We talk to startups and investors, you get the value.
We talk to startups and investors, you get the value.
Several important news of the venture capital market were announced last week. We will consider 4 most important deals based on our opinion. As always, they are from different but extremely promising verticals:
Outschool, an educational startup for home-based online classes with private teachers for schoolchildren, has closed its B round of funding;
Playco startup which creates HTML5 instant games, acquired unicorn status (event before it entered the market) by raising $100 million;
American Elder Tech startup Papa, a service for caring for the elderly, also recently successfully closed its B round;
Endel startup that generates a personalized musical background, closed round A;
Finally, Fortnite's creator Epic Games has invested in Manticore gaming startup.
As usual, find details in our digest!
About the project. San Francisco-based Outschool startup is 5 years old. Its mission is to bring motivated students, their parents and teachers together in one place to build the best global school in the long term. The service offers unique classes from hundreds of independent tutors, today there are more than 50,000 such classes on the platform. Out-of-school teachers can be certified teachers, artists, academics or experts with experience or interest in teaching. The main advantage of a startup is that all classes are held in small groups in online format, which positively affects learning outcomes. Classes are a series of lectures on a specific topic, all of them are paid: 30% of their proceeds goes to Outschool, the rest goes to mentors. Last year, the startup’s revenue reached $6.5 million, and by the end of this year, according to the CEO, it will reach $100 million. This year, the startup went into profit, thanks to the increased demand for its services in connection with COVID-19.
Investments. The startup raised $45 million in the current round of funding, led by Ligthspeed fund. Reach Capital, Union Square Ventures, SV Angel, FundersClub, Y Combinator and several other investors also participated in the round. In total, the startup has already raised $57 million.
Expert opinion. Online education never ceases to amaze with its unbridled growth! And highly specialized solutions began to dominate the market. Outschool offers real-time courses for small groups. Thus, two problems are solved at once: live learning and the ability not to lose your voice among a small audience of students. When children and students return to schools and universities, they may realize that the old offline learning system no longer has clear advantages, and we will continue to watch the decline of offline educational institutions.
Investments. Before entering the market, the startup acquired unicorn status, raising a $100 million round A investment at a valuation of approximately $1 billion. Josh Buckley, founder of Sequoia Capital Global Equities and Mino Games, became the lead investor. Also Sozo Ventures, Caffeinated Capital, KSK Angel Fund, Mistletoe Singapore, Digital Garage, Dreamers VC and Makers Fund were participating in the round.
Expert opinion. The guys from Playco haven’t launched anything yet, but have already become a unicorn. The secret is simple — the stellar line-up of the team. The guys are trying to ride the wave of HTML5-based instant games and want two people to play together with just a hyperlink. We have a similar GamePad project in the pipeline, and it is quite obvious that such services have a number of challenges that need to be addressed. IOS and Android platforms have mature ecosystems, many messengers and social networks, and connecting all of them within one framework is not an easy task. We also see Facebook Instant Games stagnate, although this social network has several billion users and strengths from the position of already proven socialization. My prediction: the demand for instant games will multiply in the near future. The winner is the one who can provide players with quality games and improve social interactions among players.
About the project. The Miami-based project has been creating a platform since 2018 that connects young and old people who need help with getting around the city, household chores, mastering technology, shopping for groceries and basic communication. All assistants (the so-called Pals) are rigorously tested and only 8% of candidates are approved. Selected winners receive $15 per hour, and can now communicate with their wards even online. To date, the service is presented in 17 states of the United States, with a new round of investment, the project plans to expand to 4 more states in the coming months.
Investments. In a recent round of funding, the startup raised $18 million, Comcast Ventures became the lead investor in the deal, Canaan, Initialized Capital, Sound Ventures, Pivotal Ventures, the founders of Flatiron Health and their investment group Operator Partners, and the founder of Behance, Scott Belsky, also participated. The company has raised $31 million to date and plans to expand its presence in all 50 states by January 2021.
Expert opinion. The world’s population is aging, the percentage of people living to old age is growing from year to year, and widespread access to modern medicine helps to prolong life. In old age, people often suffer from loneliness and, as a result, are prone to depression. Also, older people need care and medical assistance. The startup Papa enters a very large and promising gerontological market: assistants from 18 to 45 years old will always come to the aid of an elderly client. In a coronavirus crisis, the elderly often cannot take risks and try not to leave the house once again, this fact only spurs interest in the project.
About the project. Endel, a startup with Russian roots which is now based in Berlin, uses artificial intelligence to generate personal background music that helps you concentrate, relax or fall asleep. The app has already been downloaded 2 million times for iOS, Apple Watch, macOS, Amazon Alexa and Android. The application can be accessed by paying for a subscription. In addition to the subscription model, the startup also makes money from partnerships. Endel’s partners today include the Japanese airline ANA Airlines, which uses the service on their aircraft, and Warner Music, since it is important for Endel to promptly release new adaptive musicians’ albums on its platform.
Investments. In the latest round of funding, the startup raised $5 million, led by True Ventures and partner Kevin Rose, founder of Digg, who recently launched the Oak guided meditation app. Other investors in the round: SleepScore Ventures, Techstars Ventures (Endel participated in Techstars Music Accelerator), Impulse Ventures, Plus 8 Equity Partners, Waverley Capital, Amazon Alexa Fund, Target Global and several business angels. The total investment in the startup to date is $7.1 million.
What does it mean? What to listen to? The guys from Endel decided to generate personal sounds for each person, in different situations the sound will help to catch concentration, relax, get ready for sleep and promote creative thinking. A unique approach allows you to influence certain areas of the brain as well as take into account the state of a person at the moment: his heart rate, activity, biorhythms and time of day. Recently, there is a great demand for Mental Health services, the startup is definitely in an excellent niche.
About the project. American startup Manticore is the creator of the Core game development platform, which allows users to quickly create high-resolution multiplayer games. In the future, Manticore plans to turn Core into one large open meta-universe of games, where each player can create their own worlds, and the games will be connected.
Investments. Epic Games, the creator of Fortnite, has become the lead investor for Manticore’s new funding round. According to Crunchbase, since launch in 2016, Manticore has raised a total of $ 60 million. In June 2020, Manticore set up a $1 million fund for game developers on the alpha version of the Core platform.
What does it mean? What do people want? Create! After the resounding success of Roblox, the world lacked a simpler solution to quickly create games, where all your energy can be spent on creating, rather than solving technical problems, creating networked solutions for multiplayer. To create something, you don’t have to have a whole team of programmers, designers and game designers, you can make a game yourself from scratch. The platform is not only for children, like Roblox, the interface looks clearly friendlier. The games made go to the marketplace where thousands of other people can play your games. Now we see how User Generated Content becomes a User Generated Game. I am sure that we will see both future hits and new experimental mechanics on the platform, because human creativity has no boundaries.