What does it take to be a startup that raises huge sums quickly?


Some founders toil for years to secure a meager seed round. Others seem to go from launch to a massive fundraise in no time. Why is that, and how does one get into that second group?

There’s no single formula, of course. But data indicates it helps to be famous, involved in a hot technology sector or working to cure cancer.

Those are the findings from a Crunchbase News analysis of the fastest growing North American startups by capital raised. Our dataset included companies founded in 2015 or later that have raised $100 million or more in venture funding to date. We looked for patterns that could shed some light on why some startups are able to take off so quickly.

These fast growers constitute a fairly small club. Our list includes just 39 companies, after culling some corporate spin-outs.

The top companies span a broad variety of sectors, from autonomous driving to insurance tech to cancer immunotherapy. And although it’s a varied group, we did see some commonalities.

So, if you’re hoping to raise $100 million in less than three years, here are some top traits shared by companies that have recently reached that milestone.

Trait No. 1: Focus on cancer immunotherapy

Cancer immunotherapy has been a hot startup investment space for a number of years now. Over that time, companies in the field — which develop therapies to corral the body’s own immune system to destroy cancer cells — have generated both enormous returns and remarkable clinical trial results.

That progress shows little sign of slowing, which may be why it’s the most highly favored field in the Crunchbase fast-growing companies list. We identified at least seven companies in the space — Tmunity TherapeuticsNeon TherapeuticsGritstone OncologyForty SevenArcus Biosciences and FLX Bio — that have raised $100 million or more in less than three years (another, Celularity is focused broadly on placental stem cell therapies, with some immuno-oncology applications).

Beyond immunotherapy, we found that the fight against cancer accounts for about a quarter of fast growers. Funding for the space comes primarily from traditional venture firms, but we also see corporate and philanthropic investors in the mix.

There also are big exits to be had. Last month, for instance, immunotherapy pioneer Juno Therapeutics sold to pharma giant Celgene in a deal valued at  $9 billion. Five years earlier, Seattle-based Juno launched as a venture-backed startup; it went public less than two years later with a multi-billion-dollar valuation.

Trait No. 2: Have a well-known founder

If you want to raise a lot of money, it helps to look like you don’t need it.

Often, the companies that raise huge sums quickly have well-known, previously successful entrepreneur founders. Two examples from this past month are Katerra and Celularity.

Katerra, which is aiming to disrupt the industry, raised a staggering $865 million in a SoftBank-led round last month. It helps that the company’s co-founder, Michael Marks, was formerly longstanding CEO of Flex (previously Flextronics), one of the largest global electronics manufacturers. Another co-founder is Jim Davison, who earlier launched Silver Lake, the largest technology buyouts firm.

Essential, the mobile phone and device startup led by Andy Rubin, creator of the Android operating system, is another case in point. Rubin’s track record with Android certainly contributed to the company’s ability to raise $330 million in less than two years of operation.

In the chart below, we look at five fast climbers with well-known founders:

Trait No. 3: Have expertise in self-driving cars

There’s a talent shortage in the autonomous driving sector, just as automakers are competing fiercely to get the technology road-ready. For those with in-demand skills, that has translated into enormous investments for comparatively immature companies.

In our fast-climber list, we counted at least three companies: Argo AI, Pony.ai and Nauto. Of those, Pittsburgh-based Argo scored the largest sum, a $1 billion financing from Ford that has the startup developing technology for its vehicles.

The others didn’t do too badly on the fundraising trail either. Pony.ai, which has teams in both Silicon Valley and China, raised $112 million in Series A funding last month to build out a platform connecting a self-driving car’s sensors, software, cameras and other technologies. Nauto, meanwhile, has closed on nearly $175 million to date for its AI-powered connected camera technology.

Trait #4: Structure as a biotech platform company

Biotech is heavily represented in the fast-climber list, and the type of startup that seems particularly prevalent is what’s commonly called a platform company. For our purposes here, we’re using the term “biotech platform company” less as a rigid category and more as a description of a startup that deploys its expertise toward therapies for a wide number of possible ailments.

Celularity, which is investing placental stem-derived treatments for everything from immuno-oncology to nerve and tendon repair, would fit this description. So could GRAIL, which has raised $1.3  billion for cancer diagnostics; Evelo Biosciences, a developer of therapies based on the human microbiome, and others.

The platform approach has become increasingly popular with biotech investors of late. While there are challenges in managing a broad array of clinical trials and R&D efforts, the reward is greater potential for successful outcomes in one or more areas.

Trait #5: Get to know ARCH Venture Partners, SoftBank and Celgene

A few investors showed up as particularly active in backing members of the fast-climbers list.

SoftBank was the most predictable member, as the firm has spent the past year shaking up the venture industry as it deploys its $100 billion Vision Fund in an unprecedented spree of huge financing rounds. The firm backed five members of our fast climber list. (See the five here.)

ARCH Venture Partners, a big name in biotech, among other sectors, was another repeat backer of fast climbers, investing in four members of the list. (See the four here.)

Celgene was a surprise addition to our most active funders list. In addition to being one of the biggest acquirers in biotech of late, the company has also been an important strategic investor. It backed funding rounds for four of our fast climbers, including Celularity, which is expanding on much of Celgene’s work in the placental stem cell sector. (See the four here.)

What’s next?

We’ll plan to revisit the fast-climber list in a year or so to see what’s changed. For now, however, we’ll venture to make one prediction about who will be scaling up next.

Looking at the current list, we see at least two insurance-focused companies, Lemonade and Bright Health. Insurance has been a particularly popular space for early-stage deals over the past couple of years, so it’s likely other companies with high levels of initial traction will score big rounds in the coming months.

Even so, it’s probable biotech, with its historically high scaling costs, will remain the top sector for fast climbers.

The intensifying battle for Africa’s burgeoning tech landscape


Long gone are the days when Africa was disparagingly regarded as the White Man’s Burden. Today, Africa is the continent with the youngest demographic in the world, on the brink of a technical renaissance — yet the world’s tech titans are floundering to understand and gain a foothold in this market.

The scale and complexity of Africa’s technical landscape sits at the heart of the problem, and connectivity issues are particularly prevalent. Internet users in Africa represent only 10 percent of the total users in the world, despite representing 16 percent of the world population, according to Internet World Stats. And only 31 percent of the total population has access to the internet, which represents a penetration that is well below the rest of the world at 52 percent.

Africa’s technical future depends on widespread connectivity. As a result, both Eastern and Western businesses are eager to get Africa online. But for every proposed solution, myriad challenges spring up that are unique to the region.

For example, when Facebook’s co-founder and chairman Mark Zuckerberg announced plans to connect 100 million people in Africa through the now infamous Internet.org initiative, the proverbial can of worms opened.

Naysayers were quick to point out a lack of infrastructure, technical knowledge and disposable income to fund smartphones and data packages (not to mention the need to meet the continent’s diverse linguistic needs) would all hamper his ambitious goal. And there are concerns that the Internet.org initiative is a cover for Facebook-backed digital colonialism.

But Facebook is all too aware of these issues, which were highlighted in the recent Facebook-commissioned Inclusive Internet Index report.

The Free Basics app (aka Internet.org) is giving African users free access to a limited number of websites, WhatsApp and Facebook itself — without charging data costs. It works through partnerships with mobile operators (which are left to cover those data costs) and is now available in 63 countries, 27 of which are in Africa. Facebook’s partnership with the Airtel Africa mobile carrier in 2015 has certainly boosted its dominance in Africa.

While Facebook’s popularity in the region is growing, Google isn’t going down without a fight. It is focusing on improving Africa’s infrastructure and, in particular, its last-mile connectivity.

Through its Project Link initiative, Google is building links between undersea cables, ISPs and mobile networks. Its first metro fiber network rolled out in the Ugandan city of Kampala in 2015 and has expanded into Ghana, where it plans to build more than 1,000 kilometers of fiber in Accra, Tema and Kumasi. Project Link has subsequently evolved in the independent CSquared business and recently committed an additional $100 million to further its expansion in the African region. And that’s just one of a handful of initiatives Google announced in 2015 to bring the internet to a further seven billion people.

How and when will the Western tech giants ever get a return on the investments they are currently making in Africa?

Facebook and Google are also fighting for connectivity over African skies. While Google announced plans for balloon-powered connectivity through Project Loon, Facebook’s plans to bring connectivity to Africa using satellite systems were left in tatters in 2016 after the SpaceX rocket carrying its payload exploded.

Such ambitious plans are laudable, but let’s hope they do not suffer the same fate as the Iridium satellite venture. The company filed for bankruptcy in 1999 after having spent $5 billion to build and launch its satellites and provide a worldwide wireless phone service.

The Iridium service was hit with several setbacks. It was viewed as too expensive for users, and mobile phone adoption was beginning to gain traction in the emerging markets. Also, the service would not have given users complete coverage and would not have worked inside moving vehicles, buildings and many urban areas.

This highlights a dangerous assumption that many Western companies tend to make when providing Africa with new technologies: that a watered-down service is better than no service at all.

Another oversight from Facebook and Google is that the same business models will work in Africa and Western nations. A prime example is the revenue models for both tech giants, which rely predominantly on online advertising. However, an ad-supported internet is unlikely to thrive in Africa due to a range of factors, including a lack of digital footprint for many consumers who still carry out most of their transactions offline in cash (with a few notable exceptions such as the widespread use of M-Pesa in Kenya, for example) and low disposable incomes.

While Facebook and Google do earn enough in the developed world to subsidize the growth of their user base in these emerging markets, this does not seem to be a sustainable business model.

So, we are left with a conundrum: How and when will the Western tech giants ever get a return on the investments they are currently making in Africa?

Eastern promise

On the other side of the world, China has become Africa’s most important economic partner over the last two decades. With the exception of Chinese telecommunications giants Huawei Technologies and ZTE (who have helped deploy the continent’s mobile networks infrastructure for almost 20 years), China is taking a more cautious approach to entering Africa’s technology scene. However, it could still beat Western technical businesses on two important fronts: cost and innovation.

For example, Tecno is a smartphone maker under the Hong Kong parent company Transsion Holdings. It supplies handsets geared toward African markets, with longer battery life, dust-resistant screens and handsets costing between $50 and $100. Tecno has grown fast, and according to Transsion Holdings’ website, its collective brands in Africa have a more than 40 percent market share in Sub-Saharan Africa. According to CNBC Africa, Tecno itself has a 25 percent share of Africa’s total smartphone market.

We’re also seeing Eastern businesses squaring up to Western rivals with Tencent’s dominant WeChat app, for example, now available in Africa as a direct rival to the Facebook-owned WhatsApp service.

However, I believe tech giants (whether from Western or Eastern locales) need to work closely with African businesses to gain a thorough understanding of the unique challenges and opportunities the continent presents. It’s not enough to land in Africa with a flashy launch and a product that’s completely unsuitable (and unaffordable) to the continent’s population.

We’re already seeing signs of increased collaboration from both sides of the globe. For example, China’s biggest e-commerce group Alibaba recently hit the headlines in Africa as its founder and executive chairman, Jack Ma, used his first visit to the continent to announce the creation of a $10 million African Young Entrepreneurs Fund. Under the scheme, the company will help 200 budding African entrepreneurs and fly them to China to learn “hands-on” from Alibaba.

Innovation through collaboration is the best and only way to succeed in Africa’s technical landscape.

This may seem like a drop in the ocean compared to the established education and training programs run by Western tech companies in the region. For example, Microsoft launched its $75 million 4Afrika initiative four years ago, Google runs its Digify program in partnership with Livity Africa offering a free three-month full-time course on digital skills, IBM funded a $60 million computer skills program and Salesforce.com is also a strong philanthropic force in the region.

However, Alibaba (along with China’s other internet giants Tencent and Baidu) is only just starting to extend its reach beyond China and, as it does so, it will be a force to be reckoned with. Its decision to dip its toe into African waters through an educational initiative is a shrewd move, compared to the heralded and somewhat elaborate projects some of its Western counterparts are trying to introduce to Africa.

Money matters

To use a clichéd phrase used all too often in the context of traditional aid given by Western countries to populations perceived as desperate and helpless in Asia and Africa, and for many years considered the White Man’s Burden: “If you give a man a fish, he will eat for one day. If you teach him to fish, he will never be hungry again.” In the 21st century, perhaps this concept deserves a digital makeover. While the context in which the saying has traditionally been used is quite patronizing, there is, after all, an element of truth in it, which applies universally, not just to emerging markets.

This is the lesson both Western and Eastern tech companies need to take into account when working in Africa. Innovation through collaboration is the best and only way to succeed in Africa’s technical landscape.

It’s also a premise that we’ve seen played out by Africa’s mobile payment platforms such as M-Pesa, M-Shwari and M-KOPA. These three are Kenyan success stories, where innovation is being fostered through incubator spaces such as iHub and supported by companies like GoogleIBM and Intel.

The secret to success in Africa is not just to hand someone a smartphone and hope they use it. We need a scattergun approach where technical and socio-economic constraints are addressed under one umbrella. There is more than one way to fish.

This may be more difficult for Western businesses than their Easter counterparts, as Africa, being an emerging region itself, tends to relate more to those coming from other emerging markets (like China) that understand the challenges the continent faces now and in the years ahead because of their own more recent and relatable journey toward economic development.

Africa is at a technical tipping point. To survive and thrive in this diverse and highly complex marketplace, we need businesses that are flexible and capable of adapting both their products and their business models, which can most effectively work with local companies and talent to develop and promote local content and digital solutions while leveraging the power of the smartphone and widespread connectivity.

As is the case in other emerging markets, the key to enduring success in Africa is education and innovation through collaboration. Not Manifest Destiny.

Featured Image: Anton Balazh/Shutterstock

Harley Davidson’s EV debut could electrify the motorcycle industry


Harley Davidson will launch its first production e-motorcycle in 2019.

Yes, the iconic symbol of American steel and piston popping internal combustion is shifting to voltage.

“We announced we’ll invest more aggressively in…electric technology in premium motorcycles,” Harley Davidson CEO Matt Levatich said on the company’s recent earnings call.

“You’ve heard us talk about Project LiveWire…it’s an active project we’re preparing to bring to market within 18 months.”

The Milwaukee based company didn’t provide much more detail on its e-motorcycle plans. CFO John Olin added HD “expects to spend an incremental $25 million to $50 million per year” on EV infrastructure.

[embedded content]

A spokesperson wouldn’t confirm specs on Harley’s first production e-motorycle to TechCrunch. But per the CEO’s comments, it will likely be an extension of HD’s LiveWire concept bike. The 460 pound battery powered machine debuted in 2014. It has 74 horsepower, a 93 mph top speed, 50 mile ride time, and automatic drivetrain (i.e., no clutch or shifting),.

HD’s battery-bike news comes as the American motorcycle market struggles to attract younger buyers and lags behind the auto-industry in EV development.

Overall U.S. sales have dropped by roughly 50 percent since 2008, with a sharp decline in ownership by those in their 40s and under 30. The majority of the market is now aging baby-boomers, whose “Live to Ride” days are winding down.

The one bright spot in American motorcycle demographics is increased female ownership. But by most straw polls women prefer lighter motorcycles with smaller engines—pretty much the opposite of Harley Davidson’s design template of the last half-century. 

For years the company’s best sellers have come from its voluptuous cruising and touring lines, including the 798 pound, 1340cc Road King.

Unsurprisingly, prevailing trends have brought financial pains to many big motorcycle makers, including Harley Davidson. Along with HD’s EV news, the latest earnings call announced a Kansas City plant closure and 8 percent U.S. sales drop.

As for the overall U.S. motorcycle market, shrinking sales and shifting consumer preferences offer manufacturers a tricky equation. The industry is attempting to serve very different buyer groups: an aging segment that prefers yesteryears’ big engine cruisers and then women and millennials—who aren’t yet enthusiastic about completely sold on buying bikes, but appear privy to lighter motorcycles and EVs.

Companies have mixed things up to cope with the shifting U.S. landscape. On design, Honda, Yamaha, Suzuki, and Kawasaki now offer more smaller engine, lower weight models. Harley Davidson launched its Street series of leaner bikes, including the 492 pound Street 500.

Companies are also launching learn to ride programs and lifestyle brands—such as Harley’s Riding Academy and Ducati’s Scrambler series—to bring in new buyers and create fresh social groupings around motorcycles.

On the tech side, two-wheel manufacturers have mostly stagnated around EV concepts. None of the big names—Honda, Kawasaki, Suzuki, BMW, KTM—offer a production electric street motorcycle in the U.S.

Meanwhile, some e-motorcycle startups have emerged. Italy’s Energica announced a 2018 U.S. sales campaign. California also has Alta Motors and Zero Motorcycles—whose Zero SR has 75 horsepower, a 135 mile range, and $10K price.

EVs from these new ventures are closing the gap on gas bikes in price, performance, weight, recharge times, and ride distance.

So how could this all come together to pivot the mainline motorcycle industry toward electric?

A combination of competitive pressure from these upstarts and the number 1 American motorcycle seller, Harley Davidson, debuting an e-bike.

This could prompt the likes of Honda, Yamaha, and Kawasaki to quickly transition their EV programs from concept to production.

College for the 21st century


When I was in college, one of the iconic Yale experiences was visiting the Yankee Doodle — a greasy spoon at the corner of York and Elm Streets — and taking the Doodle Challenge. The Doodle Challenge involved eating as many burgers as quickly as possible in a single sitting. At the time, the record was 19 burgers in two-and-a-half hours. For my roommate Chris Douvos, 20 burgers became his white whale.

Twenty burgers meant two things: immortality by way of his name on a plaque above the door and also not having to pay for 20 burgers. While Doodle burgers were small, both the buns and patty were soaked in butter before frying (the Doodle was renowned for its fried donut). Douvos trained for months with loaves of bread. On the day, we all headed to the Doodle, supportive of our hero — but also making side bets.

Douvos was going strong at burger No. 8. At burger No. 10 he began to slow. And at burger No. 12, Douvos coughed and a tiny speck of burger flew out of his mouth. We knew his quest was at an end. We paid the bill and enveloped Douvos like a fallen prizefighter, hustling him out of the Doodle and back to school. That was the last Douvos saw of the Doodle for some time, but not the last he saw of those burgers.

College has changed a great deal in the 25 years since Douvos’ failed attempt. For one, we have an urgent crisis of college affordability. Due to skyrocketing tuition, the average student now graduates with $37,000 in student loans. Simultaneously, college graduates are facing a crisis of employability. Graduates face record underemployment as colleges and universities haven’t come close to keeping up with the increasingly technical skills demanded by employers; only 11 percent of employers think higher education is producing graduates with the skills they need.

Why force young people to eat as much post-secondary education as they can in one sitting in order have a shot at a good first job?

 

The result has been financial calamity for millennials: overall, only 57 percent of borrowers are current on their loan payments; one-third of borrowers who graduated between 2006 and 2011 have already defaulted. Home ownership and new business creation by young adults has plummeted. As Gen Zers reach college age, they’re looking at the example of millennials and contemplating whether a traditional four-year accredited college or university is the optimal path for achieving their primary goal: a good first (and probably digital) job in a growing sector of the economy.

This question is something Douvos would have supported that day at the Doodle. Why force young people to eat as much post-secondary education as they can in one sitting in order have a shot at a good first job?

Faster + cheaper pathways to good first jobs are poised to supplant slow, expensive bachelor’s degrees (particularly from non-selective colleges and universities) in Gen Z’s affections. Gen Z has already been prejudiced against large upfront investments. Why buy a car when you can summon one with an app? Why subscribe to a cable bundle when you can stream individual networks and shows? The sharing economy will not leave the $500 billion higher-education sector unscathed.

Gen Z wants to get its foot on the first rung of a career ladder — a good first job quickly, and without incurring any debt — before deciding what secondary or tertiary post-secondary education pathways to follow in order to bolster cognitive skills, become managers, move on and move up.

We’re seeing the emergence of faster + cheaper alternatives to college in the form of bootcamps that provide last-mile training and lead directly to good digital jobs, as well as income share-based college replacement programs like MissionU. But none yet have the scale to accommodate the large number of 18-year-olds who fear joining the 30 percent of college graduates who say they’d sell an organ to get rid of their student loan debt. How are we likely to get the scale to provide a college alternative for the millions that clearly want one?

Before college became the sole viable pathway to a respectable career, apprenticeships were the norm in many professions. In a head-spinning reversal of the sad status quo, apprenticeships not only don’t charge tuition or require students to take on debt, they pay students. Consequently, lots of people are interested in reinvigorating apprenticeships, including President Trump, who wants to multiply the number of apprentices in the U.S. by a factor of 10.

While few U.S. employers are scrambling to launch their own apprenticeship programs — a big hassle — every employer outsources services. A wide range of IT services are commonly outsourced, as are accounting, payroll, legal, insurance, real estate, sales, customer support, human resources, staffing, consulting, marketing, public relations and design. While mid-size and large companies are likely to have employees in these functions, most also contract with providers for these services.

Service providers like accounting firms, staffing companies and call centers have incredible scale. Staffing itself is a $150 billion industry. Advertising is $200 billion. Call centers employ more than 2 million American workers. While many service providers are accustomed to having their talent poached by clients, few have built a business model around it — until now.

We’re now seeing the emergence of service providers that explicitly serve a dual function: (1) provide business services to clients; and (2) serve as a strategic talent supply partner for entry-level talent.

Techtonic Group is a Boulder-based software development shop that is simultaneously a registered apprenticeship program. Techtonic hires and trains apprentices and, by week five or six, apprentices shadow more experienced software developers. After a few months, apprentices are billing meaningful hours on meaningful client projects.

A year later, Techtonic clients are invited to hire the software apprentices they’ve been working with and whose work they’ve seen, which radically reduces the risk of entry-level hiring. As many of the challenges faced by millennials stem from their inability to land good entry-level jobs with employers like Techtonic’s clients, this model provides an appealing and scalable faster + cheaper pathway.

Successful strategic talent partners will find themselves in the business of operating campuses and will take advantage of this immersive environment.

Becoming a strategic talent supply partner is possible for many service providers. Think of a call center providing a range of customer support and inside sales functions for your firm. You probably have employees in sales and customer service roles, but with a clear division as to what functions are outsourced. What you’re less clear about is how or who to hire for these internal roles, and how much to rely on (lower-cost) entry-level employees as opposed to (higher-cost) employees with experience.

Enter the strategic talent supply partner. Call centers will continue to charge you for providing customer service and sales, but by becoming a strategic talent supply partner to clients, you now also have a second revenue stream: charging a placement fee for hiring the entry-level talent that’s been working for you for the past year or two — talent that is purpose-trained and proven.

Many service providers already have robust recruitment and training functions. Constituting these into a talent supply business will take time, but the rewards are evident in the rapid growth experienced by talent supply pioneers like Revature, which has demonstrated the ability to fulfill orders for hundreds of purpose-trained, proven entry-level software developers for a single client.

In contemplating the emergence faster + cheaper alternatives to college, I’ve been fearful of losing all the fun. As with Douvos and the Doodle, fun is what we remember best from our college years. But as millions of young Americans launch their careers via dual service providers/strategic talent partners, I get a sense that fun won’t be lost.

Strategic talent partners like Techtonic will scale, and their many cohorts of apprentices will need a place to live; Revature already provides housing. So successful strategic talent partners will find themselves in the business of operating campuses and will take advantage of this immersive environment — even if only for a short period of time — to develop and evaluate the soft skills that clients (and future employers) value as highly as technical skills. It wouldn’t surprise me in the slightest if these future apprentices — these 21st century college students — not only land great first and second jobs with no debt (or tuition), but that — after hours — they also find themselves at a local greasy spoon, trying to set a new (faster + cheaper) record of their own.

*University Ventures has investments in MissionU and Revature.

Featured Image: tomertu/Shutterstock (IMAGE HAS BEEN MODIFIED)

Technological solutions to technology’s problems feature in “How to Fix The Future”


In this edition of Innovate 2018, Andrew Keen finds himself in the hot seat.

Keen, whose new book, “How to Fix the Future”, was published earlier this month, discusses a moment when it has suddenly become fashionable for tech luminaries to abandon utopianism in favor of its opposite.  The first generation of IPO winners have now become some of tech’s most vocal critic—conveniently of new products and services launched by a younger generation of entrepreneurs.

For example, Tesla’s Elon Musk says that advances in Artificial Intelligence present a “fundamental risk to the existence of civilization.”  Salesforce CEO Marc Benioff believes Facebook ought to be regulated like a tobacco company because social media has become (literally?) carcinogenic.  And Russian zillionaire George Soros last week called Google “a menace to society.”

Eschewing much of the over-the-top luddism that now fills the New York Times (“Silicon Valley is Not Your Friends”), the Guardian (“The Tech Insiders Who Fear a Smartphone Dystopia”), and other mainstream media outlets, Keen proffers practical solutions to a wide range of tech-related woes.  These include persistent public and private surveillance, labor displacement, and fake news.

From experiments in Estonia, Switzerland, Singapore, India and other digital outposts, Keen distills these five tools for fixing the future:

  • Increased regulation, particularly through antitrust law
  • New innovations designed to solve the unintended side-effects of earlier disruptors
  • Targeted philanthropy from tech’s leading moneymakers
  • Modern social safety nets for displaced workers and disenfranchised consumers
  • Educational systems geared for 21st century life

South Korea aims for startup gold


Back in 2011, when South Korea won its longshot bid to host the 2018 Winter Olympics, the country wasn’t widely recognized as a destination for ski and snow lovers. It wasn’t considered much of a tech startup hub either.

Fast forward seven years and a lot has changed. For the next 10 days, the eyes of the world will be on the snowy slopes of PyeongChang. Meanwhile, a couple of hours away in Seoul, a burgeoning startup scene is seeing investments multiply, generating exits and even creating a unicorn or two.

While South Korea doesn’t get a perfect score as a startup innovation hub, it has established itself as a serious contender. More than half a billion dollars annually has gone to seed through late-stage funding rounds for the past few years. During that time, at least two companies, e-commerce company Coupang and mobile-focused content and commerce company Yello Mobile, have established multi-billion-dollar valuations.

To provide a broader picture of how South Korea stacks up in terms of attracting startup investment and building scalable companies, Crunchbase News put together a data dive looking at funding totals, significant investments, exits and active investors.

Here are some of our findings.

A fast rise

Venture funding for South Korean startups started to take off in 2014, per Crunchbase data. Previously, venture funding rounds that made it into the database only totaled in the tens of millions of dollars annually. But about four years ago, the numbers started rising dramatically.

In the chart below, we look at the annual totals from 2010 through 2018:

Big, later-stage rounds pushed up the totals. In the past four years, more than two dozen companies have closed financings of $10 million or more, including a few unicorns for substantially larger sums. One of those, Coupang, has raised $1.4 billion from venture and private equity investors to date.

Totals have trended lower in the past couple of years, which may be attributed to fewer giant rounds. For instance, more than half of the 2015 total came from a $1 billion SoftBank investment in Coupang.

Emerging startups

While totals are down some over the past few quarters, South Korean startups have continued to attract attention and big checks from both domestic and overseas investors.

The largest single funding in the past year went to TMON (short for Ticket Monster), which raised $115 million last April at a reported $1.4 billion valuation. This is the second time scaling up with growth funding, as the Seoul-based company already provided an exit to early investors years ago. Coupon site LivingSocial bought the company in 2011, then sold itself to Groupon, which then spun out the Korean company.

After TMON, the next-biggest funding rounds were for travel site Yanolja, which raised $55 million, and Snow, developer of popular selfie apps, which raised $50 million. In the chart below, we look at these and other significant financings from 2017 through today:

The list of top funding recipients includes a mix of startups focused principally on the Korean market and those attracting a broad international user base.

Companies focused on the domestic market find that Korea, with 50 million inhabitants and a highly urbanized, tech-savvy customer base, is big enough to support massively scalable businesses. Those in that camp include TMON and Coupang.

But Korea also has a record of building up major global companies, like Samsung, LG and Hyundai, to name the best known. So it’s not surprising to see companies with global ambitions among the top startups. In recent years, the leading Korean search engine, Naver, in particular, has been successful launching startups with global reach. The firm is a majority owner of the Japan-headquartered messaging app LINE, which went public last year and is valued at nearly $10 billion. Line and Naver are also majority owners of Snow.

It’s also possible to start local and later go global. In this camp is Viva Republica, a developer of a fast-growing mobile payments tool Toss, which got initial traction in Korea and is now setting its sights on expansion abroad.

Playing to win

Korea’s startup scene is attracting a large and diverse collection of investors, including Korea-based funds, corporate VCs, Silicon Valley venture firms and others.

A number of firms are repeat investors. Among the most active are Samsung, Altos VenturesSoftBank Ventures KoreaFormation 8 (now Formation Group and 8VC), 500 Startups and Anchor Equity Partners.

The total pool of investors is much deeper, however. Crunchbase data shows that more than 150 angel, seed, incubator and VC and corporate venture investors have participated in funding rounds for Korea-based companies over the past five years.

Of course, not all recent bets on promising startups will turn out winners. But all in all, it appears that South Korean entrepreneurs have clearly put together a competitive lineup.

Featured Image: iStockPhoto / Greens87

A peek inside Alphabet’s investing universe


Chances are high you have heard of Google. You are likely a contributor to one of the 3.5 billion search queries the website processes daily. But unless you’re a venture capitalist, an entrepreneur or a slightly obsessive technology journalist, you may not know that Google — or, more properly, Alphabet, the corporate parent to the search and internet ad giant — is also in the business of investing in startups. And, like most of what Google does, Alphabet invests at scale.

Today we’re going to undertake, if you will forgive the pun, a search of Google’s venture investments, its portfolio’s performance and what the company’s investing activity may say about its plans going forward.

Alphabet was the most active corporate investor in 2017

Taken together, Alphabet is one of the most prolific corporate investors in startups. In 2017, Crunchbase data shows that Alphabet’s three main investing arms — GV (formerly known as Google Ventures), CapitalG and Gradient Ventures — and Google itself invested in 103 deals.

(Crunchbase News contacted Alphabet for this story but did not hear back in time for publication.)

Below, you’ll find a chart comparing Alphabet’s investment activity to other major corporate investors, based on publicly disclosed deals captured in Crunchbase data.

For years, Intel and its venture arm Intel Capital topped the ranks of most active corporate venture investors. But for 2017, Crunchbase data suggests that Alphabet’s primary venture funds unseat the chip manufacturer. With 72 deals struck, Tencent Holdings and its venture affiliates rank second and SoftBank, which has a $100 billion pool of capital to slosh around, comes in third with 64 deals announced in 2017.

The Alphabet investing universe

As we alluded to earlier, Alphabet has a somewhat unusual setup for a corporate investor. Data shows that Alphabet makes the overwhelming majority of its equity investments out of four primary entities:

  • GV, formerly known as Google Ventures, is Alphabet’s most prolific venture fund.
  • Growth equity fund CapitalG invests primarily in late-stage deals.
  • Gradient Ventures, Google’s newest fund, is focused on artificial intelligence deals.
  • Finally, Google itself, has made a number of direct corporate venture investments.

Alphabet and its funds upped their pace of investing too, as the chart below shows:

In 2017, Alphabet’s equity investment deal volume topped historical highs from 2014.

In addition to these equity investment operations, Google operates the Launchpad Accelerator, which grants $50,000 equity-free to startups in Africa, Asia, South America and Eastern Europe. The company also issues grants and makes impact-oriented investments out of an entity called Google.org.

Taken together, here is what the Alphabet investment universe looks like:

The network visualization above shows the connections between Alphabet’s various investing groups and their respective portfolios.1 This graphic depicts 676 connections between six Google investing groups (labeled above in yellow), 570 portfolio organizations and 75 companies that acquired Alphabet-backed portfolio companies.

And, for the most part, there isn’t as much overlap as one may expect. CapitalG and GV only share two portfolio companies. GV invested in the seed round of Gusto, the payroll and HR software platform, and both GV and CapitalG invested in Gusto’s Series B round. GV and CapitalG also invested in Pindrop’s Series C round, although CapitalG led that round. Apart from those two companies, though, Crunchbase data doesn’t suggest any other portfolio overlap between GV and CapitalG.

Google and GV also share some portfolio companies. Google led INVIDI Technologies’ Series D round, in which GV was a mere participant. Google also led the Series A round of popular consumer genetics company 23andMe. Google followed on in the Series B round, in which Google co-founder Sergey Brin was also an investor. GV didn’t invest in 23andMe until its Series C. GV continued its investment all the way through 23andMe’s Series E. Google and GV are also investors in Ripcord, an early-stage company building robots that scan and digitize paper documents.

Shared exits

If there isn’t much overlap between Alphabet’s assorted funds and their investing activity, where is it then? The answer, it seems, may be in the exit data.

A wide range of companies have acquired startups in which one or more of Alphabet’s capital deployment arms invested. Crunchbase data shows that 81 entities have acquired 100 companies in which Google invested. Of those, it seems like Alphabet is its own best customer, as the chart below shows:

All in, Alphabet has acquired seven companies in which it had previously invested. Google itself acquired six companies it previously invested in, and its X unit (formerly known as Google X) acquired Makani Power, a company that developed airborne wind turbines, in which Google had directly invested. Other frequent trading partners with Google are Cisco, which has acquired six Google-backed companies, and Yahoo (now, together with AOL, part of Verizon-controlled Oathwith five acquisitions.

As an aside, Google invested in both SolarCity and Tesla, two companies with ties to Elon Musk. In 2011, Google invested $280 million in SolarCity, a company founded by two cousins of Musk. Google and its co-founders Larry Page and Sergey Brin invested in Tesla’s Series C round alongside Musk, Tesla’s co-founder. Tesla went public in 2010 and completed its acquisition of SolarCity, a $2.6 billion all-stock deal, in 2016.

And as the network visualization above shows, Tesla isn’t the only Alphabet portfolio company to go public. Alphabet funds struck venture deals with 11 other companies that have since gone public, including BaiduHubSpotClouderaSpero TherapeuticsLending Club and Zynga.

Deals spanning A to Z

If one had to describe Alphabet funds’ collective portfolio of venture deals in one word, it would be “eclectic.” Unlike many corporate venture portfolios, there doesn’t appear to be a unifying, cohesive theme to Alphabet’s outside investments. The AI-focus of Gradient Ventures aside, Alphabet is just as likely to invest in a homeowners insurance company like Lemonade or a customer support platform like UJET (which Crunchbase News covered recently) as it is to invest in non-dairy milk producer Ripple Foods or African tech recruiting platform Andela.

The diversity of Alphabet’s venture investments echoes the diverse collection of businesses, initiatives and long-shot bets under its corporate umbrella. And just like it’s difficult to predict what kind of new project Alphabet will launch next, it seems that no amount of searching and sifting can say what its venture arms will embrace next.

  1. The network visualization was created using Gephi, an open-source software package used for making network visualizations, and the ForceAtlas2 layout algorithm.

Featured Image: Li-Anne Dias