Bloomberg Beta, now six years old, closes its third $75 million fund

Bloomberg Beta, a San Francisco-based outfit that uses Bloomberg LP’s money to make bets on startups, has closed its third fund with $75 million, according to Roy Bahat, who’d previously run the online media company IGN and who operates the fund as an equal partnership with Karin Klein and James Cham. (Klein formerly ran Bloomberg’s new initiatives; Cham was formerly a principal with Trinity Ventures.)

We talked with Bahat briefly last night about the new vehicle to ask how its capital will be deployed. Bahat stressed that the idea is to continue on the firm’s current path, which is to write checks of between $500,000 to $1 million initially; to loosely target ownership of around 10% in the startups it backs; and to fund companies that are focused on the future of work, which has long been an area of interest for Bahat and his colleagues.

That can mean an instant messaging platform like Slack, in which Bloomberg Beta had and continues to have a small stake, following its direct offering. It also can mean backing a company like Flexport, a San Francisco-based freight forwarding and customs brokerage company that appears to be among Bloomberg Beta’s biggest bets. (According to Crunchbase, the outfit has backed Flexport — valued most recently at $3.2 billion — at its seed, Series A and Series B rounds.)

Others of Bloomberg Beta’s portfolio companies include the augmented writing platform Textio; the insurance broker Newfront Insurance; the continuous delivery platform LaunchDarkly; and Netlify, a cloud computing company that sells hosting and serverless backend services for static websites.

What it won’t back: financial tech startups. Given where its money comes from, it’s “too close to home,” says Bahat.

In late August, California Governor Gavin Newsom announced that Bahat would be part of his Future of Work Commission, which will be “tasked with making recommendations to help California leaders think through how to create inclusive, long-term economic growth and ensure workers and their families share in that success.”

As part of his role on that commission, and as an investor in some companies that cater to independent contractors, we asked Bahat what he makes of AB 5, the new California law for contract workers that aims to address inequality in the workplace but has been met with resistance from numerous industries and players. Uber, Lyft and DoorDash are even preparing to file a ballot initiative to exempt themselves from the law.

Bahat suggested he’s not sure what to think quite yet, either. “How workers get classified is one of the issues” the commission will be studying, he said.

“We haven’t figured out how to make it all work; this story is still unfolding.”

MyGate raises $56M to bring its security management service to more gated communities in India

MyGate, a Bangalore-based startup that offers security management and convenience service for guard-gated premises, said today it has bagged more than $50 million in a new financing round as it looks to expand its footprint in the nation.

Chinese internet giant Tencent, Tiger Global, JS Capital and existing investor Prime Venture Partners funded the three-year-old startup’s $56 million Series B financing round. The new round pushes MyGate’s total fundraise to $67.5 million.

MyGate offers an eponymous mobile app that allows home residents to approve entries and exits, communicate with their neighbors, log attendance and pay society maintenance bills and daily help workers.

The startup says it is operational in 11 cities in India and has amassed over 1.2 million home customers. Its customer base is increasing by 20% each month, it claimed. The service is handling 60,000 requests each minute and clocking over 45 million check-in requests each month.

The idea of MyGate came after its co-founder and CEO, Vijay Arisetty, left the Indian armed force. In an interview with TechCrunch, he said his family was appalled to learn about the poor state of security across societies in India.

“This was also when e-commerce companies and food delivery firms were beginning to gain strong foothold in the nation. This meant that many people were entering a gated community each day,” he said.

MyGate has inked partnerships with many e-commerce players to create a system to offer a silent and secure delivery experience for its users. The startup also trains guards to understand the system.

According to industry estimates, more than 4.5 million people in India today live in gated communities, and that figure is growing by 13% each year. The private security industry in the country is a $15 billion market.

Arisetty says he believes the startup could significantly accelerate its growth as its solution understands the price-sensitive market. Using MyGate costs an apartment about Rs 20 (28 cents) per month. Even at that price, the startup says it is making a profit. “Today, we are seeing more demand than we can handle,” he said.

That’s where the new funding would come into play for the startup, which today employs about 700 people.

The startup plans to use the fresh capital to expand its technology infrastructure, its marketing and operations teams and build new features. The startup aims to reach 15 million homes in 40 Indian cities in the next 18 months.

In a statement, Sanjay Swamy, managing partner at Prime Venture Partners, said, “It’s been great to see a fledgling startup execute consistently and holistically, and grow into a category-creating market-leader.”

True Balance raises $23M to bring its payments app to more small cities and towns in India

South Korean startup True Balance, which operates an eponymous financial services app aimed at tens of millions of users in small cities and towns in India, has closed a new financing round as it looks to court more first time users in the world’s second largest internet market.

True Balance said on Tuesday that it has raised $23 million in its Series C financing round from seven Korean investors — NH Investment & Securities, IBK Capital, D3 Jubilee Partners, SB Partners, Shinhan Capital, and existing partners IMM Investment, and HB Investment.

TechCrunch reported earlier this year that True Balance — which has raised $65 million to date including the $38 million that it closed in its previous financing round — was looking to raise as much as $70 million for this financing round.

True Balance began its life as a tool to help users easily find their mobile balance, or top up pre-pay mobile credit. But in its four-year journey, its ambition has significantly grown beyond that. Today, it serves as a digital wallet app that helps users pay their mobile and electricity bills, and offer credit to customers so that they can pay later for their digital purchases.

true balance

The startup says it has amassed over 60 million registered users in India, most of whom live in small cities and towns — or dubbed India 2 and India 3. Most of these users are coming online for the first time and True Balance says it has an army of local agents — who get certain incentives — to help first time internet users understand the benefit of online transactions and start using the app.

True Balance says it clocks more than 300,000 digital transactions on its app each day. The startup, which recently introduced e-commerce shopping service on its app to sell products like smartphones, has clocked $100 million in GMV sales in the country to date.

Charlie Lee, founder of True Balance, said the startup will use the fresh capital to bulk up the offerings on the app. Some of the features that True Balance intends to add before the end of this fiscal year include the ability to purchase bus and train tickets, digital gold, and book cooking gas cylinders.

True Balance will also expand its lending and e-commerce services, Lee said. Its lending feature was used 1 million times in three months when it was introduced earlier this year. “We aim to strengthen our data and alternative credit scoring strategy to provide better financial services to our target — the next billion Indian users. Our goal is to reach 100 million digital touch points and become one of the top fin-tech companies in India by 2022,” he added in a statement.

Even as more than 600 million users in India are online today, just about as many remain offline. In recent years, many major companies in India have started to customize their services to appeal to users in India 2 and India 3 — who also have limited financial power.

SoftBank reportedly preps a package to take control of WeWork parent company

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.

Brad Feld: what founders need to know about recent changes in VC deal terms

Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch’s Connie Loizos hopped on the line with prominent investor, entrepreneur, thought leader, and Techstars co-founder Brad Feld to discuss the latest edition of his book “Venture Deals”, his advice to founders and investors, and his take on hot button issues of the day (including dual-class shares, direct listings, and what happened at WeWork).

In their conversation, Brad and Connie discuss the need to know information when it comes to preparing for, structuring and executing venture deals, and how that information has changed over the past several decades. Feld walks through the major topics that have been added in the latest edition of the book, such as how to handle venture debt, as well as tactical attributes that aren’t currently in the book, such as secondary market trading.

Brad also gives his take on the most effective fundraising tactics for founders, and what common pieces of advice might be overblown.

Brad Feld: “I think the approach to the amount of money that you’re raising is both nuanced and evolves based on what financing round you’re at. So if you’re in an early round, some of the characteristics are different than if you’re in a later round. But I think the general truism… that I like to use when people say, “Well, how much money should I raise?”

I start with two variables and you the entrepreneur get to define those two variables. The two variables are: the amount of money you raise and what getting to the next level means. The amount of money you should raise is the amount of money that you need to get your business to the next level. There are lots of different ways to define what next level is and by forcing yourself internally to define next level and then define what you need in terms of capital to get to that next level… when you’re raising that first round of financing or even the second or third round of financing, it helps you size rationally what you need versus reactively to whatever the market characteristics are.

I actually encourage entrepreneurs to raise the least amount of money they need to get to the next level, or at least that’s the number that they go out to market with. Not a range, not a big number because you’re trying to drive some kind of valuation characteristic off a big number, but the amount of money that you actually think you need to get to the next level. Then if you can be oversubscribed, that’s an awesome situation.”

Feld and Connie dive deeper into current issues in the startup and venture landscape, including Brad’s take on the impact of the SoftBank Vision Fund, what went down at internally and externally at both WeWork and Uber, as well as how boards, executives and founders can manage cult of personality and static company cultures.

For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free. 

Connie Loizos: I think the last time I saw you in person was out here in San Francisco at an event I was hosting and that was maybe two years ago?

Brad Feld: Yup, that’s right. That was at the Autodesk Lab if I remember correctly.

Loizos: Yes. It’s good to hear your voice, and thank you for joining us on this call. We have a lot of readers who are big fans of yours that are on the line and are eager to learn about your book “Venture Deals” and your broader thoughts about the current state of the market. And that said, I know you only have so much time, so let’s dive first into the book. So ‘Wiley’, your publisher has just put out the fourth edition of this book “Venture Deals”, and it’s really easy to appreciate why. I was looking through it and it’s so incredibly useful about how venture deals come together and possible pitfalls to avoid. And given there are always new entrepreneurs emerging, it continues to be highly relevant.

Can I ask you, so how do you go about updating a book like this, given that some things change and some things stay the same?

Club Factory raises $100M to expand its lifestyle e-commerce platform in India

Club Factory, a Chinese e-commerce platform that sells fashion and beauty items and electronics accessories, has raised $100 million in a new financing round as it looks to expand its footprint in India.

The new financing round — Series D — was led by Qiming Venture Partners, Bertelsmann, IDG Capital “and  other Fortune 500 companies from the U.S. and Asia,” the five-year-old Hangzhou-headquartered startup said. Club Factory, which raised $100 million in its previous financing round early last year, has raised about $220 million to date.

Club Factory has amassed more than 70 million users on its platform, of which about 40 million live in India. The startup cited figures from app analytics firm App Annie to claim that Club Factory is now the third-largest e-commerce platform in India, surpassing once a market-leader Snapdeal.

Club Factory does not charge local sellers any commission fee, incentivizing them to cut down the cost of their items and expand offerings. The number of sellers on its platform in India has grown by 10X in the last six months, the startup claimed. Club Factory, which has about 5,000 sellers in India, plans to double that figure by year-end, it said.

club factory india

A screenshot of Club Factory’s homepage

“At the same time, we have also pioneered to strengthen the ‘store-within-platform’ concept in India’s e-commerce industry, allowing direct contact between buyers and sellers through our application,” said Vincent Lou, co-founder and chief executive of Club Factory, in a statement.

He added, “We have changed the status of the Indian e-commerce industry that monopolized information of buyers and sellers, allowing SMEs to own their customers and run their business better. All this, combined with our strategy to reduce the transaction costs of buyers and sellers and allow more local players to enter the ecosystem, has worked very well for us in India.”

The startup said in the coming months it will also bulk up more items on its platform and introduce new product categories.

India’s Vahdam Teas raises $11M to grow its tea-commerce business in the US and Europe

Vahdam Teas, an India-based e-commerce startup that sells fresh tea in international markets, has closed a new financing round as it looks to expand its presence in the U.S. and Europe.

The three-year old startup said it has raised $11 million in its Series C financing round. The round, which according to a person familiar with the matter valued the startup at about $40 million, was led by Sixth Sense Ventures. Existing investor Fireside Ventures, which has put money in a number of consumer-facing brands, also participated in the round.

Mankind Group Family office, Infosys co-founder Kris Gopalkrishnan, SAR Group Family office, Zomato co-founder Pankaj Chaddah, and Urmin Group family office also participated in the new financing round. The startup, headquartered in New Delhi and New York, has raised about $16 million to date.

The startup was founded by 28-year-old Bala Sarda, who comes from a tea industry family. Vahdam Teas operates an eponymous e-commerce platform and also works with giants such as Amazon, to sell tea directly to consumers in the U.S., Europe, and other international markets.

Vahdam Teas cuts the middlemen suppliers to reduce the time it takes to ship tea to consumers. “If you look at the supply chain for exporting from India, it’s completely broken. The goods go through distributors, then sold to exporters. Somewhere in the middle, brokers show up, too. Then an importer imports the tea. It all takes months to get a supply cycle to reach consumers. Unlike wine or whiskey, tea is best when it is fresh. Its ingredients lose flavor with time,” he explained.

To address this, Vahdam Teas has built a supply chain network to source tea directly from hundreds of gardens in India. It stores all the goods in its warehouses in New Delhi and then exports directly to its entities in different markets. The faster delivery of tea and better control of the supply chain is one of the key differentiating factors for Vahdam Teas.

Today about 99% of its sales comes from outside of India, said Sarda, who noted that with the new capital the startup would explore expanding its business in India, too.

But much of the fresh capital would be invested in bulking up its supply chain network and set up additional offices in the U.S. and Europe, he said in an interview with TechCrunch earlier this week. The startup also plans to launch new products and enter new markets in South Asia and UAE.

Vahdam Teas also wants to have presence in the offline (brick and mortar) market, and bring its tea to 500-700 stores in the U.S. in the coming months. “We have aspirations to become an omni-channel brand,” he said.

India controls about 25% of tea production worldwide. But Indian brands almost have a “negligible presence” on the world map, said Nikhil Vora, founder and chief executive of Sixth Sense Ventures. “Vahdam is an interesting example of how a traditional business like tea can get disrupted. We’re impressed with the way Bala has sought to target the global markets first and create a brand salience and market innovative ethnic Indian tea flavours,” he added.

Tea is one of the biggest industries for laborers in India. Sarda said the startup donates 1% of its revenue to help these workers educate their children.

Boeing backs Virgin Galactic with strategic $20M investment

Virgin Galactic has $20 million more to pursue its goal of space tourism with a new investment from Boeing announced this morning. The two companies are both deeply involved in human spaceflight, but in different ways — and Boeing seems to feel that it’s better to join Virgin than try to beat them at this particular game.

VG is well on its way to its goal of being the first company to offer “routine, consistent and affordable” space tourism, though obviously the last item is relative. Its spacecraft have already been to space with people inside, essentially taking the same trip as what is planned for paying passengers — who, by the way, will embark from the recently unveiled Spaceport America in New Mexico.

The money came through through Boeing’s HorizonX Ventures, which has previously invested in some rather smaller scale aerospace startups, like Accion Systems and Matternet. The team there seems to prefer to give little cash injections here and there rather than back a major player with a sizable series A or the like.

Little context is offered for the investment; Quotes provided in a press release are more empty than usual, speaking only of the bright, vague future of human spaceflight. Why $20 million? Why now?

The investment will be contingent on new shares being issued in the new publicly traded company formed through a recently announced merger with Chamath Palihapitiya’s Social Capital Hedosophia. That’s expected to go forward in Q4 of this year.

Perhaps ahead of that event, and with Virgin founder Sir Richard Branson having walked away from a billion dollars offered by Saudia Arabia (in response to the Khashoggi murder), the company decided it could use a bit more relatively unstructured cash.

No specific partnerships or technologies are mentioned, simply that it is an “important collaboration,” in Branson’s words. CEO George Whitesides said he is “excited to partner with Boeing to build something that can truly change how people move around the planet.” “Something” that moves people around the planet? What else would either company build?

Boeing had probably been knocking on the door for a while, and they needed to get this funding on the books ahead of the merger, with specific collaborations and projects still on the drawing board and therefore with budgets only vaguely formed. “$20 million is probably fine,” I can imagine someone saying in a boardroom somewhere.

There’s no timeline on Virgin Galactic’s first commercial flight, but it’s conceivable it could be before the end of the year — a 2019 launch would be a nice feather to have in their cap, but either way there’s no shortage of customers; Reportedly some $80 million of commitments have already been made towards trips to space.

With $15M round and 100K tablets sold, reMarkable CEO wants to make tech ‘more human’

The reMarkable tablet is a strange device in this era of ultra-smart gadgets: A black and white screen meant for reading, writing, and sketching — and nothing more. Yet the company has sold 100,000 of the devices and now has attracted $15 million in series A funding from Spark Capital.

It’s an unusual trajectory for a hardware startup exploring a nearly unoccupied market, but CEO Magnus Wanberg is confident that’s because this category of device is destined to grow in response to increasingly invasive tech. Sometimes an anti-technology trend is the tech opportunity of a lifetime.

I reviewed the reMarkable last year and compared it with its only real competition, the Sony Digital Paper Tablet. It was launched not on Kickstarter or Indiegogo but with its own independent crowdfunding campaign — and considering we’ve seen devices like this attempt such a thing and either let down or rip off their backers, that alone was a significant risk.

The device has been a runaway success, though, selling over 100,000 units — and attracting investment in the process. When I talked with Wanberg and co-founder Gerst about their new A round, the conversation was so interesting that I decided to publish it in full (or at least slightly edited).

How did they get here? What would they have done differently? Is the threat of the “smart” world really a thing? Why fight tech with more tech?

Devin: So you guys raised some money, that’s great! But it’s been a while since we talked. I think it’s important to hear about the progress of unique companies that are doing interesting things. So first can you tell me a little about what the company’s been busy with?

Magnus: Well, we’ve created this wonderful product, the reMarkable paper tablet. We’ve been very focused on that effort, based on a love for paper and a love for technology, to see if we can find some ways to join these two together to help people think better. That’s sort of the the whole ethos of the company.

So for the last six years, we’ve just been grinding away… you know, we’re a small player up against the big guys on this. So we’ve been sort of fighting guerrilla warfare trying to trying to establish ourselves.

And we were successful, fortunately, when we did our pre-order campaign, because as we found out, we weren’t the only ones who who love this notion of thinking better with the paper tablet, seeing paper as a powerful tool for thinking and for creating.

Google-backed Dunzo raises $45M to expand its hyperlocal delivery startup in India

An Indian startup that is increasingly posing a threat to established food and grocery delivery businesses and e-commerce giants just closed a new financing round to expand its business in the nation.

Bangalore-based Dunzo said today it has raised $45 million from Google, Lightbox, STIC Ventures, and 3L Capital. The new financing round — dubbed Series D — valued the four-year-old startup at about $200 million, three people familiar with the matter told TechCrunch. The startup has raised $81 million to date.

Dunzo operates an eponymous hyper-local delivery service. Users get access to a wide-range of items from grocery, perishables, pet supplies, medicines to dinner from their neighborhood stores and restaurants.

But that’s not all. You can have Dunzo pick up and deliver anything in a city. Forgot your laptop charger at home? Dunzo can take care of it. Part of the service’s charm is that its delivery is fast (most of its deliveries take under 25 minutes) and as long as the store is not very far away, it’s not going to cost you more than a $1.

Dunzo is currently operational in eight Indian cities: Bangalore, Delhi, Noida, Pune, Gurgaon, Powai, Hyderabad, and Chennai. The startup said it will use the fresh capital to expand its technology infrastructure and develop partnerships with small and medium businesses.

dunzo hq techcrunch

Dunzo founders told TechCrunch that food category already accounts for a quarter of all deliveries the service processes. As the service scales, it is increasingly becoming a competitor to food delivery startups such as BigBasket, Swiggy, and Zomato.

In recent months, Dunzo has also started to test delivery of smartphones and other products. The startup recently quietly began to deliver Xiaomi smartphones to users in select parts of India. Unlike Amazon or Flipkart, that take a day or two to deliver an item, Dunzo was getting the new phones to users in 30 minutes. Dunzo has tested a similar partnership with Puma, executives told TechCrunch.

In an interesting turn of events, last month Swiggy announced Go, a service that allows users in select cities in India to deliver any kind of product — not just food, thereby entering Dunzo’s territory.

More to follow shortly…