PopBase seeks $1.5M in seed round

Hey everyone,

Last week, I asked Reddit and the Indie Hackers community a simple question: would you rent an apartment without viewing the unit IRL if it meant you would be compensated half of one month’s rent? The response was overwhelmingly negative. (You can delve through the threads here and here).

For a while, I had been thinking about a startup that could cut the real estate agent out of the rental transaction. Background: In Toronto, condo owners who rent out their units are generally represented by a listing agent and a prospective tenant is represented by a real estate agent. When the lease is signed, they typically split one month’s rent as their fee. When there’s no agent representing the tenant, the listing agent takes the whole fee.

I had been thinking about a model where a platform could match tenants with listing agents and the tenant would keep or receive half of the fee that’s normally paid. In competitive rental markets, like Toronto, listing agents don’t have an incentive to deal with a platform like this. But, listing agents do find the process of showing an apartment to be an inefficient point of friction. I spoke to one that suggested moving the whole process online.

I understand that the idea of committing to an apartment online, without first going to seeing it, is a radical one. Some people in the comments on both threads pointed to online schemes that are created with the intention to deceive, with no actual rental apartment ever being made available.

Someone, sarcastically, in one of the threads, asked me if I’d ever rent a unit without seeing it, and I had this response:

Yes, potentially. To date, the standard for renting an apartment is that tenants go to see the unit before signing a lease. It's a difficult product to recreate online as it requires a UI that addresses all of these trust factors (e.g. smells, sounds, ceiling height, etc...), but I don't believe that the experience of seeing a place IRL is one that can't be replicated online and I think it can be made better.

The process of renting online is one that requires establishing trust and that’s a difficult thing, but the idea that it won’t eventually happen, or that attitudes won’t change, strikes me as inaccurate. Attitudes expressed by people in these threads seem a kin to those, expressed by some, around driverless cars: they feel less safe with the idea of a driverless car than they do behind the wheel.

But this goes to a larger point: how do you know when you should listen to what the market is telling you and how should you know when to build, despite strong opposition? This is the gamble.


Few bits of housekeeping:

  • Remote jobs with equity/stock options: I launched a sister newsletter that brings together remote jobs that offer equity at early-stage startups. These roles are either not well-advertised or, when they are, they don’t mention anything about equity. I launched the newsletter because I believe remote staff, just like in-house staff, should have the opportunity to share in the financial upside of a successful startup. If you’re interested in checking it out, ping with the type of role you’re looking for and I’ll send you a link.

  • EIR + Head of Community: I read this Medium post by Ishaan Malhi where he details his hybrid role within a Venture Capital firm, spending half his time tending to the portfolio and dealflow, and the other half building a product. Have any VC firms on this listed brought on someone in this capacity in the past? If so, I’d love to chat. chris@pdreporter.com

  • New format?: Would you prefer to only receive updates about companies within your investment focus? I'm thinking about segmenting the audience based on preferences and sending emails more frequently, a kin to the way Axios sends out emails. Feedback me!

  • Thank you!: Thanks to everyone that supplied valuable feedback on the format of the newsletter over the past couple of weeks, in particular, Yigit Ihlamur (Vela Partners) and Clément Vouillon (Point Nine Capital). Feedback is always appreciated and if you’re liking the newsletter, a short testimonial that I can use would be much appreciated.

Cheers,

Chris ✌️


Recent Startup Funding Announcements 💰

PopBase, a Burbank, California-based creator of interactive digital fan clubs for social media influencers, raised a $720k pre-seed round (previously undisclosed) on a convertible note with a $4M cap, according to Lisa Wong, CEO. The original goal was to raise $500k but the round ended up being oversubscribed by 44%, so they extended it and closed a couple of months later with $720k. The company is now beginning talks for its seed round, with an expected close date in 3 months. PopBase will look to raise a $1.5M seed round. The upcoming seed round will be used to get to revenue positive by 2020; Popbase will look to achieve that goal by 1) growing its user base; 2) building out a key user content customization feature; 3) integrating good product sponsors.

Macro trend

“Everyone, from brands to individuals needs a public digital presence that represents their "brand persona" at scale. Game design is the most efficient and rewarding method of automating engagement. And storytellers are the most efficient at creating and maintaining the integrity of a brand. Modern "celebrities" are hyper-personalized and Micro/Macro influencers define what it means to be a celebrity for Millennials and GenZ. Fans are willing to pay for acknowledgement (Twitch) and Mobile gamers span all demographics, and are more likely to engage with ads.”

DynamiCare Health, a Boston-based addiction recovery technology company, pitched over 100 investors, and closed around a dozen of them, for its recent $4.1M seed funding round, according to Eric Gastfriend, co-founder and CEO. For the round, the company set the terms of a convertible note and allowed in multiple investors rather than getting competing term sheets. Four out of the five largest investors in the company have known Gastfriend and his co-founder (who his also his father) from before DynamiCare was founded. Funding will be used to secure more large B2B contracts and also experiment with the B2C market.

Macro trend

“The traditional fee-for-service model in healthcare is being disrupted by pay-for-performance and risk-sharing systems that force healthcare providers to get serious about outcomes measurement and cost-effectiveness. DynamiCare’s digital platform for monitoring and rewarding recovery from addiction is both a cost-effective way to change behavior, and a great tool for measuring outcomes. People have told us we’re ahead of the curve, so we’re excited to help healthcare systems adapt to these new changes.”

ChurnZero, an Arlington, Virginia-based provider of a real-time customer success platform, spoke with 30 investors and got 4 term sheets for its recently announced $7M Series A funding round, according to You Mon Tsang, CEO. The company has known led investor, Baird Capital, for three years. The goal for the recently raised funds will be to help ChurnZero 4x in size. To date, a total of $10M has been raised. Gainsight and Totango are other larger players in the customer success space.

Macro tends

“We see two trends: (1) customer success is a department that is being built into every B2B subscription company and (2) the leader of Customer Success as a direct report to the CEO.”

MyVillage, a Bozeman, Montana-based in-home childcare startup, received “a lot of interest last minute” for its recently announced $5.95M seed round, which was oversubscribed, according to Erica Mackey, CEO. Had the company stuck to its initial funding target, the round would have closed a couple months sooner. The company knew the lead investor for 3 months prior.

Thoughts on raising capital

Even when you run a good process with clear deadlines and are aligned about what you will and won’t do, and have good business fundamentals, the VCs and macro-market dynamics are out of your control. Entrepreneurs should ensure the company isn’t going to run out of money or find itself in a desperate position. You should have multiple relationships with competitive VCs, and a tight and logical timeline for your process.  

VCs can experience FOMO that can definitely squash you or amplify you - a lot depends on who is talking to whom behind the scenes. The VC mindset is a huge variable you can’t really control.

Macro trends

“The political landscape has shifted on this issue, and we’re seeing candidates for local and national office running on an early education platform. Clearly, it’s a bit issue for people - for parents and from a workforce development standpoint to meet the needs. More than half of Americans live in a childcare desert where kids 0-5 outnumber quality, licensed providers.

I’m heartened that we’re seeing greater public awareness and can quantify the impact of childcare on local economies. There’s a lot of innovation coming into this space, which helps us leverage partnerships that benefit families and educators in running a successful business.

I’m glad that MyVillage is playing a role in destigmatizing the career opportunities that come with training or a degree in early childhood education. We’re also disrupting franchising, because our model cracks open the door to business ownership for a lot more people. We’re a recession proof business, and as we see the costs of housing increase while wages generally stagnate, I think we’ll see more people who want to create revenue through homeownership. People are more and more comfortable with the shared economy, especially young people, and I hope we can help more people stay in the housing market and work where they live.”

Howamigoing, a London, UK-based HR tech startup, raised its recently announced £890K seed round at a valuation between $5M-$10M, according to Julian Cook, founder and CEO. For the round, the company began speaking with investors in late November and the round was oversubscribed by mid February. Howamigoing shared its deck with around 5-10 angels and 15-20 funds, of which it spoke to about half in person or via video conference. In the end, a few angels presented a compelling offer and were able to move faster than VCs. The company has known the lead investors for many years but had not met face-to-face before this fundraise. The company made some strategic client signings across the US, UK, HK and Australia in H2 2018. Capital raised will be used to leverage these market entries/hubs and 4x client base by the end of 2019.

Macro trend

“Over the past few years consumers have gotten accustomed to receiving great user experiences on B2C applications. We see a trend whereby employees will stop being treated as second-rate citizens, forced to use outdated technology when at work that provides a terrible user experience. That’s why we’re building a B2B offering that provides a B2C-style user journey for employees.”

Hoy Health, a Morristown, NJ and San Juan, Puerto Rico-based health tech platform, raised its recent round (undisclosed amount) at a valuation between $5M-$15M, according to Mario Anglada, CEO. The company spoke with 20-30 investors and received four term sheets for the round.

Macro trend

We see the expansion of primary care self-pay solutions that will allow consumers to have access to medical services without the need for insurance. This trend is evident in the United States and across our geographical footprint today. 


Was this forwarded to you? Please sign up here.