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Startups net more than capital with NBA players as investors

Posted by on Jun 1, 2019 in Alexa, Andre Iguodala, Basketball, Carmelo Anthony, Column, Dan Porter, david stern, Facebook, Golden State Warriors, Google, Kevin Durant, Messenger, national basketball association, NBA, overtime, player, SMS, Snap, Snapchat, snaptravel, Social Media, Spark Capital, Startups, stephen curry, TC, Telstra Ventures, toronto, twitch | 0 comments

If you’re a big basketball fan like me, you’ll be glued to the TV watching the Golden State Warriors take on the Toronto Raptors in the NBA finals. (You might be surprised who I’m rooting for.)

In honor of the big games, we took a shot at breaking down investment activities of the players off the court. Last fall, we did a story highlighting some of the sport’s more prolific investors. In this piece, we’ll take a deeper dive into just what having an NBA player as a backer can do for a startup beyond the capital involved. But first, here’s a chart of some startups funded by NBA players, both former and current.

 

In February, we covered how digital sports media startup Overtime had raised $23 million in a Series B round of funding led by Spark Capital. Former NBA Commissioner David Stern was an early investor and advisor in the company (putting money in the company’s seed round). Golden State Warriors player Kevin Durant invested as part of the company’s Series A in early 2018 via his busy investment vehicle, Thirty Five Ventures. And then, Carmelo Anthony invested (via his Melo7 Tech II fund) earlier this year. Other NBA-related investors include Baron DavisAndre Iguodala and Victor Oladipo, and other non-NBA backers include Andreessen Horowitz and Greycroft.

I talked to Overtime’s CEO, 27-year-old Zack Weiner, about how the involvement of so many NBA players came about. I also wondered what they brought to the table beyond their cash. But before we get there, let me explain a little more about what Overtime does.

Founded in late 2016 by Dan Porter and Weiner, the Brooklyn company has raised a total of $35.3 million. The pair founded the company after observing “how larger, legacy media companies, such as ESPN, were struggling” with attracting the younger viewer who was tuning into the TV less and less “and consuming sports in a fundamentally different way.”

So they created Overtime, which features about 25 to 30 sports-related shows across several platforms (which include YouTube, Snapchat, Instagram, Facebook, TikTok, Twitter and Twitch) aimed at millennials and the Gen Z generation. Weiner estimates the company’s programs get more than 600 million video views every month.

In terms of attracting NBA investors, Weiner told me each situation was a little different, but with one common theme: “All of them were fans of Overtime before we even met them…They saw what we were doing as the new wave of sports media and wanted to get involved. We didn’t have to have 10 meetings for them to understand what we were doing. This is the world they live and breathe.”

So how is having NBA players as investors helping the company grow? Well, for one, they can open a lot of doors, noted Weiner.

“NBA players are very powerful people and investors,” he said. “They’ve helped us make connections in music, fashion and all things tangential to sports. Some have created content with us.”

In addition, their social clout has helped with exposure. Their posting or commenting on Instagram gives the company credibility, Weiner said.

“Also just, in general, getting their perspectives and opinions,” he added. “A lot of our content is based on working with athletes, so they understand what athletes want and are interested in being a part of.”

It’s not just sports-related startups that are attracting the interest of NBA players. I also talked with Hussein Fazal, the CEO of SnapTravel, which recently closed a $21.2 million Series A that included participation from Telstra Ventures and Golden State Warriors point guard Stephen Curry.

Founded in 2016, Toronto-based SnapTravel offers online hotel booking services over SMS, Facebook Messenger, Alexa, Google Home and Slack. It’s driven more than $100 million in sales, according to Fazal, and is seeing its revenue grow about 35% quarter over quarter.

Like Weiner, Fazal told me that Curry’s being active on social media about SnapTravel helped draw positive attention and “add a lot of legitimacy” to his company.

“If you’re an end-consumer about to spend $1,000 on a hotel booking, you might be a little hesitant about trusting a newer brand like ours,” he said. “But if they go to our home page and see our investors, that holds some weight in the eyes of the public, and helps show we’re not a fly-by-night company.”

Another way Curry’s involvement has helped SnapTravel is in terms of the recruitment and retainment of employees. Curry once spent hours at the office, meeting with employees and doing a Q&A.

“It was really cool,” Fazal said. “And it helps us stand out from other startups when hiring.”

Regardless of who wins the series, it’s clear that startups with NBA investors on their team have a competitive advantage. (Still, Go Raptors!)


Source: The Tech Crunch

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Unicorns, undercorns and horses: A guide to the nonsense

Posted by on Apr 13, 2019 in TC, unicorns, Venture Capital | 0 comments

It’s been more than a half-decade since Aileen Lee of Cowboy Ventures kicked off the unicorn craze. Noting in a well-read post for TechCrunch that an interesting cohort of private companies worth a billion dollars or more was worth examining, the post brought the “unicorn” into its current usage inside of tech.

And then tech itself did the term a favor, building and financing hundreds more. Now unicorns swarm like fleas, and simply snagging a $1 billion valuation these days is something that has been done in mere months and is a well-known vanity tactic used to juice hiring.

Anyway.

This has now gone on so long that many of us in the tech-focused journalism space are sick of saying the word. Kate Clark, Equity co-host and cool person, literally has “I am so sick of the buzz word [sic] ‘unicorn’ ” on her Twitter page. I agree with the sentiment.

But the phrase unicorn is back in the mix, so let’s examine the hubbub.

Booms and busts

The term unicorn quickly became overused as startups stayed private longer by pushing IPOs off as long as they could, and the capital world decided it was fine. Bored capital was pooling in venture coffers where it was itching to be disbursed by the wealthy into the holsters of the privileged. And thus the companies that in other cycles might have gone public simply didn’t, and the ranks of unicorns multiplied.

The joke’s on us, however, as we have used the term on the order of six billion times.

Soon the overused “unicorn” moniker was also too small. Decacorns took their own spot in the pantheon of silly names. A decacorn, in case you’ve led a more exciting life than me and are thus otherwise unfamiliar, is a private tech company that has racked up a $10 billion valuation. (A centacorn, I suppose, would be worth $100 billion?)

What a unicorn is has stretched and bent over time. But regardless of how the phrase has come to be defined in recent quarters, most people are talking about tech shops when they use it. And that’s pretty reasonable.

But what tech companies do very well is go up, and go down. And that’s when we wind up on the other side (tail-end?) of the unicorn debate: All are agreed that the phrase unicorn is useful. Not all, however, agree on what we call a unicorn that has fallen.

Oops

We have two questions: What do you call a unicorn that falls under the $1 billion valuation mark. And, relatedly, what do you call a unicorn that eventually goes public or otherwise exits at a discount to its final private market valuation?

Regarding the leading question, there are two definitions that I am aware of.

First, as has come back into the discussion this week, there’s the concept of an “undercorn.” As Business Insider noted through a blog citationAxios’ Dan Primack may have coined the term. Here, per Ian Sigalow’s post, which quotes the original Dan, is what Primack said:

When a venture-backed company breaks through the $1BN valuation mark, we call it a Unicorn. When the same company falls back below the $1BN threshold, it becomes an Undercorn.

That’s simple enough. However, Erin Griffith of The New York Times used the phrase recently in a slightly different manner. Here’s her riff:

Unicorns that sell or go public below their last private valuation are known as undercorns.

That’s different, as it’s defining undercorns as exited unicorns that lose altitude; that’s different than unicorns losing their unicornyness altogether. However, as we’re working on defining made-up words to describe an economic anomaly caused by government-determined free money, we can relax a little and realize that both uses of the word undercorn are equally differentiated from zero.

Now I get to talk about myself. I had my own thoughts on what a unicorn that had lost the requisite billion-dollar valuation should be called back in 2016. Regarding what a unicorn that had fallen under the needed worth:

If a unicorn is a horse with a spike, when you take the spike off you just have a horse.

I thought it was pretty smart. No one else agreed, and thus I have to admit that Primack and Griffith have made quite a lot more noise with the undercorn phrase, even if they don’t quite agree on what it means. (Feel free to become a partisan of either side, as we are long overdue for something useless and entertaining on the internet.)

Sadly, there are even more unicorn-related terms and phrases in and amidst the tech conversation that we shouldn’t miss.

Exotica and other notes

Returning to Axios, it has a new phrase out this year that’s worth keeping in our hat. From its February coverage of the venture landscape, I give you the phrase “minotaur:”

The Big Picture: Meet the minotaurs — our term for the companies that would be worth more than $1 billion even if the only thing they did was to take the cash that they have raised and put it in a checking account.

I wanted to hate this, but wound up deciding there are a host of worse words that could have been selected. And as it wasn’t a unicorn-variant, how could I complain?

The only other thing I can recall that fits our task today is something that Jason and I wrote four years ago in TechCrunch. As a follow-up to our “How To Speak Startup” post, we wrote the brilliantly titled “How To Speak Startup, Part Deux,” which contained the following definition:

Unicorn — As if metaphors in Silicon Valley couldn’t get more childish.

The joke’s on us, however, as we have used the term on the order of six billion times since then. And that’s that, I think. Now you know!


Source: The Tech Crunch

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With these numbers, it’s no surprise SoftBank is investing in Latin America

Posted by on Mar 10, 2019 in Column, LATAM, Latin America, Softbank, TC, Venture Capital | 0 comments

After SoftBank announced its plans to launch a $5 billion innovation fund in Latin America, we reached out to the good folks at the Latin American Venture Capital Association (LAVCA) for some context, and what they told me only validates the reasoning behind SoftBank’s interest in the region. (In 2017, we reported on the growing interest in Latin America.)

Let’s start with some numbers. Venture funding in Latin American startups is up — way up — from previous years. Specifically, LAVCA’s data shows that VC funding more than doubled in 2017 to $1.14 billion compared to $500 million in 2016. While 2018 numbers haven’t been finalized, LAVCA is projecting another record year with venture investments topping $1.5 billion.

If you combine private equity and venture investing, the numbers are even more impressive. LAVCA estimates that PE and VC fundraising together in Latin America in 2017 totaled $4.3 billion, up from $2.3 billion in 2016.1

Julie Ruvolo, director of venture capital for LAVCA, said all this “fits squarely in this larger momentum that’s been building over the last year or two.”

“We’ve been seeing the continued, and increased, entry of significant global players in the market,” she told Crunchbase News. “Plus, we’ve been seeing an uptick in $100 million-plus rounds, which was a relatively rare thing in Latin America.”

Also unsurprising is the breakdown of where the majority of venture dollars have gone in Latin America. Brazil led the region across all stages of VC investment, capturing 73 percent of VC investment dollars in 2017 and the first half of 2018 (201 startup investments totaling $1.4 billion). Mexico was the second most active market by number of deals (82 startup investments totaling $154 million), but Colombia saw more money invested ($188 million over 23 deals).

Here’s a quick rundown of just some of the bigger deals that took place during that same time frame:

It’s worth noting that fintech is the top sector of VC investment by dollars and number of deals in Latin America. The region also hosts a number of unicorns, including Brazilian ride-hailing startup 99; Colombian last-mile delivery service Rappi; Brazilian learning systems provider Arco Educação; and Brazilian fintech startup Stone Pagamentos.

With all this innovation and investing going on in Latin America, there is clearly large potential. And SoftBank is now poised to capitalize on that.

  1. The fundraising and investment data LAVCA collects is specific to fund managers that have raised capital from third-party institutional investors/limited partners and doesn’t account for other types of private capital investors, like a SoftBank fund or sovereign wealth fund, corporate, etc.


Source: The Tech Crunch

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Airbnb, Automattic and Pinterest top rank of most acquisitive unicorns

Posted by on Feb 23, 2019 in Aileen Lee, Airbnb, Automattic, blockspring, coinbase, Column, Commuting, cowboy ventures, CrunchBase, Docker, flatiron school, Italy, Lyft, M&A, neologisms, Neutrino, Pinterest, Sprinklr, Startups, SurveyMonkey, TC, transport, Uber, unicorn, unity-technologies, Venture Capital, vox media, WeWork | 0 comments

It takes a lot more than a good idea and the right timing to build a billion-dollar company. Talent, focus, operational effectiveness and a healthy dose of luck are all components of a successful tech startup. Many of the most successful (or, at least, highest-valued) tech unicorns today didn’t get there alone.

Mergers and acquisitions (M&A) can be a major growth vector for rapidly scaling, highly valued technology companies. It’s a topic that we’ve covered off and on since the very first post on Crunchbase News in March 2017. Nearly two years later, we wanted to revisit that first post because things move quickly, and there is a new crop of companies in the unicorn spotlight these days. Which ones are the most active in the M&A market these days?

The most acquisitive U.S. unicorns today

Before displaying the U.S. unicorns with the most acquisitions to date, we first have to answer the question, “What is a unicorn?” The term is generally applied to venture-backed technology companies that have earned a valuation of $1 billion or more. Crunchbase tracks these companies in its Unicorns hub. The original definition of the term, first applied in a VC setting by Aileen Lee of Cowboy Ventures back in late 2011, specifies that unicorns were founded in or after 2003, following the first tech bubble. That’s the working definition we’ll be using here.

In the chart below, we display the number of known acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (yet). Keep in mind this is based on a snapshot of Crunchbase data, so the numbers and ranking may have changed by the time you read this. To maintain legibility and a reasonable size, we cut off the chart at companies that made seven or more acquisitions.

As one would expect, these rankings are somewhat different from the one we did two years ago. Several companies counted back in early March 2017 have since graduated to public markets or have been acquired.

Who’s gone?

Dropbox, which had acquired 23 companies at the time of our last analysis, went public weeks later and has since acquired two more companies (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six known acquisitions before making its exit via IPO.

Who stayed?

Which companies are still in the top ranks? Travel accommodations marketplace giant Airbnb jumped from number four to claim Dropbox’s vacancy as the most acquisitive private U.S. unicorn in the market. Airbnb made six more acquisitions since March 2017, most recently Danish event space and meeting venue marketplace Gaest.com. The still-pending deal was announced in January 2019.

WordPress developer and hosting company Automattic is still ranked number two. Automattic <a href=”https://www.crunchbase.com/acquisition/automattic-acquires-atavist–912abccd”>acquired one more company — digital publication platform Atavist — since we last profiled unicorn M&A. Open-source software containerization company Docker, photo-sharing and search site Pinterest, enterprise social media management company Sprinklr and venture-backed media company Vox Media remain, as well.

Who’s new?

There are some notable newcomers in these rankings. We’ll focus on the most notable three: The We CompanyCoinbase and Lyft. (Honorable mention goes to Stripe and Unity Technologies, which are also new to this list.)

The We Company (the holding entity for WeWork) has made 10 acquisitions over the past two years. Earlier this month, The We Company bought Euclid, a company that analyzes physical space utilization and tracks visitors using Wi-Fi fingerprinting. Other buyouts include Meetup (a story broken by Crunchbase News in November 2017) reportedly for $200 million. Also in late 2017, The We Company acquired coding and design training program Flatiron School, giving the company a permanent tenant in some of its commercial spaces.

In its bid to solidify its position as the dominant consumer cryptocurrency player, Coinbase has been on quite the M&A tear lately. The company recently announced its plans to acquire Neutrino, a blockchain analytics and intelligence platform company based in Italy. As we covered, Coinbase likely made the deal to improve its compliance efforts. In January, Coinbase acquired data analysis company Blockspring, also for an undisclosed sum. The crypto company’s other most notable deal to date was its April 2018 buyout of the bitcoin mining hardware turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.

And finally, there’s Lyft, the more exclusively U.S.-focused ride-hailing and transportation service company. Lyft has made 10 known acquisitions since it was founded in 2012. Its latest M&A deal was urban bike service Motivate, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six companies at the time of writing. Uber bought a bike company of its own, JUMP Bikes, at a price of $200 million, a couple of months prior to Lyft’s Motivate purchase. Here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competition drove Uber and Lyft to raise money in lock-step with one another, and drove M&A strategy as well.

What to take away

With long-term business success, it’s often a chicken-and-egg question. Is a company successful because of the startups it bought along the way? Or did it buy companies because it was successful and had an opening to expand? Oftentimes, it’s a little of both.

The unicorn companies that dominate the private funding landscape today (if not in the number of deals, then in dollar volume for sure) continue to raise money in the name of growth. Growth can come the old-fashioned way, by establishing a market position and expanding it. Or, in the name of rapid scaling and ostensibly maximizing investor returns, M&A provides a lateral route into new markets or a way to further entrench the status quo. We’ll see how that strategy pays off when these companies eventually find the exit door .


Source: The Tech Crunch

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Companies raising supergiant VC aren’t getting any younger

Posted by on Feb 10, 2019 in Column, TC, Venture Capital | 0 comments

This week, point-to-point “microtransit” service company Lime announced it raised $310 million in a Series D round, which valued the company at $2.4 billion, post-money. That is pretty impressive for a startup founded just a couple of years ago. Since 2017, Lime has raised more than $765 million in venture funding, which is due in part to the pretty daunting economics of the bike and scooter business. It takes a lot of capital to acquire and deploy that hardware.

Lime isn’t the only company to raise supergiant ($100 million or more) VC rounds right out of the gate. Despite the fact that supergiant venture capital rounds have recently become an almost everyday occurrence, the age at which companies close their first nine-figure funding deal hasn’t really changed over the past several years.

In the chart below, we plot the distribution of startups’ age at the time of their first supergiant venture round of $100 million or more. (The age of a company at any subsequent supergiant round was excluded.) In prior reporting, we found that supergiant deal volume began accelerating in 2013, which is why we chose that year to start. For reasons we’ll explain after the chart, it’s best to think of the numbers presented here as a very good estimation rather than a highly precise measurement. There are still lessons to learn though.

Note from the get-go that company ages were calculated by finding the number of days elapsed between their founded date listed in Crunchbase and the date on which the company’s first supergiant VC round was announced. It sometimes takes several weeks between when a deal is finalized and when it’s publicly announced (even in the case of these really big deals). We excluded companies with no listed founding date. Also note that the founding dates listed in Crunchbase are often not precise, so that introduces some fuzziness as well.

However, these caveats aside, there are some general trends to be found here. The mix of companies raising their first really big rounds hasn’t changed all that much over time. On average, a little less than half of supergiant rounds are raised by companies roughly five years old or younger. Some years, like 2016, had above-average representation of younger companies raising their first nine-figure deals. Perhaps coincidentally, 2016 was also a year where supergiant VC (and, indeed, venture activity in general) slowed slightly.

If a company is going to raise their first supergiant VC round (which, recall, are still exceedingly rare), a majority of companies do so within the first five or six years in business. Of nearly 888 first supergiant rounds (raised since 2013) we analyzed, the largest number were struck between years three and five. There is a long tail of companies that raise their first nine-figure deals more than a decade after being founded.

Generally, this isn’t too surprising. Most VC funds operate on a 10-year cycle, as do many startups. Many companies raise their first big rounds of funding within the first few years after launch. Some of these rounds are bigger than others, and that’s what’s reflected above.

In entrepreneurial finance, up-front costs matter. Founded in December 2016, Elon Musk’s tunnel-digging endeavor The Boring Company was a little less than 15 months old when it raised $113 million in venture funding in April of 2018. Tunnel boring machines aren’t cheap. The company aims to dig tunnels for the low, low price of $10 million per mile.

It’s not just Mr. Musk who can raise supergiant sums so speedily. Some sectors are more capital-intense than others, requiring some companies to seek large funding deals early, to bring a product or service to market. For example, a number of companies cropped up in the residential real estate space with the goal of streamlining the home-buying process. In practice, it means that the company acquires the home itself, before ultimately signing it over to the homeowner. Ribbon is one such venture. The fintech company was founded in September 2017 and raised $225 million in Series A funding a little over one year later, in late October 2018.

Most companies aren’t a good fit for VC funding. Of those that try to raise VC funding, most fail. Of those that do raise VC money, the surpassing majority of those deals are less than $100 million. To be clear: We’re talking about very rarified air here. But it helps to confirm another side of a trend we found earlier, through some trial and error. Startups aren’t really raising money any faster than they used to. There’s just more of them. And the rounds are bigger.


Source: The Tech Crunch

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