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January 18, 2019
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Startups Weekly: Will Trump ruin the unicorn IPOs of our dreams?

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The government shutdown entered its 21st day on Friday, upping concerns of potentially long-lasting impacts on the U.S. stock market. Private market investors around the country applauded when Uber finally filed documents with the SEC to go public. Others were giddy to hear Lyft, Pinterest, Postmates and Slack (via a direct listing, according to the latest reports) were likely to IPO in 2019, too.

Unfortunately, floats that seemed imminent may not actually surface until the second half of 2019 — that is unless President Donald Trump and other political leaders are able to reach an agreement on the federal budget ASAP.  This week, we explored the government’s shutdown’s connection to tech IPOs, recounted the demise of a well-funded AR project and introduced readers to an AI-enabled self-checkout shopping cart.

1. Postmates gets pre-IPO cash

The company, an early entrant to the billion-dollar food delivery wars, raised what will likely be its last round of private capital. The $100 million cash infusion was led by BlackRock and valued Postmates at $1.85 billion, up from the $1.2 billion valuation it garnered with its unicorn round in 2018.

2. Uber’s IPO may not be as eye-popping as we expected

To be fair, I don’t think many of us really believed the ride-hailing giant could debut with a $120 billion initial market cap. And can speculate on Uber’s valuation for days (the latest reports estimate a $90 billion IPO), but ultimately Wall Street will determine just how high Uber will fly. For now, all we can do is sit and wait for the company to relinquish its S-1 to the masses.

3. Deal of the week

N26, a German fintech startup, raised $300 million in a round led by Insight Venture Partners at a $2.7 billion valuation. TechCrunch’s Romain Dillet spoke with co-founder and CEO Valentin Stalf about the company’s global investors, financials and what the future holds for N26.

4. On the market

Bird is in the process of raising an additional $300 million on a flat pre-money valuation of $2 billion. The e-scooter startup has already raised a ton of capital in a very short time and a fresh financing would come at a time when many investors are losing faith in scooter startups’ claims to be the solution to the problem of last-mile transportation, as companies in the space display poor unit economics, faulty batteries and a general air of undependability. Plus, Aurora, the developer of a full-stack self-driving software system for automobile manufacturers, is raising at least $500 million in equity funding at more than a $2 billion valuation in a round expected to be led by new investor Sequoia Capital.


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


5. A unicorn’s deal downsizes

WeWork, a co-working giant backed with billions, had planned on securing a $16 billion investment from existing backer SoftBank . Well, that’s not exactly what happened. And, oh yeah, they rebranded.

6. A startup collapses

After 20 long years, augmented reality glasses pioneer ODG has been left with just a skeleton crew after acquisition deals from Facebook and Magic Leap fell through. Here’s a story of a startup with $58 million in venture capital backing that failed to deliver on its promises.

7. Data point

Seed activity for U.S. startups has declined for the fourth straight year, as median deal sizes increased at every stage of venture capital.

8. Meanwhile, in startup land…

This week edtech startup Emeritus, a U.S.-Indian company that partners with universities to offer digital courses, landed a $40 million Series C round led by Sequoia India. Badi, which uses an algorithm to help millennials find roommates, brought in a $30 million Series B led by Goodwater Capital. And Mr Jeff, an on-demand laundry service startup, bagged a $12 million Series A.

9. Finally, Meet Caper, the AI self-checkout shopping cart

The startup, which makes a shopping cart with a built-in barcode scanner and credit card swiper, has revealed a total of $3 million, including a $2.15 million seed round led by First Round Capital .

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News Source = techcrunch.com

In emerging markets there are no copycats, just budding entrepreneurs

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Every year I teach an MBA course at Stanford about the exciting opportunities for tech investors and entrepreneurs in developing economies. When we designed the syllabus back in 2013, Rocket Internet was still firing on all cylinders in four continents. The unapologetic machine built to copy big Internet American companies created billions of dollars for the Samwer brothers and its backers. During Rocket’s golden years, the best startups in the developing economies seemed to inevitably have an original reference in Silicon Valley.

Accordingly, we added a class about the opportunity of replicating business models to seize this information arbitrage. Call it the second-mover advantage.

Despite my conviction about the model, the copycat word  —  short for replicating startups and attached to these ventures  —  annoyed me from the start. More than a term to describe a straightforward recipe to launch, I see it as an unconscious way to belittle an entire group of hard-charging founders and investors.

Indeed, while in foreign eyes, we have been building a Mexican Kickstarter, a Middle Eastern Uber, an Indian Amazon, or a Colombian Postmates, I argue visionary founders are taking a simple idea that already exists and creating new worlds.

On the Internet, there are Einsteins and there are Bob the Builders. I’m Bob the Builder’, Oliver Samwer, Founder of Rocket Internet

Gateway to entrepreneurship

While impact is the final goal, founders can approach the journey in different ways. The most common approach in the startup world is to use the business method or more pompously, the design thinking methodology. “Fall in love with the problem, not the solution,” mentors keep telling a succession of startups clusters in acceleration programs. The best and “leanest” way to product market fit is by starting small then keep iterating the solution until you nail it.

A second way to start is favored by engineers and scientists: take a new promising technology or a forgotten molecule, then find a big problem. Keep iterating until you find a problem worth solving, like a hammer looking for a nail.

A third way is starting like painters create, building skills by copying classics, or like a new chef cooks by starting with iconic recipes: replicate a proven idea and iterate until you find traction.

Until a few years ago it was ostensibly the only way to scale in developing economies. The model helped raise local capital from risk-averse investors who needed reassurance. The playbook to scale was unfolding a couple of years ahead and served as a guide to founders without previous startup experience and no local role models. The potential acquirer was identified and sometimes contacted in advance. Founders weren’t crazy and investors weren’t dumb.

Replicating a business model has served in emerging ecosystems as the gateway to entrepreneurship and venture investing.

Photo courtesy of Flickr/A_Marga

Riding the next wave

According to conventional wisdom, new ecosystems around the world grow through the following three stages, be them in developing economies or more developed countries. First, local and foreign entrepreneurs replicate successful models focused on local markets. Then as the ecosystem evolves, founders start applying existing technologies to solve local problems. Finally, as the tech space matures new technologies begin to flourish.

In my opinion, those stages never happen sequentially as stated by ecosystem observers. Successful startups that started with a foreign inspiration can outgrow the master. If they are not bought into submission by the first mover, some of the most famous copycats reinvented the original and made it better: Mercado Libre is much more relevant in the eCommerce space than eBay . Flipkart is hardly an Amazon, not to mention WeChat. These companies are in turn some of the most prolific tech innovators on the globe. Truly ecosystems evolve organically in unique ways reflecting their history, geopolitical environment, economic structure and cultural features.

Two ways to defend the status quo: “It’s been done before” and “It’s never been done before.” — Thibault @Kpaxs

In defense of talent

Recently, it’s hard to hear American observers use the word copycat to describe any American company. After all, Guilt replicated VentesPrivees and Lime, Chinese dockless bike sharing and many more examples. All American startups are treated as innovators while the rest as mere followers.

Recently, Chinese or Indian startups seem to be given the benefit of the doubt regarding their originality. Is it because these regions have become more innovative? Maybe. But it’s also because these ecosystems have gained the respect of Silicon Valley. Indeed, Chinese consumer tech surpassed decisively the US as the most important country in terms of investments.

So here’s my humble suggestion to our wealthier and more accomplished colleagues: stop using the c-word with founders. It’s offensive. Most probably, these founders are facing more challenges to build their companies and lower odds for success that the first mover. If anything, they have more merit than the originals.

As for founders, when they call you a me-too, remember all teams started somewhere, somehow. In fact, most started like Bob the Builder before turning into Einsteins. The truth is, it doesn’t matter where you start. You can start by applying a new technology or protocol. You can start with a problem you feel passionate about. You can start by replicating a business model. It doesn’t really matter if you take a big swing at the future and trust you will figure out how to make it happen. It doesn’t matter what label they use while you change the world for the better.

News Source = techcrunch.com

Robot couriers scoop up early-stage cash

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Much of the last couple of decades of innovation has centered around finding ways to get what we want without leaving the sofa.

So far, online ordering and on-demand delivery have allowed us to largely accomplish this goal. Just point, click and wait. But there’s one catch: Delivery people. We can never all lie around ordering pizzas if someone still has to deliver them.

Enter robots. In tech-futurist circles, it’s pretty commonplace to hear predictions about how some medley of autonomous vehicles and AI-enabled bots will take over doorstep deliveries in the coming years. They’ll bring us takeout, drop off our packages and displace lots of humans who currently make a living doing these things.

If this vision does become reality, there’s a strong chance it’ll largely be due to a handful of early-stage startups currently working to roboticize last-mile delivery. Below, we take a look at who they are, what they’re doing, who’s backing them and where they’re setting up shop.

The players

Crunchbase data unearthed at least eight companies in the robot delivery space with headquarters or operations in North America that have secured seed or early-stage funding in the past couple of years.

They range from heavily funded startups to lean seed-stage operations. Silicon Valley-based Nuro, an autonomous delivery startup founded by former engineers at Alphabet’s Waymo, is the most heavily funded, having raised $92 million to date. Others have raised a few million.

In the chart below, we look at key players, ranked by funding to date, along with their locations and key investors.

Who’s your backer?

While startups may be paving the way for robot delivery, they’re not doing so alone. One of the ways larger enterprises are keeping a toehold in the space is through backing and partnering with early-stage startups. They’re joining a long list of prominent seed and venture investors also eagerly eyeing the sector.

The list of larger corporate investors includes Germany’s Daimler, the lead investor in Starship Technologies. China’s Tencent, meanwhile, is backing San Francisco-based Marble, while Toyota AI Ventures has invested in Boxbot.

As for partnering, takeout food delivery services seem to be the most active users of robot couriers.

Starship, whose bot has been described as a slow-moving, medium-sized cooler on six wheels, is making particularly strong inroads in takeout. The San Francisco- and Estonia-based company, launched by Skype founders Janus Friis and Ahti Heinla, is teaming up with DoorDash and Postmates in parts of California and Washington, DC. It’s also working with the Domino’s pizza chain in Germany and the Netherlands.

Robby Technologies, another maker of cute, six-wheeled bots, has also been partnering with Postmates in parts of Los Angeles. And Marble, which is branding its boxy bots as “your friendly neighborhood robot,” teamed up last year for a trial with Yelp in San Francisco.

San Francisco Bay Area dominates

While their visions of world domination are necessarily global, the robot delivery talent pool remains rather local.

Six of the eight seed- and early-stage startups tracked by Crunchbase are based in the San Francisco Bay Area, and the remaining two have some operations in the region.

Why is this? Partly, there’s a concentration of talent in the area, with key engineering staff coming from larger local companies like Uber, Tesla and Waymo . Plus, of course, there’s a ready supply of investor capital, which bot startups presumably will need as they scale.

Silicon Valley and San Francisco, known for scarce and astronomically expensive housing, are also geographies in which employers struggle to find people to deliver stuff at prevailing wages to the hordes of tech workers toiling at projects like designing robots to replace them.

That said, the region isn’t entirely friendly territory for slow-moving sidewalk robots. In San Francisco, already home to absurdly steep streets and sidewalks crowded with humans and discarded scooters, city legislators voted to ban delivery robots from most places and severely restrict them in areas where permitted.

The rise of the pizza delivery robot manager

But while San Francisco may be wary of a delivery robot invasion, other geographies, including nearby Berkeley, Calif., where startup Kiwi Campus operates, have been more welcoming.

In the process, they’re creating an interesting new set of robot overseer jobs that could shed some light on the future of last-mile delivery employment.

For some startups in early trial mode, robot wrangling jobs involve shadowing bots and making sure they carry out their assigned duties without travails.

Remote robot management is also a thing and will likely see the sharpest growth. Starship, for instance, relies on operators in Estonia to track and manage bots as they make their deliveries in faraway countries.

For now, it’s too early to tell whether monitoring and controlling hordes of delivery bots will provide better pay and working conditions than old-fashioned human delivery jobs.

At least, however, much of it could theoretically be done while lying on the sofa.

News Source = techcrunch.com

Tiger Global returns with a $3M investment to help restaurants deal with delivery apps

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Tiger Global has returned to backing early-stage Indian startups after it wrote a $3 million check for CheckMate, a U.S.-Indian startup the helps restaurant deals with the pain of multiple food ordering platforms.

The deal is a Series A and it represents the first time that CheckMate has raised outside funding for its business. It is also a return to early-stage investing in India — where CheckMate’s largest office is — for Tiger Global following a period of relative inactivity.

Founded 2.5 years ago initially as a bill-splitting app, CheckMate provides a platform that unifies food and payments to ease the chaos of working with modern consumer platforms. In this current age, restaurants simply must work with platforms like Uber Eats, Postmates, GrubHub, DoorDash and others to get orders, but the services don’t play together, or even with, existing restaurant systems.

That means that each service requires its own tablet for managing orders. On top of that, none integrate with order systems that print receipts for chefs or point-of-sale software. That means that restaurant staff must not only operate a bunch of iPads to handle the orders, but they have to manually enter them into their ordering systems (to ensure the ticket is processed so the order is cooked) then handle point of sale and bank the order for accounts.

That’s a lot of manual hassle and it’s the core issue that CheckMate aims to solve.

It effectively operates like a bridge that connects the various delivery platforms to a restaurant’s management system. It feeds orders from multiple food delivery services into the ordering system automatically, and feed the sales back into the restaurant management system. That helps keep the orders moving quickly, whilst managing account and sales without manual input.

“Online orders are still treated as a stepchild that’s alien to the business,” CheckMate founder and CEO Vishal Agarwal told TechCrunch in an interview. “With our solution, we inject online orders into the true heart and center of these businesses.”

A ‘wall’ of tablets is commonplace in restaurants as food delivery apps become an increasingly important source of orders

Headquartered in New York, where Agarwal is based, CheckMate has rolled out to over 1,000 locations in the U.S. and it counts Five Guys among its customers. The company recently expanded to Australia with its first customers and Agarwal — previously with e-commerce company Choxi.com — said he is looking for further international growth. The plan to get it, however, is by piggybacking the POS systems it supports, including Brink, Toast, and Revel, rather than establishing CheckMate’s own sales team.

That makes a lot of sense since the POS providers have a major incentive for linking their restaurant customers up with CheckMate because it streamlines their operations and makes their life easier. It also helps keep CheckMate lean and mean.

The team itself is already lean and international. While Agarwal, who comes from India, is based in New York, the rest of his 10-person U.S. team is distributed while the operations and tech team of 25 is located in CheckMate’s India-based office.

Since there are no public APIs, CheckMate has built its own platform in conjunction with food delivery services and now Agarwal — who said he has invested his own money in CheckMate — plans to double down on R&D, and in particular more integrations, by using this Series A raise for hiring.

“Technology in the restaurant sector is under-utilized — I was coming from e-commerce background where technology is everywhere,” he explained. “We quickly realized how much resistance to tech there is and we want to make it easy as possible for operators to adopt our product.”

That simplicity also applies to CheckMate’s pricing model which was recently adjusted. Previously, the company charged a setup fee but that has been abolished in favor of two tiers: $85 per restaurant for up to two platforms, and $100 for unlimited platforms per location.

“As restaurants streamline their operations to take advantage of rapidly increasing online orders, we
expect hundreds of thousands of restaurants to benefit from Checkmate’s unique solution,” Tiger Global partner Scott Shleifer said in a prepared statement.

The deal is an interesting one for Tiger Global, the 17-year-old New York investment firm that just closed a new $3.75 billion fund. The firm became well known for writing bold checks that backed ambitious startups in India a couple of years ago before it put the brakes on that strategy.

According to a multitude of media reports, the firm’s management grew concerned that it was overexposed in India, where it had deployed some $2 billion via deals in unicorns like Flipkart and Uber rival Ola. Flipkart’s exit via a majority investment from Walmart, however, made the firm around $3 billion in returns while it also retained a small stake in the business, which is tipped to have its own IPO in the future.

Tiger Global executive Lee Fixel, who spearheaded the India strategy, is said to have spent the last year working closely with Flipkart to realize the deal. Now that it is done, Tiger Global is said to be returning to investment mode in India, according to a recent Economic Times story. That means that CheckMate may be the first of many as the tiger begins roar again.

News Source = techcrunch.com

Postmates launches food delivery in 134 new U.S. cities

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Homebodies across the U.S. have reason to celebrate. Postmates — the on-demand food delivery service so popular in major cities that it’s a verb now— just launched in 134 new markets. Those 134 new cities mean that Postmates has a presence in 550 cities total across the U.S, including places like Lubbock, Texas; Athens, Georgia; Columbia, South Carolina and Albany, New York.

In April, the company announced that it would partner with Walmart on grocery delivery. The move was meant to offset Amazon’s potential dominance in the space given the online retail giant’s acquisition of Whole Foods last year. Postmates was most recently valued at $1.2 billion after a $300 million influx of funding last month.

In July, Postmates added a wave of more than 100 new cities, bringing its count up to 385 at the time. Now, Postmates claims coverage of 60 percent of households in the U.S., showing that the company is serious about taking Bay Area-centric on-demand luxuries and its own delivery infrastructure far beyond Silicon Valley.

News Source = techcrunch.com

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