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Tag Archives: Y Combinator

Following TechCrunch’s coverage of 500 Startups’ 25th batch (and numbers 24, 23, 22, and 21, in case you wanted to go back in time), today we’re saying hello to the accelerator’s 26th cohort.

500 Startups, in case you weren’t aware, is a seed-stage accelerator and a collection of venture funds. The group, now with a few dozen accelerator batches under its belt, has several thousand companies in its universe. 500’s 26th cohort contains 29 companies, including a handful that we’d already heard of (Juked.gg, to pick one).

Data, diversity

Before we get to the startups themselves, a few notes. To get a handle on the companies included in the batch, TechCrunch spoke with Aaron Blumenthal, a venture partner at the firm. After sharing a number of batch metrics with TechCrunch, we pressed for a bit more detail on the makeup of the startups in the group.

Here’s a hybrid of our notes, and his details (condensed and edited for clarity), on the batch that the venture partner called “another rung on the ladder of our diversity and inclusion state of mind”:

  • 37 percent of the startups are international. According to Blumenthal, “this particular batch from the ‘outside United States perspective’ is a little bit smaller — we usually see north of 50% outside the United States.”
  • 30 percent of the companies’ founding teams include a woman. TechCrunch asked Blumenthal if that number was up, flat or down, to which he responded that 500’s “average is usually in the mid 30s or so. Our last batch, for example, was 26% female. And this one is more [in] that direction which, of course, we are a fan of.”
  • 70 percent of the founding teams of the batch “have one or more founders who identify as a racial minority,” according to the firm.

It would be interesting to see a more granular breakdown for future cohorts, but the information provided was more than I expected and the numbers a bit better. And on the subject of numbers, Crunchbase has recorded 215 exits for 500 Startups. From its accelerator, 500 cites TalkDesk and Shippo as highlights.

Turning to mechanics, 500 Startups invests $150,000 apiece into its accelerator companies for 6% of their equity, and charges a $37,500 for the program itself. So, in effect, it’s a bit less capital for the same ownership percentage.

What else? Just that we’re walking into demo day season. 500 Startups will host the showcase for its 26th batch on March 19. Y Combinator will hold its own on March 23 and 24. The Techstars website defeated my hunt for its next demo day, but in the name of fairness, it’s probably hosting one around the same time somewhere in the world.

Here’s the list of companies in batch 26, with small notes from 500 on what they do:

  • Acadium: Connects business owners and marketing professionals with aspiring digital marketers.

  • Alloy Card: Offers a consumer credit card with automation that gives people more control over their finances while saving time.

  • Amixr: Incident management software that helps engineering teams around the world optimize their workflow while minimizing hassles.

  • AppBind: Lets partners buy and resell online software subscriptions as easily as licensed software, by bringing B2B SaaS into the global reseller market of implementation consultants, system integrators and distributors.

  • Bliinx: Offers an easy and fast way to find information on business relationships by aggregating all interactions with contacts into Office 365.

  • Briza: Provides an insurance-as-a-service API that enables instant quoting, binding and issuance of commercial insurance policies.

  • Butlr: Through sensor networks and AI, Butlr helps retail stores increase in-store sales by applying real-time customer behavior analytics.

  • CENOS: Easy-to-use simulation software that allows engineers to iterate designs faster than physical prototypes for induction heating and antenna design, among others.

  • Connected Analytics: Nigeria-based company helping businesses and banks integrate data analytics and rewards in order to retain customers and increase revenue.

  • Fakespot: Eliminates misinformation and deceptive content on e-commerce sites for consumers, brands and platforms.

  • GamerzClass: Offers exclusive esports masterclasses with professionals to shape the future of gaming.

  • Get on Board: Recruitment platform that connects global companies with the best Latin American tech talent.

  • Juked: Aggregates information on esports games, including live streams, player profiles, scores and calendars to make esports easier to watch and to promote engagement.

  • Kyndoo: Helps advertisers weed out fraudulent social media influencers, and provides data around their authenticity and performance.

  • Mero Technologies: Retrofits commercial buildings with sensors to analyze in real time traffic and consumables, such as toilet paper and soap, to inform cleaning routes.

  • Omnitron Sensors: Enables full autonomy of self-driving cars and drones with novel silicon photonics processes for sensors in safety-critical systems.

  • Pilota:  Applies machine learning to predict flight disruptions for passengers and automatically re-books a traveler’s flight for free.

  • Plant an App: Gives IT teams the speed of low-code development without compromising flexibility.

  • Pluto: Customizes sleep pillows at scale based on the user’s body stats, such as height, neck-to-shoulder ratio and sleep preferences in order to optimize sleep.

  • Predina: Applies AI to predict the risk of vehicle crashes for insurance and safety purposes, by analyzing more than 14 million historical crashes and other factors, such as street intersections, weather conditions and time.

  • Renetec: Enables the creation of GUIs for embedded systems with HTML, CSS and JavaScript, which reduces development time and costs.

  • ShardSecure: Enables enterprises to securely move and store sensitive information to the cloud.

  • Shiplyst: India-based ocean freight procurement marketplace that reduces costs for exporters and importers and gives them greater visibility into their shipments.

  • Silk + Sonder: Provides a women’s mental wellness subscription service that makes daily self-help more personalized through journaling and peer-to-peer support.

  • Sira Medical: Helps clinicians plan surgeries more efficiently through augmented reality, by providing them with high-fidelity 3D holograms of CT scans and MRIs.

  • The Atlas: An online community of city officials crowdsourcing ideas that is modernizing the $1.6 trillion local government market.

  • Thematic: Matches content creators who need great songs for their videos with music artists who need influencer marketing.

  • Trash Warrior: Offers on-demand junk removal services for businesses. Customers can book services online for affordable pricing and reliable quality.

  • Userpilot: Helps software product managers personalize the in-app experience across the user journey at scale.

Living in the unicorn era as we have now for some time, it’s easy to lose track of the earliest stages of startup investment. But accelerators do have a history of helping birth some impressive companies, so it’s worth paying attention. More when we get to the various demo days.

Read more: https://techcrunch.com/2020/02/11/meet-500-startups-26th-batch-of-startups/

Much of Silicon Valley mythology is centered on the founder-as-hero narrative. But historically, scientific founders leading the charge for bio companies have been far less common.

Developing new drugs is slow, risky and expensive. Big clinical failures are all too common. As such, bio requires incredibly specialized knowledge and experience. But at the same time, the potential for value creation is enormous today more than ever with breakthrough new medicines like engineered cell, gene and digital therapies.

What these breakthroughs are bringing along with them are entirely new models — of founders, of company creation, of the businesses themselves — that will require scientists, entrepreneurs and investors to reimagine and reinvent how they create bio companies.

In the past, biotech VC firms handled this combination of specialized knowledge + binary risk + outsized opportunity with a unique “company creation” model. In this model, there are scientific founders, yes; but the VC firm essentially founded and built the company itself — all the way from matching a scientific advance with an unmet medical need, to licensing IP, to having partners take on key roles such as CEO in the early stages, to then recruiting a seasoned management team to execute on the vision.

Image: PASIEKA/SCIENCE PHOTO LIBRARY/Getty Images

You could call this the startup equivalent of being born and bred in captivity — where great care and feeding early in life helps ensure that the company is able to thrive. Here the scientific founders tend to play more of an advisory role (usually keeping day jobs in academia to create new knowledge and frontiers), while experienced “drug hunters” operate the machinery of bringing new discoveries to the patient’s bedside. This model’s core purpose is to bring the right expertise to the table to de-risk these incredibly challenging enterprises — nobody is born knowing how to make a medicine.

But the ecosystem this model evolved from is evolving itself. Emerging fields like computational biology and biological engineering have created a new breed of founder, native to biology, engineering and computer science, that are already, by definition, the leading experts in their fledgling fields. Their advances are helping change the industry, shifting drug discovery away from a highly bespoke process — where little knowledge carries over from the success or failure of one drug to the next — to a more iterative, building-block approach like engineering.

Take gene therapy: once we learn how to deliver a gene to a specific cell in a given disease, it is significantly more likely we will be able to deliver a different gene to a different cell for another disease. Which means there’s an opportunity not only for novel therapies but also the potential for new business models. Imagine a company that provides gene delivery capability to an entire industry — GaaS: gene-delivery as a service!

Once a founder has an idea, the costs of testing it out have changed too. The days of having to set up an entire lab before you could run your first experiments are gone. In the same way that AWS made starting a tech company vastly faster and easier, innovations like shared lab spaces and wetlab accelerators have dramatically reduced the cost and speed required to get a bio startup off the ground. Today it costs thousands, not millions, for a “killer experiment” that will give a founding team (and investors) early conviction.

What all this amounts to is scientific founders now have the option of launching bio companies without relying on VCs to create them on their behalf. And many are. The new generation of bio companies being launched by these founders are more akin to being born in the wild. It isn’t easy; in fact, it’s a jungle out there, so you need to make mistakes, learn quickly, hone your instincts, and be well-equipped for survival. On the other hand, given the transformative potential of engineering-based bio platforms, the cubs that do survive can grow into lions.

Image via Getty Images / KTSDESIGN/SCIENCE PHOTO LIBRARY

So, which is better for a bio startup today: to be born in the wild — with all the risk and reward that entails — or to be raised in captivity

The “bred in captivity” model promises sureness, safety, security. A VC-created bio company has cache and credibility right off the bat. Launch capital is essentially guaranteed. It attracts all-star scientists, executives and advisors — drawn by the balance of an innovative, agile environment and a well-funded, well-connected support network. I was fortunate enough to be an early executive in one of these companies, giving me the opportunity to work alongside industry luminaries and benefit from their well-versed knowledge of how to build a world-class bio company with all its complex component parts: basic, translational, clinical research, from scratch. But this all comes at a price.

Because it’s a heavy lift for the VCs, scientific founders are usually left with a relatively small slug of equity — even founding CEOs can end up with ~5% ownership. While these companies often launch with headline-grabbing funding rounds of $50m or above, the capital is tranched — meaning money is doled out as planned milestones are achieved. But the problem is, things rarely go according to plan. Tranched capital can be a safety net, but you can get tangled in that net if you miss a milestone.

Being born in the wild, on the other hand, trades safety for freedom. No one is building the company on your behalf; you’re in charge, and you bear the risk. As a recent graduate, I co-founded a company with Harvard geneticist George Church. The company was bootstrapped — a funding strategy that was more famine than feast — but we were at liberty to try new things and run (un)controlled experiments like sequencing heavy metal wildman Ozzy Osbourne.

It was the early, Wild West days of the genomics revolution and many of the earliest biotech companies mirrored that experience — they weren’t incepted by VCs; they were created by scrappy entrepreneurs and scientists-turned-CEO. Take Joshua Boger, organic chemist and founder of Vertex Pharmaceuticals: starting in 1989 his efforts to will into existence a new way to develop drugs, thrillingly captured in Barry Werth’s The Billion-Dollar Molecule and its sequel The Antidote in all its warts and nail-biting glory, ultimately transformed how we treat HIV, hepatitis C and cystic fibrosis.

Today we’re in a back-to-the-future moment and the industry is being increasingly pushed forward by this new breed of scientist-entrepreneur. Students-turned-founder like Diego Rey of in vitro diagnostics company GeneWEAVE and Ramji Srinivasan of clinical laboratory Counsyl helped transform how we diagnose disease and each led their companies to successful acquisitions by larger rivals.

Popular accelerators like Y Combinator and IndieBio are filled with bio companies driven by this founder phenotype. Ginkgo Bioworks, the first bio company in Y Combinator and today a unicorn, was founded by Jason Kelly and three of his MIT biological engineering classmates, along with former MIT professor and synthetic biology legend Tom Knight. The company is not only innovating new ways to program biology in order to disrupt a broad range of industries, but it’s also pioneering an innovative conglomerate business model it has dubbed the “Berkshire for biotech.”

Like the Ginkgo founders, Alec Nielsen and Raja Srinivas launched their startup Asimov, an ambitious effort to program cells using genetic circuits, shortly after receiving their PhDs in biological engineering from MIT. And, like Boger, renowned machine learning Stanford professor Daphne Koller is working to once again transform drug discovery as the founder and CEO of Instiro.

Just like making a medicine, no one is born knowing how to build a company. But in this new world, these technical founders with deep domain expertise may even be more capable of traversing the idea maze than seasoned operators. Engineering-based platforms have the potential to create entirely new applications with unprecedented productivity, creating opportunities for new breakthroughs, novel business models, and new ways to build bio companies. The well-worn playbooks may be out of date.

Founders that choose to create their own companies still need investors to scrub in and contribute to the arduous labor of company-building — but via support, guidance, and with access to networks instead. And like this new generation of founders, bio investors today need to rethink (and re-value) the promise of the new, and still appreciate the hard-earned wisdom of the old. In other words, bio investors also need to be multidisciplinary. And they need to be comfortable with a different kind of risk: backing an unproven founder in a new, emerging space. As a founder, if you’re willing to take your chances in the wild, you should have an investor that understands you, believes in you, can support you and, importantly, is willing to dream big with you.

Read more: https://techcrunch.com/2019/08/09/biotech-researchers-venture-into-the-wild-to-start-their-own-business/

As I’m sure everyone reading this knows, female-founded businesses receive just over 2 percent of venture capital on an annual basis. Most of those checks are written to early-stage startups. It’s extremely difficult for female founders to garner late-stage support, let alone cash $100 million checks.

Maybe that’s finally changing. This week, not one but two female-founded and led companies, Glossier and Rent The Runway, raised nine-figure rounds and cemented their status as unicorn companies. According to PitchBook data from 2018, there are only about 15 unicorn startups with female founders. Though I’m sure that number has increased in the last year, you get the point: There are hundreds of privately held billion-dollar companies and shockingly few of those have women founders (even fewer have female CEOs)…

Moving on…

YC Demo Days

I spent a good part of the week at San Francisco’s Pier 48 in a room full of vest-wearing investors. We listened to some 200 YC companies make their 120-second pitch and though it was a bit of a whirlwind, there were definitely some standouts. ICYMI: We wrote about each and every company that pitched on day 1 and day 2. If you’re looking for the inside scoop on the companies that forwent demo day and raised rounds, or were acquired, before hitting the stage, we’ve got that too.

IPO corner

Lyft: This week, Lyft set the terms for its highly-anticipated initial public offering, expected to be completed next week. The company will charge between $62 and $68 per share, raising more than $2 billion at a valuation of ~$23 billion. We previously reported its initial market cap would be around $18.5 billion, but that was before we knew that Lyft’s IPO was already oversubscribed. Here’s a little more background on the Lyft IPO for those interested.

Uber: The global ride-hailing business flew a little more under the radar this week than last week, but still managed to grab a few headlines. The company has decided to sell its stock on the New York Stock Exchange, which is the least surprising IPO development of 2019, considering its key U.S. competitor, Lyft, has been working with the Nasdaq on its IPO. Uber is expected to unveil its S-1 in April.

Ben Silbermann, co-founder and CEO of Pinterest, at TechCrunch Disrupt SF 2017.

Pinterest: Pinterest, the nearly decade-old visual search engine, unveiled its S-1 on Friday, one of the final steps ahead of its NYSE IPO, expected in April. The $12.3 billion company, which will trade under the ticker symbol “PINS,” posted revenue of $755.9 million in the year ending December 31, 2018, up from $472.8 million in 2017. It has roughly doubled its monthly active user count since early 2016, hitting 265 million last year. The company’s net loss, meanwhile, shrank to $62.9 million in 2018 from $130 million in 2017.

Zoom: Not necessarily the buzziest of companies, but its S-1 filing, published Friday, stands out for one important reason: Zoom is profitable! I know, what insanity! Anyway, the startup is going public on the Nasdaq as soon as next month after raising about $150 million in venture capital funding. The full deets are here.

Seed money

General Catalyst, a well-known venture capital firm, is diving more seriously into the business of funding seed-stage business. The firm, which has investments in Warby Parker, Oscar and Stripe, announced earlier this week its plan to invest at least $25 million each year in nascent teams.

Deal of the week

Earlier this week, Opendoor, the SoftBank -backed real estate startup, filed paperwork to raise even more money. According to TechCrunch’s Ingrid Lunden, the business is planning to raise up to $200 million at a valuation of roughly $3.7 billion. It’s possible this is a Series E extension; after all, the company raised its $400 million Series E only six months ago. Backers of OpenDoor include the usual suspects: Andreessen Horowitz, Coatue, General Atlantic, GV, Initialized Capital, Khosla Ventures, NEA and Norwest Venture Partners.

Startup capital

Backstage Capital founder and managing partner Arlan Hamilton, center.

Debate

Axios’ Dan Primack and Kia Kokalitcheva published a report this week revealing Backstage Capital hadn’t raised its debut fund in total. Backstage founder Arlan Hamilton was quick to point out that she had been honest about the challenges of fundraising during various speaking engagements, and even on the Gimlet “Startup” podcast, which featured her in its latest season. A Twitter debate ensued and later, Hamilton announced she was stepping down as CEO of Backstage Studio, the operations arm of the venture fund, to focus on raising capital and amplifying founders. TechCrunch’s Megan Rose Dickey has the full story.

Pro rata rights

This week, TechCrunch’s Connie Loizos revisited a long-held debate: Pro rata rights, or the right of an earlier investor in a company to maintain the percentage that he or she (or their venture firm) owns as that company matures and takes on more funding. Here’s why pro rata rights matter (at least, to VCs).

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about Glossier, Rent The Runway and YC Demo Days. Then, in a special Equity Shot, we unpack the numbers behind the Pinterest and Zoom IPO filings.

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Read more: https://techcrunch.com/2019/03/23/startups-weekly-a-much-needed-unicorn-ipo-update/