🗞 Venture Chronicles - May 2020
Hi, it’s Alexandre from Idinvest. Overlooked is a weekly newsletter about underrated trends in the European tech industry. Today, I’m sharing the most insightful news of May.
For 2020, I want to pick one piece of news per day and write a short comment about it. I want to talk about something that strikes me. Something that happened in the tech ecosystem. Here is the issue for May!
Please note that the date picked for each event is not always the exact date of the event but the date I decided to write about the event.
Friday, May 1st: a16z raised a second $515m crypto fund and sharied 5 investment themes. I'm adding some crypto projects related to these themes that you can look at. (a16z)
Next generation payments: increase velocity, reduce costs and use a decentralized payment infrastructure -> Lightning network technology (e.g. Acinq), stablecoins (e.g. USDC)
Modern store of value: competing solutions to Bitcoin and Gold to offer safe heavens to consumers wishing to increase their independence from governments -> Ampleforth
Decentralized Finance: look at a past issue of my newsletter on this topic. -> Maker, Compound, Sablier
New ways for creators to monetize: monetization of fans through token models without centralized third party. It's growing in the gaming industry but could be extended in all the other creative industries (writing, music, podcasting, programming, design etc.) -> Unlock
Web 3: blockchains offering a decentralized infrastructure to the existing web infrastructure. -> Filecoin
Saturday, May 2nd: a16z led a $50m series D into Figma at a $2bn valuation (vs. $440m for the previous round led by Sequoia in Feb. 2019). It's a collaborative set of design tools based on a freemium business model and competing directly with Adobe and InVision. The company started to release its product in 2015 after 6 year under stealth mode! (Techcrunch, a16z)
Sunday, May 3rd: Time to take a step back! UK-based early stage investor Balderton organized a webinar on secondary transactions. Balderton raised a €150m Liquidity Fund I in Oct. 2018 dedicated to help European founders, employees and early stage investors to cash out part of their stake. This is a smart move because the European ecosystem is getting more mature and there is a growing need for good secondary options. If you are interested in the secondary private equity market, I wrote a paper that you can find here. (Balderton)
Monday, May 4th: Lifebit raised a $7.5m series A led by Idinvest with the participation of existing investors Connect and Pentech. It's a cloud-based solution to understand and analyze genomics data (i.e. the data from our ADN) used by healthcare stakeholders (pharma companies, biotechs, biobanks, DTC healthcare brands). Lifebit is also enabling federated learning between several actors to work collaboratively on genomic data without having to share the data with all the other stakeholders. In France, Owkin is also using federated learning for drug research. (Lifebit)
Tuesday, May 5th: Backmarket raised a $120m series D led by Goldman Sachs with the participation of existing investors Eurazeo Growth (which is our growth fund) and Aglaé. It's a marketplace for refurbished electronic goods (smartphones, computers, headphones, etc.). Backmarket is working with 1k sellers and is present in 8 countries (France, Spain, US, Germany, Italy, Belgium, UK and Austria). The goal of the fundraising is to double down on key foreign markets like the US, Germany and in the UK. (Techcrunch)
Wednesday, May 6th: Peanut raised a $12m series A led by EQT a couple of month following the announcement of their seed round led by Index and Partech. Peanut is a social network dedicated to women to discuss key topics like pregnancy, parenthood, marriage, menopause etc. I'm bullish on this new wave of social networks targeting a specific demography and providing this demography with a safe space in which people can really build meaningful relationships. Here are some metics (vs. Dec. 2019): 1.5m registered users (+300k), 30% rise in engagement, 40% increase in content consumption. (Techcrunch)
Thursday, May 7th: Trading mobile app Robinhood raised a $280m series F led by Sequoia. This category is also booming in Europe with great players like TradeRepublic, Freetrade and Bux. (Robinhood)
Friday, May 8th: Airbnb laid off 25% of its workforce (1.9k people) and set up an alumni directory for people interested into hiring the laid off employees. (Airbnb)
Saturday, May 9th: ISAI raised €90m for its third early stage fund (1st closing). The fund will invest seed-pre series A tickets from €1 to €3m and has also a pocket to invest €150k pre-seed tickets. (ISAI)
ISAI is a French venture firm well known for being funded partly by a network of prominent entrepreneurs. It has also brought onboard institutional investors like BPI, Arkea and Quadrille.
ISAI has a reputation of remaining disciplined in pricing its investments into startups and on focusing on capital efficiency.
ISAI is also putting emphasis on bridging the US and European continents for French entrepreneurs either planning to expand in the US or starting their companies in the US and planning to expand in Europe.
Sunday, May 10th: It’s Sunday. Time to take and step back to read this great article on Pinduoduo and the rise of social e-commerce in China. (Anu Hariharan)
Monday, May 11th: Uber is at war against covid (i) laying off 25% of its workforce, (ii) trying to acquire Grubhub, its closest competitor in the US, (iii) having troubles with the US justice on the working status of its drivers and (iv) reinvesting into Lime by leading a $170m round in the company and merging its Jump activities into Lime. (Techcrunch)
Tuesday, May 12th: Lenny Rachitsky (ex. PM/growth at Airbnb) collected precious pieces of advice and examples on how the most prominent tech companies got their first 1k users. (Lenny Rachitsky)
Wednesday, May 13th: Clubhouse is rumored to be raising a seed round that could reach $100m post money valuation from tier-one US funds like Benchmark and a16z. It could make sense because, in venture, social products are binary. I did not try the app but the concept seems promising: live audio rooms in which people talks about everything and nothing and people can either talk or listen. I'm a big believer in the need to build new social networks and Clubhouse is offering an interesting positioning at the crossroad of group chat, audio and live which are three rising trends in social products. The product is in closed beta and is used mainly by VCs and tech people from the Valley - which makes me naturally suspicious but I'm eager to try the product and look at how it will be used beyond this closed circle. Fast forward, Andrew Chen (a16z) won the deal: $10m round at a $100m post money valuation and $2m cash out for founders. (Axios, Divinations, Forbes)
Thursday, May 14th: 360 Capital is announcing the 1st closing of its fifth fund for €80m. The goal is to raise a total amount of €150m by the end of the year. 360 invests in seed, series A and series B in France, Italy and Spain with tickets ranging from €2m to €10m. The team is one of the few European VC which is doing a great job at covering the Italian market (e.g. Casavo, Supermercator24). (Maddyness 🇫🇷)
Friday, May 15th: Balderton announced three deals in the past three days welcoming PlayPlay, VanMoof and Primer in their portfolio:
Primer (UK-based, £3.8m seed round with Seedcamp, Speedinvest and Kima): a SaaS to help merchants consolidate and manage their payment stack. (Rob Moffat, Techcrunch)
PlayPlay (France-based, €10m series A with Kerala and Point Nine): a SaaS to help brands to produce high quality videos thanks to automated motion design (Techcrunch, Louis Coppey, Clément Vouillon)
VanMoof (Netherlands-based, €12.5m with Sinbon Manufacturing): an e-bike manufacturer (Techcrunch)
Saturday, May 16th: Facebook acquired Giphy, a web-based GIF search engine, for a $400m valuation. 50% of Giphy’s traffic was already coming from Facebook’s ecosystem of apps. Its employees will join the Instagram team. Giphy was founded in 2013, raised $150m in funding fromDFJ Growth, Lightspeed, Betaworks, GV, Lerer Hippeau and had a $600m last private reported valuation. (Techcrunch)
Sunday, May 17th: Monzo is rumored to raise a £70-80m round at a 40% valuation discount compared to its previous year £2bn valuation. Growth round will be the most difficult ones to raise in the coming months - especially for businesses like Monzo that have a high cash burn and have still a long path ahead before reaching profitability. (Sifted, FT)
Monday, May 18th: An anecdote on the US food delivery war exuberances with a guy doing pizza arbitrage using promo codes on Doordash. (The Margins)
Tuesday, May 19th: Ben Evans joined company builder Entrepreneur First as venture partner. He is one of the most prominent analysts in the tech industry. Few months ago, he left Andreessen Horowitz where he had a similar role to come back to Europe. Ben is a great addition to EF. I'm sure that his insights will be a great inspiration for people joining an EF cohort and trying to find the right topic to tackle. (Techcrunch)
Wednesday, May 20th: Strapi raised $10m in series A with Index Ventures. Strapi had already raised an impressive $4m seed round six months ago with Stride and Accel US. (Strapi)
Strapi is a headless content management system (CMS) that is part the second generation of CMS aiming at replacing Wordpress.
Strapi is an open source project with impressive metrics projects on Github: 25k stars, 1m downloads, 400 contributors, 4k Strapi related projects, 300 plugins done by the community etc.
Strapi will start monetizing in July by adding a proprietary Enterprise Edition with specific features for companies that have high CMS needs.
Thursday, May 21th: Masterclass raised $100m in series E at a c.$800m valuation led by Fidelity with the participation from existing investors like NEA, IVP, Atomico and Owlventures. Masterclass is a repository of classes taught by celebrities (e.g. Kasparov teaching you how to play chess or Serena Williams learning you tricks on tennis) that anyone can subscribe to for an annual $180 subscription. Masterclass is waving several interesting trends: mixing entertainment with education (like numerous Youtube channels) and helping celebrities monetize their fame (like Cameo). (Techcrunch)
Friday, May 22th: Sarah Tavel published a framework to evaluate risks and opportunities for consumer companies building in social distancing times. (Medium)
The use of our time during our day could be divided into three categories of events: rocks (long events taking several hours of our days, e.g. watching TV, reading a book), sand (shorter events between two rocks in our days, e.g. watching a YT video, reading a newspaper) and water (super short events we can do at the same time of rock and sand events, e.g. watching Tiktok or Stories on Instagram, reading Tweets).
With social distancing, offline social rocks have disappeared (going to the cinema, partying, going to the restaurant). Online events are taking advantage of the situation. Nonetheless, online consumer products need to prepare the post social distancing era.
Here are some ideas: accelerate your growth until network effects are kicking in & be flexible and brainstorm around what your product could be for a rock, sand or water consumption.
Saturday, May 23th: Argent is now accessible for anyone on the AppStore and on the Google Play Store. Argent is the best crypto customer wallet if you want to discover the DeFi universe. The app is beautiful but most importantly it does a great job at hiding the complexity of making transactions on the Ethereum ecosystem. You should give it a try. (Techcrunch)
Sunday, May 24th: AppAnnie issued its annual report on gaming with great insights on the upcoming gaming trends as well as on the impact of covid on mobile games. (AppAnnie)
Mobile gaming is the main driver of the gaming industry: games generated 70% of app stores revenues vs. 40% of app stores downloads.
The most bankable games have a strong social component (either real time multiplayer or cooperation) like Honour of Kings, Game for Peace or Animal Crossing.
Twitch (streaming) and Discord (voice and text chat for gamers) have been massively downloaded during the lockdown.
Monday, May 25th: Blablacar announced a partnership (no financial investment) with Voi to strengthen its multi-modal transportation offering by adding electronic scooters. As a reminder, Blablacar also operates a daily ride-sharing commute app called BlaBlaLines and a bus offering called BlaBlabus on top of its carpooling solution. (Techcrunch)
Tuesday, May 26th: Aircall raised a $65m series C led by DTCP and Adam Street Partners. Aircall is a cloud-based call center software for teams (sales, customer support etc.). With Front, Aircall is one of the oldest startups from the startup studio eFounders. Some figures: 4x in revenues in the past 2y, ARR above $29m, 3x in valuation vs. the last round, 33% sales in the US (vs. 60% in Europe). (Techcrunch)
Wednesday, May 27th: Coinbase is still on a shopping spree. It acquired Tagomi for a reported valuation between $70-100m (surprisingly low considering that Tagomi was created only in 2018 and raised $28m with tier one funds like Founders Fund, Paradigm and Pantera). Coinbase has been adding blocks one after the other to build the perfect one stop shop for institutional investors wanting to have a crypto exposure and obviously Tagomi's prime brokerage positioning is a perfect addition for Coinbase. (The Block)
Thursday, May 28th: La Belle Vie is raising €11.6m with Capagro, FJ Lab, A Plus Finance and Celeste Management. La Belle Vie is a dark grocery which vision is to be an online version of your local market or your trading street. It's also disclosing interesting business metrics: €4m monthly GMV, 6k SKUs, 2.5x monthly purchases for recurring customers, 1,000m2 warehouse. Paul Le has an amazing story and I love his vision of building a digital food offering not for Parisian Bobos but for the 99% with a focus on affordable prices. (🇫🇷Les Echos, 🇫🇷GDIY)
Saturday, May 30th: Turner Novak wrote a long and great paper on short video social media TikTok. (Substack)
Metrics: 1bn DAU's (Oct. 2019), 1.5bn MAU's (Jun. 2019), c. $200bn valuation, $16-20bn revenues in 2019 (2x what Google did at the same time of its company journey), 46 minutes spent on the app per user and per day (US users), 34% of DAU's shoot content on a daily basis (US users), 30 days retention from 10% to 28-40% (US users)
Two separated products: Douyin launched in Sep. 2016 for China and TikTok launched in 2017 for the rest of the world
TikTok has an anti-social approach (no need to have friends, non need to sign up). It’s more a media than a social network.
TikTok has unlocked a new "unit of supply": most creators on TikTok started to create for TikTok and had no social capital before. Key success factors to attracts this new generation of creators:
Innovative short vertical video format perfect for the memes and music culture we live in
Creator first approach (best tool to edit short videos on mobile, full service support for creators, first tools to monetize an audience with donations and ecommerce).
Competitive advantages: strong recommendation algorithms (more efficient feedback loops with multiple 15 second videos on TiktTok vs. 10 minute video on YT), video-first interface (full screen experience), ability to outspend competition in advertising with $3m spent per day (early signs that the app has reach the critical size needed to have network effects kicked in), unique social media that has been able to grow an audience both in China and in the Western world (thanks to the acquisition of Musica.ly in Nov. 2017 for $1bn)
A glimpse into TikTok's potential futures: expand into the long form video format, music streaming focused (it has its own streaming app called Resso in India, Indonesia and Brazil), gaming, consumer finance, education, messaging, news feeds, enterprise software, cloud hosting, phone (low end Android phone)
Sunday, May 30th: Creandum published a great paper on startups tackling female health issues. I think this category is a blind spot in venture capital like other categories (startups targeting millennials, minorities or poor people) that focus demographics under-represented in the people working in the VC industry. I also noticing the rise of social networks dedicated to women: Peanut (connecting moms), Chief (connecting female leaders) and Revel (connecting women over 50 y.o.). (Creandum)
Thanks for reading! See you next week for another issue! 👋