Startups Weekly: Squad’s screen-shares and Slack’s swastika

We’re three weeks into January. We’ve recovered from our CES hangover and, hopefully, from the CES flu. We’ve started writing the correct year, 2019, not 2018. Venture capitalists have gone full steam ahead with fundraising efforts, several startups have closed multi-hundred million dollar rounds, a virtual influencer raised equity funding and yet, all anyone wants to talk […]

We’re three weeks into January. We’ve recovered from our CES hangover and, hopefully, from the CES flu. We’ve started writing the correct year, 2019, not 2018.

Venture capitalists have gone full steam ahead with fundraising efforts, several startups have closed multi-hundred million dollar rounds, a virtual influencer raised equity funding and yet, all anyone wants to talk about is Slack’s new logo… As part of its public listing prep, Slack announced some changes to its branding this week, including a vaguely different looking logo. Considering the flack the $7 billion startup received instantaneously and accusations that the negative space in the logo resembled a swastika — Slack would’ve been better off leaving its original logo alone; alas…

On to more important matters.

Rubrik more than doubled its valuation

The data management startup raised a $261 million Series E funding at a $3.3 billion valuation, an increase from the $1.3 billion valuation it garnered with a previous round. In true unicorn form, Rubrik’s CEO told TechCrunch’s Ingrid Lunden it’s intentionally unprofitable: “Our goal is to build a long-term, iconic company, and so we want to become profitable but not at the cost of growth,” he said. “We are leading this market transformation while it continues to grow.”

Deal of the week: Knock gets $400M to take on Opendoor

Will 2019 be a banner year for real estate tech investment? As $4.65 billion was funneled into the space in 2018 across more than 350 deals and with high-flying startups attracting investors (Compass, Opendoor, Knock), the excitement is poised to continue. This week, Knock brought in $400 million at an undisclosed valuation to accelerate its national expansion. “We are trying to make it as easy to trade in your house as it is to trade in your car,” Knock CEO Sean Black told me.

Cybersecurity stays hot

While we’re on the subject of VCs’ favorite industries, TechCrunch cybersecurity reporter Zack Whittaker highlights some new data on venture investment in the industry. Strategic Cyber Ventures says more than $5.3 billion was funneled into companies focused on protecting networks, systems and data across the world, despite fewer deals done during the year. We can thank Tanium, CrowdStrike and Anchorfree’s massive deals for a good chunk of that activity.

Send me tips, suggestions and more to kate.clark@techcrunch.com or @KateClarkTweets

Fundraising efforts continue

I would be remiss not to highlight a slew of venture firms that made public their intent to raise new funds this week. Peter Thiel’s Valar Ventures filed to raise $350 million across two new funds and Redpoint Ventures set a $400 million target for two new China-focused funds. Meanwhile, Resolute Ventures closed on $75 million for its fourth early-stage fund, BlueRun Ventures nabbed $130 million for its sixth effort, Maverick Ventures announced a $382 million evergreen fund, First Round Capital introduced a new pre-seed fund that will target recent graduates, Techstars decided to double down on its corporate connections with the launch of a new venture studio and, last but not least, Lance Armstrong wrote his very first check as a VC out of his new fund, Next Ventures.

More money goes toward scooters

In case you were concerned there wasn’t enough VC investment in electric scooter startups, worry no more! Flash, a Berlin-based micro-mobility company, emerged from stealth this week with a whopping €55 million in Series A funding. Flash is already operating in Switzerland and Portugal, with plans to launch into France, Italy and Spain in 2019. Bird and Lime are in the process of raising $700 million between them, too, indicating the scooter funding extravaganza of 2018 will extend into 2019 — oh boy!

Startups secure cash

  • Niantic finally closed its Series C with $245 million in capital commitments and a lofty $4 billion valuation.
  • Outdoorsy, which connects customers with underused RVs, raised $50 million in Series C funding led by Greenspring Associates, with participation from Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital.
  • Ciitizen, a developer of tools to help cancer patients organize and share their medical records, has raised $17 million in new funding in a round led by Andreessen Horowitz.
  • Footwear startup Birdies — no, I don’t mean Allbirds or Rothy’s — brought in an $8 million Series A led by Norwest Venture Partners, with participation from Slow Ventures and earlier investor Forerunner Ventures.
  • And Brud, the company behind the virtual celebrity Lil Miquela, is now worth $125 million with new funding.

Feature of the week

TechCrunch’s Josh Constine introduced readers to Squad this week, a screensharing app for social phone addicts.

Listen to me talk

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm and I marveled at the dollars going into scooter startups, discussed Slack’s upcoming direct listing and debated how the government shutdown might impact the IPO market.

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Riding the RV revolution, Outdoorsy fuels up with $50 million in fresh funding

Outdoorsy is building for the road ahead. The three-year-old company, which connects customers with underused RVs and other trucks big enough to camp in overnight, just raised $50 million in Series C funding led by Greenspring Associates, with participation from earlier backers Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital. That puts its total funding, […]

Outdoorsy is building for the road ahead. The three-year-old company, which connects customers with underused RVs and other trucks big enough to camp in overnight, just raised $50 million in Series C funding led by Greenspring Associates, with participation from earlier backers Aviva Ventures, Altos Ventures, AutoTech Ventures and Tandem Capital.

That puts its total funding, in less than year’s time, at $75 million. (We’d separately reported on its $25 million Series B round last February. It has now raised $81.5 million altogether.)

It’s easy to understand why investors are excited about Outdoorsy, which moved its headquarters from the Bay Area to Austin six months ago, partly to get closer to its base of customers, as well as to take advantage of attractive tax incentives. The company is capitalizing on a global trend of millennials who want to stay overnight at places other than hotels, which are often expensive and located in commercial districts that can’t provide the same authentic experience of staying in a neighborhood.

Yet Outdoorsy is taking things a step further, so to speak. As cofounder and CEO Jeff Cavins notes, even with Airbnbs seemingly everywhere, there remain plenty of places where it makes even more sense to rent an RV and set up a grill, including at a beach, beside a lake, or right outside events like musical festivals and car races. That’s saying nothing of traditional camping spots, like Yosemite and Yellowstone Valley.

It’s easier than ever thanks largely to Outdoorsy, too, says Cavins. Earlier on, the company logged serious time with outfits like Aviva, a British insurance company that is not only an Outdoorsy investor at this point but which was convinced by Outdoorsy to create an insurance product expressly to cover RVs as distinct from more accident-prone vehicles with which they’ve long been lumped, like dune buggies.

The math was easy to grasp, offers Cavins of the argument Outdoorsy made. “Most recreational vehicles really aren’t driven around much. They are used for camping purposes. Some people do cross-country stuff, but most people don’t like driving so much on their vacations, so there isn’t a lot of mobile time with these units.”

Such products have been meaningful for both sides. Outdoorsy says it’s been able to price that insurance for “basically the cost of what you’d pay for a beer each day.” Meanwhile, by offering U.S. and Canadian RV owners up to $1 million in protection, and even more protection for its European users, Outdoorsy says it has managed to sign up 31,000 vehicles to date. These include a mix of traditional RVs, camper vans, towable campers, and trucks that are rented for six days on average and that produce, on average, $1,900 in income for their owners over that same six-day period.

And that’s mostly in North America. Outdoorsy thinks that as it expands more aggressively in Europe and Australia and New Zealand, among other places into which it’s rolling, it will have closer to 65,000 vehicles available to rent on its platform by year end.

Not that expanding geographically is all the company has in mind. On the contrary, says Cavins, Outdoorsy is evolving into a kind of recreational marketplace, one with many more premium services beyond those it introduced last year, including insurance and roadside assistance. For example, it more recently began inviting customers to finance their vacations through Outdoorsy, which has partnered with the lending company Affirm toward that end. It also now offers trip and travel insurance to offset cancellations. And Cavins says the company is introducing a spate of other new premium services in roughly one month

Outdoorsy also ushering in a new wave of entrepreneurship, by Cavin’s telling. As it stands, vehicle owners set their own pricing, with the help of tools provided by Outdoorsy, and they keep between 75 and 80 percent of what they earn. For some, it’s a nice way to make income when they aren’t using their RV. (It’s especially nice compared with the alternative, which is to pay to keep the RV stored.) For others of its customers, he says, those rental fees are beginning to produce meaningful revenue. He points, for example, to one customer who he says is generating more than $1 million a year through Outdoorsy. Pushed on this number, Cavins notes that this customer owns between 50 and 55 RVs. But he insists that while “most users start with two vehicles, we have some that get to four, then 20, then they hire hire their own mechanic and cleaning crew.”

As for those stretches of time when it isn’t a holiday, and it isn’t summer, and fewer people are looking to rent RVs, Cavins admits the market slows down markedly. In fact, it’s largely why Outdoorsy is building up a business in New Zealand and Australia. It wants to take advantage of summer somewhere all year round.

Still, insists Cavins, the market is hotter than you might imagine. Even in Europe, which doesn’t have the same sprawling freeways of North America, car camping, including via camper van, is becoming a huge part of the culture. “By May, it’s now very hard to get your hands on something to rent.”

Payment service Toss becomes Korea’s newest unicorn after raising $80M

South Korea has got its third unicorn startup after Viva Republica, the company beyond popular payment app Toss, announced it has raised an $80 million round at a valuation of $1.2 billion. This new round is led by U.S. firms Kleiner Perkins and Ribbit Capital, both of which cut their first checks for Korea with this […]

South Korea has got its third unicorn startup after Viva Republica, the company beyond popular payment app Toss, announced it has raised an $80 million round at a valuation of $1.2 billion.

This new round is led by U.S. firms Kleiner Perkins and Ribbit Capital, both of which cut their first checks for Korea with this deal. Others participating include existing investors Altos Ventures, Bessemer Venture Partners, Goodwater Capital, KTB Network, Novel, PayPal and Qualcomm Ventures. The deal comes just six months after Viva Republica raised $40 million to accelerate growth, and it takes the company to nearly $200 million raised from investors to date.

Toss was started in 2013 by former dentist SG Lee who grew frustrated by the cumbersome way online payments worked in Korea. Despite the fact that the country has one of the highest smartphone penetrations rates in the world and is a top user of credit cards, the process required more than a dozen steps and came with limits.

“Before Toss, users required five passwords and around 37 clicks to transfer $10. With Toss users need just one password and three steps to transfer up to KRW 500,000 ($430),” Lee said in a past statement.

Working with traditional finance

Today, Viva Republica claims to have 10 million registered users for Toss — that’s 20 percent of Korea’s 50 million population — while it says that it is “on track” to reach a $18 billion run-rate for transactions in 2018.

The app began as Venmo -style payments, but in recent years it has added more advanced features focused around financial products. Toss users can now access and manage credit, loans, insurance, investment and more from 25 financial service providers, including banks.

Fintech startups are ‘rip it out and start again’ in the West –such as Europe’s challenger banks — but, in Asia, the approach is more collaborative and assistive. A numbe of startups have found a sweet spot in between banks and consumers, helping to match the two selectively and intelligently. In Toss’s case, essentially it acts as a funnel to help traditional banks find and vet customers for services. Thus, Toss is graduating from a peer-to-peer payment service into a banking gateway.

“Korea is a top 10 global economy, but no there’s no Mint or Credit Karma to help people save and spend money smartly,” Lee told TechCrunch in an interview. “We saw the same deep problems we need to solve [as the U.S.] so we’re just digging in.”

“We want to help financial institutions to build on top of Toss… we’re kind of building an Amazon for the financial services industry,” he added. “We try to aggregate all those activities, covering saving accounts, loan products, insurance etc.”

Former dentist SG Lee started Toss in 2013.

Lee said the plan for the new money is to go deeper in Korea by advancing the tech beyond Toss, adding more users and — on the supply side — partnering with more companies to offer financial products.

There’s plenty of competition. Startups like PeopleFund focus squarely on financial products, while Kakao, Korea’s largest messaging platform, has a dedicated fintech division — KakaoPay — which rivals Toss on both payment and financial services. It also counts the mighty Alibaba in its corner courtesy of a $200 million investment from its Ant Financial affiliate.

Alibaba and Tencent tend to move in pairs as opposites, with one naturally gravitating to the rivals of the other’s investees as recently happened in the Philippines. It’s tricky in Korea, though. Tencent is caught in limbo since it is a long-standing Kakao backer. But might the Ant Financial deal spur Tencent into working with Toss?

Lee said his company has a “good relationship” with Tencent, including the occasional home/away visits, but there’s nothing more to it right now. That’s intriguing.

Overseas expansion plans

Also of interest is future plans for the business now that it is taking on significantly more capital from investors who, even with the most patient money out there, eventually need a return on their investment.

Lee is adamant that he won’t sell, despite Viva Republica increasingly looking like an ideal entry point for a payment or finance company that has missed the Korean market and wants in now.

He said that there are plans to do an IPO “at some point,” but a more immediate focus is the opportunity to expand overseas.

When Toss raised a PayPal-led $48 million Series C 18 months ago, Lee told TechCrunch that he was beginning to cast his eyes on opportunities in Southeast Asia, the region of over 650 million consumers, and that’s likely to see definitive action next year. The Viva Republica CEO said that Vietnam could be a first overseas launchpad for Toss.

“We’re thinking seriously about going beyond Korea because sooner or later we will hire saturation point,” Lee said. “We think Vietnam is quite promising. We’ve talked to potential partners and are currently articulating ideas and strategy materialized next year.

“We already have a very successful playbook, we know how to scale among users,” Lee added.

While the plan is still being put together, Lee suggested that Viva Republica would take its time expanding across Southeast Asia, where six distinct countries account for the majority of the region’s population. So, rather than rapidly expanding Toss across those markets, he indicated that a more deliberate, country-by-country launch could be the strategy with Vietnam kicking things off in 2019.

The Toss team at HQ in Seoul, Korea

Korea rising

Toss’s entry into the unicorn club — a vaunted collection of private tech companies valued at $1 billion or more — comes weeks after Coupang, Korea’s top e-commerce company, raised $2 billion at a valuation of $9 billion.

While that Coupang round came from the SoftBank Vision Fund — a source of capital that is threatening to become tainted given its links to the murder of journalist Jamal Khashoggi — it does represent the first time that a Korea-based company has joined the $100 billion mega-fund’s portfolio.

Some milestones can be dismissed as frivolous, but these two coming so close together are a signal of increased awareness of the potential of Korea as a startup destination by investors outside of the country.

While Lee admitted that the unicorn valuation “doesn’t change a lot” in daily terms for his business, he did admit that he has seen the landscape shift for Korea’s startup ecosystem — which has only two other privately-held unicorns: Coupang and Yello Mobile.

“More and more global VCs are aware that South Korea is a really good opportunity to do a startup. It is getting easier for our fellow entrepreneurs to pitch and get access to global funds,” he said, adding that Korea’s top 25 cities have a cumulative population (25 million) that matches America’s top 25.

Despite that potential, Korea has tended to focus on its ‘chaebol’ giants like Samsung — which accounts for a double-digital percentage of the national economy — LG, Hyundai and SK. That means a lot of potential startup talent, both founders and employees, is locked up in secure corporate jobs. Throw in the conservative tradition of family expectations, which can make it hard for children to justify leaving the safety of a big company, and it is perhaps no wonder that Korea has relatively fewer startups compared to other economies of comparable size.

But that is changing.

Coupang has been one of the highest profile examples to follow, alongside the (now public) Kakao business. But with Viva Republica, Toss and a charismatic dentist-turned-founder, another startup story is being written and that could just inspire a future generation of entrepreneurs to rise up and be counted in South Korea.