Tech stocks retain their highs as the second quarter’s earnings season begins to fade into the rearview mirror, and there are still a number of companies looking to go public while the times are good. It looks like a smart move, as public investors are hungry for growth-oriented shares — which is just what tech and venture-backed companies have in spades.
The companies currently looking to go public are diverse. China-based real-estate giant KE Holdings — a hybrid listings company and digital transaction portal for housing — is looking to raise as much as $2.3 billion in a U.S. listing. Xpeng, another China-based company that builds electric vehicles, is looking to list in the U.S as well. Xpeng has the distinction of being gross-margin negative in every key time period detailed in its S-1 filing.
And then there’s Duck Creek Technologies, a domestic tech company looking to go public on the back of growing SaaS revenues. This morning let’s quickly spin through Duck Creek’s history, peek at its financial results, calculate its expected valuation and see how its pricing fits compared to current norms.
Duck Creek is a Boston-based software company that serves the property and casualty (P&C) insurance market. Its customers include names like AIG, Geico and Progressive, along with smaller players that aren’t as well known to the American mass market.
The KE IPO will be a big affair because the company is huge and profitable with $3.86 billion in H1 2020 revenue leading to $227.5 million in net income. The Xpeng IPO will be interesting because Tesla’s strong share price has given float to a great many EV boats. But Duck Creek is a company slowly letting go of perpetual license software sales and scaling its SaaS incomes while still generating nearly half its revenues from services. It’s a company we can understand, in other words.
So let’s get under the skin of the Boston-based company that also claims low-code functionality. This will be fun.
This week saw protests spread across the world sparked by the murder of George Floyd, an unarmed Black man, killed by a white police officer in Minneapolis last month.
The U.S. hasn’t seen protests like this in a generation, with millions taking to the streets each day to lend their voice and support. But they were met with heavily armored police, drones watching from above, and “covert” surveillance by the federal government.
That’s exactly why cybersecurity and privacy is more important than ever, not least to protect law-abiding protesters demonstrating against police brutality and institutionalized, systemic racism. It’s also prompted those working in cybersecurity — many of which are former law enforcement themselves — to check their own privilege and confront the racism from within their ranks and lend their knowledge to their fellow citizens.
THE BIG PICTURE
DEA allowed ‘covert surveillance’ of protesters
The Justice Department has granted the Drug Enforcement Administration, typically tasked with enforcing federal drug-related laws, the authority to conduct “covert surveillance” on protesters across the U.S., effectively turning the civilian law enforcement division into a domestic intelligence agency.
The DEA is one of the most tech-savvy government agencies in the federal government, with access to “stingray” cell site simulators to track and locate phones, a secret program that allows the agency access to billions of domestic phone records, and facial recognition technology.
Lawmakers decried the Justice Department’s move to allow the DEA to spy on protesters, calling on the government to “immediately rescind” the order, describing it as “antithetical” to Americans’ right to peacefully assembly.
With a lot of towns instituting shelter-in-place orders to restrict how people physically interact in order to slow down the spread of the novel coronavirus, fitness has come into its own.
In places where people are still allowed outdoors to exercise, we’ve seen an explosion of independent exercising like walking, running and cycling — often in conflict with each other, if my Facebook community board is anything to go by — to get the most out of being allowed outdoors. And in cases where people are remaining indoors, figuring out exercise regimes within our four walls has become a way to stave off boredom, to offset the cessation of our normal gym or sports routines, or just to stay in shape in our newly extra-sedentary lives.
In that context, a startup called Aaptiv — a Netflix-style app-based business that connects people to a range of trainer-led indoor and outdoor fitness and wellness sessions that they can do on their own, usually without any special equipment — is today announcing that it has raised some funding from one of its big investors, Insight Partners, on the back of a recent surge in business.
Founder and CEO Ethan Agarwal says the the number of people using the service during the novel coronavirus outbreak has spiked, with organic traffic in the last month up 100% and engagement with content up 200%. Aaptiv has now passed 30 million classes consumed on its platform (up from 22 million in May last year). The company, like many startups, is not yet profitable but is coming close to breaking even.
The new infusion of funding will be used to continue expanding a new Enterprise channel that Aaptiv recently launched to provide classes via API, on other platforms. Aaptiv’s partners include FitReserve, Weight Watchers and Audible (Amazon, owner of Audible, is one of Aaptiv’s investors), and the list is growing.
We asked, but Agarwal said that Aaptiv is not disclosing the amount of the investment, nor its valuation.
“I don’t want my company’s performance or success measured by those numbers,” he noted earlier today in an interview. “It’s not how we are thinking about the company.”
That could mean the round or valuation are not huge; or it could mean that they are so large that they would distract from the company’s product news, so not much to read into that. Insight Partners’ Thilo Semmelbauer, who sits on the board of the company, was equally quiet on the numbers.
“Crossing 30 million classes is a big milestone, and we’ve been excited to see the interest from corporates increase substantially in recent months,” he told TechCrunch. “The round is specifically for launching Aaptiv’s corporate offering to capitalize on such strong global interest. As the company is nearing break-even we aren’t disclosing the figure at this time.”
Insight earlier this month disclosed that it had raised a whopping $9.5 billion for a new fund, with a mission to support existing portfolio companies through these complicated COVID-19 times.
For some more context, Aaptiv has raised over $60 million to date, and in its last round — the $22 million Series C in 2018 that included Amazon — Aaptiv was valued at $200 million. Last year, we noted that the startup was talking to potential acquirers to be sold for what we understand from a close source to be a “nine-figure” (hundreds of millions of dollars) price.
It was, in fact, those M&A conversations that led the company to deciding to build the enterprise tier and walking away from a possible exit for now.
“What was the point of selling if we could build a bigger business by making Aaptiv available to multiple companies,” said Agarwal.
Agarwal said that now Aaptiv is getting inbound interest from “multiple verticals” for its B2B2C offering, including businesses that want to integrate Aaptiv into their employee wellness programs, companies whose core business model — for example, FitReserve providing carnets of passes for in-person fitness or related classes — has been completely stalled by the coronavirus, and others that might benefit from providing more fitness and wellness services to their users.
The company started out life by connecting a network of trainers to users through a series of on-demand classes. Last year, however, it made a small pivot of sorts when it launched an AI-based service called Coach that aimed to provide workouts and other suggestions more tailored to your specific abilities and interests and goals: not replacing the human trainers, but augmenting them.
Along with that shift, Aaptiv laid off an unspecified number of trainers. Today, it has 20 on staff, Agarwal said, and has no plans to change that model with a move into, for example, an all-AI platform, or building a fitness marketplace where any trainer could sign up to offer classes.
“Part of the reason we are so successful is because it’s not that easy to create these classes,” he said. “We, and the trainers, put a lot of time, effort and energy into building them.”
Tyto Care, the provider of a home health diagnostic device and telemedicine consultation app, said it has raised $50 million in a new round of funding.
The round was led by Insight Partners, Olive Tree Ventures, and Qualcomm Ventures, according to a statement, and brings the startup’s total capital raised to more than $105 million.
The funding comes just as Tyto has seen a dramatic surge in demand brought on by the global response to the COVID-19 pandemic. Tyto Care’s toolkit is being used as a telehealth diagnostic solution that was already seeing three times sales growth in 2019 alone.
Last …
Human insights tech startup UserTesting has landed $100 million in a new round of funding, the company announced Thursday.
Subscribe to the Crunchbase Daily
UserTesting’s Human Insight Platform lets companies get feedback from customers on-demand so they can learn more about how to improve customer experiences. Insight Partners led the …
London-based insurtech AI startup Tractable, which is applying artificial intelligence to speed up accident and disaster recovery by using computer vision to perform visual damage appraisal instead of getting humans to do the job, has closed a $25 million Series C, led by Canadian investment fund Georgian Partners.
Existing investors also participated, including Insight Partners and Ignition Partners. The round nearly doubles the 2014-founded startup’s total funding, taking it to $55M raised to date.
When TechCrunch spoke to Tractable’s co-founder and CEO Alexandre Dalyac, back in 2018, he said the company’s aim is to speed up insurance-related response times around events like car accidents and natural disasters by as much as 10x.
Two years on the startup isn’t breaking out any hard metrics — but says its product is used by a number of multinational insurance firms, including Ageas in the UK, France’s Covéa, Japan’s Tokio Marine and Polish insurer Talanx-Warta — to analyse vehicle damage “effectively and efficiently”.
It also says the technology has been involved in accelerating insurance-related assessments for “hundreds of thousands of people worldwide”.
Tractable’s pitch is that AI appraisals of damage to vehicles/property can take place via its platform “in minutes”, thereby allowing for repairs to begin sooner and people’s livelihoods to be restored more quickly.
The startup said its new funding will go on expanding its market footprint. It has customers across nine markets, globally, at this point. And in addition to its first offices in the UK and US recently opened a permanent office in Japan — with the stated aim of serving new clients in the Asia region.
It also said the Series C will be used for continued product development by further enhancing its AI.
Its current product line up includes AI for assessing damage to vehicles and another focused on the appraisal of damage caused by natural disasters, such as to buildings by hurricanes.
“Our AI solutions capture and process photos and damage and predict repair costs — at scale,” Tractable claims on its website, noting its proprietary algorithms can be fed by “satellite, drone or smartphone imagery”.
Commenting on the funding in a statement Lonne Jaffe, MD at Insight Partners and also Tractable board director, said: “Tractable has achieved tremendous scale in the past year with a customer base across nine countries, a differentiated data asset, and the expansion of their team to over 100 employees across London, New York, and now Tokyo. We are excited to continue to invest in Tractable as the team brings its powerful AI technology to many more countries.”
Emily Walsh, principal at Georgian Partners, added that the startup’s “sophisticated approach to computer vision applied to accident recovery is resonating with the largest players globally, who are using the platform to make real-time, data-driven decisions while dramatically improving the customer experience”.
“We’re incredibly excited to partner with the Tractable team to help them move even faster on bringing the next wave of technological innovation to accident and disaster recovery across the world,” she added.
It’s worth noting that in the EU citizens have a right, under data protection law, to (human) review of algorithmic decisions if they a legal or similarly significant impact — and insurance would likely fall into that category.
EU policymakers also recently laid out a proposal to regulate certain “high risk” AI systems and said they intend to expand the bloc’s consumer protection rules by bringing in a testing and certification program for the data-sets that feed algorithms powering AI-driven services to support product safety.
Sisense, an enterprise startup that that has built a business analytics business out of the premise of making big data as accessible as possible to users — whether it be through graphics on mobile or desktop apps, or spoken through Alexa — is announcing a big round of funding today and a large jump in valuation to underscore its traction. The company has picked up $100 million in a growth round of funding that catapults Sisense’s valuation to over $1 billion, funding that it plans to use to continue building out its tech, as well as for sales, marketing and development efforts.
For context, this is a huge jump: the company was valued at only around $325 million in 2016 when it raised a Series E, according to PitchBook. (It did not disclose valuation in 2018, when it raised a venture round of $80 million.) It now has some 2,000 customers, including Tinder, Philips, Nasdaq, and the Salvation Army.
This latest round is being led by the high-profile enterprise investor Insight Venture Partners, with Access Industries, Bessemer Venture Partners, Battery Ventures, DFJ Growth, and others also participating. The Access investment was made via Claltech in Israel and it seems that this led to some details of this getting leaked out as rumors in recent days. Insight is in the news today for another big deal: wearing its private equity hat, the firm acquired Veeam for $5 billion. (And that speaks to a particular kind of trajectory for enterprise companies that the firm backs: Veeam had already been a part of Insight’s venture portfolio.)
Mature enterprise startups proven their business cases are going to be an ongoing theme this year fundraising stories, and Sisense is part of that theme, with annual recurring revenues of over $100 million speaking to its stability and current strength. The company has also made some key acquisitions to boost its business, such as the acquisition of Periscope Data last year (coincidentally also for $100 million, I understand).
Its rise also speaks to a different kind of trend in the market: in the wider world of business intelligence, there is an increasing demand for more digestible data in order to better tap advances in data analytics to use it across organizations. This was also one of the big reasons why Salesforce gobbled up Tableau last year for a slightly higher price: $15.7 billion.
Sisense, bringing in both sleek end user products but also a strong theme of harnessing the latest developments in areas like machine learning and AI to crunch the data and order it in the first place, represents a smaller and more fleet of foot alternative for its customers. “We found a way to make accessing data extremely simple, mashing it together in a logical way and embedding it in every logical place,” explained CEO Amir Orad to us in 2018.
“We have enjoyed watching the Sisense momentum in the past 12 months, the traction from its customers as well as from industry leading analysts for the company’s cloud native platform and new AI capabilities. That coupled with seeing more traction and success with leading companies in our portfolio and outside, led us to want to continue and grow our relationship with the company and lead this funding round,” said Jeff Horing, Managing Director at Insight Venture Partners, in a statement.
To note, Access Industries is an interesting backer who might also potentially shape up to be strategic, given its ownership of Warner Music Group, Alibaba, Facebook, Square, Spotify, Deezer, Snap and Zalando.
“Given our investments in market leading companies across diverse industries, we realize the value in analytics and machine learning and we could not be more excited about Sisense’s trajectory and traction in the market,” added Claltech’s Daniel Shinar in a statement.
Last year Insight Partners invested $500 million in cloud data management company Veeam. It apparently liked the company so much that today it announced it has acquired the Swiss startup for $5 billion.
Veeam helps customers with cloud data backup and disaster recovery. The company, which has been based in Baar, Switzerland, says that it had $1 billion in revenue last year. It boasts 365,000 customers worldwide, including 81% of the Fortune 500.
Ray Wang, founder and principal analyst at Constellation Research says that data management is an increasingly important tool for companies working with data on prem and in the cloud. “This is a smart move as the data management space is rapidly consolidating. There’s a lot of investment in managing hybrid clouds and data management is key to enterprise adoption,” Wang told TechCrunch.
The deal is coming with some major changes. Veeam’s EVP of Operations, William H. Largent will be promoted to CEO. Danny Allan, who was VP of product strategy, will be promoted to CTO. In addition, the company will be moving its headquarters to the U.S. Veeam currently has around 1200 employees in the U.S., but expects to expand that in the coming year.
New CEO Allan says in spite of their apparent success in the market, and the high purchase price, he believes under Insight’s ownership, the company can go further than it could have on its own. “While Veeam’s preeminence in the data management space, currently supporting 81% of the Fortune 500, is undeniable, this commitment from Insight Partners and deeper access to its unmatched business strategy [from its scale-up] division, Insight Onsite, will bring Veeam’s solutions to more businesses across the globe.”
Insight Onsite is Insight Partners’ strategy arm that is designed to help its portfolio companies be more successful. It provides a range of services in key business areas like sales, marketing and product development.
Veeam has backup and recovery tools for both Amazon Web Services and Microsoft Azure along with partnerships with a variety of large enterprise vendors including Cisco, IBM, Dell EMC and HPE.
The company, which was founded in 2006, had a valuation of over $1 billion prior to today’s acquisition, according to Crunchbase data. The deal is expected to close in the first quarter this year.
