August 7, 2021
Hello and welcome to Pipeline. This week: Why venture firms are disclosing more about their LPs, piñatas as a perk and why investing in pets is suddenly an investor's best friend.
At the beginning of the pandemic, Rover's business plummeted. No one needed dog walking or dog sitters at a time when everyone was stuck at home.
Then, pets became the pandemic purchase for a population stuck at home, and 70% of U.S. households now own a pet. The shutdown was terrible for Rover, but its business has rebounded to levels higher than 2019 as the world has opened back up.
Investors are barking up the pet tech tree, and backing startups selling everything from fresh food to smart dog collars. And like everything else in today's funding environment, the deals are happening fast.
Pets are estimated to fuel a $110 billion industry in the U.S. alone in 2021, according to the American Pet Products Association, which tracks spending across food, supplies, vet care and services like grooming and boarding.
So where are the opportunities? Lerer Hippeau's Meagan Loyst has one of the best breakdowns on what's happening in the pet tech space, and she pinpointed a few white spaces, like building a national brand for pet training or non-food pet supplies. "While there are many marketplaces today that help new and existing pet owners find non-food pet supplies for their furry friends, there are not many companies that are creating next-gen loved and trusted brands that resonate with Millennial and Gen Z consumers," she wrote.
After all, a favorite phrase for Millennials is that they work hard to give their dogs or cats a better life. Investors see plenty of opportunities to capture some of that upside. (Or are those "op-purr-tunities"?)
Singapore is fast becoming a global hotbed of tech innovation. It's easy to see why. Nearly 80 of the world's top 100 tech firms have set up outposts there, including Google, Facebook, Stripe, Salesforce and homegrown unicorns like the super-app Grab.
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While most investors are looking at investing in software or hardware businesses, Chris Barbin launched Tercera with a $225 million fund to invest in services businesses like consulting firms. He had built his own, Appirio, in 2006 which he sold to Wipro 10 years later for $500 million. As a self-described "work hard, play hard" entrepreneur, he's also the founder of Sip Tequila and is a venture partner at GGV.
What's a problem you want to see a startup solve?
I am fascinated by all things corporate culture, and so: Can a startup solve interviewing for culture? What is the way that you can actually interview people so that that individual will bind into your culture?
What's one of the worst predictions you've ever made?
Probably the financial forecast of some of the acquisitions that we did at Appirio. Honestly, it has shaped a lot of our thinking around how we help companies grow inorganically versus organic, especially in services. Acquiring service companies is very hard and a lot of the money that does flow in is for roll-ups, like let's put a bunch of companies together, get it bigger and sell it. I just think in professional services that's a real recipe for disaster and we learned some hard lessons in that area.
What startup sector is most underrated right now, outside of your firm's focus?
Ed tech. I think the future of higher ed in particular will look so different when our grandkids are going to school. I just watch the way my teenagers learn. I feel like there's so much innovation, there's a lot of players, but I think that's an area that decades from now will be huge. And the merger of higher ed will come together with technology companies.
What company outside of your portfolio have you been most impressed to watch this year?
Amazon. How they reacted to the pandemic with a ridiculous surge in demand and onboarding hundreds of thousands of people — maybe everyone can argue that it hasn't been super graceful — but the scale at which they've done things and continue to innovate is just mind-blowing.
What's your favorite tequila recipe?
Neat. People always say "What's your favorite tequila?" and I always say, "It's what you like best." But I think just sipping tequila on the rocks with an orange wedge is best. Everyone does it with lime, and they think margarita. But an orange added to an extra añejo is a really good balance. So that's my go-to recipe: extra añejo, on the rocks, with an orange wedge.
Business leaders say they choose Singapore for its modern tech infrastructure, strong government support, robust pipeline of talent and pro-business regulations (the World Bank ranks it No. 2 in the world for ease of doing business). Plus, its location in the heart of Southeast Asia serves as a launchpad into the bustling Asian-Pacific market.
Thanks for reading this week's Protocol Pipeline and let Chris know if you try his tequila suggestion. If you like what you're reading, sign up here to get it in your inbox. And don't forget to sign up for our Pipeline event, Going Global, on August 10. Send story tips and newsletter feedback to firstname.lastname@example.org.