India’s Livspace raises $70M for its one-stop-shop for interior design

Livspace, an India-based startup that helps consumers manage home renovations and interior design, has pulled in a $70 million Series C deal that’s led by Goldman Sachs and TPG Growth. Existing investors Jungle Ventures, Bessemer Venture Partners, and Helion Ventures also took part in the round, which takes Livspace total funding to date to around $97 million. […]

Livspace, an India-based startup that helps consumers manage home renovations and interior design, has pulled in a $70 million Series C deal that’s led by Goldman Sachs and TPG Growth.

Existing investors Jungle Ventures, Bessemer Venture Partners, and Helion Ventures also took part in the round, which takes Livspace total funding to date to around $97 million. The deal follows Goldman’s involvement in fintech startup Jumo’s recent $52 million round, while TPG Growth recently hired former Twitter Asia head Shailesh Rao to lead its business in India and Southeast Asia.

Livspace was founded by former Googler Anuj Srivastava and Ramakant Sharma, who has spent time with Myntra and Jungle Ventures among others, in 2015. The business aims to be a one-stop-shop for home interior design — whether that be renovations or new home design. That makes it an e-commerce business that integrates multiple pieces of the interior ecosystem: consumers, designers and the supply chain.

For that reason, Livspace is an inherently local business. Interior designers need to be local to customers and supply chain partners need to have the capacity to ship to a location, too, but Livspace actually goes beyond that by mapping buildings in a city to enable virtual mockups and 3D models to be rendered to help show a consumer a compelling preview of what their home could look like. The company also operates brick and mortar ‘Design Centers’ where consumers can touch and see materials and furniture, while the centers also operate as a location for designers and consumers to meet up if needed.

The company is currently present in seven cities in India. With this money in the bank, the plan is to expand to reach 13 cities in India by the end of next year but it’s ambitions go beyond its founders’ home country.

In an interview with TechCrunch, Srivastava said that he sees an opportunity to grow the business not just in Asia but also western markets where, to date, there are no integrated solutions such as Livspace.

“The industry has suffered from chaos,” he said. “There’s little to no aggregation on supply and demand, and there is significant opportunity for tech-based platform to unite consumers, agents and the supply chain market.

“We have focused so far on doing one market really, really, well,” he added. “We wanted to make sure you can knock it out of the park first.”

So far so good. Livspace says it is on track to reach $100 million in annualized gross revenue by March 2019. Srivastava said it has outfitted 5,000-6,000 houses so far with 1,200-1,500 projects in its system at any one time.

Consumers, of course, shop around for deals and the completion rate of projects is at around one-third, Srivastava said, with an average of about $15,000 per consumer. Of that, the take rate for Livspace is around 40 percent with seven percent for the designer. The company claims to have around 25,000 designers on the platform but less than 10 percent of all applicants are approved to ensure quality and expertise.

Through Livspace, Srivastava claims designers can massively boost their income, typically by around 2X. He argues that is not only because the rates earned are higher, but also because average project time is reduced from multiple-months to just 12-14 weeks. That means designers can also operate more efficiently.

Financially, Srivastava said he believes the business model itself can scale and that there is clear “path to profitability” particularly if the company can expand internationally.

“We started monetizing in India but we have our eyes set on every single other similar market in the planet. We’ll get there in time,” he said.

PagerDuty raises $90M to wake up more engineers in the middle of the night

PagerDuty, the popular service that helps businesses monitor their tech stacks, manage incidents and alert engineers when things go sideways, today announced that it has raised a $90 million Series D round at a valuation of $1.3 billion. With this, PagerDuty, which was founded in 2009, has now raised well over $170 million. The round […]

PagerDuty, the popular service that helps businesses monitor their tech stacks, manage incidents and alert engineers when things go sideways, today announced that it has raised a $90 million Series D round at a valuation of $1.3 billion. With this, PagerDuty, which was founded in 2009, has now raised well over $170 million.

The round was led by T. Rowe Price Associates and Wellington Management . Accel, Andreessen Horowitz and Bessemer Venture Partners participated. Given the leads in this round, chances are that PagerDuty is gearing up for an IPO.

“This capital infusion allows us to continue our investments in innovation that leverages artificial intelligence and machine learning, enabling us to help our customers transform their companies and delight their customers,” said Jennifer Tejada, CEO at PagerDuty in today’s announcement. “From a business standpoint, we can strengthen our investment in and development of our people, our most valuable asset, as we scale our operations globally. We’re well positioned to make the lives of digital workers better by elevating work to the outcomes that matter.”

Currently PagerDuty users include the likes of GE, Capital One, IBM, Spotify and virtually every other software company you’ve ever heard of. In total, more than 10,500 enterprises now use the service. While it’s best known for its alerting capabilities, PagerDuty has expanded well beyond that over the years, though it’s still a core part of its service. Earlier this year, for example, the company announced its new AIOps services that aim to help businesses reduce the amount of noisy and unnecessary alerts. I’m sure there’s a lot of engineers who are quite happy about that (and now sleep better).

Bessemer is reportedly raising $1.6B for its tenth fund

Bessemer Venture Partners is gearing up for its next billion-dollar fund. The early-stage venture capital firm, which had filed to raise new capital in early August, has reportedly set a $1.6 billion target for its tenth flagship fund, an amount that a source familiar with the fundraise tells us is “directionally correct.” Bessemer declined to […]

Bessemer Venture Partners is gearing up for its next billion-dollar fund. The early-stage venture capital firm, which had filed to raise new capital in early August, has reportedly set a $1.6 billion target for its tenth flagship fund, an amount that a source familiar with the fundraise tells us is “directionally correct.”

Bessemer declined to comment.

If Bessemer indeed raises that amount, it will be the same size as its ninth fund, which closed on $1.6 billion in 2015. If that’s the case, Bessemer may be bucking VCs’ new favorite trend of raising their largest funds to date. Maybe, just maybe, Bessemer hasn’t fallen victim to the SoftBank effect. The Japanese telecom giant has a nearly $100 billion “Vision Fund” and invests in tech companies, competing directly with Silicon Valley heavyweights. 

General Catalyst, for example, closed its biggest fund ever earlier this year on $1.375 billion. And Insight Venture Partners finished off a $6.3 billion fundraise in July — also the most monumental in the firm’s history.

It’s been a busy year so far for Bessemer. On top of working to secure capital for BVP X, the firm announced a $10 million early-stage seed fund, called Deep Health Seed Program, in June. The fund is being led by Bessemer healthcare investor Steve Kraus and its head of investments in Israel, Adam Fisher. Deep Health is investing $100,000 to $2 million into early-stage companies using machine learning to solve problems in healthcare.

The firm has seen a couple of notable exits so far this year. For starters, Bessemer portfolio company DocuSign went public in April, raising more than $600 million in the process. And Workday paid $1.55 billion for financial planning software startup Adaptive Insights, another Bessemer portfolio company, in June.

Bessemer’s current portfolio includes Pinterest, Betterment, Rocket Lab, Toast, PagerDuty, ServiceTitan, Fiverr and others.

What every startup founder should know about exits

Benjamin Joffe Contributor Benjamin Joffe is a partner at HAX. More posts by this contributor 70 years of VC innovation 2017 crowdfunding guide The dream of a startup founder can often be summarized by the following, well-intentioned, and mostly delusional quote, “We’ll raise a few rounds and in a few years we’ll IPO on Nasdaq.” […]

The dream of a startup founder can often be summarized by the following, well-intentioned, and mostly delusional quote, “We’ll raise a few rounds and in a few years we’ll IPO on Nasdaq.”

But a more likely scenario looks something like this.:

You invest a few years of hard work to build something of value. One day you receive an acquisition offer out of the blue. You’re elated. And you’re not prepared. You drop everything to focus on this opportunity. Exclusive due diligence starts. Your company is a mess (IP, contracts, burn). Days become weeks; weeks become months. You’ve neglected business and fundraising. You’re running out of money. M&A is now your one and only option. The buyer says they found a bunch of cockroaches in the walls and drops the price. Now what?

Sounds unlikely?

This is still a favorable situation: you had an offer! Think about how much time you invested in your various funding rounds. The hundreds of names and Google spreadsheet or Streak-powered quasi-CRM process.

Have you spent even a fraction of that on understanding exit paths? If you’d rather not live the situation described above, read along.

The E-word: A Strange Taboo

Investors live by exits, but many founders keep dreaming of unicornization and avoid the “E-word” until it’s too late. Yet, in 2016, 97% of exits were M&As. And most happened before series B.

Exits matter because that’s when you, your team and your investors get paid. Oddly enough, and to use a chess metaphor, we hear a lot about the “opening game” (lean startup), the “mid-game” (growth) but very little about this “end game”.

As a result, founders miss opportunities or leave money on the table. This is a shame. Our fund, SOSV, has over 700 companies in portfolio. We want the best possible exit for each of them. And fortune favors the prepared! Now, how to get 700 exits (and counting)?

To explore the topic, organized a series of Masterclasses tapping corporate buyers, bankers, investors, lawyers, and startup CEOs with M&A or IPO experience in San Francisco. It was a group that included the founders of Guitar Hero — bought by Activision; JUMP Bikes — a SOSV portfolio company bought by Uber, Ubiquisys  — bought by Cisco, and Withings — bought by Nokia. Each one for hundreds of millions).

Their observations can be summarized below.

Maximize Optionality

“Founders must be aware of what contributes to an exit. This means understanding partnerships and how they are formed in the business space the entrepreneur is working in,” said one MasterClass participant.  

As founders, you build your product, your company and… optionality. You need to understand the options open to your company, and take steps to enable them.

The most likely one is an acquisition but there are others like IPO (including small cap), RTO, SBO, LBO, Equity Crowdfunding and even ICO.

“Exit is not a goal ​per se, but as a CEO it is something you should think about as early in your cycle as possible, while being business-focused,” said the London-based investor Frederic Rombaut, of Seraphim Capital.

Indeed, most participants said that exits should always be on the chief executive’s agenda, no matter how early in the process. “Exits should be on the CEO agenda. Not front and center, but on the agenda. M&A is a by-product of a great business and targeted BD. IPOs are always an option once you’ve built significant cashflow forecasting.”

It’s important to ask questions like: How many “strategic engagements” with potential buyers have you had this month? Is your message and value clear in their eyes? Have you considered an acquisition track in parallel to a fundraise?

It doesn’t stop there:

  • Equity crowdfunding might help close some gaps at seed stage.
  • Early IPOs on smaller exchanges can be an option to raise over $10M — the robotics startup Balyo went public and raised 40MEUR on Euronext to get rid of a critical ‘right of first refusal’ option held by one of its corporate investors.
  • Reverse mergers can work too: the medical exoskeleton company EKSO Bionics went public this way.

One thing is sure: the time to exit is not when you’re running out of money.

Companies are bought, not sold

Unicorn or not, the most likely exit is an acquisition.

As George Patterson, Managing Director at HSBC in New York said, “Good tech companies are bought, not sold. The question is thus: how to get bought?”

Patterson says it’s important to understand how mergers and acquisitions actually work; how to prepare a startup for an exit; and how to develop a “feel” for the market you’re exiting through and into. ;

How M&A works

Hearing from corp dev veterans from Cisco, Logitech, Dassault and IBM, a few key ideas emerged:

  • Motivations vary

It could be (from least to most expensive, or as a mix), as listed by Mark Suster, Managing Partner at Upfront Ventures:

  1. Talent hire ($1M/dev as a rule of thumb — location matters)
  2. Product gap
  3. Revenue driver
  4. Strategic threat (avoid or delay disruption)
  5. Defensive move (can’t afford a competitor to own it)
  • How corporates find you

Corporates find deals via the development of partnerships, investment (CVC), their business units, corp dev research, media, and investor connections.

Asked about the best approach, Todd Neville, Manager of Corporate Business Development and Strategy at IBM (who gave the most detailed description of the corp dev process), said, “Do something cool to one of the IBM customers. If they rave about even a POC, we’re interested.”

In other words, business development is corporate development. 

Get the house in order

Buyers typically want to know three things:

  1. Is your IP really yours?
  2. Is your team capable?
  3. Will your customers stick around?

For IP, they will check your contracts (staff and contractors), run some automated code analysis for proprietary code and open source use. They will evaluate potential IP infringement. No point buying you if you end up costing more in lawsuits!

For your team skills: sitting down with your engineers will tell them plenty enough without understanding the details of this or that algorithm. Be sure the last thing a corporate wants is to be accused of stealing!

Lawyers engaged early can help. The later the clean-up, the more costly and painful.

Develop a feel for your “market”

Develop relationships and create champions within corporates. It will help promote your deal when the time comes, and will let you keep your finger on the pulse of corporate strategy to time your moves.

Do you read the earning calls of Cisco or IBM (or others relevant to you)? This is where strategies are presented. Are your keywords coming up there or in their press releases?

Chris Gilbert, former CEO of Ubiquisys (sold to Cisco for over $300M) was very deliberate in planning his exit.

Selling start on day one and is a leadership-only function — work out who will be your buyer. Only the CEO can do this. Constantly articulate why a company should buy you,” Gilbert said. Bring clear messages into the acquiring company so it can be presented upwards: give them the presentation you would like them to show their boss! When the time is right, force decisions through competition. If you know they have to buy you, your starting position is strong.”

The Dark Art of Price Discovery

There are dozens of formulas (from DCF to comparables) to evaluate a deal — which also means none is ‘correct’. What matters is: how much would you sell for, and how much is the buyer ready to pay?

Gilbert, at Ubiquisys, described how close interactions with his banker helped drive the price up among the bidders assembled.

Just like buyers, we meet bankers and lawyers too rarely at startup events, but there is much to learn with them. They make deals happen, avoid value erosion and optimize price. They often also make introductions before you engage them, to build goodwill and earn your business.

And if you worry about fees, the right banker handsomely pays for itself by finding more bidders, and playing “bad cop” for you, avoiding direct confrontation with your future employer. Do you want a slice of the watermelon or the whole grape?

Final Twist: Exits Are Not Exits

When asked about what happens after an M&A or IPO, buyers said that they generally hoped the founders would stay with them for many years. Often using re-vesting, earn-outs or shares of the acquiring company to incentivize them. Neville, from IBM, mentioned a security company they acquired whose founder is now the head of one of the largest IBM divisions.

In the case of IPOs, supposedly the ultimate “exit”, any block of shares sold by founders would face extreme scrutiny and might cause a price drop.

So who’s exiting during those deals? Investors (and not always).

Eventually, if the average age of a startup at exit is 8–10 years, the active duty period of founders (if not replaced in the meantime) extends even more. Better love the problem you’re solving, and your customers!

Thanks to speakers, participants and supporters of this Masterclass series:

London: Frederic Rombaut (Seraphim Capital), Joe Tabberer (FirstBank), Chris Gilbert (Ubiquisys), Jonathan Keeling (Crowdcube), Fred Destin, Tony Fish (AMF Ventures, James Clark (London Stock Exchange), Denise Law (SGCIB).

Paris: Frederic Rombaut (Seraphim Capital), Manuel Gruson (Dassault Systemes), Pierre-Henri Chappaz (Rothschild Global Advisory), Christine Lambert-Goue (All Invest), Olivier Younes (EXPEN), Eric Carreel (Withings), Fabien Bardinet (Balyo), Xavier Lazarus (Elaia Partners), Pierre-Eric Leibovici(Daphni). Jean de La Rochebrochard (Kima Ventures), Jeremy Sartre (SmartAngels), Gwen Regina Tan (Entrepreneur First).

San Francisco: Natasha Ligai (Logitech), Matt Cutler (Cisco),Will Hawthorne, (CODE Advisors), Ryan Rzepecki (JUMP Bikes), Charles Huang (Guitar Hero), Jeff Thomas (Nasdaq), Shahin Farshchi (Lux Capital), Ammar Hanafi (Moment Ventures), Adam J. Epstein (Third Creek Advisors), Nathan Harding (EKSO Bionics), Kate Whitcomb, Anthony Marino and Ethan Haigh (SOSV).

New York: Todd Neville (IBM), George Patterson (HSBC), Ryan Rzepecki (JUMP Bikes), Aaron Kellner (SeedInvest), Jeremy Levine (Bessemer Venture Partners), Taylor Greene (Collaborative Fund), Adam Rothenberg (BoxGroup), Eli Curi(Fenwick & West), Ian Engstrand and Salil Gandhi (Goodwin), Warren Spar(Sparring Partners Capital), Duncan Turner, Vivian Law and Sheng Ge (SOSV).