Archive for the ‘VCs’ Category


Massive Spreadsheet: Collaborative Economy Funding

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Screen Shot 2014-11-21 at 5.27.21 AM

Click on the above image, or you can advance to the Spreadsheet of the Collaborative Economy Funding, to see a multi-tab analysis of funding, which I update on a regular basis. Caveat: This sheet is incomplete: People continually submit new data to me, and early stage funding is often not reported in public.

The Collaborative Economy continues to be a darling of tech investors. In a few short years, these companies have received incredible amounts of funding, totaling nearly $7 billion across 169 startups, with no signs of it slowing. Startups continue to seek investors to raise more funds, and investors are pressured by their own partners to get into the sharing and collaboration space. Here’s a few previews of what you’ll find in the sheet:

  • This sheet contains ten tabs, with the main data tab having 513 rows, and five dynamic graphs, it includes:
    • Summary tab
    • Funding by Date (and year-by-year graph, and month frequency)
    • Funding by Value in descending order (and graph)
    • Funding by round type (a form of value)
    • Funding by Industry (and graph)
    • Comparison to popular social networks (and graph)
  • As of today, there’s been a whopping amount of $6,884,248,411 funded in this market
  • Span of Analysis is 12 years, however most has happened this year
  • The transportation space has received the greatest amount of funding (see graph), dwarfing all other industries
  • Total Startups Funded: 169
  • Total Funding Events: 512
  • Average Amount Per Funding Round: $14,933,294
  • Average Total Funding Per Startup: $40,735,198 (that includes the outliers, like Airbnb and Uber)
  • If you remove the outliers (Airbnb and Uber), the Average Total Funding Per Startup is $28,931,647
  • There’s been more funding in this market than in Social Networks, by 26%, which I’ve written about on a prior post

Over the years, I’ve analyzed social network funding and the resulting social business software funding, and can see some patterns that are likely to repeat. Don’t expect most of these startups to succeed, as many are clones in a winner-take-all marketplace. Funding continues to pour in, and I expect us to cross the $7 billion marker in just a few months.

Transportation dominates the funding space, with Uber, Lyft, and BlaBlaCar taking the lion’s share. This is “market one” to be impacted, as there are significant numbers of idle vehicles that can be activated using mobile technologies. Crowdfunding, P2P Lending and other crowd-based currency industries are next, closely followed by physical space, and physical goods. Expect additional funding to follow in these categories.

I hope this sheet provides additional market clarity. You can use this funding data to forecast which types of startups will matter in the coming years. I had created a sheet tracking 2014 data, as I saw a surge in Q2. I am now abandoning that for the above sheet, due to the initial project success.

 

Funding Comparison: Social Networks vs Collaborative Economy

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Collaborative Economy rivals popular Social Network funding
Social networks were the first phase of digital P2P. They enabled anyone to create media and then share it. The Collaborative Economy is the second phase. It enables anyone to create goods and share what they already own. So, how similar or different are the funding amounts for these two movements? This post provides some insight.

There are many ways to compare industries. I’ve conducted analysis on: adoption rates, attitudes, growth rates, and, in tech-heavy industry, funding rates. While investors have often known to be wrong, funding indicates bullish attitudes based on financial analysis and gut reaction to new markets. It’s a metric we must analyze.

If you want to see the full perspective of funding, advance to the Google Sheet of Collaborative Economy funding. Please note that there are multiple tabs.

To produce this comparison, we gathered publicly available information about consumer-facing, popular social networks, like Facebook, Twitter, and LinkedIn (and 17 others) to find out how much money a mature market, complete with winners, losers, and IPOs, has been funded. Next, we gathered public data about funding in the Collaborative Economy (Uber, Airbnb, Indiegogo, and hundreds others) to see what we could find.

A few analysis notes:

  • Popular social networks are reported to have been funded by $5.4 billion over the last decade. Mostly “consumer” Collaborative Economy startups that enable the sharing of goods, services, food, money and vehicles, have been funded $6.8 billion
  • If you compared, percentage wise, the Collaborative Economy has been funded 26% more than popular social networks.
  • This isn’t an apples-to-oranges comparison: There are few fewer social networks (we looked at 20) than Collaborative Economy startups (we tabled 497). There is no public data for many social networks that died by the wayside lack.
  • Often, funding in early stages is not reported, so it’s impossible to ever truly know what the total funding amount for many companies. Early seed and angel rounds aren’t typically reported.
  • While social networks aren’t likely to be funded significantly greater, I expect that many Collaborative Economy startups are going to receive significantly more funding.
  • I didn’t tally up enterprise social business software funding (community platforms, social media management systems) as there isn’t comparable software for the Collaborative Economy …yet.

Summary
This doesn’t mean that all Collaborative Economy startups will succeed. Markets often only have room for three players – not like the dozens of transportation players currently available. It could also mean that Collaborative Economy companies need to be more resource-intensive to lift off the ground. It certainly means that investors, many who funded social networks, are also bullish on this next phase of P2P sharing.

 

 

 

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

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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

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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

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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

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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