ManyChat raises $18M to help businesses tap into messaging

Mobile marketing company ManyChat has raised $18 million in Series A funding.

The startup, co-founded by CEO Mikael Yang, is currently focused on Facebook Messenger. It offers tools for creating a bot on Messenger while also supporting live human chatting (ManyChat says its approach is a “smart blend of automation and personal outreach”), and additional options like advertising to get more users to engage with your messaging channels.

ManyChat is just one of several startups hoping to build a business around Facebook Messenger bots, but this sounds like a product that businesses are actually using. The company says more than 1 million accounts have been created on the platform, with customers coming from e-commerce, traditional retail, gyms, beauty salons restaurants and more.

Those customers have collectively enlisted 350 million Messenger subscribers, and there are 7 billion messages sent on the platform each month. Plus, with an average open rate of 80 percent, these messages are actually being read.

The funding was led by Bessemer Venture Capital, with participation from Flint Capital. Bessemer’s Ethan Kurzweil is joining the board of directors, while the firm’s Alex Ferrara also becomes a board observer.

“ManyChat is at the forefront of a major shift in how businesses market to customers,” Kurzweil said in the funding announcement. “It’s not a matter of ‘if’ but ‘when’ email lists and static forms get replaced with a more personalized and conversational approach to customer engagement.”

He added that the company’s work with Messenger is “only the beginning”: “With Instagram, WhatsApp, RCS, and others on the horizon, there’s endless potential to scale.”

Startups Weekly: Zoom CEO says its stock price is ‘too high’

When Zoom hit the public markets Thursday, its IPO pop, a whopping 81 percent, floored everyone, including its own chief executive officer, Eric Yuan.

Yuan became a billionaire this week when his video conferencing business went public. He told Bloomberg that he actually wished his stock hadn’t soared quite so high. I’m guessing his modesty and laser focus attracted Wall Street to his stock; well, that, and the fact that his business is actually profitable. He is, this week proved, not your average tech CEO.

I chatted with him briefly on listing day. Here’s what he had to say.

“I think the future is so bright and the stock price will follow our execution. Our philosophy remains the same even now that we’ve become a public company. The philosophy, first of all, is you have to focus on execution, but how do you do that? For me as a CEO, my number one role is to make sure Zoom customers are happy. Our market is growing and if our customers are happy they are going to pay for our service. I don’t think anything will change after the IPO. We will probably have a much better brand because we are a public company now, it’s a new milestone.”

“The dream is coming true,” he added. 

For the most part, it sounded like Yuan just wants to get back to work.

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IPO corner

You thought I was done with IPO talk? No, definitely not:

  • Pinterest completed its IPO this week too! Here’s the TLDR: Pinterest popped 25 percent on its debut Thursday and is currently trading up 28 percent. Not bad, Pinterest, not bad.
  • Fastly, a startup I’d admittedly never heard of until this week, filed its S-1 and displayed a nice path to profitability. That means the parade of tech IPOs is far from over.
  • Uber… Surprisingly, no Uber IPO news this week. Sit tight, more is surely coming.

$1B for self-driving cars

While I’m on the subject of Uber, the company’s autonomous vehicles unit did, in fact, raise $1 billion, a piece of news that had been previously reported but was confirmed this week. With funding from Toyota, Denso and SoftBank’s Vision Fund, Uber will spin-out its self-driving car unit, called Uber’s Advanced Technologies Group. The deal values ATG at $7.25 billion.

Robots!

The TechCrunch staff traveled to Berkeley this week for a day-long conference on robotics and artificial intelligence. The highlight? Boston Dynamics CEO Marc Raibert debuted the production version of their buzzworthy electric robot. As we noted last year, the company plans to produce around 100 models of the robot in 2019. Raibert said the company is aiming to start production in July or August. There are robots coming off the assembly line now, but they are betas being used for testing, and the company is still doing redesigns. Pricing details will be announced this summer.

Digital health investment is down

Despite notable rounds for digital health businesses like Ro, known for its direct-to-consumer erectile dysfunction medications, investment in the digital health space is actually down, reports TechCrunch’s Jonathan Shieber. Venture investors, private equity and corporations funneled $2 billion into digital health startups in the first quarter of 2019, down 19 percent from the nearly $2.5 billion invested a year ago. There were also 38 fewer deals done in the first quarter this year than last year, when investors backed 187 early-stage digital health companies, according to data from Mercom Capital Group.

Startup capital

Byton loses co-founder and former CEO, reported $500M Series C to close this summer
Lyric raises $160M from VCs, Airbnb
Brex, the credit card for startups, raises $100M debt round
Ro, a D2C online pharmacy, reaches $500M valuation
Logistics startup Zencargo gets $20M to take on the business of freight forwarding
Co-Star raises $5M to bring its astrology app to Android
Y Combinator grad Fuzzbuzz lands $2.7M seed round to deliver fuzzing as a service

Extra Crunch

Hundreds of billions of dollars in venture capital went into tech startups last year, topping off huge growth this decade. VCs are reviewing more pitch decks than ever, as more people build companies and try to get a slice of the funding opportunities. So how do you do that in such a competitive landscape? Storytelling. Read contributor’s Russ Heddleston’s latest for Extra Crunch: Data tells us that investors love a good story.

Plus: The different playbook of D2C brands

And finally, for the first of a new series on VC-backed exits aptly called The Exit. TechCrunch’s Lucas Matney spoke to Bessemer Venture Partners’ Adam Fisher about Dynamic Yield’s $300M exit to McDonald’s.

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about rounds for Brex, Ro and Kindbody, plus special guest Danny Crichton joined us to discuss the latest in the chip and sensor world.

Pinterest prices IPO above range

Pinterest priced shares of its stock, “PINS,” above its anticipated range on Wednesday evening, CNBC reports. The company will sell 75 million shares of Class A common stock at $19 apiece in an offering that will attract $1.4 billion in new capital for the visual search engine.

The NYSE-listed business had planned to sell its shares at between $15 to $17 and didn’t increase the size of its planned offering prior to Wednesday’s pricing.

Valued at $12.3 billion in 2017, the initial public offering gives Pinterest an initial market cap of approximately $10 billion.

The IPO has been a long time coming for the nearly 10-year-old company led by co-founder and chief executive officer Ben Silbermann . Given Wall Street’s lackluster demand for ride-hailing company Lyft, another consumer technology stock that recently made its Nasdaq debut, it’s unclear just how well Pinterest will perform in the days, weeks, months and years to come. Pinterest is unprofitable like its fellow unicorns Lyft and Uber, but its financials, disclosed in its IPO prospectus, illustrate a clear path to profitability. As for Lyft and Uber, Wall Street analysts, among others, still question whether either of the businesses will ever achieve profitability.

Eric Kim of consumer tech investment firm Goodwater Capital says despite the fact that Pinterest and Lyft are very different companies, Lyft’s falling stock has undoubtedly impacted Pinterest’s offering.

“They are so close together, it’s hard for those not to influence one another,” Kim told TechCrunch. “It’s a much different category, but they are still both consumer tech and they will both be trading at a double-digital revenue multiple.

The San Francisco-based company posted revenue of $755.9 million in the year ending December 31, 2018 — 16 times less than its latest decacorn valuation — on losses of $62.9 million. That’s up from $472.8 million in revenue in 2017 on losses of $130 million.

The stock offering represents a big liquidity event for a handful of investors. Pinterest had raised a modest $1.47 billion in equity funding from Bessemer Venture Partners, which holds a 13.1 percent pre-IPO stake, FirstMark Capital (9.8 percent), Andreessen Horowitz (9.6 percent), Fidelity Investments (7.1 percent) and Valiant Capital Partners (6 percent). Bessemer’s stake is worth upwards of $1 billion. FirstMark and a16z’s shares will be worth more than $700 million each.

Zoom — another tech company going public on Thursday that, unlike its peers, is actually profitable — priced its shares on Wednesday too after increasing the price range of its IPO earlier this week. The price values Zoom at roughly $9 billion, nearly surpassing Pinterest, an impressive feat considering Zoom was last valued at $1 billion in 2017 around when Pinterest’s Series H valued it at a whopping $12.3 billion.

Profitability, as it turns out, may mean more to Wall Street than Silicon Valley thinks.

The Exit: an AI startup’s McPivot

Five years ago, Dynamic Yield was courting an investment from The New York Times as it looked to shift how publishers paywalled their content. Last month, Chicago-based fast food king McDonald’s bought the Israeli company for $300 million, a source told TechCrunch, with the purpose of rethinking how people order drive-thru chicken nuggets.

The pivot from courting the grey lady to the golden arches isn’t as drastic as it sounds. In a lot of ways, it’s the result of the company learning to say “no” to certain customers. At least, that’s what Bessemer’s Adam Fisher tells us.

The Exit is a new series at TechCrunch. It’s an exit interview of sorts with a VC who was in the right place at the right time but made the right call on an investment that paid off. 

Fisher

Fisher was Dynamic Yield founder Liad Agmon’s first call when he started looking for funds from institutional investors. Bessemer bankrolled the bulk of a $1.7 million funding round which valued the startup at $5 million pre-money back in 2013. The firm ended up putting about $15 million into Dynamic Yield, which raised ~$85 million in total from backers including Marker Capital, Union Tech Ventures, Baidu and The New York Times.

Fisher and I chatted at length about the company’s challenging rise and how Israel’s tech scene is still being underestimated. Fisher has 11 years at Bessemer under his belt and 14 exits including Wix, Intucell, Ravello and Leaba.

The interview has been edited for length and clarity. 


Saying “No”

Lucas Matney: So, right off the bat, how exactly did this tool initially built for publishers end up becoming something that McDonalds wanted?

Adam Fisher: I mean, the story of Dynamic Yield is unique. Liad, the founder and CEO, he was an entrepreneur in residence in our Herzliya office back in 2011. I’d identified him earlier from his previous company, and I just said, ‘Well, that’s the kind of guy I’d love to work with.’ I didn’t like his previous company, but there was something about his charisma, his technology background, his youth, which I just felt like “Wow, he’s going to do something interesting.” And so when he sold his previous company, coincidentally to another Chicago based company called Sears, I invited him and I think he found it very flattering, so he joined us as an EIR.

Sila Nano’s battery tech is now worth over $1 billion with Daimler partnership and $150 million investment

Sila Nanotechnologies and its battery materials manufacturing technology are now worth over $1 billion.

The company, which announced a $170 million funding led by Daimler and a partnership with the famed German automaker, started building out its first production lines for its battery materials last year. That first line is capable of producing the material to supply the equivalent of 50 megawatts of lithium ion batteries, according to Sila Nano’s chief executive officer Gene Berdichevsky.

That construction, made on the heels of a $70 million investment round, is now going to be expanded with the new cash from Daimler and 8VC along with previous investors Bessemer Venture Partners, Chengwei Capital, Matrix Partners, Siemens Next47, and Sutter Hill Ventures.

Berdichevsky would not comment on how much production capacity would increase, but did say that the company’s battery materials would find their way into consumer devices before the end of 2020. That means the potential for longer lasting batteries in smart watches, earbuds, and health trackers, initially.

From its headquarters in Alameda, Calif., Sila Nanotechnologies has developed a silicon-based anode to replace graphite in lithium-ion batteries. The company claims that its materials can improve the energy density of batteries by 20%.

“If you can increase energy density by 20%… you can use 20% fewer cells and each pack can cost 20% less,” says Berdichevsky. “The subtext of it is that it is the way to drive price of energy storage down. And that’s the way for the electric vehicle market to sand more and more on its own.”

That kind of cost reduction is what brought BMW and Daimler to partner with the company — and what led to the massive funding round and the company’s newfound unicorn status.

Our valuation is over $1 billion dollars now,” Berdichevsky says. 

Sila Nanotechnologies

Image courtesy of Sila Nanotechnologies

For Daimler, the materials that Sila Nanotechnologies are developing will give the company’s commitment to electrification a much needed boost.

Mercedes-Benz has plans to electrify its entire product suite by 2022, the company has said. That means Daimler has to accelerate its production of electrified alternatives to its fuel-powered fleet — everything from its 48-volt electrical system (the EQ Boost), to its plug-in hybrids (EQ-Power) and the more than . ten fully electric vehicles powered by batteries or fuel cells. The company is projecting that between 15% and 25% of its total sales will be electric by 2025 — depending on customer preferences, infrastructure development and the regulatory environment in each of the markets in which it sells vehicles, the company said.

In all, Mercedes-Benz cars has committed to investing €10 billion ($11.3 billion) in the production of vehicles and another $1.3 billion into a global battery production network. The global battery production network of Mercedes-Benz Cars will in the future consist of nine factories on three continents.

“We are on our way to a carbon free future mobility. While our all-new EQC model enters the markets this year we are already preparing the way for the next generation of powerful battery electric vehicles,” said Sajjad Khan, Executive Vice President for Connected, Autonomous, Shared & Electric Mobility, Daimler AG in a statement.

Still, consumers shouldn’t expect to see vehicles with Sila Nano’s technology until at least the mid 2020s, as automakers look to prove that the company’s battery technology meets their quality assurance standards. “The qualification time means there’s many years of work to make sure it is reliable for next ten to twenty years,” says Berdichevsky. “Our partnership is geared towards mid-2020s production targets, but the qualification is something that takes quite a while.”

The company’s latest round brings its total financing to just under $300 million since its launch in 2011. And as a result of the latest funding, former General Electric chief executive Jeff Immelt will take a seat on the company’s board of directors.

“Advancements in lithium-ion batteries have become increasingly limited, and we are fighting for incremental improvements,” said Jeff Immelt. “I’ve seen first-hand that this is a huge opportunity that is also incredibly hard to solve. The team at Sila Nano has not only created a breakthrough chemistry, but solved it in a way that is commercially viable at scale.”

CEO Jennifer Tejada just took PagerDuty public; we talked now about the roadshow, the IPO, and what comes next

PagerDuty debuted on the New York Stock Exchange today, and as we type, shares of the nine-year-old, San Francisco-based incident response software company are trading at nearly $39.

That’s up more than 60 percent above their IPO range of $24 per share, which was itself adjusted from the range of $21 to $23 that had been expected earlier and gives the company a valuation of close to $3 billion. That’s an awful lot for a company whose software helps technical teams at 11,000 companies spot problems with applications and respond to incidents. Though it’s growing quickly — revenue was up 48 percent last year  — it still pulled in just $117.8 million in 2018. Meanwhile, its net loss widened last year to $40.7 million from $38.1 million in 2017.

Certainly, its performance has to make the company’s investors —  who last assigned the company a valuation of $1.3 billion back in September — very happy. Some of the VCs poised to win big if PagerDuty’s shares continue flying high include Andreessen Horowitz, which owned 18.4 percent of PagerDuty’s shares sailing into the IPO; Accel, which owned 12.3 recent; and Bessemer, which owned 12.2 percent. Other winners include Baseline Ventures (6.7 percent) and Harrison Metal (5.3 percent).

It’s also exciting for CEO Jennifer Tejada, a proven operator who was brought in to lead PagerDuty in 2016 and now becomes part of a small — but growing — club of women CEOs to take their tech companies public, including Katrina Lake of Stitch Fix and Julia Hartz of Eventbrite.

We talked with Tejada earlier today about the company’s big day. In addition to crediting company cofounders (and shareholders) Andrew Miklas and Baskar Puvanathasan, both of whom have since left the company, Tejada thanked PagerDuty cofounder Alex Solomon, who remains the company’s CTO. She also told us a little bit about what today has been like and how the IPO changes things — and doesn’t. Our chat has been edited for length.

TC: First and foremost, how are you feeling?

JT: It’s been an incredible day. It’s been an incredible several months. You have to enjoy it when it’s going well.

TC: How does the vision for the company change now that it’s public? Have you been thinking ahead to possible acquisitions?

JT:  The vision doesn’t change. We intend to do exactly what we’ve been doing, which is to provide the best real-time operations platform available to companies as they undergo digital transformation to meet the growing demands of their customers. We think we’re [facing] an early and very large opportunity that will be available to us for a long time. So our job continues to be to build great products, stay close to our customers, expand regionally, and continue doing what has allowed us to be a successful private company.

TC: You and I had talked about the challenges of retaining employees in San Francisco when we sat down together in November. It’s a battle for every local company. How do you keep employees beyond the lock-up period?  How do you ensure they stay focused on performance and not your share price?

JT: I think that mindset of, ‘It’s all over when you go public,’ is kind of a Silicon Valley fable. If you look at the most successful SaaS companies on the planet, they’ve gained 10x, 20x, 30x their value post their IPO. I also think what employees look for ahead of their financial success is career success. Am I being developed and recognized and can I build my career at this company? And we’ve worked really hard to create those career opportunities for our employees who [I think see, as I do] the IPO like a racing boat pushing off the dock, across the starting line, and into the open ocean, where the next adventure awaits.

In the meantime, we’ve already lessened our reliance on [overheated job markets] by opening offices in Toronto and Atlanta and Seattle and London and Sydney, even while we’re still hiring in San Francisco and Seattle.

TC: Obviously, Lyft’s shares have been up and down, owing to short sellers. Have you been monitoring short interest? Are you at all concerned about investors driving the price sky high, then selling it on the way down?

JT: I haven’t even looked at the stock price in the last several hours .  .  . There are a lot of things outside of my control, and the free market is one of them.

TC: PagerDuty is rare in that is doesn’t have a dual-class structure, when can greatly empower leaders over everyone else associated with a company. Presumably, this is a great relief to your investors;  I just wonder whether it was ever a consideration.

JT: I’m a little bit of a traditionalist. I’ve been around long enough to know how checks and balances work, and a single-class structure made sense for PagerDuty. Also, dual-class structures tend to emerge more when you have deeply involved founders, and though Alex is still very much a part of the business, PagerDuty’s other two founders have worked outside of the business for some time.

TC: You have plenty of operating experience, including previously running Keynote Systems, but you’ve never taken a company public. Were there ways in which you found the roadshow experience surprising?

JT: I was surprised by how fun it was! [Laughs.] When you have a great story, and a great partner helping you tell it —  in my case that’s [PagerDuty CFO] Howard Wilson, who I’ve worked with for 10 years- – it’s great. We had a great reception from investors. I loved our IPO team;  our [top bank underwriting teams] were both led by women and whenever I had a question, they [had the answer]. I also had this cocoon of experience surrounding me thanks to our board.  If anyone tells you that [in this position] they are super comfortable, they’re either lying or [clueless] but I was very lucky. I also have a whole bunch of buddies who are CEOs [and other executives] in SaaS and I’ve been shaking them down for advice for months so I felt well-prepared.

TC: What was some of the advice you received from those friends about how your life is about to change?

JT:  Some of it was about the need to keep people focused and not get distracted, to remind everyone that this is a milestone, not the goal. [Some centered on] surrounding yourself with a great team and the importance of great investor relations, a function you don’t have as a private company but that can create huge value and provide support and understanding of the market.

One CEO said to just make sure you keep having fun, to try and stay “you,” to find joy in the same things as before.  There will be stressful moments and tough questions — that’s true of any company that scaling —  but I heard a lot of advice about just taking care of myself, including on the roadshow. In fact, there were a lot of really supportive notes and private tweets that, in a job that can feel lonely, made me feel not alone, and I’m very appreciative of that.

TC: People calls IPOs just another funding event, but that’s kind of baloney, isn’t it?  If you had to list the most meaningful moments in your life on a scale from 1 to 10,  1 being the most important, where might today fall? Would today be up there on that list?

JT: When I think of most meaningful moments, I think of the day my daughter was born, and my wedding. Another day that was very meaningful to me was when I approved our pledge to donate one percent [of PagerDuty’s equity, one percent of its product, and one percent of employees’ time] to social impact.  We did it a lot later in the game than some companies; our equity was already valuable. But we knew that it was going to create meaningful impact over time.

But yes, it is a gratifying day, especially for the cofounders who were pulling the idea together for PagerDuty a couple of years before they even launched it, and for employees who’ve been with the company for nearly as long and who turned down safer and higher-paying jobs along the way. Seeing their joy today — that is a memory that will be in my top 10 for sure.

Equity Shot: Pinterest and Zoom file to go public

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

What a Friday. This afternoon (mere hours after we released our regularly scheduled episode no less!), both Pinterest and Zoom dropped their public S-1 filings. So we rolled up our proverbial sleeves and ran through the numbers. If you want to follow along, the Pinterest S-1 is here, and the Zoom document is here.

Got it? Great. Pinterest’s long-awaited IPO filing paints a picture of a company cutting its losses while expanding its revenue. That’s the correct direction for both its top and bottom lines.

As Kate points out, it’s not in the same league as Lyft when it comes to scale, but it’s still quite large.

More than big enough to go public, whether it’s big enough to meet, let alone surpass its final private valuation ($12.3 billion) isn’t clear yet. Peeking through the numbers, Pinterest has been improving margins and accelerating growth, a surprisingly winsome brace of metrics for the decacorn.

Pinterest has raised a boatload of venture capital, about $1.5 billion since it was founded in 2010. Its IPO filing lists both early and late-stage investors, like Bessemer Venture Partners, FirstMark Capital, Andreessen Horowitz, Fidelity and Valiant Capital Partners as key stakeholders. Interestingly, it doesn’t state the percent ownership of each of these entities, which isn’t something we’ve ever seen before.

Next, Zoom’s S-1 filing was more dark horse entrance than Katy Perry album drop, but the firm has a history of rapid growth (over 100 percent, yearly) and more recently, profit. Yes, the enterprise-facing video conferencing unicorn actually makes money!

In 2019, the year in which the market is bated on Uber’s debut, profit almost feels out of place. We know Zoom’s CEO Eric Yuan, which helps. As Kate explains, this isn’t his first time as a founder. Nor is it his first major success. Yuan sold his last company, WebEx, for $3.2 billion to Cisco years ago then vowed never to sell Zoom (he wasn’t thrilled with how that WebEx acquisition turned out).

Should we have been that surprised to see a VC-backed tech company post a profit — no. But that tells you a little something about this bubble we live in, doesn’t it?

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

HotelTonight, Slack stakeholder Accel stays on top with $2.5B fund

Invest early and stand by your bets. Don’t buy logos or chase unicorns. That’s the Accel philosophy. At 35 years old, it has served them well, bagging the firm dozens of high-profile exits, including nine IPOs and 12 acquisitions in the last four years.

Now, sources confirm to TechCrunch, the respected venture capital firm has nabbed $2.525 billion — its largest pool of capital yet — for three new funds: $525 million for its fourteenth early-stage fund, $1.5 billion for its fifth growth fund and $500 million for its second Leaders Fund, or a dedicated pool of capital meant to help the firm strengthen its positions on particularly competitive bets.

Accel, which operates offices in Palo Alto, San Francisco, London and Bengaluru, is hot off the heels of a big exit. Its portfolio company HotelTonight, in which it was the very first institutional investor, is selling to Airbnb in what is the home-sharing company’s largest acquisition yet. The deal is said to be worth roughly $465 million, or just above the $463 million valuation the on-demand hotel booking application garnered with a $37 million Series E in 2017.

The firm can thank Brian O’Malley, now a general partner at Forerunner Ventures, for introducing Accel to HotelTonight back when he was a general partner at Battery Ventures in 2011. Accel and Battery co-led HotelTonight’s Series A, and O’Malley went on to become a partner at Accel. The firm subsequently invested in HotelTonight’s Series B, C, D and E financings, holding true to its promise to stand by its bets.

Today, Accel is the largest stakeholder in HotelTonight and can expect a decent payout in the coming months. Workplace messaging platform Slack, however, is Accel’s true portfolio standout. The company, worth more than $7 billion, is expected to go public this year. In February, the San Francisco-based unicorn filed confidentially with the U.S. Securities and Exchange Commission to make its public market debut; whether that be via a traditional initial public offering or a direct listing, a newfangled approach to going public, is still up in the air.

Accel, at consumer technology investor Andrew Braccia’s recommendation, invested in Slack when it was still Tiny Speck, a seed-stage gaming startup that would go on to become an office necessity. When Tiny Speck pivoted to become Slack, the company’s chief executive officer Stewart Butterfield offered to pay back it’s Series A and B investors, including Accel. Braccia declined.

“The reason we invested in Tiny Speck was because we were investing in that team,” Braccia told TechCrunch in 2015. “I told Stewart, ‘if you want to continue to be an entrepreneur and build something, then I’m with you.’ ”

Now owning a roughly 20 percent stake in Slack, Braccia’s faith in Butterfield will result in a billion-dollar payday for the firm.

Some other high-profile wins for Accel include Qualtrics, which famously accepted an $8 billion acquisition offer hours before completing a Nasdaq IPO. According to Qualtrics’ IPO paperwork, Accel owned a stake worth more than $1 billion. PagerDuty, which is said to have confidentially filed in January, and CrowdStrike, a cybersecurity business that reportedly hired banks for its IPO last fall, are among Accels’ upcoming exits.

Since Accel’s 2016 fundraise got them a fresh $2 billion to invest in startups, the decades-old firm has nabbed some younger talent to help it navigate an inevitable generational transition. Shortly after that fund announcement, Accel added principals Amit Kumar and Steve Loughlin, a pair of co-founders of Accel portfolio companies CardSpring and RelateIQ, respectively. In 2018, the firm hired Maya Noeth as a principal to lead its consumer growth investments, Ethan Choi to back startups in the enterprise and consumer-subscription spaces and Cherry Miao as a vice president focused on growth-stage companies. 

Its newest cohort of dealmakers — poised to become partners down the line — indicates Accel is conscious of an impending generational transition and prepared for the older investors to pass the baton to the younger folk.

Accel is among several incumbent venture funds to raise money from limited partners in the last year. Bessemer Venture Partners, one of the oldest players in the game, closed on $1.85 billion for its tenth flagship fund in October; Insight Venture Partners brought in $6.3 billion in July; Kleiner Perkins raised $600 million for its eighteenth early-stage fund in late January; and Menlo Ventures grabbed $500 million for Series B and C rounds in February. Other outfits, NEA for example, are in the process of closing up big, big funds.

At a time when nouveau venture funds are raising funds equipped with innovative investment strategies and young teams, Accel and some of its counterparts are proving old dogs can learn new tricks — or, at least, continue to lead the pack with no new tricks at all. 

Scytale grabs $5M Series A for application-to-application identity management

Scytale, a startup that wants to bring identity and access management to application-to-application activities, announced a $5 million Series A round today.

The round was led by Bessemer Venture Partners, a return investor that led the company’s previous $3 million round in 2018. Bain Capital Ventures, TechOperators and Work-Bench are also participating in this round.

The company wants to bring to applications and services in a cloud native environment the same kind of authentication that individuals are used to having with a tool like Okta. “What we’re focusing on is trying to bring to market a capability for large enterprises going through this transition to cloud native computing to evolve the existing methods of application to application authentication, so that it’s much more flexible and scalable,” company CEO Sunil James told TechCrunch.

To help with this, the company has developed the open-source, cloud-native project, Spiffe, which is managed by the Cloud Native Computing Foundation (CNCF). The project is designed to provide identity and access management for application-to-application communication in an open-source framework.

The idea is that as companies transition to a containerized, cloud-native approach to application delivery, there needs to a smooth automated way for applications and services to very quickly prove they are legitimate, in much the same way individuals provide a username and password to access a website. This could be, for example, as applications pass through API gateways, or as automation drives the use of multiple applications in a workflow.

Webscale companies like Google and Netflix have developed mechanisms to make this work in-house, but it’s been out of reach of most large enterprise companies. Scytale wants to bring to any company this capability to authenticate services and applications.

In addition to the funding announcement, the company announced Scytale Enterprise, a tool that provides a commercial layer on top of the open-source tools the company has developed. The enterprise version helps companies that might not have the personnel to deal with the open-source version on their own by providing training, consulting and support services.

Bain Capital Venture’s Enrique Salem sees a startup solving a big problem for companies that are moving to cloud-native environments and need this kind of authentication. “In an increasingly complex and fragmented enterprise IT environment, Scytale has not only built Spiffe’s amazing open-source community but has also delivered a commercial offering to address hybrid cloud authentication challenges faced by Fortune 500 identity and access management engineering teams,” Salem said in a statement.

Based in the Bay Area, Scytale launched in 2017 and currently has 24 employees.

Startups Weekly: Flexport, Clutter and SoftBank’s blood money

The Wall Street Journal published a thought-provoking story this week, highlighting limited partners’ concerns with the SoftBank Vision Fund’s investment strategy. The fund’s “decision-making process is chaotic,” it’s over-paying for equity in top tech startups and it’s encouraging inflated valuations, sources told the WSJ.

The report emerged during a particularly busy time for the Vision Fund, which this week led two notable VC deals in Clutter and Flexport, as well as participated in DoorDash’s $400 million round; more on all those below. So given all this SoftBank news, let us remind you that given its $45 billion commitment, Saudi Arabia’s Public Investment Fund (PIF) is the Vision Fund’s largest investor. Saudi Arabia is responsible for the planned killing of dissident journalist Jamal Khashoggi.

Here’s what I’m wondering this week: Do CEOs of companies like Flexport and Clutter have a responsibility to address the source of their capital? Should they be more transparent to their customers about whose money they are spending to achieve rapid scale? Send me your thoughts. And thanks to those who wrote me last week re: At what point is a Y Combinator cohort too big? The general consensus was this: the size of the cohort is irrelevant, all that matters is the quality. We’ll have more to say on quality soon enough, as YC demo days begin on March 18.

Anyways…

Surprise! Sort of. Not really. Pinterest has joined a growing list of tech unicorns planning to go public in 2019. The visual search engine filed confidentially to go public on Thursday. Reports indicate the business will float at a $12 billion valuation by June. Pinterest’s key backers — which will make lots of money when it goes public — include Bessemer Venture Partners, Andreessen Horowitz, FirstMark Capital, Fidelity and SV Angel.

Ride-hailing company Lyft plans to go public on the Nasdaq in March, likely beating rival Uber to the milestone. Lyft’s S-1 will be made public as soon as next week; its roadshow will begin the week of March 18. The nuts and bolts: JPMorgan Chase has been hired to lead the offering; Lyft was last valued at more than $15 billion, while competitor Uber is valued north of $100 billion.

Despite scrutiny for subsidizing its drivers’ wages with customer tips, venture capitalists plowed another $400 million into food delivery platform DoorDash at a whopping $7.1 billion valuation, up considerably from a previous valuation of $3.75 billion. The round, led by Temasek and Dragoneer Investment Group, with participation from previous investors SoftBank Vision Fund, DST Global, Coatue Management, GIC, Sequoia Capital and Y Combinator, will help DoorDash compete with Uber Eats. The company is currently seeing 325 percent growth, year-over-year.

Here are some more details on those big Vision Fund Deals: Clutter, an LA-based on-demand storage startup, closed a $200 million SoftBank-led round this week at a valuation between $400 million and $500 million, according to TechCrunch’s Ingrid Lunden’s reporting. Meanwhile, Flexport, a five-year-old, San Francisco-based full-service air and ocean freight forwarder, raised $1 billion in fresh funding led by the SoftBank Vision Fund at a $3.2 billion valuation. Earlier backers of the company, including Founders Fund, DST Global, Cherubic Ventures, Susa Ventures and SF Express all participated in the round.

Here’s your weekly reminder to send me tips, suggestions and more to [email protected] or @KateClarkTweets

Menlo Ventures has a new $500 million late-stage fund. Dubbed its “inflection” fund, it will be investing between $20 million and $40 million in companies that are seeing at least $5 million in annual recurring revenue, growth of 100 percent year-over-year, early signs of retention and are operating in areas like cloud infrastructure, fintech, marketplaces, mobility and SaaS. Plus, Allianz X, the venture capital arm attached to German insurance giant Allianz, has increased the size of its fund to $1.1 billion and London’s Entrepreneur First brought in $115 million for what is one of the largest “pre-seed” funds ever raised.

Flipkart co-founder invests $92M in Ola
Redis Labs raises a $60M Series E round
Chinese startup Panda Selected nabs $50M from Tiger Global
Image recognition startup ViSenze raises $20M Series C
Circle raises $20M Series B to help even more parents limit screen time
Showfields announces $9M seed funding for a flexible approach to brick-and-mortar retail
Podcasting startup WaitWhat raises $4.3M
Zoba raises $3M to help mobility companies predict demand

Indian delivery men working with the food delivery apps Uber Eats and Swiggy wait to pick up an order outside a restaurant in Mumbai. ( INDRANIL MUKHERJEE/AFP/Getty Images)

According to Indian media reports, Uber is in the final stages of selling its Indian food delivery business to local player Swiggy, a food delivery service that recently raised $1 billion in venture capital funding. Uber Eats plans to sell its Indian food delivery unit in exchange for a 10 percent share of Swiggy’s business. Swiggy was most recently said to be valued at $3.3 billion following that billion-dollar round, which was led by Naspers and included new backers Tencent and Uber investor Coatue.

Lalamove, a Hong Kong-based on-demand logistics startup, is the latest venture-backed business to enter the unicorn club with the close of a $300 million Series D round this week. The latest round is split into two, with Hillhouse Capital leading the “D1” tranche and Sequoia China heading up the “D2” portion. New backers Eastern Bell Venture Capital and PV Capital and returning investors ShunWei Capital, Xiang He Capital and MindWorks Ventures also participated.

Longtime investor Keith Rabois is joining Founders Fund as a general partner. Here’s more from TechCrunch’s Connie Loizos: “The move is wholly unsurprising in ways, though the timing seems to suggest that another big fund from Founders Fund is around the corner, as the firm is also bringing aboard a new principal at the same time — Delian Asparouhov — and firms tend to bulk up as they’re meeting with investors. It’s also kind of time, as these things go. Founders Fund closed its last flagship fund with $1.3 billion in 2016.”

If you enjoy this newsletter, be sure to check out TechCrunch’s venture capital-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I discuss Pinterest’s IPO, DoorDash’s big round and SoftBank’s upset LPs.

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