Future City: Blast from past as Neumann’s back; Hospitality startup raises $48M
Will an IPO get Porch off the deck?
Can Porch get off the deck?
As it prepares to go public with a blank-check company, Porch.com disclosed recurring losses, liquidity concerns and “substantial doubt” by accountants over its viability.
But founder and CEO Matt Ehrlichman and the company’s investors say proceeds from the deal will leave it with more than $200 million in cash and no debt, allowing Porch to grow its business twentyfold within five to seven years.
Founded in 2011, the Seattle startup provides software to home-services companies in exchange for info on their customers; it then sells other home services to those clients. In July, Porch disclosed it would go public by merging with a SPAC led by Abu Dhabi Investment Authority veterans Thomas Hennessy and Joseph Beck. According to an IPO filing, Porch generated $77.6 million in revenue last year. It’s projecting $120 million in pro forma revenue in 2021.
Here’s what else the filing said:
? Porch has accumulated $263.5 million in losses and its accountants raised “substantial doubt” about its ability to stay in business given the red ink building up. The IPO filing adds that without raising additional cash, Porch “will not have sufficient cash flows and liquidity to fund its planned business for the next 12 months.”
? The profitability question is real, with losses of $50 million in 2018 and $56 million in 2019. On an EBITDA basis, Porch said it entered positive territory in June 2020 and it projected $7 million in EBITDA in 2021. Losses will narrow, but are still expected to total $34 million this year and $11 million in 2021.
? In an investor presentation, Porch said the business has an upside of $1.5 billion. By growing its core business 20x, Porch projects it could generate up to $500 million in annual revenue from it. Other revenue opportunities include mover marketing ($200 million), insurance expansion ($400 million) and new home services ($400 million).
? The capital structure of the deal will leave a newly-traded Porch with zero debt and $205 million on its balance sheet to fund operations.
We want to be strategic. We want to be innovative. We want to be impactful. We want to be WeWork.
Adam Neumann is back
He was down, but Adam Neumann is not out. The controversial WeWork co-founder just invested $30 million in Alfred, a startup that provides services such as dog-walking, rent-processing and maintenance in apartment buildings.
The check, from Neumann’s family investment office, was part of a $42 million Series C for the startup, also known as Hello Alfred, which has raised $100 million since 2014. Alfred claims to be in 100,000 units in 20 markets and bills itself as an “operating system” for apartments. Prior backers Spark Capital, New Enterprise Associates and Greystar also participated in the round.
Meanwhile, WeWork is returning to its roots. It is changing its name back from the We Company, a moniker meant to reflect its expansion into co-living, which stalled at two buildings, and education, which was sold to Neumann’s wife, Rebekah Neumann.
Masa Son jumps on SPAC train
Forget Vision Fund 2. SoftBank’s next move is a blank-check company.
The Japanese tech giant is planning to launch a special purpose acquisition company in the upcoming weeks, according to Rajeev Misra. The SPAC’s target size has yet to be determined, but SoftBank plans to combine outside funds with some of its own money, sources told Bloomberg. SoftBank will be looking to merge with a company outside its existing portfolio, Axios reported. SoftBank portfolio company Opendoor is going public in a $4.7 billion SPAC deal with Chamath Palihapitiya’s Social Capital.
Knock Knock …
It was bound to happen: Startups Knock and EasyKnock are facing off in court over alleged trademark infringement and unfair competition.
According to court docs, Knock — which helps owners buy new homes before selling their old ones — incorporated August 2015 and has been using the mark “KNOCK” since 2016. The company, started by Trulia co-founder Sean Black, applied for a trademark last month.
EasyKnock — which buys homes and leases them back to the owners — incorporated in October 2016 and filed two trademark applications for “EASYKNOCK” in June 2017. “Our legal action is more than defending a trademark,” EasyKnock CEO Jarred Kessler told Inman. “We have built a strong company because our programs work. Their company is responsible for creating a confusing product.”
STAT OF THE WEEK
Drop in median rent for a San Francisco studio in the past year
Mortgage in a snap
With the mortgage business booming, Snapdocs has raised $60 million to meet demand for digital paperwork. The Series C was led by YC Continuity with participation from Lachy Groom, Maverick Ventures and Docusign, plus prior backers Sequoia Capital and Founders Fund.
Founded in 2012, San Francisco-based Snapdocs serviced 170,000 home sales totaling $50 billion in August, or about $300,000 per home. It projected 1.5 million in deals this year, nearly double its 2019 volume. CEO Aaron King declined to disclose the company’s valuation but told TechCrunch that Snapdocs has raised $103 million — most of which is still in the bank.
Show me the smart money
“Smart” hospitality startup Casai has raised a $48 million debt and equity round led by Andreessen Horowitz. The round includes $23 million in equity and $25 million in debt. Alongside Andreessen, other investors are Kaszek Ventures, one of Latin America’s largest venture funds, as well as Global Founders Capital and others.
Casai was started in 2018 by CEO Nico Barawid and hotel industry veteran María del Carmen Herrerías Salazar. Google alum Andrés Páez Martínez, the CTO, is building custom products for Casai apartments.
Each unit has features such as keyless entry, smart TVs and Google Home thermostats, which can be controlled by a hardware hub called Butler. The company uses technology to boost efficiency in other ways, including an app called Breezeway to manage housekeepers. On the marketing front, it relies on data-driven digital ads that take into account things like airline schedules. Casai currently has 200 units in Mexico City and will launch in Brazil as part of an international expansion. The company has a combination of leases and revenue-share agreements with landlords.
? Hospitality startup Kasa Living, which operates units in vacant hotel rooms and apartments, raised $30 million.
? Startup PassiveLogic raised $16M for smart-building design.
? Cove.tool raised $5.7M to sustainability-focused building design.
? Zillow named Hines executive Claire Cormier Thielke to its board, making good on a pledge to diversify its directors.
? Breather, which rents office space one day at a time, is testing a membership program starting at $1,500 a month.
⏲ iBuyer Offerpad is partnering with relocation company Aires, extending cash offers to select clients.
? OJO Labs, an AI startup whose digital assistant works with homebuyers, acquired personal finance startup Digs.
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