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May 23, 2019
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OpenFin raises $17 million for its OS for finance

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OpenFin, the company looking to provide the operating system for the financial services industry, has raised $17 million in funding through a Series C round led by Wells Fargo, with participation from Barclays and existing investors including Bain Capital Ventures, J.P. Morgan and Pivot Investment Partners. Previous investors in OpenFin also include DRW Venture Capital, Euclid Opportunities and NYCA Partners.

Likening itself to “the OS of finance”, OpenFin seeks to be the operating layer on which applications used by financial services companies are built and launched, akin to iOS or Android for your smartphone.

OpenFin’s operating system provides three key solutions which, while present on your mobile phone, has previously been absent in the financial services industry: easier deployment of apps to end users, fast security assurances for applications, and interoperability.

Traders, analysts and other financial service employees often find themselves using several separate platforms simultaneously, as they try to source information and quickly execute multiple transactions. Yet historically, the desktop applications used by financial services firms — like trading platforms, data solutions, or risk analytics — haven’t communicated with one another, with functions performed in one application not recognized or reflected in external applications.

“On my phone, I can be in my calendar app and tap an address, which opens up Google Maps. From Google Maps, maybe I book an Uber . From Uber, I’ll share my real-time location on messages with my friends. That’s four different apps working together on my phone,” OpenFin CEO and co-founder Mazy Dar explained to TechCrunch. That cross-functionality has long been missing in financial services.

As a result, employees can find themselves losing precious time — which in the world of financial services can often mean losing money — as they juggle multiple screens and perform repetitive processes across different applications.

Additionally, major banks, institutional investors and other financial firms have traditionally deployed natively installed applications in lengthy processes that can often take months, going through long vendor packaging and security reviews that ultimately don’t prevent the software from actually accessing the local system.

OpenFin CEO and co-founder Mazy Dar. Image via OpenFin

As former analysts and traders at major financial institutions, Dar and his co-founder Chuck Doerr (now President & COO of OpenFin) recognized these major pain points and decided to build a common platform that would enable cross-functionality and instant deployment. And since apps on OpenFin are unable to access local file systems, banks can better ensure security and avoid prolonged yet ineffective security review processes.

And the value proposition offered by OpenFin seems to be quite compelling. Openfin boasts an impressive roster of customers using its platform, including over 1,500 major financial firms, almost 40 leading vendors, and 15 out of the world’s 20 largest banks.

Over 1,000 applications have been built on the OS, with OpenFin now deployed on more than 200,000 desktops — a noteworthy milestone given that the ever popular Bloomberg Terminal, which is ubiquitously used across financial institutions and investment firms, is deployed on roughly 300,000 desktops.

Since raising their Series B in February 2017, OpenFin’s deployments have more than doubled. The company’s headcount has also doubled and its European presence has tripled. Earlier this year, OpenFin also launched it’s OpenFin Cloud Services platform, which allows financial firms to launch their own private local app stores for employees and customers without writing a single line of code.

To date, OpenFin has raised a total of $40 million in venture funding and plans to use the capital from its latest round for additional hiring and to expand its footprint onto more desktops around the world. In the long run, OpenFin hopes to become the vital operating infrastructure upon which all developers of financial applications are innovating.

Apple and Google’s mobile operating systems and app stores have enabled more than a million apps that have fundamentally changed how we live,” said Dar. “OpenFin OS and our new app store services enable the next generation of desktop apps that are transforming how we work in financial services.”

News Source = techcrunch.com

Flipkart co-founder and other top names join AngelList’s first investment syndicate in India

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A little over a year after it introduced Syndicates to the India market, AngelList — the U.S. service that helps connect companies with investors — is rolling out its own fund in the country with the backing of some stellar names.

Dubbed ‘The Collective,’ the syndicate includes money from Flipkart co-founder Binny Bansal — Flipkart, of course, sold a majority stake to Walmart for $16 billion last year — and VCs Salil Deshpande of Bain Capital Ventures, Matrix India trio Avnish Bajaj, Tarun Davda and Vikram Vaidyanathan, Navroz Udwadia from Falcon Edge Capital and Rahul Mehta of DST Global. There’s also involvement from funds that include Kalaari Capital, FJ Labs and Beenext.

The Collective will be managed through an investment committee that is Utsav Somani, a partner with AngelList who launched the service in India, former 500 Startups India partner Pankaj Jain and Nipun Mehra, who has worked with Sequoia Capital, Flipkart and payment startup Pine Labs.

The size of the fund is undisclosed, but Somani told TechCrunch it will likely back 60-80 companies over the next 12-18 months. Syndicates interested in engaging The Collective can draw up to $150,000 per deal, according to an AngelList India announcement.

“The fund will exclusively deploy on AngelList India. This is to give more power to the most active GP base we have through our syndicate leads,” Somani explained.

Utsav Somani launched AngelList’s syndicates product in India last year and he will now look after the company’s first managed fund in the country

More generally, he said that the first year of Syndicates in India has seen more than $5 million deployed across more than 50 publicly announced investments, including deals with BharatPe, HalaPlay, Yulu Bikes and Open Bank. Six of those startups have already raised follow-on capital. Somani said AngelList India Syndicates have invested alongside well-known funds that include Sequoia Capital India, Matrix Partners India, Omidyar Network, Blume Ventures and Beenext.

To date, AngelList has helped deploy some $1.09 billion to over 3,100 startups, according to its website. The company claims its portfolio has raised close to $9 billion in follow-on funding. AngelList is primarily focused on the U.S. market, but India is fast becoming a majority priority. Like the U.S., the Indian service is open only to accredited investors so it isn’t a crowdfunding service.

News Source = techcrunch.com

Bain Capital Ventures has a fresh $1B to invest in startups

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Bain Capital Ventures (BCV), the venture capital arm of the private equity giant Bain Capital, has brought in $1 billion to invest in startups across industries and stages.

The capital has been spread across three funds: $650 million for its eighth flagship vehicle, $250 million for a co-investment fund focused on growth-stage investments and an additional $100 million directly from the partners at Bain Capital, which will be deployed on every investment out of the latest fund.

Founded in 1984, BCV is known for its investments in LinkedIn, Rent the Runway, SurveyMonkey, SendGrid and DocuSign. Initially, the firm was more of a growth-stage investor, though it’s warmed to early-stage companies, making a total of 106 early-stage investments, 52 of which were at the seed stage, since 2013. The firm says that’s triple its total volume of seed and Series A investments from previous years, thanks to the members of its West Coast investment team, who are responsible for striking a majority of BCV’s early-stage bets.

The firm opened its first office in San Francisco in 2016. BCV also has offices in New York, Boston and Palo Alto.

BCV’s seventh flagship fund closed on $600 million in 2016; its latest core vehicle is even larger. Ajay Agarwal, one of BCV’s eight managing directors since 2003, said that’s because of the bull market and lack of liquidity in venture capital, which has caused several VC funds to raise larger and larger pools of capital. Just look at Thrive Capital or GGV Capital, for example, VC funds that have surpassed $1 billion with recent fund closes.

Bain Capital Ventures is headquartered in San Francisco.

“We, like many of our peers, have far more demand for our funds than we have the capacity for,” Agarwal told TechCrunch. “Companies are taking longer to go public and therefore require more capital, but we don’t want the fund size to get too large.”

“It’s certainly an environment where lots and lots of capital is coming into the market … It puts even more of an emphasis on firms that have a real competitive differentiation — something unique to offer entrepreneurs.”

BCV invests in 12 to 14 companies per year, not including its seed-stage portfolio companies. Recent investments include Ribbon, a real estate tech startup that brought in $225 million in October; Basis, a cryptocurrency startup that raised $133 million in April; and messaging startup Attentive, which closed a $13 million round in February.

With the three additional funds, BCV has $4.9 billion in assets under management.

News Source = techcrunch.com

ShipBob brings in $40M to help e-commerce businesses compete with Amazon

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Nowadays, those of us who shop for everyday goods online are accustomed to said goods arriving on our doorstep 24 to 48 hours after we click ‘buy.’ That’s because of Amazon; the e-commerce giant’s next-day delivery feature is a sweet, sweet deal, but for smaller e-commerce businesses that are trying to compete with Jeff Bezos it’s, well, tough.

ShipBob is here to help. The Chicago-based startup has raised a $40 million Series C to help small e-commerce businesses streamline the fulfillment process and manage inventory.

The company was launched through Y Combinator in 2014 by CEO Dhruv Saxena and Divey Gulati, a pair of engineers that met after college.

“Once we graduated, we thought up this e-commerce store and we were able to automate basically everything in the operation except for shipping and logistics,” Saxena told TechCrunch. “We realized none of the existing solutions out there worked. So, we applied to Y Combinator with this idea that there has never been an easier time to start an e-commerce brand online and these brands need shipping, logistics and back office solutions.”

ShipBob previously raised a $5 million Series A in 2016 and a $17.5 million Series B last year.

Menlo Ventures led the latest round and was joined by existing investors Bain Capital Ventures, Hyde Park Venture Partners, Hyde Park Angels and Y Combinator. As part of the deal, Menlo partner Shawn Carolan is joining ShipBob’s board of directors. 

“We love how ShipBob lets smaller, creative merchants affordably offer fast shipping across the country,” Carolan said in a statement. “Customers want what they want, and they want it fast, and it takes serious technology to make it look easy.”

 

News Source = techcrunch.com

Coinbase’s first investment, Compound, earns you interest on crypto

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Compound wants to let you borrow cryptocurrency, or lend it and earn an interest rate. Most cryptocurrency is shoved in a wallet or metaphorically hidden under a mattress, failing to generate interest the way traditionally banked assets do. But Compound wants to create liquid money markets for cryptocurrency by algorithmically setting interest rates, and letting you gamble by borrowing and then short-selling coins you think will sink. It plans to launch its first five for Ether, a stable coin, and a few others, by October.

Today, Compound is announcing some ridiculously powerful allies for that quest. It’s just become the first-ever investment by crypto exchange juggernaut Coinbase’s new venture fund. It’s part of an $8.2 million seed round led by top-tier VC Andreessen Horowitz, crypto hedge fund Polychain Capital and Bain Capital Ventures — the startup arm of the big investment bank.

While right now Compound deals in cryptocurrency through the Ethereum blockchain, co-founder and CEO Robert Leshner says that eventually he wants to carry tokenized versions of real-world assets like the dollar, yen, euro or Google stock. That’s because Leshner tells me “My thesis is that almost every crypto asset is bullshit and not worth anything.”

How to get Compound interest on your crypto

Here’s how Compound tells me it’s going to work. It’s an “overnight” market that permits super-short-term lending. While it’s not a bank, it is centralized, so you loan to and borrow from it directly instead of through peers, alleviating you from negotiation. If you loan, you can earn interest. If you borrow, you have to put up 100 percent of the value of your borrow in an asset Compound supports. If prices fluctuate and your borrow becomes worth more than your collateral, some of your collateral is liquidated through a repo agreement so they’re equal.

To set the interest rate, Compound acts kind of like the Fed. It analyzes supply and demand for a particular crypto asset to set a fluctuating interest rate that adjusts as market conditions change. You’ll earn that on what you lend constantly, and can pull out your assets at any time with just a 15-second lag. You’ll pay that rate when you borrow. And Compound takes a 10 percent cut of what lenders earn in interest. For crypto-haters, it offers a way to short coins you’re convinced are doomed.

“Eventually our goal is to hand-off responsibility [for setting the interest rate] to the community. In the short-term we’re forced to be responsible. Long-term we want the community to elect the Fed,” says Leshner. If it gets the interest rate wrong, an influx of lenders or borrowers will drive it back to where it’s supposed to be. Compound already has a user interface prototyped internally, and it looked slick and solid to me.

“We think it’s a game changer. Ninety percent of assets are sitting in people’s cold storage, or wallets, or exchanges. They aren’t being used or traded,” says Leshner. Compound could let people interact with crypto in a whole new way.

The Compound creation story

Compound is actually the third company Leshner and his co-founder and CTO Geoff Hayes have started together. They’ve been teamed up for 11 years since going to college at UPenn. One of their last companies, Britches, created an index of CPG inventory at local stores and eventually got acquired by Postmates. But before that Leshner got into the banking and wealth management business, becoming a certified public accountant. A true economics nerd, he’s the chair of the SF bond oversight committee, and got into crypto five years ago.

Compound co-founder and CEO Robert Leshner

Sitting on coins, Leshner wondered, “Why can’t I realize the time value of the cryptocurrency I possess?” Compound was born in mid-2017, and came out of stealth in January.

Now with $8.2 million in funding that also came from Transmedia Capital, Compound Ventures, Abstract Ventures and Danhua Capital, Compound is pushing to build out its product and partnerships, and “hire like crazy” beyond its seven current team members based in San Francisco’s Mission District. Partners will be crucial to solve the chicken-and-egg problem of getting its first lenders and borrowers. “We are planning to launch with great partners — token projects, hedge funds and dedicated users,” says Leshner. Having hedge funds like Polychain should help.

“We shunned an ICO. We said, ‘let’s raise venture capital.’ I’m a very skeptical person and I think most ICOs are illegal,” Leshner notes. The round was just about to close when Coinbase announced Coinbase Ventures. So Leshner fired off an email asking if it wanted to join. “In 12 hours they researched us, met our team, diligenced it and evaluated it more than almost any investor had to date,” Leshner recalls. Asked if there’s any conflict of interest given Coinbase’s grand ambitions, he said, “They’re probably our favorite company in the world. I hope they survive for 100 years. It’s too early to tell they overlap.”

Conquering the money markets

There are other crypto lending platforms, but none quite like Compound. Centralized exchanges like Bitfinex and Poloniex let people trade on margin and speculate more aggressively. But they’re off-chain, while Leshner says Compound is on-chain, transparent and can be built on top of. That could make it a more critical piece of the blockchain finance stack. There’s also a risk of these exchanges getting hacked and your coins getting stolen.

Meanwhile, there are plenty of peer-to-peer crypto lending protocols on the Ethereum blockchain, like ETHLend and Dharma. But interest rates, no need for slow matching, flexibility for withdrawing money and dealing with a centralized party could attract users to Compound.

Still, the biggest looming threat for Compound is regulation. But to date, the SEC and regulators have focused on ICOs and how people fundraise, not on what people are building. People aren’t filing lawsuits against actual products. “All the operations have flown beneath the radar and I think that’s going to change in the next 12 months,” Leshner predicts. How exactly they’ll treat Compound is up in the air.

One source in the crypto hedge fund space told me about forthcoming regulation: “You’re either going to get annihilated and have to disgorge profits or dissolve. Or you pay a fine and you’re among the first legal funds in the space. This is the gamble you take before asset classes get baptized.” As Leshner confirmed, “That’s the number one risk, period.”

Money markets are just one piece of the financial infrastructure puzzle that still needs to emerge around blockchain. Custodians, auditors, administrators and banks are still largely missing. When those get hammered out to make the space safer, the big money hedge funds and investment banks could join in. For Compound, getting the logistics right will require some serious legal ballet.

Yet Leshner is happy to dream big despite all of the crypto world’s volatility. He concludes, “We want to be like Black Rock with a trillion under management, and we want to have 25 employees when we do that. They probably have [tens of thousands] of employees. Our goal is to be like them with a skeleton team.”

News Source = techcrunch.com

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