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    Greylock GP Sarah Guo is as bullish on SaaS as ever / TechCrunch – 4 days ago - 13:00

Hello and welcome back to Equity , TechCrunch’s venture capital-focused podcast, where each week we discuss other people’s money and what sense their investment choices make (or don’t).

This week was honestly a treat. We had Kate Clark in the studio along with Alex Wilhelm and a special guest, Sarah Guo from Greylock Partners , a venture firm (obviously). Guo has the distinction of having the best-ever fun fact on the show.

We kicked off with Grammarly, a company that recently put $90 million into its accounts . We chatted about for whom it was built, and if we use it today. One thing that felt clear was that consumers are more willing than before to pay for their tooling. And that means that companies like Grammarly may prove strong investment candidates .

Next, we hit on two more rounds, namely Tiger Global’s investment into Lattice and Clari’s $60 million Series D . Starting with Lattice, a performance management company founded by none other than Sam Altman’s brother, Jack. The startup raised $25 million from Tiger Global; read more about that here .

Clari led us to a discussion of vertical SaaS, and Guo’s views on the future of SaaS products (she’s bullish). Alex and Guo had a lot to say on this subject.

After talking over a few rounds, the discussion turned to the Q3 venture market . A few things stood out from the data and projections. First, that early-stage fundraising was a little light in the quarter. It could be a single-quarter wobble, but the data was worth chewing on all the same. And, second, that seed deal and dollar volume were hot once again.

And we wrapped with a discussion of Tempest, a new sobriety-focused startup that raised a $10 million round . Honestly, we aren’t sure how we feel about the business model. Please let us know if you have thoughts.

It was a good time. A big thanks to Guo for coming on the show, and a shout-out to the team that makes Equity happen: Chris Gates and Henry Pickavet.

Equity drops every Friday at 6:00 am PT, so subscribe to us on iTunes , Overcast , Pocketcast, Downcast and all the casts.

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    Pelion Venture Partners adds Jeff Kearl as a managing director, opens Southern California presence / TechCrunch – Monday, 14 October - 13:30

The Salt Lake City-based Pelion Venture Partners is opening an outpost in Southern California and has added Jeff Kearl as a managing director to head up operations in the region.

Kearl was the chief executive officer of Stance , a direct-to-consumer retailer selling socks and clothing basics, and has a long history of investing in startup companies throughout Southern California, according to a statement.

In addition to Stance, Kearl serves on the board of directors for Domo, a cloud software company; Scopely, the mobile game developer; and Just Water, the water company co-founded by the actor and musician, Jaden Smith. He previously served as chairman of the board for the audio technology retailer,  Skullcandy, and was the EVP for the internet marketplace, Logoworks.

“A physical presence in Southern California will allow us closer access to a fast growing and underserved capital market,” Kearl wrote in an email. “85% of the venture capital dollars in LA are coming from investors outside of LA. Pelion believes by partnering with founders and VCs in Southern California we can create and add more value to this exciting tech scene.”

Pelion has already invested money into the Southern California tech ecosystem and Kearl’s presence will double down on that commitment, he wrote in an email.

“In the past several years, Pelion has invested in 7 companies in Southern California,” wrote Kearl. “Given our conviction on founders and startups in Southern California, we are making a conscious effort to increase our activity in the area and expect these numbers to increase dramatically.”

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    SoftBank reportedly preps a package to take control of WeWork parent company / TechCrunch – Sunday, 13 October - 22:19

SoftBank Group , the multi-billion dollar Japanese technology conglomerate and investment firm, has put together a  bid that would save WeWork parent company We Co. , just weeks before the co-working real estate company’s imminent collapse, The Wall Street Journal reports .

With the collapse of the company’s planned initial public offering, We Co. is facing a cash crunch. The company was planning to raise billions of dollars in debt on the heels of its public offering to finance its continued operations.

The botched public offering already cost We Co. co-founder Adam Neumann his leadership position at the co-working rental business he co-founded roughly a decade ago. The new financing pitch that SoftBank has put together would further remove Neumann from the company’s operations and business, according to the WSJ’s reporting.

SoftBank’s pitch isn’t the only lifeline for We Co. According to the WSJ’s reporting there’s a plan in the works to raise billions of debt through a process being managed by JPMorgan Chase & Co.

“WeWork has retained a major Wall Street financial institution to arrange a financing,” a spokesperson for We Co. wrote in an email. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”

SoftBank already owns about one-third of the company and their bid for the business would involve billions in equity and debt.

The struggles at We Co. coupled with underperforming investments in publicly traded companies like Uber and Slack have damaged SoftBank just as the company was hoping to move forward with a second version of its ambitious Vision Fund, a $100 billion investment vehicle formed in 2017 to invest in ambitious startup companies.

The results have been lackluster. And it’s not just public companies like Slack and Uber that are dragging down the fund. Investments in direct to consumer companies like Brandless , or the robotic pizza delivery startup Zume have also failed to deliver — despite hundreds of millions in commitments from SoftBank.

SoftBank did not respond to a request for comment at the time of publication.

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    Africa e-tailer Jumia’s shares fall 4% day after IPO lockup expiration / TechCrunch – Friday, 11 October - 05:45

Shares of Africa focused e-commerce company Jumia dropped 4% the day after the lockup period expired for its April IPO on the New York Stock Exchange .

The lockup provision prevents major shareholders — namely those who purchased equity pre-public listing — from selling their shares for a specified number of days following the IPO.

Jumia’s stock price began Thursday at $7.54, fell to an all-time low of $6.98 by 2pm, and then closed 35 cents down from opening, at $7.19. Jumia’s trading volume on Thursday moved up 19 percent over the daily average since the company went public.

Jumia Share Price October 10 Sites that track SEC Form 4 trades , or sales by insiders, aren’t showing anything (at the moment) for Jumia.

What does this all mean? It appears there wasn’t an immediate big stock sell by Jumia’s early and large shareholders post lockup expiry. There was some speculation these investors could drop the company after several rough and tumble months for Jumia post IPO.

Founded in Lagos in 2012, Jumia currently operates multiple online verticals in 14 African countries — from B2C consumer retail to travel bookings.

For Jumia, going public has been an up and down affair. After becoming the first tech startup operating in Africa to list on a major exchange, the company saw its share price rise 70% after listing on the NYSE in April at $14.50.

Then in May, Jumia’s stock tumbled when it came under assault from a short-seller, Andrew Left, who accused the company of fraud in its SEC filings.

Jumia’s latest earnings reporting — delivered in August — had some downside beyond losses. The  company did post second-quarter revenue growth of 58% (≈$43 million) and increased its customer base to 4.8 million from 3.2 million over the same period a year ago.

But Jumia also posted greater losses for the period, 67.8 million euros, compared to 42.3 million euros in 2018.

On top of that, Jumia opened up about a sales related fraud ( that it has reported in its original SEC IPO filing ) committed by some of its employees and members of its JForce program “to benefit from differences between commissions charged to sellers and higher commissions paid to JForce agents,” according to a Jumia statement.

“The transactions in question generated approximately 1% of our GMV in each of 2018 and the first quarter of 2019 and had virtually no impact on our 2018 or 2019 financial statements,” the statement continued.

Collectively, this has added up to influence Jumia’s share-price falling some 50% from its opening price of $14.50 and 80% from its high of $46.99 on May 1.

As a public company now, the most direct way for Jumia to revive its share-price would be reducing its losses while maintaining or boosting revenues. Of course, that’s the common prescription for many a tech company.

Jumia believes expanding and generating more revenue through its JumiaPay product (with better margins than B2C e-commerce transactions) could help close the revenue vs. loss gap.

Investors and the market at large will be able to track Jumia’s progress during its next (Q3) earnings call, scheduled for November 12, Jumia confirmed to TechCrunch.

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    Why venture capital firms need culture experts / TechCrunch – Thursday, 10 October - 21:28

When Susan Fowler’s 2017 blog post shined a light on Uber’s raucous culture, outlining rampant harassment and sexism, a debate erupted. What role do the deep-pocketed investors behind the company, those who allowed it to scale to monstrous proportions, have in developing and nurturing its culture? Entrepreneurs and venture capitalists themselves wondered aloud, how involved should a venture fund be in early-stage recruiting processes and ensuring a safe environment for employees? If a culture is bad, unsafe, damaging, is it the VC’s fault?

Late-stage venture funds, for the most part, miss the opportunity to deeply impact their portfolio companies’ cultures. When they invest, typically large sums of capital in companies with hundreds of employees and multiple offices, the company’s culture is formed and, as Uber and others have proven, rebuilding culture a decade in is no easy challenge. Early-stage funds, however, the people that write the very first check in startups, have a front-row seat to decisions crucial to defining how a company operates and treats its employees in the long term. These people, if they care to, have the power to help determine key hires and establish company values, norms and behaviors from the get-go.

This week, San Francisco-based early-stage fund True Ventures hired its first-ever vice president of culture, a move that suggests VCs are taking concrete steps toward further involving themselves in the company-building process from a D&I and hiring perspective. Madeline Kolbe Saltzman joins the firm, which raised $635 million across two new funds last year, from Handshake, where she was the VP of people and talent.

“There’s a responsibility to guide the company and the founder to being the best they can be, and that involves paying attention to who you’re hiring and how people are being treated,” Saltzman tells TechCrunch. “If we can come in and establish inclusive norms, my hope is that our companies will scale inclusively as well.”

Most venture capitalists are in regular communication with active investments. Early-stage investors, particularly, are very involved with building businesses, facilitating hires and scaling. But as they seek to decrease cash-burn or find product-market fit, VCs are not often very concerned with issues of diversity and inclusion, something that’s became increasingly important as companies are finally being held accountable for the diversity of their workforces.

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    PayPal is the first company to drop out of the Facebook-led Libra Association / TechCrunch – Friday, 4 October - 20:44

PayPal is the first company to walk away from Facebook’s Libra cryptocurrency.

PayPal’s decision to take its ball and go home was first reported by The Wall Street Journal .

“PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in an emailed statement. “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

It could be that PayPal isn’t the only firm to walk away from the ambitious effort to transform the entire global financial system.

Mastercard, Visa and other companies may join PayPal in backing away from the Libra project, which has been the subject of mounting criticism since its launch.

As we reported when Libra first launched, Facebook doesn’t control the Libra organization or currency, but gets a single vote alongside the remaining partners which include Uber, Andreessen Horowitz, the venture capital firm with roughly $10 billion in assets under management, Mastercard and Visa. Each partner has invested at least $10 million in the project and the association will promote the open-sourced Libra Blockchain.

The partners will not only pitch the Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.

Facebook has a lot more riding on the success of the Association that just it’s Libra stake. The company has also launched a subsidiary company called Calibra that handles crypto transactions on its platform that would use the Libra blockchain.

Governments around the world have been up in arms about what they see as Facebook and its partners making an end run around the existing financial services.

And earlier this month, Facebook chief executive Mark Zuckerberg indicated that the company would  be willing to push back the launch of the cryptocurrency past its planned 2020 launch date, in an interview with the Japanese Nikkei news service .

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    Why San Francisco is still the gold mine for tech startups / TechCrunch – Friday, 4 October - 13:00

Hello and welcome back to Equity , TechCrunch’s venture capital-focused podcast where each week we discuss other people’s copious dollars and lacking sense.

This week was special! Kate and Alex at Disrupt where they recorded live in front of an audience. Equity has recorded at Disrupt before. Equity has taped before an audience before. But this was the first time that we taped it at Disrupt and in front of an audience that actually had chairs. Progress!

Charles Hudson of Precursor Ventures joined us as well, making for an excellent show. Astute listeners among us will recall that Hudson is a former guest on the show, having taken part back in mid-2017 .

Onto the topics, we discussed the impending Precursor Ventures opportunity fund ( more here ). We wanted to know why it was of modest size, especially in an era of ever-larger venture capital funds.

Next, we turned to a trio of startup stories, starting with Rhino , a company that is working to shake up the rental deposit market . Hate paying deposits for an apartment? Would you rather pay a small, regular fee? Rhino hopes that you would, and has raised $21 million to build out the idea.

Also on our list of topics was a small upstart by the name of Knowable, our colleague Josh Constine profiled the business here. The company sells educational audio bits, and they want you to know, they are not a podcasting business. We’re still a bit unclear of the difference between educational audio and podcast but VCs seem confident enough in the company’s prospects, funneling $3.75 million in the project.

The last startup we riffed on is called oollee. The company provides people with an unlimited supply of filtered drinking water for a small monthly fee. It’s raised $1 million in pre-seed funding from investors, including Mission Gate Inc. and Columbus Holdings, and, of course, we have thoughts!

After that we touched on the most valuable Y Combinator companies, including Stripe ( more here and here ), Airbnb and DoorDash . The list of YC’s hits is getting long. And, it provided the perfect segue to Airbnb.

Airbnb intends to go public via a direct listing, according to a whole bunch of recent reports. Every VC in town seems to have opinions about direct listings as the next best path to the public markets, maybe they’re right. Finally, WeWork is selling off a bunch of stuff that it bought recently. Here’s a list of what it bought , but SpaceIQ, Teem, Conductor and more are said to be on the chopping block.

All that and we had fun! Back to normal next week.

Equity drops every Friday at 6:00 am PT, so subscribe to us on iTunes , Overcast , Pocketcast, Downcast and all the casts.

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    Meet Vise AI, the startup reimagining portfolio management / TechCrunch – Thursday, 3 October - 20:25

The founders of Vise AI met when they were 13, a couple of teenagers more interested in applied artificial intelligence than English class. Fast-forward several years and the pair has relocated from the Midwest to San Francisco to raise money for a financial technology business they’ve been self-funding since 2016.

As teenagers with an inordinate amount of AI knowledge, Samir Vasavada and Runik Mehrotra proved to be quite useful to large businesses, investment bankers and other financiers. Leveraging their AI know-how, they were paid $700 per hour by a consulting firm to teach financial “experts” about AI. Mehrotra, according to Vasavada, is a mathematical prodigy: “And that translates extremely well to AI, right, because what underlies AI is math,” Vasavada, co-founder and chief executive officer of Vise AI, tells TechCrunch. “We had the ability of articulating what AI is to investment bankers in a way that they would understand. Whereas most expert explanations would be really complex and very technical.”

Meanwhile, school was on autopilot. “I was taking phone calls in English class,” Vasavada said. “It wasn’t very good but we were making a lot of money.” Ultimately, that money funneled into the early makings of a real business, Vise AI, which automates portfolio management using AI and machine learning. Launching onstage at TechCrunch Disrupt San Francisco today, the SEC-registered investment advisor will begin customer on-boarding next week. In short, the platform analyzes clients’ investment needs and builds them a personalized portfolio of stocks, bonds and other assets, then provides investment manager tools to automate management.

“It’s an unsexy industry that makes all of the money in finance,” said Mehrotra, co-founder and chief technology officer of Vise AI.

For now, the team is going after independent advisory shops, those without a flock of analysts available at their beck and call and who need outsourced investment management. Ultimately, they plan to pursue the big wealth managers. The business has also been approved as a subadvisor by TD Ameritrade Institutional, which has thousands of independent RIAs on its platform.

“The icing on the cake is what we refer to as portfolio intelligence,” Vasavada explains. “We can provide unique insights, justifications and logic as to why specific investment decisions were made — talking points to make the advisor look smarter with the clients because it’s a relationship game with these advisors, so tools that will help build their relationships and help empower their relationships, while still delivering a better portfolio to the client is the type of solution that really needs to be built in this space.”

“We are literally giving them bite-sized portfolio intelligence,” adds Mehrotra. “Because most of them aren’t really doing the investment management themselves, right? So they’re either using some ETF allocation tool, like Betterment for Advisors, or something like that, where it’s just a standard set of ETFs and there really isn’t any personalization.”

We felt like we were turning away tons of money. Vise AI co-founder Samir Vasavada

Vasavada, hailing from Cleveland, and Mehrotra, raised just outside Detroit, met years ago at a Northwestern University summer research program. The two have since established themselves as AI experts, supporting high-profile clients (who they can’t name due to non-disclosure agreements) as consultants and completing the fintech conference circuit a few times over. But when it came to raising venture capital to exit the era of self-funding and launch their AI-enabled portfolio manager, they were clueless.

Their first infusion of outside capital came in the form of a $20,000 uncapped note from Dorm Room Fund. A little something to help them through the daunting fundraising process. But their first real pitch meeting was with none other than Vinod Khosla, the billionaire founder of Sun Microsystems and Khosla Ventures. Khosla’s son, Neal Khosla, had worked on the investment team at Dorm Room Fund and made the introduction.

Khosla passed and the Vise team realized they had no idea what they were doing. They began refining their pitch. After reaching out to roughly 1,000 different investors (Vasavada created a detailed CRM to track all their cold pitches) they raised $2 million from co-leads Keith Rabois, a co-founder at PayPal and a partner at Founders Fund, and Ben Ling of Bling Capital, two investors who were, ironically, former general partners at Khosla Ventures. Great Oaks Ventures, Flatiron Health co-founders Nat Turner and Zach Weinberg, Future Advisor founder John Xu, NFX’s Pete Flint and Contrary Capital also participated. Vasavada and Mehrotra said that once they had tapped two high-profile leads, offers came flooding in, including from VCs who had rejected them just weeks before.

“This was our first round of fundraising ever,” says Mehrotra. “So in the beginning, a lot of it was just like, figuring out how things worked and learning how to best pitch the company because it is a niche market. I think once we got the momentum … We felt like we were turning away tons of money.”

We want to empower advisors to be better at their jobs. Vise AI co-founder Runik Mehrotra

Once they reach $50 million in assets under management, Vise plans to raise a much larger round of funding to help the team expand and open an office in New York.

Vise is targeting a market worth trillions in one of the most valuable industries in the world. To succeed in the long term, the startup will have to infiltrate a decades-old network relying on legacy technology, as well as battle Silicon Valley’s narrative that robo-advisors will soon make the financial advisory space obsolete. According to their thesis, companies like Betterment and Wealthfront are successful with tech-rich millennials, but once one accumulates “real wealth,” it’s a conversation with a human being they’re looking for, not an easy-to-use app.

“We want to empower advisors to be better at their jobs, so they can focus on actually building better relationships and holding their clients’ hand,” said Mehrotra.