Tech boom coming to an end?

For the last few years Silicon Valley has been the darling of venture capitalists looking for the next big thing. The result has been huge investments and valuations for companies that often come with whimsical names (Think Twilio and Sprinklr). The rise of mobile has contributed to the belief that there should be and “app for that”, and paved the way for companies less than 10 years old to become part of the billion dollar startup club. But that seems to be coming to an end.

At least, that is what the data shows anyway. Since the end of 2015, venture capital has been pulling back on investing in Silicon Valley unicorns. Unicorns are Silicon Valley companies with valuations of a billion dollars or more. Funding fell 8 percent to $25.5 billion, extending a steep decline that began the quarter before, according to a report released Wednesday by KPMG, an accountancy, and CB Insights, a venture researcher.

“There’s a lot of cautiousness out there,” says Kerry Wu, an analyst at CB Insights. “It’s reflected in the data.”

What that data shows is the rate of new unicorn companies is slowing. In Q3 of 2015 there was a new unicorn showing up in the valley every four days. But by the end of 2015 that had tricked down to just 1 new unicorn that quarter. The report by KPMG points to a few key reasons for the slow down in venture capital funding.

  • Too many unicorns A unicorn is a unicorn because its rare, but there have been so many lately that it may have driven the value down. When the value goes down, the money starts to slow because investors don’t see the next app as the best way to make money fast.
  • Startups are still growing The unicorns that have received funding are continuing to get more, such as Uber. This is helping them to grow larger quickly. And spreading the money thinner for the new comers on the block.
  • American funding is cooling off  The total number of venture deals flatlined in the first quarter after plunging 15 percent a quarter earlier. The stagnation suggest that venture capitalist aren’t the excited to invest in this market.
  • California startups aren’t as exciting Funding has fallen by 1.5 percent. It’s down almost half from the $12.2 billion raised in the September quarter. Although these numbers don’t indicate trouble, it does confirm the latest data that suggest that the tech economy is slowing down.

Article via CNET, 13 April 2016

Photo Startup by Dennis Skley [Creative Commons Attribution-NonCommercial-NoDerivs]


Harlem to receive first venture capital fund

After introducing the accelerator program Cofound Harlem three months ago, 22-year-old John Henry has just announced his plans to launch Harlem’s first venture capital fund. Cofound Ventures, as the VC fund is called, has a goal to raise $8 million in order to run the accelerator program and fund Harlem startups.

Currently, all of New York City’s venture capital firms are located below Central Park, with most operating in midtown Manhattan. Cofound Ventures plans to establish itself in East Harlem on 5th Ave and East 118th St.

“Harlem has never had a fund,” said Henry. “It’s a very special town. There’s a lot of recent development with Columbia expanding, and it’s the perfect time to put up the first fund.”

Cofound Ventures will provide up to $100,000 in additional funding to each company that uses Cofound Harlem’s accelerator. The accelerator program already provides startups initial stipends of $50,000, free office space and mentorship. Instead of taking equity from the startups operating under it, Cofound Harlem requires that each startup operate for its four years in Harlem.

Harlem’s unemployment rate is twice the national average. Through the funding and mentorship of startups, Henry estimates to create 800 high-paying jobs in the next four years. Startups will be also be required to host workshops to the community, free of charge, during their nine month use of Cofound Harlem’s office space.

In Cofound Harlem’s first round of startups, 75 percent of the founders are minorities.

“In terms of what we’re looking for going forward, there is no, say, direct criteria that you have to be underrepresented to be admitted, although we definitely have it in mind,” Henry said. “My goal is to keep this 75 percent for the duration of the cohort. If you consider for a moment that everyone who went through the program was white, I don’t think it would have a meaningful impact.”

Article via TechCrunch, 4 December 2015

Photo: Harlem via Ian Freimuth [Creative Commons Attribution-NonCommercial-NoDerivs]


Insurance startup uses data to offer personalized healthcare

Clover Health, a San Francisco insurance startup, is using data to change the landscape of modern healthcare. The company examines insurance claims from a person’s medical history to offer directed care to high-risk patients, especially seniors.

In an equity round led by First Round Capital, Clover raised over $100 million in funding. The company looks to replace the larger, more conventional Medicare health insurance companies that don’t currently analyze data to offer targeted healthcare.

Clover accesses medical information only available to insurance providers who collect claims, like lab tests and radiology results. Using this information, Clover’s software models identify patient issues and trends, allowing the company’s staff of nurses and social workers the opportunity to intervene. This falls in line with one of the company’s Health goals to reduce the number of visits customers take in hospitals.

Clover Health’s CTO, Kris Gale, describes the company model: “At the core we’re using data and software to build clinical profiles of people, identify gaps in care, and fill those gaps in care. We have a small team that will do targeted interventions to drive improved health outcomes of people. Every in-patient hospital admission we can prevent by filling these gaps in care, this ends up being a positive for us.”

Article via TechCrunch; September 19, 2015

Photo: Child receives ear exam via World Bank Photo Collection [Creative Commons Attribution-NonCommercial-NoDerivs]