Devoted Health Valued at $3 Billion With New Funds


This post is by Kate Clark from The Information

Devoted Health, a startup co-founded by serial health-tech entrepreneurs Ed and Todd Park, is raising at least $200 million in a deal that values the company at more than $3 billion, according to two people familiar with the matter.

The round is not yet closed as the company plans to keep raising additional capital, one person said. The company declined to comment.

Startups Face a ‘Fundamental Reset,’ Says VC


This post is curated by Keith Teare. It was written by Kate Clark. The original is [linked here]

Ann Miura-Ko is no stranger to investing during a crisis. She got her start in venture capital as an analyst on September 10, 2001. She co-founded her seed-stage fund, Floodgate, in 2008 just as Bear Stearns was collapsing. 

The current shock set off by the global coronavirus pandemic seems worse. “This is actually a fundamental reset. It’s not just an economic event. It’s not just a healthcare crisis. It’s a pervasive, system-changing, life-altering series of events,” said Miura-Ko in a phone interview from her home in Palo Alto, California, last week. 

Startups Face a ‘Fundamental Reset,’ Says VC


This post is by Kate Clark from The Information

Ann Miura-Ko is no stranger to investing during a crisis. She got her start in venture capital as an analyst on September 10, 2001. She co-founded her seed-stage fund, Floodgate, in 2008 just as Bear Stearns was collapsing. 

The current shock set off by the global coronavirus pandemic seems worse. “This is actually a fundamental reset. It’s not just an economic event. It’s not just a healthcare crisis. It’s a pervasive, system-changing, life-altering series of events,” said Miura-Ko in a phone interview from her home in Palo Alto, California, last week. 

As Recession Looms, Brex Stockpiles Cash, Cuts Credit


This post is by Kate Clark from The Information

Before the coronavirus outbreak, Brex had become the poster child of Silicon Valley largesse. By offering fellow startups high-limit charge cards, its 24-year-old founders had attracted illustrious investors like Kleiner Perkins, rocketing Brex to a $2.6 billion valuation. Flush with cash, it blanketed downtown San Francisco with advertisements, bought four companies, quadrupled its staff, started a magazine—and even opened a restaurant. All in just three years.

Today co-founders Henrique Dubugras and Pedro Franceschi are bracing for a harsher reality. Reeling from the coronavirus shutdowns, Brex customers including Airbnb, Outdoor Voices and ClassPass are slashing costs and cutting thousands of jobs. A replay of the 2001 dot-com crash, which wiped out a generation of promising upstarts, could be Brex’s death knell. It has already cut credit limits to reduce its exposure, losing out on revenue it might have generated from these customers and angering some borrowers because it didn’t warn them in advance.

Startups Withdraw Applications for Government Loans, Fearing Backlash


This post is by Kate Clark from The Information

One week after submitting paperwork for a $2 million government loan from the Small Business administration’s Paycheck Protection Program, Zumper CEO Anthemos Georgiades asked his bank to withdraw the application. He worried taking the money was ethically dubious and legally risky.

“CEOs are having trouble sleeping thinking their company might get it and 50 restaurants might not,” said Georgiades, who co-founded the San Francisco–based apartment rental marketplace Zumper in 2012. “A venture-backed startup taking it really would come at the expense of Main Street.”

Temperature Checks and Plexiglas Partitions: Tech’s Plan to Reopen Offices


This post is by Kate Clark from The Information

Body temperature checks at the front door. Plastic partitions to create more separation in open offices. And company-branded personal protective equipment for employees. 

These are among the measures startups and other tech companies are considering as they begin actively planning for a return to their offices in the coming months. Most businesses shuttered workspaces weeks ago to help curb the spread of the coronavirus. Timelines and tactics vary for reopening workplaces, but there is growing anticipation that state and local authorities will begin easing stay-at-home restrictions before summer arrives.  

Still, few employers are expecting a return to normalcy anytime soon. Most companies will discourage, if not ban, business travel and attendance at live events. Some of them say they may never go back to their offices. Those companies that do expect to operate very differently than they did before the outbreak, with more intrusive policies than many people are accustomed to.  

Airtable May Triple Valuation as Top Startups Attract Top Dollar, Even in Downturn


This post is by Kate Clark from The Information

As some startups implore venture capitalists for lifelines, others are negotiating deals at eye-popping valuations without offering so much as a pitch deck. 

Airtable, which makes cloud-based software for collaboration, has spoken to investors about raising at least $50 million in a round that would value the business at between $2.5 billion and $4 billion, according to several people familiar with the company’s talks, which are informal. Airtable was valued at $1.1 billion in 2018.

Next Year’s VC Funds May Be Hit Harder by Covid Recession, Says LP


This post is by Kate Clark from The Information

For the people who invest in venture capital funds, the impact of Covid-19 is like watching a “slow-motion plane crash,” Sapphire Ventures managing director Beezer Clarkson said in an interview with The Information. While VCs were still raising strongly in the first quarter, next year will be different. “In 2021, we will see more of an impact on fundraising,” she said.

Clarkson, whose firm is a limited partner in VC funds such as Union Square Ventures and Data Collective, says venture investors are looking at their companies and “thinking which of them are going to make it.” Limited partners will go through the same process with their funds, but later. 

Twitter Co-Founder Biz Stone Raising Money for New Venture Fund


This post is by Kate Clark from The Information

Biz Stone, who co-founded both Twitter and Medium, is raising capital for a new venture fund, setting a target of up to $200 million, according to a person familiar with the matter.

Through the fund, Stone plans to make early-stage investments in startups focused on the future of health, work, wealth and play, and has already begun identifying potential investments, said the person. Stone is raising the fund with the entrepreneur Frederick Blackford, who filed paperwork with the U.S. Securities and Exchange Commission on March 23 indicating plans to raise an undisclosed amount of capital. Stone wasn’t listed in the filing, which identified the name of the fund as Future Positive.  

Silicon Valley Bank Struggles as Startups Rush for Government Loans


This post is curated by Keith Teare. It was written by Kate Clark. The original is [linked here]

As the first set of entrepreneurs learned they would receive emergency loans administered through the federal Small Business Administration, many of those who had applied through Silicon Valley Bank were stuck trying to deal with glitches in the application process.

The tech-focused bank had processed close to 5,000 applications to the SBA’s Paycheck Protection Program by Tuesday evening, according to people familiar with the matter. But as many as 30% of those ran into issues requiring applicants to restart the process, the people said. SVB, which handles banking for about half of all venture-backed companies, said through a spokesperson that it had “received significant interest in the program.” She declined to discuss specific numbers.

Silicon Valley Bank Struggles as Startups Rush for Government Loans


This post is by Kate Clark from The Information

As the first set of entrepreneurs learned they would receive emergency loans administered through the federal Small Business Administration, many of those who had applied through Silicon Valley Bank were stuck trying to deal with glitches in the application process.

The tech-focused bank had processed close to 5,000 applications to the SBA’s Paycheck Protection Program by Tuesday evening, according to people familiar with the matter. But as many as 30% of those ran into issues requiring applicants to restart the process, the people said. SVB, which handles banking for about half of all venture-backed companies, said through a spokesperson that it had “received significant interest in the program.” She declined to discuss specific numbers.

VCs Could Exhaust ‘Dry Powder’ in a Year Unless They Slow Investing


This post is curated by Keith Teare. It was written by Kate Clark. The original is [linked here]

Venture capital investors are flush with cash, but they may want to slow down their spending.

U.S. venture firms have roughly $150 billion of funds available to invest in cash-starved startups, a little more than half of the $279 billion they have raised since 2014. That estimate of the VC industry’s “dry powder”—business slang for cash reserves—comes from an analysis of data from PitchBook and the National Venture Capital Association performed by Jon Sakoda, founder of the early-stage venture firm Decibel Partners. He estimates that about half of the dry powder is reserved for new investments, while the other half is for follow-on investments in startups VCs previously put money into, as the chart above shows. 

VCs Could Exhaust ‘Dry Powder’ in a Year Unless They Slow Investing


This post is by Kate Clark from The Information

Venture capital investors are flush with cash, but they may want to slow down their spending.

U.S. venture firms have roughly $150 billion of funds available to invest in cash-starved startups, a little more than half of the $279 billion they have raised since 2014. That estimate of the VC industry’s “dry powder”—business slang for cash reserves—comes from an analysis of data from PitchBook and the National Venture Capital Association performed by Jon Sakoda, founder of the early-stage venture firm Decibel Partners. He estimates that about half of the dry powder is reserved for new investments, while the other half is for follow-on investments in startups VCs previously put money into, as the chart above shows. 

Amid Downturn, Silicon Valley’s Balance of Power Shifts From Startups to VCs


This post is curated by Keith Teare. It was written by Kate Clark. The original is [linked here]

For years, entrepreneurs have called the shots in Silicon Valley’s startup ecosystem as an abundance of capital chased a limited supply of good ideas. 

But in a matter of weeks, as businesses everywhere lurch to a halt due to the coronavirus pandemic, the pendulum has swung decidedly back toward venture capitalists. These investors say cash-hungry startups are now coming to them for investments on more favorable terms, offering more equity for less money than in the past. 

“If you need to raise money, you’re kind of screwed,” said Mitchell Green, a founding partner of Lead Edge Capital, a growth equity firm with investments in Uber and Spotify. “Over the last decade, companies have had the upper hand because there’s so much money. Now, if you are forced to raise capital, [investors] will have the upper hand and be able to get good prices.”

Amid Downturn, Silicon Valley’s Balance of Power Shifts From Startups to VCs


This post is by Kate Clark from The Information

For years, entrepreneurs have called the shots in Silicon Valley’s startup ecosystem as an abundance of capital chased a limited supply of good ideas. 

But in a matter of weeks, as businesses everywhere lurch to a halt due to the coronavirus pandemic, the pendulum has swung decidedly back toward venture capitalists. These investors say cash-hungry startups are now coming to them for investments on more favorable terms, offering more equity for less money than in the past. 

“If you need to raise money, you’re kind of screwed,” said Mitchell Green, a founding partner of Lead Edge Capital, a growth equity firm with investments in Uber and Spotify. “Over the last decade, companies have had the upper hand because there’s so much money. Now, if you are forced to raise capital, [investors] will have the upper hand and be able to get good prices.”

Layoffs Accelerate Across Silicon Valley Startups


This post is by Kate Clark from The Information

As the world braces for a recession triggered by the coronavirus outbreak, venture capital–backed startups across several industries are making significant cuts to their employee numbers.

Four companies have cut roughly 20% of their workforce in an effort to reduce cash burn rates and increase savings—online mattress retailer Eight Sleep, tech-enabled recruiting tool Triplebyte, hospitality startup The Guild, and luxury sleeper-bus service Cabin, according to people familiar with the companies. The number of jobs cut was relatively small—75 people across all four, ranging across both technical and nontechnical job roles—but they’re a harbinger of what is to come. Meanwhile, scooter rental service Lime is reportedly considering job cuts after terminating its operations in most of its markets. 

Big Stunts, Small Checks: Shrug Capital’s Unusual Rise


This post is by Kate Clark from The Information

Niv Dror used to ride his motorcycle up and down Sand Hill Road to ogle the entrances to Sequoia Capital, Andreessen Horowitz and other iconic venture capital firms. Then working as an accountant auditing Chris Sacca’s Lowercase Capital, Dror grew obsessed with powerful people and how they worked.

Today, two years after starting his own fund, the 29-year-old manages a $15 million fund of his own, the second in a series, called Shrug Capital. Between his first, a $3 million fund, and the new effort, he’s made small investments in about 50 startups. They include a mix of virtual reality, direct-to-consumer underwear, and business and entertainment software firms, including exclusive email service Superhuman and an app for purchasing personalized video shoutouts from celebrities, Cameo.

VCs Brace for Fundraising Delays Amid Outbreak


This post is by Kate Clark from The Information

For venture capitalist James Wang, the spread of the coronavirus in mainland China last month came at an inopportune time—as he was raising money in Asia for a new investment fund. After signing up a Taiwanese sovereign wealth fund as an investor in the fund, he canceled the Hong Kong leg of his trip and returned to the U.S. because of concerns about the outbreak.

Later, when he reached out to investors in Hong Kong, Singapore and Thailand to confirm their contributions to the $50 million fund, it was difficult to get hold of them, said Wang, a general partner at Creative Ventures. As a result, Wang and his investment partner Alex Luce said they’ve shifted to focus on securing U.S.-based investors, or limited partners. 

Venture capitalists are beginning to feel the sting from the spread of the virus, joining a growing number of tech companies that were among the first to see disruptions to their businesses from the outbreak. On Thursday, one of the most prominent Silicon Valley venture firms, Sequoia Capital, warned startups in its portfolio that the firm is seeing “significant drops in business activity” among its companies between December and February due to the outbreak.

Marc Andreessen’s Secret Weapon for Finding Startup Investments


This post is by Kate Clark from The Information

When Lucy Guo pitched Andreessen Horowitz in 2016 on an early funding round for her company, an artificial intelligence startup called Scale, the high-powered venture capital firm passed on the deal. 

In 2019, Guo sent a cold email to Chris Dixon, a general partner at the firm, asking again for capital, this time for a tiny VC fund she was raising alongside tech entrepreneur Dave Fontenot. Dixon agreed and lassoed his investment partner Marc Andreessen to co-write a $100,000 check from their personal funds for Guo’s Backend Capital, which has raised a total of $7 million. 

Marc Andreessen’s Secret Weapon for Finding Startup Investments


This post is by Kate Clark from The Information

When Lucy Guo pitched Andreessen Horowitz in 2016 on an early funding round for her company, an artificial intelligence startup called Scale, the high-powered venture capital firm passed on the deal. 

In 2019, Guo sent a cold email to Chris Dixon, a general partner at the firm, asking again for capital, this time for a tiny VC fund she was raising alongside tech entrepreneur Dave Fontenot. Dixon agreed and lassoed his investment partner Marc Andreessen to co-write a $100,000 check from their personal funds for Guo’s Backend Capital, which has raised a total of $7 million.