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The firm’s guidance to  startups is to assess their runway (as future financing might become challenging), reassess sales forecasts, raise return on investment for marketing spend, and assess headcount and capital spending. All business fundamentals need to be looked at once again.

The most striking statement in the post is: “In downturns, revenue and cash levels always fall faster than expenses.”

For startups dependent on venture cash to grow, belt tightening to extend the runway–provided you are not too late and raising this quarter–might make sense. In Crunchbase data, we have not yet seen funding slow down. However, funding rounds announced recently were closed in the past couple of months, with conversations and diligence stretching back to a very different funding climate.

In October 2008 Sequoia’s “RIP Good Times” described by TechCrunch’s Michael Arrington as a ” the message was dire with “cuts are a must” and “Get Real or Go Home”.

In the 2008 RIP report, Sequoia claimed the following:

New Realities

• $15 million raised at $100 million post is gone
• Series B/C will be smaller
• Customer uptake will be slower
• Cuts are a must

Need to become cash flow positive

• Increased challenges
• M&A will decrease
• Prices will decrease
• Acquiring entities will favor profitable companies
• IPOs will continue to decrease and take longer

Saying “cuts are a must” might be interpreted as sounding cruel.

In the middle of a health crisis, where people in nonessential industries are mandated to stay home, and with heavy job losses predicted for the travel, hotel and retail industries, getting a new job will be more difficult.

Some jobs are opening up, however. just announced it is hiring to up to 100,000 new full- and part-time workers in delivery and fulfillment centers to address the crisis.

Investors are aware that in the last downturn, new companies–formed in 2008 and its aftermath in 2009–have become significant technology companies. Those companies include , , , , , and . Investors will continue seeking those opportunities, having raised unprecedented funds themselves with no shortage of money to invest. And with valuations likely to be capped, this might just be a good time to invest.

Sequoia signs off with: “Stay healthy, keep your company healthy, and put a dent in the world.”

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The latest round, which was led by , brings Overhaul’s total funding to $27.5 million. Overhaul last raised money in May 2019, when it landed $7 million in a round led by The firm also led the company’s $4.5 million seed round in December 2017, according to Crunchbase.

Overhaul detects noncompliance in supply chains and automatically fixes the issues so companies don’t experience supply chain disruptions. Companies in the pharmaceutical and food industries use Overhaul when they move freight around the world, according to a statement from the company.

“ easily demonstrates how world-class supply chain management is a powerful advantage,” Edison Partners general partner Ryan Ziegler said in a statement. “Today, true supply chain visibility is non-existent for most global businesses. Overhaul’s device and data-agnostic solution approach generates actionable oversight and real-time data global companies need to gain a competitive advantage, with the ability to mitigate risk and significantly reduce costs.”

The company plans to use the new funding to grow its product offerings, hire for its teams in North America and Ireland (its European headquarters), and expand into new markets. Overhaul said in the statement that it “tripled in size” last year and is expecting to repeat that same growth this year.

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KP19, the 19th fund for the firm, will focus on early-stage investments in consumer, enterprise, financial technology, health care and hartech companies, according to a statement from Kleiner Perkins.

KPCB, which has backed companies like and , said it would go back to focusing on early-stage investments when it announced the closing of its last fund last year.

About 35 percent of its KP18 investments were seed series, 53 percent were Series A rounds and 12 percent were Series B. Enterprise startups made up 43 percent of KP18’s investments, with the firm investing in 15 enterprise companies. Deep tech took second place with 24 percent of KP18’s investments, or eight companies.

KP19 will be “more of the same,” according to the firm.

“It’s the same team, with the same strategy, investing in the same sectors at the earliest stages,” KPCB said in a statement.

Additionally, Annie Case, Monica Desai Weiss and Josh Coyne were promoted to principals at the firm. Case will focus on consumer and health care, Weiss will lead investments in fintech and consumer, and Coyne will focus on enterprise and fintech.

, and are the general partners listed on for KP19. , who was listed as a GP on KP18, closed last year, is not listed as a general partner on this latest fund.

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, which makes video conferencing software, than it did in all of 2019, according to . Sales of ’ popular hand sanitizers from fears of coronavirus.

And as it turns out, startups that disinfect items with UV light are also seeing a boost in sales since the outbreak–and are hustling to keep up with demand as a result.

, a company that makes devices to clean phones and other items with UV light, has seen 1,000 percent growth year over year in the past week, according to PhoneSoap co-founder and president Dan Barnes. The company, which is based in Lehi, Utah, and appeared on the show Shark Tank, isn’t into backorders yet, but it will be shortly, Barnes said.

“We’re seeing significant interest in it, and it makes sense to us,” Barnes said in an interview with Crunchbase News.

In about mid-January, PhoneSoap executives began to notice an uptick in interest from overseas on both their website and . But the surge in sales really came after United States government officials and the started speaking out more about the outbreak and threat to the U.S. The CDC doesn’t single out cellphones as items that need to be cleaned to prevent coronavirus, but it recommends frequent hand-washing and routine disinfection of frequently touched areas, like countertops and doorknobs.

“Specifically, mobile device hygiene was a major and fast-growing concern even before coronavirus came on the scene,” Taylor Mann, CEO of , said in an interview. The COVID-19 outbreak has only added fuel to that fire, he added.

CleanSlate UV, which is based in Toronto and has roughly $2 million in funding, makes devices that sanitize items with UV light. In hospitals, staff usually use CleanSlate UV for items like stethoscopes, badges and phones, and visitors often use it for their phones.

Reality check

To put it mildly, phones are nasty. In fact, scientists at the found that cellphones carry 10 times more bacteria than most toilet seats.

“They’re essentially mobile petri dishes that live in your pockets,” Mann said. PhoneSoap refers to cell phones as a “third hand that you never wash” because of how frequently they are touched and how dirty they get.

It isn’t known how effective UV light is at killing the COVID-19 virus because it’s a novel strain, said both Mann and PhoneSoap CEO and co-founder Wesley LaPorte in separate interviews.

“What we can say is UV light has been proven to be effective against previous strains of coronavirus,” Mann said. “We just don’t know how effective it is against this specific strain.”

Chemical disinfectants work to kill bacteria and viruses, but there’s often user error when cleaning with chemicals, LaPorte said. Users likely miss spots, or put their phone in their pocket immediately after wiping it so it doesn’t dry completely–something that’s critical to disinfect the item. PhoneSoap’s UV light does a 360-degree clean.

It’s been known since the 1870s that UV light has an “inhibiting effect” on bacteria, and physician Niels Ryberg Finsen won the Nobel Prize for this work fighting lupus vulgaris with UV light, according to The Nobel Prize’s . UV sanitizers use UV-C light, which has a shorter wavelength and can kill bacteria and viruses.

About 90 percent of CleanSlate UV’s customer base is in health care, Mann said, and since the company introduced its product in early 2018, it’s been doubling deployment across hospitals every six months. CleanSlate UV is now in more than 80 hospitals in the United States and Canada, and also has a presence in Australia, Hong Kong and Europe.

But since the outbreak of coronavirus, CleanSlate has received inquiries from companies spanning industries like manufacturing and education. The company has quoted more units in the past month than in the previous six months combined, Mann said, and just shipped a “big batch” to Hong Kong specifically in response to the concerns around coronavirus.

“It’s not just hospitals that are concerned about mobile device hygiene, that would be the biggest shift here,” he said.

The CleanSlate UV team is now looking at how to ramp up production to meet demand.

Said Mann, “We knew even before this crisis hit that this would be a hot topic in health care and beyond health care … everyone on our team is incredibly passionate about this problem.

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The largest growth year over year in funding includes meat alternatives, indoor farming, robotic food delivery and cloud kitchens. Investment in startups operating what the report terms upstream–closer to the farmer and before  retail–increased 1.3 percent year over year, accelerating in the second half with the highest numbers for H2 on record. Alternative proteins ( raised $300 million, , $90 million and , $75 million) and vertical farming ( raised $100 million, , $100 million and , $82 million) drove much of this. The whole sector showed 250 percent growth in the last five years.

Closer to retail and grouped as downstream in the report are eGrocers, restaurants, delivery and home cooking, which saw an overall decline of 7.6 percent year over year. The largest sector decline is food delivery by 56 percent year over year.

Agritech and foodtech experienced growth in investments in regions outside of Asia and North America. According to Louisa Burwood-Taylor head of media and research at AgFunder “Europe continued its trend for growth across VC industries posting a 94 percent increase in agri-foodtech funding, while Latin America had a breakout year, closing $1.4 billion in agri-foodtech funding across 40% more deals than in 2018; that’s more than the entire LatAm VC industry in 2017. Africa also more than doubled its funding in the space.”

Notable investors in the sector cited by the report include venture investor , corporate investors and , and late-stage private equity investors , , and .

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The fresh cash will be used to invest in research and development and scale the business, Molekule co-founder Jaya Rao said in an interview with Crunchbase News.

While the Molekule air purifiers have only been on the market for a couple years, the company has essentially been in the works for two decades, according to Rao.

“We’ve been working in some way shape or form on this company for more than 20 years,” Rao said. “Either academic research, or boots on the ground creating the product.”

Most air purifiers on the market are really air filters, Rao said, because they catch particles. Molekule’s devices, on the other hand, use photo electrochemical oxidation to actually destroy pollutants.

The air purifiers have grown in popularity and developed somewhat of a following–although it’s also received less-than-favorable scores from reviewers like and .

Rao declined to share any revenue metrics, but did say the company has strong repeat customers and has seen a 3x increase in its year-over-year filter subscription revenue since the company started selling products.

Molekule currently sells an air purifier for $799 and an “Air Mini” for $399. was Molekule’s first step out of the direct-to-consumer space, besides a couple of collaborations, like with the and New York’s . But with the new funding, the company is “looking at how can we be more available to consumers in the channels that they’re most interested in,” Rao said.

The new funding brings Molekule’s total funding to , according to Crunchbase. Molekule raised its $10.1 million , led by , in July 2017. It raised its $25 million, which was led by , in November 2018.

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Over the years, Iguodala’s funded over 40 companies including , , and . As an investor and a board member, he helped the company grow and go public in April 2019 with a billion-dollar IPO.

In recent weeks, Iguodala has taken on new roles in both the basketball and startup worlds. He recently joined the with . And on Feb. 5, he was for Catalyst Fund, the venture capital arm of Catalyst’s focus will be on early-stage investments in companies founded by African American, Latinx and female entrepreneurs.

For ’ Head of Funds and Managing Director , Iguodala’s investment experience and network, combined with his “his passion for supporting entrepreneurs from diverse backgrounds,” is a perfect fit for the firm’s Catalyst Fund.

Since its formation in 2011, the fund has backed .

Catalyst Fund Principal (a Muslim of Indian descent) told me the fund gives her and Iguodala a chance to help back founders who might not otherwise have access to capital and networks.

“We both come from unconventional backgrounds, and we want to be able to help founders who also come from unconventional backgrounds,” she told me. “We both truly believe talent and brilliance is equally distributed amongst individuals and that we can help get them the right level of resources.”

In a telephone interview, Crunchbase News caught up with Iguodala to hear more in-depth about his and Husain’s plans for the fund, and just how the NBA star got into startup investing.

CB News: How did you get into startup investing in the first place?

Iguodala: About 8 or 9 years ago, I started seeing a large return in the tech sector in the public markets. From there, I got interested and wanted to dive deeper into learning how I could invest before companies hit the public markets. I started seeing the growth in the private space, and that eventually led to where I am now.

Things I look at are: market size, does a company have a competitive advantage, can it fight off tech giants like , and ? I also look at founders and their vision–where they see themselves in 10 years. I ask myself, “How can I personally add value to a company, not just from a capital standpoint?”

CB News: What’s the most interesting part about investing in startups and helping them grow?

Iguodala: For Fatima and I, it’s really exciting. Look at technology, and how it’s changed our lives from everything to scheduling a flight or getting my son’s basketball game schedule. Everything is on my phone these days, and how we move in general is so much different than just say, eight years ago. Technology is doing so much to make our lives more efficient. So when I’m looking at that, this is an exciting time to be in this space. Not only for capital gains, but what you’re adding by having involvement in people’s day-to-day lives over the next 20, 30 or 40 years.

CB News: How does being a pro basketball player help you when it comes to making startup investments?

Iguodala: I just joined a new team, , in basketball, and one here at Catalyst. With the Heat, I was hyper focused my first couple of times on the court. While every team runs the same plays, each one has different terminologies for them. So I’ve been watching and learning on the fly, and having to figure out things fast.

It’s similar in the tech space. There’s different terminology and different acronyms for different industries and teams. Different companies have different vibes, some are more laid back and others are more buttoned-up. I have had to learn how to add value to different cultures within companies in the same way as I have with different teams.

There’s lots of egos on both sides. I thought it was just in the sports world, but I see it too in tech in other VCs, entrepreneurs or the best engineers. So I’ve had to learn how to deal with different personalities in both sports and investing. I’ve also learned to adapt and learn about different industries, from consumer to enterprise brands for example.

CB News: As someone with an unconventional “non-traditional VC” background, what skills or perspective do you have that make you a better investor and startup consultant than someone who may not have this diverse background?

Iguodala: I’m really excited because what we’re doing with the Catalyst Fund and what we represent is investing in underrepresented communities, and determining how we can put them in our ecosystem and help them grow in a responsible and sustainable way.

Being a minority, you have to have a grander scope in terms of the people you deal with on a daily basis. Many of us have that back against the wall mentality, and a passion and grit.

Every morning I wake up with a chip on my shoulder, and know I have to wake up with that passion and juice to go and prove myself. I’ve learned that I have to sacrifice, work hard and step up when it’s my turn. I’m ready to help other unconventional founders, and founders who are underrepresented in funding in the tech space, in their own journey.

Reporter’s note: For more on NBA players who are also startup investors, check out this article I wrote last summer here.

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Founded by entrepreneurs and , a duo of cousins who are also mothers, the startup today announced it closed its seed round of $900,000, adding to an early investment of $700,000. It has raised a total of $1.6 million to date.

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While TOP describes itself as a “social impact” startup, its lead investor in today’s financing announcement is a for-profit fund spun out of : . Per the press release, the firm led the round in support of Sullivan who is an alumnus of UMass Amherst. Angel investors also participated in the round, however TOP declined to disclose details.

In its announcement, TOP said it plans to use the seed capital to expand its presence in grocery stores and retail locations nationwide. It also plans to work with and its own e-commerce platform. It was refreshing to hear TOP mention product presence as a priority, especially with what feels like a flurry of direct-to-consumer (DTC) offerings everywhere.

When I asked TOP for more information, co-founder Sullivan nodded to growth in the company’s DTC channel, so that explains the focus on distributing into retail in 2020.

Let’s get into how TOP plans to differentiate the other store staple brands for tampons and pads.

TOP estimates that almost “20 billion pads and tampons end up in landfills each year and can take centuries to biodegrade.” Sullivan and her team want to change that by offering plant-based tampons.

The company sources its organic cotton from Turkey, India and Tanzania. Meanwhile, its factory in Barcelona sources power from running water, and TOP claims that everyone “from the farmer to the factory worker is paid a fair wage.” The applicator is plant-based, it claims. TOP also said all products have a seal made of cotton (not plastic) and organic certification from ICEA, the Ethical and Environmental Certification Institute.

TOP’s products are also solid in biodegradable boxes.

The company charges $7 to $8.50 per box for 16 tampons, or 20 pads. From a price-point perspective, traditional tampon brands like Tampax sell for around $7, and, a venture-backed startup that has , sells a box of tampons for around $10.

It’s noteworthy that Lola wants to destigmatize period products, but has other lines as well around sexual health and menstrual cramps. Like TOP, Lola started with tampons as a flagship offering and has since attracted investors like and .

Unlike Lola, however, TOP points to its focus on a younger demographic as a key differentiator.

“A key part of our purpose is giving back, with a focus on middle and high school students,” Sullivan told Crunchbase News. “When we heard one in five girls in the U.S. have missed school because they didn’t have access to period products, we decided to do something about it.” She added that the company is partnering with schools and nonprofits to make access easier.

TOP declined to share specific metrics around growth or volume of products sold thus far, beyond “ high triple-digit growth in our business.”

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-backed has reportedly shut down operations, according to an by Protocol’s Biz Carson.

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Brandless, a direct-to-consumer startup focused on food, beauty and personal care products, had announced it had raised a total of $292.5 million since its inception in 2016, according to .

led its last funding round, , which valued the company at $500 million, according to Crunchbase. At that time, our former editor-in-chief Alex Wilhelm pointed out the fact that it was “a huge check at a large cost in equity terms.” But it turns out that SoftBank had only provided about $100 million upfront with a commitment to “fund around another $120 million if certain milestones were met. That final tranche never came,” according to Axios.

led its $35 million Series B in July 2017, a round that also included participation from NBA player , , and , among others.

Back in 2017, Crunchbase News sat down with  , co-founder and CEO of  to talk about how the company wanted to eliminate the inefficiency of the brand tax while changing the way people shop and live.

Background

It was bound to happen eventually. With all its misteps over the past couple of years, SoftBank was bound to have a portfolio company shut down.

The news that Brandless has shuttered is not entirely shocking, considering that last June, it got a new CEO amidst “turmoil” within the company, according to .

Looks like Brandless’ vision of $3 home goods just couldn’t keep up with the steep competition from rivals like . In fact, soon after it got that big cash infusion from SoftBank, the startup’s strategy seemed to change. According to TechCrunch’s Connie Laizos, in January 2019, the “company added baby and pet products to its stable of offerings, some of them at a ”

In a statement to , Brandless blamed a “fiercely competitive” retail market that was “unsustainable” for its business.

The news is the latest in a string of bad publicity for SoftBank. In January, we reported on how SoftBank-backed Colombian delivery unicorn had been hit with a trade secrets lawsuit. Also in January, we covered how two SoftBank-funded startups were in the news for either confirmed or rumored layoffs: Rappi had , according to Axios. And published an article that discount lodging provider reportedly was “firing thousands of staff across China and India.”

That followed pizza-making robot startup , also backed by SoftBank, laying off  53 percent of its employees.

SoftBank, a Japanese investment conglomerate, has been accused of overinflating valuations with its fat checks, and it’s not ending well for many companies. But the practice of investing too much, perhaps too soon, may be catching up with SoftBank. Earlier this year, that SoftBank is cutting its ties with startup investments, even after signing term sheets.

In fact, SoftBank’s heavy-handed check-writing is leading investors and startups alike to rethink sky-high valuations in favor of a path to profitability.

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IPO last week was an important moment for the unicorn era: Could a company with slowing growth and persistently sharp losses defend its private-market value or IPO price? The answer so far is no and no.

With Uber’s equity off 8.5 percent as of the time of writing ($38.02 per share, or a value of $63.78 billion), the firm is now worth less than it was as a private company, let alone the $45 per share at which it went public. It’s a disappointing result, and not one that can be fully blamed on market conditions.

Let’s make two points this morning. First, let’s remind ourselves about some common wisdom from Silicon Valley. Following, let’s kick the knees out from under some historical revisionism that is being bandied about in defense of Uber. You know, that old “Amazon lost money while going public and did fine, Facebook’s shares fell after its IPO and it did fine” argument.

If This, Then That

Cover young, technology-related, growth-oriented companies long enough and you’ll hear a few saws trotted out as conversation blockers. The first for us today is the old chestnut that “great companies can always raise.” It isn’t true, but it is meant to indicate that the strongest startups won’t ever run out of capital because private investors will always be able to see past market conditions to provide cash to the most promising outfits.

Again, false, but what is true is that companies perceived to be the hottest things around can always raise. That’s a related, but notably different point.

Corollary to the first concept is one that’s even more interesting: “Great companies can always go public.” I hear this mostly when I ask a private-market investor about things like IPO windows. It’s a defensive response, but one that I think is sincerely held.

And then there’s Uber which made the case for the first point being true during its period of hyper-growth. And it �������Dz�����made the second point, managing a large IPO during a challenging week of macro and market fear. But then its shares fell sharply on their first day, capping off that disappointment with more losses today. So Uber has shown that companies can go public during periods of turmoil provided that there is enough demand for their shares (this is nigh-tautology but hear me out), but it has also shown that companies which get over the IPO-hump on brand more than fundamentals can get spat back up like a piece of gristle.

Are we being too harsh to Uber? Some would argue yes. After all, some of tech’s largest players today, firms like Facebook and Alphabet, struggled after they went public. Couldn’t Uber be more of the same?

(Update: Uber itself made the point this morning, “Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since.”)

No

No. For a few reasons, which we’ll explore now.

But before, let’s make some allowances: The market is fickle and impossible to predict. Uber’s result likely would have been better had the market not decided it wanted to get sick all over itself during its early trading days. And Uber could turn around its business, find efficient sources of growth, cut its losses, and drive its shares out of the ditch (now off 9.12 percent as of the time of writing this paragraph).

If that happens, however, the examples of the Facebook and Alphabet IPOs as historical precedent for the Uber turnaround. The companies are not comparable. For a few reasons, which we detail below:

• $ operating profit, trailing 12 months at IPO: $423.8 million.
• $ operating profit, trailing 12 months at IPO: $1.75 billion.
• $ operating profit, trailing 12 months at IPO: -$3.03 billion.

And in those metrics we’ve done Uber a favor by not counting its preliminary Q1 2019 results. Instead, we used its fully-accounted 2018 quarters which sport a smaller aggregate operating loss.

As you can see, there is a difference between Alphabet and Facebook, and Uber. You can repeat the experiment with growth rates as well, which I recommend that you do (S-1/As are linked in the companies’ ticker symbols).

But what you see above are two companies that were hugely profitable before they went public. And even then they struggled somewhat. Alphabet’s reverse dutch auction was a bit of a mess , and Facebook’s uncertain mobile future weighed on its shares. But since both companies were nicely profitable, and in the latter case cracked the key question regarding its future, they took off and did more than fine.

Both Facebook and Alphabet were younger at the time of their IPOs than Uber was, and they made money. That’s the difference and the reason why their success bears little to do with what may happen with Uber—at least in the short and medium-term.

Making money is better than losing money, I should point out. So while it may be true that Uber pulls through and stems its losses and finds growth and all that, reaching for examples like Alphabet and Facebook is a mistake. Which reminds me, I really do need to finish my post explaining why Amazon’s unprofitability during its youth is no excuse for money-losing unicorns to continue to lose money. Next time!

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