2015 in Review: 7 of the Biggest DC Tech Stories

December 15, 2015

12:30 pm

Over the past year we’ve seen record-breaking funding announcements, rocky exists, and the local competition heating up. In DC we’re seeing more hyperlocal businesses going toe-to-toe with nationally recognized organizations such as Uber and WeWork, while others are outgrowing the area and moving to the West Coast. There are so many impactful stories that occurred in 2015, so we compiled a list of some of the most talked about changes for DC’s startup community.

1776 Absorbs Disruption Corporation, Expands Into Crystal City

On the surface the acquisition of Disruption Corporation seemed like a proper match and part of 1776’s roadmap to become a global incubator; however, post-announcement more details were revealed. Unfortunately for Disruption Corp. they struggled to ride the dividing line between a proper burn rate and running out of runway.

“Unfortunately, like many startups, we’ve run out of runway to execute. As of April 15, Disruption will be effectively out of cash. As a result, we had been preparing to wind down the operations, let the entire team go, return the Crystal Tech Fund to its sole LP, and return the space held by Disruption to the landlord,” stated Paul Singh, Disruption Corporation Founder, in an email to investors sent on April 14, 2015.

This resulted in 1776 acquiring everything, from the team to the $50 million fund, in an all-stock deal. Singh left 1776 in August to pursue new projects. This year 1776 also acquired San Francisco, CA-based Hattery.

Local Coworking War Heats Up

Doing work from a coffee shop is always an option, but in DC we have more than 50 coworking spaces to choose from. While WeWork expands to new locations and has achieved a monstrous valuation to $10 Billion, effectively doubling their last valuation, there are some other changes to DC run coworking organizations as well.

In May, Cove announced a funding announcement of $2.8 million and has since expanded to several new locations.

“While technology has made it possible to work nearly anywhere, not everyone can be productive in their living room, coffee shop or even their cubicle… We’re thrilled that our funders, who understand the sharing economy, retail, and iconic brands, share our vision of enabling the evolution in how people work, connect, and thrive in a mobile economy,” said Cove Cofounder and CEO Adam Segal at the time of the announcement.

Just last month, Arlington, VA-based UberOffices, which has locations across DC and plans to expand outside the area, announced that they were rebranding as MakeOffices.

“At the end of the day everybody is trying to make something. Whether you’re trying to go to the gym to make muscles or make dreams happen,” MakeOffices chief executive Raymond Rahbar said in a Washington Post interview.

In December 2014, Affinity Lab, dubbed one of the first coworking spaces in the nation, was ousted from their location and a buyout fell through. Although their physical space is no longer available, some of the core team took to WeWork Wonder Bread Factory earlier in the year. Former Affinity Lab Manager Mike LaRosa has since become DC’s informal go-to source for all things coworking.

In similar fashion to the coworking wars, DC’s ride hailing service options continue to expand as Split launched earlier this year. Perhaps we’ll see similar growth for them in 2016.

Sweetgreen Raises a Lot of Green

Each week there is a least one DC-based startup announcing a new funding round, but Sweetgreen has constantly brought in the green. In July the DC founded company announced a Series F round of $35 million, in 2014 a Series E of $18.5 million, and in 2013 a Series A of $22 million. Much of their latest round was the result of dollars from the DC and Baltimore regions. As the company brings in such large rounds, their primary focus is on adding a new layer of technology to their offering and expanding to new cities across the nation.

“We’re approaching this next phase of growth with the same passion and purpose we founded Sweetgreen on, and we’re honored to have the support of investors who believe in our mission,” said Jonathan Neman, Co-Founder and Co-CEO of Sweetgreen. “As we continue to open new locations and grow into a national lifestyle brand, this funding will further enable us to innovate in technology and supply chain – to bridge the gap between health and convenience.”

In a statement Neman goes on to discuss the gap between consumers and restaurants, and how Sweetgreen will be at the forefront of finding a solution.

“There’s been very little done to connect restaurants with their consumers and leverage tech to make that a better experience, and we want to lead that charge,” said Neman. A good portion of the latest round will go towards creating an in-house development team.

Mapbox Raises $52M to Scale Open Source Maps

One of the largest raises in the DC tech community this year came from a startup that powers so much across the web. In a Series B round, Mapbox raised $52 million, a company that provides an open source mapping platform for custom designed maps. With more than 5,000 customers, they help power Foursquare, Pinterest, Etsy, and MapQuest.

Alarm.com Goes Public

Founded in 2000 after spinning off from Microstrategy Inc., Alarm.com focuses on the IoT security space. They provide a software as a service (SaaS) offering and supportive hardware. Initially focusing on home and business security, they have expanded their solutions to complete with the likes of Nest for a more holistic connected home.

In their initial public offering shares were sold at $14, and at the time of writing they are being sold for $16.69 a share.

According to Dealogic, 2015 has been the worst year for tech IPOs since 2009. This year only 28 tech companies went public vs 62 last year. More and more high-profile tech companies are remaining private.

Vox Media Acquires Re/code

DC-based Vox Media, a powerhouse of content that focuses on everything from technology to sports, acquired Re/code in May. In an all stock deal, the tech reporting publication was scooped up after having only launched in 2014. Re/code joined a lineup that consists of The Verge, SB-Nation, Eater, Polygon, and more.

There are stories on both sides of the deal describing the acquisition to be either out of necessity or as a strategic move worth a lot of money. In an interview with Business Insider, Re/code cofounder Kara Swisher describes the deal to be about joining forces with a company who can navigate the changing media landscape.

“The media business is changing at a quantum speed and we needed to be with a company like Vox that has the key capabilities in online advertising and publishing to navigate those changes, while also hewing to the same standards of high-quality journalism that we both value,” Swisher says. “In this very volatile world of content, Walt and I trust Jim Bankoff to make the right decisions.”

Earlier in March another tech publication, Gigaom, abruptly halted product operations. Several of the company’s assets were later acquired by Knowingly Corp in May, which included the website and their content library.

Speek’s Rocky Exit

In what was possibly DC’s rockiest exit this year, Speek was acquired by Utah-based Jive Communications. Although the terms of the deal were not public, only a handful of employees remained with the company and were brought on to help with the transition. Prior to the acquisition by Jive, several other rumored acquisitions failed throughout the year, which led to massive layoffs.

For the silver lining, former Speek COO Konrad Waliszewski launched a new startup in August, TripScout. Cofounder John Bracken now sits on the board of advisors for Arlington, Virginia based nvite, and cofounder Danny Boice who left prior to the acquisition is the CEO and founder of Washington DC based Trustify.

What do you think is the biggest change to impact DC’s tech community in the past year?

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Elliot is an award winning journalist deeply ingrained in the startup world. He also runs a non-profit, Digital District, which focuses on improving professional digital literacy in DC. You can contact him by email at elliot(@)elliotvolkman.com or follow him on Twitter @thejournalizer.

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