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Main article: Venture Capital

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The House Fund closes its second fund with $44 million to pour into UC Berkeley grads, alums, and faculty

03:24 | 19 November

In 2016, we profiled a then-24-year-old named Jeremy Fiance who had managed to pool together $6 million for a fund focused on his alma mater, UC Berkeley, where as as student he’d brought to campus Kairos Society, an organization for budding entrepreneurs, as well as created a student accelerator called Free Ventures.

Fiance wasn’t waiting on someone to give him a job in venture; he wanted to create his own vehicle — dubbed The House Fund — with the support of the school to invest in its talented students, alums, and professors, and eventually channel some of its gains back into the university system. To his mind, regional VCs were too focused on Stanford, creating a funding vacuum — and an opportunity. Why not address it himself?

Fast forward two years and it’s apparent that investors give Fiance high marks. To wit, The House Fund is today announcing a second fund with $44 million in capital commitments, including backing from University of California (which oversees a $126 billion endowment) and the Berkeley Endowment Management Company, which provides stewardship of endowment gifts given expressly to UC Berkeley. Other investors include funds of funds, including Ahoy Capital; unnamed family offices; Berkeley alums; and tech execs, says Fiance.

The specific pitch these investors are buying ties partly to the school’s size, says Fiance. UC Berkeley has 500,000 alums in the world and another 60,000 students on campus. Some of those graduates have also built some very valuable, still-private companies, including Flexport, Nextdoor, Warby Parker, Databricks and DoorDash (all are so-called “unicorn” companies). Others have taken their companies public (think Redfin, Coupa, and Cloudera, among others). Naturally, some percentage of UC Berkeley alums have also sold their companies, including Caviar, which was acquire by Square (and then by DoorDash), and Pillpack, which sold to Amazon.

Investors also betting on Fiance’s promising track record. Though the House Fund’s debut vehicle was relatively small, it managed to get checks into the logistics firm Flexport, the email service Superhuman, the teen app Tbh (acquired by Facebook), and Dyndrite, a maker of additive manufacturing software that that we first encountered back in April. The House Fund’s second fund already holds some promising stakes, too. Among its bets so far is the blockchain gaming company Forte, founded by esports veteran Kevin Chou, who previously founded (and sold) Kabam; Oasis Labs, a cryptographic project whose founder previously sold an earlier startup, Ensighta, to FireEye; and Placement.com, a seven-month-old company that aims to help people find better jobs in new cities. (Its cofounders, Sean Linehand and Katie Kent, came out of Flexport.)

Most of all, perhaps, they’re counting on Fiance’s ability to continue growing a network that has already allowed the House Fund to meet with more than 3,000 startups with ties to UC Berkeley. (It has funded 50 in total.)

He has help. Though House Funds remains a capital pool with just one general partner, Fiance is quick to acknowledge the team he has built. Among these members is Cameron Baradar, who was the third engineer at the mapping visualization startup Mapsense before it was acquired by Apple and who is now a partner at the firm; Brett Wilson, who founded the ad tech startup TubeMogul and sold it to Adobe in 2017 and is a venture partner; Annie Tsai, a former CMO at the marketing automation company Demandforce who is a part-time partner; and Arjun Arora, who founded and sold an ad tech startup, worked as an investor for both Expa and 500 Startups, and is now a a part-time partner.

As for the size checks they are writing, Fiance says they “sized the fund in such a way that we were right-sizing to the opportunity in front of us.” What these means: while The House Fund once wrote checks of $50,000 to $100,000, it’s now investing up to $1 million in seed rounds, with an undisclosed amount of money targeted for reserves.

It also dives in before a lot of venture funds will, insists Fiance. “There are actually few very funds that are willing to take a first leap, he says. But we put together pre-seed syndicates. We help companies fundraise by putting together a personalized demo day for them with 20 to 30 investors” who might conceivably be interested in the startup.

“We have a very strong sense of the market and other funds and where and how they’re investing,” adds Fiance. The suggestion, seemingly, is that like the university around which it is centered, the House Fund does its research.

 


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Top VCs in Paris share their investment interests

22:48 | 18 November

Since the election of president Emmanuel Macron in 2017, Paris has experienced a surge of momentum as a startup hub. Investor interest had been building for years, but Macron’s government has aggressively focused on adopting more business-friendly regulations and heavily courted the startup and VC community. In September, he announced a €5 billion initiative to bring more late-stage VC capital into the market.

To get a sense of where France’s investor community sees startup opportunities, I surveyed 10 leading VCs who focus on the Paris ecosystem and asked them to share some of their current interests:

  • Nicolas Debock (Idinvest)
  • Marie Brayer (Serena Capital)
  • Yacine Ghalim (Heartcore Capital)
  • Romain Lavault (Partech Partners)
  • Pia d’Iribarne (Stride VC)
  • Alain Caffi (Ventech)
  • Philippe Botteri (Accel)
  • Alice Zagury (TheFamily)
  • Jean de La Rochebrochard (Kima Ventures)
  • Benoit Wirz (Brighteye Ventures)

Here are their responses:

Nicolas Debock (Idinvest)

Privacy is a trend I am really excited about. After the years of deployment of the web through different platforms (browser, mobile, TV, objects…) where personal data was just gathered and used in a ruthless way, I believe end users and companies are getting more conscious of the value (and not only the financial value) of their data.

This is creating the emergence of different tools around personal data management: from personal data platform, synthetic data to anonymization tool and encryption there is a wide range of new kind of businesses that could emerge. I believe that the future always emerge from tension between two trends. The web has been all around transparency and data deluge it is maybe time for the opposite trends to build its momentum.

Marie Brayer (Serena Capital)

We’re still big on deeptech startups because we are deeply convinced that France is a great place to start them (not unlike Israel) and there are still huge fields like healthcare, infrastructure and fashion where you can develop relevant and persistent value.

We are more and more focused on positive investing, which is much more than a buzzword: the current generation of entrepreneurs (and returning entrepreneurs as well!) want to dedicate their time to a worthy cause with social and societal impact. At Serena, we already invested in several companies with strong missions such as Lifen for instance (mission: reduce medical errors), Inato (decrease R&D cost of new medicine) or Accenta (reduce carbon footprint), and can see first hand the appeal they have towards tier one talent.

A new strong focus for us is also the gaming and entertainment industry, which will take a larger share of our lives thanks to all the existing solutions already optimizing our work time and our daily mobility.

 


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If you don’t have an investment banker, replicate one

20:21 | 18 November

David Teten Contributor
David Teten is an advisor to emerging investment managers and a Venture Partner with HOF Capital. He was previously a partner for 8 years with HOF Capital and ff Venture Capital. David writes regularly at teten.com and @dteten.

The good news: even if you have a small company and can’t afford a banker, you can synthetically and cheaply replicate one. That’s part of the value proposition of an institutional VC; I have been the (unpaid) investment banker for many of my portfolio companies.  

If you don’t have relationships with potential investors, here’s how to replicate a banker:

Her job is to lead a professional outreach campaign to investors, writing highly customized emails to each based on your agreed-upon template. If you don’t have a pre-existing relationship, it is critical that you write emails which are palpably customized and of course well written, or else you’re just spamming.

The person doing outreach should have a title as senior as possible, e.g., “acting COO.” The higher the title, the higher the response rate she will generate. Any good business school will have dozens of current students who fit these criteria. She will get a lower response rate than you (with the CEO title), but likely a higher response rate than an outside banker who does not have an established relationship with the investor you are targeting. You can also have her impersonate you via email, although there’s always a risk of that ending in embarrassment if she is not highly responsible and trustworthy.  

  • You as the CEO should handle all the meetings. There’s no need to bring your colleague who’s setting up meetings, although I’m sure she will appreciate it.  

Raising capital is a time-consuming, arduous, complex task and you will be living with the consequences of your actions for decades. I recommend hiring a professional to help you, if you can afford it. I also recommend doing thorough research before hiring a banker. The wrong decision can cost you millions of dollars, in the form of a broken deal process, a suboptimal valuation, or inappropriate investors.

 


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Steve Jang & Kanyi Maqubela form or fund as Kindred Ventures

20:10 | 18 November

Venture capitalists often mutter, “I haven’t seen anything I like lately”. Founders frequently complain that “investors are back-seat drivers who won’t get their hands dirty.” A $55 million fund with a fresh approach is aiming to address both those problems.

Steve Jang and Kanye Maquebla are two exceedingly smart and sweet guys who couldn’t help but come up with ideas for startups. Jang co-founded music apps Imeem and Soundtracking, meanwhile serving as an early Uber advisor and angel investor in Coinbase. Maqubela ran operations at career network Doostang and solar startup One Block Off The Grid before becoming a venture partner at Collaborative Fund.

Today the pair officially launch Kindred Ventures to form startups as well a fund them.

“We don’t want to wait for people to come around and solve the problems we think matter” says Jang. “We’d rather proactively assemble an amazing team to go tackle that problem” Maqubela follows up. But Kindred Ventures will also step up and lead seed rounds, then help startups orchestrate their follow-on fundraises.

Kindred Ventures partner and co-founder Steve Jang

“The ethos is empathy — to take a very adaptive coaching and mentorship model” Jang tells me. That means partnering with startups rather than offering arms-length investing. By keeping the portfolio size low, Jang and Maqubela plan to turn concentrated conviction and outsized, hands-on effort into big stakes in tomorrow’s top companies.

“I originally wanted to call the fund Kindred Spirits, but it sounds a little too woo-woo” Jang says with a laugh. From multiple interviews with the team and its portfolio, though, that’s really the vibe Kindred Ventures is going for. To be the first people founders call when they’re in crisis…whether they need answers or just some cheering up.

Beyond the warm smiles, Kindred already has a strong track record from its prototype phase under Jang’s solo operation since 2014. He’d made a reputation for himself as a fixer through his advising work during Uber’s scrappy early years starting in 2009.

After Imeem’s sale to Myspace and later Soundtracking’s acquisition by Rhapsody, Jang made about 50 angel investments of around $25,000 to $250,000 in companies like Blue Bottle Coffee, Postmates, and Zymergen under the name Kindred Ventures. Instead of just throwing money around, “I’d help a co-founder — sit down and work with them on product, their presentation for seed funding, hiring their first employees, finding a co-founder — it was quite different from how VCs operate.” But to pour that kind of sweat into his portfolio, Jang needed the help of someone who could dig deep and become an ally to founders in any vertical.

After his stints in operations, Maqubela went on to work at Collaborative Fund for seven years, rising to partner at the firm looking for the intersection of positive impact and profit. He tells me developed a thesis about “what does it mean to be a techno-optimist: to believe that technology is a amoral but can be oriented towards good.”

Maqubela’s super-power is learning. I knew him from Stanford and now the same reputation precedes him through his portfolio of angel investments like Earnest and Buffer. He’ll immerse himself in any topic or industry, read and call people until he truly gets it, and then wedge his entrepreneurial skillset into the cracks to firm up an idea. Still, relatively new to venture, Maqubela was seeking someone with a well-worn process for investing and a big heart for what founders go through.

Kindred Ventures partner and co-founder Kanyi Maqubela

The coincidental co-investors became friends, then deliberately funded startups together, and now are taking the leap together as Kindred Ventures. Together they want to redefine “What does it mean to invest at t=0?. What do they really need?” Maqubela says.

The plan is to fund about twenty-five companies through pre-seed and seed per fund, which they’ll raise every two to three years. Kindred is vertical agnostic, but it has a soft spot for the future of cities, work, and living. It also keen on marketplaces, material science, food innovation, deep tech, enterprise SAAS, and developer tools.

So far Kindred Ventures has funded nine startups from its $55 million initial fund. It’s helped form two companies and hopes to do four to eight per fund. But Kindred won’t be taking founder-level equity in those. Instead it just wants the opportunity to lead the seed round and own 10% to 20% by the time of the Series A.

That makes Kindred Ventures distinct from most startup studios like Atomic that aim for bigger ~30% stakes. “The Studios are creating whole platform teams, services teams, only work on their own ideas, and own a considerable amount of equity” Jang notes. By leaving more shares for the real CEO, “We’d be able to work with a stronger profile of founders” while avoiding spending so much time per company that the model becomes unscalable.

Kindred’s two formations come from the disparate medtech and blockchain worlds. Maqubela became an expert in cardiology to help start Heartbeat, which does in-person and remote heart health diagnostics.

“It’s ‘we’re there for you when you need us’ rather than ‘we’re there for you when we fund you and then we move on’ CEO Jeff Wessler, MD tells me about Kindred. “Very quickly this evolved into Steve and Kanyi being my absolute numbers 1 and 2.” The investors gave Wessler entrepreneurship 101 coaching, provided Heartbeat’s first funding, and helped it build a team.

Plenty of funds talk a lot about getting their hands dirty. Often that means hiring big teams they can assign to help founders, though, while the partners focus elsewhere. With just two support staff, Jang and Maqubela don’t have that luxury. Instead, they’re in constant contact by WhatsApp, phone, and email to work through snags directly.

They’re always super responsive” says Michael Karnjarnaaprakorn, co-founder of collectibles investing startup Otis that was backed by Kindred’s prototype fund. He cites three big value-adds. Strategy: “Anytime I’m thinking through a big decision, I call them to help me think through it” including fundraising and product launches. Network: “They have an extremely strong network and are usually one to two degrees away from anyone.” And “everything else”, from mentorship on founder psychology to company building.

But being high-touch and cooperative doesn’t mean becoming a push-over yes-man. “Founder empathy is not always founder friendly” says Maqubela. “It’s being able to disagree with founders, even very passionately, and still constructively working together. To be able to tell them they’re wrong but come out the other side.”

That means Kindred Ventures isn’t for every founder. Those who want their investors firmly belted in the backseat or locked in the trunk may want to look elsewhere for cash. Smart founders will take all the help they can get, and Kindred strives to give the most per dollar. Jang concludes that “The idea may come from them or come from us, but we want to back amazing founders on a mission. It’s scratching both itches for us.”

 


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Opera’s Africa fintech startup OPay gains $120M from Chinese investors

09:05 | 18 November

Africa focused fintech startup OPay has raised a $120 million Series B round backed by Chinese investors.

Located in Lagos and founded by consumer internet company Opera, OPay will use the funds to scale in Nigeria and expand its payments product to Kenya, Ghana and South Africa — Opera’s CFO Frode Jacobsen confirmed to TechCrunch.

Series B investors included Meituan-Dianping, GaoRong, Source Code Capital, Softbank Asia, BAI, Redpoint, IDG Capital, Sequoia China and GSR Ventures.

OPay’s $120 million round comes after the startup raised $50 million in June.

It also follows Visa’s $200 million investment in Nigerian fintech company Interswitch and a $40 million raise by Lagos based payments startup PalmPay — led by China’s Transsion.

There are a couple quick takeaways. Nigeria has become the epicenter for fintech VC and expansion in Africa. And Chinese investors have made an unmistakable pivot to African tech.

Opera’s activity on the continent represents both trends. The Norway based, Chinese (majority) owned company founded OPay in 2018 on the popularity of its internet search engine.

Opera’s web-browser has ranked No. 2 in usage in Africa, after Chrome, the last four years.

The company has built a hefty suite of internet-based commercial products in Nigeria around OPay’s financial utility. These include motorcycle ride-hail app ORide, OFood delivery service, and OLeads SME marketing and advertising vertical.

“Opay will facilitate the people in Nigeria, Ghana, South Africa, Kenya and other African countries with the best fintech ecosystem. We see ourselves as a key contributor to…helping local businesses…thrive from…digital business models,” Opera CEO and OPay Chairman Yahui Zhou, said in a statement.

Opera CFO Frode Jacobsen shed additional light on how OPay will deploy the $120 million across Opera’s Africa network. OPay looks to capture volume around bill payments and airtime purchases, but not necessarily as priority.  “That’s not something you do ever day. We want to focus our services on things that have high-frequency usage,” said Jacobsen.

Those include transportation services, food services, and other types of daily activities, he explained. Jacobsen also noted OPay will use the $120 million to enter more countries in Africa than those disclosed.

Since its Series A raise, OPay in Nigeria has scaled to 140,000 active agents and $10 million in daily transaction volume, according to company stats.

Beyond standing out as another huge funding round, OPay’s $120 million VC raise has significance for Africa’s tech ecosystem on multiple levels.

It marks 2019 as the year Chinese investors went all in on the continent’s startup scene. OPay, PalmPay, and East African trucking logistics company Lori Systems have raised a combined $240 million from 15 different Chinese actors in a span of months.

OPay’s funding and expansion plans are also harbinger for fierce, cross-border fintech competition in Africa’s digital finance space. Parallel events to watch for include Interswitch’s imminent IPO, e-commerce venture Jumia’s shift to digital finance, and WhatsApp’s pending entry in African payments.

The continent’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population — which makes fintech Africa’s most promising digital sector. But it’s becoming a notably crowded sector where startup attrition and failure will certainly come into play.

And not to be overlooked is how OPay’s capital raise moves Opera toward becoming a multi-service commercial internet platform in Africa.

This places OPay and its Opera-supported suite of products on a competitive footing with other ride-hail, food delivery and payments startups across the continent. That means inevitable competition between Opera and Africa’s largest multi-service internet company, Jumia.

 

 

 

 

 

 


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VC Cyan Banister on her path, who decides what at Founders Fund, and the state of San Francisco

23:28 | 15 November

Cyan Banister is an American success story. A homeless teenager who originally supported herself by making hemp necklaces, then silk-screen T-shirts, she went on to become a self-taught engineer and to later hold several management roles at the security startup IronPort. It was a life-changing experience for her. She made an early fortune when it sold to Cisco for $830 million in 2007. She also met her husband, Scott Banister, who cofounded the company, and the two together and separately began writing seed-stage checks, including to SpaceX, Uber, and a long list of companies that are now household names.

When seed-stage valuations began soaring to levels that gave them both pause, they hit the brakes, and Banister, a self-described workaholic, headed over to AngelList as an “ev-angel-list” to help recruit people like herself to its platform.  Soon after, Peter Thiel’s Founders Fund reached out to her and invited her to become a partner.

In a wide-ranging conversation at a San Francisco event on Wednesday, we talked with Banister about that path, along with her investing style, which still sees her make angel investments of $1.5 million or less in companies that are often ambitiously futuristic or boringly practical and very much needed. (She kidded that they balance out one another.)

We also chatted about Founders Fund, which has changed considerably since its 2005 founding yet maintained its reputation as a top fund, and we discussed why she thinks many of its original partners no longer live in San Francisco.

Among the things we learned: that Founders Fund doesn’t have Monday morning partner meetings, as do many firms. In fact, it doesn’t even have weekly meetings, with Banister instead describing a highly decentralized operation. “We don’t have Monday morning partner meetings. We have very few meetings, actually,” she said. “We have a brunch every two or three weeks that’s an hour, hour-and-a-half long. We submit the agenda over Slack; sometimes, we have nothing to talk about and it’s very short. You literally get a plate of food, talk about the one or two items, and you’re done.”

Founders Fund also has quarterly off-sites, typically at a partner’s house and these are “all day affairs,” she said, adding that the team “doesn’t talk about specific deals. We talk about the future, about what’s exciting to all of us, what our different strategies might be.”

As for how decisions get made, Banister explained that the voting structure is dependent on the size of the check. “So you’d meet with one or two or three or four partners, depending on your [investing] stage,” she told attendees. Because she’s looking at very early-stage startups, for example, she doesn’t have to meet with many people to make a decision. “We don’t have to do a lot of consensus-type investing,” she said. But as the “dollar amount gets larger,” she’d continued, “you’re looking at full GP oversight,” including the involvement of senior members like Brian Singerman and Keith Rabois, and “that can a little more difficult.”

Asked how involved Thiel himself is in these decisions, Banister said that there’s a certain threshold above which he is always involved. Pressed on what that number is, Banister smiled, adding, “Let’s just say it’s a lot.”

Pointing to the other senior members of the team, she offered that the partnership doesn’t “need Peter’s advice all the time, but there’s a certain point where he has to get involved and meet the founders. Ideally, it’s a company that we brought in at its early stages and has grown with us and he has already developed a relationship with [its founders]. We also do an off-site once a year, which is a great opportunity for him” to see everyone involved in the firm’s portfolio. “But he’s pretty involved,” she said. “He comes to these brunches and [quarterly] off-sites. We see him more now [since he called it quits in San Francisco and moved to L.A.] than we did when he lived next door because he’s stuck. If he comes to San Francisco, where’s he going to go? He has to stay in his office,” she joked.

Banister declined to confirm or comment on a recent WSJ report that Founders Fund is in the process of closing on $3 billion in capital commitments across two funds — a flagship fund and an opportunity type of fund to support its companies as they remain private ever longer.

But before we let her go, we asked Banister about turnover at the firm. Specifically, we noted, while Founders Fund was formed by Thiel, along with cofounders Ken Howery, Luke Nosek and Sean Parker, Howery is now the ambassador to Sweden, Nosek runs a separate fund in Austin called Gigafund, and Parker is off doing a variety of other things, many of them also in L.A.

She explained that everyone is encouraged to do what they want. “Ken was encouraged to pursue his political aspirations; that’s something he has always wanted to do,” she said for example.

But she also acknowledged, when asked, that San Francisco itself might be a common thread. “It’s too expensive here. That’s the problem. We need to build more housing. We can’t afford people to even serve us in this town, they come in from other cities, they can’t even live here. And that’s a huge problem when you’re investing and your thesis is to invest only in Silicon Valley and the surrounding area.” It’s hard for founders who’ve been dogmatic about keeping their teams together and are now more likely to plant some core members in the Bay Area and hire globally, she said.  It’s also a challenge for Founders Fund, she suggested, saying that “we’re already starting to look elsewhere [for startups], including in the Midwest.”

As for whether San Francisco is doing enough for founders — or founders enough for San Francisco — Banister suggested both are coming up far short, saying of the city that “it should be the most technologically advanced” in the world. “There’s no reason we shouldn’t be like Tokyo . . . when we gave birth to Airbnb and Uber, and yet our city looks the way it does and operates the way it does and it’s a disaster.”

Tech founders and employees are in a particularly “weird situation” where on the one side a “a large part of this city hates technology and hates all of us,” and on the other are people like Salesforce founder Marc Benioff who are funneling money into the city but whose efforts don’t appear to her to be making a difference. “I’ve yet to see a dent” in homelessness, she said, as an example. More, she said, “Crime is going up and we now have a district attorney who won’t prosecute crimes that have to do with any sort of quality-of-life [issue]. [San Francisco is] going to start something instead where if your [car] window is broken, they’ll replace it with some kind of window Uber app at a discounted rate.”

The crowd laughed. Some attendees thought she was joking about the window replacement service. (She wasn’t.)  “This is a really bad direction [we’re headed in],” she said. “We need diversity of thinking here, and we don’t have it on the political level, and we all need to get more involved.”

 


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Know your startup’s value so you can communicate it to investors

21:19 | 15 November

Blair Silverberg Contributor
Blair Silverberg is co-Founder and CEO of Capital, a financial services company using technology to accelerate the fundraising process. Prior to founding Capital, Blair was a principal investor at Draper Fisher Jurvetson where he sourced and managed venture investments during his four-year residency.

I’ve always told companies that investors have a much easier job than they do. To be good at their jobs, investors have to know how to do math and make decisions. As a business owner, you have to do both while also running your business.

The math piece can seem cumbersome, but it’s vital for understanding whether your company is creating or destroying value. A few simple metrics can demonstrate to investors the health and viability of your company, and they can show you which levers to pull that will best optimize your company for investor interest (and secure a higher price). But before you can ever hope to communicate your business’ value to an investor, you must understand it yourself.

The numbers are simple; it’s the calculations that are complex

Investment math itself is not complicated. In essence, it’s just about understanding whether your company is creating or destroying value by asking:

  • Where is your company investing its financial resourcesMost growing companies invest heavily in sales and marketing or research and development.
  • What is the return on this investment?  For example, how much gross profit (revenue x gross margin percentage) does a given sales and marketing investment produce?
  • How does that number compare to your cost of capital? If it’s higher, your company is creating value. If it’s lower, you’re destroying it.

Investors use this information to determine if their return would be higher than their expectation (e.g., 15% hurdle rate), should you continue down your current path of creating or destroying value. Then, they make their decision based on that calculation.

A caveat I’ll add here is that it’s not necessarily a deal-breaker if your company is declining in value. Oil rigs, after all, are considered investment assets, even though they are perpetually declining and will eventually run out (i.e., destroy all of their value). Although this article focuses on calculations that demonstrate value creation, all investment assets can be financed at the right price.

A deep dive into calculating value

One of the best metrics you can use to demonstrate value creation is your cohort-level return on investment. It’s a calculation most investors are familiar with, but it may not be as straightforward to companies who don’t see it as often. Again, while the metrics and concepts of investment math are simple, it’s the process of getting there that requires complex analysis.

Whether you are evaluating these metrics yourself or bringing in outside counsel to assist you, use the process below to show investors you are creating value.

Determine which information to analyze

The first step in calculating value is to understand which information from your income and cash flow statements to analyze as “investments.”

Start by dividing your capital allocation into three main buckets: short-term investments, long-term investments and expenses. In general, short-term investments will be the ones you want to focus on, but it’s helpful to walk through each.

  • Short-term investments (pay back within 24 months)

 


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SoftBank Vision Fund’s Carolina Brochado is coming to Disrupt Berlin

12:00 | 15 November

SoftBank’s Vision Fund has single-handedly changed the game when it comes to tech startup investment. And that’s why I’m excited to announce that SoftBank Vision Fund investment director Carolina Brochado is joining us at TechCrunch Disrupt Berlin.

Carolina Brochado isn’t a newcomer when it comes to VC investment. She’s worked for years at Atomico in London. Originally from Brazil, she first joined Atomico as an intern in 2012 while studying her MBA at Columbia Business School.

After her MBA, she joined an e-commerce startup as head of operations. Unfortunately, that startup is now defunct. But she used that opportunity to join Atomico once again, as a principle. She became a partner at Atomico in 2016 and left the firm late last year.

At SoftBank’s Vision Fund, she focuses on fintech, digital health and marketplace startups. Just to give you an idea, some of her past investments with both Atomico and SoftBank include LendInvest, Gympass, Hinge Health, Ontruck and Rekki.

More generally, given the size of SoftBank’s Vision Fund ($100 billion), it has had a huge impact on the growth trajectory of some companies. I’m personally curious to know SoftBank’s approach as board members, whether they get involved in the strategy of those companies or let the executive teams make decisions on their own.

Buy your ticket to Disrupt Berlin to listen to this discussion and many others. The conference will take place on December 11-12.

In addition to panels and fireside chats, like this one, new startups will participate in the Startup Battlefield to compete for the highly coveted Battlefield Cup.


Carolina focuses on fintech, digital health and marketplaces. Prior to joining Softbank, Carolina was a Partner at Atomico, where she sourced and collaborated with portfolio companies for almost five years. Some of her investments included Lendinvest, Gympass, Hinge Health, Ontruck and Rekki.

Previously Carolina has worked as Head of Ops to a now defunct gifting e-commerce start-up, as an investor at Chicago-based private equity firm Madison Dearborn Partners and within Consumer/Retail Investment Banking at Merrill Lynch in New York.

Carolina has a Bachelor of Science degree in Foreign Service from Georgetown University and an MBA from Columbia Business School. She is originally from Brazil.

 


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Recycling robots raise millions from top venture firms to rescue an industry in turmoil

02:33 | 15 November

The problem of how to find the potential treasure trove hidden in millions of pounds of trash is getting a high-tech answer as investors funnel $16 million into the recycling robots built by Denver-based AMP Robotics.

For recyclers, the commercialization of robots tackling industry problems couldn’t come at a better time. Their once-stable business has been turned on its head by trade wars and low unemployment.

Recycling businesses used to be able to rely on China to buy up any waste stream (no matter the quality of the material). However, about two years ago, China decided it would no longer serve as the world’s garbage dump and put strict standards in place for the kinds of raw materials it would be willing to receive from other countries. The result has been higher costs at recycling facilities, which actually are now required to sort their garbage more effectively.

At the same time, low unemployment rates are putting the squeeze on labor availability at facilities where humans are basically required to hand-sort garbage into recyclable materials and trash.

Given the economic reality, recyclers are turning to AMP’s technology — a combination of computer vision, machine learning and robotic automation to improve efficiencies at their facilities.

trash cans

Photo courtesy of Flickr/Abulla Al Muhairi

That’s what attracted Sequoia Capital to lead the company’s latest investment round — a $16 million Series A investment the company will use to expand its manufacturing capacity and boost growth as it looks to expand into international markets.

“We are excited to partner with AMP because their technology is changing the economics of the recycling
industry,” said Shaun Maguire, partner at Sequoia, in a statement. “Over the last few years, the industry has had their margins squeezed by labor shortages and low commodity prices. The end result is an industry proactively searching for cost-saving alternatives and added opportunities to increase revenue by capturing more high-value recyclables, and AMP is emerging as the leading solution.”

The funding will be used to “broaden the scope of what we’re going after,” says chief executive Matanya Horowitz. Beyond reducing sorting costs and improving the quality of the materials that recycling facilities can ship to buyers, the company’s computer vision technologies can actually help identify branded packaging and be used by companies to improve their own product life cycle management.

“We can identify… whether it’s a Coke or Pepsi can or a Starbucks cup,” says Horowitz. “So that people can help design their product for circularity… we’re building out our reporting capabilities and that, to them, is something that is of high interest.”

That combination of robotics, computer vision and machine learning has potential applications beyond the recycling industry as well, according to Horowitz. Automotive scrap and construction waste are other areas where the company has seen interest for its combination of software and hardware.

Meanwhile, the core business of recycling is picking up. In October, the company completed the installation of 14 robots at Single Stream Recyclers in Florida. It’s the largest single deployment of robots in the recycling industry and the robots, which can sort and pick twice as fast as people with higher degrees of accuracy, are installed at sorting lines for plastics, cartons, fiber and metals, the company said.

AMP’s business has two separate revenue streams — a robotics as a service offering and a direct sales option — and the company has made other installations at sites in California, Colorado, Indiana, Minnesota, New York, Pennsylvania, Texas, Virginia and Wisconsin.

The traction the company is seeing in its core business was validating for early investors like BV, Closed Loop Partners, Congruent Ventures and Sidewalk Infrastructure Partners, the Alphabet subsidiary’s new spin-out that invests in technologies to support new infrastructure projects.

For Mike DeLucia, the Sidewalk Infrastructure Partners principal who led the company’s investment into AMP Robotics, the deal is indicative of where his firm will look to commit capital going forward.

“It’s a technology that enables physical assets to operate more efficiently,” he says. “Our goal is to find the technologies that enable really exciting infrastructure projects, back them and work with them to deliver projects in the physical world.”

Investors like DeLucia and Abe Yokell, from the investment firm Congruent Ventures, think that recycling is just the beginning. Applications abound for AMP Robotic’s machine learning and computer vision technologies in areas far beyond the recycling center.

“When you think about how technology is able to impact the built environment, one area is machine vision,” says Yokell. “[Machine learning] neural nets can apply to real-world environments, and that stuff has gotten cheaper and easier to deploy.”

 


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Decide which type of investor to target for raising capital

00:20 | 15 November

David Teten Contributor
David Teten is a Venture Partner with HOF Capital. He was previously a Partner for 8 years with HOF Capital and ff Venture Capital. David writes regularly at teten.com and @dteten.

I recently wrote Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? Since then, I’ve talked with a number of other firms and greatly expanded my database: Who are the major Revenue-Based (RBI) Investing VCs?

That said, venture capital is just one of many options to finance your business, typically the most expensive. The broader question is, what type of capital should you raise, and from whom?  

I find many CEOs/CFOs default to approaching investors who have the most social media followers; who have spent the most money sponsoring events; or whom they met at an event. But, fame and the chance that you met someone at a conference do not logically predict that investor is the optimal investor for you. In addition, the best-known investors are also the ones who are most difficult to raise capital from, precisely because they get the most inbound.

The first step is to decide the right capital structure for your financing. Most CFOs build an Excel model and do a rough comparison of the different options. Some firms provide tools to do this online, e.g., Capital’s Cost of Equity estimator; Lighter Capital’s Cost of Capital Calculator; 645 Ventures’ cap table simulator. A similar, open-source, highly visual tool focused on VC is Venture Dealr.

For each of the major categories of investors, you can find online databases of the major providers. Major options include:

  • Traditional equity venture capital and private equity. For early-stage startups in particular, I suggest Foundersuite*, Samir Kaji’s Master List of US Micro-VC’s and Shai Goldman’s database of VC funds at/below $200M in size. You can find other databases of investors at AngelList, CB Insights, Crunchbase, Dow Jones VentureSource, Pitchbook, Preqin, and Refinitiv Eikon
  • Revenue-based investing VC. See Who are the major Revenue-Based Investing VCs?
  • Venture debt. See FindVentureDebt and this comparison guide of debt options for SAAS companies. Watch out for double dipping, or interest on interest.
  • Merchant cash advances/factoring. See Debanked’s list.
  • Small Business Association Loans. Ravi Bhagavan, Managing Director, BRG Capital Advisors, said, “a low-cost and often convenient form of capital for small businesses is SBA loans, which are guaranteed by the Small Business Administration. SBA loans are $5k – $5M in size and are typically at a lower cost of capital compared to alternate forms of debt, since up to 85% of the loan is guaranteed by the SBA. Additionally, SBA loans have longer payment periods (5-25 years) than traditional forms of financing and come with less onerous ongoing disclosure requirements. However, SBA loans typically require a personal guarantee (PG) from the founder(s), who are scrutinized for income and credit history at the time of application. PGs can be quite daunting to founders because it puts their personal assets, including homes and investment accounts, on the line. SBA loans are available through SBA-approved banks and SBIC funds. SBICs make equity and debt investments of size $100k – $10M in qualifying small businesses. A good resource for looking up SBICs is here.” 
  • Crowdfunding, e.g., Republic*, Indiegogo*.  This option provides you capital and also market validation for desire for your product.  

Once you decide on the right category of investor, here are some tools I suggest using to find the optimal capital provider:

  • Most important, reference checking. I have a whitelist of investors I recommend to my portfolio — and a blacklist which I guide them to avoid.
  • Comparison websites: BitX, Fundera, GUD Capital, Lencred.com, Lendio, and NerdWallet Small Business Loans are all resources which can help you evaluate different options for small business financing, typically within a defined category of financing. Braavo specializes in financing app companies.
  • Financing supermarkets: Most investment firms start out with one asset class, and then over time they often add others. There are countless examples, e.g., most of the large B2B banks, Kapitus, Kalamata Capital, United Capital Source, etc. These firms can give you an apples-to-apples comparison of what different capital forms, albeit all from one provider, will cost you.

 


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