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Technology startups collect billions of dollars and sit on the sidelines


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If you were able to raise billions of dollars for your startup, not be subject to regulations, and achieve liquidity for the founders... why wouldn't you!??!?!

It is now easier to raise an F round than an A round. F'in A!

Niklas Östberg's startup has raised so many rounds of funding that he has almost lost track.

"I think officially we're probably on Series, oh, did we do H maybe?" says Östberg, cofounder and CEO of Delivery Hero, an online food-ordering service. Series H turns out to be the right answer. Delivery Hero periodically receives what Östberg calls "small" investments of $5 million to $20 million from individual investors. It gets hard to remember which round an investor joined.

Delivery Hero, four years old, has already raised more than $1 billion in financing. "I don’t think that the rush for an IPO is there any more," Ostberg says. "I think we could probably raise another billion without a problem."

A few years ago, the ability to draw this kind of cash would have put Delivery Hero on par with the largest private tech companies like Twitter, which raised $1.2 billion across 8 funding rounds before going public in late 2013. Now, however, Delivery Hero is just one of a growing number of startups that start collecting larger amounts of capital earlier and keep going longer.

Uber, Flipkart and Xiaomi have each raised well over $1 billion in funding to date. Pinterest hit that milestone just this week, announcing a $367 million Series G round of funding with plans to raise as much as another $211 million more on top. Other prominent startups like Snapchat, Lyft and Airbnb are closing in on the billion-dollar funding mark as well.

SEE ALSO: Chasing unicorns: Inside the not-so-exclusive billion-dollar startup club

In 2014, tech companies announced 70 funding deals that were labeled Series F or higher, up from just 19 comparable late-stage funding rounds in 2010, according to data provided to Mashable by CB Insights, a venture capital database. According to the researcher, there are now 10 tech companies with valuations of at least $1 billion that have also raised $1 billion or more in funding.

I've never heard of money described as weaponry before. 

When a startup announces an 8 or 9-figure funding round, it's often met with a flabbergasted response online. Yet, it's somehow easier to understand why a service like Uber, which invests in drivers, insurance, regulatory issues, customer service and marketing, might need to raise large sums of money than it might be for, say, Snapchat or Pinterest. After all social networks can grow to hundreds of millions of users with minimal resources — WhatsApp and Instagram each had fewer than 100 employees when they were acquired by Facebook.

"If you’re Snapchat, could you possibly spend a half billion dollars on your technology? The answer is probably not," says Harry Weller with a laugh. Weller is a general partner at New Enterprise Associates, which has backed Uber and Groupon. Instead, all that money is intended to help the startup raise its profile and compete for talent and acquisitions with larger competitors. "It gives you dexterity. It gives you weaponry to compete with the likes of Facebook."

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