What's the Deal With Form Ds?
Plus $1B+ in Funding for 15 Boston Tech Companies
What’s the Deal with Form Ds?
A lot of people ask me where I get investment data from this newsletter. The answer is pretty boring: Unless a founder reaches out to me to write about their company, I’m likely getting my information from other news publications, aggregators like Crunchbase/Pitchbook, or through publicly available SEC filings I often reference.
SEC filings are cool because you literally pay taxes for the database and they can tell you a lot about what’s going on with private companies. EDGAR has loads of corporate filing data that you can build products on top of or just utilize their existing RSS feeds. For example, I made a twitter bot that tweets out new Form D filings in Boston. If you’re looking for an easy way to sift through these filings, check out FormDs.com, where you can sort filings by date, location, and more. A Form D is a notice to the SEC that startups typically have to file within 15 days of a capital raising event.
Over the last few years though, more startups are using exemptions (or just skipping the filing) to keep fundraising events under the radar. I talk with investors that read this newsletter all that time that tell me they just closed a deal but no filing is ever made public. Similar to angel investing without being accredited, it’s one of those things that’s “illegal,” but highly unlikely to draw regulatory scrutiny. The SEC has bigger fish to fry than suing a pre-seed founder out of existence or bullying someone that wrote a $5K check. (Not legal advice).
Disclosing an investment publicly has gone from a flex to a burden
Sarah Tavel from Benchmark covers this well in a 20 Minute VC episode, explaining that only a fraction of her total lead investments are disclosed and why she likes to keep it that way. She argues that remaining under the radar while building at the earliest of stages can give founders a huge advantage outside of the gate. This makes a lot of sense, especially if you’re a company that’s first to market. Venture is a signal-driven game and seeing a filing that Benchmark backed a company in a new category makes others in that category more likely to get funded.
There are plenty of upsides to disclosing too, though. A funding announcement could be heavily leveraged for introductions, free press, customer intros, etc. If you’re looking to hire top talent, signaling to applicants that you’re backed by the same people that backed Stripe makes them draw comparisons. Depending on the industry, a big funding round from reputable institutional money could also make you appear older and more mature when selling to big enterprise customers. Sequoia wouldn’t let Robinhood’s lights go out.
Aggregating this data sucks
Danny Critchton from TechCrunch just published a piece called “PSA: Most aggregate VC trend data is garbage.” Tom Tunguz from Redpoint wrote a piece called “Conflicting Data on the State of the US Early Stage Market” back in August.
Danny’s main points are that 1) Startups are getting better at delaying Form D filings or only filing them at the state level and 2) A lot of new types of funding models (rolling funds, SaaS securitization, crowdfunding, etc.) may not trigger filing requirements. He guesses that 50-60% of deals at the seed level never get disclosed. Not sure if it’s that big a number (at least on the East Coast), but I agree that I lot never make it to the news.
Tunguz notes that you find a lot of discrepancies on the health of the market (especially early stage) when looking at deals through Crunchbase vs AngelList vs Pitchbook due to definitional differences, latency in disclosures, and differing investor demographics.
Making a product out of aggregating this data kind of sucks too because you either take the Pitchbook approach of having hundreds of people curate the data or the lower overhead AI/Automation approach that’s cheaper but less accurate.
Either way, strictly tracking fundraising announcements isn’t the perfect metric for measuring the health/growth/attractiveness of an ecosystem. It’s a vanity metric that should be celebrated, but definitely doesn’t equate to success.
Stuff I’m Reading:
Boston Tech VC Deals:
Thrasio 📫
Here I am writing about FBA acquirers again. Thrasio, the three-year-old record-smashing FBA acquisition company, just raised $750M in equity from Oaktree Capital Management and Advent International. This put’s their total raised at $1.75B with a valuation of “less than $10 billion,” according to their spokesperson. They’re reportedly now adding $1.5M in revenue per day (!) by acquiring ecommerce businesses on the Amazon third party marketplace.
I’ve written about Thrasio and their other Boston-based counterpart Perch several times now because I find the business model fascinating and the growth of competing services has been explosive. Over $1B was raised by FBA acquisition companies in 2020 and now one company has raised 75% of that amount in a single deal.
Last week I tuned into an AMA hosted by the company and asked the team how they plan on diversifying businesses off of Amazon once they’re acquired. I asked because I’m curious if they’re trying to generate more revenue by duplicating a storefront from Amazon onto Shopify, but also because I’d be worried about the concentration risk if/when Amazon decides these companies are getting too powerful.
Their answer was pretty interesting. According to the team, they’re focusing on building a process that makes it easy for all of their portfolio companies to spin up a DTC storefront off of the FBA storefront. These Amazon acquirer businesses are neat because, just like Amazon itself, they have an opportunity to productize their cost centers and make them into new revenue streams:
Offer a full service “DTC in a Box” for eCommerce entrepreneurs.
More generally, “Diversification as a Service” for these same entrepreneurs.
Build a marketplace for physical retailers to shop for new products.
Spin out whatever analytics tools they’re developing.
“Pitchbook” for eCommerce companies?
Vendr 💰
*unconfirmed*
According to Eric Newcomer’s newsletter (paywalled), Tiger Global is currently in talks to invest in vendor management software company Vendr. Newcomer is generally pretty trustworthy source and was the first to drop a scoop about Databricks late last month. I last wrote about them in June when they raised $4M from Craft Ventures, F-Prime, and others. They help businesses identify potential cost saving opportunities on software purchases.
Nexthink 💻
Switzerland and Boston-based Nexthink just raised $180M in Series D funding at a $1.1B valuation led by Permira, with participation from Highland Europe and Index Ventures. The 16-year-old company runs an end-user management platform that IT teams can use to resolve employee tech issues.
DataCebo 💽
Pre-launch synthetic data company DataCebo just raised $3M in new equity. According to Crunchbase, this is the Weston-based company’s first outside funding. It’s run by MIT professor Saman Amarasinghe and MIT research scientist Kalyan Veeramachaneni.
A YC’s last summer batch had a company called Synth that lets developers create entire synthetic data environments — removing compliance risks, database headaches, and stale product demos. An interesting space to watch.
Getaway ⛺
NY and Boston-based tiny cabin rental service Getaway just raised $42M in a Series C from Certares, putting total capital raised at ~$82M.
Beam 🌿
Beam, a DTC creator of organic CBD products for sleep and performance, just raised $5M in Series A funding from investors including the Yard Ventures, Litani Ventures, and Carter Comstock (Freshly Co-Founder). Back in fall 2019, they raised $5M from Obvious Ventures and others.
Rhino Health 🦏
Cambridge-based Rhino Health just raised a $5M in a seed round led by LionBird Ventures with participation from Arkin Holdings. They want to make underutilized and siloed data from hospital systems into valuable datasets for clinical researchers using a federated learning platform. I covered this deal late last month when the company filed a Form D under “Salienc Technologies,” which listed Rhino’s co-founder Ittai Dayan.
Silvertree 👵
Silvertree, a company building wearable technology for the elderly, just raised $4.5M in seed funding from Red Sea Ventures, RRE Ventures, and Bling Capital. The company is currently based out of New York, but is in the process of opening up a Boston office for hardware and operations. Thanks to Joe Bamberg for sharing!
LeaseUp 🏘️
LeaseUp, which is building software for real estate brokers to better serve clients, closed a pre-seed round from Bienville Capital and Fractal VC, as well as a large portion being filled by current users. Their software helps brokers pull together updated listing information in a digestible and personalized format to get deals closed faster.
PatientsLikeMe 🤒
PatientsLikeMe, which helps people with specific illnesses find and communicate with others that also have them, just raised $26M in new funding from Alta Partners, Hambrecht Ducera Growth Ventures, Optum Ventures, PBM Capital, Jeff Leerink (CEO of SVB’s investment bank), and Symphony Ventures.
Labster 🧪
Denmark and Boston-based EdTech lab simulation company Labster just raised a $60M Series C from a16z, with additional support from GGV, Owl Ventures, Balderton Capital, and others. I wrote about them back in August when they raised $9M from GGV.
Aidentified 🤝
Aidentified, a sales technology software company using AI to map sales prospects, just raised a $10M Series A — but is keeping the round open until the end of Q1. They’ve mapped out profiles of 210M consumers and 80M professionals to give sales teams deeper insights into sales relationships.
Torii 🏡
Torii Homes, a four-year-old real estate tech company that saves consumers money on closing costs, raised $2.3M. They use what a buyer would normally pay a real estate agent for commission to pay closing costs and then pocket whatever savings are left as revenue.
Nobl9 💪
Battery Ventures and CRV just co-led a $21M Series B into reliability software platform Nobl9, with participation from Bonfire Ventures, Resolute Ventures, Harmony Partners, and Sorenson Ventures. They help companies measure Service Level Objectives, which are KPIs agreed upon by a service provider and customer in an SLA to track the reliability of a product being built/paid for.
Singularity Energy ⚡
Harvard spinoff Singularity Energy raised $450K in a new Form D. The company offers a product called Carbonara that helps users visualize carbon emission data. It can be used by energy-conscious companies tracking internal data or by cleantech entrepreneurs building apps that include carbon insights.