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Fundings & Exits

Alphabet invests $375 million in Oscar Health
 Alphabet invests $375 million in Oscar Health 150 150 Brian Heater
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Google parent Alphabet has invested $375 million in next-gen health insurance company, Oscar Health. Google has been a longtime supporter of the six-year-old New York company, having previously invested in Oscar through its Capital G investment wing and Verily health and life sciences research wing.

“Alphabet has invested in Oscar over many years and has seen the company and its team up close. We’re thrilled to invest further to help Oscar in its next phase of growth,” an Alphabet spokesperson told TechCrunch.

That $165 million round raised back in March valued the health startup at around $3 billion. The new round maintains a similar valuation, while giving Alphabet a 10 percent share in Oscar. The deal also has longtime Google employee and former CEO Salar Kamangar joining Oscar’s board.

Oscar co-founder and CEO Mario Schlosser announced the news in an interview with Wired, telling the site, “We can hire more engineers, we can hire more data scientists, more product designers, more smart clinicians who can think about health care a different way. It’s the acceleration of that product roadmap that fascinates us the most. The second, more tangible piece, is that we’re launching new product lines.”

Part of that product expansion includes getting into Medicare Advantage in 2020, which is a deviation from the current offerings in the individual and employer insurance markets. Oscar started out by offering insurance for individuals, growing rapidly during the launch of the Affordable Care Act and then rolling into small business offerings with its product Oscar for Business. Medicare represents a new vertical for the company, adding to its existing focus on both the individual and employer insurance markets.

“Oscar will accelerate the pursuit of its mission: to make our health care system work for consumers,” Schlosser said in a statement provided to TechCrunch. “We will continue to build a member experience that lowers costs and improves care, and to bring Oscar to more people — deepening our expansion into the individual and small business markets while entering a new business segment, Medicare Advantage, in 2020.”

Taiwan startup FunNow gets $5M Series A to help locals in Asian cities find last-minute things to do
 Taiwan startup FunNow gets $5M Series A to help locals in Asian cities find last-minute things to do 150 150 Catherine Shu
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“Instant booking” apps that let tourists sign up for activities on very short notice have been in the news a lot lately, partly because of Klook’s new unicorn status, but also because of the proliferation of startups in the space, especially in Asia. With so many instant booking apps, are there any niches left to fill? FunNow thinks so. Instead of targeting tourists, FunNow serves locals who want to find new things to do in their cities. The Taipei, Taiwan-based startup announced today that it has raised a $5 million Series A led by the Alibaba Entrepreneur Fund, with participation from CDIB, a returning investor, Darwin Venture and Accuvest. The capital will be used to expand FunNow into Southeast Asian and Japanese cities.

Along with a pre-A round closed last July, its newest funding brings FunNow’s total raised since its launch in November 2015 to $6.5 million. FunNow currently claims 500,000 members and 3,000 vendors, who provide more than 20,000 activities and services daily. Co-founder and CEO T.K. Chen says the startup will focus on building its presence in Hong Kong, Okinawa, Kuala Lumpur, Bangkok, Osaka and Tokyo.

One noteworthy fact about its Series A is the participation of Alibaba, which is beefing up its online-to-offline (or O2O, the business of enabling users to book and pay for offline services) offerings as competitor Meituan-Dianping prepares to go public in Hong Kong. A roster of Alibaba apps, including Koubei for local bookings, food delivery platform Ele.me and travel app Feizhu, compete against Meituan-Dianping, which describes itself as a “one-stop super app” because it offers all those services.

A not-for-profit initiative, the Alibaba Entrepreneurs Fund supports startups that might eventually contribute to the tech giant’s ecosystem. While Alibaba’s O2O apps are focused on capturing a bigger share away from Meituan-Dianping in China, Chen says future synergies may include listing FunNow’s activities on Koubei so Chinese tourists can continue using the app when they travel. (Chen added that Alibaba wants FunNow to expand in Southeast Asia as soon as possible.)

Even with a backer like Alibaba, however, the obvious question is how does FunNow compare with other instant booking apps? The most notable ones are Klook and KKday, but other players include Headout, Voyagin, GetYourGuide, Culture Trip, Peek and even Airbnb’s new “Experiences” feature.

Chen, who notes Klook’s Series A in 2015 was also $5 million, says FunNow’s deep dive into the local market sets it apart. Its biggest categories are last-minute hotel bookings, like hot spring resorts in Taipei that offer rooms for blocks of several hours in addition to overnight stays; restaurants and bars; massages and other spa services; and events like music festivals and parties.

Chen adds that catering to locals looking for fun stuff to do in their own cities means FunNow’s user engagement is high, with 70% of each month’s gross merchandise volume from repeat customers. The rest comes from first-time users and about 60% of people make another booking within 30 days after their first purchase. FunNow expects to make revenue of $16 million in 2018, three times what it made in 2017.

Most of FunNow’s users are young, in the 25-to-35 age bracket. “We are like Uber, but for booking restaurants, massages, hotels or other kinds of activities around you. We are also targeting spontaneous consumers, because almost all of our bookings are for the next 15 minutes to hour. If you look at our data, 80% of our bookings are for the next hour,” says Chen.

The company tailors its technology platform to local users, too, and relies on a patented algorithm that makes real-time availability calculations to prevent overbookings by syncing with merchant databases. Chen says users can see all available slots based on their location and search perimeters in less than 0.1 seconds and updates in real-time, so people don’t click on something only to find it’s no longer available.

FunNow also screens vendors before adding them to the platform and will delist businesses that rate below 3.5 stars. The convenience is what draws users back to FunNow instead of, say, just reading reviews on Google or asking friends for recommendations and then messaging or calling for a reservation.

Another challenge that potentially arise in the future is if Klook, KKday or other instant booking apps for tourists decide to start serving locals as well. Chen says he believes those startups will continue focusing on the growing tourist market and demand for half-day or all-day tours.

“If they want to cut into our play, they need to first find merchants one by one and also deploy strong systems to the merchant side,” says Chen. “However, once merchants use our system, it’s unlikely for them to use two systems to control availability, because you’d need to update all of them to avoid overbooking.”

Despite its first mover advantage, FunNow is also constantly improving its tech, Chen says. “Even in a minute, a business might have sold the seat to a walk-in customer, causing a overbooking and that’s the worst thing to see.”

Wonderschool raises $20M to help people start in-home preschools
 Wonderschool raises $20M to help people start in-home preschools 150 150 Josh Constine
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Educators already don’t get paid enough, and those that work in preschools or daycares often make 48% less. Meanwhile, parents struggle to find great early education programs where kids receive enough attention and there’s space, but they don’t need special connections or to pass grueling admissions interviews to get in.

Any time there’s a lousy experience people have an emotional connection to and spend a lot of money on, there’s an opportunity for a startup. Enter ‘Wonderschool‘, a company that lets licensed educators and caretakers launch in-home preschools or daycares. Wonderschool helps candidates get credentialed, set up their programs, launch their websites, boost enrollment, and take payments in exchange for a 10 percent cut of tuition. The startup is now helping run 140 schools in the SF Bay, LA, and NYC where parents are happy to pay to give their kids an advantage.

That chance to fill a lucrative gap in the education market has attracted a new $20 million Series A for Wonderschool led by Andreessen Horowitz. The round brings the startup to $24.1 million in total funding just two years after launch. With the cash and Andreessen partner Jeff Jordan joining its board, Wonderschool is looking to build powerful lead generation and management software to turn teachers into savvy entrepreneurs.

“Finding good childcare has become one of the most difficult experiences for families. I’ve seen parents who are making a livable wage in urban cities like San Francisco and New York still struggle to find and afford quality childcare” says co-founder and CEO Chris Bennett. “We wanted to deliver a solution for parents that also had the potential to create jobs and empower the caregiver — that’s Wonderschool.”

By spawning and uniting programs across the country, Wonderschool could scale as the way software eats preschool. But without vigorous oversight of each educator, Wonderschool is also at risk of a safety mishap at one of its franchises ruining the brand for them all.

Airbnb For Schooling

Wonderschool started when co-founder Arrel Gray was having trouble finding childcare for his daughter close to home. “My little sister went to an in-home preschool, so I suggested he check them out” says Bennett. “But he wasn’t very satisfied with the options – the majority were full and some didn’t meet the expectations for his family. We also found that they didn’t use the internet much so they were hard to find and contact.”

The two were seeking to pivot their social commerce startup Soldsie after Facebook algorithm changes curtailed its growth. Their research led to the discovery of just how much lower preschool and daycare workers’ wages were. “When we had the idea we thought, ‘what the best way to test this?’ Why don’t we start a preschool ourselves’” says Bennett. “So we rented a home in the Berkeley Hills, hired an amazing educator, set up a school and started one. The school ended up being a huge success. Five-star reviews on Yelp. A high NPS. Parents loved the place.” It also netted the teacher a 3X higher salary than before.

With that proof, Wonderschool went on to raise $4.1 million from Josh Kopelman at First Round Capital, Omidyar Network, Cross Culture Ventures, Uncork Capital, Lerer Hippeau, FundersClub, and Edelweiss. That let Bennett and Gray flesh out the business. Wonderschool would recruit existing teachers and caregivers or guide people to get licensed so they could become “directors” of in-home schools. Wonderschool acts almost like Airbnb by turning them into small businesses earning money from home.

Teachers can pick whatever schedule, curriculum, or format they want, like Montesori or nature-focused learning. Wonderschool now has over 500 directors working with its software, with some making as much as $150,000 or $200,000. In exchange for its 10 percent cut of tuition, Wonderschool provides directors with a “bootcamp” to prep them for the job. It pairs them with a mentor, then helps them build their website and figure out their pricing options. Coaching guides train the directors to scout for new leads, offer appealing tours, and track their fledgling business.

The $20 million from Andreessen, Omidyar, Gary Community Investments, and First Round will go to expanding the Wonderschool software. Each student slot it can help director fill, the more it earns. The startup will also have to compete with  companies like Wildflower Schools, which Bennett admits has a similar business model but he says “We are focused on in home and they also focus on Montessori while we are curriculum agnostic.” There’s also Cottage Class which powers homeschooling for students up to age 18, Tinkergarten that concentrates on short-term outdoor education, and VIPKid connects kids in China with U.S. teachers over video chat.

They, like Wonderschool, are trying to scale up to meet the massive existing demand. “The challenge is that there aren’t enough programs for the number of children needing public or private schooling – 1st grade or earlier – and our goal is to provide enough supply for every child” Bennett explains.

Still, safety remains a top concern. Bennett notes that “Wonderschool has a support team that helps school Directors prepare their homes for operation. With regard to safety, each state’s licensing office covers this in their approval process for being granted a license to operate.” But could a problem at one school shake the businesses of all the rest of its franchises? “We have a system of checks in balances in place that we feel confident would allow us to anticipate any potential issues, including regular, weekly check-ins with Directors and a feedback loop with parents. We also email parents on a regular cadence to get feedback from parents and we step in and work with the Director if we find that there are issues” Bennett insists.

If Wonderschool can keep its brand clean through thorough oversight, it could both create better paying jobs in a field rife with undercompensated heroes, and open early schooling to a wider range of students. Bennett’s parents moved to the U.S. from Honduras, pouring their efforts into supporting his and his sister’s education. Now he’s building the next generation of teachers the tools to give more kids a head start in life.