Technology

Forerunner’s long game: As startups stall before IPO, all options are on the table

Thirteen years ago, Forerunner Ventures began helping to usher in a new era of consumer startups, including Warby Parker, Bonobos, and Glossier. None has gone through a traditional IPO process. Warby Parker was taken public through a special purpose acquisition vehicle. Bonobos was acquired by Walmart. Glossier is still privately held, along with many other design-forward brands in Forerunner’s portfolio.

That’s not a failure, according to Forerunner founder Kirsten Green. In today’s landscape, nearly every alternative to the traditional IPO has become the new norm.

Consider that companies like fintech Chime and smart ring outfit Ōura, founded in 2012 and 2013, respectively, were also early bets for Forerunner and have achieved valuations north of $5 billion, proving their staying power in crowded markets. But while Chime has confidentially filed to go public, Ōura’s CEO has said there are no immediate plans for an IPO.

At TechCrunch’s StrictlyVC evening late last week, Green made it clear she doesn’t mind. Asked specifically whether she is bothered by Ōura’s CEO, Tom Hale, repeatedly telling the media the company is not preparing an IPO anytime soon despite strong sales, she called the outfit an “off-the-charts phenomenal company,” adding that “we haven’t even gotten to the thought around our table about selling, because we’re here for the growth that’s happening.”

She suggested instead that investors long ago adapted to a world with fewer conventional public offerings, including by turning increasingly to the once-secondary secondary market to manage liquidity and exposure.

“We’re engaged in the secondary market, buying and selling,” Green said of Forerunner’s team, characterizing the shift as both practical and strategic. “Companies are waiting so long to go public. The venture model is generally 10-year fund lifecycles. If you now need to be a double-digit billion-dollar company to [stage] a successful IPO or [become traded] in the public markets, it takes time to get there.” The secondary market is “continuing to drive the industry” and allowing “people to unlock returns and liquidity.”

For longtime industry watchers, it’s a remarkable shift. In the past, firms could expect a major liquidity event within a few years: an acquisition, a classic stock market debut. Yet the growing reliance on the secondary market isn’t just a response to public markets that reward scale and favor already high-performing companies.

Another major benefit, Green suggested last week, is that price discovery is more efficient when there are more participants involved — even if it ultimately means a discount to one of her deals.

Green addressed, for example, Chime, the neobank that became a household name during the fintech boom. Its valuation has zigzagged wildly in recent years, from $25 billion in 2021 when it last closed a primary round of funding from a small group of venture investors, down to a reported $6 billion valuation last year on the secondary market, which typically features many more participants. More recently, it reportedly climbed again to $11 billion.

“In terms of the prices,” Green said, “if you think about it, the round that gets done, the Series D, that was a negotiation between the company and an investor. With the secondary market, you’ve got more people in the mix, right? And then when you [eventually] go to the public markets, you’ve got everybody” setting the price for what they perceive to be the value of a company.

Green can afford to be a little less invested, so to speak, in those later valuations. While it’s always nice to be associated with eye-popping numbers, the firm’s strategy of getting in at the ground floor gives it more wiggle room than other venture firms might enjoy. “We try to be early,” Green said, pointing to the firm’s framework of identifying major shifts in consumer behavior and pairing them with emerging business models.

It worked in the early 2010s, when DTC brands like Bonobos and Glossier rode the mobile-social wave to breakout success. It worked again with subscription-first plays like another Forerunner company, The Farmer’s Dog, which sells gourmet dog food and is reportedly both profitable and seeing $1 billion in annualized revenue. And it’s what the firm is betting on now, with a focus on the intersection of invention and culture, as Green describes it.

Great companies, Green noted, need time to develop and not all growth paths look the same. Venture capital, once eager for exits, is learning to wait and, when necessary, get creative.

(You can listen to our conversation with Green from this same sit-down right here, via the StrictlyVC Download podcast; new episodes are published each Tuesday morning.)

Technology

Pintarnya raises $16.7M to power jobs and financial services in Indonesia

Pintarnya, an Indonesian employment platform that goes beyond job matching by offering financial services along with full-time and side-gig opportunities, said it has raised a $16.7 million Series A round.

The funding was led by Square Peg with participation from existing investors Vertex Venture Southeast Asia & India and East Ventures.

Ghirish Pokardas, Nelly Nurmalasari, and Henry Hendrawan founded Pintarnya in 2022 to tackle two of the biggest challenges Indonesians face daily: earning enough and borrowing responsibly.

“Traditionally, mass workers in Indonesia find jobs offline through job fairs or word of mouth, with employers buried in paper applications and candidates rarely hearing back. For borrowing, their options are often limited to family/friend or predatory lenders with harsh collection practices,” Henry Hendrawan, co-founder of Pintarnya, told TechCrunch. “We digitize job matching with AI to make hiring faster and we provide workers with safer, healthier lending options — designed around what they can reasonably afford, rather than pushing them deeper into debt.”

Around 59% of Indonesia’s 150 million workforce is employed in the informal sector, highlighting the difficulties these workers encounter in accessing formal financial services because they lack verifiable income and official employment documentation.

Pintarnya tackles this challenge by partnering with asset-backed lenders to offer secured loans, using collateral such as gold, electronics, or vehicles, Hendrawan added.

Since its seed funding in 2022, the platform currently serves over 10 million job seeker users and 40,000 employers nationwide. Its revenue has increased almost fivefold year-over-year and expects to reach break-even by the end of the year, Hendrawn noted. Pintarnya primarily serves users aged 21 to 40, most of whom have a high school education or a diploma below university level. The startup aims to focus on this underserved segment, given the large population of blue-collar and informal workers in Indonesia.

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“Through the journey of building employment services, we discovered that our users needed more than just jobs — they needed access to financial services that traditional banks couldn’t provide,” said Hendrawan. “We digitize job matching with AI to make hiring faster and we provide workers with safer, healthier lending options — designed around what they can reasonably afford, rather than pushing them deeper into debt.”

image credits: Pintarnya (Founders of Pintarnya Ghirish Pokardas, Nelly Nurmalasari, and Henry Hendrawan)

While Indonesia already has job platforms like JobStreet, Kalibrr, and Glints, these primarily cater to white-collar roles, which represent only a small portion of the workforce, according to Hendrawan. Pintarnya’s platform is designed specifically for blue-collar workers, offering tailored experiences such as quick-apply options for walk-in interviews, affordable e-learning on relevant skills, in-app opportunities for supplemental income, and seamless connections to financial services like loans.

The same trend is evident in Indonesia’s fintech sector, which similarly caters to white-collar or upper-middle-class consumers. Conventional credit scoring models for loans, which rely on steady monthly income and bank account activity, often leave blue-collar workers overlooked by existing fintech providers, Hendrawan explained.

When asked about which fintech services are most in demand, Hendrawan mentioned, “Given their employment status, lending is the most in-demand financial service for Pintarnya’s users today. We are planning to ‘graduate’ them to micro-savings and investments down the road through innovative products with our partners.”

The new funding will enable Pintarnya to strengthen its platform technology and broaden its financial service offerings through strategic partnerships. With most Indonesian workers employed in blue-collar and informal sectors, the co-founders see substantial growth opportunities in the local market. Leveraging their extensive experience in managing businesses across Southeast Asia, they are also open to exploring regional expansion when the timing is right.

“Our vision is for Pintarnya to be the everyday companion that empowers Indonesians to not only make ends meet today, but also plan, grow, and upgrade their lives tomorrow … In five years, we see Pintarnya as the go-to super app for Indonesia’s workers, not just for earning income, but as a trusted partner throughout their life journey,” Hendrawan said. “We want to be the first stop when someone is looking for work, a place that helps them upgrade their skills, and a reliable guide as they make financial decisions.”

Technology

OpenAI warns against SPVs and other ‘unauthorized’ investments

In a new blog post, OpenAI warns against “unauthorized opportunities to gain exposure to OpenAI through a variety of means,” including special purpose vehicles, known as SPVs.

“We urge you to be careful if you are contacted by a firm that purports to have access to OpenAI, including through the sale of an SPV interest with exposure to OpenAI equity,” the company writes. The blog post acknowledges that “not every offer of OpenAI equity […] is problematic” but says firms may be “attempting to circumvent our transfer restrictions.”

“If so, the sale will not be recognized and carry no economic value to you,” OpenAI says.

Investors have increasingly used SPVs (which pool money for one-off investments) as a way to buy into hot AI startups, prompting other VCs to criticize them as a vehicle for “tourist chumps.”

Business Insider reports that OpenAI isn’t the only major AI company looking to crack down on SPVs, with Anthropic reportedly telling Menlo Ventures it must use its own capital, not an SPV, to invest in an upcoming round.

Technology

Meta partners with Midjourney on AI image and video models

Meta is partnering with Midjourney to license the startup’s AI image and video generation technology, Meta Chief AI Officer Alexandr Wang announced Friday in a post on Threads. Wang says Meta’s research teams will collaborate with Midjourney to bring its technology into future AI models and products.

“To ensure Meta is able to deliver the best possible products for people it will require taking an all-of-the-above approach,” Wang said. “This means world-class talent, ambitious compute roadmap, and working with the best players across the industry.”

The Midjourney partnership could help Meta develop products that compete with industry-leading AI image and video models, such as OpenAI’s Sora, Black Forest Lab’s Flux, and Google’s Veo. Last year, Meta rolled out its own AI image generation tool, Imagine, into several of its products, including Facebook, Instagram, and Messenger. Meta also has an AI video generation tool, Movie Gen, that allows users to create videos from prompts.

The licensing agreement with Midjourney marks Meta’s latest deal to get ahead in the AI race. Earlier this year, CEO Mark Zuckerberg went on a hiring spree for AI talent, offering some researchers compensation packages worth upwards of $100 million. The social media giant also invested $14 billion in Scale AI, and acquired the AI voice startup Play AI.

Meta has held talks with several other leading AI labs about other acquisitions, and Zuckerberg even spoke with Elon Musk about joining his $97 billion takeover bid of OpenAI (Meta ultimately did not join the offer, and OpenAI denied Musk’s bid).

While the terms of Meta’s deal with Midjourney remain unknown, the startup’s CEO, David Holz, said in a post on X that his company remains independent with no investors; Midjourney is one of the few leading AI model developers that has never taken on outside funding. At one point, Meta talked with Midjourney about acquiring the startup, according to Upstarts Media.

Midjourney was founded in 2022 and quickly became a leader in the AI image generation space for its realistic, unique style. By 2023, the startup was reportedly on pace to generate $200 million in revenue. The startup sells subscriptions starting at $10 per month. It offers pricier tiers, which offer more AI image generations, that cost as much as $120 per month. In June, the startup released its first AI video model, V1.

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Meta’s partnership with Midjourney comes just two months after the startup was sued by Disney and Universal, alleging that it trained AI image models on copyrighted works. Several AI model developers — including Meta — face similar allegations from copyright holders, however, recent court cases pertaining to AI training data have sided with tech companies.

Got a sensitive tip or confidential documents? We’re reporting on the inner workings of the AI industry — from the companies shaping its future to the people impacted by their decisions. Reach out to Rebecca Bellan at [email protected] and Maxwell Zeff at [email protected]. For secure communication, you can contact us via Signal at @rebeccabellan.491 and @mzeff.88.

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