Big revenues, huge valuations and major losses: charting the era of the unicorn IPO

We can make charts galore about the tech IPO market. Yet none of them diminish the profound sense that we are in uncharted territory.

Never before have so many companies with such high revenues gone public at such lofty valuations, all while sustaining such massive losses. If you’re a “growth matters most” investor, these are exciting times in IPO-land. If you’re the old-fashioned value type who prefers profits, it may be best to sit out this cycle.

Believers in putting market dominance before profits got their biggest IPO opportunity perhaps ever last week, with Uber’s much-awaited dud of a market debut. With a market cap hovering around $64 billion, Uber is far below the $120 billion it was initially rumored to target. Nonetheless, one could convincingly argue it’s still a rich valuation for a company that just posted a Q1 loss of around $1 billion on $3 billion in revenue.

So how do Uber’s revenues, losses and valuation stack up amidst the recent crop of unicorn IPOs? To put things in context, we assembled a list of 15 tech unicorns that went public over the past three quarters. We compared their valuations, along with revenues and losses for 2018 (in most cases the most recently available data), in the chart below:

 

Put these companies altogether in a pot, and they’d make one enormous, money-losing super-unicorn, with more than $25 billion in annual revenue coupled to more than $6 billion in losses. It’ll be interesting to revisit this list in a few quarters to see if that pattern changes, and profits become more commonplace.

History

It’s easy to draw comparisons to the decades-old dot-com bubble, but this time things are different. During the dot-com bubble, I remember penning this lead sentence:

“If the era of the Internet IPO had a theme song, it might be this: There’s no business like no business.”

That notion made sense for bubble-era companies, which commonly went public a few years after inception, before amassing meaningful revenues.

That tune won’t work this time around. If the era of the unicorn IPO had a theme song, it wouldn’t be nearly as catchy. Maybe something like: “There’s no business like lots of business and lots of losses too.”

I won’t be buying tickets to that musical. But when it comes to buying IPO shares, the unicorn proposition is a bit more appealing than the 2000 cycle. After all, it’s reasonably plausible for a company with dominant market share to tweak its margins over time. It’s a lot harder to grow revenues from nothing to hundreds of millions or billions, particularly if investors grow averse to funding continued losses.

Of course, the dot-com bubble and the unicorn IPO era do share a common theme: Investors are betting on an optimistic vision of future potential. If expectations don’t pan out, expect share prices to follow suit.

Starbucks’ Chinese nemesis surges 20% in public debut

Shares of Luckin Coffee jumped 20% in its first day of trading on the Nasdaq stock market.

After opening at $17.00, shares of the Chinese Starbucks competitor climbed as high as $25.96, or more than 50%, before settling back down to $20.38 at the market’s close. The company has a market cap north of $5 billion after its first day of trading.

The brick-and-mortar coffee chain has achieved major success in China by offering speedy delivery services to Chinese consumers. The company has nearly 2,400 stores compared to Starbucks’ 3,500, but it has plans to more than double that number by the end of the year as it seeks to become the country’s coffee king.

Luckin’s success doesn’t immediately seem to be thwarting the stock market success of Starbucks, which has had a glowing 2019. The company hit another all-time high Friday, closing out the day at $78.91, up more than 35% from a year ago, giving the Seattle company a market cap of nearly $96 billion.

Starbucks and Luckin Coffee may seem like mortal enemies, but their rivalry is more complicated than one might immediately think. Check out our Extra Crunch deep dive from earlier this week on the Xiamen-based company’s financials.

The misunderstandings of 18-month-old Luckin’s $500M IPO

Tutor House, the UK-based tutoring platform, scores £2M from Fuel Ventures

Tutor House, a U.K.-based startup that operates a marketplace to let parents find an online or in-person tutor for their children, has raises £2 million in funding.

Backing the round, the first for the young company, is Fuel Ventures, the London-based VC and startup builder set up by Mark Pearson of MyVoucherCodes fame. Fuel Ventures recently closed its third fund of £20 million to continue investing in early-stage B2B and B2C marketplaces, platforms and SaaS.

Founded by Ex-teacher Alex Dyer in 2012 — and self-funded until now — Tutor House connects parents and families with tutors either in-person or online. The site enables families to search for tutors across an array of subjects and academic levels, and now claims to be the U.K.’s leading tutoring agency offering private home or remote tuition for all Primary, GCSE, A-Level and University subjects.

“The large number of teachers leaving their profession in addition to ever increasing class sizes mean that the market for private tutoring has expanded significantly,” former psychology teacher and now Tutor House CEO Dyer tells me. “In order to improve the quality of each student’s academic experience, our tutors provide personalised learning plans that will help to boost grades and give learners the best chance of success”.

In addition, Dyer says that Tutor House is the only tutoring platform that interviews all tutors and ensures that they have a full DBS check before going live on the platform. “In an unregulated industry this is very important,” he adds. “We are dedicated to providing each and every student with the best level of service possible”.

Typical Tutor House customers fall into four groups. The first is hands-on parents who want the best for their child regardless of price. The second is parents who see education as important but may have to ask relatives for help with costs. The third is students who can’t access education in a mainstream school due to anxiety or other SEN related issues. “These students often need to retake A-level or GCSE exams due to poor teaching/no teacher,” says Dyer. The final group is university students and adult learners who are investing in their future by taking learning into their own hands.

A classic marketplace play, Tutor House charges tutors a 20 percent commission fee for every booking. However, if a tutor books more than twenty hours a month, the commission is reduced. “We also offer A-Level and Pre-U retake courses, in addition to residential courses and homeschooling,” explains Dyer.

Meanwhile, Tutor House says it will use the investment from Fuel Ventures to expand into other countries, and to create a bespoke school in London for students who need intensive tutoring for exam retakes.

MultiVu raises $7M seed round for its next-gen 3D sensor

MultiVu, a Tel Aviv-based startup that is developing a new 3D imaging solution that only relies on a single sensor and some deep learning smarts, today announced that it has raised a $7 million seed round. The round was led by crowdfunding platform OurCrowd, Cardumen Capital and Hong Kong’s Junson Capital.

Tel Aviv University’s TAU Technology Innovation Momentum Fund supported some of the earlier development of MultiVu’s core technology, which came out of Prof. David Mendlovic’s lab at the university. Mendlovic previously co-founded smartphone camera startup Corephotonics, which was recently acquired by Samsung.

The promise of MultiVu’s sensor is that it can offer 3D imaging with a single-lens camera instead of the usual two-sensor setup. This single sensor can extract depth and color data in a single shot.

This makes for a more compact setup and, by extension, a more affordable solution as it requires fewer components. All of this is powered by the company’s patented light field technology.

Currently, the team is focusing on using the sensor for face authentication in phones and other small devices. That’s obviously a growing market, but there are also plenty of other applications for small 3D sensors, ranging from other security use cases to sensors for self-driving cars.

“The technology, which passed the proof-of-concept stage, will bring 3D Face Authentication and affordable 3D imaging to the mobile, automotive, industrial and medical markets,” MultiVu CEO Doron Nevo said. “We are excited to be given the opportunity to commercialize this technology.”

Right now, though, the team is mostly focusing on bringing its sensor to market. The company will use the new funding for that, as well as new marketing and business development activities.

“We are pleased to invest in the future of 3D sensor technologies and believe that MultiVu will penetrate markets, which until now could not take advantage of costly 3D imaging solutions,” said OurCrowd Senior Investment Partner Eli Nir. “We are proud to be investing in a third company founded by Prof. David Mendlovic (who just recently sold CorePhotonics to Samsung), managed by CEO Doron Nevo – a serial entrepreneur with proven successes and a superb team they have gathered around them.”

Talking the future of media with Northzone’s Pär-Jörgen Pärson

We live in the subscription streaming era of media. Across film, TV, music, and audiobooks, subscription streaming platforms now shape the market. Gaming and podcasting could be next. Where are the startup opportunities in this shift, and in the next shift that will occur?

I sat down with Pär-Jörgen “PJ” Pärson, a partner at European venture firm Northzone, to discuss this at SLUSH this past winter. Pärson – a Swede who now runs Northzone’s office in NYC – led the top early-stage investor in Spotify and led the $35 million Series C in $45/month sports streaming service fuboTV (which has roughly 250,000 subscribers).

In the transcript below, we dive into the core investment thesis that has guided him for 20 years, how he went from running a fish distribution to running a VC firm, his best practices for effective board meetings and VC-entrepreneur relationships, and his assessment of the big social platforms, AR/VR, voice interfaces, blockchain, and the frontier of media. It has been edited for length and clarity.

From Fish to VC

Eric Peckham:

Northzone isn’t your first VC firm — Back in 1998, you created Cell Ventures, which was more of a holding company or studio model. What was your playbook then?

FireHydrant lands $1.5M seed investment to bring order to IT disaster recovery

FireHydrant, an NYC startup, wants to help companies recover from IT disasters more quickly, and understand why they happened — with the goal of preventing similar future scenarios from happening again. Today, the fledgling startup announced a $1.5 million seed investment from Work-Bench, a New York City venture capital firm that invests in early-stage enterprise startups.

In addition to the funding, the company announced it was opening registration for its FireHydrant incident management platform. The product has been designed with Google’s Site Reliability Engineering (SRE) methodology in mind, but company co-founder and CEO Bobby Ross says the tool is designed to help anyone understand the cause of a disaster, regardless of what happened, and whether they practice SRE or not.

“I had been involved in several fire fighting scenarios — from production databases being dropped to Kubernetes upgrades gone wrong — and every incident had a common theme: ​absolute chaos​,” Ross wrote in a blog post announcing the new product.

The product has two main purposes, according to Ross. It helps you figure out what’s happening as you attempt to recover from an ongoing disaster scenario, and once you’ve put out the fire, it lets you do a post-mortem to figure out exactly what happened with the hope of making sure that particular disaster doesn’t happen again.

As Ross describes it, a tool like PagerDuty can alert you that there’s a problem, but FireHydrant lets you figure out what specifically is going wrong and how to solve it. He says that the tool works by analyzing change logs, as a change is often the primary culprit of IT incidents. When you have an incident, FireHydrant will surface that suspected change, so you can check it first.

“We’ll say, hey, you had something change recently in this vicinity where you have an alert going off. There is a high likelihood that this change was actually causing your incident. And we actually bubble that up and mark it as a suspect,” Ross explained.

Screenshot: FireHydrant

Like so many startups, the company developed from a pain point the founders were feeling. The three founders were responsible for solving major outages at companies like Namely, DigitalOcean, CoreOS and Paperless Post.

But the actual idea for the company came about almost accidentally. In 2017, Ross was working on a series of videos and needed a way to explain what he was teaching. “I began writing every line of code with live commentary, and soon FireHydrant started to take the shape of what I envisioned as an SRE while at Namely, and I started to want it more than the video series. 40 hours of screencasts recorded later, I decided to stop recording and focus on the product…,” Ross wrote in the blog post.

Today it integrates with PagerDuty, GitHub and Slack, but the company is just getting started with the three founders, all engineers, working on the product and a handful of beta customers. It is planning to hire more engineers to keep building out the product. It’s early days, but if this tool works as described, it could go a long way toward solving the fire-fighting issues that every company faces at some point.

Founders Fund invests in Tibber, a Norwegian AI to smartly manage energy

You probably have one electricity supplier for your house. But these days the average household could probably buy form several such companies, it just can’t easily access the market place of possible suppliers. Wouldn’t it be smarter in you had an AI in your house which could purchase energy from these producers, including those within the local grid, at the best prices and at the best time of day?

That’s what the Tibber startup does in Norway, and it’s just raised a $12M Series A funding from an iconic Silicon Valley VC.

Hailing originally from Stockholm, Tibber offers customers the ability to lower their energy bills in exactly the above manner, with the user using a simple app, and the purchasing of power is automatically done by its bots. That means Tiber is always looking for the lowest electricity prices as well as alerting customers to consume energy during the cheapest hours of the day.

The funding round was led by SF-based Founders Fund, known for their early investments in Spotify, Facebook, SpaceX, Palantir, Airbnb and Stripe. Tibber is the third investment ever in Europe for Founders Fund, which is quite something. The rest of the round came from existing investors including Wellstreet, BKK, Petter Stordalen and RFF Vest.

Prior to this round the company had raised $3-4m. It now plans to expand to Germany next.

In a statement Zack Hargreaves, Principal at Founders Fund said: “The tools we currently use to manage our utilities are completely outdated. Tibber combines wholesale electricity prices with IoT integrations to save users an average of 20 % on electricity bills. Consumers will see cost savings from simply downloading the app.”

Although Tibber only powers 40,000 homes right now, 25% of are smart homes, where customers are able to control their power usage through Tibber-connected devices, such as electric car charging, connected thermostats and smart plugs.

Edgeir Aksnes, CEO and founder says all their customer growth has come from word of mouth: “With this funding round complete, we are set to further expand in the Nordics, develop our product and launch Tibber in new markets in Europe.”

Tibber has a team of 21 people and currently operates in Sweden and Norway.

Last year, Tibber launched a smart charging feature for Tesla and other electric cars and hybrids. The company claims that its solution can cut 20 percent off the charging price compared to the rest of the market.

Zeus raises $24M to make you a living-as-a-service landlord

Cookie-cutter corporate housing turns people into worker drones. When an employee needs to move to a new city for a few months, they’re either stuck in bland, giant apartment complexes or Airbnbs meant for shorter stays. But Zeus lets any homeowner get paid to host white-collar transient labor. Through its managed ownership model, Zeus takes on all the furnishing, upkeep, and risk of filling the home while its landlords sit back earning cash.

Zeus has quietly risen to a $45 million revenue run rate from renting out 900 homes in 23 cities. That’s up 5X in a year thanks to Zeus’ 150 employees. With a 90 percent occupancy rate, it’s proven employers and their talent want more unique, trustworthy, well-equipped multi-month residences that actually make them feel at home.

Now while Airbnb is distracted with its upcoming IPO, Zeus has raised $24 million to steal the corporate housing market. That includes a previous $2.5 million seed round from Bowery, the new $11.5 million Series A led by Initialized Capital whose partner Garry Tan has joined Zeus’ board, and $10 million in debt to pay fixed costs like furniture. The plan is to roll up more homes, build better landlord portal software, and hammer out partnerships or in-house divisions for cleaning and furnishing.

“In the first decade out of school people used to have two jobs. Now it’s four jobs and it’s trending to five” says Zeus co-founder and CEO Kulveer Taggar. “We think in 10 years, these people won’t be buying furniture.” He imagines they’ll pay a premium for hand-holding in housing, which judging by the explosion in popularity of zero-friction on-demand services, seems like an accurate assessment of our lazy future. Meanwhile, Zeus aims to be “the quantum leap improvement in the experience of trying to rent out your home” where you just punch in your address plus some details and you’re cashing checks 10 days later.

Buying Mom A House Was Step 1

“When I sold my first startup, I bought a home for my mom in Vancouver” Taggar recalls. It was payback for when she let him remortgage her old house while he was in college to buy a condo in Mumbai he’d rent out to earn money. “Despite not having much growing up, my mom was a travel agent and we got to travel a lot” which Taggar says inspired his goal to live nomadically in homes around the world. Zeus could let other live that dream.

Zeus co-founder and CEO Kulveer Taggar

After Oxford and working as an analyst at Deutsche Bank, Taggar built student marketplace Boso before moving to the United States. There, he co-founded auction tool Auctomatic with his cousin Harjeet Taggar and future Stripe co-founder Patrick Collison, went through Y Combinator, and sold it to Live Current Media for $5 million just 10 months later. That gave him the runway to gift a home to his mom and start tinkering on new ideas.

With Y Combinator’s backing again, Taggar started NFC-triggered task launcher Tagstand, which pivoted into app settings configurer Agent, which pivoted into automatic location sharing app Status. But when his co-founder Joe Wong had to move an hour south from San Francisco to Palo Alto, Taggar was dumbfounded by how distracting the process was. Listing and securing a new tenant was difficult, as was finding a medium-term rental without having to deal with exhorbitant prices or sketchy Cragislist. Having seen his former co-founder go on to great success with Stripe’s dead-simple payments integration, Taggar wanted to combine that vision with OpenDoor’s easy home sales to making renting or renting out a place instantaneous. That spawned Zeus.

Stripe Meets OpenDoor To Beat Airbnb

To become a Zeus landlord, you just type in your address, how many bedrooms and bathrooms, and some aesthetic specs, and you get a monthly price quote for what you’ll be paid. Zeus comes in and does a 250-point quality assessment, collects floor plans, furnishes the property, and handles cleaning and maintenance. It works with partners like Helix mattresses, Parachute sheets, and Simple Human trash cans to get bulk rates. “We raised debt because we had these fixed investments into furniture. It’s not as dilutive as selling pure equity” Taggar explains.

Zeus quickly finds a tenant thanks to listings in Airbnb and relationships with employers like Darktrace and ZS Associates with lots of employees moving around. After passing background checks, tenants get digital lock codes and access to 24/7 support in case something doesn’t look right. The goal is to get someone sleeping there in just 10 days. “Traditional corporate housing is $10,000 a month in SF in the summer or at extended stay hotels. Airbnb isn’t well suited [for multi-month stays]. ” Taggar claims. “We’re about half the price of traditional corporate housing for a better product and a better experience.”

Zeus signs minimum two-year leases with landlords and tries to extend them to five years when possible. It gets one free month of rent as is standard for property managers, but doesn’t charge an additional rate. For example, Zeus might lease your home for $4,000 per month but gets the first month free, and rent it out for $5,000 so it earns $60,000 but pays you $44,000. That’s a tidy margin if Zeus can get homes filled fast and hold down its upkeep costs.

“Zeus has been instrumental for my company to start the process of re-location to the Bay Area and to host our visiting employees from abroad now that we are settled” writes Zeus client Meitre’s Luis Caviglia. “I particularly like the ‘hard truths’ featured in every property, and the support we have received when issues arose during our stays.”

At Home, Anywhere

There’s no shortage of competitors chasing this $18 billion market in the US alone. There are the old-school corporations and chains like Oakwood and Barbary Coast that typically rent out apartments from vast, generic complexes at steep rates. Stays over 30 days made up 15 percent of Airbnb’s business last year, but the platform wasn’t designed for peace-of-mind around long-term stays. There are pure marketplaces like UrbanDoor that don’t always take care of everything for the landlord or provide consistent tenant experiences. And then there are direct competitors like $130 million-funded Sonder, $66 million-funded Domio, recently GV-backed 2nd Address, and European entants like MagicStay, AtHomeHotel, and Homelike.

Zeus’ property unit growth

There’s plenty of pie, though. With 330,000 housing units in SF alone, Zeus has plenty of room to grow. The rise of remote work means companies whose employee typically didn’t relocate may now need to bring in distant workers for a multi-month sprint. A recession could make companies more expense-cautious, leading them to rethink putting up staffers in hotels for months on end. Regulatory red tape and taxes could scare landlords away from short-term rentals and towards coprorate housing. And the need to expand into new businesses could tempt the big vacation rental platforms like Airbnb to make acquisitions in the space — or try to crush Zeus.

Winners will be determined in part by who has the widest and cheapest selection of properties, but also by which makes people most comfortable in a new city. That’s why Taggar is taking a cue from WeWork by trying to arrange more community events for its tenants. Often in need of friends, Zeus could become a favorite by helping people feel part of a neighborhood rather than a faceless inmate in a massive apartment block or hotel. That gives Zeus network effect if it can develop density in top markets.

Taggar says the biggest challenge is that “I feels like I’m running five startups at once. Pricing, supply chain, customer service, B2B. We’ve decided to make everything custom — our own property manager software, our own internal CRM. We think these advantages compound, but I could be wrong and they could be wasted effort.”

The benefits of Zeus‘ success would go beyond the founder’s bank account. “I’ve had friends in New York get great opportuntiies in San Francisco but not take them because of the friction of moving” Taggar says. Routing talent where it belongs could get more things built. And easy housing might make people more apt to live abroad temporarily. Taggar concludes, “I think it’s a great way to build empathy.”

Passbase is building a full-stack identity engine with privacy baked in

Digital identity startup Passbase has bagged $600,000 in pre-seed funding led by a group of business angel investors from Alphabet, Stanford, Kleiner Perkins and EY, as well as seed fund investment from Chicago-based Upheaval Investments and Seedcamp.

The 2018-founded Silicon Valley-based startup — whose co-founder we chatted to briefly on camera at Disrupt Berlin — is building what it dubs an “identity engine” to simplify identity verification online.

Passbase offers a set of SDKs to developers to integrate into their service facial recognition, liveness detection, ID authenticity checks and ID information extraction, while also baking in privacy protections that allow individual users to control their own identity data.

A demo video of the verification product shows a user being asked to record a FaceID-style 3D selfie by tilting their face in front of a webcam and then scanning an ID document, also by holding it up to the camera.

On the developer front, the flagship claim is Passbase’s identity verification product can be deployed to a website or mobile app in less than three minutes, with just seven lines of code.

Co-founder Mathias Klenk tells TechCrunch the system architecture draws on ideas from public-private key encryption, blockchain and biometric authentication — and is capable of completing “zero-knowledge authentications.”

In practice, that means a website visitor or app user can prove who they are (or how old they are) without having to share their full identity document with the service.

Klenk, a Stanford alum, says the founding team pivoted to digital identity in the middle of last year after their earlier startup — a crypto exchange management app called Coinance — ran into regulatory difficulties right after they’d decided to go full-time on the project.

He says they got a call from Apple, in August 2018, informing them Coinance had been pulled from the AppStore. The issue was they needed to be able to comply with know your customer (KYC) requirements as regulators cracked down on the risk of cryptocurrency being used for money laundering.

“With a quick call to our lawyers, we learned it was because we now needed to complete strong identity verification with every exchange integrated for every user in order to fulfill our KYC obligations,” explains Klenk. “This is how our pivot to Passbase began.”

The experience with Coinance convinced Klenk and his two co-founders — Felix Gerlach (an ex-Rocket Internet product manager/designer) and Dave McGibbon (previously an investment associate at GoogleX) — that there was a “huge opportunity” to build a “full-stack” identity verification tool that was easy for engineering teams to integrate. So it sounds like it’s thinking along similar lines to Estonian startup Veriff.

Klenk claims current vendors “take weeks to integrate and charged thousands of dollars from the start.” And in classic startup formula fashion, he too condenses the idea down to: “Stripe for Identity Verification” — arguing that: “In order to solve digital identity verification, you cannot only streamline the identity verification process, you need to enable identity ownership and reuse across different services.”

At the same time, Klenk says the founding team saw a growing need for a privacy-focused identity verification tool — to “protect people’s information by design and help companies collect only the information they need.”

On this he freely cites Europe’s General Data Protection Regulation as an inspiring force. (“GDPR is built into the DNA of this product,” is the top-line claim.)

“Companies gain access to users’ information in a secure enclave, and avoid the dangers of getting hacked and leaking sensitive information,” says Klenk, describing the system architecture for verification as the core IP of the business.

They’re in the process of filing patents for the “developed technology,” working with two technical advisors, he adds. 

Passbase’s verification stack itself involves modular pieces so that it can adapt to changing threats, as Klenk tells it.

The startup is partnering with service providers for various verification components. Though he says it also has in-house computer vision experts who have built its anti-spoofing and liveness detection.

“This will always be an arms race against the latest spoofing tactics. We plan to stay ahead of the curve by introducing multi-factor authentication techniques and partnering with the best technology providers,” he adds on that.

He says they’re also working with a U.S.-based security company and other security experts to test the robustness and security of their system on an ongoing basis, adding: “We are planning to obtain all required certifications to ensure the security of our system e.g. ISO, Fido.”

Passbase’s product is currently in a closed beta with more than 200 companies signed up to its early access program.

Five have been “handpicked and onboarded” for a closed pilot — and Klenk says it’s now running tests and figuring out final requirements for an open beta launch planned for the middle of this year.

“Our early customers are mostly trust-based marketplaces (like an Airbnb),” he tells TechCrunch. “We are adding features such as PEP, OFAC and others over the next month to allow us to also service the mobility space, age-restricted products and eventually online banking and fintechs with KYC obligations.”

The startup’s first tranche of investor funding will be used for building out its core tech and mobile apps — while also “delighting our first clients with our B2B solution, getting traction, nailing product market fit,” as Klenk puts it.

He emphasizes that they’re also keen to nail a healthy startup culture from the get-go — saying that building “an exciting and inclusive place to work” is a priority. (“Since many high-growth startups dropped the priority for this in order for growth. We want to get this right from the beginning.”)

On the competitive front, Passbase is certainly driving into a noisy arena with no shortage of past effort and current players touting identity and digital verification services — albeit, all that activity underlines the high demand level for robust online verification.

Demand that’s likely to rise as more policymakers and governments wake up to the risks and challenges posed by online fakes — and prepare to regulate internet firms.

Discussing the competitive landscape, Klenk name-checks Jumio, Onfido and Veriff in the identity verification space, though he argues Passbase’s “developer-focused go-to-market and focus on creating digital identity” creates a different set of incentives which he also claims “allow us to get really creative on price and auxiliary offerings.”

“Our competition cares about price x volume. We care about creating a robust and secure network of trusted user-owned digital identities,” he suggests.

On the digital identity front he points to Civic, Verimi and Authenteq as being focused on “digital and self-sovereign identity,” though he says they have “tended” to take a B2C approach versus Passbase’s “full-stack” developer offering, which he claims is “immediately useful to a large market of players.”

There’s clearly plenty still to play for where digital identity is concerned. It remains a complex and challenging problem that loops in all sorts of entities, touchpoints and responsibilities.

But add privacy considerations into the mix and Passbase’s hope is that, by going the extra mile to build a zero-knowledge architecture, it can become a key player.

Breedr raises £2M led by LocalGlobe for its livestock data and trading platform

Breedr, a U.K. startup that wants to help farmers make better use of their livestock data to improve profitability, has raised £2.2 million in funding.

The seed round is led by London-based LocalGlobe, with participation from Mons Investment and a number of angel investors. They include Ian Hogarth, Darren Shapland and Jonathan McKay. The company was previously backed by Forward Partners and Gumtree founder Michael Pennington, which both followed on.

Founded in early 2018 by Ian Wheal and later joined by co-founder Claire Lewis — both of whom grew up on a farm — Breedr aims to bring the livestock industry into the digital age. The company provides farmers with an app to lets them capture data on their livestock and then use that data to improve the efficiency of their farms and help ensure that they can sell the animals at the most optimum time and price.

This ranges from understanding which sires result in the most profitable offspring, to predicting the date of peak profit for each animal. More broadly, Breedr says that farmers using the app can benefit from a “measurable increase in profitability,” while also reducing the environmental impact and waste caused by overfeeding or poor breeding decisions.

“The current market for livestock operates the same way it has for centuries,” Wheal tells TechCrunch. “Most trading is completed with manual processes and at the last minute, with very little visibility for retailers, processors and buyers up and down the supply chain.”

This lack of visibility generates two main problems within the industry. The first is that too much guesswork leads to a mismatch in supply and demand. Unlike industries that use “just in time” manufacturing, Wheal says that in some parts of the world processors do not know on a Friday if enough animals will be available the following Monday.

The second problem is that farmers aren’t able to accurately buy, grow and sell animals on the metrics that drive the most value for their farms. By analysing profitability of individual animals, Breedr has already been able to demonstrate that the top 20 percent of profit is often wiped out by the bottom 20 percent of poor-performing animals.

Linked to the startup’s data play is the Breedr marketplace, which uses the same livestock data to improve traceability and help farmers sell their livestock to meat processors and retailers. It is also ultimately where the startup will generate revenue by charging a small transaction fee and potentially upselling other financial products in the future, such as insurance or financing.

“Our data and trading platform is moving the industry from trading on how things look to the actual data that drives commercial return to the industry,” adds Wheal. “[We enable] farmers to utilise data to differentiate their livestock to customer requirements rather than seed the market as a commodity. Suppliers can for the first time have visibility of supply to buy animals at specification, and retailers can plan promotions and build premium brands based on a trusted supply chain.”

Meanwhile, in addition to the company’s seed round, Breedr has been given a grant from Innovate UK, the U.K.’s innovation agency, to lead a consortium developing a “Smart Contracts” system for the meat and livestock sector. Working with farming groups, Imperial College London and Dunbia (one of Europe’s largest processors of red meat), it plans to use blockchain or distributed ledger technology (DLT) to capture the flows of data and transactions between multiple parties within the livestock industry.