Tag: IPO

Strava declares war on scrapers ahead of IPO

Posted on by faz_business


AI companies have grown into data-hungry entities as their models require ever-larger datasets to train on. To meet that need, many AI startups defy long-standing internet conventions — like respecting robots.txt files, which signal to automated crawlers which parts of a website are off-limits — and scrape data aggressively. This has forced websites to restrict access to their data and, in some cases, strike licensing deals with AI companies. Fitness and social running company Strava is making a move in this direction by restricting its website and introducing fees for developer access.

To stop scraping, the company is increasing security around its website and will now only allow authenticated users to view certain data. Earlier, users were able to see details like public profiles and fitness club listings without logging in. The company is putting all that data behind authentication to protect it from unauthorized AI scraping.

On the API front, developers could previously start building apps on Strava through a free, tiered access program — applying for basic access first, then requesting more as their app grew. Now the company is adding a flat $11.99 per month fee for all developers, though it noted the price may vary by geography.

Strava said its developer community has grown from 185,000 members last year to 241,000 this year, and the company plans to continue supporting them. As part of that, Strava also plans to add support for Model Context Protocol (MCP), an emerging standard that lets AI assistants and apps access external data in a structured way, giving Strava more control over exactly what gets shared and how.

The company is also planning to retire some API endpoints — discrete access points that let outside apps pull specific data, like club details — to protect user data. Strava had already tightened API rules in 2024, banning its use for AI training and limiting third-party apps from displaying other users’ data. Those changes drew backlash from developers who said their apps would be severely affected.

While some developers may accept paying a subscription fee, sunsetting certain API endpoints could still impact dependent apps. Strava is giving developers a 90-day grace period before making these changes.

In an interview with TechCrunch, Michael Martin, Strava’s CEO, said unchecked AI scraping could be the death knell of the public internet.

“AI companies are ruthlessly scraping public websites, given their endless need for training data, which is degrading site performance across the board,” Martin said. We’ve had multiple instances in the last several months where performance has been diminished and, in some cases, impaired. Beyond scraping the public sites, they’re also trying to use our API to get access to our data, ignoring API terms.”

He noted that Strava has refused overtures from leading AI labs seeking data licensing deals. He specifically singled out Perplexity, saying the AI search startup routed its scraping through aggregator services to obscure its origin despite being turned away. This is consistent with Perplexity having been accused of similar behavior elsewhere in the past.

Martin also flagged server overload caused by poorly built vibe-coded apps, whose API calls are often inefficiently structured and generate a disproportionate load on Strava’s systems. It’s a pattern: when Meta banned third-party chatbots from WhatsApp last year, it made a similar argument about system overhead.

The timing probably isn’t coincidental. Strava confidentially filed for an IPO earlier this year, and its move to protect its data may be intended to signal data discipline to prospective investors. The comparison to Reddit’s 2024 crackdown on API access is one Martin was quick to address. Unlike Reddit, which priced API access by the number of calls (making it unaffordable for many app developers), Strava is betting a flat fee keeps the developer ecosystem intact.

“We want the users to feel that they own their data and feel comfortable with how we are controlling and securing it. But we want the developers to continue to flourish and grow,” Martin said.

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ClickHouse triples anualized revenue to $250M, charting a path toward an IPO

Posted on by faz_business


Database provider ClickHouse has crossed $250 million in annualized revenue run rate, tripling its business from last year, Yury Izrailevsky, co-founder and president of product and technology, told TechCrunch. Israilevsky expects the revenue figure to reach the high nine figures by the end of the year.

ClickHouse was valued at $15 billion in January following a $400 million Series D funding round led by Dragoneer Investment Group. The latest valuation implies a steep multiple of over 60 times annualized revenue.

The fast revenue growth and premium valuation position the less-than-five-year-old company for an IPO within the next few years, according to Izrailevsky (pictured left). ClickHouse joins a small, but growing list of tech startups signaling plans to go public as the IPO window is expected to be flung wide open by SpaceX’s historic June debut, followed by highly anticipated listings from OpenAI and Anthropic later this year.

Last fall, the startup hired Jimmy Sexton, who previously ran investor relations at Snowflake, one of ClickHouse’s main competitors, as chief financial officer. Bringing on a CFO is often viewed as a signal that a company is preparing for public markets.

The company has already acquired six startups, including Langfuse, which helps developers track and evaluate AI agent performance. Izrailevsky indicated that ClickHouse plans to remain acquisitive, looking to scoop up “relatively young, but showing very promising technology” startups, typically open-source, that complement its core product suite.

The technology behind ClickHouse was originally developed inside Russian search giant Yandex 17 years ago, but spun out as an independent startup in 2021.

ClickHouse has over 4,000 customers, including Anthropic, Meta, Capital One, and Decagon.

The startup’s open-source database is designed to process the massive datasets required by AI agents. ClickHouse generates revenue by selling managed cloud services. Izrailevsky claimed that this commercial offering ultimately costs clients less than self-managing the open-source version. It “is something that’s a little counterintuitive, but it also has been a big tailwind for us,” he said.

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Robinhood’s startup fund stumbles in NYSE debut

Posted on by faz_business


Retail investors are famously locked out of the startup world. Robinhood is attempting to change that by allowing the general public to invest in a portfolio of what it calls “some of the most exciting private companies operating today.”

To do this, the company that pioneered the commission-free brokerage model has secured access to eight startups—including Databricks, Stripe, Mercor, and Oura—grouping them into a vehicle called Robinhood Ventures Fund I. The fund, which also includes Ramp, Airwallex, Revolut, and Boom, set out last month with an ambitious $1 billion target, but demand for this novel way of investing in private companies was lower than expected.

On Thursday, Robinhood announced the fund had raised $658.4 million — which could reach $705.7 million if underwriters exercise their full allotment. The shares, priced at $25 in the offering, began trading on Friday and closed the day at $21, a 16% decline.

RVI’s reception on Wall Street stands in stark contrast to another attempt to give individual investors exposure to buzzy startups. When Destiny Tech100 — a publicly traded, closed-end fund holding stakes in 100 venture-backed companies including SpaceX, OpenAI, and Discord — direct-listed on the NYSE in March 2024, its shares surged from a reference price of $4.84 to an opening trade of $8.25, eventually closing its first day at $9.00.

Destiny Tech100 has kept climbing since its public debut. The fund closed trading on Friday at $26.61, a 33% premium to its net asset value of $19.97, meaning its shares trade well above the actual value of its underlying holdings.

So what explains why retail investors aren’t nearly as excited about Robinhood’s fund as they are about Destiny Tech 100? The most likely explanation is RVI’s lack of exposure to the companies widely expected to go public at enormous valuations: OpenAI, Anthropic, and SpaceX.

Robinhood is looking to address this. RVI intends to add more startups to the fund, eventually aiming to hold what Robinhood Ventures President Sarah Pinto described to TechCrunch as “15 to 20 of the best late-stage growth companies out there.”  The company’s CFO, Shiv Verma, told Axios Pro on Friday that Robinhood is eyeing exposure to OpenAI.

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But securing access to these high-profile companies is far from straightforward. Robinhood is aiming to get directly onto their cap tables directly through primary capital raises or secondary share sales — and that’s difficult even for a firm with deep roots in Silicon Valley.

A cap table — the official record of who owns equity in a company — is closely guarded at most high-profile startups, and winning a spot on one requires either being invited by the company or purchasing shares from existing investors with the company’s blessing.

“It’s very difficult to get into any of these companies, and the investment rounds are very expensive,” acknowledged Pinto.

That is just one of the reasons democratizing private markets is easier said than done, and why the companies most retail investors actually want to own remain, for now, out of reach.

Forerunner’s long game: As startups stall before IPO, all options are on the table

Posted on by faz_business


Thirteen years ago, Forerunner Ventures began helping to usher in a new era of consumer startups, including Warby Parker, Bonobos, and Glossier. None has gone through a traditional IPO process. Warby Parker was taken public through a special purpose acquisition vehicle. Bonobos was acquired by Walmart. Glossier is still privately held, along with many other design-forward brands in Forerunner’s portfolio. 

That’s not a failure, according to Forerunner founder Kirsten Green. In today’s landscape, nearly every alternative to the traditional IPO has become the new norm.

Consider that companies like fintech Chime and smart ring outfit Ōura, founded in 2012 and 2013, respectively, were also early bets for Forerunner and have achieved valuations north of $5 billion, proving their staying power in crowded markets. But while Chime has confidentially filed to go public, Ōura’s CEO has said there are no immediate plans for an IPO. 

At TechCrunch’s StrictlyVC evening late last week, Green made it clear she doesn’t mind. Asked specifically whether she is bothered by Ōura’s CEO, Tom Hale, repeatedly telling the media the company is not preparing an IPO anytime soon despite strong sales, she called the outfit an “off-the-charts phenomenal company,” adding that “we haven’t even gotten to the thought around our table about selling, because we’re here for the growth that’s happening.”

She suggested instead that investors long ago adapted to a world with fewer conventional public offerings, including by turning increasingly to the once-secondary secondary market to manage liquidity and exposure.

“We’re engaged in the secondary market, buying and selling,” Green said of Forerunner’s team, characterizing the shift as both practical and strategic. “Companies are waiting so long to go public. The venture model is generally 10-year fund lifecycles. If you now need to be a double-digit billion-dollar company to [stage] a successful IPO or [become traded] in the public markets, it takes time to get there.” The secondary market is “continuing to drive the industry” and allowing “people to unlock returns and liquidity.”

For longtime industry watchers, it’s a remarkable shift. In the past, firms could expect a major liquidity event within a few years: an acquisition, a classic stock market debut. Yet the growing reliance on the secondary market isn’t just a response to public markets that reward scale and favor already high-performing companies.

Another major benefit, Green suggested last week, is that price discovery is more efficient when there are more participants involved — even if it ultimately means a discount to one of her deals.

Green addressed, for example, Chime, the neobank that became a household name during the fintech boom. Its valuation has zigzagged wildly in recent years, from $25 billion in 2021 when it last closed a primary round of funding from a small group of venture investors, down to a reported $6 billion valuation last year on the secondary market, which typically features many more participants. More recently, it reportedly climbed again to $11 billion.

“In terms of the prices,” Green said, “if you think about it, the round that gets done, the Series D, that was a negotiation between the company and an investor. With the secondary market, you’ve got more people in the mix, right? And then when you [eventually] go to the public markets, you’ve got everybody” setting the price for what they perceive to be the value of a company.

Green can afford to be a little less invested, so to speak, in those later valuations. While it’s always nice to be associated with eye-popping numbers, the firm’s strategy of partnering as early as possible with startups gives it more wiggle room than other venture firms might enjoy. “We try to be early,” Green said, pointing to the firm’s framework of identifying major shifts in consumer behavior and pairing them with emerging business models. 

It worked in the early 2010s, when DTC brands like Bonobos and Glossier rode the mobile-social wave to breakout success. It worked again with subscription-first plays like another Forerunner company, The Farmer’s Dog, which sells gourmet dog food and is reportedly both profitable and seeing $1 billion in annualized revenue. And it’s what the firm is betting on now, with a focus on the intersection of invention and culture, as Green describes it.

Great companies, Green noted, need time to develop and not all growth paths look the same. Venture capital, once eager for exits, is learning to wait and, when necessary, to trade.

(You can listen to our conversation with Green from this same sit-down right here, via the StrictlyVC Download podcast; new episodes are published each Tuesday morning.)

ServiceTitan could be the first of many ‘dirty’ term-sheet IPOs, VCs believe

Posted on by faz_business


When ServiceTitan filed documents last week for its IPO, hoping to have its debut before the end of 2024, the tech world wondered if a stuck IPO market was unlocking at last.

Alas, probably not.

But ServiceTitan could actually be a harbinger of something else entirely: a series of late-stage companies being forced to IPO or revealing other ugly terms they agreed to after the VC fundraising market tanked in 2022 and valuations plummeted. 

“Yes, we will see much more of this as the ZIRP companies start to IPO. You can’t hide these details in an S-1, even if they’re hard to understand in the legalese writing that exists in S-1’s,” VC Alex Clayton tells TechCrunch, referring to companies that raised lots of money during the zero interest rate policy period that ended in 2021. Clayton is general partner at late-stage firm Meritech Capital, known for its IPO analysis. He and his Meritech colleagues, Anthony DeCamillo and Austin Wang, pointed out a wild term, disclosed in ServiceTitan’s S-1 documents, in an analysis post that went viral over the weekend. 

To recap, as TechCrunch previously pointed out, with ServiceTitan’s November 2022 Series H raise, the company agreed to grant those investors a “compounding IPO ratchet structure.” 

An IPO ratchet structure means that if a company goes public at a stock price that is less than what the venture investor paid, the company will cover the loss by granting the investor more shares, as if the VC bought at the lower price. If the IPO is priced above what the investor paid, there’s no problem.

In ServiceTitan’s case, as Meritech’s crew pointed out, it agreed to a  “compounding” IPO ratchet structure. For every quarter ServiceTitan delayed going public after a deadline of May 22, 2024, the company would owe the Series H investors even more stock: 11% annually, compounding quarterly. 

The stock price for that November 2022 round was $84.57 a share. Currently, Meritech calculates that ServiceTitan would have to debut at above $90 per share to negate paying its Series H investors more stock. The S-1 did not disclose which investor(s) hold this term. 

Furthermore, the Meritech crew – who are stock pricing experts – believe that ServiceTitan’s financials currently justify closer to about $72 a share. This given its revenue (on pace for $772 annually, based on its last quarter, the company says) and growth rate (implied at 24%, based on the last quarter). That’s if the IPO prices around the mid-range of its comparable to other software companies.

More delay, no matter what’s going on in the market, would mean that ServiceTitan has to price even higher to avoid the gotcha with the Series H investors. This would also further dilute the holdings of the other major investors.

VC Bill Gurley, who was famously a partner at Benchmark and has been an IPO-process hawk for years, commented on the situation on X. “A ‘compounding ratchet’ sounds painful (it is!). Looks like company agreed to ‘dirty’ term sheets,” he wrote. “Best to steer WAY, WAY clear of investors asking for compounding ratchets.”

Clayton says he doesn’t quite agree with the “dirty term sheet” characterization, which implies a founder getting duped by an investor. Chances are ServiceTitan’s lawyers knew and understood the term and executives were willing to take the risk. ServiceTitan had agreed to ratchet terms (albeit not compounding) twice before, and got caught with lower share prices, the S-1 disclosed.

Founders typically agree to such terms because it gets them a higher valuation and/or avoids a valuation cut, also known as a down round. After all, the company is agreeing to protect the investor from overpaying. Down rounds can be damaging in all sorts of ways – employee morale, future investing rounds, media headlines.

But such terms are a kick-the-can-down-the road tactic.

“You can call it ‘dirty,’ which is the cliche term, but it’s an agreement between two parties with lengthy legal discourse and is just likely about risk the founders were willing to take,” Clayton said.

All of this means a few things. For founders, Gurley said on X, it’s better to just take a down round if that’s what a company is really worth, rather than play valuation term-sheet games. 

Had ServiceTitan done that, it might not even be going public now – and taking on the future quarterly financial scrutiny that comes with that. 

“I agree. This IPO seems to be about incentives,” Clayton says, adding that ServiceTitan “has also burned a ton of money, so they might have needed the cash too.”

It also means that the IPO window isn’t necessarily opening. Because 2022 saw a lot of founders struggling to maintain their previously high valuations, Clayton believes we’ll likely see more such things buried in S-1 disclosures.

Then again, if retail investors go wild for the stock, this debut might open the IPO window. But some financiers remain doubtful. As Miles Dieffenbach, Managing Director of Investments for Carnegie Mellon’s endowment posted on X,

“ServiceTitan isn’t going public because of the IPO window being ‘open’, but because they have a compounding ratchet from their last round. If they could’ve raised clean private capital, I bet they’d stay private!” he wrote.

ServiceTitan did not respond to a request for comment.