CNBC reported that Chime, the San Francisco-based company offering a mobile phone app to help members avoid bank fees and save money automatically, announced a $485 million Series F funding round that values the company at $14.5 billion.
Video game software developer Unity priced shares for its IPO at $52 each, above the projected range, setting an initial valuation of $13.7 billion.
The final share price is far higher than Unity’s initial and amended price ranges. In a filing earlier this month, the company set a price range of $34 to $42 per share. In an amended filing it raised the range to between $44 and $48.
The offering is one of several hot tech deals to make it to market this week while the IPO window remains wide open. Its pricing follows an even larger market debut from data warehousing company Snowflake as well as a smaller one from cloud software provider Sumo Logic.
San Francisco-based Unity reported $351.3 million in revenue for the first six months of 2020, up from $252.8 million during the first half of 2019. Its net losses also shrunk from $67 million in the first half of 2019 to $54 million in the first half of 2020.
Unity previously raised at least $1.3 billion in funding from investors including Sequoia Capital and Altimeter Capital. It last raised money with its $125 million Series E in May 2019, per Crunchbase.
TikTok and WeChat face US ban: The U.S. Commerce Department announced this morning that it is enacting prohibitions on transactions relating to mobile apps TikTok and WeChat in what it described as a move to safeguard national security interests.
NS8 founder charged with fraud:Adam Rogas, the co-founder of fraud prevention startup NS8 who abruptly resigned as CEO earlier this month, is facing fraud charges after he was arrested Thursday by the FBI in Las Vegas. Per Forbes, Rogas is accused of misleading investors who poured $123 million into his company earlier this year.
Of all the stages of venture funding, Series B is perhaps the most telling indicator of startup investor confidence. That’s the point at which most new companies have either folded or proven potential for major scaling. For backers, it’s still plenty risky, but no longer a long shot.
Previously, we’ve compared the Series B stage to a final on-ramp to the highway. Companies are expected at that point to have proven technology, early indications of market demand, and, for tech startups, at least some revenue (for biotech, clear progress toward clinical trials). The next stop is Series C, where the scaling accelerates.
In an attempt to see how Series B deals are panning out in this pandemic-impacted investment era, Crunchbase took a look at 2020 U.S. funding at this stage. We compared investment totals to previous years, spotlighted standout rounds, and took a look at how sector and geographic preferences are shifting.
The general picture shows a pretty healthy startup ecosystem, with robust funding across a broad swathe of industries. Delving a little more deeply, we can see some shifts underway, including perhaps some early indications that California may be losing its dominance as the epicenter for scaling startups. We unpack some of the numbers below.
Funding Is Holding Steady At High Levels
The big picture: Series B funding is holding up. Overall, investors put $15.3 billion into U.S. Series B deals so far this year, according to Crunchbase data. That’s roughly on par with the same period last year.
If the current fundraising pace continues, 2020 Series B* totals will likely turn out roughly the same as 2019, which was a particularly strong year. For perspective, we’ve charted total U.S. Series B investment for the past five years:
As usual, really big rounds boosted the total. Although the median U.S. Series B round is around $20 million, there have been lots of funding rounds far larger than that.
Supergiant rounds of $100 million or more were particularly prevalent. Out of more than 450 total Series B deals this year, there were 37 for supergiant rounds, per Crunchbase data. We lay out the five largest in the chart below.
Biotech, Fintech And More
Among the largest Series B rounds this year, biotech was by far the best represented sector, with about half of the supergiant fundings going to companies with ties to the space. It’s not unusual to see the industry lead for larger rounds, given that costly clinical trials make biotech one of the most expensive sectors for scaling a startup.
Overall, biotech, life sciences and health accounted for more than 43 percent of Series B funding. Telehealth in particular has been a popular area for investment. Although that’s true across stages, we did see a number of good-sized rounds at Series B specifically, including virtual and in-person care provider Carbon Health, telemedicine platform Lemonaid Health, and Kaia Health, which offers digital therapy for musculoskeletal pain.
Other areas that saw a high amount of Series B activity include fintech, security and e-commerce. Companies across a wide swath of industries are identified as having an artificial intelligence focus, indicating that AI continues to be in favor with investors.
California Sees Shrinking Share Of Series B
One standout trend in our Series B analysis is a shrinking share of funding going to Golden State companies.
Particularly significant is that only one of the 10 companies that secured the largest Series B rounds this year is based in Northern California. And that one—autonomous vehicle technology developer Pony.ai—has significant operations in China along with headquarters in Fremont, California.
Certainly, there’s been no giant exodus yet. Companies in California secured 43 percent of all Series B dollars so far in 2020, with the vast majority of that going to the San Francisco Bay Area.
But if you compare to past years, the relative share is down. In fact, it’s the first time in more than five years that the state took in less than half of all Series B money.
What’s going on here? We’re speculating, but it could have something to do with the high cost of scaling a company in the San Francisco Bay Area. Pricey and scarce housing, high living costs, high taxes and an expectation for bigger salaries are all factors that make it far more expensive to build a unicorn-scale company in the global technology capital than most other places. Going forward, it’s sadly also plausible that climate change worries could prompt more movement away from West Coast cities, particularly with the current wildfire season—the worst on record.
When looking at where some recipients of the largest Series B rounds are located, it’s possible that lower scaling costs were a factor. Two companies on the top 10 are from Dallas and another two are from Atlanta. Those are both places known for lower living and operating costs relative to other major U.S. metros.
That said, New York and Boston were also home to several of the top funding recipients. While no one considers those cities cheap places to build a business, Boston is a leading biotech hub and New York is big for fintech, so they benefit from more Series B investment in these areas.
Another purely speculative possibility is that the absence of face-to-face networking this year favored companies seeking funding from VCs outside their local areas. The logic here is that in normal times, one might expect a Silicon Valley VC to take more meetings with nearby founders and fewer with faraway ones. But when all meetings are online, geography becomes less of a factor.
At any rate, a shift away from California at the Series B stage suggests that the next generation of U.S. unicorns and decacorns may be less concentrated in San Francisco and Silicon Valley. For now, it’s still early innings and we’ll see if the trend persists when in-person networking resumes.
Year-to-date totals for 2020 are as of approximately September 10.
Finch is targeting millennials, of which not even 1 out of 5 have an investment account. As a result, they are losing out, founder Neel Ganu told Crunchbase News. Finch is helping users earn returns by automatically investing their checking balance into a portfolio designed to match their unique risk profile.
“Putting money to work is hard,” he said. “We want to make this simpler, keep people’s money within reach and flip the way it works today by empowering people to invest.”
There is no minimum amount for the account and no hidden fees. Once the investment account makes returns, those can be used to pay for items, Ganu added.
The new funding will go toward getting the product ready for launch in October. Finch is live in beta with 200 people using it so far, but there are more than 4,500 people on the waitlist, Ganu said.
This week, Grin announced a $4.3 million seed round to launch its digital orthodontic platform. It includes an app and an FDA-approved Grin Scope medical device that is designed to retract the cheeks in order to allow a full view of a patient’s mouth. The platform provides remote monitoring tools in partnership with local doctors.
The launch coincides with a strategic distribution deal with the 3M Oral Care Solutions Division (NYSE: MMM), which will be the first nationwide distributor of Grin Scopes.
The seed funding will be invested in developing disruptive technology that would allow for real telehealth in the dental-orthodontics space, CEO Adam Schulhof, DMD, said via email. Grin’s team doubled in the last year, and its plan is to invest in engineering resources to add functionality and tools for its doctor network and to bring new orthodontists onboard.
“Grin is investing to allow orthodontists to serve even more patients per practice to expand the offering to more people around the country,” he said “This means going beyond regular video chats and the EMR systems that we’ve grown accustomed to and leveraging bleeding-edge advances including incorporating the latest in image processing techniques.”
With the new capital, Zuper will continue to invest in platform innovations, as well as sales and marketing to fuel aggressive growth and expansion in North America and other regions. It will also invest in talent and is hiring across all functions in the U.S. and India.
ShoppingGives enables customers to support their favorite causes by creating a donation funded by the retailer with each purchase. On the retailer side, ShoppingGives helps them integrate cause-related campaigns across marketing channels while managing regulations, reporting and donations.
Product photos courtesy of Finch and Grin Illustration: Dom Guzman
Genetic sequencing giant Illumina is reportedly in talks to acquire Grail, the heavily funded cancer diagnostics startup it spun out in 2016, in a deal that could be valued at around $8 billion.
News of the potential purchase comes just a week after Grail filed to go public in what has been touted as one of the largest venture-funded biotech offerings in recent years.
Prior to the IPO filing, Grail had raised at least $2 billion in known funding from a long list of venture and strategic backers, including Illumina, Bill Gates, and ARCH Venture Partners.
Menlo Park, California-based Grail is focused on pioneering new technologies for early cancer detection. Its best-known offering is a multi-cancer early detection blood test that detects more than 50 types of cancer from a single blood draw.
Bunch raises $20M for mobile game socializing:Bunch, a startup that adds a social layer for friends in multiplayer mobile games, has raised $20 million in venture funding. General Catalyst led the round, which also including backing from multiple mobile game developers.
More SPACs hitting the market: Two new and very large blank check acquisition companies are hitting markets, with plans for a future acquisition. VG Acquisition Corp., a blank check company formed by Virgin Group, filed on Wednesday with the SEC to raise up to $400 million in an initial public offering. The same day, Apollo Strategic Growth Capital, a blank check company formed by private equity firm Apollo, filed to raise up to $750 million in an initial public offering.
New York’s dairy industry is looking for the next big thing in milk products. The New York Dairy Promotion Order Advisory Board partnered with corporate innovation consultancy VentureFuel on MilkLaunch, a new startup competition focusing on accelerating product innovation for milk in the state.
Product innovation takes into account what a consumer will buy. Within that, VentureFuel founder Fred Schonenberg has identified two big trends: personalization, or finding unique flavor combinations for dietary or global palates, and functional beverages–meaning those that are enriched and fortified, not just with vitamins, but to improve mood or specific functions.
One of the goals of the new program is to activate “would-be” dairy entrepreneurs to bring forward innovative ideas for new milk products, he told Crunchbase News.
“One of the great things going for New York is how diverse it is,” Schonenberg said. “You can bring cultures, flavors and tastes from home, mash that up, mix it with milk and bring it to the U.S. market.”
Entrepreneurs must have submitted an application for MilkLaunch by Sept. 15. The four finalists chosen will each get a $15,000 stipend and will compete for a grand prize. They also have the opportunity to collaborate with entrepreneurial mentors and top food scientists from Cornell University’s Food Processing Development Laboratory and Sensory Evaluation Program to improve their product’s safety, quality, labeling and product marketing practices, Schonenberg said.
“We are building something to help products get to market,” he added. “This isn’t about innovation theater, it is more about: Can we take these companies, accelerate them, go to market and make an impact on the industry?”
“Most big cities used to have small dairies around them, but now they don’t as land has become more expensive. Many people don’t think of New York as an agricultural state, but it is one of the top 10 or five states for agriculture production,” said David Anderson, Ph.D., professor and extension economist for livestock and food product marketing in the Department of Agricultural Economics at Texas A&M University, in an interview.
“Last year was bad for smaller dairy farmers, many of whom went out of production, forced out by low prices,” he added. “If they can foster some new innovation that builds on processing capacity, it may enable them to stay in business and get higher prices for milk.”
Here are some of the dairy trends that have become popular in recent years, according to Anderson:
Greek yogurt, such as Chobani, which strains out more water and whey to make it thicker;
Ultra-filtered milk products, such as Fairlife, which produces milk with less lactose and sugar and more protein than regular milk; and
Whey, a by-product of cheese-making, which has a lot of protein and is used to create high-protein drinks.
“Whey used to be worthless, something that they would throw down the drain,” Anderson said. “As fitness became more important, people started using whey in a lot of high-protein drinks, which has expanded the demand for dairy products, not necessarily just drinking milk.”
Renske Lynde is seeing similar innovation challenges. She is a general partner at 1st Course Capital, a firm that invests in entrepreneurs transforming the food system.
“Dairy is an old industry and is being forced to innovate,” Lynde said. “This is all showing that there are attempts to figure out how to innovate. However, adopting and innovation is a challenge.”
Others include the National Dairy Council’s New Product Competition and Rabobank’s FoodBytes program, a series of events that connect food industry leaders and investors with startup companies focused on food, agribusiness and technology.
Rise of plant-based ‘milks,’ other beverages
Investors have been active in backing both dairy and plant-based products for some time. Venture and seed backers have put capital into at least 54 companies over the past three years, making dairy or dairy-alternative products, per an analysis of Crunchbase data.
Companies on our funded startup list collectively raised approximately $2.5 billion to date. However, looking at only VC-backed startups paints a limited picture. For example, Impossible Foods raised about half of that total alone. In addition, companies, such as Oatly, producing oat milk, do not appear to be venture- or seed-funded or have not raised any VC-backed capital in the last three years.
Dairy-centric types of innovation competitions are a reaction to a rise in market share by plant-based and other beverage companies that have come on the market and sustainability concerns related to the dairy industry.
“It started a long time ago when there was an explosion in all kinds of drinks, giving people more choices, even bottled water,” Anderson said. “It’s really a much bigger picture than just the plant-based alternatives. Another trend that works against fluid milk consumption is how we live: we don’t eat cereal as much anymore because we can’t eat it on the way to work. Plus, kids drink a lot of milk at school, but that is not happening this year.”
Although fluid milk is on the decline, consumption of foods made by milk are experiencing the opposite. For example, cheese—with the exception of the cottage variety—yogurt and butter consumption are all growing.
Anderson attributes more pizzas and sandwiches being eaten for the rise in cheese use, while the elimination of trans fats in many foods, including butter, helped regain its popularity. People are even switching back to whole milk versus skim, especially in the organic milk varieties, he said.
In addition to falling consumption, dairy farmers have come under fire over sustainability concerns. Even plant-based drinks are not immune from similar criticism.
Two years ago, Emily Cassidy, who at the time was sustainability science manager at the California Academy of Sciences, explored the water and carbon footprint needed to make soy, almond and cow milk, as well as compared protein sources. She found that cow’s milk used more water and had a more significant carbon footprint than both the almond and soy, but the soy had more protein than the almond beverage.
Despite the sustainability challenges, Lynde said there are ways in which the dairy industry can be sustainable and promote health using innovation, such as robotics and milking equipment.
“From my perspective, the production method is ‘not the cow, but the how,’” Lynde said.
Berlin-based urban farming network Infarm said Thursday that it has raised $170 million in Series C funding that it will use for infrastructure, R&D and hiring.
The latest funding, which represents the first close of a $200 million round, was led by impact investing firm LGT Lightstone and brings Infarm’s total equity and debt financing raised to date to $300 million. Hanaco, Bonnier, Haniel and Latitude also joined the round, as did existing Infarm backers Atomico, TriplePoint Capital, Mons Capital and Astanor Ventures.
Infarm’s latest funding comes as venture investment in agricultural technology heats up. Venture capitalists have poured $4 billion into startups operating in the burgeoning agtech space in each of the past two years, a recent Crunchbase News analysis found. Through mid-August 2020, $2.6 billion had already been invested in the sector this year, putting 2020 on track to beat the previous two years.
Infarm was founded in 2013 by Osnat Michaeli and brothers Erez and Guy Galonska. It said Thursday that it wants to build out the largest urban vertical farming network in the world, scaling to 5 million square feet in farming facilities in Europe, North America and Asia by 2025.
Its vertical farms are centrally located in urban areas, in facilities like supermarkets, distribution centers and restaurants that place food production and consumption closer together. The facilities are also hooked up with cloud-connected smart devices that monitor plant health and resource consumption.
“The coronavirus pandemic has put a global spotlight on the urgent agricultural and ecological challenges of our time,” Infarm CEO Erez Galonska said in a statement. “At Infarm, we believe there’s a better, healthier way to feed our cities: increasing access to fresh, pure, sustainable produce, grown as close as possible to people.”
The company claims that because its facilities are centrally located and tech-enhanced, they’re vastly more efficient than the traditional farmland approach, using 99.5 percent less space than soil-based agriculture, 95 percent less water, 90 percent less transport, and no chemical pesticides. It has set a goal to reach zero-emission food production next year, but says that already 90 percent of its electricity usage comes from renewable sources.
“We are big believers in vertical farming as we see the traditional industry going through (much needed) rapid disruption these days,” Pasha Romanovski, co-founding partner of Hanaco Ventures, said in a statement. “We were deeply impressed by Infarm’s founders and management, with their ability to move fast and execute. What is extremely appealing about Infarm is their innovative and modular approach, using cutting edge technology that unlocks added value throughout the supply chain, benefiting both the retailers and end-customers. We see a massive demand in the market for sustainable, environment-friendly, and healthy food– and Infarm has just the right team in place to make this happen.”
Here’s a video Infarm produced of its facility in a Kroger in Seattle last year:
Long Beach, California-based Zwift, operator of an online fitness platform that provides indoor riding and running workouts immersed in virtual worlds, announced Wednesday that it has raised $450 million in a Series C round led by KKR.
The investment will go toward accelerating the development of the company’s core software platform and bring Zwift-designed hardware to market. Currently, users of the company’s platform interact, train and compete together by pairing an exercise bike or treadmill to the Zwift app, to power their in-game avatars.
The mega-sized funding round comes as the connected fitness space remains red-hot. Shares of rival Peloton have more than tripled since the company made its public market debut nearly a year ago, with the New York company now maintaining a market valuation of close to $25 billion, and Apple on Tuesday unveiled a subscription fitness service.
Long Beach, California-based Zwift, operator of an online fitness platform that provides indoor riding and running workouts immersed in virtual worlds, announced that it has raised $450 million in a Series C round led by KKR.
The investment will go toward accelerating the development of company’s core software platform and bring Zwift-designed hardware to market. Currently, users of the company’s platform interact, train and compete together by pairing an exercise bike or treadmill to the Zwift app, to power their in-game avatars.
The mega-sized funding round comes as the connected fitness space remains red-hot. Shares of rival Peloton have more than tripled since the company made its public market debut nearly a year ago, with the New York company now maintaining a market valuation of close to $25 billion.
Kahoot! acquiring Actimo: Oslo-based online education platform Kahoot! announced that it will acquire Danish startup Actimo ApS for up to $33 million in cash and stock. Founded in 2012, Actimo operates a mobile workspace for remote employees aimed at improving the way organizations connect with and engage their teams.
Enter Aidoc, a 4-year-old Israel-based startup providing artificial intelligence tools for radiologists. The company secured an additional $20 million for its Series B funding led by Square Peg Capital, which initially led the round that began in April 2019. The new funds bring the Series B round to $47 million and gives Aidoc a total of $60 million raised to date, according to Crunchbase data.
Aidoc’s products flag acute abnormalities directly in the radiology workflow. If the AI detects something, the tools alert the radiologist, Aidoc co-founder and CEO Elad Walach told Crunchbase News.
“What has happened in recent history is that scanners have become cheaper, so now there is more imaging, which is overloading a radiologist’s workflow,” he said. “Radiologists have two to three seconds to look at each image. At some point, you can’t go faster. With the adoption of new technologies, such as AI, an augmentation layer for imaging will be the standard of care.
Aidoc initially used the Series B for growth, which included increasing its FDA-cleared products from one to six. However, this year the COVID-19 pandemic helped accelerate the company’s decision-making, and Walach said he realized the opportunity for the medical imaging market was wide open with AI. The new funds will go toward increasing adoption of the technologies by physicians and adding new products.
The company has tripled its revenue since the beginning of 2020 and will make additional hires to add to its 100 employees, Walach added.
With Aidoc now running in more than 400 medical centers worldwide, Walach expects to increase that number to more than 500 by the end of 2020. In addition, the company plans to have 10 FDA clearances by next year, he added.
The New York-based startup helps banks and fintechs more quickly and safely onboard customers through a single application programming interface service and SaaS platform. It can also automate certain decisions that mitigate fraud and reduce burden on back office operations.
“All of the risk and fraud requirements to validate identity were designed for the brick-and-mortar world,” co-founder and CRO Laura Spiekerman told Crunchbase News. “In a digital world, they have to use third-party databases, such as credit bureaus. However, if someone doesn’t have a credit history, there is not that reliable data to make a risk assessment.”
As part of the investment, Canapi Ventures Partner Walker Forehand will join Alloy’s board of directors.
Forehand met Spiekerman and CEO Tommy Nicholas last year when the company was raising its Series A. At the time, Canapi was closing its fund and could not invest in Alloy, however, he stayed in contact with them.
Many of Canapi’s investors turned out to be customers of Alloy, and Forehand said he heard how much value they were getting out of using Alloy, and knew there was something there. Then during the COVID-19 pandemic, he saw the digital transformation happening combined with bank branches closing.
“It is becoming important to verify customers online, but at the same time, cybercrime has exploded since the beginning of the pandemic,” he said. “There are a number of factors coming together where automating digital onboarding makes for better outcomes.”
Meanwhile, Alloy has seen significant growth in the past year. It has nearly doubled both its recurring revenue and customer base, Spiekerman said. It has also grown 2.5 times in headcount.
As a result of the growth, the new funds will be used to build out its sales, marketing and engineering teams, as well as on product development. In addition to onboarding decisions, many customers have asked Alloy to utilize its technology to help make other decisions about identity, Spiekerman said.
“Demand has been so big, and with the pandemic, we could not anticipate what it would look like,” she added. “Banks are trying to grow through the digital transformation, and projects they had planned for 2021, they are trying to launch now, so a lot of their traffic is going into digital.”
Daniel Saks, president and co-CEO of AppDirect, touts the platform as a Shopify, but for businesses needing recurring digital services, offered via a single sign on.
The 10-year-old company, which has headquarters in both San Francisco and Montreal, raised $185 million in growth funding led by Caisse de Dépôt et Placement du Québec and existing investors. The company previously raised funds five years ago, a $140 million Series E round of funding led by JP Morgan Chase. Now, its largest round to date brings AppDirect’s total equity raised to approximately $465 million, Saks said.
Chris Arsenault, managing partner at Inovia Capital, one of AppDirect’s existing investors, said in a statement that the company’s platform is popular with organizations that have to consistently change the list of software applications they use to perform basic tasks.
“AppDirect has a proven business model and a solid client base that uses its platform daily to run their core operations,” he added. “For Inovia, this announcement is an important milestone in a longstanding relationship that has seen AppDirect flourish from a small startup to a major player in the cloud-based business services market.”
Since that last funding round in 2015, the company experienced a Gross Merchandise Value of more than 1,500 percent to over $1 billion, expanded its global footprint, and went from 100 merchants to more than 2,000 globally, Saks said.
An IMARC Group report estimates that the global anything-as-a-service subscription market will grow to more than $340 billion by 2024. AppDirect is poised to take advantage of that growth and will use the new funding to support organic expansion, consider strategic acquisitions, and make additional hires.
A few growth areas for the company are scaling its investment in the platform with digital engagement tools and investing in marketing and awareness. Despite being around since 2009, AppDirect continues to operate under the radar, Saks said. As a result, the company is launching a podcast called “Decoding Digital,” to help others learn how to navigate the digital transition.
“We see opportunity in investing in the platform and supporting our merchant and customer bases,” Saks said. “In addition, artificial intelligence will allow us to have visibility into buying behaviors so we can advise our businesses on actions they can take to boost their revenue and save on costs.”
Along with the funding news, the company announced that former LogMeIn COO Marc van Zadelhoff will join the Cambridge, Massachusetts-based company as its new CEO. Van Zadelhoff joined Devo’s board of directors in August, and now-former CEO Walter Scott will become chairman of the company’s board.
The new funding will be used to grow “all parts of the business,” van Zadelhoff said in an interview with Crunchbase News. The company will be expanding teams including sales, marketing, and engineering.
Devo had a year-over-year revenue growth rate of about 80 percent for the first half of 2020, van Zadelhoff said, and wants to maintain that as it scales. The company plans on growing its employee base by at least 25 percent by the end of the year, including through building out its team in Europe.
Van Zadelhoff has been working in security for more than 20 years, and pointed to the importance of log management–especially cloud-based log management–in the age of COVID-19.
“If you don’t collect logs and interpret them and ingest them and interpret them, you don’t know what’s happening with your business, you have no visibility,” van Zadelhoff said.
The company recently introduced a security function on top of its core platform, and expects to “double down” on that in the near future. Devo also is planning on a couple more releases of the security operation function, van Zadelhoff said.
Founded in 2011, Devo last raised money in 2018 with its $25 million Series C led by Insight Partners, per Crunchbase.
Data warehouse company Snowflake is set to start trading on the public markets on Wednesday in what’s expected to be the largest software IPO ever, according to Renaissance Capital.
Though it’s not necessarily a household name (it happens when you’re B2B software), Snowflake is a big deal. It’s a fast-growing company that’s well-capitalized and poised to be valued at more than $30.5 billion when it goes public.
We’ll be keeping an eye on the market when San Mateo-based Snowflake starts trading on the New York Stock Exchange on Wednesday, but until then, here’s what you need to know about the buzzy software company.
What It Does
In short, Snowflake is a cloud data platform. Customers can store data, exchange it, use it for data applications, and data engineering, among other things.
“Our platform solves the decades-old problem of data silos and data governance. Leveraging the elasticity and performance of the public cloud, our platform enables customers to unify and query data to support a wide variety of use cases. It also provides frictionless and governed data access so users can securely share data inside and outside of their organizations, generally without copying or moving the underlying data. As a result, customers can blend existing data with new data for broader context, augment data science efforts, or create new monetization streams. Delivered as a service, our platform requires near-zero maintenance, enabling customers to focus on deriving value from their data rather than managing infrastructure.”
Take a look back at the company’s funding and valuation history here:
In its S-1 filing with the United States Securities and Exchange Commission, Snowflake reported around $242 million in revenue for the six months that ended on July 31, 2020. That means revenue grew about 133 percent from the same period last year, when it came up with about $104 million in revenue.
The company reported $171 million in net losses for the six months ending on July 31, 2020. It lost $177 million during the same period in 2019, so losses have decreased year-over-year.
Translation: Snowflake is growing fast and getting its losses under control. Growing 133 percent year-over-year when you’re a company the size of Snowflake is no small feat, and says something about the appetite for the cloud data platform. The company had 3,117 customers as of July 31.
Early investors in the company will win big with the historic IPO. Among the biggest beneficiaries:
Here’s a breakdown of how many shares each currently owns:
Sutter Hill Ventures: 49,564,848 shares (17.4 percent) of Class B common stock
Altimeter Capital: 36,286,307 shares (15.1 percent) of Class B common stock
Iconiq Capital: 33,752,048 shares (14 percent) of Class B common stock
Redpoint Ventures: 21,928,585 shares (9.1 percent) of Class B common stock
Sequoia Capital: 20,619,156 shares (8.6 percent) of Class B common stock
Compared To Other IPOs…
Snowflake is huge. According to Renaissance Capital, Snowflake is expected to be the largest software IPO of all time.
The company initially set its price range between $75 and $85 per share. It then raised the range to be between $100 and $110 per share. If the company prices at the top of the range, it would value Snowflake around $30.5 billion.
Translation: For context, that’s much, much larger than the IPO valuations of any of the venture-backed tech or tech-ish companies that have gone public this year. Crunchbase News keeps a running list of venture-backed tech and tech-ish companies that go public via IPO, and so far ZoomInfo topped the list in terms of highest IPO valuation. ZoomInfo had an IPO valuation of $8.2 billion when it went public in June — if Snowflake prices at the top of its range, its IPO valuation will be more than three times that of ZoomInfo.
There are several tech companies going public this week and next week, but in valuation alone, Snowflake stands out.
VC firm Greylock Partners announced its sixteenth fund on Tuesday. The Bay Area-based firm raised $1 billion to invest in both enterprise-focused and consumer-facing businesses. The last time Greylock raised a round of this size was in 2016.
The firm hopes to bank on returns from portfolio companies expected to IPO soon. These include Airbnb and Sumo Logic. The latter is expected to go public later this week.
The firm plans to remain focused on seed and Series A investments, but will also be making growth-stage investments with the new fund, according to reports.
Other Greylock investments include chat tool Discord and social media business Nextdoor.com, which are both valued at more than $1 billion. Greylock’s limited partners include organizations like Management Leadership for Tomorrow and institutions like Princeton University.
As part of the investment, Luiz Ribeiro, principal at General Atlantic, will join dLocal’s board of directors.
Founded in 2016, dLocal handles payins and payouts in 20 emerging markets for 450 of the largest global e-commerce and marketplace companies, such as Spotify, Zara and Google. The company says it connects with more than 300 alternative payment methods.
“Payments is a fragmented world,” Kanovich said. “No one size fits all, and it is the merchant’s responsibility to keep up. It is frustrating to find something you want to buy and not be able to finalize the payment or to pay someone. We want to make sure that money gets to them.”
The company will use the new funding to expand into 13 new markets within Central America, Africa and Southeast Asian countries over the next 18 months, he said. Additionally, it will make new hires to its approximately 285-person workforce across all of its current and new markets.
Profitable every year, dLocal has achieved over 100 percent annual organic growth over the past four years, Kanovich said. However, since the company is doubling down on its strategy he wanted to bring in partners, such as General Atlantic and Addition, tapping into their expertise to grow it on a bigger scale, he added.
Next up, the company plans to continue to listen to its customers and go after new opportunities such as products for fraud prevention and credit cards.
“We would be expanding less and at a slower pace without this investment, but we acknowledged that we needed to be in more places,” Kanovich said. “This amount of geography is not easy to do, and there is a lot to be done. We think there is huge potential in Africa as well as the few holes left in Latin America.”
The company creates cloud-native data catalog maps of an enterprise’s data, such as business concepts, and turns the it into one body of knowledge that anyone can explore for insights and recommendations on related assets.
“The crazy reality of this space is how bad the data silo problem is, not just here, but all over the world,” CEO Brett Hurt told Crunchbase News.
The new funds will be used to ramp up sales and marketing, product development, and establishing new partnerships, Hurt said.
Due to the pandemic, many of the big conferences that drove data.world’s leads were canceled, but the company was still able to meet its lead generation goals, he added.
“That was a bright greenlight for opening up the aperture for more spending on sales and marketing,” Hurt said. “We also will spend time pioneering agile data governance, which is an important need in the data cataloging industry because you have to be careful what data goes to what person.”
Two of the company’s current partnerships include Manta, an online resource dedicated to small business, and cloud data platform Snowflake. Hurt said customers can set up a data catalog on Snowflake in approximately 10 minutes, whereas it can take six to 12 months to do the same with competitors.
Next up, the company will be expanding into new vertical industries in the U.S. with its knowledge graph.
“So far, we haven’t found a vertical that doesn’t have a data silo problem,” Hurt said. “As for our knowledge graph, it is a really killer technical differentiator for us, so we will continue to light that up so that it lights up the dark data within a company.”
Taub, managing partner at Hetz, discussed the fund’s strategy with Crunchbase News.
Tell us about the new fund.
We raised this fund completely during the COVID-19 pandemic, starting in April and closing in July. We make early investments solely in deep tech, especially in techy founders going after big markets. The vast majority of investors came out of Israel.
We plan on investing in between 12 and 14 companies, and we have invested in two companies with the new fund, but they have not been announced yet.
What’s your investment strategy?
For every dollar invested, we reserve two. We are high-conviction investors, and when we invest we often know how this will play out. From the first meeting with a founder to the investment, it typically takes the firm four weeks or less and we have never given a term sheet. We often double down in the B2B enterprise tech space and will write slightly larger checks. With this fund, it has been $1 million to $3.5 million so far. We are winning deals more than ever so we get to cherry-pick.
Within the B2B enterprise tech space, what are the hot areas?
We think artificial intelligence, development operations, fintech and cloud computing. For all of those areas, there is no better place than Israel. The country’s entrepreneurs are having a disproportionate effect on the world.
Do you have any plans to invest in U.S. companies?
We’ve invested in multiple companies that sit in the U.S. As our companies progress, they usually always move to the U.S., and the vast majority have already acquired U.S. clients and offices. We push our startups to go global faster than others.
How has the pandemic affected your portfolio?
We are bullish on COVID-19. Our companies look for a crack in the market, and it is an earthquake right now. We measure startups every quarter, and in the last two quarters our companies have shown higher results than ever in quality and quantity. That is another point that allows us to attract other companies. In fact, we are run by young, agile individuals, just like a startup, so the people running Hetz today are the people we invest in typically.
Airmeet’s platform features a ballroom-style social lounge with virtual tables for serendipitous encounters and a “speed networking” lobby where participants can spontaneously meet and make new connections in one- to-five-minute increments.
Although the company focuses on helping event organizers host interactive and immersive events ranging from a professional meetup to a large-scale festival, the origins of the company came from being a remote company, Mangal said.
“In India, there is not enough awareness of remote work,” he said. “More people are moving out of big cities, and this is a new way to build connections.”
Airmeet will use the new funding on product development and accelerating growth in regions of importance. In addition, the company plans to grow its team from 60 to 100 across six countries.
Until now, much of the company’s growth has been by word of mouth, with more than 10,000 events hosted on the platform since July, Mangal said. The goal is to support 10 million people on the platform and to host more than 1,000 events per day.
Abhishek Mohan, vice president of Sequoia Capital India, said in a statement that the COVID-19 pandemic has shifted behaviors in many industries as digitization has gained in popularity. As a result, the global online events space, which is poised to grow nearly tenfold to $744 billion in the next 10 years, is ripe for market leaders to drive the transition to online events.
“Airmeet’s mission is to create a global platform to enable millions of community managers and event organizers across the world to engage with and expand their audience,” he added. “And with Lalit and [his] team’s focus, execution and innovative thinking, they are strongly placed to achieve their goal.”
Social Lounge photo courtesy of Airmeet Illustration: Li-Anne Dias
Plants produce phytonutrients to support their growth and protect against pathogens or predators. In humans, phytonutrients support health with anti-inflammatory, cardioprotective and neuroprotective activities, Flatt said.
“We know so little about the plant kingdom, so we want to explore the relationship between plants and humans,” he added. “We will investigate how plant-based diets lead to longer life spans.”
Forager is able to explore 99 percent of the compounds in the plant kingdom that have not yet been investigated. The platform has already quadrupled the world’s knowledge of phytonutrients, and is on track to shorten the time of exploration from 50,000 to five years, Flatt said.
All of that will help Brightseed more rapidly innovate to develop products for the consumer. In June, the company signed a multiphased partnership with Danone North America to use Forager to find previously unknown nutritional benefits of plant-based ingredients within Danone’s product portfolio.
Brightseed plans to use the new funding to deepen its understanding of plant compounds, expand its operations to support a growing number of partners, and complete development and commercially launch its first phytonutrient discovery.
The company is also partnering with researchers to look at fatty liver disease, one that afflicts one-third of the world’s population and does not have a therapeutic treatment, Flatt said.
“The solution to fatty liver disease is a better diet,” he added. “We have already found phytonutrients in 80 plants, such as peppercorn. However, peppercorns add a lot of heat, and not everyone can tolerate that, so we are looking at how to get the phytonutrient’s essence into something people can tolerate.”
Next steps for Brightseed
Meanwhile, Brightseed has been steadily growing since the company was founded three years ago. It started with discovery scientists and then began to build out a product development team. The company is now bringing on its first commercial team hires to put Brightseed in position to launch the phytonutrient product and expand its reach.
The company will be able to sustain that growth over the next few years with this capital raise, Flatt said.
As part of the investment, David Russell, operating partner at Lewis & Clark AgriFood, has joined Brightseed’s board of directors.
“Brightseed’s application of technology is transforming how we understand the resources available for our health and well-being in nature,” Russell said in a written statement. “These discoveries already have a major impact on ingredient selection and how we’re formulating the things we consume every day. This is a new approach that provides a much deeper understanding of the biological connections between plants and people.”