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Posts Tagged ‘Cromwell Schubarth’

The Funded: 5 Bay Area startups raise over $100M, Google buys one from Santa Clara

By  – TechFlash Editor, Silicon Valley Business Journal

Five Bay Area startups disclosed more than $100 million in funding at week’s end and Google bought another one.

Here are the details.

Parsable Inc., San Francisco, $40 million: Future Fund led the Series C round for this provider of a digital workflow platform for deskless industrial workers. It was joined by B37 and return backers Lightspeed Venture Partners, Airbus Ventures and Aramco Ventures.

DigiLens Inc., Sunnyvale, $25 million: Continental AG invested in the Series C round of this augmented reality display maker for autos, planes and other devices. Read more here.

Mynd Property Management, Oakland, $20 million: Lightspeed Venture Partners led the Series B round for this property management tech startup. It was joined by return backers Canaan Partners and Jackson Square Ventures.

Arevo, Santa Clara, $12.5 million: Asahi Glass led the Series B round for this creator of a 3D printed carbon bike. It was joined by Sumitomo, Leslie Ventures and Khosla Ventures.

BlueCart Inc., Mountain View, $5 million: Greycroft led the Series B1 investment in this hospitality industry marketplace and sales enablement platform provider.

M&A

Cask Data Inc., Palo Alto, undisclosed amount: Google acquired this Big Data analytics startup that had raised around $40 million from firms that included Insight Venture Partners, Ericsson Ventures, Battery Ventures, AME Cloud Ventures and Ignition Partners.

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No turkeys in flock of best Bay Area venture returns of all time

By  –  TechFlash Editor, Silicon Valley Business Journal

“Returning the fund” is the phrase used in the venture world for investments whose returns cover all the bets a firm made from a particular fund.

But not all bets that “return the fund” are equal. In a week when Americans gather to thank their blessings, here is a CB Insights ranking of the 10 all-time best venture returns involving Bay Area-based companies.

The returns are based on how much was invested before a company’s IPO or sale, compared to its valuation at the time of the exit.

A few deals by Bay Area investors that returned the fund but involved companies that aren’t headquartered here have been left out.

That includes Groupon (NASDAQ:GRPN), which provided the third biggest venture return of all-time and was backed early by Accel Partners and New Enterprise Associates. It went public six years ago at a valuation of $12.7 billion after raising about $700 million in funding.

It also includes Snapchat parent Snap Inc., which was the fifth biggest return and was backed early by Lightspeed Venture Partners and Institutional Venture Partners. It went public this year at a valuation of about $33 billion after raising about $3.4 billion in funding.

In both those cases, however, the current market caps of those companies are a lot lower than they were on their Wall Street debuts — $3.1 billion for Groupon and $14.9 billion for Snap.

Let that be a reminder that it’s OK to push away from the feast before you overindulge.

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Most tech startups exit without raising funds, sell for under $50M

Billion-dollar valuations and mushrooming funding round amounts gathered much of the attention of recent years in startup-land.

But a new report shows that the majority of tech startups exit before they raise any venture or private equity funding and their valuation on exit is less than $50 million.

Venture investment research firm CB Insights said in a report on tech exits in the first half of 2016 that 53 percent involved startups that had raised less than $50 million. Another 26 percent were valued at between $50 million and $200 million.

Only about 4 percent were acquired or went public with a unicorn valuation of $1 billion or more. These included General Motors buying Cruise Automation for $1 billion, Twilio going public with a market cap of $1.2 billion and Cisco Systems buying Jasper Technologies for $1.4 billion.

Marquee acquisitions like Cruise and Jasper have increased during the tech IPO drought of the past year or so, but remain rare, Josh Elman of Greylock Partners said last week.

“That is increasing but it’s really only the strong companies that are getting acquired,” Elman said. “The acquihire market, where every team is worth something, has been falling away.”

It’s easy to see why they say that launching a successful tech startup is hard when you consider all of those numbers in the context of this rule of thumb — between 90 percent and 95 percent of them fail to achieve any sort of exit at all.

But the CB Insights report shows that it may not be necessary to do any venture visits to Sand Hill Road to sell a tech startup for millions or even tens of millions.

About 72 percent of the companies that exited in the first half did so without raising any outside venture, private equity or growth funding. That’s actually down slightly from the first half of last year when the number was 75 percent.

Cromwell Schubarth is TechFlash Editor at the Silicon Valley Business Journal.

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Verizon to go ahead with bid for Yahoo as Google mulls offer

Yahoo’s sale “book” indicates a company in a financial free fall

What Yahoo investors can look forward to prior to shareholder meeting

As layoffs proceed, Yahoo’s head of hiring bails on CEO Marissa Mayer

Verizon Communications will reportedly make a bid to buy Yahoo’s Web business next week and Google may bid for the Sunnyvale online company’s core business.

Bloomberg cited unnamed sources on those two potential Yahoo suitors. Its sources also said that AT&T, Comcast and Microsoft have decided against bidding.

Bloomberg said that Time Inc. is reportedly still evaluating a bid and private equity funds Bain and TPG — among others — are also planning to enter the action, either alone or by backing a strategic acquirer.

First-round bids for the company’s main Web assets are reportedly due on Monday.

Verizon is said to be willing to acquire the Yahoo’s stake in Yahoo Japan Corp., figured to be worth about $8.5 billion, to help sweeten its offer. It may then give the Yahoo Japan stake to its shareholders or sell it.

Another potential player is Japan’s SoftBank Group, which is the majority owner of Yahoo Japan. But discussions there have reportedly centered around Softbank wanting to get a lower licensing fee before any sale, not in buying the rest of the shares in the company.

Verizon and its subsidiary AOL are working with at least three financial advisers on its bid, Bloomberg’s sources said. The company said late last year that it was interested in bidding for Yahoo and hiring so many bankers makes it appear that it is very serious about that.

Bloomberg’s sources said that Verizon values Yahoo’s core business at less than $8 billion, based on the financial information that it’s seen.

If successful, Verizon reportedly would replace Yahoo CEO Marissa Mayer with AOL CEO Tim Armstrong and Marni Walden, Verizon’s executive vice president, who would run a combined Yahoo and AOL.

Re/code reported on Wednesday that a Yahoo slide deck that has been shown to potential buyers projects that its revenue will drop by almost 15 percent and earnings by more than 20 percent for 2016.

Cromwell Schubarth is TechFlash Editor at the Silicon Valley Business Journal.

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Startup funding slowdown hits harder in Silicon Valley than S.F

The chill that descended on fourth quarter startup funding affected Silicon Valley more than San Francisco, according to research done for TechFlash Silicon Valley by PitchBook Data.

The overall number of deals and total of dollars that poured into Bay Area venture-backed businesses reflected the dropoff from the feverish activity of recent years that PitchBook and others reported earlier this month.

But it played out unevenly in the region.

There were 176 funding deals done in Silicon Valley in the last three months of 2015, down 35 percent compared to last year’s fourth quarter.


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San Francisco had 185 deals in the fourth quarter, down by about 30 percent from last year.

Helped by a huge Q4 $1.6 billion in funding raised by Airbnb, the amount raised by San Francisco-based VC-backed companies jumped by about 29 percent year-to-year to $5.2 billion.

The dollars raised in Silicon Valley in the period dropped by about 13 percent to around $3 billion.

 

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Silicon Valley TechFlash
Benchmark VC Bill Gurley warns winds are shifting on unicorn valuations

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Cromwell Schubarth Senior Technology Reporter Silicon Valley Business Journal

Bill Gurley, a general partner at the Benchmark venture firm, sounded another alarm Thursday night about soaring valuations of VC-backed businesses.
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Bill Gurley, a general partner at the Benchmark venture firm, sounded another alarm… more

Venture investor Bill Gurley sounded another warning about the high valuations at venture-backed companies in an overnight tweetstorm on Thursday.

Volatile global stock markets are going to put pressure on CEOs at the growing crop of VC-backed businesses known as “unicorns” that are valued at $1 billion or more, the Benchmark partner said.

That is going to increase pressure to produce a profit or show how one will come, Gurley said, tweeting,”Which Unicorn entrepreneurs/CEOs are prepared for such a shift? Who can adjust quickly? Can you get to profitability on your last round? Have you even considered such a reality?”

This isn’t the first time that Gurley has warned of a pending correction in soaring valuations that profitless venture-backed companies have been getting. He predicted in an appearance at South by Southwest in March that we may see some dead unicorns in 2015.

The shift in focus by public investors to concerns over profits from excitement about rapid growth is a key reason that tech IPOs slowed dramatically since early last year. A number of venture-backed companies that had been expected to go public by now have instead raised IPO-sized funding from late-stage investors at lofty valuations.

Investment research firm CB Insights reported this week that the number of unicorns in the world has grown to 123 and they have a combined valuation of $469.1 billion. It added that their aggregate worth tops the valuation of every company on the Nasdaq 100 except for Apple, which is valued at more than $660 billion.

But LinkedIn co-founder and Greylock Partners VC Reid Hoffman argued in a blog last weekend that, while some valuations are certainly too high there, there are good reasons to believe that others will be validated eventually on Wall Street. He wrote that the term “unicorn” has created a mistaken belief that these valuations aren’t real.

“While the metaphor may put an implied cap on the number of billion-dollar companies that can credibly exist, VC firms and other investors are betting on technology, not metaphors,” Hoffman wrote in a blog posted to LinkedIn over this past weekend.

Gurley’s not buying that, though, apparently. He points to big drops in some prominent tech stocks and on Chinese markets in the past six weeks.

“The bottom line is that global tech valuation multiples are compressing (coming in). Quickly,” he tweeted Thursday night. “One might reasonably assume that this would have an adverse impact on late stage private market liquidity and valuation. I certainly do.”

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Silicon Valley VC confidence drops for first time in 2 years

 

A third quarter survey shows the first drop in Silicon Valley VC confidence in two years.

Senior Technology Reporter- Silicon Valley Business Journal

Confidence among Silicon Valley venture capital investors dropped for the first time in two year in the third quarter, according to a new survey.

The report from the University of San Francisco is the latest sign of nervousness among VCs as startup valuations hit the roof and a growing number of IPOs are underperforming or being delayed.

Among the VC-backed companies that have decided to delay offerings are Los Altos-based Box and Sunnyvale-based Good Technology. Bloomberg reports that Zoosk, GoDaddy and Yodle also may wait until next year.

The survey also comes after various reports indicated strong but slowing venture funding in the third quarter.

The survey managed by Prof. Mark Cannice asked 33 VCs in the region to rank their confidence on a five-point scale, with one being low and five being high.

The third quarter index came in at 3.89, which is still relatively high, but is down from the 4.02 registered in the second quarter. It is the first drop recorded since early 2012.

“The break in the upward trend could indicate slowing momentum going forward as the VC confidence reading is future oriented,” Cannice wrote in his report.

Some prominent VCs, including Bill Gurley of Benchmark and Marc Andreessen of Andreessen Horowitz, have publicly warned startups to be careful not to burn through too much of their cash at this time.

One of the VCs in the survey who is growing more cautious is Robert Ackerman of Allegis Capital.

“While the engine of innovation is running at full speed, there is considerable risk of overheating, particularly in consumer sectors,” he said. “The excess of capital available to these companies is inflating both valuations and their wage costs. The laws of gravity remain universal and, at some point, we can expect to see a reconciliation between hype and hope.”

Jon Soberg of Expansive Ventures said, “The ‘bubble’ talk has grown louder, especially discussion about high valuations and burn rates. I expect VCs will be more conservative in the coming months and will fulfill the predictions of things slowing down. I still see great innovation and opportunities, and I expect that we will continue to see great companies being built and scaled, but possibly with a little lower valuations.”

An interesting twist may be that as venture-backed companies wait longer to exit through an IPO or acquisition, they become more vulnerable to shifting global macro-economic factors.

“With market demand lagging in China and in most of Europe, many companies are finding it difficult to forecast 2015 international sales,” Kurt Keilhacker of Techfund Capital said. “As a result, many U.S. companies are forecasting modest growth with the headwinds of softening demand internationally and an appreciating U.S. dollar.”

Despite signs of weakening exits, a number of the VCs in the survey remain confident.

Venky Ganesan of Menlo Ventures said, “The major trends driving entrepreneurial growth remain intact — mobile and social for consumers; cloud and Big Data for enterprises. The world we live in is being refashioned by these trends and we are in the second inning of the game. There will be some short term perturbations and some of the excesses we see in certain sectors will get curtailed, but the long term secular trend remains intact.”

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Cromwell Schubarth is the Senior Technology Reporter at the Silicon Valley Business Journal.

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