Passport, a customer service company focused on shipping, has raised $3 million in seed funding from some notable names

Founders building a brand today are largely relying on new infrastructure to do it, though they’re still heavily reliant on legacy carriers like FedEx and DHL when it comes to international shipping. In fact, prohibitively high prices, along with not a lot of support or tools, are a few reasons why more American products aren’t […]

Founders building a brand today are largely relying on new infrastructure to do it, though they’re still heavily reliant on legacy carriers like FedEx and DHL when it comes to international shipping. In fact, prohibitively high prices, along with not a lot of support or tools, are a few reasons why more American products aren’t shipped abroad. Many startups especially decide it’s simply not worth it.

Enter Passport, a 1.5-year-old, San Francisco-based startup that sees an opportunity to make it easier for brands to reach far-flung customers and that has raised $3 million in seed funding toward that end. Among its backers is Resolute Ventures; Precursor Ventures; Product Hunt cofounder Ryan Hoover; Girlboss founder Sophia Amoruso; and April Underwood, the chief product officer of Slack.

What piqued investors’ interest? The team, for starters, including cofounder and COO Aaron Schwartz, who previously founded his own e-commerce company (Modify Watches) and CEO Alex Yancher, who, among other things, cofounded a smart fridge kiosk company called Pantry that was acquired. The two have some experience in moving packages from one point to another; they also know the pain of dealing with lost and delayed packages.

The company is also “asset light,” which investors typically like. Indeed, the company is largely a customer service business focused on shipping globally. How it works: one of its customers — let’s take Native Deodorants — will hold its inventory in a third party logistics warehouse. In Native’s case, it’s a Connecticut company called Fulfillment Works, and Fulfillment Works slaps a label on Native’s packages that have been created by Passport, then gets the packages ready for pickup.

After that, Passport arranges for a daily pickup of all of Native’s internationally bound parcels, working through a third-party freight company like Old Dominion or FedEx Freight. That company brings the parcels to a consolidation point, where the parcels are sorted by country and final mile. After that, the Canada parcels, say, are sent on a truck to the border and perhaps injected into the Canadian Postal system, or they’re flown to Australia on a Qantas flight and shipped out to the recipient via the Australian Post. Passport then acts as a reference point so that if a customer has any questions about his or her package, they are fielded by Passport.

It doesn’t sound like rocket science. All the same, in an age where consumer expectations are higher than ever when it comes to at-home delivery, an aggregator that connects all the pieces to provide a better customer experience may well prove worth it to some brands. Indeed, in addition to Native, others of Passport’s early customers include the men’s outfitter Shinesty, the backpack maker ISM, the socks manufacturer Bombas, and the clothing company Betabrand.

We were in touch yesterday with Yancher and Schwartz to learn more.

TC: How did you identify this particular sliver of industry as a problem worth tackling?

AY: I ran a personal shopping service — Lynks.com — that helped people abroad buy products from the U.S., and I saw that demand for American goods is booming abroad. In fact, half of a brand’s Instagram followers are from abroad, but only 10 percent of its sales are. Despite the boom in cross-border, current international shipping options are lacking a lot of what a merchant needs to successfully sell and ship abroad.

This pain doesn’t just exist for individual brands alone but also for third party logistics facilities — the operations companies that partner with brands and that receive, warehouse and fulfill customer orders.  They have incredible buying power for shipping customers, and yet they’re also unsatisfied.

TC: It sounds like your differentiator is customer service, but couldn’t another startup come in and strike relationships with international carriers and do precisely the same thing?

AY: Shipping a package internationally is complicated. Building a consistent experience across hundreds of partners with different transit times expectations, technical backends and terms and conditions requires technological as well as logistical expertise. I’ve spent years stringing together custom shipping routes. This isn’t something you just jump into, there’s a ton of nuance into how you work with global posts and private carriers.

What we do differently is embed customer support via Intercom on the tracking page, which is where consumer anxiety happens. Anyone can offer customer experience, but for international shipping, it’s pretty darn hard. You have to get detailed data from a bunch of carriers. You also have to know what the “exceptions” are. We automate a lot of the support behind the scenes, which has taken a year to get going.

We also offer proactive notifications when door tags are left, so a customer can follow-up directly with their local carrier and packages aren’t set back to the U.S.; we set up direct Slack channels with brands in order to help their own customer experience teams deal with any other questions about international shipping; and we do in-shopping-cart integrations, like a fully landed cost calculator, so consumers know exactly what they are paying for an item and won’t get hit with a “your item is held at customs.”

TC: Which international carriers are you working with, and do you have any kind of exclusive deals with them?

AS: We ship to 195 countries around the world and use a different last mile provider in each country and use a variety of trucks (to Canada and Mexico) and air transport partners to get parcels all over the world. In total we work with over 300 carriers and posts. We don’t have exclusive deals on the carrier side of the business.

TC: How do you price packages? How much more do you mark them up in exchange for the hand-holding you provide?

AS: Our price depends on multiple factors from the origin point to the quantity of shipments. Our markup range is between 5 percent to 50 percent depending on the client, but our pricing is 100 percent transparent. If you ship with DHL, FedEx, etc. you’ll get a rate sheet. But then you’ll also have a bunch of hidden fees like fuel surcharges, or “remote area surcharges” of up to 30 percent that will be sent 30 days later, after you’ve charged your customer.  They’ll charge you extra for certain deliveries. They’ll charge you extra for the fully-landed cost calculator — or tell you to partner with a different party. And if your package is lost, they’ll say, “Fill out this form. We’ll be in touch in 90 days after an investigation.”

Our point of view is that great logistics is necessary but insufficient when it comes to international shipping. You also need to deliver a great digital experience for brands. Everything that goes into delivering that gets bundled into our postage price.

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.

With $300M in new funding, Devoted Health launches its Medicare Advantage plan in Florida

Andreessen Horowitz has led the $300 million Series B, with participation from Premji Invest and Uprising.

Devoted Health, a Waltham, Mass.-based insurance startup, has raised a $300 million Series B and began enrolling members in eight Florida counties to its Medicare Advantage plan.

The company, which helps Medicare beneficiaries access care through its network of physicians and tech-enabled healthcare platform, has raised the funds from lead investor Andreessen Horowitz, Premji Invest and Uprising.

The company declined to disclose its valuation.

Devoted’s founders are brothers Todd and Ed Park — the company’s executive chairman and chief executive officer, respectively. Todd co-founded a pair of now publicly-traded companies, Athenahealth, a provider of electronic health record systems, and health benefits platform Castlight Health. He also served as the U.S. chief technology officer during the Obama Administration. Ed, for his part, was the chief operating officer of Athenahealth until 2016 and a member of Castlight’s board of directors for several years.

Venrock partners Bryan Roberts — Devoted’s founding investor — and Bob Kucker — its chief medical officer — are also part of the company’s founding team.

The Park brothers have tapped Jeremy Delinsky, the former CTO at Wayfair and Athenahealth, as COO; DJ Patil, a former data scientist at the White House, as its head of technology; and Adam Thackery, the former CFO of Universal American, as its chief financial officer.

Its board includes former Health and Human Services Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist. As part of the latest round, A16z’s Vijay Pande will join its board, too.

The company says it’s committed to treating its customers as if they were members of its employees’ own families. For Patil, the startup’s head of tech, that’s made the entire process of building Devoted a very emotional one.

“I’ve cried a lot at this company,” Patil told TechCrunch. “You meet these seniors and they’ve done everything right. They’ve worked so incredibly hard their entire lives. They’ve given it their all for the American dream. They’ve paid into this model of healthcare and they deserve better.”

Devoted, which previously raised $69 million across two financing rounds in 2017 from Oak HC/FT, Venrock, F-Prime Capital Partners, Maverick Ventures and Obvious Ventures, has begun enrolling seniors located in Broward, Hillsborough, Miami-Dade, Osceola, Palm Beach, Pinellas, Polk and Seminole counties to its Medicare Advantage plan. It will begin providing care Jan. 1, 2019.

Its long-term goal is to offer insurance plans to seniors nationwide.

“We are responsible for these people’s healthcare so we need to get it right,” Patil said.

With $300M in new funding, Devoted Health launches its Medicare Advantage plan in Florida

Andreessen Horowitz has led the $300 million Series B, with participation from Premji Invest and Uprising.

Devoted Health, a Waltham, Mass.-based insurance startup, has raised a $300 million Series B and began enrolling members in eight Florida counties to its Medicare Advantage plan.

The company, which helps Medicare beneficiaries access care through its network of physicians and tech-enabled healthcare platform, has raised the funds from lead investor Andreessen Horowitz, Premji Invest and Uprising.

The company declined to disclose its valuation.

Devoted’s founders are brothers Todd and Ed Park — the company’s executive chairman and chief executive officer, respectively. Todd co-founded a pair of now publicly-traded companies, Athenahealth, a provider of electronic health record systems, and health benefits platform Castlight Health. He also served as the U.S. chief technology officer during the Obama Administration. Ed, for his part, was the chief operating officer of Athenahealth until 2016 and a member of Castlight’s board of directors for several years.

Venrock partners Bryan Roberts — Devoted’s founding investor — and Bob Kucker — its chief medical officer — are also part of the company’s founding team.

The Park brothers have tapped Jeremy Delinsky, the former CTO at Wayfair and Athenahealth, as COO; DJ Patil, a former data scientist at the White House, as its head of technology; and Adam Thackery, the former CFO of Universal American, as its chief financial officer.

Its board includes former Health and Human Services Secretary Kathleen Sebelius and former Senate Majority Leader Bill Frist. As part of the latest round, A16z’s Vijay Pande will join its board, too.

The company says it’s committed to treating its customers as if they were members of its employees’ own families. For Patil, the startup’s head of tech, that’s made the entire process of building Devoted a very emotional one.

“I’ve cried a lot at this company,” Patil told TechCrunch. “You meet these seniors and they’ve done everything right. They’ve worked so incredibly hard their entire lives. They’ve given it their all for the American dream. They’ve paid into this model of healthcare and they deserve better.”

Devoted, which previously raised $69 million across two financing rounds in 2017 from Oak HC/FT, Venrock, F-Prime Capital Partners, Maverick Ventures and Obvious Ventures, has begun enrolling seniors located in Broward, Hillsborough, Miami-Dade, Osceola, Palm Beach, Pinellas, Polk and Seminole counties to its Medicare Advantage plan. It will begin providing care Jan. 1, 2019.

Its long-term goal is to offer insurance plans to seniors nationwide.

“We are responsible for these people’s healthcare so we need to get it right,” Patil said.

Instacart raises another $600M at a $7.6B valuation

D1 Capital Partners has led the $600 million round for Instacart.

Instacart chief executive officer Apoorva Mehta wants every household in the U.S. to use Instacart, a grocery delivery service that allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app.

Today, the company is taking a big leap toward that goal.

San Francisco-based Instacart has raised $600 million at a $7.6 billion valuation, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.

D1 Capital Partners, a relatively new fund led by Daniel Sundheim, the former chief investment officer of Viking Global Investors, has led the round.

Instacart is raking in cash aggressively but spending it cautiously. The company still has all of its Series E, which ultimately totaled $350 million, and the majority of its $413 million Series D in the bank, a source close to the company told TechCrunch. That means, in total, Instacart has $1.2 billion at its fingertips. Currently, according to the same source, the company is only profitable on a contribution margin basis, meaning it’s earning a profit on each individual Instacart order.

In a conversation with TechCrunch, Mehta said the company didn’t need the capital and that it was an “opportunistic” round, i.e. the capital was readily available and Instacart has ambitious plans to scale, so why not fundraise. Instacart plans to use the enormous pool of capital to double its engineering team by 2019, which will include filling 300 open engineering roles in its recently announced Toronto office, he said.

As far as an initial public offering, it will happen — eventually.

“It will be on the horizon,” Mehta told TechCrunch.

“2018 has been a really big year for us,” he added. “The reason why we are so excited is because the opportunity ahead of us is enormous. The U.S. is a $1 trillion grocery market and less than 5 percent of that is bought online. It’s an enormous category that’s highly under-penetrated.”

In the last six months, Instacart has announced a few notable accomplishments.

As of August, the service has been available to 70 percent of U.S. households. That’s due to the expansion of existing partnerships and new deals entirely, like a recently announced pilot program between Instacart and Walmart Canada that gives Canadian Instacart users access to 17 different Walmart locations across Winnipeg and Toronto, Ontario.

The company has also completed several executive hires. Most recently, it tapped former Thumbtack chief technology officer Mark Schaaf as CTO. Before that, Instacart brought on David Hahn as chief product officer and Dani Dudeck as its first chief communications officer.

In early September, the company confirmed its chief growth officer Elliot Shmukler would be leaving the company.

The 6-year-old Y Combinator graduate has raised more than $1.6 billion in venture capital funding from Coatue Management, Thrive Capital, Canaan Partners, Andreessen Horowitz and several others.

 

Y Combinator survey confirms what we already know — female founders are too often victims of sexual harassment

Y Combinator partnered with Callisto, a sexual misconduct reporting software built for victims, to survey its roster of female founders.

Y Combinator has released the results of a survey, completed in partnership with its portfolio company Callisto, highlighting the pervasive role of sexual harassment in venture capital and technology startups.

Callisto, a sexual misconduct reporting software built for victims, is a graduate of YC’s winter 2018 class. The company sent a survey to 125 of YC’s 384 female founders, asking if they had been “assaulted or coerced by an angel or VC investor in their startup career.”

Eighty-eight female founders completed the survey; 19 in total claimed to have experienced some form of harassment.

More specifically, 18 said that inappropriate experience consisted of “unwanted sexual overtures;” 15 said it was “sexual coercion;” four said it was “unwanted sexual contact.”

As part of the release of the survey findings, YC announced they’ve established a formal process for their founders to report harassment and assault within Bookface, the startup accelerator’s private digital portal for its founders.

“You can report at any time, even years after the incident took place,” YC wrote in the blog post. “The report will remain confidential. We encourage other investors to set up similar reporting systems.”

First Round Capital is another investor to recently poll its founders on issues of sexual misconduct. Similarly, the early-stage investor found that half of the 869 founders polled were harassed or knew a victim of workplace harassment.

As for Callisto, the 7-year-old non-profit said it will launch Callisto for founders, a new tool that will support victims. Using Callisto, founders can record the identities of perpetrators in the tech and VC industry. The company will collect the information and refer victims to a lawyer who will provide free advice and the option to share their information with other victims of the same perpetrator. From there, victims can decide if they want to go public together with their accusations.

Tech’s widespread sexual harassment problem is not new, but more women and victims of harassment have come forward in recent years as the #MeToo movement encourages them to name their harassers. Justin Caldbeck, formerly of Binary Capital, and former SoFi chief executive officer Mike Cagney are among the Silicon Valley elite to be ousted amid allegations of sexual misconduct in the #MeToo era.

Saudi ally calls for Uber boycott over response to Khashoggi’s vanishing

Uber is facing calls for a boycott of its app in the Persian Gulf, a region that has poured billions of dollars of investment into the company’s ride-hailing business in recent years: Directly via Saudi Arabia’s Public Investment Fund (PIF) and indirectly because the Saudis are major investors in Softbank’s Vision Fund vehicle, which is another big Uber […]

Uber is facing calls for a boycott of its app in the Persian Gulf, a region that has poured billions of dollars of investment into the company’s ride-hailing business in recent years: Directly via Saudi Arabia’s Public Investment Fund (PIF) and indirectly because the Saudis are major investors in Softbank’s Vision Fund vehicle, which is another big Uber investor.

The regional calls to boycott Uber were stoked yesterday by Saudi ally, Bahrain, whose foreign minister retweeted hashtags calling for a boycott of the company, according to reports by Bloomberg and Reuters.

An Uber spokesperson declined to comment when reached for a response.

A few boycott calls circulating on Twitter urge app users to switch to Uber ride-hailing rival, Careem, though it’s unclear whether Uber alternatives are seeing any local uplift as yet.

Anger at Uber has been sparked by the reaction of CEO Dara Khosrowshahi to the disappearance of Saudi journalist, Jamal Khashoggi, a U.S. resident, who has not been seen since entering the Saudi consulate in Istanbul on October 2 for a pre-arranged appointment to obtain documentation for his forthcoming marriage to a Turkish citizen.

Newspaper reports have suggested Khashoggi was killed inside the embassy by a Saudi hit squad that traveled to Turkey for the purpose of carrying out the murder. As a Saudi ex-pat the journalist had written critically of the crown prince’s regime.

And while independent CCTV footage shows Khashoggi entering the embassy but there is no proof to show he ever left. Although the Saudis have denied any wrongdoing, and claimed their citizens were just visiting Turkey as tourists.

Following growing alarm over Khashoggi’s disappearance, Uber’s CEO was among several business leaders to announce they were pulling out of an investment conference due to take place in the Saudi capital later this month.

“I’m very troubled by the reports to date about Jamal Khashoggi. We are following the situation closely, and unless a substantially different set of facts emerges, I won’t be attending the FII conference in Riyadh,” said Khosrowshahi in a statement last week.

Uber confirmed to TechCrunch today that Khosrowshahi will not be attending the Future Investment Initiative conference — a conference’s hosted by Saudi’s crown prince, Mohammad bin Salman bin Abdulaziz Al-Saud, aka MBS, who is also chairman of the PIF; a key Uber investor, which has a member sitting on Uber’s board

Those links underline quite how complicated managing this particular piece of legacy baggage is for Khosrowshahi — who, as Uber’s new broom, has made it his stated mission to chart a new course by ‘doing the right thing. Period‘. 

Yet when Uber accepted $3.5BN from the Saudi PIF two years ago ‘doing the right thing’ meant just one thing: Growing Uber, with few if any other considerations on the table for then CEO and founder Travis Kalanick .

At the time he took the Saudi billions, Kalanick said: “We appreciate the vote of confidence in our business as we continue to expand our global presence. Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers, and cities and we look forward to partnering to support their economic and social reforms.”

It’s unclear whether he weighed up the ethical and political risks of accepting investment from a conservative regime seeking to project a reforming image at the same time as carrying out violent repression in Yemen, and with its own long history of persecuting domestic critics.

But Uber’s decision to take Saudi money in 2016 and again, via SoftBank at the end of last year, is very much Khosrowshahi’s problem now. 

In a public remark on Twitter, tech investor, Mark Tluszcz, co-founder and CEO of Mangrove Capital Partners, suggested Uber’s CEO should have kept his concerns about Khashoggi’s fate to himself — saying there’s “no upside” for Uber or its investor SoftBank…

Responding to a follow up question about human rights, Tluszcz also told us: “Personally [a CEO] can do what they want, but should NOT use their position to express personal opinions. I doubt personal opinions are in the best interest of all stakeholders.”

Bloomberg also notes that SoftBank’s shares have continued to have a bumpy ride as outcry has grown over Khashoggi’s disappearance, as well as investors responding to wider uncertainties attached to its approach with the Vision Fund.

In the case of Uber, you could argue that had Khosrowshahi said nothing about the extraterritorial vanishing of a journalist critical to the Saudi regime that might have been a pretty tricky position for the CEO to square with a loud PR message about ‘doing the right thing’.

‘Uber: We do the right thing, sometimes’, wouldn’t have the same purifying ring as: ‘We do the right thing. Period.’ And detoxifying the Uber brand is clearly a key intent of Khosrowshahi’s tenure at Uber. 

Yet, at the same time, Uber remains awash with billions of dollars of Saudi investment. And a PR message alone can’t purge problematic legacy decisions which are also baked into the investment structure of the company.

That would take more than fine words.

So Uber is now facing regional blowback for something Khosrowshahi said, and setting itself against a major investor — risking another messy investor spat — while still potentially looking a like a hypocrite.

Safe to say, there are no shortcuts when the legacy issues attached to a business run so deep.

Not that Uber is alone in having Saudi money on its books, of course. As we wrote last week, a number of other Silicon Valley firms have welcomed recent overtures from MBS, and plenty will also have accepted Saudi PIF money, mostly via SoftBank’s vision fund.

Talking generally about MBS, longtime VC Jeff Bussgang of Flybridge Capital Partners in Boston told us last week that venture and private equity firms have been raising money from Middle East capital sources for many years — adding that “typically, entrepreneurs don’t like to focus on politics and historically have not cared very much where the money came from” (unless it’s “from the PLO or Iran”).

Whether future entrepreneurs will have the luxury of not being able to care so much about where investment comes from remains to be seen. Political and geopolitical risk must surely be looming larger on every entrepreneur’s radar.

Saudi ally calls for Uber boycott over response to Khashoggi’s vanishing

Uber is facing calls for a boycott of its app in the Persian Gulf, a region that has poured billions of dollars of investment into the company’s ride-hailing business in recent years: Directly via Saudi Arabia’s Public Investment Fund (PIF) and indirectly because the Saudis are major investors in Softbank’s Vision Fund vehicle, which is another big Uber […]

Uber is facing calls for a boycott of its app in the Persian Gulf, a region that has poured billions of dollars of investment into the company’s ride-hailing business in recent years: Directly via Saudi Arabia’s Public Investment Fund (PIF) and indirectly because the Saudis are major investors in Softbank’s Vision Fund vehicle, which is another big Uber investor.

The regional calls to boycott Uber were stoked yesterday by Saudi ally, Bahrain, whose foreign minister retweeted hashtags calling for a boycott of the company, according to reports by Bloomberg and Reuters.

An Uber spokesperson declined to comment when reached for a response.

A few boycott calls circulating on Twitter urge app users to switch to Uber ride-hailing rival, Careem, though it’s unclear whether Uber alternatives are seeing any local uplift as yet.

Anger at Uber has been sparked by the reaction of CEO Dara Khosrowshahi to the disappearance of Saudi journalist, Jamal Khashoggi, a U.S. resident, who has not been seen since entering the Saudi consulate in Istanbul on October 2 for a pre-arranged appointment to obtain documentation for his forthcoming marriage to a Turkish citizen.

Newspaper reports have suggested Khashoggi was killed inside the embassy by a Saudi hit squad that traveled to Turkey for the purpose of carrying out the murder. As a Saudi ex-pat the journalist had written critically of the crown prince’s regime.

And while independent CCTV footage shows Khashoggi entering the embassy but there is no proof to show he ever left. Although the Saudis have denied any wrongdoing, and claimed their citizens were just visiting Turkey as tourists.

Following growing alarm over Khashoggi’s disappearance, Uber’s CEO was among several business leaders to announce they were pulling out of an investment conference due to take place in the Saudi capital later this month.

“I’m very troubled by the reports to date about Jamal Khashoggi. We are following the situation closely, and unless a substantially different set of facts emerges, I won’t be attending the FII conference in Riyadh,” said Khosrowshahi in a statement last week.

Uber confirmed to TechCrunch today that Khosrowshahi will not be attending the Future Investment Initiative conference — a conference’s hosted by Saudi’s crown prince, Mohammad bin Salman bin Abdulaziz Al-Saud, aka MBS, who is also chairman of the PIF; a key Uber investor, which has a member sitting on Uber’s board

Those links underline quite how complicated managing this particular piece of legacy baggage is for Khosrowshahi — who, as Uber’s new broom, has made it his stated mission to chart a new course by ‘doing the right thing. Period‘. 

Yet when Uber accepted $3.5BN from the Saudi PIF two years ago ‘doing the right thing’ meant just one thing: Growing Uber, with few if any other considerations on the table for then CEO and founder Travis Kalanick .

At the time he took the Saudi billions, Kalanick said: “We appreciate the vote of confidence in our business as we continue to expand our global presence. Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers, and cities and we look forward to partnering to support their economic and social reforms.”

It’s unclear whether he weighed up the ethical and political risks of accepting investment from a conservative regime seeking to project a reforming image at the same time as carrying out violent repression in Yemen, and with its own long history of persecuting domestic critics.

But Uber’s decision to take Saudi money in 2016 and again, via SoftBank at the end of last year, is very much Khosrowshahi’s problem now. 

In a public remark on Twitter, tech investor, Mark Tluszcz, co-founder and CEO of Mangrove Capital Partners, suggested Uber’s CEO should have kept his concerns about Khashoggi’s fate to himself — saying there’s “no upside” for Uber or its investor SoftBank…

Responding to a follow up question about human rights, Tluszcz also told us: “Personally [a CEO] can do what they want, but should NOT use their position to express personal opinions. I doubt personal opinions are in the best interest of all stakeholders.”

Bloomberg also notes that SoftBank’s shares have continued to have a bumpy ride as outcry has grown over Khashoggi’s disappearance, as well as investors responding to wider uncertainties attached to its approach with the Vision Fund.

In the case of Uber, you could argue that had Khosrowshahi said nothing about the extraterritorial vanishing of a journalist critical to the Saudi regime that might have been a pretty tricky position for the CEO to square with a loud PR message about ‘doing the right thing’.

‘Uber: We do the right thing, sometimes’, wouldn’t have the same purifying ring as: ‘We do the right thing. Period.’ And detoxifying the Uber brand is clearly a key intent of Khosrowshahi’s tenure at Uber. 

Yet, at the same time, Uber remains awash with billions of dollars of Saudi investment. And a PR message alone can’t purge problematic legacy decisions which are also baked into the investment structure of the company.

That would take more than fine words.

So Uber is now facing regional blowback for something Khosrowshahi said, and setting itself against a major investor — risking another messy investor spat — while still potentially looking a like a hypocrite.

Safe to say, there are no shortcuts when the legacy issues attached to a business run so deep.

Not that Uber is alone in having Saudi money on its books, of course. As we wrote last week, a number of other Silicon Valley firms have welcomed recent overtures from MBS, and plenty will also have accepted Saudi PIF money, mostly via SoftBank’s vision fund.

Talking generally about MBS, longtime VC Jeff Bussgang of Flybridge Capital Partners in Boston told us last week that venture and private equity firms have been raising money from Middle East capital sources for many years — adding that “typically, entrepreneurs don’t like to focus on politics and historically have not cared very much where the money came from” (unless it’s “from the PLO or Iran”).

Whether future entrepreneurs will have the luxury of not being able to care so much about where investment comes from remains to be seen. Political and geopolitical risk must surely be looming larger on every entrepreneur’s radar.

International growth, primarily in China, fuels the VC market today

The venture capital business model has gone global. VC is still an exclusive club of financiers, but now with worldwide scope and scale.

The venture capital business model has gone global. VC is still an exclusive club of financiers, but now with worldwide scope and scale.

According to Crunchbase projections Crunchbase News reported in Q3 2018, worldwide VC deal and dollar volume each set new all-time records. In the U.S. and Canada, deal volume declined slightly from Q2 highs but growing deal sizes pushed total dollar volume to new heights.

Much of this global growth comes from markets outside the U.S. and Canada. A recent collaborative study between Startup Revolution and the Center for American Entrepreneurship indicates that Beijing, China was the city that contributed most to global growth in venture capital investment growth.

Here’s the geographic breakdown of projected deal volume over time. Note a somewhat choppy growth pattern in U.S. and Canadian deal volume, and compare that to a more consistent growth pattern in international deal volume. (For more about how and why Crunchbase makes these projections, check out the Methodology section at the end of the global report.)

In rapidly growing startup markets like China, venture deal volume is also at all-time highs, though venture dollar volume is down slightly.1 For the Asia-Pacific region as a whole, venture deal volume is up roughly 85 percent from the same time last year. Reported deal volume in China is up more than fourfold during the same period of time.

The rise of China’s venture market may be best seen from a city-level perspective. Below is a chart displaying the 10 most active startup cities in Q3, ranked by count of venture deals for each city as reported at the end of Q3. (The Methodology section of the global report also explains what “reported” data is and how it’s used.)

Of the top 10 cities displayed above, only three countries are represented. If it weren’t for the rest of Silicon Valley bolstering the Bay Area’s numbers, Beijing would beat out San Francisco in raw deal counts. (But, then again, Beijing is home to three times as many people as the entire Bay Area.)

Using deal and dollar volume as rough metrics for vivacity (if not necessarily health), this spread in VC activity could be seen as a good thing for the market as a whole. A rising tide of global VC activity lifts all startup markets, worldwide. However, much of that growth is still concentrated in just a few big markets.

The worldwide expansion and local reinterpretation of the Silicon Valley venture capital investment model is a phenomenon with which market participants (founders and funders alike) must reckon. Founders are responding by raising lots of money in ever-larger rounds, hoping that big investor checks are enough to buy large chunks of growing markets. Investors, in turn, are raising ever-larger funds to satiate these companies’ seemingly bottomless appetites for capital.

As in most mega-trends, participants who fail to adapt to changing market conditions will end up on the losing end of the market cycle.

  1. It should be noted that dollar volume declined mostly because Q2 numbers were skewed north by a $14 billion Series C round raised by Ant Financial. To this date, it’s the largest VC round ever closed.