Category: corporate finance

How VCs can get the most out of co-investing alongside LPs



It has rarely been easier for people looking to invest. Nontraditional investors, which include anyone outside of traditional VC firms investing in venture capital deals, are increasingly making their presence felt in the investing community.

McKinsey found that the value of co-investment deals has more than doubled to $104 billion from 2012 to 2018. And by some counts, there are as many as 1,600 “nontraditional” investors helping to fund venture capital deals in 2021.

The primary motivator for nontraditional investors is seeking better returns, and investing alongside VC funds is a great way to achieve that. A recent Preqin study shows co-investing funds significantly outperform traditional funds.

Research shows that 80% of investors found their co-investments outperforming private equity fund investments, with 46% outperforming by a margin of more than 5%. Investors also benefit from a generally less expensive fee structure compared to traditional private equity or VC funds.

When evaluating deals, keep in mind that most companies are not going to be the next tech unicorn, so set realistic views on exits.

Co-investors can also profit by sharing the investment risk, which (Read more...)

Settle raises $15M from Kleiner Perkins to give e-commerce companies more working capital



Alek Koenig spent four years at Affirm, where he was head of Credit.

There he saw firsthand just how powerful the alternative lending model could be. Koenig realized that it wasn’t just consumers who could benefit from the model, but businesses too.

So in November 2019, he founded Settle as a way to give e-commerce and consumer packaged goods (CPG) companies access to non-dilutive capital. (Not every company wants to raise venture money). By June 2020, the startup had launched its platform, which is designed to help these businesses manage their cash flow. Over time, he recruited a previous co-worker, Shane Moriah, to serve as Settle’s CTO.

And today, the company is announcing that it has raised $15 million in a Series A funding round led by Kleiner Perkins. This follows a previously unannounced $6 million seed raise led by Founders Fund in November 2020. Other investors in the company include SciFi (Affirm founder Max Levchin’s VC firm), Caffeinated Capital, WorkLife Ventures, Background Capital and AngelList Venture CEO Avlok Kohli.

With the pandemic leading to a massive shift toward digital and online shopping, e-commerce and CPG businesses found themselves with the challenge of keeping up with demand while trying to manage their cash flow. The main problem was the lag between accounts receivables and accounts payables.

“These companies suffer from the problem where there are these huge cash flow gaps from buying inventory, waiting to receive it and then turning it into revenue,” Koenig explains. “It takes quite a bit (Read more...)

Casa Blanca raises $2.6M to build the ‘Bumble for real estate’



Casa Blanca, which aims to develop a “Bumble-like app” for finding a home, has raised $2.6 million in seed funding.

Co-founder and CEO Hannah Bomze got her real estate license at the age of 18 and worked at Compass and  Douglas Elliman Real Estate before launching Casa Blanca last year.

She launched the app last October with the goal of matching home buyers and renters with homes using an in-app matchmaking algorithm combined with “expert agents.” Buyers get up to 1% of home purchases back at closing. Similar to dating apps, Casa Blanca’s app is powered by a simple swipe left or right.

Samuel Ben-Avraham, a partner and early investor of Kith and an early investor in WeWork, led the round for Casa Blanca, bringing its total raise to date to $4.1 million.

The New York-based startup recently launched in the Colorado market and has seen some impressive traction in a short amount of time. 

Since launching the app in October, Casa Blance has “made more than $100M in sales” and is projected to reach $280 million this year between New York and its Denver launch. 

Bomze said the app experience will be customized for each city with the goal of creating a personalized experience for each user. Casa Blanca claims to streamline and sort listings based on user preferences and lifestyle priorities.

Image Credits: Casa Blanca

“People love that there is one place to book, manage feedback, schedule and communicate with a branded agent for one cohesive experience,” (Read more...)

Pipe, which aims to be the ‘Nasdaq for revenue,’ raises more money at a $2B valuation



Fast-growing fintech Pipe has raised another round of funding at a $2 billion valuation, just weeks after raising $50M in growth funding, according to sources familiar with the deal.

Although the round is still ongoing, Pipe has reportedly raised $150 million in a “massively oversubscribed” round led by Baltimore, Md.-based Greenspring Associates. While the company has signed a term sheet, more money could still come in, according to the source. Both new and existing investors have participated in the fundraise.

The increase in valuation is “a significant step up” from the company’s last raise. Pipe — which only launched its platform last June — has declined to comment on the deal.

A little over one year ago, Pipe raised a $6 million seed round led by Craft Ventures to help it pursue its mission of giving SaaS companies a funding alternative outside of equity or venture debt.

The buzzy startup’s goal with the money was to give SaaS companies a way to get their revenue upfront, by pairing them with investors on a marketplace that pays a discounted rate for the annual value of those contracts. (Pipe describes its buy-side participants as “a vetted group of financial institutions and banks.”)

Just a few weeks ago, Miami-based Pipe announced a new raise — $50 million in “strategic equity funding” from a slew of high-profile investors. Siemens’ Next47 and Jim Pallotta’s Raptor Group co-led the round, which also included participation from Shopify, Slack, HubSpot, Okta, Social Capital’s Chamath Palihapitiya, Marc Benioff, (Read more...)

Foresite Capital raises $969 million fund to invest in healthcare startups across all stages of growth



Health and life science specialist investment firm Foresite Capital has raised a new fund, its fifth to date, totally $969 million in commitments from LPs. This is the firm’s largest fund to date, and was oversubscribed relative to its original target according to fund CEO and founder Dr. Jim Tananbaum, who told me that while the fundraising process started out slow in the early months of the pandemic, it gained steam quickly starting around last fall and ultimately exceeded expectations.

This latest fund actually makes up two separate investment vehicles, Foresite Capital Fund V, and Foresite Capital Opportunity Fund V, but Tananbaum says that the money will be used to fuel investments in line with its existing approach, which includes companies ranging from early- to late-stage, and everything in between. Foresite’s approach is designed to help it be uniquely positioned to shepherd companies from founding (they also have a company-building incubator) all the way to public market exit – and even beyond. Tananbaum said that they’re also very interested in coming in later to startups they have have missed out on at earlier stages of their growth, however.

Image Credits: Foresite Capital

“We can also come into a later situation that’s competitive with a number of hedge funds, and bring something unique to the table, because we have all these value added resources that we used to start companies,” Tananbaum said. “So we have a competitive advantage for later stage deals, and we have a competitive advantage for early stage (Read more...)