Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.
On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.
Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.
Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .
TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.
According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.
Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.
Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.
That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.
Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.
One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:
Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.
We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”
Looking at our own gaming levels in 2020 compared to 2019, that checks out.
This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .
Online shopping has become the norm for most people in 2020, even coaxing traditional retail brands to up their presence to stay competitive. However, now that shoppers can’t see and touch products like they used to, e-commerce discovery has become a crucial element for customer acquisition and retention.
Enter Syte, an Israel-based company that touts creating the world’s first product discovery platform that utilizes the senses, such as visual, text and voice, and then leverages visual artificial intelligence and next-generation personalization to create individualized and memorable customer experiences, Syte co-founder and CEO Ofer Fryman told Crunchbase News.
This brings the company’s total fundraising to $71 million since its inception in 2015. That includes a $21.5 million Series B, also led by Viola, in 2019, according to Crunchbase data.
Fryman intends for the new funding to be put to work on product enhancements and geographic expansion. Syte already has an established customer base in Europe, the Middle East and Africa, and will now focus expansion in the U.S. and Asia-Pacific.
Meanwhile, Syte has grown 22 percent quarter over quarter, as well as experienced a 38 percent expansion of its customer base since the beginning of 2020.
“Since we crossed $1 million annual recurring revenue, we have been tripling revenue while also becoming more efficient,” Fryman said. “We can accelerate growth as well as build an amazing technology and solution for a business that needs it right now. We plan to grow further, and even though our SaaS metrics are excellent right now, our goal is to improve them.”
Anshul Agarwal, managing director at LG Technology Ventures, said Syte was an attractive investment due in part to its unique technology.
“They have a deep-learning system and have created a new category, product discovery that will enable online shopping in a way we never had the ability to do before,” Agarwal said. “The product market fit was also unique. We believe in the strong execution by the team and the rapid growth in SaaS. We looked at many different companies, and the SaaS metrics that Syte showed are the strongest we’ve seen in a while.”
Intellimize automatically optimizes websites using artificial intelligence. Marketers are able to use the software to try different experiences in parallel and in real time.
“With A/B testing, all the work is on me,” said CEO Guy Yalif in an interview with Crunchbase News. “With intelligent website optimization, the work is on the machine.”
The company uses machine learning to adjust web pages to respond to a customer’s behavior over time. When a customer goes on a company’s website, Intellimize can give the customer’s location, time of day, previous website behavior summary, traffic source and other information so marketers can optimize the customer’s experience.
Intellimize says it delivers an average of 46 percent increase in online conversations. And more online conversations can lead to more sales and revenue.
Intellimize, which is based in San Mateo, competes with companies like Granify, accoridng to Owler.
In fact, Crunchbase conducted its own Diversity Spotlight Report in August, which looked at both Black- and Latinx-founded startups. As we reported, Black and Latinx founders raised just 2.6 percent of the total VC funding for U.S. startups, despite together accounting for 32 percent of the U.S. population.
Jackson Cummings, an investor with Salesforce Ventures, and Brian Hollins, a founding board member of BLCK VC, are among the group of the institute’s creators and spoke to Crunchbase News about the institute and its future.
What is the mission of the Black Venture Institute?
Cummings: The homogenous nature of venture capital is a real problem. It is excluding potential investors and ignoring a huge set of entrepreneurs. There are only 75 Black check-writers, and this new program will provide access and education to others.
Jackson, your Medium blog underscores the point that “Venture capital is an industry reliant upon access—access to the right network, access to the right knowledge, access to the right opportunity.” Traditionally, the access comes from a warm introduction between VCs or other relationships. Do you think it’s time for VCs to embrace cold outreach?
Cummings: The venture capital network is inherently a network-based business and has been for decades. In terms of cold outreach, BLCK VC is extending that network into this population and bridging the gaps where there wasn’t a strong tie.
Hollins: I don’t think VCs are afraid of cold intros. It is part of the introduction that investors, like Mark Cuban, among others, talk about. What we want to do is equip operators to make those cold outreaches: what to look for, how to spend time on more effective outreaches and the conversational communication points that are important in VC verbiage, to help our operators get comfortable.
Brian, aside from access, where else is there a disconnect?
Hollins: I started as a founding board member of BLCK VC in 2018. The DNA of BLCK VC is getting people into the venture capital ecosystem. Much had been done to fill the top of the funnel. However, over the past 12 months, we saw that Black operators wanted to be writing angel checks and venture capital checks, but didn’t want to join firms, be an associate or take on the role someone new might have to do within the VC ecosystem. The top-down version is to bring people in that have the relationships and the capital so that we can start seeing deal flow.
Where do you see the Black Venture Institute’s trajectory going?
Hollins: We want to give Black operators leverage and resources to help get decks in front of investors and get founders in front of Y Combinator or 500 Startups or colleagues in a way that they didn’t in the past. This is just the beginning of a long journey. Three hundred grads will be on a two- to three-year journey. I hope that each cohort becomes a champion and sounding board for the next 50 operators, that it gets stronger each year and more opportunities come out of it.
Cummings: Because venture capital is based on networks and an insular network of people you know, we can’t fall back into the same cycles that have delivered low representation of Black founders and operators. We need the culture shift, like we are seeing with organizations like Black Tech Women, to help bridge that gap. This year has shed a spotlight on how we felt as an industry and a nation, and is bringing these to light. We are hoping to create equity and representation in an industry that has traditionally lacked it. Now that the Institute is launched, we want to have it live on for years to come.