Catch Up On This Week's Startup News With Our Video Recap
Lots happened in the L.A. tech and startup community this week. dot.LA chief host and correspondent Kelly O'Grady takes you through the key stories:
- Investing: Elementary Robotics Raises $12.7M in Series A, MarsBio Fund Aims to Get Local Biotech Startups to Stay in L.A.
- Media: Newsology Seeks to Change News Feeds Based on Work Interest, Event Hub Brings Vendor Booths to Virtual Concerts
- Remote Work: GitLab's Secret to Success, How Office Life Will Change After the Pandemic with HelloOffice
Weekly Recap: L.A. Bets on Biotech, Newsology Takes On Silicon Valley and the Secrets to Remote Work www.youtube.com
Watch to stay smart on what is happening, and follow us on Instagram for daily video content.
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- Catch Up With This Week's Startup News in Our Weekly Video Recap ›
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Michael Jones and Peter Pham, the founders of Science Inc., officially joined the SPAC frenzy on Tuesday, with a special purpose acquisition company (SPAC) of their own valued at $270 million.
In an announcement, Jones and Pham said their SPAC, Science Strategic Acquisition Corp. Alpha, would debut on the NASDAQ today by selling 27 million units at $10 a share.. The SPAC plans on merging with a company in the direct-to-consumer (DTC) services space and/or mobile and entertainment sectors.
<p>Science Inc.'s SPAC is the latest in a surge of so-called blank check companies that debut on the stock market with the primary goal of merging with a company to take it public. Over the last 12 months or so, more than <a href="https://spacinsider.com/stats/" rel="noopener noreferrer" target="_blank">320 SPACs</a> have emerged. . Last week, Fifth Wall <a href="https://dot.la/fifth-wall-spac-2650072815.html" target="_self">filed to launch a SPAC</a>, Fifth Wall Acquisition Corp. I. The electric vehicle charging station provider <a data-linked-post="2650072439" href="https://dot.la/evgo-goes-after-2-6b-spac-deal-shares-soar-2650072439.html" target="_blank">EVgo announced it would go public through a SPAC</a> merger earlier this month; last November, the Santa Monica-based e-scooter company Bird Rides <a href="https://dot.la/bird-ipo-2648944903.html" target="_self">was also reportedly</a> exploring a possible stock market debut by going the SPAC route. </p><p>For Jones and Pham, joining the SPAC game represents the latest move in a strategy that means further involving themselves in working with later-stage companies. Since launching Science Inc. in Santa Monica, the company has grown to include a startup incubator, as well as two venture capital funds with a combined size of $175 million. Portfolio companies include Dollar Shave Club, the esports platform <a data-linked-post="2649035403" href="https://dot.la/playvs-raises-10-5m-making-esports-varsity-sports-2649035403.html" target="_blank">PlayVS</a> and <a href="https://dot.la/liquid-death-mountain-water-2647827209.html" target="_self">Liquid Death</a>, a canned mountain water startup. </p><p>dot.LA caught up with Jones hours after his SPAC went public to discuss why Science launched a SPAC and what he thinks of the current SPAC market.</p>
<img lazy-loadable="true" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTUzODE1Ni9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0MTAyMjI2OH0.eQnWCYl1JpXNpWxyOZdOk1_ctf6BceMftS-2p-noWoU/img.jpg?width=980" id="172b3" class="rm-shortcode" data-rm-shortcode-id="92eaa3b360143b9df970753d729a9120" data-rm-shortcode-name="rebelmouse-image" alt="Michael Jones, Science Inc." data-width="1368" data-height="1968" />
Michael Jones is the co-founder of Science Inc.
<p><strong>What motivated Science Inc. to join the SPAC game and launch one of its own?</strong></p><p>We've always looked at investing as being a lot of value on what we consider the kind of "barbell ends": the A) super early phase which we've made a big practice out of, and then B) there's a huge amount of value on the very late-stage side.</p><p>So we started looking at that strategy and we started looking at SPACs as the vehicle for that strategy, because obviously late-stage funds are a fairly crowded space. We looked at this SPAC vehicle, maybe five or six years ago, but we hadn't done anything with it.</p><p><strong>You mentioned looking at SPACs five or six years ago. But five or six years ago was such a different time for SPACs. In 2015, there were just 20 SPACS that IPO'd, and in 2014, there were just 12 SPACs that IPO'd. Fast forward to 2020, and 248 SPACs went public, while another 75 IPO'd this January alone. So why did you think now was a good time to join the SPAC boom?</strong><br></p>
<p><span style="background-color: initial;">You're exactly right. Previously, these vehicles were often led by non-operational, non-strategic sponsors. You know, when Chamath [Palihapitiya] started working on the Virgin Galactic SPAC, we started seeing just the quality of the sponsors entering the SPAC universe being extremely strong. It suddenly became a really interesting and appealing sector to spend time in. It's also correlated with the fact that later-stage capital has become very available to startup founders. So these companies are obviously staying private way longer. They're raising money without bankers, from peers within the venture community.</span><br/></p><p>I think when they look at doing typically what's a very complicated roadshow process to go public, it's frankly easier for them to stay private longer. But also when your sponsors are like us and are approaching companies and they already know us, it becomes a much more comfortable way to enter that process, which is much more efficient than the traditional IPO methodology.</p><p><strong>Over the last year or so, we've seen more SPACs IPO than any other period in recent history. Most recently, in L.A., Fifth Wall launched a SPAC of its own and electric vehicle charging station provider EVgo merged with a SPAC, as well. From your perspective, what's driving the SPAC boom?</strong></p><p>One thing that's driving the largest SPAC boom is you have very high quality managers and the other teams that want to get involved in stocks. I think that's one piece of it, which is that we're just at a point in our careers where a lot of us are excited to spend time in those later-stage public markets today. You have venture companies that have stayed private for so long. I think you have a pretty decent appetite from public investors, hedge funds and the like to participate in those fast-growing venture-oriented businesses. Because these companies have been able to raise these hyper late-stage rounds and avoid going public for so long, a lot of hedge funds and a lot investors are looking for their way into the startup world to get access to those fast growing companies. So, it provides a lot of interesting capital right now for us.</p><p><strong>Do you see a strong tie between the SPAC boom over the last 12 months to the pandemic and the pandemic's effect on the economy? Or do you see the pandemic and larger economy not influencing the SPAC market?</strong></p><p>I think the only tie-in to the last 12 months is that — and I'm sure you see it, too — meeting people every day is just a lot easier than it used to be. In order for us to do our SPAC, we ended up doing it exclusively through Zoom, and it was a really efficient process. Not that I wouldn't have had any hesitation to fly to New York and spend time with investors, of course, but this is just very efficient for a lot of people. So if you combine the fact that investors can meet a lot of prospective investments at a very rapid pace, with the stock market which happens to be at extremely high positions, as well as that appetite for later stage startups, you just end up with a really good combination for this to happen right now. </p><p><strong>Do you see the SPAC boom easing or slowing down once most people in the U.S. are vaccinated?</strong></p><p>I don't. I suspect it'll continue to grow. I think the quality of deals and the quality of managers are increasing. It'll be a meaningful way for a large licensed company to find their way into the public market. It will bring smart, strategic individuals into the public markets who will hopefully assist in creating greater growth once those companies are public. </p><p>The other thing that I think it will probably do, which will have a nice benefit for venture capitalists, is I think it will force large-scale incumbents to acquire companies more rapidly. if you look at a business like Him's, it's a really interesting business that was started as a men's specific pharmaceutical product company. It has now expanded to be a fairly impressive telehealth business. And you think to yourself: "What companies should have acquired Him's? What businesses should have bought that company before they became public?" </p><p>I think what this will teach is that incumbent companies that are looking to grow shouldn't wait on buying, you know, earlier mid-or-late to startups. They should be active and because SPACs are going to be a very viable alternative for those startups to grow and find capital, it probably will force incumbent companies to spend more — or probably drive the average M&A price up. So, it's just going to create a lot of liquidity around the venture sector broadly.</p><p><em>The Q&A has been edited for brevity and clarity. </em></p>From Your Site Articles
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Insurance tech company Sidecar Health raised $120 million in a Series C funding round led by Drive Capital. The latest infusion of funds bumped its valuation up to $1 billion.
The insurance plans let customers see any doctor they wish and pay upfront for services using a Sidecar Health Visa card. A spokesperson for the company told dot.LA in August that Sidecar Health's customers include families, small business and people over 40 — even though the startup initially set out to target millennials.
<p>Since its founding in 2018, the El Segundo-based company has raised more than $175 million. The service is offered in 16 states, not including California. </p><p>Unlike traditional insurance that covers a range of services and then offers a deductible, Sidecar offers indemnity insurance, which is cheaper but <a href="https://dot.la/sidecar-raises-20m-for-its-new-approach-to-health-care-2646804776.html" target="_self">can wind up costing more if unexpected care is needed.</a> Plus, it's not regulated in the same way that other health insurance plans are.</p><p>Customers are free to compare and shop around for services on the platform, a model that CEO and co-founder Patrick Quigley hopes will "make healthcare more affordable and accessible for all Americans," he said in a statement announcing the raise on Tuesday. </p><p>"When we think about the pandemic, it's an opportunity for us, as a company that takes our mission very seriously, to help a ton of people right now," Quigley said in an interview following the July raise. </p><p>The company says members will save around 40% compared to traditional insurance plans. </p><p>"The extraordinary level of transparency Sidecar Health brings to the marketplace has the potential to fundamentally change how millions of Americans shop for healthcare," said Molly Bonakdarpour, Partner at Drive Capital, in a statement. "We think Sidecar Health's team of consumer, technology and healthcare veterans is well positioned to capitalize on the large healthcare insurtech opportunity."</p><p>The company said it will use the funding to hire and invest in new insurance products, including an ACA or "Obamacare" offering for 2022 and later, a product for the self-funded employer market.</p><p>The round was joined by new investors BOND, Tiger Global and Menlo Ventures along with existing investors Cathay Innovation and GreatPoint Ventures. </p>
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On this episode of Behind Her Empire podcast, hear from serial entrepreneur and investor Prerna Gupta. After being at the helm of many successful startups, Gupta is now the CEO and founder of Hooked, an app that is redefining fiction for the Snapchat generation. Hooked has over 100 million viewers across social media, a short form video streaming app called Hooked TV, and has received funding from Ashton Kutcher, Mariah Carey, LeBron James and Jamie Foxx, to name a few.
<p><strong>Key Takeaways</strong></p><ul class="ee-ul"><li>Gupta grew up in the small town of Shawnee, Oklahoma, where she was acutely aware of her differences; she was a dark-skinned Indian girl with immigrant parents. Eventually, she embraced her differences as her strengths. Having a different vision is what it takes to be a successful entrepreneur.</li><li>Inspired by Facebook, her first entrepreneurial venture was to start a social media networking site in India called Yaari. Eventually, Facebook entered India, and Yaari closed.</li><li>Then, with her husband, Parag Chordia, Gupta started the company Khush, which developed apps including the successful LaDiDa and Songify. </li><li>Khush was acquired by Smule in 2011, which left Gupta and her husband wealthy executives living in a tony part of the Bay Area. But Gupta and her husband were left unsatisfied as they got their joy and creativity from building companies. So, they quit and moved to Costa Rica to figure out their next step.</li><li>Gupta was inspired by the book "The Lean Startup" by Eric Ries. Its basic premise is to build the simplest, most viable product and iterate on it with user data. This is the process she used for Hooked, her latest startup.</li></ul><div></div><blockquote>"I strongly encourage anybody...to just explore different options and to not get sucked into this idea that the only way to do something successful is to go raise money from some prestigious Sandhill Road VCs, because those voices are looking for something very specific and a lot of times money comes with expectations and it can actually oftentimes be detrimental...."<em> -- </em>Prerna Gupta</blockquote><p><strong><em></em>Prerna Gupta </strong>is the CEO of Telepathic Inc., which developed the smartphone app Hooked. She cofounded several startups focused on music, dating and short-stories. <br></p>
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