Archive for the ‘VCs’ Category


Even More Money Funnels into the Collaborative Economy (Part 3)

6

Money
Investors are doling out money by the fistful, $241 million deployed in less than three months.

See the Google Sheet that has all this data, broken down by industry, amount, and date.  You can read part 1: Meet the investors, and part 2: The investors are in love with this market.

Since my last analysis on July 3rd, 2014, there’s been continued funding into the Collaborative Economy market –where the crowd gets what they need from each other. Investors are infatuated in this market as it provides new supply, disrupts incumbents, using faster technology powered by mobile, social, and internet of things, the Phoenix Business Journal did a recent write-up of my keynote at a business conference, highlighting the market changes.

In just 2.5 months there’s been even more money flooding the market. SMB FundingCircle raised a massive $65m round, followed by big rounds to Rockettaxi to aid the disrupted incumbents, and Fiverr raised a $30m found, as they enable crowd-based tasks to be completed on a two sided marketplace.  In these past two months, there’s been $241k invested into this growing market.

Recent Funding in the Collaborative Economy

7/16/2014 Funding Circle $65,000,000 Money
7/16/2014 Shyp $10,000,000 Services
7/18/2014 Helparound $600,000 Health
7/26/2014 RocketTaxi $40,000,000 Transporation
8/8/2014 Thuzio $6,000,000 Services
8/11/2014 Fiverr $30,000,000 Services
8/12/2014 RelayRide $10,000,000 Transporation
9/4/2014 Breather $6,500,000 Space
9/25/2014 Jimubox $37,190,000 Money
9/25/2014 FlightCar $13,500,000 Transporation
9/15/2014 Sidecar $15,000,000 Transportation
9/19/2014 EatWIth $8,000,000 Food
SUM $241,790,000

 


Analysis: The Last 9 Mos of Funding
Here’s a breakdown of the 2014 Funding from Jan 1st-Sept 20th:

  • Total Funding Events: 39
  • Deals per month: 4.3
  • Average Funding Per Month $301,052,222
  • Average per Funding Round $69,473,590
  • Median $10,000,000
  • Average funding amount without Uber (outlier) $42,084,857
  • Average funding amount without Uber and Airbnb (outliers) $27,282,973
  • 2014 Sum: $2,709,470,000

Bubble? I’m often asked are we in a bubble? My answer is yes and no. First of all, unlike the first web boom I experienced in late 90s or social media phase, there’s clear revenues being generated from peer to peer commerce. Unfortunately, you can’t sustain this many competitors in each arena –particularly in the transportation space. I recently told CNBC that there’s only room for three playersin each of these markets: “In the end, the market can’t sustain this many car-sharing or ridesharing start-ups—there’s typically going to be room for three—the most convenient, the cheapest experience and a unique experience,”

Photo used within creative commons licensing, by 401k

Why Investors are in Love with the Collaborative Economy

21

Money Dollar
Continued analysis of market funding in the Collaborative Economy. Yesterday’s stunning news of European ridesharing company, BlaBlaCar prompted me to tally up the funding in 2014. Along with help from industry experts Lisa Gansky of Mesh Labs, Neal Gorenflo of Shareable, Mike Walsh of Structure VC and Michelle Regner of Near-Me. I tallied funding if the startup was over $1 million and there was a public record of the funding. I’ve published my analysis of funding in this movement before, from the banner funding month in Aprilthe frequency of top VCs and my larger body of work looking at funding in the Collaborative Economy and Social Business.

[2014 funding has increased 350% in deal size mainly due to large investments in Uber, Airbnb, Lyft, Lending Club, and BlaBlaCar] 

Exactly one year ago, the average funding amount was $29m. In July 2013, I surveyed a sample of 200 startups (read full report). I found that 37% had been funded, with startups receiving an average of $29 million in funding. The 200 had received over $2 billion in total funding, which is a very high amount for a largely undeveloped, pioneer market.  Interviews with several of the Venture Capitalists in this space indicated that they favor two-sided marketplaces that are scalable and have low inventory costs

[In 2013, average funding was $29 million. In 2014, the average funding amount is $102 million due to outliers, like Uber, receiving over $1.2 billion] 

In the first half of 2014, the average funding amount, is a whopping $102 million. The findings are stunning. I’ve not seen this much investment in tech startups for some time. Some data highlights: In seven short months, there’s been at least 24 distinct funding instances of at least $1 million or more in investment funding. Of those, Uber received the lion’s share of a whopping $1.2 billion in investment for global growth and product expansion. On average, $102 million is the common amount, but if you strip off the Uber investment, Airbnb, Lyft, and Lending Club are lower in investment amount, bringing the average closer to $52 million, which is still very high.

Collaborative Economy Funding 01

 



Last Seven Months of Collaborative Economy Funding by Date
You can access the Google sheet with this data by date, industry, and size. Please note the numbers are shifting as new data is being added.

Date and Source Startup Amount
1/10/2014 Sidecar $1,000,000
1/20/2014 Hailo $26,500,000
1/29/2014 Zopa $22,700,000
1/30/2014 Scoot $2,300,000
2/18/2014 Postmates $16,000,000
2/24/2014 Deliv $4,500,000
2/28/2014 SkillShare $6,100,000
3/20/2014 Pley $6,800,000
3/26/2014 CircleUp $14,000,000
4/2/2014 Lyft $250,000,000
4/8/2014 Airbnb $500,000,000
4/10/2014 Pivotdesk $3,600,000
4/14/2014 Storefront $7,300,000
4/26/2014 Yerdle $5,000,000
4/28/2014 OurCrowd $25,000,000
4/29/2014 LendingClub $115,000,000
4/30/2014 MakeSpace $8,000,000
5/4/0140 Prosper $70,000,000
6/4/2014 Sidecar $3,100,000
6/6/2014 Uber $1,200,000,000
6/16/2014 Instacart $44,000,000
6/24/2014 Cargomatic $2,600,000
6/24/2014 RelayRide $25,000,000
7/1/2014 BlaBlaCar $100,000,000
7/3/2014 Traity $4,700,000

Last Seven Months of Collaborative Economy Funding by Amount
Above image is the same data.

Uber $1,200,000,000
Airbnb $500,000,000
Lyft $250,000,000
LendingClub $115,000,000
BlaBlaCar $100,000,000
Prosper $70,000,000
Instacart $44,000,000
Hailo $26,500,000
OurCrowd $25,000,000
RelayRide $25,000,000
Zopa $22,700,000
Postmates $16,000,000
CircleUp $14,000,000
MakeSpace $8,000,000
Storefront $7,300,000
Pley $6,800,000
SkillShare $6,100,000
Yerdle $5,000,000
Traity $4,700,000
Deliv $4,500,000
Pivotdesk $3,600,000
Sidecar $3,100,000
Cargomatic $2,600,000
Scoot $2,300,000
Sidecar $1,000,000


Data Summary

  • Total investments from in last seven months: 24
  • Average deals per month in 2014: 3.4
  • Average funding amount in June 2013 study: $29 million
  • Average funding amount in last Jan-July 3, 2014: $102.6 million
  • Median funding in last seven months: $14 million
  • Average Funding Amount (excluding Uber) in last seven months: $52.6 million
  • Total Amount of Funding in last seven months: $2.46 billion
  • Increase in funding amount per investment in 12 months: 351%

Conclusion: Investors love the Collaborative Economy – But will it bust?
So, why are investors betting big on the Collaborative Economy? These scalable business models run on top of highly adopted social and mobile technologies. They offer a high frequency of transactions, with low operating costs. They are also disrupting traditional corporate business models, as they are more efficient by leveraging internet of everything, mobile devices, apps, and payment platforms. Neal Gorenflo reminded me that these startups cause the incumbents to wail in the media, creating incredible low cost PR value, which in turn attracts more customers.

In summary: Investors expect these startups to be highly profitable and are betting down big.

(Photo Credits, used with Creative Commons)

The Collaborative Economy Raises Over $800m In One Month

12

Money!
Who says there’s no money in sharing?
 

Data shows adoption rates by people will double in next year
My recent post in the WSJ Accelerator series stated that adoption of the Collaborative Economy is going to double, according to 90,000 people surveyed from the general population from the US, the UK, and Canada. Also, Bazzarvoice’s CMO, Lisa Pearson, points out that the peer-to-peer commerce movement is growing as people are now able to get goods, services, space, transportation, and money from each other. All of this information is well-known to VCs already. Their access to the startups they invest in allows them to see raw growth numbers from the startups themselves. Over the past year I’ve chronicled funding in this spaceanalyzed the investors, and broken down average funding amounts, but I was amazed by the funding in this one, single month of April.

Collaborative Economy funding in April 2014: 

Bubble or Bull Market?
For context, publicly-traded Twitter has raised a total of 1.2 billion over its eight year lifetime while Facebook has raised $2.4 billion over the ten years of its lifetime. Not everyone agrees that this growth is for the best. Forbes magazine took me to task for my Tweets, suggesting that the tech space is getting inflated and that we are in the midst of a bubble. There’s no question that this new market has many downsides, as pointed out by my recent post on the dark side of this burgeoning people economy. The big question, that folks like Neal Gorenflo at Shareable will tackle, is: “What happens when the startup and VC investors become billionaires while homeowners still struggle to maintain mortgage payments?” So, why are investors betting big on the Collaborative Economy? These scalable business models run on top of highly adopted social and mobile technologies; these startups offer high -requency of transactions, with low operating costs.

In summary: Investors expect these startups to be highly profitable.

 

Photo used within Creative Commons license by Tracy Olson

The Money Flows in the Collaborative Economy

17

Exchange Money Conversion to Foreign Currency

A series of significant monetary events have occurred.

In prior posts, I’ve covered the investment leaders by frequency and looked at funding in a category of 200 startups.  I found that 37% had been funded, with some receiving very large cash injections.  In the recent past, there have been some significant material events in the Collaborative Economy, including the following:

  • Avis secures a place in the ecosystem by buying Zipcar.  Zipcar to Avis for $491 million, January 2013.  To expand and defend mobility-as-a-service, Avis snaps up Zipcar.
  • PayPal spends $800 million on mobile payments player.  On Friday, PayPal bought Braintree for $800 million. This startup provides the mobile payments power for Uber, Airbnb, and other sharing startups.

A quick tally shows that funding-wise, that’s $444m (not including other startups, and additional Uber funding) and acquisition-wise, that’s $1.291b, not including the unknown Topcoder purchase. So why are big companies like Google, eBay and top investors like Andreessen and Menlo Ventures putting into this market?  Here’s a simple logic flow that helps to understand why this market matters to them.

Logic flow on why investors and tech companies are betting big on this market:

  1. They have ample technology.  These well-funded sharing startups, like Airbnb and Uber, leverage cheap, but powerful, technologies like Facebook Connect and Apple and Google hardware and mobile apps platforms.
  2. They’re efficient.  Using these startups, people are getting what they need from each other, often at a local level – rather than getting those things from corporations.
  3. They’re scalable.  Since these startups match idle inventory to buyers and renters at a local level, it means their operating costs are lower than traditional corporations, as there’s no overhead or inventory to manage.  These are scalable, two-sided marketplaces with low operating margins
  4. They shift power.  This, of course, spells disruption to inefficient institutions like corporations who pay no attention to this growing trend by which individuals are getting products, services, time and space from each other.

This means, the crowd is becoming like a company.  Airbnb is a hotel, Uber is transportation, Lending Club is a bank, Cookening is a restaurant, Yerdle is a retailer, Lockitron is a warehouse, Postmates is supply chain, and social networks are marketing.  Savvy investors and big tech companies are paying close attention to this market, injecting resources and acquiring en masse.  Corporations must pay attention, as many of these startups are directly aimed at better serving market needs – often unintentionally disrupting corporations.  The more successful they are at meeting market needs, the wider the disruption of corporate businesses will become.

Photo used with creative commons attribution by Epsos

 

Meet the Investors of the Collaborative Economy

24

100 Dollar Bills
Update:  The sample for the 200 startups was collected in February 2013, and does not, therefore, include a few startups that have since been launched.  I’ve  added a fourth graph at end of the article showing some additional Angel investors who have supports startups not in the original sampling.

As part of my ongoing research as an Industry Analyst on the Collaborative Economy (read all the posts), I have talked about market driversthe market challengescorporations who have jumped in, provided a list of startups, and published a definitive report called The Collaborative Economy.  I will now help you to better understand the funding aspect of this growing movement.  We obtained a list of 200 startups (appropriately using a Taskrabbit, I might add) in order to get our initial sample.  I recently published an infographic helping to reveal the patterns in this sample.  Now I want to expose some additional data about the force that funds this space.

Key Findings from the Collaborative Economy Funding:

  • Heavy Funding Has Spurred this Market Forward.  Across the 200 startups, I have found that 37% had been funded, with startups receiving an average of $29 million in funding.  The 200 had received over $2 billion in total funding, which is a very high amount for a largely undeveloped, pioneer market.  Interviews with several of the Venture Capitalists in this space indicated that they favor two-sided marketplaces which scale and have low inventory costs.  They are basically transaction machines akin to eBay or Netflix.
  • A Few Startups Received Exceptionally Large Funding Amounts.  Not all startups are equal.  Some have received far more funding than others.  These giants include players like AirBnb which received about $120 million; Lyft, which recently raised around $60 million; and Uber, securing over $57 million.  Most startups have not yet obtained such large funding amounts, although, as this market heats up, it will find additional funding opportunities.
  • SV Angel and Benchmark Funded Most Frequently.  San Francisco and Silicon Valley-based firms funded these firms most frequently, which coincides with the high concentration of Collaborative Economy startups in the SOMA district of the city.  In particular, SV Angel and Benchmark were the highest frequency funders, followed by Incubator/Accelerator 500 startups Andressen and Floodgate, which are located in the Silicon Valley and San Francisco area.
  • Market Has Received Early Stage Funding.  Of the total funding of the nearly 80 startups, most are in an early stage, with the most dominant being Seed round, followed by ‘A’ round. The other category includes non-disclosed personal loans, bootstrapped self loans, and the ambiguously termed ‘Venture Round,’ which could be construed to mean a variety of things.  This early market funding, which started to emerge about 3 years ago, matches the funding levels being shown.
  • Individual Investors Include Hollywood Stars and Internet Veterans.  Early stage funding often includes celebrity investors who want to get in on the action, angel investors, and a “friends and family” round of other successful entrepreneurs.  Ashton Kutcher has invested in 5 startups in this market, and seasoned internet exec, Keith Rabois, is reported to have individual investments in many startups in this market.  We should assume there are other personal loans and investments made that were not apparent in our public searches.

Graphics: Key Investors in the Collaborative Economy:
After segmenting the data, we comprised these graphs, based off frequency patterns per startup.


Screen Shot 2013-07-11 at 1.26.16 PM

Screen Shot 2013-07-11 at 1.33.54 PM

Screen Shot 2013-07-11 at 1.33.07 PM
Above: Individual investors are based off an updated sample size in Feb 2013, while data is accurate, it did not include new startups that were added to this market.

Screen Shot 2013-07-14 at 8.13.39 PM
Above, On July 14th, I’ve added the following graph, which includes new investors not in the original sample size, collected in Feb. In all cases these graphs are correct, but they represent different sample sizes. New investors include Mike Walsh and Shervin Pishevar, who take the lead, in terms of frequency.

Methodology and Data Notations

See the full data sample was from 200 startups in the Collaborative Economy.  Read the infographic to obtain a summary.  Special thanks to the Collaborative Consumption crew, as many of the names were obtained from their site.  Of the 37% who’d been funded, we mined public records ranging from Crunchbase, startup website, investor website, Wikipedia, news sources, and press releases to obtain data.  We don’t believe this list is complete, but it is a representative sample of funding from easily obtained public sources.

We included the term “venture round” is an ambiguous term which can be used in a variety of ways, in the ‘other’ category, as it’s used both in early stage and later stage funding rounds. Obtaining the exact amount of how much each firm or individual invested is next to impossible, so obtaining frequency, and estimating per round helps to determine a relatively reliable figure. Compounding this complexity, multiple investors are often involved in each round, making specific dollar amounts even more difficult to determine.  This information should not be used for official financial advice or guidance, but only for entertainment purposes only.

If you liked this post, see all my coverage and data on the VC market.  Photos used under Creative Commons, by Philip Taylor.

Meet the Investors of Social Networks and Social Media

15

Which VC invested the most frequently in Silicon Valley Social Networks? Surprise! They’re from NY! This is part of my continue industry analysis of the changing digital space (see all posts tagged VC), but probing which investors are most active –and are bellwethers for finding future growth companies.


NY Union Square Ventures Invested Most Frequently in Consumer Social Networks

Ever wonder who’s behind the backing of some of the fastest growing technology companies? To find out, I created tables and collected public data to list out the specific investors of each of the major social networks, and social media sites, and conducted frequency analysis of the investors to find out. This is part of my continued coverage of investors in the social business space, read the rest of my posts, analysis, and insights to this important group in our industry. One caveat, I’m not a financial analyst, I’m an industry analyst, and this data shouldn’t be considered for investment purposes.

Financial investment data of these social networking companies seems like it’s easy to get, but it’s very unstructured.    The data was all over the web, it was hard to find a single repository of information, common sources were press releases, wikipedia, CrunchBase, and corporate web pages.  It’s difficult to tell the specific amount each VC put into a shared investment round, even probing through the S-1 filings would not yield the specifics of each investor.

There was plenty of information about how much funding each startup received, but it wasn’t broken down by VC group.   This analysis is based of the public available data on investment funding of the following consumer social networks: Facebook, Groupon, Foursquare, Gowalla, Twitter, Zynga, LivingSocial, LinkedIn, Branch, Pinterest, Digg, Reddit, Instagram, Tumblr, Yelp, WordPress (Automattic), and Snapchat. Of these players, only a few had public available data that they’ve been funded. Then, we segmented the investments by individual round, then looked for pattern analysis on which VC firm had invested the most frequently.  Here’s the findings:

Variations on Investments Segments VC Strategies

  • Early Stage Funding Modest. Research found there were over 120 distinct investors, which includes about 50 individual investors or angels.  Among them, most investment rounds in A-X had multiple investors in each round.  A handful of angel and seed rounds had individual investors.   Seed round amount across the 17 startups was a mere $3m, yet the sum of the angel rounds grew to $863m, a big chunk of that amount is Reid Hoffmans multi million dollar investment into Zynga, which in some categories can be considered to be as large as some C or D rounds.
  • Later Stage Funding Balloons. Across this category of 17 social networks, the largest rounds of funding were within C and D, each over 1 billion. A Rounds across these startups were a sum of $85m, followed by B Rounds of $620m, C Rounds of $1,2b, D Rounds $1,7b, then a tapering off as E of $452m F of $376m and G Rounds of $110m.  As usual the later rounds had institutional investors, banks, and larger VC firms.  The amorphous term “venture round” (a sum of $2.5b) in this space was often a late stage growth round, which, in my opinion, was used to bolster valuation before a startups material event.
  • NY Union Square Ventures Leads the Way, Frequency Wise.  While this doesn’t account for total size of investments, we found that NY based Union Square Ventures invested in many deals, and had up to 14 investments in social networks over the past years. Like most rounds, they were involved in multi-investor deals, and frequently was involved in majority of A and B rounds.   This investor, placed many investments a early A, then came back for B through C after they saw traction.

 


Data: Frequency of VC firms who invested in consumer social networks
1. Union Square Ventures invested in 14 distinct investments:
Partial investor in Foursquare, Angel Round ($1.35M)
Partial investor in Foursquare, B Round ($20M)
Partial investor in Foursquare, C Round ($50M)
Partial investor in Twitter, A Round ($5M)
Partial investor in Twitter, B Round ($15M)
Partial investor in Twitter, C Round ($35M)
Partial investor in Zynga, A Round ($10M)
Partial investor in Zynga, A Round ($5.03M)
Partial investor in Zynga, B Round ($25M)
Partial investor in Tumblr, A Round ($750K)
Partial investor in Tumblr, B Round ($4.5M)
Partial investor in Tumblr, C Round ($5M)
Partial investor in Tumblr, D Round ($30M)
Partial investor in Tumblr, Venture Round ($85M)

2. Greylock Partners invested in 10 distinct investments
Partial investor in Facebook, B Round ($27.5M)
Partial investor in Groupon, D Round ($950M)
Partial investor in Gowalla, B Round ($8.29M)
Partial investor in LinkedIn, B Round ($10M)
Partial investor in LinkedIn, D Round ($53M)
Partial investor in Digg, A Round ($2.8M)
Partial investor in Digg, B Round ($8.5M)
Partial investor in Digg, C Round ($28.7M)
Partial investor in Instagram, B Round ($50M)
Partial investor in Tumblr, Venture Round ($85M)

3. Spark Capital invested in 9 distinct investments
Partial investor in Foursquare, C Round ($50M)
Partial investor in Twitter, B Round ($15M)
Partial investor in Twitter, C Round ($35M)
Partial investor in Twitter, D Round ($100M)
Partial investor in Tumblr, A Round ($750K)
Partial investor in Tumblr, B Round ($4.5M)
Partial investor in Tumblr, C Round ($5M)
Partial investor in Tumblr, D Round ($30M)
Partial investor in Tumblr, Venture Round ($85M)

4. Andreessen Horowitz invested in 8 distinct investments
Partial investor in Groupon, D Round ($950M)
Partial investor in Foursquare, B Round ($20M)
Partial investor in Foursquare, C Round ($50M)
Partial investor in Zynga, B Round ($15.2M)
Partial investor in Pinterest, B Round ($27M)
Partial investor in Pinterest, C Round ($100M)
Partial investor in Pinterest, D Round ($200M)
Partial investor in Instagram, Seed Round ($500K)

5. Bessemer Venture Partners invested in 8 distinct investments
Partial investor in LinkedIn, C Round ($12.8M)
Partial investor in LinkedIn, D Round ($53M)
Partial investor in LinkedIn, E Round ($22.7M)
Partial investor in Pinterest, A Round ($10M)
Partial investor in Pinterest, B Round ($27M)
Partial investor in Pinterest, C Round ($100M)
Partial investor in Pinterest, D Round ($200M)
Partial investor in Yelp, B Round ($5M)

6. SV Angel invested in 8 distinct investments
Partial investor in Facebook, B Round ($27.5M)
Partial investor in Foursquare, Angel Round ($1.35M)
Partial investor in Foursquare, B Round ($20M)
Partial investor in Gowalla, B Round ($8.29M)
Partial investor in Twitter, A Round ($5M)
Partial investor in Zynga, A Round ($10M)
Partial investor in Branch, Seed Round ($2M)
Partial investor in Digg, A Round ($2.8M)


Highlight: Digital Sky Technologies
While not a frequent investor, Russian based DST (I’ve had a dinner with Yuri to hear his strategy), when they did invest, it was large sums, and large amounts, their current investments include:
Lead investor of Facebook $200,000,000
Partial investor of Groupon $950,000,000
Partial  investor of Twitter Round  $400,000,000
Partial Investor of Zynga  $15,200,000


Concluding Remarks: At first, it’s surprising that the most frequent investor of silicon valley social networks is NY based Union Square ventures, but if you look at the pattern, they placed early bets, saw growth, then double and triple downed their investments. While frequency doesn’t account for total fund performance, it demonstrates the specific strategy some VC firms are playing. On the other hand, Russian Based DST places few bets, but when does, places them big and strong, after seeing growth. Both investment strategies are needed for emerging markets, both for initial catalyzing, then followed by acceleration, then increased in valuation. These patterns help to define the market maturity of a space, and you should use them to identify maturity stages in the markets in which you’re acting.