All posts in “Venture Capital”

Robinhood hires Josh Elman as VP of product, who’ll stay at Greylock

Zero-fee stock trading app Robinhood is getting some product firepower as it dives into cryptocurrency and weighs platform aspirations. Investor Josh Elman will join Robinhood as its VP of product while remaining a partner at Greylock, though in a reduced capacity.

With 4 million registered users, $176 million raised and a $1.3 billion valuation, the five-year-old fintech startup is shifting from a period of finding product-market fit to building a serious business. Elman’s experience with rapidly rising companies like Facebook, Twitter and LinkedIn could help guide Robinhood toward maturity.

“In January, I started talking with a few of my partners about how I want to spend the next decade of my professional life. What gets me the most energized is when I can dig in on product with a hyper-growth company. To that end, I’m joining Robinhood to lead product, where we will continue building powerful tools to give everyone broader access to our financial system,” Elman tells TechCrunch. “I am going to continue my role at Greylock as a venture partner, and will continue to represent Greylock on the boards in my portfolio. I am grateful to my partners for their support, and excited for what is next.”

Greylock has always been known as a fund run by veteran operators like Reid Hoffman, who joined as a partner while still the CEO of LinkedIn . A Greylock spokesperson tells me, “Josh is a sharp product-thinker who has backed excellent entrepreneurs and innovative companies that we are proud to have as part of the Greylock portfolio. We are supportive of Josh as he takes on this new operating role, and look forward to continuing our work with him as a venture partner.”

That term ‘venture partner’ typically means someone who won’t lead investments and/or isn’t a full-time permanent member of the firm like a “partner” as Elman previously listed himself. Some might view the shift as a demotion, or the start of a transition out of the firm.

The new role could create some conflicts, though. Greylock recently invested in cryptocurrency exchange Coinbase’s August Series D. But Robinhood just launched its own cryptocurrency trading platform in December, undercutting Coinbase’s 1.5 percent to 4 percent fee on trades in the U.S. by charging zero commission. Coinbase might worry that plans it shares with Greylock could make it back to Robinhood.

Read our post on the roll-out of Robinhood Crypto

Elman has dealt with this before, having hyped text fiction app Hooked whose seed round Greylock funded before it backed competing app Yarn’s parent company Mammoth Media with Elman joining its board. Elman declined to comment about the matter.

Josh Elman at TechCrunch Disrupt SF

An eye for interfaces

Elman began his career after a bachelor’s degree in symbolic systems with a focus on human computer interaction at Stanford in 1997. Elman worked on product for music company RealNetworks, and growth and job boards for LinkedIn before joining custom merchandise startup Zazzle . His big break came working on the launch of the Facebook Connect platform. He was then a PM at Twitter until joining Greylock as a partner in 2011.

In my experience, Elman is one of the best investors at spotting emerging social trends and helping companies find winning product strategies. Despite being in his 40s, he’s quick to dive into teen-focused social apps, understanding and funding them before they blow up. He was on the boards of Musically (sold to Toutiao) and SmartThings (sold to Samsung), plus was one of the few investors in honest feedback app tbh, which sold to Facebook. He’s currently on the boards of Medium, Houseparty and Discord — which are redefining blogging, video chat and video game communities.

Robinhood’s Bay Area HQ

Robinhood could use Elman’s skills as it tries to unite the traditional stock and cryptocurrency worlds using free trades up front while monetizing with subscription bonus features. The way Facebook and Twitter turned friends and thought leaders into a feeds of content to consume, Elman could assist as Robinhood does the same to financial markets.

Robinhood founders Baiju Bhatt (left) and Vladamir Tenev (right)

“I’ve known Josh for a couple years now and he’s always struck me as one of the most thoughtful product builders,” says Robinhood co-founder and co-CEO Baiju Bhatt. (Disclosure: I know Bhatt and his co-founder Vlad Tenev from

college). “We’re lucky to have him lead our product initiatives and join our leadership team as we take Robinhood to the next level.” Robinhood now has 170 team members across the Bay Area and Orlando, Florida. It’s planning to hire a VP for engineering and for customer support while scaling those teams, as well as legal and biz dev.

Having jumped the regulatory and engineering hurdles to offer cost-efficient stock trading, Robinhood has a huge opportunity to become the backbone of a new generation of fintech apps. The company declined to comment, but the startup could one day build APIs so other products could interact with your Robinhood balance and bank account. Elman worked with Facebook to let partners piggyback on your identity, and he might have ideas for turning Robinhood into a fintech platform.

The rise and rise of supergiant rounds

With more money flowing into a shrinking number of deals, the average startup funding round is getting bigger. And it’s not by a small margin, either. Supergiant funding rounds are coming to dominate the funding landscape at all stages.

Although a lot of attention has been paid to huge funding rounds at the later stage — in particular, the recent spate of mega-rounds led by SoftBank’s $100 billion Vision Fund — outsized rounds abound at all stages. Crunchbase News has also explored some of the smallest funding rounds startups raise. But up to this point, we haven’t taken a look at big rounds at early stages. And this is a somewhat glaring omission, because seed and early-stage funding rounds make up the surpassing majority of deal volume around the world.

If you’ll forgive the pun, it’s kind of a big deal.

Today, we’re going to take a look at this growing phenomenon, what it means and what might be happening “under the hood” in supergiant seed rounds.

The rise and rise of supergiant rounds

In this section, we’re going to zip through a fairly large amount of funding data rather quickly. The exact numbers are less important than the overall trends they indicate. To wit, that both middle-of-the-road rounds and their supergiant counterparts alike have grown significantly in size over the past decade.

But before showing the charts and analyzing the data behind them, allow us a second to explain what, exactly, we’re talking about when we talk about supergiant rounds.

For our purposes here, we’ve borrowed the term “supergiant” from astronomy. Supergiant stars, as the name may suggest, are some of the most massive and luminous celestial bodies in the universe. Similarly, the supergiant funding rounds we’re examining here are among the largest raised by startups, and they’re the rounds that grab the most headlines.

Hunting for giants

We define the set of “supergiant” rounds as the top 10 percent of deals struck for each round type, by year. So, for example, if there were 5,000 seed rounds closed in a given year, the “supergiants” would be the top 500 seed rounds — ranked by the amount of money raised — for that year. Likewise, if there were 1,500 Series A rounds closed in that same year, we’d call the 150 largest Series A rounds supergiants, as well.

The following analysis is based on a data set of more than 44,000 seed, angel, Series A, Series B, Series C and Series D rounds raised by startups headquartered in the U.S. and Canada between 2008 and mid-February 2018. We’ll compare the average size of supergiant rounds against a trimmed average of round sizes, which doesn’t include the top or bottom 10 percent of rounds.

Why go with a trimmed average? We want to exclude the supergiant rounds because they’d artificially skew the general average upward, but by the same token, we want to filter out the smallest rounds (like this listed $33,000 Series B, for example) that would artificially skew figures lower. To reiterate, by comparing an average of the median 80 percent rounds to the average of the top 10 percent of rounds, we’ll be able to see how supergiant round sizes related to those “in the middle of the road” over the past decade.

Our primary focus here will be deals from the earliest stages — seed and angel, Series A and Series B — but we’ll get into some findings from later stages, too. Let’s start with the earliest rounds and move later from there. And once we’ve shown the data, we’ll share some observations gleaned from it.

Seed and angel rounds

For the approximately 24,600 seed and angel rounds we analyzed, we found that the size of both middle-of-the-road and supergiant rounds have grown significantly over the past decade, as the chart below shows.

The size of middle-of-the-road seed and angel rounds grew by roughly 145 percent over the course of the last 10 years, and supergiant rounds are just under 63 percent larger than the supergiant average from a decade ago.

And — in what will become a common refrain — the companies that raised these large rounds are primarily located in just a few cities.

A majority of supergiant seed and angel rounds were raised by startups based in the SF Bay Area and New York City. Let’s see if the same pattern occurs at Series A.

Series A rounds

Like with seed and angel rounds, the chart below aggregates data from nearly 10,000 rounds and shows how much Series A rounds have grown over the past decade.

The size of supergiant Series A rounds grew by a similar amount to middle-of-the-road seed and angel deals, increasing by 140 percent over the course of the last 10 years. More pedestrian Series A rounds are just under 130 percent larger, up from a trimmed average of $4.93 million in 2008 to $11.29 million in 2018, year to date.

The distribution of startups raising supergiant Series A rounds is similar to even earlier-stage counterparts.

Again, a majority of supergiant Series A rounds are raised by startups headquartered in just a few cities. In addition to San Francisco and New York City, life sciences-heavy Boston takes second place in the ranking of a decade’s worth of huge Series A rounds.

Last but not least, it’s on to Series B.

Series B rounds

Our Series B data set contained nearly 5,700 Series B deals, but, unlike earlier rounds, the general “up and to the right” trendline isn’t so clear. As the chart below shows, it appears as though the size of Series B rounds has somewhat leveled off, at least on an annual timescale.

Supergiant Series B rounds have grown by 65 percent over the last decade. The more middle-of-the-road Series B rounds have also grown, but by a more significant 83 percent since 2008.

The geographic distribution of startups that raised the most supergiant Series B rounds is strikingly similar to the population of Series A fundraisers.

Again, San Francisco and the broader Bay Area ranks at the top of the charts, followed by Boston, NYC, Los Angeles and San Diego — the same rank order as the prior round type.

And now that we’ve got the raw data out there, let’s see what we can take away from all of this.

The pie shrinks as the middle grows

Higher growth rates amongst middle-of-the-road rounds

Although the growing size of supergiant rounds may be impressive due to sheer size alone, it’s actually middle-of-the-road rounds that have grown the most consistently over the past decade.

In two of the three round types we reviewed above, the compound annual growth rate (or CAGR, for those of you who like acronyms) of supergiants underperformed more quotidian rounds, as the table below shows.

This all suggests that despite supergiant rounds getting all the attention, performance in more middle-of-the-road rounds has been even better, at least from a dollars-raised standpoint.

Growing geographic concentration of supergiant rounds

By definition, supergiant rounds suck up a lot of capital, and they seem to be primarily located in just a few deep pools. As the funding cycle progresses, it appears as though more of the supergiant rounds are raised in just a handful of cities.

As the funding cycle progresses, the percentage of rounds raised by startups located in the top three cities seems to increase after an initial drop following seed. Fifty-five percent of supergiant Series A rounds were raised by startups from the Bay Area, NYC and Los Angeles. Although not pictured above, 67 percent of supergiant Series C deals were struck by companies from the Bay Area, Boston and New York City.

But what’s even more striking is the declining percentage share of supergiant rounds raised by startups outside the top-five rankings for a particular stage.

The chart above shows that the ability to close very large rounds is generally concentrated in fewer and fewer places as the funding cycle progresses.

We stopped our analysis at Series D due to limited sample size.

The growing dominance of supergiant rounds

Some have shown that it’s not just the average round size that’s growing across most stages over time, but the number of large outlier rounds, as well. For example, Seth Levine, a venture investor at Foundry Groupfound that the proportion of Series A deals larger than $50 million grew by an astonishing 721 percent from 2008 to 2017. The share of Series B rounds in the $50 million-plus range grew 300 percent over the same period. He concluded that “venture is being increasingly driven by large rounds.”

Inspired by Levine’s research, Ian Hathaway, an economist, and strategy advisor, found that between 2007 and 2017, deal volume has declined while dollar volume rose across almost all stages of funding he analyzed. This is in line with analysis from Crunchbase News from late 2017. And in a follow-up to prior analysis, he charted the growing number of large rounds over that time period.

Indeed, it was Levine and Hathaway’s analysis that prompted us to look at the numbers, as well, albeit from a slightly different angle, one more focused on geography and population-scale shifts in round size at the highest end of the spectrum. Our findings confirm a piece of common sense: expensive cities (see: NYC and the Bay Area) and those home to capital-intensive industries like biotechnology and advanced manufacturing (see: Boston and San Diego) are the primary drivers and beneficiaries of the trend toward supergiant rounds.

A decade’s worth of history suggests that this is one status quo that won’t be disrupted soon, no matter how much “disruptive” startups may raise in the future.

Featured Image: Li-Anne Dias

Startup that sells your salary data to VCs gets bought by Solium

Investors don’t want their portfolio companies to pay you too much, or too little. So they pay Advanced-HR for its compensation data pulled from 2,500 startups. With a generic name, the service has flown somewhat under the radar since launching 20 years ago.

As startups grow more professional while staying private longer, they’re getting serious about how they structure equity compensation plans to retain talent. Solium sells them stock option planning software.

But together, they hope to offer the most accurate view of how much salary and stock other companies offer to help startups figure out exactly how to pay their employees. Today Solium announced that it’s acquiring the tech and whole team of Advanced-HR, which will continue to sell its Option Driver software-as-a-service.

It’s part of an acquisition spree that comes from a war chest of $50 million that Solium has told the public markets is going to buying companies and developing new products. In October Solium bought Capshare, which helps 10,000 smaller startups manage their equity compensation plans. In March, it bought NASDAQ’s ExactEquity planning business. Terms of the deal weren’t disclosed, but you could expect it’s a modest chunk of the $50 million that’s being spread across multiple deals.

The plan seems to be working, as Solium’s share price is up 35 percent this year. Though Solium went public in 2001 and became profitable in 2004, it raised a $48 million financing last year to capitalize on the shift toward startups staying private longer and equity becoming an increasingly important way to keep talent from skipping off to somewhere with a higher salary.

“The other over-arching trend is that startups are taking over control of managing their equity,” says Lopez. “Equity has been historically managed with spreadsheets in a startup while the official ledger/cap table sat with a law firm. With equity management platforms like Shareworks there is now a system of record that the company controls and can give access to legal counsel, investors and other stakeholders as desired.”

Dee DiPietro started AHR as a consultant practice back in 1997 as a solo female founder. Eventually she took over running the popular Venture Capital Executive Compensation Survey from Benchmark. Its sponsors, including heavy hitters like Accel, Andreessen Horowitz, Sequoia and Y Combinator, pay $4,000 a year to submit their data and get everyone else’s. The service has evolved from models in Excel to automated compensation planning software used by 120 top VC firms.

“We launched the first private company compensation survey, the first internet-based salary survey, the first real-time compensation data delivery system,” says DiPietro. “And more recently, the first compensation planning platform for scaling private companies in Silicon Valley and beyond.”

Still, what the industry really needs is a better tool for employees to vet their own job offers. It can be quite tough to predict what your stock options will be worth depending on vesting schedules, multiple rounds of funding and dilution. And then there’s the heavy upfront costs and risks of actually exercising your stock options.

The sad truth of the matter is that unless a company is an extraordinary 1-in-10,000 success, few teammates beyond the founders or very first employees stand to gain a life-changing windfall. Yet employees number 10 to 50 are often tasked with unrelenting deadlines and long hours that might only really benefit the C-level executives. Software like Advanced-HR and Solium make sure startups don’t pay too much, but it’s the rank-and-file workers that need to know if they’re earning enough.

Featured Image: studiostoks/Shutterstock

betaworks Studios is a membership club for builders

betaworks, the 10-year-old startup studio out of NYC, is today introducing a brand new business in the form of betaworks Studios.

Think of betaworks Studios as a membership club for builders, offering entrepreneurs, artists, enginneers/developers, and creatives the space to work on their projects and get to know one another.

Builders is the word that betaworks uses to describe its core demographic for Studios. The premise for betaworks Studios is to give developers and creative-focused individuals a chance to be a part of the betaworks community, with all that entails.

“I was having a lot of conversations where I was getting asked ‘Could we do a betaworks in our city?’” said CEO and founder John Borthwick. “I always thought ‘that doesn’t make a lot of sense’ because what we do at betaworks is fairly bespoke and heavy lift. But after a number of conversations I realized that maybe I’m answering a different question than they are asking.”

betaworks is responsible for some of the most well-recognized names on the internet, from Digg to Giphy to Dots to The company has three branches: Build, Fund and Camp. The Build branch works on projects internally and brings in EIRs to run those projects. Fund, obviously, is about financing outside companies. And Camp is all about accelerating a small number of companies in a certain vertical. (Thus far, betaworks has run a BotCamp, VisionCamp, and VoiceCamp.)

This framework has allowed entrepreneurs and developers to share knowledge organically on a day to day basis, not to mention the fact that betaworks holds plenty of events and speaker programming to keep the community informed on the latest in tech.

But that community has always been somewhat closed off to just a small number of people.

betaworks Studios, which will be located in betaworks former office in NYC’s Meatpacking district, will be run by betaworks Studios COO and President Daphne Kwon. Builders will apply to be accepted to the club, which will cost $2400/year or $225/month.

This is not your WeWork-style coworking space with set desks, but more like The Wing, letting members stop in and do some work, take a meeting, or attend a discussion with experts.

“Studios is meant to connect the community,” said Kwon. “People have become more isolated. With the gig economy on the rise, where and when people work is becoming fragmented. […] Studios is one of the only places we know where you should level up during the membership, learning the things you need to learn about frontier technologies, which is something that people in the betaworks community right now already get to enjoy.”

Alongside programming, betaworks Studios will also have a live concierge on hand in the space to help connect users with the folks they want to meet based on the areas of knowledge they’d like to explore. Software will also be introduced to help facilitate these connections.

Plus, betaworks’ Camps will be set up downstairs from the Studios building, giving developers and creatives quick access to folks who are building a company based on emerging tech.

betaworks plans to bring this model to other locations, though hasn’t yet disclosed which market will be home to the second betaworks Studios implementation.

Norwest Venture Partners raises $1.5 billion fund

Norwest Venture Partners has closed a $1.5 billion fund, bringing the total under management to $7.5 billion.

The firm will be using the money to invest primarily in the consumer, enterprise and healthcare categories. And they are looking for opportunities at all stages, from seed stage to growth.

Norwest said it has had a record past two years, achieving liquidity events for 30 of its portfolio companies. ShotSpotter and iRhythm Technologies went public in this timeframe. Jet, Kendra Scott and Apigee are amongst its recent acquisitions.

Norwest is “feeling good about the opportunities that we’re seeing,” said Jeff Crowe, managing partner. They made 25 Series A and 20 Series B investments last year alone.

Some of Norwest’s existing portfolio companies include Modsy, Honeybook, Udemy, Madison Reed and Minted.

While the firm is based in Silicon Valley, for the later stage they are particularly looking for “businesses that have been bootstrapped, that are already profitable,” said Crowe, which are “rarely” in this region. These companies are typically in the software, business services and consumer categories.

They are, however, doubling down on office space in the Bay Area. Norwest is announcing a new larger office in the South Park area of San Francisco.

They are also promoting two members of the team.

Jon Kossow and Lisa Wu

Jon Kossow has been promoted to managing partner. He’s been at the firm since 2009 and runs the firm’s growth equity practice.

Lisa Wu has been elevated to partner. She’s been at NVP since 2012 and was instrumental in sourcing the Jet deal.

Norwest’s main limited partner is Wells Fargo. NVP began under the umbrella of Norwest Corporation, which was bought by Wells Fargo in 1998.

Featured Image: Norwest Venture Partners