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Have hundreds of unicorns missed their exit window as Q1 IPOs grind to a halt?

Published March 17, 2020

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

As investors struggle to price the stock market as economic and political news continues to break, the private market is entering a rough period. It seems increasingly likely that the period of disruption due to COVID-19 will persist for months, if not quarters. That means missed Q1 and Q2 revenue growth, bookings, and the like from startups domestically and around the world.

And that’s the bullish case. For some cohorts of startups, the outlook is even worse. Think about travel startups, ride-hailing upstarts, and any grouping of private companies that pursued a high-burn, high-growth model; that final category is about to run into the twin issues of the inflexibility of cost structure and the impact of slowing sales. That alone would make fundraising more difficult; toss in a deflating stock market and possible recession, and the mixture is a downright mess.

But we owe it to ourselves to survey what is going on in an attempt to answer our own questions about IPOs, exits, unicorn tallies, and who might be in trouble. Unlike when things were less bad, there will be no laughing this morning and no jokes. Just notes on what’s going wrong and what it might mean for private companies.

Oura raises $28 million for its health and sleep tracking ring

Published March 17, 2020

Smart rings are still a relatively young category in the wearable hardware world, but the Oura Ring seems to be a standout in terms of early success. The Oura Ring hardware is sleek and packed with sensors, allowing it to measure a user’s sleep patterns, take your body temperature and track activity, and now Oura has raised $28 million in Series B funding to bring on new key hires and product updates.

In a Medium post announcing the raise, Oura CEO Harpreet Singh Rai revealed that to date, the company has sold over 150,000 of its rings since launch (which was in early 2018) and that its team has grown to over 100 people globally. The Series B funding comes from Forerunner Ventures, which has a strong track record when it comes to direct-to-consumer product company investments, as well as from Gradient Ventures and Square.

Along with the investment, Oura gains two new board members, and one new board observer all with expertise in different aspects of the startup’s business: Forerunner’s Eurie Kim and Square’s hardware lead Jesse Dorogusker are the new board members, and Gradient partner (and former VP of engineering at Google) Anna Patterson joins as the observer.

Oura will be revamping its website and adding a new web-based portal for Oura Ring users that offers “actionable insights,” the company says, and it’s going to be doing more in terms of collaborating with academic researchers on ensuring its products measurements and guidance remain as accurate and useful as possible.

Oura prioritizes the role of sleep in terms of its contribution to health, and has also recently ventured into the realm of meditation, but it acts as a general fitness tracking device as well. It has attracted a number of fans among the plugged-in tech elite, too, including Twitter and Square CEO Jack Dorsey. The company deserves kudos for delivering a solid, attractive and feature-rich gadget in a category that seemed like a tough sell in the early offing, and this new funding is a good vote of confidence.

Spectro Cloud launches with $7.5M investment to help developers build Kubernetes clusters their way

Published March 17, 2020

By now we know that Kubernetes is a wildly popular container management platform, but if you want to use it, you pretty much have to choose between having someone manage it for you or building it yourself. Spectro Cloud emerged from stealth today with a $7.5 million investment to give you a third choice that falls somewhere in the middle.

The funding was led by Sierra Ventures with participation from Boldstart Ventures.

Ed Sim, founder at Boldstart, says he liked the team and the tech. “Spectro Cloud is solving a massive pain that every large enterprise is struggling with: how to roll your own Kubernetes service on a managed platform without being beholden to any large vendor,” Sim told TechCrunch.

Spectro co-founder and CEO Tenry Fu says an enterprise should not have to compromise between control and ease of use. “We want to be the first company that brings an easy-to-use managed Kubernetes experience to the enterprise, but also gives them the flexibility to define their own Kubernetes infrastructure stacks at scale,” Fu explained.

Fu says that the stack, in this instance, consists of the base operating system to the Kubernetes version to the storage, networking and other layers like security, logging, monitoring, load balancing or anything that’s infrastructure related around Kubernetes.

“Within an organization in the enterprise you can serve the needs of your various groups, down to pretty granular level with respect to what’s in your infrastructure stack, and then you don’t have to worry about lifecycle management,” he explained. That’s because Spectro Cloud handles that for you, while still giving you that control.

That gives enterprise developers greater deployment flexibility and the ability to move between cloud infrastructure providers more easily, something that is top of mind today as companies don’t want to be locked into a single vendor.

“There’s an infrastructure control continuum that forces enterprises into trade-offs against these needs. At one extreme, the managed offerings offer a kind of nirvana around ease of use, but it’s at the expense of control over things like the cloud that you’re on or when you adopt new ecosystem options like updated versions of Kubernetes.”

Fu and his co-founders have a deep background in this, having previously been part of CliQr, a company that helped customers manage applications across hybrid cloud environments. They sold that company to Cisco in 2016 and began developing Spectro Cloud last spring.

It’s early days, but the company has been working with 16 beta customers.

Addapptation snares $1.3M seed to build a better UX for Salesforce

Published March 17, 2020

Addapptation, a startup that wants to build a practical design layer on top of Salesforce and other enterprise tools, announced a $1.3 million seed investment today.

2048 Ventures led the round with participation from East Coast Angels, The Millworks II Fund and additional angel investors from New Hampshire, where the firm is located

Co-founder Sumner Vanderhoof says the startup’s goal is to build a user experience platform for enterprise tools like Salesforce . “Our goal is to help make simple, easy to use Salesforce.com solutions built on the addapptation UX platform.

“At the end of the day, we’re really helping transform the way companies work, making their employees more efficient, making the job they do easier and more consistent, so they have a bigger impact on the companies that they work for,” Vanderhoof told TechCrunch.

He says they do this by looking at the company workflow and what issue the customer is trying to solve — such as a problem converting deals through the sales cycle. They will then help build tools and an interface to make it easier to pinpoint this information with the goal of being able to reuse whatever solutions they create for other customers.

He says the platform is template-driven and designed to quickly go from idea to solution. A typical solution takes no longer than two weeks to build and implement. Once a customer is using addapptation, employees can log into the addapptation platform or it can be a layer built into Salesforce providing a more guided experience.

The company has built around 40 plug-ins for the platform, including a heat map that identifies where sales is likely to find the best opportunities to close a deal. The solutions they build are designed to work online or on mobile devices as needed.

Photo: addapptation

Vanderhoof says that the company has a good relationship with Salesforce, and it doesn’t compete directly with the company. “Their main focus is providing tools for a wide audience. Ours is extending the platform beyond what it can do,” he said.

The two founders, Vanderhoof and his wife Carla, took three years building the platform, essentially bootstrapping before taking today’s funding. The company has 15 employees in its Exeter, NH, headquarters and has 20 customers including Comcast and Ingram Micro.

Nintendo’s online Switch services are experiencing an outage when we need them most

Published March 17, 2020

The era of social distancing is going to put a lot of existing systems to the test. Nintendo’s online services for the Switch have been experiencing outages in the U.S. and parts of Europe. The company noted the issues on social media, adding that it’s “looking to rectify the situation as soon as possible.”

The official Network Maintenance Information page noted that it is currently “Unable to connect to the network service.”

Surely not the most dire of situations, though many are no doubt relying on such services to help pass the time, as more and more cities enact bans on gatherings and closures of schools and restaurants to encourage social distance in order to curb COVID-19’s spread. Microsoft’s Xbox Live also experienced a multiple-hour outage over the weekend.

Nintendo is currently readying the system for the release of Animal Crossing: New Horizons. The latest entry in the series looks perfectly positioned to help eat away some hours when it’s released March 20.

Torch & Everwise merge into affordable exec coaching for all

Published March 17, 2020

While companies might pay for a CEO coach, lower level employees often get stuck with lame skill-building worksheets or no mentorship at all. Not only does that limit their potential productivity, but it also makes them feel stagnated and undervalued, leading them to jump ship.

Therapy… err… executive coaching is finally becoming destigmatized as entrepreneurs and their teams realize that everyone can’t be crushing it all the time. Building a business is hard. It’s okay to cry sometimes. But the best thing you can do is be vulnerable and seek help.

Torch emerged from stealth last year with $18 million in funding to teach empathy to founders and C-suite execs. Since 2013, Everwise has raised $26 million from Sequoia and others for its peer-to-peer mentorship marketplace that makes workplace guidance accessible to rank-and-file staffers. Tomorrow they’ll official announce their merger under the Torch name to become a full-stack career coach for every level of employee.

“As human beings, we face huge existential challenges in the form of pandemics, climate change, the threats coming down the pipe from automation and AI” says Torch co-founder and CEO Cameron Yarbrough. “We need to create leaders at every single level of an organization and ignite these people with tools and human support in order to level up in the world.”

Startup acquisitions and mergers can often be train wrecks because companies with different values but overlapping products are jammed together. But apparently it’s gone quite smoothly since the products are so complementary, with all 70 employees across the two companies keeping their jobs. “Everwise is much more bottom up whereas Torch is about the upper levels, and it just sort of made sense” says Garry Tan, partner and co-founder of Initialized Capital that funded Torch’s Series A and is also a client of its coaching.

Torch takes $10M to teach empathy to executives

How does each work? Torch goes deep, conducting extensive 360-interviews with an executive as well as their reports, employees, and peers to assess their empathy, communication, vision, conflict resolution, and collaboration. Clients’ executives do extensive 360-interviews. It establishes quantifiable goals that executives work towards through video call sessions with Torch’s coaches. They learn about setting healthy workplace boundaries, staying calm amidst arguments, motivating staff without seeming preachy, and managing their own ego.

This coaching can be exceedingly valuable for the leaders setting a company’s strategy and tone. But the one-on-one sessions are typically too expensive to buy for all levels of employees. That’s where Everwise comes in.

Everwise goes wide, offering a marketplace with 6,000 mentors across different job levels and roles that can provide more affordable personal guidance or group sessions with 10 employees all learning from each other. It also provides a mentorship platform where bigger companies can let their more senior staffers teach junior employees exactly what it takes to succeed. That’s all stitched together with a curated and personalized curriculum of online learning materials. Meanwhile, a company’s HR team can track everyone’s progress and performance through its Academy Builder dashboard.

“We know Gen Z has grown up with mentors by their side from SAT prep” says Torch CMO Cari Jacobs. Everwise lets them stay mentored, even at early stages of their professional life. “As they advance through their career, they might notch up to more executive private coaching.” Post-merger, Torch can keep them sane and ambitious throughout the journey.

“It really allows us to move up market without sacrificing all the traction we’ve built working with startups and mid-market companies,” Yarbrough tells me. Clients have included Reddit and ZenDesk, but also giants like Best Buy, Genentech, and T-Mobile.

The question is whether Everwise’s materials are engaging enough to not become just another employee handbook buried on an HR site that no one ever reads. Otherwise, it could just feel like bloat tacked onto Torch. Meanwhile, scaling up to bigger clients pits Torch against long-standing pillars of the executive coaching industry like Aon and Korn Ferry that have been around for decades and have billions in revenue. Meanwhile, new mental health and coaching platforms are emerging like BetterUp and Sounding Board.

But the market is massive since so few people get great coaching right now. “No one goes to work and is like, ‘Man, I wish my boss was less mindful,’” Tan jokes. When Yarbrough was his coach, the Torch CEO taught the investor that while many startup employees might think they thrive on flexibility, “people really want high love and high structure.” In essence, that’s what Torch is trying to deliver — a sense of emotional camaraderie mixed with a prod in the direction of fulfilling their destiny.

Hashicorp soars above $5B valuation in new $175M venture round

Published March 17, 2020

The rise of the cloud over the past decade has forced software developers and DevOps engineers to completely rearchitect the modern web application, ensuring scalability, performance, and security. That’s a really painful proposition when done manually, which is where Hashicorp comes in to play. The company’s suite of products helps everyone in the tech workforce from IT admins to software developers operate in the cloud (mostly) effortlessly and natively.

The company’s products have long garnered rave reviews from technical staffs, and now the company is looking at a brand new massive valuation.

The SF-based startup announced today that it has raised $175 million in Series E financing from Franklin Templeton Investments at a scorching $5.1 billion valuation. For context, when we last covered the company back in late 2018, its valuation was only a “paltry” $1.9 billion following a $100 million round led by growth investor IVP.

HashiCorp scores $100M investment on $1.9 billion valuation

The company in its release today touted its success in doubling revenues and customers every year for four straight years as the key reason behind the flush valuation. The company is making a (not so) subtle point that David McJannet, who joined the company as CEO in mid-2016 following a stint as an EIR at Greylock, has seen some success in his new role.

Hashicorp CEO David McJannet. Photo via Hashicorp

The company, founded by Mitchell Hashimoto and Armon Dadgar in 2012, is one of the major pioneers in helping companies build high-quality infrastructure that’s a mix of multi-cloud providers, private cloud, and even legacy systems.

It’s most well-known product is Terraform, which allows developers to write repeatable rules around enterprise infrastructure rather than a patchwork of different scripts that might not work as its writers intended. The idea is that with a consistent framework, Hashicorp’s product can help companies reduce costs (by protecting against, say, over-provisioning of resources) while also helping to balance scale and performance. The company’s other products include Consul around network automation, Vault for security, and Nomad for application deployment.

Hashicorp touches on a bunch of competitive products, but its cohesive set of tools and strong outreach to the developer community has set itself apart from the competition in recent years.

Franklin Templeton is a fairly late stage investor that has funded such enterprise companies as Cloudflare, which went public last year, logs management platform SumoLogic, and cybersecurity business Tanium, all according to Crunchbase.

With a hefty $5.1 billion valuation, the company narrowly missed the catastrophic decline of SaaS stocks over the past few weeks, which have been buffeted by the rapidly spreading global pandemic. But with a new war chest and a focus on a popular and growing enterprise market, the company seems poised to continue its growth.

Top VCs say the landscape for enterprise startups is changing

TransferWise partners with Alipay for international money transfers

Published March 17, 2020

TransferWise, the London-headquartered international money transfer service most recently valued by investors at $3.5 billion, has partnered with China’s Aliplay for international transfers.

The launch enables TransferWise’s now 7 million-plus users to be able to send Chinese yuan from 17 currencies to users of Alipay, which serves more than 1.2 billion people worldwide including via its local e-wallet partners.

Promising “instant” money transfers — under 20 seconds, apparently — TransferWise users simply need the recipient’s name and Alipay ID to initiate a money transfer. The money will then be sent to the bank account linked to the recipient’s Alipay profile.

It could be a potentially smart bit of business by TransferWise, which has sometimes struggled to secure the kind of partnerships that can accelerate its customer base and increase transaction volume. According to a 2019 report, the fintech is citing, China is projected to be one of the top remittance recipient countries in the world, with £54bn expected to be sent back home by Chinese expats and migrants living abroad.

“The partnership is a major expansion for TransferWise as it reaches a new, additional market of people managing their money via the Alipay platform,” says the company.

With that said, Alipay is the second meaningful partnership that TransferWise has announced in the last few months. In November, it joined forces with GoCardless, the London fintech that lets customers pay via recurring bank payments (known as Direct Debits in the U.K.). GoCardless is used by more than 50,000 businesses worldwide, spanning multinational corporations to SMBs, and the partnership sees its own FX functionality powered by TransferWise.

To make locks touchless, Proxy bluetooth ID raises $42M

Published March 16, 2020

We need to go hands-off in the age of coronavirus. That means touching fewer doors, elevators, and sign-in iPads. But once a building is using phone-based identity for security, there’s opportunities to speed up access to WIFI networks and printers, or personalize conference rooms and video call set-ups. Keyless office entry startup Proxy wants to deliver all of this while keeping your phone in your pocket.

“The door is just a starting point” Proxy co-founder and CEO Denis Mars tells me. “We’re . . . empowering a movement to take back control of our privacy, our sense of self, our humanity, our individuality.”

With the contagion concerns and security risks of people rubbing dirty, cloneable, stealable key cards against their office doors, investors see big potential in Proxy. Today it’s announcing here a $42 million Series B led by Scale Venture Partners with participation from former funders Kleiner Perkins and Y Combinator plus new additions Silicon Valley Bank and West Ventures.

The raise brings Proxy to $58.8 million in funding so it can staff up at offices across the world and speed up deployments of its door sensor hardware and access control software. “We’re spread thin” says Mars. “Part of this funding is to try to grow up as quickly as possible and not grow for growth sake. We’re making sure we’re secure, meeting all the privacy requirements.”

How does Proxy work? Employers get their staff to install an app that knows their identity within the company, including when and where they’re allowed entry. Buildings install Proxy’s signal readers, which can either integrate with existing access control software or the startup’s own management dashboard.

Employees can then open doors, elevators, turnstiles, and garages with a Bluetooth low-energy signal without having to even take their phone out. Bosses can also opt to require a facial scan or fingerprint or a wave of the phone near the sensor. Existing keycards and fobs still work with Proxy’s Pro readers. Proxy costs about $300 to $350 per reader, plus installation and a $30 per month per reader subscription to its management software.

Now the company is expanding access to devices once you’re already in the building thanks to its SDK and APIs. Wifi router-makers are starting to pre-provision their hardware to automatically connect the phones of employees or temporarily allow registered guests with Proxy installed — no need for passwords written on whiteboards. Its new Nano sensors can also be hooked up to printers and vending machines to verify access or charge expense accounts. And food delivery companies can add the Proxy SDK so couriers can be granted the momentary ability to open doors when they arrive with lunch.

Rather than just indiscriminately beaming your identity out into the world, Proxy uses tokenized credentials so only its sensors know who you are. Users have to approve of new networks’ ability to read their tokens, Proxy has SOC-2 security audit certification, and complies with GDPR. “We feel very strongly about where the biometrics are stored . . . they should stay on your phone” says Mars.

Yet despite integrating with the technology for two-factor entry unlocks, Mars says “We’re not big fans of facial recognition. You don’t want every random company having your face in their database. The face becomes the password you were supposed to change every 30 days.”

Keeping your data and identity safe as we see an explosion of Internet Of Things devices was actually the impetus for starting Proxy. Mars had sold his teleconferencing startup Bitplay to Jive Software where he met his eventually co-founder Simon Ratner, who’d joined after his video annotation startup Omnisio was acquired by YouTube. Mars was frustrated about every IoT lightbulb and appliance wanting him to download an app, set up a profile, and give it his data.

The duo founded Proxy in 2016 as a universal identity signal. Today it has over 60 customers. While other apps want you to constantly open them, Proxy’s purpose is to work silently in the background and make people more productive. “We believe the most important technologies in the world don’t seek your attention. They work for you, they empower you, and they get out of the way so you can focus your attention on what matters most — living your life.”

Now Proxy could actually help save lives. “The nature of our product is contactless interactions in commercial buildings and workplaces so there’s a bit of an unintended benefit that helps prevent the spread of the virus” Mars explains. “We have seen an uptick in customers starting to set doors and other experiences in longer-range hands-free mode so that users can walk up to an automated door and not have to touch the handles or badge/reader every time.”

The big challenge facing Proxy is maintaining security and dependability since it’s a mission-critical business. A bug or outage could potentially lock employees out of their workplace (when they eventually return from quarantine). It will have to keep hackers out of employee files. Proxy needs to stay ahead of access control incumbents like ADT and HID as well as smaller direct competitors like $10 million-funded Nexkey and $28 million-funded Openpath.

Luckily, Proxy has found a powerful growth flywheel. First an office in a big building gets set up, then they convince the real estate manager to equip the lobby’s turnstiles and elevators with Proxy. Other tenants in the building start to use it, so they buy Proxy for their office. Then they get their offices in other cities on board…starting the flywheel again. That’s why Proxy is doubling down on sales to commercial real estate owners.

The question is when Proxy will start knocking on consumers’ doors. While leveling up into the enterprise access control software business might be tough for home smartlock companies like August, Proxy could go down market if it built more physical lock hardware. Perhaps we’ll start to get smart homes that know who’s home, and stop having to carry pointy metal sticks in our pockets.

Grocery delivery apps see record downloads amid coronavirus outbreak

Published March 16, 2020

As the COVID-19 pandemic spreads across the U.S., grocery delivery apps have begun seeing record numbers of daily downloads, according to new data from app store intelligence firm Apptopia. On Sunday, online grocery apps, including Instacart, Walmart Grocery and Shipt, hit yet another new record for daily downloads for their respective apps, the firm says.

Comparing the average daily downloads in February to yesterday (Sunday, March 15), Instacart, Walmart Grocery and Shipt have seen their daily downloads surge by 218%, 160% and 124%, respectively.

Typically, these apps (except for Shipt) see tens of thousands to as many as 20,000+ downloads per day. But on Sunday, Instacart saw more than 38,500 downloads and Walmart Grocery saw nearly 54,000 downloads, the firm says. Shipt, though hitting record numbers, saw only 7,285 downloads on Sunday. To some extent, its lower figures could be due to Target’s move to integrate Shipt’s grocery delivery service, which it owns, into its main app.

In fact, the Target app has also broken records for daily downloads, the report found. On Sunday, Target’s app saw more than 53,100 daily downloads; a month ago, it was seeing 25,000+.

Walmart very recently announced it would merge its grocery delivery service into its main app, as Target has done. But for now, consumers are still seeking and downloading its standalone grocery app at record levels.

These grocery delivery apps are in demand more than ever during this health crisis.

With government mandates to practice “social distancing,” U.S. consumers have been stocking up for long weeks to be spent at home. Stores were cleared of key supplies, like toilet paper, and several also saw long lines and crowds as panic-buying set in. Grocery delivery and pickup, meanwhile, presents an easier option — as well as one where you could limit your exposure to other people. With grocery pickup, consumers only have to interact with a single store employee from their curbside parking space. And with grocery delivery, most orders can simply be left on the doorstep with no person-to-person contact required.

Several grocery delivery services, including Instacart and others, promoted the fact they would add a “contactless” delivery option, which helps contribute to the huge sales boost. On Thursday, Instacart said its sales growth rates for the week was 10 times higher than the week before, and had increased by as much as 20 times in areas like California, New York, Washington and Oregon.

Apptopia’s report didn’t analyze the impact of the coronavirus outbreak on Amazon’s grocery delivery business, which includes Amazon Fresh and Whole Foods deliveries. This is more difficult to do because Amazon grocery orders aren’t placed inside a dedicated app, as with Instacart. However, Amazon confirmed a technical glitch on Sunday affected online orders through both its grocery delivery services, which the company attributed to the increase in online shopping.

“As COVID-19 has spread, we’ve seen a significant increase in people shopping online for groceries,” an Amazon spokeswoman explained, in a statement shared with Bloomberg. “This resulted in a systems impact affecting our ability to deliver Amazon Fresh and Whole Foods Market orders [on Sunday night]. We’re contacting customers, issuing concessions, and are working around the clock to quickly to resolve the issue,” they added.

Amazon Prime is also expected to experience delays and shortages as consumers stock up on non-grocery household items, the company says.

But even as grocery delivery booms, the market for food delivery apps has not seen the same results.

Despite promises for contactless delivery from several providers, including Uber Eats, food delivery apps are not experiencing a similar surge in daily downloads. According to Apptopia, the food delivery market earlier in March was starting to cool off. It later began to pick up but then cooled off again as consumers realized the expense of ordering food compared with home cooking, and because some consumers view restaurant delivery as not being as safe as cooking at home.