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VCs reload ahead of the election as unicorns power ahead

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This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

It was an active week in the technology world broadly, with big news from Facebook and Twitter and Apple. But past the headline-grabbing noise, there was a steady drumbeat of bullish news for unicorns, or private companies worth $1 billion or more.

A bullish week for unicorns

The Exchange spent a good chunk of the week looking into different stories from unicorns, or companies that will soon fit the bill, and it’s surprising to see how much positive financial news there was on tap even past what we got to write about.

Databricks, for example, disclosed a grip of financial data to TechCrunch ahead of regular publication, including the fact that it grew its annual run rate (not ARR) to $350 million by the end of Q3 2020, up from $200 million in Q2 2019. It’s essentially IPO ready, but is not hurrying to the public markets.

Sticking to our theme, Calm wants more money for a huge new valuation, perhaps as high as $2.2 billion which is not a surprise. That’s more good unicorn news. As was the report that “India’s Razorpay [became a] unicorn after its new $100 million funding round” that came out this week.

Razorpay is only one of a number of Indian startups that have become unicorns during COVID-19. (And here’s another digest out this week concerning a half-dozen startups that became unicorns “amidst the pandemic.”)

There was enough good unicorn news lately that we’ve lost track of it all. Things like Seismic raising $92 million, pushing its valuation up to $1.6 billion from a few weeks ago. How did that get lost in the mix?

All this matters because while the IPO market has captured much attention in the last quarter or so, the unicorn world has not sat still. Indeed, it feels that unicorn VC activity is the highest we’ve seen since 2019.

And, as we’ll see in just a moment, the grist for the unicorn mill is getting refilled as we speak. So, expect more of the same until something material breaks our current investing and exit pattern.

Market Notes

What do unicorns eat? Cash. And many, many VCs raised cash in the last seven days.

A partial list follows. It could be that investors are looking to lock in new funds before the election and whatever chaos may ensue. So, in no particular order, here’s who is newly flush:

All that capital needs to go to work, which means lots more rounds for many, many startups. The Exchange also caught up with a somewhat new firm this week: Race Capital. Helmed by Alfred Chuang, formerly or BEA who is an angel investor now in charge of his own fund, the firm has $50 million to invest.

Sticking to private investments into startups for the moment, quite a lot happened this week that we need to know more about. Like API-powered Argyle raising $20 million from Bain Capital Ventures for what FinLedger calls “unlocking and democratizing access to employment records.” TechCrunch is currently tracking the progress of API-led startups.

On the fintech side of things, M1 Finance raised $45 million for its consumer fintech platform in a Series C, while another roboadvisor, Wealthsimple, raised $87 million, becoming a unicorn at the same time. And while we’re in the fintech bucket, Stripe dropped $200 million this week for Nigerian startup Paystack. We need to pay more attention to the African startup scene. On the smaller end of fintech, Alpaca raised $10 million more to help other companies become Robinhood.

A few other notes before we change tack. Kahoot raised $215 million due to a boom in remote education, another trend that is inescapable in 2020 as part of the larger edtech boom (our own Natasha Mascarenhas has more).

Turning from the private market to the public, we have to touch on SPACs for just a moment. The Exchange got on the phone this week with Toby Russell from Shift, which is now a public company, trading after it merged with a SPAC, namely Insurance Acquisition Corp. Early trading is only going so well, but the CEO outlined for us precisely why he pursued a SPAC, which was actually interesting:

  • Shift could have gone public via an IPO, Russell said, but prioritized a SPAC-led debut because his firm wanted to optimize for a capital raise to keep the company growing.
  • How so? The private investment in public equity (PIPE) that the SPAC option came with ensured that Shift would have hundreds of millions in cash.
  • Shift also wanted to minimize what the CEO described as market risk. A SPAC deal could happen regardless of what the broader markets were up to. And as the company made the choice to debut via a SPAC in April, some caution, we reckon, may have made some sense.

So now Shift is public and newly capitalized. Let’s see what happens to its shares as it gets into the groove of reporting quarterly. (Obviously, if it flounders, it’s a bad mark for SPACs, but, conversely, successful trading could lead to a bit more momentum to SPAC-mageddon.)

A few more things and we’re done. Unicorn exits had a good week. First, Datto’s IPO continues to move forward. It set an initial price this week, which could value it above $4 billion. Also this week, Roblox announced that it has filed to go public, albeit privately. It’s worth billions as well. And finally, DoubleVerify is looking to go public for as much as $5 billion early next year.

Not all liquidity comes via the public markets, as we saw this week’s Twilio purchase of Segment, a deal that The Exchange dug into to find out if it was well-priced or not.

Various and Sundry

We’re running long naturally, so here are just a few quick things to add to your weekend mental tea-and-coffee reading!

Next week we are digging more deeply into Q3 venture capital data, a foretaste of which you can find here, regarding female founders, a topic that we returned to Friday in more depth.

Alex

Source: https://techcrunch.com/2020/10/17/vcs-reload-ahead-of-the-election-as-unicorns-power-ahead/

Startups

8 Common Payroll Mistakes Employers Make and How to Avoid Them

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Paying your employees on time and correctly is important to ensure they feel valued and respected, and that they continue to work hard for you. Payroll mistakes can cause problems in the long run, so it’s essential to be aware of common payroll errors and how to avoid them before it’s too late. The following eight common payroll mistakes that employers make and how to avoid them will help you find success with payroll as an employer or employer-to-be.

1) Overtime Wages

When an employee works over 40 hours in a week, employers are legally required to pay them time-and-half for every hour worked over 40. This is referred to as overtime wages. Oftentimes, however, employers will forget to track their employees’ hours or simply choose not to pay them for their overtime work. If you are missing time from one of your employees or are unsure if they are getting paid properly. Be sure to check this regularly for errors; it could end up saving you a lot of money in fines and legal fees down the road.

2) Income Tax

Failing to collect income tax is another common payroll mistake. The IRS penalizes employers for underreporting or non-reporting of income tax that’s due. Self-employed individuals are responsible for paying their own taxes, so it’s important for you to report your income on a regular basis. The easiest way to avoid these kinds of mistakes is by using payroll software that will do all of these calculations automatically.

3) Employee Reimbursements

Many employers provide reimbursements for certain expenses their employees incur while on business trips. The employee then pays for these items from his own pocket. It’s important that any reimbursements made be processed correctly, however, or your employees could get audited—and you could end up paying a hefty fine. To avoid making common payroll mistakes when it comes to employee reimbursements, keep a regular check on it.

4) Missing a deadline.

Missing a deadline is a classic mistake that many businesses make. Missing a deadline can cost your business money, but more importantly, it can hurt your company’s reputation. When you miss a deadline on a project or deliverable, you’re not just disappointing one client—you’re disappointing dozens of them! Don’t let deadlines slip through the cracks by setting reminders for yourself with online payroll software like UZIO.

5) Over-withholding Federal Taxes

Tax withholding is what your employer does when they match your paychecks against an estimate of how much tax you should be paying. If they withhold too much, you’ll end up owing money at tax time; if they withhold too little, you’ll be owed a tax refund. There are two kinds of federal taxes that employers can withhold: Federal income taxes (FIT) and Federal Insurance Contributions Act (FICA) taxes.

6)Failing to keep proper payroll records

If you’re responsible for paying your employees, you have a legal obligation to keep records of those payments. The IRS even offers employers free software that automatically keeps track of everything from payroll taxes to W-2 forms—meaning there’s no excuse for failing to report payroll on time or correctly. While mistakes are common, particularly when it comes to things like withholding rates, if your company isn’t making appropriate tax withholdings from its employees’ paychecks then you could end up owing a large amount of money come tax season—or worse yet, get audited by a government agency. If your business is new and has never handled payroll before, switch to payroll software and keep off this burden

7) Not using payroll software

Using software can help you run payroll faster, more efficiently, with less room for error, and it allows you to streamline other aspects of employee management, like tax filing. The software simplifies many accounting tasks so you can focus on growing your business. If you’re looking for a full-service payroll system, take advantage of software that helps you set up your employees correctly so they can begin saving money on taxes.

8) Forgetting about a holiday

If you run a company, it’s easy to get caught up in how many widgets your company produces or what color your new line of products will be. If you forget about holidays, though, you might find that employees are not as productive as they could be. No one wants to come into work on Martin Luther King Jr. Day or Memorial Day weekend because their time off has been spoiled. Before announcing new products or sales pitches, take some time to see if any important holidays are coming up—they can help boost morale! Sometimes workers feel they have more of a stake in their work when they have input on who gets recognized for certain days.

Source: Plato Data Intelligence

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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.
Click here to access.

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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Artificial Intelligence

Cabinet brings in $2.6M, designs software for executive assistants

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Executive assistants are the ultimate multitaskers and instead of relying on half a dozen apps to make their jobs easier, startup Cabinet is pulling all of that together into one software package designed for the 10 million-person administrative professional market.

The company, with bases in both Denver and New York, is developing software to aid with daily productivity; for example, a scheduling tool that sits on top of existing company calendars like Outlook and GCal and a peer-to-peer community for EAs to share knowledge.

Cabinet was founded by CEO Julia Leibowitz and CTO Evan Kesten in 2018. Leibowitz, herself, started her career as an executive assistant, which she told TechCrunch was “an incredible place to start” because she was able to gain an inside look at how her organization functioned, especially at the top.

However, as her job grew, so did her responsibilities. And it wasn’t just owning the calendar and making travel arrangements for executives, which Leibowitz says most people think of when they think of EAs. Instead, that is a small part of the job that also includes event coordination, office catering, human resources and even marketing.

“You wear a lot of hats, especially if you are capable,” she added.

While in graduate school, she discovered that many tools and software were created for nearly everyone else in the organization to drive productivity, from engineering, sales and marketing to human resources, but she felt EAs were an overlooked market.

In 2018, she met Kesten while attending Cornell Tech. He was in engineering, and Leibowitz was getting her MBA. She brought him to an administrative professional conference, and not only was Kesten one of only two men, there were no software vendors of any kind, Leibowitz recalled. It was that starting point that then became Cabinet.

The company’s software is not just one feature, but brings a lot of capabilities into one package to drive workflow. Some EAs may have to schedule for more than one executive, and could be doing that more than 50 times per day. While some scheduling software is more suitable for individual executives, Cabinet provides ease in offering the option to either send a booking link or handpick from a variety of times that are automatically aggregated based on the executive’s calendar. It can even generate an email that lists the times available in plain text.

The software also goes beyond scheduling to improve efficiencies in travel management, office management and inbox management. Cabinet is a subscription-based model that charges users a fee of $29 per month if paying annually, or $36 per month.

“It’s a charge that EAs can easily purchase on their company credit card,” Leibowitz said. “That’s one of the ways that differentiates them — EAs are powerful customers because they typically have access to cards and are used to spending money on behalf of their teams.”

To get the software in front of more executive assistants, Cabinet closed on $2.6 million in funding, led by Harlem Capital with participation from Good Friends Capital and existing investor Parade Ventures. The investment also includes money from a pre-seed round in July 2020 from Parade, Techstars, Heroic Ventures, The Fund and angel investors.

“One of our former interns and now senior associates, Nicole DeTommaso, sourced Cabinet at a late 2020 Techstars demo day,” Henri Pierre-Jacques, managing partner of Harlem Capital, said via email. “It was a little early for us, but we kept in touch with Julia even through her pregnancy earlier this year. Seeing the product development and customer growth over the past few months was very impressive, especially for a small team and new mother. Julia embodies the type of founder we look for and we are grateful that she and Evan chose to partner with us.”

In the last six months, Cabinet has grown 30% month over month. It has also amassed over 4,000 administration professionals in its community, where they can exchange insider knowledge on topics like the best non-glitchy conferencing software.

The company also plans to invest the new funding in technology development. Cabinet works closely with its customers who often give feedback on new features, and the investment will enable the company to quickly iterate to drive efficiency in new feature launches.

In addition, the company is looking to hire marketing and engineering positions in its Denver and New York offices. Cabinet has three employees currently, and Leibowitz expects to be at eight in the next six months.

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Source: https://techcrunch.com/2021/09/22/cabinet-brings-in-2-6m-designs-software-for-executive-assistants/

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