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Online catering marketplace ezCater gets another $150M at a $1.25B valuation

In 2007, Stefania Mallett and Briscoe Rodgers conceived of ezCater, an online marketplace for business catering, and began building the company in Mallet’s Boston home, mostly at her kitchen table.

Recently, sitting at that same table, Mallett negotiated with Brad Twohig of Lightspeed Venture Partners the final terms of a $150 million Series D-1 at a $1.25 billion valuation. Lightspeed, alongside GIC, co-led the round, with participation from Light Street Capital, Wellington Management, ICONIQ Capital and Quadrille Capital.

“Raising money or getting to unicorn status, it’s all nice validation but that’s not the purpose, the purpose of being in business is to grow a very successful company with happy customers and happy employees,” Mallett, ezCater’s chief executive officer, told TechCrunch. “We are going to have cupcakes with unicorns on them. That will take us about a half hour, then we will get back to work.”

EzCater co-founder and CEO Stefania Mallett

Mallett compares ezCater to Expedia . The travel company doesn’t own and operate hotels, nor do they create them. EzCater, similarly, works with 60,500 restaurants and caterers around the U.S. to fulfill orders, but at no point do they work directly with food nor make any deliveries themselves.

Since its inception, the ezCater marketplace has grown considerably, expanding 100 percent annually for the last eight years, Mallett tells us. Though, like most unicorns, ezCater isn’t profitable yet.

Both Mallett and Rodgers are software industry veterans, establishing engineering careers prior to tackling business catering. The pair bootstrapped the company until 2011, when they secured a small Series A investment of $2.7 million. That same year, U.S. foodtech startups raised $176 million, per PitchBook. EzCater would go on to raise more than $300 million in equity funding, including its latest round, and VC interest in foodtech would explode. Already this year, U.S. foodtech startups have brought in $626 million after pulling in a whopping $5 billion in 2018.

EzCater has benefited from this boom. The company raised a $100 million Series D just 10 months ago.

“We really didn’t need the money, we have quite a lot of money in the bank from the last round,” Mallett said. “There was so much talk of a funding winter and a recession coming so we said maybe we should try to raise money and then people jumped on it so we thought OK, why not? If there is a funding winter, we’re set; if not, well, we are still set.”

The investment comes hot off the heels of ezCater’s acquisition of Monkey Group, a cloud platform for take-out, delivery and catering. Mallett declined to disclose terms of the deal but said the partnership makes ezCater the indisputable market leader in catering management software. The company will use its recently expanded war chest to accelerate its international expansion and, potentially, continue its M&A streak. As for the future, an initial public offering is amongst the possibilities.

“We certainly are considering it,” Mallett said. “As we’ve grown, we’ve become more sophisticated and mature; that puts us in a good position to continue operating as a successful standalone company or be acquired by a public company or go public if we see an opportunity to do that. We are not wedded to any of these outcomes.”

VCs give us their predictions for startups and tech in Southeast Asia in 2019

The new year is well underway and, before January is out, we polled VCs in Southeast Asia to get their thoughts on what to expect in 2019.

The number of VCs in the region has increased massively in recent years, in no small part due to forecasts of growth in the tech space as internet access continues to shoot up among Southeast Asia’s cumulative population of more than 600 million consumers.

There are other factors, including economic growth and emerging middle classes, but with more than 3.8 million people becoming first-time internet users each month — thanks to smartphones — Southeast Asia’s ‘digital economy’ is tipped to more than triple to reach $240 billion by 2025. That leaves plenty of opportunity for tech and online businesses and, by extension, venture capitalists.

With a VC corpus that now numbers dozens of investment firms, TechCrunch asked the people who write the checks what is on the horizon for 2019.

The only rule was no more than three predictions — below, in no particular order, is what they told us.


Albert Shyy, Burda

Funds will continue to invest aggressively in Southeast Asia in the first half of this year but capital will tighten up by Q4 as funds and companies prepare for a possible recession. I think we will see a lot of companies opportunistically go out to fundraise in Q1/Q2 to take advantage of a bull market.

We will see two to three newly-minted unicorns from the region this year, after a relative lull last year.

This will (finally) be the year that we start to see some consolidation in the e-commerce scene


Dmitry Levit, Cento

A significant portion of capital returned by upcoming U.S. IPOs to institutional investors will be directed to growth markets outside of China, with India and Southeast Asia being the likeliest beneficiaries. Alternative assets such as venture and subsets of private equity in emerging markets will enter their golden age.

The withdrawal of Chinese strategic players held back by weakened domestic economy, prudent M&A by local strategics and ongoing caution among Japanese, Korean and global corporates, combined with ongoing valuations exuberance by late-stage investors allocating funds to Southeast Asia, will continue holding back large liquidity events. Save perhaps for a roll-up of a local champion or two into a global IPO. Fundraising will get more troublesome for some of Southeast Asia’s larger unprofitable market leaders. Lack of marquee liquidity events and curtailed access to late-stage capital for some will lead to a few visible failures (our money is on the subsidy-heavy wallets!) and a temporary burst of short-term skepticism around Southeast Asia as an investment destination towards the end of 2019.

The trend towards the emergence of value-chain specific funds and fund managers will continue, as digitalization is reaching ever further into numerous industry sectors and as Southeast Asia hosts an increasing portion of global supply chains. We foresee at least dozen new venture firms and vehicles emerging in 2019 with clear sector-led investment thesis around the place of Southeast Asian economies in the global value chains of fashion industry, agriculture and food; labour, healthcare services; manufacturing, construction tech and so on, with investment teams that have the necessary expertise to unravel this increasing complexity.


Willson Cuaca, East Ventures

Jakarta becomes Southeast Asia’s startup capital surpassing Singapore in terms of the number of deals and investment amount.

As Indonesia’s startup scene heats up, regional seed and series A funds move away from Indonesia and target Vietnam, Malaysia, Thailand and the Philippines (in market priority order).

Southeast gets two new unicorns.


Rachel Lau, RHL Ventures

North Asian companies will provide well-needed liquidity as they withdraw capital from developed American and European markets due to the Federal Reserve’s actions. The FED raised interest rates and reduced the size of its balance sheet (by not replacing the bonds that were maturing at a rate of $50 billion a month). This has been seen in the recent fundraising exercise by Southeast Asian unicorns. Grab has recently seen an impressive list of North Asian investors such as Mirae, Toyota and Yamaha . A recent stat stated that 85 percent of the funding of Southeast Asia startups have gone to billion dollar unicorn such as Grab and Gojek, bypassing the early stage startups that are more in need for funding, this trend is expected to continue. Therefore, we will see early-stage companies and venture capitalists becoming more focused on generating cash flow from operating operations instead as fundraising activities become more difficult.

A growth in urbanization in Southeast will create new job opportunities in small/medium businesses, as evident in China. Currently, only 12 percent of Asia’s urban population live in megacities, while four percent live in towns of fewer than 300,000 inhabitants. New companies will see the blurred lines between brick and mortar businesses vs pure online businesses. In the past year or so, we have seen more and more offline businesses going online and more online businesses going offline.

Fertility rates in the Philippines, Laos, Cambodia, Indonesia and Vietnam exceed 2.1 births per woman — the level that sustains a population — but rates below 1.5 in Singapore and Thailand mean their populations will decline without immigration. As we see more startup activities coming to Southeast Asian countries, we expect to see more qualified foreign talent moving to the region vs staying in low growth American and European countries.


Kay-Mok Ku, Gobi Ventures

First Chinese “Seaward” Unicorn in Southeast Asia. In recent years, a growing number of Chinese startups are targeting overseas markets from the get go (known as Chuhai 出海 or “Seaward”). These Chinese entrepreneurs typically bring with them best practices in consumer marketing and product development honed by a hyper-competitive home market, supported by strong, dedicated technical team based out of China and increasingly capitalized by Chinese VCs which have raised billion-dollar funds.

Consolidation among ASEAN Unicorns. While ASEAN now boasts 10 unicorns, they are duplicative in the sense that more than one exists in a particular category, which is unsustainable for winner-takes-all markets. For example, in the ASEAN ride-hailing space, while one unicorn is busy with regional geographic expansion, the other simply co-exists by staying focused on scope expansion within its home market. This will never happen in a single country market like China but now that the ASEAN ride hailing unicorns are finally locking horns, the stage may be set for a Didi-Kuadi like scenario to unfold.

ASEAN jumps on Chinese 5G bandwagon. The tech world in the future will likely bifurcate into American and Chinese-led platforms. As it is, emerging markets are adopting Chinese business models based on bite-sized payment and have embraced Chinese mobile apps often bundled with cheap Chinese smartphones. Looking ahead, 5G will be a game changer as its impact goes beyond smartphones to generic IoT devices, having strategic implications for industries such as autonomous driving. As a result, the US-China Trade War will likely evolve into a Tech War and ASEAN will be forced to choose side.


Daren Tan, Golden Equator Capital

We are excited by growth in the AI and deep tech sectors. The focus has generally been on consumer-focused tech in Southeast Asia as an emerging market, but we are starting to see proprietary solutions emerge for industries such as medtech and fintech. AI also has great applicability across a wide range of consumer sectors in reducing reliance on manpower and creating cost savings.

Data analytics to uncover organizational efficiencies and customer trends will continue to be even more widely used, but there will also be greater emphasis on securing such data especially confidential information in light of multiple high-profile data breaches in 2018. Tools enabling the collection, storage, safe-keeping and analysis of data will be essential.

We are seeing the emergence of more institutional funds from North Asia. So far it has predominantly been Chinese tech giants like Tencent and Alibaba, now we are starting to see Korean and Japanese institutions placing greater emphasis on investment in the Southeast Asian region.


Vinnie Lauria, Golden Gate Ventures

Even more capital flowing from U.S. and China into Southeast Asia, with VCs from both locations soon to open offices in the region

A fresh wave of Series A investments into Vietnam.

Ten exits over $100 million.

 


Amit Anand, Jungle Ventures

The emergence of a financial services super app, think the Meituan or WeChat but only for financial services: The Southeast Asian millennial is one of the most underserved customer from a financial services perspective whether it is payments, consumer goods loans, personal loans, personal finance management, investments or other financial services. We will see the emergence of digital platforms that will aggregate all these related services and provide a one stop financial services shop for this digitally native consumer.

Digitisation of SMEs will be new fintech: Southeast Asia is home to over 100 million SMEs that are at the cusp of digital transformation. Generational change in ownership, local governments push for digitization and increased globalization have created a perfect storm for these SMEs to adopt cloud and other digital technologies at neck-breaking pace. Startups focussing on this segment will get mainstream attention from the venture community over the next few years as they look for new industries that are getting enabled or disrupted by technology.


Kuo-Yi Lim and Peng Ong, Monk’s Hill Ventures

Lyft and Uber go public and show the path to profitability for other rideshare businesses. This has positive effect for the regional rideshare players but also puts pressure on them to demonstrate the same economics in ridesharing. Regional rideshare players double down on super-app positioning instead, to demonstrate value in other ways as rideshare business alone may not reach profitability — ever.

The trade war between China and the US reaches a truce, but a general sense of uncertainty lingers. This is now the new norm — things are less certain and companies have to plan for more adverse scenarios. In the short term, Southeast Asia benefits. Companies — Chinese, American etc — see Southeast Asia as the neutral ground. Investment pours in, creating jobs across industries. Acquisition of local champions intensifies as foreign players jostle for the lead positions.

“Solve the problem” – tech companies will become more prominent… tech companies that are real-estate brokers, recruiters, healthcare providers, food suppliers, logistics… why: many industries are very inefficient.


Hian Goh, Openspace Ventures

Fight to quality will happen. Fundraising across all stages from seed to Series C and beyond will be challenging if you don’t have the metrics. Investors will want to see a path to profitability, or an ability to turn profitable if the environment becomes worse. This will mean Saas companies with stable cash flows, vertical e-commerce with strong metrics will be attractive investment opportunities.

Investor selection will become critical, as investors take a wait and see approach. Existing or new investors into companies will be judged upon their dry powder in their funds and their ability to fund further rounds

The regulatory risk for fintech lenders will be higher this year, rising compliance cost and uncertainty on licensing, which would lead to consolidation in the market.


Heang Chhor, Qualgro

Southeast Asia: an intensifying battlefield for tech investments

There has never been so much VC money in Southeast Asia chasing interesting startups, at all life cycle stages. The 10 most active local and regional VCs have raised their second or third funds recently, amassing at least two times more money than a few years ago, probably reaching a total amount close to $1 billion. In addition, international VCs have also doubled down on their allocation into the region, while top Chinese VCs have visibly stated their intent not to miss the dynamic momentum. Several growth funds have recently built a local presence in order to target Southeast Asia tech companies at Series C and beyond. Not counting the amount going to the unicorns, there might be now more than $3-4 billion available for seed to growth stages, which may be 3-4 times the amount of three years ago. There are, of course, many more good startups coming up to invest into. But the most promising startups will be in a very favorable position to negotiate higher valuation and better terms. However, they should not forget that, eventually, what creates value is how they make a difference with their tech capabilities or their business model, how they acquire and retain the best talent, with the funds raised, not only how much money they will be able to raise. Most local and regional corporate VCs are likely to lose in this more intense investment game.

Significant VC money investing into so-called ‘AI-based startups’, but are there really much (deep) Artificial Intelligence capabilities around?

A good portion of the SEA startups claim they have ‘something-AI’. Investors are overwhelmed, if not confused, by the ‘AI claim’ that they find in most startup pitches. While there is no doubt that Southeast Asia will grow its own strong AI-competence pool in the future, unfortunately today most ‘AI-based’ business models from the region would still be just ‘good algorithms or machine learning’ that can process some amount of data to come up with good-enough outcomes, that do not always generate substantial business value to users/customers. The significant budget that some of the very-well-funded Southeast Asia unicorns are putting into their ‘AI-based apps’ or ‘AI platform’ is unlikely to make a real difference for the consumers, for lack of deep AI competences in the region. 2019 may be another year of AI-promise, not realized. Hopefully, public and private research labs, universities and startups will continue to be (much more) strongly supported (especially by governments) to significantly build bigger AI talent pool, which means growing and attracting AI talent into the region.

Bigger Series A and Series B rounds to fuel more convincing growth trajectory, towards growth-stage fundraising.

Although situations vary a lot: typical Series A in Southeast Asia used to be around $5 million, and Series B around $10-15 million. Investors tended to accept that normally companies would raise money after 18 months or so, between A and B, and between B and C. There has been an increasing number of larger raises at A and B recently, and very likely this trend will accelerate. The fact that VCs now have much more money to deploy into each investment will contribute to this trend. However, the required milestones for raising Series C have become much more around: minimum scale and very solid growth (and profit) drivers. Therefore, entrepreneurs will have to look for getting as much funding reserve as possible, irrespective of time between raises, to build growth engines that take their companies past the milestones of the next Series, be it B or C. In the future, we will see more Series A of $10 million and more Series B of well-above $20 million. Compelling businesses will not have too much difficulties for doing so, but most Southeast Asia entrepreneurs would be wise to learn to more effectively master fundraising skills for capturing much bigger amounts than in the past. Of course, this assumes that their businesses are compelling enough in the eyes of investors.


Vicknesh R Pillay, TNB Aura

Out-sized valuations will be less commonplace in 2019 as Southeast Asian investors learn from experience and become more sophisticated. Therefore, we do see opportunities at Series A/B for undervalued deals due to lack of early-stage funding while we expect to continue to see the trend of the majority of venture capital investments going into later stage companies (Series C and beyond) due to lower risk appetite and ‘herd’ mentality.

2018 has also seen the rapid emergence of many corporate venture capital funds and innovation programs. But, 2019 will see large corporations cutting back on their allocation towards startup investing which would be the easiest option for them in case of adverse news to the jittery public markets in 2019.

With the growth of AI, the need for API connections and increased thought leadership to embrace tech, Southeast Asia is going to see an upsurge in SaaS startups and existing startups moving to a Saas business model. Hence, we expect increased investments into Saas companies focused on IoT and cybersecurity as hardware data and software are moved onto the cloud.


Chua Kee Lock, Vertex Ventures

Southeast Asia VC investment pace has grown steadily and significantly since 2010 where it started from less than $100 million in VC investment in the region. For the first eight months of 2018, the region’s VC investment was over $5.4 billion. For the whole of 2018, it will likely end around $8 billion. For 2019, we expect the VC investment pace to surpass 2018 level and record between $9-10 billion. Southeast Asia will continue to attract more VC investments because:

(1) Governments in Southeast Asia, especially ASEAN, continue their support policy to encourage startups.

(2) young demographics and the fast technology adoption in Southeast Asia give rise to more innovative and disruptive ideas.

(3) global investors looking for a better return and will naturally focus on growing emerging market like Southeast Asia.

The trend towards gig economy will begin to have an impact in the region. In developed economies like the U.S, gig economy is expected to reach over 40 percent by 2020. The young population will look for more freelance opportunities as a way to increase income levels while still maintaining flexibility. This will include white-collar work like computer programming, accounting, customer service, etc. and also blue-collar work like delivery services, ride-sharing, home services, etc. We believe that the gig economy will grow to over 15 percent in Southeast Asia by 2019.

AI-heavy or -driven startups will begin to make inroads into Southeast Asia.


Victor Chua, Vynn Capital

The BIG convergence — there will more integration between industries and sectors. Traveloka went into car rental, Blibli went into travel business and these are only some examples. There is a lot of synergistic value between travel startups and food startups or between property startups and automotive startups. Imagine a future where you travel to a city where you stay in an apartment you rented through a marketplace (like Travelio, my portfolio company), and when you need to book a restaurant you can make the reservation through a platform that is integrated with the property manager, and when you need to move around you go down to the car park to drive a car you rent from an automotive marketplace. There is clear synergy between selective industries and this leads to an overall convergence between companies, between industries.

More channels to raise Series B/C, early-stage companies find fundraising more challenging — We have seen a number of VC funds raising or already raised growth funds, this means that there are now more channels for Series A or B companies to raise growth rounds. As the market matures, there will be more competition for investments amongst growth funds as there is considerably more growth in the number of growth funds than companies that are raising at growth-stage. On the flip side, the feel is that there is a consistent growth in the number of early-stage companies, yet the amount of capital in early-stage funds is not growing as much as more VCs prefer bigger and later stages, due to the maturity of their existing portfolio companies.

Newcomers gaining weight — there will be at least 10 companies that will hit a valuation of at least $100 million. These valuations will not be based on a single market exposure. Companies that raise larger rounds will need to show that they are regional.


Thanks to all the VCs who took part, I certainly felt like the class teacher collecting assignments.

Cities that didn’t win HQ2 shouldn’t be counted out

Scott Andes
Contributor

Scott Andes is the program director for the National League of Cities City Innovation Ecosystem program.

The more than year-long dance between cities and Amazon for its second headquarters is finally over, with New York City and Washington, DC, capturing the big prize. With one of the largest economic development windfalls in a generation on the line, 238 cities used every tactic in the book to court the company – including offering to rename a city “Amazon” and appointing Jeff Bezos “mayor for life.”

Now that the process, and hysteria, are over, and cities have stopped asking “how can we get Amazon,” we’d like to ask a different question: How can cities build stronger start-up ecosystems for the Amazon yet to be built?

In September 2017, Amazon announced that it would seek a second headquarters. But rather than being the typical site selection process, this would become a highly publicized Hunger Games-esque scenario.

An RFP was proffered on what the company sought, and it included everything any good urbanist would want, with walkability, transportation and cultural characteristics on the docket. But of course, incentives were also high on the list.

Amazon could have been a transformational catalyst for a plethora of cities throughout the US, but instead, it chose two superstar cities: the number one and five metro areas by GDP which, combined, amounts to a nearly $2 trillion GDP. These two metro areas also have some of the highest real estate prices in the country, a swath of high paying jobs and of course power — financial and political — close at hand.

Perhaps the take-away for cities isn’t that we should all be so focused on hooking that big fish from afar, but instead that we should be growing it in our own waters. Amazon itself is a great example of this. It’s worth remembering that over the course of a quarter century, Amazon went from a garage in Seattle’s suburbs to consuming 16 percent — or 81 million square feet — of the city’s downtown. On the other end of the spectrum, the largest global technology company in 1994 (the year of Amazon’s birth) was Netscape, which no longer exists.

The upshot is that cities that rely only on attracting massive technology companies are usually too late.

At the National League of Cities, we think there are ways to expand the pie that don’t reinforce existing spatial inequalities. This is exactly the idea behind the launch of our city innovation ecosystems commitments process. With support from the Schmidt Futures Foundation, fifty cities, ranging from rural townships, college towns, and major metros, have joined with over 200 local partners and leveraged over $100 million in regional and national resources to support young businesses, leverage technology and expand STEM education and workforce training for all.

The investments these cities are making today may in fact be the precursor to some of the largest tech companies of the future.

With that idea in mind, here are eight cities that didn’t win HQ2 bids but are ensuring their cities will be prepared to create the next tranche of high-growth startups. 

Austin

Austin just built a medical school adjacent to a tier one research university, the University of Texas. It’s the first such project to be completed in America in over fifty years. To ensure the addition translates into economic opportunity for the city, Austin’s public, private and civic leaders have come together to create Capital City Innovation to launch the city’s first Innovation District at the new medical school. This will help expand the city’s already world class startup ecosystem into the health and wellness markets.

Baltimore

Baltimore is home to over $2 billion in academic research, ranking it third in the nation behind Boston and Philadelphia. In order to ensure everyone participates in the expanding research-based startup ecosystem, the city is transforming community recreation centers into maker and technology training centers to connect disadvantaged youth and families to new skills and careers in technology. The Rec-to-Tech Initiative will begin with community design sessions at four recreation centers, in partnership with the Digital Harbor Foundation, to create a feasibility study and implementation plan to review for further expansion.

Buffalo

The 120-acre Buffalo Niagara Medical Center (BNMC) is home to eight academic institutions and hospitals and over 150 private technology and health companies. To ensure Buffalo’s startups reflect the diversity of its population, the Innovation Center at BNMC has just announced a new program to provide free space and mentorship to 10 high potential minority- and/or women-owned start-ups.

Denver

Like Seattle, real estate development in Denver is growing at a feverish rate. And while the growth is bringing new opportunity, the city is expanding faster than the workforce can keep pace. To ensure a sustainable growth trajectory, Denver has recruited the Next Generation City Builders to train students and retrain existing workers to fill high-demand jobs in architecture, design, construction and transportation. 

Providence

With a population of 180,000, Providence is home to eight higher education institutions – including Brown University and the Rhode Island School of Design – making it a hub for both technical and creative talent. The city of Providence, in collaboration with its higher education institutions and two hospital systems, has created a new public-private-university partnership, the Urban Innovation Partnership, to collectively contribute and support the city’s growing innovation economy. 

Pittsburgh

Pittsburgh may have once been known as a steel town, but today it is a global mecca for robotics research, with over 4.5 times the national average robotics R&D within its borders. Like Baltimore, Pittsburgh is creating a more inclusive innovation economy through a Rec-to-Tech program that will re-invest in the city’s 10 recreational centers, connecting students and parents to the skills needed to participate in the economy of the future. 

Tampa

Tampa is already home to 30,000 technical and scientific consultant and computer design jobs — and that number is growing. To meet future demand and ensure the region has an inclusive growth strategy, the city of Tampa, with 13 university, civic and private sector partners, has announced “Future Innovators of Tampa Bay.” The new six-year initiative seeks to provide the opportunity for every one of the Tampa Bay Region’s 600,000 K-12 students to be trained in digital creativity, invention and entrepreneurship.

These eight cities help demonstrate the innovation we are seeing on the ground now, all throughout the country. The seeds of success have been planted with people, partnerships and public leadership at the fore. Perhaps they didn’t land HQ2 this time, but when we fast forward to 2038 — and the search for Argo AISparkCognition or Welltok’s new headquarters is well underway — the groundwork will have been laid for cities with strong ecosystems already in place to compete on an even playing field.

Chipmaker Renesas goes deeper into autonomous vehicles with $6.7B acquisition

Japan-based semiconductor firm Renesas — one of the world’s largest supplier of chips for the automotive industry — is scooping up U.S. chip company IDT in a $6.7 billion deal that increases its focus on self-driving technology.

Renesas produces microprocessor and circuits that power devices, and automotive is its core focus. It is second only to NXP on supply, and more than half of its revenue comes from automotive. IDT, meanwhile, includes power management and memory among its products, which focus on wireless networks and the converting and storing of data. Those are two areas that are increasingly important with the growth of connected devices and particularly vehicles which demand high levels of data streaming and interaction.

The acquisition of IDT — which is being made a 29.5 percent on its share price — is set to expand Renesas’ expertise on autonomous vehicles. The firm said it would also broaden its business into the “data economy” space, such as robotics, data centers and other types of connected devices.

Renesas has already demoed self-driving car tech, which puts it into direct competition with the likes of Intel . Last year, the firm paid $3.2 billion to buy up Intersil, which develops technology for controlling battery voltage in hybrid and electric vehicles, and IDT deal pushes it further in that direction.

“There’s little overlap between their product portfolios, so it’s a strategically sound move for Renesas. But it does seem like the price is a little high,” said Bloomberg analyst Masahiro Wakasugi.

The IDT deal has been on the table for a couple of weeks after Renesas first revealed its interest in an acquisition last month. It is expected to close in the first half of 2019 following relevant approvals.

Shared housing startups are taking off

When young adults leave the parental nest, they often follow a predictable pattern. First, move in with roommates. Then graduate to a single or couple’s pad. After that comes the big purchase of a single-family home. A lawnmower might be next.

Looking at the new home construction industry, one would have good reason to presume those norms were holding steady. About two-thirds of new homes being built in the U.S. this year are single-family dwellings, complete with tidy yards and plentiful parking.

In startup-land, however, the presumptions about where housing demand is going looks a bit different. Home sharing is on the rise, along with more temporary lease options, high-touch service and smaller spaces in sought-after urban locations.

Seeking roommates and venture capital

Crunchbase News analysis of residential-focused real estate startups uncovered a raft of companies with a shared and temporary housing focus that have raised funding in the past year or so.

This isn’t a U.S.-specific phenomenon. Funded shared and short-term housing startups are cropping up across the globe, from China to Europe to Southeast Asia. For this article, however, we’ll focus on U.S. startups. In the chart below, we feature several that have raised recent rounds.

Notice any commonalities? Yes, the startups listed are all based in either New York or the San Francisco Bay Area, two metropolises associated with scarce, pricey housing. But while these two metro areas offer the bulk of startups’ living spaces, they’re also operating in other cities, including Los Angeles, Seattle and Pittsburgh.

From white picket fences to high-rise partitions

The early developers of the U.S. suburban planned communities of the 1950s and 60s weren’t just selling houses. They were selling a vision of the American Dream, complete with quarter-acre lawns, dishwashers and spacious garages.

By the same token, today’s shared housing startups are selling another vision. It’s not just about renting a room; it’s also about being part of a community, making friends and exploring a new city.

One of the slogans for HubHaus is “rent one of our rooms and find your tribe.” Founded less than three years ago, the company now manages about 80 houses in Los Angeles and the San Francisco Bay Area, matching up roommates and planning group events.

Starcity pitches itself as an antidote to loneliness. “Social isolation is a growing epidemic—we solve this problem by bringing people together to create meaningful connections,” the company homepage states.

The San Francisco company also positions its model as a partial solution to housing shortages as it promotes high-density living. It claims to increase living capacity by three times the normal apartment building.

Costs and benefits

Shared housing startups are generally operating in the most expensive U.S. housing markets, so it’s difficult to categorize their offerings as cheap. That said, the cost is typically lower than a private apartment.

Mostly, the aim seems to be providing something affordable for working professionals willing to accept a smaller private living space in exchange for a choice location, easy move-in and a ready-made social network.

At Starcity, residents pay $2,000 to $2,300 a month, all expenses included, depending on length of stay. At HomeShare, which converts two-bedroom luxury flats to three-bedrooms with partitions, monthly rents start at about $1,000 and go up for larger spaces.

Shared and temporary housing startups also purport to offer some savings through flexible-term leases, typically with minimum stays of one to three months. Plus, they’re typically furnished, with no need to set up Wi-Fi or pay power bills.

Looking ahead

While it’s too soon to pick winners in the latest crop of shared and temporary housing startups, it’s not far-fetched to envision the broad market as one that could eventually attract much larger investment and valuations. After all, Airbnb has ascended to a $30 billion private market value for its marketplace of vacation and short-term rentals. And housing shortages in major cities indicate there’s plenty of demand for non-Airbnb options.

While we’re focusing here on residential-focused startups, it’s also worth noting that the trend toward temporary, flexible, high-service models has already gained a lot of traction for commercial spaces. Highly funded startups in this niche include Industrious, a provider of flexible-term, high-end office spaces, Knotel, a provider of customized workplaces, and Breather, which provides meeting and work rooms on demand. Collectively, those three companies have raised about $300 million to date.

At first glance, it may seem shared housing startups are scaling up at an off time. The millennial generation (born roughly 1980 to 1994) can no longer be stereotyped as a massive band of young folks new to “adulting.” The average member of the generation is 28, and older millennials are mid-to-late thirties. Many even own lawnmowers.

No worries. Gen Z, the group born after 1995, is another huge generation. So even if millennials age out of shared housing, demographic forecasts indicate there will plenty of twenty-somethings to rent those partitioned-off rooms.

Southern California needs to find its hub for it to develop its own tech ecosystem

Recognizing the tens of billions of dollars that the Southern Californian region leaves on the table, because it hasn’t taken its rightful place in the American technology industry, a new group called  the Alliance for Southern California Innovation has just released a report to analyze how SoCal can work to assume its pole position.

Through interviews with 100 leaders of the technology ecosystem and an analysis of venture capital funding for the region, the organization has concluded (with the help of the Boston Consulting Group) that the promise of a regional rival to Northern California’s silicon valley won’t be fulfilled without the establishment of a geographic hub and a willingness to overcome regional differences.

Founded by Steve Poizner last year to accelerate the growth of a startup entrepreneurial ecosystem in Southern California, The Alliance is building a network of investors, entrepreneurs and universities to provide ballast in the south to the dominance of the Northern California tech industry.

The Alliance estimates that Southern California’s tech community could be one-third the size of Silicon Valley’s by supporting or further developing the six pillars it already has for innovation to occur.

The potential impact making these changes could have is an added 200,000 new jobs and growth of $100 billion for the whole economic region.

“Over the past several years we have observed a significant decrease in startups leaving SoCal,” said Greg Becker, CEO of Silicon Valley Bank . “We’ve also seen a substantial inflow of venture capital from all over the world.”

In fact, as is well-reported, the luster of Silicon Valley is fading. As BCG writes in its report:

The good news for SoCal and any region with tech ambitions is that the Bay Area has in some ways been too successful. Our research revealed a saturation level causing unprecedented challenges, starting with exorbitant housing prices and runaway operating costs that accelerate a startup’s “burn rate”—its monthly spending.

Los Angeles investor Mark Suster, a general partner with Upfront Ventures, has been beating the drum for Los Angeles as a new tech hub for a while — and billion dollar exits for Ring and Dollar Shave Club, in addition to the public offering for Snap, lend credence to his position.

Suster has also noted for years that the region produces more technology doctorates than any other geography in the United States. Caltech generates more patents than any other university while UCLA boasts more startups founded by its graduate than any other school in the nation. Meanwhile, UCSD in San Diego has a deep bench of biotechnology expertise stemming from its proximity to the Sanford Consortium for Regenerative Medicine, the Salk Institute, and the Scripps Research Institute.

However, to thrive, BCG recommends taking six steps to bolster the the ecosystem and its chances to begin to catch up to Silicon Valley.

The consulting firm says that Southern California needs more local venture capital; the individual geographies need to work to promote their regional strengths; regions need to collaborate more closely with each other; founders need to start gunning for that IPO slot instead of taking acquisition offers; the region’s commitment to diversity needs to be emphasized; and finally the embarrassment of entrepreneurial riches needs to be promoted abroad.

“Southern California is a region of extreme innovation; however, it is so spread-out, making it hard to navigate,” said Steve Poizner founder and board chair of the Alliance, in a statement. “We believe by finding, filtering and aggregating exciting startups from top universities, research institutes, and incubators/accelerators, we can demonstrate the combined strength of SoCal in a compelling way to top investors and thought leaders.”

Do VC woes extend to portfolio companies? For Rothenberg, probably not

 As VC brands go, Rothenberg Ventures has seen better days. The firm built up a reputation as an up-and-coming early-stage investor. But Silicon Valley soured on Rothenberg Ventures last year; lawsuits ensued. So it hasn’t been a good year for Mike Rothenberg. But what about the Rothenberg Ventures portfolio? Read More

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DeepGraph feeds enterprise sales teams with hyper-targeted warm leads

 The best way to grow sales is to better understand sales, but unfortunately that’s often easier said than done. Kemvi, a seed-stage startup, is launching out of stealth today to announce DeepGraph, which helps sales teams reach the right potential customers at the right time. The company has closed north of $1 million in seed financing from Seabed VC, Neotribe Ventures, Kepha… Read More

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A look inside the Skopje startup scene

 On Wednesday I had the unique pleasure of hanging out with a a bunch of Macedonian startup founders and was very impressed. The Balkans have long been a promising spot for startups – the cost of living is low and the talent level is high – and this visit was unique in that everyone was fully prepared to pitch on a global scale. The winners of the pitch-off were Letz, a cool… Read More

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Data Collective and SynBioBeta founder John Cumbers launch a seed stage biotech fund

 Data Collective (DCVC) is bringing Dr. John Cumbers, the founder of synthetic biology platform SynBioBeta and setting him up with his own biotech fund for pre-seed and seed stage startups, aptly called the DCVC SynBioBeta Fund. DCVC co-managing partner Matt Ocko, who spoke to TechCrunch about the new development didn’t have an exact number set aside for the new fund but did mention… Read More

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Permira’s Brian Ruder on private equity’s attraction to tech — and where he’s shopping now

 For the last couple of years, private equity firms have been buying up public software companies that had fallen out of favor with investors. In fact, many of the top software deals in the U.S. last year were take-private transactions. Just three of them — the visual analytics company Qlik Technologies, which sold to Thomas Bravo; marketing software company Marketo, acquired by… Read More

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China’s newest source of on-demand hype, rental bicycles, gets its first unicorn

A bike sprocket cut out of titanium There can be no hype without a unicorn. China’s newest startup money pit — bicycle rentals on-demand — now has its first billion-dollar valued company.
The industry has sucked in more than $300 million from investors this year alone — that’s counting just one company — and now Ofo has become the first in the space to reach the much-coveted $1 billion… Read More

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China’s Qunar to delist from NASDAQ after completing sale to private equity firm

NASDAQ Chinese travel site Qunar is all set to delist from the NASDAQ after it completed its sale to private equity firm Ocean Management. The deal was first announced last October and today it went through having gained shareholder approval earlier this week. The transaction values Qunar, which is backed by Baidu, at around $4.44 billion. The firm raised $167 million from its IPO in November… Read More

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mClinica raises $6.3M to map healthcare data in Southeast Asia

Scattered colorful medical pills and capsules Health startups are pulling in money in Southeast Asia. A week after wellness-focused insurance brokerage CXA drew $25 million from investors, fellow Singapore-based startup mClinica has announced a $6.3 million Series A raise. mClinica was founded in 2012 and its mission is to provide healthcare data in Southeast Asia, much like Nielsen and other traditional analyst houses, through an… Read More

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Venture capital in 2017 is when the rubber hits the road for returns

road In the United States, VC funds raised a whopping $40.6 billion in 2016[1]. It was the largest year for VC fundraising since 2000 when the venture industry raked in a jaw dropping $101.4 billion[1]. Yet the 2016 exit market was a mixed bag.
Despite many forecasting (hoping?) that herds of unicorns would enter the public market in 2016, the IPO market was lackluster at best. There were only 31 U.S. Read More

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