The Second Order Consequences Of The Uber, Lyft And Beyond Meat IPO’s

These public listings include some of the biggest names from Silicon Valley such as Pinterest, Uber, Lyft and several other so-called “unicorns.”.

With the IPO’s of Uber & Beyond Meat, an entirely new wave of young startups may soon be attacking a wide range of “non-tech” industries. Credit: Getty

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Over the last few months, the IPO window has opened in a significant way on Wall Street as a host of venture capital Startups have gone public on the New York Stock Exchange and NASDAQ.These public listings include some of the biggest names from Silicon Valley such as Pinterest, Uber, Lyft and several other so-called “unicorns.”

While this in itself is newsworthy, one aspect not being talked about enough is that several of the biggest IPO’s are not technology companies in the pure sense of being SaaS, Social Media or Enterprise Software. Instead, they are companies that are leveraging technology to innovate and disrupt traditional analog industries such as:

  • Transportation:Companies like Uber and Lyft pioneered ride-sharing as they compete with the taxi and automobile industries to redefine “mobility.”
  • Food:Beyond Meat and its “alternative protein” is trying to change how the world eats its hamburgers.
  • Retail:Luckin Coffee, which calls itself “China’s second largest and fastest-growing coffee network” is trying to beat Starbucks and Dunkin Donuts with a delivery-centric model that is UberEats meets coffee.
  • Home Entertainment: Sonos is redefining the home sound system with their smart wireless speakers as they compete against Sony, Bose, Samsung and a host of other home electronics companies.

Each of these IPO’s have been extremely successful in their offerings, generating significant demand on Wall Street. In just one day, Beyond Meat saw its value soar from $1.6 billion to $4.2 billion.Lyft, despite trading down since going public, is still valued near $20 billion. Meanwhile, Luckin is looking to raise over $500 million at north of a $4 billion valuation when it goes public in the coming days/weeks.

The part of the story that intrigues me as a brand marketer in these IPO’s will be the Second Order Consequences that come from them.If you aren’t familiar with the term, Benedict Evans of the venture firm Andreessen Horowitz touched upon the concept in a post about electric and autonomy in automobiles:

There are profound consequences beyond the industry itself. It’s useful, and perhaps more challenging, to think about second and third order consequences. What those consequences would be is much harder to predict: as the saying goes, it was easy to predict mass car ownership but hard to predict Wal-mart, and the broader consequences… will come in some very widely-spread industries, in complex interlocked ways. Still, we can at least point to where some of the changes might come. I can’t tell you what will happen – but I can suggest that something will happen, and probably something big.”

In this case, the Second Order Consequences will be the behavior around categories and industries that are just now feeling the impact of digital disruption.This behavior will come from two direct effects where the cause might just be the IPO of these digitally-enabled companies.

“The 2nd Order Consequences will be around industries that are just now feeling the impact of digital disruption.”

First, IPO’s have a cascading impact on how venture capital investors view certain categories – both positive and negative. The strong performance of an offering can have an impact on the entire category. This can lead to more investors being willing to consider a category as attractive from an investment standpoint, making it easier for early-stage companies to raise financing – or more difficult if a sector struggles like AdTech a few years ago. In this case, these IPO’s have the potential to show the financial visibility of certain non-technology categories that traditional venture investors may have shied away from in the past for any number of reasons.

Second, in addition to investors being more attracted to these industries, the IPO’s unleash founders that now have deep domain and subject matter expertise. These founders have seen first-hand what it takes to build high-growth companies. They also have the financial means thanks to profitable stock options to launch their own ideas or to back other founders. This exact scenario is what famously gave rise to the “PayPal Mafia,” which counts entrepreneurs and investors such as Elon Musk, Peter Thiel, and Reid Hoffman amongst its group. In today’s market, we now have a group of potential markets that have deep domain expertise in using digital to disrupt Blue Chips.

While the Second Order Consequences of these IPO’s are far from certain, the potential is one that Fortune 500 leaders need to consider. With investors and founders more comfortable in leveraging digital for traditionally analog industries, an entirely new wave of young startups may soon be attacking a wide range of industries in the very near future.

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10 innovative insurtech startups in London to work for in 2019

The fresh crop of insurtech startups is leveraging technological advancements by using blockchain, machine learning and other revolutionary …

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Nowadays, everyone needs insurance but not all get excited to get one due to policies that are difficult to comprehend, low levels of trust and more. To resolve these issues and make insurance user-friendly, several startups have mushroomed across the world. These startups are involved in developing easy to understand policies that are simple and user-friendly.

The fresh crop of insurtech startups is leveraging technological advancements by using blockchain, machine learning and other revolutionary technologies that are in the boom. These technologies are used to streamline their product lines and are passed on the customers to create an ecosystem of more efficient policies and services.

Talking about the UK, the insurtech industry has exploded recently and a number of startups have cropped up launching new products meant to make it easy for consumers. Today, we list some innovative London-based insurtech startups that are hiring at a fast rate as sourced from Dealroom.

Zego

Founders: Harry Franks, Sten Saar, Stuart Kelly

Funding: €1.4 million

Founded in 2016, Zego provides contemporary insurance solutions for enterprises. While insurance has not changed, it is the way we live and work that has changed, believes the company. Eventually, the traditional annual insurance policies do not keep up with the pace and don’t fit the modern enterprises. Eventually, Zego has come up with simpler, better and more flexible insurance policies that fit the modern world.

CloudMargin

Founders: Stuart McHardy

Funding: €9.1 million

CloudMargin was established in 2014 as the world’s first cloud-based collateral management workflow tool. The company has earned over 20 industry awards since its inception for best-in-class and innovative technology. It uses a SaaS model to help financial institutions across the world including retail banks, brokerage firms, asset management firms, investment banks and insurance companies.

Concirrus

Founders: Andrew Yeoman, Craig Hollingworth

Funding: €16.8 million

Concirrus takes a fresh approach to resolve the challenges faced by companies in the insurance industry since 2012. Its products access and interpret large sets of behaviour-based data sets and combine the same with historical claims information. This way, they can reveal behaviours that relate to claims. As a result, they can get new insights and rating factors that did not exist till date. This leads to the ability to improve loss ratios, drive down operating cost and better deploy risk capital.

Bought by Many

Founders: Guy Farley, Steven Mendel

Funding: €27 million

Founded in 2012, Bought By Many is an award-winning insurtech startup that creates better insurance products. The company analyses search data to identify key problems with existing insurance policies and products. The team at Bought By May aims at improving all aspects of buying insurance cover starting from creating products that fulfil unmet demand to pioneering online claims.

Wrisk

Founders: Darius Kumana, Niall Barton

Funding: €8.5 million

Wrisk founded in 2016 is a mission to modify the way people think and buy insurance. The company operates with the aim to make getting insurance easy for as many people as possible. The team at Wrisk has designed to deliver insurance cover that is personal and simple for users available in a single app.

Cytora

Founders: Aeneas Wiener, Andrzej Czapiewski, Joshua Wallace, Richard Hartley

Funding: €38 million

Cytora transforms underwriting commercial insurance since 2014. The API-enabled underwriting platform lets insurers underwrite more accurately and deliver fairer prices to users by reducing frictional costs. It is a trusted partner for global insurers, which is supported by builders and backed by leading venture capital firms.

Acturis

Founders: David McDonald, Theo Duchen

Acturis founded in 2000 is one of the highest rated and fastest growing companies in the UK. It is dedicated to delivering awesome solutions aimed at helping clients streamline their business with a more connected approach to insurance. Now, it remains to be a leading commercial e-trade product in the UK supporting many insurers and brokers.

PremFina

Founders: Bundeep Singh Rangar

Funding: €32.7 million

Founded in 2010, PremFina empowers brokers by letting them maximise control over their customer relationships. This is possible as the company provides them with their own-branded premium finance software and financing options. The SaaS solution offers white-label software to manage insurance policies.

Azur Underwriting

Founders: Graham Elliott

Funding: €16 million

Azur Underwriting was founded in 2016. It is a Managing Digital Agency that was launched in partnership with AIG, one of the largest and most respected insurance companies in the world. It focuses on high net worth insurance for clients. It emphasis continuous product development and deployment of new features.

Neos

Founders: Krystian Zajac, Matt Poll

Funding: €7.1 million

Established in 2016, Neos is a smart and new way to protect your home. The company gives users the latest technology to warn when there is a fire, water leak or burglary in their house. It uses smart home technology and lets users check their home from anywhere via its app.

Stay tuned to Silicon Canals for more updates in the tech startup world.

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Cashing out in Uber’s IPO: China, Russia and the Middle East

Previously, Uber’s former chief executive Travis Kalanick spoke publicly about the need to raise large sums quickly to buy market share and find local …

SAN FRANCISCO (Reuters) – In 2015, Uber Technologies Inc went on a fundraising spree in China, tapping venture capitalists and state-backed corporations for cash and connections to try and navigate the Chinese regulatory environment.

Logo of Uber is seen on a smartphone screen as a picture of stock exchange graph is displayed on a computer screen in this illustration picture, May 7, 2019. REUTERS/Kacper Pempel/Illustration

Uber ultimately pulled out of China, but the investors it gained in the country became part of a gallery of far-flung Uber financiers that include U.S. geopolitical rivals under intense regulatory scrutiny by the U.S. government.

Uber’s investors come in all stripes: state-owned banks and corporations from China and Russia; sovereign wealth funds from Qatar, Singapore and Saudi Arabia; a Russian businessman arrested last year on embezzlement charges; venture capital funds from across Europe and the United Arab Emirates; and Indian conglomerates and a Malaysian public pension fund.

Many of these investors will likely have made a bundle this week in Uber’s long-awaited initial public offering. The company on Thursday priced its shares at $45 a piece, raising $8.1 billion in the largest U.S. IPO since 2014, and will begin trading on the New York Stock Exchange Friday.

The ride-hailing company’s aggressive pursuit of capital and international presence from early on gave executives greater access to foreign investors compared to other U.S. startups. Uber was also seeking cash at a time of frenzied growth, with global investment into U.S. startups jumping 50 percent from 2013 to 2014, according to PitchBook Inc data.

That helped it raise nearly $14 billion in venture capital, making it the fourth best-funded startup globally. Uber has also raised more than $6 billion in debt, according to PitchBook.

Uber, more than almost any other Silicon Valley company, symbolizes the glut of foreign money that has helped fuel a tech investing frenzy.

But replicating its feat today would be an improbable task in the current regulatory climate, analysts and legal experts say.

In August, U.S. President Donald Trump signed a law to expand the powers of a government group known as the Committee on Foreign Investment in the United States (CFIUS), which is tasked with reviewing foreign investments for potential national security and competitive risks.

It gives CFIUS a mandate to probe transactions previously excluded from its purview, including attempts by foreigners to purchase minority stakes in U.S. startups. It must approve deals between U.S. companies employing sensitive technology and foreign investors with influence over the startup, such as a board seat.

CFIUS has so far approved only about 10 percent of the deals submitted under the new law, according to attorneys’ estimates.

“What happened (with Uber) in 2015, you certainly could not do that again,” said an attorney who advises clients on CFIUS cases and who spoke on condition of anonymity because of the sensitivity of the matter.

A spokesman for Uber declined to comment. Previously, Uber’s former chief executive Travis Kalanick spoke publicly about the need to raise large sums quickly to buy market share and find local investors who would help smooth the regulatory path in different countries.

CRACKING DOWN

The lion’s share of Uber’s fundraising was completed prior to the new CFIUS law, and there is no indication any of these investments were in any way unlawful. Chinese state-backed funds have invested in dozens of Silicon Valley companies, from drones to self-driving cars and cyber security.

But the challenge of a tech company replicating Uber’s fundraising today highlights just how much U.S. regulators have cracked down on foreign investment.

Attorneys who work on CFIUS cases say a business like Uber’s would be highly scrutinized if fundraising today. The company has a trove of personal data on customers, including who they are and where they go, which CFIUS has indicated is a national security matter.

“The Uber product is its users,” said the CFIUS attorney. “So when you look at it from that way you can see why CFIUS would be interested in it.”

That’s not to say it is impossible to raise money from overseas, and investors from ally countries have an easier time getting clearance for their tech investments.

But state-owned or state-backed investors from China and Russia in particular would be a no-go for CFIUS, say attorneys.

CFIUS earlier this year unwound the acquisition by a Chinese gaming company of dating app Grindr, calling its ownership a national security risk. Grindr collects personal information on its users and data on their whereabouts.

Uber’s autonomous driving business would also likely cause problems with CFIUS today. Autonomous driving is considered important technology for the military, making it a national security concern for CFIUS.

Uber last month raised $1 billion for its autonomous vehicle unit from a consortium of investors including Japan-based SoftBank Group Corp and Toyota Motor Corp. It remains to be seen if that investment receives CFIUS’ blessing.

Reporting by Heather Somerville, Editing by Rosalba O’Brien

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Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion

Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and …

Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and particularly Southeast Asia, a major focus. Despite the newcomers, a more established startup from Singapore has raised a large bowl of cash to go after regional expansion.

Founded in 2014, Grain specializes in clean food while it takes a different approach to Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.

It adopted a cloud kitchen model — utilizing unwanted real estate as kitchens, with delivery services for output — but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. A so-called ‘full stack’ model if you can stand the cliched tech phrase.

Finally, Grain is also profitable. The new round has it shooting for growth — more on that below — but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.

Now it is reaping the rewards of a model that keeps it in control of its product, unlike others that are complicated by a chain that includes the restaurant and a delivery person.

We previously wrote about Grain when it raised a $1.7 million Series A back in 2016 and today it announced a $10 million Series B which is led by Thailand’s Singha Ventures, the VC arm of the beer brand. A bevy of other investors took part, including Genesis Alternative Ventures, Sass Corp, K2 Global — run by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber among others — FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull — from Thai Express founder Ivan Lee — and Cento Ventures participated.

The round includes venture debt, as well as equity, and it is worth noting that the family office of the owners of The Coffee Bean & Tea Leaf — Sassoon Investment Corporation — was involved.

Grain covers individual food as well as buffets in Singapore

Three years is a long gap between the two deals — Openspace and Cento have even rebranded during the intervening period — and the ride has been an eventful one. During those years, Sung said the business had come close to running out of capital before it doubled down on the fundamentals before the precarious runway capital ran out.

In fact, he said, the company — which now has over 100 staff — was fully prepared to self-sustain.

“We didn’t think of raising a Series B,” he explained in an interview. “Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors.”

And, ladies and gentleman, the irony of that is that VCs very much like a business that can self-sustain — it shows a model is proven — and investing in a startup that doesn’t need capital can be attractive.

Ultimately, though, profitability is seen as sexy today — particularly in the meal space where countless U.S. startups has shuttered including Munchery and Sprig — but the focus meant that Grain had to shelve its expansion plans. It then went through soul-searching times in 2017 when a spoilt curry saw 20 customers get food poisoning.

Sung declined to comment directly on that incident, but he said that company today has developed the “infrastructure” to scale its business across the board, and that very much includes quality control.

Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]

Grain currently delivers “thousands” of meals per day in Singapore, its sole market, with eight-figures in sales per year, he said. Last year, growth was 200 percent, Sung continued, and now is the time to look overseas. With Singha, the Grain CEO said the company has “everything we need to launch in Bangkok.”

Thailand — which Malaysia-based rival Dahamakan picked for its first expansion — is the only new launch on the table, but Sung said that could change.

“If things move faster, we’ll expand to more cities, maybe one per year,” he said. “But we need to get our brand, our food and our service right first.”

One part of that may be securing better deals for raw ingredients and food from suppliers. Grain is expanding its ‘hub’ kitchens — outposts placed strategically around town to serve customers faster — and growing its fleet of trucks, which are retrofitted with warmers and chillers for deliveries to customers.

Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to bolt down the fundamentals and reduce burn rate is crucial in the event that things go awry. Just look to grocery startup Honestbee, also based in Singapore, for evidence of what happens when costs are allowed to pile up.

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