PANDEMIC VENTURE INVESTMENT SERIES EPISODE 2: MOBILITY

Michael Dick, CEO, C2A Security

Graham Gullans, VP Business & Corporate Development, Superpedestrian

Adi Pinhas, CEO, Brodmann17

Yakir Machluf, OurCrowd Mobility Lead

Watch the full episode here.

As the coronavirus pandemic challenges the world of transportation and mobility, the crisis is also offering opportunities for new technological solutions, from electric scooters to self-driving cars, according to some of the leading entrepreneurs in the sector.

“The mobility sector is among the hardest hit due to Covid-19, seeing one of the greatest declines in history,” said Yakir Machluf, mobility lead for OurCrowd, whose portfolio includes dozens of mobility startups. At the beginning of the pandemic, many car manufacturers shuttered operations as much of the world went into lockdown. Although manufacturing has now resumed, it is slower, and other aspects of mobility, including public transportation and ride-hailing apps continue to see a downturn in users.

At the same time, more people have turned to alternative modes of transportation, including bicycles and scooters.

“The entire way in which people and goods move around has changed,” Machluf said in the second episode of the Pandemic Venture Investment Series, co-sponsored by OurCrowd and Anthony Scaramucci’s SALT. “And some would say for the better.”

The increased reliance on these so-called micromobility systems, like electric bikes, opens up opportunities for investors and entrepreneurs in the sector, said Graham Gullans, vice president of business and corporate development at Boston-based Superpedestrian Fleet Solutions, which makes electric scooters with onboard and cloud-based software to automatically and constantly perform maintenance and safety checks.

Superpedstrian’s scooters, which operate under the brand name LINK, have been deployed in multiple US cities and Rome, and are now in trials in the UK.

Not only did the pandemic push more people to try these methods of transportation, it also resulted in cities quickly making changes to better accommodate them, including closing roads to cars and adding bike lanes and bike racks, Gullans said.

“With cities and public policy, things are typically difficult to change, they take time,” he said. “But now, cities are really promoting more options for mobility, specifically micromobility, because micromobility is preferable when you are in the open-air environment, and you don’t face the public health challenges of public transport with people being close to each other.”

People use the new mobility options for tourism, recreation and also for daily tasks and errands, and the average ride distance has doubled, he said. Gullans is hopeful that the pandemic will also push the sector to become more cost-efficient and develop in additional locations, including in smaller cities and towns.

Shared electric bike and scooter systems have largely been limited to big cities, where there is constant high user demand, he explained. Operating costs are high, including for large numbers of employees to constantly monitor and maintain the shared vehicles. Superpedestrian’s technology aims to change this by eliminating much of the need for people to monitor and check on the vehicles, cutting costs and increasing safety in fleets, and also making the systems economically feasible in places with lower use volume.

“When you can lower your costs, your market and the promise becomes so much bigger for micromobility,” he said.

Meanwhile, the pandemic slowdown has forced companies in the car sector to rethink their business plans and how they will recover and compete in the future, explained Adi Pinhas, co-founder and CEO of Tel Aviv-based Brodmann17, which makes and develops software for automatic driving functions, especially for the mass market.” As in many other cases, Covid accelerated decisions that should have been made earlier,” he said. “People are regrouping, making more solid plans.”

It has especially helped make it clear to car-manufacturers that fully self-driving vehicles, especially for the mass market, are still probably a decade away, Pinhas said. In the meantime, consumers and new safety regulations are increasing demand for more automated elements in vehicles, like automatic emergency-braking systems and self-parking. Manufacturers are increasing investment in such features, even in lower-end cars.

“Now that there are not going to be autonomous vehicles anytime soon, they realize we need to take care of the driver to create systems that are going to make the car more efficient, more comfortable, and safer,” Pinhas said, explaining that his company has seen steady business despite the pandemic. “Now they have a gap to close, so they are working with us.”

As car companies consider the path to economic recovery, they are considering more seriously the need for cyber security, especially as regulations increasingly require it, said Michael Dick, founder and CEO of Jerusalem-based C2A Security, which provides an automotive cyber-security management platform and other solutions.

“There is no way back,” Dick said.

In addition to forcing the mobility industry to look forward, the pandemic has also changed the way these startups work, often with surprising success. As working remotely has become the norm, Superpedestrian has expanded its talent pool by hiring outside its base in Boston. And executives at Brodmann17 and C2A said the broader industry acceptance of remote demos and sales, rather than in-person meetings, has also allowed them to be more efficient.

“You never want to let a crisis go wasted,” Gullans said. “There’s always short-term challenges, but also open opportunities.”

View the full episode here.

For more information on the SALT Talks-OurCrowd Pandemic Venture Investment Series click here.

The post PANDEMIC VENTURE INVESTMENT SERIES EPISODE 2: MOBILITY appeared first on OurCrowd Blog.

OurCrowd Blog

The Big Score: why the pandemic won’t stop VCs from reaching into their pockets

The Big Score: Fortino en Smartfin interview

COVID-19 brought a lot of uncertainty in the markets. Generally, investors are not too fond of uncertain results. At the European-focussed funds of Smartfin Capital and Fortino, experience and a bit of luck get them through the pandemic quite nicely. Both VCs are present on the VC-track of The Big Score, to scout the next big thing in B2B startups.

VC-nominated startups pitching for investors

At The Big Score, high growth startups have the opportunity to score funding or sales. The event, organised by Scale-Ups.eu, brings B2B startups in close contact with large corporations looking for innovation and ‘deep pocket’ VCs ready to invest. 

The 2019 edition of The Big Score resulted in some big numbers. 400 international VCs and corporate ‘buyers’ were present for over 1400 one-on-one meetings with 75 European startups. The second and third day of the event is all about meeting the VCs. During the two days VC-track, nominated startups and scaleups are pitching their solutions to international tech investors and corporate sourcing profiles.

Two of the VCs that are scouring the event for startups ready to make an impact are Belgian Fortino and Smartfin, both with an international portfolio that is ready for expansion. But with the ‘new normal’ caused by the pandemic, a lot of uncertainty surrounds the future. How willing are investors still to stick their necks out and write a cheque?

‘Sometimes you need a bit of luck’

“We mostly focus on B2B software startups. In that area, there has never been a lot of uncertainty,” says Jurgen Ingels. He is founding partner of SmartFin, a private equity fund with a strong focus on emerging B2B platform companies in fintech, telecom and infrastructure. Their portfolio consists of companies from the Benelux and the Nordics, including Roamler, Divitel and EyeSee. 

As a sign that B2B software startups are generally fairing well, Ingels only has to look at his portfolio. “Generally the cashflow is good. And these are creative entrepreneurs, they can adjust very quickly.” In some cases, they even got lucky and business boomed. Ingels: “One of our companies offers a platform for takeaway food. With restaurants closed, they are doing really well. Sometimes you need a bit of luck in this business, as you can’t predict everything all the time.”

“The philosophy of our fund is to save companies time. We can do that through technology, by investing in startups that help other businesses safe time. During COVID, that has been an increasingly important factor,” explains Ingels. “Formula One driver Ayrton Senna once said that he prefers to drive in bad weather. That’s when he can overtake more easily. There is always something you can’t foresee, but despite COVID, we also go full steam ahead.”

‘Willingness to invest’

Some investors get lucky in these times, but they can’t fair blindly on luck alone though. What is apparent for Renaat Berckmoes, is that VCs are pooling their resources, especially in the Benelux. “Tickets of 4 million and higher are now rarer than before the pandemic. I think this is because they don’t want to take as much risk as they did previously. There is a willingness to invest, just for smaller amounts.” 

Berckmoes is a partner at Fortino. Venture activities take place from two separate funds, solely focussed on B2B software companies. The Belgium VC has startups from Northwestern Europe in its portfolio. Among them are Bloomon, FoodDesk and Teamleader. 

“Companies in our portfolio have come through largely unscathed,” says Berckmoes. All of them report growth, some faster than others. Many of them are right in the middle of the move to the cloud that enterprises are making. The move to working from home and remote access has pushed this whole movement forward. We do see that offering a plug and play solution is very important. A drawn-out implementation process has a negative impact.”

‘Watch the cash burn’

One of the reasons Berckmoes’ companies haven’t been suffering from the fallout of the pandemic, has been some solid advice: “we already considered 2020 to be a year of recession”, says Berckmoes. “So we urged our portfolio companies to watch their cash burn.” 

As soon as COVID-19 started to shut down Europe, they doubled down on this wisdom. “We told them to reduce costs and spend as little as possible. At many of these companies, a lot of money is being put in R&D. This is something you can control yourself. Cut everything you don’t need, bite the bullet.”

Berckmoes also told them to contact existing investors for interim funding. Some of them were able to think outside the box to salvage their revenue, like FoodDesk which shifted its business from Dubai to the Nordics overnight.

‘Every company has a dip’

At SmartFin, Ingels was also able to share his experience with the founders of companies in his portfolio. “We urged them not to give up. There is no company, not even Apple or Google, that hasn’t had a dip. Dare to cut costs, even if it is only for a couple of months.” Another important aspect of a business in rough weather is the people working in it. “Surround yourself with good people. A good team with a bad product can have success. It doesn’t work the other way around.”

What to look for at The Big Score?

Both SmartFin and Fortino are part of the VC-track of The Big Score, where VC nominated startups have the opportunity to pitch their business for an audience of investors. Berckmoes has a couple of points he’ll be paying attention to when deciding to continue doing business with a startup he meets at the virtual event. 

“The most important thing for me is; how good are the founders. They need to grow with the company. To scale up a business from 7 to 250 employees in two years is hard. You need to be an entrepreneur to start a business, but a manager to allow it to grow.”

Berckmoes will also be looking at how disruptive the product can be, while international ambitions are also important to gain his attention. Benelux is an interesting starting point. But with a small market and tricky language, Berckmoes wants startups to look beyond that: “I want them to think internationally from their day one, so a company can quickly outgrow Benelux. 

For Ingels, passion is the main driver of success. “I want entrepreneurs that wake up their spouses at 3.00 in the morning to explain an idea. Someone who reads everything there is to read about the market and business he’s in and who can tirelessly talk about it. An entrepreneur that doesn’t even know his main competitors, lacks that passion.”

Want to discover new tech? join The Big Score in December 

VCs and corporate buyers looking to connect with some of Europe’s most innovative startups should look no further. The Big Score takes place on 1st, 2nd and 3rd of December. On December 1st, 25 corporates live-stream pressing challenges towards startups. On December 2nd and 3rd, 50 VC selected scale-ups live-stream their pitch towards growth stage VCs and corporate sourcing profiles.

Startups – Silicon Canals

How the pandemic drove the IPO wave we see today

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

I had a neat look into the world of mental health startup fundraising planned for this week, but after being slow-motion carpet-bombed by S-1s, that is now shoved off to Monday and we have to pause and talk about COVID-19.

The pandemic has been the most animating force for startups and venture capital in 2020, discounting the slow movement of global business into the digital realm. But COVID did more than that, as we all know. It crashed some companies as assuredly as it gave others a boost. For every Peloton there is probably a Toast, in other words.

Such is the case with this week’s crop of unicorn IPO candidates, though they are unsurprisingly weighted far more toward the COVID-accelerated cohort of startups instead of the group of startups that the pandemic cut off at the knees. 

More simply, COVID-19 gave most of our recent IPOs a polite shove in the back, helping them jog a bit faster toward the public-offering finish line. Let’s talk about it.

Roblox, the gaming company that targets kids, has been a beneficiary during the COVID-19 pandemic, as folks stayed home and, it appears, gave their kids money to buy in-game currency so that their parents could have some peace. Great business, even if Roblox warned that growth could slow sharply next year, when compared to its epic 2020 gains.

But Roblox is hardly the only company taking advantage of COVID-19’s impacts on the market to get public while their numbers are stellar. We saw DoorDash file last week, crowing from atop a mountain of revenue growth that came in part from you and I trying to stay home since March. As it turns out you order more delivery when you can’t leave your house.

Affirm got a COVID-19 boost as well, with not only e-commerce spend growing — Affirm provides point-of-sale loans to consumers during online shopping — but also because Peloton took off, and lots of folks chose to finance their new exercise bike with the payment service. Call it a double-boost.

The IPO is well-timed. Wish falls into the same bucket, though it did hit some supply-chain and delivery issues due to the pandemic, so you could argue it either way.

Regardless, as we have seen from global numbers, COVID-19 is very much not done wreaking havoc on our health, happiness, and ability to go about normal life. So the trends that this week’s S-1s have shown us still have some room to run.

Which is irksome for Airbnb, a unicorn that was supposed to have debuted already via a direct listing, but instead had to hit pause, borrow money, lay off staff, and now jog to the startup finish line with less revenue in this Q3 than the last. In time, Airbnb will get back to full-speed, but among our new IPO candidates it’s the only company net-harmed by COVID-19. That makes it special.

There are other trends to keep tabs on, regarding the pandemic. Not every software company that you might expect to be thriving at the moment actually is; Workday shares are off 8% today as I write to you, because the company said that COVID-19 is harming its ability to land new customers. Here’s its CFO Robynne Sisco from its earnings call

Keep in mind, however, that while we have seen some recent stability in the underlying environment, headwinds due to COVID remains particularly to net new bookings. And given our subscription model, these headwinds that have impacted us all year will be more fully evident in next year’s subscription revenue weighing on our growth in the near-term.

Yeesh. So don’t look at recent IPOs and think that all things are good for all companies, or even all software companies. (To be clear, the pandemic is a human crisis, but my job is to talk about its business impacts so here we are. Hugs, and please stay as safe as you can.)

Market Notes

There was so much news this week that we have to be annoyingly summary. 

I caught up with Brex CEO Henrique Dubugras the other day, giving The Exchange a chance to parse what happened to the company during the early COVID days when the company decided to cut staff. The short answer from the CEO is that the company went from growing 10% to 15% each month, to seeing negative growth — not a sin, Airbnb saw negative gross bookings for a few months earlier this year — and as the company had hired for a big year, it had to make cuts. Dubugras talked about how hard of a choice that was to make.

Brex’s business rebounded faster than the company expected, however, driven in part by strong new business formation — some data here — and companies rapidly moving into the digital realm and moving to finance systems like Brex’s. 

Looking forward, Dubugras wants to expand the pool of companies that Brex can underwrite, which makes sense as that would open up its market size quite a lot. And the company is as remote as companies are now, with its CEO opening up during our chat about the pros and cons of the move. Happily for the business fintech unicorn, Dubugras said that some of the negatives of companies working more remotely haven’t been as tough as expected. 

Next up: Growth metric. Verbit, a startup that uses AI to transcribe and caption videos, raised a $ 60 million Series C this week led by Sapphire Ventures. I couldn’t get to the round, but the company did note in its release that it has seen 400% year-over-year revenue growth, and that its “revenue run-rate [has] grown five-fold since 2019.” Nice.

Jai Das led the round for Verbit, and, in a quirk of good timing, I’m hosting an Extra Crunch Live with him in a few weeks. (Extra Crunch sub required for that, head here if you need one. The discount code ‘EQUITY’ should still be working if it helps.)

Telos, a Virginia-based cybersecurity and identity company went public this week. It fell under our radar because there is more news than we have hands to type it up. Such is the rapid-fire news cycle of late 2020. But, to catch us both up, Telos priced midrange but with an upsized offering, valuing it around $ 1 billion, according to MarketWatch.

After going public, Telos shares have performed well. Cybersecurity is having one hell of a year.

Turning back to our favorite topic in the world, SaaS, ProfitWell’s Patrick Campbell dropped a grip of data on the impact of COVID-19 on the B2B SaaS market. Mostly it’s positive. There was a hit early on, but then growth seems to have accelerated. Just keep in mind the Workday example from earlier; not everyone is in software growth paradise as 2020 comes to a close.

And, finally, after Affirm released its S-1 filing, competing service Klarna decided it was a good time to drop some performance data of its own. First of all, Klarna — thanks. We like data. Second of all, just go public. Klarna said that it grew from 10 million customers in the United States to 11 million in three weeks, and that the second statistic was up 106% compared to its year-ago tally. 

Affirm, you are now required by honor to update your S-1 with even more data as an arch-nerd clapback. Sorry, I don’t make the rules.

Various and Sundry

Alright, that’s enough of all that. Chat to you soon, and I hope that you are safe and well and good.

Alex

Startups – TechCrunch

European micromobility industry is proving to be extremely resilient amid global pandemic: Report

Micromobility

A report on European micromobility amid COVID-19 pandemic

The pandemic delivered a big blow to the European micromobility sector. According to a report, the sector was hit just as the industry was accelerating along a growth trajectory. “In 2019, a banner year, our models predicted that the micromobility industry would be a $ 300B to $ 500B (€253.5B to €422.5B) market by 2030.” The report also predicts that the industry might “make a strong post-pandemic recovery.”

European micro-mobility

According to a new white paper from INVERS, the European micro-mobility industry has proved extremely resilient amid pandemic. Based out of Siegen, Germany, INVERS is a mobility services company that offers innovative SaaS and IoT-based products. 

Recently, the company worked together with mobility intelligence provider fluctuo to analyse seven submarkets in the European shared micro-mobility ecosystem (moped sharing in Germany, Spain, France, and Italy and kick scooter sharing in Germany, France, and Italy) to understand and quantify how COVID-19‘s first peak and lockdown impacted utilisation across the different markets.

The whitepaper analyses the market development in moped and scooter sharing in core European markets (Germany, France, Spain and Italy) over three periods: September 2019 (pre-COVID), March/April 2020 (COVID lockdown) and September 2020 (post-COVID lockdown). The utilisation benchmark was indicated by the average number of trips per day per available vehicle. 

According to INVERS, “Despite the large decrease of moped and scooter usage during the peak of the first COVID wave in March/April 2020, overall, shared moped and scooter usage recovered over the summer. In some cases, the average number of trips per day per available vehicle even surpassed pre-COVID usage levels.”

Here’s what the report found by comparing data across three key periods Sept 2019, Mar/Apr 2020 (peak of the 1st COVID wave), and Sep 2020:

France 

The French market has proved to be very resilient. The kick scooter sharing sector showed strong resilience as well, as the sector made a comeback to a utilisation rate of 2.4 trips per available vehicle. 

Germany

In Germany, while the number of trips per available vehicle dropped to roughly 25% compared to Sep 2019, utilisation increased to roughly 75% in Sep 2020 year over year.

Italy

In Italy, strict lockdown regulations saw a substantial reduction in rental numbers in March with some operators even pausing their operations. However, the Italian micro-mobility market bounced back across the summer, with cities like Milan and Rome even welcoming new operators than ever with increasing fleet size.

Spain

In Spain, the first lockdown took a heavy toll on shared mobility operations – Moped sharing dropped from a pre-COVID utilisation rate of 4.9 to a lockdown-caused rate of just 0.2. In September 2020, the rate recovered to a level of 2.4 trips per available vehicle or approx. 50 % of pre-COVID usage.

Alexander Gmelin, CPO of INVERS, sees two trends to dealing with the pandemic: focus and innovation. First off, operators must focus on how to quickly adapt their business to an evolving and changing landscape; for example, by implementing new revenue opportunities or entering into new partnerships. For this, the reliable technical infrastructure is crucial for success. 

Secondly, operators should develop innovative approaches to diversify their business; for example, subscription models can be added on top of shared mobility offerings to minimise the time a shared vehicle is not used. In addition, new functions such as sensors for air quality or noise sensors can be implemented to provide a supplemental service. Technology should offer operators this flexibility.

Image credit: Pixabay

Startups – Silicon Canals

Investing in the Pandemic and the New Normal

SALT Talks-OurCrowd Pandemic Venture Investment Series (Part 1)

Watch the full episode here.

Despite the economic fallout from the coronavirus pandemic, venture capital is well placed to thrive as the world becomes increasingly digital and demands innovative solutions, according to one veteran Silicon Valley investor. Unlike previous economic crises, the pandemic offers a chance for venture capital to respond directly to the world’s most pressing needs, from healthcare to online banking to secure communications.

The crisis “will be different because of the importance of venture capital,” said Steve Krausz, general partner at U.S. Venture Partners, a Menlo Park-based VC firm that backed companies like Checkpoint Software Technologies Ltd. and Box Inc.  “The digitalization of the world economy is going to be enormous.”

Even before Covid-19, many VC-backed industries, including cloud computing, financial technology, and digital health, were growing, and driving some of the most dynamic changes in the economy. The virus, along with stay-at-home orders and social distancing requirements, has boosted those shifts, Krausz said, with consumers, businesses and healthcare providers relying even more on digital and online tools.

“It has been playing on trends that were already underway,” Krausz told Alec Ellison, U.S. chairman of OurCrowd, in an interview in the SALT Talks-OurCrowd Pandemic Venture Investment Series Oct 29. Krausz does not see any turning back, even after the pandemic fades. Companies are now more aware than ever of the need to harness technology, and are increasingly demanding more innovative solutions, he said.

“It feels like this time we’re dealing with a shift in the economy,” Krausz said. “What has changed is the attitude of company management, about how quickly they have to make the transformation to a more digital footprint across the globe. That’s a fundamental shift.”

In the medical sector, there are signs of quicker and more efficient patient trials and regulatory approvals, which could pave the way for more venture investments.

“A lot of firms have avoided the area because of regulatory clearance,” Ellison said. “But the pandemic is clearly accelerating elements of the speed of approval.”

Krausz sees this as an ongoing trend as the data and analytics systems to track trials and other approval processes improve.

“There is so much pressure to improve that cycle, I don’t think we are going to go back,” he said. 

The VC industry itself, raising $ 257 billion in 2019, is also much bigger and more geographically spread out than it was during other other recent economic crises, like the dot-com bubble of the early 2000s and the 2008 global financial crisis, when the sector took big hits.  There are more sources of money, with private equity firms, large multinational companies and public-private partnerships playing a growing role in venture funding, he said. Historically-low interest rates and government economic stimulus measures – which will likely continue for a couple more years – also create a lucrative investment atmosphere, he said.

“There is so much capital now that’s available,” he said.  This increased liquidity is also raising valuations of start-ups, he said, with later-stage enterprises seeing their values double over the last few years, and early-stage companies going up about 50%. 

“Doubling sounds like a lot until you look at Amazon and Apple,” Ellison pointed out, referring to record-high public markets, which startup valuations often mimic.

While large technology companies, like Facebook, Apple and Microsoft, still dominate, Krausz insists there is always room for new players.

“It is a winner take all economy right now but it’s also one in which innovation is happening all the time so you can knock down the big dogs in any sector,” he said. “I won’t say easily, but you can do it.”

The pandemic actually offers opportunities, he said, rather than simply being a period to try to survive.

“In past crises, most of us burrowed down and tried to extend the life of the capital that we had invested, but we didn’t change strategies dramatically,” Krausz said.  “This time I think the strategies are changing quite a bit.”

For example, U.S. Venture Partners has increased the share of medical-related companies in its portfolio, and made some new investments in cyber security, which has become increasingly important as more data moves online. “That’s been an explosion since the pandemic hit,” he said. 

But there have also been some challenges and slowdowns for his firm and the industry, especially when it comes to the field of enterprise software, or programs designed for companies, in sectors that have suffered downturns, like retail, travel, and advertising, he said. 

“Part of it is because retailers have had less budget,” he said. For Krausz, the lack of in-person meetings when deciding what startups to fund are also a hurdle. This has led his firm to mainly stick to funding entrepreneurs they have worked with before or know well.

“I would say that is an area we feel very strongly about, in terms of really wanting to sit down and getting to know our teams and their ability to hire teams,” he said. “Hiring a full management team over Zoom, people are still people, it’s really tough”

Overall, Krausz is optimistic, and confident that investors will only increase their interest in innovative investments, even during the pandemic, as the world rapidly changes, with VCs playing a growing role in fields like medical care, cyber security and even space exploration.

“Crises like these really shake the industry to its core, and prove to be a real test of the teams that we invest in,” Krausz said.  “But some of our best investments have come out of these periods of extreme stress in the markets,”

Watch the full recording of this episode HERE.

For more information on the SALT Talks-OurCrowd Pandemic Venture Investment Series click here.

The post Investing in the Pandemic and the New Normal appeared first on OurCrowd Blog.

OurCrowd Blog

DoorDash IPO bets that the pandemic has accelerated change

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

DoorDash has become the go-to delivery choice for millions of people cooped up during the pandemic this year. Now it has filed an S-1, revealing its financials as it nears a long-intended IPO. These innards show an exciting business — and a larger story about how the year is going for tech companies in general.

When the company filed initial public offering paperwork back in February, it was coming off of an expensive year of growth in 2019. The California state legislature was passing laws, meanwhile, that directly targeted its gig-economy labor model. Then the pandemic hit. More from Alex Wilhelm:

DoorDash has grown incredibly rapidly, scaling its revenues from $ 291 million in 2018 to $ 885 million in 2019. And more recently, from $ 587 million in the first nine months of 2019 to $ 1.92 billion in the same period of 2020. That is 226% growth in 2020 thus far… How high-quality is DoorDash’s revenue? In the first three quarters of 2019, the company had gross margins of 39.9%, and in the same period of 2020 the figure rose to 53.1%, a huge improvement for the consumer consumable delivery confab.

The other jolt of good news for the company arrived last week. A California ballot proposition passed that preserved the contractor model it relies on for deliveries.

World events did not take a breath, though. A COVID-19 vaccine appeared on the horizon this week, and could lead to the pandemic ending as soon as next year. Will this be bad for DoorDash’s business? Alex took another look at the numbers for Extra Crunch, and didn’t come away with a clear answer. On the one hand, the company has been making ongoing investments in its delivery platform technology, which has helped to drive the success this year already. On the other hand, the S-1 is open about post-pandemic reality — profitability is going to decline. Alex:

To buy into the DoorDash IPO, especially at its currently floated $ 25 billion price, you have to believe that the company’s revenue growth will slow modestly at most. Otherwise the price makes no sense. Bearish investors who might expect the company to post negative growth in Q3 2021 won’t pay any price for DoorDash shares, but in between the two camps is a mess of vaccine timings, shifts in consumer behavior and macroeconomic questions that could determine how many American families can afford delivery. All of which will impact DoorDash’s future growth rates.

For those looking further out, DoorDash stock is about how you think the pandemic is going to change the world for the long term, or not. Are we going to be using DoorDash more often now for deliveries? Are we going to be at home as much in the first place? Or are we going to go back to offices, stores and restaurants like we did before?

Speaking of investors, Danny Crichton illustrates why it pays to bet on the world changing. The company has raised nearly $ 2.5 billion over the years. Today that includes an 18.2% ownership stake by Sequoia, 22.1% by the SoftBank Vision Fund, and 9.3% by Singapore’s GIC. As he writes for Extra Crunch, the founding executives Tony Xu, Andy Fang and Stanley Tang each own around 5% — smallish wedges of a growing pie. Maybe that is too much dilution? Or maybe, considering all of the other delivery companies that have failed or gone sideways, this is the pinnacle of success in the sector.

A health care worker holds an injection syringe of the phase 3 vaccine trial, developed against the novel coronavirus (COVID-19) pandemic by the U.S. Pfizer and German BioNTech company, at the Ankara University Ibni Sina Hospital in Ankara, Turkey

(Photo by Dogukan Keskinkilic/Anadolu Agency via Getty Images)

The Vaccine

We all knew that at some point solutions would be figured out. But as COVID-19 cases have climbed this season, and as anxiety built around elections, it was hard to believe that the vaccine was right around the corner. The initial success reported Monday by BioNTech and Pfizer may mean that these two companies are close to success. But many other companies are attempting to use the same experimental gene-based vaccines so we may see others winners soon.

The stock market is already repricing tech stocks, in any case. Besides the timely arrival of the DoorDash S-1, here are a few other headlines about the impact of the news:

Positive vaccine news punishes pandemic-boosted companies like Zoom, Peloton, Etsy

What happens to high-flying startups if the pandemic trade flips? (EC)

As public investors reprice edtech bets, what’s ahead for the hot startup sector? (EC)

5 VCs discuss the future of SaaS and software after Pfizer’s vaccine breakthrough (EC)

Image Credits: John Artman

Tencent’s fintech business is the size of an Ant

In other news about political turbulence and the tech world, Rita Liao inspects Tencent’s quietly huge fintech empire and concludes that it “will need to tread more carefully on regulatory issues.”

Here’s why, for those trying to understand this global company and its place across markets:

As Ant Group seizes the world’s attention with its record initial public offering, which was abruptly called off by Beijing, investors and analysts are revisiting the fintech interests of Tencent, Ant’s arch rival in China. It’s somewhat complicated to do this, not least because they are sprawled across a number of Tencent properties and, unlike Ant, don’t go by a single brand or operational structure — at least, not one that is obvious to the outside world. However, when you tease out Tencent’s fintech activity across its wider footprint — from direct operations like WeChat Pay through to its sizeable strategic investments and third-party marketplaces — you have something comparable in size to Ant, and in some services even bigger.

How one founder combined edtech and gaming

Serial founder Darshan Somashekar writes that if you want to build a great edtech product, then perhaps it should be a game. Here’s more, from his guest column for Extra Crunch this week:

Earlier this year, we launched Solitaired, a casual gaming platform that ties card games to educational experiences and brain training. We’re still early, but signs are encouraging: Our average time on site is 30 minutes, more than three times that of our earlier business. Even better, users come back often, on average returning more than five times per month. Since we’re now in the gaming space, we should have expected these metrics, but they still blew our expectations away. We’ve also found that the downsides can be mitigated. For example, high engagement has led to strong virality, driving down our CAC and increasing our growth. In-app purchase abuses can be tempting for game developers, but by focusing on user growth KPIs, we don’t have the desire to go down those routes. Lastly, the threat of Big Tech is there, but at present most of their attempts have yet to strike a chord among users. More importantly, that’s why choosing a market so massive that even individual Big Tech players can’t dominate is key: With a market this size, you can shoot for the stars, miss the moon and still do well for yourself.

Around TechCrunch

Pioneers of in-space refueling and manufacturing join TC Sessions: Space 2020

NASA’s head of human spaceflight, Kathryn Lueders, will join us at TC Sessions: Space

Get fast money for your space startup at TC Sessions Space this December

Across the week

TechCrunch

This startup is betting that you want to binge remote-work content

Calling Dublin VCs: Be featured in The Great TechCrunch Survey of European VC

Human Capital: The gig economy in a post-Prop 22 world

‘Free speech’ social network Parler tops app store rankings following Biden’s election win

Renewable power represents almost 90% of total global power capacity added in 2020

Extra Crunch

Square and PayPal earnings bring good (and bad) news for fintech startups

What I wish I’d known about venture capital when I was a founder

Conflicts in California’s trade secret laws on customer lists create uncertainty

What we’ve learned about working from home 7 months into the pandemic

Dear Sophie: What does Biden’s win mean for tech immigration?

#EquityPod

From Alex:

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

The full Equity crew was on hand to debate the current venture capital market, curious about how risk-on, or risk-off things really are today. DannyNatasha and I framed the conversation around a number of news items from the week, including:

  • Wrkfrce has launched, and we wanted to chat more about the future of niche media, bringing The Juggernaut’s own recent round and the Quartz shakeup into the conversation.
  • And on the media front — always a risky venture capital investing domain — Spotify has snapped up another podcasting company, this time paying $ 235 for Megaphone. Our take? A string of small exits probably won’t encourage VCs to take on more risk in the space (Hunter Walk said the same thing here.)
  • Turning to risk more generally, I asked Natasha to weigh in on the earlier stages of the venture market, and Danny on its later tranches. There’s still lots of money, but it appears more focused on chasing winners than bolstering or supporting less-obvious startups.
  • That market is not slowing a risk-on move toward more venture capital players, as the Spearhead news showed a new focus for the firm to invest in emerging fund managers.
  • And there’s still plenty of risk tolerance in remote-work solutions like Hopin, which just raised $ 125 million at a $ 2+ billion valuation. We’re torn on the round, but Danny likes it and he’s a former VC.
  • And we wrapped with a chat about upcoming IPOs, and the recent SoftBank results. If DoorDash, Airbnb and others are going to go this year, they need to go soon. So far, no dice.

It was a busy week, despite the month. Expect more of the same next week.

Finally, don’t forget that our own Chris Gates is cutting Equity videos out of every episode that you can find over on YouTube. He does a great job and it’s great to be on video, as well as audio platforms.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

 

 

Startups – TechCrunch

Big News: Consumers are Still Shopping Small During the Pandemic

The year 2020 has been a transformational one, especially for startups and small businesses impacted by the COVID-19 pandemic. Constant Contact, an online marketing leader, surveyed over 3,000 consumers in the U.S. (aged 18 and up) on how the pandemic has changed the way they shop to help small businesses understand how to engage with them in this new normal.

The 2020 Small Business Pulse Report highlights these new purchasing behaviors and where small businesses can find new opportunities this holiday season.

While the pandemic has created incredible challenges for small businesses, it has also generated tremendous support from their communities.


StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here

As the infographic below highlights, consumers have made it more of a priority to choose small businesses:

  • 60 percent of shoppers have made more of an effort to support local businesses in their community this year compared to 2019.
  • 71 percent said they have shopped at a small business at least once a month since the start of the pandemic.
  • 62 percent said they plan to visit a small business they’ve never shopped at before the year ends.

With social distancing orders still impacting in-person shopping and brick-and-mortar retail, small businesses that jumped on the e-commerce train early are experiencing the benefits of having a remote shopping method. This holiday season will only continue to bring in online sales.


Related: Annual Holiday Purchase Intention Study Says This is the Most Important Factor Among Consumers

The infographic below shows how small businesses that have e-commerce capabilities are more likely to capture shoppers over the next couple of months:

  • 71 percent of surveyed consumers said they plan to do some of their holiday shopping at small businesses.
  • The majority of consumers don’t even need to go to brick-and-mortar locations; only 10 percent said they had to visit a physical store in order to make a purchase.

While consumer behavior has changed since the start of the pandemic, some of these trends are here to stay for the foreseeable future.

With Black Friday, Small Business Saturday and Cyber Monday quickly approaching, there’s no time to waste for startups and small businesses looking to increase their audience and capture more sales this holiday season.


Sign Up: Receive the StartupNation newsletter!

For more information, continue reading the infographic below:

Constant Contact Holiday Survey

The post Big News: Consumers are Still Shopping Small During the Pandemic appeared first on StartupNation.

StartupNation

JumpCloud raises $75M Series E as cloud directory service thrives during pandemic

JumpCloud, the cloud directory service that debuted at TechCrunch Disrupt Battlefield in 2013, announced a $ 75 million Series E today. The round was led by BlackRock with participation from existing investor General Atlantic.

The company wasn’t willing to discuss the current valuation, but has now raised more than $ 166 million, according to Crunchbase data.

Changes in the way that IT works have been evolving since the company launched. Back then, most companies used Microsoft Active Directory in a Windows-centric environment. Since then, things have gotten more heterogeneous with multiple operating systems, web applications, the cloud and mobile, and that has required a different way of thinking about directory structures.

JumpCloud co-founder and CEO Rajat Bhargava says that the pandemic has only accelerated the need for his company’s kind of service as more companies move to the cloud. “Obviously now with COVID, all these changes made it much more difficult for IT to connect their users to all the resources that they needed, and to us that’s one of the most critical tasks that an IT organization has is making their team productive,” he said.

He said their idea was to build an “independent cloud directory platform that would connect people to really whatever it is they need and do that in a secure way while giving IT complete control over that access.”

The product, which includes a free tier for 10 users on 10 systems for an unlimited amount of time, has 100,000 users. Of those, Bhargava says that about 3,000 are paying.

The company has 300 employees, with plans to add 200-250 in the next year with a goal of adding 500 in the next couple of years. As he does that, Bhargava, who is South Asian, sees diversity and inclusion as an important component of the hiring process. In fact, the company tries to make sure it always has diverse candidates in the hiring pool.

“Some of the things that we’ve tried to do is make sure that every role has some diversity candidates involved in the hiring process. That’s something that our recruiting team is working on and making sure that we’re having that conversation with every single hire,” he said. He acknowledges that it’s a work in progress, and a problem across the entire tech industry that he and his company continue to try to address.

Since the pandemic, the company, which is based in Colorado, has made the decision to be remote first, and they will be hiring from across the country and across the world as they make these new hires, which could help contribute to a more diverse workforce over time.

With a $ 75 million investment, and having reached Series E, it’s fair to ask if the company is thinking ahead to an IPO, but Bhargava didn’t want to discuss that. “We just raised this $ 75 million round. There’s so much work to be done, so we’re just looking forward to that right now,” he said.

Startups – TechCrunch