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Tech Bro Uniform Meets Margaret Thatcher. Disruption Ensues.

The death knell of the Patagonia vest, at least as a symbol of utopianism co-opted by the tech and venture capital world and transformed into shorthand for a certain kind of unbridled corporate power, was much predicted last summer.

That is when the outdoor recreation company put its puffers where its principles were and said it would no longermake vests branded with its own name and the names of companies that did not share its environmental commitments.

“Woe to the bros!” cried customers and commentators alike, in both glee and horror.

The prophesies of doom turned out to be somewhat overstated. But they may soon be heard again in the land, thanks to an unexpected source: Simon Denny, a New Zealand-born artist who lives in Berlin.

Mr. Denny is the man behind a new show at the Altman Siegel gallery in San Francisco, “Security Through Obscurity,” that combines (of all things) Patagonia, Salesforce (the customer relations digital behemoth) and Margaret Thatcher. The result is a visual treatise on income inequality, global capitalism and the digital world built on shared fashion references.

Also proof positive that clothes are part of the currency of our times, no matter where you look.

After all, Patagonia and Margaret Thatcher are not two names most people would put in the same sentence. Their heydays are separated by decades; their power bases across an ocean; their philosophies of life even further apart.

Yet both Patagonia and the former British prime minister have one thing in common: They each gave the world items of dress that transcended their origins to become emblems.

In the case of Patagonia, the power vest: the fleece or puffer zip-up that is the de facto uniform of the private equity and venture capital world and the tech companies that loves it.

In the case of Mrs. Thatcher, the silk scarf, which, along with the skirt suit and pussy-bow blouse, became signifiers of the Iron Lady, the woman who put on her absolutely appropriate clothes like armor in her battle to liberate the markets and bring “tough capitalism” to Britain.

Combining both, Mr. Denny, 37, found the shape, literally, of an idea.

Mr. Denny is known for work that explores the culture of technology and its effects on society. He grew up in New Zealand and moved to Germany in 2007 to attend art school.

After graduating, as he began developing his signature, he started “following” individuals he saw as paradigm changers: reading their press, their speeches and books; checking in as their careers progressed.

Peter Thiel was one. Mr. Denny’s 2019 exhibition, “The Founder’s Paradox,” held in Auckland, New Zealand, featured Mr. Thiel (for one), the billionaire tech venture capitalist who is known for buying up swaths of land in that country, as a figure called Lord Tybalt, in art inspired by fantasy board games. Dominic Cummings, the architect of Boris Johnson’s electoral victory, is another. Ditto Mrs. Thatcher.

“She was very visible in the 1980s, shaping a new kind of politics that emphasized the individual, deregulation and global neoliberalism,” Mr. Denny said, speaking on the phone from Berlin a few days before the opening.

Though Mr. Denny has previously had exhibitions at MoMA PS1 and the Serpentine in London, and represented New Zealand at the 56th Venice Biennale in 2015, this is the first time he has used fashion in his work, and it is partly because of the former prime minister.

In early 2019, a Christie’s auction catalog crossed his desk that included a group of Mrs. Thatcher’s scarves. “There were a number of things being sold,” Mr. Denny said, “but many were quite expensive.” There were suits, jewelry, silver, decorative vases. The scarves, however, were a more accessible story.

“I thought, ‘Wow, these could be quite potent material for me,’” he said. “I knew I really wanted to work with them.”

He ended up winning 17 of them from two different lots after “quite fierce competition.” The estimate for one lot was 400 to 600 pounds, and it ultimately went for £3,250 ($4,218.82); the other was £500 to £800, and the final price was £3,000 ($3,894.30). They include a Nicole Miller scarf with a Forbes print, dollar bills and slogans like “Forbes capitalist tool” and “No guts, no story”; a leopard print that made Mr. Denny think of England’s colonial past; a Chanel design; and one from Liberty of London.

“To me, they represent an era of dress — the feminine but power business look,” Mr. Denny said. “Also the Thatcher policies, which have accelerated global inequality.”

Combine that with the offer of a show in San Francisco, home of both the tech elite and a growing divide between rich and poor that is painfully visible, and Mr. Denny’s thoughts turned to another kind of dress: the vest.

He zeroed in on one example in particular, a Salesforce branded Patagonia vest, like the kind given to Dreamforce conference attendees in 2015. (Salesforce, the company co-founded by Marc Benioff in 1999 that has revenues of over $13 billion, is one of the largest employers in San Francisco.)

Credit…Simon Denny, via Altman Siegel Gallery; Nick Ash
Credit…Simon Denny, via Altman Siegel Gallery; Nick Ash

The result is four Nano Puff power vests made from a variety of Mrs. Thatcher’s scarves with a repurposed Patagonia label taken from an actual Patagonia garment and pasted over one breast, displayed in shallow glass vitrines like collector’s memorabilia, and two Patagonia sleeping bags, which are references to the homeless in San Francisco.

Standing up, the sleeping bags resemble nothing so much as sarcophagi, likewise made from the scarves. All of the pieces are filled with repurposed down stuffing from sleeping bags sourced in resale stores around the city.

The exhibition also includes collages made from 3-D printing Salesforce patents (the kind that Wired magazine suggested could be potential foreign tax havens). Prices range from $7,500 to $60,000.

None of the individuals or brands involved were contacted before the show; this is not a collaboration, like the Louis Vuitton handbags done by Yayoi Kusama or Haruki Murakami, but a commentary. And its implications are hard to avoid.

“The Patagonia vest is something people here will relate to right away,” said Claudia Altman-Siegel, the owner of the gallery. “I don’t know if they will like it or find it too close to home. But I really hope Marc Benioff will come.” (According to Mr. Denny, Mr. Thiel did come to see his show in New Zealand.)

Mr. Denny is not by any means the first artist to use the visual representations of luxury and fashion as a material way to confront cultural dissonance. Tom Sachs did it in the late 1990s when he used luxury brand signifiers to explore consumerism and branding. (Remember the Tiffany Glock, Chanel Guillotine or Hermès Value Meal?)

Wang Guangyi, a Chinese artist, did it with his “Great Criticism” series of paintings, which superimposed brand logos on Mao-era Communist propaganda posters.

“More and more artists like to use fashion as a way to help deliver a message because it’s an accessible point of entry for so many people,” said Stefano Tonchi, the former editor of W and now the creative director of L’Officiel Group. “It’s a way of talking not to a niche, but to a larger audience.”

None of this has escaped fashion itself, which as a rule has attempted to embrace artists who use its products as material, thus defanging the critical potential of the work. “I don’t think he’s the kind of artist who, if Dior called and said, ‘Let’s do a bag!’ he would want to say yes,” Mr. Tonchi said of Mr. Denny.

Though Mr. Denny has many artist friends in Berlin who are close to Demna Gvasalia, the designer for Balenciaga, and though Mr. Denny himself has been featured in L’Uomo Vogue and the magazine of the Canadian retailer Ssense, he has no plans to parlay his current dalliance with clothing into a sideline.

He seemed taken aback by the suggestion that he collaborate with a brand — though he does hope the show has an effect on how we dress.

“I think it would be hard not to think about the Patagonia vests differently,” he said. “I hope it puts all the super-contradictions of how we live into a frame that is impossible to ignore.”

Or, perhaps, wear — except in the wilderness, as the company originally intended.

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How some founders are raising capital outside of the VC world

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Today, we’re exploring fundraising from outside the venture world.

Founders looking to raise capital to power their growing companies have more options than ever. Traditional bank loans are an option, of course. As is venture capital. But between the two exists a growing world of firms and funds looking to put capital to work in young companies that have growing revenues and predictable economics.

Firms like Clearbanc are rising to meet demand for capital with more risk appetite than a traditional bank looking for collateral, but less than an early-stage venture firm. Clearbanc offers growth-focused capital to ecommerce and consumer SaaS companies for a flat fee, repaid out of future revenues. Such revenue-based financing is becoming increasingly popular; you could say the category has roots in the sort of venture debt that groups like Silicon Valley Bank have lent for decades, but there’s more of it than ever and in different flavors.

While revenue-based financing, speaking generally, is attractive to SaaS and ecommerce companies, other types of startups can benefit from alt-capital sources as well. And, some firms that disburse money to growing companies without an explicit equity stake are finding a way to connect capital to them.

Today, let’s take a quick peek at three firms that have found interesting takes on providing alternative startup financing: Earnest Capital with its innovative SEAL agreement, RevUp Capital, which offers services along with non-equity capital, and Capital, which both invests and loans using its own proprietary rubric.

After all, selling equity in your company to fund sales and marketing costs might not be the most efficient way to finance growth; if you know you are going to get $3 out from $1 in spend, why sell forever shares to do so?

Your options

Before we dig in, there are many players in what we might call the alt-VC space. Lighter Capital came up again and again in emails from founders. Indie.vc has its own model that is pretty neat as well. In honor of starting somewhere, however, we’re kicking off with Earnest, RevUp and Capital. We’ll dive into more players in time. (As always, email me if you have something to share.)

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At SoftBank’s Jewel in India: ‘Toxic’ Culture and Troubling Incidents

NEW DELHI — Oyo, a start-up that offers budget hotel rooms, has grown into one of India’s most valuable private companies and aims to be the world’s largest hotel chain by 2023.

But at least part of Oyo’s rise in India was built on practices that raise questions about the health of its business, according to financial filings, court documents and interviews with 20 current and former employees, as well as others familiar with the start-up’s operations. Many spoke on the condition of anonymity for fear of retaliation from the company.

Oyo offers rooms from unavailable hotels, such as those that have left its service, according to the company’s chief executive and nine of the current and former employees. That has the effect of inflating the number of rooms listed on Oyo’s site.

Thousands of the rooms are from unlicensed hotels and guesthouses, its executives have acknowledged. To deter trouble from the authorities over the illegal rooms, Oyo sometimes gives free lodging to the police and other officials, according to nine of the current and former employees and internal WhatsApp messages viewed by The New York Times.

Oyo has also imposed extra fees on hotels and declined to pay the hotels the full amounts they claimed they were owed, according to interviews with hotel owners and employees, emails, legal complaints and other documents viewed by The Times. Some hotel operators have sought to file criminal complaints against Oyo, which said it withheld payments primarily over the hotels’ customer service issues.

“It’s a bubble that will burst,” said Saurabh Mukhopadhyay, a former Oyo operations manager in northern India who left the company in September.

It would also be another black eye for SoftBank, which is Oyo’s biggest investor and owns half the start-up’s stock. Masayoshi Son, SoftBank’s chief executive, has hailed Oyo as a jewel of his company’s $100 billion Vision Fund, even as he recently wrote off billions of dollars on other investments like WeWork.

“This is the only company which went global at this scale from India,” Satish Meena, a senior forecaster for the research firm Forrester in New Delhi, said of Oyo. “But as of now, there are serious doubts about the business model.”

SoftBank declined to comment.

Ritesh Agarwal, Oyo’s chief executive, acknowledged in a recent interview that some of his company’s room listings included hotels that it no longer worked with. He said Oyo left those listings up and marked them as “sold out” as it tried to woo the hotels back.

Aditya Ghosh, Oyo’s head of India operations, also said in an interview that many hotels lacked required licenses, leaving them vulnerable to the occasional government raid. He denied that Oyo gave free rooms to officials.

Mr. Ghosh dismissed what he called “noise” from hotels about extra fees and nonpayment of bills. “The disagreement is about the penalties we charge on customer service failure,” he said.

He added that nearly 80 percent of Oyo’s employees had been at the company for less than a year, so training has been a challenge. “We have just grown very, very fast,” he said.

Founded in 2013 by Mr. Agarwal, then a 19-year-old student, Oyo set out to organize India’s budget hotels, which have traditionally been small, family-run enterprises. The company coaxes the hotels to become Oyo-branded destinations that list exclusively through its website; it then markets those rooms online to travelers and takes a cut of each stay. The start-up also runs some hotels itself.

Oyo is trying to expand globally and now offers more than 1.2 million rooms in 80 countries, including the United States. It employs more than 20,000 people and has raised more than $2.5 billion in funding. Mr. Agarwal has become a business star, hobnobbing with India’s prime minister, Narendra Modi.

But as Oyo has grown, its losses have mushroomed. The company expects to lose money through at least 2021, according to recent government filings. Some efforts to expand in countries like Japan have flopped.

In December, SoftBank and Mr. Agarwal put another $1.5 billion into Oyo to accelerate its expansion. The funding, negotiated over the summer, valued the company at $8 billion.

At the same time, two other big investors, Sequoia Capital and Lightspeed Venture Partners, reduced their holdings. The venture capital firms, which both hold board seats at Oyo, sold $1.5 billion of their stock — about half their stakes — to Mr. Agarwal. He borrowed money to buy the shares and paid the venture firms a price that valued Oyo at $10 billion.

Lightspeed and Sequoia declined to comment.

The current and former workers said that Oyo was never an easy place to work but that pressure increased over the last year.

Mohammad Jahanzeb Gul, who joined the start-up in January 2019 and supervised 23 Oyo properties, said that during the nine months he was there, he sometimes spent all day and night in front of a computer to meet deadlines.

“The culture is really very toxic,” he said.

Mr. Mukhopadhyay, who began working at Oyo in August 2018, said employees were under so much pressure to add new rooms that they brought hotels online that lacked air-conditioning, water heaters or electricity. He and eight others said their managers had asked them to engage in a monthly shell game of briefly inserting these unavailable properties into Oyo’s listings — complete with fake photographs — to help impress investors.

Mr. Ghosh, who left the India job this week and joined Oyo’s board, said that some hotels open in stages and that “there is no padding.”

Saurabh Sharma, who worked for Oyo from 2014 to 2018 as an operations manager, said the company sometimes deliberately withheld payments from hotel owners — a practice that half a dozen other current and former employees also described.

In some cases, they said, the start-up wanted to squeeze the hotel owners into renegotiating contracts that it deemed unprofitable. In others, Oyo wanted to save money and figured that most owners would not press for full payment.

“If 1,000 people shout, we will pay 200,” Mr. Sharma said Oyo managers had told him.

In a police complaint filed in November, Betz Fernandez, owner of the Roxel Inn in Bangalore, said Oyo owed him $49,000 and acted with “intention to cheat and cause wrongful loss” by charging him for nonexistent guests and refusing to pay the contracted minimum monthly payment. Oyo said the dispute was in arbitration.

Oyo’s oversight of its workers was also sometimes so lax that employees brazenly stole from it, said four people who were involved in the start-up’s fraud-fighting efforts.

Because Oyo hotels are popular with unmarried couples looking for places for their trysts, one scheme involved workers at properties run directly by the start-up colluding to keep the guests checked in after they left. The workers then cleaned and resold the rooms for cash to other guests and pocketed the money, the people said.

Oyo has conducted surprise raids at some properties, seizing employee cellphones and checking rooms and records for evidence, they said.

An Oyo spokeswoman said it investigates all fraud accusations and had in some instances fired employees.

Executives have also asked employees to paper over troubling incidents, some workers said.

Mr. Mukhopadhyay said that one night last June, a long-term guest at an Oyo-run property in Noida, near New Delhi, called him. She said three men had raped her in her room.

The next morning, Mr. Mukhopadhyay and another Oyo employee were summoned to the police station, where they pleaded with the guest not to register a formal complaint. Oyo’s legal team also instructed them not to tell anyone about the incident because it could hurt the company’s image, he said. The guest withdrew the complaint and moved out.

In a telephone interview, the guest confirmed Mr. Mukhopadhyay’s account. Oyo disputed some details and said any decision to file a complaint was up to the guest. The Noida police said they had no record of a complaint.

To placate the authorities over unlicensed properties, Oyo managers also gave the police and other government officials free rooms on request, current and former employees said. They said the details were recorded in dedicated WhatsApp groups, one of which The Times reviewed.

Mr. Ghosh said, “We do not encourage or involve ourselves in any kind of bribery or graft.”

Mr. Mukhopadhyay said Oyo’s growth practices contributed to his decision to leave.

“There’s something called integrity,” he said. “I can’t compromise on that.”

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Centaurs, centurions, centipedes: the $100M ARR CLUB

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week Kate was in SF, Alex was in Providence and there was a mountain of news to shovel through. If you’re here because we mentioned linking to a certain story in the show notes, that’s here. For everyone else, let’s get into the agenda.

We kicked off with a look at three new venture funds. In order:

  • Tusk Ventures: Tusk’s new fund, worth $70 million, is an effective doubling of its prior fund’s $36 million size. The politically savvy firm has put money into Coinbase, and other companies that deal with regulated industries.
  • Sapphire Ventures: SAP’s former corporate venture fund Sapphire Ventures announced a whopping $1.4 billion fundraise this week. Sapphire may be one of or the most successful CVC spinouts to date.
  • Moxxie: Katie Jacobs Stanton, known for co-founding #ANGELS, just closed her debut fund on $25 million. Kate chatted with her about her experience fundraising her very own fund, some of her previous investment and her plans for Moxxie Ventures, so there was plenty to unpack here.

From there we turned to the gender imbalance in the world of venture capital. This year, companies founded by women raised only 2.8% of capital. These not-so-stellar statistics are always worth digging into.

We then took a quick look at two different venture rounds, including ProdPerfect’s $13 million Series A and Pepper’s smaller $5.6 million round. ProdPerfect’s round was led by Anthos Capital (known for investing in Honey, which sold for $4 billion). The company has $2 million in ARR and is growing quickly. Pepper, formed by former Snap denizens, is working to help other startups lower their CAC costs in-channel. Smart.

And finally, Alex wanted to bring up his series on startups that reach the $100 million ARR threshold (Extra Crunch membership required). A first piece looking into the idea led to a few more submissions. There seem to be enough companies to name the grouping with something nice. Centurion? Centipede? Centaur? We’re working on it.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

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Where Are the Tech Zillionaires? San Francisco Faces the I.P.O. Fizzle

SAN FRANCISCO — Seven months ago, the Four Seasons in San Francisco sent out a news release announcing the glad tidings that would come soon: New residences for the new money.

Builders were hoisting glass and steel into a 43-story tower where residents would have their own on-staff wine concierge, plus Blue de Savoie French marble, German milled Poggenpohl cabinetry and Dornbracht fixtures. The building’s $49 million penthouse would be the most expensive in San Francisco.

“Just in time for the coming wave of I.P.O. millionaires in San Francisco,” the Four Seasons said, promising “an elevated sales experience” to cater to “this new class of buyers.”

But then the wave of tech initial public offerings — the one that was supposed to mint San Francisco’s new ultra rich — fizzled. The stock of Uber, the ride-hailing giant, has dropped nearly 30 percent since the company went public in May. Lyft shares are down nearly 40 percent. Pinterest and Slack have declined, too.

San Francisco has been left as a slightly more normal town of tech workers who got rich-ish, maybe making a few hundred thousand dollars. But that doesn’t go far in a city where the median cost of a single family home is about $1.6 million.

“Everyone that came back post-I.P.O. seemed to be the same person. I didn’t see any Louis Vuitton MacBook case covers or champagne in their Yeti thermos,” said J.T. Forbus, a tax manager at Bogdan & Frasco in San Francisco.

Private wealth managers are now meeting with a chastened clientele. Developers are having to cut home prices — unheard-of a year ago. Party planners are signing nondisclosure agreements to stage secret parties where hosts can privately enjoy their wealth. Union organizers are finding an opportunity.

Everyone had gotten too excited, and who could blame them? The money was once so close: A start-up that coordinated dog walkers raised $300 million. The valuations of the already giant ride-hailing behemoths had nearly doubled again. WeWork, a commercial real estate management start-up that owned very little of its own real estate, was valued at $47 billion.

Towers rose across San Francisco to house the money. The marble was polished. The bathroom floors were warm. The private pools were being filled.

“The world has changed in a year,” said Herman Chan, a real estate broker with Sotheby’s International. “We expected an upward trajectory at least, and it really kind of deflated. These companies aren’t dying but the cultural zeitgeist, that momentum of I.P.O.s, is gone. You don’t even hear anyone talking about it anymore.”

The developers who had fought the odds of regulation and zoning to build their glass residences in the sky had timed their units to the I.P.O.s. But on a recent visit with the Four Seasons sales team, they acknowledged that techie wealth was not what they were seeing. Interest was mostly coming from overseas buyers, young heirs to foreign fortunes and older executives looking for city pieds-à-terre, they said.

Also in time for the wave that was not a wave are more luxury towers: The Avery, The Harrison, 181 Fremont, The Mira.

“The definition of luxury is scarcity, and there’s so many now,” Mr. Chan said. “Nowadays, my buyers are getting a contingency period and inspectors. Things you would never ask for before. There’s not 10 offers on a house anymore.”

Case in point: A full-floor apartment in San Francisco’s poshest neighborhood of Pacific Heights was listed at $21.6 million and advertised that “a sommelier-worthy wine cellar awaits 1,500 of your most prized bottles.” But more than a year later and after a $5 million price cut, it is still on the market.

Prices for the top 5 percent of San Francisco area real estate listings — the cream of the crop — rose 7 percent between 2017 and 2018. This year, they have fallen more than 1 percent, according to data prepared for The New York Times by the real estate listing service Zillow.

The malaise has spread south into Silicon Valley. A $10.8 million home listing in the town of Portola Valley, Calif., was slashed to $5.7 million. The median sale price for a nearby home in San Jose, Calif., has dropped 10 percent in a year to just under $1 million, according to data from Zillow.

Before the tech I.P.O.s, Deniz Kahramaner, then a real estate data analyst with the property brokerage Compass, had rallied packed rooms of real estate agents and investors about the bonanza that lay ahead. He had charts and estimates of thousands of new millionaires raising the average price of single family homes in San Francisco above $5 million.

Now, he is more muted. “The I.P.O. cash-out hasn’t played out as I mentioned in my original presentation,” he said.

Mr. Kahramaner added, hopefully, that it was still early. “People need more time,” he said.

Instead of yachts, tech workers are funding more mundane ventures like college savings plans.

“This year brought a lot of people back to reality,” said Ryan S. Cole, a private wealth adviser at Citrine Capital, a wealth management firm in San Francisco. “We’ve had a lot of people fund 529 plans for their kids. Pretty boring stuff.”

Some private wealth managers said they were actually somewhat relieved.

“At the end of the day, it’s funny money until it’s realized,” said Jonathan DeYoe, another private wealth adviser. “I’ve got Uber and Lyft clients that are disappointed. It’s a different house now. It’s a different school situation for the kids. But they’re still by and large in good places. No one’s impoverished.”

And so workers who thought they would upgrade from Allbirds to Berluti shoes are remaining, after all, in the Allbirds.

As some rank-and-file tech workers realize they might not get rich from company stock, the allure of working long hours without comparable real money pay is also wearing thin, said labor organizers. They have found traction this year in an industry long resistant to unions.

“The incentives to take the licks that you do are in the hope of some sort of big payoff down the road,” said Paul Thurston, who focuses on unionizing San Francisco tech workers and is the organizing director at the International Federation of Professional and Technical Engineers.

Now, “the engineers and the app designer and the developers are going to be treated a lot more like the employees that they are rather than like partners, which is what they’re told pre-I. P. O.,” he said.

Jonathan Wright, the organizing director of Engineers and Scientists of California, said he was in talks to unionize the workers of several big tech companies.

“There’s a promise: you work 100 hours a week, you sleep under your desk, and then you’ll be rewarded with the wealth of Bezos,” Mr. Wright said. “That mythology has been fading for years. The day of the unicorn is over.”

Where there is new wealth, it’s coming from the older tech companies like Apple and Alphabet, whose stocks this year have soared. And some fortunes are still being made from the I.P.O.s. While Uber’s shares have fallen, the company’s co-founder, Travis Kalanick, has sold off more than $2 billion in stock, according to securities filings.

“Especially with things like Uber, almost all the I.P.O. wealth was going to a couple of people,” said Kalena Masching, a Redfin agent in San Jose. “They are not looking to buy a standard house here.”

Another bright spot: female-led companies, with more becoming unicorns in 2019 than any other year, according to Aileen Lee, the venture capitalist who coined the phrase “unicorn” to refer to a private company valued at $1 billion or more.

And post-I.P.O. parties are happening. They are just secret — and phone-free.

“We’re signing a lot more nondisclosures,” said Jay Siegan, who curates party entertainment for corporate tech clients. “A year ago, people would set up social media stations at the party, signs with the hashtag for Instagram. Now we have clients asking guests to check their phones at the door or using those Yondr bags.

These are pouches used to lock phones en masse at concerts and events where someone might be tempted to record.

However, in public, the tech world is all about reflection and self-critiquing after the year that was.

The I.P.O. disappointment has gotten so extreme that two Silicon Valley techies are setting out to do what few have done before: Make fun of themselves.

David Cowan, a venture capitalist with Bessemer Venture Partners, which invested in Lyft, and Michael Fertik, the founder of Reputation.com, are launching an online talk show called “The Bubble Report.” It will feature interviews with other tech executives. The point, they hope, is to poke fun at Silicon Valley from within Silicon Valley.

Mr. Cowan, either in character or just being very honest, decried the falling stock prices of newly public tech companies as victims of cruel Wall Street analysts.

“It should be against the law for unscrupulous analysts to assess stocks based on cash flow and profit, to impugn a company based on eight lines of a financial report,” he joked. “Imagine how much more value we’d have in the stock market if we got rid of that arcane thinking.”

Mr. Fertik said his inspiration to mock his industry came in part from realizing how far from reality it had all gotten.

“I want people to understand that Silicon Valley is a deeply religious place that thinks of itself as agnostic,” he said. “It has some of the strengths and many of the frailties of organized religion.”

For now, most people are waking up to find they are still on Earth. This is good news for those in San Francisco who mostly viewed the tech exuberance as bad news: housing rights activists, first-time home buyers, and renters.

“We are excited by any resetting of Bay Area rents that bring them down from their artificially inflated high,” said Fred Sherburn-Zimmer, the executive director of Housing Rights Committee, which fights against evictions. “Eventually all bubbles burst.”

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Tech startups going public raise 3x more today than in 2015

Hello and welcome back to our regular morning look at private companies, public markets and the grey space in between.

Today we’re exploring the 2019 IPO cohort from a capital-in perspective. How much did tech companies going public in 2019 raise before they went public, and what impact that did that have on their valuation when they debuted?

Looking ahead, the tech startups and other venture-backed companies expected to go public in 2020 will include a similar mix of mid-sized offerings, unicorn debuts and perhaps a huge direct listing. What we’ve seen in 2019 should be a good prelude to the 2020 IPO market.

With that in mind, let’s examine how much money tech companies that went public this year raised before their IPO. Spoiler: It’s a lot more than was normal just a few years ago. Afterwards, I have a question regarding what to call companies in the $100 million ARR club (more here) that we’ve been exploring lately. Let’s go!

Privately rich

According to CBInsights’ recent IPO 2020 IPO report, there’s a sharp, upward swing in the amount of capital that tech companies raise before they go public. It’s so steep that the data draw a nearly linear breakout from a preceding, comfortable normal.

Here’s the chart:

There are two distinct periods; from 2012 to 2015, raising up to $100 million was the norm (median) for tech companies going public. That’s still a lot of cash, mind.

The second period is more exciting. From 2016 on we can see a private capital arms race in which tech companies going public stacked ever-greater sums under their mattresses before debuting. This is generally consistent with a different trend that you are also aware of, namely the rise of $100 million financings.

Before we turn back to the CBInsights data, let’s observe a chart from Crunchbase News that underscores the simply astounding rise of $100 million financings that was published just a few weeks ago. As you look at this chart, remember that prior to 2016, more than half of venture-backed technology companies going public had raised less than $100 million total:

Now, compare the two data sets.

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Enterprise Startups Venture Capital

SAP spinout Sapphire Ventures raises $1.4B for new investments

Sapphire Ventures, the former corporate venture arm of SAP, has raised $1.4 billion for growth investments, including a $150 million opportunity fund to support larger deals.

The firm, which focuses primarily on enterprise tech companies in the U.S., Europe and Israel, writes checks to Series B through pre-IPO businesses. Its portfolio includes 23andMe, Sumo Logic and TransferWise.

The new funds brings Sapphire Ventures, which became independent from the German software company SAP in 2011, assets under management to north of $4 billion. Sapphire will write checks sized between $5 million and $100 million with the new funds, allowing the team “to do any financing we need to or want to,” chief executive officer and managing director Nino Marakovic tells TechCrunch. Sapphire’s fourth growth fund is the firm’s largest to date at more than double the size of Sapphire Ventures $700 million Fund III. 

“Wee need this fund because companies are staying private much longer because they want to get to a $200 million revenue run rate before they go public,” Sapphire Ventures president and co-founder Jai Das (pictured) tells TechCrunch. “We want to have the capital to support these companies as they keep growing.”

News of the fund comes nearly one year after Sapphire Ventures lassoed $115 million from new limited partners to invest at the intersection of tech, sports, media and entertainment. Sapphire Sport has ties to the sports industry, from City Football Group, which owns English Premier League team Manchester City, to Adidas, the owners of the Indiana Pacers, New York Jets, San Jose Sharks and Tampa Bay Lightning, among others.

Before that, the firm closed on $1 billion for its third flagship venture fund.

With seven check writers and another seven investment professionals focused on growth-stage investments, Sapphire has had a number of recent wins, counting a total of 21 initial public offerings and 55 exits since the firm’s inception.

“We’re excited to have no reached critical mass with $4 billion under management,” Marakovic said. “We are the right size to take advantage of our target area of early and later-stage enterprise software companies. We are innovating on the model by adding value-add LPs and trying to align our whole model of services to the target companies to serve them as best as possible.”