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Casa Blanca raises $2.6M to build the ‘Bumble for real estate’

Published April 15, 2021

Casa Blanca, which aims to develop a “Bumble-like app” for finding a home, has raised $2.6 million in seed funding.

Co-founder and CEO Hannah Bomze got her real estate license at the age of 18 and worked at Compass and Douglas Elliman Real Estate before launching Casa Blanca last year.

She launched the app last October with the goal of matching home buyers and renters with homes using an in-app matchmaking algorithm combined with “expert agents.” Buyers get up to 1% of home purchases back at closing. Similar to dating apps, Casa Blanca’s app is powered by a simple swipe left or right.

Samuel Ben-Avraham, a partner and early investor of Kith and an early investor in WeWork, led the round for Casa Blanca, bringing its total raise to date to $4.1 million.

The New York-based startup recently launched in the Colorado market and has seen some impressive traction in a short amount of time.

Since launching the app in October, Casa Blanca has “made more than $100M in sales” and is projected to reach $280 million this year between New York and its Denver launch.

Bomze said the app experience will be customized for each city with the goal of creating a personalized experience for each user. Casa Blanca claims to streamline and sort listings based on user preferences and lifestyle priorities.

Image Credits: Casa Blanca

“People love that there is one place to book, manage feedback, schedule and communicate with a branded agent for one cohesive experience,” Bomze said. “We have a breadth of users from first time buyers to people using our platform for $15 million listings.”

Unlike competitors, Casa Blanca applies a direct-to-consumer model, she pointed out.

“While our agents are an integral part of the company, they are not responsible for bringing in business and have more organizational support, which allows them to focus on the individual more and creates a better end-to-end experience for the consumer,” Bomze said.

Casa Blanca currently has over 38 agents in NYC and Colorado, compared to about 15 at this time last year.

“We are in a growth phase and finding a unique opportunity in this climate, in particular, because there are many women exploring new, more flexible job opportunities,” Bomze noted.

The company plans to use its new capital to continue expanding into new markets, nationally and globally; as well as enhancing its technology and scaling.

“As we continue to grow in new markets, the app experience will be curated to each city — for example, in Colorado you can edit your preferences based on access to ski areas — to make sure we’re offering a personalized experience for each user,” Bomze said.

10 proptech investors see better era for residential and retail after pandemic

A look at how proptech startup Knotel went from a $1.6B valuation to filing for bankruptcy

Published February 5, 2021

This week, flexible workspace operator (and one-time unicorn) Knotel announced it had filed for bankruptcy and that its assets were being acquired by investor and commercial real estate brokerage Newmark for a reported $70 million.

Knotel designed, built and ran custom headquarters for companies. It then managed the spaces with “flexible” terms. In March 2020, it was reportedly valued at $1.6 billion.

At first glance, one might think that the WeWork rival, which had raised about $560 million since its 2016 inception, was another casualty of the COVID-19 pandemic.

But New York-based Knotel was reportedly in trouble — facing a number of lawsuits and evictions — before the pandemic had even hit, according to multiple reports, such as this one in The Real Deal.

Jonathan Pasternak, a partner in the bankruptcy, restructuring and creditor rights group at New York-based Davidoff Hutcher & Citron, believes the company’s Chapter 11 filing was inevitable despite it reaching unicorn status after raising $400 million in Series C funding in August 2019.

Workspace provider Knotel secures $400M, putting it in WeWork’s rear-view mirror

“In addition to being grossly overvalued on the market, the company overextended itself with long term leases and lavish build-outs, leaving the company in significant debt while failing to ever turn a profit,” Pasternak wrote via email. “The pandemic exacerbated their vacancy situation, resulting in more than 35% vacancies in their 2.4 million square-foot NYC portfolio. The company overextended and likely ran out of cash.”

Newmark’s purchase of Knotel’s assets is an effort to recoup some of its investment, according to Pasternak.

Anytime a company that has raised more than half a billion dollars basically implodes, it’s worth taking a look at the roller coaster ride it was on before it got to that point.

2016

Virgin Mobile co-founder Amol Sarva and former VC Edward Shenderovich founded Knotel, essentially reversing the WeWork model. There’s hype around the company in its early days.

2017

Knotel raised a Series A round of $25 million in February from investors such as Peak State Ventures, Invest AG, Bloomberg Beta and 500 startups. It marketed its offering as “headquarters as a service” — or a flexible office space that could be customized for each tenant while also growing or shrinking as needed.

Knotel raises $25M to expand its “headquarters as a service” approach to office space

2018

In April, Knotel announced the close of a $70 million Series B financing led by Newmark Knight Frank and The Sapir Organization. In August, the company told me that it was operating over 1 million square feet across 60 locations in New York, London, San Francisco and Berlin, and that it was on track to reach 2.5 million square feet and $100 million in revenue by year’s end. Revenue growth had increased by 300% year over year, according to the company. Customers and users and clients ranged from VC-backed startups Stash and HotelTonight to enterprise customers such as The Body Shop.

“What they’re doing is different,” said Barry Gosin, CEO of Newmark Knight Frank, in a press release, at the time of the round. “It’s a new category the industry hasn’t seen and is rapidly adopting. We’ve watched their ascent from a distance and are now thrilled to join them on the journey. It marks a shift in how owners and tenants are coming together.”

2019

In August, Knotel announced the completion of a $400 million financing, led by Wafra, an investment arm of the Sovereign Wealth Fund of Kuwait. With the round, the company had achieved unicorn status and was being touted as a formidable WeWork competitor. At the time, Knotel said it operated more than 4 million square feet across more than 200 locations in New York, San Francisco, London, Los Angeles, Washington, D.C., Paris, Berlin, Toronto, Boston, São Paulo and Rio de Janeiro.

Workspace provider Knotel secures $400M, putting it in WeWork’s rear-view mirror

In a statement at the time, CEO Sarva said: “Knotel is building the future of the workplace, and we are excited to welcome a group of investors who believe passionately in our product, vision and ability to execute. Wafra will help us continue our rapid global expansion and solidify our position as the leader in a fast-growing, trillion-dollar flexible office market.”

2020

In late March, Forbes reported that Knotel had laid off 30% of its workforce and furloughed another 20%, due to the impact of the coronavirus. At the time, it was valued at about $1.6 billion.

The company had started the year with about 500 employees. By the third week of March, it had a headcount of 400. With the cuts, about 200 employees remained with the other 200 having either lost their jobs or on unpaid leave, according to Forbes.

“Business as usual is over,” Amol Sarva, Knotel’s CEO and co-founder, said in a statement to Forbes. “Knotel has decided to take sharp action to prepare for the worst case — a long health and economic crisis.”

In the second quarter, Knotel’s revenue slipped by about 20% to about $59 million compared to the first quarter, reported Forbes. Multiple landlords had filed lawsuits against the company.

By July, Forbes had reported that Knotel was attempting to raise as much as $100 million, according to various sources “familiar with the matter.”

2021

Knotel files for bankruptcy, agrees to sell assets to investor Newmark for a reported $70 million after being valued at $1.6 billion less than one year prior.

“Newmark’s commitment offers a path forward amidst this challenging climate,” CEO Sarva said in a statement. “We are optimistic that, through a successful restructuring, we can refocus on our mission of providing state-of-the-art, tailored flex space in key U.S. and international markets.”

To facilitate the transaction under Section 363 of the United States Bankruptcy Code, an affiliate of Newmark agreed to provide Knotel with about $20 million in cash as DIP financing to support Knotel through the bankruptcy process.

Just as the startup and VC world watched as WeWork lost a significant amount of value over the past two years, we’re paying attention to the demise of Knotel and wondering what this means for the flexible workspace sector. As much of the world continues to work from home and office buildings remain mostly vacant as this pandemic rages, our guess is that things will only get worse before they get better.

Silicon Valley should reward zebras, not unicorns

Published December 21, 2020

Rebecca Honeyman
Contributor

Rebecca Honeyman is co-founder and managing partner of SourceCode Communications.

Silicon Valley has a unicorn problem.

While no one is calling for startups with high valuations to go extinct, there ought to be a lot fewer of them. At least that’s what many young founders have concluded after looking at the trials and travails of billion-plus-dollar private companies.

A unicorn is a mythical animal, so investors expect magical results: Lightning growth, near-monopolies and a record-setter IPO yielding 100x or 1,000x returns. A “zebra” company is different. Zebras are real animals that have evolved to fill and thrive in a particular niche. Unlike unicorn companies, zebras are lean, efficient and consistent.

Exponential growth is neither the best nor the only way for businesses to operate.

Too often, a company’s name or perceived cachet — rather than its actual product or realistic business prospects — becomes the thing it is selling. For the most recent, and maybe most damning, example of this trend, look at WeWork .

The company’s 2019 failed IPO was the corporate debacle of the decade; few businesses since Enron have fallen so far so quickly. When the market got a chance to examine the unicorn, they discovered it was really a one-trick pony with a cardboard horn. Adam Neumann built his company for net worth, not actual value, and his employees and supporters paid the price. Then again, imagine if the IPO had been a success: How much of the company’s worth would have evaporated when COVID-19 rolled around in March?

Although most tech innovation requires venture capital in today’s economy, unicorns sometimes become case studies in taking too much of a good thing. Round after round of funding can, as in the case of WeWork, disguise rickety foundations and unsound business plans.

Earlier this month, the mobile video unicorn Quibi folded less than a year after its launch. Film and TV critics weren’t surprised, and neither were those few consumers who’d heard of the company.

Well before its ill-timed launch in early April, most observers knew it was a bad idea. So why did Quibi receive so much funding? The big names attached to the company, including Dreamworks co-founder Jeffrey Katzenberg and one-time HP CEO Meg Whitman, attracted investors who somehow didn’t realize that everything about the product, from its name to its pricing, was wrong.

What a unicorn offers isn’t as important as the fact that it’s a unicorn. The opposite of a unicorn company, to my mind, is a zebra company. They may be a little odd, they may not get the front-page headlines or breathless news coverage, but they’re built to last and built to do something.

Unicorns thrive so long as they remain in the enchanted forest of endless venture rounds; zebras tough it out in the savannas of the free market. A zebra company won’t become the next behemoth like Facebook or Amazon, but neither will it become the next Quibi or WeWork.

The emergence of zebra companies like Handshake and Turo, and to some extent corporations like Ben and Jerry’s and Patagonia, speaks to a broader change in our business and economic understanding. Even before the coronavirus shut down much of the world, endless growth was looking less and less attractive.

Instead of extracting ever more value from the economy, companies like Patreon realize that the same dollar can be earned multiple times as it circulates through the economy. One-way extraction of value is replaced with a circular flow of value. Exponential growth is neither the best nor the only way for businesses to operate.

For most of us, the new year will be a relief: 2020, over at last. But we shouldn’t neglect the opportunity to reflect on the past and plan for the future that a new year offers. The mistakes of WeWork and Quibi are all too easy to repeat; chances are that somewhere in Silicon Valley, a venture capitalist is giving too much money to a doomed business. We’ve been too focused on the unicorns. It’s time to give the zebras the attention they deserve.

Increasing diversity in tech hiring requires a common-ground approach

WeWork employees used an alarmingly insecure printer password

Published November 1, 2020

A shared user account used by WeWork employees to access printer settings and print jobs had an incredibly simple password — so simple that a customer guessed it.

Jake Elsley, who works at a WeWork in London, said he found the user account after a WeWork employee at his location mistakenly left the account logged in.

WeWork customers like Elsley normally have an assigned seven-digit username and a four-digit passcode used for printing documents at WeWork locations. But the username for the account used by WeWork employees was just four-digits: “9999”. Elsley told TechCrunch that he guessed the password because it was the same as the username. (“9999” is ranked as one of the most common passwords in use today, making it highly insecure.)

Startup founders set up hacker homes to recreate Silicon Valley synergy

Published October 15, 2020

In Y Combinator’s early days, founders would move to Palo Alto, split a two-bedroom with five others to save money and trade notes around the clock with their new, like-minded roommates.

Now, as remote work continues and the pandemic persists, scores of entrepreneurs are working from home around the world. Y Combinator isn’t requiring its recent cohorts to relocate and collaboration is a screen-to-screen affair.

Now that they can work from literally anywhere, many entrepreneurs are forming homes with other founders. Hacker homes, the newest iteration of remote work adaption, feels like a nostalgic attempt to recreate some of the synergies COVID-19 wiped out. Generally speaking, it’s a nod to the digital nomad lifestyle, but in some cases, hacker homes feel closer to Hype House, a TikTok mansion laden with sponsored indulgence and wealth.

For Greg Isenberg, a growth advisor to TikTok and former head of strategy at WeWork, entrepreneur homes are a signal of what the foreseeable future of building could look like.

“The type of vibe you used to get from Y Combinator just doesn’t exist anymore,” Isenberg said, as these houses could recreate some of the scrappiness and like-mindedness that defined the incubator’s early days.

While some see founder communes as vehicles for creating a more level playing field, critics say the model perpetuates Silicon Valley cultural constructs that favor white men.

In other words, sometimes there’s a cost to after-work happy hours making a comeback.

Product Hunt, and then TikTok

Michael Houck, a former product manager at Airbnb and Uber, rented a home in Tulum, Mexico in May 2020. He put $21,000 of non-refundable money on his credit card and invited friends and people he met on the internet before hopping on a plane. Anyone who came had to be okay with a few rules: you must pay rent, launch projects and you have to be okay with building your company in public.

In all, 18 entrepreneurs, including Houck, formed The Launch House. Residents include former startup fellowship participants from On Deck, product managers and solo entrepreneurs. On the plane ride over, house founder Brett Goldstein launched its first tool.

Habitants of the Launch House use the pool for recreation and brainstorm sessions, called “pool-storms.” Image Credits: The Launch House

“How do you actually launch a consumer product? You need wide reach, influence, community and media properties all together,” Goldstein said. “I wouldn’t say we’re the next Y Combinator, but the next YC would look something like that.”

In just a few weeks, The Launch House has produced nine products, including a discovery platform for the best OnlyFans accounts, an anonymous Twitter bot that sends positive comments and tools that enhance newsletter and email reading experiences.

Launch House members described a strong focus on inclusion when populating future homes and just opened up the application process for Launch House 2. One way the house is trying to give access to other people is by open-sourcing information and projects that residents build together.

The website has a Launch Library where builders can submit their email addresses to access resources on how to build anything from a podcast to a clothing brand to a community.

“There’s this sort of veil of mystique that surrounds a lot of entrepreneurs and founders,” Goldstein said. “The curtain has been lifted, and now you can get a social media perspective, and inside look at what it takes to start and launch a company.”

Now, more than 1,500 people are on the Launch House waitlist. Multiple investors have approached the group to sponsor internal and external events and some companies have even asked for the right to do product placements.

The concept has surely brought in an audience, and copycats: an unaffiliated group called The Rocketship House posted a trailer on Twitter in October:

Welcome to . pic.twitter.com/tnp9MQ03V7

— (@rocketshiphouse) October 13, 2020

When reached via e-mail, organizers of Rocketship House declined to answer specific questions about the launch, or as they put it, “blast off.” The group confirmed that it is funded by a few unnamed large investors based in Beverly Hills, and includes a mix of marketers and influencers that invest in social media. It is currently accepting applications, drawing itself as similar to a TikTok mansion.

“Similar to Sway House [a residence for TikTok personalities], we will be making fun and dramatic dope bro content, centered around launching startups. We all live exciting lives, and there’s plenty of drama, so we’re excited to showcase that,” the e-mail from Rocketship House read.

Not all entrepreneur homes are following suit in terms of strategy, for more reasons than one.

3 founders on why they pursued alternative startup ownership structures

Published September 24, 2020

There is no one-size-fits all model for building a startup.

At TechCrunch Disrupt, we heard from a handful of founders about alternative approaches to creating a sustainable company that ensures more than just VCs and early founders benefit from its success.

One way is building a cooperative, which Driver’s Seat CEO Hays Witt described as “a kind of corporate entity that both allows and requires that we return the majority of our profits to our members, and that our members have a majority of governance.”

Driver’s Seat helps ride-hail drivers use data to maximize their earnings. It works by requiring drivers to install an app that educates them about how the co-op collects and uses their data. In exchange, the app gives them insights about their real hourly wages after expenses and how those wages relate to different driving strategies.

“At a community level, what we do is sort of align everybody’s interest so that as gig workers come into our co-op, as they generate data, the value of that data in the aggregate gets higher and higher,” Witt said. “The dividends that we’re able to return back to drivers gets higher and also the kind of insights we’re able to give communities about work gets higher at the same time. So we kind of align all of our impact and mission goals. And our business model is through our co-op structure.”

That’s not to say Driver’s Seat does not create returns for its investors — investors are just one group of many that benefit from the company’s success. Witt said a desire for accountability made him decide to form a co-op.

“If we are always accountable to our co-op members, and our co-op members are gig workers, then we’re going to know that we’re accountable to the right things,” Witt said. “Now, we have investor members, too. We’re accountable to them, too. But our structure means that the gig workers always have at least that 51%. [ … ] it’s certainly not the only way to build a business. But, you know, for us, it was the way that we would build a business that would align with our mission of really changing the gig economy.”

Benchmark’s Peter Fenton: ’10 to 20 years of innovation just got pulled forward’

Published September 17, 2020

Earlier today at TechCrunch Disrupt, venture capitalist Peter Fenton joined us to talk about a variety of issues. Among them, we discussed how he’s putting his stamp on Benchmark now that, 15 years after joining the storied firm, he’s its most senior member.

Fenton said that he’s mostly focused on ensuring that the firm doesn’t change. It wants to remain small, with no more than six general partners at a time. It wants to keep investing funds that are half a billion dollars or less because its small team can only work closely with so many founders. He also made a point of noting that Benchmark’s partners still divide their investment profits equally, unlike at other, more hierarchical venture firms, where senior investors reap the biggest financial benefits.

We also talked about diversity because (hint hint) Benchmark — which is currently run by Fenton, Sarah Tavel, Eric Vishria and Chetan Puttagunta — is hiring one to two more general partners.

We talked about why Benchmark, a Series A investor in both Uber and WeWork, seemingly took so long to address cultural issues within both companies.

And we talked about the opportunities that has Benchmark, and Fenton specifically, most excited right now. Read on for more, or check out our full conversation below.

On whether Benchmark, which historically had all white male partners and now counts Fenton as its only white male partner, might hire a Black partner on his watch, given the dearth of Black investors in the industry (along with the changing demographics of the U.S.):

“That’s a personal issue for me, which is going to be measured in the outcomes, just like we have companies that take on initiatives that matter and then measure them and hold themselves accountable. I won’t feel good about our failure if we don’t continue to tilt towards diversity. It’s not enough that I’m the only white male partner. The industry is so systematically skewed in the wrong direction, and we’ve gotten so good at rationalizing how it ended up here, that I don’t think we can tolerate it anymore.”

Benchmark is looking to reinvent itself through “three interfaces,” he continued. “It’s who are we talking with and spending time with in terms of [who we might invest in] — that has to change; who are the people making investment decisions, [meaning] the partnership; and then what’s the composition of the companies we’ve invested in, meaning the executives and the boards.

“Before I’m done with the venture business, I want to be able to point to empirical outcomes . . .”

As for why Benchmark waited for the public to rally against its portfolio companies Uber and WeWork before taking action to address cultural issues (in Uber’s case, in reaction to former engineer Susan Fowler’s famous blog post and, in the case if WeWork, in reaction to its S-1 filing):

“I can’t give you a crisp answer because ultimately, what happens in the public eye isn’t the whole story of what was going on between Benchmark and those CEOs.” It’s “far more complicated, far more nuanced, far more engaged.”

Said Fenton: “What you start with in any partnership is this idea that we’re all flawed and providing what feels like unconditional support to a founder to nurture them and help them to understand in ways they might be able to from their direct reports where they are going to get in trouble, where they’re going to fall short, and then buttress them.

“I can say, having watched both [Benchmark investors] Bruce [Dunlevie] and Bill [Gurley] in those roles that they give their heart and soul to enable the full potential of those entrepreneurs, and in each case, it wasn’t enough.

“I don’t know what to say other than, I don’t envision another individual in that [board] role being able to do a better job because what they gave was everything, and those companies built enormous organizations, great success, delight and joy for customers, and they had, in each of their cases, pathologies in their culture. A number of companies that I’m involved with have pathologies in their culture. Every organization can build them. What motivated both Bill and Bruce was the constituencies that go beyond the CEO, the employees, the customers, and in the case of Uber, the drivers . . .

“You could say Susan Fowler was the reason it all happened; I can assure you that the work that was being done far preceded [the publication of her blog post]. Could we have done more, more quickly? You always look back and say, ‘Yeah.’ I think you learn as an organization. We’re not perfect.”

As for the trends that Fenton is watching most closely right now, he suggested a world of opportunities have opened up in the last six months, and he thinks they’ll only gain momentum from here:

“What I’m most excited about is, we’re not going back to normal. What’s so amazing is this shock to the system is really a big opportunity for entrepreneurs to come and say, ‘What do we need to build to recreate and unlock all these things we lost when we stopped going into workplaces?’

“So I think this opportunity to build the tools for a world that’s ‘post place’ has just opened up and is as exciting as anything I’ve seen in my venture career. You walk around right now and you see these ghosts towns, with gyms, classes you might take [and so forth] and now maybe you go online and do Peloton, or that class you maybe do online. So I think a whole field of opportunities will move into this post-place delivery mechanism that are really exciting. [It] could be 10 to 20 years of innovation that just got pulled forward into today.”

WeWork and SoftBank unveil the first 14 startups in their Emerge accelerator for underrepresented founders

Published May 14, 2020

SoftBank Investment Advisers and WeWork Labs say they’ve officially kicked off the first session of Emerge, an accelerator program designed for underrepresented founders.

In their press release, the companies describe Emerge as “launched by SoftBank with support from WeWork Labs” (that’s the co-working company’s global accelerator program), with a goal of bringing more equality to tech and venture capital.

It’s an equity-free, eight-week program that includes workshops, access to mentors from SoftBank and the WeWork community and sessions with SoftBank executives. It all culminates in a showcase event for investors and SoftBank partners.

The Emerge website describes the program as based in San Mateo, Calif. — but given COVID-19, the sessions and programming are all virtual.

“Supporting underrepresented founders is a top priority for us, ensuring we see more diverse startups across the tech ecosystem,” said Catherine Lenson, managing partner and chief human resources officer at SoftBank Investment Advisers, in a statement. “There is a lack of diversity in the sector as a whole, and we need to do more to address it. That is why we’re excited to launch this program and to see the positive impact that these inspiring founders will have.”

This is also a reminder that while the larger corporate entities are currently embroiled in a legal and financial dispute, WeWork and its largest investor remain closely intertwined.

Here are the 14 startups in the initial program:

Aquagenuity, which allows users to take any smart device and track water quality and monitor their environment in real time
Bridge to College, which helps students choose colleges wisely by matching and providing data
Caldo uses flexible automation and mobile designs to power satellite eateries for restaurants
GameJolt, a platform for gamers to follow more than 100,000 games while they’re still in development
Koniku, which is diagnosing disease using breath
Mogul, which helps employers find diverse talent
Moment AI, which uses AI to understand the driver and improve safety
Node, which builds houses through a proprietary assembly kit
OjaExpress, a marketplace connecting immigrants and foodies to local ethnic mom-and-pop grocery stores
Proven, which offers personalized skin care products powered by The Skin Genome Project, winner of MIT’s 2018 Artificial Intelligence Award
Rebellyous Foods, a production stack for plant-based meat
ScriptHealth, which provides easy access to prescription medications
Shyft, which builds IoT hardware and integrated software to connect and intelligently manage distributed energy resources
SPS, a cross-border payments provider operating across all major U.S. states and Canada

Rebooted startup program WeWork Labs celebrates its one-year anniversary

Frank raises $5M more in its quest to get students max financial aid

Published April 13, 2020

Frank, a New York-based student-facing startup, has raised $5 million in what the company described as an “interim strategic round” that Chegg, a public edtech company, took part in. According to Frank founder and CEO Charlie Javice, previous investors Aleph and Marc Rowan took part in the round alongside new investor GingerBread Capital.

The education funding-focused startup last raised known capital in December of 2017, when it closed a $10 million Series A. Frank raised a seed round earlier that same year worth $5.5 million.

According to Javice, her firm closed its round in early March, before the recent market carnage. Bearing in mind that there is always lag between when a funding round is closed and when it is announced, the new Frank round is on the fresher side of things. Most rounds are a bit more like Shippo’s recent investment (closed in December, announced in April) than Podium’s recent deal, which it started raising in mid-February of this year.

Timing aside, what Frank is doing is interesting, so let’s talk about its business, how it approached 2019 and how it’s faring in today’s changed market.

Everyone’s broke

To help keep student debt low, Frank is a bit akin to TurboTax for college money, as TechCrunch wrote when covering its Series A, helping students get through a thicket of forms and aid to collect as much aid as possible while avoiding borrowing.

American higher education is too expensive, and applying for financial help is irksome and byzantine. I can safely report that sans quoting an expert, as I had to go through it as a student and only finished paying my student loans last July.

Frank wants to help make college more affordable, with the company noting in a call with TechCrunch that there’s been a good number of companies working to help students service debt in a less expensive way after they’ve hired the money; it wants to help students avoid taking on so much red ink in the first place.

According to Javice, lots of students fail to finish signing up for federal aid programs, and some students wind up dropping out of programs before finishing them, leaving them saddled with debt but no degree. That’s a hell of a trap to wind up in, as student loans are the barnacles of the financial world — incredibly hard to get rid of.

According to Javice, Frank was a little early to rethinking its own growth/profit trade-off than the rest of the startup world, which woke up when WeWork filed to go public and was quickly booed off Wall Street. In mid-2019, Frank slowed growth to get closer to the margins it wanted. (Thinking out loud, this is probably how the startup managed to survive so long off its December 2017 Series A.)

Indeed, according to Frank’s CEO, it was in a comfortable cash position before this round, which she described as more a vote of confidence than a round of necessity.

Which brings us to today, and the new, COVID-19 world. In an email to TechCrunch, Javice said that “like everyone else,” her company is “adjusting to the new realities.” She added that college and university attendance “has typically been countercyclical” and that her company is “seeing a large demand for higher education and specifically financial aid.”

If the new economy winds up creating a little tailwind for Frank, it won’t be the only startup to accrue help; Slack and Zoom and other remote work-friendly companies have also seen their fortunes turn for the better in recent weeks. And now with $5 million more on hand, it can certainly meet new demand.

Update: An earlier version of this article listed Chegg as the round’s lead investor; it did receive a board seat in the transaction but Frank does not consider it a lead investor. The post has been amended.

Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million

Published February 21, 2020

Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.

The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.