Celebrity funds from Jay Z, Will Smith and Robert Downey Jr. are backing a life insurance startup

Ethos, the company that bills itself as making life insurance accessible, affordable and simple, has officially come out of stealth with an $11.5 million investment led by on of the world’s top venture firms, Sequoia Capital, and additional participation from the family offices of Hollywood’s biggest stars and an NBA all-star.

Jay Z’s Roc Nation, the family funds of Kevin Durant, Robert Downey Jr. and Will Smith all participated in the new round for Ethos, and Sequoia Partner Roelof Botha is taking a seat on the company’s board. Because nothing says star power like a life insurance startup.

The life insurance market is one that’s been attracting interest from venture investors for a little over a year now. Companies like England’s Anorak, HealthIQ, Ladder, Mira Financial, France’s Alan, which is backed by Partech Investments (among others), Fabric, and Quilt, are all pitching life insurance products as well.

Ethos is licensed in 49 states, which is pretty comparable to the offering from providers like Haven Life, the Mass Mutual-backed life insurance product.

What has made the life insurance market interesting for investors is the fact that consumers’ interest in it continues to decline. Whether it’s because no one trusts insurers to actually pay out, or because Americans are putting their faith in the anti-aging technologies from funds like the Longevity Fund, folks just aren’t buying insurance products the way they used to.

So when investors see the numbers of users of a formerly ubiquitous product decline from 77% in 1989 to below 60% in 2018, the assumption is that there’s room for new companies to come in and provide better service.

Scads of investors have taken the same bet, which makes Ethos a marketing play as much as anything else. In the company’s press release it touts the fast, easy, and inexpensive process for getting a quote.

The initial process requires only four questions to et a quote and a ten minute survey to get a policy (in most cases). The company says 99% of its applicants don’t need a medical exam or blood test to get a policy.

What may have been most interesting to investors is the pedigree of the company’s co-founders. Peter Colis and Lingke Wang have both worked in the insurance industry before. They previously co-founded a life insurance marketplace called, Ovid Life

“Life insurance is critical for families, but the process is broken for those who want and need it,” said Peter Colis. “We are consumer advocates, intensely focused on expanding life insurance accessibility to the millions of US families who have college debt, mortgages​, spouses and children​ to care for, and who want to be financially empowered to live their lives without worry.”

Truecaller makes first acquisition to build out payment and financial services in India

Sweden’s Truecaller started out life as a service that screens calls and messages to weed out spammers. In recent times the company has switched its focus to India, its largest market based on users, adding services that include payments to make it more useful. Now Truecaller is putting even more weight behind its India push after it announced its first acquisition, mobile payment service Chillr.

The vision is to go deeper into mobile payments and associated services to turn Truecaller into a utility that goes beyond just handling messages and calls, particularly payments — a space that WhatsApp is preparing to enter in India.

Truecaller doesn’t have WhatsApp -like scale — few companies can match 200 million active users in Indua, but it did recently disclose that it has 100 million daily active users worldwide, while India is its largest country with 150 million registered users.

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith. Chillr, which offer payment services between over 50 banks, had raised $7.5 million from the likes of Blume Ventures and Sequoia Capital.

Truecaller isn’t disclosing how much it has paid for the deal, but it said that Chillr’s entire team of 45 people will move over and the Chillr service will be phased out. In addition, Chillr CEO Sony Joy will become vice president of Truecaller Pay, running that India-based payment business which will inherit Chillr’s core features.

“We’ve acquired a company that is known for innovation and leading this space in terms of building a fantastic product,” Truecaller co-founder and CSO Nami Zarringhalam told TechCrunch in an interview.

Zarringhalam said the Truecaller team met with Chillr as part of an effort to reach out to partners to build out an ecosystem of third-party services, but quickly realized there was potential to come together.

“We realized we shared synergies in thought processes for caring for the customer and user experience,” he added, explaining that Joy and his Chillr team will “take over the vision of execution of Truecaller Pay.”

Truecaller added payments in India last year

Joy told TechCrunch that he envisages developing Truecaller Pay into one of India’s top three payment apps over the next two years.

Already, the service supports peer-to-peer payments following a partnership with ICICI Bank, but there are plans to layer on additional services from third parties. That could include integrations to provide services such as loans, financing, micro-insurance and more.

Joy pointed out that India’s banking push has seen many people in the country sign up for at least one account, so now the challenge is not necessarily getting banked but instead getting access to the right services. Thanks to gathering information through payments and other customer data, Truecaller could, with permission from users, share data with financial services companies to give users access to services that wouldn’t be able to access otherwise.

“Most citizens have a bank account (in each household), now being underserved is more to do with access to other services,” he explained.

Joy added that Truecaller is aiming to layer in value-added services over its SMS capabilities, digging into the fact that SMS remains a key communication and information channel in India. For example, helping users pay for items confirmed via SMS, or pay for an order which is tracked via SMS.

The development of the service in India has made it look from the outside that the company is splitting into two, a product localized for India and another for the rest of the world. However, Zarringhalam said that the company plans to replicate its approach — payments and more — in other markets.

“It could be based on acquisitions or partners, time will tell,” he said. “But our plan is to develop this for all markers where our market penetration is high and the market dynamics are right.”

Truecaller has raised over $90 million from investors to date, according to Crunchbase. TechCrunch reported in 2015 that it was in talks to raise $100 million at a valuation of around $1 billion, but a deal never happened. Truecaller has instead raised capital from Swedish investment firm Zenith.

SoftBank Vision Fund leads $250M Series D for Cohesity’s hyperconverged data platform

San Jose-based Cohesity has closed an oversubscribed $250M Series D funding round led by SoftBank’s Vision Fund, bringing its total raised to date to $410M. The enterprise software company offers a hyperconverged data platform for storing and managing all the secondary data created outside of production apps.

In a press release today it notes this is only the second time SoftBank’s gigantic Vision Fund has invested in an enterprise software company. The fund, which is almost $100BN in size — without factoring in all the planned sequels, also led an investment in enterprise messaging company Slack back in September 2017 (also a $250M round).

Cohesity pioneered hyperconverged secondary storage as a first stepping stone on the path to a much larger transformation of enterprise infrastructure spanning public and private clouds. We believe that Cohesity’s web-scale Google-like approach, cloud-native architecture, and incredible simplicity is changing the business of IT in a fundamental way,” said Deep Nishar, senior managing partner at SoftBank Investment Advisers, in a supporting statement.

Also participating in the financing are Cohesity’s existing strategic investors Cisco Investments, Hewlett Packard Enterprise (HPE), and Morgan Stanley Expansion Capital, along with early investor Sequoia Capital and others.

The company says the investment will be put towards “large-scale global expansion” by selling more enterprises on the claimed cost and operational savings from consolidating multiple separate point solutions onto its hyperconverged platform. On the customer acquisition front it flags up support from its strategic investors, Cisco and HPE, to help it reach more enterprises.

Cohesity says it’s onboarded more than 200 new enterprise customers in the last two quarters — including Air Bud Entertainment, AutoNation, BC Oil and Gas Commission, Bungie, Harris Teeter, Hyatt, Kelly Services, LendingClub, Piedmont Healthcare, Schneider Electric, the San Francisco Giants, TCF Bank, the U.S. Department of Energy, the U.S. Air Force, and WestLotto — and says annual revenues grew 600% between 2016 and 2017.

In another supporting statement, CEO and founder Mohit Aron, added: “My vision has always been to provide enterprises with cloud-like simplicity for their many fragmented applications and data — backup, test and development, analytics, and more.

“Cohesity has built significant momentum and market share during the last 12 months and we are just getting started.”

The formula behind San Francisco’s startup success

Why has San Francisco’s startup scene generated so many hugely valuable companies over the past decade?

That’s the question we asked over the past few weeks while analyzing San Francisco startup funding, exit, and unicorn creation data. After all, it’s not as if founders of Uber, Airbnb, Lyft, Dropbox and Twitter had to get office space within a couple of miles of each other.

We hadn’t thought our data-centric approach would yield a clear recipe for success. San Francisco private and newly public unicorns are a diverse bunch, numbering more than 30, in areas ranging from ridesharing to online lending. Surely the path to billion-plus valuations would be equally varied.

But surprisingly, many of their secrets to success seem formulaic. The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and ability to post massive, sustained losses; high-powered investors; and a preponderance of easy-to-explain business models.

No, it’s not a recipe that’s likely replicable without talent, drive, connections and timing. But if you’ve got those ingredients, following the principles below might provide a good shot at unicorn status.

First you conquer, then you earn

Losing money is not a bug. It’s a feature.

First, lose money until you’ve left your rivals in the dust. This is the most important rule. It is the collective glue that holds the narratives of San Francisco startup success stories together. And while companies in other places have thrived with the same practice, arguably San Franciscans do it best.

It’s no secret that a majority of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations. Uber, called the world’s most valuable startup, reportedly lost $4.5 billion last year. Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that. Even Airbnb, whose model of taking a share of homestay revenues sounds like an easy recipe for returns, took nine years to post its first annual profit.

Not making money can be the ultimate competitive advantage, if you can afford it.

Industry stalwarts lose money, too. Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history. Square, valued at nearly $20 billion, has never been profitable on a GAAP basis. DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year (and more than $100 million in each of the two preceding years). Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.

We could go on. But the basic takeaway is this: Losing money is not a bug. It’s a feature. One might even argue that entrepreneurs in metro areas with a more fiscally restrained investment culture are missing out.

What’s also noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits themselves. Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business. Today, Uber and Lyft have decimated the value of taxi medallions.

Not making money can be the ultimate competitive advantage, if you can afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share. Then, when rivals are out of the picture, it’s possible to raise prices and start focusing on operating in the black.

Raise money from investors who’ve done this before

You can’t lose money on your own. And you can’t lose any old money, either. To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously backed valuable, unprofitable Northern California startups.

It’s not a mysterious list. Most of the names are well-known venture and seed investors who’ve been actively investing in local startups for many years and commonly feature on rankings like the Midas List. We’ve put together a few names here.

You might wonder why it’s so much better to lose money provided by Sequoia Capital than, say, a lower-profile but still wealthy investor. We could speculate that the following factors are at play: a firm’s reputation for selecting winning startups, a willingness of later investors to follow these VCs at higher valuations and these firms’ skill in shepherding portfolio companies through rapid growth cycles to an eventual exit.

Whatever the exact connection, the data speaks for itself. The vast majority of San Francisco’s most valuable private and recently public internet and technology companies have backing from investors on the short list, commonly beginning with early-stage rounds.

Pick a business model that relatives understand

Generally speaking, you don’t need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does. Instead, it’s more along the lines of: “They have an app for getting rides from strangers,” or “They have an app for renting rooms in your house to strangers.” It may sound strange at first, but pretty soon it’s something everyone seems to be doing.

It’s not a recipe that’s likely replicable without talent, drive, connections and timing. 

list of 32 San Francisco-based unicorns and near-unicorns is populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and Airbnb. While there are some lesser-known enterprise software names, they’re not among the largest investment recipients.

Part of the consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center. If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less space-constrained suburban setting.

Reading between the lines of red ink

While it can be frustrating to watch a company lurch from quarter to quarter without a profit in sight, there is ample evidence the approach can be wildly successful over time.

Seattle’s Amazon is probably the poster child for this strategy. Jeff Bezos, recently declared the world’s richest man, led the company for more than a decade before reporting the first annual profit.

These days, San Francisco seems to be ground central for this company-building technique. While it’s certainly not necessary to locate here, it does seem to be the single urban location most closely associated with massively scalable, money-losing consumer-facing startups.

Perhaps it’s just one of those things that after a while becomes status quo. If you want to be a movie star, you go to Hollywood. And if you want to make it on Wall Street, you go to Wall Street. Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while losing eye-popping sums of money, then you go to San Francisco.

Orchid Labs is in the process of raising $125 million for its surveillance-free layer atop the internet

Orchid Labs, a San Francisco-based startup that’s developing a a surveillance-free layer on top of the internet, has raised a bunch of funding, according to a newly processed SEC filing that shows the year-old startup has closed on $36.1 million. The money comes just five months after Orchid closed on a separate, $4.5 million in funding from investors, including Yes VC, cofounded by serial entrepreneurs Caterina Fake and Jyri Engeström.

Others of its earliest backers include Andreessen Horowitz, DFJ, MetaStable, Compound, Box Group, Blockchain Capital, and Sequoia Capital, according to its site.

The stated goal of the Orchid is to provide anonymized internet access to people across the globe, particularly individuals who live in countries with excessive government oversight of their browsing and shopping.

Part of the point also seems to be to insulate users from the many companies that now harvest and sell their data, including walled gardens like Facebook and other giants like AT&T.

In a word where one assumes the Cambridge Analytica scandal is merely the tip of the iceberg when it comes to data abuse, it’s easy to see the project’s appeal. So far, judging by the filing, the company has raised that $36.1 million via a SAFT agreement, an investment contract offered by cryptocurrency developers to accredited investors.

The filing shows that 42 individuals have participated to date. It shows a target of $125,595,882 million, however, and judging by how hot particular blockchain ideas are getting, and how quickly (see the Basis deal earlier this week), you can imagine more money will flow to the company if it hasn’t already. (That’s also an awfully specific target on its filing.)

We’ve reached out to the company for more information. If you want to learn more, you can also check out its white paper.

In the meantime, it’s worth noting that Orchid has five founders with varied and interesting backgrounds. They include Stephen Bell, who spent seven years as a managing director at Trilogy Ventures, shopping for opportunities in China, before returning to the states in 2015; Steve Waterhouse, long an investor with the digital currencies-focused firm Pantera Capital; former Ethereum Foundation developer Gustav Simonsson; software engineer Jay Freeman; and Brian Fox, who is credited with building the first interactive online banking software for Wells Fargo in 1995 and was first employee of the legendary programmer Richard Stallman’s Free Software Foundation, among other things.

Between the money involved, the mission, and the founders, this one looks like a Big Deal. Stay tuned.

Q1 2018 global diversity investment report: Investing trends in female founders

In this report, we look at venture and seed investment trends in female-founded startups over the last five quarters. For this time period, we look at more than 9,119 venture deals and 6,802 seed deals for companies with founders associated.

To begin, $3.6 billion was invested in companies with at least one female founder in Q1 2018. That result was up 60 percent from Q1 2017’s $2.2 billion tally but down from Q4 2017 by 30 percent. We fully expect this amount to go up as more fundings are added for the quarter retroactively.

Overall, the money invested into companies with at least one female founder represents just nine percent of venture dollars invested in Q1 2018. That is one percentage point below Q1 2017’s 10 percent result. The second, third and fourth quarters of 2017 all presented higher percentages, as well: 14, 15 and 15 percent of venture dollars invested in those quarters, respectively.

When we narrow the criteria, however, the figures fall. In the Q1 2018, three percent of venture dollars were invested in solo female founders.

From a deal volume perspective, Q1 2018 saw 14 percent of venture deals include at least one female founder. That result mirrored the year-ago, Q1 2017 figure. However, in line with what we saw when looking at 2017’s dollar volume breakdown between teams with and without women, the interim quarters showed a higher deal count at 15 and 16 percent of all venture deals.

Deals of note

While the deal and dollar volume progress will disappoint many, inside the data are a host of interesting deals that we’d like to highlight. However, in the interest of space, we’ve selected three to share.

Here are the notable venture deals made in Q1 2018 with female founders that caught our eye:

  • Glossier: A New York-based direct to consumer beauty company founded by Emily Weiss. Glossier raised a $52 million Series C round. Index Venture and Institutional Venture Partners led the Series C round.
  • DataVisor: A Silicon Valley-based fraud prevention company led by two female founders, Yinglian Xie and Fang Yu. DataVisor raised a Series C round of $40 million. Sequoia Capital China led the round with previous investors NEA and GSR Ventures participating.
  • Zum: A provider of scheduled on-demand rides for parents of children for highly vetted drivers, founded by Ritu Narayan. Zum raised a $19 million Series B round from Spark Capital with previous investors Sequoia Capital and AngelPad participating.

Next, we’ll turn to who is cutting the checks. Or, more precisely, which firms are investing in companies with female founders.

Leading venture investors in female founders

Investors that represented the highest deal count in startups with at least one female founder include Sequoia Capital with seven investments and Omidyar Network with New Enterprise Associates at five each for Q1 2018.

But, of course, investors have different focuses, especially when it comes to startup maturity. So, to that end, we’ll break down investment into companies with female founders of one particular stage.

Seed investments in female founders

Seed-funded companies with at least one female founder raised $218 million in Q1 2018. This represented 18 percent of all seed dollar volume for the quarter, up from 15 percent in Q4 2017 and 17 percent in Q1 2017.

Overall, seed is a leading indicator for venture, and it has been growing year over year in absolute dollar terms and by percent since 2009 when we first started measuring these trends. That means that if the percentage of deals and dollars at the seed level that women are raising is going up, we may be able to expect more women-founded early, middle and late-stage companies to raise venture capital in time.

Here’s a look at the dollar volume of seed capital invested into companies with and without female founders:

Next here’s the same data in relative percentage terms.

Returning to the big picture, seed deal counts are down slightly quarter over quarter. As more than 59 percent of seed deal volume is reported after the end of a specific quarter, the count of seed deals will increase from what is listed below:

Again, we now want to know who was closing these deals with female founders.

Leading seed investors

Leading seed investors in companies with at least one female founder include Y Combinator with 28, SOSV with 10 and BBG Ventures and Innovation Works at five investments each.

Investing in diverse founders

Kapor CapitalBackstage CapitalBBG VenturesBroadway AngelsPipeline Angels and more have been leading the charge to invest in diverse founders. With the increase in the number of female founders in the last five years, pressure has been growing on the broader venture capital community. With 74 percent of the top 100 firms with no female investing partners, bringing women and minorities both into their ranks and into their investment portfolios is a goal.

All Raise sets new goals for investing in diverse founders

AllRaise.org, which launched this past week, led by prominent female venture investors, seeks to impact these numbers. The organization has set the goal within the U.S. for the percent of female investing partners to double from 9 percent to 18 percent within 10 years or by 2028.

Why 10 years? For the venture industry that’s the typical life term of a single fund. Venture is a cottage industry with partners typically committing to stay for the lifetime of one or more funds. Therefore, turnover at the partner level tends to be much slower than other industries. With funds raising ever-larger amounts, and more often, expanding teams provides an opportunity to bring on diverse candidates. According to All Raise, the fastest growth for female partners is not with existing firms, but with new funds.

In the next five years, All Raise would like to see venture investments in female-founded companies move up from 15 percent to 25 percent. The organization is leading efforts to impact these numbers directly with Female Founder Office Hours supporting women who are seeking funding, to having tech founders and CEOs commit to increasing diversity in their team, board and investors.

Crunchbase is partnering with All Raise to keep abreast of these numbers within the U.S. market. For venture investments in female founders, we have a ways to go to get to 25 percent within the next five years. Reviewing the data over the last 10 years, 2015 is the first year that companies with at least one female founder have broken through the threshold of 10 percent of venture dollars. 2017 represents the best full year to date, at 14 percent of venture dollars.

The U.S. market mirrors this percent. We would need to see an average of two percentage growth points each year to reach this goal. With the number of female-founded companies growing slowly each year, these numbers are a stretch; however, it may still be attainable.

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Moritz sabotages Sequoia, again

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Sequoia is looking to raise a $5 billion investment fund

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