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Startups Weekly: Spotify gets acquisitive and Instacart screws up

Posted by on Feb 9, 2019 in alex wilhelm, anchor, Bessemer Venture Partners, consumer reports, CrunchBase, funding, Fundings & Exits, Fusion Fund, gimlet, gimlet media, Instacart, josh constine, lime, Mark Suster, Megan Rose Dickey, Mike McNamara, Reddit, Sanjay Jha, Spotify, Startups, steve huffman, TC, Uber, upfront ventures, Venture Capital, web summit, Y Combinator | 0 comments

Did anyone else listen to season one of StartUp, Alex Blumberg’s OG Gimlet podcast? I did, and I felt like a proud mom this week reading stories of the major, first-of-its-kind Spotify acquisition of his podcast production company, Gimlet. Spotify also bought Anchor, a podcast monetization platform, signaling a new era for the podcasting industry.

On top of that, Himalaya Media, a free podcast app I’d never heard of until this week, raised a whopping $100 million in venture capital funding to “establish itself as a new force in the podcast distribution space,” per Variety.

The podcasting business definitely took center stage, but Lime and Bird made headlines, as usual, a new unicorn emerged in the mental health space and Instacart, it turns out, has been screwing its independent contractors.

As mentioned, Spotify, or shall we say Spodify, gobbled up Gimlet and Anchor. More on that here and a full analysis of the deal here. Key takeaway: it’s the dawn of podcasting; expect a whole lot more venture investment and M&A activity in the next few years.

This week’s biggest “yikes” moment was when reports emerged that Instacart was offsetting its wages with tips from customers. An independent contractor has filed a class-action lawsuit against the food delivery business, claiming it “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers.” TechCrunch’s Megan Rose Dickey has the full story here, as well as Instacart CEO’s apology here.

Slack confidentially filed to go public this week, its first public step toward either an IPO or a direct listing. If it chooses the latter, like Spotify did in 2018, it won’t issue any new shares. Instead, it will sell existing shares held by insiders, employees and investors, a move that will allow it to bypass a roadshow and some of Wall Street’s exorbitant IPO fees. Postmates confidentially filed, too. The 8-year-old company has tapped JPMorgan Chase and Bank of America to lead its upcoming float.

Reddit CEO Steve Huffman delivers remarks on “Redesigning Reddit” during the third day of Web Summit in Altice Arena on November 08, 2017 in Lisbon, Portugal. (Horacio Villalobos-Corbis/Contributor)

It was particularly tough to decide which deal was the most notable this week… But the winner is Reddit, the online platform for chit-chatting about niche topics — r/ProgMetal if you’re Crunchbase editor Alex Wilhelm . The company is raising up to $300 million at a $3 billion valuation, according to TechCrunch’s Josh Constine. Reddit has been around since 2005 and has raised a total of $250 million in equity funding. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation.

Runner up for deal of the week is Calm, the app that helps users reduce anxiety, sleep better and feel happier. The startup brought in an $88 million Series B at a $1 billion valuation. With 40 million downloads worldwide and more than one million paying subscribers, the company says it quadrupled revenue in 2018 from $20 million to $80 million and is now profitable — not a word you hear every day in Silicon Valley.

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

I listened to the Bird CEO’s chat with Upfront Ventures’ Mark Suster last week and wrote down some key takeaways, including the challenges of seasonality and safety in the scooter business. I also wrote about an investigation by Consumer Reports that found electric scooters to be the cause of more than 1,500 accidents in the U.S. I’m also required to mention that e-scooter unicorn Lime finally closed its highly anticipated round at a $2.4 billion valuation. The news came just a few days after the company beefed up its executive team with a CTO and CMO hire.

Databricks raises $250M at a $2.75B valuation for its analytics platform
Retail technology platform Relex raises $200M from TCV
Raisin raises $114M for its pan-European marketplace for savings and investment products
Self-driving truck startup Ike raises $52M
Signal Sciences secures $35M to protect web apps
Ritual raises $25M for its subscription-based women’s daily vitamin
Little Spoon gets $7M for its organic baby food delivery service
By Humankind picks up $4M to rid your morning routine of single-use plastic

We don’t spend a ton of time talking about the growing, venture-funded, tech-enabled logistics sector, but one startup in the space garnered significant attention this week. Turvo poached three key Uber Freight employees, including two of the unit’s co-founders. What’s that mean for Uber Freight? Well, probably not a ton… Based on my conversation with Turvo’s newest employees, Uber Freight is a rocket ship waiting to take off.

Who knew that investing in female-focused brands could turn a profit for investors? Just kidding, I knew that and this week I have even more proof! This is L., a direct-to-consumer, subscription-based retailer of pads, tampons and condoms made with organic materials sold to P&G for $100 million. The company, founded by Talia Frenkel, launched out of Y Combinator in August 2015. According to PitchBook, it was backed by Halogen Ventures, 500 Startups, Fusion Fund and a few others.

Speaking of ladies getting stuff done, Bessemer Venture Partners promoted Talia Goldberg to partner this week, making the 28-year-old one of the youngest investing partners at the Silicon Valley venture fund. Plus, Palo Alto’s Eclipse Ventures, hot off the heels of a $500 million fundraise, added two general partners: former Flex CEO Mike McNamara and former Global Foundries CEO Sanjay Jha.

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 and I chat about the expanding podcast industry, Reddit’s big round and scooter accidents.

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Source: The Tech Crunch

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Reddit is raising a huge round near a $3 billion valuation

Posted by on Feb 5, 2019 in Apps, funding, Fundings & Exits, Recent Funding, Reddit, Social, Startups, steve huffman, TC, Tencent, Venture Capital | 0 comments

Reddit is raising $150 million to $300 million to keep the front page of the internet running, multiple sources tell TechCrunch. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation. Depending on how much follow-on cash Reddit drums up from Silicon Valley investors and beyond, its post-money valuation could reach an epic $3 billion.

As more people seek esoteric community and off-kilter entertainment online, Reddit continues to grow its link-sharing forums. Indeed, 330 million monthly active users now frequent its 150,000 Subreddits. That warrants the boost to its valuation, which previously reached $1.8 billion when it raised $200 million in July 2017. As of then, Reddit’s majority stake was still held by publisher Conde Nast, which bought in back in 2006 just a year after the site launched. Reddit had raised $250 million previously, so the new round will push it to $400 million to $550 million in total funding.

It should have been clear that Reddit was on the prowl after a month of pitching its growth to the press and beating its own drum. In December Reddit announced it had reached 1.4 billion video views per month, up a staggering 40 percent from just two months earlier after first launching a native video player in August 2017. And it made a big deal out of starting to sell cost-per-click ads in addition to promoted posts, cost per impression and video ads. A 22 percent increase in engagement and 30 percent rise in total view in 2018 pushed it past $100 million in revenue for the year, CNBC reported.

The exact details of the Series D could fluctuate before it’s formally announced, and Reddit and Tencent declined to comment. But supporting and moderating all that content isn’t cheap. The company had 350 employees just under a year ago, and is headquartered in pricey San Francisco — though in one of its cheaper but troubled neighborhoods. Until Reddit’s newer ad products rev up, it’s still relying on venture capital.

Tencent’s money will give Reddit time to hit its stride. It’s said to be kicking in the first $150 million of the round. The Chinese conglomerate owns all-in-one messaging app WeChat and is the biggest gaming company in the world thanks to ownership of League of Legends and stakes in Clash of Clans-maker Supercell and Fortnite developer Epic. But China’s crackdown on gaming addiction has been rough for Tencent’s valuation and Chinese competitor ByteDance’s news reader app Toutiao has grown enormous. Both of those facts make investing in American newsboard Reddit a savvy diversification, even if Reddit isn’t accessible in China.

Reddit could seek to fill out its round with up to $150 million in additional cash from previous investors like Sequoia, Andreessen Horowitz, Y Combinator or YC’s president Sam Altman. They could see potential in one of the web’s most unique and internet-native content communities. Reddit is where the real world is hashed out and laughed about by a tech-savvy audience that often produces memes that cross over into mainstream culture. And with all those amateur curators toiling away for internet points, casual users are flocking in for an edgier look at what will be the center of attention tomorrow.

Reddit has recently avoided much of the backlash hitting fellow social site Facebook, despite having to remove 1,000 Russian trolls pushing political propaganda. But in the past, the anonymous site has had plenty of problems with racist, misogynistic and homophobic content. In 2015 it finally implemented quarantines and shut down some of the most offensive Subreddits. But harassment by users contributed to the departure of CEO Ellen Pao, who was replaced by Steve Huffman, Reddit’s co-founder. Huffman went on to abuse that power, secretly editing some user comments on Reddit to frame them for insulting the heads of their own Subreddits. He escaped the debacle with a slap on the wrist and an apology, claiming “I spent my formative years as a young troll on the Internet.”

Investors will have to hope Huffman has the composure to lead Reddit as it inevitably encounters more scrutiny as its valuation scales up. Its policy choice about what constitutes hate speech and harassment, its own company culture and its influence on public opinion will all come under the microscope. Reddit has the potential to give a voice to great ideas at a time when flashy visuals rule the web. And as local journalism wanes, the site’s breed of vigilante web sleuths could be more in demand, for better or worse. But that all hinges on Reddit defining clear, consistent, empathetic policy that will help it surf atop the sewage swirling around the internet.


Source: The Tech Crunch

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