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Saturday, March 23, 2019

Flying taxi startup Blade is helping Silicon Valley CEOs bypass traffic

One year after a $38 million Series B valued on-demand aviation startup Blade at $140 million, the company has begun taxiing the Bay Area’s elite.

As part of a new pilot program, Blade has given 200 people in San Francisco and Silicon Valley exclusive access to its mobile app, allowing them to book helicopters, private jets and even seaplanes at a moments notice for $200 per seat, at least.

Blade, backed by Lerer Hippeau, Airbus, former Google CEO Eric Schmidt and others, currently flies passengers around the New York City area, where it’s headquartered, offering the region’s wealthy $800 flights to the Hamptons, among other flights at various price points. According to Business Insider, it has worked with Uber in the past to help deep-pocketed Coachella attendees fly to and from the Van Nuys Airport to Palm Springs, renting out six-seat helicopters for more than $4,000 a pop.

Its latest pilot seems to target business travelers, connecting riders to the San Francisco International Airport and Oakland International Airport to Palo Alto, San Jose, Monterey and Napa Valley. The goal is to shorten trips made excruciatingly long due to bad traffic in major cities like New York, Los Angeles and San Francisco. Recently, the startup partnered with American Airlines to better establish its network of helicopters, a big step for the company as it works to integrate with existing transportation infrastructure.

Blade, led by founder and chief executive officer Rob Wiesenthal, a former Warner Music Group executive, has raised about $50 million in venture capital funding to date. To launch at scale and, ultimately, to compete with the likes of soon-to-be-public transportation behemoth Uber, it will have to land a lot more investment support.

Uber too has lofty plans to develop a consumer aerial ridesharing business, as do several other privately-funded startups. Called UberAIR, Uber plans to offer short-term shareable flights to commuters as soon as 2023. The company has raised billions of dollars to turn this sci-fi concept to reality.

Then there’s Kitty Hawk, a company launched by former Google vice president an Udacity co-founder Sebastian Thrun, which is developing an aircraft that can take off like a helicopter but fly like a plane for short-term urban transportation. Others in the air taxi or vertical take-off and landing aircraft space, including Volocopter, Lilium and Joby Aviation, have raised tens of millions to eliminate traffic congestion or, rather, to chauffer the rich.

Blade’s next stop is India, the Financial Times reports, where it will conduct a pilot connecting travelers in downtown Mumbai and Pune. The company tells TechCrunch they are currently exploring one additional domestic pilot and one additional international pilot.



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Startups Weekly: A much-needed unicorn IPO update

As I’m sure everyone reading this knows, female-founded businesses receive just over 2 percent of venture capital on an annual basis. Most of those checks are written to early-stage startups. It’s extremely difficult for female founders to garner late-stage support, let alone cash $100 million checks.

Maybe that’s finally changing. This week, not one but two female-founded and led companies, Glossier and Rent The Runway, raised nine-figure rounds and cemented their status as unicorn companies. According to PitchBook data from 2018, there are only about 15 unicorn startups with female founders. Though I’m sure that number has increased in the last year, you get the point: There are hundreds of privately held billion-dollar companies and shockingly few of those have women founders (even fewer have female CEOs)…

Moving on…

YC Demo Days

I spent a good part of the week at San Francisco’s Pier 48 in a room full of vest-wearing investors. We listened to some 200 YC companies make their 120-second pitch and though it was a bit of a whirlwind, there were definitely some standouts. ICYMI: We wrote about each and every company that pitched on day 1 and day 2. If you’re looking for the inside scoop on the companies that forwent demo day and raised rounds, or were acquired, before hitting the stage, we’ve got that too.

IPO corner

Lyft: This week, Lyft set the terms for its highly-anticipated initial public offering, expected to be completed next week. The company will charge between $62 and $68 per share, raising more than $2 billion at a valuation of ~$23 billion. We previously reported its initial market cap would be around $18.5 billion, but that was before we knew that Lyft’s IPO was already oversubscribed. Here’s a little more background on the Lyft IPO for those interested.

Uber: The global ride-hailing business flew a little more under the radar this week than last week, but still managed to grab a few headlines. The company has decided to sell its stock on the New York Stock Exchange, which is the least surprising IPO development of 2019, considering its key U.S. competitor, Lyft, has been working with the Nasdaq on its IPO. Uber is expected to unveil its S-1 in April.

Ben Silbermann, co-founder and CEO of Pinterest, at TechCrunch Disrupt SF 2017.

Pinterest: Pinterest, the nearly decade-old visual search engine, unveiled its S-1 on Friday, one of the final steps ahead of its NYSE IPO, expected in April. The $12.3 billion company, which will trade under the ticker symbol “PINS,” posted revenue of $755.9 million in the year ending December 31, 2018, up from $472.8 million in 2017. It has roughly doubled its monthly active user count since early 2016, hitting 265 million last year. The company’s net loss, meanwhile, shrank to $62.9 million in 2018 from $130 million in 2017.

Zoom: Not necessarily the buzziest of companies, but its S-1 filing, published Friday, stands out for one important reason: Zoom is profitable! I know, what insanity! Anyway, the startup is going public on the Nasdaq as soon as next month after raising about $150 million in venture capital funding. The full deets are here.

Seed money

General Catalyst, a well-known venture capital firm, is diving more seriously into the business of funding seed-stage business. The firm, which has investments in Warby Parker, Oscar and Stripe, announced earlier this week its plan to invest at least $25 million each year in nascent teams.

Deal of the week

Earlier this week, Opendoor, the SoftBank-backed real estate startup, filed paperwork to raise even more money. According to TechCrunch’s Ingrid Lunden, the business is planning to raise up to $200 million at a valuation of roughly $3.7 billion. It’s possible this is a Series E extension; after all, the company raised its $400 million Series E only six months ago. Backers of OpenDoor include the usual suspects: Andreessen Horowitz, Coatue, General Atlantic, GV, Initialized Capital, Khosla Ventures, NEA and Norwest Venture Partners.

Startup capital

Backstage Capital founder and managing partner Arlan Hamilton, center.

Debate

Axios’ Dan Primack and Kia Kokalitcheva published a report this week revealing Backstage Capital hadn’t raised its debut fund in total. Backstage founder Arlan Hamilton was quick to point out that she had been honest about the challenges of fundraising during various speaking engagements, and even on the Gimlet “Startup” podcast, which featured her in its latest season. A Twitter debate ensued and later, Hamilton announced she was stepping down as CEO of Backstage Studio, the operations arm of the venture fund, to focus on raising capital and amplifying founders. TechCrunch’s Megan Rose Dickey has the full story.

Pro rata rights

This week, TechCrunch’s Connie Loizos revisited a long-held debate: Pro rata rights, or the right of an earlier investor in a company to maintain the percentage that he or she (or their venture firm) owns as that company matures and takes on more funding. Here’s why pro rata rights matter (at least, to VCs).

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about Glossier, Rent The Runway and YC Demo Days. Then, in a special Equity Shot, we unpack the numbers behind the Pinterest and Zoom IPO filings.

Want more TechCrunch newsletters? Sign up here.



https://ift.tt/2Ucnzdj Startups Weekly: A much-needed unicorn IPO update https://ift.tt/2HDnZ6v

Friday, March 22, 2019

Equity Shot: Pinterest and Zoom file to go public

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

What a Friday. This afternoon (mere hours after we released our regularly scheduled episode no less!), both Pinterest and Zoom dropped their public S-1 filings. So we rolled up our proverbial sleeves and ran through the numbers. If you want to follow along, the Pinterest S-1 is here, and the Zoom document is here.

Got it? Great. Pinterest’s long-awaited IPO filing paints a picture of a company cutting its losses while expanding its revenue. That’s the correct direction for both its top and bottom lines.

As Kate points out, it’s not in the same league as Lyft when it comes to scale, but it’s still quite large.

More than big enough to go public, whether it’s big enough to meet, let alone surpass its final private valuation ($12.3 billion) isn’t clear yet. Peeking through the numbers, Pinterest has been improving margins and accelerating growth, a surprisingly winsome brace of metrics for the decacorn.

Pinterest has raised a boatload of venture capital, about $1.5 billion since it was founded in 2010. Its IPO filing lists both early and late-stage investors, like Bessemer Venture Partners, FirstMark Capital, Andreessen Horowitz, Fidelity and Valiant Capital Partners as key stakeholders. Interestingly, it doesn’t state the percent ownership of each of these entities, which isn’t something we’ve ever seen before.

Next, Zoom’s S-1 filing was more dark horse entrance than Katy Perry album drop, but the firm has a history of rapid growth (over 100 percent, yearly) and more recently, profit. Yes, the enterprise-facing video conferencing unicorn actually makes money!

In 2019, the year in which the market is bated on Uber’s debut, profit almost feels out of place. We know Zoom’s CEO Eric Yuan, which helps. As Kate explains, this isn’t his first time as a founder. Nor is it his first major success. Yuan sold his last company, WebEx, for $3.2 billion to Cisco years ago then vowed never to sell Zoom (he wasn’t thrilled with how that WebEx acquisition turned out).

Should we have been that surprised to see a VC-backed tech company post a profit — no. But that tells you a little something about this bubble we live in, doesn’t it?

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.



https://ift.tt/eA8V8J Equity Shot: Pinterest and Zoom file to go public https://ift.tt/2Hzke1T

Our 9 favorite startups from Y Combinator W19 Demo Day 2

Heathcare kiosks, a home-cooked food marketplace, and a way for startups to earn interest on their funding topped our list of high-potential companies from Y Combinator’s Winter 2019 Demo Day 2. 88 startups launched on stage at the lauded accelerator, though some of the best skipped the stage as they’d already raised tons of money.

Be sure to check out our write-ups of all 85 startups from day 1 plus our top picks, as well as the full set from day 2. But now, after asking investors and conferring with the TechCrunch team, here are our 9 favorites from day 2.

Shef 

Two months ago, California passed the first law in the country legalizing the sale of home cooked food. Shef creates a marketplace where home chefs can find nearby customers. Shef’s meals cost around $6.50 compared to $20 per meal for traditional food delivery, and the startup takes a 22 percent cut of every transaction. It’s been growing 50 percent week over week thanks to deals with large property management companies that offer the marketplace as a perk to their residents. Shef wants to be the Airbnb of home cooked food.

Why we picked Shef: Deregulation creates gold rush opportunities and Shef was quick to seize this one, getting started just days after the law passed. Food delivery is a massive megatrend but high costs make it unaffordable or a luxury for many. If a parent is already cooking meals for their whole family, it takes minimal effort to produce a few extra portions to sell to the neighbors at accessible rates.

Handle

This startup automates the collection process of unpaid construction invoices. Construction companies are often forced to pay for their own jobs when customers are late on payments. According to Handle, there are $104 billion in unpaid construction invoices every year. Handle launched six weeks ago and is currently collecting $22,800 in monthly revenue. The founders previously launched an Andreessen Horowitz-backed company called Tenfold.

Why we picked Handle: Construction might seem like an unsexy vertical, but it’s massive and rife with inefficiencies this startup tackles. Handle helps contractors demand payments, instantly file liens that ensure they’re compensated for work or materials, or exchange unpaid invoices for cash. Even modest fees could add up quickly given how much money moves through the industry. And there are surely secondary business models to explore using all the data Handle collects on the construction market.

Blueberry Medical

This pediatric telemedicine company provides medical care instantly to families. Blueberry provides constant contact, the ability to talk to a pediatrician 24/7 and at-home testing kits for a total of $15 per month. They’ve just completed a paid consumer pilot and say they were able to resolve 84 percent of issues without in-person care. They’ve partnered with insurance providers to reduce ER visits.

Why we picked Blueberry: Questionable emergency room visits are a nightmare for parents, a huge source of unnecessary costs, and a drain on resources for needy patients. Parents already spend so much time and money trying to keep their kids safe that this is a no-brainer subscription. And the urgent and emotional pull of pediatrics is a smart wedge into telemedicine for all demographics.

rct studio

Led by a team of YC alums behind Raven, an AI startup acquired by Baidu in 2017, rct studio is a creative studio for immersive and interactive film. The platform provides a real time “text to render “engine (so the text “A man sits on a sofa” would generate 3D imagery of a man sitting on a sofa) that supports mainstream 3D engines like Unity and Unreal, as well as a creative tool for film professionals to craft immersive and open-ended entertainment experiences called Morpheus Engine.

Why we picked rct studio: Netflix’s Bandersnatch was just the start of mainstream interactive film. With strong technology, an innovative application, and proven talent, rct could become a critical tool for creating this kind of media. And even if the tech falls short of producing polished media, it could be used for storyboards and mockups.

Interprime

Provides “Apple level” treasury services to startups. Startups are raising a lot of money with no way to manage it, says Interprime. They want to help these businesses by managing these big investments by helping them earn interest on their funding while retaining liquidity. They take a .25 percent advisory fee for all the investment they oversee. So far, they have $10 million in investment capital they are servicing.

Why we picked Interprime: The explosion of early stage startup funding evidenced by Y Combinator itself has created new banking opportunities. Silicon Valley Bank is ripe for competition and Interprime’s focus on startups could unlock new financial services. With Interprime’s YC affiliation, it has access to tons of potential customers.

 

Nabis

Nabis is tackling the cannabis shipping and logistics business, working with suppliers to ship out goods to retailers reliably. It’s illegal for FedEx to ship weed so Nabis has swooped in and is helping ship and connect while taking cuts of the proceeds, a price the suppliers are willing to pay due to their 98 percent on-time shipping record.

Why we picked Nabis: Quirky regulation creates efficiency gaps in the marijuana business where incumbents can’t participate since they’re not allowed to handle the flower. As more states legalize and cannabis finds its way into more products, moving goods from farm to processor to retailer could spawn a big market for Nabis with a legal moat. It’s already working with many top marijuana brands, and could sell them additional services around business intelligence and distribution.

WeatherCheck

This startup measures weather damage for insurance companies. WeatherCheck has secured $4.7 million in annual bookings in the five months since it launched to help insurance carriers reduce their overall claims expense. To use the service, insurers upload data about their properties. WeatherCheck then monitors the weather and sends notifications to insurance companies, if, for example, a property has been damaged by hail.

Why we picked WeatherCheck: Extreme weather is only getting worse due to climate change. With 10.7 million US properties impacted by hail damage in 2017, WeatherCheck has found a smart initial market from which to expand. It’s easy to imagine the startup working on flood, earthquake, tornado, and wildfire claims too. Insurance is a fierce market, and old-school providers could get a leg up with WeatherCheck’s tech.

 

Upsolve

Upsolve wants to help low-income individuals file for bankruptcy more easily. The non-profit service gets referral fees from pointing non low-income families to bankruptcy lawyers and is able to offer the service for free. The company says that medical bills, layoffs and predatory loans can leave low-income families in dire situations and that in the last 6 months, their non-profit has alleviated customers from $24 million in debt.

Why we picked Upsolve: Financial hardship is rampant. With the potential for another recession and automation threatening jobs, many families could be at risk for bankruptcy. But the process is so stigmatized that some people avoid it at all costs. Upsolve could democratize access to this financial strategy while inserting itself into a lucrative transaction type.

Pulse Active Stations Network

This startup makes health kiosks for India, meant to be installed in train stations. Co-founder Joginder Tanikella says that there are 600,000 preventable deaths in India as many in the region don’t get regular doctor checkups. “But everyone takes trains,” he says. Their in-station kiosk measures 21 health parameters. The company made $28,000 in revenue last month. Charging $1 per test, Tanikella says each machine pays for itself within 3 months. In the future, the kiosks will allow them to sell insurance and refer users to doctors.

Why we picked Pulse: Telemedicine can’t do everything, but plenty of people around the world can’t make it in to a full-fledged doctor’s office. Pulse creates a mid-point where hardware sensors can measure body fat, blood pressure, pulse, and bone strength to improve accuracy for diagnosing diabetes, osteoarthritis, cardiac problems, and more. Pulse’s companion app could spark additional revenue streams, and there’s clearly a much bigger market for this than just India.

More Y Combinator coverage from TechCrunch:

Additional reporting by Kate Clark, Lucas Matney, and Greg Kumparak



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Clark, a venture-backed tutoring platform, will now help tutors build their own sites

A couple of years ago, Clark, a New York-based startup, appeared on the scene with tutoring software that aimed to both make it easier for educators to start and manage a tutoring business by handling on its platform all the work that tutors struggle to find time to do, from drumming up students, to managing scheduling and payments, to making it far simpler to communicate with parents.

Today the company is announcing a bit of a shift, moving away from simply selling access to its business software for a monthly subscription fee to now helping tutors set up their very own storefronts, replete with websites, certifications, marketing materials and even clients, which Clark will help them find.

How it will work, from a dollars standpoint: Clark will charge an upfront fee for setting up the business and getting it off the ground, then charge a smaller monthly fee for use of its software, which is 15 percent of sessions fees for students who are referred by Clark for the initial year, and then 15 percent of all sessions after that.

Called its “business in a box” product, it’s an interesting twist and part of a broader wave of startups that are capitalizing on the growing number of people who are self-employed, or who want to be, or who simply want to supplement their income with a “side hustle.” Bird’s recent decision to partner with local entrepreneurs in other parts of the world who will manage their own fleets of its electric scooters (and pay Bird a cut of their revenue), is another recent example. Clark may also have drawn inspiration from Wonderschool, a venture-backed startup that’s empowering early childhood educators to open their own in-home preschools or day cares while it handles the administration and logistics.

What teachers get with this new product, specifically, is support in building their business from the ground up, including website creation and branding, building a presence on review sites, marketing the business and search engine optimization and a hands-on bootcamp for managing a business that covers things like setting rates and managing clients, according to co-founder and CEO Megan O’Connor. She also tells us that once a business is off the ground, customers will get access to the company’s software, which should allow them to schedule tutoring sessions, manage payments and invoices, give session feedback to parents through a communications tool and match with new students. Not least, Clark has a dedicated customer success team based in New York, says O’Connor, so clients have somewhere to turn.

According to Clark, the startup has so far facilitated roughly 20,000 tutoring sessions and it has hundreds of businesses across the country using its existing service. It’s because many of these clients weren’t sure how to get their businesses off the ground that Clark adopted this new model, which will also strive to connect parents with educators that match their children’s needs (parents have final say over who they ultimately hire).

Clark has raised just $1 million to date, including from Lightspeed Venture Partners, Rethink Education, Flatworld Partners and Winklevoss Capital — money it has used to grow its business along with the revenue it has brought in from the outset by charging for its services.

Whether its new direction speeds up its momentum remains an open question, but the company is operating in a huge market. According to some new market research on the global private tutoring opportunity, the market was valued at $96 billion in 2017, and it’s expected to generate more than $177 billion by 2026.



https://ift.tt/eA8V8J Clark, a venture-backed tutoring platform, will now help tutors build their own sites https://ift.tt/2HOwZ7W

Firefox is now a better iPad browser

{rss:content:encoded} Firefox is now a better iPad browser https://ift.tt/2FkbTeU https://ift.tt/2WgxDiw March 22, 2019 at 06:50PM

Mozilla today announced a new iOS version of Firefox that has been specifically optimized for Apple’s iPad. Given the launch of the new iPad mini this week, that’s impeccable timing. It’s also an admission that building a browser for tablets is different from building a browser for phones, which is what Mozilla mostly focused on in recent years.

“We know that iPads aren’t just bigger versions of iPhones,” Mozilla writes in today’s announcement. “You use them differently, you need them for different things. So rather than just make a bigger version of our browser for iOS, we made Firefox for iPad look and feel like it was custom made for a tablet.”

So with this new version, Firefox for iPad gets support for iOS features like split screen and the ability to set Firefox as the default browser in Outlook for iOS. The team also optimized tab management for these larger screens, including the option to see tabs as large tiles, “making it easy to see what they are, see if they spark joy and close with a tap if not.” And if you have a few tabs you want to share, then you can do so with the Send Tabs feature Mozilla introduced earlier this year.

Starting a private browsing session on iOS always took a few extra tabs. The iPad version makes this a one-tap affair as it prominently highlights this feature in the tab bar.

Because quite a few iPad users also use a keyboard, it’s no surprise that this version of Firefox also supports keyboard shortcuts.

If you are an iPad user in search of an alternative browser, Firefox may now be a viable option for you. Give it a try and let us know what you think in the comments (just don’t remind us how you work from home for only a few hours a day and make good money… believe me, we’re aware).

Indonesia’s Kargo comes out of stealth with $7.6M from Travis Kalanick, Sequoia and others

Travis Kalanick may be busy cooking up a cloud kitchen business, but that hasn’t stopped the former Uber CEO’s VC fund from making its first investment in Southeast Asia. 10100, the firm that Kalanick launched last year for investments in Asia, just took part in a $7.6 million seed round for Kargo, an early-stage “Uber for trucks” startup based in Indonesia and — you guessed it — was founded by a former Uber Asia executive.

Kargo takes some of the concepts behind Uber and applies them to trucking and logistics. That’s to say that business customers order trucks using a mobile app or website, but the scope is wider, Kargo CEO and co-founder Tiger Fang told TechCrunch. Unlike Uber, Kargo works with truck operators and 3PLs rather than truck drivers themselves.

The goal is to remove excessive middlemen who broker logistics and trucking deals and thereby provide greater transparency, better quality service and improved financials for clients and those operating the services — so cheaper pricing for companies and a larger share of the revenue for those actually out driving. So rather than being subject to closed discussions and chains of brokers, each taking their cut, Kargo wants to offer a more direct connection between logistics operators and clients.

“This is a huge opportunity,” Fang said in an interview. “We’ve been looking at what types of problems we can go and solve [since the Uber-Grab deal]… starting another e-commerce startup was probably not the best idea.

“We hope we can lower the price for shippers and raise the earnings from shippers and transporters,” he added. “We think there are hundreds of thousands of smaller companies who all get their jobs from agents and middleman.”

Fang — whose stint at Uber included time in the U.S., launches across Southeast Asia and managing its business in Chengdu, once the company’s busiest city on the planet based on daily trip volume — started Kargo late last year with Yodi Aditya, its CTO, following “months” of research after Uber sold its local business to Grab. They went on to close the financing deal before the end of 2018 and launch in beta early this year.

Operationally, Fang said Kargo is currently piloting with “a couple of big FMG companies” and their logistics, while, on the supply side, it has access to “thousands” of trucks. The initial focus is strictly on FMCG, he added, because each industry and segment requires different types of trucks.

As those figures suggest, Kargo is in its early stages, and that makes a $7.6 million seed round pretty notable. Yes, valuations and rounds have been ratcheted up in Southeast Asia, where investors and tech companies see potential as internet access grows among the region’s 600 million-plus consumers, but this is a large check for a venture that is literally just kicking off. But that’s not all; the caliber of the backers is also quite unlike your average seed deal.

Kalanick’s 10100 firm is participating, but the round is led by Sequoia India and Southeast Asia, which announced its new $695 million fund six months ago and has since added an early-stage accelerator program. Other names involved include China’s Zhenfund, Indonesia-focused Intudo Ventures, a personal investment from Patrick Walujo — co-founder of Indonesian hedge fund group North Star — ATM Capital, Innoven Capital and Agaeti Ventures from Indonesian businessman Pandu Sjahrir.

Kalanick is, in many ways, the headline investor, given his profile and connections to Fang and others at Kargo. TechCrunch understands that Kalanick agreed to invest last year when he visited Southeast Asia on a trip that combined hiring for his CloudKitchens startup and more generally catching up with the Uber alumni in Asia.

Fang declined to comment on the circumstances, but he said Kalanick “has been a big mentor” to him.

Clearly, a lot of the interest in Kargo stems from the team’s credentials — Fang said a large chunk of Kargo’s 50-person team are ex-Uber Asia — but there are also promising examples of what Kargo is doing in other parts of the world.

China’s two trucking platform unicorns merged to create Full Truck Alliance Group, a startup reportedly valued at $10 billion that counts Google and SoftBank among its investors, while in India, Blackbuck is reportedly raising at an $800 million valuation. It’s logical, then, that Indonesia — the world’s fourth largest population and Southeast Asia’s largest economy — would also come under the radar, and Fang believes that his team is ideally suited to go after the problem.

The focus is entirely on Indonesia for now, where Fang believes logistics accounts for close to one-quarter of the national $1 trillion GDP, but further down the line he anticipates there will be expansions across Southeast Asia and potentially beyond.

“We definitely want to build a global company,” he said.

Uber had a tough run in Indonesia. Taxi drivers and those with interests in the industry staged often-violent demonstrations in protest at this “foreign” entrant that posed a threat to their businesses and financial returns. Trucking feels a lot like that with decades of inefficiencies in place, and certain parties profiting from those extended chains of deal-making. Like taxis, those who are being disintermediated aren’t likely to take a threat lying down, so it remains to be seen if Fang, and his fellow ex-Uberites, will run into similar conflict in the future. But Kargo is certainly off to a bright start with plenty of money to go out and test its thesis.



https://ift.tt/eA8V8J Indonesia’s Kargo comes out of stealth with $7.6M from Travis Kalanick, Sequoia and others https://ift.tt/2CrXWuP

Respondology helps brands and influencers hide toxic comments

“Don’t read the comments” is one of those cliches that sticks around because it’s still good advice — maybe the best advice. But the team at Respondology is trying to change that.

The company started out by helping brands find and respond to messages on social media. Senior Vice President of Sales Aaron Benor explained that in the course of that work, it also built a tool to mitigate “the vitriol, the awful toxicity of online social media.”

“We realized that the tool had a lot more legs than we thought, and we decided to pursue it full force and sunset the advertising business,” Benor said. “What really I love about this new product is that the big picture, long-term, is: We can put an end to cyberbullying.”

That’s a big goal, and to be clear, Respondology isn’t trying to reach it immediately. Instead, it’s launching a product called The Mod that allows individual brands and influencers to weed out toxic, trollish or spammy comments on Instagram and YouTube, rendering them invisible to most followers.

Benor explained that the product has two lines of defense. First, there’s automated keyword detection, where certain words will cause a comment to be flagged. The customer can decide which categories they want to filter out (“mild” or “severe” swearing, sexual references, racist remarks and so on), and they can also view and reinstate flagged comments from their Respondology dashboard.

Respondology settings

Respondology settings

Second, the company has built up a network of around 1,500 moderators who look at all the comments that aren’t flagged, and they can decide whether they’re appropriate to post. So even if a comment doesn’t use one of the red-flag keywords, a human can still catch it. (Customers that want to be extra careful can also turn on an option where multiple moderators vote on whether a comment should be hidden or posted.)

Benor demonstrated the system for me using a test Instagram account. I got to play the troll, posting several comments at his prompting. Each time, the comment was visible for just a few seconds before the Respondology system sprang into action and the comment disappeared.

When I posted profanity, it was automatically flagged and stayed hidden, while my other comments popped up in the moderation app — and if they were approved, they’d reappear on Instagram. All of this activity remained hidden from my account, where it just looked like my comments had been published normally.

Of course, the big social platforms have built their own moderation tools, but it seems clear that the problem remains unsolved. And even if platform moderation improves, Benor said, “This is an agnostic tool. [Our customers] have complete choice and control. This is not the platform saying, ‘This is what we’re going to offer you’; this is what’s going to work for you as a creator.”

We also discussed a recent story in The Verge highlighting the impact that moderating toxic content can have on people’s mental and emotional health. But Benor argued that while Facebook moderators have to spend most of their time dealing with “the worst of the worst,” Respondology’s team is mostly just approving innocuous commentary. Plus, they’re freelancers who only work when they want, and can stop at any time.

“We haven’t heard any negative feedback,” Benor added. “We all act as moderators ourselves — because what better way is there to know the product and understand it — and I’ve never been shocked by what I’ve seen.”

Respondology charges customers of The Mod based on the volume of comments. Benor said the pricing can range from “a few dollars a month to a few thousand dollars a month.”

Ultimately, he’s hoping to release a version for non-professional users too — so parents, for example, can automatically hide the worst comments from their kids’ online accounts.



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Facebook staff raised concerns about Cambridge Analytica in September 2015, per court filing

Further details have emerged about when and how much Facebook knew about data-scraping by the disgraced and now defunct Cambridge Analytica political data firm.

Last year a major privacy scandal hit Facebook after it emerged CA had paid GSR, a developer with access to Facebook’s platform, to extract personal data on as many as 87M Facebook users without proper consents.

Cambridge Analytica’s intention was to use the data to build psychographic profiles of American voters to target political messages — with the company initially working for the Ted Cruz and later the Donald Trump presidential candidate campaigns.

But employees at Facebook appear to have raised internal concerns about CA scraping user data in September 2015 — i.e. months earlier than Facebook previously told lawmakers it became aware of the GSR/CA breach (December 2015).

The latest twist in the privacy scandal has emerged via a redacted court filing in the U.S. — where the District of Columbia is suing Facebook in a consumer protection enforcement case.

Facebook is seeking to have documents pertaining to the case sealed, while the District argues there is nothing commercially sensitive to require that.

In its opposition to Facebook’s motion to seal the document, the District includes a redacted summary (screengrabbed below) of the “jurisdictional facts” it says are contained in the papers Facebook is seeking to keep secret.

According to the District’s account a Washington D.C.-based Facebook employee warned others in the company about Cambridge Analytica’s data-scraping practices as early as September 2015.

Under questioning in Congress last April, Mark Zuckerberg was asked directly by congressman Mike Doyle when Facebook had first learned about Cambridge Analytica using Facebook data — and whether specifically it had learned about it as a result of the December 2015 Guardian article (which broke the story).

Zuckerberg responded with a “yes” to Doyle’s question.

Facebook repeated the same line to the UK’s Digital, Media and Sport (DCMA) committee last year, over a series of hearings with less senior staffers

Damian Collins, the chair of the DCMS committee — which made repeat requests for Zuckerberg himself to testify in front of its enquiry into online disinformation, only to be repeatedly rebuffed — tweeted yesterday that the new detail could suggest Facebook “consistently mislead” the British parliament.

The DCMS committee has previously accused Facebook of deliberately misleading its enquiry on other aspects of the CA saga, with Collins taking the company to task for displaying a pattern of evasive behavior.

The earlier charge that it mislead the committee refers to a hearing in Washington in February 2018 — when Facebook sent its UK head of policy, Simon Milner, and its head of global policy management, Monika Bickert, to field DCMS’ questions — where the pair failed to inform the committee about a legal agreement Facebook had made with Cambridge Analytica in December 2015.

The committee’s final report was also damning of Facebook, calling for regulators to instigate antitrust and privacy probes of the tech giant.

Meanwhile, questions have continued to be raised about Facebook’s decision to hire GSR co-founder Joseph Chancellor, who reportedly joined the company around November 2015.

The question now is if Facebook knew there were concerns about CA data-scraping prior to hiring the co-founder of the company that sold scraped Facebook user data to CA, why did it go ahead and hire Chancellor?

The GSR co-founder has never been made available by Facebook to answer questions from politicians (or press) on either side of the pond.

Last fall he was reported to have quietly left Facebook, with no comment from Facebook on the reasons behind his departure — just as it had never explained why it hired him in the first place.

But the new timeline that’s emerged of what Facebook knew when makes those questions more pressing than ever.

Reached for a response to the details contained in the District of Columbia’s court filing, a Facebook spokeswomen sent us this statement:

Facebook was not aware of the transfer of data from Kogan/GSR to Cambridge Analytica until December 2015, as we have testified under oath

In September 2015 employees heard speculation that Cambridge Analytica was scraping data, something that is unfortunately common for any internet service. In December 2015, we first learned through media reports that Kogan sold data to Cambridge Analytica, and we took action. Those were two different things.

Facebook did not engage with questions about any of the details and allegations in the court filing.

A little later in the court filing, the District of Columbia writes that the documents Facebook is seeking to seal are “consistent” with its allegations that “Facebook has employees embedded within multiple presidential candidate campaigns who… knew, or should have known… [that] Cambridge Analytica [was] using the Facebook consumer data harvested by [[GSR’s]] [Aleksandr] Kogan throughout the 2016 [United States presidential] election.”

It goes on to suggest that Facebook’s concern to seal the document is “reputational”, suggesting — in another redacted segment (below) — that it might “reflect poorly” on Facebook that a DC-based employee had flagged Cambridge Analytica months prior to news reports of its improper access to user data.

“The company may also seek to avoid publishing its employees’ candid assessments of how multiple third-parties violated Facebook’s policies,” it adds, chiming with arguments made last year by GSR’s Kogan who suggested the company failed to enforce the terms of its developer policy, telling the DCMS committee it therefore didn’t have a “valid” policy.

As we’ve reported previously, the UK’s data protection watchdog — which has an ongoing investigation into CA’s use of Facebook data — was passed information by Facebook as part of that probe which showed that three “senior managers” had been involved in email exchanges, prior to December 2015, concerning the CA breach.

It’s not clear whether these exchanges are the same correspondence the District of Columbia has obtained and which Facebook is seeking to seal. Or whether there were multiple email threads raising concerns about the company.

The ICO passed the correspondence it obtained from Facebook to the DCMS committee — which last month said it had agreed at the request of the watchdog to keep the names of the managers confidential. (The ICO also declined to disclose the names or the correspondence when we made a Freedom of Information request last month — citing rules against disclosing personal data and its ongoing investigation into CA meaning the risk of release might be prejudicial to its investigation.)

In its final report the committee said this internal correspondence indicated “profound failure of governance within Facebook” — writing:

[I]t would seem that this important information was not shared with the most senior executives at Facebook, leading us to ask why this was the case. The scale and importance of the GSR/Cambridge Analytica breach was such that its occurrence should have been referred to Mark Zuckerberg as its CEO immediately. The fact that it was not is evidence that Facebook did not treat the breach with the seriousness it merited. It was a profound failure of governance within Facebook that its CEO did not know what was going on, the company now maintains, until the issue became public to us all in 2018. The incident displays the fundamental weakness of Facebook in managing its responsibilities to the people whose data is used for its own commercial interests.

We reached out to the ICO for comment on the information to emerge via the Columbia suit, and also to the Irish Data Protection Commission, the lead DPA for Facebook’s international business, which currently has 15 open investigations into Facebook or Facebook-owned businesses related to various security, privacy and data protection issues.

Last year the ICO issued Facebook with the maximum possible fine under UK law for the CA data breach.

Shortly after Facebook announced it would appeal, saying the watchdog had not found evidence that any UK users’ data was misused by CA.

A date for the hearing of the appeal set for earlier this week was canceled without explanation. A spokeswoman for the tribunal court told us a new date would appear on its website in due course.



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Lyft’s IPO is hot, YC demo day, two new unicorns, and what’s Boy Brow?

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week Kate Clark and Alex Wilhelm took us through an IPO, a big round, 943 startup pitches, two new unicorns, and some scooter news. A very 2019 mix, really.

Up first we took a peek at the latest from the Lyft IPO saga. Recall that Lyft is beating Uber to the public markets, and we can report that it’s having a good time doing so. The popular ride-hailing company, second-place by market share in its domestic market, is oversubscribed at an already-healthy valuation. If the company will raise its price or the number of shares that it sells isn’t yet known, but early indications hint that Lyft timed its IPO well.

Next, we took a look at the recent OpenDoor round that has been long-rumored. Tipping the scales at $300 million, and valuing the home-buying-and-selling startup at $3.8 billion, the company’s latest equity event was a bit higher than expected. There are other players in its space, and the firm isn’t yet recession-tested. All the same, a Murderers’ Row of capital lined up for the latest round.

Moving on, Kate went to Y Combinator’s Demo Day and got a closer look at the accelerator’s latest batch. There were a ton of two-minute pitches, many of which sounded the same, but chances are we’ll see a few unicorns emerge from the bunch. And, interesting tidbit, some of the companies actually forwent Demo Day and raised capital before they could hit the stage!

Later, we discuss two new unicorns. This week’s unicorns had a theme and one that was new to Equity. This time, both the billion-dollar businesses mentioned on the show were founded by women. As Kate noted, there aren’t too many of those, so to see two in the same week is great.

Glossier, founded by Emily Weiss, brought in a $100 million Series D led by Sequoia Capital. The round values the beauty business at a whopping $1.2 billion, tripling the valuation it garnered with a $52 million Series C in 2018. As for Rent The Runway, a startup founded by Jen Hyman and Jennifer Fleiss, it closed a $125 million round led by Franklin Templeton Investments and Bain Capital Ventures. This round values the company at $1 billion. Hyman took to Twitter to share some inspirational words on raising capital as a woman, a pregnant woman, in heels!

And finally, we took a look at a Parisian scooter tax. Mostly because Alex wanted to talk about Paris.

And that’s Equity for the week. We’ll see you soon!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.



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Keatz, a European ‘cloud kitchen’ startup, raises further €12M

Keatz, one of a growing number of so-called “cloud kitchens” — delivery only restaurant brands running on the rails of Deliveroo and UberEats — has raised €12 million in new funding.

Backing the round are existing investors Project A Ventures, Atlantic Labs, UStart, K Fund and JME Ventures, who are joined by RTP Global. It adds to €7 million raised last May and will be used by the Berlin-based company to further expand its roll-out of cloud kitchens across Europe.

Launched in Spring 2016, Keatz now operates 10 cloud kitchens across Europe, having expanded beyond Berlin to Amsterdam, Madrid, Barcelona and Munich. The startup’s network of satellite kitchens are designed to negate the high front-of-house costs found in conventional restaurants, while also selling takeout food that is better suited to delivery.

“We believe the last unsolved part in food delivery is the preparation of food itself,” Keatz co-founder Paul Gebhardt tells TechCrunch. “Delivery food today is often compromised and sold by companies focusing on hospitality and not delivery food. Classic brick and mortar restaurants simply have a different business model, namely hospitality, which is all about the experience and location and the food is meant to be eaten immediately. Nobody at Nandos or Byron Burger designed the food keeping in mind that the food might travel on a Deliveroo bike for another 15 miles, mostly upside down in a delivery bag”.

Similar to other cloud kitchen startups, such as France’s Taster, Gebhardt says Keatz is changing this by focusing exclusively on food “made for delivery,” including designing dishes that can withstand a minimum 15 journey. The startup has a portfolio of eight delivery-only food brands, which are all prepared in the same shared kitchens.

“Our kitchens are usually between 100-200 square metres big and serve a delivery radius of 1-2 kilometres and we sell exclusively on existing delivery platforms, such as Deliveroo, UberEats, Glovo, JustEat, Delivery Hero, and TakeAway. Food arrives warm in nice sustainable packaging,” he says.

Meanwhile, although Gebhardt thinks the future of takeout food will ultimately be drones delivering robot-cooked meals, he says autonomous kitchens are much more in reach than autonomous food delivery and already forms a large part of Keatz’s vision to build “highly automated kitchens”.

“It is much easier for us to iteratively automate our kitchens compared to drone-delivery, which is a fairly binary technological transition,” he explains. “Our existing cloud kitchens today are already much more automated than traditional kitchens, from WiFi-connected convection ovens to a software supported food assembly process. At the end of the day high quality food preparation is an on-demand manufacturing problem: a customer orders a Burrito on UberEats and expects a warm meal 20 minutes later. This is quite a technological challenge we are trying to solve”.

To that end, Keatz’s cloud kitchens can be thought of as akin to a “factory operator”. Rather than developing autonomous kitchen hardware of its own, Gebhardt says the company is partnering with kitchen equipment and automation companies in a similar way to BMW partnering with companies to build its car manufacturing plants.

“Despite our ambition to automate the kitchen, we are also very keen on being a great employer,” he adds, citing above market pay and comprehensive training opportunities. Today, Keatz employs around 200 people across its 10 kitchens in Europe.



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Thursday, March 21, 2019

How to develop a brand identity system (like Intercom)

[Editor’s note: This is the first of a series of articles that we’re writing about branding for startups. It’s part of our latest initiative to find the best brand designers and agencies in the world who work with early-stage companies — nominate a talented brand designer you’ve worked with.]  

When designer Ryan Hubbard joined Intercom, a SaaS unicorn that makes customer engagement tools, he knew that he would be working at the forefront of brand design. The company’s leadership empowered its Intercom Brand Studio to help Intercom stand out in an increasingly crowded field.

“I always look to figure out what is possible or push expectations,” Hubbard says. “There’s a more traditional view on brand design — the idea that people are there to create order and make rules. And that’s valid, but it’s not how I look at it.”

Now a senior designer at Medium, Hubbard has a lot more to say on how startups should approach branding to make a memorable impression.  

The essential principle of branding

“The one thing you should probably have buttoned up prior to investing in brand is some kind of clear point of view about who you are as a company and what makes you different,” says Hubbard.

While the elements of a brand are primarily visual, brand identity is based on foundational values and attitudes that define a company.

That’s why it’s essential to start with your company’s unique story. Those who approach branding as an exercise in defining and expressing their core ideas will find it much easier to create a striking and memorable brand.

Intercom has a compelling origin story about friends in Dublin longing for online customer service to mimic the welcoming atmosphere of the coffee shop where they liked to work. Accordingly, Intercom’s brand focuses on values like approachability, personality, warmth and helpfulness.

Those values translate into the brand’s visual language: a smile-like logo, joyful colors, quirky illustration.

“You could start with, ‘What is the story you’re telling?’ ” says Hubbard. “The stronger and better you can be with your story, that’s a really strong foundation for a good brand.”

How to define your look and feel

The basic elements of visual branding include logo, language, colors, imagery and typography. A strong brand is one that can be distilled down to the most basic elements and still be recognizable. Even a single word written a particular way can convey volumes.

“There’s a lot you can communicate with just typography,” says Hubbard. “The best identity systems I’ve seen — not just in tech — are all brands that are really strong with typography.”

Free-flowing creativity is key in experimenting with these elements. You’ll be holding on tight to your brand identity as you refine your story and identify your values. But it’s important to be open to all kinds of creative expression when you start designing.

“Don’t be too precious with exactly how you want everything to look,” advises Hubbard. “You can’t have a predetermined direction in your mind when you’re going into it.”

Get ideas and images out onto the page quickly. Then identify which draft elements light a spark and develop them. It will soon become obvious which connect most strongly.

How to deploy your branding

Once you have a brand identity system in hand, the next step is deploying it consistently. Your brand must be consistent across touch points, both inside and outside the organization.

But don’t mistake consistency for rigidity. If your brand is built on ideas and not just on a simple collection of visual elements, you can be consistent and creative. Allow your brand to have a life of its own, anchored by its core values and principles.

“It’s really easy to create a brand system that gives you no flexibility for expression, so you wind up putting the same thing over there over and over again,” says Hubbard. “If you don’t give yourself any room to do new exciting things with your brand, you’ll get stagnant and forgotten.”

That’s a death knell for any company, but a strong brand identity system will keep your brand at the forefront of customers’ minds.

Help us find the best startup brand designers and agencies in the world — nominate a talented brand designer you’ve worked with.



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To fund Y Combinator’s top startups, VCs scoop them before Demo Day

Hundreds gathered this week at San Francisco’s Pier 48 to see the more than 200 companies in Y Combinator’s Winter 2019 cohort present their two-minute pitches. The audience of venture capitalists, who collectively manage hundreds of billions of dollars, noted their favorites. The very best investors, however, had already had their pick of the litter.

What many don’t realize about the Demo Day tradition is that pitching isn’t a requirement; in fact, some YC graduates skip out on their stage opportunity altogether. Why? Because they’ve already raised capital or are in the final stages of closing a deal.

ZeroDown, Overview.AI and Catch are among the startups in YC’s W19 batch that forwent Demo Day this week, having already pocketed venture capital. ZeroDown, a financing solution for real estate purchases in the Bay Area, raised a round upwards of $10 million at a $75 million valuation, sources tell TechCrunch. ZeroDown hasn’t responded to requests for comment, nor has its rumored lead investor: Goodwater Capital.

Without requiring a down payment, ZeroDown purchases homes outright for customers and helps them work toward ownership with monthly payments determined by their income. The business was founded by Zenefits co-founder and former chief technology officer Laks Srini, former Zenefits chief operating officer Abhijeet Dwivedi and Hari Viswanathan, a former Zenefits staff engineer.

The founders’ experience building Zenefits, despite its shortcomings, helped ZeroDown garner significant buzz ahead of Demo Day. Sources tell TechCrunch the startup had actually raised a small seed round ahead of YC from former YC president Sam Altman, who recently stepped down from the role to focus on OpenAI, an AI research organization. Altman is said to have encouraged ZeroDown to complete the respected Silicon Valley accelerator program, which, if nothing else, grants its companies a priceless network with which no other incubator or accelerator can compete.

Overview.AI’s founders’ resumes are impressive, too. Russell Nibbelink and Christopher Van Dyke were previously engineers at Salesforce and Tesla, respectively. An industrial automation startup, Overview is developing a smart camera capable of learning a machine’s routine to detect deviations, crashes or anomalies. TechCrunch hasn’t been able to get in touch with Overview’s team or pinpoint the size of its seed round, though sources confirm it skipped Demo Day because of a deal.

Catch, for its part, closed a $5.1 million seed round co-led by Khosla Ventures, NYCA Partners and Steve Jang prior to Demo Day. Instead of pitching their health insurance platform at the big event, Catch published a blog post announcing its first feature, The Catch Health Explorer.

“This is only the first glimpse of what we’re building this year,” Catch wrote in the blog post. “In a few months, we’ll be bringing end-to-end health insurance enrollment for individual plans into Catch to provide the best health insurance enrollment experience in the country.”

TechCrunch has more details on the healthtech startup’s funding, which included participation from Kleiner Perkins, the Urban Innovation Fund and the Graduate Fund.

Four more startups, Truora, Middesk, Glide and FlockJay had deals in the final stages when they walked onto the Demo Day stage, deciding to make their pitches rather than skip the big finale. Sources tell TechCrunch that renowned venture capital firm Accel invested in both Truora and Middesk, among other YC W19 graduates. Truora offers fast, reliable and affordable background checks for the Latin America market, while Middesk does due diligence for businesses to help them conduct risk and compliance assessments on customers.

Finally, Glide, which allows users to quickly and easily create well-designed mobile apps from Google Sheets pages, landed support from First Round Capital, and FlockJay, the operator an online sales academy that teaches job seekers from underrepresented backgrounds the skills and training they need to pursue a career in tech sales, secured investment from Lightspeed Venture Partners, according to sources familiar with the deal.

Pre-Demo Day M&A

Raising ahead of Demo Day isn’t a new phenomenon. Companies, thanks to the invaluable YC network, increase their chances at raising, as well as their valuation, the moment they enroll in the accelerator. They can begin chatting with VCs when they see fit, and they’re encouraged to mingle with YC alumni, a process that can result in pre-Demo Day acquisitions.

This year, Elph, a blockchain infrastructure startup, was bought by Brex, a buzzworthy fintech unicorn that itself graduated from YC only two years ago. The deal closed just one week before Demo Day. Brex’s head of engineering, Cosmin Nicolaescu, tells TechCrunch the Elph five-person team — including co-founders Ritik Malhotra and Tanooj Luthra, who previously founded the Box-acquired startup Steem — were being eyed by several larger companies as Brex negotiated the deal.

“For me, it was important to get them before batch day because that opens the floodgates,” Nicolaescu told TechCrunch. “The reason why I really liked them is they are very entrepreneurial, which aligns with what we want to do. Each of our products is really like its own business.”

Of course, Brex offers a credit card for startups and has no plans to dabble with blockchain or cryptocurrency. The Elph team, rather, will bring their infrastructure security know-how to Brex, helping the $1.1 billion company build its next product, a credit card for large enterprises. Brex declined to disclose the terms of its acquisition.

Hunting for the best deals

Y Combinator partners Michael Seibel and Dalton Caldwell, and moderator Josh Constine, speak onstage during TechCrunch Disrupt SF 2018. (Photo by Kimberly White/Getty Images)

Ultimately, it’s up to startups to determine the cost at which they’ll give up equity. YC companies raise capital under the SAFE model, or a simple agreement for future equity, a form of fundraising invented by YC. Basically, an investor makes a cash investment in a YC startup, then receives company stock at a later date, typically upon a Series A or post-seed deal. YC made the switch from investing in startups on a pre-money safe basis to a post-money safe in 2018 to make cap table math easier for founders.

Michael Seibel, the chief executive officer of YC, says the accelerator works with each startup to develop a personalized fundraising plan. The businesses that raise at valuations north of $10 million, he explained, do so because of high demand.

“Each company decides on the amount of money they want to raise, the valuation they want to raise at, and when they want to start fundraising,” Seibel told TechCrunch via email. “YC is only an advisor and does not dictate how our companies operate. The vast majority of companies complete fundraising in the 1 to 2 months after Demo Day. According to our data, there is little correlation between the companies who are most in demand on Demo Day and ones who go on to become extremely successful. Our advice to founders is not to over optimize the fundraising process.”

Though Seibel says the majority raise in the months following Demo Day, it seems the very best investors know to be proactive about reviewing and investing in the batch before the big event.

Khosla Ventures, like other top VC firms, meets with YC companies as early as possible, partner Kristina Simmons tells TechCrunch, even scheduling interviews with companies in the period between when a startup is accepted to YC to before they actually begin the program. Another Khosla partner, Evan Moore, echoed Seibel’s statement, claiming there isn’t a correlation between the future unicorns and those that raise capital ahead of Demo Day. Moore is a co-founder of DoorDash, a YC graduate now worth $7.1 billion. DoorDash closed its first round of capital in the weeks following Demo Day.

“I think a lot of the activity before demo day is driven by investor FOMO,” Moore wrote in an email to TechCrunch. “I’ve had investors ask me how to get into a company without even knowing what the company does! I mostly see this as a side effect of a good thing: YC has helped tip the scale toward founders by creating an environment where investors compete. This dynamic isn’t what many investors are used to, so every batch some complain about valuations and how easy the founders have it, but making it easier for ambitious entrepreneurs to get funding and pursue their vision is a good thing for the economy.”

This year, given the number of recent changes at YC — namely the size of its latest batch — there was added pressure on the accelerator to showcase its best group yet. And while some did tell TechCrunch they were especially impressed with the lineup, others indeed expressed frustration with valuations.

Many YC startups are fundraising at valuations at or higher than $10 million. For context, that’s actually perfectly in line with the median seed-stage valuation in 2018. According to PitchBook, U.S. startups raised seed rounds at a median post-valuation of $10 million last year; so far this year, companies are raising seed rounds at a slightly higher post-valuation of $11 million. With that said, many of the startups in YC’s cohorts are not as mature as the average seed-stage company. Per PitchBook, a company can be several years of age before it secures its seed round.

Nonetheless, pricey deals can come as a disappointment to the seed investors who find themselves at YC every year but because their reputations aren’t as lofty as say, Accel, aren’t able to book pre-Demo Day meetings with YC’s top of class.

The question is who is Y Combinator serving? And the answer is founders, not investors. YC is under no obligation to serve up deals of a certain valuation nor is it responsible for which investors gain access to its best companies at what time. After all, startups are raking in larger and larger rounds, earlier in their lifespans; shouldn’t YC, a microcosm for the Silicon Valley startup ecosystem, advise their startups to charge the best investors the going rate?



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