#32: Grabango, Klipworks & more📍
|Christopher DeLuca||Jan 29, 2019|
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Future Funding 🔮
Grabango, a Berkeley, California-based provider of checkout-free technology, has begun the initial planning for a Series B round, Will Glaser, founder and CEO, said. The company anticipates that some, if not all, existing investors will participate in the round. Propel Venture Partners led the company’s Series A investment with participation from Ridge Ventures, Abstract Ventures, Commerce Ventures, and Founders Fund. The Series A, which came together within a few months, brings total amount of capital raised to date to $18M (Crunchbase has the figure at $17.3M). Grabango knew the Series A round lead for more than a year. The company isn’t yet sure if the Series B would be equity, debt or both.
Klipworks, a Denmark-based video recording platform, is looking to raise between €200k-€250k from private business angels in syndicated investments, said Asger Rasmussen, CEO and founder. The company expects to close the round by Q1 2019 and talks with a Danish investment syndicate are currently underway. The preference is for the round to be equity-based rather than debt or a combination. Total amount raised to date is €200k. Talks for the last round of capital were underway for a 4 to 5 months. Capital raised would be used to scale up commercial side, attract an experienced sales director, and boost the company’s online presence with digital marketing.
Recent Startup Funding Announcements 💰
Spiral Therapeutics took 3 months to line up syndicate for its $3.7M Series A. The company spoke with 30 to 40 investors and the syndicate was partially led by an existing investors, making negotiations easier. The round was co-led by Savoir Capital and Camden Partners. Total amount raised to date is $8.3M. The competitive landscape includes Decibel Therapeutics and Frequency Therapeutics.
Truss raised its $15M Series A-2 in 6 months. The company spoke to approximately 20 investors, one-third as many as it did for its Series A-1. Truss had a significant positive multiple increase on a valuation basis from the last round. The company met the lead investor 6 months prior. Total amount raised to date is $25M.
WhyHotel raised its $10M Series A in 3 months. The company spoke with a few dozen groups and struck a deal with the lead investor mid-road show. Valuation increased significantly from Seed round to Series A. The company knew the lead investor for 5 months prior. Total amount raised to date is $14.8M.
Spiral Therapeutics (Hugo Peris, founder and CEO)
Spiral Therapeutics, a San Francisco-based clinical stage pharmaceutical company focused on the development of therapies targeting inner ear disorder, raised a $3.7M Series A round back in December.
Recommended rule to live by: The best way for me to be productive is to start my day early. If I want to avoid distractions, I usually switch off my email notifications. But my most productive time is usually on planes, specifically the SFO to NYC leg. Other than this, nothing special!
Recommended book: A booked that changed the way I approach investor meetings: Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal (Oren Klaff)
I am also a big fan of biographies. I really enjoyed reading Phil Knights’ Shoe Dog, Angre Agassi’s Open and Ashley Vance’s Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
Thoughts on work-life balance: While everything is under control at Spiral, it’s easier to keep my life balanced: when I am not at work or on the road, I spend time with my wife (urban hikes and date nights are some our favorite plans), I go on runs and I try to find time for friends and other social plans. But there are always stressful periods in the life of a startup. When that happens, work takes over and my wife is great at reminding me that I have to keep a good balance. Building Spiral would be much harder if she wasn’t around to keep me focused on the important things!
How long did the round take to close: Fundraising is a full time effort. I am constantly talking to existing and potential investors to keep them up to date and to ask for advice. Lining up our syndicate for the initial closing of our Series A took about 3 months. We were lucky to receive strong support from our existing investors.
What capital will be used for: The capital raised as part of this round will go into our first clinical trial (Phase 1), which we launched last December; into additional work to complete our IND in the US; and into R&D for drug delivery technologies around other inner ear indications.
Number of investor conversations: For our Series A, we might have spoken with 30 to 40 investors. The syndicate was partially led by one of our existing investors, which made negotiations easier.
Seems as though the process of raising money isn’t efficient. Your thoughts: I am starting to learn that the best way to raise venture capital is by building long-term relationships with investors. They prefer to follow a company for a period of time rather than making a decision on the spot. If you spend a little bit of time every week building these relationships, once you hit your milestones for the next round, the fundraising process should be less disruptive.
Length of relationship with lead investor: The round was co-led by Savoir Capital and Camden Partners. Savoir Capital was one of our first investors after I started the company in February 2016. I knew Guy Jean Savoir well before starting the company. I met George Petrocheilos and Jacob Vogelstein of Camden Partners in early 2018 through Justin Hanes, our Chief Scientific Officer, who also serves as Advisory Board Member at Camden Partners.
Total amount raised to date: To date we’ve raised $8.3M.
Competitive landscape: There are no drugs approved for any of the disorders affecting the inner ear. Today, only cochlear implants and hearing aids are available to those suffering from hearing loss. This is an extremely exciting space as a handful of companies are working hard to bring the first hearing loss drug to market. The learning curve over the past ten years has been very steep, with a few high profile failures. The unmet need is still huge, and awareness for hearing loss continues to grow. As one of the few innovative companies to recently enter the inner ear space, Spiral Therapeutics competes with public companies like Otonomy, Auris Medical and Fennec Pharmaceuticals. Other players in the space are Decibel Therapeutics and Frequency Therapeutics, both of which have raised large sums of money from top tier VC firms. Akouos is leading the charge in the gene therapy arena.
Macro trends: We are seeing increased appetite from investors for the biotech space. Life sciences-focused VCs are increasingly launching their own companies with large Series A rounds around specialty platforms and led by industry veterans. Small and entrepreneurial companies like Spiral are raising money from alternative sources (mostly family offices) until reaching early clinical stage, to then pursue larger rounds led by professional VCs. Within the inner ear space, we are seeing a strong push to develop novel drug delivery technologies, an area where we are well positioned to continue to differentiate ourselves thanks to our proven and multidisciplinary team.
Truss (Tom Smith, co-founder)
Truss, a marketplace for commercial real estate, raised $15M in Series A-2 funding earlier this month.
Recommended rule to live by: I try to have face-to-face meetings whenever possible. Much more efficient and valuable from a relationship perspective – and nothing gets lost in translation.
Recommended book: There’s a few books I’ve read recently that I recommend – “The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World,” “Twitter Hatched,” on how Twitter started and “Bad Blood,” a guide on what not to do.
Thoughts on work-life balance: I’m on the “all in” side of the spectrum and I try to have some balance on the weekends. When it is this exciting, you want to be all in. It’s self-imposed “all in” for me.
How long did the round take to close: This round was about six months.
How many firms did you speak with:
What capital will be used for: We’ll continue to grow our team and expand into more markets, coast to coast. At the same time, we will continue our commitment to providing price transparency and increased efficiency for small business owners looking for the perfect space for their businesses.
Comment of valuation after the round: We had a significant, positive multiple increase on a valuation basis from the last round, which was just 18 months ago (August 2017).
Number of investor conversations: We talked to around 20 investors – one-third as many as we did for our series A-1.
Seems as though the process of raising money isn’t efficient. Your thoughts: There’s likely a more efficient way and maybe that’s a great startup idea for someone. There’s some things in the process that you can’t get around or shortcut – there’s an important relationship component and determining if there’s a culture fit for both the founders and the principals at that firm. You have to do the work, just like in any other relationship. The process could be more efficient in the business actuals and projection side, which could be streamlined. For example, when students apply for college now, there’s a universal app that sends your interest to colleges – that could be used for startups as well and that’s where I see some streamlining with venture capital firm
Length of relationship with lead investor: We were introduced at the beginning of the process – about six months so far.
Total amount raised to date: We’ve raised nearly $25 million.
Competitive landscape: We are the only full transaction platform focused on all aspects of commercial real estate, including office, coworking, retail and industrial space. One of the reasons we started Truss is because this is such a green filed. We are the only company to offer complete price transparency to prospective tenants during the search process. Small business owners can take 3D virtual tours of the different spaces, which saves them time and helps them visualize the space without needing to visit it in person.
Macro trends: We’re seeing that more and more business owners want to make the process of finding space very easy and convenient and they want flexibility in their leases. We all know that coworking is a buzz term but that whole mindset of having it be easy and flexible is what makes it attractive. You can’t put the genie back in the bottle and coworking is here to stay. That trend is completely in line with the way Truss is – simplifying the leasing process – and the opportunity to see all your availability and options in one marketplace. There’s also other macro trends we’re seeing outside of real estate that underscore the importance of our business – people want more control in the process. That’s true with buying airline tickets, buying stocks, etc. – they want to do it themselves now rather than using travel agents or brokers. And they want to do it on their own time. We’re seeing more business owners searching and touring spaces on our platform outside of normal business hours. It is clear people want a platform that doesn’t sleep and they can use at all time.
WhyHotel (Jason Fudin, CEO)
WhyHotel, a Washington, D.C.-based alternative lodging service that operates pop-up hotels in newly built, luxury apartment buildings, raised a $10M Series A round back in December.
Recommended rule to live by: Both Bao (co-founder) and I are morning people. We get a lot accomplished in the morning, before the world wakes up. We have also become big Google doc people. It is so much more efficient than multiple versions emailed back and forth.
Recommended book: Before you start building out your team, read “Who: The A Method For Hiring”. It will set you on the right hiring path which is everything when the team is small and everyone has a really large impact.
Thoughts on work-life balance: The WhyHotel team works incredibly hard but also believes in family/personal time. The corporate office adheres to the credo that once you’ve established credibility, and we know you’re reliable and effective in getting your work done, if you need to work from home or take care of personal matters, everyone understands that a healthy work-life balance benefits the entire team. That doesn’t mean that sometimes we don’t forget about balance and skip the gym for a month or a year or longer.
How long did the round take to close: We set a quick timeline for raising our Series A so that it wouldn’t distract too much from time that could be spent building the business. We took about 4 weeks to prep for a road show, 3 weeks on the road, and 5 weeks to close on the round; all in about a three-month process.
Comment of valuation after the round: We don’t state this publicly, but our valuation increased significantly from Seed round to Series A.
Number of investor conversations: We spoke with a few dozen groups and were mid-road show when we struck a deal with our lead investor.
Seems as though the process of raising money isn’t efficient. Your thoughts: We found the process to be efficient, but that’s probably because it went quickly. Only the road show (about 4 weeks) was a full-time job. Otherwise, the prep and closing periods weren’t too bad. As a team led by two co-founders, I was able to spend time fundraising while my business partner (Bao) continued to operate and grow the business
Length of relationship with lead investor: We met the lead investor before we had gone out for our round (about 5 months before we closed).
Total amount raised to date: We have raised a total of $14.8M.
Competitive landscape: We have a two-sided market. On one side are real estate owners and the other side are our guests. On the real estate side, we compete with corporate housing and newer, venture-backed short-term furnished operators. There are a lot of different models, but most are tired or operating illegally. On the guest side, we compete with traditional hotels, vacation rentals, corporate housing, and venture-backed short-term furnished operators. Our approach is unmatched in its ability to always provide brand new spaces, with a 24/7 onsite hospitality staff, and significant depth of inventory (100+ units per hotel). This gives us a unique advantage with both family/leisure travelers and consummate business travelers.
Macro trends: In our space we see a number of trends:
The physical layout of units being a larger defining factor in travelers’ choices
Mon-Thurs. business travelers and groups (families) continuing to choose apartment product for their short stays (with a strong preference for professionally serviced units)
Single or two night stay individual travelers choosing micro-units (Yotel, Pod, Motto, etc.)
More hardware/software becoming an integral part of the travel experience
Access control by phone for returning guests, so no need to physically check-in
Smart speakers becoming a part of the in-unit experience and communication tools available to residents
Streaming enabled so guests can watch Netflix, Prime, Hulu, etc.
Collection of data about each guest as a first step to eventually have customized experiences and pricing for certain individuals
A tightening regulatory environment around short-term apartment rentals
Real estate being designed, entitled, and constructed for flexible use
Our model is poised to take advantage of all of these macro trends.
Hiring: Our focus is to hire a team of A-players with diverse backgrounds, who can bring their different perspectives and invaluable experience to help us write the next chapter of WhyHotel. Check out our website for a list of our open positions.