Fundings & Exits
Auto Added by WPeMatico
VMware to acquire Kubernetes security startup Octarine and fold it into Carbon Black
VMware announced today that it intends to buy early-stage Kubernetes security startup Octarine and fold it into Carbon Black, a security company it bought last year for $2.1 billion. The company did not reveal the price of today’s acquisition.
According to a blog post announcing the deal, from Patrick Morley, general manager and senior vice president at VMware’s Security Business Unit, Octarine should fit in with what Carbon Black calls its “intrinsic security strategy” — that is, protecting content and applications wherever they live. In the case of Octarine, that is cloud native containers in Kubernetes environments.
“Acquiring Octarine enables us to advance intrinsic security for containers (and Kubernetes environments), by embedding the Octarine technology into the VMware Carbon Black Cloud, and via deep hooks and integrations with the VMware Tanzu platform,” Morley wrote in a blog post.
This also fits in with VMware’s Kubernetes strategy, having purchased Heptio, an early Kubernetes company started by Craig McLuckie and Joe Beda, two folks who helped develop Kubernetes while at Google before starting their own company,
We covered Octarine last year when it released a couple of open-source tools to help companies define the Kubernetes security parameters. As we quoted head of product Julien Sobrier at the time:
Kubernetes gives a lot of flexibility and a lot of power to developers. There are over 30 security settings, and understanding how they interact with each other, which settings make security worse, which make it better, and the impact of each selection is not something that’s easy to measure or explain.
As for the startup, it now gets folded into VMware’s security business. While the CEO tried to put a happy face on the acquisition in a blog post, it seems its days as an independent entity are over. “VMware’s commitment to cloud native computing and intrinsic security, which have been demonstrated by its product announcements and by recent acquisitions, makes it an ideal home for Octarine,” the company CEO Shemer Schwarz wrote in the post.
Octarine was founded in 2017 and has raised $9 million, according to PitchBook data.
Powered by WPeMatico
Slice, an online ordering and marketing platform for pizzerias, raises $43M
Global investment firm KKR is betting on the pizza business — it just led a $43 million Series C investment in Slice.
Formerly known as MyPizza, Slice has created a mobile app and website where diners can order a custom pizza delivery from their local, independent pizzeria.
And for those pizzerias, CEO Ilir Sela said Slice helps to digitize their whole business by also creating a website, improving their SEO and even allowing them to benefit from the “economies of scale” of the larger network, through bulk orders of supplies like pizza boxes.
Sela contrasted his company’s approach with other popular food delivery apps that he characterized as aggregators. For one thing, Slice “anchors” your favorite pizzerias in the app, giving them the top spots and making it easy to place your regular order with just a few taps. And it will be adding more loyalty features soon.
“Our job is to make loyal customers even more loyal,” he said.
In addition, while there’s been services like Grubhub have faced criticism for their steep fees, Sela said Slice’s fee is capped at $2.25 per order, allowing pizzerias to get all the upside from large orders.
Of course, the environment for restaurants has changed dramatically in the last few months, thanks to COVID-19. But most pizzerias are already set up for takeout and delivery, and Sela said that more than 90% of the 12,000-plus pizzerias that work with Slice have stayed open.
He also pointed to the company’s Pizza vs Pandemic initiative, which raises funds for pizzerias to feed healthcare workers. The program has raised more than $470,000 and fed an estimated 140,000 workers.
“Local independent pizzerias have been feeding Americans across communities for decades and we are excited to put our resources behind Slice as they help to move these businesses online,” said KKR Principal Allan Jean-Baptiste in a statement. “Slice charges small business owners a fraction of the fees charged by food delivery apps and offers a suite of vertical specific solutions to solve the challenges faced by independent pizza makers.”
Slice had previously raised $30 million, according to Crunchbase. Sela said he’ll be using the new funding to bring on more pizzerias and continue building a “vertically integrated solution for the small businesses, in order to solve more and more of their challenges.”
Powered by WPeMatico
Atlassian acquires Halp to bring Slack integration to the forefront
Atlassian announced today that it was acquiring Halp, an early-stage startup that enables companies to build integrated help desk ticketing and automated answers inside Slack. The companies did not disclose the purchase price.
It was a big day for Halp, which also announced its second product today, called Halp Answers. The new tool will work hand in glove with its previous entry Halp Tickets, which lets Slack users easily create a Help Desk ticket without leaving the tool.
“Halp Answers enables your teams to leverage the knowledge that already exists within your company to automatically answer tickets right in Slack . That knowledge can be pulled in from Slack messages, Confluence articles or any piece of knowledge in your organization,” the company wrote in a blog post announcing the deal.
Note that integration with Confluence, which is an Atlassian tool. The company also sees it integrating with Jira support for other enterprise communications tools down the road. “Existing Halp users can look forward to deeper (and new) integrations with Jira and Confluence. We’re committed to supporting Microsoft Teams customers as well,” Atlassian wrote in a blog post.
Halp is selling early, having just launched last year. The company had raised a $2 million seed round in April 2019 on a $9.5 million post valuation, according to PitchBook data. The startup sees an opportunity with Atlassian that it apparently didn’t think it could achieve alone.
“We’ll be able to harness the vast resources at Atlassian to continue with our mission to make Halp the best tool for any team collaborating on requests with other teams. Our team will grow and be able to focus on making the core experience of Halp even more powerful. We’ll also develop a deeper integration with the Atlassian suite — improving our existing Jira and Confluence integrations and discovering the possibilities of Halp generating alerts in Opsgenie, cards in Trello, and much more,” the company wrote.
Halp’s founders promise that it won’t be abandoning its existing customers as it joins the larger organization. As a matter of fact, Halp is bringing with them a slew of big-name customers, including Adobe, VMware, GitHub and Slack.
Powered by WPeMatico
Fintech startups amass war chests for the economic downturn
Consumer fintech startups were massively successful in 2019, attracting millions of new users and disrupting traditional retail banks and financial services with mobile-first, consumer-oriented products. Despite the economic downturn in public markets and the massive wave of cuts at public and private companies in recent weeks, fintech startups have been raising a ton of money.
It feels like they’re all building a war chest to survive the economic winter as traditional banks continue to iterate so they can catch up and offer more user-friendly services. This is not the time to raise fees, slow down on product development or plans to acquire new users.
Nine-figure rounds
Back in January, I looked at challenger banks and their growth trajectories, but since then, they have managed to attract even more customers. According to the most recent figures:
- Nubank has 20 million customers;
- Revolut has 10 million users;
- Chime has 8 million users;
- N26 has 5 million users;
- Monzo has 4 million users.
And that’s without mentioning Starling Bank, Atom Bank, Bunq, Bnext, Paysend, etc. At some point, there will be as many challenger banks as non-challenger banks — perhaps we shouldn’t call them challenger banks anymore.
Beyond these startups, trading app Robinhood recently reached 13 million users, international payments startup TransferWise has 7 million customers and cryptocurrency exchange Coinbase has 30 million users.
Powered by WPeMatico
SaaS stocks defy gravity amid pandemic, record job losses
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
This week shares of SaaS and cloud companies reached new record highs as investors bid their equities higher following an earnings cycle that came in better than some expected.
SaaS stocks, as measured by the Bessemer-Nasdaq cloud index, closed at a 1,484.93 yesterday, a record, and just a hair under its intraday high of 1,491.59.
The raw numbers matter less than the index’s movement. From highs of around 1,400 in March, the index dropped to 892.60 during the early-year market selloff. Since then, SaaS and cloud companies have come roaring back. This is reflected in the new, higher valuation multiple that the companies are priced at by investors today, namley an enterprise value/revenue multiple of 14.7x.
So let’s take a look at why the SaaS cohort is the apple of Wall Street’s eye. There isn’t a single reason, but we have two that are worth considering. (Also up ahead: Notes on a chat with Alteryx’s CEO and a working definition of socialism. It’s Friday, let’s have some fun.)
A reminder
Briefly, we observe movements in the value of public SaaS and cloud stocks because they inform private market investors about possible exit values for startups. This helps VCs price venture rounds. So, in a somewhat slow mechanism, public values of a stocks help price startups. Given the portion of venture capital dollars and the amount of startup effort that goes into the SaaS space (AI companies are often built using SaaS models, lots of consumer apps are SaaS, and business software is lucrative), we care a lot about the value of SaaS and cloud stocks.
So is the run-up in SaaS stocks, therefore, good for startups? Yep. Now let’s get into why clouds shares are going up.
A meditation of the morality on capitalism
Powered by WPeMatico
More debt, improving margins: How startups are retooling in the COVID-19 era
A new data set from Silicon Valley Bank (SVB) details how startups are reacting to the post-unicorn era as COVID-19-related disruptions upset the global economy and remake the risk tolerance of private investors.
What SVB’s new report shows is unsurprising: venture capital deal volumes are falling, startups are tapping existing debt capacities to add cash to balances while they still can and some upstart firms are curtailing spend to reduce unprofitability. The last data point comes via the lens of startups that recently raised, making the data more a snapshot of what companies that are successfully attracting capital may have accomplished with regard to improving profitability — the directional shifts are material regardless of that particular nuance.
Let’s briefly examine what the data says and what it tells us about the state of the startup market.
Spending less, borrowing more
Venture capitalists are pulling back, SVB data indicates. A chart from its Q2 markets report notes that the “SVB Deal Activity Index” had fallen from a rating of 160 in early March to just over 70 by mid-to-late-April. That staggering decline means fewer rounds are getting done and that there is less capital going into startups of all sizes.
Powered by WPeMatico
Orca Security raises $20M Series A for its multi-cloud security platform
Orca Security, an Israeli cloud security firm that focuses on giving enterprises better visibility into their multi-cloud deployments on AWS, Azure and GCP, today announced that it has raised a $20 million Series A round led by GGV Capital. YL Ventures and Silicon Valley CISO Investments also participated in this round. Together with its seed investment led by YL Ventures, this brings Orca’s total funding to $27 million.
One feature that makes Orca stand out is its ability to quickly provide workload-level visibility without the need for an agent or network scanner. Instead, Orca uses low-level APIs that allow it to gain visibility into what exactly is running in your cloud.
The founders of Orca all have a background as architects and CTOs at other companies, including the likes of Check Point Technologies, as well as the Israeli army’s Unit 8200. As Orca CPO and co-founder Gil Geron told me in a meeting in Tel Aviv earlier this year, the founders were looking for a big enough problem to solve and it quickly became clear that at the core of most security breaches were misconfigurations or the lack of security tools in the right places. “What we deduced is that in too many cases, we have the security tools that can protect us, but we don’t have them in the right place at the right time,” Geron, who previously led a security team at Check Point, said. “And this is because there is this friction between the business’ need to grow and the need to have it secure.”
Orca delivers its solution as a SaaS platform and on top of providing work level visibility into these public clouds, it also offers security tools that can scan for vulnerabilities, malware, misconfigurations, password issues, secret keys in personally identifiable information.
“In a software-driven world that is moving faster than ever before, it’s extremely difficult for security teams to properly discover and protect every cloud asset,” said GGV managing partner Glenn Solomon . “Orca Security’s novel approach provides unparalleled visibility into these assets and brings this power back to the CISO without slowing down engineering.”
Orca Security is barely a year and a half old, but it also counts companies like Flexport, Fiverr, Sisene and Qubole among its customers.
Powered by WPeMatico
Daily.co raises $4.6M video chat API service
API-powered startups are having a good year, with Plaid’s mega-exit to Visa still fresh in mind. And digital video-powered startups are also having a good year, as the world stays home more than before and work shifts to a more remote-friendly landscape. What about a company that does both?
Well, they’d probably raise money and see their usage spike, right? That’s precisely the case with Daily.co, a startup that has both raised new capital this year and has seen usage of its product rapidly rise.
New capital
In simple terms, Daily.co is a startup that provides an API that lets users and customers quickly integrate video chat into their product or website.
Today’s news is that Daily.co put together a $4.6 million round that was led by Jenny Lefcourt from Freestyle. The round was closed in January, but announced this week. (It’s common for venture rounds to close and then ripen in a dark cellar before they are uncorked and shared with the world, though increased Form D vigilance is changing the game.)
Freestyle was not alone in the new round. The investment was funded by a bevy of investors, including three new institutional investors (Moxxie, Slack Fund, SV Angel), and a host of angels (April Underwood, Sarah Imbach, Ellen Levy and Elizabeth Weil, among others). Three prior investors also took part: Haystack, TenOneTen and Root.
If the round didn’t have a lead investor the deal would feel like a unicorn-era party round. Daily.co previously raised $2.5 million in 2016, co-founder Kwindla Hultman Kramer told TechCrunch in an interview. TechCrunch’s first question was how the startup lasted so long on just a few million dollars. The answer was a surprise.
Hardware is … easy?
Daily.co’s path to an API-powered service was not as simple as you’d imagine. In fact, it’s the first startup I’ve ever spoken to that used a hardware product as a temporary method of funding itself.
According to Kramer, his company built and sold a video-conferencing hardware box that it sold for a few hundred dollars and a regular stream of SaaS payments (you can read more about it here, and here, if you want to go spelunking). The income its boxes generated helped the startup keep at its longer-term plan of building a WebRTC-powered API.
According to the firm, handling a “non-trivial” number of minutes via that first product was also an important learning mechanism.
Daily.co’s thesis that the live video tooling that large companies built into expensive conference rooms would come to everyone’s pocket now feels somewhat obvious. But back in 2015 when the company got started (it went through Y Combinator in 2016) the future wasn’t as clear.
A few market trends came together to make the company’s original vision bear out, including growing device power (your new iPhone has more oomph than your old iPhone), better, faster internet penetration, and the uptake of the WebRTC protocol. As each trend matured, Daily.co’s product wager has gone from possible to likely to existing in the market.
After moving away from the hardware world, Daily.co launched its video chat API in 2019, a year in which the company did not grow its staffing. However, 2020 has seen the startup’s headcount quickly expand (recall that this round was closed in January) and its usage skyrocket — according to Kramer, Daily.co has seen 12x usage growth in the last six weeks.
Daily.co charges a hybrid price for its service, including a small SaaS fee and usage costs. Given that it is a SaaS company, effectively, TechCrunch was curious about its margins. According to Kramer, the firm’s margins are attractive, and there are ways for the startup to actively manage its bandwidth costs (thus lowering revenue costs, and bolstering its gross margin profile). So, the startup should be valued at a SaaS multiple during its life.
Looking ahead, Daily.co is seeing increased attention from larger companies, it told TechCrunch, something that could power future growth. But those clients will require hand-holding, we presume, which means an ever-larger staff. It will be interesting to see how much Daily.co can grow in people and revenue terms in 2020 while the rest of the global economy slips into negative territory. More when we have it.
Powered by WPeMatico
Robinhood raises $280M, pushing its valuation to $8.3B
As expected, Robinhood has closed a new round of capital. The late-stage, consumer investing app announced today that it has closed a $280 million Series F funding at an $8.3 billion valuation. This closely tracks prior coverage that the firm was hunting for a nine-figure round at a valuation of around $8 billion.
Robinhood raised capital several times in 2019, including a $323 million mid-year Series E that valued the firm at around $7.6 billion, counting the value of the investment.
The valuation gains that the Menlo Park, Calif.-based unicorn has enjoyed over time are slowing. The firm’s 2017 Series C valued it at around $1.3 billion. That rose to around $5.6 billion the next year when it raised $363 million in its Series D. The firm’s Series E’s $7.6 billion valuation was strong, then, but a deceleration. And today’s $8.3 billion valuation brings its slimmest valuation gain in years.
It seems likely that Robinhood is growing into its valuation as it scales. According to its blog post, Robinhood has added 3 million accounts this year.
According to Bloomberg, which broke the news of the firm’s then-impending funding round, Robinhood recorded around $60 million in revenue this March, three times its February result. It is unclear if the firm can continue that pace of revenue generation during the remainder of 2020, but Robinhood’s trailing valuation multiple would decline sharply if the feat was possible. (Revenue multiples are broadly contracting as the economy slows, and investors project slower growth amongst startups.)
But while Robinhood is caught in an updraft that is lifting the fortunes of many savings and investing apps, its road has not been entirely smooth this year.
Growing pains
Robinhood made headlines in March with less fortuitous news: three outages in two weeks. An outage, in the company’s case, means that consumers were unable to trade during specific hours due to technical difficulties. As the financial services startup handles people’s money — often tied to specific market movements — making any disruption to its operations the opposite of good news.
The stability of apps that handle your money is especially important right now, as people try to get their financial health in order amid rising unemployment and an uncertain future economy at large, let alone the stock market.
We don’t know whether the round was closed before the outages and before COVID-19, but we wouldn’t be surprised if discussions were underway months earlier. (We asked; Robinhood declined to comment.)
It’s worth noting that when Robinhood suffered its first massive outage, its co-CEOs noted that the cause was largely due to a stress on infrastructure due to an unprecedented load of usage.
Robinhood has spent time in the last few weeks figuring out how to handle another increases in usage — sensibly, the new capital will be used to build out capabilities and prevent future crashes. (The company said in its announcement that it intends to “continue to invest in scaling our platform.”)
It’s going to need that platform stability if the market keeps moving as swiftly toward its portion of the fintech world as it has in the last few months.
A savings boom
Robinhood’s citing of “unprecedented load” as part of the cause of its difficulties drove some snark. It’s hard to fit a small brag into an apology, after all. But one thing TechCrunch has learned is that individuals are investing and saving during the pandemic.
Data for this abounds. Acorns, a savings and investing app, saw a record of signups on March 19, the same day that the company noted the stock market recorded their second-worst day of trading since 1987.
We’ve collected further data in the same vein, with Public (another free stock-trading app) reporting surging usage, and other fintech providers telling TechCrunch that more folks than ever are looking to save and buy stocks. Indeed, Robinhood later said that in March it saw “more than 10x net deposits” when compared to the monthly average it set in the last quarter of 2019.
The company, then, raised around a usage high. This makes its failure to generate a larger valuation premium nearly confusing; after all, when would there be a better time for it to raise? The answer appears to be that the same market dynamic that gave it a surge in demand (the pandemic) is likely also the reason that its valuation gains were slight (falling revenue multiples and falling private investor sentiment).
Sequoia Capital led the round, which saw participation from NEA, fintech-focused Ribbit and smaller firms 9Yards Capital and Unusual Ventures.
Other companies are riding the same fundraising wave. Last week, investing app Stash raised a $112 million round led by LendingTree. In its most recent quarter Stash claims it had an over 100% increase in weekly customer deposits across banking and investing.
There are no shortages of other investing platforms for consumers during this time, even if that looks like a traditional incumbent bank. With a new nine-figure round, Robinhood will have to prove that it is competitive, and more importantly, reliable.
Powered by WPeMatico
In conversation with Icebreaker, Finland’s most active pre-seed VC
Icebreaker claims to be Finland’s most active pre-seed VC. The firm, which also invests in Estonia and Sweden, has backed 38 companies in the last three years out of its first fund, with a 65% success rate so far for companies that have been able to raise follow-on funding.
Two weeks ago, Icebreaker announced the launch of Fund II, with an initial close of €50 million. That’s more than twice the size of its first fund, which topped out at €20 million.
Its remit remains largely the same, however. The company typically invests between €150k and €800k in teams that have “deep domain expertise” and are building globally competitive tech companies according to Icebreaker co-founder and partner Riku Seppälä.
Noteworthy, this goes right to the top of the funnel and includes backing and helping to connect “pre-founders,” defined as individuals with over 5 years of work experience in their domain who are aiming to start or join a tech company. As part of this effort, Icebreaker operates an online and offline community to act as a catalyst for new companies to be founded.
Meanwhile, I’m told that Fund II was signed just as the coronavirus crisis began to take hold and includes the majority of LPs from Fund I in addition to new investors. Lead LPs are Tesi, KRR III, Varma Mutual Pension Insurance Company and Elo Mutual Pension Insurance Company, together with 41 other entities consisting of institutional investors, family offices and founders.
To find out more about Fund II and what’s it’s like to launch a new pre-seed fund at a time of such uncertainty, and to understand how Icebreaker thinks about startup life during and after lockdown, I put questions to Icebreaker co-founder and Partner Riku Seppälä.
TechCrunch: What does it feel like to close a new fund right at the start of a pandemic?
Riku Seppälä: Of course, we have been distracted by the mounting health crisis and how the world economy will recover, so the feelings are mixed.
Powered by WPeMatico