Valence, the Los Angeles-based online community dedicated to increasing economic opportunity for the Black community, has raised $5.25 million in financing as it looks to continue to expand its network for Black professionals in all fields.
The timing for the investment is critical as the country reckons with the implications and effects of systemic racism. In no field is the under-representation of Black professionals more deeply felt than the tech industry, where lack of diversity can have profound implications on products and services that are becoming increasingly central to large swaths of the economy.
Problems with under-representation and underlying issues of systemic racism manifest in facial recognition technologies, social networking applications and decision-making software for lending and credit that are aspects of how American society functions.
It’s with an eye toward technology and entrepreneurship that Valence raised its most recent round, according to a letter sent to the company’s users by new chief executive officer Guy Primus.
“Now that we have the capital that we were seeking, we will be doing three things. First we will improve the current product. We are very proud of what we have built thus far, but we know there are a few issues. We will continue to address those issues and will accelerate work to enhance technical performance on the platform,” Primus wrote. “Second, we will be expanding the team. We expect the team to more than triple in the coming months so that we can better serve you. Finally, we’ll be adding features and expanding our services. We will be delivering additional tools that facilitate even more meaningful connections and will expand Valence’s scope to include the professional growth and development of our members.”
A lot of that product development will go toward building tools that can help with professional development and career growth.
“We’re being very targeted in how we can drive economic opportunity and wealth creation in the black community,” said Valence co-founder and Upfront Ventures general partner Kobie Fuller.
Valence currently has 10,000 people signed up for the platform and is growing at about 20% per month, according to Primus. The goal is to serve educational advice and tools to Valence users while at the same time making that group of career-minded Black professionals available to companies that would want to hire them.
Primus said that Valence will be selling its database and access to companies that would want to find prospective hires on the platform in a per-seat licensing model that would be accessible to headhunters and human resources departments.
The new investment round was led by GGV Capital, the international investment firm whose investments include Slack, Peloton, Wish and StockX. Hans Tung, the managing director who invested in those marquee deals, will be joining the company’s board of directors.
Other investors in the round include Upfront Ventures, along with Maveron, the SoftBank Opportunity Fund and Silicon Valley Bank.
Xpeng, an electric vehicle startup run by former Alibaba executive He Xiaopeng, said Monday it has raised around $500 million in a Series C+ round to further develop models tailored to China’s tech-savvy middle-class consumers.
The announcement followed its Series C round of $400 million closed last November. A source told TechCrunch that the company’s valuation at the time had exceeded the 25 billion yuan ($3.57 billion) round raised in August 2018.
The new proceeds bring the five-year-old Chinese startup’s to-date fundings announced to $1.7 billion.
Investors in the latest round include Hong Kong-based private equity firm Aspex Management; the storied American tech hedge fund Coatue Management; China’s top private equity fund Hillhouse Capital; and Sequoia Capital China. The other existing big-name backers are Foxconn, Xiaomi, GGV Capital, Morningside Venture Capital, IDG Capital, and Primavera Capital.
Despite the sizable round, Xpeng is headed for a slew of challenges. Electric vehicle sales in China have shrunk in the wake of reduced government subsidies set in motion last year, and the COVID-19 pandemic is expected to further dampen demand as the economy weakens.
Xpeng claims it has so far been able to withstand coronavirus challenges. In May, the company obtained a production license for its fully-owned car plant in a city near its Guangzhou headquarters, signaling its reduced dependence on manufacturing partner Haima Automobile.
BigCommerce, similar to public market darling Shopify, provides e-commerce services to merchants. Given how enamored public investors are with its Canadian rival, the timing of BigCommerce’s debut is utterly unsurprising and is prima facie intelligent.
Of course, we’ll know more when it prices. Today, however, the timing appears fortuitous.
BigCommerce is a SaaS business, meaning that it sells a digital service for a recurring payment. For more on how it derives revenue from customers, head here. For our purposes what matters is that public investors will classify it along with a very popular — today’s trading notwithstanding — market segment.
Starting with broad strokes, here’s how the company performed in 2019 compared to 2018, and Q1 2020 in contrast to Q1 2019:
In 2019, BigCommerce’s revenue grew to $112.1 million, a gain of around 22% from its 2018 result of $91.9 million.
In Q1 2020, BigCommerce’s revenue grew to $33.2 million, up around 30% from its Q1 2019 result of $25.6 million.
BigCommerce didn’t grow too quickly in 2019, but its Q1 2020 expansion pace is much better. BigCommerce will file an S-1/A with more information in Q2 2020, we expect; it can’t go public without sharing more about its recent financial performance.
If the company’s revenue growth acceleration continues in the most recent period — bearing in mind that e-commerce as a segment has proven attractive to many businesses during the COVID-19 pandemic — BigCommerce’s IPO timing would appear even more intelligent than it did at first blush. Investors love growth acceleration.
Moving from revenue growth to revenue quality, BigCommerce’s Q1 2020 gross margins came in at 77.5%, a solid SaaS result. In Q1 2019 its gross margin was 76.8%, a slightly worse figure. Still, improving gross margins are popular as they indicate that future cash flows will grow at a faster clip than revenues, all else held equal.
In 2018 BigCommerce lost $38.9 million on a GAAP basis. Its net loss expanded modestly to $42.6 million in 2020, a larger dollar figure in gross terms, but a slimmer percent of its yearly top line. You can read those results however you’d like. In Q1 2020, however, things got better, as the company’s GAAP net loss fell to $4 million from its year-ago Q1 result of $10.5 million.
The BigCommerce big commerce business is growing more slowly than I had anticipated, but its overall operational health is better than I expected.
A few other notes, before we tear deeper into its S-1 filing tomorrow morning. BigCommerce’s adjusted EBITDA, a metric that gives a distorted, partial view of a company’s profitability, improved along similar lines to its net income, falling from -$9.2 million in Q1 2019 to -$5.7 million in Q1 2020.
The company’s cash flow is, akin to its adjusted EBITDA, worse than its net loss figures would have you guess. BigCommerce’s operating activities consumed $10 million in Q1 2020, an improvement from its Q1 2019 operating cash burn of $11.1 million.
The company is further in debt than many SaaS companies, but not so far as to be a problem. BigCommerce’s long-term debt, net of its current portion, was just over $69 million at the end of Q1 2020. It’s not a nice figure, per se, but it is one small enough that a good IPO haul could sharply reduce while still providing good amounts of working capital for the business.
Investors listed in its IPO document include Revolution, General Catalyst, GGV Capital, and SoftBank.
Geek+, a Beijing-based startup that makes warehouse fulfillment robots similar to those of Amazon’s Kiva, said Thursday that it has closed over $200 million in a Series C funding round.
That bumps total capital raised by the 5-year-old company to date to nearly $390 million. The new round, completed in two parts, was separately led by GGV Capital and D1 Capital Partners in the summer of 2019, and V Fund earlier this year. Other participants included Warburg Pincus, Redview Capital and Vertex Ventures.
The company said it will continue to develop robotics solutions tailored to logistics, ramp up its robot-as-a-service monetization model, and expand partnerships.
Geek+ represents a rank of Chinese robotics solution providers that are increasingly appealing to clients around the world. The startup itself boasts over 10,000 robots deployed worldwide, serving 300 customers and projects in over 20 countries.
Just last month, Geek+ announced a partnership with Conveyco, an order fulfillment and distribution center system integrator operating in North America, to distribute its autonomous mobile robots (ARMs) across the continent. Leading this part of its business is Mark Messina, the startup’s chief operating officer for the Americas who previously worked at Amazon, where he oversaw mechanical engineering for the Kiva robotics system.
Geek+’s ambitious move overseas came amid continuous pressure from the Trump administration to boycott Chinese tech players. Back home, Geek+ has worked closely with retail giants such as Alibaba and Suning to replace human pickers in warehouses.
But in countries like Brazil, these types of spaces are not common for a number of reasons. (Historically, most people have lived at home with their parents until they marry, for example.) However, as the Latin American country’s society evolves, the real estate scene is attempting to keep up. One proptech startup is hoping to help bring the country up to date in terms of its apartment offerings.
I talked with Yuca co-founder and CEO Eduardo Campos, who told me more about what the startup is doing exactly. He also helped shed some light on how Yuca fits into an evolving narrative of how São Paulo’s core is being impacted by the growth of its startup scene.
Campos was born in the Northeastern Brazil city of Recife, Pernambuco, before moving to the U.S. when he was 14 years old. His first experience with the venture world was when he helped set up a small VC practice with a family office in São Paulo in 2012.
“Today’s unicorns were just getting started then,” he recalls. In fact, Campos’s first deal was investing in fitness discovery platform Gympass, which became a unicorn last February. He also invested in fintech startup Creditas and QuintoAndar, another Brazilian real estate-related startup (that happened to become a unicorn with a $250 million Series D raise last September).
It was that experience that led Campos to “fall in love with tech as a whole.”
So last year, he started Yuca after realizing how big a problem finding affordable housing was becoming in tech hubs around the world.
“Most of those cities have an affordability problem where people can’t find decent housing at a decent cost,” Campos told me. “So we put those two things together to come up with this business model.”
Knocking down walls
While the funding round was actually raised last summer, Yuca did not disclose it publicly until recently. Last week, the company launched its first “unit.”
What does that mean? Well, it started off by looking at the real estate supply in São Paulo, and noticed that tech companies as a whole were starting to congregate in two specific central neighborhoods that were well-served by public transportation.
But when the Yuca team looked at the real estate supply in those areas, it realized the apartments were not only decades old, but “pretty rundown and super expensive still because of their location.”
“They offered no amenities or parking spaces even,” Campos said.
So Yuca set about buying some of those units, completely tearing them down, and rebuilding them as shared apartments. Its target demographic is tech workers who want to live close to where they work.
Yuca has bundled the apartments with services such as cleaning and concierge, and takes care of all the backend issues like water and electricity. It’s also made sure its terms are “super convenient and flexible, not the standard Brazilian 30-month contract, which we think is absurd,” Campos said.
“We’re not looking to make a quick buck like an Airbnb rental,” he added. “We want to solve the problem of how people live.”
Rent starts out at about $500 a month, including condo fees, utilities, cleaning services and support.
“Even for Brazil, this is very affordable for a new apartment,” Campos said.
All units, each about 200-220 square feet, are fully renovated with four units fitting in one apartment. There’s about 600 square feet of common area, including a centralized living room and kitchen.
The buildings that were torn down were typically approximately 1,800-square-foot, three-bedroom apartments that included a separate maid’s quarters.
“In Brazil, it’s common for the middle and upper class to have a live-in maid, but these days younger folks are not wanting to have that relationship with help inside the house, so those floor plans don’t work anymore,” Campos told me. “So we turned those maid’s quarters into a fourth bedroom and, for us, tearing down that wall is a figurative thing.”
The renovation process takes anywhere from one to three months, and Yuca currently has 30 units under renovation in the pipeline. It plans to launch one apartment per week over the next two months with the goal of “ramping up and scaling faster in the future.”
For Pedro Sorrentino, founder of ONEVC, Yuca represented an attractive investment opportunity for a number of reasons.
For one, he said, the opportunity for full-stack proptech companies “is extremely attractive at the moment, given how low real interest rates are.”
“Investors are looking for yield, and Yuca is a perfect example of top- and bottom-level efficiencies that are brought to this market,” Sorrentino said. “When better utilization per square feet meets a technology-enabled apartment, you have a different, promising IRR (internal rate of return) profile than a regular REIT (real estate investment trust).”
He also points to the global “epidemic” of loneliness with the rising use of smartphones ironically being a big contributor.
“Once you think through the implications of co-living spaces, they are a massive indirect solution for a mental health problem that is increasing in our society, since community building is essential for the co-living model to thrive,” Sorrentino added.
Also, millennials and Gen Z are less worried about a large apartment than they are about being close to work and surrounded by a good community.
“Branding and a human approach to this solution is vital,” he said.
The trend of rising rental costs in hot job markets has brought all sorts of new ideas regarding living to the market. And so long as jobs continue to cluster in large urban environments, the market may keep generating demand for new housing arrangements like what Yuca, Tripalink and others can provide.
Vedantu, a Bangalore-based startup that operates a learning app aimed at students aged between 12 to 18, has secured an additional $24 million as part of its Series C financing round as it looks to serve more students and make its brand a household name.
The fresh infusion to Series C, which Vedantu first unveiled in August last year, was led by Chinese giant GGV Capital. Some existing investors also participated in the round. The $24 million extension broadens the five-year-old startup’s Series C round to $66 million, and its total raise to date to $82 million.
Vedantu serves students in grade 6 to 12 and offers live and interactive courses. Students who have enrolled for the interactive sessions are required to answer questions every few minutes by tapping on their smartphone screen or on the desktop. They also can raise their doubts at the end of the session.
Some of these sessions are free for students, but a selection of it requires a subscription, Vamsi Krishna, co-founder and CEO of the startup, told TechCrunch in an interview.
The app has amassed over 75,000 paying subscribers, a figure that Krishna expects to surpass 100,000 this year, he said. The cost of these subscriptions can vary from Rs 100 ($1.4) for students looking for sessions around a particular topic, to Rs 50,000 ($700) for long-term courses that focus on training students for undergraduate-level courses. More than 25 million users, in total, come to Vedantu app or website each month to consume free lessons.
India has the largest school-age population in the world and households in the nation are willing to invest in their children’s education to advance their lives. About a million students look to pursue under graduate courses each year, for instance.
But the quality of education and its affordability are two major challenges that millions of students, especially those living in smaller cities and towns, have to confront. An offline coaching centre can have as many as 100 students sitting in the room, with most not getting a chance to engage with the teacher. But for some, it also means there aren’t many teachers left to teach them.
From right to left: Vamsi Krishna, CEO and co-founder; Anand Prakash, co-founder; and Pulkit Jain, co-founder and head of product
Vedantu allows students to interact with their teachers through the microphone and camera on their smartphone or desktop and also through a chat box on the app. These teachers also have assistants who work with students on their doubts.
Since it’s a virtual class, Vedantu is also able to accommodate more students in a session. A paid session may have as many as 600 students while the free lessons could have 2,000, said Krishna, who is a teacher himself, and ran Lakshya Institute that helped students prepare for undergraduate-level courses until early 2014 before selling a majority stake to Mumbai-based K-12 tutoring and test preparation firm MT Educare.
Running a tech platform has also enabled Vedantu to offer its subscription service at a more affordable price than a typical offline coaching equivalent that can cost users anything between a few hundred dollars to a few thousand.
To ensure that students are paying attention and identify their weaknesses, Vedantu says it has built a patented system called WAVE that evaluates about 70 parameters including whether the student is looking at the screen. More than 90% of its students engage with the session (raise and answer questions, for one), said Krishna.
Hans Tung, Managing Partner at GGV Capital, who is joining the board of Vedantu as part of the investment, said he thinks Vedantu has reached the inflection point with its WAVE product. WAVE enables teachers to deliver “superior results as it can offer personalized education to many students at once,” he said. “We are excited to partner with Vamsi and the Vedantu team and share GGV’s global expertise and network to help them scale and shape learning outcomes for millions of students in India and beyond.”
Krishna said the startup has grown phenomenally in recent years so it is beginning to spend some money to better market its brand. In December, the startup ran some commercials on TV channels. In addition to that, Vedantu has also started to add courses to serve even younger students. The new courses are in pilot stage and would be broadly launched in a few months, he said.