• Kleiner Perkins Partner Mamoon Hamid, who was an early investor in companies such as Slack, Box and Yammer, explains the fine points of pitching to venture capital firms for early-stage startups.
• The key is to find "an alignment around the end-market that the founders are pursuing and our belief in those founders to go actually do it," he told Business Insider.
• "With Series A, there are not a lot of numbers to talk about," he said. "With Series A, I'm thinking a lot about the vision, the team, the market that they are going into. In Series B, it's really about execution since the Series A -- how developed is the product? Is it in the hands of customers? What is the sales cycle like?"
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A startup's early years can be the toughest, especially when it comes to financial matters.

That's why founders and entrepreneurs typically turn to venture capital investors as they look for their initial big investments: The Series A investment round that gives the startup the cash to really establish the business, and then the crucial Series B follow-up round that can add more fuel to the proverbial fire.

Mamoon Hamid, managing director at Kleiner Perkins and one of the early backers of such companies as Slack, Box and Yammer, boiled down for us what VCs like him are typically looking for from startup founders and entrepreneurs in both rounds.

Investors will generally be looking for "an alignment around the end-market that the founders are pursuing and our belief in those founders to go actually do it," he told Business Insider.

Series A to Series B

In a Series A round, investors will be focused on your vision, your game plan and if it's addressing a key need — and less so on financial metrics, since the expectation is that the company is still really just establishing itself. By the time the Series B rolls around, though, that should probably be swapped around. 

"With Series A, there are not a lot of numbers to talk about," he said. "With Series A, I'm thinking a lot about the vision, the team, the market that they are going into. In Series B, it's really about execution since the Series A — how developed is the product? Is it in the hands of customers? What is the sales cycle like?"

The biggest mistakes startup founders and entrepreneurs make in pitching to VCs is failing to turn the spotlight on key areas that investors would be interested in in each round, he said. In all cases, he said, what you're trying to do should ideally match what the VC investors are looking to add to their portfolio.

"The blunder is not highlighting the right thing at the right time," he said.

Having deep expertise in solving a problem

In all cases, too, you need to demonstrate that "you're solving a problem, that you have deep domain expertise and you have thought about it probably more than anyone else and you have come up with an elegant solution," he said.

"You've either built the product already, or you will be building the product and your prior credentials make us believe that you will build that product," he added.

Many startups founders and entrepreneurs make the mistake of pitching an old or otherwise unoriginal idea with what VCs would see us a weak or sloppy game plan, he said. 

"It's been done or it's been tried slightly differently," Hamid said. More importantly, you may be taking aim at "a hard market" and your game plan for taking it on clearly won't work — or you're not able to convince the VCs that it can work.

'Seeing around the corners'

That's not to say that the idea is inherently doomed. It might just mean a trip back to the drawing board.

"It's just that you haven't seen around the corners yet," he added.

In many ways, it's about being able to tell a compelling story based on a solid, well thought-out  plan. For example, it may be an old idea, but maybe you've found a fresh approach.

"For early stage companies, there are a  lot of unknowns," Hamid said. "Things that couldn't have been possible five years ago may be possible today. You don't want to take yourself too seriously by saying, 'It was done before and it can't be done today.' Well, maybe times have changed and maybe the time is now."

The key is being able to demonstrate what VCs and entrepreneurs refer to as "product-market fit."

"What that means is you built a product that now customers are saying, 'This is useful for me. I will pay for it,'" Hamid said. "You've identified a pain point for them that they are willing to take out their credit card."

Identifying that pain point can take a lot of effort and precision. Hamid cited the experience of Moveworks, which just raised a $75 million Series B round led by Kleiner Perkins, ICONIQ Capital and Sapphire Ventures.

Moveworks uses AI to help businesses automate the processing tech support issues and problems faster. To develop its product, the startup did its homework by interviewing many CIOs to figure out the scope of the problem and what they needed.

"They do a lot of customer interviews and ask a few questions before even going into a company," Hamid said. Moveworks reached out to companies that "had forward-thinking IT CIOs" and "had a priority list of things that mattered."

All that work helped Moveworks stand out, he added: "They really just pulled ahead from the rest of the competition. It's just a lot progress since their Series A."

"I think it requires a high level of precision and having that point of view to get it right."

Got a tip about startups and tech companies? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentelor send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.

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• Now through December 2, beauty startup Glossier is offering 20% off sitewide.
• With savings on makeup and skin-care products like Cloud Paint, Lash Slick, Balm Dotcom, and more, it's a great way to stock up on your favorites or pick up some thoughtful holiday gifts.
• To potentially save even more on Black Friday deals this year, visit Business Insider Coupons to find the most up-to-date Glossier coupons and promo codes.

Beauty startup Glossier is offering 20% off the entire site starting Black Friday and running through Cyber Monday on December 2. The only exclusions are on gift cards and GlossiWEAR, the brand's line of merch. There is also no promo code, the discount will be automatically applied at checkout.

Glossier rarely has sales, so whether you're looking to switch up your skin-care routine for winter, stock up on your favorite concealer, or are looking for a great gift, this Black Friday sale is worth checking out. We're big fans of Cloud Paint, the brand's creamy cheek tint; Lash Slick, a barely-there mascara; and Balm Dotcom, the cult-favorite do-it-all balm.

Glossier has had a pretty big year. Not only has the brand continued to build its cult-like following among millennials and released a slew of new products, but it became a retail "unicorn" after a $1.2 billion valuation. What better way to celebrate this success than a great Black Friday sale. 

The 7 best Black Friday Glossier deals:

1. Balm Dotcom Trio, $24 (originally $36) [You save $12]
2. Cloud Paint Cheek Color, $14.40 (originally $18) [You save $3.60]
3. Boy Brow Grooming Pomade, $12.80 (originally $16) [You save $3.20]
4. Solution Exfoliating Skin Perfector, $19.20 (originally $24) [You save $4.80]
5. Haloscope Dew Effect Highlighter, $17.60 (originally $22) [You save $4.4o]
6. Mask Duo Greens + Moon Masks, $32 (originally $40) [You save $8]
7. Lash Slick Mascara, $12.80 (originally $16) [You save $3.20]

Looking for more Black Friday deals? Here's where to find them:

1. The overall best Black Friday deals of 2019
2. The best tech deals of Black Friday 2019
3. Amazon Black Friday deals
4. Best Buy Friday deals
5. Target Black Friday deals
6. Walmart Black Friday deals
7. Macy's Black Friday deals
8. Kohl's Black Friday deals

Looking for more Black Friday deals from our favorite startups? We have you covered:

1. 30 Black Friday deals from cool startups that should be on your radar this week
2. Leesa Black Friday deals on mattresses
3. Casper Black Friday deals on mattresses
4. Burrow Black Friday deals on furniture
5. Brooklinen Black Friday deals on sheets and bedding bundles
6. Parachute Black Friday deals on sheets and other home essentials
7. Dagne Dover Black Friday deals on workbags, backpacks, and more 
8. Mott & Bow Black Friday deals on jeans, cashmere sweaters, and more 
9. Bombas Black Friday deals on socks
10. Mejuri Black Friday deals on everyday fine jewelry

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• Amazon and Google have been at the forefront of voice computing technology through smart devices like Amazon Echo and Google Home.
• The companies have created corporate venture funds like Alexa Fund to invest exclusively in voice-first startups to bolster the capabilities of smart assistants like Alexa.
• Paul Bernard, director of Amazon's Alexa Fund, told Business Insider that corporate venture funds have been more active investors in voice tech than traditional venture firms. That is partly driven by self-interest in furthering the technology, he said, but also so that voice computing can become as widespread as mobile computing.
• Corporate venture also has the benefit of a sole investor, the backing company, instead of a wider investor base that necessitates a more varied portfolio, Bernard said.
• For voice computing to reach critical mass, both corporate funds and venture firms will have to partner on early and mid-stage deals to best support companies furthering the emerging technology, according to Bernard.
• Read more about the tech industry's shift to the voice platform in BI Prime's special report.

Amazon and Google have pioneered the shift to consumer-facing voice technology through smart devices like Amazon Echo and Google Home, but the tech giants are also putting their weight behind some of the most promising startups helping advance the next wave of personal computing.

Through corporate venture funds, Amazon and Google have poured millions of dollars into young startups based on voice technology. Amazon's Alexa Fund, named for its smart assistant Alexa, has invested in more than 70 companies itself, and has expanded to include an accelerator and university-focused program.

"At the time, Amazon didn't have a venture fund and this seemed like a good way to bring a focused effort to accomplish a few things at once," Alexa Fund director Paul Bernard told Business Insider. "We could support companies that are pushing what's possible in voice and Alexa, and also create a vehicle that allowed us to work with the venture community in a way our corporate partnership just didn't allow us to do."

As voice computing continues to gain traction, Alexa Fund is positioned to lead the way in dollars invested and range of companies among its portfolio, Bernard said. As director of the Alexa Fund, Bernard oversees Amazon's investment in companies like Drivetime, a car-based interactive audio entertainment startup, and Bamboo Learning, an educational startup that works exclusively with Alexa. 

As with other corporate venture funds, Alexa Fund has the benefit of a sole backer in Amazon. Unlike traditional venture firms that have multiple investors and a necessarily varied portfolio of investments, corporate venture firms are able to invest in companies that take longer to provide a return. So it's no surprise that corporate funds are driving investment activity in voice computing startups, Bernard said.

"No one has a singular view of how to represent the interest of startups and how to make them successful," Bernard said.

Google, meanwhile, launched the Google Assistant Investments program in May 2018. The fund has backed 14 early-stage companies so far, including developer testing startup Pulse Labs, insurance chatbot Claimbot, and wardrobe suggestion tool StyleHacks. 

According to a CNBC report, the Assistant Investment program is separate from Alphabet's in-house venture funds, GV and Capital G. There's no cap on the overall amount of money that the Assistant Investment team can put to work to fund startups, according to the report, and the goals of the investments are strategic rather than to maximize returns.

Alexa or Google Assistant? A dilemma for startups funded by tech giants

For voice startups, one tricky aspect of working with these corporate backers is the impact on choosing which voice assistant and associated devices to build on. Not every corporate fund maintains that portfolio companies must exclusively build or develop on internal technology, but it is an incentive for both founders and investors evaluating a deal.

For some voice startups, like Drivetime, the best option is to play both sides of the field. The company is backed by Amazon and Google, helping it optimize its product for two crucial car-based platforms, Echo Auto and Android Auto.

"Amazon had to open up the Skills Store. They envisioned the Skill Store before they even had a hardware product," Niko Vuori, CEO and cofounder of Alexa Fund portfolio company Drivetime, told Business Insider. "In order to make voice valuable over time, you need that developer community. The platform owners and tech giants needed to make their software and their ecosystem available to developers."

Vuori pointed to Apple's Siri as proof of what happens when a tech giant doesn't open up its underlying technology to the developer community. Amazon Alexa and Google Voice Assistant have both reached more customers through an array of devices, while Apple's Siri remains confined to what Vuori called "Apple's walled garden."

But while tech giants duke it out over the biggest deal of the day, traditional venture capital has been noticeably absent from the industry. Bernard said that makes sense, since Amazon and Google have a vested interest in seeing the tech succeed. Traditional venture capital firms will catch on, just as they did with mobile-first technology at the beginning of the decade.

"It's not atypical for new ecosystems to require some pump priming by the corporate incumbents that are building the products," Bernard said. "And then you get FOMO that comes with time and progress, and you're starting to see that now in the traditional VC world. It's not an unnatural sequence that we are starting to see. When the numbers are as big as they are around the number of people using voice devices, the venture community cannot afford to not be involved and not have points of view."

• Read more about the voice-first platform shift:
• 2 Amazon execs discuss plans to make a smarter Alexa that can anticipate your needs and stay ahead of Google in the voice wars
• Smart speakers have been been reluctant to bombard users with ads, but that could be about to change
• Hackers are inventing clever ways to trick the microphones in smart speakers, and it's opening a 'new world of dangers'

SEE ALSO: 7 startups hit a valuation of $1 billion or more in 2010. By 2019, 4 of them have gone out of business or seen their valuations crumble.

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• Twitch founder Justin Kan sold his company to Amazon in 2014.
• Kan said the best time to sell your startup is when you don't need to and you have some leverage. You don't want to wind up selling because you're running out of cash and you're desperate.
• Research suggests that it helps to start planning early for your eventual exit.
• Click here for more BI Prime stories.

In 2014, Justin Kan sold Twitch, a live-streaming platform for gamers, to Amazon for $970 million.

Several years later, after he'd launched his next company — Atrium, a law firm for startups — he published a guide to selling your startup.

Right at the beginning of the guide, he tells readers: "The best time to sell your startup is when you don't need to or want to."

In other words, the most successful startup acquisitions happen when things are going well. The startup is realistically able to negotiate an offer because it has interest from outside investors or other potential buyers.

One way to set yourself up for an acquisition that benefits you and your employees is to start planning early.

You'll want to be in a position of leverage when you're evaluating an acquisition offer

Kan shared more about the best time to sell your startup in an interview with Business Insider. 

Ideally, he said, you should be in a position of leverage when you sell. That could mean your company is growing rapidly; you have offers from other potential buyers; or you've been given term sheets for your next round of financing.

Twitch, for example, reportedly had acquisition offers from Google and Yahoo! before Amazon swooped in.

"If you're running out of money, your company hasn't been growing, and you're desperate to sell it, then you don't have any leverage," Kan said. Partners aren't just looking for a proven record of success. They also want to see the potential for continued success.

Founders who make strategic decisions early on are more likely to go public or get acquired

To minimize the likelihood of a desperate sale, you'll want to start planning for your eventual exit earlier than you think.

According to a report from market intelligence platform CB Insights, 44% of all tech startup exits in 2016 — including but not limited to acquisitions — involved startups that had not raised beyond Series A funding. That's partly because it gets harder to scale and raise money in later rounds, and partly because acquirers are more interested in buying at lower valuations, according to TechCrunch. (Twitch, however, was acquired by Amazon after raising a Series C round.)

Meanwhile, Business Insider's Sherin Shibu reported on research suggesting that the decisions a startup makes early on are closely linked to later business outcomes.

Jorge Guzman, a professor of entrepreneurship at Columbia Business School, tracked over 10 million startups and found the companies that reached an "equity growth event"— like an IPO or acquisition — greater than $100 million were more likely to have a "proactive" orientation. For example, the founders were more inclined to trademark their ideas and register their company in Delaware, where the legal system and corporate-tax policies are easier to navigate.

Still, some startup founders hesitate to identify a specific direction for their company. Silicon Valley Bank surveyed 1,377 US startup executives in 2019 and found that half said their realistic long-term goal is to be acquired. However, 15% said they don't know what their goal is, up from 9% in 2018.

Bottom line: While your answers may change over time, it's worth considering what value your company could provide a potential acquirer. In the guide, Kan says it might be that your company can help the acquirer stay competitive in a certain business area.

Selling your business because you're losing traction and running out of cash isn't ideal, Kan writes. "You will have few bidders and be more likely to acquiesce to the demands of anyone who does show up."

SEE ALSO: The ultimate guide to selling your startup for a boatload of cash, from founders who sold their startups for billions

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• Europe has minted a new generation of tech millions after some notable IPOs and acquisitions. These wealthy founders are now re-investing their earnings back into the continent's tech ecosystem.
• Private wealth has doubled from $33 trillion in 2008 to $70 trillion in 2018 with some 92% of respondents saying they now invest in venture capital, according to a survey by London-based fund Talis Capital. 
• Money committed to VC now outstrips real estate among ultra-high net worth individuals as they hunt for yield outside of traditional assets. 
• Click here for more BI Prime stories.

The young and ultra-wealthy want to pile their billions into tech startups.

Research conducted by Dealroom.co for London-based fund Talis Capital has found that increasing numbers of family offices and ultra-high net worth individuals are committing larger proportions of their finances towards European tech, via venture capital funds.

It's a sign that the continent's ecosystem is becoming more like Silicon Valley where millionaires and tech entrepreneurs are major investors in new startup ventures.

Where previously Amazon founder Jeff Bezos invested in Uber and Twitter, now European tech and other business founders may be well-placed to fuel the next big thing. 

In the past decade, private wealth has doubled from $33 trillion in 2008 to $70 trillion in 2018 with some 92% of respondents saying they now invest in venture capital, according to a survey by Talis Capital.

Talis Capital is a London-based venture capital fund which invests on behalf of wealthy private individuals

This is down to a few reasons. One is that some traditional types of investment don't offer the same attractive returns that they used to, such as property. Investors seeking higher returns need to look at riskier models, such as venture capital.

"It's a product of a hunt for yield in private markets and investors turning away from traditional assets," Vasile Foca, cofounder and managing partner at Talis Capital, said in an interview with Business Insider. 

Another reason is that successful exits by European entrepreneurs have created new millionaires who want to put money back into the ecosystem. A notable example in Europe is Skype cofounder Niklas Zennstrom, who set up venture capital firm Atomico.

iZettle, and Adyen are just some of the major European exits in recent years while individual entrepreneurs such as TransferWise cofounder Taavet Hinrikus have been notable investors across a number of sectors. 

These newly wealthy entrepreneurs don't account for all ultra-high net worth individuals investing in venture capital, but Talis believes they account for some of the shift.

Over the past five years, the number of individuals and families using private wealth to directly participate in VC rounds in Europe has grown five-fold to a record-breaking $5 billion. According to the research, 2019 could yet beat that record.

In fact, Dealroom calculates that 20% of new venture capital funds raised in Europe came from private limited partners and that 18% of the $28 billion investment in European startups in 2018 came directly from private wealth.

Young, wealthy investors want to back tech

A survey of investors in the US with more than $25 million to hand earlier this year found that the average age of wealthy investors had dropped to 47, down from a previous 58. While youthfulness doesn't always scream tech savvy, it may well be behind an adoption of hitherto tricky bets.

Research from BNP Paribas found millennials are more than twice as likely to invest in VC funds and startups than other age groups. 

So-called digital natives are more interested in technology but still need help with understanding venture capital as an asset class, according to Matus Maar, cofounder and managing partner at Talis Capital.

"Having more capital means European investors can make bold bets like they can in the US or China," Maar said. "The key is educating investors as to how VC works as it has previously been quite opaque and they need to understand the returns cycle is longer than other assets." 

Similarly, a lack of tech expertise makes it harder for first time venture investors to do the necessary due diligence alone but are still keen to be part of a an exciting part of the market. Since 2013, tech exits in Europe have totalled $354 billion with $115.5 billion worth of exits last year alone with Spotify's $30 billion deal standing out. 

"Everyone knows you need to invest in tech and investors can see that it's not just the US that can create large companies in tech," Foca added.  

SEE ALSO: European startups are being flooded with cash thanks to mega-rounds and US giants hovering for deals

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• Highspot uses machine learning to help salespeople land and retain customers by organizing and recommending the types of sales content, such as brochures or case studies, most likely to help them win a deal.
• The Seattle-based startup was cofounded by a former Microsoft exec who served as a chief marketing officer under Satya Nadella. 
• Highspot announced $75 million in funding from existing investors ICONIQ Capital, Madrona Venture Group, OpenView, Salesforce Ventures, and Sapphire Ventures.
• The funding follows a $60 million Series D round in June. The company declined to reveal its valuation, but PitchBook estimated it was worth $530 million at the end of its June funding round. 
• Highspot now has 375 employees and plans to grow to 700 employees by the end of 2020, including aggressively hiring engineering, product management and design roles based in Seattle. 
• Highspot has focused on providing a platform for salespeople but now, with the latest funding, it plans to expand its services.
• Click here to read more BI Prime stories

Robert Wahbe left his job at Microsoft in 2012, a couple of years before his boss Satya Nadella would become CEO. 

Now the startup that Wahbe left Microsoft to launch has achieved a big milestone of its own. Highspot, Wahbe's Seattle-based startup, has raised $200 million from investors including Salesforce's venture capital arm and has partnerships with Salesforce and Microsoft.

Companies such as Microsoft and Salesforce sell customer relationship management software that helps salespeople record interactions with current and potential customers, such as when they were last contacted and where they are in the sales process.

"It turns out those systems don't tell you how to engage those customers effectively so that you … either become or stay a customer," he said. "Highspot helps teams understand how to engage those customers – what to know and what to say."

Highspot on Wednesday announced $75 million in funding from existing investors ICONIQ Capital, Madrona Venture Group, OpenView, Salesforce Ventures, and Sapphire Ventures. The funding follows a $60 million Series D round in June. The company declined to reveal its valuation, but PitchBook estimated it was worth $530 million after the June funding round.

How it works

Large enterprise companies might have 50,000 pieces of content, such as brochures or case studies, available for salespeople to use to court customers, Wahbe said.

Because of the sheer volume of documents, a lot of those pieces go unused. Highspot's software is meant to help salespeople organize all those pieces and provide guidance about how and when to use them to maximize their chances of landing or keeping a customer.

For example, when a salesperson is about to contact a potential customer, Highspot uses machine learning to analyze data including on the interactions the salesperson has had with that customer and can recommend the three or four case studies most likely to help them win the deal. 

Highspot's origins

Wahbe joined Microsoft in 1996 after the company acquired his first startup, a software maker called Colusa. He stayed at the company for more than 15 years, ultimately serving the corporate vice president who ran marketing for Microsoft's server and tools division, which Nadella ran before took over for Steve Ballmer in 2014 as Microsoft's CEO.

Wahbe left the company to start Highspot out of a rented house with his two cofounders Oliver Sharp, the former general manager of strategy for Microsoft's server and tools division, and David Wortendyke, a former partner architect for Microsoft's Azure cloud computing business.

Wahbe said the "moment of truth" for Highspot was when it landed its first large enterprise customer SAP Concur in 2015.

At the time, the company had commercial and small and medium business customers but was just starting to ask big customers to put their time, reputation and money on the line and work with a startup, Wahbe said.

He remembers driving to the Chateau Ste. Michelle Winery about eight miles north of Microsoft's headquarters to a venture capital event where Satya Nadella would be attending at 7 p.m. on a weekday when he got a call from SAP Concur.

"I was driving in the dark and in the rain when I got a call from business contact at this major enterprise and thought, "Is this going to be good news or is this going to be bad news?'," he said. "They decided to adopt our platform – it's a great feeling when you start to feel validation."

Since then, Wahbe said Highspot has doubled year over year in metrics including revenue, user count and customer count, though Highspot declined to share actual figures for those metrics.

What's next

Highspot has focused on providing a platform to salespeople but now, with the latest funding, it plans to expand its services to other groups within a company who interact with customers such as services and support.

Highspot now has 375 employees and plans to grow to 700 employees by the end of 2020, including aggressively hiring engineering, product management and design roles based in Seattle. 

Highspot's website list 26 open positions, but the company may be hiring for more than one person per position, and it has space for about 800 employees in its Seattle headquarters.

Wahbe said the startup plans to grow across offices in the UK, Western Europe, the Middle East and Africa and potentially in the Asia-Pacific region.

SEE ALSO: Microsoft is rolling out something called 'Project Cortex' to take on rivals like Slack and Google

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• The tech landscape looks completely different today than it did at the beginning of the decade.
• Numerous tech companies that didn't even exist before 2010 joined the ranks of the unicorns in 2019, reaching the vaunted benchmark of a $1 billion valuation.
• Some of the young companies to reach unicorn status this year include Lyft, Instagram, Casper, Snapchat, and Warby Parker.
• Visit Business Insider's homepage for more stories.

During the decade of the 2010s, future unicorns — a term used to denote startups worth at least $1 billion — were born left and right. 

A unicorn is not a mythical creature in Silicon Valley. With great help from the tech boom and investors with deep pockets, unicorns are everywhere. You see ads for them in the subway, scroll past posts of influencers touting their products on social media, and you may even sleep on one at night. 

The last decade introduced too many startups to count. Only a few hundred of them, though, ever went on to see a $1 billion valuation.

The more notable billion-dollar startups born in the 2010s include ride-hailing app Lyft, millennial-marketing mastermind Glossier, and WeWork. But if you get your insurance from a sleekly designed app called Lemonade, or order your Sweetgreen salad via Postmates, you'll start to realize there are unicorns all around you. 

With that in mind, take a look at 30 companies worth at least $1 billion that didn't exist 10 years ago.

SEE ALSO: Scientists reveal the 13 dark technology scenarios that keep them up at night

Paris-based Meero has become the go-to tool for photo editors since its launch in 2016. The company raised $230 million, pushing its valuation to $1 billion this past June.

Meero is an online editing and production tool assistant for photographers that uses artificial intelligence, akin to Photoshop — but much quicker and more streamlined. The tech behind Meero lets AI edit raw images automatically. It also matches freelance photographers with companies looking for content, with a 24-hour turnaround time. Meero raised $230 million in June, pushing its valuation to $1 billion to become one of Europe's fastest growing companies of the decade. 

Meero CEO Thomas Rebaud wants to host more photographer meet-ups in the future, host masterclasses, and maybe even launch a magazine.

Juul Labs launched in 2015 and has grown into a multi-billion-dollar company, with a valuation of $24 billion. But the company has come under fire over the last few years, making its future uncertain.

One of the more controversial startups of this decade, Juul, the e-cigarette company, sparked national outrage, congressional investigations, and criticism by the Food and Drug Administration, leading to total product bans in some countries. 

Juul's rise was fast, thanks in part to its marketing strategy. Advertisements on social media — depicting young adults in flashy, bright-colored ads promoting e-cigarette flavors like cucumber and mango — are what some critics attribute to the epidemic of teenage nicotine use. A year after Juul's launch, sales rose 700%, selling over 1 million products. 

But in September, Juul's CEO stepped down under increasing scrutiny over vaping's effect on lung health, despite the company touting its product as the safer alternative to cigarettes. The company also recently halted advertising in the US and its lobbying efforts in Washington. Its valuation fell from $38 billion earlier this year. 

DoorDash, the popular food delivery service, is valued at $13 billion.

DoorDash launched in San Francisco in 2013, and has since gained a fair amount of competitors like UberEats, Postmates, and Seamless. This past summer, the company faced backlash for its pay model for delivery workers that sometimes meant workers didn't actually receive customers' tips. The company changed its policy following the criticism.

DoorDash remains a private company and cofounder Tony Xu told Forbes the company will not disclose financials, but is still not profitable. He said the company plans to continue to raise money, launch new products, and expand the service.

WeWork, the commercial real estate and shared workspace company launched in 2010, was the most valuable private tech startup at the beginning of 2019 at $47 billion. Today, it's worth a fraction of that.

When WeWork was first introduced into society's consciousness, it was called revolutionary. WeWork's office spaces, sleek and full of amenities, attracted all kinds of members. Cofounder Adam Neumann proved to be so charming and persuasive that he secured a $4.4 billion investment from SoftBank CEO Masayoshi Son.

But when WeWork publicly filed its IPO paperwork in 2019, the public got its first look at the company's financials, which showed mounting losses, in the billions, concerning corporate governance. Combined with reports of erratic behavior by its eccentric CEO, Neumann, the IPO plans hit a wall and initial measures to placate potential investors weren't enough to save the public offering. WeWork eventually shelved its plan to go public indefinitely, and Neumann stepped down, but not without walking away with more than $1 billion. According to CB Insights, WeWork's valuation is around $8 billion now.

The on-demand grocery delivery app Instacart founded in 2012 was last valued at nearly $8 billion.

Instagram's partnerships with large chain grocery stores, like Amazon's Whole Foods, and its willingness to cater to "brick-and-mortar retailers," according to Recode, are essential for its future growth.

Like DoorDash, Instacart's fleet of workers have publicly called out the company for its pay model, which replaced tips with a service fee. The company brought the option to tip back, but the move still drew criticism after the location of the tipping feature changed.

The company's pay model still is an issue of contention for its workers, who just this past summer urged the platform's users to tip in cash instead of through the platform, and have even gone on strike. 

Robinhood, the no-fee stock-trading app popular among millennials, launched in 2013, and as of October 2019 was valued at $8.78 billion.

With a user base of over 6 million, the app also offers the option of buying and trading of cryptocurrencies like bitcoin, ethereum, and litecoin.

"There were a lot of people who didn't believe in it, and we had to bang down a ton of doors," cofounder Vlad Tenev told Business Insider. Some of Robinhood's flashier investors include Snoop Dogg and San Francisco-based venture capital firm Index Ventures. 

Robinhood's rise didn't come without some roadblocks. Earlier this year, the company had to walk back the launch of its high-yield checking and savings accounts within just one day of its announcement.

SoFi, the US-based online personal money management startup, was founded in 2011 and has a valuation of $4.8 billion.

In 2015, the company announced a $1 billion series F round led by SoftBank, making it the largest "single largest financing round in the fintech space" at the time. 

In 2017, former SoFi CEO Mike Cagney stepped down after a New York Times investigation reported Cagney was at the center of sexual harassment claims and the company's "toxic" environment. Since the scandal, Anthony Noto — former chief operating officer of Twitter and former managing director at Goldman Sachs — has taken over and shown interest in SoFi entering the cryptocurrency game.

Scooter and bike rental startup Lime is valued at $2.4 billion after raising over $777 million since its launch in 2017.

The last two years have seen a rise in e-scooter companies like Lime, which first launched in its hometown of Santa Monica and is now available in 120 markets around the world. Last year, however, was a tumultuous one for Lime, but was also the same year it hit the billion-dollar valuation mark. 

The city of San Francisco sent the company a cease and desist alleging its "current business practices [that] create a public nuisance." Multiple studies examined the number of injuries caused by e-scooters, leading to a very public backlash, while newer reports suggest that cities don't know how to regulate them, or end up banning them completely, and riders don't really know how to ride them.  

Postmates was first introduced in San Francisco in 2011. Today, the company, which employs thousands of couriers who deliver groceries, takeout, and more locally, operates in over 3,000 cities.

This past September, Postmates was valued at $2.4 billion after raising $225 million in funding— raising its total funding to $906 million. It first reached billion-dollar valuation status in 2018 as better-funded competitors entered the market. The company was expected to go public by the end of 2019, but its IPO has reportedly been shelved until 2020 at the earliest.

According to a report by Business Insider, Postmates remains "unprofitable and lags a crowded field of rivals in the food delivery market."

Plant-based food company Impossible Foods is currently valued at $4 billion and is expected to go public soon.

Founded in 2011, Impossible Foods makes plant-based foods to replace meat, dairy, and fish. This past year, the Silicon Valley-based company launched a nationwide partnership with Burger King, bringing its plant-based burgers to thousands of locations across the US. 

Demand for its products led Impossible Foods to complete a $300 million Series E funding round in May, skyrocketing its valuation to $2 billion as the demand for a better vegetarian burger fires up. Some noteworthy investors include pop singer Katy Perry, tennis star Serena Williams, and Microsoft cofounder Bill Gates. At the end of 2018, the company said it was turning out a million pounds of the product every month — and there are no signs of demand slowing down.

It it now raising $350 million at a $4 billion valuation, according to PitchBook.

Hims, the online platform where men can order personal care products discreetly, reached unicorn status in January 2019 and is currently valued at $1.1 billion.

The success of Hims, which was founded in San Francisco in 2017, is largely attributed to its splashy, millennial-focused ad campaigns. Hims offer users sexual-health products, birth control, skin care, and hair-loss treatments without having to physically go to the doctor to get a prescription. 

The company has raised nearly $200 million since its launch, but has also sparked concern among some doctors who said the health startup's effort to increase the number of online patients that could be treated with generic Viagra was worrisome. 

Glossier, the online beauty brand that sells makeup and skincare, reached a billion-dollar valuation in the first half of 2019.

Founded in 2010, CEO Emily Weiss harnessed the power of her social media presence to build a community of dedicated makeup and skincare enthusiasts where "less is more" is the motto.

Glossier's products, famous for its "millennial pink" packaging, have been used by countless celebrities, but the company has also made a point of tracking down "micro" and "nano" influencers (those with 1,000 to 100,000 followers) and paying them to promote the brand through their personal Instagram profiles. With a small number of brick-and-mortar stores, Glossier instead does semi-regular pop-ups where customers can come shop IRL.

Casper, the mattress and bedding company, was founded in 2014 and is credited with being one of the first bed-in-a-box startups.

With over $400 million in revenue for 2018, and $355 million in total funding to date, Casper reached a $1.1 billion valuation in March.

The company opened a retail store last year, and plans to open over a hundred more in the coming year, on top of its products being available in most Target stores.

In addition to popularizing the boxed delivery of mattresses, Casper's success can be linked to a marketing strategy taken up by many other popular-among-millennial brands: ads, ads, ads— on the subway, on podcasts, on billboards, on social media. So what's next for the company dedicated to revolutionizing sleep? A possible IPO.

Warby Parker, a direct-to-consumer brand that sells eyeglasses, reached unicorn status just five years after it launched in 2010.

Warby Parker offers a wide variety of stylish eyewear and sunglasses, as well as eye exams, at low costs, attracting millions of customers and raking in nearly $300 million in funding. It was last valued at $1.75 billion. 

Warby Parker has hundreds of stores around the US, but new features such as its"virtual try-on" is an attempt to attract customers outside of metropolitan hotspots and those who just don't have time to make an appointment.  In 2018, the company said it had reached profitability, and its founders are talking about an initial public offering in terms of "when" not "if," according to Recode. 

Ride-hailing giant Lyft went public at $72 a share and a $29 billion valuation in March — the first of its competitors to do so.

Lyft was founded in 2012 and quickly became one of Uber's closest competitors, though Uber remains the leader in the crowded ride-hailing market. Since it launched in San Francisco, the  company went on to raise around $5 billion from big-name investors like General Motors, Andreessen Horowitz, and Google's parent company Alphabet, before eventually going public at $72 a share.

Since then, its share price has traded below the IPO share price. On Friday, it was trading at around $49 a share.

Lyft is available in nearly 700 cities in the US, despite having no clear timeline for reaching profitability. Lyft has also come under fire for some of the same reasons users revolted against Uber. In October, over 30 women filed a lawsuit against the company saying it did not do enough to protect them against sexual assault and, in some cases, kidnapping. Lyft drivers also went on strike in May to protest what they called poor work conditions and low pay rates. 

Founded in early 2015, Away, the suitcase retailer that prides itself on sleek design and durable materials, reached a $1.45 billion valuation in May.

With its products being praised as "Instagram worthy," Away has raised $181 million in total, sold over 1 million of its lightweight, high-tech suitcases, and is backed by models including Karlie Kloss.

Away's cofounder Jen Rubio got her start at Warby Parker. Rubio and the Away team are now working on wellness products and travel-approved apparel in addition to their luggage lineup.

When tech meets mindfulness, you get Calm, the meditation app born in 2012 that reached a $1 billion valuation this year.

As mental health initiatives spread across the country, the Calm app and its many features, like breathing exercises and sleep stories, have gained a lot of traction. Calm got the attention of celebrities like Aston Kutcher and his VC firm Sound Ventures. In July, Calm completed a $115 million Series B raise — bringing its valuation to a bit over $1 billion and making it the first so-called unicorn startup focused on meditation. 

Cofounders Alex Tew and Michael Acton Smith plan to expand Calm through its partnerships with XpresSpa, American Airlines, Sonos, and Uber.

Famously used by human resource professionals, ZipRecruiter was founded in 2010 with the intent to connect candidates to companies looking to hire. It reached a $1.5 billion valuation in October 2018.

ZipRecruiter uses artificial intelligence to connect hiring managers with job seekers. Over 100,000 businesses use ZipRecruiter to find the candidates, according to TechCrunch. With no whispers of a potential IPO just yet, cofounder Ian Siegel said the company will continue to improve its existing software. 

Instagram, founded in 2010, was estimated to be worth over $100 billion in 2018, according to a report from Bloomberg Intelligence. In 2012, Facebook bought the image-sharing platform for $1 billion.

It is safe to say Facebook's $1 billion investment in Instagram paid off. According to Bloomberg Intelligence, Instagram would be worth at least $100 billion as a standalone company. In 2018, the company announced it had reached 1 billion active monthly users, a number many expect to rise. 

Since its launch, Instagram has expanded beyond photo sharing. There's IG TV, shopping, live video, stories, and even the ability to donate to different nonprofit organizations. More recently Instagram announced it was testing a feature that would do away with likes— a move that some praised and others threatened to quit the app over.

New York-based health insurance startup Oscar Health was founded in 2012 and is worth $3.2 billion.

Oscar raised $375 million from Alphabet last year, and said it pulled in nearly $1 billion in revenue. Oscar caters to the digital-savvy in search of adequate health insurance who don't want to deal with too much red tape typically associated with signing up for insurance. The company has a couple hundred thousand users, its biggest age group being those 26 to 35 years old. Alphabet's $375 million in 2018 gave Google's parent company a ~10% stake, and pushed Oscar's valuation to $3.2 billion.

For the first nine months of 2018, according to state insurance filings reviewed by Business Insider, Oscar lost $12 million. That's significantly less of a loss than 2017, when it reported a $96 million loss in the third quarter alone. For the first half of 2019, the company said it took in $678 million in gross premium revenue, and that it generated a gross underwriting profit of $128 million. 

This past summer, CEO Mario Schlosser announced Oscar's marketplace would start selling Obamacare plans, including Medicare Advantage plans, in 12 new markets starting in 2020. 

Additional reporting by Lydia Ramsey and Clarrie Feinstein.

Robotic food-preparation company Zume, known for its pizza-making robots, landed a $375 million investment led by SoftBank in 2018, skyrocketing its valuation to over $2 billion. It's now reportedly seeking additional funding at a $4 billion+ valuation.

A year before Zume hit unicorn status, it was valued at only $170 million. But since its launch in 2015, Zume Pizza set out to revolutionize the pizza-making process — employing robots and artificial intelligence to man the kitchen and send out orders more swiftly at a low cost. CEO and cofounder Julian Collins said from Zume's data collection, it "predict what pizza you want before you even order it."

But the company is now pivoting amid an executive exodus as it restructuring to focus on growing revenues, Business Insider's Megan Hernbroth reported in November. In September, Zume announced a partnership to launch mobile kitchens, expanding into compostable packaging and food-truck services.

Allbirds, the company that manufactures the trendy wool sneakers dubbed "the world's most comfortable shoes," reached a $1.4 billion valuation this year.

Allbirds launched in Silicon Valley in 2014 and has since raised over $77 million from investors including Fidelity and legacy firm Tiger Global Management. The core concept of Allbirds is its commitment to sustainability — the foam in the sneakers are made from sugarcane, and the textile of choice is, of course, Merino wool. Celebrities like Jessica Alba, Amy Adams, and Blake Lively have been seen sporting the sneaker, too. 

The company has recently filed a lawsuit alleging Austrian footwear company Giesswein Walkwaren of copying its iconic kicks. And it wasn't the first time Allbirds went to court over another company over copying concerns. In 2017, the brand settled a suit with footwear giant Steve Madden. Allbirds recently called out Amazon's own wool shoes, and CEO Joey Zwillinger penned an open letter to Jeff Bezos asking the company to "please steal our approach to sustainability."

As for the future of Allbirds, founders of Tim Brown and Joey Zwillinger still plan on challenging "the status quo" of sustainable material innovation. 

Online resale retailer The Real Real was valued at $1.65 billion and went public this summer.

The Real Real got its start in 2011 in San Francisco. At first, the company was only online, but with its success selling items like Adidas Yeezys, Hermes Birkin bags, Chanel shoes, and Louboutin heels, it opened its first store in 2017. 

Consumers eager to buy used designer items led The Real Real to grow quickly, opening new fulfillment centers and three stores in Los Angeles and New York City. 

Julie Wainwright, the company's founder and CEO, told Recode that the luxury resale market remains largely online still — so don't get your hopes up for The Real Real department stores all over the world any time soon. 

Gusto, the platform that makes payroll easier for managers, was founded in 2011 and has a valuation of $3.8 billion.

According to CEO Joshua Reeves, customer service and satisfaction are what drive him and his team to refine Gusto as a product for the average small business owner. Gusto's simplified platform has attracted over 100,000 customers, processing billions of dollars of payroll every year. It even lets business owners offer their employees health insurance, retirement and savings plans. 

This past July, Gusto raised $200 million in funding, bringing its total to over $500 million. The next step for Gusto is to hire more employees and "double down on research and development," according to Crunchbase. 

Fintech insurance startup Lemonade has raised a total of $480 million in funding, launching its valuation to $2.1 billion earlier this year.

Lemonade uses an AI bot to create personalized renters and homeowners insurance policies on a simplified platform where users can be insured starting from $5 and $25 per month. Lemonade's ability to thoughtfully explain technical terminology, like what a deductible is, while making it easy to submit claims has won it the support of many millennials. 

The startup has reportedly sold more than half a million insurance policies and generated more than $57 million in revenue last year. After a successful 2018, Lemonade announced its plans to bring the platform to all 50 states and Europe, as well as hire more employees to help manage its rapid growth. 

Snapchat went public in 2017, and today its market valuation is around $23 billion, making a rebound from its low of $7 billion last December.

Snapchat, the photo-and-video-based messaging app, launched in July 2011, and attracted millions of younger users who loved the platform's disappearing message feature. That's no longer the app's only draw, however. Snapchat has evolved as a social media company, introducing its Discover page, where users can find news and famous internet personalities, and a text chat feature, among other features. The app has almost 200 million daily users and continues to be one of the preferred platforms for Gen Z. 

And though the company is worth around $23 billion today, and is considered to be this year's "best performing" tech stock, the LA Times reported in April that Snapchat has three years to reach profitability before it runs out of cash.

Coinbase, the cryptocurrency exchange, launched in 2012 and hit unicorn status in October 2018 with an $8 billion valuation.

If you are interested in Bitcoin, Ethereum, and Litecoin, chances are you're already aware of Coinbase, though the app didn't really take off until 2014 when investors like rapper Nas and VC firms like Andreessen Horowitz began to take notice. 

With more than half a billion dollars in total funding, Coinbase hopes to expand outside of the United States. Coinbase vice president Dan Romero told Business Insider in 2018 that the company's goal was to become the Google of crypto.

With big investments from industry giants like Ford and Volkswagen, Argo AI reached a $7.25 billion valuation in July, just two years after the company launched.

Autonomous vehicles seem to be on the mind of every car maker, including the biggest: VW is the world's biggest automaker by sales volume last year. And that's where Argo AI comes in. The autonomous-driving tech startup caught the eye, and cash, of two of the largest car makers in the world. Ford invested early with $1.6 billion, and with Volkswagen's $2.6 billion total investment, Argo AI's valuation reached new heights in 2019.

These partnerships will help Argo share the cost of getting its autonomous cars to the market, while also turning its attention to the future automation of off-road equipment, too. But with so many other competitors in the field, the race is on. 

Healthcare is a ripe industry to disrupt, and San Francisco-based Clover Health knows it. The company, founded in 2014, is valued at $1.2 billion.

Clover Health's incentive is to do away with paperwork and focus more on the patient by using "predictive analytics technology"— a feature Clover promoted as a way to keep costs down using the Medicare Advantage Plan.

But the road hasn't been easy for the startup. Last year, seniors insured on Clover began receiving medical bills for blood work, a surprise experience that was not supposed to happen, according to the company.

And even five years after launching, Clover has managed to make its way into "select counties" in seven states, thanks to the historically slow-moving healthcare industry, one many other startups are attempting to disrupt. But that doesn't mean investors are not interested — in January, Clover raised $500 million, bringing its total funding to over $900 million, with help from Alphabet's venture arm GV. 

Valued at over $3.6 billion when it went public, gene sequencing startup 10x Genomics continues to help doctors and scientists understand cancers and cell therapy.

Launched in 2012, 10x Genomics went public in September after hitting unicorn status in January. The company focuses on "single-cell sequencing" and has worked with institutions like Fred Hutchinson Cancer Research Center.

In 2017, the company, backed by investors like Softbank, said its sales reached $71 million. CEO Serge Saxonov was one of the founding researchers at 23andMe, and hopes 10x can help scientists better understand genetics down to a single-cell level. The company continues to sell its handful of products to academic, federal, and drug-development labs across the country, with plans to expand further, and make more DNA-focused acquisitions. 

Check out a list of all the companies that hit $1 billion valuation in 2019 over on PitchBook. 

• Postmates is in talks to find a potential buyer, CNBC reported on Tuesday, citing a single source.
• The food-delivery startup has also laid off dozens of employees and decided to close its office in Mexico City, CNBC reported, citing sources familiar with the matter.
• Postmates filed confidential IPO paperwork in February, but delayed its plans to join the stock market after Uber and Lyft delivered disappointing debuts and WeWork pulled the plug on its IPO in the face of fierce investor backlash.
• View Business Insider's homepage for more stories.

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Postmates is in talks to find a potential buyer, CNBC reported on Tuesday, citing a single unnamed source.

The food-delivery startup  — which boasts around 1,300 employees — has laid off dozens of employees and decided to close its office in Mexico City, CNBC reported, citing sources familiar with the matter. It has also trimmed headcount in San Francisco, Los Angeles, Nashville, and elsewhere, the news outlet reported.

"We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the US," a Postmates spokesperson told CNBC. "We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result."

The reports of layoffs, office closures, and sale talks come after Postmates raised $225 million in September, valuing it at $2.4 billion. The startup filed confidential IPO paperwork in February, but delayed its plans to join the stock market after Uber and Lyft delivered disappointing debuts and WeWork pulled the plug on its IPO in the face of fierce investor backlash.

"We had a window earlier in the year, but after [the] somewhat lukewarm reception of tech companies, specifically after WeWork and their losses, I think we're ready to go when we feel that the market conditions are right," Postmates cofounder and CEO Bastian Lehmann told CNBC last month. "We have the time to figure out when we want to go out."

Money has poured into food-delivery companies in recent months. DoorDash — which counts WeWork-investor SoftBank among its biggest backers — raised $100 million at a valuation close to $13 billion last month, according to Bloomberg. Amazon led a $575 million financing round into Deliveroo in May, which likely valued the startup at north of $4 billion.

However, food-delivery startups are facing more and more questions about their business models and paths to profitability. GrubHub's stock plummeted by more than 40% in a day after it revealed a steep third-quarter earnings decline and gave a muted sales forecast.

Lehmann distanced Postmates from its rival, telling CNBC the issues were "100%" specific to GrubHub. "The idea that bad management equals a bad market is a shoe that doesn't fit the new breed of companies," he said.

He added that different brands appeal to different customers, and Postmates' millennial fans may not be excited by a company that caters to people over 50.

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

• On Nov. 22, Carta CEO Henry Ward announced new separation policies at the fintech startup, including departure pay for all employees and removing separation agreements and legal documents.
• Ward told Business Insider that the changes will likely cost his business around $3 million through 2020, but he sees it as an investment in benefits spending for employees.
• After posting his internal memo on Medium in November, Ward said several other startup CEOs reached out to him to gauge how he won over the board and legal team. He told Business Insider that many CEOs wanted to implement similar changes but were waiting to see whether or not the board fired him for the decision.
• According to Ward, Carta was also among the first to offer employees a 7-year window to exercise any options they earned during employment after they left, a policy which many other highly valued private startups have adopted as employees have become more vocal about equity.
• Click here for more BI Prime stories.

The freewheeling culture at Silicon Valley's biggest tech companies has come under intense scrutiny from an unlikely source: its own employees.

Companies like Google and Facebook have faced marches, petitions, and lawsuits from current and former employees questioning the motives of the companies that were once heralded as best places to work. Employees are putting everything up for debate, from paternity leave policies and gender inclusive benefits all the way up to whether the company should take on controversial projects with the government. A sea change has come to Silicon Valley with workers at the forefront.

Carta cofounder and CEO Henry Ward could see the seismic shifts at his own startup, a company that is essentially the NASDAQ for private companies like Carta itself. The $1.6 billion businessannounced on Nov. 22 that it was revamping its employee departure policies, including paying out all employees at the time of departure and doing away with separation agreements and non-disparagement clauses.

"It had always kind of bothered me that we did this," Ward told Business Insider. "It didn't sit well with me, but I never really thought about doing it differently."

That changed when an early employee left the company voluntarily to pursue passions outside of tech, Ward explained. Shortly after, a different employee who had been with the company for only a month had to be let go, but that employee was given severance where the early employee had not.

"This woman that left, we gave her nothing," Ward said. "I couldn't sleep at night."

Doing away with 'draconian' procedures

In addition to paying out every employee that leaves, a move that Ward estimates will cost his business $3 million through 2020, Carta also updated the language it uses internally when an employee leaves. There are "employee-initiated departures" and "company-initiated departures," but no firings or quitting, Ward said.

"Somehow we got this war language with words like 'termination' and 'firing'," Ward said. "Somehow that entered the vernacular of letting employees go. I think words matter, so changing the language is the first step in changing how people think about it."

But it's not just all talk, Ward said. The biggest hurdle he had to overcome with his legal team and board of directors was ultimately doing away with legal paperwork that tends to accompany any employee departure, such as a separation agreement or non-disparagement clause. The goal of any agreement is typically to protect the company from lawsuits coming from former employees, but can have an adverse effect on culture and unofficial codes of silence.

"The separation agreement is draconian," Ward said. "The lawyers told me I needed it for protection, but I've done this for a while and I've been through litigation, and not once have I ever had a lawyer tell me not to worry about it because the employee signed a separation agreement."

Ward said his conviction helped sway the lawyers and his board of directors, which consists mainly of his investors. After posting the changes publicly, he said several other tech CEOs reached out to him to ask how he'd done it. They were interested but concerned their own boards wouldn't go for it, he said.

"Everyone knew it was the right thing to do but they needed someone to do it first and not blow up," Ward said. "If I don't get fired over it other, CEOs will start doing it. I feel pretty good, so far the world hasn't exploded."

The change is the second major overhaul at Carta, which is widely credited with spearheading an extended window in which startup employees could buy or sell vested stock options. Typically, employees could only buy or sell options in private companies while they were employed, and so either left money on the table to leave or stuck around long past when they would've liked. Carta lobbied hard to extend that window to up to 7 years after an employee had left, which is now standard at most major tech startups.

"It's all conviction. If you are a successful visionary with a founder-supportive board, you can make it work," Ward said of the new changes. "If you are a private-equity supported thing, they are not going to like it. It's just the right thing to do, and we're going to do it."

SEE ALSO: SoftBank-backed robotic pizza startup Zume is losing 4 more executives, including its CMO and the head of a major business division, amid a big restructuring

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NOW WATCH: Apple just released iOS 13.2 with 60 new emoji and emoji variations. Here's how everyday people submit their own emoji.

• Employees of luggage startup Away were reportedly fired after complaining about their company in a secret Slack channel, according to a new report from The Verge.
• The Verge investigation describes a "cutthroat culture" at Away, where employees' activity in workplace messaging threads was closely monitored.
• Bosses also reportedly used Slack to berate employees who were deemed to be underperforming, which a worker said was "like having your pants pulled down in front of the company."
• Visit Business Insider's homepage for more stories.

It's the stuff of nightmares for digital-first office workers: A group of employees forms a private messaging channel to vent about their jobs. Their bosses find out about the channel and read the messages. The employees are fired.

That's exactly what happened to former employees of the luggage startup Away, according to a new investigation by The Verge, which cites 14 current and former employees who describe a "cutthroat culture" in the office.

Like many other digital-oriented companies, employees at Away reportedly communicate using Slack, an instant-messaging platform designed for the workplace. Slack allows users to interact in public channels, which anyone can see, as well as private channels that require an invite.

Away's office culture was exceptionally Slack-centric, according to the report. Employees were reportedly banned from using email to communicate (Away cofounder Jen Rubio is also engaged to Slack CEO Stewart Butterfield). Workers were also reportedly banned from using direct messages on Slack, instead urged to post all messages in public channels.

Bosses would reportedly provide feedback — at times harsh criticism — in public Slack channels, regularly lambasting employees in rants that one source said was "like having your pants pulled down in front of the company."

Exasperated workers at Away reportedly formed a private channel called #Hot-Topics, where they complained about their jobs and negative interactions with bosses. Many of the channels users were reportedly queer employees and employees of color, who used the channel to vent about subtle bigotry they faced on the job.

Then, one day, employees saw CEO Steph Korey's name appear in the Slack channel. One former employee told The Verge that the next day, Korey called people who were using the channel into her office and fired them.

Away did not immediately respond to a Business Insider request for comment. Korey said in a statement to The Verge that the company's Slack policies were intended to prevent exclusion.

"Slack affords levels of inclusion and transparency email simply doesn't. With email the original author gets to pick who is included in the conversation and whose voices won't be heard. That's not the company we want," Korey said.

Read The Verge's full report on Away's office culture here.

SEE ALSO: Tinder says 'there are definitely registered sex offenders on our free products'

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NOW WATCH: Why it's so hard for planes to land on water

• Peloton's stock plunged 15% in three days this week, wiping more than $1.5 billion from its market capitalization.
• The connected-fitness startup is facing backlash over a holiday ad that has been widely panned as sexist, tone-deaf, and dystopian.
• Consumer sentiment can cause "a lot more stock price volatility when there are events that can cause people's views to move up or down," one expert said.
• Peloton this week also slashed the cost of a monthly subscription to its workout apps.
• View Business Insider's homepage for more stories.

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Peloton's stock plunged 15% in three days this week, wiping more than $1.5 billion from its market capitalization.

The connected-fitness startup is weathering a social-media backlash over a recent holiday advertisement. "The Gift That Gives Back" features a young woman receiving a Peloton bike for Christmas and then filming herself exercising on it over the next year.

The ad, which has racked up more than 4 million views and 15,000 dislikes on YouTube, has been widely panned as sexist, tone-deaf, and dystopian.

Sentiment matters

Peloton's steep stock decline could reflect the weight that investors put on consumer sentiment toward the brand and enduring relationships with users, Daniel McCarthy, an assistant marketing professor of marketing at Emory University, told Forbes.

"It can cause companies like Peloton to exhibit a lot more stock price volatility when there are events that can cause people's views to move up or down," he said. "I think that is exactly what we are seeing right now."

"Peloton missed the mark, and social commentary is largely negative," analysts at Raymond James said in a research note. "Backlash is worth monitoring," they continued, adding that they expected the ad to be taken down.

Price cut could 'accelerate adoption'

Peloton — which sells $2,000 exercise bikes and $4,000 treadmills equipped with screens and offers live and recorded fitness classes for a monthly fee — made other moves this week.

On Wednesday it slashed the cost of a monthly subscription to its workout apps to $12.49 from $19.99, The Verge reported. It also rolled out apps for the Apple Watch and Amazon's Fire TV.

The price cut could "accelerate adoption of its fitness platform," JMP analysts said in a research note. Combined with Peloton's 30-day free home trial and the prospect of a cheaper treadmill and rowing machine next year, they argue the company is "well positioned to attract a greater customer base into its broader ecosystem." They raised their price target to $38 from $34.

"We do not believe this does much to affect holiday sales," the Raymond James analysts said. "Black Friday traffic appeared solid, and the affordability campaign is compelling."

Bullish options bets 

Some traders are betting Peloton's stock drop will be short-lived. About 10,600 January $50 calls — which give traders the right to buy the stock at $50 in the coming weeks — were traded Thursday evening, according to Bloomberg.

The $50 price tag represents a 60% premium to Peloton's closing stock price on Thursday, and the total call volume for the day was more than twice the 20-day average, Bloomberg said.

Peloton's defense

Peloton defended the ad to CNBC on Wednesday, saying viewers missed the message.

"Our holiday spot was created to celebrate that fitness and wellness journey," a representative said. "While we're disappointed in how some have misinterpreted this commercial, we are encouraged by — and grateful for — the outpouring of support we've received from those who understand what we were trying to communicate."

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

• Autotech Ventures cofounder Quin Garcia is a big believer in next-generation car technologies, such as electric and autonomous vehicles.
• But his venture fund has intentionally avoided backing startups that are developing electric or self-driving cars for the masses.
• Such companies require massive investment and are many years away from delivering returns, he said.
• But Autotech is finding ways to place bets in those areas and in other areas where the transportation sector is being transformed by technology, such as in a startup working on self-driving mining vehicles and another that's built an online marketplace for auto repairs.
• Click here for more BI Prime stories.

Quin Garcia is a self-described "car guy."

He also really believes autonomous and electric vehicles will revolutionize the transportation industry and the broader society.

But if you scrutinize the portfolio of Autotech Ventures, the transportation-focused venture-capital firm that Garcia cofounded, you won't find any investments in companies developing or building cars for the masses — autonomous, electric, or otherwise. That's intentional, Garcia told Business Insider in a recent interview.

"Our job is to make money, and if we don't, we're out of business. So that's the ultimate lens through which we look when making investment decisions," Garcia said. "And when you are a financially motivated investor, you also have to think about time horizon" for a payoff, he added.

As transformational as electric and self-driving cars will eventually be, companies building them require huge investments, Garcia said. Tesla aside, it could be many years — maybe even decades — before investors in those kinds of companies see much of a return.

"As much as I want EVs here yesterday and for everyone to have one ... it's going to take time," he said.

Autonomous-vehicle startups face 'a day of reckoning'

Likewise, he said, fully autonomous vehicles that can drive anywhere and everywhere are likely more than 10 years out.

"We're just too early to be investing in something that's more than 10 years away, so we stayed away," Garcia said.

Indeed, in the autonomous area, he thinks a shakeout is coming among the numerous startups that are working on self-driving cars. The technological and regulatory obstacles to the rollout of such vehicles remain huge, even after years of investment, he said. And he said some companies were likely going to run low on cash in the next year or so — long before there's a widespread market for autonomous vehicles.

"We think that there's a day of reckoning coming for a lot of these ... autonomous startups," he said.

But Garcia thinks there are still ways to benefit in the much nearer term, from both the development of autonomous-vehicle technology and the still nascent, but growing, market for electric cars. Autotech has placed bets in both areas, even if it's not investing in mainstream car companies, per se.

In the electric-car area, the firm has backed Volta, a startup that has rolled out a network of more than 1,000 charging stations around the country. Unlike other such companies, Volta doesn't charge customers to juice up their cars. Instead, it makes its money on advertising. Its charging stations are designed to look like kiosks or digital billboards that carry ads, and it tries to place them in prominent areas, such as near the front of retail stores. As such, the company isn't dependent on the number of people who have electric cars, but on the much larger number of people who can see its ads.

"In Volta's case, they're selling eyeballs instead of electrons," he said.

Mines will adopt self-driving vehicles much faster than consumers 

Similarly, in the autonomous area, the company is backing SafeAI, which is developing self-driving technologies for mining and construction vehicles, and Verdant Robotics, which is working on similar technologies for farm vehicles. Such vehicles generally won't be operated on public roads and instead will typically be operated on privately owned land, Garcia said. So they won't have to worry about the complexities of navigating city streets or highways and the challenges of contending with human drivers, complicated street signs, and sometimes unpredictable pedestrians or bicyclists.

Because of that, such vehicles will likely face much less government regulation — and a significant market for them could develop much sooner than for fully self-driving cars for consumers.

"The time to market and the time to revenue is much shorter," Garcia said.

And Garcia sees plenty of opportunities in the transportation sector outside electric vehicles and self-driving-car technologies. Three other big trends are shaping the transportation-industry writ large, he said — the connecting of vehicles to the internet, vehicle sharing, and the adoption of enterprise software by transportation-related companies. Autotech was a backer of Lyft— Garcia and John Zimmer, the app-based taxi company's cofounder, were fraternity brothers in college. But many of its investments have been less high profile.

The firm focuses on finding and betting on early-stage companies in the transportation sector, often investing in the seed or Series A round. Autotech's limited partners include some of the major auto-industry suppliers, including Murata Manufacturing and Denso. Garcia and his team also have other, long-standing connections in the transportation industry. Autotech's forte is helping connect those contacts to the transportation-related startups it backs, he said.

Among the other firms in which it has invested outside the autonomous- and electric-vehicle areas is Fixico, a European startup that's created a marketplace for car-repair and body-shop services. Instead of having to go from body shop to body shop to get quotes for a minor repair, customers can submit a picture and description through Fixico's website and request quotes for fixing it.

"Is that going to have as an enormous an impact on our society as autonomous? Nope," Garcia said. "But there's still a huge pain there, and the opportunity is more near term to solve that pain.

"It's not going take 10 years to solve the challenge of getting gouged by a mechanic."

Got a tip about venture capital or startups? Contact this reporter via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

• Read more about venture capital and startups:
• A VC invests in dozens of companies each year and helps them raise their next round of funding. Here's his top advice for creating a winning pitch deck.
• As billions of dollars flooded in to Silicon Valley, some startups and founders got left behind. Here's why this VC thinks there's still good money to be made investing in them.
• 2 months after Israeli startup Stoke was founded, it raised $4.5 million. Here's the pitch deck it used.
• Emergence Capital backed Salesforce before its IPO. Here's why one of the VC firm's partners thinks the $141 billion software giant is vulnerable to a next-generation enterprise software startup.

SEE ALSO: This VC helped make VMware the giant it is today as its CTO. Here's why he thinks his background helps him score deals and sift through the hype.

Join the conversation about this story »

NOW WATCH: Why it's so hard for planes to land on water

• According to PitchBook data reviewed by Business Insider, 200 startups achieved valuations at or above $1 billion between 2010 and 2019.
• These billion-dollar businesses have achieved the "unicorn" milestone in fewer funding rounds in 2019 than in 2010, according to PitchBook data.
• But the unicorn heydays may be coming to an end. Several venture-capital investors in Silicon Valley told Business Insider that 2020 may not be as big of a boom time for privately funded startups.
• Investors pointed to a potential economic downturn and industry uncertainty after disappointing exits like Uber and a rethinking of the growth-at-all-costs model, which tended to favor unicorn startups.
• Click here for more BI Prime stories.

The decade of billion-dollar private companies is coming to a close. And the next decade may not be so kind to young startups, investors warn.

In 2010, only 16 companies were valued at $1 billion or more. By 2019, that number had ballooned to 216, according to PitchBook data reviewed by Business Insider. The decade has been marked by rapid rises of the likes of Uber, Airbnb, and a host of other venture-capital-backed startups promising to disrupt entire portions of the world economy only a few years after inception. The companies grew, garnering massive private valuations and delaying going public as long as possible.

In fact, since 2010, the number of funding rounds it took for a company to reach the $1 billion mark increased, even as more companies reached the threshold. Startups were staying private longer, and more kept raising venture capital at bigger and bigger valuations before entertaining the idea of a public offering.

"The unprecedented run of massive late-stage private financings will dramatically slow. This will ripple down through the system, negatively impacting access to capital for private companies," Tribeca Venture Partners cofounder and managing director Chip Meakem told Business Insider via email. 

As the decade wound down, companies like Uber, Lyft, and Slack tested that theory by going public via either a traditional initial public offering or direct listing. Neither strategy insulated the companies from outside scrutiny, and public-market investors struggled to make the math work against high private valuations and meager, if any, profits. 

"VCs will renew focus on tried and true tech sectors like software driven by a resurgent preference for high gross margin businesses," Meakem's cofounder Brian Hirsch said. "The IPO market will slow down considerably but will be replaced by a surge in M&A as strategics find pricing to be more reasonable."

Going into 2020, many venture capitalists are aligned with Meakem and Hirsch in preparing their portfolios for the economic uncertainty that tends to accompany an election year. Add to that the longest bull market in history, and conditions are ripe for the end of the unicorn era, several investors said.

"We are testing any investment we make by asking, how would this stand up in a different economic market," Next Coast Ventures cofounder and managing director Michael Smerklo told Business Insider. "We're near the end of a bull market. There are ideas that are nice to have, but I don't know how they will do in the recession. We need to make sure the value proposition stands up regardless of the economic environment."

Many investors said they were looking away from high-growth businesses in favor of less flashy software-as-a-service startups that could produce reliable revenue and grow into a lucrative acquisition. The risky big bets that defined the 2010s may be well behind them, investors said.

"Gross margins don't lie," Smerklo said. "Selling a nickel for 10 cents is an interesting business model. Giving away product and hoping one day scale will make up for it, maybe Walmart and Amazon have mastered that, but not many others have worked over time."

SEE ALSO: 7 startups hit a valuation of $1 billion or more in 2010. By 2019, 4 of them have gone out of business or seen their valuations crumble.

Join the conversation about this story »

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Welcome to Cultivated, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom. Sign up here to get it in your inbox every week. If you want a discount to BI Prime to read my stories, sign up here!

Happy Friday,

Welcome to another edition of Cultivated! We're back after a week off for (American) Thanksgiving. 

Across the industry, the story's the same: public cannabis companies are getting hammered, deals are stuck in the mud, but more people all over the world are buying cannabis legally every day.

To that end, Michigan made the first legal marijuana sales in the Midwest on Sunday. Illinois will follow shortly after on January 1. And countries as far-flung as New Zealand are weighing legalization bills. 

In other news, I'll be at MJBizCon in Las Vegas next week. My schedule will obviously be pretty crazy but please get in touch if you'll be there and want to talk.

Last, we're continuing to report on the wave of layoffs in cannabis. If you have a tip, please send me an email. We can talk about moving our conversation to Signal, an encrypted chat app, or even going on background or off-the-record.

-Jeremy 

Here's what we wrote about this week:

Capital raises, M&A activity, partnerships, and launches

• Canopy Growth unveiled its full lineup of "Cannabis 2.0" products, including vape pens, CBD and THC-infused beverages, and chocolates. The company said it will stagger the rollout of products to "ensure a smoother rollout" and they'll start hitting shelves in Canadian dispensaries in January 2020. 
• Cannabis infusion tech startup Vertosa closed a $6 million seed funding round, co-led by California-based AFI Capital Partners and New York City-based Welcan Capital. 
• Chicago-based cannabis startup Leaf Trade raised a $4.5 million seed round led by Hyde Park Angels and Duke Software Investments.
• GrowGeneration Corp., a chain of specialty retail hydroponic centers, began trading on the NASDAQ on Monday. 
• Kevin Durant's Thirty Five Ventures is joining the board of Toronto-based cannabis investment firm Canopy Rivers. 
• Rapper Lil' Wayne is joining his former protegee Drake in hawking cannabis products. Weezy rolled out his brand, GKUA Ultra Premium, in which the high-THC products are tasted and approved by "Lil' Wayne himself."

Executive moves

• Former Canndescent CFO Tom DiGiovanni is joining Harborside as the company's new CFO. Former Harborside CFO Keith Li is staying on as VP of Finance.
• Holly Hamman is joining cannabis payroll startup Wurk as the company's CMO. She joins Wurk from Automox, a cybersecurity company.
• Katy Dickson, a former Mattel and General Mills exec, is taking over as president of Manitoba Harvest, which was acquired by Tilray earlier this year. 
• Bhang's interim president, Jamie Pearson, is taking over as CEO.
• Alex Shah is joining Akerna as the company's CTO. 
• Former Beboe CMO Kiana Anvaripour is joining Sweet Flower as the company's new CMO.

Chart of the week

Despite the tumult in the public markets, cannabis legalization is spreading around the US. Michigan started recreational cannabis sales on December 1, and Illinois is set to start January 1: 

What I'm reading

Join the conversation about this story »

NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.

• Steph Korey, the CEO of luggage startup Away, has issued an apology after The Verge's Zoe Schiffer reported on a toxic work culture at the company.
• According to The Verge, bosses reportedly berated employees publicly over Slack, and demanded long hours with little paid time off or overtime pay.
• Korey was included in many of the leaked Slack conversations published by The Verge, and said in a statement that she was "appalled" to read messages she'd sent in the past.
• On Friday, The Verge reported that managers at Away were instructing employees not to interact online with any of the coverage of the company's culture. 
• Visit Business Insider's homepage for more stories.

Travel startup Away just became the most recent workplace horror story after Zoe Schiffer at The Verge published an account of the company's "cuttroat culture" where employees were regularly "brutally criticized" on public Slack channels.

In the wake of the story, CEO Steph Korey has issued an apology.

"I can imagine how people felt reading those messages from the past, because I was appalled to read them myself," Korey said in a statement to Business Insider. "I am sincerely sorry for what I said and how I said it. It was wrong, plain and simple."

Many of Korey's Slack conversations were included in the story. At one point, she reportedly called the manager of a project "brain dead," and in another conversation, screenshots show Korey sending messages at 3 a.m., informing her team that no paid time off or work from home requests would be approved until they reached specific consumer experience milestones.

Read Korey's full statement below:

"I can imagine how people felt reading those messages from the past, because I was appalled to read them myself. I am sincerely sorry for what I said and how I said it. It was wrong, plain and simple.

We want Away to be a company that sets the highest standards for how we treat our employees and help them grow. Over the last 12 months we've invested in creating a culture that allows our people to thrive, including executive coaching for the senior staff, diversity and inclusion training for everyone at the company, 360 reviews, establishing employee resource groups and adding 100 plus new team members to better divide workloads. I am working to be better every day and I promise to keep at it for the sake of our employees, our customers and our company."

One week before The Verge published this article, Away's vice president of people and culture, Erin Grau, told Business Insider that Away cared about its employees and their career development. Away has since disputed some of the investigation's findings. 

On Friday, The Verge reported on a leaked memo from Away managers telling employees: "Please do not share the article. Please do not fave/like/comment or interact with any commentary (negative or positive) through either your personal or professional accounts."

To read the full report on Away's culture, head over to The Verge.

SEE ALSO: The HR chief at $1.4 billion Away told us the company wants employees to 'bring their full authentic selves to work.' But a new bombshell investigation describes a cutthroat culture of bullying and burnout.

Join the conversation about this story »

NOW WATCH: Watch Elon Musk unveil his latest plan for conquering Mars

• The power of voice computing has spawned a generation of startups designing their products for audio devices instead of mobile devices.
• They are creating hands-free, voice-controlled apps for the car, the phone, and smart speakers like Amazon Echo and Google Home.
• Read more about the tech industry's shift to the voice platform in BI Prime's special report.

The ascent of mobile devices and cloud computing spurred a new generation of startups that were mobile-first, or mobile-only, designing their products for smartphone users instead of desktop users. The same is happening for voice.

As more people equip their homes with smart speakers, displays, vacuums, and thermostats, a new crop of startups are racing to create apps for these voice-controlled devices. Others are testing the boundaries of voice computing with applications in cognitive neuroscience and early childhood development.

Startups are taking voice computing outside the home, with hands-free apps for the phone and voice-controlled games for the car. Paul Bernard, director of Amazon's corporate venture fund, Alexa Fund, said the rise of use cases that go beyond asking for the weather forecast or setting an alarm will help voice technology become mainstream.

"I've had my eye on the idea that Alexa would need to become untethered from the home at some point to fully manifest the vision of pervasive ambient voice computing," he said.

From new ways to shop to audio erotica, these are the voice-first startups to watch.

SEE ALSO: Goodbye screens, Hello voice: Tech's biggest platform shift since the smartphone is happening. Here's what it means.

SEE ALSO: In-house venture funds at Amazon and Google are leading the charge into the voice-first revolution and pouring millions of dollars into startups

Volley thinks smart speakers are the future of family game night.

What it is: Founded by a pair of former roommates at Harvard, Volley builds voice-controlled games for smart speakers and phones. Its top titles, like "Song Quiz" and "Yes Sire," have captured a following of more than half a million users in the Alexa Skills Store.

The power of voice, says cofounder Max Child, is that it makes it easy for anyone ages 5 to 95 to pick up the rules of a game. There's no fumbling with a controller or a screen. Volley's games allow people to play together gathered around a speaker, which makes them a high-tech substitute for the board game.

Child, who grew up playing intense games of Cranium, said the company sees huge spikes in users playing in groups of two or more on holidays.

Founded: 2017 by Max Child and James Wilsterman.

Funding:$5.75 million from Advancit Capital, Amplify.LA, MTGx, Rainfall Ventures, Y Combinator, and NFX Capital, among others.

HereAfter lets people hear stories from their dead loved ones after they're gone.

What it is: Almost as soon as James Vlahos, a journalist, wrote about the chatbot that he created to mimic his dying father, he started hearing from people who wanted a "legacy bot" of their own. His company, HereAfter, transforms hours of recorded interviews with a subject into a conversational voice bot. It can make small talk and tells stories through Amazon Alexa.

Vlahos said he gets asked often about a 2013 episode of "Black Mirror," in which a young woman tries a service that brings back her dead boyfriend as a bot. He agrees that the outcome was creepy.

"But that's because it was trying to actually replicate the woman's dead boyfriend," Vlahos said. "HereAfter is in no way trying to replicate the people we love. We're just creating a better way to help remember them."

HereAfter has hundreds of people on a waitlist for its private beta program. The company plans to raise outside funding in early 2020 to help scale the product.

Founded: 2019 by Sonia Talati and James Vlahos.

Funding: Bootstrapped.

Blutag brings the power of voice to online shopping.

What it is: If voice technology is the next frontier of personal computing, it's no surprise that Amazon is getting a jump on what shopping might look like in the voice era. It created a corporate venture fund, Alexa Fund, with a focus on investing in companies that build tools for Amazon's smart assistant.

Backed by the fund, Blutag develops software for retailers that want to have voice-controlled apps for the Alexa family of devices. Its app for EZneeds, a delivery service for big-box stores, for example, lets customers order and re-order items, request coupons, and get personalized recommendations. 

Paul Bernard, director of Alexa Fund, said voice-controlled apps have become "a must-have for a lot of different companies."

Founded: 2015 by Shilp Agarwal and Rahul Agarwal.

Funding:$1.81 million from Alexa Fund.

Drivetime thinks the future of voice entertainment will be in the car.

What it is:Gaming was the catalyst for the mobile computing explosion, and startup founder Niko Vuori is betting that games will also help usher in the era of voice computing.

The former Zynga employee partnered with other gaming industry experts in 2018 to create Drivetime. The startup is working on technology that allows drivers to play voice-controlled games in cars equipped with Amazon's Alexa.

"Voice is here and it's growing," Vuori tells us. "The car is the most obvious and natural platform for it because your voice is the only way to interact and engage while you are driving."

Founded: 2018 by Niko Vuori, Justin Cooper, and Cory Johnson.

Funding:$15 million from Makers Fund, Alexa Fund, Canaan Partners, Sinai Ventures, Fuel Capital, and Access Ventures, among others.

WinterLight Labs is working to diagnose cognitive impairments using short speech samples.

What it is: Based in Toronto, Canada, WinterLight Labs builds tools to help screen patients for the onset of symptoms associated with dementia, schizophrenia, and other mental illness. Its iPad app provides short verbal exercises, such as describing a picture on screen, and analyzes those speech samples to identify if the speaker is at risk of a decline in cognitive health.

The company is working with senior care facilities and clinical researchers to help them evaluate individuals more frequently and with greater objectivity. 

Its combination of computational linguistics, cognitive neuroscience, and machine learning could help healthcare providers diagnose and monitor cognitive impairments, as well as help pharmacists adjust drug dosages.

Founded: 2015 by Liam Kaufman, Katie Fraser, Maria Yancheva, and Frank Rudzicz.

Funding:$5.45 million from Pacific Health Ventures, Hikma Ventures, Grey Sky Venture Partners, First Star Ventures, and Novatio Ventures, among others.

Maslo is a voice journal app that lets executive coaches pulse a client's mood between sessions.

What it is:Maslo is essentially a smart diary. The app suggests a series of prompts, such as, "What is something you learned in the last week?" and the user responds out loud. Maslo's algorithms track hundreds of data points, from voice pitch to loudness and vocabulary to sentiment, and visualize changes in mood and energy.

Ross Ingram, cofounder and chief executive of Maslo, likens the "digital companion" to a good friend. "They don't try to fix you," Ingram said.

In October, the company released a new app and dashboard for executive coaches and their clients. The coaches can read transcripts of journal entries with the client's permission, or get a summary of their wellness and energy.

Founded: 2017 by Ross Ingram and Cristina Poindexter.

Funding:Undisclosed seed round from Techstars, Right Side Capital Management, and angel investor Ray Mazuka, the founder and former chief executive of Bioware, among others.

Wunder makes a monitor that listens for the quality of your child's play and learning environment.

What it is: For the parent who wants to know everything about their young child, a device from Wunder uses natural language processing technology to measure the number of words a child hears, how often they speak, and how often they're spoken to. The company's app can make recommendations for activities and books for parent and child to enjoy together, with the goal of improving language development.

While plenty of people are wary of devices that are "always listening," Wunder cofounder and chief executive Lamont Tang sees their benefit.

"Capturing language in a child's natural habitat allows us to provide cost-effective benefits such as improving a child's language and cognitive benefits," said Tang, explaining that Wunder hopes to help young children avoid expensive speech therapy in the future.

Wunder, formerly known as Oya Labs, is testing the device in a beta program and plans to start selling it in spring 2020.

Founded: 2017 by Lamont Tang and SC Yu.

Funding:$2 million from Johnson & Johnson Innovation, StartX, SOSV, and Cloud Angel Fund, among others.

Dipsea makes audio erotica for the podcast-obsessed generation.

What it is: Inspired by research that suggests the vast majority of women use their imagination to get turned on, Dipsea is a content studio that writes, produces, and distributes short audio stories designed to titillate the mind. A monthly subscription costs $9 and unlocks a library of nearly 200 stories.

Gina Gutierrez, Dipsea's chief executive, says audio has certain advantages over the traditional text-based erotic fiction.

"In a Dipsea story, talented actors help get you inside a story, so you can relate to the characters and feel their chemistry," Gutierrez said. "If we can suspend your disbelief, then your imagination can run wild. A Dipsea story can be imagined a hundred different ways by a hundred different people. When you think about how diverse people's preferences are, that's a really powerful thing."

Founded: 2018 by Gina Gutierrez and Faye Keegan.

Funding:$5.5 million from Bedrock, Thrive Capital, and angel investor Heidi Zak, the chief executive of ThirdLove, among others.

Voiceitt helps people with severe speech disorders be understood.

What it is: A startup graduate of Amazon's Alexa Accelerator, Voiceitt is working on a suite of products to make voice technology more accessible. 

Its main app, Talkitt, lets someone with a severe speech disorder talk into their smart speaker, tablet, or phone, and it reads out a transcript of what the person said. The company's speech recognition software becomes trained on the speaker's voice so it gets better at understanding their unique speech irregularities and pronunciations.

"We try to shoot for first in kind integration," said Paul Bernard, Alexa Fund's director. "The companies we invest in bring entirely new utility to our customers."

Founded: 2012 by Danny Weissberg, Stas Tiomkin, and Sara Smolley.

Funding:$9.75 million from Microsoft, Alexa Fund, Connecticut Innovations, VentureClash, M12, and Cahn Capital, among others.

Novel Effect wants to make reading interactive for the entire family.

What it is:Novel Effect uses speech recognition technology to add sound effects and music to children's books. The company was part of the first class of Amazon's Alexa Accelerator and appeared on TV show "Shark Tank."

Husband and wife founding team Matt and Melissa Hammersley came up with the idea for Novel Effect when they were expecting their first child in 2015. They wanted to make reading fun while preserving the bonding experience for the entire family. They first built the technology to simulate a theatrical reading performed at their baby shower.

The company's library contains more than 250 titles, including "The Cat in the Hat" and "The Tale of Peter Rabbit."

Founded: 2015 by Matt and Melissa Hammersley.

Funding:$5.09 million from Alexa Fund, TenOneTen Ventures, Lux Capital, Carbon Ventures, Waverly Capital, Maveron, and Techstars, among others.

• Silicon Valley startups are offering no-shoes office policies, allowing employees to spend the workday in house slippers, socks, or barefoot.
• It's the latest trend that embodies the region's famous pared-down office culture.
• Here's what it's like in the shoeless offices of Silicon Valley.
• Visit Business Insider's homepage for more stories.

The tech world has become inextricably linked to a very specific work uniform: hoodie, t-shirt, jeans, and sneakers.

That informality has permeated the office environment as well, with startups in Silicon Valley garnering a reputation for embracing out-of-the-norm office perks to compete for the best and brightest of the region's stock of tech talent. They've famously included free lunches, in-house nap rooms, free fitness classes and massages, and dog-friendly offices. 

But now some of those perks have come to include strutting around the office in house slippers or socks, or for some, bare feet.

Why? A simple reason: The CEOs grew up in households with no-shoe policies.

The offices of Gusto and Notion, both enterprise software startups, are a far cry from the American offices of old, where strict dress codes were enforced and meandering through the office in jeans, let alone barefoot, could have sent you packing.

But if shoeless workspaces are going to become a reality, it might as well be in tech country. After all, Silicon Valley was the epicenter of the business-casual dress movement in the 1990s. Since then, as Business Insider's Aine Cain writes, much of the corporate world — outside of finance and law — has taken on a results-oriented mindset. Employers don't care what you look like when you're working, as long as you're producing results.

And more than that, it's become a way for employers to lure freshly graduated tech workers — they're more likely to join you if they don't have to shed their hoodie for a suit jacket or swap their couch for a stiff desk chair.

As for the barefooted-ness, is it a health code violation? Turns out it's not, according to the San Francisco Department of Public Health.

"We are not aware of any health code violations in San Francisco for workers to be barefoot in a commercial space," a spokesperson told Business Insider in an email.

So march on, shoeless techies. March on.

Here's what it's like in the shoeless offices of Silicon Valley.

SEE ALSO: Inside dating app Tinder's new San Francisco office, where teams are devoted to studying Gen Z and employees are served tasty local lunches through Caviar

Shoe cubbies were once thought to be confined to the preschool classroom.

Nowadays, you'll find them in the Gusto office in San Francisco, where employees store their shoes while they navigate the workday barefoot or in socks.

Office culture is markedly lax in the West Coast tech hub, and there are a lot of reasons why.

Some have called the region the birthplace of the business casual movement of the late 1980s and 1990s.

Source: Business Insider

Eventually, it evolved into the inescapable t-shirt-and-sneaker combination we know today. You've seen the look embodied on the CEOs leading the region's tech giants.

The Valley's schtick has always been "discarding norms and celebrating rule-breaking," as The Atlantic reports.

Source: The Atlantic

And over time, that hallmark has bled into the work environment as well.

Tech companies famously began instituting office perks like free lunch, nap rooms, and dog-friendly offices.

Gusto and Notion are two startups in the past few years that have offered similar out-of-the-box office practices to workers.

Gusto CEO Joshua Reeves told Business Insider's Melia Russell in 2018 that he grew up in a shoeless household.

Source: Business Insider

And then when Reeves and a few other techies launched the company in 2011, it was out of a house in Palo Alto.

They all took their shoes off before ascending into the upstairs bedroom-turned-office.

Source: Business Insider and Entrepreneur

When Gusto moved into a more stable office, the tradition stuck.

The company's employees sprawl out on living room furniture — as well as at desks — sporting slippers or socks. Some are barefoot in the Gusto office.

Over at Notion, CEO Ivan Zhao had the same reasoning for implementing a no-shoes policy.

Zhao told Business Insider that he grew up in a shoeless household as well.

And in lieu of a designated shoe cubby, Notion's office is even more pared-down — employees merely kick them off on the floor near the front door.

Employees saunter around in slippers and socks ...

... and foot cushions are placed beneath their desks.

Both companies said their offices are outfitted with radiant heated floors to help keep their shoeless workers' feet toasty.

The shoeless practice is an example of startups crafting their own unique company culture.

Source: LinkedIn

There's a high turnover rate at tech companies, and singling your company out in one way or another can help not only recruit, but retain, techies.

Source: LinkedIn

On the other hand, some perks that companies offer, like beer on tap and yoga rooms, have been seen as "golden handcuffs" that persuade workers to stay at the office later and work overtime.

Source: Forbes and Quartz

Some critics have painted them as more harmful than beneficial to workers as it reinforces the Valley's "work hard/play hard" startup culture.

Source: Quartz and The New York Times

In response, some tech companies are changing the way they implement startup culture for the better.

Source: Forbes and Business Insider

And some made sure they embraced a healthy culture from the beginning. For Gusto, the company has managed to avoid the fratty company culture often associated with Silicon Valley startups, as Business Insider's Melia Russell writes.

Source: Business Insider

Fortune magazine has named Gusto one of the 100 best workplaces for millennials.

Source: Fortune

The distinction is likely for a number of factors, but no doubt the cozy office environment and practices are among them.

The company has also earned rave reviews by employees on Glassdoor, with some crediting the company for its "ridiculously generous benefits."

Source: Business Insider

Eight years in and the company's growth is notable too. Gusto crossed over into the unicorn club in 2015, and now has a post-money valuation of $3.8 billion.

Source: Crunchbase and Fortune

And Notion — besides attracting so much buzz in Silicon Valley's VC scene that investors were literally knocking on the door — has a tight-knit workforce in San Francisco's Mission District.

Source: Business Insider

So maybe they're onto something with bringing the coziness of home into work.

• Imply, an open source data analytics startup, announced $30 million in Series B funding led by Andreessen Horowitz's new growth fund. The funding values the 4-year-old startup at $350 million.
• Imply cofounder and CEO Fangjin Yang told Business Insider that its technology is based on Apache Druid, a popular open source database project that he founded.
• This is the first Series B investment for Andreessen's growth fund, which was announced earlier this year, Andreessen partner Martin Casado told Business Insider.
• The fund typically invests in later stages, Casado explained, but Imply had reached key growth milestones uncommon for a company at that stage, and required additional capital to continue growing.
• Yang said Imply had only spent about 10% of its Series A funding, also led by Andreessen, over the last 18 months — partly by keeping its offices outside of San Francisco's pricey real estate market.
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As Silicon Valley VCs consider pulling back on big funding rounds, Andreessen Horowitz's growth fund is doubling down with its earliest-stage investment to date — a $30 million Series B round.

The storied Silicon Valley firm is leading the Series B in Imply, a 4-year-old open source data analytics startup, now valued at $350 million. It is one of the earliest rounds Andreessen's growth fund has participated in, according to partner Martin Casado, who led the firm's Series A investment in Imply through its more traditional venture fund.

"I don't think we have ever seen a company that hit these numbers so efficiently," Casado told Business Insider. "The reason for the growth investment was really because the top line was great, the size of the business is much more advanced than what you would expect, and they burned very little money to get there."

The low burn rate was especially key, according to Casado and Imply cofounder and CEO Fangjin Yang. The company had only burned through 10% of its Series A funding over the last 18 months, Yang said. It did this in part by keeping headcount low, and partly by keeping its headquarters in Burlingame, a less-trendy suburb of San Francisco where office space isn't quite so hard to come by.

After the implosion of spend-more-to-grow-more startups like WeWork, Yang's bet is apparently paying off. Investors are increasingly looking for young companies that have financial efficiency baked into their culture. When asked how Imply compared to some of those high-flying startups burning mounds of cash, Casado laughed.

"Imply is the anti-one of those," Casado said.

The engine powering the car 

Yang built the technology behind Imply while working at a different startup in San Francisco. He and his team had been tasked with developing a better way to think about databases, which almost always deal with historical data — making it easy to see what happened in the past, but much harder to get a sense of what will happen in the future.

Companies like Microsoft and Tableau (now a subsidiary of Salesforce) have made analytics their stock in trade. But Yang's team saw that those kinds of solutions fell short when it came to taking data from multiple sources, all streaming in real-time, and using it all to come up with useful and actionable insights. 

The team built what would ultimately become Apache Druid, a popular open source database. This approach would find itself especially useful in fields like finance or e-commerce logistics, where tons of data is flowing around at all times.

"The innovation is to think about data not as static or delayed but as a continuous flow," Yang said. "It can help users answer the 'why' behind the data, which makes data more accessible."

As demand grew, though, Yang realized that the project warranted a dedicated team. So he started Imply.

"At Imply, I like to say we are building a car around the engine. The project was the engine, and Imply is the car," Yang said.

Designed for non-technical users

Although Yang and his cofounders are themselves technical, the product itself is designed for users with little to no technical experience. Making that information more accessible is part of the reason Imply has been able to expand beyond Silicon Valley startups as customers — growth that will likely continue with the fresh influx of cash.

"Enterprise sales and the [business-to-business] model is very well understood in Silicon Valley, so you're not reinventing the wheel," Yang said. "There's a lot less risk, and the business model is much better understood, which is a very different model than something like WeWork that is potentially unproven."

Yang said the funding will help the company expand to new markets in Asia and the Middle East over the coming months, in addition to investing heavily in marketing and hiring.

Still, don't expect its culture of responsible spending to change any time soon. Asked about the San Francisco Bay Area rite of passage of landing a billboard advertisement on one of the major highways, Yang laughed.

"I think it's a little against our culture to buy a billboard on the 101," Yang joked.

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• London-based investors Matt Penneycard and Check Warner have closed a $34 million new fund called Ada Ventures to support underrepresented startup founders. 
• Warner and Penneycard both formerly worked at Downing Ventures and have named their new fund after computer science trailblazer Ada Lovelace.
• "We're really excited to have this fund raised despite some headwinds which might have made this impossible," Warner told Business Insider.
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Venture capital's diversity problem might see a little improvement, thanks to a new fund dedicated to finding underrepresented founders.

Two London-based investors, Francesca "Check" Warner and Matt Penneycard, both formerly of early-stage fund Downing Ventures, have launched a $34 million vehicle called Ada Ventures to support diverse startup founders.

Warner is also the cofounder of Diversity VC, a group dedicated to widening access to venture from underrepresented groups. The fund is named after British female computer science trailblazer Ada Lovelace, who is credited with having written the first algorithm but was not recognised contemporaneously. 

Europe's diversity issue is stark. Currently, 92 in every 100 dollars invested in Europe goes to all male teams, 83% founders are white and 82% are university educated, according to Atomico's recent State of European Tech report. In the UK, a quarter of investment committees saw no female founders in 2017, per Diversity VC. 

"We're really excited to have this fund raised despite some headwinds which might have made this impossible," Warner told Business Insider in an interview. "The mission of making venture capital genuinely inclusive is so inspiring." 

It goes beyond gender and education however, with race, religion, and age often issues in venture capital. Ada Ventures will focus on finding diverse founders through a programme of "Ada scouts," 50 or so local talent spotters who can recommend startups to the fund in exchange for a finders' fee and potentially further incentives. 

Warner cites a network of Muslims in tech in London, Muslamic Makers, an 800-strong group of people who could be potential founders. "The idea is to flip the introduction process which often requires an introduction or prior relationships," she added, referencing the common investor practice of only investing in founders who come recommended.

Funding the future

Ada Lovelace was a mathematician and pioneer in the field of computer science, and is thought to have written the first algorithm for Charles Babbage's "Analytical Engine", an early computer. She was the only legitimate child of famed poet Lord Byron.

Warner said Lovelace was a constant source of inspiration during a tricky fundraising process with Brexit and an election just around the corner in the UK. "I would start every pitch by saying 'We could have had computers 100 years earlier if she [Lovelace] had been listened to,'" Warner said. "I spent a lot of time in meetings educating investors on why this isn't philanthropy but actually a massive market where there's money to be made." 

British Business Bank is the main backer of the fund, as previously reported by Business Insider, through its Enterprise Capital Funds (ECF) programme. Other investors include US-based BlueSky Capital and Dubai based Rasmala alongside angel investors such as TransferWise cofounder Taavet Hinrikus, gaming company Supercell's cofounders, and Backstage Capital's Arlan Hamilton. The fund is also backed by advertising executive Dame Cilla Snowball, Silicon Valley law firm Wilson Sonsini and later stage funds Atomico and Inovia Capital.

Ada will focus on seed and early-stage investments with initial funding expected to be approximately £500,000 ($658,000). The plan is to make 30 investments through the fund predominantly in underrepresented companies, especially in sectors including healthcare and the future of work. 

Ada has made seven investments to date, five of which the fund has led. These are Predina, a road traffic accident risk monitoring technology; Inoviv, a companion diagnostics tool; Motley, a vertically-integrated jewellery company; Ferly, a female-oriented sexual wellbeing company; Huboo, a multi-channel fulfillment service for e-commerce businesses; Polipop, the world's first flushable sanitary pad, and Juno Bio, which is working on decoding the vaginal microbiome to increase the success of IVF.

"In some ways people who feel disenfranchised think differently," Warner said. "We are lucky to have such amazing investors onboard but there are so many barriers to entry so we need more funds like Ada." 

SEE ALSO: A young investor who shook up European venture capital on its appalling lack of diversity is now raising $30 million for her own fund

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• In addition to harming employees, venture investors, and some of its managers, WeWork's collapse harmed a group many thought were protected from it — everyday investors.
• That's because such investors owned stakes in mutual funds that had invested in WeWork; those funds recently were forced to slash the value of their holdings in the company, some by as much as 68%.
• More pain may be coming for such funds and their investors because many still assign a higher value to their stakes than the price SoftBank recently paid for WeWork shares as part of its bailout of the company.
• Many investors likely didn't realize they were exposed to WeWork; mutual funds don't tout such investments in the documents regularly viewed by ordinary investors.
• Read more WeWork news here.

When WeWork imploded, seeing its attempt at an initial public offering fail, its valuation collapse, and its cash stockpile dwindle to the point that it was within mere weeks of running out, some observers latched on to one bit of good news — the disaster left everyday investors unharmed.

Yes, thousands of WeWork employees, many of whom received shares or options in the company, were at risk of losing their stakes, as well as their jobs. But those workers aside, the stakeholders who were going to see financial pain from the company's collapse were going to be the kinds of investors who knew and presumably could afford the risks — venture capitalists and big institutional investors such as SoftBank. That's because US securities laws and regulations generally prohibit average individual investors from buying stakes in private companies like WeWork.

It turns out, though, that the story that retail investors were sheltered from WeWork's meltdown wasn't entirely true. In fact, many everyday people were and are invested in private startups, at least indirectly through the mutual funds and publicly traded private-equity and business-development companies they've invested in.

Many such investors suffered losses when WeWork foundered. What's worse, they likely had no idea they were exposed to such risk. Even now, they may not understand that they themselves were affected by the crumbling of the real-estate behemoth and could be hurt if other giant startups — the so-called unicorns — collapsed.

"Are they aware that they're investing in these unicorns?" said Mike Pieciak, the commissioner of the Vermont Department of Financial Regulation and the former president of the North American Securities Administrators Association. "On the mutual-fund side, I would argue that the vast majority — if not 99% of the cases — the retail investor probably does not have any knowledge of that."

Mutual funds have recognized huge losses on their WeWork stakes

But what they don't know can hurt them. In recent weeks, numerous mutual funds have acknowledged in public filings and in reports to the research firm Morningstar that they have slashed their estimated valuations of their stakes in WeWork and other startups. As might be expected, given the magnitude of WeWork's collapse, the write-downs of the funds' stakes in that company specifically were dramatic.

For example, at the end of the third quarter, T. Rowe Price's Mid-Cap Growth Fund estimated that the value of its stake in WeWork had declined by 68% — or about $92 million — since the end of June. As Morningstar detailed in a recent report, numerous other funds advised by T. Rowe Price — including the MassMutual Select Mid Cap Growth Fund and the Optimum Large Cap Growth Fund, and the VY T. Rowe Price Diversified Mid Cap Growth Fund — also slashed the estimated value of their WeWork stakes by 68%, shaving thousands or posting thousands or millions of dollars in losses on those investments.

Other funds didn't recognize as great a percentage decline in their WeWork stakes but still posted significant losses as a result of the size of their investments. Fidelity's Contrafund, for one, estimated that the value of its stake in WeWork had declined by only 35% from the end of the second quarter to the end of the third. But that decline still translated into a $108 million loss on its investment.

While the extent to which WeWork affected the funds' third-quarter performance is not clear, many of these funds underperformed the market. 

The Fidelity Contrafund, for example, posted a 2.4% decline during the third quarter, compared with a 1.2% gain in the S&P 500 and a 0.1% decline in the Nasdaq. The T. Rowe Price Mid-Cap Growth Fund was down 0.7%. The John Hancock Mid Cap Stock Fund, which had one of the highest exposures to WeWork, was down 5.5% in the third quarter.

And there will likely be more losses to come, at least at some funds. The Contrafund estimated that the per-share value of its WeWork stake was about $35 at the end of September. Vanguard's US Growth Portfolio had an even higher per-share estimate for its stake in the company, valuing it at $45.90 a share at the end of the third quarter, according to Morningstar.

But when SoftBank bailed out WeWork a few weeks later, it paid as little as $11.60 each for the company's shares — a move that will likely force other investors to cut the values of their stakes again in coming months.

Because there's no established public market for private-company shares, fund managers have a lot of latitude to determine the value of their holdings in startups such as WeWork. The values they recognize in their reports could well be much higher than what their shares would be worth in an open market.

"Until there's public offering or other exit, you don't really know if that's a real valuation or if it's just smoke and mirrors," Renee Jones, a professor at Boston College Law School who focuses on securities regulation, said.

Funds generally held small stakes in WeWork

The mutual funds' write-downs of their stakes in WeWork come as Congress and the Securities and Exchange Commission are debating whether to make it easier for everyday people to invest directly in private companies. Proponents of such a move argue that with more companies staying private longer, retail investors, who today are generally barred from directly investing in such firms, are missing out on much of the growth and appreciation in value of those companies.

But consumer and small-investor advocates worry that opening up private companies to investment from everyday people would put those people at greater risk of losing money because they would not have the tools to effectively evaluate such investments. Private companies aren't required to disclose nearly as much information about their finances and operations as public companies are, and many startups fail before ever going public. Those advocates argue it would be better for retail investors if regulators encouraged companies to go public earlier in their life cycles than to liberalize the rules on investing in private companies.

For the most part, the stakes mutual funds had in WeWork were small compared with their overall holdings, limiting investors' pain. The SEC rules ban such funds from devoting more than 15% of their total assets to so-called illiquid investments — stocks, bonds, or other instruments that can't be easily bought or sold on public markets. Many funds that had stakes in WeWork devoted far less of their assets to such investments.

Of the funds Morningstar examined in its recent report, the average one had only about 0.5% of its assets invested in the real-estate giant. The highest percentage stake was the John Hancock Mid Cap Stock fund, for which WeWork comprised 0.77% of its investments, Morningstar found. But Vanguard's US Growth Portfolio and the Contrafund had just 0.09% and 0.18%, respectively, of their assets invested in the company, according to Morningstar.

But even such small stakes can limit fund performance if they decline in a big way, as WeWork did. The bigger danger is that the drop in the value of one startup is an indication of a bigger problem in the private markets, and fund managers have to cut the value of their stakes in multiple startups at the same time.

There's some indication that in the wake of WeWork's decline, and the fall in the share prices of recently public companies such as Uber, Lyft, and Slack, fund managers are starting to do that kind of broader reevaluation. At the end of the third quarter, many funds trimmed the values they placed on their stakes in Airbnb and other startups, according to Morningstar.

Investors "might not feel ton of pain on that investment" in WeWork, Pieciak said. But "if there are continued write-downs among that asset class, and you have a 3 or 4 or 5 or 6% exposure ... that is real pain, and that will have a real impact on the bottom line," he added.

Shares in private companies can be hard to sell

And there are other dangers. Because such stakes are, by their nature, difficult to sell off, funds can be forced to hold on to them even when they'd rather hold more desirable stocks or assets. The result can be that the fund ends up with significant exposure to private companies.

Such an event happened a few years ago with the Morgan Stanley Institutional Mid Cap Growth fund. In the wake of its underperformance, investors started selling off their stakes in the fund. To account for such redemptions, Morgan Stanley was forced to divest some of the fund's assets. But because it found it easier to sell off publicly held shares than stakes in private companies, the portion of the fund's assets devoted to the latter swelled from about 5% to more than 9% between 2014 and 2016, Morningstar has previously reported.

The performance of Morgan Stanley's fund bounced back in 2017. But being that exposed to the vicissitudes of startups — many of which die or fail to deliver much of a return to investors — could have sabotaged its performance relative to the rest of the market.

During the dot-com boom and bust 20 years ago, Garrett Van Wagoner managed a group of funds that were heavily invested in tech startups. The performance of those funds mirrored the big boom and bust of the tech stock market. As investors pulled out of his funds, Van Wagoner kept bumping up against the 15% cap on illiquid investments.

"On any given normal day, liquidity may not be an issue, but it's always sort of the worst-case scenario" that investors need to be concerned about, Tom Lauricella, an editor at Morningstar, said.

Funds have been upping their stakes in startups

One bit of good news for everyday investors is that few mutual funds have invested in private companies. In a study three years ago, Morningstar found that just 3.6% of funds had invested in at least one of some 133 different private companies.

And the amounts that mutual funds have devoted to such companies are tiny compared with their overall holdings. Funds had about $11.5 billion invested in those companies in 2016 out of $8.6 trillion in total assets, according to Morningstar.

Mutual-fund investment in private companies has been increasing in recent years, particularly since 2013, when the capital markets started rebounding after the Great Recession, according to Gary Kirkham, the global cohead of technology, media, and telecom investment banking for Bank of America.

A variety of factors, including changes in laws and regulations, helped shift capital from public to private markets. As it did, companies started staying private longer, and much of the appreciation in their value began occurring before they went public.

Meanwhile, everyday investors were shifting growing amounts of money into index funds. To try to outperform those indexes, some fund managers started to invest in private companies, hoping to get in on such startups at a discount before they went public. Those investments were riskier than the public companies mutual funds typically invest in, but they offered the possibility of much higher returns, Kirkham said.

"If you're a mutual fund, and you are in are business of deploying capital and getting returns, that's a pretty attractive market to tap into," he said.

Kirkham declined to comment specifically about WeWork or mutual fund firms' investments in the company.

Few investors are likely aware of such investments

The problem is that most investors likely have no idea that the funds have taken on such risks and that they themselves could be indirectly invested in startups through their 401(k)s or other accounts.

The funds themselves typically don't disclose their specific stakes in such companies in the prospectuses or in other documentation that they make available to everyday investors. At best, the funds may indicate in such documents that they may from time to time invest in nonpublic companies in general.

Mutual-fund firms do make public their investments in startups in the periodic reports they make to the SEC. But the investments are typically buried in the small print of such disclosures, mixed in with the funds' other holdings, often with little or no indication that they represent stakes in private companies. Unless investors knew about such filings and what to look for within them, and which private companies to search for by name, they'd generally have no idea that their fund was invested in them.

"Even a person who's paying attention isn't always enough to be up on the latest developments" in a mutual fund's portfolio holdings, Boston College's Jones said.

• Read more:
• WeWork's turnaround plan calls for it to stanch its losses while opening hundreds of new locations. Here's why business and real-estate experts are baffled.
• Adam Neumann personally invested tens of millions in startups while he ran WeWork. Founders who took his money reveal what it was like.
• SoftBank could have just walked away from WeWork and its $9 billion investment. Business experts explain why it didn't.
• SoftBank likely had the Vision Fund on its mind when it decided to rescue WeWork

SEE ALSO: WeWork used massive discounts — in some cases, essentially giving away space for 2 years — to try to poach customers from rivals

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