Dec
13
2019
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Chicago’s Sprout Social prices IPO mid-range at $17 per share, raising $150M

On the heels of Bill.com’s debut, Chicago-based social media software company Sprout Social priced its IPO last night at $17 per share, in the middle of its proposed $16 to $18 per-share range. Selling 8.8 million shares, Sprout raised just under $150 million in its debut.

Underwriters have the option to purchase an additional 1.3 million shares if they so choose.

The IPO is a good result for the company’s investors (Lightbank, New Enterprise Associates, Goldman Sachs and Future Fund), but also for Chicago, a growing startup scene that doesn’t often get its due in the public mind.

At $17 per share, not including the possible underwriter option, Sprout Social is worth about $814 million. That’s just a hair over its final private valuation set during its $40.5 million Series D in December of 2018. That particular investment valued Sprout at $800.5 million, according to Crunchbase data.

So what?

Sprout’s debut is interesting for a few reasons. First, the company raised just a little over $110 million while private, and will generate over $100 million in trailing GAAP revenue this year. In effect, Sprout Social used less than $110 million to build up over $100 million in annual recurring revenue (ARR) — the firm reached the $100 million ARR mark between Q2 and Q3 of 2019. That’s a remarkably efficient result for the unicorn era.

And the company is interesting, as it gives us a look at how investors value slower-growth SaaS companies. As we’ve written, Sprout Social grew by a little over 30% in the first three quarters of 2019. That’s a healthy rate, but not as fast as, say, Bill.com . (Bill.com’s strong market response puts its own growth rate in context.)

Thinking very loosely, Sprout Social closed Q3 2019 with ARR of about $105 million. Worth $814 million now, we can surmise that Sprout priced at an ARR multiple of about 7.75x. That’s a useful benchmark for private companies that sell software: If you want a higher multiple when you go public, you’ll have to grow a little faster.

All the same, the IPO is a win for Chicago, and a win for the company’s investors. We’ll update this piece later with how the stock performs, once it begins to trade.

Dec
12
2019
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Why Bill.com didn’t pursue a direct listing

Bill.com went public today after pricing its shares higher than it initially expected. The B2B payments company sold nearly 10 million shares at $22 apiece, raising around $216 million in its IPO. Public investors felt that the company’s price was a deal, sending the value of its equity to $35.51 per share as of the time of writing.

That’s a gain of over 61%.

On the heels of its successful pricing run and raucous first day’s trading, TechCrunch caught up with Bill.com CEO René Lacerte to dig into his company’s debut. We wanted to know how pricing went, and whether the company (which possibly could have valued itself more richly during its IPO pricing, given its first-day pop) had considered a direct listing.

Lacerte detailed what resonated with investors while pricing Bill.com’s shares, and also did a good job outlining his perspective on what matters for companies that are going public. As a spoiler, he wasn’t super focused on the company’s first-day return.

For more on the Bill.com IPO’s nuts and bolts, head here. Let’s get into the interview.

René Lacerte

The following interview has been edited for length and clarity. Questions have been condensed.

TechCrunch: How did your IPO pricing feel, and what did you learn from the process?

Lacerte: I think the whole experience has been an incredible learning experience from a capitalism perspective; that’s probably a broader conversation. But you know, it really came down to how our story resonated with investors, and so there’s three components that we kind of really talked to folks about.

Dec
12
2019
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DataRobot is acquiring Paxata to add data prep to machine learning platform

DataRobot, a company best known for creating automated machine learning models known as AutoML, announced today that it intends to acquire Paxata, a data prep platform startup. The companies did not reveal the purchase price.

Paxata raised a total of $90 million before today’s acquisition, according to the company.

Up until now, DataRobot has concentrated mostly on the machine learning and data science aspect of the workflow — building and testing the model, then putting it into production. The data prep was left to other vendors like Paxata, but DataRobot, which raised $206 million in September, saw an opportunity to fill in a gap in their platform with Paxata.

“We’ve identified, because we’ve been focused on machine learning for so long, a number of key data prep capabilities that are required for machine learning to be successful. And so we see an opportunity to really build out a unique and compelling data prep for machine learning offering that’s powered by the Paxata product, but takes the knowledge and understanding and the integration with the machine learning platform from DataRobot,” Phil Gurbacki, SVP of product development and customer experience at DataRobot, told TechCrunch.

Prakash Nanduri, CEO and co-founder at Paxata, says the two companies were a great fit and it made a lot of sense to come together. “DataRobot has got a significant number of customers, and every one of their customers have a data and information management problem. For us, the deal allows us to rapidly increase the number of customers that are able to go from data to value. By coming together, the value to the customer is increased at an exponential level,” he explained.

DataRobot is based in Boston, while Paxata is in Redwood City, Calif. The plan moving forward is to make Paxata a west coast office, and all of the company’s almost 100 employees will become part of DataRobot when the deal closes.

While the two companies are working together to integrate Paxata more fully into the DataRobot platform, the companies also plan to let Paxata continue to exist as a standalone product.

DataRobot has raised more than $431 million, according to PitchBook data. It raised $206 million of that in its last round. At the time, the company indicated it would be looking for acquisition opportunities when it made sense.

This match-up seems particularly good, given how well the two companies’ capabilities complement one another, and how much customer overlap they have. The deal is expected to close before the end of the year.

Dec
11
2019
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Hyperproof wants to make it easier to comply with GDPR and other regulations

As companies try to figure out how to comply with regulations like GDPR, ISO or Sarbanes Oxley, they face a huge challenge just getting started. Hyperproof, a Bellevue, Wash. startup, is launching a new product to help companies build a workflow to get them in compliance in a more organized way.

Company co-founder and CEO Craig Unger says most companies struggle with the complexity of compliance. It involves a lot of different activities and often requires the cooperation of employees, who typically aren’t involved in compliance.

Hyperproof wants to provide a single place where companies can undertake their compliance activities. “In reality, there’s no single place where if you’re a compliance officer, you can say, ‘here is where I do my work.’ Here is the equivalent of my SAP system for a CFO or my CRM system for a head of sales or head of marketing — and Hyperproof is just that,” Unger explained.

He says most companies do compliance today in a fairly ad hoc way, relying on technology like spreadsheets to track tasks, and email to make requests for needed information. What Hyperproof does is package all of that into a single program. You indicate which compliance regimen you want to work with, and Hyperproof builds a workspace for you with all of the requirements you need for that compliance framework.

Unger says at this point, the company is simply putting all of the tasks in a single workflow to simplify and organize your activities around this compliance framework.You can also import a spreadsheet to get that information inside Hyperproof, or outline the requirements in your own language in the program.

“Once you have a defined program in place, you can start working with the rest of the organization in a collaborative way by sending emails. The evidence that comes back gets put inside Hyperproof as an immutable record with an audit trail around this data collection,” Unger explained. Should you get audited, you have a central place to show the auditor your work.

The company has concentrated on building the workflow part of this, but in the future wants to add automation and APIs to connect directly to other systems to automate many of the activities. The goal with the initial release was to get companies a compliance framework workflow, and then build on that in the future.

The company was founded last year and has raised $3 million from 23 angel investors in the Seattle area where they are based. In fact, Unger is a former Microsoft employee and also helped found Azuqua, a workflow startup he sold to Okta this year for $52.5 million.

Dec
11
2019
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Refocusing on relocation, Jobbatical launches new offices in Spain and Germany

I’ve been following Estonia-headquartered Jobbatical and its founder, Karoli Hindriks, for years. Part of the vanguard of startups working on infrastructure for digital nomads, the startup has been building the base platform to help global job seekers hire and fire their governments.

As Jobbatical has worked with more and more companies and governments though, it has learned that the friction here is not just finding employment globally for talented individuals, but rather the actual process of applying for immigration and work permits, ranging from forms that must be filed in person to the hours of labor it can take to fill out an application.

“What started to happen was that the relocation part… became something that the clients came back to us and said, ‘Can you do relocation for everyone and not just those coming through Jobbatical?’” Hindriks explained.

Last year, Jobbatical began to refocus its platform on powering relocation for workers at companies, and now its new strategy is coming into focus with the launch of the company’s new offices in Spain and Germany, announced on stage earlier today at TechCrunch Disrupt Berlin.

In the process, the company hopes to not just make the immigration process easier — but also much faster.

“How much time are government officials doing dummy work?” Hindriks asked. “30-40% of the consulate’s time is spent on answering the question of ‘what is the status of my visa?’”

The problem is that feedback in the immigration system is not available to all the players involved. Immigration process agents at companies who handle their workers’ visas have to constantly search around to make sure they are moving each of their cases forward. Managers have no idea when their workers may move, while employees are kept in the dark about their current status, inducing anxiety.

Hindriks’ vision is to help each of these three sides use a “TurboTax for immigration” to streamline the process. Jobbatical now can handle immigration applications in Estonia, Germany, and Spain and hopes to add Finland early next year.

But the more ambitious vision is ultimately to help governments drive their processes faster. Similar to how, say, the U.S. tax agency the Internal Revenue Service offers eFiling, Hindriks sees a future where Jobbatical can help facilitate immigration filings and massively speed up the efficiency of governments around these processes by allowing workers to directly submit applications to the government. She is working with two countries today to create exactly these sorts of digital submission systems.

It’s a space that has heated up in recent years as immigration continues to flow across the world. Boundless, for instance, helps individuals apply for U.S. green cards. Jobbatical is focused on the B2B market, focused on companies with global workforces.

Despite the deep debate in many countries over immigration, the reality is that every country has skills deficits that can be helped with smart and efficient immigration. Jobbatical is one company that may make the system more fair and relaxing for stressed workers looking to build their international careers.

Dec
11
2019
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Accel and Index back Tines, as the cybersecurity startup adds another $11M to its Series A

It was just a couple of months ago that Tines, the cybersecurity automation startup, raised $4.1 million in Series A funding led by Blossom Capital. The Dublin-based company is now disclosing an $11 million extension to the round.

This additional Series A funding is led by venture capital firm Accel, with participation from Index Ventures and previous backer Blossom Capital. The extra cash will be used to continue developing its cybersecurity automation platform and for further expansion into the U.S. and Europe.

Founded in February 2018 by ex-eBay, PayPal and DocuSign security engineer Eoin Hinchy, and subsequently joined by former eBay and DocuSign colleague Thomas Kinsella, Tines automates many of the repetitive manual tasks faced by security analysts so they can focus on other high-priority work. The pair had bootstrapped the company as recently as October.

“It was while I was at DocuSign that I felt there was a need for a platform like Tines,” explained Hinchy at the time of the initial Series A. “We had a team of really talented engineers in charge of incident response and forensics but they weren’t developers. I found they were doing the same tasks over and over again so I began looking for a platform to automate these repetitive tasks and didn’t find anything. Certainly nothing that did what we needed it to, so I came up with the idea to plug this gap in the market.”

To remedy this, Tines lets companies automate parts of their manual security processes with the help of six software “agents,” with each acting as a multipurpose building block. The idea is that, regardless of the process being automated, it only requires combinations of these six agent types configured in different ways to replicate a particular workflow.

In addition, the platform doesn’t rely on pre-built integrations to interact with external systems. Instead, Tines is able to plug in to any system that has an API. “This means integration with commercial, off-the-shelf products, or existing in-house tools is quick and simple, with most security teams automating stories (workflows) within the first 24 hours,” says the startup. Its software is also starting to find utility beyond cybersecurity processes, with several Tines customers using it in IT, DevOps and HR.

“We heard that Eoin, a senior member of the security team at DocuSign (another Accel portfolio company), had recently left to start Tines, so we got in touch,” Accel’s Seth Pierrepont tells TechCrunch. “They were in the final stages of closing their Series A. However, we were so convinced by the founders, their product approach and the market timing, that we asked them to extend the round.”

Pierrepont also points out that a unique aspect of the Dublin ecosystem is that many of the world’s largest tech companies have their European headquarters in the country (often attracted by relatively low corporation tax), “so it’s an incredibly rich talent pool despite being a relatively small city.”

Asked whether Accel views Tines as a cybersecurity automation company or a more general automation play that puts automation in the hands of non-technical employees for a multitude of possible use cases, Pierrepont says, given Hinchy and Kinsella’s backgrounds, the cybersecurity automation sector should be the primary focus for the company in the short term. However, longer term it is likely that Tines will be adopted across other functions as well.

“From our investment in Demisto (which was acquired by Palo Alto Networks earlier this year), we know the security automation or SOAR category (as Gartner defines it) very well,” he says. “Demisto pioneered the category and was definitively the market leader when it was acquired. However, we think the category is just getting started and that there is still a ton of whitespace for Tines to go after.”

Meanwhile, in less than a year, Tines says it has on-boarded 10 enterprise customers across a variety of industries, including Box, Auth0 and McKesson, with companies automating on average 100,000 actions per day.

Dec
10
2019
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Soci raises $12M to help big brands manage local marketing

According to CEO Afif Khoury, we’re in the middle of “the third wave of social” — a shift back to local interactions. And Khoury’s startup Soci (pronounced soh-shee) has raised $12 million in Series C funding to help companies navigate that shift.

Soci works with customers like Ace Hardware and Sport Clips to help them manage the online presence of hundreds or thousands of stores. It allows marketers to post content and share assets across all those pages, respond to reviews and comments, manage ad campaigns and provide guidance around how to stay on-brand.

It sounds like most of these interactions are happening on Facebook. Khoury told me that Soci integrates with “40 different APIs where businesses are having conversations with their customers,” but he added, “Facebook was and continues to be the most prominent conversation center.”

Khoury and CTO Alo Sarv founded Soci back in 2012. Khoury said they spent the first two years building the product, and have subsequently raised around $30 million in total funding.

“What we weren’t building was a point solution,” he said. “What we were building was a massive platform … It took us 18 months to two years to really build it in the way we thought was going to be meaningful for the marketplace.”

Soci has also incorporated artificial intelligence to power chatbots that Khoury said “take that engagement happening on social and move it downstream to a call or a sale or something relevant to the local business.”

The new round was led by Vertical Venture Partners, with participation from Grayhawk Capital and Ankona Capital. Khoury said the money will allow Soci to continue developing its AI technology and to build out its sales and marketing team.

“Ours is a very consultative sale,” he said. “It’s a complicated world that you’re living in, and we really want to partner and have a local presence with our customers.”

Dec
06
2019
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Canva introduces video editing, has big plans for 2020

Canva, the design company with nearly $250 million in funding, has today announced a variety of new features, including a video editing tool.

The company has also announced Canva Apps, which allows developers and customers alike to build on top of Canva. Thus far, Dropbox, Google Drive, PhotoMosh and Instagram are already in the Canva Apps suite, with a total of 30 apps available at launch.

The video editing tool allows for easy editing with no previous experience required, and also offers video templates, access to a stock content library with videos, music, etc. and easy-to-use animation tools.

Meanwhile, Canva is taking the approach of winning customers when they’re young, with the launch of Canva for Education. It’s a totally free product that has launched in beta with Australian schools, integrating with GSuite and Google Classroom to allow students to build out projects, and teachers to mark them up and review them.

Canva has also announced the launch of Canva for Desktop.

As design becomes more important to the way every organization functions and operates, one of the only barriers to the growth of the category is the pace at which new designers can emerge and enter the workforce.

Canva has positioned itself as the non-designer’s design tool, making it easy to create something beautiful with little to no design experience. The launch of the video editing tool and Canva for Education strengthen that stance, not only creating more users for the platform itself but fostering an environment for the maturation of new designers to join the ecosystem as a whole.

Alongside the announcement, Canva CEO Melanie Perkins has announced that Canva will join the 1% pledge, dedicating 1% of equity, profit, time and resources to making the world a better place.

Here’s what she had to say about it, in a prepared statement:

Companies have a huge role to play in helping to shape the world we live in and we feel like the 1% Pledge is an incredible program which will help us to use our company’s time, resources, product and equity to do just that. We believe the old adage ‘do no evil’ is no longer enough today and hope to live up to our value to ‘Be a Force for Good’.

Interestingly, Canva’s position at the top of the design funnel hasn’t slowed growth. Indeed, Canva recently launched Canva for Enterprise to let all the folks in the organization outside of the design department step up to bat and create their own decks, presentations, materials, etc., all within the parameter’s of the design system and brand aesthetic.

A billion designs have been created on Canva in 2019, with 2 billion designs created since the launch of the platform.

Dec
05
2019
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Figma launches Auto Layout

Figma, the design tool maker that has raised nearly $83 million from investors such as Index Ventures, Sequoia, Greylock and Kleiner Perkins, has today announced a new feature called Auto Layout that takes some of the tedious reformatting out of the design process.

Designers are all too familiar with the problem of manually sizing content in new components. For example, when a designer creates a new button for a web page, the text within the button has to be manually sized to fit within the button. If the text changes, or the size of the button, everything has to be adjusted accordingly.

This problem is exacerbated when there are many instances of a certain component, all of which have to be manually adjusted.

Auto Layout functions as a toggle. When it’s on, Figma does all the adjusting for designers, making sure content is centered within components and that the components themselves adjust to fit any new content that might be added. When an item within a frame is re-sized or changed, the content around it dynamically adjusts along with it.

Auto Layout also allows users to change the orientation of a list of items from vertical to horizontal and back again, adjust the individual sizing of a component within a list or re-order components in a list with a single click.

It’s a little like designing on auto-pilot.

Auto Layout also functions within the component system, allowing designers to tweak the source of truth without detaching the symbol or content from it, meaning that these changes flow through to the rest of their designs.

Figma CEO Dylan Field said there was very high demand for this feature from customers, and hopes that this will allow design teams to move much faster when it comes to user testing and iterative design.

Alongside the launch, Figma is also announcing that it has brought on its first independent board member. Lynn Vojvodich joins Danny Rimer, John Lilly, Mamoon Hamid and Andrew Reed on the Figma board.

Vojvodich has a wealth of experience as an operator in the tech industry, serving as EVP and CMO at Salesforce.com. She was a partner at Andreesen Horowitz, and led her own company Take3 for 10 years. Vojvodich also serves on the boards of several large corporations, including Ford Motor Company, Looker and Dell.

“I’ve never brought on an investor that I haven’t heavily reference checked, both with companies that have had success and those who don’t,” said Field. “A good board can really help accelerate the company, but a challenging board can make it tough for companies to keep moving.”

Field added that, as conversations progressed with Vojvodich, she continually delivered value to the team with crisp answers and great insights, noting that her experience translates.

Dec
05
2019
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Design may be the next entrepreneurial gold rush

Ten years ago, the vast majority of designers were working in Adobe Photoshop, a powerful tool with fine-tuned controls for almost every kind of image manipulation one could imagine. But it was a tool built for an analog world focused on photos, flyers and print magazines; there were no collaborative features, and much more importantly for designers, there were no other options.

Since then, a handful of major players have stepped up to dominate the market alongside the behemoth, including InVision, Sketch, Figma and Canva.

And with the shift in the way designers fit into organizations and the way design fits into business overall, the design ecosystem is following the same path blazed by enterprise SaaS companies in recent years. Undoubtedly, investors are ready to place their bets in design.

But the question still remains over whether the design industry will follow in the footprints of the sales stack — with Salesforce reigning as king and hundreds of much smaller startup subjects serving at its pleasure — or if it will go the way of the marketing stack, where a lively ecosystem of smaller niche players exist under the umbrella of a handful of major, general-use players.

“Deca-billion-dollar SaaS categories aren’t born everyday,” said InVision CEO Clark Valberg . “From my perspective, the majority of investors are still trying to understand the ontology of the space, while remaining sufficiently aware of its current and future economic impact so as to eagerly secure their foothold. The space is new and important enough to create gold-rush momentum, but evolving at a speed to produce the illusion of micro-categorization, which, in many cases, will ultimately fail to pass the test of time and avoid inevitable consolidation.”

I spoke to several notable players in the design space — Sketch CEO Pieter Omvlee, InVision CEO Clark Valberg, Figma CEO Dylan Field, Adobe Product Director Mark Webster, InVision VP and former VP of Design at Twitter Mike Davidson, Sequoia General Partner Andrew Reed and FirstMark Capital General Partner Amish Jani — and asked them what the fierce competition means for the future of the ecosystem.

But let’s first back up.

Past

Sketch launched in 2010, offering the first viable alternative to Photoshop. Made for design and not photo-editing with a specific focus on UI and UX design, Sketch arrived just as the app craze was picking up serious steam.

A year later, InVision landed in the mix. Rather than focus on the tools designers used, it concentrated on the evolution of design within organizations. With designers consolidating from many specialties to overarching positions like product and user experience designers, and with the screen becoming a primary point of contact between every company and its customers, InVision filled the gap of collaboration with its focus on prototypes.

If designs could look and feel like the real thing — without the resources spent by engineering — to allow executives, product leads and others to weigh in, the time it takes to bring a product to market could be cut significantly, and InVision capitalized on this new efficiency.

In 2012, came Canva, a product that focused primarily on non-designers and folks who need to ‘design’ without all the bells and whistles professionals use. The thesis: no matter which department you work in, you still need design, whether it’s for an internal meeting, an external sales deck, or simply a side project you’re working on in your personal time. Canva, like many tech firms these days, has taken its top-of-funnel approach to the enterprise, giving businesses an opportunity to unify non-designers within the org for their various decks and materials.

In 2016, the industry felt two more big shifts. In the first, Adobe woke up, realized it still had to compete and launched Adobe XD, which allowed designers to collaborate amongst themselves and within the organization, not unlike InVision, complete with prototyping capabilities. The second shift was the introduction of a little company called Figma.

Where Sketch innovated on price, focus and usability, and where InVision helped evolve design’s position within an organization, Figma changed the game with straight-up technology. If Github is Google Drive, Figma is Google Docs. Not only does Figma allow organizations to store and share design files, it actually allows multiple designers to work in the same file at one time. Oh, and it’s all on the web.

In 2018, InVision started to move up stream with the launch of Studio, a design tool meant to take on the likes of Adobe and Sketch and, yes, Figma.

Present

When it comes to design tools in 2019, we have an embarrassment of riches, but the success of these players can’t be fully credited to the products themselves.

A shift in the way businesses think about digital presence has been underway since the early 2000s. In the not-too-distant past, not every company had a website and many that did offered a very basic site without much utility.

In short, designers were needed and valued at digital-first businesses and consumer-facing companies moving toward e-commerce, but very early-stage digital products, or incumbents in traditional industries had a free pass to focus on issues other than design. Remember the original MySpace? Here’s what Amazon looked like when it launched.

In the not-too-distant past, the aesthetic bar for internet design was very, very low. That’s no longer the case.

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