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Alex Mike

Another major VC firm has closed two major rounds, underscoring the long-term confidence investors continue to have for backing privately-held companies in the tech sector.

Early-stage VC firm Bessemer Venture Partners announced Thursday the close of two new funds totaling $3.3 billion that it will be using both to back early-stage startups as well as growth rounds for more mature companies.

The Redwood City-based firm closed BVP XI with $2.475 billion and BVP Century II with $825 million in total commitments.

With BVP XI, it plans to focus on early-stage companies spanning across enterprise, consumer, healthcare, and frontier technologies. 

Its Century II fund is aimed at backing growth-stage companies that Bessemer believes “will define the next century,” and will include both follow-on rounds for existing portfolio companies or investments in new ones.

BVP XI marks Bessemer’s largest fund in its 110-year history. In October 2018, the firm brought in $1.85 billion for its tenth flagship VC fund. This latest fund is its fifth consecutive billion-dollar fund, based on PitchBook data. 

Despite being founded more than 100 years ago, Bessemer didn’t actually enter the venture business until 1965. It’s known for its investments in LinkedIn, Blue Apron and many others, with a current portfolio that includes PagerDuty, Shippo, Electric and DocuSign. Exits include Twitch and Shopify, among many others.

With more money than ever before available for backing startups, the challenge now for VCs is to see how and if they can find (and invest in) whatever will define the next generation of tech. 

“As venture capitalists, we pay too much attention to pattern recognition and matching when in reality, the biggest opportunities exist where those patterns break,” the firm wrote in a blog post today. “Our job is to make perceptive bets on the future, especially those that others will dismiss and ridicule. We are fundamental optimists and strong believers in the power of innovation; our life’s work is putting our reputation, time, and money to help entrepreneurs realize a different future. They’re the ones pioneering something entirely new and obscure – a technology, a business model, a category.

In addition to announcing the new funds, Bessemer also revealed today that it’s brought on five new partners including Jeff Blackburn, who joins after a 22-year career at Amazon, alongside the promotion of existing investors Mary D’Onofrio, Mike Droesch, Tess Hatch, and Andrew Hedin.

Most recently at Amazon, Blackburn served as senior vice president of worldwide business development where he oversaw dozens of Amazon’s minority investments and more than 100 acquisitions across all business lines – including retail, Kindle, Echo, Alexa, FireTV, advertising, music, streaming audio & video, and Amazon Web Services.  

“Having been part of Amazon for more than two decades, I’m excited to begin a new chapter helping customer-focused founders build breakthrough companies,” said Blackburn in a written statement.  “I’ve known the Bessemer team for many years and have long admired their strategic vision and success backing early-stage ventures.” 

With the latest changes, Bessemer now has 21 partners and over 45 investors, advisors, and platform “team members” located in Silicon Valley, San Francisco, Seattle, New York, Boston, London, Tel Aviv, Bangalore, and Beijing. 

“At Bessemer, there’s no corner office or consensus; every partner has the choice, independently, to pen a check. This kind of accountability and autonomy means a founder is teaming up with a partner and board director who thoroughly understands your business and can respond quickly and decisively,” the firm’s blog post read.

Bessemer’s task is all the more difficult because there is more competition than ever before to get into the best deals.

TCV closed on a record $4 billion fund to invest in e-commerce, fintech, edtech, travel and more in late January.

Last November, Andreessen Horowitz (a16z)  closed a pair of funds totaling $4.5 billion. The firm raised $1.3 billion for an early-stage fund focused on consumer, enterprise and fintech; and closed a $3.2 billion growth-stage fund for later-stage investments.

And, last April, Insight, the firm that has backed the likes of Twitter and Shopify and invests across a range of consumer and enterprise startups, announced it had closed a fund of $9.5 billion, money it said it would be using to support startups and “scale-ups” (larger and older startups that are still private) in the coming months.

Although BVP is one of the older firms in the valley, there have been a new wave of investors, some like SoftBank with very deep pockets, and others will less money but a lot of credibility, so it will be interesting to see how these next two funds play out for the firm.


Source: https://techcrunch.com/2021/02/25/bessemer-venture-partners-closes-on-3-3-billion-across-two-funds/

Alex Mike

Newsela, a SaaS platform for K-12 instructional material backed by the likes of TCV, Kleiner Perkins, Reach Capital and Owl Ventures, announced today that it has raised $100 million in a Series D round. The financing was led by new investor Franklin Templeton, and brings Newsela’s valuation to $1 billion. The new round is larger than the aggregate of Newsela’s prior capital raised to date.

“Hitting $1 billion [in valuation] doesn’t change a thing,” Newsela CEO Matthew Gross told TechCrunch. But the startup is joining Quizlet, ApplyBoard and CourseHero as companies within the sector that have hit the unicorn mark as remote education continues to gain traction.

Newsela has created a platform that strings together a number of different third-party content, such as primary source documents or the latest National Geographic articles. Gross defines it as “material that isn’t purpose-built for education, [but] purpose-built for being interesting and informative.” If Newsela is doing its job right, the content can replace textbooks within a classroom altogether, while helping teachers give fresh, personalized material.

“Textbooks are dead in classrooms, but are well-and-live in district purchasing,” Gross said. The startup is on a mission to distribute its product better, and the money will be used to get it into more classrooms. Part of this, Gross explains, is telling teachers what else it can provide along with textbooks. Analytics has become a big part of Newsela’s business, as remote learning hurts student engagement.

The startup’s paid product is between $6 to $14 per student, which contrasts with textbooks that can cost a school $20 to $40 per student “even on an annualized basis.”

Like other edtech companies, Newsela offered its product for free in the beginning of the pandemic, which gave it a healthy bump of new users.

Newsela estimates that gross bookings have grown 115% over the pandemic, and that revenue grew 81%. It declined to share revenue numbers or if it has hit profitability. There will be more than 11 million students using Newsela licensing by the end of 2021, Gross said.

Newsela estimates that two-thirds of public schools in the United States are using their platform, likely aided by school district flexibility that has grown amid the pandemic.


Source: https://techcrunch.com/2021/02/25/newsela-the-replacement-for-textbooks-raises-100m-and-becomes-a-unicorn/

Alex Mike

Twitter reveals its move into paid subscriptions, Australia passes its media bargaining law and Coinbase files its S-1. This is your Daily Crunch for February 25, 2021.

The big story: Twitter announces ‘Super Follow’ subscriptions

Twitter announced its first paid product at an investor event today, showing off screenshots of a feature that will allow users to subscribe to their favorite creators in exchange for things like exclusive content, subscriber-only newsletters and a supporter badge.

The company also announced a feature called Communities, which could compete with Facebook Groups and enable Super Follow networks to interact, plus a Safety Mode for auto-blocking and muting abusive accounts. On top of all that, Twitter said it plans to double revenue by 2023.

Not announced: launch dates for any of these features.

The tech giants

After Facebook’s news flex, Australia passes bargaining code for platforms and publishers — This requires platform giants like Facebook and Google to negotiate to remunerate local news publishers for their content.

New Facebook ad campaign extols the benefits of personalized ads — The sentiments are similar to a campaign that Facebook launched last year in opposition to Apple’s upcoming App Tracking Transparency feature.

Startups, funding and venture capital

Sergey Brin’s airship aims to use world’s biggest mobile hydrogen fuel cell — The Google co-founder’s secretive airship company LTA Research and Exploration is planning to power a huge disaster relief airship with an equally record-breaking hydrogen fuel cell.

Coinbase files to go public in a key listing for the cryptocurrency category — Coinbase’s financials show a company that grew rapidly from 2019 to 2020 while also crossing the threshold into unadjusted profitability.

Boosted by the pandemic, meeting transcription service Otter.ai raises $50M — With convenient timing, Otter.ai added Zoom integration back in April 2020.

Advice and analysis from Extra Crunch

DigitalOcean’s IPO filing shows a two-class cloud market — The company intends to list on the New York Stock Exchange under the ticker symbol “DOCN.”

Pilot CEO Waseem Daher tears down his company’s $60M Series C pitch deck — For founders aiming to entice investors, the pitch deck remains the best way to communicate their startup’s progress and potential.

Five takeaways from Coinbase’s S-1 — We dig into Coinbase’s user numbers, its asset mix, its growing subscription incomes, its competitive landscape and who owns what in the company.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

Paramount+ will cost $4.99 per month with ads — The new streaming service launches on March 4.

Register for TC Sessions: Justice for a conversation on diversity, equity and inclusion in the startup world — This is just one week away!

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.


Source: https://techcrunch.com/2021/02/25/daily-crunch-twitter-announces-super-follow-subscriptions/

Alex Mike

AT&T just announced an agreement with private equity firm TPG that will turn DirecTV into a standalone company, albeit one that’s still majority owned by the telecom giant.

Specifically, AT&T says it will own 70% of the new company, while TPG owns 30%. This transaction values DirecTV at $16.25 billion — a dramatic decline from the $48.5 billion that AT&T paid to acquire the pay TV provider in 2015, part of a wave of telecom-media acquisitions. (Verizon owns TechCrunch thanks to its acquisition of AOL.)

Even with new offerings like AT&T TV (which will be part of the standalone company, along with the DirecTV and U-Verse services) pay TV subscriptions have been declining, with AT&T reporting a net loss of 617,000 premium video subscribers in its most recent quarter. AT&T is trying to point out the positive trends in the numbers by noting that “it hit its peak level of subscriber losses in 2019” and that “premium video net losses had improved sequentially for five straight quarters.”

Meanwhile, AT&T made an even bigger acquisition with Time Warner (now known as WarnerMedia), and its TV ambitions seem to be focused on the streaming service HBO Max.

“As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability,” said AT&T CEO John Stankey in a statement. “TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation.”

The company said the transaction should close in the second half of 2021. The combined entity is expected to pay AT&T $7.8 billion, which the telecom company will use to reduce debt. AT&T also said that when the transaction closes, DirecTV’s CEO will be Bill Morrow, currently CEO of AT&T’s U.S. video unit.

The Wall Street Journal reported last year that AT&T was exploring a deal for DirecTV.


Source: https://techcrunch.com/2021/02/25/att-is-turning-directv-into-a-standalone-company/

Alex Mike

This morning DigitalOcean, a provider of cloud computing services to SMBs, filed to go public. The company intends to list on the New York Stock Exchange (NYSE) under the ticker symbol “DOCN.”

DigitalOcean’s offering comes amidst a hot streak for tech IPOs, and valuations that are stretched by historical norms. The cloud hosting company was joined by Coinbase in filing its numbers publicly today.

DigitalOcean’s offering comes amidst a hot streak for tech IPOs.

However, unlike the cryptocurrency exchange, DigitalOcean intends to raise capital through its offering. Its S-1 filing lists a $100 million placeholder number, a figure that will update when the company announces an IPO price range target.

This morning let’s explore the company’s financials briefly, and then ask ourselves what its results can tell us about the cloud market as a whole.

DigitalOcean’s financial results

TechCrunch has covered DigitalOcean with some frequency in recent years, including its early-2020 layoffs, its early-2020 $100 million debt raise and its $50 million investment from May of the same year that prior investors Access Industries and Andreessen Horowitz participated in.

From those pieces we knew that the company had reportedly reached $200 million in revenue during 2018, $250 million in 2019 and that DigitalOcean had expected to reach an annualized run rate of $300 million in 2020.

Those numbers held up well. Per its S-1 filing, DigitalOcean generated $203.1 million in 2018 revenue, $254.8 million in 2019 and $318.4 million in 2020. The company closed 2020 out with a self-calculated $357 million in annual run rate.

During its recent years of growth, DigitalOcean has managed to lose modestly increasing amounts of money, calculated using generally accepted accounting principles (GAAP), and non-GAAP profit (adjusted EBITDA) in rising quantities. Observe the rising disconnect:


Source: https://techcrunch.com/2021/02/25/digitaloceans-ipo-filing-shows-a-two-class-cloud-market/

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