Another crypto exchange goes old school as KuCoin raises $20M from VCs

I’ve said it before but I’ll say it again: one of the biggest trends in crypto this year is companies raising money the old fashioned way through venture capitalists.

Hot on the heels of Binance raising money from Singapore’s Vertex Ventures, so KuCoin, a relatively new crypto exchange, has pulled in $20 million. The money comes from two big name investors — IDG Capital and Matrix Partners — and the venture capital arm of Chinese crypto organization Neo, and it’ll be used to expand KuCoin’s global reach, develop technology and launch an investment arm of its own.

We’ve confirmed that the deal is based on equity not a sale of tokens as is often the case with crypto investments.

Binance took its investment as part of its plan to introduce a fiat currency exchange in Singapore, and likewise KuCoin — which relocated from Hong Kong to Singapore this year — is turning to investors to help advance its business by tapping into networks and connections.

The deal will “open new doors” for the company, KuCoin CEO Michael Gan told TechCrunch in an interview.

KuCoin started trading in September 2017 following an ICO that raised 5,500 Bitcoin, then worth around $27.5 million. Still, the company is unlikely to be short of money. The exchange business is the most lucrative perch in the crypto space and while it hasn’t reached the size of Binance, KuCoin is ranked as the 49th largest exchange according to Coinmarketcap.com, which puts its daily trading at around $25 million.

Gan — who previously spent time with Alibaba’s Ant Financial affiliate — said that the capital will go towards hiring, both on new developers and doubling its 50-person support team. In particular, KuCoin is developing features for serious traders, including faster transactions, stop-loss features and more.

Decentralized exchanges — which remove the middleman to connect buyer and seller directly — are the big buzzword right now in the exchange world with figures like Binance making progress on offerings. Gan said that KuCoin will need “a little more time” to develop its ‘Dex.’ He declined to provide a timeframe. KuCoin, he explained, is focused on ensuring that it will offer a quality user experience and on a stable platform.

Elsewhere, the firm said it plans to offer its service in more languages. It claims that it is working closely with regulators in Europe to gain a license to offer its services in the region, although the company did not comment on whether it plans to adhere to regulations in New York where authorities are investigating a number of other exchanges for doing business unlawfully.

First up, KuCoin aims to launch ‘communities’ in Vietnam, Turkey, Italy, Russia and Spanish-speaking countries before the end of this year using online marketing and ads. It aims to grow its reach to 10 markets within the next six months while it is doubling down on in-house research to identify promising projects.

Linked to that last point, KuCoin is also getting into the investment game.

As I wrote earlier this year, cash-rich crypto companies are turning provider with investments in smaller organizations to build out platforms, establish relationships and more. Binance is perhaps the most notable mover — with a fund that it claims is worth $1 billion and an ambitious early-stage accelerator program. Gan confirmed the plan to launch a “VC arm” but he declined to detail its size or investment strategy at this point.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life

WeWork picks up ANOTHER $3B from SoftBank

WeWork has picked up another $3 billion in financing from SoftBank Corp, not to be confused with SoftBank Vision Fund. The deal comes in the form of a warrant, allowing SoftBank to pay $3 billion for the opportunity to buy shares before September 2019 at a price of $110 or higher, ultimately valuing WeWork at $42 billion minimum.

In August, SoftBank Corp invested $1 billion in WeWork in the form of a convertible note.

According to the Financial Times, SoftBank will pay WeWork $1.5 billion on January 15, 2019 and another $1.5 billion on April 15.

SoftBank is far and away WeWork’s biggest investor, with SoftBank Vision Fund having poured $4.4 billion into the company just last year.

The real estate play out of WeWork is just one facet of the company’s strategy.

More than physical land, WeWork wants to be the central connective tissue for work in general. The company often strikes deals with major service providers at “whole sale” prices by negotiating on behalf of its 300,000 members. Plus, WeWork has developed enterprise products for large corporations, such as Microsoft, who tend to sign longer, more lucrative leases. In fact, these types of deals make up 29 percent of WeWork’s revenue.

The biggest issue is whether or not WeWork can sustain its outrageous growth, which seems to have been the key to its soaring valuation. After all, WeWork hasn’t yet achieved profitability.

Can the vision become a reality? SoftBank seems willing to bet on it.

Vista snaps up Apptio for $1.94B, as enterprise companies remain hot

It seems that Sunday has become a popular day to announce large deals involving enterprise companies. IBM announced the $34 billion Red Hat deal two weeks ago. SAP announced its intent to buy Qualtrics for $8 billion last night, and Vista Equity Partners got into the act too, announcing a deal to buy Apptio for $1.94 billion, representing a 53 percent premium for stockholders.

Vista paid $38 per share for Apptio, a Seattle company that helps companies manage and understand their cloud spending inside a hybrid IT environment that has assets on-prem and in the cloud. The company was founded in 2007 right as the cloud was beginning to take off, and grew as the cloud did. It recognized that companies would have trouble understanding their cloud assets along side on-prem ones. It turned out to be a company in the right place at the right time with the right idea.

Investors like Andreessen Horowitz, Greylock and Madrona certainly liked the concept, showering the company with $261 million before it went public in 2016. The stock price has been up and down since, peaking in August at $41.23 a share before dropping down to $24.85 on Friday. The $38 a share Vista paid comes close to the high water mark for the stock.

Stock Chart: Google

Sunny Gupta, co-founder and CEO at Apptio liked the idea of giving his shareholders a good return while providing a good landing spot to take his company private. Vista has a reputation for continuing to invest in the companies it acquires and that prospect clearly excited him. “Vista’s investment and deep expertise in growing world-class SaaS businesses and the flexibility we will have as a private company will help us accelerate our growth…,” Gupta said in a statement.

The deal was approved by Apptio’s board of directors, which will recommend shareholders accept it. With such a high premium, it’s hard to imagine them turning it down. If it passes all of the regulatory hurdles, the acquisition is expected to close in Q1 2019.

It’s worth noting that the company has a 30-day “go shop” provision, which would allow it to look for a better price. Given how hot the enterprise market is right now and how popular hybrid cloud tools are, it is possible it could find another buyer, but it could be hard to find one willing to pay such a high premium.

Vista clearly likes to buy enterprise tech companies having snagged Ping Identity for $600 million and Marketo for $1.8 billion in 2016. It grabbed Jamf, an Apple enterprise device management company and Datto, a disaster recovery company last year. It turned Marketo around for $4.75 billion in a deal with Adobe just two months ago.

Nested, the online estate agent that makes home sellers ‘chain-free’, raises further £120M

Nested, the London-based “data-driven” estate agency that provides a cash advance to help you buy a new home before you’ve sold your old one, has raised a further £120 million in funding. The new round is a mixture of equity and debt: £20 million and £100 million, respectively. Leading the equity round is Northzone, and Balderton Capital, while the debt finance comes from an unnamed institutional investor.

It is noteworthy that Balderton has only just invested in Nested several rounds into the company’s existence, considering that the London-based venture capital firm typically invests earlier at Series A. Balderton is also a backer of GoCardless, the payments company previously co-founded by Nested founder Matt Robinson. That said, Balderton General Partner Tim Bunting did invest in Nested in a personal capacity very early on.

Launched in late 2016, Nested competes with high-end estate agents by providing all of the services needed to sell your house, but with a key difference. In addition to handling valuation, marketing and sales, the startup will loan you up to 95 per cent of the market value of your property as a cash advance, that way you’re able to purchase a new home prior to your old one selling. Before Brexit and the uncertainty it has caused with regards to London house prices, that figure was up to 97 percent of the market value of the property, and I understand Nested hopes to return to that percentage once things settle down.

More broadly, the idea behind Nested is to eliminate much of the stress and uncertainty of selling and buying a home, including what your final budget will be, and also ensure that you’re never caught up in the dreaded property ‘chain’ and miss out on your desired home, or are kept in limbo indefinitely waiting for your property to sell. By becoming a cash buyer, it also puts you in the strongest possible position to negotiate on your onward purchase. Robinson says this typically sees savings of 2-4 percent.

In return, Nested charges a fee from 2-4 per cent (plus VAT) depending on how soon you want to receive the advance, and takes a loss if it fails to sell the property for an amount above its initial advance. The idea is to incentivise the startup to always try to get you the genuine market price or more.

TechCrunch’s Steve O’Hear giving Nested’s Matt Robinson (pictured right) a hard time at Startup Grind London earlier this year.

Asked how well that is working out so far, Robinson tells me historical valuation accuracy is on average within 1.5 percent of what the company predicted. Better still, Nested is running at 100 percent accuracy for 2018 and is confident enough to make this data public.

“The traditional agents don’t even track it and the online players do their best to obscure the fact that they sell only roughly 4/10th of properties they take on i.e. most customers pay them £1,000 up-front to not sell their house and are left out-of-pocket!” says the Nested founder.

To date, Nested has helped over 400 home-owners, and, aside from increasing volume, including helping property owners outside of London, the company says it plans to further expand its product offering. The bulk of these new products will continue to target sellers to “radically improve the selling experience”. However, I understand that since sellers are buyers, too, future services could also include using Nested’s data, tech and expertise to help with the buying process as well.

Adds Robinson in a statement: “We’re excited to receive the backing from some of Europe’s top VCs who share our vision for fixing the age-old problem of buying and selling homes. We are building an incredible team to offer an unassailable service with the most progressive technology in the property industry. This investment will allow us to continue solving the problems that prevent people from moving home with ease”.

SoftBank’s debt, Ford buys Spin, and Chinese coffee is huge money

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a blast. Connie and I were in the studio with our guest, True Ventures’s Tony Conrad, while Danny repped the other side of the country, dialing in from New York.

It was another week shaped by news from Asia. Once we had sorted the sartorially expedient, we first turned to the world of SoftBank, this time taking a close look at its debt load. While SoftBank is currently famous for its investments through its Vision Fund, the company is picking up some notable, debt-powered investments into its vehicle that could add to its risk profile.

After all, who doesn’t want more risk as 2018 comes to a close?

Moving on, Ford is doubling-down on its wager that mobility means more than cars, this time picking up Spin for some sum of money between $40 and $100 million, with most figures coming in a bit light from the nine-figure range.

We care as it’s a fresh turn in the scooter skirmish, not to mention the greater micromobility wars. Bird and Lime have a new competitor that has, possibly, super-deep pockets.

Next, we took a peek at Luckin Coffe’s meteoric rise. This is where our guest selection really showed off; Conrad is a former investor in Blue Bottle, making him a functional caffeine expert. We dug through margins, growth, and why venture players are interested in Luckin at all.

And finally, a look at how recently-public companies are selling more shares after their initial debut. So, when it comes to money on the table, don’t fret it too much.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Pocket Casts, Downcast and all the casts.

Bonobo AI raises $4.5M seed round to help companies turn interactions with customers into valuable data

Bonobo AI, an AI-based platform that helps companies get insights from customer support calls, texts, and other interactions, announced today that it has raised $4.5 million in seed funding led by G20 Ventures and Capri Ventures. Founded in 2016 and led by co-founder and CEO Efrat Rapoport, the Tel Aviv-based startup claims that its technology has been used to analyze more than a billion interactions so far and that it has signed up a “few dozen” clients including DreamCloud and Honeybook.

The idea behind Bonobo is that even though customer service texts and voice calls can provide companies with a trove of valuable information, these data points are difficult to aggregate and analyze at scale. Bonobo’s technology integrates into the platforms that its clients use to communicate with customers, like Gmail, Zendesk, or Twilio) and CRM platforms like Salesforce or Hubspot. Then it analyzes interactions for “events of interest in calls,” Rapoport told TechCrunch, like “when customers ask for a discount, complain, ask for a missing feature, become dissatisfied, etc.”

There are two main types of issues that Bonobo helps its clients with. One is opportunity detection, or identifying things that can either help the closing of a sale, like features that have proven popular among past buyers, or hinder it, such as customer questions that aren’t satisfactorily answered. By doing so, Bonobo is also able to help clients create very targeted marketing campaigns. For example, instead of sending marketing material all customers who need to renew their subscriptions, Rapoport says Bonobo’s clients can create campaigns to help retain customers who need to renew their subscriptions but have complained about the price being too high or missing a feature.

Another example of how Bonobo can increase conversion rates is predicting customer cancellations and other potentially costly issues. For example, one vehicle repair company was losing millions of dollars due to cancelled jobs. Bonobo helped it identify factors associated with a higher likelihood of cancellations during customer interactions with the company’s representatives, which helped it retain thousands of customers.

The second is risk detection. For example, Bonobo detects if a customer starts mentioning a competitor, threatens to post their complaint on social media, or brings up problems that are a legal or compliance risk. Rapoport says that Bonobo’s technology can identify specific segments in conversations, so companies can review it directly from Bonobo’s dashboard without having to perform a time-consuming search.

Rapoport says that she and her co-founders (CTO Idan Tsitiat, COO Barak Goldstein, and VP of research and development Ohad Hen) began working on Bonobo after they realized that while there are many tools from companies like Tableau, Oracle, Microsoft, SAP, and Salesforce for gathering insights from structured data (like customer behavior on websites), very few exist for analyzing unstructured data, including conversational data, at scale. “It’s easy to measure how many people go to their cart but then change their mind and exit, but how do you do the same on thousands of customers calls? How do you know what’s the reason customers change their minds?” says Rapoport. “That’s the gap we are filling.”

Anti-fraud startup Fraugster score $14M Series B

Fraugster, the Berlin-based startup that uses artificial intelligence to prevent fraud for online retailers, has raised $14 million in a Series B funding. The round is led by CommerzVentures, the venture capital subsidiary of Commerzbank, alongside early Fraugster investors Earlybird, Speedinvest, Seedcamp, and Rancilio Cube.

Notably, Munich Re/HSB Ventures, the VC arm of global reinsurer Munich Re, also participated in the round. That’s because Munich Re is insuring Fraugster’s “Fraud Free” product, which takes on the full liability for each transaction to ensure retailers utilising Fraugster’s fraud detection technology never lose out — a sign that the company is pretty confident in its machine learning.

Selling its wares to payments companies — including Ingenico ePayments, and Six Payments — the Fraugster AI technology takes data from multiple sources, analyses and cross-checks it in a fraction of a second, to determine whether a transaction is fraudulent or not.

The idea isn’t just to block any potential fraud, which rules-based systems can already do, but to actually let more transactions through. That’s because false-positives (ie accidentally preventing perfectly valid purchases) is the real bane of the industry.

Citing industry average stats of false positives, Fraugster CEO and co-founder CEO Max Laemmle tells me that for every dollar lost to fraud, $17 is lost through transactions that are wrongly turned down, leading to lower revenues for merchants. He says that Fraugster’s technology has already got that down to $2.

Meanwhile, the anti-fraud startup says it will use the new funds to continue expansion into new markets. This includes the U.S., Asia and Europe, where retailers are facing “an accelerating battle against fraud”.

Precision farming startup Taranis gets $20M Series B for its crop monitoring tech

Taranis, an ag-tech startup that uses aerial scouting and deep learning to identify potential crop issues, announced today that it has raised a $20 million Series B led by Viola Ventures. Existing investors Nutrien (one of the world’s largest fertilizer producers), Wilbur-Ellis venture capital arm Cavallo Ventures, and Sumitomo Corporation Europe also participated.

Tel Aviv-based Taranis says its aerial imaging technology, carried on high-speed drones or manned aircraft, is currently used by farms in Argentina, Brazil, Russia, Ukraine, and the United States. It plans to expand into more countries with this round of funding, including Australia.

Founded in 2015 by Ofir Schlam, Asaf Horvitz, Eli Bukchin, and Ayal Karmi to increase food production, Taranis’ software targets commodity crops like corn, cotton, wheat, soybean, sugarcane, and potatoes. It identifies potential crop issues, including insect damage, nutrient deficiencies, and diseases, and provide farmers with magnified, high-resolution images that are detailed enough to (for example) let them see what bugs are eating their plants.

In a press statement, Viola Ventures partner Zvika Orron said “After analyzing the digital farming industry, we proudly chose Taranis to be our first investment in this space. Taranis has all the necessary ingredients to become the leader in farm digitalization: a comprehensive precision agriculture solution, leading industry partners to scale and penetrate the market and a passionate team making it all happen.”

Traditional crop monitoring is labor-intensive and not always accurate, even with the use of sensors to track soil quality, fertilizer levels, insects, and other issues. Other venture capital-backed startups using computer vision and AI-based technology to make the process more efficient (a growing field referred to as “precision farming”) include Prospera, which is also based in Tel Aviv, Arable, and Ceres Imaging.

Agricultural giants have also started shopping for precision farming startups. For example, over the past twelve months, Deere agreed to buy Blue River, and Brazilian startup Strider was purchased by Syngenta.

SoftBank to wait on Khashoggi murder investigation before deciding on second Vision Fund

SoftBank CEO Masayoshi Son says the company won’t walk away from its existing commitment with the Saudi Arabian royal family — the largest LP in its $100 billion Vision Fund — but the firm will wait on the outcome of an investigation into the death of journalist Jamal Khashoggi before deciding on whether to continue the relationship.

In his first public remarks following the gruesome death of Khashoggi, whose murder last month is linked with Saudi Arabia’s Crown Prince Mohammad bin Salman, Son condemned the journalist’s killing as an “act against humanity and also journalism and free speech… a horrible and deeply regrettable act.”

While he said the company “want(s) to see those responsible held accountable,” Son told the audience at a SoftBank investor day that there’s no immediate strategy for a follow-up to the $100 billion fund, which has forced other VCs to raise charge fund and adjust their investment strategies.

“We still have money in the Vision Fund 1, in addition, the [SoftBank Mobile] IPO is underway so therefore we can collect money so we will use that effectively for now,” he said. “I think it is still too early to go ahead with Vision Fund 2 so we will be cautious in our next step… however, we have no change in the SoftBank 2.0 strategy, we want to continue expanding better.”

That is in line with previous comments from SoftBank playing down an imminent second fund — its COO Marcelo Claure recently said there is “no certainty” of a follow-up — but the firm has adopted a softer response than other top businessmen who are aligned with Saudi money.

Virgin CEO Richard Branson very publicly suspended his role with two Saudi projects and walked away from investment talks with the country’s Public Investment Fund (PIF), which was in discussion to put money into his Virgin Galactic and Virgin Orbit ventures.

While Son did cancel a speaking engagement at a high-profile Saudi investment event last month, he said today that he believes SoftBank has a responsibility to use the funds it has already collected from PIF.

“Before this tragic case happened, we had already accepted a responsibility to the people of Saudi Arabia to help them manage their financial resources and we can’t all of a sudden drop such responsibility. Things that we have already accepted, we would like to fulfill our fiduciary duties,

“For new projects, we would like to carefully watch the outcome of the case and once the explanation is fully made then we will think about it once again,” Son said.

Despite ducking out of that event, the SoftBank supremo has traveled to the Middle East to meet Saudi Arabia’s Crown Prince Mohammad bin Salman and government officials, and he said that he “directly raised our concerns with them and asked for further clarity on this tragic case.” The prince, he said, is “taking this very seriously.”

PIF’s role in Vision Fund — it is the largest single investor — has threatened to taint its efforts, with chatter in Silicon Valley suggesting that many companies would prefer to take money from less-tainted sources. However, SoftBank has struck two deals in the past week — putting $375 million into robotic food-prep startup Zume and $1.1 billion into glass maker View — which suggest that the sheer size of the checks on offer outweigh any concerns on the origins of its money.

When asked about negative blowback, Son said he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did concede that there “may be some impact” in the future.

Silicon Valley hoped the Khashoggi story would go away; instead, it may end an era

Sequoia leads $10M round for home improvement negotiator Setter

You probably don’t know how much it should cost to get your home’s windows washed, yard landscaped or countertops replaced. But Setter does. The startup pairs you with a home improvement concierge familiar with all the vendors, prices and common screwups that plague these jobs. Setter finds the best contractors across handiwork, plumbing, electrical, carpentry and more. It researches options, negotiates a bulk rate and, with its added markup, you pay a competitive price with none of the hassle.

One of the most reliable startup investing strategies is looking at where people spend a ton of money but hate the experience. That makes home improvement a prime target for disruption, and attracted a $10 million Series A round for Setter co-led by Sequoia Capital and NFX. “The main issue is that contractors and homeowners speak different languages,” Setter co-founder and CEO Guillaume Laliberté tells me, “which results in unclear scopes of work, frustrated homeowners who don’t know enough to set up the contractors for success, and frustrated contractors who have to come back multiple times.”

Setter is now available in Toronto and San Francisco, with seven-plus jobs booked per customer per year costing an average of over $500 each, with 70 percent repeat customers. With the fresh cash, it can grow into a household name in those cities, expand to new markets and hire up to build new products for clients and contractors.

I asked Laliberté why he cared to start Setter, and he told me “because human lives are made better when you can make essential human activities invisible.” Growing up, his mom wouldn’t let him buy video games or watch TV so he taught himself to code his own games and build his own toys. “I’d saved money to fix consoles and resell them, make beautiful foam swords for real live-action games, buy and resell headphones — anything that people around me wanted really!” he recalls, teaching him the value of taking the work out of other people’s lives.

Meanwhile, his co-founder David Steckel was building high-end homes for the wealthy when he discovered they often had ‘home managers’ that everyone would want but couldn’t afford. What if a startup let multiple homeowners share a manager? Laliberté says Steckel describes it as “I kid you not, the clouds parted, rays of sunlight began to shine through and angels started to sing.” Four days after getting the pitch from Steckel, Laliberté was moving to Toronto to co-found Setter.

Users fire up the app, browse a list of common services, get connected to a concierge over chat and tell them about their home maintenance needs while sending photos if necessary. The concierge then scours the best vendors and communicates the job in detail so things get done right the first time, on time. They come back in a few minutes with either a full price quote, or a diagnostic quote that gets refined after an in-home visit. Customers can schedule visits through the app, and stay in touch with their concierge to make sure everything is completed to their specifications.

The follow-through is what sets Setter apart from directory-style services like Yelp or Thumbtack . “Other companies either take your request and assign it to the next available contractor or simply share a list of available contractors and you need to complete everything yourself,” a Setter spokesperson tells me. They might start the job quicker, but you don’t always get exactly what you want. Everyone in the space will have to compete to source the best pros.

Though potentially less scalable than Thumbtack’s leaner approach, Setter is hoping for better retention as customers shift off of the Yellow Pages and random web searches. Thumbtack rocketed to a $1.2 billion valuation and had raised $273 million by 2015, some from Sequoia (presenting a curious potential conflict of interest). That same ascent may have lined up the investors behind Setter’s $2 million seed round from Sequoia, Hustle Fund and Avichal Garg last year. Today’s $10 million Series A also included Hustle Fund and Maple VC. 

The toughest challenge for Setter will be changing the status quo for how people shop for home improvement away from ruthless bargain hunting. It will have to educate users about the pitfalls and potential long-term costs of getting slapdash service. If Laliberté wants to fulfill his childhood mission, he’ll have to figure out how to make homeowners value satisfaction over the lowest sticker price.