in a total of 125 U.S. markets, two markets in Canada and five markets in Australia. It plans to use its new capital in part to expand into new markets and toward product development.
Image Credits: Swimply
The way it works is pretty straightforward. Swimply simply connects homeowners that have underutilized backyard spaces and pools with those seeking a way to gather, cool off or exercise, for example. People or families can rent pools by the hour, ranging in price from $15 to $60 per hour (at an average of $45/hour) depending on the amenities. New markets that Swimply has recently expanded to include Portland, Oregon; Raleigh, North Carolina and the California cities of Oakland, San Luis Obispo and Los Gatos.
“The shifting mindset from younger generations about ownership is a huge contributor to increased growth of the Swimply marketplace,” said co-founder Weinberger, who serves as Swimply’s COO. “Swimming is the third most popular activity for adults and number one for children, and yet no other company has tackled the aquatic space to make swimming more affordable and accessible…until now.”
While the company declined to provide hard revenue figures, Laskin said Swimply was seeing “seven digits a month in revenue” and 15,000 to 20,000 reservations a month. Families represent the most popular reservation.
“People can book and pay through our platform, and only 20% of hosts ever meet their guests,” Laskin said. “We’re enabling a new kind of consumer behavior with what we’re doing.”
The company is planning to use its new capital to also rebuild much of its tech infrastructure and boost its customer support team to be more “readily available.”
It is also now offering a complimentary up to $1 million worth of insurance per booking for liability as well as $10,000 for property damage.
Swimply has a little over 20 employees, up 10 times from two people in December of 2020. It plans to double that number over the next few months.
The company’s model has proven quite lucrative for some owners, according to Laskin.
“Last year, there were some owners who earned $10,000 a month. One owner in Denver earned $50,000 last year and he had signed up toward the end of the summer. He should make over $100,000 this year,” Lasken projects.
Its only criteria is that owners offer a clean pool. Eighty-five percent of hosts offer restrooms as well. If they don’t, they are limited to one-hour reservations with a max of five guests. Swimply has also partnered with local pool companies, and if they pay one of its owners a visit and certify that pool, that owner gets a badge on the site “so guests get an additional level of security,” Laskin said.
Ed Yip of Norwest Venture Partners admits that when he first heard of the concept of Swimply, he “didn’t know what to make of it.”
But the more he heard about it, the more excited he got.
“This is the Holy Grail for a consumer investor. We’re not changing consumer behavior, but rather [we] productize the experience and make it safer and easier on both sides,” Yip told TechCrunch.
What also gets the investor excited is the potential for Swimply beyond just swimming pools in the future.
“We’re seeing a ton of demand from hosts wanting to list hot tubs and tennis courts, for example,” Yip said. “So this can turn into a marketplace for shared outdoor resources and that’s a huge market opportunity that adds value on both sides.”
Indeed, the concept of monetizing underutilized space is a growing concept. Earlier this year, we reported on Neighbor, which operates a self-storage marketplace, raising $53 million in a Series B round of funding. Neighbor’s unique model aims to repurpose under-utilized or vacant space — whether it be a person’s basement or the empty floor of an office building — and turn it into storage.
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New clinical trial data from Locus Biosciences shows promise in CRISPR-Cas3 technology
Antibiotic resistance is one of the biggest potential threats to global health today. But Locus Biosciences is hoping that their crPhage technology might provide a new solution.
Based in North Carolina’s Research Triangle, the startup recently announced promising phase 1b clinical trial results for their use of CRISPR-Cas3-enhanced bacteriophages as a treatment for urinary tract infections caused by escherichia coli. Led in part by former Patheon executive and current Locus CEO Paul Garofolo, the startup launched in 2015 with the goal of using a less popular application of CRISPR technology to address growing antimicrobial resistance.
CRISPR-Cas3 technology has notably different mechanisms from its more well-known CRISPR-Cas9 counterpart. Where the Cas9 enzyme has the ability to cleanly cut through a piece of DNA like a pair of scissors, Garofolo describes Cas3 more like a Pac-Man, shredding the DNA as it moves along a strand.
“You wouldn’t be able to use it for most of the editing platforms people were after,” he said, noting that meant there wouldn’t be as much competition around Cas3. “So I knew it would be protected for some time, and that we could keep it quiet.”
Garofolo and his team wanted to use CRISPR-Cas3 not to edit harmful bacteria found in the body, but to destroy it. To do this, they took the DNA-shredding mechanism of Cas3 and used it to enhance bacteriophages — viruses that can attack and kill different species of bacteria. Together, co-founder and Chief Scientific Officer Dave Ousterout — who has a PhD in biomedical engineering from Duke — thinks this technology offers an extremely direct and targeted way of killing bacteria.
“We armed the phages with this Cas3 system that attacks E. coli, and that sort of dual mechanism of action is what comes together, essentially, as a really potent way to remove just E. coli,” he said in an interview.
That specificity is something that antibiotics lack. Rather than targeting only harmful bacteria in the body, antibiotics typically wipe out all bacteria they come across. “Every time we take antibiotics, we’re not thinking about all the other parts of us that are impacted by the bacteria that do good things,” said Garofolo. But the precision of Locus Biosciences’ crPhage technology means that only the targeted bacteria would be wiped out, leaving those necessary to the body’s normal function intact.
Beyond offering this more specific approach to treatment of pathogens, or any bacteria-based disease, Garofolo and his team also suspect that their approach will also be extremely safe. Though deadly to bacteria, bacteriophages are typically harmless to humans. The safety of CRISPR in humans is well-established, too.
“That’s our secret sauce,” said Garofolo. “We can build drugs that are more powerful than the antibiotics they’re trying to replace, and they use phage, which is probably one of the world’s safest ways to deliver something into the human body.”
While this new technology could certainly help treat pathogens and infectious diseases, Garofolo hopes that indications in immunology, oncology and neurology might benefit from it too. “We’re starting to figure out that some bacteria might promote cancer, or inflammation in your gut,” he said. If researchers can identify the bacteria at the root cause of those conditions, Garofolo and Ousterout think the crPhage technology might prove to be an effective treatment.
“If we’re right about that, it’s not just about infections or antimicrobial resistance, but helping people overcome cancer or delay the onset of dementia,” Garofolo said. “It’s changing the way we think about how bacteria really help us live.”
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Home services platform Porch acquires four companies
Only a few weeks after its SPAC IPO, Porch today announced that it has made four acquisitions, worth a total of $122 million. The most important here is probably the acquisition of Homeowners of America for $100 million, which gets Porch deeper into the home insurance space. In addition, Porch is also acquiring mover marketing and data platform V12 for $22 million, as well as home inspection service Palm-Tech and iRoofing, a SaaS application for roofing contractors. Porch did not disclose the acquisition prices for the latter two companies.
You may still think of Porch as a marketplace for home improvement and repair services — and that’s what it started out as when it launched about seven years ago. Yet while it still offers those services, a couple of years after its 2013 launch, the company pivoted to building what it now calls a “vertical software platform for the home.” Through a number of acquisitions, the Porch Group now includes Porch.com, as well as services like HireAHelper, Inspection Support Network for home inspectors, Kandela for providing services around moving and an insurance broker in the form of the Elite Insurance Group. In some form or another, Porch’s tools are now used — either directly or indirectly — by two-thirds of U.S. homebuyers every month.
Porch founder and CEO Matt Ehrlichman. Image Credits: Porch
As Porch founder and CEO Matt Ehrlichman told me, he had originally planned to take his company public through a traditional IPO. He noted that going the increasingly popular SPAC route, though, allowed him to push his timeline up by a year, which in turn now enables the company to make the acquisitions it announced today.
“In total, we had a $323 million fundraise that allows us now to not only be a public company with public currency, but to be very well capitalized. And picking up that year allows us to be able to go and pursue acquisitions that we think make really good fits for Porch,” Ehrlichman told me. While Porch’s guidance for its 2021 revenue was previously $120 million, it’s now updating that guidance to $170 million based on these acquisitions. That would mean Porch would grow its revenue by about 134% year-over-year between 2020 and 2021.
As the company had previously laid out in its public documents, the plan for 2021 was always to get deeper into insurance. Indeed, as Ehrlichman noted, Porch these days tends to think of itself as a vertical software company that layers insurtech on top of its services in order to be able to create a recurring revenue stream. And because Porch offers such a wide range of services already, its customer acquisition costs are essentially zero for these services.
Image Credits: Homeowners of America
Porch was already a licensed insurance brokerage. With Homeowners of America, it is acquiring a company that is both an insurance carrier as well as a managing general agent..
“We’re able to capture all of the economic value from the consumer as we help them get insurance set up with their new home and we can really control that experience to delight them. As we wrap all the technology we’ve invested in around that experience we can make it super simple and instant to be able to get the right insurance at the right price for your new home. And because we have all of this data about the home that nobody else has — from the inspection we know if the roof is old, we know if the hot water system is gonna break soon and all the appliances — we know all of this data and so it just gives us a really big advantage in insurance.”
Data, indeed, is what a lot of these acquisitions are about. Because Porch knows so much about so many customers, it is able to provide the companies it acquires with access to relevant data, which in turn helps them offer additional services and make smarter decisions.
Homeowners of America is currently operating in six states (Texas, Arizona, North Carolina, South Carolina, Virginia and Georgia) and licensed in 31. It has a network of more than 800 agencies so far and Porch expects to expand the company’s network and geographic reach in the coming months. “Because we have [customer acquisition cost]-free demand all across the country, one of the opportunities for us is simply just to expand that across the nation,” Ehrlichman explained.
As for V12, Porch’s focus is on that company’s mover marketing and data platform. The acquisition should help it reach its medium-term goal of building a $200 million revenue stream in this area. V12 offers services across multiple verticals, though, including in the automotive space, and will continue to do so. The platform’s overall focus is to help brands identify the right time to reach out to a given consumer — maybe before they decide to buy a new car or move. With Porch’s existing data layered on top of V12’s existing capabilities, the company expects that it will be able to expand these features and it will also allow Porch to not offer mover marketing but what Ehrlichman called “pro-mover” services, as well.
“V12 anchors what we call our marketing software division. A key focus of that is mover marketing. That’s where it’s going to have, long term, tremendous differentiation. But there are a number of other things that they’re working on that are going to have really nice growth vectors, and they’ll continue to push those,” said Ehrlichman.
As for the two smaller acquisitions of iRoofing and Palm-Tech, these are more akin to some of the previous acquisitions the company made in the contractor and inspection verticals. Like with those previous acquisitions, the plan is to help them grow faster, in part through integrating them into the overall Porch group’s family of products.
“Our business is and continues to be highly recurring or reoccurring in nature,” said Porch CFO Marty Heimbigner. “Nearly all of our revenues, including that of these new acquisitions, is consistent and predictable. This repeat revenue is also high margin with less than 20% cost of revenue and is expected to grow more than 30% per year on our platform. So, we believe these deals are highly accretive for our shareholders.”
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With Goat Capital, Justin Kan and Robin Chan want to keep founding alongside the right teams
Justin Kan and Robin Chan have each been angel investing for more than a decade. They’re starting a new fund together now, though, to stay involved as cofounders of more startups.
Goat Capital is a hybrid incubator versus a pure seed investment firm, Chan explains. It will be writing checks ranging between roughly half a million and $3 million dollars, and it is only planning to raise $40 million — so the checks will be selective.
The offering is that “you’re going to be working with Justin and Robin,” he says, as a direct collaboration to help your company succeed. With $25 million closed already from themselves and several family offices, the fund has begun investing globally with particular interests in digital health, ecommerce, digital entertainment and gaming, robotics and climate change.
The goal is not just about being the Greatest Of All Time, Kan adds. In a startup, you “climb high heights and eat shit to get there. That tenacity is what we want.”
It’s a nod to their own successes and struggles as founders over the years, and what they have seen as investors and advisors to a wide range of companies around the world (Twitter, Xiaomi, Bird, Uber, Square, Ginkgo Bioworks, Scale.ai, Cruise, Razorpay, Xendit, Equipment Share, Wave, Teachable, Semantic Machines, Rippling, Built Robotics, etc.)
Kan was a cofounder of Justin.tv, which became Twitch as well as Socialcam. He later had an on-demand company called Exec and previously a calendar app called Kiko, both of which sold for small amounts. Most recently, he took a big shot at the traditional legal industry with Atrium, a law firm and legal software startup that raised big rounds of funding before shuttering earlier this year.
His prototype for Goat is Alto Pharmacy, a booming digital health unicorn today that the founders started in his living room.
“We do think founders should be treated like athletes, going for gold really hard… the Olympic metaphor,” Kan qualifies about the name. “That means grinding for years — and having to rest, too. I’m very passionate about mental health and wellness as part of the journey.” (More on that here.)
Chan, meanwhile, sold his gaming startup in China to Zynga a decade ago, then helped lead a failed attempt to buy Blackberry before founding Operator, a well-funded ecommerce company that closed a few years ago. During the pandemic, he helped create Operation Masks, a nonprofit that has been providing PPE across the US. He’s also an ongoing advisor to Sleeper, Bird, Expa and Flipboard.
The focus will be fully global now. Chan explains that even though you’re seeing more challenges to building a truly global company these days, there’s more space for local startups to win big.
“There’s the US internet, the China internet, the India internet, the EU internet — in some ways it makes those markets more valuable to win, like traditional media. Broadcast and cable are highly geographic but the franchise value becomes higher because of the regulatory moat.”
Chan, on that note, met Kan back when he was a director at [current TechCrunch owner] Verizon Wireless, when Justin.tv was trying to negotiate for free data. When I asked if they had worked out a deal during a phone interview, Kan said “you [expletive] didn’t.”
But it did lead to other co-investments later on, including Ramp, Workstream and others, and now this fund.
Today, Kan says that the focus on teams will be as flexible as the times. “When we started, the internet was America,” he says. “If you weren’t there, you weren’t a company. It’s been a complete reversal of that. Now teams are international, talent is international, more and more companies are building remote first — although you’d seen that before given the costs of the Bay. We have an entirely remote company in North Carolina, Grammarly in Europe… it’s more and more the norm. Smart founders are going anywhere to find talent.
For the two partners, this new fund will be about staying connected to that certain startup feeling that is elusive for anyone trying to build something great.
“There’s nothing more magical than being in the first step of a special company,” Chan says. “That glimpse of the future. We wouldn’t get the same feeling at the growth stage versus working with small teams or a single founder. I think we have the instinct.”
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JupiterOne raises $19M Series A to automate cyber asset management
Asset management might not be the most exciting talking topic, but it’s often an overlooked area of cyber-defenses. By knowing exactly what assets your company has makes it easier to know where the security weak spots are.
That’s the problem JupiterOne is trying to fix.
“We built JupiterOne because we saw a gap in how organizations manage the security and compliance of their cyber assets day to day,” said Erkang Zheng, the company’s founder and chief executive.
The Morrisville, North Carolina-based startup, which spun out from healthcare cloud firm LifeOmic in 2018, helps companies see all of their digital and cloud assets by integrating with dozens of services and tools, including Amazon Web Services, Cloudflare and GitLab, and centralizing the results into a single monitoring tool.
JupiterOne says it makes it easier for companies to spot security issues and maintain compliance, with an aim of helping companies prevent security lapses and data breaches by catching issues early on.
The company already has Reddit, Databricks and Auth0 as customers, and just secured $19 million in its Series A, led by Bain Capital Ventures and with participation from Rain Capital and its parent company LifeOmic.
As part of the deal, Bain partner Enrique Salem will join JupiterOne’s board. “We see a large multi-billion-dollar market opportunity for this technology across mid-market and enterprise customers,” he said. Asset management is slated to be a $8.5 billion market by 2024.
Zheng told TechCrunch the company plans to use the funds to accelerate its engineering efforts and its go-to-market strategy, with new product features to come.
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Unity’s IPO numbers look pretty … unreal?
Unity, the company founded in a Copenhagen apartment in 2004, is poised for an initial public offering with numbers that look pretty strong.
Even as its main competitor, Epic Games, is in the throes of a very public fight with Apple over the fees the computer giant charges developers who sell applications (including games) on its platform (which has seen Epic’s games get the boot from the App Store), Unity has plowed ahead, narrowing its losses and maintaining its hold on over half of the game development market.
For the first six months of 2020, the company lost $54.2 million on $351.3 million in revenue. The company narrowed its losses compared to 2019, when the company lost $163.2 million on $541.8 million in revenue, and 2018 when the company lost $131.6 million on $380.8 million in revenue. As of June 30, 2020 the company had total assets of $1.29 billion and $453.2 million in cash.
Increasing revenue and narrowing losses are things that investors like to see in companies that they’re potentially going to invest in, as they point to a path to profitability. Another sign of the company’s success is the number of customers that contribute more than $100,000 in annual revenue. In the first six month of the year, Unity had 716 such customers, pointing to the health of its platform.
The company will trade on the NYSE under the single-letter ticker “U”. The NYSE only has a few single letters left to offer, although Pandora gave up the letter P when it was bought by Liberty Media back in 2018.
Unlike Epic Games, Unity has long worked with the major platforms and gaming companies to get their engine in front of as many developers and gamers as possible. In fact, the company estimates that 53% of the top 1,000 mobile games on the Apple App Store and Google Play Store and over 50% of mobile, personal computer and console games were made with Unity.
Some of the top titles that the platform claims include Nintendo’s Mario Kart: Tour, Super Mario Run and Animal Crossing: Pocket Camp; Niantic’s Pokémon GO and Activision’s recent Call of Duty: Mobile are also Unity games.
The knock against Unity is that it’s not as powerful as Epic’s Unreal rendering engine, but that hasn’t stopped the company from making forays into industries beyond gaming — something that it will need to continue doing if it’s to be successful.
Unity already has a toehold in Hollywood, where it was used to recreate the jungle environment used in Disney’s “Lion King” remake (meanwhile, much of “The Mandalorian” was created using Epic’s Unreal engine).
Of course, Unity’s numbers also reveal that the size of its business is currently a bit smaller than its biggest rival. In 2019, Epic said it had earnings of $730 million on revenue of $4.2 billion, according to VentureBeat . And the North Carolina-based game developer is now worth $17.3 billion.
Still, the games market is likely big enough for both companies to thrive. “Historically there has been substantial industry convergence in the games developer tools business, but over the past decade the number of developers has increased so much, I believe the market can support two major players,” Piers Harding-Rolls, games analyst at Ampere Analysis, told the Financial Times.
Venture investors in the Unity platform have waited a long time for this moment, and they’re certainly confident in the company’s prospects.
The last investment round valued the company at $6 billion, with the secondary sale of $525 million worth of the company’s shares.
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Investors find a spot for $65 million in Passport’s parking management tech
The big new round of funding for Passport’s ticketing and parking management tech proves that software can even disrupt something as mundane and seemingly low-tech as the parking lot.
The startup, which just raised $65 million in new financing from investors, is a permitting, parking and ticketing management service for cities, office parks and campuses.
The capital commitment more than doubles the North Carolina-based startup’s funding to $125 million and is actually the second big investment round of the year for a parking tech company. SpotHero, the Chicago-based marketplace for parking, raised $50 million earlier in the year, and other services related to auto care and servicing in parking lots or on-demand have raised tens of millions of dollars as well.
“In the future, almost everyone in the world will live in a city, so there’s no more important challenge to work on than how people move throughout communities and transact with cities,” said Bob Youakim, Passport co-founder and chief executive, in a statement. “We envision a world where mobility is seamless. To bring this vision to life, we are creating an open ecosystem where any entity — a connected or autonomous vehicle, a mapping app, or a parking app — can leverage our transactional infrastructure to facilitate digital parking payments.”
Passport’s application interfaces allow any government to set up electronic payments for parking tickets and with mobile readers can scan licenses to check for permits and approvals that car owners have through the company’s management service.
With the close of the new round, Habib Kairouz from Rho Capital Partners and Scott Hilleboe from H.I.G. will both take seats on the company’s board of directors.
The company processes more than 100 million transactions per year and will see $1.5 billion pass through its system this year.
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SmartNews’ head of product on how the news discovery app wants to free readers from filter bubbles
Since launching in the United States five years ago, SmartNews, the news aggregation app that recently hit unicorn status, has quietly built a reputation for presenting reliable information from a wide range of publishers. The company straddles two very different markets: the U.S. and its home country of Japan, where it is one of the leading news apps.
SmartNews wants readers to see it as a way to break out of their filter bubbles, says Jeannie Yang, its senior vice president of product, especially as the American presidential election heats up. For example, it recently launched a feature, called “News From All Sides,” that lets people see how media outlets from across the political spectrum are covering a specific topic.
The app is driven by machine-learning algorithms, but it also has an editorial team led by Rich Jaroslovsky, the first managing editor of WSJ.com and founder of the Online News Association. One of SmartNews’ goal is to surface news that its users might not seek out on their own, but it must balance that with audience retention in a market that is crowded with many ways to consume content online, including competing news aggregation apps, Facebook and Google Search.
In a wide-ranging interview with Extra Crunch, Yang talked about SmartNews’ place in the media ecosystem, creating recommendation algorithms that don’t reinforce biases, the difference between its Japanese and American users and the challenges of presenting political news in a highly polarized environment.
Catherine Shu: One of the reasons why SmartNews is interesting is because there are a lot of news aggregation apps in America, but there hasn’t been one huge breakout app like SmartNews is in Japan or Toutiao in China. But at the same time, there are obviously a lot of issues in the publishing and news industry in the United States that a good dominant news app might be able to help, ranging from monetization to fake news.
Jeannie Yang: I think that’s definitely a challenge for everybody in the U.S. With SmartNews, we really want to see how we can help create a healthier media ecosystem and actually have publishers thrive as well. SmartNews has such respect for the publishers and the industry and we want to be good partners, but also really understand the challenges of the business model, as well as the challenges for users and thinking of how we can create a healthier ecosystem.
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Public health startup Cityblock raises $65M Series B
Redpoint Ventures has led a $65 million Series B in Cityblock, a healthcare company focused on providing improved care to low-income neighborhoods.
The business launched roughly 18 months ago out of Alphabet’s Sidewalk Labs, an urban innovation incubator known for projects like mobility data startup Coord, which itself raised a $5 million round in October.
“We’re a tech-enabled services company focused on caring for a population that has been traditionally overlooked by the innovation community and generally underserved across healthcare,” co-founder and chief executive officer Iyah Romm told TechCrunch. “We believe we can fundamentally redefine the way that health services are built across the country for low-income populations. These are populations that have never been prioritized.”
Romm has spent his entire career in the public health sector. Prior to joining Sidewalk Labs as an entrepreneur-in-residence in 2017, he spent one year as the chief transformation officer of the Commonwealth Care Alliance, a nonprofit medical care delivery organization.
Cityblock provides personalized medical and behavioral health and social services across a growing number of clinics on the East Coast. The company will use the investment to open additional clinics and continue the development of its core platform, Commons. The care delivery platform helps care workers collaborate and stay up to date on patients, with real-time hospital admission alerts to tools for tracking treatment progress.
Cityblock opened its first clinic, or “neighborhood hub,” in Brooklyn, New York after forging a partnership with EmblemHealth, a New York neighborhood health insurance business. They’ve since expanded to Connecticut via a partnership with ConnectiCare, a Connecticut insurance provider. Cityblock will open clinics in North Carolina later this year. Cityblock’s services come at no additional costs to members covered by partner insurance businesses.
The startup’s hope is to get these low-income demographics regular access to more affordable care. Preventative care, after all, is a whole lot cheaper than emergency room visits.
“People end up going to the ER when problems are really bad, for conditions that can be managed,” Redpoint partner and newly appointed Cityblock board member Elliot Geidt told TechCrunch. “There are 75 million people on Medicaid alone and a good portion of these people are living in the inner cities. It’s a problem that has a scope larger than most things that we see in the venture community. The big problem with this population is the existing healthcare system doesn’t work for them, it falls short on so many levels.”
New investors 8VC, Echo Health Ventures and StartUp Health also participated in the latest round, as did existing investors including Sidewalk Labs, Thrive Capital, Maverick Ventures, Town Hall Ventures and EmblemHealth.
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Foxconn or Foxgone? Tariffs, Wisconsin and iPhone fires
First some notes on SoftBank’s rumored expansion into China and its weird fund math, then Foxconn and then quick notes on tech depression, Huawei and more.
TechCrunch is experimenting with new content forms. This is a rough draft of something new — provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.
SoftBank has fund visions (and a Vision Fund) for China? That, and more money
Kane Wu at Reuters reported overnight that SoftBank is looking to open an office and hire an investment team in China, which Wu says will be based in Shanghai. That’s following the fund’s recent global expansion with new targeted offices in Saudi Arabia and India.
When I saw this, I sort of did a double-take: SoftBank doesn’t have a presence in China? The fund has reportedly been seeking investments in some of China’s leading unicorn stars, including controversial face recognition startup SenseTime, and leading edtech startup Zuoyebang (作业帮, which literally translates as “school assignment help”). (Hat-tips to Selina Wang at Bloomberg, who seems to just be sitting in Vision Fund partner meetings). And of course, it dumped a pretty penny into WeWork China, where it was part of a $500 million syndicate, and is a huge investor in Didi.
It’s sort of obvious that SoftBank would expand to China. What will be interesting though is to see how the fund structures itself long-term. As far as I know, the Vision Fund is a singular “fund” that invests worldwide (send me an email if I am wrong on this count). China has a thicket of regulations on funds and companies, which is one of several reasons we see specifically China-focused vehicles (such as Lightspeed and Lightspeed China or Sequoia and Sequoia China). If the Vision Fund continues to be a unified fund, that would be a notable strategy shift that might be cloned by other trans-Pacific funds.
Aside: SoftBank Vision Fund math is complicated
Rajeev Misra, board director of SoftBank Group and CEO of SoftBank Investment Advisors. Photo by Drew Angerer/Getty Images.
When it first closed the Vision Fund, SoftBank explained they had raised just over $93 billion in committed capital or, more precisely, around $93.15-$93.2 billion, according to the initial investor presentations and its annual Form D filings. In those docs, SoftBank said that the fund was financed with $28 billion from SoftBank and $65 billion from third-party investors.
On top of the $93 billion raised for the Vision Fund, SoftBank detailed that it had committed $4.5 billion of its own capital to a separate “Delta Fund,” which was used to alleviate conflicts around SoftBank’s Didi investment. Thus, SoftBank’s total VC funding aggregates to around $97.7 billion.
To add a complication, SoftBank later shifted $1.6 billion of the Vision Fund’s previously disclosed $65 billion in third-party capital over to the Delta Fund. In current disclosures, SoftBank shows $91.7 billion of committed capital for the Vision Fund ($28.1 billion from SoftBank and $63.6 billion from third-party investors). For the Delta Fund, SoftBank shows $6 billion in committed capital ($4.5 billion SoftBank contribution and $1.6 billion from third-party investors).
Here is where it gets even more complicated. In its latest filings, SoftBank also notes that it completed the interim closing of an additional $5 billion for the Vision Fund in mid-October, “intended for the installment of an incentive scheme for operations of SoftBank Vision Fund.” That additional cash would bring Vision Fund’s total committed capital to $96.7 billion, and $102.7 billion together with the Delta Fund.
While it wouldn’t be included in the committed equity capital total, SoftBank is also rumored to be raising a $4 billion credit facility to help finance additional acquisitions.
So, it’s probably best to say that the Vision Fund — as constituted right now — is $97 billion or $96.7 billion with precision, assuming this $5 billion reaches a final close.
SoftBank IPO
We have, of course, covered SoftBank quite obsessively, particularly its debt situation (Part 1, Part 2, Part 3, Part 4 and Part 5). What we haven’t covered more recently are the latest developments in SoftBank’s IPO, which is slated for December 19th and expected to bring in a haul of $21 billion. More to come on that front in the coming days.
Foxconn or Foxgone?
U.S. President Donald Trump and Foxconn Chairman Terry Gou. BRENDAN SMIALOWSKI/AFP/Getty Images
The South China Morning Post reported yesterday that Foxconn is investigating expanding its factories to Vietnam in order to avoid tariffs. Makes sense, and I have some calls this week and next trying to suss out how much hardware supply chains have really changed in response to the trade conflict.
That decision though isn’t just about the trade conflict, but also about the quickly increasing wages of Chinese laborers, as well as political interference from Beijing. The Trump administration’s trade policies are just the excuse Foxconn needs to (at least partially) extricate itself from China, while saving face in the process.
What’s interesting is that Foxconn is also dealing with a massive brush fire in Wisconsin, where it received one of the largest economic development incentives ever offered by an American government, a whopping $3 billion package that was expected to drive manufacturing employment in the state.
Overnight, Republicans in the state legislature passed a bill that would place large restrictions on incoming Democratic governor Tony Evers. Jessie Opoien for the (Madison) Cap Times:
Under the bill, legislators would have increased influence over the Wisconsin Economic Development Corporation, and the WEDC board, not the governor, would appoint the job creation agency’s CEO. However, the governor’s power to appoint a CEO would be restored in September 2019.
That is the agency that provided the Foxconn funding, which has become a political football in Wisconsin politics. Republicans are trying to protect one of the major economic legacies of outgoing governor Scott Walker, as well as what they believe is the future direction of manufacturing work in the state. Democrats smell a boondoggle in the making.
If that wasn’t all, rumored skimpy sales for iPhones is putting enormous pressure on Foxconn’s bottom line. Debby Wu at Bloomberg reported two weeks ago that:
The contract manufacturer aims to cut 20 billion yuan ($2.9 billion) from expenses in 2019 as it faces “a very difficult and competitive year,” according to an internal document obtained by Bloomberg. The company’s spending in the past 12 months is about NT$206 billion ($6.7 billion).
Foxconn is a very dynamic organization that has weathered repeated crises over the years. It is pretty much unique in what it does today: very few other companies can scale up and down hundreds of thousands of workers to meet iPhone and other device demands with such alacrity.
But, the fundamentals of the mobile device market have apparently changed dramatically this year, and Foxconn is likely to be the company most harmed as the assembler of those devices. That could destroy not just the Chinese dream of leading in manufacturing, but also the Vietnam and Wisconsin dreams as well.
Also: If you haven’t read it, this poetry by a Foxconn worker who committed suicide really resonated with me. Foxconn’s suicide problem is well-documented, but we often don’t hear from the individuals themselves.
Quick bites
Which big tech companies are most depressed?
Blind, the anonymous enterprise chatting app that has taken the tech world by storm, published survey results asking tech employees “I believe I am depressed.” Roughly 40 percent of employees responded yes. Interestingly, there wasn’t too much variation between companies. Amazon had the highest rate at 43 percent and Apple had the lowest rate at 30 percent. It’s an informal survey, probably without high scientific validation, but it is a reminder for all of us in the community that mental health and burnout is very real in the startup and tech ecosystems and we should be vigilant in helping each other when times are rough.
More bad news for Huawei as British Telecom bans its equipment
This is one of those stories that we are just going to keep hearing about. After bans in Australia and New Zealand, British Telecom has announced they will not just ban Huawei’s 5G equipment, but also its 3G and 4G equipment. Britain, like Aus/NZ, Canada and the U.S., is part of the Five Eyes intelligence network, and national security officials have been leading the crusade against Huawei infrastructure. What’s interesting is not just the rapidity of the bans, but also that the bans haven’t (from what I have seen) migrated outside the Five Eyes community yet.
Pendo commits to hometown of Raleigh
Raleigh skyline. Photo by James Willamor used under Creative Commons via Flickr.
Pendo is a digital product management platform that has had quite a bit of success with customers and has raised more than $100 million in VC funding, most recently a Series D from Sapphire. The company announced that they have received a grant from home state North Carolina’s economic development department to grow in the Raleigh region. Pendo is committing $34.5 million to its headquarters (with the potential of creating 590 jobs), while the state will offer around $8.8 million in potential reimbursements over the next 12 years.
Given what I wrote yesterday about Wes McKinney leaving NYC and heading to Nashville and the work Chattanooga is doing to aid startups, it’s great to see other hotspots like Raleigh, NC invest to build out their ecosystems in a compelling way.
Todd Olson, CEO of Pendo, explained to me by email that, “Office rents in our downtown are a fraction of the cost of operating in other cities, and the cost of living is appealing to our employees. They can afford to buy a house here. In some markets around the country, that is becoming more difficult. It’s also just a nice place to live and work.”
Creative work is increasingly going to have to find a lower-cost home.
What’s next
I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.
Thoughts on articles
The LP Anti-Portfolio – Great short read. Lindel Eakman, former managing director at UTIMCO, the University of Texas/Texas A&M endowment, gives a list of funds that he passed on that he now regrets. Unfortunately, this is pretty rare coming from an LP, albeit a former one. It would be great to get more public discussion on which funds were missed and why by LP investors.
Hopefully more reading time tomorrow.
Reading docket
What I’m reading (or at least, trying to read)
- Huge long list of articles on next-gen semiconductors. More to come shortly.
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