Libra’s Launch and Slack’s Debut
Weekly Recap #2: June 17th — 21st
Facebook Launched Libra to a less than stellar reception in an attempt to disrupt the financial system. Libra has the potential to bring cryptocurrency to the mainstream.
Libra is a simple global currency and financial infrastructure that empowers billions of people built upon three pillars that will work together to create a more inclusive financial system.
- The Network: Built on a secure, scalable, and reliable Libra Blockchain powered by its open-source programming language, Move.
- The Coin: The Libra Coin is backed by a basket of bank deposits and treasuries from high-quality central banks designed to provide intrinsic value and stability.
- The Governing Entity: The Libra Association is an independent group comprised of 28 Members set to and oversee the evolution of the ecosystem through voting rights to fulfill Libra’s purpose.
Public opinion seems to lean against Libra due to the fear that Facebook will establish a stronghold on financial data, on top of their social data. Federal Reserve Chairman Jerome Powell has high expectations for safety, soundness, and regulatory standpoint if Facebook decides to go forward with something. The Fed doesn’t have plenary authority over cryptocurrencies, though it does have input in payments.
For a deeper dive into Libra, I linked the analysis which goes into further detail on the new cryptocurrency.
Notable IPO
Slack, the workplace chat service taking on email, opened on the New York Stock Exchange at $38.50 a share with a direct listing, giving it a market cap of just under $20Bn. By listing directly, the company did not raise new financing. Slack raised $1.4Bn across 10 rounds of venture financing from Accel, Andreessen Horowitz, Social Capital, and Softbank. Slack is the second direct listing from a major tech company and the first of a non-consumer. Following in Spotify’s footsteps, the company drafted behind the same legal framework.
Slack offers it’s chat services for free and scales its pricing based on added features and storage. This B2B model is familiar to investors and analysts, however, slack doesn’t carry the name brand that a consumer company like Spotify do. Airbnb and Pinterest are closely watching the success of this IPO. Slack might not be the last IPO featuring a direct listing and continuing the trend of investment banks being undercut and disrupted.
Noteworthy Financings:
Collective Health, a San Francisco-based employee of health benefits management software, raised $205M Series E led by Softbank’s Vision Fund, with DFJ Growth, Founders Fund, GV and NEA following on. Collective Health provides transparency into a company’s existing health offerings — medical, dental, vision, telemedicine, clinics, by plugging them into its technology. These tools help employees discover doctors in-network or what their plan covers. The funding will go towards expanding the platform and customer base.
In a self-funded health care model, the employer provides health or disability benefits to employees using the company’s funds. This differs from a fully insured plan where a company goes through an insurance provider. Some companies purchase stop-loss insurance from insurance carrier to mitigate financial risk for funding claims. Self-funding is effective for large corporations and fortune 500 companies and corporations with over 1000 employees. Rising costs of healthcare, along with the potential for wasteful spending that comes with a self-funded plan, Collective Health is an appealing option. According to the Kaiser Family Foundation, more than 60% of employers receive benefits through self-funded plans.
Let’s run through a quick bottom-up analysis on Collective Health with the US Workforce. Fortune 500 companies employ nearly 17M people in 2015, roughly 17% of the nation’s workforce. The rest of the civilian workforce is made up of 129M, bringing the total workforce up to about 155M in 2015. Collective Health charges between $20 — $30 per employee per month.
Collective Health is looking at a Total Addressable Market (TAM) of $21Bn with the application of a $20 price tag to the software. However, this is also assuming that 60% of workers are cover under a self-funded model which can increase or decrease to impact the TAM.
Quartet Health, a New York-based behavioral health startup improving outcomes for patients, providers, and payers, raised $60M in Series D funding led by Centene, a major insurer offering Medicaid managed care and specialty services. The company aligns stakeholders by sharing treatment plans, clinical notes, and assessments results, enabling care providers to be more informed to patient needs. The use of funds will go towards expanding their platform to adjacent providers and community-based organization, like case managers, to collaborate on care.
These improved outcomes lower the cost of care — a rising issue among employers. Quartet Health is building a user base of patient data which would benefit from the application of AI to uncover patterns leading to better diagnosis and more accurate patient outcomes. The investment from Centene will offer Quartet around 22.3 million members, once Centene’s acquisition of WellCare Health Plans is finalized. Developers will have a more significant impact on the future of healthcare than doctors.
Clockwise, a San Francisco -based workplace calendar software startup has raised $11M Series A funding led by Greylock and Accel with a handful of angels participating. The company leverages AI to create uninterrupted blocks of time by helping with complex scheduling, resolve double bookings, updates Slack status and provides a weekly recap to show the evolution of your calendar.
Clockwise falls into the enterprise software, productivity tools category where entrepreneurs seek to streamline a problem they encountered at a previous startup. The founders were part of the team at RelateIQ; a company Salesforce acquired for $390M back in 2014. Netting an acquisition of that magnitude required plenty of uninterrupted blocks of time to innovate and reflect.
The company is providing its services for free and could follow a freemium model similar to the most successful companies in the last generation of SaaS products: slack, Asana, Dropbox, and Zoom. This acquisition model is product-led without having to be qualified by a salesperson. These structures are often accompanied by parameters to limit usage such as feature limit, capacity limit, seat limit, support limit, or space limit — to name a few.
IRL, a San Francisco-based work social calendar startup has raised $8M Series A led by Goodwater Capital with participation from Fort Ventures and Kleiner Perkins with follow on from Founders Fund. The company seeks to turn your calendar into a social network. All of your plans are organized into one pace and seamlessly integrate with the rest of your life. You can also discover events happening nearby, from pick up sports to shows. There is also a feature to explore and discover accounts like the New York Jets to stay up-to-date on events.
In 2018 I spent 10 months on the road, sometimes in a city for months on end on business trips. IRL would have been great to find events nearby and explore communities. This has real potential to be anchor social experiences into a calendar. This might have the impact Yikyak was looking to create with local communities. I imagine IRL will try to monetize its user base in the future by promoting events. There are plenty of partnerships IRL can take advantage of too, I see an Airbnb integration in the future.
Tally Technologies, a San Francisco-based financial services company that helps users manage multiple credit cards, raised a $50M Series C led by Andreessen Horowitz and follow on from Shasta Ventures, Sway Ventures, Kleiner Perkins, and Cowboy Ventures. Angela Strange, who led the deal at Andreessen Horowitz, will be joining the board with this investment.
Anglea was drawn to Tally due to their retention numbers, stating they were the best of almost any financial services app but also any consumer app. The capital deployment will focus on more software engineers to build more products. Tally hopes to double the 70 person team over the next 12 months — a major operational undertaking.
Financial companies are a dime a dozen, no pun intended. If their retention numbers are as good as Angela says, then Tally has achieved sales and marketing efficiency — meaning they will be able to return a positive value for every marketing dollar spent. Moreover, this efficiency will require little capital to grow, enabling the team to focus its capital deployment on software engineers to build more products.
Apitble, a San-Francisco based infrastructure hosting company, raised $12M in Series A funding led by Maverick and participation from Thrive Capital and WTI. The company went through Y Combinator. Apitble helps companies get ready for audits and comply with frameworks like HIPAA, GDPR, and more. The platform helps companies build a central record of what should happen with security, what did happen with security, and what the difference is. The goal is to comply continuously and act as your first security hire
As covered in my last recap, data management will fall on companies and will expand with continuing government scrutiny. California is deploying its version of GDPR in 2020 that will impact any company interacting with citizens within California. HIPAA is critical for Healthcare, especially as more protected health information is created, received, used, or maintained by a covered entity. Compliance is a costly procedure, with 88% of companies spending more than $1M to prepare for GDPR and 40% report spending over $10M. This pattern is consistent regardless of company size. Apitble will be able to lower these barriers to entry costs.
GoTenna, a New York-based providing mesh-networking based products have raised $24M in Series C led by Founders fund with USV, Bloomberg Beta and Comcast participating. Previous investors include MentorTech Ventures, Walden VC, BBG Ventures, and Brooklyn Bridge Ventures. GoTenna takes a different approach to mesh-networking, rather than provide kits to blanket your home with a wifi network, GoTenna enables off-grid connection to send encrypted messages from your phone with no service required.
Mesh networking is deployed by the military, hospitals, and is intended for large scale commercial use. Traditional mesh-networking kits such as Luma, Netgear Orbi, and Google WiFi focus on killing WiFi dead zones by blanketing your home in a WiFi signal. These kits cost between $299 — $500 depending on the brand. A GoTenna kit comes with two units for $179. GoTenna also offers a “push for help” feature — making it an ideal item for those outdoor outings, groups traveling abroad, festival goers, or those who want to remain prepared for emergency situations.
