Wellness startup Hims enters the unicorn club with $100M investment

Men and women’s wellness startup Hims has raised $100 million on a $1 billion pre-money valuation.

Hims, known by many for its phallic New York subway advertisements, has raised an additional $100 million in venture capital funding on a pre-money valuation of $1 billion. The round was first reported by Recode and confirmed to TechCrunch by sources with knowledge of the deal.

A growth-stage investor has led the round, which is ongoing, with participation from existing investors. Our source declined to name the lead investor but did say it was a “super big fund” that isn’t SoftBank and that hasn’t previously invested in Hims.

Hims officially launched just over one year ago and has raised $197 million already, as well as incorporated a women’s wellness brand, Hers, to go alongside its flagship men’s wellness brand. The business sells sexual wellness products, skin care and hair loss treatments directly to consumers. In addition to erectile dysfunction medication, it offers the birth control pill to customers with prescriptions and Addyi, the only FDA-approved medication for women with hypoactive sexual desire disorder.

According to Recode, Hims spent months negotiating with investors, “with some of them balking at the valuation.” Meanwhile, our source says Hims passed on several viable terms sheets and had plenty of IVP — which led its last round — money in the bank ahead of their latest infusion.

$1 billion, a 2x increase from its previous valuation, is a hefty price tag for such an early-stage digital health startup. Then again, most valuations for venture-backed businesses are foolish.

San Francisco-based Hims is also backed by Forerunner Ventures, Founders Fund, Redpoint Ventures, SV Angel, 8VC, Maverick Capital and more.

 

Maverick Ventures announces $382M evergreen fund

The under-the-radar VC firm counts 13 unicorns in its portfolio.

In an era when validation-seeking venture capitalists are lauded as much as high-flying founders, Maverick Ventures’ small team of investors have opted to stay quiet.

Now, the years-old firm is ready to publicize its successes and shed some light on its global strategy. Today, Maverick is disclosing for the first time the size of its evergreen venture fund: a $382 million early-stage vehicle.

Launched in 2015 as the venture arm of 25-year-old hedge fund Maverick Capital, San Francisco-based Maverick has funneled cash into direct-to-consumer wellness brand Hims, new-age insurer Devoted Health and primary care services provider One Medical. Led by David Singer (pictured above, center), the former chief executive officer of genetics company Affymetrix and drug developer Genesoft Pharmaceuticals, Maverick has oft supported healthtech startups.

We are thematic, but this business is all about opportunism,” Singer told TechCrunch. “The whole challenge of venture is to figure out what’s next and that, by nature, doesn’t fit into one bucket.”

With that in mind, Maverick has deviated from healthcare, a decision that led it to some of its biggest successes. The firm became the first institutional investor in Coupang, Korea’s largest e-commerce business, which recently brought in $2 billion from SoftBank’s Vision Fund at a reported $9 billion valuation and is poised for a multi-billion exit. It also supported the Tencent-acquired video streaming platform Youku and the now-public Korean texting service Kakao.

Grocery delivery service FreshDirect, facial recognition startup D-ID and cloud-based software firm Aptible are also among its non-healthtech portfolio companies.

In total, Maverick has helped build 13 unicorns across a portfolio of 100 companies. The firm, Singer explained, almost always provides its companies follow-on capital, beyond the seed, Series A or Series B investment they initially provide. Why? Because they believe in their companies, as any good VC should, but also because Singer admittedly has a hard time saying no to Maverick’s startups.

“I’ve lost money from being too emotionally invested,” he said. “We are old-school. We feel this is a business to help build strong companies. It’s not a quick flip. For better or for worse, that’s what we like doing.”

In addition to Singer, Maverick’s investment team includes former Bessemer Venture Partners vice president Ambar Bhattacharyya and Oscar’s former director of finance Prateesh Maheshwari.

iPharmacy Roman fights stigmas with premature ejaculation meds

There’s a war brewing to become the cloud pharmacy for men’s health. Roman, which launched last year offering erectile dysfunctional medication and recently added a ‘quit smoking’ kit, is taking on $97 million-funded Hims for the hair loss market. Today, Roman launched four new products it hopes to cross-sell to users through a unified telemedicine […]

There’s a war brewing to become the cloud pharmacy for men’s health. Roman, which launched last year offering erectile dysfunctional medication and recently added a ‘quit smoking’ kit, is taking on $97 million-funded Hims for the hair loss market. Today, Roman launched four new products it hopes to cross-sell to users through a unified telemedicine subscription and pill delivery app. It now sells meds for premature ejaculation, oral herpes, genital herpes, and hair loss at what’s often a deep discount versus your local drug store. And for those who are too far gone, it’s launching a “Bald Is Beautiful, Too” microsite for finding the best razors, lotions, and head shaving tips.

Roman CEO Zachariah Reitano

“It’s unlikely that you’ll buy razors from Bonobos or pants from Dollar Shave Club. But with a doctor, it’s actually the exact opposite” Roman CEO Zachariah Reitano tells me. “As a customer you’re frustrated if they send you somewhere else.” And so what started as a single product startup is blossoming into a powerful product mix that can keep users loyal.

Roman starts with a telemedicine doctor’s visit where patients can talk about their health troubles without the embarrassment of going to their general practitioner. When appropriate, the doc can then prescribe medications customers can then instantly buy through Roman.

“If you have something that’s truly consuming your day-to-day, it makes it really hard or nearly impossible to think about the long-term. If you’re 30 pounds overweight and experiencing erectile dysfunction, [it’s the latter symptom] that’s dominating your head space” Reitano explains. The doctor might focus on the underlying health issue, but most humans aren’t so logical, and want the urgent issue fixed first. Reitano’s theory is that if it can treat someone’s erectile dysfunction or hair loss first, they’ll have the resolve to tackle bigger lifelong health challenges. “We’re hoping to work on this so you can take a deep breath and get the monkey off your back” the CEO tells me.

But one thing Roman won’t do is prescribe homeopathic remedies or spurious remedies. “We will only ever offer products that are backed by science and proven to work” Reitano declares. Taking a shot at Roman’s competitor, he says “Hims sells gummies. Roman does not.  No doctor would say Biotin would help you regrow hair”, plus the vitamin can distort blood pressure readings that make it tough to tell if someone is having a heart attack.

“Roman will never slap sugar on vitamins, sell them on Snapchat, and say they’ll regrow your hair” Reitano jabs. Roman also benefits from the fact that Reitano’s father and one of the company’s advisors Dr. Michael Reitano was a lead author on a groundbreaking study about how Valacyclovir could be used to suppress transmission of genital herpes.

So what is Roman selling?

With Roman, Hims, Amazon acquisition PillPack, and more, there’s a powerful trend in direct-to-consumer medication emerging. Reitano sees it as the outcome of five intersecting facts.

  1. The evolution of telemedicine regulation allowing physicians to have a national presence by seeing patients online
  2. Physicians are being reimbursed less by Medicare, Medicaid, and private insurers for the same activity, pushing them towards telemedicine
  3. A patent cliff is making many medications suddenly affordable under generic names.
  4. Insurance deductibles are increasing, turning patients into consumers
  5. Technology is making it easier and cheaper to start medical startups

Roman’s $88 million Series A it announced last month is proof of this growing trend. Investors see the traditional pharmacy structure as highly vulnerable to disruption.

Roman will have defeat not just security threats and competitors, but also the status quo of keeping a stiff upper lip. A lot of men silently suffer these conditions rather than speak up. By speaking candidly about his own erectile dysfunction as a side-effect of heart medication, Reitano is trying to break the stigma and get more patients seeking help wherever feels right to them.

Keeps parent company Thirty Madison raises $15 million to fight male pattern baldness

Men’s hair loss brand Keeps has raised $15 million in a round co-led by Maveron and Northzone.

Thirty Madison, the healthcare startup behind the hair loss brand Keeps, has brought in a $15.25 million Series A co-led by Maveron and Northzone.

The company provides a subscription-based online marketplace for men’s hair loss prevention medications Finasteride and Minoxidil. Keeps sells these drugs direct-to-consumer, working with manufacturers to keep the costs low.

On Keeps, a subscription of Minoxidil, an over-the-counter topical treatment often referred to as Rogaine, is $10 monthly. A subscription to Finasteride, a prescription drug taken daily, is $25 per month.

It’s an end-to-end platform that is the single best place for guys who are looking to keep their hair,” Thirty Madison co-founder Steven Gutentag told TechCrunch.

Keeps is tapping into a big market. According to the American Hair Loss Association, two-thirds of American men experience some hair loss by the age of 35.

You may have heard of Hims, a venture-backed men’s healthcare company that similarly sells subscriptions to hair loss treatments, as well as oral care, skin care and treatments for erectile dysfunction. Keeps is its smaller competitor. For now, the company is focused solely on haircare, though with the new funds, Thirty Madison plans to launch Cove, a sister brand to Keeps that will provide treatments to migraine sufferers.

The company was founded last year by Gutentag and Demetri Karagas with a plan to develop several digital healthcare brands under the Thirty Madison umbrella.

“Going through this process myself of starting to experience hair loss, I was not sure where to turn,” Gutentag said. “I went online and looked up ‘why am I losing my hair,’ and if you search on Google, really for any medical condition, you usually walk away thinking you’re going to die … I was so fortunate that I got access to this high-quality specialist who could help me with my problem and I was in the position to afford those treatments but most people don’t get that access.”

Keeps also provide digital access to a network of doctors at a cost of roughly $30 per visit.

TechCrunch’s Connie Loizos wrote last year that “it’s never been a better time to be a man who privately suffers from erectile dysfunction, premature ejaculation or hair loss” because of advances and investments in telemedicine. Since then, even more money has been funneled into the space.

Hims has raised nearly $100 million to date and is rumored to be working on a line of women’s products. Roman, a cloud pharmacy for erectile dysfunction, raised an $88 million Series A last month and is launching a “quit smoking kit.” And Lemonaid Health, which also provides prescriptions to erectile dysfunction medications and more, secured $11 million last year.

Greycroft, Steadfast Venture Capital, First Round, Entrepreneurs Roundtable, HillCour and Two River also participated in Thirty Madison’s fundraise, which brings its total raised to date to $22.75 million.

Keeps parent company Thirty Madison raises $15 million to fight male pattern baldness

Men’s hair loss brand Keeps has raised $15 million in a round co-led by Maveron and Northzone.

Thirty Madison, the healthcare startup behind the hair loss brand Keeps, has brought in a $15.25 million Series A co-led by Maveron and Northzone.

The company provides a subscription-based online marketplace for men’s hair loss prevention medications Finasteride and Minoxidil. Keeps sells these drugs direct-to-consumer, working with manufacturers to keep the costs low.

On Keeps, a subscription of Minoxidil, an over-the-counter topical treatment often referred to as Rogaine, is $10 monthly. A subscription to Finasteride, a prescription drug taken daily, is $25 per month.

It’s an end-to-end platform that is the single best place for guys who are looking to keep their hair,” Thirty Madison co-founder Steven Gutentag told TechCrunch.

Keeps is tapping into a big market. According to the American Hair Loss Association, two-thirds of American men experience some hair loss by the age of 35.

You may have heard of Hims, a venture-backed men’s healthcare company that similarly sells subscriptions to hair loss treatments, as well as oral care, skin care and treatments for erectile dysfunction. Keeps is its smaller competitor. For now, the company is focused solely on haircare, though with the new funds, Thirty Madison plans to launch Cove, a sister brand to Keeps that will provide treatments to migraine sufferers.

The company was founded last year by Gutentag and Demetri Karagas with a plan to develop several digital healthcare brands under the Thirty Madison umbrella.

“Going through this process myself of starting to experience hair loss, I was not sure where to turn,” Gutentag said. “I went online and looked up ‘why am I losing my hair,’ and if you search on Google, really for any medical condition, you usually walk away thinking you’re going to die … I was so fortunate that I got access to this high-quality specialist who could help me with my problem and I was in the position to afford those treatments but most people don’t get that access.”

Keeps also provide digital access to a network of doctors at a cost of roughly $30 per visit.

TechCrunch’s Connie Loizos wrote last year that “it’s never been a better time to be a man who privately suffers from erectile dysfunction, premature ejaculation or hair loss” because of advances and investments in telemedicine. Since then, even more money has been funneled into the space.

Hims has raised nearly $100 million to date and is rumored to be working on a line of women’s products. Roman, a cloud pharmacy for erectile dysfunction, raised an $88 million Series A last month and is launching a “quit smoking kit.” And Lemonaid Health, which also provides prescriptions to erectile dysfunction medications and more, secured $11 million last year.

Greycroft, Steadfast Venture Capital, First Round, Entrepreneurs Roundtable, HillCour and Two River also participated in Thirty Madison’s fundraise, which brings its total raised to date to $22.75 million.

Forerunner Ventures just closed a $360 million fund, tripling the size of its last effort

Last year, retail e-commerce sales worldwide reached $2.3 trillion, a 24.8 percent increase over the previous year, according to eMarketer. A growing percentage of that spend was being captured by startups with strong online identities that are savvy about collecting and analyzing their customer data. Involved with many of them, from the eyewear company Warby […]

Last year, retail e-commerce sales worldwide reached $2.3 trillion, a 24.8 percent increase over the previous year, according to eMarketer. A growing percentage of that spend was being captured by startups with strong online identities that are savvy about collecting and analyzing their customer data.

Involved with many of them, from the eyewear company Warby Parker to the cosmetics startup Glossier to the athleisure brand Outside Voices, is Forerunner Ventures, a seven-year-old, San Francisco-based venture firm that has built its own name around expertise in e-commerce — and which sees a giant opportunity to fund many more brands.

Forerunner suddenly has much more capital to chase those opportunities, too, having just closed its fourth fund with $360 million in capital commitments. That’s almost exactly triple the size of its previous, $122, third fund, closed in 2016.

That investors are eager to give Forerunner more money to deploy isn’t surprising. In addition to a strong portfolio of still-private companies, which also includes the vitamin company RItual, the luggage company Away, and the men’s wellness brand Hims, the firm has already seen a number of big exits in recent years.

One of its very first checks, in fact, went to Dollar Shave Club, which sold to Unilever for $1 billion in 2016. Roughly one month later, Wal-mart spent $3.3 billion to acquire another of its startups, the web retailer Jet.com. Meanwhile, last year, a third investment, the menswear brand Bonobos, sold for $310 million, again to Wal-mart.

The firm — which was somewhat famously founded by former equity research analyst Kirsten Green and largely co-run by general partner Eurie Kim — also made a high-profile hire four months ago. It poached longtime VC Brian O’Malley, who’d spent the previous four years with Accel and who co-invested alongside Forerunner over the years, including in Away and Dollar Shave Club, as well as the booking platform HotelTonight and the home goods store Serena & Lily.

Not only does the move underscore that Forerunner is maturing, it signals a bigger push into software-as-a-service businesses, where O’Malley has been active, including by leading investments into companies like Duetto, which makes pricing, revenue management, and forecasting software for hotels and casinos worldwide.

Indeed, on a call with Green on Friday about the firm’s rapid growth since closing its first institutional fund with $40 million six years ago, she talked about Forerunner’s interest in business-to-business opportunities that support the firm’s broader thesis of focusing on the consumer.

She pointed, as an example, to Faire, an online marketplace that connects independent retailers directly with product manufacturers, so they can place wholesale orders and track shipments online, as well as return the items that don’t sell in their stores.

Another related bet is Inturn, which helps move excess inventory. Specifically, its subscription-based software pulls inventory data from whatever legacy systems a manufacturer or retailer may be operating; it then creates detailed product information about whatever is “excess” and shows it to off-price chains and other outlets and helps facilitates its sale.

Forerunner even has a bet on a Canadian robotics company, Attabotics, which is focused on warehousing and fulfillment.

Green also talked broadly about being able to write bigger checks and to better support some of Forerunner’s many breakout companies. But as she explained it, the firm plans to do little else differently going forward. If anything, she suggested, it will simply be capitalizing on the know-how about startups it has gleaned by working in the trenches with so many new brands over the last decade.

“Throughout my career, I’ve looked to understand cycles,” said Green. “Generally, I think there are micro cycles, where there’s lots of newness happening and high experimentation, and I think [toward that end] mobile is a new platform that’s just gaining momentum. You also have emerging areas like blockchain and AR and VR that aren’t mainstream and it’s not obvious when they’ll bust into the market in a big way but that stand to drive new waves of newness.”

Still, she added, “I’m feeling there’s also an opportunity now to leverage what’s been tested and tried over many years, things that are done with the benefit of perspective. We — and many of the founders we know, too — now have the benefit of having some lessons learned.”

Pictured above: Forerunner General Partners Green, O’Malley, and Kim.

Business school grads and quants are winning the battle to create the next P&G

Micah Rosenbloom Contributor Micah Rosenbloom is a venture partner at Founder Collective. More posts by this contributor Startups need to respect the laws of retail physics Is VC The Right Money For Fintech? These days my Instagram feed feels more like QVC than a social network. And many of these companies are enjoying tremendous success […]

These days my Instagram feed feels more like QVC than a social network.

And many of these companies are enjoying tremendous success pitching natural deodorants, unique underwear, creative candles, glam glasses, stunning shoes — all manner of well-crafted microbrands. We’re witnessing a cambrian explosion of new consumer startups.

For the last couple of years, building a successful startup has seemed as simple as picking an out of favor category like ketchup and turning the most mundane of condiments into a $100M+ exit! Why try to build a robot or AI company when you can just modify and repackage a topping?

But how should founders evaluate the markets for mattresses and men’s health? What heuristics should an investor use to weigh Hims and Hubble, or to compare AllBirds and Away? And what is the right kind of founder for this sort of startup? Do you look for the designer with an unimpeachable aesthetic sense? Or an MBA who’s run the numbers on every facet of the fashion industry?

It’s far from clear at this point, but I think there are a few emerging ground rules:

It’s more Science than Art

What strikes me as most unusual and unpredictable is that most of these companies were founded by entrepreneurs with analytical, business training. They’re strong on finance, marketing, and customer acquisition. It’s not what you would have expected in categories noted more for an ineffable “cool” factor than feature lists. Creative design helps a brand stand out, but accounting acumen is what keeps it alive and on its way to becoming a unicorn.

It turns out that much of the same playbook for building and scaling a software company applies to a modern CPG startup. In many ways, Casper isn’t so different from Slack, and they are certainly closer in spirit than a direct competitor like MattressFirm.

This is why you see a migration of founders and VCs like me playing in categories previously out of bounds for tech investors. Whether its finding the latest targeting tools or closely monitoring customer NPS, this is the DNA needed to be successful. For this reason, VCs are able to pattern match, somewhat, based on what they’ve seen working in other aspects of their investing.

Market structure is more important than marketing

Bootstrapped mattress maker Tuft & Needle merged with market leader Serta-Sealy for somewhere between $200 million and $800 million. Purple, who only raised $2 million via crowdfunding, was acquired for $1.1 billion by a private equity company. Casper is reported to have broken through the $600 million in revenue milestone earlier this year and is on the trajectory towards becoming a public company. These mattress companies, along with other emerging D2C players have captured 20% of the market in the space of five years.  

Perhaps it’s a coincidence that three amazing founding teams bet on beds, but I’d wager the state of the mattress market is partially responsible for their success. The mattress business is essentially a duopoly run by private equity firms who have made major investments in real-estate and an in-store sales model. As a result, we see less experimentation and artificially high prices.

Compare the mattress industry to the meal kit delivery business which had to contend with a wide variety of substitute food products, from Domino’s to DoorDash and supermarkets to Soylent — not to mention spoilage, high levels of customer churn, etc. As a result, companies in this space have had a harder time dominating their respective categories. Sadly, there is no amount of clever branding or subway advertising that will eliminate those realities.

Image: Soifer/iStock

What’s the million-dollar insight?

The first Casper mattress was the 50,001st mattress sold by Philip Krim. Prior to manufacturing his own beds, Krim built a drop ship business serving other manufacturers and learned which levers to pull in order to attract customers and generate demand. It was this seemingly mundane insight – that you could box and ship a mattress via a carrier instead of onboard a large truck that allowed him to scale much faster than Sleepys and generate $100M+ in sales just a couple of years after founding.

Similarly, ButcherBox and Daily Harvest each ignited a boom in direct-to-consumer food delivery. These companies recognized that fresh and immediately frozen products limit spoilage and allows for much easier transport. While competitors had to worry about organic kale rotting in a fulfillment center, these companies could focus more attention on customer acquisition. This insight coupled with smart marketing, virality, and high NPS has helped them both garner millions of dollars of weekly sales.

It’s not nearly enough to say, “The competitors don’t get it.” or this is for “Gen Z.” Instead, like with all start-ups, the founders need to identify that non-obvious, often contrarian, insight. This is usually less of a product “A-Ha!” and is more likely an arbitrage opportunity in a dysfunctional market.

Spend Carefully, Your Potential Buyer Will

Digital vertical native brands can be compelling investments, but they are unlikely to have deal dimensions, in terms of multiples or absolute exits, that we see with traditional tech investments.

Just look at a few recent sales of DNVBs. The absolute dollar amounts are reasonable, but the multiples are small relative to tech, ranging from 1.6X to a potential 8X (no doubt subject to earn outs), with the average being in the 2-3X range. On the bright side, these acquisitions do tend to consummate quickly, often within a few years of their founding.

If you finance a DNVB like a deep tech company with heavy reliance on tens of millions of venture capital, founders and investors are likely to see little in return. As Jason Del Ray recently wrote at ReCode, many of these brands are skipping VC all together.

It’s important to remember that these sales are predicated on impressive revenues. Cruise Automation can get acquired for $1B because its technology could be the basis for a new kind of car, but don’t expect Kellogg’s to acquire a pre-launch cereal company for a similar sum.

DNVB investing is here to stay as there is a fundamental shift going on in retail and how consumers shop. Unless you’re Kylie Jenner with a hit reality show, investors would be wise not to dismiss that nerdy MBA or former consultant pitching the next great brand.