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Daily Crunch: In all-stock transaction, Zoom to purchase Five9 for $14.7 billion

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Hello and welcome to Daily Crunch for July 19, 2021. In the old days, venture capital had seasons. VCs didn’t work in December, and the July-August period could be a bit hazy. Such variations have declined. Deal-making, it turns out, is now pretty much the theme for all seasons. Evidence? Just read what’s below! — Alex

The TechCrunch Top 3

  • Rappi raises $500M: The on-demand economy is still hot around the world, something we can know for sure thanks to Rappi’s latest half-billion-dollar raise. The Colombian delivery company is now worth $5.25 billion. That’s a lot of money. Per Crunchbase data, the unicorn has now raised more than $2 billion since inception. Rappi operates in nine countries and 250 cities across Latin America.
  • Zoom buys Five9: Well, the deal got announced at least. It won’t close until next year. But the $14.7 billion transaction has folks talking. It’s a large amount of money, and it’s the combination of two public companies. Both companies, of course, are formerly venture-backed companies, and the deal could help set some pricing notes for other software M&A. TechCrunch has a look at the price of the deal here.
  • Robinhood and Duolingo set prices for their IPOs: If you are into watching the biggest tech companies go public, you are in luck. We got fresh infusions of data from both Robinhood, the U.S. consumer fintech giant, and Duolingo, the U.S. edtech giant. Enjoy!

Startups/VC

  • Sweetch raises $20M to help you get off your backside: If you wear a smartwatch, you’ve gotten notifications from it at the wrong time. A nudge to get up and move, say, when you are seated at a restaurant. Sweetch wants to provide smarter inducements for folks to take better care of themselves, framing it as a way to “outsmart chronic conditions.” Given how much we could all do better at health, I am curious about how this startup performs.
  • Dover raises $20M to make recruiting more organized: Recruiting is not a great process. Mostly it’s done by hand, and managed in spreadsheets, or perhaps a system like Lever. But startups think that there is more room for improvement. Dover is one such company, hoping that its software that helps recruiters “juggle and aggregate multiple candidate pools to source suitable job candidates automatically, and then manage the process of outreach” is just the ticket. And now it has raised from Tiger.
  • Breakr wants to connect musicians and influencers: The days when radio play was the way to break into the mainstream are firmly behind us. Startups like Breakr want to help musical artists navigate the new world by connecting them to folks with their own audiences. Along the way, Breakr will take a 10% cut of fees generated from linking the two parties.
  • Recapped raises $6.3M for better sales software: Akin to how Dover wants to help make recruiting a smoother process, Recapped wants to improve the sales process, namely by building software that provides greater visibility into sales pipelines and by providing buyers with a similar digital interface that it provides to sales folks. Anything to make buying stuff less awful, please!
  • Jones wants to make hiring commercial real estate vendors simpler: If you own a building, hiring folks to do work in or on said building is fraught with liability. Jones just raised $12.5 million to help CME folks “find and hire the people they need in a compliant way.”
  • TechCrunch broke the news that private equity group Carlyle is looking to spend more than $400 million on LiveU, a livestreaming service.

Founders: How well do you really understand seed-stage financing?

A famous poem advises us not to compare ourselves with others, “for always there will be greater and lesser persons than yourself.”

The same holds true for startup fundraising; the size of your seed round will be determined solely by your company’s immediate needs and the investors you’re working with.

“Remember that fundraising is not the goal,” says three-time YC alum Yin Wu. “Building a successful business is.”

If you are an early-stage founder who’s seeking clarity about apportioning equity — or if you’re biting your nails over how much to raise — read this primer. It’s also a useful overview for early employees and co-founders who may be new to startup financing.

  • How financing works: SAFEs versus equity rounds.
  • How much to raise.
  • How to arrive at your valuation.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

  • Chaos in lidar-world: The CEO is out at Velodyne, a lidar company that went public via a SPAC. The news follows much other post-SPAC drama, our own Kirsten Korosec reports. In short, going public does not ensure that a company’s ducks will remain in a row after its shares start to trade. Velodyne is now worth just $8.69 per share, down from a high of $32.50.
  • CNN is going +: Yep, another streaming service with a “+” in its name is coming out. This time from cable news pioneer and hoster-of-many-useless-panels CNN. The company is apparently hiring heavily for the effort. CNN, I hereby offer to host a regular TechCrunch show on CNN+. Call me.
  • Uber wants to deliver more carrots: That’s our takeaway from news that the ride-hailing giant is expanding its grocery-delivery service to some 400 new cities. Uber also has earnings coming up, so the timing of this news item isn’t an accident; the company will have something positive to chat about in case its earnings do not delight investors’ expectations regarding its trailing performance.
  • Today in cybersecurity, the United States is pointing a finger at China for “the mass-hacking of Microsoft Exchange servers earlier this year, which prompted the FBI to intervene as concerns rose that the hacks could lead to widespread destruction,” TechCrunch reports. The climate regarding cyber fuckery is changing, with nation-states increasingly content to point a finger at China and Russia for bad behavior.

TechCrunch Experts: Growth Marketing

Illustration montage based on education and knowledge in blue

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

Join us tomorrow, July 20, at 5 p.m. ET on Twitter Spaces to hear Danny Crichton and MKT1, who we’ve previously interviewed for TechCrunch Experts, talk about the trends they’re seeing in growth marketing.

Announcing the agenda for the Disrupt Stage in September

We’re excited to give you a closer look at the Disrupt Stage, where the biggest names in tech talk about their companies, their plans and what’s next for the greater tech ecosystem.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://techcrunch.com/2021/07/19/daily-crunch-in-all-stock-transaction-zoom-to-purchase-five9-for-14-7-billion/

Techcrunch

PandaDoc, the e-document startup, now valued at $1B as it closes a big Series C

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Business tools have gone completely virtual in the last 20 months due to the Covid-19 pandemic, and today a startup whose e-document platform has played a big role in supporting that shift is announcing a big round of funding on the heels of huge growth. PandaDoc, which lets users create, share and sign official documents online, has closed a Series C that the company confirms values it at $1 billion.

To be clear, PandaDoc is not making the full amount of funding in this round public. The company is based out of San Francisco, but it has extensive operations in Belarus, where it has been in hot political water — several employees were arrested by authorities over a year ago there after publicly protesting the current regime. The lack of disclosure on the size of this round is intentional and related to this. From what we understand, that situation is still ongoing.

OMERS Growth Equity and G Squared are co-leading this Series C, and Altos Ventures, Rembrandt Venture Partners, One Peak Partners, and Microsoft’s venture arm M12 are also participating.

Today PandaDoc — which competes with the likes of DocuSign, Eversign, DocSend, GetAccept and others — already provides a range of services to users across many different verticals. Content ranges from building and collecting e-signatures and payments around contracts, proposals and forms through to invoices; and PandaDoc’s users are also pretty varied, including construction, education, medical, and professional services businesses — some 30,000 customers in all. The plan will be to double down on growing more of that current business as well as bring more functionality and use cases into the fold.

“We plan on getting broader and deeper in the areas where we already play,” Mikita Mikado, PandaDoc’s CEO and co-founder, said in an interview with TechCrunch. Its contract management product is one of the most popular already in the market, and PandaDoc claims that its e-signature solution is one of the top three in terms of ubiquity. “We are going to continue competing in these areas, but at the same time we plan to go global this year and invest in localization and international growth.”

That comes on the heels of an already-strong business. PandaDoc’s customers are currently distributed across some 130 countries, and in the last year its user base has grown by 80%, with revenues jumping 63%. (The company’s business model is based around a freemium model, where basic e-signing is free — notably, a tweak it made at the start of the pandemic, and perhaps one reason it’s one of the top-three e-signing solutions today — and additional features and usage are priced in $19/month, $49/month, and enterprise-scale “let’s talk” tiers.)

The “let’s talk” tier is important in the context of this investment. Small and medium businesses are the company’s bread and butter but investors see an opportunity in selling up market, too, by way of vastly expanding the features that it provides to customers.

“As a leader in the SMB segment, we believe the company is uniquely positioned to challenge current incumbents with a dynamic full-stack product that goes far beyond e-signing,” said Larry Aschebrook, managing partner at G Squared, said in a statement. “The management team is one of the best we’ve seen, and we look forward to supporting their creative and efficient approach to this fast-growing space.”

Mikado puts it a different way: “The more workflows that we can automate and achieve and do over time, the better.”

PandaDoc’s widening window of opportunity is a sign of the times.

Covid-19 has precipitated a huge amount of so-called “digital transformation”: organizations that in the past used to carry out a lot more work in physical environments, were essentially, overnight, asked to shift all of that into digital, virtualized formats.

While that has definitely seen companies make bigger infrastructure and operational shifts, it’s also played out on a more immediate services level. Specifically, daily materials like documents that people have long relied on in physical formats still were getting created, shared and made official, but now all of that needed to be done in a digital format: that ushered in a big wave of business to companies like PandaDoc.

The company got its start, Mikado said, with B2B sales, “but we have started getting requests from organizations that have other use cases that aren’t in the same bucket, such as schools, government institutions and healthcare organizations trying to streamline their employee onboarding, for example.”

It’s partly because of this trend that investors have been swarming around enterprise tech. The other main reason in this case is that PandaDoc has proven to be one of the solutions that’s seen a lot of traction.

“We are proud to have led this new investment in PandaDoc – a highly-innovative company that is shaping the future of documents, through its robust, all-in-one document automation platform,” said Mark Shulgan, managing partner and head of OMERS Growth Equity. “PandaDoc is a leader in the document automation market, and its solutions allow businesses to increase efficiency, reduce costs, and accelerate their growth. We are thrilled to support Mikita Mikado’s ambitious vision, and look forward to supporting him and his team in this further evolution.”

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/09/22/pandadoc-the-e-document-startup-now-valued-at-1b-as-it-closes-a-big-series-c/

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Fintech

Insight Partners leads $34M round in Singapore-based fintech Spenmo

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Spenmo originated as an expense management platform before realizing that expenses “are just a tiny sliver” of a company’s payables, founder and CEO Mohandass Kalaichelvan told TechCrunch. Financial teams also need to manage vendor payments, supplier payments, payroll and reconcile bank accounts, often in different countries, resulting in an overwhelming amount of work. Spenmo was created to centralize SMBs’ accounts payable workflows. The Singapore-based company announced today it has raised a $34 million Series A led by Insight Partners, the New York-based investment firm known for its ScaleUp program.

Spenmo says this is one of the largest Series A rounds ever raised by a Singaporean startup. It included participation from Lee Fixel’s investment firm Addition, Salesforce Ventures, Alpha JWC, Global Founders’ Capital, Broadhaven, Operator Partners and Commerce Ventures, along with angels like Plaid co-founder William Hockey; Grab Financial Group senior managing director Reuben Lai; and head of Stripe Indonesia Ongki Kurniawan.

A Y Combinator alum, Spenmo was launched last year and has now raised a total of $36 million.

“We stopped branding ourselves as expense management and focused on building a payables experience because we want to be at the heart of everything a company pays out,” Mohandass Kalaichelvan told TechCrunch. “Right now companies don’t have that one source of truth. They use a tool for expense management, which is a silo, something else for vendor payments, something else for payroll and all these bank accounts they have to manage. We quickly realized that gave us an opportunity to bring all of these things into one place and reduce the silos that teams have to manage.”

Since one of Spenmo’s products is corporate cards, it is often compared to Brex or Aspire. But Mohandass Kalaichelvan said the company has no desire to build a neobank. Instead, its aim is to help businesses manage the bank accounts they already have. Spenmo also doesn’t want to replace accounting software and, in fact, it integrates with solutions like Xero and Quickbooks.

About 80% of Spenmo’s customers perform cross-border payments and have multiple bank accounts across Southeast Asia. If a company has 500 invoices and bank accounts in Singapore and Indonesia, Spenmo helps its finance team manage which ones to send payments from.

“One thing we found about Southeast Asia is that cross-border is super important. Your workforce is remote, so very early on you have to send salaries abroad,” said Mohandass Kalaichelvan. “Secondly, your supply chain is international as well, so there’s a lot of cross-border trades and services you want to account for.” Spenmo can integrate with FX wallets in addition to bank accounts, so its clients can find the best rates.

Along with Singapore, Spenmo is also currently focused on Vietnam and Indonesia because both of those countries have growing numbers of small- to medium-sized businesses, and a lot of payment gateways, making managing payables even more complicated.

Spenmo’s clients typically process about 500 to 9,000 payables a month. “That space is good for us because we don’t want to be anchored around things like the total dollar amount of payables,” Mohandass Kalaichelvan said. “If it’s just one invoice for a million dollars, someone can do that on their own. But if the million dollars is 1,000 different freelancer payments and they need to manually extract all that data to schedule payments, Spenmo will be immensely useful for them.”

Insight Partners principal Rebecca Liu-Doyle, who is joining Spenmo’s board, said in a statement that the firm is “thrilled to partner with Spenmo as the company builds its category-leading finance workflow software. Corporate spend management and payments remain ripe for disruption, especially in the Southeast Asian market.”

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/09/22/insight-partners-leads-34m-round-in-singapore-based-fintech-spenmo/

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Real Estate

SoftBank and Demi Lovato back June Homes, a proptech startup emerging from stealth with $50M in funding

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June Homes, a proptech startup that aims to make renting less painful and more flexible for both tenants and landlords, is emerging from stealth today with $50 million in total funding.

SoftBank Ventures Asia led the startup’s latest round — a $27 million Series B. Other backers in the company include FJ Labs, Kairos, TQ Ventures II LP (Scooter Braun, Schuster Tanger, Andrew Marks), Reshape, Quiet Capital and angel investors including musician Demi Lovato and Behance founder Scott Belsky. 

The New York-based company also previously raised (but did not announce) a $13 million Series A — also led by SoftBank Ventures Asia —  and $10 million in seed funding.

Founder and CEO Daniel Mishin first became interested in real estate with a missed train and an unplanned stay in a cheap youth hostel in Berlin when he was 11 years old. The experience inspired him to start his first business at an early age, turning his grandmother’s empty apartment into a short-term rental space for backpackers. After starting, and selling, a hospitality business, Mishin founded June Homes in 2017. He was motivated after his one struggle with apartment hunting in New York City.

“Prohibitive costs, predatory fees, complicated requirements, long-term lease commitments — it seemed impossibly difficult to secure housing under these terms,” Mishin said. “I started thinking that there was a real opportunity for innovation that could benefit tenants as well as mom and pop landlords, and that’s how June Homes was born.”

Mishin founded the company on the premise that the current rental system is “broken” for both tenants and small landlords. Even the fact that we use the word “landlord” in itself is very outdated, he said, since the word literally means “lord over land.”

“We’re still speaking like we’re in the 16th century,” he said.

So how does it work exactly? The company says it has built an algorithm that detects mispriced rental apartments that are often in need of repair. It also has developed a process that it says can inspect, upgrade, renovate and list units for rent in less than 72 hours. Then, according to Mishin, people can discover, apply for and move into a new apartment “in as little as three hours.”

“Our proprietary algorithm automatically performs best use analysis for every building and chooses which June Homes model to apply to it,” Mishin said.

The startup touts that its units are fully customizable. Tenants can rent furnished or unfurnished, with roommates or alone, and have the option to stay for anywhere from one to 18 months. The company says that unlike some short-term corporate housing companies that significantly upcharge tenants for flexibility, its rental rates are more in line with the price range you’d expect to pay on a traditional lease.

On the flip side, June Homes says it helps landlords by working to help them fill properties faster and managing things like tenant defaults, non payments and building performance. The startup also eliminates broker and management fees, and never charges upfront fees to owners, according to Mishin. Instead, June Homes processes all rental payments from tenants through its platform and pays owners either a smaller fixed payment every month, or a portion of revenue collected from tenants. 

Over the last six months, according to Mishin, June Homes has seen a 150% increase in tenant growth and a 137% increase in unit growth. Specifically, it has signed on thousands of tenants across New York City, Washington, D.C., San Francisco, Los Angeles, Philadelphia and Boston. In particular, millennials and Gen Zers seeking convenience and flexibility are some of the biggest users of the platform.

“The new generation deserves more when it comes to housing, and June Homes has created the easiest and fastest way for them to find their footing in a new city,” said singer Demi Lovato, who invested as part of the company’s Series A last year, in a written statement.

Because it offers more flexible lease terms, the company claims to have 25.5x less tenant defaults than the industry average. It also says that it can fill units 10x faster than traditional legacy systems. For example, Mishin said, in July 2021 the average June Homes apartment in New York was rented in 7.5 days while all other rental listings rented on average in 76 days. 

Looking ahead, June Homes plans to use the new capital primarily to expand to other markets in the U.S. in the short term, and then globally over the next 12 to 18 months. It also plans to do more hiring. Currently, the company has 144 employees, up 3x compared to this time last year.

Sherman Li, partner at SoftBank Ventures Asia and June Homes board member, believes that June Homes is providing today’s renters “with exactly what they want in the post-pandemic world — flexibility, access and convenience,” he wrote via email. 

He said SoftBank was also impressed with the company’s ability to build such a large housing company “without owning a single property.”

While SoftBank Ventures Korea initially focused on the South Korean market, it has since expanded its focus toward early-stage ventures all over the world. 

“We actively look for early- to growth-stage startups that have strong business potential regardless of geographical boundaries, and June Homes is definitely one such case,” Li said.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/09/22/softbank-and-demi-lovato-back-june-homes-a-proptech-startup-emerging-from-stealth-with-50m-in-funding/

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Real Estate

As inflation fears spike, 1build raises $14M to help construction firms optimize their cost estimates

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It’s an extraordinarily exhausting time to estimate costs in the construction industry. Lumber prices skyrocketed during the post-pandemic construction spree, only to come hurtling back down to Earth in recent weeks. Copper, concrete, and steel have also seen wild price swings as supply chain breakages, workers shortages, border restrictions and more plague price stability.

Construction is among the world’s largest industries, with firms planning and building projects valued at trillions of dollars at pretty much any time. Yet, it’s also one of the most archaic industries, with a heavy reliance on paper even as IT has increasingly filtered into more of the industry’s processes. Paper though can’t match the extreme volatility in materials and labor happening today, and that means construction firms need better and more real-time software tools to handle cost estimates.

1build has a bold vision to own not just cost estimating, but everything that it takes to get a building under construction. “We are going to occupy the whitespace niche of pre-construction — your planing, your estimating, up until you break ground on your building,” CEO and founder Dmitry Alexin said.

Alexin had been scouting around for startup ideas in the real estate sector in 2018 and 2019, having previously worked in finance. He worked briefly at a stealth startup in the space, where he “helped to select real estate with data science.” He discovered a problem when it came to modeling the development of a property though: it wasn’t easy to determine what could be built or how much it would cost. “I just assumed you can just use an API to figure out the cost to build,” he said.

That led him into the rabbit hole that is the math of the construction industry. He discovered “this analog industry … three times as large as ecommerce and still in this offline, non-digitized way to consume,” he said. He wanted to automate more of these processes, but even that ran into challenges. “When I was forming 1build, it was creating a data standard for the construction industry,” he explained. Eventually, he zeroed in on cost estimating.

Alexin is a solo founder, who has since built up a management team around him. He and a few early employees joined the YC Winter 2020 batch, where 1build was identified as one of TechCrunch’s 20 most exciting startups in the batch out of several hundred (the company was my selection).

The startup’s timing, though, was horrific. “COVID happened right as we were graduating,” Alexin said. The company suffered a “50% reduction in usage in the first 30 days.” The company was still small and it hunkered down, but then something surprising happened: the construction industry just zoomed forward as millions of people moved to new homes and offices with the rise of remote work.

The company raised a previously undisclosed $5.5 million seed round from Initialized Capital and kept building. It focused on building a single platform (that’s the “1build”) around all aspects of estimating costs and handling the planning phase of construction. It’s “almost an experience that feels like interacting a spreadsheet, but we pull in the latest materials rate, the latest labor rates,” Alexin said. From there, you can “develop your estimate yourself, line item by line item.” He says that integrating all construction planning in one location can massively save time and money, and is particularly valuable for smaller contractors and construction firms who don’t have the scaled-up planning teams of their larger brethren.

1build’s team, with CEO and founder Dmitry Alexin sitting in center of first row. Image Credits: 1build

Alexin said that subscription revenues have risen 7x in the past 10 months, and 10x since April when we talked a few weeks ago. That excitement led it to a quick, $14.5 million Series A led by Brent Baltimore at Greycroft. Alexin said that Baltimore has been engaged in construction tech for a long time, and said that “we felt that they were the one firm that understood what we are doing.”

The team, as is typical these days, is spread out, with the majority in the U.S. and others in Canada and Europe.

1build wants to be the one stop for the construction industry, and hopes that the industry standardizes on a universal set of data formats. “The more and more builders that adapt that, the more we can build into the product,” he said.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
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Source: https://techcrunch.com/2021/09/22/1build-series-a/

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