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Equity Monday: Clubhouse, UiPath and the crypto flash crash
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.
First, our news roundup from last week was probably the most fun I’ve had in a few months, so make sure to catch up on that if you haven’t. That said, here’s a rundown of what we got into on the show this morning:
- The new Clubhouse round has us thinking about what is a good venture-style bet, and what isn’t. At least you can’t fault the Clubhouse crew for not having conviction.
- UiPath raised its IPO range, as expected.
- There’s an Apple event this week, which caused us to wonder why more startups aren’t competing with the giant.
- Cryptos have recovered from the flash crash, which had us thinking.
- Druva raised $147 million as TechCrunch will report later today, and Razorpay raised even more capital at a newly refreshed valuation.
- Finally, DoNotPay had some news, but its corporate ethos proved even more interesting.
The week is here, everyone! It’s Monday! We can do this!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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Detroit VCs weigh in on fundraising and building startups in Michigan and the Midwest
TechCrunch just hosted a small virtual meetup with Detroit startups and venture capitals. Like the one we held last month in Miami, the event was a blast and featured a talk with two local VCs on which startups work in Detroit and how to raise money from local investors.
In case you missed it, the video of this talk is below. Jonathon Triest from Ludlow Ventures and Patti Glaza from Invest Detroit Ventures spoke extensively on the wide-ranging types of startups that call Detroit home. They point to Bloomscape (houseplants) and StockX (sneakers) and the numerous medical and security startups in Detroit, nearby Ann Arbor and the surrounding metro area. Both firms invest in early-stage startups, but do so in radically different ways.
All about Detroit
- A quick peek inside Fontinalis, one of Detroit’s best-known young venture firms
- Origin story: How StockX became the stock market of hype
- Bloomscape’s Justin Mast explains how he built a thriving garden startup in Detroit
- Hardware is still hard in the Motor City
- Building tech for worker safety, Guardhat Technologies is a company that could only come from Detroit
The 20-minute conversation covers the types of founders who can find success in Detroit and other Midwestern areas.
This event was part of TechCrunch’s growing series of City Spotlights, where we focus on a growing startup ecosystem and highlight what makes the area attractive for startups. We’re going to Pittsburgh next and hope you can join us.
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Zoom launches $100M Zoom Apps investment fund
When Zoom launched Zoom Apps and the Marketplace as a place to sell them last year, it was a big signal that the company wanted to be more than just a popular video conferencing application. It wanted to be a platform, which developers could use to build applications on top of Zoom.
Today the company announced a $100 million investment fund to encourage the most promising startups using the Zoom toolset to launch a business by giving them funding, while using that as a springboard to encourage other developers to take advantage of the tooling on the platform.
“We’re looking for companies with a viable product and early market traction, and a commitment to developing on and investing in the Zoom ecosystem,” Zoom’s Colin Born wrote in a blog post announcing the new program.
The company’s corporate development team, with heavy involvement from the Zoom executive team, will be in charge of selecting and managing the portfolio companies. The company plans to invest between $250,000 and $2.5 million in each startup in the portfolio.
“A big part of this is helping facilitate those early companies and giving them the access to resources and connections within Zoom, so that they can grow and succeed,” Zoom CTO Brendan Ittelson told me.
While the company wants to invest successfully, a big part of this is using the fund to encourage developers to take advantage of the platform offerings from Zoom. “We feel we’ll help [these startups] build these valuable and engaging experiences and by having that and by investing, we’re helping bring solutions and further expand the ecosystem and our customers should benefit from that,” he said.
Zoom has a number of developer tools that budding entrepreneurs can use to build applications that take advantage of Zoom functionality. In March the company introduced an SDK (software development kit) designed to help programmers embed Zoom functionality inside other applications.
The company also provides tools for embedding an application inside of Zoom, such as one designed for a specific purpose, like education or healthcare, and it has created a centralized place to learn about all of them at developer.zoom.us.
Zoom is not alone in investing in companies building applications on its platform. Firms like Sequoia, Maven Ventures and Emergence Capital have already started investing in startups building companies on top of Zoom, including Mmhmm, Docket and ClassEdu.
The fund gives startup founders one more option to get some funding to get their idea off the ground. Ittelson says all of the investments will be seed-level investments for starters, and they will be providing developer and business resources to help the young startups build and distribute their products.
While he says the company will be on the lookout for promising startups to bring into the portfolio, interested entrepreneurs can apply directly at zoom.com/fund.
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Gwyneth Paltrow invests in The Expert, a video marketplace for high-end interior designers
The pandemic-induced lockdowns halted many a home decoration project, but the irony was that our homes became even more important. But where to get ideas to decorate? Home décor experts could no longer visit. Now an LA-based startup is addressing this digitization of the interior design market, but kicking off with a typically LA-oriented, high-end clientele.
The LA-based The Expert — a platform for video consultations with interior designers — has raised a $3 million seed funding round led by Forerunner Ventures, with participation from Sweet Capital, Promus Ventures, Golden Ventures, Jeffrey Katzenberg’s WndrCo, AD 100 designer Brigette Romanek and CEO/founder of goop, Gwyneth Paltrow.
The Expert offers 1:1 video consultations with leading interior designers, it says.
The founders consist of Jake Arnold, a celebrity interior designer (who has worked with John Legend and Rashida Jones and Chrissy Teigen, among others) and YC-alumni, Leo Seigal, who previously founded and sold Represent.com to CustomInk for $100 million in 2015.
After being “inundated” with DMs during lockdown asking for his advice, Arnold says he realized he didn’t have the business model to help non-retainer clients. So he joined Seigal to create The Expert.
The Expert features 85 designers, so far. Clients click on designers’ profiles to see rates and availability, then click to book. Clients can upload any relevant floor plans, images of the home, inspiration ideas, etc. for the designer to review ahead of time. They then join a Zoom link (the platform uses the Zoom API) to meet with an interior designer, and can leave a review afterward.
The company claims it has 700 designers on its waitlist and will hit $1 million of bookings after its first quarter, after launching in early February this year.
The startup has some competition in the form of Modsy and Havenly, but The Expert says it is going for a more high-end experience, where clients are willing to pay $300-$2,500 for an hour of a designers’ time. The startup takes a 20% cut of the transaction.
Co-founder Leo Seigal said: “We were able to attract a crazy roster of designers partly thanks to co-founder Jake who is so highly regarded in the industry, and partly due to a timeliness of offering which is far above anything that has been tried in the home space.”
In a statement, Gwyneth Paltrow said: “I’ve always felt that access to great design – and those who create it – is too rare of a commodity. It’s a game-changer for someone without the budget for a full-time designer to have this roster of talent on speed dial.”
Nicole Johnson, partner at Forerunner, said: “We’ve been thinking through new models for the interior design sector for years at Forerunner, observing room for improvement for the trade and consumers alike. Interior design is arguably the ultimate, best-suited source of home inspiration and commerce enablement for consumers, but the trade is a famously walled garden. The Expert solves for this, connecting anyone, anywhere with the world’s leading interior designers via video consultation—allowing Experts to broaden their reach and monetization in a predictable, rewarding, and low-friction way.”
Pippa Lamb, partner at Sweet Capital, which led their pre-seed investment round last summer said: “The Expert is democratizing access to top creators in the $150B global interior design industry. By partnering with leading talents like Amber Lewis and Leanne Ford, it’s solving both upstream discovery and downstream services: bringing Instagram feeds to life. Leo and his team are visionaries and Sweet Capital has been proud to back them since Day 1.”
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HDS, from the Borders and Webvan founder, raises $3M as it gears up to launch its robot-run grocery and general merchandise play
The online grocery market is poised to get a little more crowded in the next several months, with the launch of a startup led by a veteran founder who has taken big hits from Amazon in the past, but now hopes to come back swinging with the help of an army of robots.
Home Delivery Services, a delivery startup founded by Louis Borders that plans to sell groceries and general merchandise online using a massive, automated system to power the fulfillment and logistics, is today announcing funding of $3 million to finalize the finishing touches on an AI-based robotic demonstration center outside of Indianapolis.
The plan is for the center to showcase the technology that HDS Global has been building over the last several years (plans first emerged as long ago as 2014), robots and other automation under the name RoboFS, that will power a wide fulfillment system extending from stocking, sorting and picking items that will then be delivered, mostly by humans, to consumers, to take on what Borders describes as a $1 trillion grocery market in the U.S.
“The $1 trillion grocery in the U.S. is not well penetrated,” he said, comparing the opportunity to the one that Walmart seized 20 years ago in physical stores. “We want to offer a complete selection of groceries and general merchandise in one order.” The idea is to build warehouses that cover some 150,000 square feet to do $200 million in revenue over millions of SKUs for one-hour deliveries.
A funding round of $3 million — which is coming from Bob DiRumualdo, the chairman of Ulta and CEO of Naples Ventures — might sound a little modest, especially considering the hundreds of millions of dollars that have been collectively raised by online grocery players in the last several months — all of them racing to scale up their businesses in the wake of huge consumer demand for online shopping alternatives to visiting stores in person in the wake of the COVID-19 pandemic.
Borders said in an interview that this small round is primarily to kick off the demo center to show off RoboFS to help bring on new investors and new partners with the proof of concept. It already has a few investor partners (Ingram Micro and Toyota), and the idea will be to add more.
And he confirmed that HDS — which will unveil a different name when it launches commercially, he added — is also working on a much bigger round of funding, likely to close in the next 15 months, to fuel that wider commercial launch. It has raised $38 million to date, he said.
Borders’ name will ring a bell to many in the worlds of retail and technology: He was the founder and head of the Borders book superstores and later started Webvan, a very early mover in the world of online grocery ordering and delivery. Both companies crashed hard in their times and became case studies, and more specifically cautionary tales, around how to build businesses in the digital era: Beware the specter of Amazon, of innovating too early or too late, of being less agile, too inefficient and of not correctly identifying where the puck was going and skating to it.
This time around, the idea is that he’s focusing first and foremost on technology to try to head off those problems in ways that his previous ventures did not. This is one reason why HDS has spent so many years on building the technology: automation, specifically in areas like picking groceries, is one area that has foxed a lot of companies to date — Amazon continues to work on this, and Ocado, a leader in the space, has yet to launch robotic picking, although it says this is coming soon. Borders estimates that bringing in automation can bring down the cost of labor by two-thirds, with people instead focused on delivering and selling at people’s doors.
“When we went out to buy the tech we didn’t see what we wanted,” Borders said. “We’re trying to be smart about technology but the tech was just not there when we decided to build this five years ago. So we started with building that system. This became our opportunity.”
The interesting opportunity is not just to build services that don’t quite exist yet, but to provide a set of infrastructure that can be a viable alternative and supply chain to Amazon — a common goal that brings together players from a lot of disparate yet interconnected areas in the grocery value chain. This is one reason why companies like Toyota and Ingram have come on board to work with the startup.
Given that it’s been so many years in the making and has yet to see the proof of concept, there will continue to be a lot of factors that could not come together, but it’s a play that HDS, Borders and their partners are willing to make.
“Ecommerce has become an essential component in people’s daily lives but what many don’t realize is that it can be exponentially better than what is offered today,” said DiRumualdo in a statement. “I was attracted to working with Louis again and to the company’s big idea approach – an all-new robotic fulfillment system purpose-built for ecommerce – which can deliver a vastly improved experience at lower cost. I am excited to be a part of bringing this vision to life.”
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Clubhouse closes an undisclosed $4B valuation Series C round, as tech giants’ clones circle
Buzzy “social audio” app Clubhouse has raised a Series C funding round, reportedly valuing the company at $4 billion. Clubhouse said the new round of financing was led by Andrew Chen of Andreessen Horowitz, with participation from DST Global, Tiger Global and Elad Gil. This round means Clubhouse has tripled the valuation it attained in January when Andreessen Horowitz led its Series B funding round.
The funding comes as Twitter, Spotify, Facebook, Telegram, Discord and LinkedIn are all prepping similar features to Clubhouse’s live audio streaming rooms, which has attracted attention for hosting live chats with the likes of Elon Musk and Mark Zuckerberg. Indeed, Vox reported that Facebook will announce a series of “social audio” products only today.
But, unusually for such a late stage of funding, the company has not revealed the amount raised. Industry sources say that this is probably because the Series C funding round is “multi-stage” and therefore not officially closed. Alternatively, the company is “hyping” itself ahead of a sale, as is often the case with “hot” startups. Twitter reportedly broke off talks to acquire the startup at a $4 billion valuation, according to Bloomberg.
And despite appearances that this funding round has been timed to coincide with the launch this week of Facebook’s Clubhouse clone, one well-placed source told me “this funding round has been in the works for the last 1.5 months” and that some offers have been “above 2x” the $4 billion valuation. In other words, there are some investors out there who think Clubhouse is worth more than $8 billion.
So far Clubhouse is demurring on all this, and declining to comment more directly to the media. The company disclosed the news about the funding during its weekly “town hall” chat last Sunday night and in a blog post, the company said the fundraising will support a fresh burst of growth for the app.
“While we’ve quadrupled the size of our team this year, stabilized our infrastructure, launched Payments in beta to help creators monetize, and readied Android for launch, there is so much more to do as we work to bring Clubhouse to more people around the world. It’s no secret that our servers have struggled a bit these past few months, and that our growth has outpaced the early discovery algorithms our small team originally built,” said the post.
Noting that “it’s important to us to be building all of this with people who are invested in the community and who represent a diverse set of backgrounds and voices,” Clubhouse has, however, been struck by a wave of problems in the last few days, when anti-Semitic audio rooms seemed to proliferate on the platform. Clubhouse has previously been criticized for its seeming inability to moderate extremism on the app.
The year-old platform, which has reported 10 million weekly active users, has thrived during the pandemic while people were locked down and therefore unable to chat easily in person.
Tech news site The Information first reported details on the Clubhouse funding on Friday.
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Andela begins global expansion in 37 countries months after going remote across Africa
More than a year after the pandemic began, remote work shows no signs of going away. While it has its cons, it remains top of mind for potential employees around the world before joining a new company.
But while most people in Africa still go to physical offices despite the pandemic, a few companies have nevertheless embraced this concept. Andela, a New York-based startup that helps tech companies build remote engineering teams from Africa, was one of the first to publicly announce it was going remote on the continent.
Today, it is doubling down on this effort by announcing the global expansion of its engineering talent. Over the past six months, the company has seen a 750% increase in applicants outside Africa. More than 30% of Andela’s inbound engineer applications also came from outside the continent in March alone. Half this number came from Latin America while Africa saw a 500% increase in applications as well.
When Andela launched in 2014, it built hubs in Nigeria, Kenya, Rwanda and Uganda to source, vet and train engineers to be part of remote teams for international companies. It also tested satellite models in Egypt and Ghana as substitutes to physical hubs.
The company would issue a call for applications, select a few (less than 1%), pay them a salary for the first six months and provide them with housing and food. It also helped developers improve their skills via training and mentorship. Over 100,000 engineers have taken part in the company’s learning network and community, and, as of 2019, Andela had more than 1,500 engineers on its payroll.
However, after noticing that this model wasn’t sustainable, it began to make changes.
In September 2019, it let go of 420 junior engineers across Kenya, Uganda and Nigeria. Nine months later, citing the pandemic, it laid off 135 employees while introducing salary cuts for senior staff. But despite the layoffs, the pandemic provided some form of clarity to how Andela wanted to operate — which was remote, judging by the success of the satellite models.
“In the very beginning, a developer had to be in Lagos to work with Andela. Then it became living in Nigeria. Then Kenya. Then Uganda, Rwanda,” CEO Jeremy Johnson told TechCrunch. “Before the pandemic, Andela was opening applications in country after country. The pandemic came and changed that as we opened up to the entire continent.”
Shutting down its existing physical campuses and going remote also helped the company focus on getting engineers with more experience to meet its clients’ requirements. That experiment, which the company conducted in less than a year, is also part of its mission to be a global company.
“That went so well and we thought ‘what if we accelerated it now that we’re remote and just enable applicants from anywhere?’ because it was always the plan to become a global company. That was clear, but the timing was the question. We did that and it’s been an amazing experiment,” Johnson added.
Now with its global expansion, its clients can tap into regional expertise to support international growth.
According to a statement released by the firm, it currently has engineers from 37 countries across Africa, Asia, Latin America, North America and Europe.
Johnson didn’t go into details about how many of these engineers are getting jobs from Andela or even its total developer count. He’s more interested in helping its clients solve the diversity issues that have plagued many Western corporations.
Andela is currently working with eight companies that have hired its engineers in Latin America and Africa. In addition to the diversity play, the CEO says that means Andela engineers get to prove themselves on a global playing field in a way the company has “always wanted to see.”
Andela serves more than 200 customers, including GitHub, ViacomCBS, Pluralsight, Seismic, Cloudflare, Coursera and InVision. GitHub is one company that seems to be benefitting from Andela’s new offerings. The company’s VP of Engineering, Dana Lawson, in a statement said, “As a business in the developer tool space, a lot of us are trying to enter those areas of the world (Southeast Asia, Latin America and Africa) where the emergent developers are coming so we can better understand their needs. Having a local presence there with amazing talent is super valuable to building a global product.”
Image Credits: Andela
In its quest to become a global company, going up against competition is unavoidable for the seven-year-old company. But since most of these companies are horizontal marketplaces (providing a wide range of expertise), whereas Andela is vertical, Johnson believes there’s enough market share to be acquired by the company.
“We are focused on building digital products, and because of that, we’re able to do more, essentially, for our customers… That’s where our focus is — [building long-term relationships] and around building great digital products,” the CEO said.
The company was founded by Jeremy Johnson, Christina Sass, Nadayar Enegesi, Ian Carnevale, Brice Nkengsa and Iyinoluwa Aboyeji. It has raised more than $180 million (up to Series D) from firms like Chan Zuckerberg Initiative, Generation Investment Management, Google Ventures and Spark Capital, at a valuation of about $700 million.
While announcing the layoffs last year, Andela said it was on an annual revenue run rate of $50 million. But when asked how this number has changed over the past year, Johnson said the company is “growing at a healthier pace as we’ve ever had.”
The future of remote work is global and Johnson believes Andela provides the vital link to talent wherever it is found. The company’s head of talent operations, Martin Chikilian, echoed similar sentiments regarding the expansion.
“We’ve seen exponential growth and interest from engineers from across Africa who want to work with some of the world’s most exciting technology-focused companies,” he said. “Growing our network of talent from Africa to include more markets is a unique proposition and we continue to match talent with opportunity beyond geographical boundaries.”
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What does it take to create a startup ecosystem?
Say it louder for the people in the back: As tech grows bigger by the minute and venture capital adds dollar signs by the day, a startup hub’s success is not an either/or situation. The next Silicon Valley is a tired narrative, when in reality startups look, innovate and create differently all over the world.
On that note, my colleagues spent the past few months digging into the market in Detroit, Michigan:
While StockX is the startup darling that may have put the region in the generalist spotlight, I soon learned that the sneaker marketplace company wasn’t at all where the city’s story started and ended. Instead, it started a little more at ground level.
Detroit techies consistently point to billionaire Dan Gilbert, the co-founder of Quicken Loans and the owner of the Cleveland Cavaliers, as the reason behind the region’s startup growth. It made me immediately wonder if all it takes to create a startup ecosystem is deep pockets.
Turns out it’s a little more complicated than that.
Gilbert has poured at least $2.5 billion into rehabilitating buildings in the core of Detroit. Then he invested in the companies that took office space in those buildings, the restaurants that would feed those new families in the area and the retailers that would fill up the side blocks. It wasn’t one check by one billionaire, but instead a measured and consistent approach to try to reestablish Detroit as a city of innovation within the United States.
I think one founder put it best: “there are a lot of people who hate him, but the reality is that, while he wasn’t the only billionaire in town, he’s the only one who heavily invested in Detroit.”
Beyond Gilbert, the vitalization is spread throughout different sectors. There’s a 12-year-old early-stage venture firm that was one of the first to ever bet on mobility as an investment thesis; there’s a thriving garden startup; and there’s a hardware company that, despite remote work, is finding space to scale:
- Detroit’s native son, billionaire Dan Gilbert, makes the case for his town
- Hardware is still hard in the Motor City
- Building tech for worker safety, Guardhat Technologies is a company that could only come from Detroit
- A quick peek inside Fontinalis, one of Detroit’s best-known young venture firms
We’ll continue exploring emerging tech hubs, so throw us suggestions as we virtually (and one day physically) road trip across the country.
In the rest of this newsletter, we’ll talk about Tiger Global, IPOs and a few exciting upcoming events. Make sure to follow me on Twitter @nmasc_ to hang during the week.
Tiger Global has a spending problem
This week on Equity, we talked about Tiger Global’s aggressive investment approach and what it could mean for early-stage firms and founders.
- Alexa Von Tobel outlines how founders should manage personal finances
- How Pilot charted a course of raising not too much money
Here’s what to know: One of the reasons Tiger Global is feeling spendy is that it just closed one of the biggest venture funds ever. In 2020, the firm closed $3.75 billion in capital commitments. In 2021, it nearly doubled its own record, with $6.7 billion raised for its latest fund.
And if you don’t believe me, below is a list of just some of the New York-based firms’ recent activity:
- HighRadius’ $300M Series C
- Cityblock Health’s $192 million Series C
- 6sense’s $125 million Series D
- Groq’s $300 million financing event
- Outschool’s $75 million Series C
- Tiger Global goes super aggressive in India
Crypto’s Coinbase moment
Cryptocurrency trading giant Coinbase went public this week. The company opened at $381 per share, valuing the exchange at nearly $100 billion. It was a massive exit for the company, which underwent scrutiny last year when it banned politics at work.
Here’s what to know: It’s fairly obvious that Coinbase’s successful IPO was a big moment for fintech and crypto startups, as well as the decentralized finance movement. My colleagues Alex Wilhelm and Anna Heim dug into how the crypto ripple effect could look from the perspective of a few venture capitalists. There are too many good bits for me to choose an excerpt, so read it for yourself here, and a take sneak peek below:
So while there is an ocean of bullish sentiment that the Coinbase listing will lead to rising venture capital investment into crypto startups, there’s also some caution to be had; how much of the growing market that Coinbase can capture and control is not yet clear, though IVP’s Loverro was very bullish during our interview about the company’s expanding feature set — things like staking Tezos, or buying Uniswap. Its backers think that Coinbase is well-positioned to absorb future market upside in its niche.
Around TechCrunch
As always, we have a ton of exciting events coming up. Here’s just a taste:
- Tamika Butler, Remix’s Tiffany Chu and Revel’s Frank Reig to discuss how to balance equitability and profitability at TC Sessions: Mobility
- Greylock GP Mike Duboe to discuss growth, growth and more growth at TechCrunch Early Stage in July
Across the week
Seen on TechCrunch
Pakistan temporarily blocks social media
Republican antitrust bill would block all Big Tech acquisitions
Can the tech trade show return in 2021?
Garry Kasparov launches a community-first chess platform
Seen on Extra Crunch
Billion-dollar B2B: cloud-first enterprise tech behemoths have massive potential
For startups choosing a platform, a decision looms: build or buy?
Building customer-first relationships in a privacy-first world is critical
The IPO market is sending us mixed messages
Best,
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Outdoor startups see supercharged growth during COVID-19 era
After years of sustained growth, the pandemic supercharged the outdoor recreation industry. Startups that provide services like camper vans, private campsites and trail-finding apps became relevant to millions of new users when COVID-19 shut down indoor recreation, building on an existing boom in outdoor recreation.
Startups like Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.
Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.
Social media, increased environmentalism and high urbanization were already fueling a boom in popularity. There was a 72% increase in people who camp more than three times a year between 2014 and 2019, mostly spurred by young millennials, young families with kids and nonwhite participants.
But 2020 was a different animal: After months of shelter-in-place orders, widespread shutdowns and physical distancing, outdoors became the only location for safe socializing. In South Dakota, the Lewis and Clark Recreation Area saw a 59% increase in visitors from 2019 to 2020. In the pandemic year, consumers spent $887 billion on outdoor recreation according to the Outdoor Industry Association, more than pharmaceuticals and fuel combined.
And it’s going to continue to grow. Hiking equipment alone is supposed to reach a $7.4 billion market size by 2027, a 6.3% compound annual growth rate. Camping and caravanning is having an even more drastic moment. Without international travel, vacations shifted from flights to exotic resorts to domestic road trips, self-contained rentals and camping. In 2020, the market for camping and caravanning was almost $40 billion and is predicted to rise 13% to just over $45 billion this year.
After the initial and extreme drop-off in engagement early as national parks closed, private camping sites shut down and domestic travel ceased, many outdoor startups have had a breakout year. Outdoorsy, the peer-to-peer camper van rental marketplace, said it saw 44% of all bookings in the company’s history in 2020.
Campsite booking platform Hipcamp said it sent three times as much money to landowners in 2020 as compared to 2019. And it’s not just experienced outdoor veterans taking advantage of the work-from-home lifestyle: in 2020, Cabana, a camper van rental startup, said 70% of its customers had never rented a camper van or an RV before and another 26% had only done it once.
But a report commissioned by the Outdoor Industry Association showed that the most popular outdoor activities were ones that people could do close to home, not the traveling kind Hipcamp, Cabana and Outdoorsy traffic in. The three most popular outdoor activities for newbies: walking, running and bicycling.
But the pandemic did create a small boost for camping, climbing, backpacking and kayaking; fueled by an increase in women, younger, more ethnically diverse, urban and slightly less wealthy people pushing into the outdoors. This class of outdoor startups will need to engage the new demographic shift to capitalize on the pandemic’s outdoor boom because, according to the report, a quarter of those who started new outdoor activities during the pandemic don’t plan on continuing once it’s over.
Startups are increasing accessibility to the outdoors
But getting into the outdoors can be overwhelming: there’s gear to buy, skills to learn, exploring unfamiliar areas and the added stressor of safety. Outdoor startups are working to lower the barrier to entry to help grow their businesses.
“I think anytime you have like 2,000 articles with two dozen tips on how to use a product, that tells me that it is really, really too hard to use,” said Cabana founder Scott Kubly. “To me, that says there’s nothing but friction in this process. If you want to build something that’s mainstream, you need to make it super consistent and really easy to use.”
Kubly said only half a percent of the U.S. population takes a rental van or RV trip each year. Planning an outdoor adventure can be time-consuming — choosing a location, finding an open campsite, planning meals and water, and figuring out dump stations for trash or septic. That planning is multiplied tenfold if you are going for a road trip or backpacking and need to find new places every other night.
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Extra Crunch roundup: UiPath’s IPO filing, predicting revenue, how to pivot properly, much more
This is not a boast, but a warning: I could write a how-to article on almost any topic.
Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.
Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:
- Pouyan Salehi, CEO and co-founder, Scratchpad
- Rami Essaid, CEO and founder, Finmark
- Melonee Wise, CEO and co-founder, Fetch Robotics
The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.
Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?
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In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.
Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!
I hope you got something out of reading Extra Crunch this week. Have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Building the right team for a billion-dollar startup
Image Credits: Bryce Durbin/TechCrunch
From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.
At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.
She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.
So you want to raise a Series A
Image Credits: Bryce Durbin/TechCrunch
During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).
In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.
Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.
With the right tools, predicting startup revenue is possible
For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.
Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?
How we dodged risks and raised millions for our open-source machine learning startup
Image Credits: erhui1979 / Getty Images
If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.
Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.
But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.
Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.
Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting
Image Credits: Ureeka
Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.
She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.
Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.
Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best
Image Credits: Eric Millette / Scale AI
Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.
Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.
Ride-hailing’s profitability promise is in its final countdown
Image Credits: Nigel Sussman (opens in a new window)
Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.
UiPath’s first IPO pricing could be a warning to late-stage investors
Image Credits: Noam Galai/Getty Images
For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.
But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.
Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?
How to choose and deploy industry-specific AI models
Image Credits: alexsl / Getty Images
As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.
While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.
Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.
Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.
Atomico’s talent partners share 6 tips for early-stage people ops success
Image Credits: Atomico
In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.
However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.
Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.
5 questions about Grab’s epic SPAC investor deck
Image Credits: Roslan Rahman/Getty Images
Southeast Asian superapp Grab is going public via a SPAC.
Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.
Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.
Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal
Image Credits: Nigel Sussman (opens in a new window)
Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.
For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.
In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?
What’s fueling hydrogen tech?
Image Credits: Bryce Durbin
When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.
But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.
Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.
5 product lessons to learn before you write a line of code
Image Credits: LaylaBird / Getty Images
Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.
The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.
Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.
Inside the US’ epic first-quarter venture capital results
Image Credits: Nigel Sussman (opens in a new window)
In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.
That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.
Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.
Dear Sophie: How can I get an H-1B without the lottery?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie:
For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.
We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?
— Soldiering on in Sunnyvale
Alexa von Tobel outlines how founders should manage personal finances
Image Credits: Alexa von Tobel
Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.
She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.
At Early Stage 2021, she gave a presentation on how founders should think about managing their own wealth. Startup founders can often put all their money into their venture and end up paying more attention to the finances of their company than their own bank account.
Von Tobel outlined the various steps you can take to stay out of debt, build credit and accumulate wealth through investments to ensure you have financial peace of mind as you take on the most stressful venture of your life: Starting a company.
How to pivot your startup, save cash and maintain trust with investors and customers
Image Credits: Olive
A few years ago, founder Sean Lane thought he’d achieved product-market fit.
Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.
Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.
Building customer-first relationships in a privacy-first world is critical
Image Credits: jayk7 (opens in a new window) / Getty Images
In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.
But the truth is that the companies that champion privacy will be better-positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.
For startups choosing a platform, a decision looms: Build or buy?
Image Credits: Chris Jongkind (opens in a new window)/ Getty Images
Founders shouldn’t be worried about starting companies that rely on other platforms.
Platforms exist to help startups get to users and customers faster and should be used as a means to an end, but everyone must get their piece.
Coinbase’s direct listing alters the landscape for fintech and crypto startups
Image Credits: Nigel Sussman (opens in a new window)
Coinbase’s direct listing was a massive finance, startup and cryptocurrency event, and the transaction’s effects will be felt for some time in the public market, but also among the startups and capital that comprise the private market.
In the buildup to Coinbase’s flotation — and we’d argue especially after it released its blockbuster Q1 2021 results — there was a general expectation that the unicorn’s direct listing would provide a halo effect for other startups in the space.
The widely held perspective raised two questions: Will the success of Coinbase’s direct listing bolster private investment in crypto-focused startups, and will that success help other areas of financially focused startup work garner more investor attention?
Billion-dollar B2B: Cloud-first enterprise tech behemoths have massive potential
Image Credits: twomeows (opens in a new window)/ Getty Images
The “billion-dollar B2B” paradigm refers to the forces shaping a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR — and achieve market capitalizations in excess of $50 billion or even $100 billion.
One of the biggest factors driving billion-dollar B2Bs is a simple but important shift in how organizations buy enterprise technology today.
How startups can ensure CCPA and GDPR compliance in 2021
Image Credits: tumsasedgars (opens in a new window) / Getty Images
Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.
Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.
Should Dell have pursued a more aggressive debt-reduction move with VMware?
Image Credits: Bloomberg / Getty Images
When Dell announced it was spinning out VMware, the move itself wasn’t surprising; there had been public speculation for some time.
But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.
It seems Dell hopes to have its cake and eat it too with this deal: It generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned.
What we all missed in UiPath’s latest IPO filing
Image Credits: Nigel Sussman (opens in a new window)
Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising.
Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors.
But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.
But let’s dig into the company’s quarterly results to get a clearer picture of UiPath.
The IPO market is sending us mixed messages
Image Credits: Mohd Hafiez Mohd Razali/EyeEm (opens in a new window) / Getty Images
If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.
But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.
To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.
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