Alphabet, Apple, Amazon and Facebook are in the crosshairs of the FTC and DOJ

The last time that technology companies faced this kind of scrutiny was Google’s antitrust investigation, or the now twenty-one year old lawsuit brought by the Justice Department and multiple states against Microsoft.

But times have changed since Google had its hearing before a much friendlier audience of regulators under President Barack Obama .

These days, Republican and Democratic lawmakers are both making the case that big technology companies hold too much power in American political and economic life.

Issues around personal privacy, economic consolidation, misinformation and free speech are on the minds of both Republican and Democratic lawmakers. Candidates vying for the Democratic nomination in next years Presidential election have made investigations into the breakup of big technology companies central components of their policy platforms.

Meanwhile, Republican lawmakers and agencies began stepping up their rhetoric and planning for how to oversee these companies beginning last September, when the Justice Department brought a group of the nation’s top prosecutors together to discuss technology companies’ growing power.

News of the increasing government activity sent technology stocks plummeting. Amazon shares were down $96 per-share to $1,680.05 — an over 5% drop on the day. Shares of Alphabet tumbled to $1031.53, a $74.76 decline or 6.76%. Declines at Facebook and Apple were more muted, with Apple falling $2.97, or 1.7%, to $172.32 and Facebook sliding $14.11 (or 7.95%) to $163.36.

In Senate confirmation hearings in January, the new Attorney General William Barr noted that technology companies would face more time under the regulatory microscope during his tenure, according to The Wall Street Journal .

“I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers,” Barr said. “You can win that place in the marketplace without violating the antitrust laws, but I want to find out more about that dynamic.”

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Key Vision Fund investors are reportedly lukewarm on a second fund

SoftBank shook up the venture capital world with its unprecedented $100 billion Vision Fund, and the speculation continues around its follow-up.

The fund hasn’t quite closed $100 billion — it is mighty close… — but that hasn’t stopped reports of a sequel from surfacing for the last 18 months. SoftBank has mown through its allocation at speed, dealmaking increased to a record speed in Q1 despite controversy while its hiring has intensified, but the latest chatter suggests that a number of the fund’s key backers are lukewarm at the prospect of a return act.

The Wall Street Journal this weekend reported that Saudi Arabia’s Public Investment Fund (PIF), which anchored the Vision Fund with a $45 billion investment (but also provides the controversy), and the Canada Pension Plan Investment Board are among those that “plan to make limited or no contributions” to the follow-up vehicle.

Sources told the Journal that a key factor is that many of these funds have disintermediated SoftBank to create their own vehicles that make late-stage investments in a more direct way. That cuts out the management fees to third-parties, and it gives the fund managers total control.

One wonders whether the criticism of PIF, which is controlled by Crown Prince Mohammad bin Salman, who has been strongly linked with the murder of Saudi journalist Jamal Khashoggi, an outspoken critic of the regime, is part of the equation here. It isn’t mentioned in the report. The Vision Fund’s links to Khashoggi death hasn’t bothered startups offered access to billions, at least those in Asia that TechCrunch has probed over the issue.

SoftBank supremo Masayoshi Son has given the outside world a glimpse at the Vision Fund’s performance, which shows impressive gains on paper, but still the Journal reports that some investors are concerned a lack of transparency. Son pledged to provide a public update on the Vision Fund once per year on SoftBank’s annual earnings day; that’s a move that could provide greater transparency and, in the short term, potentially encourage an IPO for the fund itself, which has been rumored.

The Vision Fund refuted the Journal’s claims, calling them “misleading and even inaccurate.”

In the meanwhile, the Vision continues along at speed. In May alone it backed five ventures: India-based grocery startup Grofers, DoorDash, Germany’s GetYourGuide, lender Greensill Capital and GM Cruise.

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DoorDash, now valued at $12.6B, shoots for the moon

More than five years ago, Sequoia partner Alfred Lin called Tony Xu, the founder of a small on-demand delivery startup called DoorDash, to say he was passing on the company’s seed round.

This was, of course, before venture capital funding in food delivery startups had taken off. DoorDash, launched out of Xu’s Stanford graduate school dorm room, wasn’t worth Sequoia’s capital — yet.

Today, venture capitalists are valuing the San Francisco-based company at a whopping $12.6 billion with a $600 million Series G. New investors Darsana Capital Partners and Sands Capital participated in the deal, which nearly doubles DoorDash’s previous valuation, alongside existing backers Coatue Management, Dragoneer, DST Global, Sequoia Capital, the SoftBank Vision Fund and Temasek Capital Management.

As for Sequoia’s Alfred Lin, he realized his mistake years ago and jumped in on DoorDash’s 2014 Series A and has participated in every subsequent round since. DoorDash, a graduate of Y Combinator’s Summer 2013 cohort, is also backed by Kleiner Perkins, CRV and Khosla Ventures, among others. In total, the company has raised $2.5 billion in VC funding, making it one of the most well-capitalized private companies in the U.S.

SoftBank, via its prolific dealmaker Jeffrey Housenbold, was responsible for making DoorDash a unicorn in early 2018. The nearly $100 billion Vision Fund led DoorDash’s $535 million Series D, valuing the business at $1.4 billion. Just three months ago, the SoftBank Vision Fund, DST Global, Coatue Management, GIC, Sequoia and Y Combinator put an additional $400 million in the fast-growing business.

SAN FRANCISCO, CA – SEPTEMBER 05: DoorDash CEO Tony Xu speaks onstage during Day 1 of TechCrunch Disrupt SF 2018 at Moscone Center on September 5, 2018 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch)

Xu told TechCrunch the company’s Series F was “a reflection of superior performance over the past year.” DoorDash was currently seeing 325 percent growth year-over-year, he said, pointing to recent data from Second Measure showing the service had overtaken Uber Eats in the U.S., coming in second only to GrubHub.

“I think the numbers speak for themselves,” Xu said at the time. “If you just run the math on DoorDash’s course and speed, we’re on track to be number one.”

At a venture capital-focused summit hosted in April, Xu added that DoorDash was the largest delivery platform in America by “pretty wide margins,” explaining that it was, in fact, growing 4x faster than its next closest peer. In this morning’s announcement, the company added that it’s grown 60 percent since its late February Series F, with its annualized total sales hitting $7.5 billion in March, an increase of 280 percent year-over-year. 

Still, one wonders what kind of growth metrics DoorDash might be sharing to attract that kind of valuation multiple. The company has yet to disclose revenues and is not yet profitable but has seen its price tag grow astronomically in just two years. Since March 2018, DoorDash’s valuation has skyrocketed from $1.4 billion to $4 billion with a $250 million Series E to $7.1 billion with a $350 million Series F and finally, to nearly $13 billion with its Series G.

The $12.6 billion valuation makes DoorDash one of the 10 most valuable venture-backed companies in the U.S., surpassing Coinbase, Instacart and even Slack, according to PitchBook.

DoorDash is currently active in more than 4,000 cities in the U.S. and Canada, with hundreds of partners including both restaurants and supermarkets (Walmart is using DoorDash for grocery deliveries). The company also operates DoorDash Drive, which allows businesses to use the DoorDash network to make their own deliveries.

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Trendy luggage brand Away packs on $100M, rolls past $1.4B valuation

Away‘s new lofty valuation proves how far you can get with excellent branding.

The direct-to-consumer seller of Instagrammable luggage has collected $100 million in Series D funding at a $1.4 billion valuation in a round led by Wellington Management, with support from Baillie Gifford, Lone Pine Capital and Global Founders Capital, reports The Wall Street Journal .

We’ve reached out to Away for comment.

The capital will be used to build additional brick-and-mortar stores, as well as add to Away’s portfolio of merchandise with an eye toward expanding into generic travel gear. To date, Away has sold more than 1 million suitcases.

“When someone’s going on a trip, we want to make everything that they need to go on on that trip,” Away co-founder and chief brand officer Jen Rubio said recently on NPR’s How I Built This podcast.

Rubio’s eye for branding and social media expertise has bolstered the company, as has various celebrities’ early adoption of the brand. Rubio got her start at Warby Parker as the company’s head of social media. In 2015, she brought her idea for a modern luggage company to Steph Korey, Warby’s former head of supply chain.

Away’s new valuation, up from $400 million in 2018, firmly places Away into the unicorn club. It joins several other recently added female-founded companies to the exclusive group, such as Rent The Runway and Glossier.

Here’s a closer look at its funind history, via PitchBook:

August 2015: $2.5 million seed round at a $7.2 million valuation
September 2016: $8.5 million Series A at a $40 million valuation
May 2017: $20 million Series B at a $120 million valuation
June 2018: $50 million Series C at a $400 million valuation
May 2019: $100 million at a $1.4 billion valuation

Away has brought in a total of $181 million, including the latest investment. Previously, Away raised a $50 million Series C and claimed in the announcement that it had already hit profitability, a notable accomplishment for a startup that was still shy of 3-years-old.

Away is backed by Forerunner Ventures, Accel, Battery Ventures, Comcast Ventures, Shawn Carter, Slack CEO Stewart Butterfield and Karlie Kloss.

Butterfield and Rubio’s are romantically linked and perhaps soon-to-be married? The well-known Slack executive Tweeted shortly after the WSJ story on Away broke asking Rubio to marry him. She has yet to announce her response.

All in a day’s work.

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Lyft lost $1.14B in Q1 2019 on $776M in revenue

In its first-ever earnings report as a public company, Lyft (NASDAQ: LYFT) failed to display progress toward profitability.

The ride-hailing business, which raised $2 billion in a March initial public offering, posted first-quarter revenues of $776 million on losses of $1.14 billion, including $894 million of stock-based compensation and related payroll tax expenses. The company’s earnings surpassed Wall Street estimates of $740 million while losses came in much higher as a result of IPO-related expenses.

“The first quarter was a strong start to an important year, our first as a public company,” Lyft co-founder and chief executive officer Logan Green said in a statement.  “Our performance was driven by the increased demand for our network and multi-modal platform, as Active Riders grew 46 percent and revenue grew 95 percent year-over-year. Transportation is one of the largest segments of our economy and we are still in the very early stages of an enormous secular shift from personal car ownership to Transportation-as-a-Service.”

The company said adjusted net losses came in at $211.5 million compared to $228.4 million in the first quarter of 2018. Next quarter, Lyft expects revenue of more than $800 million on adjusted EBITDA losses of between $270 million and $280 million. For the entire year, Lyft projects roughly $3.3 billion in total revenue on EBITDA losses of about $1.2 billion.

Lyft was the first of a cohort of venture-backed ‘unicorns,’ including Pinterest, Zoom and soon, Uber — which will make its long-overdue debut on the New York Stock Exchange later this week — to complete a public offering in 2019. Despite a sizeable IPO pop, Lyft shares have only sunk since its first appearance on the Nasdaq. Lyft hit a share price of $87 on its first day of trading, up from a $74 IPO price. However, in the weeks post-IPO its floated closer to the $60 mark, closing Tuesday down 2 percent at $59.41.

Lyft has never posted a profit and its founders John Zimmer and Green have made it clear they expect to invest in the company’s growth for the next several years as it expands its multimodal offerings and ultimately launches operations overseas.

“The road ahead represents a massive opportunity to serve our communities and drive value for our stockholders, Lyft’s co-founders wrote in the company’s IPO prospectus. “We take this responsibility to serve our communities and stockholders seriously, and we look forward to proving that with actions and results. If we told you we were building the world’s best canal, railroad or highway infrastructure, you’d understand that this would take time. In that same light, the opportunity ahead requires continued long-term thinking, focus and execution.”

Given Lyft’s unprofitable history, analysts are likely keeping a watchful eye on top-line revenue, active riders and revenue per rider. According to its earnings report, Lyft’s revenue per active rider has grown 34 percent year-over-year to $37.86, while active riders, generally, expanded nearly 50 percent to 20.5 million.

The earnings report comes just three days before Uber is expected to begin trading on the NYSE. The company is set to price between $44 and $50 per share for a fully-diluted market cap of about $90 billion if it prices at the high end. Selling 180 million common shares, Uber plans to raise between $7.9 billion and $9 billion, 4x that of Lyft’s IPO bounty.

Given Lyft’s performance on the stock exchange, investors are likely hesitant to go all-in on Uber’s offering. Reports indicate that Uber slashed targets ahead of its IPO, citing Lyft’s stock nose-dive, with Uber executives “eager to avoid the pitfalls that sunk” Lyft, according to The Wall Street Journal.

“Because Lyft and Uber compete heavily in the US, Lyft’s first earnings report will provide insights into Uber’s prospects,” Goodwater Capital managing director Eric Kim told TechCrunch. “At the same time, each company has shown its own unique differentiation. For example, [Uber has] shown very strong unit economics with sub 4-month paybacks and very valuable international stakes worth billions.”

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