Apr
12
2018
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Subscription biller Zuora soars 43% following IPO

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.

It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13.

Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.”

Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail.

It helps its 950 customers manage subscriptions, including billing and revenue recognition. Zuora touts that it has 15 of the Fortune 100 businesses as clients.

Zuora’s revenue for its fiscal 2018 year was $167.9 million. This was up from $113 million in 2017 and $92.2 million the year before. Losses remained constant in this timeframe, from $48.2 million in 2016 to $47.2 million in 2018.

“We have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” warned the requisite risk factors section of the filing.

It also acknowledged a competitive landscape. Oracle and SAP are amongst the companies offering software in the ERP (enterprise resource planning) category. It also competes with other startups like Chargebee.

The largest shareholders are Benchmark, which owned 11.1% prior to the IPO . Founder and CEO Tien Tzuo owned 10.2%. Others with a significant stake included Wellington Management, Shasta Ventures, Tenaya Capital and Redpoint.

The San Mateo, California-based company previously raised over $240 million, dating back to 2007.

Zuora listed on the New York Stock Exchange, under the ticker “ZUO.” Goldman Sachs and Morgan Stanley worked as lead underwriters on the deal. Fenwick & West and Wilson Sonsini served as counsel.

After a slow start to the year for tech IPOs, there has been a flurry of activity in recent weeks. Dropbox and Spotify were amongst the recent public debuts. We also have DocuSign, Pivotal and Smartsheet on the horizon.

Apr
12
2018
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Background checks pay for Checkr, which just rang up $100 million in new funding

Criminal records, driving records, employment verifications. Companies that use on-demand employees need to know that all the boxes have been checked before they send workers into the world on their behalf, and they often need those boxes checked quickly.

A growing number of them use Checkr, a San Francisco-based company that says it currently runs one million background checks per month for more than 10,000 customers, including, most newly, the car-share company Lyft, the services marketplace Thumbtack, and eyewear seller Warby Parker.

Investors are betting many more customers will come aboard, too. This morning, Checkr is announcing $100 million in Series C funding led by T. Rowe Price, which was joined by earlier backers Accel and Y Combinator.

The round brings the company’s total funding to roughly $150 million altogether, which is a lot of capital in not a lot of time. Yet Checkr is very well-positioned considering the changing nature of work. The company was born when software engineers Daniel Yanisse and Jonathan Perichon worked together at same-day delivery service startup Deliv and together eyed the chance to build a faster, more efficient background check. The number of flexible workers has only exploded in the four years since.

So-called alternative employment arrangements, in the parlance of the Bureau of Labor Statistics, including gig economy jobs, have grown from representing 10.1 percent of U.S. employees in 2005 to 15.8 percent of employees in 2015. And that percentage looks to rise further still as more digital platforms provide direct connections between people needing a service and workers willing to provide it.

Meanwhile, Checkr, which has been capitalizing on this race for talent, has its sights on much more than the on-demand workforce, says Yanisse, who is Checkr’s CEO. While the 180-person company counts Uber, Instacart, and GrubHub among its base of customers, Checkr is also actively expanding outside of the tech and gig economy, he says. It recently began working with the staffing giant Adecco, for example, as well as the major insurer Allstate.

At present, all of these customers pay Checkr per background check. That may change over time, however, particularly if the company plans to go public eventually, which Yanisse suggests is the case. (Public shareholders, like private shareholders, love recurring revenue.)

“Right now, our pricing model for customers is pay-per-applicant,” says Yanisse. “But we have a whole suite of SaaS products and tools” — including an interesting new tool designed to help hiring managers eradicate their unwitting hiring biases — “so we’re becoming more like a SaaS” business.

While things are ticking along nicely, every startup has its challenges. In Checkr’s case, one of these would seem to be those high-profile cases where background checks are painted as far from foolproof. One situation that springs to mind is the individual who began driving for Uber last year, six months before intentionally plowing into a busy bike path in New York. Indeed, though Checkr claims that it can tear through a lot of information within 24 hours — including education verification, reference checks, drug screening — we wonder if it isn’t so fast that it misses red flags.

Yanisse doesn’t think so. “Overall background checks aren’t a silver bullet,” he says. “Our job is to make the process faster, more efficient, more accurate, and more fair. But past information doesn’t guarantee future performance,” he adds. “This isn’t ‘Minority Report.’”

We also ask Yanisse about Checkr’s revenue. Often, a financing round of the size that Checkr is announcing today suggests a revenue run rate of $100 million or so. Yanisse declines to say, telling us Checkr doesn’t share revenue or its valuation publicly. “It’s still a bit early,” he says. “There’s this obsession with metrics in Silicon Valley, and we just want to make sure we’re focused on the right things.”

But, he adds, “you’re in the ballpark.”

Correction: An earlier version of this story incorrectly listed Visa as a customer.

Apr
10
2018
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Conductive Ventures launches $100 million enterprise fund

There’s a new venture fund in town from some familiar faces.

Carey Lai, who previously worked at Intel Capital and IVP, is joining forces with Paul Yeh, formerly of Kleiner Perkins.

They’re calling it Conductive Ventures and it’s launching with $100 million under management. They’ll be investing in “expansion stage” companies across enterprise software and hardware categories, meaning Series A, Series B and beyond.

Check sizes will be between $2 million and $7 million dollars. They expect to invest in 10-15 companies for this first fund.

Conductive will be looking for “early product market fit with customer success,” Lai told TechCrunch. Then the plan is to “help them grow their businesses abroad.”

It’s not a corporate venture arm, but Conductive has Panasonic as its sole LP. Because of this, there will be a special focus on helping North American startups expand into Asia, particularly Japan.

Lai and Yeh touted “connections to Foxconn” and also ties to Taiwan to help them succeed overseas.

They also said they want to be hands-on when it comes to growth. Conductive will place an emphasis on improving margins, aiming to accelerate revenue and reduce costs.

The two were roommates when they were younger and think that they will get along especially well as an investment team.

So far, they’ve made four investments. There’s Ambiq Micro, a semiconductor manufacturer; CSC Generation, for consumer leasing; Desktop Metal, in 3D printing; and Sprinklr, for customer experience management. Lai has served on the board of Sprinklr. They hope to continue to take board seats.

Not to get ahead of things, but they are already thinking about fund two. Yeh said that it will be in “a couple years” and “slightly higher, slightly bigger” in size.

Oct
24
2017
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Primer helps governments and corporations monitor and understand the world’s information

 When Google was founded in 1998, its goal was to organize the world’s information. And for the most part, mission accomplished — but in 19 years the goalpost has moved forward and indexing and usefully presenting information isn’t enough. As machine learning matures, it’s becoming feasible for the first time to actually summarize and contextualize the world’s… Read More

Oct
17
2017
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Feedzai closes $50M Series C to help banks and merchants identify fraud with AI

 Feedzai is announcing a $50 million Series C this morning led by an unnamed VC with additional capital from Sapphire Ventures. The six year old startup builds machine learning tools to help banks and merchants spot payment fraud. In today’s rapidly maturing world of fintech, Feedzai is trying to thread the needle between turnkey solution and customizable platform. With 60 clients… Read More

Oct
11
2017
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ROSS Intelligence lands $8.7M Series A to speed up legal research with AI

 Armed with an understanding of machine learning, ROSS Intelligence is going after LexisNexis and Thomson Reuters for ownership of legal research. The startup, founded in 2015 by Andrew Arruda, Jimoh Ovbiagele and Pargles Dall’Oglio at the University of Toronto, is announcing an $8.7 million Series A today led by iNovia Capital with participation from Comcast Ventures Catalyst Fund,… Read More

Oct
10
2017
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Petuum secures $93M Series B to push AI into the mainstream

 With a shortage of machine learning developers bearing down on the industry, startups and big tech companies alike are moving to democratize the tools necessary to commercialize artificial intelligence. The latest startup, Petuum, is announcing a $93 million Series B this morning from Softbank and Advantech Capital.
Founded last year by Dr. Eric Xing, a Carnegie Mellon machine learning… Read More

Oct
06
2017
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Butterfly nabs $2.4M seed round to improve managers with targeted tips

 One of life’s puzzles that eludes me most is how a person could enjoy corporate trainings enough to spend their time designing and running them. Perhaps only with disdain for the status quo can a startup create something that people not only don’t hate, but find helpful. The idea for Butterfly originated from poor experiences the founders had when receiving leadership training. Read More

Sep
20
2017
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Our favorite pitches from Alchemist Accelerator’s 16th batch

 Alchemist Accelerator, known for its specialty in working with enterprise startups, held its 16th demo day at Microsoft’s offices in Mountain View, California. 18 startups pitched ideas ranging from more traditional marketplaces to frontier aerospace technology. Addressing the packed auditorium before the pitches began, Ravi Belani, managing partner at Alchemist, reasserted his core… Read More

Sep
20
2017
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Our favorite pitches from Alchemist Accelerator’s 16th batch

 Alchemist Accelerator, known for its specialty in working with enterprise startups, held its 16th demo day at Microsoft’s offices in Mountain View, California. 18 startups pitched ideas ranging from more traditional marketplaces to frontier aerospace technology. Addressing the packed auditorium before the pitches began, Ravi Belani, managing partner at Alchemist, reasserted his core… Read More

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