Casa pivots to provide self-custody services to secure bitcoin

Casa, a Colorado-based provider of bitcoin security services, is launching a managed service allowing customers to buy and hold their own bitcoin, rather than using an external custodian like Coinbase.

“With self-custody using Casa it’s impossible to be hacked and nearly impossible to have your bitcoin stolen,” wrote chief executive Nick Neuman in an email. “Leaving bitcoin on an exchange (e.g. Coinbase or many others) opens it up to theft; there is a long history of bitcoin theft and hacks from exchanges.”

Just last year, the major cryptocurrency exchange, Binance, was hacked and thieves made off with bitcoin that was worth $40 million at the time.

Before the upgrade with the new product offering, bitcoin traders had to buy their bitcoin at an exchange and then move their bitcoin off of the exchange to increase security. They can now be secure by default using Casa, according to Neuman.

Bitcoin can now be purchase through Casa and deposited directly into a user’s wallet on the service where they control the funds. Casa never has custody of the user’s bitcoin at any point in the process, which the company said eliminates the risk of using an exchange.

“With the dollar declining in value and a new era of potential inflation on the horizon, consumers are naturally looking for a safe asset class that’s outside the turbulence of the existing financial system,” said Neuman in a statement. “Traditionally, if investors wanted the security and control of Bitcoin self-custody, they had to jump through multiple hoops to register with an exchange, deposit funds for trading, and then move bitcoin to their wallet. As new users begin their Bitcoin journey, they have a much simpler and faster option for buying and securing their first bitcoin with Casa.”

Funding in an uncertain market: using venture debt to bridge the gap

While a handful of tech companies like Zoom and Shopify are enjoying massive gains as a result of COVID-19, that’s obviously not the case for most. Weaker demand, slower sales cycles, and customer insistence on pricing concessions and payment deferrals have conspired to cloud the outlook for many tech companies’ growth.

Compounding these challenges, a lot of tech companies are struggling to raise capital just when they need it most. The data so far suggests that investors, particularly those focused on earlier stage financings, are taking a more cautious approach to new deals and valuations while they wait to see how individual companies perform and which way the economy will go. With the outcome of their planned equity financings uncertain, some tech companies are revisiting their funding strategies and exploring alternative sources of capital to fuel their continued growth.

Forecasting growth in a pandemic: a difficult job just got harder

For certain businesses, COVID-19’s impact on revenue was immediate. For others, the effects of slower economic activity and tighter budgets surfaced more gradually with deals in the funnel before the pandemic closing in April and May. Either way, in the second half of 2020, technology CFOs face a common challenge: How do you accurately forecast sales when there’s very little consensus around key issues such as when business activity will return to pre-COVID levels and what the long-term effects of the crisis might be?

Unfortunately, navigating this uncertainty is just as daunting a challenge for investors. These days, equity investors’ assessment of a company’s growth potential, and the value they are willing to pay for that growth, aren’t just impacted by their view of the company itself. Equally important is their assumptions about when the economy will recover and what the new normal might look like. This uncertainty can lead to situations where companies and their potential investors have materially different views on valuation.

Longer funding cycles, more investor-friendly deals

While the full impact of COVID was felt too late to have a material impact on Q1 deal volumes, recently released data from Pitchbook and the NVCA suggest that 2020 will see a significant decrease in the number of companies funded, possibly by as much 30 percent compared to 2019 among early stage companies. And, while it often takes several months to see evidence of broad trends in investment terms, anecdotal evidence indicates investors are seeking to mitigate risk by demanding additional protective provisions.

Unmortgage founder’s new startup wants to make it free to sell your house

Having left his previous company under unceremonious circumstances, Rayhan Rafiq-Omar, who founded Unmortgage, is launching his next proptech venture.

Called Free.co.uk, the startup wants to eradicate listing fees when selling your house, as well as streamlining other parts of the house selling process. Instead of charging for a listing on Rightmove, it hopes to make money in commissions if you also let the company find you a suitable mortgage.

Prospective house buyers can also use Free.co.uk as a mortgage broker, with the free listings and accompanying user journey acting as a funnel for third party mortgage commissions.

“I’ve been thinking about this for three years now, but was running Unmortgage. So on leaving Unmortgage, I knew this is what was next,” Rafiq-Omar tells me. “Even thinking of selling your home is painful; there’s just so much friction. And the thought of spending all that money is debilitating”.

To remedy this, Free.co.uk removes “the BS and the fees,” according to its founder, and promises to enable you to get your home listed “in just 5 minutes, from your phone [and] for free”.

Targeting do-it-yourself house sellers, Free.co.uk has online real estate agencies, such as Purplebricks, in its sights rather than offline agencies that charge for and specialise in handholding for sellers that require it. Presuming there are enough of these types of sellers — likely those that have already gone through the house selling process at least once before — that feels like a quite smart strategy, essentially picking off the most profitable portion of an online estate agent’s customerbase.

Explains Rafiq-Omar: “We aren’t competing with high street agents – they exist to hold people’s hands, which many people feel they need to sell their home. [But] for those who know their home, it’s value and the local area better than any ‘local property expert,’ Free.co.uk gives them a new choice to be in control. Purplebricks is the main/only competition”.

Meanwhile, with the U.K. treasury announcing a stamp duty tax cut to help stipulate the housing market amidst the coronavirus crisis — saving buyers up to £15,000 — Free.co.uk has brought its launch forward by a month.

“We’ve worked really hard to put simple tech in the palm of your hand: listing a home, scheduling viewings, getting a mortgage. All of these are now so simple, you’ll wonder why no-one did this before,” adds the Free.co.uk founder.

In pandemic era, entrepreneurs turn to SPACs, crowdfunding and direct listings

If necessity is the mother of invention, then new business owners are getting very inventive in the ways in which they access cash. Relying on some long-tested and some new avenues to raise money, entrepreneurs are finding more ways to get public market cash faster than they would have in the past.

Whether it’s from Reg A crowdfunding dollars, Special Purpose Acquisition Companies (SPACs) or direct listings, these somewhat arcane and specialized financing vehicles are making a comeback alongside a rise in new funding mechanisms to get to market quickly and avoid the dilution that comes from private market rounds (especially since those rounds are likely to come at a reduced valuation given market conditions).

Some of these tools have existed for a while and are newly popular in an era where retail investors are driving much of the daily fluctuations of the public markets. Wall Street institutions are largely maintaining their conservative postures with regard to new offerings, so secondary market retail volume growth is outpacing institutional. Retail investors want into these new issues and are pouring into the markets, contributing to huge pops to new public offerings for companies like Lemonade this Thursday and creating an environment where SPACs and crowdfunding campaigns can flourish.

The rise of zero-commission brokerages and the popularization of fractional trading led by the startup Robinhood and adopted by every one of the major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers has created a stock market boom that defies the underlying market conditions in the U.S. and globally. For instance, daily trades on Robinhood are up 300% year-over-year as of March 2020.

According to data from the BATS exchange, the total trade count in the U.S. was up 71% and May trading was up more than 43% over 2019. Meanwhile, E-Trade daily average revenue trades posted a 244% increase in May over last year’s numbers.

Don’t call it a comeback

The appetite for new issues is growing and if many of the largest venture-backed companies are holding off on going public, smaller names are using SPACs to access public capital and reach these new investors.

Growth capital investor Kennet raises $250M fund, backed by Edmond de Rothschild

Venture capital is “not the only fruit” for entrepreneurs, as the often quieter ‘Growth Capital’ can also see great returns for entrepreneurs who prefer to retain a lot of ownership and control but are also willing to bootstrap over a longer period in order to reach revenues and profits. With the COVID-19 pandemic pushing millions of people online, tech investors of all classes are now reaping the dividends in this accelerated, Coronavirus-powered transition to digital.

Thus it is that Kennet Partners, a leading European technology growth equity investor, has raised $250m (€223m) for its fifth fund, ‘Kennet V’, in partnership with Edmond de Rothschild Private Equity, the Private Equity division of the Edmond de Rothschild Group.

Kennet is perhaps best know for its involvement in companies such as Receipt Bank, Spatial Networks and its exist from Vlocity, IntelePeer, and MedeAnalytics. It’s also invested in Eloomi, Codility, Nuxeo and Rimilia. In raising this new fund, Kennet says it exceeded its target and secured new investors from across Europe and Asia.

The Kennet V fund has already started to deploy the capital into new investments in B2B, SaaS across the UK, Europe and the US.

Typically, Kennet invests in the first external funding that companies receive and is used to finance sales and marketing expansion, particularly internationally. It’s cumulative assets managed are approximately $1 billion.

Hillel Zidel, managing director, Kennet Partners, told me by phone that: “We were fortunate in that most of the capital was raised just before Covid hit. But we were still able to bring additional investors in. Had we been designing a fund for now, then this would have been it, because people have rushed towards technology out of necessity. So this has brought forward digitization but at least five years.”

Johnny El-Hachem, CEO, Edmond de Rothschild Private Equity said in a statement: “We partnered with Kennet, because we liked the dynamism of the team coupled with their strategy of financing businesses providing mission-critical technology solutions. The COVID crisis has underscored the importance of many of these tools to business continuity.”

Insurtech unicorn Lemonade raises IPO range ahead of debut

Ahead of its expected IPO pricing later today, SoftBank -backed insurtech startup Lemonade has raised its expected price range. After initially targeting $23 to $26 per share in its debut, Lemonade now intends to sell its equity for $26 to $28 per share.


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The new range boosts Lemonade’s expected value, a boon for insurtech startups like Root, Kin, MetroMile, Hippo and others. Had Lemonade been forced to reduce its pricing, the valuations of its contemporaries could have come under pressure when they went to raise more capital. But with Lemonade noting that the market will bear a higher price for its equity, it’s a good day for startups looking to rebuild insurance products in a digital-first manner.

This morning, let’s work out the Lemonade’s new valuation range, compare it to the company’s final private valuation and figure out if we can understand why the stock market may support the company at its new price. After that, we’ll share a few notes from folks about the IPO and how they think it might go, just for fun.

Upward

Lemonade intends on selling 11 million shares as before, so the company is not targeting a larger bloc of shares to disburse. At its new price range, Lemonade will sell shares worth between $286 million and $308 million, a few dozen million more at the top end of its new range than it had anticipated with its first IPO pricing interval ($253 million and $286 million).

The company has two valuation ranges: one without the 1.65 million shares its underwriters may purchase at its IPO price if they choose, and one including those shares. Without the extra equity, Lemonade is aiming at a $1.43 billion to $1.54 billion valuation; including the extra equity, Lemonade is worth $1.47 billion to $1.58 billion.

Brazil’s BizCapital raises $12 million for its online lending service

BizCapital, an online lender based in Brazil, has raised $12 million from a clutch of investors including the German development finance institution, the corporate venture capital fund of MercadoLibre and existing investors Quona Capital, Monashees, Chromo INvest and 42K Investments.

“This latest round reinforces investors’ confidence in BizCapital’s ability to innovate in the Latin American credit market amid challenging circumstances caused by Covid-19,” said Francisco Ferreira, the company’s chief executive, in a statement. “We have seen four times as many business credit inquiries on our site year over year, and we are ready to serve them.” 

Founded in 2016, the company pitches itself as a fast and reliable way to access financing for working capital. It already has more than 5,000 customers across 1,200 cities in Brazil, according to a statement.

The company said it would use the money to develop new products for Brazilian small and medium-sized businesses and will expand into new distribution channels.

“With this new round of capital, we will continue to widen our product lineup, helping entrepreneurs during the entire lifecycle of their companies,” said Ferreira, in a statement. “There’s never been a more important time for innovation.” 

In a reflection of their American counterparts, Brazil’s venture capital firms had slowed down the pace of their investments, but now it seems like a slew of new deals are coming to market.

The investment reflects the longterm confidence that investors have in the increasingly central position e-commerce and technology-enabled services will have in the future of the Latin American economy.

 

 

All bets are off as Hertz pulls plan to issue $500 million in new stock

Hertz, which filed for bankruptcy last month, halted its $500 million stock offering Wednesday after the U.S. Securities and Exchange Commission told the rental company it would review its controversial plan to sell shares that could soon be wiped out completely.

Hertz disclosed Monday that it would issue a $500 million stock offering following approval from the U.S. Bankruptcy Court for the District of Delaware . Last week, the court gave Hertz permission to sell up to 246.8 million unissued shares (about $1 billion) to Jefferies LLC.

The financially strained company was aiming to tap into a new pool of speculative short-term retail investors in an effort to raise capital. But that plan got the SEC’s attention. Staff at the regulatory agency reached out to Hertz on Monday afternoon and told the company it intended to review its Prospectus Supplement, according to an SEC filing Wednesday. Trading was halted briefly Wednesday prior to Hertz’s announcement.

More from Hertz:

After discussions with the Staff, sales under the ATM Program were promptly suspended pending further understanding of the nature and timing of the Staff’s review. The company is not currently offering any shares under the ATM Program. The company’s advisors have been in regular contact with the Commission since the Staff’s initial contact on June 15, 2020. 

As COVID-19 spread throughout the globe, business trips and other travel stopped, leaving Hertz with an unused asset — lots and lots of cars. It wasn’t just that revenue stopped coming in; used car prices plummeted, further devaluing its fleet.

Hertz filed for Chapter 11 bankruptcy May 22. But as its business dried up, prospectors jumped in. Retail investors, including those using the Robinhood trading app, invested in Hertz and drove up the stock price. Hertz stock dropped more than 83% between February 21 and March 18. It rose briefly and then continued to slide until May 26, when shares closed at $0.56 (that’s down 97.24% from the closing high in February).

Robinhood traders looked at Hertz and didn’t see the poor fundamentals; they saw opportunity. By March 18, more than 3,500 Robinhood users held Hertz stock, according to Robintrack. A month later, that number popped to more than 18,000, and then nearly doubled to surpass 43,000 users by May 21. It peaked June 14, when more than 170,000 Robinhood users held Hertz stock. The stock price rose 887.5% since that May 26 low, until it reached $5.53 on June 8. Shares of Hertz have since fallen 63.8% and closed Wednesday at $2.

Anthos Capital and NBA All-Star Baron Davis back LA-based college tuition savings service, UNest

UNest, a Los Angeles provider of financial planning and savings tools for parents including college savings plans and other beneficial investment vehicles for various life events, has raised $9 million in a new round of funding, the company said. 

Its round will be used to speed up its growth through strategic hires and partnerships, according to UNest.

Ksenia Yudina initially founded the company to provide financial planning and services to lower- and middle-class families looking for ways to start saving for their children’s education, she said.

Over time, the company realized that tax-advantaged savings plans for college tuition weren’t providing the range of financial services that these families needed so UNest added Uniform Transfer To Minor Accounts  management services to its slate of offerings.

The business attracted interest from Northwestern Mutual Future Ventures, Artemis Fund, Draper Dragon and Unlock Ventures initially, and the company has now added Anthos Capital to its roster of investors.

Since its public launch in February, one month before the COVID-19 pandemic forced a major lockdown of US cities and sent the economy into a tailspin, UNest has actually signed up more than 25,000 users.

The savings app is similar to other financial planning services available, but funnels users’ money into 529 accounts and UTMAs so that parents can begin to save for the children’s future.

“To me the investment in UNest is a great opportunity to help my community. It aligns with my vision that all kids deserve a chance to get an education and have equal opportunities in life regardless of their race or ethnicity. All kids should have access to the financial resources that make these goals achievable,” said Baron Davis, two-time NBA All-Star, current CEO and Founder of Baron Davis Enterprises, in a statement. “As a father of two young boys, I care about their financial future and I know that other parents are feeling the same way. By making it easy for parents to step into saving plans, UNest is going to transform the future of the next generation and I’m excited to be a part of this journey.”

Users can open a savings account with as little as $25, according to Yudina. The company charges a $3 advisory fee per-user, per-month and on average customers are depositing around $250 per-month in the accounts, according to Yudina.

People who are more sophisticated and pick their own stocks themselves, according to a company executive, and see how their portfolio grows over ten or fifteen years.

“We have made it our priority to invest in minorities and exceptional female entrepreneurs that are transforming how individuals experience financial security,” said Craig Schedler, Managing Director, Northwestern Mutual Venture Fund, in a statement. “Our additional investment in UNest on top of our initial participation in the company’s Seed round is a testament to the tremendous progress UNest has demonstrated over the past several months. It also reflects the ongoing commitment to providing smart, practical financial solutions to people of all economic backgrounds. We are delighted to be part of UNest’s future in helping even more American families achieve financial stability.”

Forget the casino, bankrupt Hertz can now sell up to $1 billion in stock

Hertz, the rental car company that is going through Chapter 11 bankruptcy proceedings, can now sell up to $1 billion in stock as it seeks to tap into one of the hottest tickets in town: traders with an appetite for short-term speculative bets. .

The decision Friday by the U.S. Bankruptcy Court for the District of Delaware gives Hertz permission to sell as up to 246.8 million unissued shares to Jefferies LLC. Hertz, which made the emergency request Thursday, has not entered into an agreement with Jefferies, the company noted in a regulatory filing.

Yes, that’s right. The company, which is fighting the New York Stock Exchange from being delisted, can sell stock that might soon be wiped out completely. And it appears there are plenty of retail investors willing and ready to jump in on this scheme.

Shares of Hertz closed at $2.83 Friday, a 37.38% rise from the previous day’s close. The company has seen its share price rise more than 400% since reaching a historical closing low of $0.56 on May 26.

Last month, Hertz filed for Chapter 11 bankruptcy protection. The filing was hardly a surprise. The rental company has been crushed by the COVID-19 pandemic. Once business trips and other travel was halted, Hertz was suddenly sitting on an unused asset — lots and lots of cars. It wasn’t just that the revenue spigot was turned off. Used car prices also went into free fall, which further devalued the fleet.

The company said in its May filing that it had more than $1 billion in cash on hand, which it said it will use to keep the business operating through the bankruptcy process. Since then, another compelling source of capital has emerged. Robinhood traders, we’re looking at you.

This week, Hertz was No. 2 on the popularity chart at Robintrack, a website that tracks Robinhood’s data. The chart tracks the number of Robinhood users holding a particular stock over a 1-day, 3-day, 1-week and 1-month periods. This week, the most popular stock in terms of increases in traders, was Nikola Motor, a company that saw its share price skyrocket despite forecasting that it wouldn’t generate a drop of revenue until at least 2021.

To fully immerse ourselves in this puzzling trend, let’s go into the TechCrunch time machine — bleep bop bleep — and look at February 21, 2020. Hertz shares closed at $20.29, the highest closing price since January 2018. At that time, about 1,064 Robinhood users held Hertz stock.

As the COVID-19 pandemic sent the economy into a tailspin, Hertz stock followed suit and dropped more than 83% between February 21 and March 18. It rose briefly and then continued to slide until May 26 went shares closed at $0.56 (that’s down 97.24% from the closing high in February). Meanwhile, over at Robinhood, Hertz’s problems started to look like a buying opportunity. Robinhood traders began to invest in Hertz as the stock price fell. By March 18, more than 3,500 Robinhood users held Hertz stock. A month later, that number popped to more than 18,000 and then nearly doubled to surpass 43,000 users by May 21.

Robintrack - Hertz shares

Image Credits: Robintrack

Hertz filed for Chapter 11 bankruptcy May 22. And that’s when it got nutty.  As of Friday, 170,046 Robinhood users held Hertz stock.

To be clear, Robinhood is just one of the many tools retail investors use. What’s popular on Robinhood might not reflect broader investor sentiment. However, it does provide a snapshot into what younger and newer investors are interested in.