All posts in “Andreessen Horowitz”

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

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

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.

Cratejoy sheds nearly half of workforce amid restructuring effort

Cratejoy, a startup that runs a marketplace for subscription businesses and helps founders launch and scale their own subscription box services, has laid off 18 members of its 43-person team.

The company’s co-founder and chief executive officer Amir Elaguizy confirmed the lay-offs to TechCrunch. He says the cuts are part of a restructuring effort to keep costs in line and that subscribers and merchants will not be impacted.

The startup has raised a total of $10 million to date from investors, including Charles River Ventures, SV Angel, Andreessen Horowitz, Maverick Capital, Start Fund and ACE Venture Fund. Cratejoy completed the Y Combinator accelerator program in the summer of 2013 alongside DoorDash, Le Tote and Bloom That, which itself recently hit pause on its on-demand flower service.

“This was a hard decision made by the leadership team to keep our costs in line,” Elaguizy told TechCrunch. “Whenever we’re forced to make hard staffing decisions it is difficult, and this reduction was no exception. We had to part ways with many very good and talented people.”

Elaguizy declined to elaborate on any other changes to the business.

Austin-based Cratejoy sells a curated collection of subscription boxes and helps entrepreneurs develop their own subscription box. It exists on the premise that the future of e-commerce is these packaged collections of goods delivered on a recurring basis.

For some time, venture capitalists were drinking the subscription box Kool-Aid, but those days appear to be over. Funding into subscription box startups, according to Crunchbase data, has dropped off significantly.

Cratejoy was founded in 2014 amid the subscription box funding boom. The same year it completed its $4 million Series A, Birchbox completed a $60 million round, Dollar Shave Club raised $13 million and Stitch Fix brought in $30 million. With 30 companies raising about $200 million, 2014 was the highest on record for investment in subscription box companies.

Last year, companies in the sector raised just $39.7 million across 20 deals.

Atrium raises $65M from A16z to replace lawyers with machine learning

Let the computers do the legal busy work so attorneys can focus on complex problem solving for their clients. That’s the lucrative idea behind Atrium LTS, Twitch co-founder Justin Kan’s machine learning startup that digitizes legal documents and builds applications on top to speed up fundraising, commercial contracts, equity distribution, and employment issues. For example, one of its apps automatically turns startup funding documents into Excel cap tables.

Automating expensive legal labor has led to a rapid rise to 110 employees and 250 clients for Atrium, including startups like Bird and MessageBird. Atrium only came of stealth a year ago with a $10.5 million party round before going into Y Combinator last winter. Today it announces it’s raised a $65 million round led by Andreessen Horowitz.

In characteristic dude fashion, Kan tells me “I’m pretty stoked about that because of having more resources for Atrium.” The venture firm’s partner Andrew Chen is taking a board seat and famed co-founder Marc Andreessen is joining as a board observer. “I wanted a visionary who’s always going to be pushing us to build something really big” Kan says. YC’s Continuity Fund and Ashton Kutcher’s Sound Ventures are also joining the round

With the massive influx of cash, Atrium will be able to develop more internal tools it can use to crank out client work faster than its traditional competitors. “We can ultimately be this platform on top of which you’re building these legal business and eventually other professional services and software services” Kan explains,”They’re all sitting on top of the platform that understands legal documents.”

In more Atrium news, Y Combinator’s leading partner Michael Seibel will join the startup’s board too. And it’s acquired Tetra, a YC artificial intelligence startup that had raised $1.5 million to analyze voice, “to help us build our platform that understands and structures data” Kan tells me.

What Kan didn’t initially mention is that two of Atrium’s co-founders, CTO Chris Smoak and legal partner BeBe Chueh. have left. He later admitted they had transitioned out of the company several months before the new funding. “BeBe wanted to spend time working on family (she just got engaged); Chris and I disagreed on his job role” regarding the definition of the CTO position, Kan tells me. He’ll now be running Atrium with remaining co-founder Augie Rakow, formerly of mega-law firm Orrick, and Kan’s long-term business partner and former McKinsey analyst Nick Cortes.

Justin Kan (Atrium) at TechCrunch Disrupt SF 2017

The law firm business model has left the door open for disruption by technology companies like Atrium. “Law firms generate revenue from hourly billing, and lack an incentive to vastly improve efficiency” Chen writes. “Many law firms dividend out all their profits at the end of each year, making it hard to invest in the expensive investment of building software. Software is hard to build inside a software company, much less a law firm”.

But Atrium is an engineering company with a legal clientele. It takes the most common and time-consuming activities — often related to ingesting mountains of documents — and builds machine learning workarounds. Atrium’s lawyers can focus on advising their clients on what to do, rather than burning the midnight oil doing it as they look for tiny quirks in the paperwork. The legal services get faster, cheaper, and more predictable so Atrium can offer upfront pricing.

For now, Atrium’s tech is limited to a narrow band of use cases. But “over $300 billion is spent per year in the enterprise legal market” Chen writes, so there’s plenty of room to grow now that Atrium is well capitalized. It will have to convince big corporations to ditch the old way and let computers lend a hand. Luckily, Atrium isn’t a SAAS company forcing clients to use the tech themselves. Done right, they shouldn’t even know that it’s machine vision software, not junior associates, pouring over their docs. It will have to out-match fellow legal tech startups like Ravel, CaseText, Judicata, Premonition, and more, though they’re often just tools rather than software-equipped law firms.

Kan also cops to his lack of experience in legal. “I think for any full stack vertical startup started by a non subject matter expert (ie. me who is not a lawyer), there is a risk that you come in and are very prescriptive on how things work. Then you build software that says ‘the providers must do it this way!’” Kan tells me. “But the practical reality is that it doesn’t work with the nuanced, non-linear workflows that providers already have. So the technology doesn’t get adopted and fails to provide value. That to me is the biggest upcoming risk.”

Justin Kan, from lifevlogger to legal giant

Yet if Atrium can ease clients into this new world service by service, it could generate network effects that fuel the whole business. It’s just a matter of prioritization. “One of the things I always need to be focused on is…focusing. That’s sometimes a blindspot.” From Justin.tv to Twitch to its acquisition by Amazon to his role as YC partner, Kan delivers but can be frenetic. “As an entrepreneur, I have a tendency to take on too much.”

But after leaving YC because “I had felt like I’d stopped learning”, Kan has found the legal space so full of knowledge and opportunity that it can hold his attention. “Part of why I like this business is because it was so different. I didn’t think it was something that would be as easily competed with” Kan recalls. “I had this calendar company and Google came out with something similar. I told [Twitch co-founder] Emmett ‘We have to do something no one can compete with. At least Google will never do this’. Then they did.”

But unlike with that game streaming startup, Atrium doesn’t have to worry about beating or getting bought by some legal tech giant. Instead, it wants to become one.

Rappi raises $200M as Latin American tech investment reaches new highs

Rappi, the Colombian on-demand delivery startup, has brought in a new round of funding at a valuation north of $1 billion, as first reported by Axios and confirmed to TechCrunch by a source close to the company. DST Global has led the more than $200 million financing, with participation from Andreessen Horowitz and Sequoia — all of which were existing investors in the company.

Rappi kicked off its business delivering beverages and has since expanded into meals, groceries and even tech and medicine. You can, for example, have a pair of AirPods delivered to you using Rappi’s app. The company also has a popular cash withdrawal feature that allows users to pay with credit cards and then receive cash from one of Rappi’s delivery agents.

Rappi charges $1 per delivery. To help keep costs efficient, the company’s fleet of couriers use only motorcycles and bikes.

Simón Borrero, Sebastian Mejia and Felipe Villamarin launched the company in 2015, graduating from Y Combinator the following year. From there, Rappi quickly captured the attention of American venture capitalists. A16z’s initial investment in July 2016 was the Silicon Valley firm’s first investment in Latin America.

The new capital will likely be used to help Rappi compete with Uber Eats, which is active across Latin America.

The round for Rappi is notable for a Latin American company, as is its new unicorn status. Only one other Latin American startup, Nubank, has surpassed a billion-dollar valuation with new venture capital funding so far in 2018. São Paulo-based Nubank makes a no-fee credit card and is also backed by DST.

Investment in Latin American tech continues to reach new highs. In the first quarter of 2018, more than $600 million was invested. That followed a record 2017, which was the first time VCs funneled more than $1 billion into the continent’s tech ecosystem during a 12-month period.

The rise in investment is mostly due to sizable fundings for companies like Rappi and Nubank, as well as Brazil-based 99, which sold to fellow ride-hailing business Didi Chuxing in a deal worth $1 billion earlier this year.