Airbnb raising a reported $850M at a $30B valuation

Airbnb raising a reported 0M at a B valuation

Tech unicorn and sharing economy darling Airbnb has informed the State of Delaware that it’s raising another heap of cash.

TechCrunch independently verified that Airbnb indicated in a 28 page filing on July 28th that it has plans to bring in additional late-stage capital. Almost a year after its last raise of $1.6 billion, the company is said to be adding $850 million to its coffers, according to information obtained by Equidate.

While $850 million is a ton of cash, it is not the largest round the company has raised. Last year, the company raised $1.5 billion in one of the largest VC rounds in history. The additional capital would only move Airbnb from the fifth to the forth most valuable tech unicorn at a potential valuation of $30 billion (tear).

Mega-rounds have been popular this year with Uber raising a $3.5 billion equity round from Saudi Arabia’s Public Investment Fund. After the round, Uber followed up with another $1.15 billion, this time in leveraged loans.

Even as a late-stage company, Airbnb has to be increasingly conscious of the capital it takes on. Too much equity dilutes early investors, while too much debt could put investors at risk if valuations were to suddenly tank. Debt as an asset class is paid off before equity.

Airbnb has notoriously taken actions to strategically prolong an IPO, bringing on a $1 billion credit faculty last year to support growth without diluting investors.

The company previously had an approximate valuation of $27 billion, so while the round is large, it doesn’t deviate from prior anti-dilution strategies. With respect to deals that Airbnb reportedly walked away from, the $850 million dollar deal is tame. The Wall Street Journal reported that Airbnb left money on the table, rejecting a deal that would have valued the company at $34 billion.

Also according to the WSJ, investors are concurrently planning to buy approximately $200 million in stock from employees in a buyback program. Stock buyback programs are particularly common among late-stage companies looking to remain private while offering some liquidity to early employees. Buyback programs are catered towards employees rather than venture investors and typically only apply to common stock.

Early investors would have to be bought off the company’s cap-table to remove any pressure from preferred stock holders. Sequoia led a $615,000 seed round in Airbnb back in 2009. According to PitchBook, Sequoia utilized its XII fund for that investment and all follow-on Airbnb investments. That fund was created all the way back in 2006.

This all comes amidst legal battles at home and abroad. Most recently, Airbnb sued the city of San Francisco over a law requiring Airbnb to verify that hosts had filed with the city before advertising their homes.

TechCrunch reached out to Airbnb and other parties involved and will update this post as information comes in.

Featured Image: Carl Court / Staff/Getty Images
Source: TechCrunch

What can happen when mortgage lenders become VCs

What can happen when mortgage lenders become VCs

Buying a home in Silicon Valley is no joke.

It’s difficult for tech workers and it’s even more difficult for those not touched by the modern gold rush. One mortgage originator, Opes Advisors, is incorporating restricted stock units (RSU) and private shares to make it easier for techies to move from incubator to nest egg. But what appears helpful to a population that sees housing prices moving out of reach could actually end up damaging the Bay Area economy if startup valuations take a turn south. 

Opes has developed an automated system for incorporating a number of data points, including RSUs and private shares, into determining key mortgage metrics like interest rates and down payments. A reasonable reaction to this might be to wonder how a mortgage lender values a mostly illiquid asset like a restricted stock unit, and ultimately forms a judgement of the borrower’s ability to repay.

How does this work?

Opes is counting RSUs as income, which in simple terms is a metric for earnings. The key lies in debt to income ratios of prospective borrowers. Because Opes can visualize RSUs as income or stock, it can effectively make a statement about how close a borrower is to being overwhelmed by debt.

“We have investors that allow Opes Advisors to look at RSU’s as both income and / or stock,” said Edgar Urrutia, Marketing Communications Manager for Opes Advisors. “Because of this we can help clients come up with mortgage solutions that are ideally suited to their individual needs.”

Commonly used back-end ratios calculate the portion of income required to pay monthly bills and would be pushed downward if stock was incorporated as income. Notably, restricted stock units are a key component of many startup compensation packages.

“The key metrics for underwriting have always been collateral, credit, and income,” said Robert Box, board member of the California Mortgage Association.

While Opes stresses the complexity and case-by-case nature of mortgage originations, any connection between illiquid private shares/RSUs and mortgage terms deepens the relationship between the historically volatile valuations of private startups and the recovering housing market.

Financial creativity addresses a growing market

By increasing the interdependence of two relatively disparate markets, the Bay Area is making itself more dependent on continued tech prosperity. In the post-2008 housing apocalypse, mortgage lenders are flexing their minds and their checkbooks in an effort to follow the money. In Silicon Valley, that translates to putting more young techies in houses.

Last month, Bloomberg reported that so-called “100 percent mortgages” were trending in California. These mortgages, which require little to no down payment, are being specially built for tech workers who have a substantial portion of their assets tied up in RSUs and don’t have the liquidity for a large down payment.

Indeed, 100 percent mortgages are not a new invention. Before the great recession, such generous terms were quite common. Many traditional mortgage lenders offered them without many drawbacks. Even before that, 100 percent mortgages have been used to put veterans in homes since the G.I. Bill, initiated in 1944. These mortgages are underwritten to different standards and don’t require a down payment. Credit Unions, USDA loans and other government agencies also offer various interpretations of the zero-down concept.

Today, while most government programs still exist, few traditional lenders still offer zero-down mortgages. Those that do have attached stipulations that de-risk the mortgages. For example, Barclays requires that borrowers involve family members in the process, and many banks require home buyers to hold a deposit in a separate account for a few years.

Tech companies have been jumping on the 100 percent mortgage bandwagon, helping banks market directly to tech workers who otherwise might abandon their current jobs for greener pastures and more affordable housing elsewhere.

Network analytics startup Kentik pulls in $23M Series B

Network analytics startup Kentik pulls in M Series B

In a beacon of hope for onlooking founders, Y Combinator reject and network analytics startup Kentik Technologies, locked down a $23 million Series B this morning.

Let’s be honest — most of us don’t know anything about network infrastructure. Fortunately for most of us, we can afford not to know. For internet service providers and companies making use of a large number of APIs, being able to quickly receive transparent network information means you have to refresh your Yelp, Box, and Pandora accounts fewer times to get what you need.

While it’s easy for us to unplug our routers at the first sign of trouble, most companies have complex server systems where advanced tactics like rebooting and unplugging are often not effective.

Kentik gives companies the infrastructure data they need to detect network attacks, log performance, and plan and engineer systems with a time machine feature to see inside the network at various points in history. Companies are handling close to a zettabyte (one trillion gigabytes) of information and Kentik wants to help customers break some of it quickly into actionable insights.

This logging feature is one of the biggest market differentiators for Kentik. Datadog, one of Kentik’s competitors, raised a $94.5 million Series D back in January of this year.

CEO and co-founder Avi Freedman noted that on a revenue basis, the company is moving past “single digit millions” and into “double digit territory.” Kentik has over 60 customers, and while 80 percent are domestic, the company is developing a strong presence in Western Europe.

The $23 million dollar round was led by Third Point Ventures, with participation by existing investors August Capital, Data Collective (DCVC), First Round Capital, and Engineering Capital, and new investors Glynn Capital and David Ulevitch.

Featured Image: xPACIFICA/Getty Images
Source: TechCrunch

Splice launches rent-to-own pricing model for software synths

Splice launches rent-to-own pricing model for software synths

One by one, most software has succumbed to the cloud; Designers have Adobe, gamers have Steam, programmers have GitHub and now musicians have Splice.

Splice is launching a rent-to-own pricing model for software synths. Starting today, musicians will be able to use Serum from X for Records, to their hearts content without any upfront fees. 

The company likes to call their service a rental, but it’s more like a mortgage. For $9.99 a month, users can use a desktop app to access the synth. Splice will let users try the synthesizer free for three days. After this time, they will be charged a “rental” fee that slowly eats away at the ownership cost. Over time, users can either opt to stop paying and move on to a new program, or fully payoff the software to own it outright. Splice isn’t charging any premium, and buyers won’t ever pay more than the $189 market price for the product.

Above all else, Splice is a community for people who love to make music. Launched in 2013 by Steve Martocci and Matt Aimonetti, the company first set out to produce software to help musicians collaborate in the cloud. Notably, Martosi was previously a co-founder at GroupMe that sold to Skype for $80 million back in 2011.

Martocci believes that music creation is experiencing a paradigm shift. The production process is becoming increasingly collaborative. Splice’s first product was a version control system. The platform supported the workflow process of a dedicated community that has rapidly shifted to new offerings from the company. The version control system remains free for most users and integrates directly with digital audio workstations like Ableton and FL Studio.

Last year, Splice launched Splice Sound, a subscription service for large sample libraries. Splice Sound lets users subscribe to a catalog of over a million sounds for $7.99 a month.

Once a subscriber, users have 100 credits that they can use to download samples. Although Splice Sound was technically the company’s first major revenue stream, it is also serving a social good by reducing the incentives to pirate.

Subscribers have what essentially amounts to a royalty free license over all downloaded sounds and can re-distribute them as long as they are not in their original form. Using a legal platform to download samples also means your sounds stay organized and not in a giant heaping pile of unorganized files topped with sketch names and a side of guilt.

Since launch, the company has been growing 20 percent month over month with 500,000 unpaid users and 50,000 paid subscribers. Splice has raised $7.25 million over seed and Series A rounds led by Union Square Ventures and True Ventures respectively.

Source: TechCrunch

Tesla misses Q2 earnings, delivers 14,402 vehicles

Tesla misses Q2 earnings, delivers 14,402 vehicles

Tesla news has been dominating Silicon Valley over the last few weeks and today’s earnings report released after the close of the market hasn’t shaken fundamental views about the company.

The energy company born out of an automobile company reported non-GAAP Q2 revenue of $1.56 billion up from last year’s Q2 revenue of $1.2 billion. The company came close but ultimately missed analyst estimates of $1.6 billion.

Tesla closed down 0.62 percent today at $225.79. After the news was released, Tesla shares moved up almost instantly in after-hours trading after the news dropped but have been fluctuating up and down by 2 percent since.

Wall Street analysts expected an adjusted net loss of $52 cents a share but found themselves with a worse than expected loss of $1.06 per share.

Tesla delivered 14,402 new vehicles consisting of 9,764 Model S and 4,638 Model X in Q2, slightly ahead of last month’s estimates.

Tesla had originally aimed to deliver 80,000 vehicles by the end of the year. It is growing tougher by the day for the company to hit that goal. On the bright side, the company noted that almost half of Q2 production occurred in the final four weeks of the quarter.

Investors have expressed angst as Tesla has moved forward on plans to acquire SolarCity and pivot into a vertically integrated energy and transportation company.

Developing.

Source: TechCrunch

Etsy shows signs of life in Q2 earnings with merchant sales hitting $669.7 million

Etsy shows signs of life in Q2 earnings with merchant sales hitting 9.7 million

If you’re an Etsy investor, you’re somewhere between ecstatic and off the rails after two days of gains totaling over 23 percent. Fortunately for investors, the fun isn’t stopping.

The e-commerce site specializing in handmade goods posted its second quarter earnings just after the bell today. Investors reacted by trading shares in the company up in after-hours trading.  This comes in the wake of a “buy” rating issued by Citigroup that sparked the greatest spike in value for the company since July 2015.

The company posted revenue of $85.3 million, above analyst forecasts of $80.6 million. Revenue for the same period last year was $64.1 million.

Gross merchandise sales (GMS) for Etsy came in at $669.7 million. This time last year, Etsy was running $546.2 million in goods. This quarter’s GMS is up 22.6 percent compared to 2015, which doesn’t match the 24.6 percent gains the company saw between Q2 2014 and Q2 2015.

“During the second quarter, we expanded our global community to include approximately 1.7 million active sellers and 26.1 million active buyers,” said Etsy CEO, Chad Dickerson, in a statement.

Etsy stock has struggled to find a foothold since the company IPOed back in April of 2015. Etsy ended trading today at $12.71, below its IPO price of $16 per share, despite a strong week.

Amazon is on the heels of Etsy with its own Handmade store. Etsy has struggled with its payment processor WorldPay over the last month. Millions of transactions ended up being delayed for buyers and merchants in a saga that went on for over a week. The issues don’t seem to have had a significant negative effect on gross merchandise sales.

Source: TechCrunch

Medium nabs Embedly to add to its list of publisher tools

Medium nabs Embedly to add to its list of publisher tools

Medium announced today that it has acquired Embed.ly to support publishers with backend APIs for embedding content.

Embed.ly supports writers by providing analytics on content and customized recommendations and promotions. Their APIs are currently used by an all-star list of publishers including The New York Times, NPR, and The Atlantic. Companies like Reddit and Airbnb also use the service.

At this point, the company is servicing 500 million API requests per month. The team will continue to operate independently of Medium and is currently pursuing innovations in embedding native video.

The analytics features of Embed.ly let publishers see who is clicking on what, and the number of plays and minutes watched for video.

“We want publishers to understand why content is doing well,” said Kate Mason, head of communications for Medium.

Medium is doubling down on publisher tools. Earlier this year the company acquired Superfeedr, a company that produces APIs to help produce feeds quickly and push them to the right places.

As part of its services, Medium rolled out a beta monetization program allowing users to promote stories as an advertising unit. Additionally, the company has a membership program that enables content creators to lock some content behind a paywall.

At a greater level, Embed.ly has consistently strived to standardize embedded content to make life easier for both content creators and content consumers.

“The problem with embeded content is that there are no good standards,” said Sean Creeley, co-founder of Embed.ly. “We want what appears amazing on Medium to look great on WordPress VIP and other platforms. Medium gives us the ability and platform to create really great open standards around embeds.”

To date, the company has raised $1.02 million in both equity and debt financing from Y Combinator, SV Angel, Lowercase Capital, and others. According to PitchBook, the company’s most recent valuation was $3.9 million in 2011.

Source: TechCrunch

Snapchat lets the people have Geostickers

Snapchat lets the people have Geostickers

Everyone loves stickers. Snapchat must be on to us because the company just launched Geostickers, a new feature that lets users send city specific stickers in snaps and messages.

There are 15 stickers available in SanFrancisco as of now and we expect more to come.

The adorable caricatures delightfully mock tech culture, jab at rising rents, and highlight local landmarks.

The feature is launching in Los Angeles, New York City, San Francisco, Washington DC, Honolulu, London, Sydney, São Paulo, Paris, and Riyadh.

Source: TechCrunch

Online used car dealer Vroom leverages virtual reality to bring the showroom to you

Online used car dealer Vroom leverages virtual reality to bring the showroom to you

It would be a shame if we were able to build autonomous cars before we could simplify car buying.

Today, buying a used car means booking multiple weekends to test drive and examine every car at every dealership within a 50 mile radius. We fight through every other lemming on the nine to five grind who only had their weekend to hunt for their DeLorean every time we go out. Eventually we settle, we always do. Because no matter how cool our new ride is, we leave the dealership ready to drive the shiny vehicle through the sales office after painful negotiations and a trail of documents rivaling those of an IPO road show.

Online used car dealer Vroom wants to use virtual reality to put a smile on the face of car buyers while supporting their search for the perfect car.

The version launching today will cover 30 models of sports cars. By the end of the year, 300 models will be available for home inspection. While it’s true that over a million households now have access to VR headsets, Vroom will be opening popups at malls to let users who don’t have access to the expensive technology experience the virtual showroom.

From within the showroom, users can inspect vehicles and learn about models. Beyond cool features like hearing the exact corresponding engine sounds of each model, users can visualize important components including blind-spots review mirrors.

All vehicle models have been rendered from actual cars sold on Vroom. The company spends 48 hours going through cars to recondition them before sale

Eventually Vroom plans to use 3D modeling to allow customers to visualize their cars in in different colors with different packages. Individual automakers have used VR for some time, but Vroom believes their strongest asset is the ability to compare cars in one place. The company is developing a virtual garage to assist customers in the purchasing process.

We tried their new system on an HTC Vive and it’s nifty. The version rolling out today is a decent preview of what’s to come, but the coolest version by far is yet to be released. Future versions will not only include additional cars, but additional interactivity. The version I tested let me bend down and walk around vehicles. I could examine cars close up and far away, open doors, and inspect specific components inside and outside of the vehicles. The higher resolution models were complemented with appropriate lighting and paint shine. The best way to describe it would be like going from Gran Turismo 4 to Gran Turismo 5.

Of course virtual reality is more of a pleasant distraction than a true solution to the stresses of car buying. While customers will be able to check out within the virtual showroom, they will only be able to buy cars outright. To address the loan market, Vroom will need to digitize and standardize documents and offer a solution for docusignatues. The company is quick to point out that it’s their next priority to service this market of car-buyers. The base VR experience will also be coming to Google Cardboard in Q4.

Source: TechCrunch

Tesla moves forward on $2.6B SolarCity acquisition

Tesla moves forward on .6B SolarCity acquisition

Early this morning, Tesla announced that it had come to an agreement to acquire SolarCity in a $2.6 billion all stock transaction. Tesla first announced it was interested in acquiring the solar power company back in June.

In the wake of the announcement, both Tesla and SolarCity stock is being traded down. The original anticipated rage for the sale was $26.50 to $28.50 per share. Rather, the deal will be moving forward at $25.37 per share. This is a loss of over $200 million dollars in SolarCity value over the last month based on shares of the company outstanding.

When the announcement was first made back in June, Tesla stock tumbled while SolarCity was bid up. Unfortunately for SolarCity, investors didn’t get the same treatment this time. SolarCity lowered its guidance in sync with the announcement this morning, blaming lower than expected demand for its solar technology.

Both Tesla and SolarCity filed Form 8-K’s notifying investors the the companies had reached an agreement. SolarCity shareholders will receive 0.110 common shares per SolarCity share rather than the originally proposed 0.122 to 0.131. Members of both boards, including Musk, have recused themselves from voting on the transaction because of conflicts of interest.

Tesla expects the transaction to produce $150 million in cost synergies in the year after the deal closes. The company wants to kick-back some of these synergies to consumers and make clean energy more accessible. Many of the synergies are textbook: combined customers and streamlined marketing.  However, because Tesla has a retail network of its own, it will be able to sell direct-to-consumer right from its stores at the time a car is purchased.

Tesla is now on the second part of its two-part master plan. The Tesla SolarCity acquisition represents the completion of the final goal in Musk’s first master plan. The decade old plan called on Tesla to “provide zero emission electric power generation options.” The new plan announced last month calls on Tesla to “Create stunning solar roofs with seamlessly integrated battery storage.”

To create a truly vertically integrated energy company, Musk needs to own both power generation and the storage of energy produced. In time for its acquisition of SolarCity, Tesla opened its $5 billion Gigafactory earlier this week. At full efficiency, the factory will reduce lithium ion battery costs by 30 percent by 2020. To charge all these batteries, Tesla needs to get inside the solar market lickety–split if it wants full control of the space.

To realize the full value that this acquisition could bring to Tesla shareholders, it is important to view the transaction in the context of Tesla’s future plans. Musk wants to push Tesla farther into the commercial space with electric solutions for public mass transit and cargo transport. Battery technology will not be limited to Powerwall and Powerpack in the future.

To put Tesla’s hunger for batteries in perspective, the average car today can attain 25 miles-per-gallon while a semi in gasoline equivalent comes out around 5 miles-per-gallon. This presents both an engineering and economic challenge. Not only would Tesla need to supply enough batteries to close the gap, it would need to simultaneously reduce vehicle charging downtime while increasing battery output. Every minute spent charging extends delivery times. Every battery in a trailer results in fewer goods being transported.

Tesla has its work cut out over the next decade. Investors are angsty about the acquisition because it means more uncertainty. Musk’s mission depends on success in not one but many areas of research and development. Autonomous driving technology could remove the driver all together opening up cab space for batteries. Reductions in the cost of batteries could open up Tesla’s technology to emerging markets.

If Musk can catch the clean energy conversion at just the right time, Tesla will make a fortune that will bankroll other projects. Unfortunately, Breakout Labs isn’t funding Tesla right now and technical execution risk will reduce the value of Tesla in the short term on public markets.

The transaction is expected to close in Q4 2016 after shareholders vote at their respective meetings.

Featured Image: Joe Raedle / Staff/Getty Images
Source: TechCrunch