January 17, 2019
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Venture Capital

Resolute Ventures sticks to its knitting with $75 million fourth fund

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Resolute Ventures, an early-stage firm with offices in San Francisco and Boston, just closed its fourth fund with $75 million.

It’s an almost shockingly conservative amount of capital in today’s era of big-is-better funds. And with valuable companies like the real estate startup OpenDoor, the applicant tracking system company Greenhouse and the dog products company BarkBox in its portfolio, one imagines that seven-year-old Resolute could have raised more.

It didn’t want to do that, says firm founder Mike Hirshland, who spent 17 years with Polaris Partners before founding Resolute and soon after bringing aboard the firm’s only other general partner, Raanan Bar-Cohen, a former exec with WordPress parent company Automattic.

It’s much the same story as Hirshland shared with us back in 2017, when the firm closed its third fund with $65 million. As he told us in a call yesterday, “There was a lot of interest in having us raising a larger fund, but that would require a shift in strategy, and we want to stick with what we do.” What that is, exactly: investing “very early, in some cases, pre-product and pre-launch.” Says Hirshland, “Much of the seed-stage industry has become more focused on early signs of traction, but we’re really still betting on teams.”

Hirshland points to OpenDoor, calling its team so “phenomenal” that it “didn’t take a genius to say yes to that one.”

Greenhouse was meanwhile “two guys and a really crappy PowerPoint” when Resolute met with the team. Founders Daniel Chait and Jon Stross “wildly impressed” Hirschland, but their pitch also resonated. Says Hirshland, “There was nothing special or sexy about this big recruiting jobs market” the company was chasing. But Chait and Stross had “both done a bunch of stuff at large companies” and “seemed like the perfect team. Daniel was very CEO-like. He had a technical background but also knows how to run a business; Jonathan was the quintessential product guy.”

OpenDoor was most recently valued at roughly $2 billion. Greenhouse has not disclosed its valuation, but it has raised $110 million to date, including from Riverwood Capital and Benchmark.

“On the spectrum,” says Hirshland, “we lean toward going with a team. However, we fundamentally need to believe in the market opportunity.” Yet even then there are exceptions to the rule, he says. One case in point is BarkBox, the New York-based pet supplies company that is surviving and — says Hirshland — thriving on customers who pay it a monthly subscription fee.

Founder Matt Meeker, who previously founded Meetup.com, had “had worked with me [when I was with Polaris],” says Hirshland, and “I did not like the idea. I didn’t think a subscription doggy business would be a big one. But,” he continues, “I’d back Matt any day of the week, and now BarkBox is enjoying hundreds of millions of dollars in annual revenue, so we know who was right and wrong about that one.”

Resolute looks to fund between 30 and 35 companies with each fund. Its median size check is $750,000.  It also prefers to lead deals, typically securing 10 percent of a startup’s equity by working with teams at their most nascent stages.

Asked whether Resolute has taken advantage of the vibrant secondary market to sell any of its still-private shares, he suggests it has not, but that it may well. Asked if Resolute might raise an opportunity fund at some point to support its breakout winners, Hirshland says that that’s “always on the table. We’ve been approached about one, but we don’t have the conviction yet that we know the right answer.”

For now, he says, the firm relies from time to time instead on special purpose vehicles — basically pop-up funds created to back one company at a time — to ensure its investors have as much exposure as possible to Resolute’s hardiest startups.

It has also seen a few outright exits in its portfolio, including the sale of the calendaring app Sunrise to Microsoft for more than $100 million in 2015, and the sale of Orbitera, a platform for cloud marketplaces, which also sold for a reported $100 million, to Google the following year.

News Source = techcrunch.com

Riding the RV revolution, Outdoorsy fuels up with $50 million in fresh funding

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Outdoorsy is building for the road ahead. The three-year-old company, which connects customers with underused RVs and other trucks big enough to camp in overnight, just raised $50 million in Series C funding led by Greenspring Associates, with participation from earlier backers Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital.

That puts its total funding, in less than year’s time, at $75 million. (We’d separately reported on its $25 million Series B round last February. It has now raised $81.5 million altogether.)

It’s easy to understand why investors are excited about Outdoorsy, which moved its headquarters from the Bay Area to Austin six months ago, partly to get closer to its base of customers, as well as to take advantage of attractive tax incentives. The company is capitalizing on a global trend of millennials who want to stay overnight at places other than hotels, which are often expensive and located in commercial districts that can’t provide the same authentic experience of staying in a neighborhood.

Yet Outdoorsy is taking things a step further, so to speak. As cofounder and CEO Jeff Cavins notes, even with Airbnbs seemingly everywhere, there remain plenty of places where it makes even more sense to rent an RV and set up a grill, including at a beach, beside a lake, or right outside events like musical festivals and car races. That’s saying nothing of traditional camping spots, like Yosemite and Yellowstone Valley.

It’s easier than ever thanks largely to Outdoorsy, too, says Cavins. Earlier on, the company logged serious time with outfits like Aviva, a British insurance company that is not only an Outdoorsy investor at this point but which was convinced by Outdoorsy to create an insurance product expressly to cover RVs as distinct from more accident-prone vehicles with which they’ve long been lumped, like dune buggies.

The math was easy to grasp, offers Cavins of the argument Outdoorsy made. “Most recreational vehicles really aren’t driven around much. They are used for camping purposes. Some people do cross-country stuff, but most people don’t like driving so much on their vacations, so there isn’t a lot of mobile time with these units.”

Such products have been meaningful for both sides. Outdoorsy says it’s been able to price that insurance for “basically the cost of what you’d pay for a beer each day.” Meanwhile, by offering U.S. and Canadian RV owners up to $1 million in protection, and even more protection for its European users, Outdoorsy says it has managed to sign up 31,000 vehicles to date. These include a mix of traditional RVs, camper vans, towable campers, and trucks that are rented for six days on average and that produce, on average, $1,900 in income for their owners over that same six-day period.

And that’s mostly in North America. Outdoorsy thinks that as it expands more aggressively in Europe and Australia and New Zealand, among other places into which it’s rolling, it will have closer to 65,000 vehicles available to rent on its platform by year end.

Not that expanding geographically is all the company has in mind. On the contrary, says Cavins, Outdoorsy is evolving into a kind of recreational marketplace, one with many more premium services beyond those it introduced last year, including insurance and roadside assistance. For example, it more recently began inviting customers to finance their vacations through Outdoorsy, which has partnered with the lending company Affirm toward that end. It also now offers trip and travel insurance to offset cancellations. And Cavins says the company is introducing a spate of other new premium services in roughly one month

Outdoorsy also ushering in a new wave of entrepreneurship, by Cavin’s telling. As it stands, vehicle owners set their own pricing, with the help of tools provided by Outdoorsy, and they keep between 75 and 80 percent of what they earn. For some, it’s a nice way to make income when they aren’t using their RV. (It’s especially nice compared with the alternative, which is to pay to keep the RV stored.) For others of its customers, he says, those rental fees are beginning to produce meaningful revenue. He points, for example, to one customer who he says is generating more than $1 million a year through Outdoorsy. Pushed on this number, Cavins notes that this customer owns between 50 and 55 RVs. But he insists that while “most users start with two vehicles, we have some that get to four, then 20, then they hire hire their own mechanic and cleaning crew.”

As for those stretches of time when it isn’t a holiday, and it isn’t summer, and fewer people are looking to rent RVs, Cavins admits the market slows down markedly. In fact, it’s largely why Outdoorsy is building up a business in New Zealand and Australia. It wants to take advantage of summer somewhere all year round.

Still, insists Cavins, the market is hotter than you might imagine. Even in Europe, which doesn’t have the same sprawling freeways of North America, car camping, including via camper van, is becoming a huge part of the culture. “By May, it’s now very hard to get your hands on something to rent.”

News Source = techcrunch.com

Global VC market sees highest-ever concentration of supergiant dollar volume in Q4 2018

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For the global VC industry, 2018 was a supergiant year. Crunchbase projects that 2018 deal and dollar volume surpassed even the high-water mark left by the dot-com deluge and the drought that followed.

As covered in Crunchbase News’s global VC report reviewing Q4 and the rest of 2018, projected deal volume rose by 32 percent and projected dollar volume jumped 55 percent since 2017. For all of 2018, Crunchbase projects that well over $300 billion was invested in equity funding rounds across all stages of the venture-backed company life cycle. (This figure includes an estimate of transactions that were finalized in 2018, but won’t be publicized or added to Crunchbase until later. More on how Crunchbase projects data can be found at the end of that report.)

Is the market mostly buoyed by the billions raised by the biggest private tech companies, or is a rising tide in this extended aquatic metaphor raising all ships? In other words, is the bulk of the capital going to only a handful of the largest rounds? That’s what the numbers show.

In the global VC pool, capital is definitely sloshing toward rounds totaling $100 million or more. In the chart below, you can see what percent of reported global VC dollar volume was raised in “supergiant” rounds versus deals of smaller size.


In the year, over 56 percent of worldwide dollar volume can be attributed to supergiant rounds. With 61 percent of reported capital coming from supergiants in the final quarter, Q4 2018 has the highest concentration of supergiant dollar volume of any single quarter on record.

Big money weighs on the market

Following that same theme, the calendar year 2018 is the most concentrated year on record. In the chart below, we show how much capital was raised in non-supergiant (<$100 million) venture rounds over the past decade. (It’s basically the bottom part of the first chart, with the data aggregated over a longer period of time.)

For the first time in at least a decade (and likely ever) supergiant, $100 million+ VC rounds accounted for a majority of reported capital raised. So in summary: Q4 2018 had the highest share of supergiant VC dollar volume on record, and 2018 was the most concentrated year on record.

On the one hand, the results are not surprising, considering that the biggest-ever VC round (a preposterously large $14 billion Series C raised by Ant Financial) and several rivals for that top spot were closed last year. That big round made a big splash. It was the year of multi-billion-dollar global growth funds, SoftBank and scooter CEOs worth supergiant sums, at least on paper. But was it good for the smaller players too?

Seed and early-stage deal and dollar volume were both up in 2018, but then again, so is everything toward the end of a bull market cycle. The question is, when the bottom falls out, between supergiant and more normal-sized rounds, which has the farthest to fall?

News Source = techcrunch.com

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

Daily Crunch: How the government shutdown is damaging cybersecurity and future IPOs

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The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here:

1. How Trump’s government shutdown is harming cyber and national security
The government has been shut down for nearly three weeks, and there’s no end in sight. While most of the core government departments — State, Treasury, Justice and Defense — are still operational, others like Homeland Security, which takes the bulk of the government’s cybersecurity responsibilities, are suffering the most.

2. With SEC workers offline, the government shutdown could screw IPO-ready companies
The SEC has been shut down since December 27 and only has 285 of its 4,436 employees on the clock for emergency situations. While tech’s most buzz-worthy unicorns like Uber and Lyft won’t suffer too much from the shutdown, smaller businesses, particularly those in need of an infusion of capital to continue operating, will bear the brunt of any IPO delays.

3. The state of seed 

In 2018, seed activity as a percentage of all deals shrank from 31 percent to 25 percent — a decade low — while the share and size of late-stage deals swelled to record highs.

4. Banking startup N26 raises $300 million at $2.7 billion valuation

N26 is building a retail bank from scratch. The company prides itself on the speed and simplicity of setting up an account and managing assets. In the past year, N26’s valuation has exploded as its user base has tripled, with nearly a third of customers paying for a premium account.

5. E-scooter startup Bird is raising another $300M 

Bird is reportedly nearing a deal to extend its Series C round with a $300 million infusion led by Fidelity. The funding, however, comes at a time when scooter companies are losing steam and struggling to prove that its product is the clear solution to last-mile transportation.

6. AWS gives open source the middle finger 

It’s no secret that AWS has long been accused of taking the best open-source projects and re-using and re-branding them without always giving back to those communities.

7. The Galaxy S10 is coming on February 20 

Looks like Samsung is giving Mobile World Congress the cold shoulder and has decided to announce its latest flagship phone a week earlier in San Francisco.

News Source = techcrunch.com

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