Mental health startups are raising spirits and venture capital

A spate of startups focused on mental health recently made enough noise as a group that they caught the eye of the Equity podcast crew. Sadly, the segment we’d planned to discuss this topic was swept away by a blizzard of IPO filings that piled up like fresh snow.

But in preparation, I reached out to CB Insights for new data on the mental health startup space that they were kind enough to supply. So this morning we’re going to dig into it.

Regular readers of The Exchange will recall that we last dug into overall wellness venture capital investment in August, noting that it was mental health startups inside the vertical that were seeing the most impressive results.

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I wanted to know what had happened even more recently.

After all, Spring Health recently raised $ 76 million for its service that helps companies offer their workers mental health benefits, Mantra Health disclosed that it has raised $ 3.2 million to help with college-age mental health issues and Joon Care announced $ 3.5 million in new capital to “grow its remote therapy service for teens and young adults,” per GeekWire.

Sticking to theme, Headway just raised $ 32 million to build a platform that “helps people search for and engage therapists who accept insurance for payments,” according to our own reporting, and online therapy provider Talkspace is pursuing a sale — it looks like an active time in the mental health startup realm.

So, let’s shovel into the latest data and see if the signals that we are seeing really do reflect more total investment into mental health startups, or if we’re over-indexing off a few news items.

The state of mental health venture investing

To prepare the ground, let’s talk about the general state of healthcare investing in the venture capital world. Per CB Insights’ Q3 healthcare VC report, venture capital deal volume and venture capital dollar volume reached new record highs in the sector during Q3 2020.

The quarter’s 1,539 rounds and $ 21.8 billion in invested capital were each comfortably ahead of prior records set in Q2 2018 for round volume (1,431) and Q2 2020 for dollar volume ($ 18.4 billion) for healthcare startups.

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Relativity Space is raising a massive $500M round at $2.3B valuation

Rocket printer Relativity Space is raising a $ 500 million D round, valuing the launch provider at $ 2.3 billion, as reported by CNBC and confirmed to TechCrunch by sources familiar with the matter. That’s not bad for company that has yet to take its first payload to orbit.

Relativity aims to reduce the cost and increase the speed of assembling a launch vehicle by 3D printing it from tip to tail fin. The process has many advantages that have been borne out in testing — and the company aims to launch its first mission in 2021.

The company’s last big raise was $ 140M in late 2019, which helped it build out a new Long Beach headquarters and finalize its Terran-1 rocket. The switch from a series of machines and assembly lines with fixed tooling to a handful of enormous custom 3D printers both simplifies the building process and enables new capabilities.

For instance, Relativity recently snagged its first big government contract, a NASA-Lockheed mission with special considerations for the cyogenic systems in the payload. These can be revised and tested right up to a couple months before launch, unlike an ordinary building process which might require the hardware to be locked in a year or more before.

The $ 500 million round would presumably be to scale operations in earnest, gathering the personnel, materials, transportation, insurance, and other necessaries for taking on major missions. Terran-1 hasn’t flown yet, but the projected costs and cadences make it a very attractive option, larger than Rocket Lab’s Electron but smaller than a SpaceX Falcon 9 — and pound for pound, maybe more cost effective than both.

Much depends on the next year as Relativity takes Terran-1 from the factory to the launchpad. The first orbital test flight is planned for late 2021.

CNBC’s Michael Sheetz reported that Tiger Global Management will lead the round, with Fidelity also joining and existing investors adding their support.

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Filing: Online learning marketplace Udemy is raising up to $100M at a $3.32B valuation

Online education has been one of the hotspots in the tech world this year, as people turn to e-learning tools to fill in the gaps variously arising from closed schools, closed offices, social distancing and more time on our hands at home because of the COVID-19 pandemic. And that is giving a big bump to education startups, which are raising money to capitalise on the growth opportunity.

In one of the latest developments, Udemy — which provides a marketplace currently numbering some 130,000 video-based courses across 65 languages, ranging from learning Python or how to photograph better, through to mastering mindfulness and business analytics — is raising up to $ 100 million in a Series F round of funding that would value the company at up to $ 3.32 billion.

The company has filed paperwork for the fundraise in Delaware, first discovered by Justin Byers and the team at Prime Unicorn Index. It’s not clear if the round has closed, and whether the full amount was raised (or indeed, more).

Contacted for a response, Udemy didn’t deny the report but also declined to say anything for the moment. “We have a company policy where we don’t comment on speculations,” a spokesperson said to me via email. “We don’t have a comment at this time but I’ll reach out if anything changes.”

The fundraise would be a strong move for Udemy, which only closed its Series E earlier this year — a $ 50 million round that catapulted the company to a $ 2 billion+ post-money valuation.

But that was in February, before the novel coronavirus really took hold of the world. Since then, startups focused on education have been seeing a surge of business starting in the spring of this year, and as a result, also a surge of attention from investors who see a good moment to back rising stars.

Just looking at some of the most recent deals, last week, Udacity announced a $ 75 million debt round and said it was finally profitable. In October, Kahoot announced a $ 215 million round from SoftBank. And in September, Outschool raised $ 45 million (and is now profitable); Homer raised $ 50 million (from an impressive group of strategic backers); Unacademy raised $ 150 million and the juggernaut that is Byju’s picked up $ 500 million from Silver Lake.

And these are just some of the bigger deals; there have been many smaller fundraises, new edtech startup launches and other signs of momentum alongside this. (And Prime Unicorn, incidentally, also noted that Duolingo is also raising money, up to $ 35 million at a valuation of $ 2.21 billion if all shares are issued. We’re still digging on that lead.)

When Udemy last raised money, earlier this year, the president of the business division told me it had clocked up 50 million students that purchase courses in an à la carte format, while enterprise customers — which include Adidas, General Mills, Toyota, Wipro, Pinterest and Lyft in a list of some 5,000 in all — use a subscription model.

It looks like its business users have grown and now number over 7,000, according to figures on its site, with total course enrollments now totalling 400 million to date. That could point to the opportunity that Udemy is now exploring with more capital.

But to be clear, the filing does not detail who is in this latest round, nor what the purpose of the fundraising is.

As we wrote at the time of the round in February, that fundraise came from a single, strategic investor, the Japanese educational publisher Benesse Holdings, which partners with Udemy in Japan. Benesse’s bigger business includes developing educational content for children and courses for adults, both online and in-person, and for other educational brands that it owns, such as Berlitz, and Udemy helps Benesse develop content for those various efforts.

Other investors in the company include Stripes, Naspers (now Prosus), Learn Capital, Insight Partners and Norwest Venture Partners, among others.

Prime Unicorn Index notes that the terms surrounding this latest Series F include a “pari passu liquidation preference with all other preferred, and conventional convertible, meaning they will not participate with common stock if there are remaining proceeds.” It also noted that Udemy’s most recent price per share is $ 24.13, an up round from the Series E, which priced shares at $ 15.57.

We’ll update this post as we learn more.

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Challenger bank Starling is out raising a new £200M funding round

Starling founder Anne Boden recently told TechCrunch that the U.K. challenger bank is on track to be profitable by Christmas, but this doesn’t mean it isn’t out raising additional capital already.

According to well-placed sources, Starling has hired Rothschild with the aim of raising a new £200 million round. The draw is its expected profitability, which one source says is already creating private equity investor interest. Starling declined to comment.

Having raised £363 million to date, including a £100 million state-aid grant, Starling now boasts 1.9 million customers. Since launching business banking in March 2018 and subsequently taking part in the U.K. government’s bounce back scheme for struggling businesses hit by the pandemic, this also now includes more than 180,000 business accounts for sole traders and small to medium sized businesses.

In our recent interview with Boden to primarily talk about her tell it all book on Starling’s founding, she told TechCrunch that her ultimate aim is to get to an initial public offering. “I didn’t do all this to sell out to a big bank,” she told me. “I’ve got my sights on an IPO. I’d very much like to do that”.

However, to just that will almost certainly require additional capital injections for the next few years to continue telling an appealing story for future public investors, which will include further U.K. expansion and making meaningful in-roads into Europe.

In the shorter term, we might also see some M&A activity. Speaking at the LendIt Fintech Europe 2020 virtual conference in October, Boden said that Starling is continuing to expand the SME side of its business and SME loans now make up the largest segment of its overall book (approaching £1.5 billion of lending). As part of this, she didn’t rule out acquiring companies in the SME lending space.

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Founders don’t need to be full-time to start raising venture capital

“More than 50% of our founders still are in their current jobs,” said John Vrionis, co-founder of seed-stage fund Unusual Ventures.

The fund, which closed a $ 400 million investment vehicle in November 2019, has noticed that more and more startup employees are thinking about entrepreneurship as the pandemic has shown how much room there is for new innovation. To gain a competitive advantage, Unusual is investing small checks into founders before they’re full-time.

Unusual, which cuts an average of eight checks per year into seed-stage companies, isn’t doling out millions to every employee who decides to leave Stripe. The firm is conservative with its spending and takes a more focused approach, often embedding a member from the firm into a portfolio company. It’s not meant to scale to dozens of portfolio companies a year, but instead requires a methodical approach.

One with a healthy pipeline of companies to choose from.

In an Extra Crunch Live chat, Vrionis and Sarah Leary, co-founder of Nextdoor and the firm’s newest partner, said lightweight investing matters in the early days of a company.

“There were a lot of teams that needed capital to start the journey, but frankly, it would have been over burdensome if they took on $ 2 or $ 3 million,” Leary said. “[New founders] want to be in a place where they have enough money to get going but not too much money that they get locked into a ladder in terms of expectations that they’re not ready to take advantage of.” The checks that Unusual cuts in pre-seed often range between $ 100,000 to half a million dollars.

Leary chalks up the boom to the disruption in consumer behavior, which opens up the opportunity for new companies to win.

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Lee Fixel burnishes his reputation, raising his second massive fund in 2020

On Friday, former Tiger Global Management investor Lee Fixel registered plans for the second fund of his new investment firm, Addition, just four months after closing the first. But investors who were shut out of that $ 1.3 billion debut fund and who might have hoped to write a check this time around are already too late.

According to the Financial Times, that ship has sailed. Fixel has already secured a fresh $ 1.4 billion in capital commitments for the second fund, which Addition reportedly doesn’t plan to begin investing until next year.

It’s obviously a lot of money to raise in a very short amount of time, even in today’s go-go market, and will surely help cement Fixel’s reputation as a prized dealmaker, one whose reluctance to talk on the record with media outlets seems only to add to his mystique.

Forbes published a lengthy piece about Fixel this summer, in which Fixel seems to have provided just one public statement, confirming the close of Addition’s first fund and adding little else. “We are excited to partner with visionary entrepreneurs, and with our 15-year fund duration, we have the patience to support our portfolio companies on their journey to build impactful and enduring businesses,” it read.

According to Forbes, that first fund — which Fixel is actively putting to work right now — intends to invest one-third of its capital in early-stage startups and two-thirds in growth-stage opportunities.

Whether that includes some of the special purpose acquisition vehicles, or SPACs, that are coming together right and left, isn’t yet known, though one imagines these might appeal to Fixel, who has longed seemed to be at the forefront of new trends impacting growth-stage companies in particular. (A growing number of SPACs is right now looking to transform some of the many hundreds of richly valued private companies in the world into public companies.)

Clearer is that Addition is wasting little time in writing some big checks. Among its announced deals is Inshorts, a seven-year-old, New Delhi, India-based popular news aggregation app that last week unveiled $ 35 million new funding led by Fixel.

The deal represents Addition’s first India-based bet, even while Fixel knows both the country and the startup well. He previously invested in Inshorts on behalf of Tiger; he’s also credited for snatching up a big stake in Flipkart on behalf of Tiger, a move that reportedly produced $ 3.5 billion in profits when Flipkart sold to Walmart.

Addition also led a $ 200 million round last month in Snyk, a five-year-old, London-based startup that helps companies securely use open-source code. The round valued the company at $ 2.6 billion — more than twice the valuation it was assigned when it raised its previous round ten months ago.

And in August, Addition led a $ 110 million Series D round for Lyra Health, a five-year-old, Burlingame, Ca.-based provider of mental health care benefits for employers that was founded by former Facebook CFO David Ebersman.

A smaller check went to Temporal, a year-old, Seattle-based startup that is building an open-source, stateful microservices orchestration platform. Last week, the company announced $ 18.75 million in Series A funding led by Sequoia Capital, but Addition also joined the round, having been an earlier investor in the company.

According to Pitchbook data, Addition has made at least 17 investments altogether.

Fixel — whose bets while at Tiger include Peloton and Spotify — isn’t running Addition single-handedly, though according to Forbes, he is the single “key man” around which the firm revolves, as well as the biggest investor in Addition’s first fund.

He has also brought aboard least three investment principals from Wall Street and a head of data science who worked formerly for Uber (per Forbes). Ward Breeze, a longtime attorney who worked formerly in the emerging companies practice of Gunderson Dettmer, is also working with Fixel at Addition.

Startups – TechCrunch

London-based Wirex achieves record crowdfund for crypto company, raising +€4 million on Crowdcube

UK startup Wirex, a next-gen payments platform sending waves through the fintech and crypto spaces, raised over €1 million in just 90 minutes and smashed its crowdfunding target by 370%. Nearly 7,000 investors from 94 countries took part to support Wirex on its mission to democratise access to cryptocurrency. Having closed their crowdfunding 15 days…

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Raising Series-A: Where do I Find Other Founders At A Similar Place?

Technical Co-Founder CTO, my company is raising a Series-A we're doing great. I've come to realize that since we've been so successful, the people around me mostly cannot relate and can no longer offer me much advice. I don't know any other technical co-founder who has ever made it this far in the startup world and I'm realizing that I need to build a new community of peers that I can talk to who are going through the same things. I know tons of technical folks, but nobody in a similar spot and most of the tech people I know are actually pretty jaded — they say things like "I don't even take equity any more. I just take cash because options never turn out to be worth anything."

Where should I look?

Ideas I have:

-Reach out to our investors / advisors and ask for intros to other CTOs of companies that they have invested in that are in a similar spot.

-Referrals from my existing network

-Ask around at the local CTO roundtable that I attend

Curious of any other suggestions. When I google around about finding founders all the websites are about looking for a co-founder which I'm not. I'm looking for others who are experiencing similar success and growth.

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