Are you ready for the coming wave of VC down rounds?


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

Nathan Beckord
Contributor
Nathan Beckord is CEO of Foundersuite.com, a software platform for raising capital and managing investors that has helped entrepreneurs raise over $2 billion since 2016. He is also the host of Foundersuite’s How I Raised It podcast.

As North America slowly begins to reopen after nearly two months of sheltering in place and business lockdowns, startups that paused fundraising are starting to get back into the game. But these are shaky economic times, and most founders will be coming back to a different world altogether.

George Arison, founder and co-CEO of Shift, has a few ideas on how entrepreneurs should approach fundraising in “the new normal,” whatever that means.

A tech platform that buys used cars off of individuals and sells them to new buyers, Shift has raised over $225 million over five rounds. But Arison has experience fundraising under difficult circumstances: In 2017, the company’s $38 million Series C was a down round, where Shift had to raise money at a lower valuation than it did for its Series B.

In a fundraising world where many companies have been “massively” overvalued, Arison expects these conditions to shape the new normal.

“I think flat is going to be the new up round, to be honest,” he says. “Some companies will do up rounds — like Stripe. But most companies are going to have a much harder time with capital.” On an episode of How I Raised It, Arison shared his top fundraising tips for when times get tough — from how to pick VC partners strategically to successfully navigating a down round.

Lean in to “no” and go for investors who will reject you

When Arison was trying to raise Shift’s Series A, he cast a wide net in terms of the venture capitalists he spoke to and purposefully connected with VCs who might not invest in the company.

“I’m a big believer in talking to a broader range of people than founders normally would,” Arison says. “There are many benefits to getting to know really great investors, even if they don’t invest in you, because you’ll learn a lot from them. They’ll tell you things you otherwise might not pay attention to — and that information, over time, becomes really critical.”

Andreessen Horowitz Report: Crypto Not as Chaotic as It Appears


This post is curated by Keith Teare. It was written by Cointelegraph By Turner Wright. The original is [linked here]

Top venture capital firm Andreessen Horowitz looked at four key metrics for three cycles of cryptocurrency showing consistent growth.

IPOs, crypto funds and other things I missed this week


This post is by Alex Wilhelm from Fundings & Exits – TechCrunch

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

What a week it’s been. I’m exhausted. Not only are we another cycle deeper into the COVID-19 quarantine, but there seems to be more news than ever to sift through. I’ve fallen behind. So, today, this little column is taking look back at things that it missed but wanted to cover. (There may come a day when we run out of stuff to talk about, but it’s not coming any time soon.)

So let’s talk about a16z’s new crypto fund, recent economic data, the Ebang F-1, Lime’s layoffs, Procore’s IPO delay and fresh valuation, stocks, Luckin, and, if we have time, Twitter’s changing jobs data. Let’s get this all out of our heads and into the world.

Odds, ends

To annoy my editors, we’re using bullet points this morning. Bullet points are great way to convey a bloc of information in a neat format. Let the haters hate, we have a lot of ground to cover:

Fishtown Analytics raises $12.9M Series A for its open-source analytics engineering tool


This post is by Frederic Lardinois from Fundings & Exits – TechCrunch

Philadelphia-based Fishtown Analytics, the company behind the popular open-source data engineering tool dbt, today announced that it has raised a $12.9 million Series A round led by Andreessen Horowitz, with the firm’s general partner Martin Casada joining the company’s board.

“I wrote this blog post in early 2016, essentially saying that analysts needed to work in a fundamentally different way,” Fishtown founder and CEO Tristan Handy told me, when I asked him about how the product came to be. “They needed to work in a way that much more closely mirrored the way the software engineers work and software engineers have been figuring this shit out for years and data analysts are still like sending each other Microsoft Excel docs over email.”

The dbt open-source project forms the basis of this. It allows anyone who can write SQL queries to transform data and then load it into their preferred analytics tools. As such, it sits in-between data warehouses and the tools that load data into them on one end, and specialized analytics tools on the other.

As Casada noted when I talked to him about the investment, data warehouses have now made it affordable for businesses to store all of their data before it is transformed. So what was traditionally “extract, transform, load” (ETL) has now become “extract, load, transform” (ELT). Andreessen Horowitz is already invested in Fivetran, which helps businesses move their data into their warehouses, so it makes sense for the firm to also tackle the other side of this business.

“Dbt is, as far as we can tell, the leading community for transformation and it’s a company we’ve been tracking for at least a year,” Casada said. He also argued that data analysts — unlike data scientists — are not really catered to as a group.

Before this round, Fishtown hadn’t raised a lot of money, even though it has been around for a few years now, except for a small SAFE round from Amplify.

But Handy argued that the company needed this time to prove that it was on to something and build a community. That community now consists of more than 1,700 companies that use the dbt project in some form and over 5,000 people in the dbt Slack community. Fishtown also now has over 250 dbt Cloud customers and the company signed up a number of big enterprise clients earlier this year. With that, the company needed to raise money to expand and also better service its current list of customers.

“We live in Philadelpha. The cost of living is low here and none of us really care to make a quadro-billion dollars, but we do want to answer the question of how do we best serve the community,” Handy said. “And for the first time, in the early part of the year, we were like, holy shit, we can’t keep up with all of the stuff that people need from us.”

The company plans to expand the team from 25 to 50 employees in 2020 and with those, the team plans to improve and expand the product, especially its IDE for data analysts, which Handy admitted could use a bit more polish.

Andreessen Horowitz is reportedly raising as much as $450M for new crypto fund


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

The Financial Times reported Tuesday that Silicon Valley investment powerhouse Andreessen Horowitz (a16z) is seeking to raise $450 million for a second crypto-focused fund.

Citing "two people briefed on the matter," the FT said that the a16z "could finalise the new fund in about a week but has not yet placed a hard cap on its size, one of the people said."

A16z declined comment to the FT, and a representative for the firm did not immediately respond to The Block’s request for comment.

The investment firm’s first crypto-dedicated fund attracted $350 million in capital commitments in mid-2018, as previously reported. A16z also operates a crypto school for would-be sector entrepreneurs.

A16z is one of the industry’s biggest investment backers, investing in major firms like Coinbase, Libra and Polychain, among others. It has also invested in significant projects that form the Open Finance (DeFi) ecosystem such as Maker, Compound and dYdX. 

The company is one of a number of investment firms said to be in the process of closing or raising funds, as The Block’s Frank Chaparro noted in a column last month.

Where top VCs are investing in remote events


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

The novel coronavirus pandemic has rapidly moved companies into a remote-first world.

Nearly all of the world’s largest events have been canceled, put on pause or pivoted to online-only. In the tech world, event cancellations thus far have included SXSW, GDC, Mobile World Congress, Google I/O, Facebook F8, E3 and others.

As more and more hosts consider staging fully remote events as possible alternatives, we decided to take a deeper look into the venture-backed startups focused on supporting large-scale virtual gatherings, like Hopin and Run The World. To further understand the impact of COVID-19, we asked five leading VCs who have invested in or have knowledge of startups focused on remote events to update us on the state of the market and to share where they see opportunity in the sector:

Sarah Cannon, Index Ventures

Which trends in remote events/conferencing excite you the most from an investing perspective?

Where top VCs are investing in remote events


This post is by Arman Tabatabai from Fundings & Exits – TechCrunch

The novel coronavirus pandemic has rapidly moved companies into a remote-first world.

Nearly all of the world’s largest events have been canceled, put on pause or pivoted to online-only. In the tech world, event cancellations thus far have included SXSW, GDC, Mobile World Congress, Google I/O, Facebook F8, E3 and others.

As more and more hosts consider staging fully remote events as possible alternatives, we decided to take a deeper look into the venture-backed startups focused on supporting large-scale virtual gatherings, like Hopin and Run The World. To further understand the impact of COVID-19, we asked five leading VCs who have invested in or have knowledge of startups focused on remote events to update us on the state of the market and to share where they see opportunity in the sector:

Sarah Cannon, Index Ventures

Which trends in remote events/conferencing excite you the most from an investing perspective?

Arweave’s permaweb stops coronavirus censorship, raises $8M


This post is by Josh Constine from Fundings & Exits – TechCrunch

The Chinese government has been removing criticism of its coronavirus response from apps like Weibo, the local equivalent of Twitter. But before it can, that content is being saved, decentralized and highlighted thanks to Arweave’s permaweb. Today it’s announcing another $8.3 million in funding from Andreessen Horowitz, Union Square Ventures and Coinbase Ventures.

Arweave has developed a new type of blockchain based on Moore’s Law of the declining cost of data storage. Users pay upfront for a hundred years of storage at less than a cent per megabyte, and the interest that accrues will cover the dwindling storage cost forever. More than one million pieces of data are now stored on the permaweb, and nearly 200 apps have been developed.

That includes perma-apps like WeiBlocked, which crawls Weibo for content likely to be censored. It indexes these posts and decentralizes them in the storage of hundreds of Arweave nodes operated around the world. WeiBlocked later checks back to see if the content has been censored, and then highlights them on its permaweb site you can access from a standard web browser. “By censoring it, it puts it out of the control of the censor,” says Arweave founder Sam Williams. 

It’s like the Streisand Effect in product form. The act of censorship actually causes the sensitive content to become increasingly visible. The more the Chinese government tries to hide information about Dr. Li Wenliang, an early coronavirus whistleblower who was pressured into silence by Chinese police and later Continue reading “Arweave’s permaweb stops coronavirus censorship, raises $8M”

Investors Serve Up $53M In Series C Funding To Web Dev Platform Netlify


This post is by Jason D. Rowley from Crunchbase News

Developer platform Netlify announced it has raised $53 million in a Series C funding led by EQT Ventures. Prior investors Andreessen Horowitz, Kleiner Perkins, and Preston-Werner Ventures1 participated in the deal, which brings the San Francisco-based company’s total funding to $93 million.

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Valuations and other key financial metrics were not publicly disclosed by the company. However, in its announcement, Netlify did say that it’s tripled its customer base (to 800,000 users) and revenue year over year. The company says that 8 percent of internet users visit a Netlify-powered site each month.

In a public statement, Netlify’s co-founder and CEO Mathias Biilmann said “We started Netlify with the mission to empower developers and change the way the web is built. The growing number of developers signing onto Netlify daily and the latest investment in our business has validated that vision. With this funding we’re full-speed ahead delivering new features, investing in our enterprise-grade infrastructure and growing our team, to help more developers and businesses take advantage of the JAMstack.”

What is the JAMstack? It’s a web development architecture co-developed by Biilmann. The acronym stands for JavaScript, APIs and prebuilt Markup. Dynamic functionality is handled by client-side JavaScript; server-side operations get abstracted into composable APIs which can be called over HTTPS via JavaScript; and sites are served as static HTML which can either be written natively or be generated from source files written in Markdown format using a static site generator.2

The Continue reading “Investors Serve Up $53M In Series C Funding To Web Dev Platform Netlify”

$75M legal startup Atrium shuts down, lays off 100


This post is by Josh Constine from Fundings & Exits – TechCrunch

Justin Kan’s hybrid legal software and law firm startup Atrium is shutting down today after failing to figure out how to deliver better efficiency than a traditional law firm, the CEO tells TechCrunch exclusively. The startup has now laid off all its employees, which totaled just over 100. It will return some of its $75.5 million in funding to investors, including Series B lead Andreessen Horowitz. The separate Atrium law firm will continue to operate.

“I’m really grateful to the customers and the team members who came along with me and our investors. It’s unfortunate that this wasn’t the outcome that we wanted but we’re thankful to everyone that came with us on the journey” said Kan. He’d previously founded Justin.tv which pivoted to become Twitch and later sold to Amazon for $970 million. “We decided to call it and wind down the startup operations. There will be some capital returned to investors post wind-down” Kan told me.

Atrium had attempted a pivot back in January, laying off its in-house lawyers to become a more pure software startup with better margins. Some of its lawyers formed a separate standalone legal firm and took on former Atrium clients. But Kan tells me that it was tough to regain momentum coming out of that change, which some Atrium customers tell me felt chaotic and left them unsure of their legal representation.

More layoffs quietly ensued as divisions connected to those lawyers were eliminated. But trying to build software for third-party Continue reading “$75M legal startup Atrium shuts down, lays off 100”

Accolade Is Latest To Join Health Service IPO Bandwagon


This post is by Joanna Glasner from Crunchbase News

To launch a successful IPO in the current market environment, it seems to help to be a fast-growing health care services provider.

Shares of One Medical, a provider of primary care clinics and telemedicine, closed up nearly 60 percent in first-day trading a month ago. Since then, it’s largely held on to those gains.

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Progyny, a benefits management focusing on fertility, meanwhile, has seen its shares roughly double from its initial offer price back in October. While the broader markets have swooned, Progyny has held strong.

Now, another well-funded health service company is betting investor enthusiasm for the space will trump market skittishness. Accolade, a service provider that serves as a kind of go-between for consumers, employers and health insurance companies, is seeking to raise up to $100 million in an IPO, according to a prospectus filed late Friday.

The ups and downs of IPOs

Like most venture-backed companies on the IPO path, Accolade is posting both strong growth and persistent losses. Its most recent financials are for the ninth-month period ending Nov. 30, for which it reported revenue of $88 million, and a net loss of $49 million. For the corresponding period a year earlier, revenue was $60 million, with the same net loss of $49 million. (Accolade operates on a fiscal year ending in February, so results for its last full fiscal year are not yet available.)

The company’s pitch to investors is that its platform will see continued Continue reading “Accolade Is Latest To Join Health Service IPO Bandwagon”

Quantum Shop Rigetti Computing Has Raised Over $71M In New Funding, Per SEC Filing


This post is by Jason D. Rowley from Crunchbase News

Full-stack quantum computing company Rigetti Computing is on the fundraising trail, according to an SEC filing submitted by the company on Friday.

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According to the filing, the company has raised a little over $71 million of a round aiming to raise up to $83.85 million in fresh capital for the company. Rigetti Computing disclosed in its filing that the total amount raised and the total offering amount includes approximately $23.85 million1 from the conversion of convertible securities into equity in the company.

The filing states that, so far, 65 investors contributed capital to the round, and that the company received its first capital commitment for the round on Feb. 18, 2020.

Tomer Diari, an investor with Bessemer Venture Partners, is a new addition to the company’s board. It’s typical for lead investors to take a board seat following a deal, so it’s likely that Bessemer is the lead investor in Rigetti’s latest round.

According to Crunchbase data, the company has raised nearly $120 million in prior funding. Rigetti’s last round was a $50 million Series B deal closed in November 2017.

Depending on whether the convertible securities mentioned in today’s filing were previously reported, the company has now raised between $166.7 million and $190.5 million, and it is authorized to raise $12.8 million more in this offering.

The company’s valuation and information about which investors participated in the deal have not been disclosed at this time. Previously Continue reading “Quantum Shop Rigetti Computing Has Raised Over $71M In New Funding, Per SEC Filing”

Roblox Building A Busier Platform With $150M Series G Andreessen Horowitz-Led Round


This post is by Sophia Kunthara from Crunchbase News

Gaming platform Roblox raised $150 million in a Series G round led by Andreessen Horowitz’s (a16z) Late-Stage Venture Fund.

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The new round, which included participation from new investors Temasek and Tencent Holdings, brings Roblox’s total funding to more than $335 million, according to CrunchBase data.

Roblox recently reached 115 million monthly active users and more than 1.5 billion hours of monthly engagement.

“If early-stage venture is about asking ‘What if it works?’, later-stage venture is about asking and assessing, ‘Is it working?’,” a16z general partners David George and Marc Andreessen wrote in a blog post on the firm’s website. “With largely organic user sign-ups, highly recurring purchase behavior, a high margin structure for the platform, and a super strong value proposition for users (who derive hours of entertainment at a lower cost than they can find elsewhere), Roblox is cash flow positive. Roblox is working.”

Along with the new funding, Roblox has a secondary offering of up to $350 million to provide liquidity for early employees and stakeholders, according to a statement from the company. The company is now valued at $4 billion, according to The Wall Street Journal.

Roblox last raised money in July 2018, when it pulled $150 million for its Series F, according to Crunchbase. Its other investors include Index Ventures, Greylock Partners and Tiger Global Management.

 

Illustration: Li-Anne Dias.

The post Roblox Building A Busier Platform With $150M Series G Andreessen Horowitz-Led Round appeared first on Crunchbase News.

NY-Based K Health Raises $48M Series C For AI-Powered Primary Care Application


This post is by Mary Ann Azevedo from Crunchbase News

K Health, a primary care consultant powered by artificial intelligence, announced this morning it has raised a $48 million Series C round.

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14W and Mangrove Capital Partners led the round. Lerer Hippeau, Anthem, Primary Ventures and others also participated in the financing, bringing the company’s total funding to $97 million since its November 2016 inception.

New York-based K Health has developed an app that uses AI and anonymized health records to augment the diagnoses of health problems. It claims to be the first startup to use true AI in consumer health at the primary care level, as our Holden Page wrote at the time of the startup’s $12.5 million Series A.  The company launched its consumer product in mid-2018.

How it works

K Health works by leveraging AI-driven health data that was accumulated over two decades by tracking billions of anonymized health events. (That data was collected by Maccabi, the second\-largest HMO in Israel.) K Health has taken that data to create a predictive model aimed at enabling people to learn more about their health by comparing themselves to other people with similar characteristics such as gender, age, symptoms and medical history.

Users can chat with a licensed doctor for a diagnosis and prescription for $14 for a consultation, or $39 for an annual subscription, according to co-founder and CEO Allon Bloch.

“K uses technology to reduce barriers to quality primary care,” he said. “Our users are able to Continue reading “NY-Based K Health Raises $48M Series C For AI-Powered Primary Care Application”

Andreessen Horowitz Raises $750M For Its Third Bio Fund


This post is curated by Keith Teare. It was written by Jason D. Rowley. The original is [linked here]

On Tuesday, Andreessen Horowitz (often abbreviated as “a16z”) announced it raised $750 million for it’s third fund, earmarked for biotechnology and health care investing.

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Fund III is the largest in this series of funds. Andreessen Horowitz’s previous biotech and health care funds came in at $450 million for Bio Fund II (announced in December 2017) and $200 million for Bio Fund I (announced in November 2015).

According to Crunchbase data and announcements on Andreessen Horowitz’s blog, the firm has made investments in dozens of companies in the health care, biotechnology and pharmaceutical sectors.

In its announcement for Fund III, the firm’s managing directors said “[t]ech, biotech, and our healthcare system are merging—into what we call simply ‘bio.’ And whether for pharma, hospitals, or investors, bio is now officially the hot new thing.”

The firm’s portfolio companies are operating on several sides of this emerging sector.

Take Devoted Health as an example. It’s a broker of Medicare Advantage plans. Andreessen Horowitz led the company’s $300 million Series B round in October 2018.

More recent additions to the portfolio include cancer drug company Erasca and The One Health Company, which develops cancer treatment protocols for dogs, and medical data management upstart Ciitizen.

“We are now approaching a new ability to rethink bio’s biggest problems, from intractable diseases and massive inefficiencies or disparities in an overburdened health care system, to what we eat, what we wear, what we build, even how we heal our Continue reading “Andreessen Horowitz Raises $750M For Its Third Bio Fund”

Controlling AI

AI can do a lot of specific tasks as well as, or even better than, humans can — for example, it can more accurately classify images, more efficiently process mail, and more logically manipulate a Go board. While we have …

The post Controlling AI appeared first on Andreessen Horowitz.

Explaining AI

From movie recommendations to medical diagnoses, people are increasingly comfortable with AI making recommendations, or even decisions. However, AI often inherits bias from the datasets that train it, so how do we know we can trust it? Dr. Harry Shum, …

The post Explaining AI appeared first on Andreessen Horowitz.

Investing in WorkBoard

Running a business is hard there are many things a team could be doing, but only a small number they should be doing. Organizations waste a lot of mental calories figuring out where to focus and trying to track

The post Investing in WorkBoard appeared first on Andreessen Horowitz.

The crypto rich find security in Anchorage

Not the city, the $57 million-funded cryptocurrency custodian startup. When someone wants to keep safe tens or hundreds of millions of dollars in Bitcoin, Ethereum or other coins, they put them in Anchorage’s vault. And now they can trade straight from custody so they never have to worry about getting robbed mid-transaction.

With backing from Visa, Andreessen Horowitz and Blockchain Capital, Anchorage has emerged as the darling of the cryptocurrency security startup scene. Today it’s flexing its muscle and war chest by announcing its first acquisition, crypto risk modeling company Merkle Data.

Anchorage Founders

Anchorage has already integrated Merkle’s technology and team to power today’s launch of its new trading feature. It eliminates the need for big crypto owners to manually move assets in and out of custody to buy or sell, or to set up their own in-house trading. Instead of grabbing some undisclosed spread between the spot price

Continue reading “The crypto rich find security in Anchorage”

The Promise of Cloud-Native Games

Much of the buzz around cloud gaming has centered on its potential to “kill the console”—to remove the need for local hardware to play games. But the ongoing focus on hardware fails to grasp cloud gaming’s true potential. The real

The post The Promise of Cloud-Native Games appeared first on Andreessen Horowitz.