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Facebook has acquired Scape Technologies, the London-based computer vision startup
Scape Technologies, the London-based computer vision startup working on location accuracy beyond the capabilities of GPS, has been acquired by Facebook, according to a regulatory filing.
Full terms of the deal remain as yet unknown, although a Companies House update reveals that Facebook Inc. now has majority control of the company (more than 75%). However by looking at other filings, including a recent share issue, I understand the price could be about $40 million.
Further filings show that Scape’s previous venture capital representatives have resigned from the Scape board and are replaced by two Facebook executives.
Scape’s backers included Entrepreneur First (EF) — the startup is an alumni of the company builder program — along with LocalGlobe, Mosaic Ventures, and Fly Ventures.
Noteworthy is that EF and Fly Ventures have both already had a joint exit to Facebook of sorts, when Bloomsbury AI was acqui-hired by the social networking behemoth (a story that I also broke).
Founded in 2017, Scape Technologies was developing a “Visual Positioning Service” based on computer vision which lets developers build apps that require location accuracy far beyond the capabilities of GPS alone.
The technology initially targeted augmented reality apps, but also had the potential to be used to power applications in mobility, logistics and robotics. More broadly, Scape wanted to enable any machine equipped with a camera to understand its surroundings.
Scape CEO and co-founder Edward Miller previously described Scape’s “Vision Engine” as a large-scale mapping pipeline that creates 3D maps from ordinary images and video. Camera devices can then query the Vision Engine using the startup’s “Visual Positioning Service” API to determine their exact location with far greater precision than GPS can ever provide. The Visual Positioning Service was made available to select developers via Scape’s SDK.
Meanwhile the acquisition by Facebook, no matter what form it takes, looks like a good fit given the U.S. company’s investment in next generation platforms, including VR and AR. It is also another — perhaps, worrying — example of U.S. tech companies hoovering up U.K. machine learning and AI talent early.
Update: A Facebook spokesperson provided the following statement: “We acquire smaller tech companies from time to time. We don’t always discuss our plans.”
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3 unicorn takeaways from the Casper and One Medical IPOs
With Casper’s public offering earlier this week, we’ve closed the book on the first two venture-backed IPOs of note in 2020. Casper, joined by One Medical, carried over $870 million of private capital, venture and otherwise, across the finish line.
Even though each IPO featured an unprofitable tech-enabled business that had posted sub-30% growth and gross margins under 50% (far more, in the case of One Medical), they wound up miles apart in terms of their market reception and resulting valuation, measured in revenue multiples terms.
So what can we learn from the two IPOs as we look ahead to other unicorn debuts in 2020? A great number of things that help set the stage for the rest of 2020’s IPO class. Let’s discuss three observations that stick out the most.
Tech-enabled businesses can secure high-flying valuations in public offerings
The surprise of the year so far has been the public market’s reaction to One Medical’s IPO. The company, today worth $3.13 billion, is trading at 11.3x times the top end of its 2019 revenue projections (the company has yet to close the books on its Q4 accounting).
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Our.News fights misinformation with a ‘nutrition label’ for news stories
A startup called Our.News is working to make its users smarter consumers of the news.
In other words, it’s confronting some big, seemingly intractable problems. For one thing, there’s a tremendous amount of disinformation online — as Our.News founder and CEO Richard Zack put it, “Unfortunately, you have thousands of people all over the world who intentionally make it hard for people to know what’s true.”
At the same time, many people don’t trust the media and don’t trust fact-checkers. (Also, facts don’t actually change people’s minds.)
All of this adds up to an environment where no one is quite sure what to believe, or they simply accept the stories that reinforce their existing beliefs.
“You can’t fight misinformation by telling people what’s true, because they don’t believe it,” Zack said. His solution? Something that he described as a “nutrition label for news.” “It doesn’t tell you it’s good or bad, it doesn’t say buy it or don’t buy it, it leaves the buying decision in the hands of the consumers.”
In some ways, the approach is similar to NewsGuard, which rates online news sources. In fact, Zack said, “We really support NewsGuard and what they’re doing.” Still, he suggested that evaluating publishers isn’t enough, which is why Our.News provides labels for individual articles — he compared it to “trying to choose between Lucky Charms and Cheerios,” where it’s not enough to know that both cereals are manufactured by General Mills.
To put it another way, you don’t want to just accept what a publisher tells you. Even the best publisher can make mistakes, so you also want to understand what claims they’re making, what their sources are and whether those claims have been vetted by independent fact checkers.
An Our.News label is accessible through Firefox and Chrome browser extensions, as well as an iOS app. The label includes publisher descriptions from Freedom Forum, along with bias ratings from AllSides; information about an article’s sources, author and editor; fact-checking information from sources like PolitiFact, Snopes and FactCheck.org; labels like “clickbait” or “satire”; and user ratings and reviews.
Zack said Our.News has created around 600,000 labels to date, generating about 5,000 new ones every day. Of course, there’s still a good chance that the article you’re reading won’t have a label, but if that’s the case, Our.News might still be able to show you publisher information, and users can also click a button to add the article into the system.
“We’ve intentionally combined objective facts [about the article] with subjective views,” Zack added. “We think that’s the solution … If you go purely subjective, then it’s just a popularity contest. If it’s just objective, then who’s the determiner of truth? We’re mixing the two together, condensing it all into the nutrition label, so news consumers can more quickly make their own decision.”
He also acknowledged that different users will treat the labels in different ways. Some, for example, may still not trust the fact-checkers, but even then, Zack argued there’s still value in giving them a way to provide feedback to publishers in a way that’s more structured than a regular comments section.
He also noted that user ratings will be weighted based on their interaction with the label — if you skip the publisher information, skip the sources and skip the fact-checking, then your rating won’t be worth as much as someone else who carefully considered all of that information.
In addition to its current, consumer-focused distribution, Our.News just launched a way for publishers and other businesses to incorporate its labels. Zack said this could be used by “news publishers, content aggregators, social networks, anywhere that’s displaying articles.” (This is also how he plans to make money.)
The hope is that Our.News partners can use these labels to make readers more comfortable trusting their content, and to collect feedback from those readers. There will be some degree of customization available, but Zack emphasized that publishers won’t be able to change the actual content of the labels.
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AssoConnect is a service that helps you manage your nonprofit organization
Meet AssoConnect, a French startup that is building a software-as-a-service application to give you all the tools you need to manage your nonprofit organization (association in French).
The company just raised a $7.7 million (€7 million) funding round with XAnge and ISAI leading the round. Various business angels, such as Nicolas Macquin, Rodolphe Carle, Michaël Benabou, Thibaud Elzière and Phil Tesler are also participating in today’s funding round.
Many nonprofit organizations use tools and services that aren’t really designed for this type of organization. Some manage members in an Excel spreadsheet, waste a ton of time with accounting tasks and leave money on the table by making it hard to accept donations and memberships.
AssoConnect combines multiple services in its web interface. First, it lets you centralize information about your members in a single database. It acts as a light CRM, and you can create multiple groups of members depending on what they do in the organization.
Second, AssoConnect handles memberships and donations directly. You can create a form that interacts directly with your database to help new users join your organization. You also can create a donation module that can automatically generate tax forms. And you can create an online store if you’re selling goods.
If you don’t have a website already, you can use AssoConnect’s template-based website builder. You also can create events and email your members from AssoConnect using Mailgun.
Finally, the startup tries to generate accurate accounting reports based on donations, membership fees, ticket sales, etc. That’s why it makes sense to centralize everything through AssoConnect.
The service offers a free tier for organizations with 30 members or fewer. But you’ll have to pay a monthly subscription fee if you have higher needs. It’s a tough sell, given that nonprofit organizations usually don’t have a ton of money to spend on tools and services.
But the company has managed to convince 10,000 French organizations to switch to AssoConnect so far. Up next, AssoConnect wants to hire 80 people in 2020 and launch its service in the U.S.
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What to expect when pitching European VCs
Russ is the cofounder and CEO of DocSend. He was previously a product manager at Facebook, where he arrived via the acquisition of his startup Pursuit.com, and has held roles at Dropbox, Greystripe, and Trulia. Follow him here: @rheddleston and @docsend
Fundraising is the single most important thing you can do for your business, but I know very few founders who enjoy the process.
It’s inherently stressful: you’re running out of capital, which is why you’re trying to get more of it. There’s also no clear roadmap to getting funding and almost every company goes through the process differently. I’ve talked a lot about what makes a successful early-stage pitch deck and what you can expect when you’re trying to close a funding round. But do those same best practices still apply when you’re fundraising outside of the United States?
Before we continue, the research project that we’ve completed is opt-in, and we don’t look at anyone’s data without their express permission. We take privacy very seriously, but we also work with an amazing group of founders who are willing to pass on what they’ve learned to the next generation of founders going through the process. If you want to be included in our next round of research, you can find the survey links at the bottom of this blog post.
So what can you expect while sending your pitch deck out to European VCs?
Have a 9-12 month runway
When DocSend conducted this study previously, we found that the average length of a Series seed or pre-seed was about 11-15 weeks. In fact, according to our research, if you’re in the United States and you’re sending your pitch deck to investors, you can expect about 50 percent of your views to come in just the first nine days. You’ll also hit 75 percent of your visits in just over a month, which is very much in line with the 11-15 week average window.
However, when we look outside of the U.S., the numbers change dramatically.
Sending out your pitch deck in Europe, you can expect to wait over two weeks (15 days) for the first 50 percent of your visits. And you’ll likely wait nearly two months (53 days) for 75 percent of your visits. There are a lot of reasons for the discrepancies. It could be that your potential investors are more spread out. We also don’t see the same level of urgency in EU funding rounds as we often see in the U.S. No matter the reason, you’re going to want to have enough runway to survive the fundraising gauntlet in your region. While I usually recommend having at least six months in the bank, you may want to look at having 9-12 months of runway so you’re not desperate by the end of your fundraising round.
However, your round speed will most likely vary depending on the type of company you are. There has been a trend in recent years of U.S. investors looking to make deals with European startups. We also know American investors are looking for 100x companies to make solid returns for their funds. There are only so many 100x-type companies in the U.S you can invest in, but Europe is an emerging market. But American VCs have a different pace and rounds for hot startups can last weeks, not months. So if you think you have a unicorn in the making (and are comfortable with a more aggressive growth plan and the burn rate that goes with it), you can use U.S. investors to help create a sense of urgency. But even if that’s your plan, I would still recommend having a healthy runway to get you through in case the round doesn’t go as you expect.
VCs are likely to spend more time on your deck — you should too
A clear indicator of VC interest is the amount of time they spend reading your deck before they request a meeting. Knowing how long they spend reading your deck and what pages they stop on (which isn’t necessarily a good thing) can help you gauge VC interest.
We’ve seen an interesting trend in Europe over the last few years. The average amount of time VCs are spending reading a deck has increased and not by a small amount. We’ve seen an increase of more than 20 seconds between 2018 and now, even while the length of the standard fundraising deck has stayed stable. It’s still within the industry average (both in and outside of the U.S.) of 19-20 pages. With page length staying stable, that extra time on a deck means VCs are willing to spend more time assessing an investment.
If you know your slides will be scrutinized, make sure you have content in each of the key sections VCs expect to see in your deck. Be very clear with the goal for each page and don’t include too much information. If your page is describing the problem your company is solving, you don’t need to add in your market size and the traction you’ve already gotten. Remember, the pitch deck is just there to get you the meeting; you don’t need to include every detail about your business. Your goal is to build an understandable narrative that will make a VC want to know more.
You could face more competition for European VCs’ attention
Investments are heating up outside of the U.S.
With fund sizes increasing, especially in the earlier rounds, there’s more money being invested. But with the continual focus on unicorns, that money is being concentrated in fewer companies. In fact, in the U.S., we’ve seen the number of decks with six or more views drop by nearly a full percentage point from 2018 to 2019. But the trend is the opposite in Europe. The number of pitch decks that are being viewed six or more times is actually on the rise.
We’ve also seen the number of pitch decks being viewed only once drop outside of the U.S. by 1.2 percent. This could be due to several factors. The number of VC firms in Europe viewing decks has grown by 56 percent on our platform in the last year. In the U.S., it’s only grown by 35 percent since 2018. Having more active VCs means there are more opportunities to pitch your company. But with a decrease in pitch decks that aren’t getting any action, it could be that the quality of startups is increasing, so VCs are saturated with opportunities. With well over 250 accelerators in Europe, it isn’t hard to imagine that with more and more resources available, startups are further along when looking for that initial investment than they were just a few years ago.
Takeaways
Raising a funding round is completely different in Europe than it is in the U.S.
Investors in Europe aren’t in a rush to view your deck, but when they do, they will likely spend more time reading it through and considering it. Combine that with the fact that the number of highly-viewed decks is increasing, and you have the makings for a long and potentially arduous round pitching to VCs who have multiple good investments on offer.
If your business will support a more aggressive growth plan and investment, it may be worth it to court outside investment. But if you’d like to play it safe, aiming for a U.S. VC may be a waste of time.
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New Early Stage speakers to tackle growth marketing, media strategy and M&A
In a little less than three months, TechCrunch will bring its Early Stage event to SF for the very first time. Early Stage is meant to bring together more than 50 experts across startup core competencies, from funding to marketing to operation.
Today, I’m pleased to announce another four experts being added to the agenda. We’re thrilled to be joined by Priti Youssef Choksi, Brooke Hammerling, Ethan Smith and Susan Su.
Priti Youssef Choksi
Choksi is a partner on the Norwest Venture Partners consumer internet team. Before joining Norwest, she spent nine years in executive roles at Facebook around corporate and business development, leading the company’s M&A efforts. Before Facebook, Choksi spent six years at Google in strategic partnership roles. She was one of the people responsible for setting up the search partnerships with Apple and Mozilla, with top-line revenue from these deals growing from $0 to $4 billion on her watch.
How To Get Your Company Acquired, Not Sold
Learn how to think about M&A as a possible exit opportunity from a former Facebook corporate development executive turned investor. Understand what acquirers are looking for and what questions you should be asking. Create optionality for yourself as you build and grow your company.
Brooke Hammerling
Brooke Hammerling is the founder of The New New Thing, a strategic communications advisory that works with founders to shape the brand narrative. She also founded Brew Media Relations, which was acquired by Freuds in 2016 for a reported $15 million. She has 20 years of experience in the communications field, with a focus on authenticity and relationships at the core of her business. Brands she’s worked with include Live Nation, Framebridge, Refinery 29, Sonos, Splice, GroupMe, Eko and Oracle.
How To Tell The Story Between The Stories
The news never sleeps. Hear from communications veteran Brooke Hammerling, founder of Brew PR and The New New Thing, about how to build a narrative that isn’t driven by press releases and announcements.
Ethan Smith
Ethan Smith is the founder and CEO of Graphite, an SEO and growth marketing agency based out of San Francisco. He’s served as a strategic advisor to Ticketmaster, MasterClass, Thumbtack and Honey. Before Graphite, Smith held several executive roles in product management and marketing, and has been tapped by organizations like VenturebBeat, MarketWatch and INC to speak and write about SEO and growth marketing.
How To Build A High-Performance SEO Engine
Hear from Ethan Smith, who has worked with brands like MasterClass, Ticketmaster and Thumbtack, as he shares some of the most effective modern SEO strategies. Starting with a deep understanding of the user and their intent, the most successful modern SEO strategies focus on building a data-driven approach to drive user experience, content and conversion to ultimately beat the competition.
Susan Su
Susan Su is a startup growth advisor and EIR at Sound Ventures. Su has led startup growth at Stripe, served as an in-house growth advisor at 500 startups and led the growth marketing as a founding team member at Reforge. After a career that spanned both product and marketing, Su has combined the two to take advantage of the rise of scaled distribution platforms.
Minimum Viable Email
Love it or hate it, email is here to stay. But understanding where it fits into the conversion funnel, and how to maximize its impact, can be arduous. Learn from Sound Ventures advisor and EIR Susan Su how to optimize open rates, deliverability, unsubscribes and conversions for consumer and enterprise products alike.
There will be about 50+ breakout sessions at the show, and attendees will have an opportunity to attend at least seven. The sessions will cover all the core topics confronting early-stage founders — up through Series A — as they build a company, from raising capital to building a team to growth. Each breakout session will be led by notables in the startup world on par with the folks we’ve announced today.
Don’t worry about missing a breakout session, because transcripts from each will be available to show attendees. And most of the folks leading the breakout sessions have agreed to hang at the show for at least half the day and participate in CrunchMatch, TechCrunch’s great app to connect founders and investors based on shared interests.
Here’s the fine print. Each of the 50+ breakout sessions is limited to around 100 attendees. We expect a lot more attendees, of course, so signups for each session are on a first-come, first-serve basis. Buy your ticket today and you can sign up for the breakouts we are announcing today. Pass holders will also receive 24-hour advance notice before we announce the next batch. (And yes, you can “drop” a breakout session in favor of a new one, in the event there is a schedule conflict.)
We’re absolutely thrilled for this event, and we hope you are, too. Buy a pass to Early Stage SF 2020 right here!
Interested in sponsoring Early Stage? Hit us up here.
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Why is One Medical worth more than Casper?
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week was something fun. First, we were back as a group in the San Francisco studio, which is always fun. Even better, we had NEA’s Rick Yang on hand to chat with Danny and Alex about the week. Yang, as old-school Equity listeners will recall, was on the show back in 2017. (Equity turns three soon, which is somewhat amazing.)
All that aside, let’s talk about what we talked about. As always, we kicked off with three rounds:
- Sendoso raises $40 million on the back of 330% revenue growth
- Finix raises $35 million for its payments infra product with Sequoia as its new lead
- Elodie Games picks up $5 million for cross-platform, in-house games (this sounds super cool)
After that we chugged through a mountain of news. First up, the confirmation of a story that we mentioned on the show before, namely the existence of a new venture fund (angel pool, perhaps) from the CEO of email startup Superhuman Rahul Vora and Eventjoy founder Todd Goldberg. The $7 million vehicle is going to cut pre-seed sized checks ($75,000 to $200,000), which should make it a popular pit stop for pre-revenue companies.
What next? Well, Casper of course. The company’s IPO pricing and debut was this week, something that we’ve had something to say about. That, and the latest from One Medical’s strong post-IPO performance, and the news that Asana has filed privately to go public in a direct listing.
That last item was of particular interest, as the company hasn’t raised as much cash as other companies that we’ve seen direct list, the Spotifys and Slacks of the world. So has it raised capital that we haven’t heard about, or has it simply not spent the capital it has raised? If it had spent the money, then wouldn’t it want to raise some like with a traditional IPO? Mysteries! Riddles that will be solved when we get to see the damn filing.
Oh, and Spotify continues to pour money into podcasting. Which everyone ’round the table thought was pretty smart.
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Carta debuts fund to invest in startups that tap into its platform
This morning Carta, a startup that helps private companies manage equity, announced it has created an investing vehicle called Carta Ventures. The well-funded unicorn wants to invest in young startups that it sees building off of its data-driven perspective into the world of private companies, helping to foster an ecosystem around its core products and services.
As TechCrunch has reported, the world of corporate venture capital has seen an enormous rise in the number of players active in the category, as cash-rich incumbents of all sizes deploy cash as a way to both keep an ear to the ground in their market and surrounding areas, and perhaps drive some cash-on-cash returns to boot. Companies like Slack have also compiled investing entities while private to put capital to work in companies that plug into their platform.
With all the activity in corporate venture capital, why do we care about Carta Ventures? Mostly because Carta itself is of growing importance in the expanding and increasingly crucial world of private companies, and the company has some pretty specific things it’s looking to invest in.
Why private companies matter
Carta works with private companies to help with certain valuation varietals, cap tables and reporting. It also offers tools and services for the venture class. This puts it squarely in the middle of the private market, which is in the midst of a long crescendo.
Investment into private companies is growing. The number of public companies is falling, and it’s taking longer for private companies to go public. The companies staying private are worth hundreds of billions of dollars. Hell, even The Economist dug into the private company boom, noting that “[i]nstitutional investors are rushing headlong into private markets, especially into venture capital, private equity and private debt.”
And Carta provides behind-the-scenes sinew and tissue to both the players (startups and other private companies) and their fuel (investors of all stripes). Efforts that sum to the startup working to expand the world of companies supporting those same firms through its new venture fund.
Carta wants to accelerate (and even instigate, as we’ll see) companies that add to its own platform, making investing and participating in the private markets a bit more limpid and simple — two things that the world of private capital and its constituent bets have never had in abundance.
Capital for whom?
To get a grip on who Carta wants to fund and why, TechCrunch caught up with James McGillicuddy, who heads up strategy for the company. Starting with the basics, the capital that Carta Ventures plans to invest will come out of Carta’s own accounts. McGillicuddy said that the entity will invest “balance sheet capital, with no outside structure,” meaning that the setup is “very much from the corporate ventures playbook.”
Standard so far, then. Next we wanted to know about how many general partners Carta Ventures would muster to go into the market. Instead of answering that directly, McGillicuddy discussed a number of existing internal staffers, and a collection of folks that he considers a “pretty good group of folks in the classical sense on the investment committee that will be able to help these entrepreneurs and guide them towards a business that we think should exist now that we [are] programmatically opening up access to the markets.”
Carta Ventures intends to write seed checks, according to a pre-release copy of a blog post shared with TechCrunch. McGillicuddy added that Carta Ventures’ “first priority is helping folks think through how to leverage our platform to build things that we think should exist, that we don’t have the expertise [in].”
As you can tell from McGillicuddy’s last two answers, there is intentionality afoot at Carta Ventures in terms of what it wants to see built.
In a blog post written by Carta CEO Henry Ward, three companies are mentioned: A startup focused on helping other companies come up with fair and market-fitting “total compensation” for employees including both cash and stock; a startup focused on “build[ing] analytic investment tools for venture as an asset class;” and one final startup focused on executing and publishing research on private companies.
I was curious why Carta wouldn’t just build this out itself, given how precise its anticipation of what it wants to be built. McGillicuddy said that the best people for all things that Carta wants to see aren’t inside its offices (true), and that even if some of those folks were already working for Carta, his company has “many other priorities and so many things to build.”
Fair enough. But it indicates that Carta isn’t just building a corporate venture arm to go out and put money to work in companies that could later eat its lunch. Instead, it wants to put to use capital as a lever to power particular firms that could extend its reach.
What else?
Carta’s venture fund is willing to put money to work in idea-stage companies, provided that you’re doing stuff that it finds enticing (see above). And Carta is willing to put you up in its office and so forth. It’s there to help if you want it.
Why is all this happening? Carta isn’t public and probably isn’t profitable. How can it afford to have its own venture arm? This is how:
That was back in mid-2019 when it raised $300 million at a $1.7 billion valuation.
When the private capital markets are wiling to throw that much money at you, why not put it to work funding smaller companies who may profit off of your private company platform?1
- If you say “private companies” four times fast, you have to accept a check from Carta Ventures. It’s the rule.
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Rideshare startup HopSkipDrive raises $22M to focus on school transportation
It’s no secret that it’s hard to make the economics work at rideshare companies. That may explain the success to date of HopSkipDrive, a six-year-old, L.A.-based company that pairs drivers with both families but also, crucially, school districts. Specifically, the now 100-plus person company has deals in place with school districts in 13 markets across eight states where it works with more than 7,000 contractors.
All contractors, says cofounder and CEO Joanna McFarland, must have at least five years of childcare experience before they are allowed to drive for the startup.
Interestingly, McFarland says the school systems’ most burning need is to ensure the safe arrival of both homeless and foster children, whose numbers in the U.S. have reached an astonishing 2.5 million and 440,000, respectively. On the heels of a brand-new funding round, we asked her what’s going on and why.
TC: You’re just announcing $22 million in new venture backing, congratulations. I wonder if your story was harder to tell investors than it might have been a year ago, when they were more bullish on car-share companies.
JM: We’ve never considered ourselves comparable to Uber or Lyft. We’re really caregivers on wheels, providing a very different service. We work with families, but we also contract with school districts and counties, and that has a strong path to profitability. We can predict supply and demand; we’re [enjoying] contracted revenue. It’s very different.
TC: How do you describe the market opportunity?
JM: U.S school districts spend $25 billion a year on transportation, yet only one-third of kids take a bus to school, so it’s expensive and inefficient and meanwhile districts are being asked to do more with less.
Particularly challenging for them are children with specialized needs or homeless children who are moving around a lot but have the same right to get to school. It’s hard to re-route school buses, so we help schools with alternative transportation. Once we’ve contracted with them, we’re available, including to pick up a student who might be in foster care and moved to a new place at 10:30 at night. We can still pick them up the next morning.
TC: There are thousands of homeless children attending San Francisco schools. Are you serving other markets where housing prices are forcing more families on to the streets?
JM: Unfortunately, there’s a large and growing population in a lot of places. Districts might not even know how many students are homeless or in foster care because their situations can change so significantly throughout the year. It might start with 500 students at the beginning of the year and end with 1,000. Because it fluctuates so much, it puts a ton of demand on these transportation directors to figure it out.
We’re partnered with L.A. County, for example, and it has the largest child welfare system in the country, with 88 districts and between 20,000 and 30,000 kids in foster care at any one time. It’s not a great statistic for L.A., but it’s the reality.
TC: And it’s one driver, one child?
JM: Sometimes there will be two or three kids. We can do carpools. If there are group homes, we’ll take them to their different schools.
TC: What do your contracts look like then with these school districts?
JM: We dictate the ride price, then it’s really on as as-needed basis. They pay for what they need. We talk with them about their needs last year and this year and that does help us tremendously with supply and demand.
TC: How much of your business is coming from school partnerships versus from families that hire your company to take their kids to soccer games?
JM: Our business for families is growing organically, there’s such a need for it, but 70 percent of our revenue comes from [school districts].
TC: Your drivers are 1099 workers, so presumably they are working for other ride-share or other gig-economy companies? How busy can you keep them?
JM: They are contractors. Because they must have five years of caregiving experience and because of the vetting we do, 90 percent of them are female, and they love what they do because they’re driving in communities where their kids grew up and they’re tied to the mission of what we’re doing.
We have some overlap with other gig companies, but with [HopSkipDrive] there’s safety on both sides of the platform, meaning they are driving kids, they aren’t driving late at night, they aren’t driving anyone who is drunk. They also have control over where they drive and when, based on personal preferences. They can choose some rides before school so they can take care of an elderly relative or grandchildren. They can see rides that are available up to a week in advance and select which ones they want depending on their schedule. Many are semi-retired and not looking for full-time income.
TC: How can parents be certain their kids are safe?
JM: We have a dual authentication process so drivers confirm a code word with the child and another piece of information that the child will know. Parents can track the rides in real time. We also have tech that monitors rides and can detect anomalies and provide support as needed. For example, they know via GPS and sensors if a driver is hitting traffic or has stopped owing to a flat tire and can react proactively, whether it is to send another car (in the case of a flat tire) or let the school and parents know that the child will be late. We designed the whole system for when a passenger may not have a phone.
TC: Why start this company?
JM: I started in finance then went into product management, working for tech companies. But as I was working, I was also growing my family, and I couldn’t get my son to karate at 3 o’clock. It was so frustrating. I didn’t need a nanny; I just needed to get him to karate.
All the moms I knew had their own version of this transportation story. [At a school function,] I suggested we put out money in a pot and hire a driver, and another mom said, ‘How do we do that?’ She’s one of my cofounders.
Pictured above from left to right: HopSkipDrive cofounders Carolyn Yashari Becher. Joanna McFarland, and Janelle McGlothlin
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Shrunken unicorn Fair cancels car leasing to Uber drivers
When Fair laid off 40% of its staff in October, CEO Scott Painter promised it wasn’t shuttering leasing services to on-demand fleets. But just one week later, Painter was removed as CEO and replaced in the interim with Adam Hieber, a CFA from Fair investor SoftBank. Today, according to two sources, Fair announced at an all-hands meeting that it would end its Fair Go program that helped Uber drivers lease cars. The program will cease in April. Uber now confirms the news to TechCrunch, and now Fair has directly confirmed the news to us as well.
“Due to an unexpected increase in insurance premiums that would have significantly raised prices for Fair’s rideshare drivers, we will wind down our weekly rideshare service over the coming months,” a spokesperson said. “We are working to minimize the disruption for Fair’s rideshare drivers, including notifying these customers of the status of their subscription in the coming weeks. We are working closely with Uber and exploring options with third parties to provide alternative customer mobility options to ensure a seamless transition for them, as well as continuity in Uber’s vehicle supply. We are thankful for our loyal Fair rideshare drivers and are disappointed we can no longer operate the business in a cost-effective way for our customers.”
Formerly valued at $1.2 billion after raising over $2 billion in equity and debt financing from SoftBank and Lightspeed, Fair laid off 40% of its staff in October. It had bought Uber’s XChange leasing program in early 2018. The deal lets drivers lease an Uber-eligible car with subscriptions to roadside assistance and maintenance for as low as $130 per week with a $500 start fee.
But Uber had sold the leasing program because it was unprofitable and adding to its losses at a tough time for the rideshare giant. As additional fees stacked up, Fair didn’t fare much better operating it.
A source tells us Fair Go was profitable. It was an important focus for the company as it retooled its subscription services for traditional drivers. Another source says at one point Fair Go was adding about 250 to 300 car leases per day and had thousands of active leases.
But Fair Go was facing higher insurance rates from carriers, which make sense since Uber drivers can be on the road far, far longer than traditional car owners.
Rather than trying to pass those fees along to drivers — many of whom are already cash-strapped — Fair told employees it would cease to lease to Uber drivers. That’s a respectable choice, since it could have pushed Uber drivers into debt if they didn’t fully comprehend what their total costs would be.
Attempts to reach Fair for comment were complicated by many of its in-house PR team being hit with October’s layoffs. An agency representative provided the statement above after publishing time.
An Uber spokesperson confirmed the shut down of Fair Go and their partnership, telling TechCrunch that “Unlocking options for vehicle access so drivers can earn with Uber remains a top priority. We’re thankful for Fair’s collaboration, and their contributions to our vehicle rental program. We’re continuing to invest in rental partnerships, and building more flexibility beyond hourly, weekly, and monthly options available today.”
Uber tells me it remains committed to offering rental options to drivers through partnerships with Hertz, Avis, ZipCar and Getaround, and they may be able to work with Uber drivers formerly leasing from Fair.
Painter kept a role as chairman of Fair.com when he stepped away from the CEO position at the end of October — a change we are still confirming is in place today. At the time of the layoffs in October, he maintained that the action was proactive, and not in response to SoftBank pressure.
“SoftBank is a big shareholder and supporting my focus, and that is the reality right now,” Painter said at the time. “Leaning on us is not the term,” he added in response to our questions of whether SoftBank pressured it to make these changes. “They are supporting us — there is a big difference,” he stressed.
The CEO change one week later, and today’s news about Fair Go, points to a different unfolding of events that speaks to the pressure SoftBank itself is under.
The news is the latest low point for the SoftBank portfolio in the wake of the WeWork implosion. That’s caused potential repeat LPs for SoftBank’s massive Vision Fund to tighten their purse strings and other late stage investors to focus on sustainable unit economics. Late-stage startups have been left scrambling to cut their burn rates, often through layoffs.
SoftBank’s portfolio, which may have trouble raising on good terms after what many saw as inflated valuations propped up by the megafund, has been hit the hardest. This week TechCrunch broke the news that Flexport was laying off 3% of staff, or 50 employees.
Other SoftBank-funded company layoffs include Zume Pizza (80% of staff laid off), Wag (80%), Getaround (25%), Rappi (6%), and Oyo (5%). There may be more to come: activist investor Elliott Management, which now owns more than $2.5 billion of SoftBank shares, has reportedly been in talks with the company over a range of issues including better corporate governance and more transparency and management around investments.
Updated with confirmation from Fair, and a correction that Uber will continue offering car rentals through partners but not leasing as we originally printed.
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