This Week In VC covering vc from a student perspective

August 23 (TWIVC Newsletter #05)

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This is a weekly newsletter covering the top stories in startups, venture capital, and cutting-edge technologies. The newsletter is organized into three sections: a recap of the biggest stories of the week, a long-form deep dive into a specific topic, and a profile of a lesser-known fund.


Weekly Recap

1. 📈 Robinhood trades to a new round

The popular stock-trading startup Robinhood announced a $200 million Series G led by D1 Capital Partners, which values the company at $11.2 billion. This is on the heels of a $280 million Series F in May, and a possible IPO in the next 12 months. The Menlo Park-based fintech plans to use the new funding to continue investing in its core product and in customer service (mainly in hiring financial representatives). Robinhood has significantly benefited from the surges in day trading during the pandemic, with huge growth in users and daily trades.

2. 🤖 Dataiku models new funding

Enterprise artificial intelligence and machine-learning platform Dataiku announced a $100 million Series D round led by Stripes. Dataiku helps corporations use their data to create ML/AI models for operational processes, like churn prevention, fraud detection, supply chain optimization, etc. The round also had participation from Tiber Global Management, Battery Ventures, CapitalG, Dawn Capital, FirstMark Capital, and ICONIQ. The company will use the funding to expand its leadership team.

3. 🎓 Lambda School learns how to raise major funding

The online computer science education startup Lambda School raised $74 million in Series C funding, a sign of continued growth in edtech funding. Lambda School, largely known for its income-share agreement with its students, positions itself as an ideal alternative to traditional computer science degrees and bootcamps with courses in data science and full-stack web development. CEO Austen Allred plans to use the funding from the recent round led by Gigafund to refine coursework and curriculum, and optimize post-graduation employment success.

4. 🚀 SpaceX launches to a new round (update to funding discussed in Newsletter #01!)

Elon Musk’s SpaceX announced another $1.9 billion in funding, valuing the company at the highest valuation among US venture-backed companies at $46 billion. Investors in this round were not disclosed, but Fidelity is reported to be among the largest participants in the round. The funding comes after a string of recent successes in its commercial space program partnership with NASA, and continued launches of SpaceX’s Starlink satellites into a constellation of hundreds of satellites.

5. ✈️ Omio travels to new funding

Travel platform Omio raised $100 million in a new round of funding to push through the tough economic environment caused by the pandemic. The Berlin-based travel platform provides a search tool to enable users to find the fastest, cheapest, and best travel options. Speculations indicate the funding may be used for M&A purposes. Investors included Temasek, Kinnevik, Goldman Sachs Asset Management, NEA, and Kleiner Perkins.

6. 💵 BlockFi mines a new round

Financial services company BlockFi announced a $50 million Series C round to develop products for cryptocurrencies. The Jersey City-based startup offers zero-commission trading, crypto-based interest accounts, and crypto-loans. The funding will be used to grow the team and expand business lines including a potential bitcoin rewards-based credit card and additional support for new crypto assets. The round was led by Morgan Creek Digital with participation from Valar Ventures, CMT Digital, Castle Island Ventures, Winklevoss Capital, SCB 10X, Avon Ventures, Purple Arch Ventures, Kenetic Captial, HashKey, and Matthew Dellavedova.

7. 🩺 Exo scans a new round of funding

Redwood City-based Exo raised $40 million Series B funding for its handheld ultrasound device designed to speed up imaging during emergencies. The health tech company stated the funding will go towards research and product development, with a goal for launch by Q4 2020/Q1 2021. The round was led by Fiscus Ventures, Reimagined Ventures, and Action Potential Venture Capital, with participation from TDK ventures, Solasta Ventures, Intel Capital, and Applied Ventures.


VC Profile

I like to profile lesser-known venture funds who are focused on impact investing, run specialized mandates, or have a diverse set of GP’s leading the fund. Let me know if you come across an interesting fund!

This week, I’ll be profiling Better Ventures, an impact investing venture capital firm focused on pre-seed startups with strong technical teams. Better Ventures backs founders who are leveraging breakthrough innovations in science and technology towards achieving the Sustainable Development Goals. They focus on software, data science, and life science startups that are innovating across industries in ways that can deliver both big profits and accomplish and measurable progress towards a sustainable, equitable ecosystem.

They invest early with a typical check size of $500k to pre-seed companies, with a very hands-on approach with portfolio companies. Currently, Better Ventures is sourcing opportunities in three themes: Sustainable Economy, Data-Driven Health, and the Adaptive Workforce. The firm is led by Wes Selke and Rick Moss, who both have extensive experience on the founder and the investor side.

Recent investments that excite me include:

Recent exits include:

VCs like Better Ventures help drive funding and resources towards companies that are truly making a more sustainable and equitable economy, which is vital as we combat issues like climate change and social inequality.


Longform: The effects of Uber and Lyft’s showdown with the California government on the gig economy ecosystem

This week, the battle between California’s state government and ride-sharing companies Uber and Lyft have been thrown into the spotlight. On Thursday, an appeals court allowed for Uber and Lyft to continue operating after a previous court made a ruling that would have forced Uber and Lyft to convert its drivers to employees or shutdown operations in California by Friday. The appeals court provided a temporary reprieve for the popular ride-sharing companies till October, when judges will hold a hearing for a final decision.

The real showdown is in November, with a statewide measure on the ballot known as Proposition 22 to create a third category of employment with a minimum wage, some auto insurance, and a health care stipend compared to the paid sick leave, health benefits, unemployment insurance, and other benefits of full employment. Uber, Lyft, Instacart, and Doordash have poured over $110 million into a campaign to pass Proposition 22, as it would allow for many of these tech startups’ business models to continue operating in an economical way. If Proposition 22 is not approved, these gig economy startups will be forced to leave California or face regulations that will destroy the current business models they operate on.

There’s a real moral quandary at play here - anti Prop. 22 groups like Gig Workers Rising say that passing the regulation will endorse an unprofitable business model that denies workers overtime pay, reimbursement for expenses, workers’ compensation, and paid leave, with pro Prop. 22 groups endorsing the bill’s protections for drivers and advantages of being independent contractors, like flexibility, freedom of wage opportunity, etc.

Businesses like Uber and Lyft have been bleeding money for years, with no real avenue to profitability ahead of them. A serious restructuring of their entire business model that would have to happen if Prop. 22 was struck down would put these companies at an even more precarious financial situation, with investors beginning to question the validity of these gig economy businesses. On the other hand, they have such a large number of drivers on their platform that suddenly shutting down operations completely in California would have serious ramifications for local economies and social structures.

At the end of the day, there needs to be a compromise; drivers should get labor protections that protect their livelihood and also sustain the companies that they operate under.


Addendum

If you have any suggestions, comments, or ideas, please feel free to reach out to me at rohil at upenn dot edu.