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Accel closes on $3B across three funds as it ramps up global investing
Accel announced Tuesday the close of three new funds totaling $3.05 billion, money that it will be using to back early-stage startups, as well as growth rounds for more mature companies. Notably, the 38-year-old Silicon Valley-based venture firm is doubling down on global investing.
The announcement underscores both the robust confidence investors continue to have for backing startups in the tech sector and the amount of money available to startups these days.
Specifically, today Accel is announcing its 15th early-stage U.S. fund at $650 million; its seventh early-stage European and Israeli fund also at $650 million and its sixth global growth stage fund at $1.75 billion. The latter fund is in addition, and designed to complement, a previously unannounced $2.3 billion global “Leaders” fund that is focused on later-stage investing that Accel closed in December.
Accel expects to invest in about 20 to 30 companies per fund on average, according to Partner Rich Wong. Its average investment in its growth fund will be in the $50 million to $75 million range, and $75 million and $100 million out of its global Leaders fund.
But the firm is also still eager and “excited” to incubate companies, Wong said.
“We’ll still write $500,000 to $1 million seed checks,” he told TechCrunch. “It’s important to us to work with companies from the very beginning and support them through their entire journey.”
Indeed, as TechCrunch recently reported, Accel has a history of backing companies that were previously bootstrapped (and often profitable) -– the latest example being Lower, a Columbus, Ohio-based fintech, which just raised a $100 million Series A.
Interestingly, Accel is often referred to some of these companies by existing portfolio companies (also in the case of Lower, whose CEO was referred to Accel by Galileo Clay Wilkes). More often than not, companies that Accel backs out of its early-stage and growth funds are bootstrapped and located outside of Silicon Valley.
The venture firm has long looked outside of Silicon Valley for opportunities, and has had offices not only in the Bay Area, but in London and Bangalore for years. Part of its investment thesis is to “invest early and locally,” according to Wong. Examples of this philosophy include investments in companies based all over the world — from Mexico to Stockholm to Tel Aviv to Munich.
Since the time of its last fund closure in 2019, the firm has seen 10 portfolio companies go public, including Slack, Austin-based Bumble, Bucharest-based UiPath, CrowdStrike, PagerDuty, Deliveroo and Squarespace, among others.
It also had 40 companies experience an M&A, including Utah-based Qualtrics’s $8 billion acquisition by SAP and Segment’s $3.2 billion acquisition by Twilio. Also, just last week, Rockwell Automation announced it was buying Michigan-based Plex Systems for $2.22 billion in cash. Accel first invested in Plex, which has developed a subscription-based smart manufacturing platform, in 2012.
Recent investments include a number of fintech companies such as LatAm’s Flink, Berlin-based Trade Republic, Unit and Robinhood rival Public. Accel has also backed as existing portfolio companies such as Webflow, a software company that helps businesses build no-code websites and events startup Hopin.
Wong says Accel is “open-minded but thematic” in its investment approach.
Accel Partner Sonali de Rycker, who is based out of London, agrees.
“For example, we’ll look at automation companies, consumer businesses and security companies, but at a global scale. Our goal is to find the best entrepreneurs regardless of where they are,” she said.
That has only been intensified by the recent rise of the smartphone and cloud, Wong said.
“Before, companies were mostly selling to the consumer in their own country,” he added. “But now the size of the market is so dramatically bigger, allowing them to become even larger, which is one of the reasons why I believe we’re seeing investment pace at this speed.”
To support this, it’s notable that Accel’s global Leaders fund is “dramatically” larger than the $500 million Leaders fund the firm closed in 2019.
Also, de Rycker points out, companies are staying private longer so the opportunity to invest in them until they sell or go public is greater.
Accel is also patient. In some cases, the firm’s investors will develop “years-long” relationships with companies they are courting.
“1Password is an example of this approach,” Wong said. “Arun [Mathew] had that relationship for at least six years before that investment was made. Finally, 1Password called and said ‘We’re ready, and we want you to do it.’ ”
And so Accel led the Canadian company’s first external round of funding in its 14-year history — a $200 million Series A — in 2019.
While the firm is open-minded, there are still some industries it has not yet embraced as much as others. For example, Wong said, “We’re not announcing a $2.2 billion crypto fund, but we have done crypto investments, and see some very interesting trends there. We’ll look at where crypto takes us.”
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Harness Wealth raises $15 million to democratize the power of family offices
Family offices have existed since the 1800s, but they’ve never been so manifold as in recent years. According to a 2019 Global Family Office Report by UBS and Campden Wealth, 68% of the 360 family offices surveyed were founded in 2000 or later.
Their rise owes to numerous factors, including the tech startups that mint new centi-millionaires and billionaires each year, along with the increasingly complex choices that people with so much moolah encounter. Think household administration, legal matters, trust and estate management, personal investments, charitable ventures.
Still, family offices tend to cater to people with investable assets of $1 billion or more, according to KPMG. Even multi-family offices, where resources are shared with other families, are more typically targeting people with at least $20 million to invest. That high bar means there are still a lot of people with a lot of resources who need hand-holding.
Enter Harness Wealth, a three-year-old, New York-based outfit that was founded by David Snider and Katie Prentke English to cater to individuals with increasingly complex financial pictures, including following liquidity events. The two understand as well as anyone how one’s vested interests can abruptly change — and how hard these can be to manage when working full-time.
Snider got his start out of school as an associate with Bain & Company and later as an associate with Bain Capital before becoming the first business hire at the real estate company Compass and getting promoted to COO and CFO after the company’s $25 million Series A raise in 2013. That little company grew, of course, and now, less than four months after its late-March IPO, Compass boasts a market cap of nearly $27 billion.
Indeed, over the years, Snider, who rejoined Bain as an executive-in-residence after 4.5 years with Compass, began to see a big opportunity in bringing together the often siloed businesses of tax planning and estate planning and investment planning, including it because “it resonated with me personally. Despite all these great things on my resume, every six months I found something I could or should have been doing differently with my equity.”
Prentke English is also like a lot of the clients to which Harness Wealth caters today. After spending more than six years at American Express, she spent two years as the CMO of London-based online investment manager Nutmeg. She left the role to start Harness after being introduced to Snider through a mutual friend; in the meantime, Nutmeg was just acquired by JPMorgan Chase.
While there is no shortage of wealth managers to whom such individuals can turn, Harness says it does far more than pair people with the right independent registered investment advisors — which is a key part of its business and part of the secret sauce of its tech platform, it says. It also helps its customers, depending on their needs, connect with a team of pros across an array of verticals — not unlike the access an individual might have if they were to have a family office.
As for how Harness makes money, it shares revenue with the advisers on the platform. Snider says the percentage varies, though it’s an “ongoing revenue share to ensure alignment with our clients.” In other words, he adds, “We only do well if they find long-term success with the advisers on our platform,” versus if Harness merely collected an upfront lead generation fee by pointing new customers to so-so financial planners or tax attorneys.
Ultimately, the company thinks it can replace a lot of the do-it-yourself services available in the market, like Personal Capital and Mint. That confidence is rooted in part in Snider’s experience with Compass, which, in its earlier days, though it could navigate around real estate agents but “found that while people wanted better data insights and a better user interface, they also wanted that coupled with someone who’d had many clients who looked like them,” says Snider.
He adds that Prentke English joined forces with him after discovering that Nutmeg, too, was “running into the limitations of a non-human-powered solution.”
Investors think the thesis makes sense, certainly. Harness just closed on $15 million in Series A funding led by Jackson Square Ventures, a round that brings the company’s total funding to $19 million. (Both new and existing investors include Bain Capital; Torch Capital; Activant; GingerBread Capital; FJ Labs; i2BF Ventures; First Minute Capital; Liquid2 Ventures; Alleycorp, Marc Benioff; Compass founder Ori Allon; and Paul Edgerley, who is the former co-head of Bain Capital Private Equity.
As for what Harness Wealth does with that fresh capital, part of it, interestingly, will be used to develop its own captive business line called Harness Tax. As Snider explains it, more of its clients are finding that tax planning is among their biggest concerns, given all that is happening on the IPO front, with SPACs, with remote work, and also with cryptocurrencies, into which more people are pouring money but around which the tax code has been playing catch-up.
It makes sense, given that tax planning can be time-sensitive and often dictate the overall financial planning strategy. At the same time, it’s fair to wonder whether some of Harness Wealth’s adviser partners will be turned off from working with the outfit if it thinks its partner is evolving into a rival.
Snider insists that Harness Wealth — which currently employs 22 people and is not-yet profitable — has no such designs. “Our goal is only to help people where we can add value, and we saw an opportunity to lean in on tax side.”
Harness has a “a very large population of people who may not understand their tax liabilities” because of the crypto boom in particular, he explains, adding, “We want to make sure we’re front and center” and ready to help as needed.
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Demand Curve: Email marketing tactics that convert subscribers into customers
Email has the highest return on investment of any other marketing channel. On average, email earns you $40 for every $1 spent. And the best part is that email is an owned channel, which means you can reach your subscriber directly instead of relying on social media algorithms to surface your content.
At Demand Curve, we’ve worked with over 500 startups, meticulously documenting growth tactics for all growth channels. We also incorporate what we’ve learned from our agency, Bell Curve, which works with Outschool, Imperfect Produce and Microsoft to name a few.
To understand how to use email marketing effectively, we interviewed email marketers at this year’s fastest-growing startups. This post covers the most profitable tactics they use that capture 80% of the value using 20% of the effort.
If people don’t open it, nothing else matters
The subject line of your email is the most important, yet most marketers neglect it until after crafting the body of the email.
The subject line of your email is the most important, yet most marketers neglect it until after crafting the body of the email.
Increase the open-rate of your subject lines by making them self-evident. You don’t want people guessing why you want them to pay attention to your email. If the subject line is unclear or vague, your subscribers will ignore it.
One trick is to write like you speak. Try using subject lines that use informal language and contractions (it’s, they’re, you’ll). Not only will this save character count, it will also make your copy more friendly and quick to read.
Subject lines should be relevant to your subaudiences. Marketers generate 760% more revenue from segmented email campaigns than from untargeted emails.
A good subject line will increase the chances of your email being read. Image Credits: Demand Curve
If you’re collecting emails from multiple areas on your website, chances are the context will be slightly different for each. For example, people who subscribe after reading an article on ketogenic diets should receive emails that further educate them on keto and seeds products relevant to that lifestyle. Sending them information and product recommendations for vegetarians would not be relevant and could lead to them unsubscribing.
To ensure you’re sending relevant emails to the right audiences, segment your audience using tags and filters within your email marketing platform. Each platform will do this slightly differently, but all modern platforms should allow you to do this. When crafting your email subject line, ask yourself: “Would this email make sense to receive for this segment of subscriber?”
Your subject lines should be short and concise. About 46% of all emails are opened on mobile devices, which means the subject line must be short enough to fit on a smaller screen while getting your point across. Fifty characters is approximately the maximum length a subject line can be before it gets cut off on a mobile screen.
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Keeping your subject lines short also makes them easier to scan when your subscriber is looking through their inbox. Including emojis in your subject line can cut down your character count and emulates how friends send text messages to each other. Including emojis in your subject lines will make your email feel less corporate and more friendly.
Designing emails that get read
Once your subscriber opens your email, there are three outcomes that can follow: read, skim or bounce.
Subscribers that read your emails are the most valuable, because they will consume the full contents of your email. Skimmers will only read the headlines and look at the images you include. Subscribers who bounce will open your email, but if nothing catches their attention right away, they will simply delete or close your email.
You’re going to want to design your emails to minimize the number of bouncers, satisfy readers and provide enough high-level information that skimmers still understand your message.
To minimize the number of bounces, choose an email design that catches the eye and is relevant to your brand. Take the Casper email below for example. The starry night background and moon illustration is directly relevant to the mattresses they sell. Visually branded email designs will help elevate your brand perception.
Design your emails to appeal to all kinds of readers. Image Credits: Demand Curve
To optimize for skimmers, write action-focused headlines. Use designs that draw the eye of your reader to key elements. As you can see in the Headspace example, the image of the rising sun pushes your gaze upward to the headline and the call-to-action button. Skimmers should be able to understand the context of the entire email and take action without needing to read the body.
To convert more readers, fulfill the expectation set by the subject line. Readers will be looking for any promises or hints you gave them in your subject line. Be sure to deliver on this promise in the body. Do so in an aggressively concise way — just because they’re reading doesn’t mean they don’t value their time.
Call to actions that convert
The goal of your body copy is to drive people to your call-to-action button (CTA). Your CTA is crucial, because it’s how you convert an email subscriber into a paying customer. To increase the conversion of your CTA, make a valuable promise in your body copy and headers that’s only delivered through your CTA.
Good CTA copy typically begins with a verb that teases what the reader will encounter next:
- Get your free sample.
- Redeem discount now.
- Browse the full inventory.
Low-converting CTA copy is vague or nonactive:
- Learn more.
- See inventory.
- Download.
Your email should only have one CTA. Any more and your conversion will decrease due to unnecessary decision-making. Ensure that the page on your site that your CTA leads to fulfills the promise you made in your body and CTA button.
Recap
Once the focus of the subject line is clear and the desired outcome is chosen, everything else should be crafted to carry the reader step by step through the email, eventually taking them to the desired action.
It’s a good idea to work backward from the desired outcome you want the reader to perform. If the desired outcome is for them to click on a CTA button, frame your subject line, headers and body copy as a valuable promise that can only be achieved by clicking the button.
Consider the experience of your email through the eyes of all three types of subscribers: readers, skimmers and bouncers. Use visual and written prompts that make the purpose of your email clear to all three categories. Failing to do so could lead to unsubscribes and lost revenue.
Email has the highest return on investment than any other marketing channel because you have a captive audience who has opted-in to you communicating with them. Email can drive six times more conversions that a Twitter post and is 40 times more likely to get noticed than a Facebook post.
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A startup’s guide to software delivery
One of the biggest factors in the success of a startup is its ability to quickly and confidently deliver software. As more consumers interact with businesses through a digital interface and more products embrace those interfaces as the opportunity to differentiate, speed and agility are paramount. It’s what makes or breaks a company.
As your startup grows, it’s important that your software delivery strategy evolves with you. Your software processes and tool choices will naturally change as you scale, but optimizing too early or letting them grow without a clear vision of where you’re going can cost you precious time and agility. I’ve seen how the right choices can pay huge dividends — and how the wrong choices can lead to time-consuming problems that could have been avoided.
The key to success is consistency. Create a standard, then apply it to all delivery pipelines.
As we know from Conway’s law, your software architecture and your organizational structure are deeply linked. It turns out that how you deliver is greatly impacted by both organizational structure and architecture. This is true at every stage of a startup but even more important in relation to how startups go through rapid growth. Software delivery on a team of two people is vastly different from software delivery on a team of 200.
Decisions you make at key growth inflection points can set you up for either turbocharged growth or mounting roadblocks.
Founding stage: Keep it simple
The founding phase is the exciting exploratory phase. You have an idea and a few engineers.
The key during this phase is to keep the architecture and tooling as simple and flexible as possible. Building a company is all about execution, so get the tools you need to execute consistently and put the rest on hold.
One place you can invest without overdoing it is in continuous integration and continuous deployment (CI/CD). CI/CD enables developer teams to get feedback fast, learn from it, and deliver code changes quickly and reliably. While you’re trying to find product-market fit, learning fast is the name of the game. When systems start to become more complex, you’ll have the practices and tooling in place to handle them easily. By not having the ability to learn and adapt quickly, you give your competitors a massive edge.
One other place where early, simple investments really pay off is in operability. You want the simplest possible codebase: probably a monolith and a basic deploy. But if you don’t have some basic tools for observability, each user issue is going to take orders of magnitude longer than necessary to track down. That’s time you could be using to advance your feature set.
Your implementation here may be some placeholders with simple approaches. But those placeholders will force you to design effectively so that you can enhance later without massive rewrites.
Very early stage: Maintain efficiency and productivity
At 10 to 20 engineers, you likely don’t have a person dedicated to developer efficiency or tooling. Company priorities are still shifting, and although it may feel cumbersome for your team to be working as a single team, keep at it. Look for more fluid ways of creating independent workstreams without concrete team definitions or deep specialization. Your team will benefit from having everyone responsible for creating tools, processes and code rather than relying on a single person. In the long run, it will help foster efficiency and productivity.
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The pandemic showed why product and brand design need to sit together
Young startups need to be great at design, not just for their products, but for their brands. The pandemic made that all harder — but lessons are being learned. We caught up with Scott Tong, a startup design expert who advises early-stage companies, to learn more.
The office may still be the best place to hash out big multiteam decisions, he says, but new best practices and modern tools are making remote collaboration easier and easier.
Brand design seems to only be getting trickier, however. “To users,” he explains, “brand and product are lumped together and they each represent the other.”
Today, many users have spent lots of time at home online, often thinking harder about world events and how they are living their lives. They’re scrutinizing what they can observe about a startup to see if its values line up with theirs before they make a decision to sign up (or quit).
The solution, in Tong’s view, is to create a unifying plan where design decisions can address problems before they emerge.
More details are in the interview below. For a full conversation, check out Tong’s talk about design strategy coming up at our TC Early Stage 2021 – Marketing & Fundraising conference on July 8.
The pandemic affected us all. How has it affected user-focused brand design?
The pandemic drove people to consume even more media than before. News about science, politics, race and the economy were unavoidable. Brands have had to navigate a very complex landscape of topics that can be divisive. People increasingly identify with brands that are aligned with their values. But in order to understand a brand’s values, someone has to sift through competing signals — some from the brand itself, and others from vocal supporters and critics. Say the wrong thing and a brand can risk alienating large portions of their audience (including their own employees). If a brand says nothing, their silence can be interpreted as complicity. And if brand messaging comes across as unauthentic, it could spell disaster. It’s a difficult needle to thread. It’s not uncommon for companies to run surveys to gather signals about how their brand is perceived by customers and noncustomers alike.
What new things about users should startups consider when working on designing their identities? What are you advising startups now about designing their brands, versus what you said circa December 2020?
Identities are only one part of a much larger constellation of touch points that make up a user’s perception of a brand. User expectations are extremely high and will continue to rise. Even with their free products, users have gotten accustomed to highly polished experiences. While “high quality” is table stakes for users, the challenge for a company is to pinpoint the handful of dimensions that matter most. That’s why constantly seeking to understand users is so important. Deeply understanding what they care about will help isolate those critical dimensions so teams can focus on areas that will drive the most meaningful impact.
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What do startups continue to get wrong?
One recurring observation is that brand teams and product teams often sit in different parts of a company’s org structure. While there are reasons for this, it’s important to remember that users don’t care about your org structure. To users, brand and product are lumped together and they each represent the other.
Internally, how are companies handling internal challenges like collaborative designing in a more remote world? In-person communication has been vital historically to get all parts of a company thinking in the same way. What is helping those who have gone remote-first succeed (tools, approaches to meeting and documentation, etc.)?
Collaboration tools have never been more abundant. But while tools are plenty, norms around their usage can vary significantly from group to group, even within the same company. Where can I find the project brief? How many back-to-back meetings is too many? How are brainstorms run in a virtual environment? When do I use Slack versus email? Establishing those norms requires conversation and experimentation.
Along with norms around tools, it’s helpful to establish a cadence/rhythm that allows team members to get and stay in sync. Depending on the team, that cadence may be daily, weekly, biweekly, monthly or quarterly, etc., but find the appropriate cadence for each audience.
Alternatively, do you think the demands of good design work will motivate more early-stage startups back into in-person office work?
There are varying opinions on whether being in-person spurs innovation or productivity. The pandemic has forced us all to adapt, and design is no exception. It’s been encouraging to see good design happen in remote work environments, and a lot of that has been enabled by tools and the norms around their usage. While I personally would prefer being in-person, especially at the early stages of company building, I think it’s entirely possible to establish a high-functioning team in a remote environment. Of course there are cases — like hardware or soft goods — where tactile feedback is important and hard to replicate remotely. But even then I’ve seen some successful workarounds (for example, sending the same material sample to every team member). Given that this is all still very new, there will inevitably be hiccups along the way. But a team of willing participants with the right mix of tools and norms can make it work.
Overall, with more teams remote and distributed, it may be even more natural than before to work with a third-party brand design expert. When do you advise startups to bring in an outside consultant today, and how should they work with them?
This depends largely on how design is valued within an organization — as a service or as a partner.
If design is viewed as a partner, then the relationship is ongoing and iterative. This means design is a function that builds, measures and learns alongside their product and engineering counterparts and the benefits of institutional knowledge compound over time.
If design is viewed as a service, third parties make sense, because in a service relationship there is usually a defined beginning and end to an engagement. Clear scope, timeline and deliverables will set this kind of service relationship up for success.
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VCs discuss the opportunities — and challenges — in Pittsburgh’s startup ecosystem
Ahead of our TechCrunch City Spotlight: Pittsburgh event tomorrow, I spoke to current Mayor Bill Peduto and Dave Mawhinney, the executive director of Carnegie Mellon University’s Swartz Center for Entrepreneurship. Like many in the Steel City startup community, both share a focus on the historically difficult task of keeping startups in town.
For more on investing in Pittsburgh, be sure to tune in to our City Spotlight on Tuesday, June 29, where we will be joined by Peduto, Duolingo director of engineering Karin Tsai and Carnegie Mellon University President Farnam Jahanian. Register for the free event here.
I asked Peduto and Mawhinney what the single biggest obstacle has been in building out Pittsburgh’s startup ecosystem. Both responded the same way: venture capital. Raising funding is, of course, a hurdle regardless of location, but many VCs have been reluctant to invest in startups outside of traditional hubs like San Francisco and New York.
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“But one of the challenges is getting that capital to come into the community,” said Mawhinney, who leads CMU’s startup efforts. “If you look at how much Uber ATG brought in, how much Argo AI and Aurora — collectively, those three companies, which have all licensed CMU technologies, they’ve all got over $7 billion in collective capital. Not all of it will be spent here, but a lot of it will be spent here. But that doesn’t necessarily trickle down to the next AI startup raising their first $3 million.”
Image Credits: Eilis Garvey/Unsplash
Peduto said growing the VC pipeline has been a focus during his time as mayor.
“I think we’ve been able to convince investors from the coast that the companies don’t need to leave Pittsburgh in order to be highly successful and see their investment pay off,” he told TechCrunch. “However, I believe if we had more venture capital arriving here to help take early-stage companies into that critical next stage of expansion, it would build off itself and it would excel growth in all of the industry cluster, significantly.”
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Real estate tech startup Side raises $50M more at a $2.5B valuation as it preps for an IPO
Side, a real estate technology company that works to turn agents and independent brokerages into boutique brands and businesses, has raised “$50 million-plus” in a funding round that more than doubles its valuation to $2.5 billion.
The latest financing comes just three months after the San Francisco-based startup raised $150 million in a Series D funding round led by Coatue Management at a $1 billion valuation. Tiger Global Management led the latest investment, which also included participation from ICONIQ Capital and D1 Capital Partners. With the latest capital infusion, Side’s total raised since its 2017 inception now totals over $250 million. Matrix Partners, Sapphire Ventures, Trinity Ventures and 8VC led its earlier rounds.
Side says that it is now “backed by the three top technology initial public offering (IPO) underwriters” and that the latest funding “sets the stage for a future IPO.”
The startup pulled in between “$30 million and $50 million in revenue” in 2020 (a wide range, we know), and expects to double revenue this year. In 2019, Side represented over $5 billion in annual home sales across all of its partners. Today, the company’s community of agent partners represents over $15 billion in annual production volume. And it’s predicting that by the end of 2021, it will have closed over $20 billion in home sales, positioning the company “as a top 10 national brokerage by volume.”
Today, Side supports more than 1,800 partner agents across California, Texas and Florida. It says it’s seen a 200% year-over-year increase in agent-represented home sales across its three operating markets of California, Texas and Florida. The company plans to enter 15 new states by year’s end.
Guy Gal, Edward Wu and Hilary Saunders founded Side on the premise that most real estate agents are “underserved and under-appreciated” by traditional brokerage models.
CEO Gal said existing brokerages are designed to support “average” agents and, as such, the top-producing agents end up having to do “all of the heavy lifting.”
Side’s white label model works with agents and teams by exclusively marketing their boutique brand, while also providing the required technology and support needed on the back end. The goal is to help partner agents “predictably grow” their businesses and improve their productivity.
“The way to think about Side is the way you think about what Shopify does for e-commerce […] When partnering with Side, top-producing agents, teams and independent brokerages, for the first time in history, gain full ownership of their own brand and business without having to operate a brokerage,” Gal told me at the time of the company’s last raise. “When you spend years solving the problems of this very specific community of agents, you are able to use software to drive enormous efficiency for them in a way that has never been done before.”
Existing brokerages, he argues, actively discourage agents from becoming top producers and teams, because agents who serve fewer clients can be forced into paying much higher commission fees on every transaction, which means the incentives between brokerages and top agents and teams are misaligned.
“Top producers want to grow and differentiate, and brokerages want them to do less business at higher fees and be one more of the same under the same brand,” Gal said. “Side, rather than discouraging and competing with top-producing agents and teams, enables them to grow and scale their own business and brand.”
This story was updated post-publication with an updated valuation figure.
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Foursquare founder Dennis Crowley steps back from the company
Foursquare co-founder Dennis Crowley has announced that he is stepping back from his full-time role at the company. During the first seven years of the company, he was the startup’s Chief Executive Officer. In 2016, Crowley moved to an executive chairman position. He’s also been running the Foursquare Labs R&D group since then.
Going forward, Crowley won’t be working full-time at the company. He’ll remain on the board of directors as co-chair with Factual founder Gil Elbaz.
In 2009, Foursquare was better known for its location-based social network. People would check in to locations to share what they’ve been up to with their friends. Users would earn badges and mayorships.
Over the years, the most active users had amassed thousands of checkins. Foursquare became a great app to keep track of places you like. You could also use it to discover your friends’ favorite places.
That’s why the company decided to split its main app into two separate apps — the Foursquare City Guide and Swarm. At the same time, the company started working on developer APIs and SDKs so that other companies could take advantage of Foursquare’s location data.
That business in particular has been quite lucrative. With the company’s Pilgrim SDK, developers can build location-aware apps. For instance, an advertiser can send a personalized notification based on where you are. Foursquare tries to be as accurate as possible and can sometimes even figure out when you enter or exit a venue.
That SDK enables many different possibilities. It’s easy to track the impact of an advertising campaign on online sales, but what about offline interest?
Foursquare’s SDK can help advertisers and brands see whether an advertising campaign has an impact on foot traffic. Of course, you can also combine that data with other customer data.
The company has become an important advertising and marketing platform focused on location. Overall, the company has generated more than $100 million in revenue in 2020. And it plans to grow in 2021 and beat that number.
Crowley mentions two reasons why he’s leaving now. According to him, the company is doing well, and he’s been working on the same thing for 12 years already.
“Foursquare hasn’t just found its way … it leads the way. I used to say that my goal was to make the name ‘Foursquare’ synonymous with ‘innovation in contextual aware computing’ … And, here in 2021, we’ve built the tools and frameworks that can make that so,” Crowley writes in a blog post.
“Also, 12 years is a lot of time. I have lots of things I still want to build — many of which don’t fit neatly into the Foursquare of 2021 (and, hey fellow founder, it’s fine to feel this way!),” he adds. He’s also going to spend some well-deserved time with his family.
Crowley has been an iconic startup founder during the Web 2.0 era. He managed to attract tens of millions of users. It’s clear that he’s been a great product CEO during the early years of the company. And now, the company is also generating revenue. So it’s going to be interesting to see what he builds next.
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SentinelOne’s upgraded IPO pricing is good news for Tiger, public markets and your local VC
As the second quarter races to a close, we’re down to the wire for IPOs looking to get out before June ends. One such company is SentinelOne, a cybersecurity startup backed by Insight Venture Partners, Redpoint, Tiger Global Management, Data Collective and Anchorage Capital, among others.
SentinelOne raised an ocean of capital while private, including nearly $500 million across two rounds in 2020. Its debut is therefore a huge liquidity event for a host of investing groups. And today, the cybersecurity unicorn had good news in the form of an upgrade to its IPO price range.
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Last week, The Exchange wrote that the company’s IPO would be a “good heat check for the IPO market” given its rapid growth and pace of losses. How investors valued it would help explain the public market’s current appetite for loss-making startups. Today’s news implies healthy appetites.
SentinelOne raised its IPO price range this morning from $26 to $29 per share to $31 to $32 per share, a sizable lift to its valuation and IPO raise.
This morning, we’re unpacking the company’s new valuation range, thinking about SentinelOne’s growth and revenue results compared to similar public companies, and working to understand if the company is inexpensive, neutrally priced or expensive compared to current comps. Sound fun? It will be!
What’s SentinelOne worth?
Recall that when SentinelOne last raised capital it was valued at $2.7 billion on a pre-money basis. The company was therefore worth just under $3 billion after the $267 million round. The unicorn is going to yeet that figure into space in its IPO, barring something catastrophic.
Its new IPO price range of $31 to $32 per share values the company on a much richer basis. With an anticipated simple share count of 253,530,006 after its IPO, inclusive of a private placement, the company would be worth $7.86 billion to $8.11 billion.
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Tapcart, a ‘Shopify for mobile apps,’ raises a $50 million Series B
Shopify changed the e-commerce landscape by making it easier for merchants to set up their websites both quickly and affordably. A startup called Tapcart is now doing the same for mobile commerce.
The company, which has referred to itself as the “Shopify for mobile apps,” today powers the shopping apps for top brands, including Fashion Nova, Pier One Imports, The Hundreds, Patta, Culture Kings, and thousands more. Following a year of 3x revenue growth, in part driven by the pandemic, Tapcart is today announcing the close of a $50 million round of Series B funding, led by Left Lane Capital. Having clearly taken notice of Tapcart’s traction with its own merchant base, Shopify is among the round’s participants.
Other investors in the round include SignalFire, Greycroft, Act One Ventures and Amplify LA.
Tapcart’s co-founders, Sina Mobasser and Eric Netsch, have worked in the mobile app industry for years. Mobasser’s previous company, TestMax, offered one of the first test prep courses on iOS, while Netsch had more recently worked on the agency side to create mobile and digital experiences for brands. Together, the two realized the potential in helping online merchants bring their businesses to mobile, as easily as they were able to go online with Shopify.
Tapcart’s founders Sina Mobasser and Eric Netsch at their Santa Monica HQ. Image Credits: Tapcart
“Now, you can launch an app on our platform in a matter of weeks, where historically it would take up to a year if you wanted to custom build an app,” explains Mobasser. “And you can do it for a low monthly fee.”
Tapcart’s platform itself offers a simple drag-and-drop builder that allows anyone to create a mobile app for their existing Shopify store using tools to design their layout, customize the product detail pages, integrate checkout options, include product reviews, and even optionally add other branded content, like blogs, lookbooks, videos (including live video) and more. Everything is synced directly from Shopify to the app in real-time, so the merchant’s inventory, products and collections are all kept up-to-date. That’s a big differentiator from some rivals, which require duplicate sets of data and data transformation.
Tapcart, meanwhile, leverages all of Shopify’s APIs and SDKs to create a native application that works with Shopify’s existing data structures.
Image Credits: Tapcart
This tight integration with Shopify helps Tapcart because it doesn’t have to focus on the e-commerce infrastructure, as the way things are structured around inventory and collections are roughly 90% the same across brands. Instead, Tapcart focuses on the 10% that makes brands stand out from one another, which includes things like branding, content and design. Its CMS allows merchants to create exclusive content, change the colors and fonts, add videos and more to make the app look and feel fully customized.
Beyond the mobile app creation aspect to its business, Tapcart also helps merchants automate their marketing. Through the Tapcart platform, merchants can communicate with their customers in real-time using push notifications that can alert them to new sales, to encourage them to return to abandoned carts, or any other promotions. The marketing campaigns can be automated, as well, which helps merchants schedule their upcoming launches and product drops ahead of time. The company claims these push notifications deliver click-through rates that are 72% higher than a traditional email or SMS text because of their interactivity and branding.
Image Credits: Tapcart
The platform has quickly found traction with SMB to mid-market enterprise customers who have reached the stage of their business where it makes sense for them to double down on customer retention and conversion and optimize their mobile workflow.
“Our sweet spot is when you have maybe a couple hundred customers in your database,” notes Netsch. “That’s a perfect time to now focus less on the paid acquisition portion of your business and more on how to retain and engage those existing customers, [so they’ll] shop more and have a better experience,” he says.
During the past 12 months, over $1.2 billion in merchant sales have flowed through Tapcart’s platform. And in 2020, Tapcart’s recurring revenue increased by 3x, as mobile apps grew even faster during the pandemic, which had increased consumer mobile screen time by 20% year-over-year from 2019. Mobile commerce spending also grew 55% year-over-year, topping $53 billion globally during the holiday shopping season, the company says. Tapcart’s own merchants saw mobile app orders at a rate of more than once-per-second during this time, and it believes these trends will continue even as the pandemic comes to an end.
Today, Tapcart generates revenue by charging a flat SaaS (software-as-a-service) fee, which differentiates it from a number of competitors who charge a percent of the merchant’s total sales.
Image Credits: Tapcart
With the additional funding, Tapcart plans to focus on its goal of becoming a vertically integrated mobile commerce suite of tools, which more recently includes support for iOS App Clips. It will also soon release an upgraded version of its insights analytics platform and will offer scripts that merchants can install on their mobile websites to compare what works on the site versus what works in the app.
Later this year, Tapcart plans to launch a full marketing automation product that will allow brands to automate and personalize their notifications even further. And it plans to invest in market expansions to make its product better designed for mobile, global commerce.
The funding will allow Santa Monica-based Tapcart to hire another 200 people over the next 24 months, up from the 70 it has currently. These will include new additions across time zones and even in markets like Australia and Europe as it moves toward global expansion.
Shopify’s investment will open up a number of new opportunities as well, including on product, engineering, business strategy and partnerships. It will also help to get Tapcart in front of Shopify’s 1.7 million global merchants.
“There’s still quite a lot of merchants that need better mobile experiences, but have yet to really double down on the mobile effort and get something like a native app,” notes Netsch. “There’s a lot of different ways and methods that merchants are experimenting with mobile growth, and we’re trying to offer all of the best parts of that in a single platform. So there’s tons of expansion for Tapcart to do just that with the existing target addressable market,” he says.
“We believe brands must be where their customers are, and today that means being on their phones,” said Satish Kanwar, VP of product acceleration at Shopify, in a statement. “Tapcart helps merchants create mobile-first shopping experiences that customers love, reinforcing Shopify’s mission to make commerce better for everyone. We look forward to seeing Tapcart expand its success on Shopify with the more than 1.7 million merchants on our platform today.”
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