Archive | May, 2015

Automattic forays into the world of ecommerce

In a bid to expand into ecommerce, Automattic, the company behind WordPress, has announced its acquisition of WooThemes, the creator of WooCommerce, an ecommerce plugin built on WordPress. The plugin, in effect, turns any website running the WordPress engine into an ecommerce platform. Founded in Cape Town, South Africa, WooThemes is one of the most successful tech startups in the country and its acquisition is likely to spark investor interest in South African startups. According to WooThemes, WooCommerce has amassed 7 million downloads, dominates global ecommerce platforms at 20% market share, and powers roughly 30% of all online stores. For Automattic, the acquisition is an important milestone. The deal gives the company not only access to the largest group of ecommerce stores in the world, but the potential to become a major force in the ecommerce space.

Carl Icahn invests in Lyft

Billionaire activist investor Carl Icahn has invested $100 million in ride-sharing startup Lyft. Icahn, known for investing in publicly-listed companies such as Apple, Netflix, and Ebay/PayPal, and then pressuring these companies to make radical changes to boost their value, believes that Lyft has a lot of potential for growth despite the presence of Uber in the market. Lyft raised $150 million at this funding round at a $2.5 billion valuation. The other $50 million investment came from anonymous sources. While other companies may cringe at the thought of Icahn being on board, Lyft executives are quite bullish. The new investment will allow them to broaden Lyft’s presence in the United States and innovate existing products. Also, being backed by Icahn, one of the most influential and well-connected investors in the world, will add a sense of legitimacy to Lyft that could help the company attract more funding in the future.

Weekly Featured Company: Zenefits

Founded Headquarters Sector Employees Revenue Total Investment Recent Investment
2013 San Francisco Software & Services 1,000 $120M $583.6M $500M

Disrupting HR

Most small companies do away with HR departments. After all, money is tight and the managers themselves are expected to do the hiring and firing, while the accountant takes care of the payroll and benefits. While this process may work for some businesses, the truth is, managing human resources is one of the more tedious aspects of running a small business and the work itself can be frustrating to non-HR managers.

Zenefits, a San Franciso-based SaaS startup, is making the entire HR process a whole lot easier and cheaper, too. Dubbed by Forbes the hottest startup of 2014, Zenefits offers free, cloud-based HR software to small businesses. So how did Zenefits beat the likes of Uber and Airbnb to become Forbes’ 2014 hottest startup? What makes Zenefits stand out is its awesome business model. By giving away a free HR cloud software to companies and then contracting to become the insurance broker of record for these companies, Zenefits earns hefty commissions from their partner insurance firms. This business model has been so effective that Zenefits has amassed more that 10,000 companies and announced a projected annually recurring revenue of $100 million over the next year. The company also recently raised $500 million at a $4.5 billion valuation.

Warby Parker: the next IPO star

Years ago, billion-dollar tech startups were considered the stuff of myth. These so-called tech “unicorns” were regarded as rare and highly exclusive. Today, however, the tech industry is teeming with them. Thanks to generous funding from private investors, companies like Uber, Airbnb, Dropbox, Spotify, Snapchat and Pinterest have all sprinted towards “unicorn” status and definitely created an impact on the business status quo. The latest startup to join this elite group is Warby Parker. Only five years old, the online and offline retailer of fashionable eyewear, is now reportedly worth $1.2 billion, based on a recent funding round of $100 million. The funding made Warby Parker one of the few ecommerce startups in the US to grow beyond a $1 billion valuation. Thanks to a very effective business model: Find a premium product, get rid of the middle man and sell the product online at an affordable price, Warby Parker has made huge inroads on sales because of its attractive pricing. It’s also one of the most successful online brands to open physical retail stores. The company now has 12 stores across the US. According to experts, the $1 billion valuation has placed the company on an IPO timetable and it could very well be New York’s next big IPO.