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6 VCs explain why seed investors now favor enterprise startups
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re digging into seed-stage companies, the vanguard of the venture market. In particular, we’re trying to understand why the ratio of seed deals now favor enterprise startups over their consumer-focused brethren. The fact that seed investors recently inverted their preferences, cutting more checks to enterprise (B2B) startups in 2019 than consumer-oriented companies (B2C) was news.
We wrote about the trend here, as regular readers will recall.
To better understand what’s going on, I spoke with a number of early-stage venture investors who recently dropped by Equity, came highly recommended by peers, and several I know personally. The goal was to get a handful of inputs from different firms to get under the skin of the trend.
What in the hell is going on in seed? Let’s find out.
Why are enterprise seed deals on top?
This morning we’ll hear from Jenny Lefcourt at Freestyle Capital, Jomayra Herrera of Cowboy Ventures, Hunter Walk from Homebrew, Iris Choi of Floodgate, Sarah Guo from Greylock and Ajay Agarwal of Bain Capital Ventures. As you can see, we picked a list of investors form firms of different sizes, theses and focus. However, each investing group either focuses on early-stage investments that include seed deals or dabbles in them.
Here’s what we want to know: why did the the majority of seed deals swap from consumer-focused startups to enterprise-focused deals?
Our investing group detailed a number of explanations, a handful of which echoed each other. To best convey their thinking, we’ll quote each investor at moderate length. If you are in a hurry, the most common point made against consumer-focused seed deals is go-to-market difficulty in the current market.
Other reasons include price, secular changes to the technology landscape, and the changing experience profile of the investing class themselves. (Minor edits made to select responses for clarity.)
Freestyle’s Jenny Lefcourt said via email that consumers are an increasingly difficult cohort to sell to, because they “became fickle with the proliferation of VC-backed, consumer-focused startups over the past few years.” As a result, consumers became “harder and more expensive to acquire and even harder to retain,” meaning higher customer acquisition costs (CAC) and lower lifetime value (LTV).
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Don’t wait – First ticket release of 2020 for 3rd Annual Winter Party at Galvanize
If you haven’t scored a ticket yet to our 3rd Annual Winter Party at Galvanize, now’s your chance. We just released another batch of tickets to the best Silicon Valley soiree. Shake off your post-holiday doldrums and join the movers and shakers of the startup community at Galvanize in San Francisco on February 7.
Last year, nearly 1,000 of you joined us for luscious libations, fantastic food, world-class networking and some crazy karaoke . No one does karaoke like TechCrunch does karaoke.
Tickets are limited — and we’re rolling them out in batches. Grab yours now ($85 a pop, right here). If you miss out, keep checking back for the next ticket release.
What’s on tap this year? Well, craft beer for one thing, and wine for another. Plus delicious apps (just eat them — no coding required), party games and activities, plenty of photo ops and giveaways. We even have a few surprises for you.
Between the food and the fun, be sure to check out a select few early-stage startups exhibiting their products. Interested in doing just that? You can buy demo tables here for $1,500 each — and the price includes four tickets to the party. Remember, we said a “select few,” so get yours before we sell out (only four tables left!).
Here’s the party 4-1-1.
- When: Friday, February 7, 6:00 p.m. – 9:00 p.m.
- Where: Galvanize, 44 Tehama St., San Francisco, CA 94105
- Ticket price: $85
- Demo tables: $1,500 (buy tickets and tables here)
You never know who you’ll meet at a TechCrunch party — potential investors, the perfect co-founder or maybe a coding wizard. But they have a history of being a place where startup magic happens.
Here’s a classic “but wait, there’s more” moment. We’ll also give away some awesome door prizes, like TC swag and tickets to Disrupt SF, our flagship event coming in September 2020.
Don’t miss the food, the fun, the community and the opportunity. Join us for the TechCrunch 3rd Annual Winter Party at Galvanize in San Francisco on February 7. We can’t wait to see you!
Is your company interested in sponsoring or exhibiting at the 3rd Annual Winter Party at Galvanize? Contact our sponsorship sales team by filling out this form.
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Ben Horowitz will explain how to create and sustain culture at TC Early Stage SF
The hardest challenges to tackle are usually the most nebulous. Culture, for example, is hard to define, implement, cultivate and evolve… How do you structure culture within a business or organization? Are there steps to follow? Is there a manual?
Interestingly enough, there is. “What You Do Is Who You Are” is the latest book from legendary investor, entrepreneur and founding partner at Andreessen Horowitz, Ben Horowitz. We are absolutely thrilled to announce that he’ll be joining us on April 28th at our brand new TC Early Stage event in San Francisco to discuss his new book and the lessons within it.
From the sleeve:
To Horowitz, culture is how a company makes decisions, and he explains how to make your culture purposeful by examining four intriguing models of leadership and culture-building well outside the usual business case studies: Haiti’s Toussaint Louverture, who was the leader of the only successful slave revolt in history; the Samurai, who ruled Japan for seven hundred years and shaped modern Japanese culture; Genghis Khan, who built the world’s largest empire; and Shaka Senghor, an American ex-con who created the most formidable prison gang in the yard and ultimately transformed prison culture.
Horowitz also authored The New York Times Bestseller “The Hard Thing About Hard Things,” which is one of the past decade’s most practical guides to entrepreneurialism and the challenges that come with it. The 2014 book speaks to founders in a way that business schools can’t, offering empathy and solutions to real-world, human problems that founders face.
And let’s not forget the wealth of wisdom and experience that comes with helming Andreessen Horowitz since its inception in 2009. The firm has more than $10 billion under management, with portfolio companies that include Box, Facebook, Lyft, Slack, GitHub, Instagram and Skype. And those are just the exits.
Horowitz himself sits on the boards of 14 portfolio companies, including Okta, Lyft, Foursquare, Genius, Medium and Databricks.
Suffice it to say, there is plenty to learn from Horowitz at TC Early Stage come April 28 in San Francisco.
TC Early Stage is meant to give founders a place to learn directly from the experts who have come before. All day long, seasoned VCs and operators will be holding breakout sessions where they identify the biggest challenges in their fields, and tangible, actionable insights on how to take on those challenges. These experts will cover a wide range of core startup disciplines, including but not limited to growth, legal, product management, tech stack, recruiting, design and company culture.
Horowitz joins Cyan Banister (How to get your first yes), Asher Abramson (How to create great growth assets for paid channels), Lior Zorea (What VCs want in a term sheet and how you can get what you want), and Dalton Caldwell (How to get into Y Combinator). We’ll be announcing many, many more speakers over the coming weeks, totaling more than 50 breakouts for the entire day.
Here’s the fine print. Each of the 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.)
TC Early Stage SF 2020 goes down on April 28. You can pick up your ticket and start registering for breakout sessions right now.
Interested in sponsoring TC Early Stage SF? Contact us here and we’ll send you more information.
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Perch, now called Orchard, raises $36M to simplify home buying and selling
Perch, the vertically integrated platform for buying and selling homes, has today announced the close of a $36 million equity round led by Navitas, with participation from existing investor FirstMark Capital, Juxtapose and Accomplice. The company is also announcing that it is rebranding from Perch to Orchard.
Orchard launched in September of 2017 with a plan to bring the full home selling and buying experience under one roof. Most home buyers are what the industry calls “dual trackers,” which means they are in the process of selling their house and buying a new one at the same time.
This usually forces those buyers to either take on a huge financial risk by buying a new home before they’ve sold their last home, or to place an offer on their new home contingent on the sale of their old home, which is unattractive to most sellers.
Orchard solves this by making an offer on buyers’ old houses that is guaranteed for 90 days. Orchard co-founder Court Cunningham says that more than 85% of those homes sell at a market price before the 90-day period.
Cunningham believes that Orchard’s advantage comes not only in the fact that it has products to serve each part of the process — search, title and mortgage — but that it’s iterated on each of those pieces of the puzzle.
For example, Orchard has improved its search functionality to allow users to choose which photo they’re searching for. Let’s say the master bathroom or the kitchen is the most important room in the home to you. Orchard lets you search by pictures of that room as you browse homes. Orchard is also working on a new machine learning-powered search system that would allow users to select five homes they love to help the search algorithm find homes similar to them.
With a team of data scientists, Orchard works to price homes as “close to the pin as possible,” according to Cunningham. It’s also worth noting that Orchard compensates its realtors via salary and benefits as opposed to the usual commission framework most real estate agents live off.
Cunningham believes this is what makes Orchard a more human tech real estate platform, fully aligning the interests of the real estate agent with the buyer/seller.
When a home doesn’t sell before the 90-day period, Orchard buys the home a few points below market value through that guaranteed offer, and then makes small improvements to the home to help it sell. Orchard underwrites the home again and puts it back on the market in a process Cunningham describes as “much more capital efficient than you think.”
This is thanks in large part to the $200 million+ debt financing Orchard secured alongside its Series A funding round, and the fact that Orchard’s data scientists can help recycle those homes (and with it, the capital) relatively quickly on the market. Cunningham says the company is only using a fraction of its debt financing.
Orchard also offers a title business, letting buyers close the transaction via their phone from the comfort of their home. And Orchard shows no signs of slowing. The company currently has a mortgage product in beta.
On the heels of this new funding round, Orchard wants to double the size of its team from 150 people to 300 by the end of 2020. Cunningham also expects to see more than 100% revenue growth over the next year.
“The greatest challenge is to grow rapidly and build the tech around this that allows us to deliver in a repeatable way,” said Cunningham. “Buying a home is the biggest financial transaction of someone’s life and the human element is really important. So we need to grow quickly but in a way that is highly human and highly consistent.”
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Quantum Machines launches its Quantum Orchestration Platform
Quantum computers are, by default, hybrid machines that combine the exotic properties of the quantum world with a classical computer that, essentially, manages it. A lot of the focus in the industry has gone into the actual quantum processors, but as those machines get more powerful, the classical part — and the process of converting those digital commands for use in the analog world of quantum computing — is becoming a bottleneck. That’s what Quantum Machines, an Israeli startup that’s coming out of stealth today, is tackling.
The company’s Quantum Orchestration Platform is a full hardware and software solution for controlling quantum systems. The company built its own custom pulse processor that can handle multi-qubit manipulation while being independent of the quantum processor with which it interacts (assuming it’s supported, of course).
“The classical layers of the quantum computer are the real unmet need. They are the bottleneck,” Quantum Machines co-founder Itamar Sivan told me. “We were really looking into what is holding the industry back. What are the things that we can do today to drive this industry forward, but that will also enable faster progress in the future. Since most of the focus in the last years has been devoted to quantum processors, it was only natural that you know we take on this challenge.”
The problem, he explained, is that in order to run complex algorithms on quantum processors, you also need extremely powerful classical computers. But with Moore’s Law at its end, it takes specialized hardware to do that effectively. And Quantum Machines’ hardware also offers very fast calibration, which in turn yields better, more precise results from the quantum processors it controls. What the company isn’t sharing, of course, is how exactly it is solving this problem. That is, after all, the secret sauce the team developed.
Sivan co-founded the company with Yonatan Cohen and Nissim Ofek; all three have doctorates from top universities with a lot of experience working on quantum computing problems. “We have an unfair advantage in this, given our experience,” Sivan quipped.
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Cloudflare acquires stealthy startup S2 Systems, announces Cloudflare for Teams
Cloudflare announced that it has acquired S2 Systems, a browser isolation startup founded by former Microsoft execs. The two companies did not reveal the acquisition price.
Matthew Prince, co-founder and CEO at Cloudflare, says that this acquisition is part of a new suite of products called Cloudflare for Teams, which has been designed to protect an organization from threats on the internet. S2 developed a solution specifically to help prevent browser-based code attacks.
Prince said the company had been thinking for some time about how to incorporate this kind of technology into the Cloudflare family of products. As with many companies, it had to decide if it should partner, build or acquire a company. Prince says that when he met the founding team from S2 and tested its technology, he was impressed with the speed and execution.
The team felt like a good fit, so Cloudflare made an offer. It had to bid against some other companies (which he did not name), but in the end S2 chose Cloudflare. He sees technology like this helping to even the playing field for internet users around the world.
“We’re super excited to have them on board, and we think that combining their better browser isolation technology with our ubiquitous network, we can really redefine how enterprises protect their employees, and over the long term how people generally browse the internet, where we can make it so that a low-end phone can have a similar experience as a brand new modern iPhone,” Prince said. He says that’s due to the tremendous processing power that can take place on its network across 200 cities worldwide, taking that processing burden off of the phone or other device.
The acquisition does not stand in isolation though. It’s part of a broader announcement around a new product category called Cloudflare for Teams. This is designed to provide a set of protections that includes S2 browser isolation as well as VPN and identity protection.
There are two main pieces to Cloudflare for Teams: Cloudflare Access and Cloudflare Gateway. Access is a Zero Trust identity and access management tool designed to help companies ensure their employees are using the most up-to-date software on their devices.
Gateway is designed to protect companies and individuals from threats on the internet, which is where S2 fits in. The company offers three versions: Gateway, which includes DNS-based filtering and audit logging; Gateway Pro, which secures all internet-bound traffic; and Gateway Enterprise, which helps prevent data loss and includes the browser isolation tech from S2.
The S2 acquisition closed on December 31st. S2’s 10 employees are now part of the Cloudflare team, and will remain in Kirkland, Wash. to establish a Cloudflare office there. The company was in stealth prior to the acquisition.
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Union Square Ventures leads legal tech startup Juro’s $5M Series A
Juro, a UK startup that’s using machine learning tech and user-centric design to do for contracts what Typeform does for online forms, has caught the eye of Union Square Ventures. The New York-based fund leads a $5 million Series A investment that’s being announced this morning.
Also participating in the Series A are existing investors Point Nine Capital, Taavet Hinrikus (co-founder of TransferWise) and Paul Forster (co-founder of Indeed). The round takes Juro’s total raised to-date to $8M, including a $2M seed which we covered back in 2018.
London is turning into a bit of a hub for legal tech, per Juro CEO and co-founder Richard Mabey — who cites “strong legal services industry” and “strong engineering talent” as explainers for that.
It was also, he reckons, “a bit of a draw” for Union Square Ventures — making what Juro couches as a “rare” US-to-Europe investment in legal tech in the city via the startup.
“Having brand name customers in the US certainly helped. But ultimately, they look for product-led companies with strong cross-functional teams wherever they find them,” he adds.
Juro’s business is focused on taking the tedium out of negotiating and drawing up contracts by making contract-building more interactive and trackable. It also handles e-signing, and follows on with contract management services, using machine learning tech to power features such as automatic contract tagging and for flagging up unusual language.
All of that sums to being a “contract collaboration platform”, as Juro’s marketing puts it. Think of it like Google Docs but with baked in legal smarts. There’s also support for visual garnish like animated GIFs to spice up offer letters and engage new hires.
“We have a data model underlying our editor that transforms every contract into actionable data,” says Mabey. “Juro contracts look like contracts, smell like contracts but ultimately they are written in code. And that code structures the data within them. This makes a contract manager’s life 10x easier than using an unstructured format like Word/pdf.”
“Still our main competitor is MS Word,” he adds. “Our challenge is to bring lawyers (and other users of contracts) out of Word, which is a significant task. Fortunately, Word was never designed for legal workflows, so we can add lots of value through our custom-built editor.”
Part of Juro’s Series A funds will be put towards beefing up its machine learning/data science capabilities, per Mabey — who says the overall plan at this point is to “double down on product”, including by tripling the size of the product team.
“That means hiring more designers, data scientists and engineers — building our engineering team in the Baltics,” he tells us. “There’s so much more we are excited to do, especially on the ML/data side and the funding unlocks our ability to do this. We will also be building our commercial team (marketing, sales, cs) in London to serve the EU market and expand further into the US, where we already have some customers on the ground.”
The 2016-founded startup still isn’t breaking out customer numbers but says it’s processed more than 50,000 contracts for its clients so far, noting too that those contracts have been agreed in 50+ countries. (“Everywhere from Estonia to Japan to Kazakhstan,” as Mabey puts it.)
In terms of who Juro users are, it’s still mostly “mid-market tech companies” — with Mabey citing the likes of marketplaces (Deliveroo), SaaS (Envoy) and fintechs (Luno), saying it’s especially companies processing “high volumes of contracts”.
Another vertical it’s recently expanded into is media, he notes.
“E-signature giants have grown massively in the last few years, and some are gradually encroaching into the contract lifecycle — but again, they deal with files (pdfs mostly) rather than dynamic, browser-based documentation,” he argues, adding: “In terms of new legal tech entrants — I’m excited by Kira Systems especially, who are working on unpicking pdf contracts post-signature.”
As part of the Series A, Union Square Ventures parter, John Buttrick, is joining Juro’s board.
Commenting in a supporting statement, Buttrick said: “We look for founders with products equipped to change an industry. While contract management might not be new, Juro’s transformative vision for it certainly is. There’s no greater proof of the product’s ease of use than the fact that we negotiated and closed the funding round in it. We’re delighted to support Juro’s team in making their vision a reality.”
Juro’s contract management platform — dashboard view
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Study associates frequency, quality of monthly reports with startup success
“Despite a lot of publicity and social media, number of sign-ups were modest,” reads one of the last monthly reports I sent to my VCs before my startup ceased to exist. “After the initial wave, sign-ups have slowed right down to near pre-launch levels. User acquisition is our number-one priority and my biggest headache.”
Like, I suspect, many other early-stage founders, I hated the monthly chore of writing a short report for investors. We used the PPP format (progress, problems and plans) for these regular missives, but progress was almost always slow and most of the time, problems far outstripped plans.
On good months, I was far more motivated to file our monthly report — it is a very human thing to want to deliver good news — and on bad months I had a million other more important things I thought a CEO should be spending their time on.
However, according to a research conducted by Jan Luca Ernst, a masters student at The University of St. Gallen, I may have been misguided. In his thesis, supported by Prof. Dr. Elgar Fleisch (Professor of Technology Management at University of St. Gallen) and Florian Schweitzer (a partner at VC firm btov), he writes “startups that submit regular, high-quality reports are shown by the statistics to be better investments than other startups.”
The research was based on analysis of hundreds of monthly startup reports submitted to btov Partners by portfolio companies out of its first two funds, which ran between 2006 to 2014. Specifically, researchers looked at 64 startups, covering the performance of startups during the first two years after initial investment from the first fund, and the performance during a single year, 2015, for the second fund.
“Hypotheses on the positive effects of monthly startup reports were tested, using several multivariate regressions,” write the paper’s authors. “As a result, several initial assumptions were discarded.”
For example, the punctuality of startup reports did not appear to indicate whether a startup would be more successful. In contrast, the frequency of reporting (at a confidence level of 95%), as well as the quality of the reporting (at a confidence level of 99%), were identified as contributors to success.
“Overall, the findings emphasize the importance of the post-investment phase and the value added by venture capitalists beyond financial support,” say Ernst, Fleisch and Schweitzer. “One main implication of the findings has an impact on subsequent investment rounds. Startups that submit regular, high-quality reports are shown by the statistics to be better investments than other startups. This may be an indicator that justifies further investment, that, in turn, leads to better performance.”
The authors also suggest that, in the future, investors may ask for “full, unfiltered access” to all past reporting of a startup, including evidence on the quality of reports and regularity of submission. “This would increase transparency and therefore eventually lead to better investment decision making,” they write.
With that said, during a call with btov’s Florian Schweitzer, he conceded that correlation doesn’t necessarily mean cause, but argued that there are many softer, and sometimes hidden, positive outcomes from monthly reports — especially when a founder does them honestly and whole heartedly.
Extra Crunch: What should a monthly report contain?
Florian Schweitzer: We always define what we would like or what we think would be sensible, because for each startup, of course, it is different. In general, the idea is that the founders can do the report in half an hour. Usually, it contains something like eight KPIs, and then some bullet points reflecting on what went well, and what are the challenges right now. And those challenges are a superb opportunity to understand where the founder is struggling, and where we can support them. So it can be a very, very productive agenda for a discussion, which we usually have regularity.
I think it is very good that founders sit back and think for half an hour: what happened during the last 30 days? What did I want to achieve? What did I not achieve? And to be honest about the progress and challenges.
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The Guild, which turns apartments into short-term rentals, has nabbed $25 million in Series B funding
The Guild, a nearly four-year-old, Austin, Texas-based startup that turns apartments into comfortable short-term accommodations for business and other travelers, has landed $25 million in Series B funding from some of its earlier investors, including Maveron and Convivialite, along with real estate companies like the Nicol Investment Company, which owns some of the buildings in which The Guild has units.
The 171-person company — started by two University of Texas grads who met in 2015 through their overlapping interests (one worked in boutique hotel development and the other is a co-founder of the apartment marketplace Apartment List) — has plenty of competition. Lyric, Domio and Sonder are but three of the many other well-funded companies now in the business of gussying up apartments and renting them out like hotel rooms.
The competition is so stiff, in fact, that all are fast adding other services to their offerings. All promise around-the-clock support, for example, so if the Wi-Fi goes down, there’s someone to scream at, no matter the hour. Lyric also offers its customers “curated in-suite art, music and coffee programs.” The Guild touts its personal approach, like adding a Christmas tree to a room for a family that is temporarily displaced during the holidays. Meanwhile, among its offerings, Sonder offers “pre-stay cleaning.”
The last seems less like a perk than a necessity, but in the race to capture mindshare, no detail is too small to promote, apparently.
As for its part, The Guild is now operating 565 units, with another 235 units in the “final stages of development,” the company tells us. It’s also operating in six cities currently — Austin, Cincinnati, Dallas, Denver, Miami and Nashville — but it plans to land in six more in the next 12 to 24 months. (If you’re curious about how long it takes for a unit to become profitable, the company says the investment payback is traditionally within 12 months.)
As for how it’s breaking through the noise of its competitors, the company has a corporate sales team that works with companies like McKinsey, Google and Whole Foods, and it partners with travel companies, including Concur, Airbnb and Expedia.
Certainly, investors see promise in its strategy — and its momentum.
The Guild, which says it generated $10 million in revenue in 2018, tells us it generated more than $20 million in 2019 and that it expects to maintain 100% growth in 2020, thanks in part to its new round of funding.
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As NIO and Tesla rally, Chinese EV company Lixiang said to file for US IPO
The recovery in value of several high-profile electric car companies could help move yet-private EV manufacturers out of the pit lane and onto the IPO track.
On the heels of NIO’s shocking value appreciation after its recent earnings report, and Tesla’s own public market run, China-based Lixiang Automotive is reported to have filed privately for an IPO in the United States.
Lixiang Automotive is a Beijing-based company that was founded in 2015, according to Crunchbase data. The company has raised north of $1 billion while private, and is said to be valued at just under $3 billion. It most recently raised a $530 million round led by Xing Wang, of Meituan-Dianping fame.
It would not be the first Chinese EV company to go public in the United States, as NIO managed the feat in 2018. But the reported filing shows newfound confidence concerning investor sentiment by the alternative car market’s players and bankers.
To understand the news, we’ll first look at recent happenings from Lixiang’s public peers, and then examine the company itself.
A month ago, the Lixiang Automotive confidential IPO filing would have appeared quixotic. After all, its closest market comparable was flirting with penny-stock status.
NIO was in the tank more than a year after an IPO that proved far from smooth. After going public at $6.26 per share, its equity had traded down to nearly the $1 mark, setting a 52-week low at the terrifying figure of $1.19 per share. However, since then, shares of the unprofitable, cash-strapped EV manufacturer have recovered, trading for $3.84 per share today. Still down from its IPO price, yes, but up more than 200% from its recent all-time lows (a more than tripling in value).
That likely cleared a path for Lixiang Automotive to file, albeit privately. Reuters broke the news of its IPO prospects.
Tesla’s ascent also helped. After some oddly normal (for Tesla) drama cooled, the company’s shares have come back a long way. From 52-week lows of $176.99, Elon’s car company is now worth $445.25. Shares of Tesla are up 150% from their lows, a more than doubling in market cap. Investors appeared to find its earnings and delivery totals (and progress on its Chinese factory) heartening.
For Lixiang Automotive, the moves showed that U.S. equity markets were warming waters worth testing. Given that it is certainly unprofitable, the opening of a new funding avenue was welcome.
Notably, similar to NIO when it went public, the company is set to debut while its history of actually delivering cars is nascent. NIO went public having delivered cars in the mere hundreds. The firm did note at the time that it had commits north of 10,000 for its cars. During the early days of its IPO I wrote that the company’s limited history of revenue generation made its shares a gamble.
Lixiang is set to go public at a similar level of immaturity. According to Equal Ocean, Lixiang now delivers cars, though it began to ship them just last month:
Chinese electric vehicle manufacturer Lixiang Automotive, formerly known as CHJ, has announced that its EV project ‘Lixiang ONE 2020’ is officially mass-produced at the Changzhou factory and will start mass delivery in early December.
Pre-sales for the car took place in Q4 2019, as well, meaning that the company’s pre-Q4 2019 revenue should wind up looking very light.
If Lixiang does successfully go public it will show that corporate maturity is not a requirement for an IPO. When we do get to see Lixiang’s F-1 filing, we won’t see the history of a company with an obvious path to profits amid quick growth — we’ll see a deeply unprofitable company in the early motion of generating material revenue.
A little bit ago I would have given such an offering slim chance of success. But with NIO on the bounce and Tesla back on form, who knows?
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