VENTURE CAPITAL MARKET REVIEW, ISSUE 24 (FEBRUARY 9-15)
Week that passed was not full of hot news: M&A deals were directed to market part strengthening, and spectrum of services widening, few interesting startups has closed rounds of investment.
M&A. Twitter Acquires Startup That Helps Advertisers And Social Media Celebrities
Twitter announced that it has acquired social marketing startup Niche.
Founded by Rob Fishman and Darren Lachtman, Niche helps advertisers work with influencers on Vine and other platforms. It pitches itself as a place where marketers can find “all the world’s creators, in one place.”
Seed round investors including David Tisch (Box Group), Michael Kassan (MediaLink), Chris Altchek (PolicyMic), Bryan Goldberg (Bleacher Report/Bustle), and John Alderman. It subsequently raised a $2.5 million Series A led by SoftTech.
Niche offers free analytics to social media creators so they can see what is and isn’t working, while allowing brands to browse leaderboards and collaborate with top creators on marketing campaigns.
Twitter says it will be sharing more details about the integration between the companies soon.
Niche says it now works with more than 6,000 creators. Post-acquisition acquisition, it plans to “continue our commitment to creators: more tools, more platforms, and even more opportunities to team up with the best advertisers in the world.”
The financial terms were not disclosed, but the price could reach $50 million.
M&A. China’s Top Two Taxi-Hailing Services Will Merge
Two biggest players of Chinese taxi app space — Kuaidi Dache and Didi Dache — confirmed that they will merge.
Xinhua — China’s state-run news service — reported that the companies will retain their respective branding and businesses after the merger. Neither side has disclosed the price of the deal, but analysts estimate the value of the combined entity at around $6 billion. That’s because both services are believed to account for more than 95 percent of the taxi-hailing app market in China, which is estimated at 150 million monthly users.
Yet, despite their dominance, the two are coming together to end a war of attrition which has seen each side make financial concessions and cut their fees to lure taxi drivers to their platform. In short, fighting each other was bad for business — pulling in the same direction makes more sense. The alliance may also help weather future government regulation which, for now, has not cut into either business.
The duo aren’t short of backers. Kuaidi Dache and Didi Dache are backed by two of China’s most prominent internet companies, fierce rivals Alibaba and Tencent respectively, and both have raised significant amounts of capital. Didi Dache closed a $700 million funding round in December of last year, while Kuaidi Dache pulled in $600 million this January.
M&A. Yelp Buys Delivery Network Eat24 For $134M
Another acquisition for Yelp that will take the local listings company even deeper into commerce and food-related services. It’s gobbling up Eat24, a U.S. food delivery business that competes with GrubHub, Delivery.com and others in the area of delivering food on behalf of various restaurants. Yelp is paying $134 million for Eat24, with $75 million in cash and the rest in Yelp shares, for the company.
Eat24 currently has about 20,000 restaurants on its platform across 1,500 cities, and it looks like it was bootstrapped.
Yelp currently has 135 million average monthly users, with 72 million average monthly uniques on mobile.
As a result of the deal, Yelp revised up its earnings for Q1 and the full year. For Q1 2015, Yelp is increasing its revenue outlook and expects net revenue to be in the range of $118.5 million to $120.5 million. For the full year 2015, Yelp is increasing its revenue outlook and expects net revenue to be in the range of $574 million to $579 million. Yelp’s currently trading 7% up at $45.29/share in the wake of the news.
M&A. Insightpool Acquires Next Principles
Social marketing company Insightpool has acquired a startup called Next Principles.
Insightpool bills itself as a “the social relationship intelligence platform,” which basically means that it can identify social media influencers and suggest ways that a marketer might connect with them. Next Principles, meanwhile, has developed what it calls a “Smart Sense” algorithm that’s analyzes social media data to understand consumer intent.
CEO Devon Wijesinghe told that by integrating Next Principles’ product, Insightpool can help marketers get smarter about actually driving sales, for example by targeting their efforts at consumers who are actually ready to make a purchase.
The financial terms of the deal were not disclosed. Next Principles had raised $3.2 million in venture funding from investors including Birchmere Ventures.
STARTUP. Lyft Seeks To Raise Another $250 Million
Car-for-hire startup Lyft is going back to investors for another round of funding. The company is looking to raise another $250 million at a $2 billion valuation.
The funding comes nearly a year since Lyft’s last financing — a $250 million round from Coatue Management, Alibaba and Daniel Loeb’s Third Point, along with existing investors Andreessen Horowitz, Founders Fund and Mayfield Ventures. To date, the company has raised more than $330 million since it launched as Zimride back in 2007.
Its new valuation would propel Lyft into the so-called “unicorn club” — the realm of companies valued at more than a billion dollars.
STARTUP. E-commerce Site Jet Raises Another $140M
Super-trendy e-commerce site Jet has raised an additional $140 million in funding. The company announced that it has pulled in a new round led Bain Capital Ventures, with additional participation from Accel Partners, Coatue, General Catalyst, Goldman Sachs, Google Ventures, MentorTech Ventures, NEA, Norwest Venture Partners, Silicon Valley Bank, Temasek, Thrive Capital and other investors.
The startup said the funding will help Jet “deliver on our core promise of radical price innovation in e-commerce.” In other words, they now have more room to undercut Amazon and other sites on price.
The Wall Street Journal reported that the new round would bring Jet’s valuation near $600 million.
STARTUP. Metaps Grabs $36M To Push Deeper Into Big Data
Japanese company Metaps, which in recent times has sold services to Android developers to monetize their apps — offering an SDK that let app makers quickly incorporate in-app offers to increase user engagement and revenues — has pulled in a $36 million Series C round of financing from existing and new investors in Japan. The business has now raised a total of $51.2 million to date.
Investors in the latest round are not being disclosed at this point but two years ago its $11 million Series B included investment from Fidelity Growth Partners Japan. The company has also previously partnered with social messaging platform Line as part of the latter’s virtual currency push, with Line Coin.
While Metaps’ initial focus was on app monetization, the company now touts itself as a big data and machine-learning play — detecting patterns of user behavior to optimize and automate app marketing. It says it plans to use some of its new financing to aggressively hire addition AI expertise to continue building this out.
STARTUP. Move Loot Raises $9 Million To Develop Its Online Furniture Marketplace
Online furniture marketplace Move Loot offers a place where buyers can find affordable pre-owned goods and where sellers can get rid of things they no longer want or need. In order to make its service available in new places and to new users, the company just raised $9 million in new funding.
Move Loot’s goal is to help reduce waste and provide true collaborative consumption through a seamless sharing of goods. According to co-founder and CEO Bill Bobbitt, that ultimately changes the way people view the things they buy and sell.
But unlike some other marketplaces out there, Move Loot offers a full-service offering for both buyers and sellers, which includes the pickup, listing, storage, and delivery. To do so, it has to build out the warehousing and logistics infrastructure necessary to serve the markets it operates in.
To support its expansion, Move Loot raised a $9 million round of funding led by Metamorphic Ventures with participation from First Round Capital, Index Ventures, Great Oaks, IDG, Sherpa Ventures, Google Ventures and Y Combinator. Along with the funding, Metamorphic General Partner David Hirsch is joining the company’s board of directors.
STARTUP. ‘Humanity’ Raises A $9M To Build Out Its Workforce Platform
Humanity.com, which bills itself as a workforce-management platform, has secured $9 million in a Series B round of funding led by MHS Capital. Also participating were Point Nine Capital in Germany, Klever Internet Investments, Team Builder Ventures and Boku CEO Mark Britto. This round follows a $3.2 million round in September 2014.
Previously known as Shiftplanning, the platform is used for workforce scheduling, labor and sales forecasting, performance evaluations, identity management, time and attendance tracking, payroll reporting, leave management and a secure communications platform. It works over web and mobile.
Employees get a mobile app that they can use to access their schedule, request shift swaps, etc. Against on-premise software you have all the benefits of a SaaS solution that you don’t have to maintain or worry about upgrades.
New applications available on the Humanity platform include a secure messaging application and connections with third-party payroll providers.
Humanity added three Silicon Valley executives to its advisory board: Victoria Treyger, the chief marketing officer at Kabbage; Michael Wolfe, technology entrepreneur and portfolio advisor at Point Nine Capital; and Mark Britto. The company also has a development office out of Belgrade, Serbia.
STARTUP. Soothe Raises $1.7 Million To Deliver Massage Therapists To Your Door
Soothe provides a way for people to book same-day appointments with massage therapists who come to them.
Customers can choose between male or female massage therapists and also from different variations of massage. A one-hour massage costs $99, a 90-minute massage costs $139, and a two-hour massage costs $169. Soothe massage therapists bring their own equipment to a customer’s home and perform the massage onsite, so users don’t have to go anywhere once they’ve booked something.
Now the company has more than 1,000 massage therapists throughout six cities in he U.S., but pretty soon it’ll be expanding into new cities.
Soothe was founded in May 2013 and was self-funded for about 13 months, with revenue growing about 20 percent month-over-month. Last September the company began fundraising and had its seed round led by Gil Penchina’s AngelList syndicate.
Altogether, the company raised $1.7 million from the syndicate and other investors that include IDG Ventures and Walter Loewenstern, as well as angel investors Scott & Cyan Bannister, Tasty Labs founder Joshua Schachter, Dogvacay’s Aaron Hirschhorn, Xobni founder Jeff Bonforte, and HomeDepot CTO Aaron Lee. The company is advised by Scopely founder Eytan Elbaz.
INVESTMENT. August Capital Raises $450 Million For Its Seventh Fund
August Capital said it has closed on $450 million for its latest venture capital fund, called August VII.
The new raise represents a downsizing of sorts for the 20-year-old Sand Hill Road firm. In 2012 August Capital raised $550 million for its sixth fund, August VI, and prior to that in 2009 raised $650 million for its fifth fund, August V.
August Capital partner David Hornik explained that the smaller size was an intentional choice for the firm, bucking the larger industry trends of seemingly constant expansion to instead focus on quality over quantity.
He added that his team initially targeted to raise just $400 million for August VII, so that each of the fund’s five general partners would have $80 million to deploy. The fund was eventually stretched to $450 million, giving each partner $90 million to work with.