Tag: early stage

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Talking cybersecurity, SaaS and early-stage valuations with ForgePoint Capital

Earlier today TechCrunch covered the launch of a new, $450 million cybersecurity-focused fund, the second from venture group ForgePoint Capital.

The new vehicle, inventively named Fund II, will mostly focus on early-stage companies in the cybersecurity space. The fund’s timing is somewhat unsurprising. As we noted in our earlier coverage, the recent IPOs of Cloudflare (more here) and CrowdStrike (more here) have given cybsersecurity a halo, showing founders and investors alike that outsize returns are possible in the space. Such successes can’t hurt VCs looking for fresh capital.

To get a stronger grip on how ForgePoint sees the market, TechCrunch corresponded with the group, asking about fund mechanics (check sizes, investing pace), the cybersecurity sector itself (business models, valuations) and recent liquidity events (CrowdStrike in particular). ForgePoint’s Alberto Yépez, a co-founder and managing director at the group, answered our questions.

The following interview has been lightly edited for clarity and length. Let’s have some fun:

TechCrunch: The new fund is $150 million larger than its predecessor. Why raise 50% more for the new vehicle? What is the target number of checks per year? Will it be faster than the preceding fund?

ForgePoint Capital: We were one of the first investors to focus on cybersecurity when we raised our first fund. Since then, the cybersecurity market has grown by more than 50%, driven by the constantly evolving challenges facing businesses, governments and individuals. We’ve also doubled our investment team. Our team has a singular focus on the market, driving unparalleled domain expertise and insights into emerging industry trends.

We will continue to invest in six to ten new cybersecurity companies per year, and find great opportunities with leading entrepreneurs.

Putting capital to work in “early-stage and select growth companies” is delightfully flexible. What check size range is the fund targeting, and what is the target deal size for growth-oriented deals?

We target up to $25 million for early-stage ventures throughout the life of an investment, and up to $50 million for growth-oriented companies achieving considerable revenue growth.

How much did Crowdstrike’s successful IPO boost cybersecurity-focused startup valuations and fundraising last year?

A rising tide lifts all boats. In cybersecurity, as elsewhere, the market rewards rapid growth and valuations reflect [that]. We target companies with great teams building innovative solutions that are poised for high growth. While the Crowdstrike IPO certainly boosted attention on the market, over 90% of successful cybersecurity exits are through M&A. Strategic buyers and financial sponsors pay up for companies that can scale.

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Fintech VC sets records in Q4 despite early-stage slowdown

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Fintech is what you hear about constantly, but probably aren’t as read up on as you’d like to be. Neither am I.

Luckily we have a new report concerning fintech investing to unpack and explore. Thanks to a dataset from startup and venture data provider CB Insights, we have a fresh, deep look into the world of startup fintech investment. 

Here’s what we want to know:

  • Did fintech venture activity rise in 2019?
  • How are the various venture stages of fintech investing performing
  • Are early-stage fintech startups able to attract capital at similar velocity to their much-lauded, late-stage counterparts?

Let’s find out!

2019: A (near) record

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SaaS kicks off 2020 with an extra billion in VC funding as round count halves

The venture capital world is investing more capital into software as a service companies (SaaS), despite cutting the number of deals it executes within the startup category, according to Crunchbase data. The results echo other venture data we’ve explored recently, including a look into early-stage dealmaking that shows a rise in invested venture dollars inversely correlating with a boost to the number of total deals recorded.

More capital and fewer deals means larger venture-backed investments, implying a general tilt towards the later-stage market. Instead of looking at things by stage, however, this afternoon we’re exploring a startup category. And SaaS is a key category in the startup world, making the inspection worth our time.

As the venture capital world’s seed investors focus more on enterprise deals than consumer investments, seeing SaaS perform well is not surprising. How well it is doing this year might be.

But let’s get the data in front of us before we get ahead of ourselves. Strap in, we’re digging into the numbers.

2020 SaaS funding is robust

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Austin-based Next Coast Ventures just closed its second fund with $130 million

It’s November. We’re eleven years into a bull run. And a protracted trade war with China — not to mention the impeachment proceedings — are causing some nervousness about what next year will hold.

Little wonder that venture firms, which have been writing checks faster than ever in recent years, are also stocking up on dry powder. In the 10 days alone, some of the many firms to announce new funds include Boldstart Ventures, Drive Capital, .406 Ventures, CAVU Venture Partners, Unusual Ventures, Northzone, Kindred Ventures, EQT Ventures, Inspired Capital, and Norwest Venture Partners.

Newly in the same company is Next Coast Ventures, a firm that just closed on $130 million in fresh capital commitments to pursue a thematic approach and focused (for now) on the future of work, the rise of digital natives, the death of traditional retail, and the ways that ubiquitous connectivity is changing marketplaces.

It’s the second fund for the firm, which closed its debut fund with a very respectable $85 million, thanks in large part to its two managing directors: Michael Smerlko previously bought a technology services company called ServiceSource that he ran for 12 years and eventually took public. His cofounder, Thomas Ball, previously spent more than a decade with Austin Ventures.

Interestingly, for many years, Austin Ventures was the only game in town in Austin, but that has changed meaningfully since it announced in 2015 that it wouldn’t be raising more capital. Not only has Next Coast just gathered up more capital, but so have numerous other regional firms this year. In April, for example, we reported on the newest, $105 million, fund raisedLiveOak Ventures. Meanwhile, Silverton Partners, one of the city’s most active investors, is zeroing in on a new $120 million fund just one year after closing a $108 million fund and several other firms — including ATX Ventures and Quake Capital are trying to raise sizable debut funds.

As for Next Coast, some of its many current bets include Everylywell, a company that sells tens of in-home diagnostic tests and that closed on $50 million in funding earlier this year and AlertMedia, a cloud-based mass notification system that aims to streamline notifications across devices and platforms and which raised $25 million in Series C funding back in January.  (You can check out a longer list of its investments here.)

The firm has also seen five companies in its portfolio sell to acquirers (all for undisclosed terms). While one has yet to be announced, the other four are OnRamp, a cloud hosting company that sold last year to a data and IT company called LightEdge; the personal finance startup Clarity Money, which sold to Goldman Sachs last year; the wardrobe tech company Finery, which sold to Stitch Fix in September; was the smart oven maker Brava, which just yesterday disclosed that it’s being acquired by Middleby, an industrial equipment company.

We were in touch with in touch yesterday with Smerlko to learn how Next Coast’s new and bigger fund might differ from its predecessor and the answer seems to be: not much. He said check sizes will increase, from a range of $3 million to $7 million into Series A stage companies to more like $5 million to $10 million at the upper end. He also suggested that NextCoast remains as committed as ever to uncovering and funding talent regionally, something that’s getting easier all the time, evidently.

“Austin’s entrepreneurial and startup ecosystem is absolutely booming,” Smerlko wrote us via email. “It’s never been cheaper to start a company, and places like Austin with a high quality of life, growing available capital and a strong entrepreneurial spirit will continue to be a hotbed for founders and tech talent.”

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Announcing TechCrunch Early Stage, a new event series all about founders

TechCrunch covers a lot of bases in the tech startup world, but none is more important than supporting founders — especially early-stage founders. That’s what our new event series, TechCrunch Early Stage, is all about.

These single-day events debuting next year will be highly interactive opportunities for founders to tap experts in the core startup disciplines, starting with early-stage investors (lots of investors), legal wizzes, growth gurus, product-market fit wallahs, tech stack experts, recruiting aces and much more, including workshops on pitch breakdowns.

TechCrunch’s goal is to provide founders with insights and new relationships on par with what an accelerator experience provides, only in a single day, and with a much greater variety of experts and investors.

TC Early Stage is an outgrowth of Extra Crunch, TechCrunch’s subscription-based editorial offering that focuses on deep analysis and advice around the big topics facing founders. In October this year at Disrupt SF, we brought Extra Crunch to life on its own stage and featured experts on dozens of topics, including:

  • How to Raise My First Dollars (Russ Heddleston, DocSend, Charles Hudson, Precursor Ventures,  and Annie Kadavy, Redpoint Ventures)
  • How to Hire at Breakneck Speed (Scott Cutler, StockX, Harjeet Taggar, TripleByte, and Liz Wessel, WayUp)
  • How to evaluate talent and Make Decisions (Ray Dalio, Bridgewater Capital)
  • How to get into Y Combinator (Michael Siebel, Y Combinator),
  • How to Decide Between Bootstrapping and Raising Venture (Ben Chestnut, Mailchimp and Kathryn Petralia, Kabbage)

The sessions were mobbed. The TechCrunch team knows a winner when they one, and the result is this new event series. The first of three TC Early Stage events next year will be in San Francisco on April 28, with one in Paris on October 28 and another in New York City (date TBA).

TC Early Stage is designed for founders who are in their early innings, anywhere from pre-seed through series A, when entrepreneurs need all the guidance they can get. With that in mind, the event’s heart is dozens of breakout sessions run by with experts and curated by TechCrunch editors. The breakouts will be long on attendee questions and conversation, and the event is structured so that attendees can easily get to six to eight different breakouts over the course of the day. In addition, TechCrunch editors will hold a handful of interviews on a main stage with notable founders and investors in time slots that will not conflict with the breakouts.

Here is a sampling of the types of breakout sessions TechCrunch Early Stage will feature:

  • Raising a first seed round
  • Landing a Series A
  • Raising early stage investment for a SaaS company (also consumer and other major categories)
  • Considering your first term sheet
  • Growing users fast
  • Recruiting a fabulous team
  • Building a tech stack (you won’t regret)

Between sessions, attendees can also meet the experts running the breakout sessions, as well as each other, via CrunchMatch, TechCrunch’s event networking platform that connects like-minded attendees and arranges a meeting time and place.

The TechCrunch team is already busy building an all-star line-up for experts for the breakout sessions and memorable interviews for the main stage. The response from the expert community around TechCrunch has been resoundingly clear. Everyone sees the need – the deeper education of early stage founders – and they love the TC Early Stage format – a single day, highly interactive event that brings together early stage founders with an unprecedented collection of experts from across the startup ecosystem.

Tickets for the San Francisco event are available now, so jump in and grab yours to secure your seat while they last.

Not an early-stage founder? That’s okay, too. Later-stage founders, investors or just general startup enthusiasts are welcome to attend. A limited number of “Innovator passes” are available for folks who are not early-stage founders.

Partners are also very welcome! The event has many sponsorship opportunities, including breakout sessions. Contact the sales team to learn more by filling out this form.

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Applications are open for Startup Battlefield at TechCrunch Disrupt Berlin 2019

Listen up founders — TechCrunch is on the lookout for game-changing, early-stage startups to feature at TechCrunch Disrupt Berlin‘s Startup Battlefield. This is your chance to launch on the famous TechCrunch stage and compete for the a $50,000 equity-free prize and the attention of top global investors and hundreds of media outlets from around the world. Apply here.

We’ve had some incredibly successful companies launch at our European-based event. N26, European fin-tech startup and Startup Battlefield EU 2016 alum, just raised a $170 million Series D round, bringing the company’s valuation up to a whopping $3.5 billion dollars. Startup Battlefield EU 2015 winner JukeDeck was just acquired by TikTok. The list of Startup Battlefield companies doesn’t stop there — Dropbox, GetAround, SirenCare, Fitbit, Mint.com, Vurb and more, and now is your chance to join this impressive group of companies. More than 857 participating companies have raised over $8.9 billion in funding, with 112 successful exits (IPOs or acquisitions). 

How does it work?

Apply. TechCrunch charges zero fees and takes no equity. Fill out your app here. Early-stage startups from any country and any vertical are eligible — hardware, AI/ML, biotech, insurtech, to name a few. All companies must have an MVP to demo to the review committee. TC editors review applications and select 15-20 of the highest potential startups to pitch onstage at Disrupt Berlin (December 11-12).

Train. Selected founders will get intensive training from the Startup Battlefield team to refine pitches and demos, sharpen business models and prepare for this international launch.

Pitch. Trained Startup Battlefield founders will pitch on the live-streamed main stage at Disrupt Berlin for six minutes, including a live demo, followed by a six-minute Q&A with our esteemed judges. Past judges have included Jeff Clavier (Uncork Capital), Eileen Burbidge (Passion Capital), Sonali De Rycker (Accel) and Roelof Botha (Sequoia Capital). After the semi-final round, 4-6 companies will pitch again on day two — same pitch, but with a new panel of judges. The judges will select the winner, who will get the $50,000 check, a feature post on TechCrunch, the Disrupt Cup and the attention of millions.

Disrupt. At the conference, participants get VIP treatment with access to private events, CrunchMatch: TechCrunch’s Investor Startup Matching Program, backstage access, complimentary exhibition space for all days of the conference, free subscriptions to Extra Crunch and a ticket to all future TechCrunch events.

Pitch on the most famous stage in tech. Apply now.