• $200 million finance startup Curve is facing complaints from customers who were handed business cards rather than standard personal cards.
• Curve issues a smart card that groups all your debit and credit accounts into one, meaning you can spend from multiple accounts using a single card.
• Customers complained that they were issued corporate cards without being clearly informed and, in some cases, were charged additional fees while making payments.
• Curve did not respond to a request for comment.
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Hot UK finance startup Curve is facing complaints from customers who were unexpectedly issued business cards rather than standard consumer cards. It's a move that nets Curve more money but, in some cases, has resulted in unexpected extra fees for customers, who are now complaining about the startup's lack of clarity on the issue.

Curve is the $200 million British fintech that lets people group all the cards and accounts onto a single physical Curve card. It isn't a bank — rather the sell is that users don't have to scrabble in their wallets for various physical debit and credit cards, and instead rely on one neat payment solution on their phone. The concept is similar to Apple Pay, and Curve is one of a host of emerging players in the UK's competitive fintech scene that aims to reshape how people manage their finances.

Curve customers can be issued with a business or standard consumer account, depending on whether the card is for personal or business expenses. But the startup's online community message board is awash with customers who say they were sent a business card without realising what they had signed up for. 

Ivan Cameron, an entrepreneur based in Amsterdam, said he signed up to Curve expecting to receive a regular consumer card. He claims that when he contacted the company to ask that it to be changed, they effectively told him the two account types were the same. 

"I got in touch with them when I received a commercial card [and] they tried to convince me there was no difference between the two," he said on the message board. "When I disagreed, they sent me a replacement card... Curve shouldn't be sending commercial cards to people who don't expressly request one." 

One user, writing under the name "Wittgendworkin", said they faced extra charges when buying train tickets to work due to additional corporate card fees.

They wrote: "I had no idea what a corporate card was or that I would face extra fees... In my view, Curve needs to be WAY more upfront about this, and ensure that self-employed people are not bounced into corporate cards if they don't want them." 

Curve earns more money per transaction on business accounts

Commercial (or "business") debit cards are more profitable than ordinary personal cards, earning the companies issuing them up to 1.1% in commission on every payment made – five times the approximately 0.2% made off personal accounts. 

This money is paid by the "merchant bank", as in: the bank serving the store where you just bought something. These charges help keep global operations running smoothly. 

Under UK competition guidelines, those applying for business accounts usually have to submit some evidence of their work, such as their Companies House registration documents. For example, as part of the onboarding process for Starling Bank, another fintech challenger, applicants for business accounts need to submit information including proof of ID, a self-recorded video, a company website address, Linkedin profiles and a letter from their accountant or lawyer. 

However, as Curve is not actually a bank but an "over-the-top" platform used to access other accounts, these regulations don't apply. Given how much time and effort it usually takes to open a business account, they are very rarely given to the wrong people. But no such checks appear to exist for Curve customers. 

Curve customers might not even realise they even have a business card until they are hit by additional corporate fees on their transactions.

What's potentially troubling is that every time a Curve business card has been unknowingly spent in, for example, a grocery store, that store's bank will have paid Curve a higher interchange fee entirely unnecessarily. 

Curve isn't especially transparent about what type of account customers will be getting

When Business Insider ordered a Curve card, we selected the "self-employed" option and were given no further information about the type of card we had ordered. Curve sent us a card with "commercial" written on the back. 

When signing up for a Curve "Blue" card, the company's only fee-free option, users are presented with six choices, including "entrepreneur and business owner", "self-employed", "employee" and "other".

Regardless of which one you choose, it is never made clear in Curve's sign-up process whether you will receive a consumer or commercial card. 

Curve were quick to respond when we requested our card be exchanged for a personal one. But when asked which option one should tick to avoid opening a business account, they told us they were "unable to provide more information due to regulations". 

When asked whether documentation should be a requirement for those opening a business account, the UK's Financial Conduct Authority declined to comment. 

However, Business Insider understands the watchdog is "actively considering the future of regulation" around emerging financial technologies. There are regulations and principles that apply to firms like Curve, requiring them to be transparent about their products, who they are for, and what fees and charges are levied. 

Curve did not respond to requests for comment. 

SEE ALSO: Leaked numbers show $200 million fintech startup Curve has far fewer active users than the number of 'customers' it has claimed

AND NEXT: $200 million finance startup Curve quietly removed its own crowdfunding video after questions about its user numbers

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• On Wednesday, credit card startup Brex announced it had secured $200 million in debt financing from Credit Suisse.
• This is the second round of debt financing for the $2.6 billion startup following a $100 million round in June from Barclays — and the third funding event overall.
• Brex CFO Michael Tannenbaum told Business Insider that the company's fundraising strategy "makes sense" given its rapid pace of growth and continuous development of new products and services that are more asset-intensive than its original credit cards for startups.
• This year alone, Brex has announced a San Francisco cafe exclusively for cardholders, a checking account, a members-only lounge, and ACH transfers. Tannenbaum said that pace will only continue, if not accelerate, going into 2020.
• Click here for more BI Prime stories.

Buzzy credit card startup Brex has had a breakout year. 

In the last 12 months, the company has swiftly expanded beyond its roots as a "black card for startups" to include a checking account service, ACH transfers, a members-only lounge, and a restaurant.

Its presence at the annual startup conference TechCrunch Disrupt was so ubiquitous that it wasn't clear whether the conference was essentially a customer marketing event for the startup itself. The sleek black and orange ads blanket San Francisco's buses, newspaper stands, and billboards.

The cherry on top of the company's year is a whopping $200 million round of debt financing led by banking giant Credit Suisse, the company announced Wednesday. The financing will help fund the company's e-commerce credit card, also launched this year, Brex CFO Michael Tannenbaum told Business Insider.

"Debt makes sense for business models that are more asset intensive, because debt helps unlock additional funding capacity for these assets," Tannenbaum said. "Fintech is a good example of these type of businesses. If you look at scale financial services companies, including credit card companies, most of them will take advantage of the debt capital markets in addition to the equity capital markets."

This is the second debt financing round for Brex in 2019, and its third funding event of the year, according to PitchBook data. The $2.6 billion startup raised $100 million in debt financing from Barclays in April, and completed a new venture round, also $100 million, in June.

Tannenbaum said that the venture fundraising and the debt "serve different purposes." It doesn't make sense for Brex to dilute equity in the company just to get the cash it needs to back the core credit-related aspects of its business, he said.

"We raise equity to fund the operations of the business, while the debt is used to leverage our balance sheet and the credit card receivables that arise as part of our corporate credit card business. Debt is much more efficient financing for that part of our business," he said.

However, there's no avoiding the fact that taking on this much debt financing does complicate matters when it comes to balancing the books.

To help steady the course, Brex also announced Wednesday that it was bringing on former American Express underwriter Mira Srinivasan as Head of Credit and fintech startup exec Erica Dorfman as VP of Cash. Marco Mahrus, from Uber's payments team, rounds out the senior leadership team as VP of Payments.

"These individuals are consistent with our overall hiring strategy at Brex, which is to bring leaders who have experienced scale and success at other companies," Tannenbaum said. "Mira brings expertise from best in class corporate card underwriter American Express, Marco from the highly respected payments organization at Uber, and Erica from SoFi and then Tally."

Those fresh faces will be necessary going into 2020, Tannenbaum said, as the company is not slowing down its growth, already breakneck even by Silicon Valley standards, in the new year.

"The pace of innovation and product investment, alongside the overall value we add to our customers, will only continue," Tannenbaum said.

SEE ALSO: Andreessen Horowitz's new growth fund just invested $30 million into Imply, an open source data analytics startup taking on Microsoft and Salesforce's Tableau

Join the conversation about this story »

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• While best known as the headquarters of Amazon and Microsoft, experts believe the Seattle area is on the precipice of a major startup boom because of a confluence of factors including a critical mass of talent, and the increasing availability of venture capital and angel investments.
• Business Insider compiled a list of the Seattle area's top enterprise startups based on nominations from industry leaders and venture capitalists.
• Eighteen startups – meaning private companies that haven't sold a majority stake – made the cut.
• Click here to read more stories from BI Prime

The Seattle area is known for Amazon and Microsoft – except when the companies are mistakenly referred to as "Silicon Valley giants"– but the region also punches above its weight when it comes to enterprise startups.

While the Bay Area is unlikely to be knocked off its perch as the top tech hub in the world, early Amazon investor and cofounder of Seattle's most prolific venture firm Madrona Venture Group Tom Alberg said, Seattle is a clear No. 2.

"You've got Amazon and Microsoft – two of the five most valuable companies in the world," Alberg said. "The other three are in the valley. There are none in New York – I love this – none in Chicago, none in L.A., none in Austin."

The other three – Apple, Google, Facebook – have huge offices in the Seattle area. Facebook's largest engineering outpost is here, and the company is quietly laying the foundation for its own HQ2-style expansion by leasing enough office space for 20,000 employees in the region.

Since Amazon went public in 1994, 31 startups founded in Seattle have reached valuations in excess of $1 billion, according to an analysis from a Madrona Venture Group venture capitalist. 

The Seattle area is on the precipice of a major startup boom because of a confluence of factors including a critical mass of talent, increasing availability of venture capital and angel investments, and STEM education through the University of Washington, as two artificial intelligence experts wrote in a recent guest post for Seattle-based tech news site GeekWire.

Business Insider compiled the following list of the Seattle area's top enterprise startups based on nominations from industry leaders and venture capitalists. Here are the startups to watch in 2020:

Got a tip? Contact this reporter via email at astewart@businessinsider.com, message her on Twitter @ashannstew or send her a secure message through Signal at 425-344-8242.

SEE ALSO: Microsoft CEO Satya Nadella explains how he future-proofed Microsoft's cloud by using the next big thing called 'edge computing'

Accolade

What it does: Accolade calls itself a "healthcare concierge" service. It's a subscription-based service sold to companies to help their employees navigate healthcare benefits and resources.

Why it's on the list: The healthcare tech startup is run by Rajeev Singh, one of the co-founders of expense reporting software company Concur, which sold to German software giant SAP in 2014 for $8.3 billion (Singh's brother and fellow Concur cofounder is Steve Singh, former Docker CEO). With Singh at the helm, the company has raised money from top VCs including Andreessen Horowitz and has big customers including Comcast.

• CEO: Rajeev Singh
• Headquarters: Co-headquarters in Seattle and Plymouth Meeting, Pennsylvania
• Raised to date: $240 million (PitchBook estimate)
• Valuation: Declined to disclose, but PitchBook estimates the company is worth $630 million as of October
• Investors: Andreessen Horowitz, Carrick Capital Partners, Madrona Venture Group, McKesson Ventures, CrossCreek Advisors and Madera Technology Partners
• Number of employees: 1,100
• Number of customers: Accolade "supports 1.5 million members"
• Notable customers: Comcast, Lowe's, American Airlines, United Airlines, Apptio, Intuit, and Amerigas.

Algorithmia

What it does: Algorithmia creates artificial intelligence products and algorithms for companies to use for data science.

Why it's on the list: Algorithmia had a big year in 2019, raising $25 million and hiring Atlassian's former engineering head, Ken Toole, as vice president of platform engineering. Algorithmia's marketplace is used by more than 100,000 developers, according to the startup, and its advised by board member Anna Patterson of Google's AI fund Gradient Ventures.

• CEO: Diego Oppenheimer
• Headquarters: Seattle
• Raised to date: $35.5 million
• Valuation: Declined to disclose, but PitchBook estimates the company is worth $100 million
• Investors: Gradient Ventures, Norwest Venture Partners, Madrona Venture Group
• Number of employees: 65
• Number of customers: Declined to disclose
• Notable customers: MS & AD Toyota Insurance, ONS (United Nations department of statistics), Tevec (Brazilian Supply Chain Company).

Amperity

What it does: Amperity is a customer data platform that uses artificial intelligence to help users know who their customers are and make business decisions based on that data.

Why it's on the list: Amperity is taking on giants including Salesforce and Oracle in the emerging customer data platform space – and it's gaining traction with big brands like Starbucks and Gap Inc. The Seattle-based startup raised $50 million this summer from investors including Goldman Sachs.

• CEO: Kabir Shahani
• Headquarters: Seattle
• Raised to date: $87 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $450 million in July 2019.
• Investors: Tiger Global Management, Goldman Sachs, Declaration Partners (an investment firm backed by David Rubenstein), Madera Technology Partners, Madrona Venture Group, and investor Lee Fixel
• Number of employees: 175
• Number of customers: Declined to disclose
• Notable customers: Starbucks, Gap Inc., J.Crew, Alaska Airlines, Uniqlo, Kenneth Cole, Moët Hennessy USA, Lucky Brand, Planet Fitness, Seattle Sounders FC, e.l.f. Cosmetics, Crocs, and BECU credit union.

Auth0

What it does: Auth0 is a cybersecurity software startup that manages user authentication and secures the login pages for large consumer and enterprise businesses.

Why it's on the list: Cofounded and run by a 12-year veteran of Microsoft, Auth0 raised $103 million and doubled it valuation this year. The company was include in Forbes' recent Cloud 100 list and accounting firm Deloitte determined it was among the fastest-growing technology companies in the country.

• CEO: Eugenio Pace
• Headquarters: Bellevue, Washington
• Raised to date: $210 million
• Valuation: $1.16 billion
• Investors: Sapphire Ventures, Bessemer Venture Partners, K9 Ventures, Trinity Ventures, Meritech Capital, and World Innovation Lab
• Number of employees: 600
• Number of customers: 9,000
• Notable customers: Atlassian, News Corp, Autotrader, Cimpress, Servcorp, and World Vision.
• Notable partners: Amazon Web Services, Globant, Traxion, and IDMWorks.

ExtraHop

What it does: ExtraHop is a cloud security and analytics startup with a core product that uses machine learning to analyze customer networks to spot threats and make sure applications are running properly.

Why it's on the list: Founded by former senior engineers from F5 Networks, ExtraHop is a longtime partner of Amazon Web Services and was funded by Madrona Venture Group in the early days of the cloud. ExtraHop announced earlier this year the company had reached $100 million in bookings.

• CEO: Arif Kareem
• Headquarters: Seattle
• Raised to date: $61.6 million
• Valuation: $288.5 million, but the company's last valuation was back in 2014.
• Notable investors: TCV, Meritech Capital Partners, Madrona Venture Group
• Number of employees: More than 500
• Number of customers: More than 800
• Notable customers: The Home Depot, Ulta Beauty, Lawrence Livermore National Laboratory, CURO, Credit Suisse, Caesars Entertainment, and Liberty Global.
• Notable partners: Microsoft, Amazon Web Services, Google, and Service Now.

Highspot

What it does: 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.

Why it's on the list: Run by one of Microsoft CEO Satya Nadella's former lieutenants, Highspot just raised $75 million from investors including Microsoft rival Salesforce. Highspot is in the midst of a big hiring push and has landed big customers including Red Hat, SAP Concur and Twitter. The startup now has 375 employees and plans to grow to 700 employees by the end of 2020.

• CEO: Robert Wahbe
• Headquarters: Seattle
• Raised to date: $200 million
• Valuation: Declined to disclose, but PitchBook estimates the company is worth $790 million as of this month
• Investors: ICONIQ Capital, Salesforce Ventures, OpenView, Madrona Venture Group, Sapphire Ventures, Shasta Ventures
• Number of employees: 375
• Number of customers: Declined to disclose customer count, but said it has "doubled in the past year."
• Notable customers: Apptio, Dun & Bradstreet, Red Hat, SAP Concur, and Twitter.
• Notable partners: Microsoft and Salesforce

Icertis

What it does: Icertis builds a platform to help customers manage contracts in the cloud, which its leaders say increases a company's capacity for contracts, ensures those contracts comply with regulations and policies and reduces costs.

Why it's on the list: Icertis is the cloud-based software large companies including Microsoft use to manage their contracts. The startup's valuation surpassed $1 billion this year when it raised $115 million as it takes on competitors such as DocuSign-owned SpringCM and made Forbes' recent Cloud 100 list.

• CEO: Samir Bodas
• Headquarters: Bellevue, Washington
• Raised to date: $171 million
• Valuation: $1.15 billion (PitchBook estimate)
• Investors: B Capital Group, Cross Creek, Eight Roads, Greycroft, Ignition Partners, Meritech Capital Partners, Premji Invest and PSP Growth
• Number of employees: 120 employees in the greater Seattle area
• Number of customers: Declined to disclose, but an investor in the company said it has 6.5 million contracts under management in more than 90 countries.
• Notable customers: ABB, Airbus, BASF, Bertelsmann, Cognizant, Daimler, Humana, Johnson & Johnson, Microsoft, and Qantas.

Igneous

What it does: Igneous is an enterprise data management startup that helps customers such as high tech manufacturers and financial institutions manage the billions of files and petabytes of data in their datacenters.

Why it's on the list: Cofounded and led by a veteran of Isilon Systems and EMC, Igneous raised $25 million this year from investors including Madrona Venture Group and Paul Allen's Vulcan Capital. 

• CEO: Kiran Bhageshpur
• Headquarters: Seattle
• Raised to date: $68 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth more than $100 million in March.
• Investors: Madrona Venture Group, New Enterprise Associates, WestRiver Group, Vulcan Capital, and Redpoint Ventures
• Number of employees: 75
• Number of customers: Declined to disclose.
• Notable customers: PAIGE, Tippet Studio, and Altius Institute for Biomedical Sciences.

Integris Software

What it does: Integris Software is a data privacy startup that helps companies manage the information they keep on customers and ensure they are in compliance with privacy regulations.

Why it's on the list: Companies have to comply with an increasing number of privacy regulations, including the new California Consumer Privacy Act, and investors believe that's a big opportunity for Integris Software. The company – founded and led by former Microsoft manager and Ignition Partners principal Kristina Bergman – recently raised $3 million.

• CEO: Kristina Bergman
• Headquarters: Seattle
• Raised to date: $16 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $30 million in July 2018. 
• Investors: Workday Ventures, Madrona Venture Group, Amplify Partners and Aspect Ventures.
• Number of employees: 30
• Number of customers: Declined to disclose, but said customers include Fortune 1000 companies in the telecommunications, CPG, insurance, travel and expense, and security industries.
• Notable partners: TrustArc, VMWare, AWS, Microsoft, Evident ID, Imperva, and Cloudentity.

Outreach

What it does: Outreach is a sales automation startup that helps salespeople engage with customers more effectively by using artificial intelligence to help them determine the best action to take with prospective customers.

Why it's on the list:Once on the verge of bankruptcy, the Seattle startup founded by a former Amazon Web Services and Microsoft executive is now worth more than $1 billion. Outreach this year raised a $114 million round and is used by companies including Adobe and Tableau.

• CEO: Manny Medina
• Headquarters: Seattle
• Raised to date: $239 million
• Valuation: $1.1 billion
• Investors: Lone Pine Capital, Meritech Capital Partners, Lemonade Capital, Allison Bhusri's investment fund, DFJ Growth, Four Rivers Group, Mayfield, M12 (Microsoft's venture capital arm), Sapphire Ventures, Spark Capital and Trinity Ventures.
• Number of employees: 350
• Number of customers: More than 3,500 companies
• Notable customers: Adobe, Tableau, Okta, Splunk, DocuSign, and SAP

Pulumi

What it does: Pulumi builds an "infrastructure as code" platform that lets developers use regular familiar programming languages for cloud infrastructure. The startup says the technology eliminates silos between developers and infrastructure operators, and helps companies create and manage cloud applications more effectively.

Why it's on the list: Founded in 2017 by veterans of Amazon Web Services and Microsoft, Pulumi has already attracted the attention of customers including Tableau and Mercedes Benz and is chaired by Eric Rudder, the former Microsoft executive once thought to be a contender to take over for Bill Gates.

• CEO: Joe Duffy
• Headquarters: Seattle
• How much you've raised to date: $20 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $85 million in October.
• Investors: Madrona Venture Group, Tola Capital
• Number of employees: 30
• Number of customers:"Thousands of end users across hundreds of companies."
• Notable customers: Tableau, Mercedes Benz, Credijusto, Sourcegraph, Cockroach Labs and PLOS.

Moz

What it does: Moz is a subscription software startup that sells marketing and marketing analytics software.

Why it's on the list: Founded in 2004, Moz is a veteran of Seattle's startup scene and has customers that include Zillow, Trivago, and Alaska Airlines.

• CEO: Sarah Bird
• Headquarters: Seattle, WA
• Raised to date: $29.1 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $137.24 million in 2016.
• Investors: Foundry Group, Ignition Partners, Curious Office Partners
• Number of employees: 170 employees 
• Number of customers: "Customers and users of Moz products and free tools exceed 700,000," the company said.
• Notable customers: Zillow, Trivago, Alaska Airlines, and Razorfish.

Qumulo

What it does: Qumulo is a hybrid cloud storage startup that helps customers manage data inside their own data centers and the cloud.

Why it's on the list: Led by longtime Isilon and EMC executive Bill Richter, Qumulo has attracted the attention of top venture firms and customers including Uber and Target. Qumulo just hired Michael Cornwell, the former general manager of storage technologies for Microsoft Azure, as chief technology officer.

• CEO: Bill Richter
• Headquarters: Seattle
• Raised to date: $222.3 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $553 million in July 2018.
• Investors: Kleiner Perkins, Highland Capital, Goldman Sachs, Data Collective, Madronis Group, BlackRock Private Equity Partners, Western Digital, and Valhalla Partners.
• Number of employees: 290
• Number of customers: Declined to disclose
• Notable customers: Sinclair Oil, Hyundai Mobis, NBC, Uber and Target.

Skilljar

What it does: Skilljar develops a customer training platform it says helps companies onboard, engage and retain customers to improve customer adoption and retention rates.

Why it's on the list: Cofounded and run by former Amazon manager Sandi Lin, Skilljar participated in the TechStars accelerator, received investment from firms including Microsoft board member and T-Mobile founder John Stanton's Trilogy Equity Partners and has landed customers including Tableau and Verizon.

• CEO: Sandi Lin
• Headquarters: Seattle
• How much you've raised to date: $20.1 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $46.4 million in February 2018.
• Investors: Mayfield Fund, Trilogy Equity Partners, and Shasta Ventures
• Number of employees: 85
• Number of customers: More than 250 companies
• Notable customers: Tableau, U-Haul, Cisco, Procore, and Verizon

Skytap

What it does: Skytap is a cloud service that helps enterprise customers update their traditional, existing technologies into the modern era, including from data centers to the cloud.

Why it's on the list: While Amazon Web Services dominated the cloud market, Skytap has found success by focusing exclusively on helping big businesses modernize their software. The approach is catching on with customers, attracting dollars from investors including Goldman Sachs and has put Skytap on the road to an IPO.

• CEO: Brad Schick
• Headquarters: Seattle
• How much you've raised to date: $109 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $360 million in August 2017.
• Investors: Goldman Sachs, Insight Venture Partners, Madrona Venture Group, Ignition Partners, OpenView Capital, W Capital Partners, and WRF Capital.
• Number of employees: About 175
• Number of customers: Less than 500
• Notable partners: IBM, Microsoft and VMware.

Suplari

What it does: Suplari's software analyzes a company's spending, contracts, and supplier relationships and recommends changes to improve financial performance.

Why it's on the list: Suplari's technology has landed customers including Hulu and Nordstrom, and dollars from investors including Workday's venture arm Workday Ventures. The startup is run by CEO Nikesh Parekh, the former vice president of new ventures at real estate startup Trulia before it was acquired by Zillow in 2015.

• CEO: Nikesh Parekh
• Headquarters: Seattle
• Raised to date: $18.6 million
• Valuation: Declined to disclose, but PitchBook estimates the company was worth $30.3 million in April 2018.
• Investors: Madrona Venture Group, Shasta Ventures, Amplify Partners, Two Sigma, and Workday Ventures
• Number of employees: 40
• Number of customers: More than 25
• Notable customers: Nordstrom, Sonos, Wayfair, Hulu, LendingTree, New York Public Library, CDK Global, Workday, Qualtrics, and Fox Corporation

Textio

What it does: Textio's augmented writing software is intended to help customers write faster and more effectively. The startup's technology, for example, uses artificial intelligence to help companies write job postings by tracking, and then using, words and phrases that are most likely to fill a role.

Why it's on the list: Textio's coaching network is used in more than a quarter of the Fortune 500, according to investors, including companies such as McDonalds, American Express, Johnson & Johnson, and eBay.

• CEO: Kieran Snyder
• Headquarters: Seattle
• Raised to date: $29.5 million
• Valuation: Declined to disclose, but PitchBook estimated the company was worth $115 million in 2017.
• Investors: Scale Venture Partners, Emergence Capital, Cowboy Ventures, Bloomberg Beta, and Upside Partnership.
• Number of employees: 150
• Number of customers: Declined to disclose 
• Notable customers: Johnson & Johnson, Procter & Gamble, Cisco, British Airways, Slack, McDonalds, eBay, Credit Suisse, The World Bank, American Express, NASA JPL, Virgin Atlantic, Avery Dennison, Spotify, and Dropbox.

Zipwhip

What it does: Zipwhip software enables companies to send and receive texts through existing fixed-line business numbers.

Why it's on the list: No one answers their phone anymore, investors say, so companies like Farmers Insurance use Zipwhip to communicate with their customers via text. The startup has funding from top investors like Goldman Sachs and Microsoft's venture capital arm M12, partnerships with companies like Microsoft and Salesforce and customers like Twilio and the Seattle Seahawks.

• CEO: John Lauer
• Headquarters: Seattle
• Raised to date: $95 million
• Valuation: Declined to disclose, but PitchBook estimates  the company is worth more than $261 million as of January.
• Investors: Goldman Sachs, M12 (Microsoft's venture capital arm), OpenView, Voyager Capital, and Ronin Capital
• Number of employees: 292
• Number of customers: 12,000 software customers (and more than 35,000 businesses use Zipwhip technology)
• Notable customers: Twilio, OpenMarket, San Antonio Spurs, Seattle Seahawks, and Cumulus Media.
• Notable partners: Salesforce, Microsoft Dynamics 365 and Zapier.

• Tech legend John Chambers, the former CEO of Cisco, who is now an investor and mentor to startup founders, recently helped inaugurate the Silicon Valley headquarters of Uniphore, an Indian AI startup that is expanding to the US.
• He sat down with Business Insider to discuss his views on the tech scene, including his strong belief that the US needs more startups that go public. 
• "It is in the best interest of this country to dramatically increase the number of IPOs," Chambers told Business Insider. "We've got to probably triple the number of startups, we need to have more IPOs. I would like to see them be earlier."
• Chambers was also critical of many startups that he said have been too focused on growth while not paying enough attention on strategies for profitability.
• Click here for more BI Prime stories.

Tech legend John Chambers was back at center stage recently. It was a smaller, more modest venue in Silicon Valley, but one that highlighted his new passion: startups. 

The former Cisco CEO was certainly excited about the startup whose new office he helped inaugurate.

"Watch this company — I think it has a chance to light the world on fire," the former Chambers said after cutting the ribbon at the brand new US headquarters of Uniphore, a small but fast-growing Indian startup which uses AI to help businesses manage customer relations.

One of Uniphore's main backers is JC2 Ventures, which Chambers founded after leaving Cisco. In fact, Chambers has been designated as Uniphore's chief guru, and mentor to  the company's 34-year-old founder and CEO Umesh Sachdev. 

An intense focus on startups

Four years after stepping down as CEO of the networking tech behemoth, the 70-year-old Chambers now directs his energies to startups like Uniphore, advising and financing them and often serving as a mentor to young founders like Sachdev. This focus is based largely on a what Chambers considers a pressing need: more startups. Specifically, more startups that eventually go public.

"It is in the best interest of this country to dramatically increase the number of IPOs," he told Business Insider at the Palo Alto event. "We've got to probably triple the number of startups, we need to have more IPOs. I would like to see them be earlier."

In Chambers' view, operating in the public markets makes a company stronger, which ultimately leads to more sustainable innovation and job creation. 

His comments come at a time when startups, particularly private firms with billion-dollar valuations, have been under scrutiny, following the IPO flops of companies like Uber, Lyft and Peloton, and the aborted public offering of WeWork. Then there's the trend of startups with no clear plans of going public buoyed by seemingly endless rounds of VC funding.

Asked if he thinks startups are staying private too long, Chambers was quick to reply: "Absolutely."

Some experts argue that weak disclosure requirements for startups led to the recent IPO flops. But Chambers sees other causes as well and cites everything from "shareholder activists to short-term thinking in the financial markets."

A focus on profitability

Chambers said startups stay private to avoid the regulatory hassles of being a public company and what they see as "interference" that's not conducive for growing a business. 

"Without that interference, we make our decisions for what's right, three and five years out, not this quarter," he said. "We take risks, and some of them will work and some will not."

Chambers did point out a problem that's been raised in the startup scene: a lack of focus on profitability.

"So many of the startups are focused on purely growth, and they really don't even have a plan to profitability, much less free cash flow," he said.

It's a point Chambers has stressed to startup founders and entrepreneurs, and one that Sachdev, the Uniphore founder, has taken seriously. 

Founded in 2008, Uniphore has been growing rapidly in Asia and is now pushing to expand in Europe and the US While the startup is in hyper-growth mode, he said, his team is constantly thinking about their path to profitability.

"Profitability is a word that has gone out of fashion for a bit and it's about time it comes back," he told Business Insider. "The last few companies that have gone public in the US, barring couple of exceptions, haven't had that. … We are determined to to be free cash flow positive and profitable as we keep growing."

Chambers said a renewed emphasis on startup profitability will be critical especially amid signs that there could be another recession. It's important not just for the tech industry but also for the broader economy. That's because startups are also a major force in creating jobs, he said.

Chambers has had his share of downturns, having led Cisco through several bad economic periods, including the dot-com bust in the early 2000s and the financial crisis in 2008 about a decade ago.

"We forget that's  been the longest economic run in our lifetime," he said. "These teams have never seen a recession. It's going to happen. And the recession is where most companies get wiped out."

What he's hoping for, he said, are more startups with "very clear profitability goals, free cash flow goals, as well as growth and nothing will wipe out."

Got a tip about Uniphore or another tech company? 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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• Scott Dorsey is hoping to help build Indianapolis into a tech hub.
• Dorsey was the cofounder of Indianapolis-based ExactTarget, which Salesforce bought in 2013 for $2.5 billion.
• He now runs a venture firm and startup studio in the city called High Alpha that's helping to build and fund the next-generation of Indianapolis-based tech companies.
• The city has many features that make it an attractive place for tech, particularly enterprise software firms, including a wealth of talent and proximity to plenty of Fortune 500 companies looking for technological solutions to their business problems, he said.
• Click here for more BI Prime stories.

If you were asked to name the top tech hubs in the US, you'd probably list San Francisco or Silicon Valley, New York, and maybe Boston, Seattle, or Austin.

Scott Dorsey is hoping that someday soon you'll include Indianapolis on that list.

Indiana's state capital has all the right ingredients to become a tech center, according to Dorsey, a managing partner at High Alpha, a venture firm and startup studio based there. Dorsey knows first-hand that the city can foster innovation. He founded and helped build cloud marketing service provider ExactTarget in the city before selling the company to Salesforce in 2013 for $2.5 billion.

"There's an unusual amount of talent ... right here in Indy," Dorsey told Business Insider in a recent interview. "We have all the conditions in place," he continued, "to create a lot more ExactTargets."

Indianapolis has a good collection of high-quality nearby universities churning out business-school graduates and software and other engineers, including Purdue, Indiana University, and Notre Dame, he noted. Plus Softbank has continued to invest in the former ExactTarget operation there; the largest tower in Indiana is now named Salesforce Tower after the company expanded and moved its Indianapolis operations there. So there are plenty of well-trained and experienced tech workers and aspiring tech entrepreneurs in the area, he said.

Additionally, the city is a short nonstop flight away from the tech, financial centers of New York and Boston. And it's centrally located in relation to the the headquarters of a plethora of Midwest-based Fortune 500 companies, many of which are searching for technological solutions to their business problems, he said. Those are the type of potential customers that Silicon Valley-based enterprise software firms may have a difficult time understanding and connecting with, he said.

"That proximity advantage we have of not being all the way on the West Coast gives us, I think, an edge around customer accessibility," he said.

Dorsey's firm is creating new Indianapolis-based startups

Dorsey himself is trying to play a big role in transforming Indianapolis into a tech center. High Alpha, which he cofounded in 2015, both incubates and funds local startups.

The firm has its own team of business design people who are continuously exploring new startup ideas in the enterprise software space. They solicit concepts from corporations, other venture firms, entrepreneurs, and from High Alpha's own staff. Every quarter or so, the firm holds what it calls a sprint week, in which it takes the four most promising ideas the team has been exploring and attempts to flesh them out. At the end of the week, it holds an internal pitch competition and selects the best one or two concepts to turn into startups.

High Alpha turns the concepts into companies, funds them, helps recruit their leadership teams, and assists them in building out their initial product. The firm has a staff of 35 and for the first six to 12 months after the startups launch, High Alpha's employees serve as support staff for them, taking care of their payroll and taxes, helping them recruit employees and build their brands.

"We're very hands-on during that forming stage," Dorsey said.

Thus far, High Alpha has founded 17 companies through its studio, three of which have been acquired.

Once the companies get off the ground and are ready for seed-stage capital, High Alpha starts to transition from acting as a kind of incubator to taking on more of an advisory role. But it continues to assist the startups, often giving them funding through its separate venture funds and also by helping them attract the outside financing they need to grow and mature.

Indianapolis is still nascent as a tech hub

Unlike New York or Silicon Valley, Indianapolis doesn't have a deep reservoir of venture capital, so startups there often have to rely on sources outside the state to get funding, he said. Dorsey and his colleagues have built relationships with venture firms on both coasts and have been successful in getting them to back the startups it's founded.

Emergence Capital, a Silicon Valley venture firm that specializes in funding enterprise software startups, is one of the biggest investors in High Alpha and two of its partners, Santi Subotovsky and Gordon Ritter, sit on High Alpha's board.

Meanwhile, Silicon Valley-based Menlo Ventures, recently invested in Zylo, a High Alpha startup that helps companies manage their enterprise software subscriptions. And, Sigstr, which also came out of High Alpha's studio and offers and email marketing service, counts Boston's Battery Ventures among its investors.

To be sure, Indianapolis still has a long way to go to be considered in the same breath as the established tech hubs. Last year, venture capitalists invested $367.7 million in Indiana-based startups, according to the National Venture Capital Association and Pitchbook. That amount ranked 23rd among all states, trailing far behind the $77.3 billion venture funders put into California-based firms.

Some 88 Indiana companies got venture funding last year, putting the state in 19th place in that category, according to the NVCA and Pitchbook. By contrast 2,869 firms got venture funding in top-ranked California.

Still, Dorsey is bullish on Indianapolis and he's happy to be using the experience and insights he gained from building ExactTarget to help other budding Indiana entrepreneurs.

"That's been one most rewarding aspects to what we've done at ExactTarget and now at high alpha, is just helping to transform our community — helping to transform the tech community, creating jobs, creating a tech hub," he said.

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 'reckoning' is coming for self driving car startups says an early backer of Lyft. Here's how the founder of Autotech Ventures is betting on the transportation shakeup.
• 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.

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• Eric Gilmore, the CEO of Silicon Valley startup Turvo, was fired back in May after it was discovered he spent more than $75,000 at strip clubs and expensed it to a company credit card, Bloomberg reported.
• Gilmore allegedly expensed $76,120 at "adult entertainment venues" over a three-year period, according to a legal filing.
• Gilmore filed a lawsuit against Turvo, but didn't deny the claims around his expenses. Rather, he argued that the board didn't follow proper procedure when it released him from the role. The suit settled in September, Bloomberg reports.
• Turvo named a new CEO in November named Scott Lang. The company, which makes software for the logistics industry, was last valued at $435 million, according to Pitchbook.
• Visit Business Insider's homepage for more stories.

The cofounder of a Silicon Valley software startup was fired as CEO earlier this year after he allegedly used his company credit card to expense over $75,000 spent at strip clubs while entertaining clients.

Bloomberg was the first to report on Friday that Eric Gilmore, the cofounder of Turvo, was fired back in May from his position as CEO. Over a three-year period, Gilmore allegedly expensed $76,120 of costs from "adult entertainment venues,"according to a legal filing reviewed by Business Insider.

All told, Gilmore allegedly expensed "at least $125,000 in entertainment charges," discovered in May when Turvo's chief financial officer reviewed company credit card expense reports, according to the filing.

That filing is in connection with a lawsuit that Gilmore filed against Turvo in August. In the suit, Gilmore didn't deny the claims regarding his expenses, but argues that the company's board didn't adhere to proper procedure in removing him from his position as CEO. The suit was ultimately settled in September, Bloomberg reports.

"Turvo has no further comment. The matter has been resolved and the company has moved on," said a spokesperson.

Gilmore could not be reached by Business Insider, but declined to comment to Bloomberg. However, Gilmore remains on Turvo's board of directors, and is still its largest shareholder, Bloomberg reports.

Turvo was started back in 2014 as a platform for various pieces of the supply chain, including shippers and carriers, to work together. The three cofounders — Gilmore, Sai Nagboth, and Jeff Dangelo — all took C-suite positions at the startup, which was last valued at $435 million, according to Pitchbook.

According to PitchBook, Turvo has raised $89 million from investors, including prominent figures like former Nest CEO Tony Fadell, Box CEO Aaron Levie, and Square Product Engineering Lead Gokul Rajaram.

Meanwhile, Turvo announced in November it had appointed a new CEO, Scott Lang, to take over for Gilmore. In an interview with Bloomberg, Lang was asked if he has tried to "win over prospective clients at stripper joints."

"Never have. Never will," Lang told Bloomberg.

Read the full legal filing below:

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• The Employee Stock Option, or ESO, Fund, which is based in Silicon Valley, offers a way for startup workers to exercise their stock options in exchange for a cut of the shares when the startup goes public or is acquired, plus fees and interest.
• ESO Fund's financing are non-recourse loans. In other words, the firm takes on all the risk. If your options end up not being worth much because of a disappointing IPO or if they become worthless because the startup goes out of business, you wouldn't have to pay back the money.
• ESO Fund has helped clients exercise stock options worth as little as $1,500, and has funded major deals worth a few millions, founder Scott Chou told Business insider. "A median transaction is probably $55,000," he said. 
• Click here for more BI Prime stories.

I took a brief break from journalism to work for a couple of startups. That meant getting some stock options, which gave me the right to buy shares of a new company at low prices, before it went public or got acquired.

But when I left these firms I found myself wrestling with the typical dilemma faced by startup employees. I didn't have the cash to exercise my vested options. And once I left the company, I had roughly 90 days to do so — or give them up.

That's what happened at the first startup. I was about to walk away from my options with the second startup when I came across a Silicon Valley firm that helps employees of venture-backed startups exercise their options.

The Employee Stock Option, or ESO, Fund, which is based in Foster City, gives startup employees access to funds they need to exercise vested options, in exchange for a percentage of their shares plus fees and interest.

Exercising options is risky business

Other firms, such as Shares Post and Nasdaq Private Market, also offer ways for startup employees to sell their exercised options, typically through the companies that issued them. But these firms do not offer individual financing for exercising options.

What made ESO Fund compelling to me was that it offers what is a essentially a non-recourse loan, which is a fancy way of saying it takes on all the risk. If your options end up not being worth much because of a disappointing IPO or if they turn out to be worthless because the startup goes out of business, you wouldn't have to pay back the money.

"Because we're non-recourse, we're essentially free leverage," ESO Fund co-founder Scott Chou told Business Insider.

Zero leverage was exactly what I was looking for. Now, I wasn't a hotshot executive, manager or engineer so we're not talking about options that would have made me a millionaire. But I thought the proceeds certainly could help offset my kids' college costs and pay down some credit card debt.

But I didn't have the extra cash and was not willing to go deeper into debt to exercise my options. Also, I didn't really have any appetite for the risk involved.

With ESO Fund, I didn't have to dip into our family savings or take out a personal loan to cover the options and the taxes I'd have to pay for exercising them. And I wouldn't have to worry about the risk that the investment might fail.

The tradeoff

But it's a tradeoff. 

I'd still have to wait for the startup to go public or be acquired, but if it ends up with a gangbusters IPO or gets acquired at a hefty price tag, I'd have to share a sizeable chunk of the proceeds with ESO Fund. Which is fine with me since ESO Fund did take on all the risk.

Typically, ESO takes roughly 30% of the proceeds, though it can vary depending on the startup.

It was an alternative that paid off handsomely for Shariq Minhas, an engineer who once was employed by a ride-sharing startup that went public recently. He had left before the company's IPO.

"I didn't have money to do the early exercise of the stock options," he said. "There was significant money on the table." He found it hard to accept that he may just have to simply walk away, he said: "You're screwed. You'd have nothing to show for all those years of work."

He decided to sign with ESO Fund which provided him with the roughly $400,000 he needed to exercise his options and to cover the sizeable tax burden related to the exercise. 

"It was a no-risk proposition," he said. "ESO Fund was taking all the risk over here by fronting the money. They have no recourse. If the company goes under, they don't get any of the money back."

But ESO Fund did get its money back — and more.

The ride-sharing company went on to have a solid IPO which was great news for Minhas — and for ESO Fund. Minhas estimated that ESO Fund made roughly $800,000 on the transaction.

In a way, that's money Minhas gave up because he opted to work with ESO Fund, he said. But then again, he didn't have to come up with the dough for the options and the taxes.

"If you think about it, they could have lost that very easily and never gotten it back," Minhas, who has launched his own startup, a Silicon Valley engineering recruiting service called JetCake, said. "Or I could have lost the 400K and never got anything for it."

Chou came up with the idea during the dot-com era

ESO Fund, which started in 2012, has funded more than 1,000 individuals from more than 400 companies, Chou said. He said he came up with the idea for the fund in the early 2000s after the dot-com boom when stock options became one of the principal ways to compensate employees.

Chou found out that many people were simply walking away from options because they didn't have the funds to exercise them. That led him and other investors to set up the fund.

ESO Fund has helped clients exercise stock options worth as little as $1,500, and has funded much bigger deals worth a few million, Chou said. "A median transaction is probably $55,000," he said. 

Chou said ESO Fund is ideal for young people working for startups who do not have the resources to exercise stock options.

"Younger people have less money saved to do this," he said. "And younger people are less likely to be connected to the alternative sources of capital, you know, like wealthy friends or, or something like that."

Of course, ESO Fund will not offer funding to any startup employee. The biggest challenge for ESO Fund is figuring out which startups are worth the risk -- and which ones may be bad news.

"What we're doing is effectively investing," he said. "Granted, these are small-scale numbers, but it all adds up. We have to do due diligence just like a regular VC. Since we don't have access to all of that information, the  formal presentations of the company and stuff like that, we sort of have to infer the health of the company through public sources."

'Cycles are part of doing business.'

They do the due diligence with the help of cutting-edge AI and Machine Learning technology. ESO Fund has a data team that is "constantly gathering lots and lots of information," Chou said. He would not elaborate on their methods, but he said their data team considers all kinds of information, from the age of the startup's CEO to "whether their street address ends in an even number."

"When I run the machine learning it will identify attributes that do matter," Chou said.

The system isn't perfect. ESO Fund has worked with clients from startups that turned out to be in bad shape. One prominent example is WeWork, the once hot startup whose public offering got shelved amid serious questions about its financials and business projections.

"Yes we have some WeWork but the fund is highly diversified so no one company makes us or breaks us," Chou said. 

In fact, he sees the WeWork fiasco as a reminder of the cycles that VC investing typically goes through. "A WeWork-like disaster becomes the poster child for every VC-industry correction," he said.

Chou has seen his share of corrections and downturns, including the tech dot-com bust in 2000 and the great recession a decade ago. "Cycles are just a part of doing business and will never end," he said.

But in a time of growing economic uncertainty, the process of picking winners can certainly be trickier for ESO Fund. Chou said that in the event of a downturn "more companies will struggle to raise capital, investors are going to concentrate capital only on their best assets and the probability of companies dying will be higher."

"So, that means we will probably say 'No' more often," he said.

But Chou said he remains upbeat about the future.

"I've been in this business for a long time and the doors have been slammed many times and it always comes back because of the fundamentals of the country and the economy are still there," he said. "Just because the market's not super warm and receptive, it doesn't mean it doesn't exist. So I'm not concerned. We'll still deploy capital. The venture community will still deploy capital. I'm positive of all these things."

Got a tip about ESO Fund or another tech company? 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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• Jeff Canin is an expert on early-stage startups, having evaluated hundreds of business proposals as an investor and business advisor. 
• If there's one thing that turns him off when hearing a pitch, it's overly optimistic funding and revenue projections. He says they suggest the entrepreneur is unrealistic or dishonest. 
• But that's just one of the tips he shared with Business Insider about how to pitch an early-stage energy startup and impress angel investors and VCs. 
• Do you have a tip or story idea about the business of clean tech and green energy? Contact this reporter at bjones@businessinsider.com or through the encrypted messenger app Signal at 646-768-1657. 
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By many measures, we're living in the age of clean energy. Analysts predict renewable power capacity will expand another 50% by 2024, dozens of cities are committing to net-zero emissions across the US, and hundreds of corporations — including oil and gas majors — are redirecting billions of dollars toward clean energy. 

But that doesn't mean investors are throwing their money at clean-tech startups. 

VC and private-equity funding has yet to fully recover, according to Bloomberg New Energy Finance. Plus, many investors remain hesitant to back energy startups. Returns take time, energy technologies can be risky, and for some, the bitter memories of failed investments are still fresh. That makes pitching investors all the more challenging, and mistakes can be fatal.

Some are worse than others. 

"The thing that immediately turns me off is when companies project a ridiculously ambitious business plan to go from, say, $0 to $150 million in revenue with 70% net margins in four years," Jeff Canin, a VC and fund manager, said. Unrealistic fundraising targets and timelines are equally problematic, he says. "That indicates one or both of two things: Low integrity, or [the entrepreneur] is supremely unrealistic, and we're just heading into a disaster."

Canin is a board member of E8, the oldest clean-tech angel investing group in the US, and the co-manager of a new venture fund. He's spent more than two decades in the venture capital world, a decade advising early-stage startups, and he guesses he's reviewed around 2,000 business proposals. 

It's not just unrealistic projections that trips up startups in the pitching process, he says. Another turn-off is when entrepreneurs use half of their precious pitch time — which could be as short as 15 minutes — to explain the dangers of climate change. Know your audience, Canin says.  

"We already know that," he said, speaking about his investment group. "It's very annoying to be preaching to the choir and not getting down to business."

Canin shared another pet peeve: When entrepreneurs compare their product to what's currently on the market. That doesn't matter, he says. The relevant question is what will be on the market in two or three years when the entrepreneur's product is likely to be commercialized. 

"With a minimal amount of research, we come up with some clear competitors that are obvious, and they fail to mention those," he said. "I wonder how much research they've done in the other areas that they should be focused on or are they hiding something from us? " 

Canin isn't just looking for red flags when he hears pitches. More importantly, he listens for information that makes a particular business or product unique and likely to acquire a new market. That includes intellectual property — more specifically, patents that the company has either filed or been granted — or a proprietary lock on part of the market. 

"Be very clear in articulating what your unfair advantages are," he said. "And truly differentiate who you're going for." 

It's not compelling when an entrepreneur says they're going after some share of a $50 billion market — "that doesn't carry any weight." What would be more credible, he says, is for them to say they're going after a much smaller, $100 million market, but that they're confident that they can gain a large percentage of it based on market analysis.

Essentially: Be specific and be reasonable. 

That applies to the exit strategy, as well. It's fine to include some generic slides that mention an IPO or M&A event, Canin says, but keep in mind that IPOs are incredibly rare within the clean energy industry. 

"Identify what categories of buyers you'd be pursuing, the timeframe, or what's the unique value to them," he said.

Finally, Canin adds, know who you're pitching. Yes, it's obvious. But mismatches between the startup and the fund are common.

"Study their websites, see what kind of companies they invest in — both stage and sector," he said. "Also, look at when that fund was formed. Because if it's a new fund that just raised $100 million, that's going to be a lot more patient." 

One more tip: Your pitch shouldn't include everything about your business, crammed in with an 8-point font, he said. It's a teaser to get to the next step. Just be ready to share more detail when investors request it.

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

• Ucommune, China's biggest coworking real estate startup, is preparing to go public on the New York Stock Exchange.
• The company is the first major office-sharing company to attempt to go public since WeWork's disastrous attempt at an IPO in September.
• Some analysts are skeptical that Ucommune will face the same fate as WeWork, according to The Wall Street Journal.
• Ucommune isn't profitable yet, and the company explains its path to profitability using language that's almost identical to WeWork's IPO prospectus.
• Visit Business Insider's homepage for more stories.

After raising millions from early investors, a massive office-sharing startup is preparing a public offering on the New York Stock Exchange, despite the fact that it still isn't profitable. Sound familiar?

Ucommune, the Beijing-based flexible office startup known as the "WeWork of China," has filed plans for an IPO — the first major office-sharing startup to attempt to go public since WeWork's failed IPO attempt earlier this year.

Ucommune raised $200 million in its last round of funding at a valuation of $2.6 billion. It could go public as soon as January, according to The Wall Street Journal, but some analysts are already worried that Ucommune will face the same fate as WeWork, which pulled its public offering in September as investors raised concerns about its profitability.

Ucommune's filing bears some striking similarities to the prospectus WeWork published in advance of its own IPO attempt. The Chinese company's description of its path to profitability is nearly identical to WeWork's.

"Once a space reaches maturity, occupancy is generally stable, our initial investment in build-out and sales and marketing to drive member acquisition is complete and the space typically generates a recurring stream of revenue and cash flows," Ucommune's prospectus reads. WeWork's prospectus contained a sentence that's all but identical, but using the term "location" instead of "space."

Similarly, former WeWork CEO Adam Neumann faced criticism for leasing properties that he owns to WeWork. According to Ucommune's filing, the company has signed leases on six properties owned by an affiliate of its founder and CEO, Mao Daqing.

Ucommune did not immediately respond to Business Insider's request for comment. The company states in its filing that it has "adequate sources of liquidity and capital resources to support its daily operations for the next 12 months."

Some early investors have already dropped out of Ucommune's public offering — Citibank and Credit Suisse both walked away due to concerns over the size of the valuation Ucommune was seeking, according to Reuters.

SEE ALSO: Tech and finance experts are shocked by SoftBank's 'stone-cold crazy' $1.7 billion golden parachute for ousted WeWork CEO Adam Neumann

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• SoftBank's $100 billion Vision Fund has made huge investments in startups like WeWork,, Zume, and Fair.
• For all the differences in industry and business models, several of these Silicon Valley startups share the common thread of eccentric founders with outsized personalities and unorthodox management styles. 
• Like WeWork's Adam Neumann, some of these founders are great "storytellers," capable of inspiring employees to go all in on noble missions.
• The founder similarities raise questions about whether they are part of an investing pattern by SoftBank and its CEO Masayoshi Son, who often talks of 300 year business plans and visions.
• Click here for more BI Prime stories.

Does Masayoshi Son have a "type?"

SoftBank's billionaire CEO and head of the Vision Fund has emerged as Silicon Valley's kingmaker over the past several years, writing nine-figure checks to back tech startups at dizzying valuations.

As the recent implosion of office-sharing company WeWork shows, these investments don't always work out.

But WeWork, which was led by brash, voluble founder Adam Neumann, also suggests something else about SoftBank's investment strategy: Many of the traits that Neumann is now known for are also present in the entrepreneurs leading other startups funded by SoftBank. 

Whether by design or by the power of the subconscious, Masayoshi Son, or "Masa," seems to have repeatedly put his money and his faith in a particular type of person.

"If you went through Masa's portfolio, he has invested in people just like him," one Silicon Valley investor told Business Insider. "It's people with a grandiose vision, an outsized personality, and a huge ego. That's why the portfolio looks like it does."

What does Masa's type look like? 

They're almost always male, often middle-aged, and share many of Masa's own qualities, reflecting his idea of success. Perhaps more than anything else, they are gifted storytellers, capable of inspiring employees to go all in on world-changing "missions" that, in other circumstances, might seem like ordinary business endeavors.

And yet as reports emerge of dysfunctional corporate cultures inside various Vision Fund startups, the Masa leader archetype may also share many of the same flaws. 

"VC's, like people in general, tend to feel most comfortable with people who look like them and have similar backgrounds," Cameron Yarbrough, a former executive coach, told Business Insider in an email. 

That predisposition can be a blind spot for some investors causing them to miss big opportunities, while for others it's a phenomenon they willingly accept because they believe the payoff from the successes will be worth the trade off, said Yarbrough, who is now the CEO of management training startup TorchLabs.

Master Yoda and his startup knights

Son, who famously bought the most expensive house in California history back in 2012, sees himself as a storyteller, sources told Business Insider. He talks of a 300-year vision for companies pioneering cutting-edge tech like artificial intelligence and robotics. 

Now the second richest man in Japan, Son has demonstrated an entrepreneurial bent since his younger days, selling his first tech product — a multilingual translator — to Sharp for $1 million before the age of 21. 

Son's level of involvement and influence in funding startups can vary — the Vision Fund has a team of investors who scour the globe hunting for promising startups and overseeing the deals. 

When he is involved, Son can be quick to act and decisive. Known to quote Star Wars' Yoda, Son says he likes to "feel the force" and use intuition to guide his investing decisions, according to a Financial Times profile. 

He initially invested in WeWork after a 12-minute meeting with Adam Neumann, according to Wired. And Neumann has described Son as the living incarnation of the little green sage. 

"He is Yoda. He has 'the Force' with him," Neumann told Business Insider in an October interview.

The common thread between Vision Fund founders

Like the Jedi knights under Yoda's training, several entrepreneurs in Son's orbit seem to be made from the same mold. WeWork's Neumann and Zume cofounder and CEO Alex Garden, for instance, were repeat founders with an intense passion for building globally dominant businesses.

Neumann and Garden are "the exact same person," the Silicon Valley investor said. 

Garden liked to tell employees that "Masa invested in me," implying that he personally was the driving force in securing the investment, a former Zume employee told Business Insider.

A messianic zeal for the startup's business is another common trait. WeWork famously sought to "elevate the world's consciousness" under Neumann's stewardship, while Scott Painter, the cofounder and CEO of car-leasing startup Fair told employees he was seeking "crusaders," and spoke of a mission to "liberate."

Garden's Zume, which initially went to market with automated pizza-making robots, sold investors on his vision to "engineer a more sustainable food system" around the world, a claim that is still the company's mission, a company spokesperson told Business Insider. But the business division overseeing the robots recently lost its president and will fold into the broader Zume, Inc., parent company in January, Business Insider previously reported.   

Several sources told Business Insider that Son is particularly excited about founders who have similar personalities to his. He values "aggressive" types that aren't afraid to push themselves, and their employees, to bring their vision to reality. These founders know they are expected to grow their companies at all costs, and are excited about doing so. That's Son's sweet spot.

At startups like WeWork and Zume, that growth-at-all-costs mentality can result in problems like high employee turnover, low morale, and constantly changing business objectives. 

The growth was also the impetus for disfunction at car-leasing startup Fair. According to previous Business Insider reporting, employees at the SoftBank-backed startup rapidly increased headcount following the Series B funding, sometimes hiring employees it didn't have jobs for. Painter told Business Insider in November that his business was still viable, but he was struggling to finance the costly model after burning funding on lavish company retreats and perks like on-demand massages - a situation reminiscent of the Neumann-led culture at WeWork.

"We've built the hardest part; we have to figure out how to finance all of it," Painter told Business Insider from a conference in Portugal. "We're at a point now where we have to get it right, given our scale."

SoFi, an online lending startup that raised $1 billion from SoftBank and others in 2015, was founded by Mike Cagney, a boisterous, former Wells Fargo trader and entrepreneur with a reputation for shouting obscenities at underlings. Under Cagney's reign, SoFi tasked customer service representatives with approving loans and of misrepresenting the amount of debt financing the company had secured, according to a New York Times profile.  Cagney resigned in 2018 amid allegations of sexual harassment within the company. 

The original founder prototype that paid off big time 

Of course, with more than 80 companies in SoftBank's Vision Fund portfolio, there are plenty of startups led by executives who don't fit the profile.

Kabbage, another online lender that SoftBank invested in, is led by founder Rob Frohwein and has been rated one of Inc magazine's best workplaces for two years in a row. And when the Vision Fund invested in dog-walking app Wag in 2018, it brought on Hilary Schneider, an experienced internet business operator to replace the company's two cofounders. 

If these startups emerge as big winners, they may shine the light on other common threads among the startups that prove the wisdom of SoftBank and Son's investing strategy.

And it's worth remembering that the original model for a startup founder that Masa invested in has worked out pretty well. Jack Ma, a former English teacher with a penchant for grand statements and a surplus of confidence, convinced Masayoshi Son to invest $20 million in a fledgling commerce company called Alibaba in 2000. Today Alibaba is one of the world's most powerful tech companies, worth more than $500 billion, and the early bet on Jack Ma has made Son one of the richest people in the world.

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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• On Wednesday, Sapphire Ventures announced its fourth fund with $1.4 billion in commitments. 
• The fund spun out of enterprise software giant SAP in 2011 as SAP Ventures but changed its name in 2014 to further distance itself from its corporate backer.
• Corporate venture capital has a reputation among founders as simply a pipeline for mergers and acquisitions for larger companies instead of building support, financially and otherwise, that traditional VCs offer.
• Sapphire Ventures managing director and CEO Nino Marakovic told Business Insider that the fund's structure is the "best of both worlds," although he had to build trust with founders early on who were skeptical of the corporate venture structure.
• As of Wednesday, the firm has backed hundreds of startups and been a part of 55 separate exits, including 21 public offerings, what Marakovic called a "proof point" that the firm is not just a pipeline for acquisitions.
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Corporate venture capital has gotten something of a reputation among Silicon Valley's elite founders. 

Once an easy introduction to potential customers and thousands of users, the funds were quickly seen as a ruse for larger companies to snatch up smaller competitors with buckets of funding. Corporate venture fell out of favor, just like MySpace and hoverboards. Silicon Valley was over it.

Nino Marakovic saw the writing on the wall when he joined SAP to lead its own corporate venture initiative in 2006 as CEO and managing director. 

"Corporate venture has a tainted history, and that didn't resonate as much with others as it did for us," Marakovic told Business Insider.

Now, more than a decade later, Marakovic oversees Sapphire Ventures, the result of his crucial decision to spin out of SAP in 2011. On Wednesday, the firm announced its fourth fund as an independent venture firm with more than $1.4 billion in commitments — from SAP and outside investors — to invest in everything from enterprise software to music and sports, Marakovic said.

"There was always this idea that we created this new thing as the industry was changing," Marakovic said. "It's the best of both worlds. You have the best of operating structure but also the value add and presence of a large, multinational corporation in SAP."

Out from under the corporate shadow

Marakovic said a wholly separate fund wasn't an easy sell inside or outside the company in its earliest days, but he eventually convinced leadership to let him lead SAP Ventures in 2011. 

"We spun out because we wanted to be structured to succeed and build a sustainable business that keeps partners engaged and interested," Marakovic said. But the fund's name was still off-putting to many entrepreneurs that he wanted to fund, he said.

"We are no means the first fund to have our origins in a corporation. That shouldn't be surprising. Corporations are playing a much bigger role in venture capital and those ecosystems have always been related. That said, we were not a corporate venture capital fund," Marakovic explained.

By 2014, Marakovic needed a new name. The team settled on Sapphire Ventures, still a wink and a nod to the firm's substantial backer but different enough to convince entrepreneurs that they wouldn't be wheeled into a preexisting pipeline of acquisitions.

As of Wednesday, the firm has backed hundreds of startups and been a part of 55 separate exits, including 21 public offerings.

"We needed those proof points to put up on the board," Marakovic said.

Working for market share instead of buying it

The new fund will adhere to what Marakovic says is a tried and true strategy for Sapphire Ventures. Instead of backing a specific kind of founder or focusing entirely on a single industry, the firm backs everything from enterprise software to music startups that are what he calls "companies of consequence." Those are the companies that typically have the pick of investors, some of which can promise hundreds of millions of dollars in funding.

"There are still some mega rounds that we will not want to participate in because of the valuation or maturity of the company," Marakovic said. "You look at the current events unfolding, there's this idea that you can just king winners with tons of capital and that doesn't work."

The fund will continue to focus on writing growth-stage checks, typically between Series B and Series D, of up to $100 million. 

"Our size is conditioned upon targeting returns," Marakovic said. "Anyone can go out there and have crappy returns to buy market share, but that's not the way to do it. We called that long-term greedy. We have earned the right to earn capital for our LPs."

SEE ALSO: Andreessen Horowitz's new growth fund just invested $30 million into Imply, an open source data analytics startup taking on Microsoft and Salesforce's Tableau

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• According to a new report from CB Insights out Wednesday, 23 tech startups are hoping to go public in 2020 via a traditional IPO or direct listing.
• Popular tech companies like Airbnb, Credit Karma, and DoorDash are joined by several enterprise software companies such as Tanium, Snowflake, and Databricks.
• Tiger Global Management and Sequoia Capital are among the Silicon Valley venture firms poised to make a tidy return in 2020 by backing some of the decade's biggest hits in the earliest stages.
• Most of the startups hoping to go public raised significant venture funding in 2019, and have been fundraising since 2011. Many investors have credited the poor performance of recent IPOs in companies like Uber and Lyft to staying private longer and taking on too much venture capital in the lead up to the public offering.
• Click here for more BI Prime stories.

Even though 2019 ultimately did not become the IPO windfall many insiders hoped, that hasn't stopped the parade of startups from marching along to Wall Street in 2020.

According to a new report from CB Insights released Wednesday, at least 23 startups are hoping to go public via traditional IPO or direct listing in 2020. The pipeline includes popular hits such as home rental startup Airbnb, financial management tool Credit Karma, and on-demand food delivery app DoorDash. 

But among the long list of public hopefuls are several enterprise software startups that have been happily chugging along behind the more notorious consumer companies that have led 2019's disappointing IPO window. There's security software company Tanium, perhaps best known to industry outsiders for its engineers that consulted on hacker TV series "Mr. Robot." There is also Databricks and Snowflake in the data warehousing realm and website creation tool Squarespace. 

If even a handful of the companies go public in 2020, however, the biggest winners may not be the founders or early employees, a relief for those feeling the housing crunch and skyrocketing cost of living in the San Francisco Bay Area. Instead, returns will most likely go down the peninsula to the Sand Hill Road offices of Sequoia Capital and Tiger Global Management.

Both firms are poised to make the heftiest returns if and when the current pipeline of startups go public, according to the report. The two have made significant bets across enterprise and consumer startups and have a habit of getting in on the earliest funding rounds for some of the hottest companies. Sequoia, for example, backed gaming engine Unity, a top prospect for a 2020 public offering.

Other Silicon Valley institutions Andreessen Horowitz, Accel, and GV (formerly Google Ventures) round out the top five venture firms ready to cash in on the 2020 IPO parade.

Here are the 23 startups hoping to go public in 2020. 

SEE ALSO: Venture capitalists predict a drastic startup slowdown after more than 200 startups hit $1 billion valuations over the last decade

Asana

What it is: Asana creates project management software for on-site and distributed teams.

Founded: 2008 by Justin Rosenstein and Dustin Moskowitz

Total funding: $213.51 million

Investors: SV Angel, Andreessen Horowitz, Benchmark, Founders Fund, Mark Zuckerberg, Peter Thiel, Kapor Capital, Y Combinator

Most recent funding round: Asana raised $50 million in its Series E led by Generation Investment Management on November 29, 2018, that valued the startup at $1.5 billion.

Airbnb

What it is: Airbnb operates a property rental website that allows users to rent and lease everything from treehouses and mansions to spare bedrooms and Airstream trailers.

Founded: 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia

Total funding: $4.4 billion

Investors: Y Combinator, Sequoia Capital, SV Angel, General Catalyst, Andreessen Horowitz, DST Global, Founders Fund, Tiger Global Management, Kleiner Perkins, FirstMark Capital

Most recent funding round: Airbnb raised $1 billion in its Series F on September 2, 2017. CapitalG and Technology Crossover Ventures led the round, which valued Airbnb at $31 billion.

Unity

What it is: Unity created real-time 3-D development software for app and gaming developers.

Founded: 2004 by Joachim Ante and David Helgason

Total funding: $1.22 billion

Investors: Sequoia Capital, London Venture Partners, D1 Capital Partners, WestSummit Capital, iGlobe Partners, Thrive Capital, DFJ Growth, Oceanic Ventures, Breakaway Growth Fund

Most recent funding round: Unity raised $150 million in its Series E on May 6, 2019, but was reportedly looking to raise an additional $525 million in undisclosed funding as of July 25. 

Snowflake

What it is: Snowflake is an enterprise-level software startup that provides data warehousing and analytics.

Founded: 2012 by Marcin Zukowski, Thierry Cruanes, and Benoit Dageville

Total funding: $922.95 million

Investors: Sutter Hill Ventures, Wing Venture Capital, Redpoint Ventures, Altimeter Capital Management, Sequoia Capital, Meritech Capital Partners, Human Capital

Most recent funding round: Snowflake completed a $450 million Series F led by Sequoia Capital on October 11, 2018. The round valued Snowflake at $3.5 billion.

GitLab

What it is: GitLab is a developer tool that offers an open-source code collaboration software.

Founded: 2014 by Sid Sijbrandij and Dmitriy Zaporozhets

Total funding: $413.82 million

Investors: Y Combinator, Sound Ventures, Tuesday Capital, Khosla Ventures, 500 Startups, August Capital, Telstra Ventures, GV, Capital Factory, Tiger Global Management, General Catalyst

Most recent funding round: GitLab raised $268 million in Series E funding led by ICONIQ Capital and The Goldman Sachs Group on September 17, 2019, which valued the company at $2.75 billion.

Credit Karma

What it is: Credit Karma offers a suite of financial management tools, including credit card recommendations, free credit score monitoring, and tax preparation.

Founded: 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard

Total funding: $645.27 million

Investors: SV Angel, Founders Fund, Felicis Ventures, Ribbit Capital, Tiger Global Management, 500 Startups, CapitalG, Archer Venture Capital

Most recent funding round: Credit Karma raised $175 million of Series D funding from Tiger Global Management, Valinor Management, and Susquehanna Growth Equity on June 23, 2015, and has since completed two rounds of debt financing and secondary sales.

Squarespace

What it is: Squarespace is a website creation and content management software creator.

Founded: 2003 by Anthony Casalena

Total funding: $278.55 million

Investors: Index Ventures, Accel, Man Capital, General Atlantic, The State of Maryland

Most recent funding round: Squarespace received $200 million in growth funding from General Atlantic on December 19, 2017, that valued the company at $1.7 billion.

Roblox

What it is: Roblox is a virtual reality startup that creates games and experiences for students and adults learning computer science.

Founded: 2004 by David Baszucki

Total funding: $185.76 million

Investors: Kleiner Perkins, First Round Capital, Altos Ventures, Meritech Capital Partners, Index Ventures, Tiger Global Management, Greylock Partners, Greenspring Associates

Most recent funding round: Roblox raised $150 million in its Series F led by Greylock Partners and Tiger Global Management on June 5, 2018, that valued the startup at $2.4 billion.

Databricks

What it is: Databricks is a data analytics startup for large enterprises.

Founded: 2013 by Ali Ghodsi, Reynold Xin, Matei Zaharia, Patrick Wendell, Andy Konwinski, and Ion Stoica

Total funding: $897.36 million

Investors: Andreessen Horowitz, NEA, Data Collective, SineWave Ventures, B7, Green Bay Ventures, Battery Ventures, A.Capital Ventures, Tiger Global Management, Coatue Management

Most recent funding round: Databricks raised $400 million in its Series F that valued the startup at $6.2 billion led by Andreessen Horowitz's growth fund on October 22, 2019.

Freshworks

What it is: Freshworks makes customer service software for large and medium companies.

Founded: 2010 by Girish Mathrubootham and Shanmugam Krishnasamy

Total funding: $401.1 million

Investors: Accel, Tiger Global Management, YourStory Media, CapitalG, Sequoia Capital India

Most recent funding round: Freshworks closed a $150 million Series H from CapitalG, Sequoia Capital India and Accel on November 4, 2019, that valued the startup at $3.5 billion.

Wish

What it is: Wish is a direct-to-consumer e-commerce mobile app.

Founded: 2010 by Danny Zhang and Peter Szulczewski

Total funding: $1.8 billion

Investors: SV Angels, Formation 8, Felicis Ventures, CRV, GGV Capital, Third Point Ventures, Legend Capital, Founders Fund, FJ Labs, DST Global, IDG Capital, 8VC, Caffeinated Capital

Most recent funding round: The startup closed $300 million in Series H funding from General Atlantic on August 1, 2019, that valued it at $11.2 billion.

Blend

What it is: Blend is a financial lending website that uses machine learning to track fraud and assess a user's creditworthiness.

Founded: 2012 by Nima Ghamsari, Eugene Marinelli, and Erin Collard

Total funding: $314.08 million

Investors: Thrive Capital, Lightspeed Venture Partners, Formation 8, Conversion Capital, Andreessen Horowitz, Founders Fund, Greylock Partners, Emergence Venture Partners, Fifth Wall

Most recent funding round: The company raised $130 million in its Series E led by General Atlantic and Temasek Holdings on June 24, 2019.

DoorDash

What it is: DoorDash is one of several on-demand food delivery apps.

Founded: 2013 by Tony Xu, Andy Fang, and Stanley Tang

Total funding: $2.07 billion

Investors: Y Combinator, Khosla Ventures, CRV, Benchmark, Sequoia Capital, Kleiner Perkins, Cota Capital, SoftBank Investment Advisors, DST Global, Sands Capital Ventures

Most recent funding round: DoorDash closed a $700 million Series G on November 13, 2019. The round was led by Sands Capital Ventures and Darsana Capital Partners and valued the company at $13 billion.

Procore

What it is: Procore is a project management software tool for on-site management in industries like real estate and construction.

Founded: 2003 by Craig Courtemanche

Total funding: $490 million

Investors: Lumia Capital, Lead Edge Capital, Greater Pacific Capital, TenOneTen Ventures, Bessemer Venture Partners, Tiger Global Management, Persistence Partners

Most recent funding round: Procore closed $103.5 million in Series H1 funding from undisclosed investors on July 30, 2019, valuing the startup at $3.3 billion.

AvidXChange

What it is: AvidXchange provides accounting software for accounts payable and invoicing.

Founded: 2000 by David Miller and Michael Praeger

Total funding: $490 million

Investors: QED Ventures, Nyca Partners, Foundry Group, Bain Capital Ventures, Pivot Investment Partners, Peter Thiel

Most recent funding round: The 19-year-old startup raised $150 million on October 14, 2019, from undisclosed investors in a round valuing the company at $2 billion.

Fanatics

What it is: Fanatics is an e-commerce sports memorabilia retailer.

Founded: 1995 by Alan Trager

Total funding: $1.62 billion

Investors: Andreessen Horowitz, Temasek Holdings, Alibaba Capital Partners, SoftBank Investment Advisors, Silver Lake Management, NFL, MLB

Most recent funding round: Fanatics completed $500 million in debt refinancing on April 24, 2019. Deutsche Bank, Bank Of America, SunTrust Bank, Barclays, PNC Bank, Goldman Sachs, Citigroup, HSBC Financial and Mizuho Bank provided the revolving line of credit.

ServiceTitan

What it is: ServiceTitan provides cloud software for residential services such as housecleaning or repairs. 

Founded: 2012 by Ara Mahdessian and Vahe Kuzoyan

Total funding: $325.96 million

Investors: Mucker Capital, I2BF Global Ventures, Bessemer Venture Partners, Hive Ventures, Battery Ventures, Index Ventures, Dragoneer Investment Group

Most recent funding round: Index Ventures led the startup's $165 million Series D on November 14, 2018. The round valued ServiceTitan at $1.65 billion.

StockX

What it is: StockX is a trading website for limited edition and rare sneakers.

Founded: 2012 by Greg Schwartz, Chris Kaufman, and Josh Luber

Total funding: $162 million

Investors: Detroit Venture Partners, CourtsideVC, Revolution, GV, Battery Ventures, GGV Capital, General Atlantic, DST Global, Marshall Mathers, Scooter Braun, Marc Benioff

Most recent funding round: The buzzy sneaker startup raised $110 million in its Series C on June 26, 2019. DST Global led the round, which valued StockX at $1.11 billion. 

InVision

What it is: InVision is a digital-only product design software startup. 

Founded: 2011 by Clark Valberg and Ben Nadel

Total funding: $350.2 million

Investors: FirstMark Capital, Tiger Global Management, Accel, Spark Capital, RiverPark Ventures, Redpoint Ventures, Battery Ventures, Goldman Sachs Investment Partners

Most recent funding round: InVision closed $115 million in a combination round that included debt and Series F venture funding on December 11, 2018. The round was led by Spark Capital and valued the startup at $2.02 billion.

Braze

What it is: Braze is a customer service communication and management software startup.

Founded: 2011 by Bill Magnuson and Jonathan Hyman

Total funding: $177.1 million

Investors: Supernode Ventures, Bullpen Capital, T5 Capital, Ridge Ventures, Rally Ventures, Accelerator Ventures, Citi Ventures, Spark Capital, Shasta Ventures, Battery Ventures

Most recent funding round: Braze raised $80 million in its Series E on October 3, 2018. Meritech Capital Partners led the round, which valued the startup at $850 million.

Outreach

What it is: Outreach is a customer relationship management and communication tool for sales teams at large companies.

Founded: 2012 by Manual Medina, Gordon Hempton, Andrew Kinzer, and Wesley Hather

Total funding: $237.96 million

Investors: Three Point Group, Founders' Co-op, Version One Ventures, Techstars, Floodgate Fund, Mayfield Fund, Trinity Ventures, M12, Four Rivers Group, Spark Capital, Sapphire Ventures

Most recent funding round: The Salesforce competitor raised $114 million in a combination Series E round that included debt and venture funding on April 16, 2019. Lone Pine Capital led the round, which valued the company at $1.1 billion.

HashiCorp

What it is: HashiCorp is a cloud-based software infrastructure company for medium and large businesses.

Founded: 2012 by Armon Dadgar and Mitchell Hashimoto

Total funding: $174.53 million

Investors: Haystack, True Ventures, Mayfield Fund, GGV Capital, Redpoint Ventures, Snap, Slack, IVP, Bessemer Venture Partners, AppDynamics, TCV

Most recent funding round: HashiCorp raised an undisclosed amount of venture funding from TCV on January 1, 2019. Two months earlier, it had raised $100 million in Series D funding from IVP with a valuation of $1.9 billion.

Tanium

What it is: Tanium creates endpoint security software for large-scale organizations.

Founded: 2007 by Orion Hindawi and David Hindawi

Total funding: $682.29 million

Investors: Andreessen Horowitz, Citi Ventures, T. Rowe Price, TPG Capital, IVP, Geodesic Capital, Bullpen Capital, SharesPost, Omega Venture Partners, Baillie Gifford

Most recent funding round: Tanium raised $200 million from Wellington Management on October 2, 2018, in a deal that valued the security startup at $6.7 billion. 

• The British startup StandardToilet designed a toilet with a slanted seat intended to make it less comfortable for workers to hang out in the bathroom for extended periods of time.
• The toilet has a 13-degree slope that makes it painful to remain sitting for more than five minutes, founder Mahabir Gill told WIRED.
• The toilet is going mildly viral on Twitter, where people are reacting with near-universal horror.
• Visit Business Insider's homepage for more stories.

Bosses who are fed up with workers taking too long on the toilet may have a new weapon in their arsenal.

A new toilet designed by the British startup StandardToilet has a downward-sloping seat that's designed to make it unbearably painful to spend more than 5 minutes on the loo, WIRED first reported.

On its website, StandardToilet says the toilet is meant to improve efficiency at companies, promising that the uncomfortable seat will discourage employees from using social media while in the bathroom.

"In modern times, the workplace toilet has become private texting and social media usage space," StandardToilet laments in its press release. "With the advent of flexible zero hour contracts it is easy to see why our StandardToilet can be an asset to a business."

People across the internet have already begun to react to the toilet, mostly with indignation.

StandardToilet did not immediately respond to a request for comment. The StandardToilet retails for between $200 and $650, and began shipping in November.

SEE ALSO: The biggest password flubs of 2019, from Facebook's stolen data to Lisa Kudrow's Instagram

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• In its annual startups report, Crunchbase found that just 5 startups valued at $1 billion or more in 2019 were founded by women, and only 16 had a female cofounder. 
• The other 108 startups were founded by men or all-male teams.
• Although the report is yet another example of how Silicon Valley continues to lag behind gender parity in pay, wealth creation, and equity, some founders and investors said it's helpful to know where the industry stands so that it can progress.
• The wealth creation or equity gap is discussed much less than the hiring and pay gaps, but many founders say it could be more important because that's the ticket to board rooms and venture firms, which then perpetuate the other disparities in the industry.
• Click here for more BI Prime stories.

Although female founders were on track to receive record investment this year, only a few were able to break the $1 billion glass ceiling.

Of the 128 startups that achieved a valuation of $1 billion or higher in 2019, just five of them, about 4%, were founded by all-female teams, according to Crunchbase'sannual startups report out Wednesday. Sixteen had at least one female cofounder, the report stated, and the remaining 108 were founded by all-male teams.

Some VCs see the unicorn status of this handful of female-led startups as half-full.

"What I love about the female-founded unicorns that have emerged this year is what incredible role models they are for the entrepreneurs of tomorrow. From Rent the Runway to Glossier, these founders are setting examples that will inspire the next generation," Inspired Capital founder and managing partner Alexa von Tobel told Business Insider.

But the report is also yet another example of how Silicon Valley continues to lag behind gender parity in pay, wealth creation, and equity, founders and investors said.

Some point out that data is data so it's helpful to know where the industry stands so that it can progress. Yet, the data doesn't show one of the most critical pieces of information: if VCs across the board are offering the same terms to female-led startups as they are to male-led ones. 

Some suspect they are not and that women are being asked to sell bigger chunks of their company to investors for less money.

"Especially in the early days, I suspect the cost of capital is more expensive for female founders than their peers," Carrot Fertility founder and CEO Tammy Sun told Business Insider. "Of course, this isn't tracked anywhere so it's hard to definitively say."

The disparity highlights a glaring omission in many conversations around equality in the tech industry. While much attention is rightfully paid to the number of female founders, board members, and engineers, the ability to equally create wealth is largely overlooked. Especially at early-stage startups, founders and early employees tend to forgo salary in favor of shares in the company that may turn into a nest egg down the road. Without an income, many founders end up relying on savings or other ways to cover living expenses. 

"I know it can be hard especially when access to capital is already an uphill battle but my tip to female founders is to keep an eye on valuation, too," Sun said. "Fundraising is a combination of performance and potential. Don't undervalue your potential." 

The uphill battle to raise investment at the same level as male cofounding peers can become a self-fulfilling prophecy, too. Female employees see how other founders struggle to raise money, so they delay starting their own companies until they have accrued enough savings to leave full-time employment. Founders continue to struggle to raise, and even when they do, do so at lower valuations and bring in less for themselves. Even with an exit — the holy grail for many tech founders — a female founder might take home less than a male counterpart, and thus will have less money to use as an investor or repeat founder. 

"It starts with parity at the top of the funnel," von Tobel said. "As seed and series A investors at Inspired Capital, we're fortunate to see equal numbers of male and female founders pitching us every day. We're confident that this diverse pool of founders will shape the future with massive ideas, build the next generation of successful companies, and become role models for all the entrepreneurs that follow."

SEE ALSO: Venture capitalists predict a drastic startup slowdown after more than 200 startups hit $1 billion valuations over the last decade

Join the conversation about this story »

NOW WATCH: Apple just revealed its AirPods Pro for $249, which feature noise cancellation. Here's everything that was wrong with the $159 pair of the wireless headphones.

• Truvalue Labs provides banks and asset managers on Wall Street with data and analytics around ESG factors to help them assess investments.
• Hendrik Bartel, chief executive and co-founder of Truvalue, is seasoned in the Silicon Valley startup world. He worked at three startups before going to business school, where he got the idea for his latest fintech, Truvalue Labs.
• For seed and Series A fundraises, it's key for startup founders to win the confidence of investors, Bartel said.
• Capturing the attention of Wall Street can be hard. But once deals are signed, Bartel said, serving those customers is one of the stickiest business models he's ever seen.
• Visit Business Insider's homepage for more stories.

There's a lot of talk of tech encroaching on Wall Street's turf. And fintech is a crowded market, with challenger banks like Chime to trading platforms like Robinhood raking in VC cash and notching unicorn valuations.

But there's another segment of fintech aimed at serving, not unseating, the legacy players of finance. In doing so, they often have to fuse tech hype with old-school Wall Street sensibilities. 

Truvalue Labs is one such B2B player, providing banks and asset managers on Wall Street with data and analytics around ESG factors to help them assess investments. 

Hendrik Bartel, chief executive and co-founder of Truvalue, is seasoned in the Silicon Valley startup world, working at three startups before going to business school at St. Mary's College of California.

"The impetus for Truvalue was going back to business school, after having participated in three startups from start to finish," said Bartel.

While pursuing an MBA, Bartel developed an interest in financial data and spotted a need in the market. ESG-minded asset managers often use inconsistent data to rate environmental, social, and governance factors related to companies. 

"There's a number of ratings providers out there in the market, but there is no regulatory oversight or standard of how ESG has to be reported," said Bartel. There was also little correlation between ratings providers results, he said.

When looking for an ESG investment, it's hard to know how environmentally or socially responsible a company actually is. The data is often self-reported, and relies on analysts to review and update it. 

Learning that the data was heavily human-driven, slow to update, and unaudited was what drove Bartel to found Truvalue.

Building credibility

Bartel founded Truvalue in 2013 with a team of coworkers from his earlier startup days. With a few exits already under their belts, the team self-funded as they started building the platform.

"We got lucky through some of the exits over the years that we were actually able to bootstrap the business and get to where it's more than just a PowerPoint, where there's actual code, where there's something that's working already," Bartel said. 

Initially, the team wasn't building with being a fintech in mind, Bartel said.

"I'm not from what's called fintech. I'm from technology," he said.

And the Silicon Valley-based team lacked Wall Street experience.

"We didn't really have the experience to know what it means to participate in capital markets," Bartel said.

Before raising a Series A, Bartel wanted more credibility. So Truvalue hired a chief marketing officer and chief data and analytics officer who both previously worked at Thomson Reuters, and a chief financial officer with more than 25 years of experience.

For seed and Series A fundraises, it's key for startup founders to win the confidence of investors, Bartel said.

"I would say seed and [Series] A really come down to the team, the gel between the team, and what you have done before," said Bartel.

Scaling for Wall Street

During the first few years, Truvalue focused on building a marketable product.

"We really spent on building a technology stack and understanding the intricacies of fintech and capital markets-grade data sets," said Bartel. 

They collected historical ESG data, built audit trails, and weaved corporate actions into the data. Bartel wanted to make sure Truvalue was building a product that asset managers and analysts would use.

"That's the challenge that I see with a lot of alternative data companies that are run in New York these days," Bartel said. "On principle, some of these ideas sound really good, and it might work on a small sample, but it's not scalable."

Fintechs building data platforms need to think about backtesting, audit trails, and application across markets and indices, he said.

Playing on the herd mentality

"One of the key challenges I still struggle with as an impatient entrepreneur is looking at the sales cycles and looking at the herd mentality in the capital markets industry," said Bartel. 

On the Street, there is a sense of FOMO, he said, where asset managers want to make sure competitors aren't getting ahead with the latest data.

Because of this herd mentality, serving Wall Street can be challenging. For consumer-facing products, 1% market share could be substantial, depending on the market. But Truvalue is leaning on a network effect for customer adoption.

That said, Bartel has seen high customer retention rates once deals are signed.

"Once something is deployed, it's the stickiest business model I've ever seen," said Bartel. "It's so hard to rip something back out because it's just ingrained in a workflow."

And with that stickiness, Bartel noticed that customers were looking to expand their contracts. A firm would use Truvalue in one business area, and then other business units would see the benefits of the platform, and the contract would grow, Bartel said.

"It's much easier for us to grow with an existing account than capturing new clients," said Bartel.

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• Popular online startups like Casper and Dagne Dover are making their products more accessible by partnering with Nordstrom.
• Their presence on Nordstrom means you can put them all in the same cart along with your buys from traditional brands, and you'll benefit from Nordstrom's free two-day shipping policy in most cases. 
• We found 34 great startups ranging from clothing to home goods that are now available on Nordstrom.

Though a popular business strategy for new startups today is to sell direct-to-consumer through their own websites, the practice often serves as a springboard for other retail opportunities, not an outright boycott.

Many online startups eventually find their way into popular retail stores that you've been shopping at for years. It's another way to get their products in front of more eyes, plus it's undeniably convenient to shop all your favorites at one site and enjoy free shipping and return perks.

Startups tend to be careful about the traditional retailers they do decide to partner with. They don't want to dilute their brands and they want to reach the right types of customers. Understandably, Nordstrom, with its reputation for curated style and quality, is a popular retail partner for up-and-coming online startups. 

On Nordstrom's site, you can shop 34 brands that the internet has been buzzing about for the last few years. They tend towards clothing and shoes, but you'll also find skin-care and home products. 

With the holidays right around the corner, Nordstrom is a great place to shop if you're crunched for time. If you want to use standard, free shipping, you'll need to place your order by Sunday, December 22 to ensure your gifts get under the tree in time for Christmas. If you're willing to pay extra for next-day shipping, you can order as late as Monday, December 23. Head to Nordstrom to check out its complete holiday shipping calendar. Just remember that the sooner you place your order, the better your chances of a timely arrival.

Summersalt

Shop Summersalt swimsuits at Nordstrom

Along with standbys like Aerie, new startups like Summersalt are also catching waves with their eye-catching styles and comfortable, supportive fits. Unlike trendy women's swimsuits that you can only lounge in, Summersalt's one-pieces and bikinis are both cute and functional, made for beach games, ocean swims, and more.

Senreve

Shop Senreve bags at Nordstrom

The price of these beautiful bags can be difficult to swallow, but we've personally discovered they're worth it— they're distinctive, they come in attractive colors and finishes, and they can be worn many different ways (backpack, crossbody, tote). Inside, you'll find plenty of organizational compartments for everything from your tech to your makeup essentials. 

Amour Vert

Shop Amour Vert clothing at Nordstrom

Amour Vert— or "green love" in French — lives up to its name by making clothing sustainably. Pieces are made in limited quantities to reduce waste, and the company uses sustainable fabrics like organic cotton, merino wool, and Tencel. Plus, for every T-shirt purchased, it plants a tree in North America through American Forests, an organization working to reforest the region. 

Revtown

Shop Revtown jeans at Nordstrom

When a new denim brand is founded by former Under Armour execs, you can rightly expect that the jeans will be comfortable and ready for any type of activity. Even better, they're not expensive at all. All of Revtown's jeans on Nordstrom cost just $79. 

TomboyX

Shop TomboyX underwear at Nordstrom here

TomboyX was created with the mission of making underwear everyone regardless of size and gender could feel comfortable in. It adapts styles like trunks and boxer briefs for women's bodies so that there's a masculine aesthetic, without the design shortcomings of trunks and boxers. 

Boll & Branch

Shop Boll & Branch bedding and bath products at Nordstrom

Startups can hold their own against the big brands, too. Boll & Branch pulls ahead of companies like Patagonia and Nike in its use of organic Fair Trade Certified cotton, which results in more luxurious, soft, and durable sheets for a good night's sleep. 

Universal Standard

Shop Universal Standard clothing at Nordstrom

Though it probably shouldn't be, Universal Standard's approach to making clothing is revolutionary: All the clothing is available in sizes 00 through 40, and the styles are sophisticated and well-made. This type of "fashion freedom," as the brand calls it, makes shoppers feel like they never have to compromise as they look for dresses, shirts, pants, and outerwear. 

Ritual

Shop Ritual vitamins at Nordstrom

The one-month supply of women's multivitamin and a convenient travel case are available only at Nordstrom for a limited time. Ritual's vitamins contain the nine essential nutrients that women lack the most, and the company prides itself on transparent ingredient sourcing. 

Hatch

Shop Hatch maternity clothing at Nordstrom

Forget the unflattering sack dresses of days past. Hatch's easygoing and stylish maternity clothes are nice enough that even people who aren't pregnant want to wear them. The breathable and low-maintenance clothes can certainly be worn after pregnancy, so it doesn't feel like you're wasting money on something you'll only wear for less than a year. 

Caraa

Shop Caraa bags at Nordstrom

Athleisure brand Caraa is one of our favorite bag brands, making the "everything bags" we stuff and tote to work, the gym, and on travels. We especially love the cloud-like bags made from ultra-soft and puffy nylon. 

Frank And Oak

Shop Frank And Oak clothing at Nordstrom

This Canadian startup has impressed us ever since we tried the style plan subscription available on its website. Nordstrom has a limited selection of the brand's quality basics, but it's a strong collection, featuring cozy pullovers and everyday button-ups. 

Care/of

Shop Care/of supplements at Nordstrom

Best known for sending you personalized vitamin packs, Care/of is also helping you get your protein intake so you can reach your health and fitness goals. It offers two types of protein, plant and whey, and you have the opportunity to try the $15 sampler before committing to a bulk container. 

LIVELY

Shop Lively bras, underwear, and swimwear at Nordstrom

If you don't want to spend more than $35 for a good bra, look no further than Lively. It can be hard to feel confident in your skin if your bra is uncomfortable, but Lively nabs the comfort factor (even for much-maligned strapless bras) without sacrificing style. 

MVMT

Shop MVMT watches and sunglasses at Nordstrom

MVMT's sleek watches look a lot more expensive than they are, but have no fear — you can get an automatic watch for $300 and other watches for even less. Grab a pair of its sunglasses to make a powerhouse pair of accessories. 

Youth to the People

Shop Youth to the People skin care at Nordstrom

Spinach and kale go well in salads, smoothies, and according to startup Youth to the People, skin care products, too. These safe creams, cleansers, and masks containing powerful antioxidants, vitamins, and nutrients have been described as "a superfood smoothie for your skin." 

Dagne Dover

Shop Dagne Dover bags at Nordstrom

Dagne Dover handles all your bag needs — work tote, laptop bag, travel or gym bag— with the same poise and sophistication you hope to approach your busy schedule with. We're continually impressed not only by the distinctive styles but also by their smart interior compartment organization. 

Casper

Shop Casper bedding at Nordstrom

While you can't pick up a Casper mattress from Nordstrom, you can buy its surprisingly impressive bedding products or a small bed for your best friend. A good night's rest relies on a number of factors, not only the mattress type, so don't sleep (or do) on Casper's sheets and duvet covers. 

Bombas

Shop Bombas socks at Nordstrom

We wear our Bombas socks whenever we can: to the gym, for hiking, or with our winter boots. That's because they're just the right thickness, they feel supportive, and they never slip down our legs or ankles. 

Foreo

Shop Foreo skincare devices at Nordstrom

After trying many other facial cleansing devices, we always find ourselves returning to Foreo's gentle yet highly effective silicone brush cleansers. They're not cheap, but you'll feel the difference in your skin after just one use, and we love that they stay powered for weeks (if not months) on a single charge. 

Baggu

Shop Baggu bags at Nordstrom

Baggu's founder calls these cotton and ripstop nylon bags"simple, useful, and delightful." Its famous tote bags are often used for activities like grocery shopping and laundry, but its other bags (backpacks, weekenders) are also practical options to shop. 

Tommy John

Shop Tommy John underwear and loungewear at Nordstrom

"Do I really want to spend $30 on underwear?" you might ask yourself. The Insider Picks team's unequivocal answer is yes, and you won't regret it. You can't go wrong with any of Tommy John's innovative and comfortable fabrics, and now both men's and women's styles are available to shop at Nordstrom. 

Outdoor Voices

Shop Outdoor Voices athletic wear at Nordstrom

Cult-favorite brand Outdoor Voices revolves around the concept of "Doing Things." Sporting its distinctive color-blocked leggings and sports bras, you'll always feel motivated to take this mantra to heart. 

Birdies

Shop Birdies slippers at Nordstrom

The velvet, cushioned slippers from Birdies bring the warmth and comfort of indoor lounging to the city streets in a fashionable way. You can choose between slides and classic smoking slippers in a variety of colors and patterns. 

Stance

Shop Stance socks and underwear at Nordstrom

Once the NBA's official on-court sock, Stance is the rare brand that's as beloved by athletes as it is by artists and rock musicians. Part of the reason has to be its bold, graphic prints that reveal a refusal to stick to the status quo. If you have enough socks in your drawer, its underwear is also worth checking out. 

Native Union

Shop Native Union tech accessories at Nordstrom

Tech, while useful, can be written off as cold and impersonal. Native Union brings personality back to tech accessories like phone cases, charging cables, and charging hubs with its unique and modern designs. 

Bonobos

Shop Bonobos menswear at Nordstrom

As a direct-to-consumer startup that started early in the game, Bonobos offers the advantage of having many styles available at its traditional retail partners. From graphic print T-shirts and swim trunks to sport coats and tuxedos, you'll be comfortably suited for any occasion in your life.

Sugarfina

Shop Sugarfina candy at Nordstrom

Candy lovers should be familiar with Sugarfina, a playground of elevated treats for adults with sweet tooths (or is it sweet teeth?). It's always coming out with fun collaborations and seasonal collections, which can often also be found at Nordstrom. 

Greats

Shop Greats shoes at Nordstrom

We've lusted after many a designer sneaker but have never been able to justify paying thousands of dollars for a pair. Thanks to Greats, we don't have to. Its under-$300 sneakers combine premium Italian craftsmanship with classic, Brooklyn-inspired style. 

Richer Poorer

Shop Richer Poorer loungewear at Nordstrom

Some of the most impressive startups are the ones that do "simple" really well. Richer Poorer, maker of organic cotton T-shirts and bralettes, comes to mind immediately. Good luck getting yourself out of the bed or couch once you've slipped on its soft and cozy loungewear. 

Freshly Picked

Shop Freshly Picked baby shoes at Nordstrom

Babies and toddlers nowadays are more stylish than I ever was at that age, and that's thanks in part to the influence of Freshly Picked, a leather shoe company that grew out of a mom's Etsy shop. The adorable moccasins are made from 100% genuine cowhide leather and they're easy to pull on and off. 

State Bags

Shop State Bags at Nordstrom

Adults are carrying backpacks well past their school years and State Bags is one of those brands making the transition a seamless one. They're more affordable than luxury backpack options but still made with quality materials including leather and water-resistant nylon. 

True & Co.

Shop True & Co. bras at Nordstrom

Part of a wave of new lingerie startups challenging Victoria's Secret, True & Co. asked 6 million women what their perfect wireless bra looked like and delivered accordingly. The $49 True Body Wireless Bra is stretchy, seamless, and so light you might forget you're wearing it. 

Happy Socks

Shop Happy Socks at Nordstrom

Happy Socks are socks that you actually want to peek out from under your pants. In fact, whole outfits could be styled around this small article of clothing. Because of their flashy patterns and bright colors, they're highly giftable — for a loved one or yourself. 

Thinx

Shop Thinx underwear at Nordstrom

Thinx makes innovative period-proof underwear that lets women carry on with their daily activities and workouts without a worry in the world. The super-absorbent underwear is even machine-washable. 

• The rise of "mega-rounds" has created more startups unicorns in New York City in 2019 than any previous year, according to a report from VC firm White Star Capital.
• These outsized transactions are becoming more common, as tech investors raise bigger funds to compete for the hottest deals.
• The year's new $1 billion startups include e-commerce giants Casper, Glossier, and Rent the Runway, as well as buzzy luggage brand Away.
• Click here for more BI Prime stories.

A year of uncertainty in the financial markets did not discourage a parade of startup unicorns in New York in 2019.

The city created more companies valued above $1 billion in 2019 than in any previous year, according to a report from White Star Capital in New York and Pitchbook data. The 10 new startup unicorns include direct-to-consumer heavyweights like Casper, Glossier, and Rent the Runway, as well as buzzy luggage startup Away, whose cutthroat culture was at the center of a recent investigation published by The Verge.

The previous two years produced four unicorns each year, which puts their total behind the first half of 2019 alone, according to White Star Capital, which cited research by CB Insights. The second biggest year for startup unicorns in New York was 2017, when BuzzFeed, Oscar, Warby Parker, and others gave the city seven $1 billion companies.

Most of the companies this year pulled in more than $100 million in a single fundraising event, known as a "mega-round." These outsized transactions are becoming more common, as tech investors raise bigger and bigger funds to compete for the most sought-after deals. In the first half of the year, there were 16 mega-rounds in New York, more than the yearly totals for any year prior.

"Without a doubt, the easier access to mega-rounds plays a larger role in the increase in the number of unicorns, as mechanically, these large sums of money create significant uptick on the company valuation," said Eric Martineau-Fortin, founder and managing partner at White Star Capital.

The tech investor started his career in investment banking in Paris, New York, and London. His portfolio at White Star Capital includes healthcare startup Parsley Health and gluten-free meal-delivery service Freshly.

He explained that in the past, fast-growing companies would start trading on the public markets to grab funding as they neared $1 billion in valuation. An initial public offering would require such companies to be "Wall Street-ready," Martineau-Fortin said, "with financial metrics allowing them to deliver well on their quarterly reporting obligations" after listing. As a tech investor, he said an IPO continues to be his preferred outcome, because it provides exits to early backers and forces a higher level of discipline in the way the company handles its finances.

Still, there are clear advantages to raising a mega-round, Martineau-Fortin said. Going public too early can hurt a company's ability to grow fast while avoiding the spotlight, and creates a near-sighted focus on profitability and quarterly reporting over longer-term strategy. A mega-round allows the company to continue to scale quickly without the same pressures.

"However, it is quite reassuring that more and more of the startups raising large sums of money now have the metrics to do so, and chose this path for the right reason," he added. "This is particularly true in New York where financial discipline, diversity of talents, and access to capital is part of the city's DNA."

These are the New York startup unicorns minted in the first half of 2019, and the amount of funding they've raised to date, according to Pitchbook and CB Insights:

• Collibra ($235 million)
• Glossier ($192 million)
• Rent the Runway ($521 million)
• Casper ($355 million)
• Lemonade ($480 million)
• VTS ($190 million)
• Away ($181 million)
• Gympass ($300 million)
• Wheels Up ($778 million)
• Knotel ($595 million)

Join the conversation about this story »

NOW WATCH: The founder of a $1.7 billion startup walked us through the pitch decks that helped him raise $448 million

• Startup founders and employees are fed up with the hype over cryptocurrency, machine learning, and virtual reality, according to a new survey.
• Venture capital firm First Round polled over 900 founders and employees of startups for their annual State of Startups report, published this week.
• The most underhyped startup trend is agriculture tech, according to respondents.
• Visit Business Insider's homepage for more stories.

The world of startups may be running out of patience for heavily-hyped trends like cryptocurrency, virtual reality, and autonomous vehicles, according to a new survey published this week.

To findings were published by First Round, a venture capital firm that compiles an annual "State of Startups" report. The survey polled 950 founders and employees of startups, and asked each respondent to name three overhyped trends.

In addition to ranking the most overhyped technologies, survey respondents were asked which startup trends are the most underhyped. Agriculture tech was named the most underhyped trend, followed by construction and digital health.

The survey also found that startup founders are increasingly worried about the startup "bubble" popping. Over 47% of founders said we're in a bubble for tech companies, and 32% said it's close to popping, while just 21% said they don't think there's a tech bubble.

Here are the most overhyped tech startup trends, according to 950 startup founders and employees surveyed by First Round.

13. Personal finance apps

Broadly, personal finance apps are platforms like Venmo and Wealthfront that let users move money around or manage it using their smartphone. 7.5% of startup employees and 5.6% of founders said personal finance apps are overhyped.

12. Fitness/wellness

One of this year's most-hyped fitness startups, Peloton, had a disappointing Wall Street debut, falling below its IPO price in October. 8.4% of employees and 7.3% of founders said fitness is an overhyped startup trend.

11. Productivity apps

Productivity apps help companies or individuals get work done more efficiently, like Slack, Trello, or Asana. 7.3% of founders and 12.6% of employees said the trend is overhyped.

10. Dating apps

This year, Facebook hopped on the dating hype train, launching an in-app dating service to compete with Tinder, Hinge, and Bumble. Dating apps were ranked as overhyped by 13.4% of startup employees and 8.2% of founders.

9. Esports

The esports industry is undergoing massive growth— investments in esports rose to $4.5 billion in 2018 from just $490 million the year prior, according to Deloitte. 9% of startup founders said esports are overhyped.

8. Direct-to-consumer

Several direct-to-consumer brands that built audiences on Instagram and YouTube, like Glossier, Away, and MailChimp, are now attempting to secure their long-term appeal with their own branded content studios. 10% of startup employees and founders said direct-to-consumer is an overrated trend.

7. Social networks

Social media startups are notoriously risky investments, but backers are still drawn to them because of their potential to attract young users abandoning aging social media platforms, according to Investopedia. 13.4% of startup employees and 12.9% of founders said social networks are overhyped.

6. Meat alternatives

The imitation-meat industry is booming, fueled by customer concern over the environmental and ethical downsides of meat production. However, 12.3% of startup employees and 15% of founders said the trend is overhyped.

5. Autonomous vehicles

Autonomous vehicles are seen as the future of industries ranging from shipping to ride-hailing, but concerns over the safety risks of self-driving cars, and the maturity of the technology, only intensified in 2019. 17% of startup employees and 22.3% of founders said autonomous vehicle startups are overrated.

4. Venture-backed beverages

Investors poured millions into trendy beverage startups this year — Liquid Death, a canned-water company with a punk marketing aesthetic, raised $2 million from angel investors, while "smart drink" maker More Labs raised $8 million in VC funding, according to TechCrunch. 11.9% of startup employees and 22.8% of founders said venture-backed beverages are overhyped.

3. Virtual reality and augmented reality

Virtual reality is taking longer to catch on than investors expected. Facebook, which purchased VR headset maker Oculus for $2 billion five years ago, is now facing challenges with getting people to buy the product, but Mark Zuckerberg said he's "still optimistic." 19.4% of startup employees and 26.6% of founders said virtual reality and augmented reality are overhyped.

2. Artificial intelligence and machine learning

The world of tech is fascinated with AI — from 2011 to 2018, investors poured more than $110 billion into 9,800 rounds of fundraising for AI startups, according to MIT researchers who argue that the trend has "the trappings of a financial bubble." 19.8% of startup employees and 40% of founders said AI is overhyped.

1. Cryptocurrency

By most accounts, the cryptocurrency bubble has already popped — by mid-2019, assets across cryptocurrencies fell by more than 75% from their peak in 2017, and could take decades to return to their prior value, according to analysts. Facebook's push to establish a new cryptocurrency also stumbled this year, with several high-profile partners backing out of the project. 44.9% of startup employees and 56.2% of founders said they believe cryptocurrency is overhyped.

On the other hand, agriculture tech, digital health, and construction topped the list of the most underhyped startup trends.

Startup founders and employees were also polled on which trends are the most underhyped. Agriculture tech was the clear leader, with 34.8% of employees and 30% of founders ranking it as underhyped.

Other underhyped trends, according to survey respondents, include construction, digital health, vertical software-as-a-service, synthetic biology, and low-code platforms.

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 an extra special year-end edition of Cultivated! This is the last one you'll get to read before the next decade starts. I'll be off skiing some deep powder (hopefully) in Utah next week.

It's been fun putting this newsletter together every Friday since we started in July, and I hope you all enjoy reading it.

With that, let's get to it.

I had a whirlwind week at the MJBizCon in Las Vegas last week — I think I did something like 35 meetings over three days, wearing out the soles of my shoes in the process — but I found it to be a fruitful reporting trip.

It was my first time at the conference, and I heard the mood was a little more... dour... than in years past for obvious reasons. That being said, most investors and execs I spoke with laid out an optimistic case for the future of cannabis, though all acknowledged that the industry is going through its first painful correction.

You can read my story on the burst cannabis bubble, and where things are going to go, right here.

We also took a look at where cannabis investors are placing their bets in 2020. You guessed it: distressed assets are on everyone's radar. 

And of course, we're still keeping track of layoffs around the industry, and we're bringing you scoops. In the latest one, we broke the news of Green Bits' new CEO, Barry Saik, and got the first interview with him.

Until next year. 

-Jeremy 

Here's what we've been writing about:

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

• Curaleaf announced a $275 million secured loan facility, at a 13% interest rate. Cowen analyst Vivien Azer called it "exceedingly helpful in addressing near-term cash commitments" and maintained her outperform rating on the stock.
• iAnthus raised $36 million of senior convertible notes from cannabis investment firm Gotham Green Partners. The raise is part of a planned $100 million financing. 
• NASDAQ-listed Akerna is acquiring Canadian cannabis company Ample Organics in a $45 million deal. 
• Boston-based Ascend Wellness Holdings raised $28.2 million from a number of investors, including Salveo Capital and JM10. The company plans to deploy capital to go after the newly opened Michigan and the soon-to-open Illinois recreational cannabis markets.
• Holistic Industries is spending $20 million on a new headquarters in Michigan, which will include a cultivation facility and a flagship retail store. Holistic Industries is also partnering with the estate of Grateful Dead legend Jerry Garcia to release the Jerry Garcia 2020 cannabis collection. 
• Canopy Growth released First & Free, a line of hemp-derived CBD products in the US. The products are available to purchase online. 
• Canadian medical cannabis company FSD Pharma has received approval to list its shares on the NASDAQ. They'll begin trading soon under the ticker HUGE. 
• Green Growth Brands terminated its planned $50 million acquisition of MXY Holdings, or Moxie, as "the market adjusts to the changing macro environment." For more information on that changing macro environment, see my story from October. 
• Tilray has completed its merger with Privateer Holdings. 

Executive moves

• Harvest Health & Recreation is beefing up its advisory team. Daniel Reiner joins as a special advisor to the board, and Scott Atkinson will join as co-executive chairman.
• Medical Marijuana Inc (MJNA), an OTC-listed cannabis company, promoted Brooke Beers to CFO from VP of corporate finance.
• David Kelman is joining the investment bank Stifel as a managing director in the consumer & retail group, where he'll oversee US cannabis investment banking from Stifel's New York office. Kelman was previously a managing director at Viridian Capital Advisors, a cannabis-focused advisory.
• ManifestSeven (M7) has appointed Hélène Blanchette, formerly a VP at Xerox, as president of MyJane, M7's retail subsidiary targeted towards women. MyJane president cofounder Kim Kovacs is leaving the company. 
• Jeanette VanderMarel has resigned from her position as COO of Beleave Cannabis after less than two months on the job. 

Chart of the week

With all of the doom-and-gloom around cannabis capital markets, I think it's important to keep this in mind: 

What I'm reading

Cannabis' largest trade show is pretty ordinary, and that's what the industry wants (CNN Business)

Leafly investigation: Inside the billion-dollar race to patent cannabis (Leafly) 

From Canada's legal high, a business letdown (New York Times) 

Pot firms' grim reality: cash crunch, no U.S. bankruptcy access (Bloomberg News)

The budtender will see you now (Politico)

A company is sending cannabis and coffee to space to see if they mutate (Vice)

Traders betting against pot stocks made almost $1 billion in 2019. Here are the 8 stocks most responsible for those gains. (Markets Insider)

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.

• DoorDash is one of the most valuable private startups and has recently emerged as the leader in the food-delivery industry.
• It's also reportedly gearing up for a public offering as soon as next year.
• Early investors in the company aren't shocked by its success.
• Even when the company was less than a year old, its business plan and management team impressed them and suggested it had a big future ahead of it, they told Business Insider.
• Click here for more BI Prime stories.

Paul Buchheit was worried that the team from Stanford wasn't going to figure things out.

It was summer 2013, and the four-person team was a part of Y Combinator's latest class of founders of fledgling startups. Months earlier, the group had launched a company that took orders for and delivered food from restaurants near the university, including a popular Israeli restaurant called Oren's Hummus.

The team had seen some initial success, enough to get them into the incubator's program, but now they were struggling to determine what to focus on. They seemed to be getting some traction delivering larger catering-type orders to companies. Meanwhile, delivering meals one at a time to customers looked like it could be a tough business, particularly in trying to figure out how to attract customers in a cost-effective and sustainable way. Jokingly, Buchheit suggested they could hand out refrigerator magnets to advertise their company.

"It wasn't clear if it was going to work at all," Buchheit told Business Insider in a recent interview.

But within a few weeks, the group had settled on a plan — they would concentrate, at least initially, on delivering to consumers after all. And after a bunch of experimentation, they had figured out how to reach those customers without blowing their budget. A key piece of that was simply getting more restaurants tied into their service so people were more likely to find their favorites.

The team's turnaround impressed Buchheit, so much so that even though more than six years have passed and he's worked with thousands of other founding teams, the Stanford group's story still stands out.

"Going from me thinking this might not ever work to having confidence in about a month and a half is very fast," he said.

The team and company that so impressed Buchheit? Tony Xu and his cofounders at DoorDash.

DoorDash is now the most popular food-delivery service in the US. Backed by top venture and institutional investors, including Sequoia Capital, Kleiner Perkins, and SoftBank, DoorDash has a valuation of $12.7 billion and is rumored to be preparing for a public listing next year.

That makes the 6-year-old food-delivery company one of the key startups to watch in 2020. DoorDash's next move, be it through an initial public offering or a direct listing, will test whether public investors can still muster an appetite for a buzzy gig-economy startup with an impressive founder at a time when several earlier offerings from the same Silicon Valley cookbook have been decisively rejected. 

DoorDash has taken off

From its small-scale origins delivering meals from restaurants near the Stanford campus, DoorDash grown to a national, even international, giant, offering food delivery in some 4,000 cities across the US and Canada. It's now the most popular food-delivery service in the US, according to the market-research firm Second Measure, accounting for 35% of delivery transactions in October and surpassing that of longtime leader Grubhub. It's expected to pull in as much as $1 billion in sales this year, according to The Information.

Only a tiny fraction of startups achieve the kind of success DoorDash has seen. But early investors in the company say they aren't surprised at how the food-delivery startup has turned out. To them, the company just made sense, and its founding team, particularly Xu, stood out even among all the high-achieving Silicon Valley entrepreneurs.

Xu "was just an execution machine," David Lee, who invested in DoorDash in fall 2013 while a managing partner at SV Angel, said. "His pace of getting things done is just really impressive."

"Every time I would speak to him," added Lee, who is now the chairman of Refactor Capital, "he had done so much. He had accomplished so much."

DoorDash representatives declined to comment for this story.

Palo Alto residents had few delivery options

Several of DoorDash's early investors lived in or near Palo Alto, California, at the time and were well aware of the paucity of food-delivery options there and in other suburban areas. With Grubhub and similar companies primarily focused on big cities at the time, the only food people in less dense areas could get delivered was pizza and sometimes Chinese or other Asian food.

Even in areas where consumers could get food delivered, the service was typically bad, Lee said. The deliveries were often late. The food was frequently cold. And the delivery charges were expensive.

So when Xu and his team offered a wider variety of options for Palo Alto residents — including food from Oren's Hummus, one of Lee's favorite restaurants — it didn't take much to convince Lee to back the company.

"It was a pretty easy investment," he said. "I was kind of looking for something like this."

Buchheit was so excited about the service DoorDash was offering that he asked Xu and the team, while they were still in the Y Combinator program, to redraw their service area to specifically include his house.

Including DoorDash in the Y Combinator and investing in the company was "not too hard of a decision because it was literally a thing I had been wanting," Buchheit said. Before DoorDash came along, he added: "It seemed a little bit mysterious that the only food that could be delivered to my house was pizza."

But early investors weren't just enthused about DoorDash because they could suddenly get Oren's falafel pita sandwiches delivered to their doors. Many saw that it could have appeal far from Stanford's campus.

Early investors foresaw big potential for DoorDash

US consumers collectively spend hundreds of billions of dollars each year on food made outside the home— and that amount has been rising steadily. With many people short on time, it made sense to some of those investors that a growing number of consumers would pay for the convenience of having food delivered to them, particularly in the suburbs, where they hadn't had many options in the past. And the advent of smartphones and apps for them promised to make it much easier for people to place orders.

"There's a very strong desire among consumers to eat, and consumers are lazy," Semil Shah, who invested in DoorDash in fall 2013 as a general partner of Haystack, said. The company's general business plan "made sense to me," he added.

And some investors saw even bigger possibilities. Other companies in the food-delivery market at the time, such as Blue Apron, were intensely focused on the food itself, James Currier, a managing partner at NFX, said. In pitching investors, they would talk about the quality of the food they would be delivering and how it would differ from that of other services in terms of the amount of salt or fat or who their target customers were, he said.

By contrast, Xu and his team weren't fixated on the food DoorDash was delivering, Currier, who also backed DoorDash in fall 2013 as the CEO of Ooga Labs, said. Instead, they were much more focused on building out a delivery network that could be eventually be a new kind of logistics company, a sort of next-generation UPS that could deliver much more than just food, he said.

"It just made sense," Currier said. "It made sense that with the high frequency of food ordering, you could build out a network. And once you got a network in place, that network would allow you to provide greater value at higher speed and lower cost to all other deliveries that you might want to do on that network."

Tony Xu and his team stood out

Early investors saw other things to like about DoorDash, namely its team. Many investors point to founding teams as the reason why they backed particular companies. After all, Silicon Valley has more than its share of energetic entrepreneurial wunderkinds ready to conquer the world. But even in that environment, Xu and his cofounders stuck out, early backers said.

Part of what stood out for investors was Xu's organization and his grasp of even the smallest details about his business. He could succinctly make his pitch, articulating what the business was all about, the early backers said. But he also had a command of the facts.

Xu is "just really organized and really focused," Shah said. "If you meet him, in two to five minutes, you just feel that immediately."

"It's very different than meeting other people day in and day out," he added. "Occasionally, you meet somebody where you just kind of go, 'Whoa!'"

Early backers were also impressed with how quickly Xu and his team were moving. By the time they entered Y Combinator, they'd already started their service in Palo Alto and had paying customers, mere months after coming up with the idea for the company. They then quickly sorted through their struggles in Y Combinator and pressed forward.

By that fall, when the company raised a $2.5 million seed round, it already had an operating service to tout to angel investors.

"They had accomplished so much in such a short amount of time," Currier said.

Another thing struck Currier about Xu and his team. Even in DoorDash's earliest funding round, it attracted investments from a virtual all-star team of investors. The company's earliest backers included Khosla Ventures' Keith Rabois; Andy Rachleff, who had cofounded Benchmark; and Charles River Ventures' Saar Gur — not to mention Currier himself. That group had extensive experience investing in, launching, and running startups.

"These guys stacked — just at their seed round — they stacked themselves up with operators," Currier said, adding, "There was a preponderance of people who knew what we were doing."

There are still plenty of challenges ahead

To be sure, for all the excitement DoorDash generated early on and all the success it's had since, the company still faces plenty of challenges. According to a recent report from The Information, it's on track to lose some $450 million this year— or about $0.50 for every dollar of revenue it brings in. And that's on an adjusted basis, not its net loss, so it excludes things like taxes, interest, and amortization of assets.

That kind of loss could put a damper on DoorDash's expected public offering. Other so-called unicorns — startups with a private valuation of $1 billion or more — have faced intense scrutiny from the public markets this year over their ongoing losses. Uber, Lyft, and Slack — all of which have consistently operated in the red — are each trading well below their public-offering prices. The public-investor pushback against WeWork and its massive losses was so intense that it had to cancel its IPO.

DoorDash's potential listing comes as the spotlight is on other SoftBank-backed companies after the upheaval at WeWork and the collapse in its valuation, revealing further troubles at those firms. In recent weeks, the struggling dog-walking service Wag bought back its shares that were held by the Japanese conglomerate, laid off numerous workers, and saw the departure of its CEO. The robotic-pizza-making company Zume saw the departure of four top executives and announced a reorganization.

The company's plan to expand beyond food delivery to become a delivery network for all types of goods sounds a lot like what other companies, including Uber and Amazon, are already doing.

Meanwhile, DoorDash is contending with other concerns, particularly its network of delivery drivers. The company faced backlash from drivers and customers earlier this year over its practice of using customers' tips to cover part of the fees it had promised drivers. It later announced it would change that policy so that any tips customers paid would go directly to drivers and be in addition to the fees DoorDash itself paid them.

Starting next year, a new law in California could force the company — as well as competitors including Grubhub and Uber Eats — to classify many of its delivery drivers as employees. The move would generally increase wages and benefits for those workers, while raising costs for DoorDash. The company, along with its rivals, is trying to overturn the new law with a ballot measure.

Still, the company's early backers are thrilled with what the company has achieved so far — thrilled, but not necessarily astonished.

"With Tony, I'm not surprised," Shah said. "If you told me in five years, DoorDash is public and worth 100 billion bucks, I wouldn't be surprised," he added. "Maybe I'd be a little bit surprised ... I wouldn't be shocked."

Got a tip about DoorDash or another 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.

SEE ALSO: WeWork's meltdown was supposed to leave everyday investors unharmed. It didn't, and you probably don't even realize if your 401(k) took a WeWork hit.

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