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This VC went long on HotelTonight and it paid off; here’s how.

Posted by on Mar 10, 2019 in Accel Partners, battery ventures, brian omalley, forerunner ventures, HotelTonight, TC, Venture Capital | 0 comments

Brian O’Malley has enjoyed a lot of success as a venture capitalist, thanks to bets on Bazaarvoice before its IPO, Dollar Shave Club before it was nabbed by Unilever, and a variety of other startups that were ultimately acquired or went public. It’s one reason that O’Malley, who began his venture career with Battery Ventures and stayed for nearly a decade, has been poached time and again, first joining Accel Partners for almost five years and, more recently, hopping over to Forerunner Ventures.

Interestingly, all three firms are investors in one company that O’Malley has known from nearly its outset and whose cash and stock sale for a reported $465 million to Airbnb, announced last week, he is still celebrating: HotelTonight, “The O’Malley family went long on HotelTonight,” he said in a call Thursday. “Now, we’re long Airbnb.”

For your Sunday reading, we thought you might enjoy an oral history from O’Malley about how he stumbled upon HotelTonight and remained connected to the company across its nine year history.

I’d originally met Sam [Shank HotelTonight’s CEO] way back. He had TravelPost,com, a travel blogging platform. I really liked him, but i didn’t think it was a ‘venture fundable’ company, [meaning I didn’t see] an explosive opportunity. But Sam is the kind of guy you file away in the back of your head. I knew I’d like to work with him sometime.

Then, I think it was the last week of 2010, I was at home reading up on new things and I came cross this announcement about this new thing called HotelTonight. I was looking at mobile services at the time. We [at Battery Ventures] were invested in Groupon and we saw how much customers loved this whole last-minute-deal angle. But it was hard for Groupon to [drill deep] across categories, given that merchant needs are different. The industry needed verticalized [players] and [HotelTonight] fit nicely in that sweet spot, so I did a little digging, and lo and behold, it was Sam Shank and his partner Jared [Simon] behind the company. I reached back out to Sam and said, ‘This is a great idea; I’d love to catch up with you.’

They were [running a company called] Dealbase [that aggregated and compared hotel deals] and HotelTonight was their mobile offering, so I got together with him and we set it up in a way where we wrote a [letter of intent to Dealbase’s angel investors] to spin HotelTonight out of Dealbase and make it its own company. But to do that, we wanted not just the technology but the team.

They had pretty well-known angels, so I went and talked with them, and some of them were not very excited about having the team go to this new company, so we set up this structure where Dealbase shareholders would get 50 percent of HotelTonight if they came over, and if they didn’t want to come over, we’d buy their shares. I think all of them came over eventually, though some were more curmudgeonly about it. Hopefully they appreciate it now! Then we put together a large option pool for the team and put together a syndicate, including myself at Battery, Theresia [Gouw] when she was at Accel, Kent Goldman [then of First Round Capital], and Kirsten [Green, the founder of Forerunner Ventures] was a small investor as well. And that’s what helped start the company.

At the time, I was one of the first customers, and I remember checking into one of their hotels in New York, and the hotel had never heard of HotelTonight but there on the fax machine was my booking reservation; that was the technology that was available at the time.

Then we [at Battery] led the Series A, we split it with Accel. I was already on the board from the seed round, then Theresia joined the board at the Series A.

When I left Battery [to join Accel] it was the smoothest transition. When you leave a firm, you leave behind [your companies]; your investments belong to the fund and not to you. But this was more seamless because Theresia was transitioning out of Accel [to start her own firm, Aspect Ventures] around the time that I was joining. So I think I was off the [HotelTonight] board for about a month. Then I took Theresia’s seat at Accel and [longtime Battery investor] Roger Lee went on my seat. Then at Accel, we led HotelTonight’s last round of financing.

It’s kind of serendipitous that all three firms where I’ve worked were shareholders.

[As for the outcome of the company], we’d talked about an IPO a while ago. It was growing really quickly. It’s a large business now with well over a hundred million [dollars] in [annual] revenue. It’s profitable. It has a lot of the characteristics you’d want. And they’d been approached by a variety of partners over time. But Sam and [Airbnb CEO] Brian [Chesky] have a special relationship. They’d known each other since even before HotelTonight.

And it’s great when you can clearly fill a void, and continue your mission under a bigger umbrella. Airbnb is rapidly growing a good business. It has done a great job of winning the hearts and minds of customers. But it had a gap in that it hadn’t focused on hotels and last-minute travelers, and it gets a lot of interest in those areas, so we thought the companies culturally would really complement each other, but also that the products would complement each other.

Decisions are always led by the team, and this is one where they were really excited about it, and we were super supportive of that. It’s the funny thing about all these deals, though. Yes, you can get a banker like Qatalyst [Partners] involved.  But a lot of it comes back to relationships.


Source: The Tech Crunch

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Airbnb agrees to acquire last-minute hotel-booking app HotelTonight

Posted by on Mar 7, 2019 in Airbnb, Australia, battery ventures, Europe, First Round Capital, forerunner ventures, Fundings & Exits, Gaest, greg greeley, HotelTonight, Lyft, M&A, Pinterest, Sam Shank, San Francisco, Startups, TC, Uber, unicorn, vacation rental, Venture Capital | 0 comments

As Airbnb gears up for its big leap into the public markets, it’s expanding its accommodations platform to include more than just treehouses and quirky homes.

Today, the company has confirmed its intent to acquire HotelTonight, the developer of a hotel-booking application that lets travelers arrange last-minute accommodations. The deal was previously reported by The Wall Street Journal, which wrote in January that negotiations for the transaction had “gone cold.”

Airbnb is expected to complete an initial public offering as soon as this year, though co-founder and chief executive officer Brian Chesky has refrained from revealing a specific timeline. Like Uber, which plans to become the ultimate transportation company, Airbnb’s long-term ambition is to build an end-to-end travel platform complete with home sharing, hotel booking, business travel arrangements, experiences and more.

Airbnb declined to disclose terms of its HotelTonight acquisition. Once the deal is complete, the HotelTonight app and website will continue to operate independently, with co-founder and CEO Sam Shank reporting to Airbnb’s president of homes, Greg Greeley.

“We started HotelTonight because we knew people wanted a better way to book an amazing hotel room on-demand, and we are excited to join forces with Airbnb to bring this service to guests around the world,” Shank said in a statement. “Together, HotelTonight and Airbnb can give guests more choices and the world’s best boutique and independent hotels a genuine partner to connect them with those guests.”

Founded in 2010, San Francisco-based HotelTonight garnered a valuation of $463 million with a $37 million Series E funding in 2017, according to PitchBook. In total, the startup has raised $131 million in venture capital funding from Accel and Battery Ventures, which have participated in nearly every funding round for HotelTonight. Other early investors include Forerunner Ventures and First Round Capital.

Airbnb, for its part, was valued at $31 billion in 2017, with a $1 billion round. In January, Airbnb said it was profitable for the second consecutive year on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis.

HotelTonight offers discounts at hotels in the Americas, Europe and Australia. The company partners with hotels to offer un-sold rooms, catering to business travelers or those looking to make last-minute arrangements. The deal will make it easier for Airbnb users to book hotels without planning weeks or months in advance and will help Airbnb expand its community beyond short-term rental hosts and guests.

Airbnb introduced boutique hotels to its platform in early 2018 and has boasted its quick growth. In 2018, the business said it more than doubled the number of boutique hotels, bed and breakfasts, hostels and resorts available. Airbnb’s business travel unit, Airbnb for Work, also had quick success. Launched in 2014, it now accounts for 15 percent of bookings. In total, Airbnb offers some 5 million places to stay in 191 countries.

Airbnb is kicking off 2019 with an acquisitive streak. In January, the company acquired Danish startup Gaest, a provider of a marketplace-style platform for people to post and book venues for meetings and other work-related events. The company again declined to pinpoint the price, though given Gaest had raised just $3.5 million in equity funding, the deal pales in comparison to Airbnb’s HotelTonight acquisition.

2019 is stacking up to be a particularly busy year for unicorn IPOs, some of which were likely delayed by a weeks-long government shutdown at the start of the year. Lyft, which recently unveiled its S-1, is poised to be the first billion-dollar company to exit to the stock markets, followed by Uber, Slack and Pinterest. Will Airbnb nudge its way into that lineup? We’ll see.


Source: The Tech Crunch

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Startups Weekly: Even Gwyneth Paltrow had a hard time raising VC

Posted by on Feb 2, 2019 in Airbnb, alex wilhelm, Andreessen Horowitz, Bessemer Venture Partners, collibra, connie loizos, CrunchBase, Entertainment, felix capital, forerunner ventures, founders fund, Frederic Court, funding, Goldman Sachs, gwyneth paltrow, hitRECord, James Beriker, jeff clavier, Joseph Gordon-Levitt, lucas matney, maverick capital, Mike Maples, munchery, Partech, Pinterest, sam altman, Sapphire Ventures, Softbank, Startups, TechCrunch, upfront ventures, Venture Capital, wellington management, Y Combinator | 0 comments

I spent the week in Malibu attending Upfront Ventures’ annual Upfront Summit, which brings together the likes of Hollywood, Silicon Valley and Washington, DC’s elite for a two-day networking session of sorts. Cameron Diaz was there for some reason, and Natalie Portman made an appearance. Stacey Abrams had a powerful Q&A session with Lisa Borders, the president and CEO of Time’s Up. Of course, Gwyneth Paltrow was there to talk up Goop, her venture-funded commerce and content engine.

“I had no idea what I was getting into but I am so fulfilled and on fire from this job,” Paltrow said onstage at the summit… “It’s a very different life than I used to have but I feel very lucky that I made this leap.” Speaking with Frederic Court, the founder of Felix Capital, Paltrow shed light on her fundraising process.

“When I set out to raise my Series A, it was very difficult,” she said. “It’s great to be Gwyneth Paltrow when you’re raising money because people take the meeting, but then you get a lot more rejections than you would if they didn’t want to take a selfie … People, understandably, were dubious about [this business]. It becomes easier when you have a thriving business and your unit economics looks good.”

In other news…

The actor stopped by the summit to promote his startup, HitRecord . I talked to him about his $6.4 million round and grand plans for the artist-collaboration platform.

Backed by GV, Sequoia, Floodgate and more, Clover Health confirmed to TechCrunch this week that it’s brought in another round of capital led by Greenoaks. The $500 million round is a vote of confidence for the business, which has experienced its fair share of well-publicized hiccups. More on that here. Plus, Clutter, the startup that provides on-demand moving and storage services, is raising at least $200 million from SoftBank, sources tell TechCrunch. The round is a big deal for the LA tech ecosystem, which, aside from Snap and Bird, has birthed few venture-backed unicorns.

Pinterest, the nine-year-old visual search engine, has hired Goldman Sachs and JPMorgan Chase as lead underwriters for an IPO that’s planned for later this year. With $700 million in 2018 revenue, the company has raised some $1.5 billion at a $12 billion valuation from Goldman Sachs Investment Partners, Valiant Capital Partners, Wellington Management, Andreessen Horowitz, Bessemer Venture Partners and more.

Kleiner Perkins went “back to the future” this week with the announcement of a $600 million fund. The firm’s 18th fund, it will invest at the seed, Series A and Series B stages. TCV, a backer of Peloton and Airbnb, closed a whopping $3 billion vehicle to invest in consumer internet, IT infrastructure and services startups. Partech has doubled its Africa VC fund to $143 million and opened a Nairobi office to complement its Dakar practice. And Sapphire Ventures has set aside $115 million for sports and entertainment bets.

The co-founder of Y Combinator will throw a sort of annual weekend getaway for nerds in picturesque Boulder, Colo. Called the YC 120, it will bring toget her 120 people for a couple of days in April to create connections. Read TechCrunch’s Connie Loizos’ interview with Altman here.

Consumer wellness business Hims has raised $100 million in an ongoing round at a $1 billion pre-money valuation. A growth-stage investor has led the round, with participation from existing investors (which include Forerunner Ventures, Founders Fund, Redpoint Ventures, SV Angel, 8VC and Maverick Capital) . Our sources declined to name the lead investor but said it was a “super big fund” that isn’t SoftBank and that hasn’t previously invested in Hims.

Five years after Andreessen Horowitz backed Oculus, it’s leading a $68 million Series A funding in Sandbox VR. TechCrunch’s Lucas Matney talked to a16z’s Andrew Chen and Floodgate’s Mike Maples about what sets Sandbox apart.

Here’s your weekly reminder to send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets

In a new class-action lawsuit, a former Munchery facilities worker is claiming the startup owes him and 250 other employees 60 days’ wages. On top of that, another former employee says the CEO, James Beriker, was largely absent and is to blame for Munchery’s downfall. If you haven’t been keeping up on Munchery’s abrupt shutdown, here’s some good background.

Consolidation in the micromobility space has arrived — in Brazil, at least. Not long after Y Combinator-backed Grin merged its electric scooter business with Brazil-based Ride, it’s completing another merger, this time with Yellow, the bike-share startup based in Brazil that has also expressed its ambitions to get into electric scooters.

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm, TechCrunch’s Silicon Valley editor Connie Loizos and Jeff Clavier of Uncork Capital chat about $100 million rounds, Stripe’s mega valuation and Pinterest’s highly anticipated IPO.


Source: The Tech Crunch

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Wellness startup Hims enters the unicorn club with $100M investment

Posted by on Jan 29, 2019 in forerunner ventures, founders fund, funding, Health, Hims, Softbank, Startups, TC, Venture Capital | 0 comments

Hims, known by many for its phallic New York subway advertisements, has raised an additional $100 million in venture capital funding on a pre-money valuation of $1 billion. The round was first reported by Recode and confirmed to TechCrunch by sources with knowledge of the deal.

A growth-stage investor has led the round, which is ongoing, with participation from existing investors. Our source declined to name the lead investor but did say it was a “super big fund” that isn’t SoftBank and that hasn’t previously invested in Hims.

Hims officially launched just over one year ago and has raised $197 million already, as well as incorporated a women’s wellness brand, Hers, to go alongside its flagship men’s wellness brand. The business sells sexual wellness products, skin care and hair loss treatments directly to consumers. In addition to erectile dysfunction medication, it offers the birth control pill to customers with prescriptions and Addyi, the only FDA-approved medication for women with hypoactive sexual desire disorder.

According to Recode, Hims spent months negotiating with investors, “with some of them balking at the valuation.” Meanwhile, our source says Hims passed on several viable terms sheets and had plenty of IVP — which led its last round — money in the bank ahead of their latest infusion.

$1 billion, a 2x increase from its previous valuation, is a hefty price tag for such an early-stage digital health startup. Then again, most valuations for venture-backed businesses are foolish.

San Francisco-based Hims is also backed by Forerunner Ventures, Founders Fund, Redpoint Ventures, SV Angel, 8VC, Maverick Capital and more.

 


Source: The Tech Crunch

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