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January 17, 2019
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Goldman Sachs

Report: Morgan Stanley lands coveted Uber IPO role

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Uber has reportedly picked Morgan Stanley to lead its upcoming initial public offering, news of which became public last week when the ride-hailing giant filed confidentially with the U.S. Securities and Exchange Commission for an IPO expected in the first quarter of 2019.

Uber’s choice, first reported by Bloomberg, comes after a months-long bidding war, of sorts, between Morgan Stanley and Goldman Sachs. The pair of investment banks presented IPO plans to Uber this fall, in hopes of landing the top underwriting spot in what will be one of the largest stock market debuts to date. Morgan Stanley, having won the battle, can expect to receive a large portion of the fees that come with an IPO.

We’ve reached out to Uber and Morgan Stanley for comment.

Michael Grimes, managing director of global technology for Morgan Stanley, speaks at the TechCrunch Disrupt conference on Tuesday, Sept. 28, 2010.

Uber’s pick isn’t too surprising; rumors pointing to Morgan Stanley have floated the tech ecosystem for months. Morgan Stanley’s head of technology investment banking Michael Grimes, the lead underwriter on Facebook’s initial public offering, resorted to gimmicks to ensure his spot in Uber’s IPO. According to The Wall Street Journal, Grimes moonlighted as an Uber driver for years to demonstrate his loyalty.

Both Morgan Stanley and Goldman Sachs are investors in Uber. Morgan Stanley participated in Uber’s Series G funding in 2016 and Goldman Sachs has been a backer for years, investing in the company as early as 2011.

Uber was most recently valued at $72 billion and is expected to garner a valuation as high as $120 billion upon its stock market debut. Lyft, its key competitor in the U.S., also recently filed to go public. It has picked JPMorgan Chase & Co. as the lead underwriter of its offering, per reports, which is also expected as early as Q1 2019. People familiar with the company’s IPO plans said its valuation will exceed the $15.1 billion it was valued at earlier this year.

News Source = techcrunch.com

Fintech startup Plaid raises $250M at a $2.65B valuation

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In the five years since its product was showcased onstage at TechCrunch Disrupt New York’s hackathon, Plaid has emerged as one of the most critical contributors to financial technology’s evolution — and one of the most under the radar.

That is, until now. The company is today announcing a $250 million Series C investment led by famed venture capitalist and the author of the Internet Trends report Mary Meeker, who will join its board of directors as part of the deal. The funds were raised at a valuation of $2.65 billion, according to sources close to the company. Capital from Meeker’s investment came from Kleiner Perkins’ growth fund — where Meeker has been a partner since 2010 — not from the reported billion-dollar-plus solo fund she’s in the process of raising.

New investors Andreessen Horowitz and Index Ventures also participated, as did existing investors Goldman Sachs, NEA and Spark Capital. The financing brings Plaid’s total raised to $310 million and provides a major boost to its valuation, which was just over $200 million with its 2016 Series B.

Making money easier for everyone

Plaid builds infrastructure that allows a consumer to interact with their bank account on the web through a number of third-party applications, like Venmo, Robinhood, Coinbase, Acorns and LendingClub. The San Francisco-based startup has integrated with 10,000 banks in the U.S. and Canada and says 25 percent of people living in those countries with bank accounts have linked with Plaid through at least one of the hundreds of apps that leverage Plaid’s application program interfaces (APIs) — an increase from 13 percent last year.

The platform allows companies to create financial services applications without having to hire their own team of engineers to build out a tool that connects apps to its users’ bank accounts, something Plaid’s founders themselves lacked when they set out to build a fintech startup years ago. Plaid was founded by a pair of former Bain consultants, William Hockey and Zach Perret, the chief technology officer and chief executive officer, respectively, in 2012.

“We were always really infatuated with the concept of financial services,” Hockey told TechCrunch. “We thought it had so much power to impact and improve people’s lives but at the time it really wasn’t … We quickly realized building financial services was almost impossible to do because there wasn’t the tooling or the infrastructure, so we turned around and started building that infrastructure.”

Plaid closed a $44 million Series B in mid-2016 and has since seen its valuation increase more than tenfold. On top of that, it doubled its customer base this year, launched in Canada — its first market outside the U.S. — opened its third office, expanded its overall headcount to 175 employees and debuted a digital mortgage product called Assets.

Hockey and Perret say the new funding will be used to continue expanding the team in San Francisco, Salt Lake City and New York. Plaid, given how essential its tools are to any technology companies that deals with payments in any fashion, which these days is the vast majority of businesses, is a company to watch going into 2019.

“When we think about our long-term goals, we want to make money easier for everyone,” Perret told TechCrunch. “We want everyone to lives these simple, straightforward digitally enabled financial lives and for us, that means supporting these tech innovators in the space and these large incumbents. We want to be able to help them create great consumer financial experiences so consumers can live simpler financial lives.”

News Source = techcrunch.com

Growing pains at venture-backed Moogsoft lead to layoffs

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Eight months after bringing in a $40 million Series D, Moogsoft‘s co-founder and chief executive officer Phil Tee confirmed to TechCrunch that the IT incident management startup had shed 18 percent of its workforce, or just over 30 employees.

The layoffs took place at the end of October; shortly after, Moogsoft announced two executive hires. Among the additions was Amer Deeba, who recently resigned from Qualys after the U.S. Securities and Exchange Commission charged him with insider trading.

Founded in 2012, San Francisco-based Moogsoft provides artificial intelligence for IT operations (AIOps) to help teams work more efficiently and avoid outages. The startup has raised $90 million in equity funding to date, garnering a $220 million valuation with its latest round, according to PitchBook. It’s backed by Goldman Sachs, Wing Venture Capital, Redpoint Ventures, Dell’s corporate venture capital arm, Singtel Innov8, Northgate Capital and others. Wing VC founder and long-time Accel managing partner Peter Wagner and Redpoint partner John Walecka are among the investors currently sitting on Moogsoft’s board of directors.

Tee, the founder of two public companies (Micromuse and Riversoft) admitted the layoffs affected several teams across the company. The cuts, however, are not a sign of a struggling business, he said, but rather a right of passage for a startup seeking venture scale.

“We are a classic VC-backed startup that has sort of grown up,” Tee told TechCrunch earlier today. “In pretty much every successful company, there is a point in time where there’s an adjustment in strategy … Unfortunately, when you do that, it becomes a question of do we have the right people?”

Moogsoft doubled revenue last year and added 50 Fortune 200 companies as customers, according to a statement announcing its latest capital infusion. Tee said he’s “extremely chipper” about the road ahead and the company’s recent C-suite hires.

Moogsoft’s newest hires, CFO Raman Kapur (left) and COO Amer Deeba (right).

Moogsoft announced its latest executive hires on November 2, only one week after completing the round of layoffs, a common strategy for companies looking to cast a shadow on less-than-stellar news, like major staff cuts. Those hires include former Splunk vice president of finance Raman Kapur as Moogsoft’s first-ever chief financial officer and Amer Deeba, a long-time Qualys executive, as its chief operating officer.

Deeba spent the last 17 years at Qualys, a publicly traded provider of cloud-based security and compliance solutions. In August, he resigned amid allegations of insider trading. The SEC announced its charges against Deeba on August 30, claiming he had notified his two brothers of Qualys’ missed revenue targets before the company publicly announced its financial results in the spring of 2015.

“Deeba informed his two brothers about the miss and contacted his brothers’ brokerage firm to coordinate the sale of all of his brothers’ Qualys stock,” the SEC wrote in a statement. “When Qualys publicly announced its financial results, it reported that it had missed its previously-announced first-quarter revenue guidance and that it was revising its full-year 2015 revenue guidance downward. On the same day, Deeba sent a message to one of his brothers saying, ‘We announced the bad news today.’ The next day, Qualys’s stock price dropped 25%. Although Deeba made no profits from his conduct, Deeba’s brothers collectively avoided losses of $581,170 by selling their Qualys stock.”

Under the terms of Deeba’s settlement, he is ineligible to serve as an officer or director of any SEC-reporting company for two years and has been ordered to pay a $581,170 penalty.

Tee, for his part, said there was never any admission of guilt from Deeba and that he’s already had a positive impact on Moogsoft.

“[Deeba] is a tremendously impressive individual and he has the full confidence of myself and the board,” Tee said.

 

News Source = techcrunch.com

81% of VC firms don’t have a single black investor — BLCK VC wants to change that

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Venture capital has a diversity problem.

BLCK VC, a new organization founded by Storm Ventures associate Frederik Groce and NEA associate Sydney Sykes meant to connect, engage and advance black venture capitalists, is ready for a new era in the industry.

Their mission: Turn 200 black investors into 400 black investors by 2024.

“We think of ourselves as an organization formed by black VCs for blacks VCs to increase the representation of black investors,” Sykes told TechCrunch.

“You can look around and say ‘well, I know five black VCs,’ but you can also say this firm does not have a single black VC, they may not even have a single underrepresented minority … We want to make firms reckon with the fact that there is a racial diversity problem; there is a lack of black VCs and every firm should really care about it.”

BLCK VC has been at work since the beginning of 2018, building and expanding a network of black investors in the San Francisco area, Los Angeles and New York. They seek to provide a community for black investors, a space for honest conversations and questions, and a resource for VC firms looking to make more diverse hires. Today at AfroTech, the organization is taking the wraps off its plan to diversify the VC industry.

“There’s an incredible need to ensure there are resources in place so people don’t churn out of the community; getting people in the door is only half the battle,” Groce told TechCrunch. “This is us saying ‘hey, get involved.’ It’s time to broaden and give others access to what we are doing. It takes a village if we really want to see things start to shift.”

According to data collected by Richard Kerby, a partner at Equal Ventures, 81 percent of VC firms don’t have a single black investor. Roughly 50 percent of black investors in the industry are at the associate level, or the lowest level at a firm; only 2 percent of black investors are partners at a firm.

“It takes a village if we really want to see things start to shift,” BLCK VC co-chair Frederik Groce told TechCrunch.

The lack of representation, especially in powerful positions, has made it difficult for black aspiring investors to enter the industry, as well as for black investors to stay in VC.

“VC, more than a lot of industries, is very network driven in the way that they hire,” Sykes said. “The network started 40 or 50 years ago with a lot of white men who had the wealth at the time to invest in companies. As VC has grown, a lot of the people who started it hired people they knew, there wasn’t an effort to recruit from outside of their network. That has made VC this very homogenous industry.”

Aside from Kerby’s data and a Harvard Business School study on diversity in innovation, there is limited data available on black VCs and funding for black founders. Digitalundivided‘s research arm ProjectDiane is one of the few organizations to report on funding for black female founders, for example. According to its latest report, black women have raised just .0006 percent of all tech venture funding since 2009.

BLCK VC’s board includes Adina Tecklu, a venture investor at Canaan Partners; Brian Hollins, a growth equity investor at Goldman Sachs; Earnest Sweat, an investment manager at Prologis Ventures; and Elliott Robinson, a partner at M12 Ventures.

News Source = techcrunch.com

Local venture capital fund formation is on the rise in Africa, led by Nigeria

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Africa’s VC landscape is becoming more African with an increasing number of investment funds headquartered on the continent and run by locals, according to data from Crunchbase.

The study also tracked the emergence of homegrown corporate venture arms and more Africans in top positions at outside funds. These results derived from a year-long project to boost Crunchbase’s Africa data capture and increase awareness of its platform across the continent’s tech ecosystem.

Drawing on its database and primary source research, Crunchbase identified 51 “viable” Africa-focused VC funds globally—defining viable as formally established entities with 7-10 investments or more in African startups, from seed to series stage.

Those who made the list with 7 investments indicated they would reach 10 by early 2019.  

Of the 51 funds investing in African startups, 22 (or 43 percent) were headquartered in Africa and managed by Africans.

Of the 22 African managed and located funds, 9 (or 41 percent) were formed since 2016 and 9 are Nigerian.

Four of the 9 Nigeria located funds were formed within the last year: Microtraction, Neon Ventures, Beta Ventures, and CcHub’s Growth Capital fund.

The research prioritized organizational viability and number of investments over fund and round size. Therefore, the range in typical investment values across the group was wide, with some offering $25K seed investments, and others doing $1 to $10 million rounds at the series A and B stage.

In the group of 51 total funds, TPG’s Growth Fund led the largest round on the continent in 2018 (so far):  $47.5 million to Kenyan fintech startup Cellulant.

This has only been topped by the $52 million round to South Africa’s Jumo, but that was led by Goldman Sachs—which (by the information we have) hasn’t invested significantly in African startups, aside from Jumia.   

The Nigerian funds with the most investments were EchoVC (20) and Ventures Platform (23).

Notably active funds in the group of 51 included Singularity Investments (18 African startup investments) Ghana’s Golden Palm Investments (17) and Musha Ventures (36).

At least one corporate venture arm—Safaricom’s Spark Venture Fund—made Crunchbase’s list of 51. The research also tracked a rise in corporate venture funding and acquisition activity. MTN has invested in African startups and Standard Bank added $1 million to Founders Factory’s new African accelerator. Fintech firm Interswitch has been in the acquisition market and established its E-growth Fund to invest in startups.

Cellulant CEO Ken Njoroge indicated recently his company will likely go acquisition shopping for local startups in the near future.

During the course of Crunchbase’s research sources speaking on background flagged the pending launch of three new African corporate venture arms within the next 12 to 16 months.

In addition to tracking more funds on the continent, another emerging trend point was Africans in senior positions at those located elsewhere—including the three that raised the most capital over the last 24 months.

Former Nigerian ICT minister Omobola Johnson is a senior partner at TLcom Capital’s $40 million fund. Yemi Lalude is Managing Partner of TPG Growth’s Africa fund, which announced $2 billion in its coffers last year. And at French firm Partech—which raised $70 million for its Africa fund—Tidjane Deme is General Partner.

Crunchbase’s overall findings come as a several recent articles (and a heap of Twitter debate) have expressed concern about possible outsized influence of external actors in Africa’s tech ecosystem — primarily East Africa — and bias among VC investors toward non-African founders.

More accurate data on Sub-Saharan Africa’s VC could help better inform these discussions.

Pinning down solid stats on the region’s nascent startup scene is a budding exercise. The core growth in Sub-Saharan Africa’s tech sector has occurred over the last 5-7 years so there’s less accompanying infrastructure—i.e., analyst reporting, long-term databases, and robust media coverage—than other markets

Some VC firms have taken stabs at quantifying the value of VC investment over select timeframes. In 2017, Village Capital did a report tracking fintech funding in East Africa.

The last two years, Partech and media firm Disrupt Africa have done reports on Africa’s annual VC values. Their diverging numbers demonstrate the continued challenges to producing confident stats. Partech’s study tallied 2017 funding to African startups at $560 million, while Disrupt Africa came up with $195 million for the same year.

For its part, Crunchbase aims to create as accurate a VC representation for Africa as it does for other global markets. In addition to tracking stats on African funds, the platform has extended its  Venture Program—which allows partners to directly update their Crunchbase data and investments.

To date, Crunchbase has added 33 African focused Venture Program partners including Greenhouse Capital, TLcom Capital, Draper Darkflow, Silvertree Internet Holdings, Naspers, Orange Digital Ventures, and Accion Venture Lab.

News Source = techcrunch.com

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