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How to find your next VC

I presume that by now you are caught up on all things DoorDash IPO (pricing, trading, the future), C3.ai (pricing, trading, the future), and Airbnb (pricing, trading). What follows presumes you are read-up.
To kick off Market Notes this weeks, some Market News: Braze has grown 60% during the first three quarters of its fiscal year.
Sadly, while the New York-based customer engagement software startup joined the $100 million ARR club just under a year ago, we can’t just say that it’s at $160 million ARR today. Why not? The company has moved to counting GAAP revenue instead of ARR, …

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Early DoorDash investor Saar Gur makes the case for 10x growth from here

The stunning debut of the food delivery company DoorDash on the public market this week has plenty of people puzzled. While undeniably fast-growing, the unprofitable delivery company has come under fire numerous times over its employment practices, and its IPO, like that of other gig-economy companies, leaves a lot of economic issues unresolved.
So why is a company that lost $667 million in 2019 and $149 million in the first nine months of 2020 — during a period of hypergrowth because of the pandemic — being valued at $55.8 billion by public market investors? Have they lost their minds?
Saar Gur thinks he has answers to such …

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The IPO market looks hot as Airbnb and C3.ai raise price targets

Plus: Wish and Upstart price their debuts

Alex Wilhelm

8 hours

So much for a December slowdown— this morning, Airbnb and C3.ai raised their IPO price ranges and we got early pricing information from Upstart and Wish.
This gives us a good amount of ground to cover. So, we’ll dig into Airbnb’s new price range first, working to understand how richly investors are valuing the American home-sharing unicorn. We’ll repeat the experiment with C3.ai, a company we find utterly fascinating. And then we’ll calculate valuation ranges for both Upstart — a consumer lending fintech — and Wish — …

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Why does TechCrunch cover so many early-stage funding rounds?

Funding-round stories are TechCrunch’s bread and butter.
For early-stage companies, the fact that an investor has put thousands, millions (or billions) into an idea that will likely fail, and might never make money, is big news. That’s a story that we can tell every day.
From time to time, a debate pops up about the role of funding-round stories: Are financings the right metric to focus on? Should the trend be scratched and reinvented? After all, raising money is not indicative of making money. Let’s be real: news needs news to be published. There needs to be …

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DoorDash amps its IPO range ahead of blockbuster IPO

Investors have not lost their appetite for growth shares

Alex Wilhelm

10 hours

DoorDash filed a fresh S-1/A, providing the market with a new price range for its impending IPO.
The American food delivery unicorn now expects to debut at $90 to $95 per share, up from a previous range of $75 to $85. That’s a bump of 20% on the low end and 12% on the upper end of its IPO range.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

DoorDash still anticipates 317,656,521 shares outstanding after its IPO, giving the company …

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All IPOs should be paid for in Robux

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This is an all-time first for the show, it’s an Equity Leftovers. Which means that we’re not focusing on a single topic like we would in an Equity Shot. This is just, well, more Equity.

Danny and I and Chris got together to chat about a few things that we could not leave out:

And with this, our fourth episode in six days, we shall pause until Monday. Hugs from the Equity crew.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

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Extra Crunch roundup: A fistful of IPOs, Affirm’s Peloton problem, Zoom Apps and more

DoorDash, Affirm, Roblox, Airbnb, C3.ai and Wish all filed to go public in recent days, which means some venture capitalists are having the best week of their lives.

Tech companies that go public capture our imagination because they are literal happy endings. An Initial Public Offering is the promised land for startup pilgrims who may wander the desert for years seeking product-market fit. After all, the “I” in “ISO” stands for “incentive.”

A flurry of new S-1s in a single week forced me to rearrange our editorial calendar, but I didn’t mind; our 360-degree coverage let some of the air out of various hype balloons and uncovered several unique angles.

For example: I was familiar with Affirm, the service that lets consumers finance purchases, but I had no idea Peloton accounted for 30% of its total revenue in the last quarter.

“What happens if Peloton puts on the brakes?” I asked Alex Wilhelm as I edited his breakdown of Affirm’s S-1. We decided to use that as the subhead for his analysis.

The stories that follow are an overview of Extra Crunch from the last five days. Full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.

Thank you very much for reading Extra Crunch this week; I hope you have a relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist


What is Roblox worth?

Gaming company Roblox filed to go public yesterday afternoon, so Alex Wilhelm brought out a scalpel and dissected its S-1. Using his patented mathmagic, he analyzed Roblox’s fundraising history and reported revenue to estimate where its valuation might land.

Noting that “the public markets appear to be even more risk-on than the private world in 2020,” Alex pegged the number at “just a hair under $10 billion.”

What China’s fintech can teach the world

HANGZHOU, CHINA – JULY 31: An employee uses face recognition system on a self-service check-out machine to pay for her meals in a canteen at the headquarters of Alibaba Group on July 31, 2018 in Hangzhou, Zhejiang Province of China. The self-service check-out machine can calculate the price of meals quickly to save employees’ queuing time. (Photo by Visual China Group via Getty Images)

For all the hype about new forms of payment, the way I transact hasn’t been radically transformed in recent years — even in tech-centric San Francisco.

Sure, I use NFC card readers to tap and pay and tipped a street musician using Venmo last weekend. But my landlord still demands paper checks and there’s a tattered “CASH ONLY” taped to the register at my closest coffee shop.

In China, it’s a different story: Alibaba’s employee cafeteria uses facial recognition and AI to determine which foods a worker has selected and who to charge. Many consumers there use the same app to pay for utility bills, movie tickets and hamburgers.

“Today, nobody except Chinese people outside of China uses Alipay or WeChat Pay to pay for anything,” says finance researcher Martin Chorzempa. “So that’s a big unexplored side that I think is going to come into a lot of geopolitical risks.”

Inside Affirm’s IPO filing: A look at its economics, profits and revenue concentration

Consumer lending service Affirm filed to go public on Wednesday evening, so Alex used Thursday’s column to unpack the company’s financials.

After reviewing Affirm’s profitability, revenue and the impact of COVID-19 on its bottom line, he asked (and answered) three questions:

  • What does Affirm’s loss rate on consumer loans look like?
  • Are its gross margins improving?
  • What does the unicorn have to say about contribution profit from its loans business?

If you didn’t make $1B this week, you are not doing VC right

Image Credits: XiXinXing (opens in a new window) / Getty Images

“The only thing more rare than a unicorn is an exited unicorn,” observes Managing Editor Danny Crichton, who looked back at Exitpalooza 2020 to answer “a simple question — who made the money?”

Covering each exit from the perspective of founders and investors, Danny makes it clear who’ll take home the largest slice of each pie. TL;DR? “Some really colossal winners among founders, and several venture firms walking home with billions of dollars in capital.

5 questions from Airbnb’s IPO filing

The S-1 Airbnb released at the start of the week provided insight into the home-rental platform’s core financials, but it also raised several questions about the company’s health and long-term viability, according to Alex Wilhelm:

  • How far did Airbnb’s bookings fall during Q1 and Q2?
  • How far have Airbnb’s bookings come back since?
  • Did local, long-term stays save Airbnb?
  • Has Airbnb ever really made money?
  • Is the company wealthy despite the pandemic?

Autodesk CEO Andrew Anagnost explains the strategy behind acquiring Spacemaker

Andrew Anagnost, president and CEO, Autodesk.

Earlier this week, Autodesk announced its purchase of Spacemaker, a Norwegian firm that develops AI-supported software for urban development.

TechCrunch reporter Steve O’Hear interviewed Autodesk CEO Andrew Anagnost to learn more about the acquisition and asked why Autodesk paid $240 million for Spacemaker’s 115-person team and IP — especially when there were other startups closer to its Bay Area HQ.

“They’ve built a real, practical, usable application that helps a segment of our population use machine learning to really create better outcomes in a critical area, which is urban redevelopment and development,” said Anagnost.

“So it’s totally aligned with what we’re trying to do.”

Unpacking the C3.ai IPO filing

On Monday, Alex dove into the IPO filing for enterprise artificial intelligence company C3.ai.

After poring over its ownership structure, service offerings and its last two years of revenue, he asks and answers the question: “is the business itself any damn good?”

Is the internet advertising economy about to implode?

Image Credits: jayk7 / Getty Images

In his new book, “Subprime Attention Crisis,” writer/researcher Tim Hwang attempts to answer a question I’ve wondered about for years: does advertising actually work?

Managing Editor Danny Crichton interviewed Hwang to learn more about his thesis that there are parallels between today’s ad industry and the subprime mortgage crisis that helped spur the Great Recession.

So, are online ads effective?

“I think the companies are very reticent to give up the data that would allow you to find a really definitive answer to that question,” says Hwang.

Will Zoom Apps be the next hot startup platform?

Image Credits: Zoom

Even after much of the population has been vaccinated against COVID-19, we will still be using Zoom’s video-conferencing platform in great numbers.

That’s because Zoom isn’t just an app: it’s also a platform play for startups that add functionality using APIs, an SDK or chatbots that behave like smart assistants.

Enterprise reporter Ron Miller spoke to entrepreneurs and investors who are leveraging Zoom’s platform to build new applications with an eye on the future.

“By offering a platform to build applications that take advantage of the meeting software, it’s possible it could be a valuable new ecosystem for startups,” says Ron.

Will edtech empower or erase the need for higher education?

Image Credits: Bryce Durbin

Without an on-campus experience, many students (and their parents) are wondering how much value there is in attending classes via a laptop in a dormitory.

Even worse: Declining enrollment is leading many institutions to eliminate majors and find other ways to cut costs, like furloughing staff and cutting athletic programs.

Edtech solutions could fill the gap, but there’s no real consensus in higher education over which tools work best. Many colleges and universities are using a number of “third-party solutions to keep operations afloat,” reports Natasha Mascarenhas.

“It’s a stress test that could lead to a reckoning among edtech startups.”

3 growth tactics that helped us surpass Noom and Weight Watchers

3D rendering of TNT dynamite sticks in carton box on blue background. Explosive supplies. Dangerous cargo. Plotting terrorist attack. Image Credits: Gearstd / Getty Images.

I look for guest-written Extra Crunch stories that will help other entrepreneurs be more successful, which is why I routinely turn down submissions that seem overly promotional.

However, Henrik Torstensson (CEO and co-founder of Lifesum) submitted a post about the techniques he’s used to scale his nutrition app over the last three years. “It’s a strategy any startup can use, regardless of size or budget,” he writes.

According to Sensor Tower, Lifesum is growing almost twice as fast as Noon and Weight Watchers, so putting his company at the center of the story made sense.

Send in reviews of your favorite books for TechCrunch!

Image via Getty Images / Alexander Spatari

Every year, we ask TechCrunch reporters, VCs and our Extra Crunch readers to recommend their favorite books.

Have you read a book this year that you want to recommend? Send an email with the title and a brief explanation of why you enjoyed it to bookclub@techcrunch.com.

We’ll compile the suggestions and publish the list as we get closer to the holidays. These books don’t have to be published this calendar year — any book you read this year qualifies.

Please share your submissions by November 30.

Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?

Image Credits: Sophie Alcorn

Dear Sophie:

My VC partner and I are working with 50/50 co-founders on their startup — let’s call it “NewCo.” We’re exploring pre-seed terms.

One founder is on a green card and already works there. The other founder is from India and is working on an H-1B at a large tech company.

Can the H-1B co-founder lead this company? What’s the timing to get everything squared away? If we make the investment we want them to hit the ground running.

— Diligent in Daly City

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Extra Crunch roundup: Inside DoorDash’s IPO, first-person founder stories, the latest in fintech VC and more

One of my favorite series of Monty Python sketches is built around the concept of surprise:

Chapman: I didn’t expect a kind of Spanish Inquisition.

[JARRING CHORD]

[Three cardinals burst in]

Cardinal Ximénez: NOBODY expects the Spanish Inquisition!

I was reminded of this today when I needed to reschedule a few stories so we could cover DoorDash’s S-1 filing from multiple angles. First, Managing Editor Danny Crichton looked at how well the company’s co-founders and many investors stand to make out. Alex Wilhelm covered the IPO announcement in depth on TechCrunch before writing an Extra Crunch column that studied the role the COVID-19 pandemic played in the home-delivery platform’s recent growth.

Our all-hands-on-deck coverage of DoorDash’s S-1 is a good illustration of Extra Crunch’s mission: timely analysis of current and future technology trends that serves founders and investors. We have a talented team, and as today’s coverage shows, they’re just as good as they are fast.

The stories that follow are an overview of Extra Crunch from the last five days. The full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.

Thanks very much for reading Extra Crunch this week. I hope you have a great weekend!

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist


What I wish I’d known about venture capital when I was a founder

Why I left edtech and got into gaming

Image Credits: Klaus Vedfelt / Getty Images

We frequently run posts by guest contributors, but two stories we published this week were written in the first person, which is a bit of a departure.

In Why I left edtech and got into gaming, Darshan Somashekar brought us inside his decision to pivot away from a sector that’s been growing hotter in 2020.

His post is a unique take on two oft-discussed categories, but it also examines one founder/investor’s thought process when it comes to evaluating new opportunities.

Andy Areitio, a partner at early-stage fund TheVentureCity, wrote What I wish I’d known about venture capital when I was a founder, a reflection on the “classic mistakes” founders tend to make when it’s time to fundraise.

“Error number one (and two) is to raise the wrong amount of money and to do it at the wrong time,” he says. “They can also put all their eggs in one basket too early. I made that mistake.”

You can find business writing that explores best practices anywhere, which is why we hunt down stories that are firmly rooted in data or personal experience (which includes success and failure).

How COVID-19 accelerated DoorDash’s business

Image Credits: DoorDash

The coronavirus pandemic looms large in DoorDash’s S-1 filing.

According to the food-delivery platform, “58% of all adults and 70% of millennials say that they are more likely to have restaurant food delivered than they were two years ago,” and “the COVID-19 pandemic has further accelerated these trends.”

As in other sectors, the pandemic didn’t wave a magic wand — instead, it hastened trends that were already in play: consumers love convenience, which means DoorDash’s gross order volume and revenue were tracking well before the virus started to shape our lives.

“It’s your call on how to balance the factors and decide whether or not to buy into the IPO, but this one is going to be big,” writes Alex Wilhelm in a supplemental edition of today’s The Exchange.

The VC and founder winners of DoorDash’s IPO

SAN FRANCISCO, CA – SEPTEMBER 05: DoorDash CEO Tony Xu speaks onstage during Day 1 of TechCrunch Disrupt SF 2018 at Moscone Center on September 5, 2018 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch)

None of us knew DoorDash would release its S-1 filing today, but Danny Crichton jumped on the story “so we can see who is raking in the returns on the country’s delivery startup champion.”

After estimating the value of the respective ownership stakes held by DoorDash’s four co-founders, he turned to the investors who participated in rounds seed through Series H.

Some growth funds are about to look very good after this IPO, and each founder is looking at hundreds of millions, he found.

But even so, their diminished haul of about $1.3 billion is “a sign of just how much dilution the co-founders took given the sheer amount of capital the company fundraised over its life.”

Fintech VC keeps getting later, larger and more expensive

Investors sent stacks of cash to late-stage fintech companies in Q3 2020, but these sizable rounds may also point to shrinking opportunities for early-stage firms, reports Alex Wilhelm in this morning’s edition of The Exchange.

2020 could be a record year for fintech VC in Europe and North America, but are these “huge late-stage dollars” actually “a dampener for new fintech startups trying to get off the ground?”

Accelerators embrace change forced by pandemic

Devin Coldewey interviewed the leaders of three startup accelerators to learn more about the adaptations they’ve made in recent months:

  • David Brown, founder and CEO, Techstars
  • Cyril Ebersweiler, founder HAX, venture partner at SOSV
  • Daniela Fernandez, founder, Ocean Solutions Accelerator

Due to travel bans, shelter-in-place orders and other unknowns, they’ve all shifted to virtual. But accelerators are intensive programs designed to indoctrinate founders and elicit brutally honest feedback in real time.

Despite the sudden shift, that boot-camp mindset is still in effect, Devin reports.

“Cutting out the commute time in a busy city leaves founders with more time for workshops, mentor matchmaking, pitch practice and other important sessions,” said Fernandez. “Everybody just has more flexibility and tranquility.”

Said Ebersweiler: “People are for some reason more participative and have more feedback than physically — it’s pretty strange.”

Greylock’s Asheem Chandna on ‘shifting left’ in cybersecurity and the future of enterprise startups

Image Credits: Greylock

In a recent interview with Greylock partner Asheem Chandna, Managing Editor Danny Crichton asked him about the buzz around no-code platforms and what’s happening in early-stage enterprise startups before segueing into a discussion about “shift left” security:

“Every organization today wants to bring software to market faster, but they also want to make software more secure,” said Chandna.

“There is a genuine interest today in making the software more secure, so there’s this concept of shift left — bake security into the software.”

Square and PayPal earnings bring good (and bad) news for fintech startups

If you missed Wednesday’s The Exchange, Alex scoured earnings reports from PayPal and Square to see what the near future might hold for several fintech startups currently waiting in the wings.

Using Square and PayPal’s recent numbers for stock purchases, card usage and consumer payment activity as a proxy, he attempts to “see what we can learn, and to which unicorns it might apply.”

Conflicts in California’s trade secret laws on customer lists create uncertainty

Image Credits: jayk7 (opens in a new window)/ Getty Images

In California, non-competition agreements can’t be enforced and a court has ruled that customer contact lists aren’t trade secrets.

That doesn’t mean salespeople who switch jobs can start soliciting their former customers on their first day at the new gig, however.

Before you jump ship — or hire a salesperson who already has — read this overview of California’s trade secret laws.

“Even without litigation, a former employer can significantly hamper a departing salesperson’s career,” says Nick Saenz, a partner at Lewis & Llewellyn LLP, who focuses on employment and trade secret issues.

As public investors reprice edtech bets, what’s ahead for the hot startup sector?

Image: Bryce Durbin / TechCrunch

News of a highly effective COVID-19 vaccine appeared to drive down prices of the three best-known publicly traded edtech companies: 2U, Chegg and Kahoot saw declines of about 20%, 10% and 9%, respectively after the report.

Are COVID-19 tailwinds dissipating, or did the market make a correction because “edtech has been categorically overhyped in recent months?”

Dear Sophie: What does a Biden win for tech immigration?

Image Credits: Sophie Alcorn

What does President-elect Biden’s victory mean for U.S. immigration and immigration reform?

I’m in tech in SF and have a lot of friends who are immigrant founders, along with many international teammates at my tech company. What can we look forward to?

— Anticipation in Albany

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