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Lots of happy people as Palantir and Asana spike on first day of trading

The markets are closed and the verdicts are in: investors liked what they saw in Palantir and Asana .

The two companies, which debuted this morning in dual (and duel) direct listings, continued to prove that enterprise tech companies without the brand recognition of Spotify (which conducted its own direct listing back in 2018) can make direct listings work. So far, the evidence is decent that the mechanism isn’t throwing off investors.

Michael Nagle/Bloomberg via Getty Images

Asana closed its first trading day at $28.80 a share — a gain of 37% against its reference price of $21 a share. The company’s first trade was at $27. Meanwhile, Palantir closed the day at $9.73, a gain of 34% against its reference price of $7.25. Its first trade was at $10. Asana is valued at about $4.3 billion at close, while Palantir reached $24.8 billion, based on its fully diluted share count, including recent securities sold.

As an aside, my Equity co-host Natasha Mascarenhas and I did an “Equity Shot” talking more about these early numbers. Tune in if you want to hear our discussion and analysis:

That done, with big bold numbers on the board, there were a number of winners.

First and foremost, Founders Fund, which is the only major investor shared between the two companies, has a lot of capital incoming. The firm owns 5.8% of Asana and approximately 6.6% of Palantir, netting it somewhere around $1.8 billion given today’s valuations (that’s definitely back-of-the-envelope math mind you).

Meanwhile, Benchmark owns 9.3% of Asana, and a number of other investors including Japanese insurer SOMPO, Disruptive Technology Solutions, UBS, and 8VC own significant stakes in Palantir.

The other winners are the founders of these companies. Dustin Moskovitz retains a 36% stake in Asana, while his cofounder Justin Rosenstein holds a 16.1% stake. Over at Palantir, the trio of founders of Alex Karp, Stephen Cohen, and Peter Thiel now have liquid billions at their collective disposal.

Asana founders Justin Rosenstein and Dustin Moskovitz. Photo via Asana

Of course, employees will be happy to get liquidity as well. Asana does not have a lockup period, and so its employees and insiders are free to trade. Palantir coupled a direct listing with a lockup, and so only about 28% of the company’s shares are eligible for sale today. The remainder will be authorized to be sold over the next year.

In an interview with Moskovitz shortly after the markets closed today, he said that “it’s been an exciting morning, but ultimately it’s just one step in a much longer journey towards fulfilling our mission” (you can read more of our interview with Moskovitz on Extra Crunch).

While it’s just one trading day, it was a positive one for both companies, and that provides even more evidence that the classic IPO now has stiff competition from direct listings and other alternative methods like SPACs.

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Postmates cuts losses in Q2 as it heads towards tie-up with Uber

Popular food delivery service Postmates is in the process of merging with Uber in a blockbuster $2.65 billion deal that would see it join forces with its food delivery competitor, Uber Eats. The deal remains under antitrust scrutiny, and has not yet been approved for closing. The deal is expected to close in the first half of 2021.

However, a new SEC filing posted after hours this Friday gives us a glimpse into how Postmates is faring in the new world of global pandemics and sit-in dining closures across the United States.

Postmates posted a loss of just $32.2 million in Q2, compared to a loss of $73 million in Q1, nearly cutting its cash burning in half. That compares to Uber Eats’ results, which showed a loss of $286 million in the first quarter of 2020 and a loss of $232 million in the second quarter — an improvement of roughly 20%, according to Uber’s most recent financial reports.

Altogether, Postmates lost $105.2 million in the first half of 2020, compared to a loss of $239 million in the same period of 2019.

Uber through its filing today also disclosed the cap table for Postmates in full detail for the first time. On a fully diluted basis, the largest shareholder in Postmates is Tiger Global, which owns 27.2% of the company. Following up is Founders Fund with 11.4%, Spark Capital with 6.9% and GPI Capital with 5.3%. At Uber’s $2.65 billion all-stock deal, that nets Tiger Global roughly $720 million and Founders Fund roughly $302 million, not including some stock preferences and dividends that certain owners of the company hold.

While Postmates and Uber continue to go through the antitrust review process at the federal level, the companies also face legal pressure in their own backyards. Uber noted in its filing today that it and Postmates face headwinds due to California’s AB 5 bill, which is designed to give additional employment protections to freelance workers. However, the company notes that such litigation “may not, in and of itself, give rise to a right of either party to terminate the transaction.”

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Virtual events startup Run The World just nabbed $10.8 million from a16z and Founders Fund

Run The World, a year-old startup that’s based in Mountain View, Calif., and has small teams both in China and Taiwan, just nabbed $10.8 million in Series A funding co-led by earlier backer Andreessen Horowitz and new backer Founders Fund.

It’s easy to understand the firms’ interest in the company, whose platform features every functionality that a conference organizer might need in a time of a pandemic and even afterward, given that many outfits are rethinking more permanently how to produce events that include far-flung participants. Think video conferencing, ticketing, interactivity and networking.

We’d written about the startup a few months ago as it was launching with $4.3 million in seed funding led by Andreessen partner Connie Chan, who was joined by a slew of other seed-stage backers, including Pear Ventures, GSR Ventures and Unanimous Capital. Perhaps unsurprisingly given the current climate, Run The World has received a fair amount of traction since, according to co-founder and CEO Xiaoyin Qu, who’d previously led products for both Facebook and Instagram.

“Since we launched in February — and waived all set-up fees for events impacted by the coronavirus — we are receiving hundreds of inbound event requests each day,” Qu says. More specifically, she says the startup has doubled the size of its core team to 30 employees and enabled organizers from a wide variety of countries to oversee more than 2,000 events at this point.

Qu says that a lot of event planners who’ve used Zoom to run webinars are now choosing Run The World instead because of its focus on engagement and social features. For example, attendees to an event on the platform are invited to create a video profile akin to an Instagram Story that can help inform other attendees about who they are. It also organizes related “cocktail parties,” where it can match attendees for several minutes at a time, and attendees can choose who they want to follow up with afterward.

That heavy focus on social networking isn’t accidental. Qu met her co-founder, Xuan Jiang, at Facebook, where Jiang was a technical lead for Facebook events, ads and stories.

Of course, Run The World — which takes 25% of ticket sales in exchange for everything from the templates used, to ticket sales, to payment processing and streaming and so forth — still has very stiff competition in Zoom. The nine-year-old company has seen adoption by consumers soar since February, with 300 million daily meeting participants using the service as of April’s end.

Not only is it hard to overcome that kind of network effect, but Run The World is hardly alone in trying to steer event organizers its way. Earlier this week, for example, Bevy, an events software business co-founded by the founder of the events series Startup Grind, announced it has raised $15 million in Series B funding led by Accel. Other young online events platforms to similarly raise venture backing in recent months include London-based Hopin (whose recent round was also led by Accel, interestingly) and Paris-based Eventmaker.

Still, the fresh funding should help. While Run The World has grown “entirely organically through word of mouth” to date, says Qu, the startup plans to grow its team and will presumably start spending at least a bit on marketing.

It could well get a boost on this last front by its social media-savvy investors.

In addition to a16z and Founders Fund, numerous other backers in its Series A include Will Smith’s Dreamers VC and Kevin Hart’s Hartbeat Capital.

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IRL, the calendar app for virtual events, launches a web product

IRL, the recently pivoted calendar app that aggregates live virtual events, has today launched a web version of the platform.

The company, which has $11 million in funding from Goodwater Capital, Founders Fund and Floodgate, started as a social planning app that helped folks find each other in the real world, based on interest and geography.

Over time, the company realized the power of the calendar itself. No one has successfully made the calendar social, explained cofounder Abe Shafi. Where you can follow someone’s music on SoundCloud or follow their updates on Twitter, how can you follow their events?

Pre-pandemic, those events were physical events, with people communing in a venue. But the coronavirus may have split open a much wider world for the startup, which recently pivoted into virtual events.

Through API partnerships with YouTube, Twitch and Spotify, as well as user-generated content, IRL (which now stands for In Remote Life) wants to aggregate all the virtual events across the globe into a curated, categorized home page. That may include an esports tournament, a virtual concert, a Zoom cocktail party or a webinar.

Critical to this push is a web presence, which launches today. Folks can follow content producers, or simply get alerts on individual events. Importantly, IRL is also launching an ‘add to calendar’ button that content producers can add to their own websites.

For now, that ‘add to calendar’ button embed is only available to select partners, with a waitlist for others interested in adding the button to their website.

Co-founder and CEO Abe Shafi explained the company’s monetization plans with TechCrunch, though warned that the current focus is gaining a critical mass before flipping on the monetization switch.

“The way we think about making money is around monetizable intent,” said Shafi. “When you’re on Facebook or Instagram, your monetizable intent is pretty low because you’re interested in what your friends are up to. Whereas, when you’re on Google your monetizable intent is really high because your intent is to find something and go somewhere else. Our monetizable intent is much closer to a Google search than it is to a Facebook or an Instagram in the sense that people come to IRL to go to other people’s content that they’re monetizing in one way or another.”

Importantly, content producers must use the app to add their own events to the platform, but Shafi told TechCrunch that the company has plans to add that same functionality to the web product.

When asked whether IRL would get into content creation itself, Shafi said that the premise of that “gives him a headache.”

“We want to be the bank,” said Shafi. “So many great people are creating content. Getting into the content business is its own beast. If we can be seen as the best place to discover it all, that’s a huge win.”

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Made Renovation Raises $9M Seed For Tech-Enabled Bathroom Remodels

In hot real estate markets such as the Bay Area, finding a contractor who will do a small remodeling job at an affordable price can be a challenge.

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A new startup is emerging from stealth today with the goal of helping solve that problem.

Made Renovation, which manages bathroom remodeling projects on behalf of homeowners, has raised $9 million in a seed round led by Base10 Partners. Felicis Ventures, Founders Fund and some angel investors also participated in the financing.

Serial entrepreneurs Roger Dickey (who previously co-founded Gigster) and Sagar Shah (who previously founded Quad) founded San Francisco-based Made Renovation last year with the Bay Area’s construction talent shortage in mind. It’s been operating in “stealthy beta” since June. It’s up to now selling more than 10 projects a month with an average project price of around $30,000, according to Dickey. 

How it works

Made Renovation essentially handles a bathroom remodel project on behalf of a homeowner from start to finish. Eventually, the startup will expand to other markets with a supply-demand imbalance, but for now it’s only focused on the Bay Area.

“Not only do we handle everything for customers from design and architecture to procuring materials and pulling permits, we also match them with a contractor and then oversee the project to make sure it goes smoothly,” Dickey said in a phone interview.

Made Renovation also claims to perform a bathroom remodel more affordably than if a homeowner worked directly with a general contractor. Many contractors might be reluctant to take on a smaller project due to the lower profit margin.

Dickey himself said he called 30 to 40 contractors when working on a small bathroom remodel. But it was tough to find anyone considering that a higher cost of living has pushed out many contractors.

“People wouldn’t return my calls, or said they only would take projects with a $100,000 to $200,000 minimum,” he said. “We’ve also had customers who were quoted $75,000 for a 40-square-foot bathroom, which amounts to nearly $2,000 a square foot. We offer a guaranteed fixed price, which customers appreciate because they don’t have to worry about project overruns.”

Niche focus

Eventually, the 15-person startup may branch out, but for now it is “happy being bathroom experts.”

“Customers like knowing that we specialize in bathrooms,” Dickey told Crunchbase News.

In conjunction with the seed funding, Made Renovation also unveiled today a bathroom design showroom at 2108 Chestnut Street in San Francisco where “people can visualize their bathrooms with virtual reality.”

The company plans to use its new capital to grow its delivery and technology teams.

“For us, it’s mostly process automation,” Dickey said. “You can think of us a construction firm that churns out a high volume of relatively similar projects. Since the bathrooms we’re doing have similarities, our customers can save money.”

For TJ Nahigan, co-founder and managing director of Base10 Partners, Made Renovation “is creating a 10 times better solution to the status quo” in the multibillion-dollar renovation industry. He claims much of the industry is made up of “DIYers,” or homeowners doing the work themselves.

Sundeep Peechu, managing director at Felicis Ventures, previously worked with Dickey when his firm invested in Gigster.

“At this stage, a high percentage of conviction is usually about the team. We’re huge believers in Roger,” he wrote via email. Plus, “the renovation market in the US is 7 times larger than the ride-hailing market. A large portion of that is smaller renovation projects that Made is making more efficient.”

We’ve written plenty about startups focused on improving efficiencies and processes within the construction industry raising money, but they have mostly focused on larger projects. More recently, though, we also covered Homebound, which essentially serves as a tech-enabled general contractor. That startup has developed tools to track and manage 370 unique tasks associated with building a home, and recently raised $35 million in a round led by Fifth Wall Ventures.

Blog Roll Illustration: Dom Guzman

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Source: Crunchbase News

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A look at Made Renovation, which just raised $9 million in seed funding to zero in on bathroom remodels

Made Renovation, a new, San Francisco-based company, thinks it has found a profitable way to help homeowners get done something that busy general contractors in the Bay Area won’t otherwise make time for, which is bathroom remodels.

Why they typically pass on these: they have too many entire homes, or, at least, entire floors, to build for affluent regional homeowners who’ve kept the construction industry buzzing for years.

It’s a problem that founders Roger Dickey, who previously co-founded Gigster, and Sagar Shah, who previously founded Quad, think they can solve through technology, naturally. Their big idea: create bathroom templates that customers can customize but whose scope and costs are generally understood, line up these customers, then hire general contractors who are willing to focus only on these bathrooms.

It’s an idea that’s picking up traction with these GCs, says Dickey, who explains it this way: “General contractors generally see net margin of 3%” no matter the size of the job, owing to unforeseen hurdles, like pipes that suddenly need to be rebuilt, drains that need to be dug and materials that don’t ship on schedule.

In addition to timing issues, GCs are also often dealing with frustrated building owners who might underestimate a project’s costs, particularly in California, where construction bills often cause sticker shock.

Made Renovation sees an opportunity to make both the lives of GCs and homeowners easier. Through pre-negotiated pricing, volume and materials handling (it right now rents part of a warehouse where it receives goods), it’s promising GCs a “reasonable margin” so they can not only pay their crews but live a higher quality of life themselves.

Meanwhile, per the plan, customers need only choose from the company’s “modern” collection, its more traditional “heritage”design or its “artisan” collection — all of which can be customized — then sit back while their long-neglected bathrooms are remade.

Whether Made Renovation can pull off its grand vision is a giant question mark. The construction industry is nothing if not messy, and in addition to convincing GCs of its merits, Made Renovation — like any marketplace company — has to strike the right balance between customer demand and supply as it gets off the ground.

In the meantime, investors clearly think it has promise. Led by Base10 Partners and with participation from Felicis Ventures, Founders Fund and some individual investors, the company has already raised $9 million in seed funding across two tranches.

Part of that capital is on display right now in San Francisco, where Made Renovation today opened its doors to customers who want to check out its design ideas and, if all goes as planned, will begin lining up their own home improvement projects. Customers simply pick a collection, Made Renovation then puts together a “mood board” of materials from that collection, sends out a 3D rendering of what to expect, then goes into build mode with its GC partners.

As for what happens when that build goes awry, Dickey says Made Renovation has it covered. Most notably, while it guarantees the work to its own customers, the GCs with whom it works guarantee their work to Made Renovation.

Dickey also notes that while the startup “may lose money on some projects,” he stresses there are caveats that customers agree to at the outset. Among these, he says, “We can’t X-ray their walls and see if they don’t have wiring up to code. We don’t cover dry rot in walls.” Technology, suggests Dickey, can only do so much.

If you’re in the Bay Area and want to check out its new storefront, it’s on Chestnut Street in SF, in the city’s Marina district. The company hopes to perfect its model in the Bay Area, says Dickey, then expand into other regions. As for why Made Renovation decided to tackle one of the most challenging U.S. markets first, he suggests it’s the best way to test its mettle. “I like the idea of starting a company here, because if we can make it work here, I think we can succeed anywhere.”

Source: TechCrunch

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Practice Fusion, backed by top VCs before selling in 2018, pushed doctors to prescribe opioids in kickback scheme

Practice Fusion, a medical records startup that attracted more than $150 million from VCs, including at Founders Fund, Kleiner Perkins, and Artis Ventures, has some negative press coverage since selling to its older and publicly traded rival Allscripts in a $100 million cash deal in early 2018.

Yet it appears that Practice Fusion, founded in 2005, was run even more poorly than has been reported. In fact, the company was just tied to same drug overdose epidemic that has killed tens of thousands of Americans in just the last few years alone. How is it possible that a venture-backed, San Francisco-based medical records startup could have that kind of impact? In a word: kickbacks.

According to the U.S. Department of Justice, Practice Fusion solicited and received pay from a major (unnamed for now) opioid company in exchange for using its EHR software to influence doctors in the act of prescribing opioid pain medications. Specifically, according to court documents released earlier today by federal prosecutors in Vermont, Practice Fusion solicited a nearly $1 million payment from the opioid company, promising that in exchange it would create alerts in its software that would cause physicians to write more prescriptions for extended release opioids than were needed.

Practice Fusion has agreed to pay $145 million to resolve the DOJ’s criminal and civil investigations, including a $26 million criminal fine and a $118.6 million civil settlement that “also resolves allegations of kickbacks relating to thirteen other CDS arrangements where Practice Fusion agreed with pharmaceutical companies to implement CDS alerts intended to increase sales of their products.”

Not last, it agreed to post documents about its conduct on a public website — though apparently not on its own site, which instead features very typical marketing language, beginning with the suggestion that visitors, “Meet the EHR that helps independent practices thrive.”

The news isn’t featured on Practice Fusion’s still live blog or press section or a separate “resource center” area, either. And good luck finding mention of the settlement on the site of Allscripts, which has no acknowledgment of the case listed on its site that we can find. Instead, a vice president at Allscripts, Brian Farley, today released a statement that reads:  “Since learning of this matter we have further strengthened Practice Fusion’s compliance program. Allscripts recognizes the devastating impact that opioids have had on communities nationwide, and we are using our technology to fight this epidemic.”

Allscripts has denied from the start that it knew the depths of Practice Fusion’s woes, even while it apparently had an inkling. According to numerous reports, AllScripts submitted a nonbinding letter of intent in May 2017 to purchase Practice Fusion for between $225 million and $250 million, which is twice what it paid seven months later.

According to FierceBiotech, Allscripts pulled its offer in June 2017 after an other EHR vendor, eClinicalWorks, settled with federal prosecutors for $155 million to resolve allegations that it falsified EHR certification. The “settlement suddenly clarified [for Allscripts] just how expensive a similar legal battle could be,” says the outlet, noting that the DOJ had separately reached out to Practice Fusion about its own EHR certification in March of 2017.

Either way, by last August, AllScripts had agreed to pay the $145 million settlement after reaching an agreement with the DOJ related to what was then an ongoing investigation. At the time, Allscripts President Rick Poulton told investors during a second quarter earnings call, “As you know from our previous SEC filings, DOJ began investigations into certain practices of Practice Fusion before we acquired the business early last year. These investigations had many similarities that have either been settled or remain active with many of our industry competitors.”

Poulton added, “After acquiring Practice Fusion, the DOJ investigations continued to expand and required expanding levels of resources from us to support.”

The company’s admission of guilt and accompanying settlement is a black mark for everyone involved with Practice Fusion from its earliest days, particularly given that this latest news punctuates a string of concerning revelations about the way that Practice Fusion was managed.

Soon after the startup was acquired by Allscripts, for example, CNBC published a report outlining “several years of missed targets,” a “management shake-up that resulted in the ouster of founder and CEO Ryan Howard,” and a board that was “quietly looking for a way out.” It also reported that many longtime employees left the company with nothing while managers “banked millions” in a pre-arranged carve-out.

Christina Nolan, U.S. Attorney for the District of Vermont had her own harsh words in delivering news of the settlement earlier today, calling Practice Fusion’s conduct “abhorrent.”

Said Nolan, “During the height of the opioid crisis, the company took a million-dollar kickback to allow an opioid company to inject itself in the sacred doctor-patient relationship so that it could peddle even more of its highly addictive and dangerous opioids.

“The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts.”

Source: TechCrunch