Social Leverage Review of H1 2019

The 4th of July festivities are behind us and the US Women's team has won the World Cup. Now it's time for us to take a quick look at the first half of 2019 for Social Leverage and our companies.

1upHealth took first place honors in MassChallenge HealthTech's 3rd co-hort pitch event. They also took home the startup's choice award via popular vote. Between the two awards, the company received $110,000 in non-dilutive funding. We had invested in 1upHealth earlier this year.

Validately was acquired by UserZoom. Social Leverage Fund II invested in Validately with the belief that the user testing market was ready for a better solution. Founders Steven Cohn and Mark Bathie delivered by building a terrific product that their customers love. We're looking forward to seeing what Validately can do as part of UserZoom.

Steven Cohn and Mark Bathie, founders of Validately, with the Social Leverage team. Congratulations on joining forces with UserZoom!

Steven Cohn and Mark Bathie, founders of Validately, with the Social Leverage team. Congratulations on joining forces with UserZoom!

Distil was acquired by Imperva. Distil had been a Social Leverage Fund I portfolio company since we first invested in 2013.

Kustomer raised a $40 million Series D round, led by Tiger Global. Earlier in the year, Kustomer had raised a $35 million Series C round, led by Battery Ventures. These two funding rounds culminated a total of over $100 million raised in a single year. Kustomer is building a modern customer service platform, used by incredible companies like Away and Ring.

Life360 went public! The family tracking app made their initial public offering in Australia on May 9th, raising over $100 million. The stock rose a little over 5%, giving the company a market value of $535 million. Life360 is the biggest tech IPO on the ASX in three years, according to CEO Chris Hulls. Life360 was a Social Leverage LLC portfolio company.

Return Path was acquired by Validity. Fund I had invested in Embarke in 2013, which in turn split their assets in selling the company to both Return Path and Seismic. Seismic raised their Series E last December.

Shippable was acquired by JFrog. Shippable had been a Social Leverage Fund I portfolio company since we first invested in 2013.

StayTuned Digital raised $2.5 million to help video creators distribute their content. TechCrunch covered the funding and we had our viewpoint on it as well.

ChartIQ completed a $17 million Series B financing. They have begun to role out their Finsemble product while also expanding the team in the US, London and Hong Kong. ChartIQ is a Social Leverage Fund I portfolio company.

Open Roles: Social Leverage companies are continuing to hire great talent. An updated view of the companies that are hiring in our portfolio is visible on our site via AngelList. We’d appreciate help finding terrific candidates.

We continue to thank and celebrate our founders. Our success is truly because of them. We're looking forward to what the back half of the year will bring.

Social Leverage Year in Review - 2018

2018 in Numbers
As the first full quarter of 2019 ends, we wanted to take a look at Social Leverage in 2018. Across our funds, we invested in 4 new companies, participated in 8 up rounds and saw 3 exits.

When we make initial seed stage investments, our portfolio companies often raise $2M or less. Our 4 new investments in 2018 brought in a combined total of less than $5M in their seed rounds. Once we make the initial investment, we work with the CEO to help the companies reach milestones and to scale. Our scaled companies, brought in significant dollars, raising over $450M in 2018.

First Republic used Preqin data to issue a report which showed both our Fund I and Fund II as top quartile funds. This report highlights Fund II as a top performing fund for both Micro VC and general VC funds for 2007-2015 vintages. The same Preqin data shows that as of the end of Q2 2018, our Fund II is the number one performing 2015 vintage fund in the country, based on its then current IRR of 59.3%:

Prequin Data

New Portfolio Companies
We had the privilege of backing the founders of the following four companies in 2018. In each case, we're honored that they chose us not solely for our capital but also for the leverage that we hope to add to their businesses.

 
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RallyRd is democratizing the blue-chip collector car market by making it available to average investors. This market has outperformed the S&P over the past 20 years. There is a disproportional amount of interest in the asset class, while only a select few can actually participate. The team at RallyRd has built a beautiful application allowing any investor to buy a fractionalized share of a car. The magic which makes this work is that each car is actually an SEC registered investment vehicle. If you have an iPhone, get the app and try it for yourself. If you're looking for some more insights, take a look at Tom's post on the company.

RallyRd successfully raised a Series A, less than a year after our initial investment in January 2018. Our friend Greg Bettinelli of Upfront Ventures led the round.

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Coinmine is a consumer product company. Their first creation is a beautiful device which allows anyone to easily and efficiently mine cryptocurrency. Over 25 million people in the US own crypto, but very few are involved on any other level because it is too hard to setup, maintain and adapt. Coinmine is changing that with beautiful hardware coupled with an intuitive app. Howard penned a post that discusses this company in more detail, including their initial launch. 

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Manscaped is a direct to consumer company specializing in "men's below the belt grooming". Although non-traditional, Manscaped's creative messaging has resonated with their target demographic.

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Koyfin is a financial analytics platform. Koyfin provides users with market insights through dashboards, graphs and other data visualizations. Howard called Koyfin "The Ultimate Markets Dashboard" and followed up with a market analysis leveraging Koyfin, highlighting some of its capabilities.

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Follow On Rounds
Some of the more significant follow on financings from 2018 include:


Exits
Three of our portfolio companies were acquired in 2018.

  • Joist, the #1 app for contractors, was acquired by EverCommerce. Joist was a Fund I company.

  • Datafox, a provider of insightful data to prioritize accounts, enrich leads, refresh and harmonize CRM data and identify new prospects, was acquired by Oracle. Datafox was also a Fund I company.

  • Sapho, the only employee experience portal designed for the digital workplace, was acquired by Citrix. Sapho was a Fund II company.

It's bittersweet to have these companies and founders leave our portfolio. That said, we're grateful for the time we spent together. And we feel encouraged that we'll have the opportunity to work with the founders again, down the road.


More from Social Leverage Here's a look at some of our blog posts and activities from the past year:

  • Raising Fund III: It's been a while in the making, but we're looking forward to closing out the fund in the next 20 days. We now have 9 portfolio companies, three of which have raised significant Series A rounds.

  • Stocktoberfest East: Stocktwits held its annual NY event, with some incredible speakers sharing their wisdom.

  • Invest with the Best: Listen to Howard Lindzon on Patrick O'Shaughnessy's "Invest with the Best" podcast

  • Stoctoberfest West: Stocktwits later headed out West to Coronado for another day of great fin-tech content.


Start of 2019
We've had a fast start to 2019 with 2 new investments in Fund III so far. We're looking forward to what the year has in store and sharing the update again in 2020!

Powering up healthcare with 1up

Developers, developers, developers. That was the call a crazed Steve Ballmer made back in 2000. Ballmer's enthusiasm centered around his belief that a community of enabled developers would lead to a vibrant and thriving ecosystem. His chant has echoed in our minds for years, and over time, his thesis has proven out.

Since then we've seen companies create compelling platforms by enabling developers. Making it easier for developers to build enables their creativity. It allows them the freedom to concentrate on the core business problem vs the plumbing. It enables the creation of unique applications. Amazon has done this with AWS. Twilio has created an ecosystem by creating a cloud telephony platform. Plaid has enabled unique banking experiences with their banking integration platform. And there are countless other developer centric companies, all enabling endless possibilities.

Healthcare data is all around us. 70% of the US population has health apps and sensors that track location, heart-rate and more. Government MU3 mandates that health system & EHRs make APIs available to patient apps. Value-based incentives are growing and benefit greatly from external data. FHIR is exploding & applications want it. And yet there has been no simple way to access this available data - until now.

1upHealth is creating a centralized platform, aggregating and enabling the exchange of electronic health data between patients, providers and developers. 1up empowers patients, simplifies workflow for providers, and provides a FHIR API platform for developers. 1up helps developers get access to patient data through it’s integrations with hundreds of systems via an API. Without 1up, each developer would need to secure access to every health system on their own, which is both cost and time prohibitive.

The 1up product is built on FHIR (Fast Healthcare Interoperability Resources). FHIR has taken hold and is now the de facto standard. Because 1up is built on top of FHIR , developers can build medical apps fast. Developers get to stop worrying about HIPAA, HL7 standards and other infrastructure. In practice, 1upHealth saves a year of work for developers.

1up is led by founder and CEO, Ricky Sahu. Ricky is an XGoogler, having worked there from 2009-2012. Ricky is technical and a coder, but is also a business leader. Most importantly, Ricky has deep domain knowledge in healthcare data, with three years as the VP of Engineering at CareJourney.

1upHealth's mission is to extend life. They are doing this by enabling healthcare data to flow between systems and providers. This pathway for connecting the dots, both at an individual level and across massive data sets, will help Ricky and his team achieve their goals. We are excited to join Meridian Street Capital and Eniac Ventures in leading 1upHealth's Seed round. I am personally thrilled to be a part of this hugely ambitious mission.

You can see some more details at the 1up Health site and also read more coverage of their seed round.

And if you're as pumped about this opportunity as I am, 1up is actively hiring for their Boston office. Check out their open roles and apply!

The Video Distribution Problem - And How to Fix It

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There is an endless stream of content all around us. Text, audio and now video. As a consumer, it's both a bit overwhelming and also awesome to be able to consume wherever and whenever we want. It's up to us to determine how to consume. This poses a problem for creators as they need to distribute their content everywhere.

For content creators, the most important consideration is distribution. If no one sees your work, irrespective of its quality, what's the point of creating it in the first place? The problem has been somewhat solved for text. Wherever the creator publishes it, they can also push it to Medium and tweet it out - in the simplest case. This is a more difficult problem for audio, but has also been solved to some extent. Video distribution has not been solved - at all. This problem will get worse as additional distribution endpoints are created.

As an example, take a look at this section of Jason Calacanis' "This Week in Startups" email:

podcast options

Jason's team has highlighted 9 places for a person to be able to hear the content. But to watch it, the only option seems to be YouTube. What about AppleTV, Facebook Watch, Instagram Video, Snap and other options? Video creators face a very fragmented market of device types, platforms and social channels that they need to distribute to. There is more video than ever and this growth will not stop. And yet it's too difficult to post to the endless endpoints. The answer is StayTuned.

Although the product has not yet been completed, the vision is clear and compelling. StayTuned is a single platform that enables smart video syndication everywhere. And video is a huge and growing market. 79% of internet traffic will be video by 2020 and by 2025, OTT devices and services will be a $165B market.

Co-founder and CEO, Serge Kassardjia immedialy impressed us. Serge was previously the Global Head of Media Apps for Google Play and Android and has incredible deep domain knowledge of the problem set. Serge has teamed up with Randy Jimenez, his co-founder and CTO. Randy is a multi-time CTO and has both the knowledge and the network to build a tremendous team.

Randy on the left & Serge on the right

Randy on the left & Serge on the right

We're proud to join our friends at Bowery Capital in supporting StayTuned's $2.5M seed round. We're staying tuned to see their impact on video distribution. You can read more about it at TechCrunch.

StayTuned is actively hiring for their New York office. Check out their open roles and apply!

Our Investment in Coinmine

Yesterday was the launch of Coinmine, a new Social Leverage Fund III investment.

What is Coinmine?

Brian Norgard, who introduced me to the product, the company and Farbood the founder, says:

It is quite surreal that my first investment, Coinmine, launches today. Coinmine is the world’s first plug-and-play cryptocurrency mining device. It is sleek (Apple-esque, according to Fortune), easy to use, and consumes less energy than a PlayStation — powered by Coinmine’s own operating system and elegant mobile app.

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“There are a lot of parallels I draw from Coinmine and Tinder,” Norgard said. “Online dating was very complicated six years ago. It was an arduous process and so is mining. You have to be pretty sophisticated, but this takes it down to the studs. A normal consumer with no technical knowledge can get into the crypto game.”

Coinmine helps anyone turn electricity into money.  You can be your own FED, you can save money, learn about crypto and even trade, with a monthly electricity spend of $5.  We think it's a perfect gift to anyone interested in money and technology.  

Farbood and his team, which includes co-founder Justin Lambert (designer of Pebble Watch) built a new OS for mining. A new operating system designed to make crypto easy. Built from the ground up to adapt to the future of crypto.

Get crypto for powering the networks you love. Participate in Proof-of-Work currency mining, and control the whole process from your phone. Switch which currency you’re mining whenever you like or add additional Coinmine Ones to your account.

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Now that the product is released and orders are coming in (shipping in 3-5 weeks), I will give a little bit of the backstory.

In March of last year I met Brian Norgard as he walked into Stocktoberfest and though we had never actually met, we knew each other pretty well from our work backgrounds and Twitter.

He showed me an app that he was helping both with an investment and some product and design advice called Coinmine and the way it would work with a personal crypto mining machine that was being built for the home.

Over the summer, while I was in Italy, I spoke with Farbood (the founder) and got the full pitch.  I was sold.  Gary,Tom and I met with Farbood over the following months and we eventually led a seed round with some other great investors including Coinbase, and Coinbase's chief technology officer Balaji Srinivasan

Coinmine has raised a total of $2 million.

Here is what Fortune had to say and another take on the launch and product from Coindes.

You can order one, two or ten right here today and get it in time for Christmas.

Also published on HowardLindzon.com.

A Robin by Any Other Name...

Robin Healthcare has set out to change healthcare in America.  They believe that by writing a doctor's notes for her, they can do just that.

Most of us have had interactions with our doctors that are sub-optimal.  Perhaps the doctor is typing notes into a computer as she's talking to us, making us feel like she's not fully present.  Perhaps we've seen fatigue take over while the doctor is talking to us, knowing that they spend more time on paperwork then on caring for their patients.  And we've certainly seen the inefficiencies as doctors click a mouse button more than 4,000 times per day while working in antiquated systems.

Robin has set out to solve this problem.  They do the paperwork so the doctor can go back to the business of actual medicine.  Robin is unobtrusive (no keyboards, mice, people or accessories), effortless (passively captures with very low correction rate), fully integrated with any EMR and affordable for providers and practices.  And of course they're HIPAA compliant too.

The Robin device

The Robin device

I've known Noah Auerhahn since at least some time in 2012. I was an advisor to his last company, Extrabux, which he sold to eBates/Rakuten in the summer of 2013.  Although he was young at the time - and still is compared to me - he always struck me as being extremely thoughtful and deep, while also having the ability to make a decisive decision and move quickly.  After leaving eBates, in 2015, Noah took some time away from work to travel the world, get married and think through how to best fix healthcare in America.  On that path, he met his co-founder, Emilio Galan.  Emilio is an entrepreneur, data geek and an MD candidate; he's helped start companies, is the Executive Director for Honest Health, got deep into health care data and pricing with Catalyst for Payment Reform and is now completing his MD requirements - he's definitely been busy.  These two have really formed a terrific nucleus for this company.

Robin Founders, Noah on the left and Emilio on the right

Robin Founders, Noah on the left and Emilio on the right

Since our investment at the end of last year, Noah and Emilio have brought on an incredible team of experts.  They have leaders and entrepreneurs in the scribing space (Kathleen Myers and Adam Okeson) that are taking their knowledge and domain of the "old world" and are applying it to the new paradigm.  They have attracted PhD's in NLP and machine learning (Adam Richards and Marc Errlinger) to ensure that the application is able to automate as much of the interaction as possible. And they've brought on world class expertise in IoT and hardware (Sid Mirgati and Justin Atienza) as they assemble the next version of their hardware.  Of course there's a larger tech and product team that's not mentioned, but is driving immense value to the company.  They've also recruited and trained 3 separate classes of incredible scribes that power the business.  And they've generated more demand from individual doctors and practices than they can handle at present.  They're moving fast and will be moving even faster shortly.

When talking about the opportunity in front of Robin and our excitement for the Robin vision, one of our co-investors said it best:

...my view is that voice-to-text and NLP is not at the point where it can not only be encoded and scored correctly, but placed in the proper fields based upon note structure and domain. ...where I see Robin going is merely using massively scalable scribing as a beachhead for taking over the ugly parts of the medical practice, namely coding, dealing with insurers and ultimately underwriting the risks associated with coding errors. This, to me, is the real game changer, when the most impactful burdens of doctoring are removed and certainty and convenience is brought to the key parts of the practice.
— Roger Ehrenberg

Speaking of co-investors, we're thrilled to be joined on this journey by Roger Ehrenberg of IA Ventures and Scott Law of Meridian Street Capital.  Both of these investors and their firms are very much excited by Robin's vision and the team that's coming together to make that vision a reality.

I'd be remiss if I didn't mention the name.  Although I had nothing to do with it, I smile thinking that this is now our second investment in  a "Robin H" company.  The first, is doing quite well and of course, we have lofty expectations of the second as well!

Welcoming SecFi to Our Portfolio

Last year Social Leverage led an investment in SecFi, whose vision is to help startup employees make sense of their stock options and equity.  The company was founded by Wouter Witvoet and Frederik Mijnhardt. Wouter was motivated to start the company from his own experiences at a fast growing startup.

Wouter on the left and Frederik on the right.

Wouter on the left and Frederik on the right.

As of today, the website and product are live to the public (transactions have been happening the last six months while in stealth mode). The website has some very useful options calculators and education for ANY start-up employee and founder.

So what does SecFi do?
Whereas traditional financial institutions only care about the currently wealthy, SecFi is building products for employees pre-wealth so they can take advantage of their financial opportunities. They do this by providing financing to employees of growth and late-stage private companies so they can exercise their stock options and to the shareholders who already own their stock. The key to their offering is that all financing comes without risk to the borrower – if the company goes under, there is no legal obligation on the borrower to pay anything back. In return, borrowers pay a compounding interest rate and share a portion of their equity when the company has a liquidity event.  Using SecFi for financing has the following benefits:

  • Unlike selling, a Secfi financing defers capital gains taxes until exit and lets companies and employees keep their Qualified Small Business Stock (QSBS) tax treatment.
  • Financing against your shares lets you keep the upside compared to selling on the secondary market.
  • Avoid having all your wealth locked up in one company and keep your savings for what matters to you.

How does it work?
Employees and shareholders apply for financing on SecFi’s platform, which based on each individual’s personal and tax situation determines how much financing you are eligible for. Once an agreement is reached, SecFi pays the determined amount. SecFi’s structure works for all companies, too. They have ensured that their platform doesn’t violate any company’s restrictions so employees everywhere will have an opportunity to exercise their options when they want to.  In instances where the employee doesn't need financing, they can still use SecFi's products to better understand the value of their equity/options, better plan for upcoming taxes and best prepare for a potential IPO or company tradesale.

 

SecFi’s Vision
SecFi’s ultimate goal is to be the financial advisor that helps employees and shareholders before they are wealthy and are bombarded by a plethora of “old school” financial advisors. We simply couldn't find a technology solution that helps people in this process.

The vision and the solution line up very well with how we see financial services and the industry evolving and we're excited to have a role in helping SecFi succeed.

Meet Social Leverage portfolio company Rally Road

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Howard was first on our team to write about the founders (Chris Bruno, Max Niederste-Ostholt, Rob Petrozzo) and team at Rally Road.  

RallyRd is a mobile platform which provides investment opportunities in individual, high-end, blue-chip automobiles. RallyRd intends to democratize the collector car market by providing passionate automobile enthusiasts with an opportunity to invest in the market, even if they may not have the financial capability to purchase one of these beautiful cars on their own. RallyRd are currently targeting the 50 million US auto-enthusiasts, more than 25 million of whom have seen car auctions (Barrett-Jackson and Mecum), in order to allow them to participate in the classic car auction space. The opportunity is in monetizing off of enthusiasts’ desire to participate in their passion, while giving them an opportunity to grow their wealth as well.

RallyRd securitizes each individual asset into a mini-company, which is then packaged into an Initial Car Offering (ICO). After educating participants about the asset through a variety of mediums such as photo and video, RallyRd allows investors to participate in the ICO through the RallyRd app. Using the app, participants can then also engage in a secondary market as the value of the asset fluctuates.

The RallyRd app in action.

The RallyRd app in action.

To get a better idea of what RallyRd is really up to, checkout CEO Chris Bruno discuss with Maria Bartiromo of Fox Business News.

Chris, Max and Rob and are three life-long friends, who have always followed the collector car market, but never felt like they had an access lane to get inside the velvet rope.  It was easy to dig in around RallyRd as the guys are fully transparent and as eager to learn from our team as we were about their business.

Max, Rob & Chris (from left to right)

Max, Rob & Chris (from left to right)

Estimates put the size of the collector car market at 10 billion dollars, with RallyRd focusing specifically on bluechip cars. The value of these has increased more than 300% in the last decade according to the Hagerty index, which tracks the average value of the 25 most sought-after automobiles (adjusted for inflation):

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As you can see, the vehicles on Rally Rd. represent an asset class that has historically outperformed the stock market as well as other alternative asset classes (including gold, fine art, and real estate). Expanded opportunity lies in rebranding and increasing the number of available markets to investors. All of these markets could feasibly be adapted to this model and significantly increase the market size of the product.  

Rally Road’s mission is to democratize alternative investments like these, providing access, liquidity, and transparency to markets that have traditionally only been available to a select few.

We’re excited to help RallyRd bring their vision to life.  It truly is where People, Passion and Profit meet.

Techcrunch recently covered our investment along with the company’s press release.

Social Leverage intern, Samuel Roland, contributed to the research for the blog post.

A Whiff of eCommerce

We've long been thinking about changes to ecommerce.  There's no doubt that Amazon is killing it and along the way, drastically changing the retail landscape as we've known it for the past 50 years.  And yet, it seems that there are niche brands that are able to create a loyal audience, create an authentic movement and cement a place in history all for themselves.

I recently spoke to an ecommerce entrepreneur who hit the nail on the head.  He told me that it doesn't matter what he sells - although in his case, it was mattresses.  The value of his platform is his ability to acquire customers in cost effective ways, build the brand and following for repeat and word of mouth customers and to control the supply chain to be able to provide the ultimate product.

That mindset led to our second investment in our Fund III (we'll talk about the first, third and fourth investments in future updates).  The company is Whiff.com and they sell custom and curated fragrances - that's right - perfume!  At the highest level, they sell a pack of 5 different perfumes (or colognes) that they put together into themes (Autumn Nights, After Dark, Work & Play) and many, many more.  You subscribe to receive a different curated pack (5 scents and 3 of each one) every month for $7.95 or simply buy them a la carte.  It gets more interesting though, because you can also customize the different fragrances to create your own scent.  And once you're happy with your custom fragrance, you can even sell it on their platform and earn a commission.  They have an impressive vision for the platform which they're seeding with perfume subscribers. 

Whiff.com Website

As is our usual custom, we were excited by both the size of the market opportunity and by the team.  One of the founders and COO is Jason Pang (clearly he needs to tweet more).  Jason was previously the founder of our Fund II portfolio company SparkFin (acquired by Stocktwits) and before that he was the CEO of Prima Cinema, and first employee at DivX where they exited with an IPO. 

Jason on the left and Paul on the right.

Jason on the left and Paul on the right.

Jason initially drew us into the company and he is heading up the operations side of the business, which is much more complex than it might seem on the surface. The company is led by founder and CEO, Paul Tran.  Paul is a lifelong entrepreneur, leading companies in different in industries from enterprise real estate software to surveillance equipment distribution.  Most recently, Paul has become an ecommerce and social media ad expert, launching and growing both Dermaclara and Manscaped in the past few years to almost cult like followings.

Below is a quick example of a creative video ad that the team put together to spur some interest:

 

 

 

 

 

Whiff.com launched last week, allowing everyone to smell better; go grab your Whiff pack today!

Congratulations to Bitium, now a part of Google

We were fortunate to be able to invest in Bitium in early 2013.  With the rise in the sheer number of SaaS applications, it was evident to us that there needed to be a company and product to securely and easily consolidate all of the logins and permissions across the enterprise.  Founders Scott Kriz and Erik Gustavso built just that product, and have been successfully growing the company over the last four years.

Today we're proud to say that the company has been acquired by Google and that the product will help Google Cloud continue to deliver best in class identity management solutions to its customers.  We are very happy for Scott, Erik and the entire Bitium team.