Startups Weekly: A pre-IPO list of unicorn companies that also generate lots of revenue(!)

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My colleague Alex Wilhelm has been researching the companies that are both getting impressive valuations and also generating annual recurring revenues of around $100 million on more. These are the sorts of companies that any savvy public-market tech investor might want to take a closer look at, particularly the sort of investor who is comfortable digesting modern online subscription metrics. That is, the startup-oriented types who read this kinda newsletter.

The following is not investment advice, but this week Alex added Seismic, ThoughtSpot, Noom, Riskified and Movable Ink to the club, based on their funding histories, growth metrics and his own interviews with the teams. “Perhaps we’re really just compiling an IPO watchlist, a grouping of firms that will probably go (or should go) public in the next 18 months,” he mused along the way.

He then assembled a list of the dozen existing companies he’s covered in the last few months that form “The $100M ARR Club.” Read the full thing on Extra Crunch, and get ready for more coverage as the hundreds of unicorns produced in this era continue running the public gauntlet.

Raising a seed round? You have more options in 2020

You have more options than ever if you want to raise a seed round today. But you have to know how to pitch the right investors at the right time.

In recent years investors have come up with more ways to back companies that are still finding product-market fit or still figuring out how to grow. But there are approximately six stages of seed today — and each investor who writes these sorts of checks has their own preferences within the stages. Some are fine with just a big idea, some want to see the start of long-term traction.

So! Our resident former VC, Danny Crichton, has put together for Extra Crunch the latest tips that he’s hearing from founders and early-stage investors about the following stages of young companies:

0. Team – deck: This might be dubbed the “hello world” stage of a startup’s journey. There is at least one person looking to build some form of company, but the full team, product, market and target aren’t fleshed out at all.

1. Team + deck: In this stage, there is leadership for the startup and the founder(s) have identified a working hypothesis for a product or at least a market they want to tackle. Because there is no product, there is obviously no product-market fit (PMF).

2. On course to product-market fit: There is a real product, there are users, maybe even a bit of revenue, but everything is sort of ambiguous and the team is still actively experimenting and testing ideas around the product.

3. Product-market fit, pre-scaling: The startup has identified and developed a product that has clear signs of product-market fit, which might come in the form of high NPS scores, strong word-of-mouth marketing, excited feedback from users or some other data that says users of the product love it.

4. On course to scalable growth: There is a product people love, but now the company needs to prove it knows how to spend money to buy growth. This means setting up marketing channels, handling growth marketing within the product itself (on-boarding, sharing tools, etc.) and, if relevant, building out a sales team. Many of these functions haven’t been fully tested by the startup yet.

5. Proven, if early growth: Growth channels have real and positive data that’s comparable with other startups.

This list is focused on funding for venture-oriented companies — he’ll be exploring the booming world of alternative finance in the coming weeks. On that note, don’t miss Alex Wilhelm’s coverage on TechCrunch this week about the rise of venture debt.

Where top investors are putting money in construction robotics

With our 2020 Robotics + AI sessions event on the horizon in early March, we’re going deeper into some of the most dynamic real-life uses through our regular investor survey series.

With global housing, material and labor shortages, and new technologies becoming commercially available, construction robotics has become a major subcategory of investment. Arman Tabatabai, our in-house research analyst, identified 16 of the investors most ready to write checks for startups in the space this year, and got nearly 6,000 words of detailed responses on what they are looking for. Click through to Extra Crunch for more. 

Married founders are making it work

Speaking of newly popular ways to build a company, over on TechCrunch Anna Escher identifies a striking number of married couples who also have founded successful startups together.

“We got into a momentum of talking about work all the time,” explains Lidia Yan of logistics startup NEXT Trucking. “Not only at the office but at home.” The solution that she and her husband Elton Chung developed is a simple rule enforced by an iPhone alarm: All work-related talk must cease after 8pm every day after the alarm goes off. They use the time for shared side passions, like exploring local restaurants.

Earlier couple-founder success like Eventbrite and VMware have helped break the ice for investors. NEXT, for example, has raised nearly $100 million from top investors.

However, the couples that Escher talked to were clear about the risks (from chronic disharmony to divorce) and the trade-offs (from less travel to later starts on a family).

Across the week

TechCrunch:

Mike Volpi on the art of board membership

Portfolio bloat: What’s happening to thousands of startups going nowhere fast

FTC votes to review influencer marketing rules & penalties

Catching up on China’s tech influence operations in America

Peru’s startup scene is ready for more

Extra Crunch:

Understanding Airbnb’s new, stubborn lack of profits

4 factors to consider before entering international markets

How to advertise a podcast in 2020

Meet 5 cybersecurity unicorns that could IPO in 2020

This co-op wants to put money back into patients’ hands

#EquityPod

Alex and Danny sat down with Elliot Robinson, a growth-focused partner at Bessemer. Key topics this week included funding rounds from Headspace and Nova Credit, Battery’s new capital vehicles, why some firms need more capital for the same number of checks and much more.

The drunken HQ Trivia finale before it shut down was insane

“Not gonna lie. This f*cking sucks. This is the last HQ ever!” yelled host Matt Richards . And it just got crazier from there.The farewell game of HQ Trivia before it shut down last night was a beautiful disaster. The hosts cursed, sprayed champagne, threatened to defecate on the homes of trolls in the chat window, and begged for new jobs. Imagine Jeopardy but Trebek is hyped-up and blacked-out.

Yesterday HQ Trivia ran out of money, laid off its 25 employees, and shut down. It was in talks to be acquired, but the buyer pulled out last minute and investors weren’t willing to pour any money into the sagging game show. It had paid out $6 million in prizes from its $15 million-plus in venture capital since launching in late 2017.

But HQ was in steady decline since February 2018 when it peaked at over 2.3 million concurrent players to just tens of thousands recently. The games grew repetitive, prize money was split between too many winners, co-founder Colin Kroll passed away, original host and quiz daddy Scott Rogowsky was let go, the startup’s staff failed in an attempt to mutiny and oust the CEO, and layoffs ensued. You can read how it all went down here.

But rather than wither away, the momentary cultural phenemenon went out with a bang. “Should HQ trivia shut down? No? Yes? Or f*ck no!” Richards cackled.

You can watch the final show here, and we’ve laid out some of Richards’ and co-host Anna Roisman’s choicest quotes from HQ’s last game:

  • “If you just got here, this is HQ Trivia. It’s a live mobile gameshow. We’re gonna read about 34 questions and then you’re gonna win about 2 cents and you’re gonna fucking loooooove it” -Roisman
  • “This $5 prize is coming out of my own pocket. We ran out of money. We just kept giving it away. We gave it all to the players, to you, you loyal HQties” -Richards
  • “Take this time now to buy some extra lives. You never know when you’re going to need them. I wish we had an extra life for the company. I’m sorry. I f*cking can’t. I’m gonna cry. My dogs eat $200 worth of food a day. My dogs are gonna starve” -Richards
  • “Why are we shutting down? I don’t know. Ask our investors. What am I going to do with my fish tank? I think our investors ran out of money” -Richards
  • “Who likes healthy snacks! That’s why the investors stopped giving us money, because there wasn’t any f*cking snacks in this b*tch. We were snackless. Who the fuck can work in a place without snacks!” -Richards
  • “I met a couple who told me HQ is part of their foreplay” -Richards
  • “Who’s going to miss the HQ chat? I’m going to miss all those people telling me I don’t have eyebrows or to do the Carlton” -Richards
  • “Maybe we should close every night. These are the nicest f*cking comments I’ve ever seen. Wow, you’re finally telling me I look hot. I tried for a year and a half -Roisman
  • [Reading comments] “‘Won’t miss you at all, good riddance’” -Roisman. “Who said that? Let’s find that mothef*cker and sh*t on his porch” -Richards
  • “Hire everyone! All the people who don’t have jobs they f*cking rock!” -Richards
  • [While doing a headstand] “Someone hire me! I’m f*cking talented” -Roisman
  • “We should have unionized a long time ago” -Richards
  • [To his girlfriend] “Hello baby! I don’t got a job, you still love me?” -Richards
  • “We bought this giant bottle of champagne for when we hit 3 million players” -Richards (HQ never got there)
  • [Shakening up the champagne and opening it to a disappointing trickle] “It wasn’t as big as I thought it was gonna be” -Richards.That’s what she said. It was anti-climactic” -Roisman. “Much like this episode” -Richards. “Much like this app” -Roisman
  • “They gave me like two double shots of tequila” -Richards, on why he was drunk

Then things really went off the rails at 41 minutes in, cued up here:

  • [Upon a bunch of people getting a question wrong] “Y’all fucking fucked up!  You are dumb! I’m kidding, you’re not dumb. You fucked up. It happens” -Richards
  • [Reading the final question together] “What does Subway call it’s employees? Ham hands, sandwich artists, or beef sculptors?”
  • “520 people are splitting $5. Send me your Venmo requests and I’ll send you your fraction of a penny” -Richards

Farewell, HQ Trivia, you glorious beast.