It’s not so obvious that this VC firm is focused on impact

Obvious Ventures was founded in 2014 by Medium CEO and Twitter co-founder Ev Williams, along with Vishal Vasishth and James Joaquin. Its mission? To invest in startups that make a positive impact on the world.

It’s a bold idea, and in its marketing material, San Francisco-based Obvious specifically states that it “invests only in companies where every dollar of revenue is also delivering some environmental or social impact.”

Despite that promotional language, the firm doesn’t want you to call it an impact investor. So to settle the confusion, we asked the firm directly to find out if we were getting caught up in semantics, or if this seemingly intentional differentiation stems from the fact that traditional impact investors have earned a reputation of being laissez-faire about returns.

We suspected the latter, and we were right — for the most part.

Founding the obvious

When the firm came together five years ago, the partners’ intention was “to invest in entrepreneurs we felt were purpose-driven and going after some of the world’s biggest challenges, or pieces of them at least,” said Andrew Beebe, managing director at Obvious. At the same time, the firm was looking for “top venture performance.” It is by this reasoning the venture firm, also a B-corp, prefers to describe its investment strategy as “World Positive.” It’s a nuance that’s easy to miss, even for founders looking for cash.

“When the fund first started, we did get a lot of people coming to us thinking of us as a social impact fund,” Beebe told Crunchbase News. “We would get pitches for yoga mat cleaners, or people selling a lot of used clothing and putting it into a business model that just reeked of first-world hubris,” he said. “But that’s not the kind of stuff we wanted to invest in.”

“We believe if you combine purpose-driven terrific entrepreneurs solving the world’s biggest problems, you should outperform your peers,” he told Crunchbase News. “We think those companies can adjust, grow and scale better as world-changers. Put simply, we believe purpose fuels profit.”

Obvious has closed on two funds since its inception: raising a deliberate $123,456,789 million in 2015 and $191,919,191 million in 2017. It currently has more than 50 companies in its portfolio, including Plant Prefab, a prefabricated home factory; Good Eggs, an online grocer and meal kit delivery service; and Diamond Foundry, which says it “cultures diamonds in California with a zero carbon footprint.”

(Note that our chart above shows fewer than 50 companies because, according to Obvious, some of its portfolio companies “might be in stealth mode” or not disclosing their funding for another reason.)

Obvious claims it values diversity, noting that 20 percent of its current portfolio companies have female founders, according to Beebe.

“In our view, that represents where the world is going, as we think it’s becoming more diverse,” he said.

However, the firm doesn’t “make” its portfolio companies measure their positive impact in the world, although many do so anyway “as part of who they are.” For example, Beyond Meat on its website (in a section titled “our impact” no less) touts that its burgers use “99 percent less water, 93 percent less land, 90 percent fewer GHGE (greenhouse gas emissions), and 46 percent less energy.”

“We didn’t tell them they had to measure those things or hit those milestones, but that’s what they were going after and wanted to prove to the world,” Beebe said.

For his part, Diamond Foundry CEO R. Martin Roscheisen said his company’s goal is to create real diamonds above ground in its San Francisco foundry using a proprietary solar technology.

“We use renewable energy and are the world’s first and only diamond producer certified to be carbon neutral,” he said, adding the company is now producing more than 100,000 carats per year with the goal of expanding to 1 million carats per year.

Roscheisen said Obvious Ventures invested in his company “when they barely existed,” so for his company, it was more about the people.

“James Joaquin [an Obvious co-founder] is simply irresistible, and they’ve now built a whole team that’s great,” he said.

I asked him to confirm if his company’s mission matched Obvious’ stated desire to only invest in companies “where every dollar of revenue was also delivering some environmental or social impact.”

His answer?

“Yes, this is true for us,” he said. “We create diamonds without social and environmental harm…. But we’re also growing as fast as the fastest growing companies in Silicon Valley and have even been profitable.”

Meanwhile, I thought it would be interesting to get the perspective of a traditional impact investor on whether he considers Obvious to be an impact venture firm.

Dan Graham, co-founder of Austin-based Notley Ventures, has co-invested alongside Obvious Ventures. He believes there are two pillars of impact investors: those that want to improve the world through business but are looking for “great returns” at the same time, and those that are OK with lower returns and are almost viewed more as philanthropy.

Obvious Ventures, in his view, falls into the first category.

“They’re looking for those home runs that will return very nicely for their investors but are also having a positive impact,” he told Crunchbase News. Obvious might be hesitant to be lumped into the impact category because it doesn’t want to scare away capital that is looking for great returns, or portray itself as being willing to take a below market return, Graham said.

“But if you look at their mission and all the companies in their portfolio, I’d definitely describe them as impact,” he added.

So does it really matter how Obvious Ventures (or any other company) identifies itself? Marketing gurus certainly have opinions on that, but we aren’t here to make that call. What we do know for certain, because we report on it day in and day out, is that whether a company survives or dies ultimately comes down to sound business metrics, and that is something we can measure.

To get big faster, younger unicorns start buying startups sooner

In the name of getting big quick, it seems like some of the most valuable private tech companies are turning to mergers and acquisitions (M&A) as a way to accelerate business growth. So-called “unicorns”—privately-held technology companies which achieve billion-dollar valuations sometime before (or as a direct result of) going public or exiting via M&A—are chomping at the bit to make their first acquisitions, suggesting a mounting pressure on companies to grow even quicker.

Analysis of Crunchbase data indicates that, on average, recently founded unicorn companies are more likely to make their first M&A transactions sooner after founding than their older counterparts. In other words, younger unicorns buy other companies earlier. Here’s the data.

The narrowing gap between founding and first M&A

Using M&A data for companies in Crunchbase’s unicorn list, we found out when unicorn companies made their first M&A transactions on average. (We detail a bit more of the methodology in a note at the end.) Companies founded in more recent years were quickest to hit the M&A trail.

Eleven unicorn companies founded in 2007 took an average of roughly 8.33 years before making their first acquisitions. At time of writing, 29 unicorns founded in 2012 have made their first startup purchases, averaging just 4.1 years before doing so.

Note that there’s a bit of a sampling bias here. To an extent, it’s expected that unicorn companies founded in more recent years will have a lower average age of first acquisition, because there are many unicorn companies which haven’t yet made their first M&A deals.

The bulk of all M&A transactions by unicorns (not just the first ones) occur within the first seven years after founding.

We should take recent years’ dramatic reduction in average time until first acquisition with a heftier grain of salt (again, there are plenty of unicorns which haven’t yet gone shopping for startups). Even with that caveat made, averages have steadily trended lower between 2007 and 2012, after remaining steady (across an admittedly small sample set) since the start of the unicorn era.

This suggests that younger unicorns are increasingly using M&A transactions as a way to accelerate their path to massive market power.

It’s a big move for a company to buy another one. There’s all the financial particulars to negotiate, the legal and regulatory hurdles to clear, and the inevitable friction of integrating teams and technology from one entity with another. And that’s when the process is amicable and goes smoothly. The amount of time and resources a company commits to carrying out an M&A strategy is nontrivial, so it’s understandable why a company would put this process off to a later date or eschew it entirely. That high-growth tech companies are pursuing such a time and energy-intense strategy earlier on in the venture life-cycle points to the benefits M&A can bring to startups seeking to scale speedily.

Methodology notes

We found this by analyzing the set of acquisitions made by companies in Crunchbase’s list of unicorns, which we used as a proxy for “high-performing private technology companies” as a collective whole. We found the time elapsed between unicorns’ listed founding dates (which, note, have varying levels of precision) and the date of their first-ever acquisitions, regardless of whether the acquirer had achieved unicorn status. We then plotted the resulting data in a couple of ways.

More information about Crunchbase News’s methodology can be found on a dedicated page on this site.

Uber’s IPO targets April, Stash stacks cash, and YC shakes it up

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a lot of fun. Connie Lozios took the captain’s chair in San Francisco while I manned the sails, and we had Female Founders Fund’s founder Anu Duggal in the studio to round out our crew.

It was a week of conclusions. Our prior notes on YC and Uber and a few other things came home to roost. But, you’re busy so let’s sink our teeth into the good stuff:

Uber’s IPO lands in April: Right before we hit record, news broke that Uber’s IPO will land in April. This isn’t an unexpected result, but it is one that is long-expected. With Lyft’s S-1 live, and in the wild, it’s time for Uber to, ahem, shift and catch up? Regardless, the company’s possible $1 billion raise to fund its research arm is another indicator that Uber is serious about going public. You know, that, and the fact that it’s filed privately.

Q1 IPO pace was slack: Aside from Lyft’s public S-1, there’s been an annoying dearth of public progress on the IPO front from tech’s biggest players. Sure, some companies filed to go public privately, but that’s more annoying than helpful. My point here was undercut by the Uber news, but if Lyft doesn’t debut in March then it’s going to be a complete first-quarter miss.

Stash raises $65 million: Another of the neo-banks raised capital this month, with Stash stacking a fresh $65 million dollars. The firm was coy about the round’s participants (odd), and silent on its new valuation (more normal, but still annoying). What matters is that Stash now has more dosh on hand to compete with Chime and Acorns, each of which recently raised big new rounds this year.

Changes at YC: As expected, and presaged on this very show, Sam Altman is graduating himself to the chairman’s seat at Y Combinator. That and the firm is finding office space in San Francisco. That’s more evidence that the center of gravity has truly shifted here in Northen California. Sand Hill Road is more Route 66 than it is a hyperloop.

And with that failed attempt at a joke, I give up. We’re back in seven days!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

With these numbers, it’s no surprise SoftBank is investing in Latin America

After SoftBank announced its plans to launch a $5 billion innovation fund in Latin America, we reached out to the good folks at the Latin American Venture Capital Association (LAVCA) for some context, and what they told me only validates the reasoning behind SoftBank’s interest in the region. (In 2017, we reported on the growing interest in Latin America.)

Let’s start with some numbers. Venture funding in Latin American startups is up — way up — from previous years. Specifically, LAVCA’s data shows that VC funding more than doubled in 2017 to $1.14 billion compared to $500 million in 2016. While 2018 numbers haven’t been finalized, LAVCA is projecting another record year with venture investments topping $1.5 billion.

If you combine private equity and venture investing, the numbers are even more impressive. LAVCA estimates that PE and VC fundraising together in Latin America in 2017 totaled $4.3 billion, up from $2.3 billion in 2016.1

Julie Ruvolo, director of venture capital for LAVCA, said all this “fits squarely in this larger momentum that’s been building over the last year or two.”

“We’ve been seeing the continued, and increased, entry of significant global players in the market,” she told Crunchbase News. “Plus, we’ve been seeing an uptick in $100 million-plus rounds, which was a relatively rare thing in Latin America.”

Also unsurprising is the breakdown of where the majority of venture dollars have gone in Latin America. Brazil led the region across all stages of VC investment, capturing 73 percent of VC investment dollars in 2017 and the first half of 2018 (201 startup investments totaling $1.4 billion). Mexico was the second most active market by number of deals (82 startup investments totaling $154 million), but Colombia saw more money invested ($188 million over 23 deals).

Here’s a quick rundown of just some of the bigger deals that took place during that same time frame:

It’s worth noting that fintech is the top sector of VC investment by dollars and number of deals in Latin America. The region also hosts a number of unicorns, including Brazilian ride-hailing startup 99; Colombian last-mile delivery service Rappi; Brazilian learning systems provider Arco Educação; and Brazilian fintech startup Stone Pagamentos.

With all this innovation and investing going on in Latin America, there is clearly large potential. And SoftBank is now poised to capitalize on that.

  1. The fundraising and investment data LAVCA collects is specific to fund managers that have raised capital from third-party institutional investors/limited partners and doesn’t account for other types of private capital investors, like a SoftBank fund or sovereign wealth fund, corporate, etc.

Small VC funds continue to raise, despite pressure from above

Recently, we bore out with data what has been felt for several years in most U.S. tech scenes: a rising venture market raises funds of all sizes. But it’s a trend that most favors entrenched firms, which raise ever-larger funds to accommodate a shift in the startup life cycle. Private companies are dawdling at the exit door, postponing graduation to public markets because private-market money is cheap and plentiful, for now.

In a time when “blitzscaling” is the business strategy du jour, some high-growth companies raise supergiant nine and 10-figure VC rounds to help them build moats around walled-garden markets they’re trying to build up from both sides, or they’ll die trying.

This is all to point out that, at the high end of the assets-under-management (AUM) spectrum, fund size has ballooned. This nets the biggest size class of VC funds a supermajority of all the capital general partners (GPs) call down from limited partners (LPs). This trend has accelerated in more recent fund vintages.

Small-dollar funds may get less of the overall fundraising pie, but their ranks continue to grow as more fund managers enter the industry. In most cases, sub-$100 million funds aren’t competing for the same institutional capital or sovereign wealth that typically invests in much bigger funds.

All this said, the upswing in smaller-sum funds continues. U.S.-based general partners raised more sub-$100 million venture funds in 2018 than in any year prior. This is true for two separate size classes: “Micro” and “Nano,” which exhibit similar growth patterns over time.

Featherweight funds soar on market thermals

Let’s tackle the smallest funds first. “Nano VC” is a relatively new entrant into the venture lexicon, and its definition is somewhat in flux. Samir Kaji, a managing director at First Republic Bank who has tracked the phenomenon of small venture funds for years, coined the term in early 2017 to describe new venture funds raising $15 million or less. Recently, we’ve heard the term “Nano VC” used to reference funds under $25 million, a slightly more expansive definition (perhaps accounting for growing seed and early-stage deal size).

Below, we plot the count of new U.S. Nano VC funds raising $25 million or less, by year announced (via press release or regulatory filing), over time. It is based on a snapshot of Crunchbase’s data taken at the time of writing.

Funds at these sizes are mostly focused on pre-seed, seed and Series A deals. Many are led by first-time and other “emerging” fund managers early on in their investing careers, according to follow-up research by Kaji.

The next size class up, Micro VC, includes venture funds in the $25 million to $100 million range. (Quick terminology note: Sometimes, people refer to all funds under $100 million as Micro, without designating Nano funds as a separate size class.) Micro VC funds are also generally focused on investing in seed and early-stage companies, and are also commonly run by new and emerging managers.

Creation of Micro VC funds also picked up over time, as well.

Although it’s a tidy little coincidence that our analysis shows roughly the same number of Micro and Nano VC funds raised in 2018, it’s important to remember that we’re sometimes talking about an order-of-magnitude difference in AUM between the two size classes. Nano and Micro VC funds accounted for roughly 24 and 25 percent, respectively, of the count of new venture firms announced or disclosed (via SEC filing) in 2018. However, Micro VC funds ($25 million-$100 million) raised six percent of the total capital raised by venture firms, while Nano VC funds (<$25 million) accounted for roughly one percent of total LP-GP dollar volume in 2018.

Good reason for caution

Lately, there’s been a lot of talk about declines in the reported number of seed-stage deals, a primary destination for capital raised by smaller funds. However, it’s likely that these declines aren’t as precipitous as the numbers may suggest. There are known delays in seed and early-stage deal reporting, as documented by Crunchbase News (in our quarterly reporting and methodology guide) and others. And, at least anecdotally, it seems like startups are staying in “stealth mode” longer, which only serves to exacerbate the reporting lag.

All this being said, projections (which try to compensate for delays using historical patterns of deal disclosures) from our Q4 2018 report on U.S. and Canadian venture investing found that seed-stage deal volume has declined for the past couple of quarters, while total dollar volume raised by seed-stage companies rose slightly in the final quarter of last year. Projected early-stage deal volume leveled off in the past several quarters, while projected dollar volume grew more than 11 percent quarter over quarter.

In other words, both seed and early-stage deals are getting bigger, on average, at the same time deal volume growth is stagnating in the U.S. and Canada. If this trend continues, funds on the smaller end of the AUM spectrum may face deal-flow pipeline problems in the future, or get priced out of bidding wars for a diminishing supply of equity in fledgling technology ventures with high growth potential.

Two Austin-based VC firms are each raising $100M funds

Texas startups will soon have two new sources for capital.

Crunchbase News has learned that two Austin-based venture capital firms, ATX Seed Ventures and Quake Capital, are in the process of each raising $100 million funds.

The news comes off a period in which the Austin tech scene saw a number of wins. Tech giants Apple and Google recently committed to expanding their presence in the Texas capital in a big way. And venture investing in the city is picking up at an impressive pace. In January alone, Austin startups raised nearly as much as was raised in all of the 2018 fourth quarter.

While both firms have different investment strategies, they share some similarities: They’re both trying to fill what they perceive as an early-stage gap in the Austin market, and they both are naturally bullish on the region.

First let’s discuss what ATX Seed Ventures has planned.

The firm only just recently closed its second $32 million fund and is already busy raising money for its third fund, which has a target of $100 million. It’s expecting a first close as soon as May, and a final close later this year.

While that might seem like a big jump, the five-year-old firm’s partners — managing director Chris Shonk, COO Danielle Allen and Brad Bentz — explained to me that the firm actually has more than $60 million under management, so the larger fund size may seem more dramatic than it actually is.

“We put a significant amount of capital to work outside of our primary fund with co-investments…” Shonk said. “But we’re excited to have investors not just doubling down, but tripling down. It’s a strong sign of investor confidence.”

ATX Seed Ventures launched its first fund at SXSW 2014, in which it deployed $17.25 million worth of capital. The firm currently has 26 portfolio companies and has already seen four exits: Incent Games (also known as FantasySalesTeam) was acquired by MicrosoftRideScout was acquired by moovel Group, a subsidiary of Daimler; Set.fm was acquired by VNUE Inc. and Unbill was acquired by Q2ebanking.

Per its name, ATX Seed Ventures started by primarily investing in Austin-based companies. It has since branched out to investing in other Texas cities and is now considering “surrounding” markets.

Despite its name, the firm doesn’t just invest in the seed stage, although that’s when it most prefers to get in.

“What we really came into the market trying to do was institutionalize seed by leading rounds, taking a board seat and structuring terms,” Shonk told Crunchbase News. “We like being a company’s first institutional round and bringing in what we think of as Series A and B rigor and discipline at the seed valuation stage.”

One of the things the firm likes most about being the first institutional check is that it can “control valuation a bit.”

“Valuations have kind of gone nuts, especially in later rounds,” Shonk said. “So this way, we’re not inheriting someone’s prior complexities.”

Bentz agrees.

“In terms of valuations, they’re not as out of control here in Texas as they are in some markets,” he said. “So, on a risk-adjusted basis you can still make some really good deals here.”

As for sectors, ATX is particularly focused on B2B — which Austin is known for — with a SaaS business model. But it’s also interested in supply chain/manufacturing, real estate tech and energy-related businesses.

“We try to run the races we think we can win,” Bentz said. “So we focus on our own areas of expertise as well as that of our LPs so that we can add strategic value, and not just put money into deals.”

Another quake

Meanwhile, Quake Capital — which moved its headquarters from New York to Austin last July — is also in the process of raising a $100 million fund.

Founded in January 2016, Quake started investing in early 2017 out of a $4.65 million fund. It invested in 31 companies out of that fund. Jim Brisimitzis, managing partner of Quake’s Seattle office, noted that Quake’s second fund was capped at $15 million “by request” of its LPs. That fund closed in December. Overall, the firm currently has more than 110 companies in its portfolio.

As part of what it describes as its increased commitment to the region, the firm has hired a new managing director, Jason Fernandez, to run its Austin office. As part of his new role, Fernandez will oversee Quake’s ATX accelerator program as well as the firm’s investor and advisor network. Most recently, he worked as an operations and finance partner at BASE Equity Partners.

“We believe Quake is coming into the Austin market at the right time,” Fernandez said. “We see a real opportunity to participate in this early-stage/seed category as most of the existing VCs seem to be moving up the food chain a bit and investing at later stages.”

Brisimitzis reiterated Quake’s confidence in the Austin market.

“We see a tremendous amount of growth in this ecosystem and want to be a part of it,” he told Crunchbase News.

As Austin’s startup ecosystem continues to grow, there’s no doubt two new nine-figure funds will be welcomed with open arms.

Four rounds for women-led startups, and a huge Series A for Motif

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

February is now behind us, but we gathered the troops to send it off in style: Connie Loizos was here, Kate Clark was in, I was around, and NEA’s Jonathan Golden joined us, as well.

It was good to have a full contingent on hand, as there was a lot to get through:

  • ThirdLove raises $55 million: Direct-to-consumer undergarment company ThirdLove raised a huge round this week, picking up $55 million on top of the roughly $13 million it had raised before. The company is well-known for having a plethora of sizes for bodies of all types. The company’s round was one of four from women-led businesses that we wanted to highlight this week.
  • Dipsea raises $5.5 million: Dipsea just , but it’s launching out the gate with $5.5 million in capital. The company’s subscription app ($8.99 per month, or yearly at a discount) provides short-form audio erotica aimed at the women in the market. The company is female-founded and fits into a recent trend we’ve seen of audio content picking up new money as the genre’s listening base expands during this, the second golden era of podcasting.
  • Rockets of Awesome raises $19.5 million: Our third woman-led startup that picked up capital this week is Rockets of Awesome, which sells subscription-based clothing for kids to parents. The new round contains a strong infusion of money from Foot Locker, a brand that we’re all aware of. Notably, Rockets of Awesome intends to dip its toe into the physical realm with its new money.
  • Coterie raises $2.75 million: Wrapping up our list of women-led companies that have raised this week, Coterie raised a smaller round to help fuel its Instagram-ready-party-in-a-box business. Sadly I didn’t get to mock Instagram during the show, but we did get to learn all about what a “friendaversary” is.
  • Wrapping the topic on women in venture, and women founding and running startups, we looked at a few data points here, and here. Summary: There’s more work to do.
  • Motif raises $90 million: Returning to our running look at companies that have raised outsized rounds, Motif, a spinout, raised a $90 million Series A. I wanted to know if we can all such a thing a Series A, and Jonathan told me to stop being such a square.
  • Uber versus Lyft: Closing out, we wanted to call ourselves out for being wrong about Uber and Lyft not taking shots at one another this close to their IPOs via discounts. They are, indeed, back on their bullshit.

All that and February is behind us. Here’s to March and what’s next.

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Airbnb, Automattic and Pinterest top rank of most acquisitive unicorns

It takes a lot more than a good idea and the right timing to build a billion-dollar company. Talent, focus, operational effectiveness and a healthy dose of luck are all components of a successful tech startup. Many of the most successful (or, at least, highest-valued) tech unicorns today didn’t get there alone.

Mergers and acquisitions (M&A) can be a major growth vector for rapidly scaling, highly valued technology companies. It’s a topic that we’ve covered off and on since the very first post on Crunchbase News in March 2017. Nearly two years later, we wanted to revisit that first post because things move quickly, and there is a new crop of companies in the unicorn spotlight these days. Which ones are the most active in the M&A market these days?

The most acquisitive U.S. unicorns today

Before displaying the U.S. unicorns with the most acquisitions to date, we first have to answer the question, “What is a unicorn?” The term is generally applied to venture-backed technology companies that have earned a valuation of $1 billion or more. Crunchbase tracks these companies in its Unicorns hub. The original definition of the term, first applied in a VC setting by Aileen Lee of Cowboy Ventures back in late 2011, specifies that unicorns were founded in or after 2003, following the first tech bubble. That’s the working definition we’ll be using here.

In the chart below, we display the number of known acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (yet). Keep in mind this is based on a snapshot of Crunchbase data, so the numbers and ranking may have changed by the time you read this. To maintain legibility and a reasonable size, we cut off the chart at companies that made seven or more acquisitions.

As one would expect, these rankings are somewhat different from the one we did two years ago. Several companies counted back in early March 2017 have since graduated to public markets or have been acquired.

Who’s gone?

Dropbox, which had acquired 23 companies at the time of our last analysis, went public weeks later and has since acquired two more companies (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six known acquisitions before making its exit via IPO.

Who stayed?

Which companies are still in the top ranks? Travel accommodations marketplace giant Airbnb jumped from number four to claim Dropbox’s vacancy as the most acquisitive private U.S. unicorn in the market. Airbnb made six more acquisitions since March 2017, most recently Danish event space and meeting venue marketplace Gaest.com. The still-pending deal was announced in January 2019.

WordPress developer and hosting company Automattic is still ranked number two. Automattic  href="https://www.crunchbase.com/acquisition/automattic-acquires-atavist--912abccd">acquired one more company — digital publication platform Atavist — since we last profiled unicorn M&A. Open-source software containerization company Docker, photo-sharing and search site Pinterest, enterprise social media management company Sprinklr and venture-backed media company Vox Media remain, as well.

Who’s new?

There are some notable newcomers in these rankings. We’ll focus on the most notable three: The We CompanyCoinbase and Lyft. (Honorable mention goes to Stripe and Unity Technologies, which are also new to this list.)

The We Company (the holding entity for WeWork) has made 10 acquisitions over the past two years. Earlier this month, The We Company bought Euclid, a company that analyzes physical space utilization and tracks visitors using Wi-Fi fingerprinting. Other buyouts include Meetup (a story broken by Crunchbase News in November 2017) reportedly for $200 million. Also in late 2017, The We Company acquired coding and design training program Flatiron School, giving the company a permanent tenant in some of its commercial spaces.

In its bid to solidify its position as the dominant consumer cryptocurrency player, Coinbase has been on quite the M&A tear lately. The company recently announced its plans to acquire Neutrino, a blockchain analytics and intelligence platform company based in Italy. As we covered, Coinbase likely made the deal to improve its compliance efforts. In January, Coinbase acquired data analysis company Blockspring, also for an undisclosed sum. The crypto company’s other most notable deal to date was its April 2018 buyout of the bitcoin mining hardware turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.

And finally, there’s Lyft, the more exclusively U.S.-focused ride-hailing and transportation service company. Lyft has made 10 known acquisitions since it was founded in 2012. Its latest M&A deal was urban bike service Motivate, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six companies at the time of writing. Uber bought a bike company of its own, JUMP Bikes, at a price of $200 million, a couple of months prior to Lyft’s Motivate purchase. Here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competition drove Uber and Lyft to raise money in lock-step with one another, and drove M&A strategy as well.

What to take away

With long-term business success, it’s often a chicken-and-egg question. Is a company successful because of the startups it bought along the way? Or did it buy companies because it was successful and had an opening to expand? Oftentimes, it’s a little of both.

The unicorn companies that dominate the private funding landscape today (if not in the number of deals, then in dollar volume for sure) continue to raise money in the name of growth. Growth can come the old-fashioned way, by establishing a market position and expanding it. Or, in the name of rapid scaling and ostensibly maximizing investor returns, M&A provides a lateral route into new markets or a way to further entrench the status quo. We’ll see how that strategy pays off when these companies eventually find the exit door .

Investor momentum builds for construction tech

Although it’s not the sexiest of industries, the hefty construction sector in 2018 attracted not only the attention but, more importantly, the dollars of investors.

Historically, the multi-trillion-dollar sector has been slow to adopt new technologies, as builders rely on a variety of disparate systems to manage projects, traditional building methods to construct homes and non-smart materials.

But a wave of startups is looking to capitalize on opportunities within the sector. Companies that have developed software solutions aimed at streamlining processes and increasing efficiencies are increasingly common. Prefab construction has evolved thanks to innovation in that space, and 3D printing technology can create homes in a matter of days.

Investors are taking notice. Funding in U.S.-based construction technology startups surged by 324 percent, to nearly $3.1 billion in 2018 compared with $731 million in 2017, according to Crunchbase data. While the 2018 numbers are impressive, it’s important to note that a few large rounds did take place last year and thus skewed the results. One startup alone, Menlo Park-based Katerra, brought in $865 million from SoftBank Vision FundRiverPark Ventures and Four Score Capital in a Series D round last January. And, smart glass company View closed a $1.1 billion Series H in November. Also, Procore, a (unicorn) provider of cloud-based construction management applications, in December raised a $75 million Series H round from Tiger Global Management.

Without those two rounds, the construction tech sector saw just $1.135 billion in funding in 2018, up a more modest 55 percent over 2017’s totals.

The industry continues to see M&A activity. Larger software companies are recognizing that it makes more sense to acquire companies in this space rather than try to reinvent the wheel from within. For example, in the fourth quarter of last year, 3D design software provider Autodesk announced plans to acquire two cloud-based software startups in the space: PlanGrid for $875 million and BuildingConnected for $275 million. Publicly traded software developer Trimble in July acquired construction management software startup Viewpoint for $1.2 billion.

Jerry Chen, partner at Greylock Partners, is bullish on the sector and expects 2019 will only see more funding and acquisitions. His firm invested in San Francisco-based Rhumbix, which has raised $28.6 million to grow its mobile platform designed for the construction craft workforce. That company, he says, had a “record year” in terms of customers and users.

“2018 was an inflection point for the construction tech industry,” Chen told Crunchbase News. “Major venture investing and strategic M&A by incumbent players continued… and I think you will see other major enterprise software companies begin to invest more in construction in 2019.”

One construction tech startup founder, Nick Carter of Chicago-based IngeniousIO, believes that despite the big numbers, the industry has a ways to go in terms of true startup growth. Part of that is simply due to one thing: tech founders and some investors are intimidated by the space.

“A lot of people don’t understand it,” he said. “There’s a massive learning curve. Companies have been building buildings the same way for hundreds of years and not everyone understand its complexities.”

The fact that construction is a largely unregulated industry is also a factor, Carter believes.

“Eventually money will flow into the sector because of the pure size of the market,” he told Crunchbase News. “The money is there. There are VCs at every angle wanting to get into this space, but they’re looking for the right opportunities. There just aren’t a ton of startups in the space.”

Construction is also a very cyclical business, and one has to wonder if a potential economic downturn would give investors pause. But to Carter, a downturn would only create more need for products like the one his company is working to build. IngeniousIO’s platform uses artificial intelligence to redefine the process of construction projects by creating what Carter describes as “a unifying, data-driven approach.”

“Tighter budgets are where a company like ours can do very well,” he said. “Companies wouldn’t have the overhead of outdated apps that take a significant amount of support to manage, scale and implement.”

The construction sector may not have the cache of other more Twitter-friendly markets, but it does have the sheer size and potential to provide ripe soil for investors willing to break ground on new opportunities.

Companies raising supergiant VC aren’t getting any younger

This week, point-to-point “microtransit” service company Lime announced it raised $310 million in a Series D round, which valued the company at $2.4 billion, post-money. That is pretty impressive for a startup founded just a couple of years ago. Since 2017, Lime has raised more than $765 million in venture funding, which is due in part to the pretty daunting economics of the bike and scooter business. It takes a lot of capital to acquire and deploy that hardware.

Lime isn’t the only company to raise supergiant ($100 million or more) VC rounds right out of the gate. Despite the fact that supergiant venture capital rounds have recently become an almost everyday occurrence, the age at which companies close their first nine-figure funding deal hasn’t really changed over the past several years.

In the chart below, we plot the distribution of startups’ age at the time of their first supergiant venture round of $100 million or more. (The age of a company at any subsequent supergiant round was excluded.) In prior reporting, we found that supergiant deal volume began accelerating in 2013, which is why we chose that year to start. For reasons we’ll explain after the chart, it’s best to think of the numbers presented here as a very good estimation rather than a highly precise measurement. There are still lessons to learn though.

Note from the get-go that company ages were calculated by finding the number of days elapsed between their founded date listed in Crunchbase and the date on which the company’s first supergiant VC round was announced. It sometimes takes several weeks between when a deal is finalized and when it’s publicly announced (even in the case of these really big deals). We excluded companies with no listed founding date. Also note that the founding dates listed in Crunchbase are often not precise, so that introduces some fuzziness as well.

However, these caveats aside, there are some general trends to be found here. The mix of companies raising their first really big rounds hasn’t changed all that much over time. On average, a little less than half of supergiant rounds are raised by companies roughly five years old or younger. Some years, like 2016, had above-average representation of younger companies raising their first nine-figure deals. Perhaps coincidentally, 2016 was also a year where supergiant VC (and, indeed, venture activity in general) slowed slightly.

If a company is going to raise their first supergiant VC round (which, recall, are still exceedingly rare), a majority of companies do so within the first five or six years in business. Of nearly 888 first supergiant rounds (raised since 2013) we analyzed, the largest number were struck between years three and five. There is a long tail of companies that raise their first nine-figure deals more than a decade after being founded.

Generally, this isn’t too surprising. Most VC funds operate on a 10-year cycle, as do many startups. Many companies raise their first big rounds of funding within the first few years after launch. Some of these rounds are bigger than others, and that’s what’s reflected above.

In entrepreneurial finance, up-front costs matter. Founded in December 2016, Elon Musk’s tunnel-digging endeavor The Boring Company was a little less than 15 months old when it raised $113 million in venture funding in April of 2018. Tunnel boring machines aren’t cheap. The company aims to dig tunnels for the low, low price of $10 million per mile.

It’s not just Mr. Musk who can raise supergiant sums so speedily. Some sectors are more capital-intense than others, requiring some companies to seek large funding deals early, to bring a product or service to market. For example, a number of companies cropped up in the residential real estate space with the goal of streamlining the home-buying process. In practice, it means that the company acquires the home itself, before ultimately signing it over to the homeowner. Ribbon is one such venture. The fintech company was founded in September 2017 and raised $225 million in Series A funding a little over one year later, in late October 2018.

Most companies aren’t a good fit for VC funding. Of those that try to raise VC funding, most fail. Of those that do raise VC money, the surpassing majority of those deals are less than $100 million. To be clear: We’re talking about very rarified air here. But it helps to confirm another side of a trend we found earlier, through some trial and error. Startups aren’t really raising money any faster than they used to. There’s just more of them. And the rounds are bigger.