Travis Kalanick’s ghost kitchen empire, plus proptech investing for the masses
This startup lets buyers design and build new homes online
Not spooked: Kalanick bets on “ghost kitchens”
Uber co-founder Travis Kalanick pioneered ride-sharing. Next up? Kitchen sharing. Companies tied to Kalanick’s CloudKitchens, an L.A. company that rents space to food delivery startups, have shelled out $130 million to buy 40 properties nationwide, reported the Wall Street Journal.
“Ghost kitchen” companies rent out non-traditional spaces — CloudKitchens bought shuttered restaurants, auto-body shops and warehouses — to food businesses that don’t want to buy or lease restaurant space. (Similar to co-working, multiple vendors can share one space.) CloudKitchens has raised $400 million from Saudi Arabia’s sovereign-wealth fund since 2016, and Goldman Sachs helped finance its property buys.
That makes it a big player, but not the only one. Uber Eats reportedly has 5,000 ghost kitchens globally. Last month, Virtual Kitchen Co., started by two former Uber employees, raised $20 million. Kitopi, based in Dubai and New York, raised $60 million to expand its network of ghost kitchens.
On the whole, investors pumped $5.5 billion into ghost kitchens over the past 12 months at an average deal size of $15 million, according to Pitchbook.
Adam wanted to become just as enmeshed in the real estate world as the big banks had become in the broader economy; if WeWork grew large enough, landlords would have to bend to its will.
SPAC attack continues
Spencer Rascoff’s blank-check company is off and running after raising $350 million in an Oct. 21 IPO. (Worth noting: The IPO was upsized from $300 million because of demand.)
Investor Alexander Klabin co-chairs Supernova Partners Acquisition Corp. with the ex-Zillow chief. The special-purpose acquisition company hasn’t targeted a specific industry, but it’s said to be looking to merge with an “advanced growth company.”
There have been 157 SPAC IPOs totaling $58.4 billion so far this year. (iBuying pioneer Opendoor is going public via Chamath Palihapitiya’s Social Capital.) That’s up from 59 such deals totaling $13.6 billion for all of 2019, according to SPAC Insider.
Rascoff left Zillow in February 2019 and exited the board this year. He’s since launched Dot.LA, a tech news site, and Pacaso, a startup that helps buyers purchase and co-own second homes.
Fitch downgrades WeWork bonds
The ratings agency downgraded WeWork’s credit, citing concerns about the viability of its business model as companies reduce their full-time office needs. Fitch said WeWork has reduced its cash burn rate to $2.5 billion in 2020 from about $4 billion in 2019. But it could still need additional capital beyond SoftBank’s $3.3 billion bailout last year.
Covid has given WeWork a few bright spots, though. It’s been able to negotiate exits from a number of locations, Fitch noted. The percentage of enterprise members rose to 48 percent on June 1, up from 40 percent a year prior. “Large companies appear to be using WeWork facilities to meet a distributed workforce and decrease density,” the ratings agency said.
Porch’s clean slate
Porch’s merger with a blank-check company will wipe out its history of losses and set the stage for massive revenue growth, CEO Matt Ehrlichman told The Real Deal. The chief executive defended Porch’s finances after an IPO filing revealed $263 million in cumulative losses as well as liquidity concerns. Ehrlichman said the deal would give Porch $200 million in cash and no debt. “It gives us a significant war chest, which we can use to play offense,” he said.
Specifically, he said M&A would be a “meaningful” strategy going forward. Porch, which lost $103 million last year, is projecting $120 million in revenue by 2021. By growing its core business it projected 20x revenue growth in five to seven years. It hopes to add several verticals for a $1.5 billion revenue opportunity.
STAT OF THE WEEK
Square feet of NYC office space leased by Apple, Amazon and Facebook in 2020
Crowdfunding for proptech startups is now a thing
Atlanta-based Shadow Ventures is raising money from individual investors for a new accelerator program for real estate and construction tech startups. “I want us to be the Robinhood of VC,” founder K.P. Reddy said, referring to the stock-trading app. The minimum investment is $1,000 and Shadow Ventures will introduce a new cohort of four to five startups every month. The goal is to raise $1 million per cohort. On its website, Shadow Ventures said it is targeting a 50.39 percent internal rate of return after 18 months.
No office, no problem
One of Silicon Valley’s biggest backers says an office is no longer a criteria for startups seeking cash. “We are now backing startups without offices, which isn’t something we had done before,” Bill Gurley of Benchmark told Bloomberg. Benchmark has backed eBay, Uber and Zillow, the latter of which adopted a permanent WFH policy for most employees earlier this year. It may be bad news for commercial landlords, but the new outlook makes sense from a talent perspective. “People struggled with building large engineering teams [in Silicon Valley] anyway because it was just so competitive and expensive,” Gurley said.
Design, click and build
Building a new home from the ground up may get easier thanks to a New York City startup that’s bringing the entire process online. Welcome Homes lets buyers choose a plot of land, select finishes for their new home and put down a deposit on the platform.
The company has raised a $5.35 million seed round led by Global Founders Capital. Buyers can currently choose from one design, with prices starting at $969,000 for a 4,590-square-foot house. “In our attempt to be super turn-key, we did a ton of value engineering,” said co-founder and CEO Alec Hartman.
Unlike iBuyers, Welcome Homes options plots of land for buyers. “It’s a single closing process,” Hartman said. “It’s like buying a home but you’re really building it.”
? Adam Neumann only got part of his controversial, $185M exit package from WeWork and SoftBank. The fee was part of a noncompete.
?Airbnb hired Apple designer Jony Ive, who led the design of the iPhone and candy-colored iMacs of the 1990s.
? WoHo, short for World Home, is a new startup out of M.I.T. that’s raised $4.5M for its design, engineering and construction platform.
? JLL’s OfficeBlocks app lets users conduct due diligence on Asian commercial real estate by using a photo of the building. It costs $5K per month.
? There’s a new website for bulk condo deals, www.BulkCondoDeals.com, from Richard Swerdlow (founder of Miami-based Condo.com) and developer Bruce Goldstein.
? Doorstead — which bills itself as “Opendoor for rentals” — tapped Expedia’s Jason Karas as vice president of growth. Former Uber Eats exec Andy Szybalski and WeWork alum Granit Gjonbalaj joined the company’s advisory board.