top startups of 2014

What We Learned From The Top 7 Startups in 2014

If you were involved with a startup in 2014, you may have noticed that this was a record-breaking year for funding, especially in Silicon Valley.

According to investment database research firm CB Insights, more than $11.6 billion was invested in over 800 deals, and over $50 million invested in 44 deals. If that doesn’t sound all that impressive, consider that Silicon Valley has seen more tech investment than New York has seen in the last five years combined.

But which startups, where, are receiving all of this funding? Most of the them were already a part of the Billion-Dollar Start-Up Club, which may be bad news if you’re trying to get your startup up and running.

These seven startups have already proven to be successful, and there’s still a lot we can learn from their continued journey to the top.

Snapchat

From a fraternity to a valuation of $10 billion, Evan Spigel’s disappearing messaging app continued to pick up steam this year after securing Series D funding from venture capital firm Kleiner Perkins Caufield & Byers in the amount of $20 million in August. As if that weren’t enough, Snapchat is continuing to raise money. Most recently it received an investment from Yahoo.

Lesson Learned

Snapchat is the third-most popular app in the highly coveted 18-34 demographic — it’s being used by 33 percent of that demographic. Despite not having a business model, Snapchat is extremely popular with millennials, and brands like Taco Bell have given us a sequence map to tell other brands how to follow. It’s simple to use and gives people the chance to constantly connect with each other.

Dropbox

Drew Houston founded Dropbox in 2007 after being frustrated with working on multiple computers. Along with Arash Ferdowsi, Houston has turned Dropbox from a web storage provider to a company that is valued at $10 billion. In January, Dropbox received $350 million in Series C funding from investors that include Sequoia Capital, Accel Partners, Benchmark, Greylock Partners and Index Ventures. In April, it received $500 million in debt financing from Queensbridge Venture Partners.

Lesson Learned

Dropbox has cashed in on the popularity of the online storage industry and have executed and marketed the idea perfectly. This business is continuing to expand by developing products that will help the industry with overall productivity, which should be appealing to its current audience.

Pinterest

The social network continued its hot streak in 2014 and will be landing another $200 million in venture funding from its investors, which include SV Angel, Bessemer Venture Partners, Fidelity, Andreessen Horowitz, FirstMark Capital, and Valiant Capital Partners. Since 2008, the visual discovery tool founded by Ben Silbermann, Paul Sciarra and Evan Sharp has raised $762.5 million in seven rounds, and has over 25 million users.

Lesson Learned

Pinterest is one of the most talked-about social networks over the last couple of years. Why? Because it’s easy to use and is truly the first visual social network that gives users the freedom to create something inherently valuable and beneficial while expressing themselves. Images have a strong emotional factor, so it’s not difficult to understand why Pinterest is attracting users and investors.

Airbnb

Founded in August 2008 by Brian Chesky and Joe Gebbia, the extremely popular community accommodations marketplace is now connecting people in over 190 countries with more than 800,000 listings. Earlier this year, the company was able to obtain Series D funding from Andreessen Horowitz, General Catalyst Partners, Sequoia Capital, Greylock Partners, Digital Sky Technologies, Jeff Bezos, Y Combinator and SV Angel in the amount of $475 million. Airbnb is now valued at $10 billion and has raised a total of over $800 million.

Lesson Learned

Airbnb has been on a roll and seems like an unstoppable force. Why? Because they provide a user experience that can’t be beat thanks to cost, trust in the community, and hosting only high-quality images. As long as the community remains happy, the sky is the limit for Airbnb.

Square

Founded by Jim McKelvey and Twitter co-founder Jack Dorsey in 2009, this payments company received $100 million in debt financing from Morgan Stanley, Goldman Sachs, Silicon Valley Bank, Barclays Capital and JP Morgan Chase & Co. More recently, Square received Series E funding from the Government of Singapore Investment Corporation (GIC) in the amount of $150 million. This has raised the company’s value to $6 billion.

Lesson Learned

There have been high expectations since Square arrived. But side bumps like the highly publicized deal with Starbucks have prevented Jack Dorsey from living up to the hype. So, why be optimistic about Square? As Jack Dorsey informed Fast Company, “We always knew it was not our core business.” He also added that “We knew the real business was around the data.” Furthermore, business isn’t as terrible for Square as it’s been made out to be. In fact, the company is continuing to expand.

Square is still a relatively new company that is still trying to figure out its core business model. If it continues to invest in hiring, marketing and developing new products, Square could become a must-have service/product provider for retailers.

Cloudera

After launching in 2008, Christophe Bisciglia and Amr Awadallah have witnessed their open-source enterprise version of Hadoop software rise to $4 billion in value. 2014, however, was especially good for Cloudera. In March it was announced that Cloudera had “raised a whopping $900 million in financing from the likes of Google Ventures, T.Rowe Price, Intel and Michael Dell’s private equity arm.”

Lesson Learned

With a lot of buzz surrounding big data, people are expecting Cloudera to be “well positioned to lead the big data push” by giving clients a place to store, analyze and manage big data. Being on top of this trend and developing a great product has helped Cloudera become an industry leader.

Uber

The ride-sharing service has been unstoppable since being founded in 2009 by Travis Kalanick and Garrett Camp. In June 2014, it was announced that it had raised “$1.2B of primary capital at a $17B pre-money valuation from investors.” These include Fidelity Investments, Wellington Management, BlackRock Inc., Google Ventures, Summit Partners, Kleiner Perkins and Menlo Ventures.

Recently it’s been reported that Uber will be receiving another round of funding that will raise its valuation to $35-$40 billion.

Lesson Learned

Despite some recent PR hiccups and the fact that Uber isn’t popular with the taxi industry, people can’t get enough of the on-demand service that will make sure you’re never late, which explains why it’s experienced a 300 percent growth rate last year and presumably this year.

As for investors, gross revenue is expected to reach $10 billion by the end of the year. As Henry Blodget states in Business Insider:

“For Uber’s most recent round of investors to lose money, for example, Uber would most likely have to sell for a valuation of less than $1.2 billion, more than 90 percent below the $18.2 billion valuation of the deal. Things would have to go horribly, catastrophically wrong for that to happen.”

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