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01 Advisors, the venture firm of Dick Costolo and Adam Bain, has closed fund two with $325 million

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Dick Costolo and Adam Bain, renowned early Twitter execs who served as company’s CEO and its chief operating officer, respectively, have quietly closed a second venture fund just one-and-a-half years after disclosing they’d secured $135 million for a debut fund under their firm, 01 Advisors.

According to an SEC filing, they wrapped up their second fund late last week with $325 million in capital commitments from 81 investors.

We’ve reached out to the firm and hope to share more soon. In the meantime, its strategy appears to center around more concentrated bets in both the consumer and enterprise spheres — with checks going out both early and sometimes later in a startup’s trajectory.

Among these recipients is Literati, a nearly five-year-old, Austin, Tex.-based book club subscription service that raised $40 million in Series B funding in January led by Felicis Ventures; Tipalti, a 10-year-old, Israel-based company that develops automation software for global payments and raised $150 million in Series E funding at a $2 billion valuation back in October (01 Advisors joined as a follow-on investor); and SpotOn Transact, a payments software startup that raised $50 million in Series B funding last year led by 01 Advisors. (Worth noting: the company raised a $60 million Series C round just six months later. DST Global led that next round, with participation from 01 Advisors and others.)

In fact, numerous of the outfit’s investments have hit the gas during the pandemic, including the San Francisco-based mental health and wellness platform Modern Health, which last week announced $74 million in Series D funding just a few months after announcing $51 million Series C funding. The startup, reportedly now valued at $1.17 billion, has raised roughly $170 million to date; 01 Advisors has joined the last two rounds.

01 Advisors has itself largely remained the same size since it publicly launched in August 2019, years after Costolo and Bain had begun investing in startups on an individual and joint basis.

In addition to Costolo and Bain and Dave Rivinus, who spent four years in corporate development and finance at Twitter and is also a founding partner of the firm, Kelly Kovacs is a partner at the firm. Kovacs was Costolo’s chief of staff at Twitter before joining Color Genomics in a similar capacity, then founding her own startup meant to empower executive assistants. She joined 01 Advisors full time in 2018.

Jenny Pater is meanwhile the firm’s operations manager.

01 Advisors did recently list a position for a senior associate.

Costolo, who great up in Troy, Michigan, found himself in the headlines in October when he fired off an incendiary tweet about the decision of Coinbase founder and CEO Brian Armstrong to publicly discourage employee activism and political discussions at work, a stance that drove at least 60 employees to take a severance package offered to them afterward.

While some business leaders were quick to praise Armstrong, Costolo wasn’t shy about hiding his disgust over Armstrong’s position. “Me-first capitalists who think you can separate society from business are going to be the first people lined up against the wall and shot in the revolution,” he tweeted. “I’ll happily provide video commentary.”

Bain, a long-suffering Browns fan (like all native Clevelanders), has meanwhile been busy, too. In addition to scouting for startups, he now sits on the public company boards of both the real estate tech outfit Opendoor and the space tourism company Virgin Galactic.

01 Advisors served as a co-sponsor of the SPAC that took Opendoor public, along with investor Chamath Palihapitiya. Palihapitiya also spun up the blank-check company that took public Virgin Galactic and the company invited Bain to be a director as that merger was coming together.

Earlier bets by the pair — as angel investors — include the corporate travel site TripActions and the connected fitness startup Tonal.

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Snowflake latest enterprise company to feel Wall Street’s wrath after good quarter

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Snowflake reported earnings this week, and the results look strong with revenue more than doubling year-over-year.

However, while the company’s fourth quarter revenue rose 117% to $190.5 million, it apparently wasn’t good enough for investors, who have sent the company’s stock tumbling since it reported Wednesday after the bell.

It was similar to the reaction that Salesforce received from Wall Street last week after it announced a positive earnings report. Snowflake’s stock closed down around 4% today, a recovery compared to its midday lows when it was off nearly 12%.

Why the declines? Wall Street’s reaction to earnings can lean more on what a company will do next more than its most recent results. But Snowflake’s guidance for its current quarter appeared strong as well, with a predicted $195 million to $200 million in revenue, numbers in line with analysts’ expectations.

Sounds good, right? Apparently being in line with analyst expectations isn’t good enough for investors for certain companies. You see, it didn’t exceed the stated expectations, so the results must be bad. I am not sure how meeting expectations is as good as a miss, but there you are.

It’s worth noting of course that tech stocks have taken a beating so far in 2021. And as my colleague Alex Wilhelm reported this morning, that trend only got worse this week. Consider that the tech-heavy Nasdaq is down 11.4% from its 52-week high, so perhaps investors are flogging everyone and Snowflake is merely caught up in the punishment.

Snowflake CEO Frank Slootman pointed out in the earnings call this week that Snowflake is well positioned, something proven by the fact that his company has removed the data limitations of on-prem infrastructure. The beauty of the cloud is limitless resources, and that forces the company to help customers manage consumption instead of usage, an evolution that works in Snowflake’s favor.

“The big change in paradigm is that historically in on-premise data centers, people have to manage capacity. And now they don’t manage capacity anymore, but they need to manage consumption. And that’s a new thing for — not for everybody but for most people — and people that are in the public cloud. I have gotten used to the notion of consumption obviously because it applies equally to the infrastructure clouds,” Slootman said in the earnings call.

Snowflake has to manage expectations, something that translated into a dozen customers paying $5 million or more per month to Snowflake. That’s a nice chunk of change by any measure. It’s also clear that while there is a clear tilt toward the cloud, the amount of data that has been moved there is still a small percentage of overall enterprise workloads, meaning there is lots of growth opportunity for Snowflake.

What’s more, Snowflake executives pointed out that there is a significant ramp up time for customers as they shift data into the Snowflake data lake, but before they push the consumption button. That means that as long as customers continue to move data onto Snowflake’s platform, they will pay more over time, even if it will take time for new clients to get started.

So why is Snowflake’s quarterly percentage growth not expanding? Well, as a company gets to the size of Snowflake, it gets harder to maintain those gaudy percentage growth numbers as the law of large numbers begins to kick in.

I’m not here to tell Wall Street investors how to do their job, anymore than I would expect them to tell me how to do mine. But when you look at the company’s overall financial picture, the amount of untapped cloud potential and the nature of Snowflake’s approach to billing, it’s hard not to be positive about this company’s outlook, regardless of the reaction of investors in the short term.

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A first look at Coursera’s S-1 filing

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After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year. It paints a picture of growth, albeit one that came at steep expense.

Revenue

In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same noncash, share-based compensation expenses in both years. Even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for “earnings before interest, taxes, depreciation and amortization,” EBITDA strips out some nonoperating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the noncash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

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The owner of Anki’s assets plans to relaunch Cozmo and Vector this year

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Good robots don’t die — they just have their assets sold off to the highest bidder. Digital Dream Labs was there to sweep up IP in the wake of Anki’s premature implosion, back in 2019. The Pittsburgh-based edtech company had initially planned to relaunch Vector and Cozmo at some point in 2020, launching a Kickstarter campaign in March of last year.

The company eventually raised $1.8 million on the crowdfunding site, and today announced plans to deliver on the overdue relaunch, courtesy of a new distributor.

“There is a tremendous demand for these robots,” CEO Jacob Hanchar said in a release. “This partnership will complement the work our teams are already doing to relaunch these products and will ensure that Cozmo and Vector are on shelves for the holidays.”

I don’t doubt that a lot of folks are looking to get their hands on the robots. Cozmo, in particular, was well-received, and sold reasonably well — but ultimately (and in spite of a lot of funding), the company couldn’t avoid the fate that’s befallen many a robotics startup.

It will be fascinating to see how these machines look when they’re reintroduced. Anki invested tremendous resources into bringing them to life, including the hiring of ex-Pixar and DreamWorks staff to make the robots more lifelike. A lot of thought went into giving the robots a distinct personality, whereas, for instance, Vector’s new owners are making the robot open-source. Cozmo, meanwhile, will have programmable functionality through the company’s app.

It could certainly be an interesting play for the STEM market that companies like Sphero are approaching. It has become a fairly crowded space, but at least Anki’s new owners are building on top of a solid foundation, with the fascinating and emotionally complex toy robots their predecessors created.

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