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September 16, 2019

My colleague Robert Hackett and I sat down with Hippo Insurance CEO Assaf Wand to talk about, well, insurance. Hippo raised $100 million in new funding in July, making it a “unicorn” startup, meaning the firm is privately valued at $1 billion or more. The company’s backers include Comcast, housing giant Linnar, and Bond, a late-stage investment fund recently spun out of Kleiner Perkins that’s led by renowned investor Mary Meeker.


As I noted several weeks ago, insurance is an attractive category in financial tech right now. Root Insurance, which focuses on auto insurance, recently raised $350 million at a $3.65 billion valuation. Assurance IQ, another insurance startup, was scooped up earlier this month by Prudent Financial for $2.35 billion. And VC titan SoftBank has thrown its weight behind Lemonade, an Israeli insurance tech startup now privately valued at $2 billion.


I’ve noted before that capital itself can be a prime differentiator. In today’s world, even a really well-funded startup company will have trouble competing when it’s up against a rival backed by a mega-fund like the Vision Fund. At Brainstorm Tech in 2017, SoftBank’s Jeffrey Housenbold explained that there are certain industries where “winner takes most.” 


So early on in the formation of an industry, the company with more capital can attract more talent, acquire smaller players, market aggressively, and capture customers. In those instances, he says, capital can be a differentiator. “So there are certain industries where writing a bigger check helps increase the likelihood of success,” Housenbold said.


When I asked Wand how Hippo plans to outmaneuver competitor Lemonade (which is backed by SoftBank), Wand says determination will matter more than dollars. “It’s not the people with the biggest pockets that are actually winning,” he says. “It’s the people with the most passion.”


He added some more shade: “I haven’t seen (an investment by) SoftBank as an added bonus to win in a category so far.”


Watch our interview here.


…SPEAKING OF SOFTBANK: Talk about a well-capitalized startup with SoftBank’s stamp of approval. WeWork may seek a valuation as low as $10 billion in its initial public offering, according to Reuters. That statement is cringeworthy when you consider that Softbank is by far the largest shareholder in the company, with a total investment that tops $10 billion. That includes a $2 billion investment in WeWork’s latest private funding round at a $47 billion valuation earlier this year. It’s unclear whether WeWork will earn enough from the IPO to get access to $6 billion in bank financing that is tied to the offering’s success. 


Last week, the company announced plans to curb the voting power of co-founder Adam Neumann, eliminated a provision in which Neumann’s wife would play a key role in choosing his successor, and said Neumann would pay back any profits he makes from his real-estate transactions with the company. The governance changes were intended to make the IPO more attractive.


Now, WeWait. 


FINTECH MONEY: Visa and Mastercard both decided to bet on fintech platform Plaid, which announced that it has secured “strategic investments” from the two competing giants. The previously undisclosed deals were made through Plaid’s $250 million Series C funding round, which closed last December and valued the San Francisco-based startup at $2.65 billion.


Bill Sheedy, executive vice president of Visa’s strategy group, told Fortune the company’s investment in Plaid was made “almost exclusively with strategic objectives in mind.” In non-corporate speak, that roughly translates to: “We need to know what’s going on so we don’t fall behind the curve.”


Sheedy said Visa is determined to “stay relevant” as its industry continues to evolve. “Companies like Plaid wake up every day thinking about these [factors],” he told Fortune. “It’s very different from how we’ve thought about product innovation in the past.”


Read more on Fortune.com


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VENTURE DEALS


- Capsule, a New York-based digital pharmacy,  raised $200 million in funding. TCV led the round, and was joined by investors including Thrive Capital and Glade Brook Capital.


- Element AI, a Canada-based provider of artificial intelligence solutions for organizations, raised 200 million Canadian dollars ($151.3 million) in funding. CDPQ led the round, and was joined by investors including DCVC (Data Collective), Hanwha Asset Management, BDC Capital, and Real Ventures.


- Shape Security, a Santa Clara, Calif.-based maker of the platform for bot and online fraud mitigation, raised $51 million in funding. C5 Capital led the round, and was joined by investors including Kleiner Perkins, HPE Growth, Norwest Ventures Partners, Focus Ventures, JetBlue Technology Ventures, Top Tier Capital Partners and EPIC Ventures.


- Beekeeper, a Switzerland-based provider of an operational communications platform for non-desk workforces, raised $45 million Series B funding. Thayer Ventures and Swisscanto Invest by Zürcher Kantonalbank co-led the round, and were joined by investors including Atomico, Alpana Ventures, Edenred Capital Partners, Fyrfly, Hammer Team, investiere, HighSage Ventures, Keen Venture Partners, Samsung NEXT, Swiss Post, and Swisscom.


- Insilico Medicine, a Hong Kong-based artificial intelligence company, raised $37 million in funding. Qiming Venture Partners led the round, and was joined by investors including Eight Roads, F-Prime Capital, Lilly Asia Ventures, Sinovation Ventures, Baidu Ventures, Pavilion Capital and BOLD Capital Partners.


- Voyage, a Palo Alto, Calif.-based autonomous vehicle startup, raised $31 million in Series B funding. Franklin Templeton led the round, and was joined by investors including Khosla Ventures, Jaguar Land-Rover’s InMotion Ventures and Chevron Technology Ventures.


- Crisp, a New York-based technology platform that seeks to facilitate a more efficient supply chain for the food industry, raised $14 million Series A funding. FirstMark Capital led the round, and was joined by investors including Spring Capital, Swell and HDM LLC.


- Tiny Organics, a New York-based baby wellness company, raised $2.5 million in venture funding. Elizabeth Street Ventures led the round, and was joined by investors including Rocana Ventures, Human Ventures, Chingona Ventures, Bonin Ventures, Gary Vaynerchuk and Liz Lange.


- FOSSA, a San Francisco-based open source management company, raised $8.5 million in Series A funding. Bain Capital Ventures and Costanoa Ventures co-led the round, and was joined by investors including Norwest Venture Partners. 


- Rafay Systems, a Sunnyvale, Calif.-based provider of an automation framework for containerized app lifecycle management, raised $8 million in Series A funding. Ridge Ventures led the round, and was joined by investors including NTT DOCOMO Ventures, Costanoa Ventures and Moment Ventures.


- Middesk, a San Francisco-based provider of background checks for businesses, raised $4 million in seed funding. Accel Partners led the round, and was joined by investors including Sequoia Capital and Y Combinator.


- Echopoint Medical Ltd, a London-based developer of optical-fiber sensors into medical devices, raised £2.8 million ($3.5 million) in funding. Investors include UCL Technology Fund and Parkwalk.


- Wallit, a Berkeley, Calif.-based rewards-based savings app for families, raised $2.6 million in seed round funding. Investors include BlueIO, Mendoza Ventures, BoxOne Ventures, and the Maine Technology Institute


- LINQ, an Oakland, Calif.-based construction data and document search tool, raised Series A funding of an undisclosed amount, from Stanley Black & Decker.


PRIVATE EQUITY DEALS


- Spectrum Equity made an investment in Datassential, a Chicago-based provider of data, intelligence and market research to the foodservice industry. Financial terms weren't disclosed. 



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IPOs


- Endeavor Group, the company behind Hollywood’s largest talent agency, plans to raise $601.4 million in an IPO of 19.4 million shares priced between $30 to $31. The firm posted revenue of $3.6 billion and income of $316.5 million in 2018. Silver Lake (41.3% post-offering), - Jasmine Ventures (8.6%), and Canada Pension Plan Investment Board (8%) back the firm. It plans to list on the NYSE as “EDR.” Read more.


- HBT Financial, a Bloomington, Ill.-based bank with branches in the area, filed to raise $100 million in an IPO. The firm posted net interest income of $129.4 million in 2018 and income of $63.8 million. It plans to list on the Nasdaq as “HBT.” Read more.


- Oportun Financial, a San Carlos, Calif.-based provider of installment loans to those with a limited credit history, plans to raise $100 million in an IPO of 6.25 million shares (24% insider sold) priced between $15 to $17 apiece. The company posted revenue of $497.6 million and income of $16.6 million in 2018. Fidelity(8.5%), Greylock(14.7%), and Institutional Venture Management (13.4%) back the firm. It plans to list on the Nasdaq as “OPRT.” Read more.


- Madewell, the Long Island City-based fashion holding company behind Madewell, filed to raise $100 million in an IPO. The firm posted revenue of $2.5 billion and loss of $67.8 million in the year ending Feb. 2019. J. Crew back the firm. It has yet to choose an exchange. Read more.


- Kaspi.kz, a Kazakh financial group, plans to list in London in 2019, per Reuters. Read more.


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