CLICKUP RAISES $100M IN VENTURE CAPITAL
Software firm makes productivity and collaboration tools
San Diego-based ClickUp, which makes productivity software for businesses including tools for remote work, has raised $100 million in a second round of venture capital funding.
The latest funding, announced Tuesday, comes on the heels of ClickUp corralling $35 million in June. It highlights how San Diego startups continue raising money at what looks like a record pace despite the coronavirus pandemic.
Local startups are expected to pull in well over $1 billion in the fourth quarter based on deals announced so far. That comes on top of $3.4 billion raised during the first three quarters of the year.
For all of 2019, San Diego startups took in a total of $3.5 billion, which was the largest amount of venture capital f lowing into the region in the previous five years, according to industry research firm Pitchbook.
Founded in 2017 by Chief Executive Zeb Evans, ClickUp moved from the Bay Area to San Diego about a
Trump said in May. “We’re bringing it back.”
But despite Trump’s restrictions on Chinese goods, including tariffs on more than $360 billion worth of its imports, there is little sign that global supply chains are returning to the United States. Instead, the prolonged effects of the pandemic on the United States appear to have only reinforced China’s manufacturing position.
China employed draconian lockdowns and extensive surveillance to shake off the effects of the pandemic earlier this year, allowing its factories to reopen at a large scale more quickly than businesses in the United States, where the disease is still running rampant. With many American companies, especially those based on services, crippled by the coronavirus, consumers are pumping their money into online shopping for manufactured goods instead.
Mary E. Lovely, a senior fellow at the Peterson Institute, said that U.S. imports from the world were on track to be lower this year than in 2019, but that China’s overall share of U.S. imports would likely increase.
“Overall, China’s quick economic recovery and its dominance as a source for products that Americans have turned to during the pandemic have outweighed the dampening effect of Trump’s tariffs,” she said.
Consumer demand is so strong that it has overwhelmed the capacity of the cargo industry, leading to a record spike in shipping rates. The surge in shipments is clogging many supply chains, snarling major ports and delaying delivery of holiday gifts by up to several weeks.
At the Port of Los Angeles, the country’s largest processor of container cargo and the gateway for many Chinese goods, shipping containers carrying Chinese imports are stacked like Legos in piles six high. Truckers jam the parking lots, waiting hours to pick up goods, which are then dispatched across the continent.
October was the busiest month in the port’s 114-year history, and traffic has remained high. On Dec. 1, dockworkers were busy unloading 19 vessels, compared with 10 to 12 on a normal day, said Gene Seroka, the port’s executive director. Twelve more ships waited in the harbor, which, on average, had been waiting about 48 hours beyond their scheduled arrival, he said.
“We’re going through a time that truly is unprecedented,” Seroka said. “You’re trying to stuff 10 pounds of potatoes in a fivepound bag. This ordering and replenishment is bigger than anything we’ve seen, and now it coincides with holidays.”
The pileup started earlier this year, as U.S. retailers and manufacturers began to restock products this summer after brief lockdowns in the spring, and consumer spending began to rebound. While the pandemic has left former employees of restaurants, airlines and theme parks destitute, many members of the country’s vast remote workforce have seen their bank accounts grow, and surveys show expectations for consumer spending remain strong.
The initial data snapshot of November trade released earlier this month by China’s General Administration of Customs did not include detailed data by product and country. But trade data for the first 10 months of this year, compiled from U.S. Customs data by IHS Markit, shows that U.S. imports of consumer electronics from China have been strong, as have imports of masks and other personal protection equipment for the pandemic.
Jay Foreman, chief executive of the toy company Basic Fun, said his company had gone from being “panicked” about the future of its business in March and April to suddenly realizing that demand was stronger than ever.
“Especially as you got into June, July and August, the spigot got turned on,” he said. “Everybody realized we don’t need less stuff from Asia and China, we need more
stuff.”
For the toy industry, it is shaping up to be one of the biggest holiday seasons in years. But Foreman said his business would be dampened somewhat by the shipping delays. Some of the Tonka Trucks, Lite Brite sets and Care Bears that the company sells are stuck on container ships, or in the yard of the Port of Los Angeles.
While Foreman was confident he could still sell those toys in January, he said missing the Christmas cutoff would be much more problematic for small companies and importers of seasonal products, like wreaths and Christmas lights.
“Everyone has stuff sitting,” he said. “Everything is a week or two behind schedule.”
Arnold Kamler, the chief executive of bicycle-maker Kent International Inc., said he was also experiencing a significant combination of strong demand and shipping delays.
Lockdowns in China earlier this year led to production delays at Kent’s Chinese factories, while American demand for bicycles began to surge, as buyers sought them for entertainment and exercise, as well as an alternative to public transportation.
Pandemic-related demand for bicycles was so strong that some had begun referring to them as “the new toilet paper,” Kamler said.
“I never had hoped to be compared to toilet paper, but in this case, this was a good thing,” he said.
After maintaining light inventory all year, Kamler said his company had finally accumulated enough bicycles in its warehouses in California and South Carolina in the past four to six weeks to meet demand. But UPS and FedEx, which deliver the company’s bicycles directly to customers on behalf of Target, Kohl’s, Walmart and other retailers, have drastically cut the number of trucks they can dispatch to the warehouses each week.
“We can’t get trucks to show up,” he said. “It’s crazy to have this demand and not be able to ship it.”
That surge has created an unusual problem for China: finding enough 40-foot steel boxes into which all those goods can fit. China’s exports have been so strong this autumn that far more shipping containers are leaving Chinese ports than are coming back.
U.S. exports to China have also soared this fall, driven by strong purchases of soybeans and other agricultural goods under the U.S.China trade agreement. But these goods — like the iron ore and coal that China also imports plentifully — travel in bulk freighters, not 40foot containers. China imports few American manufactured goods that would travel in containers.
Seroka said exports of containers stocked with American goods were down 14 percent annually so far this year at the Los Angeles port, creating inefficiencies and logistical issues for railroads, trucking companies and cargo lines.
In the month of October, the port exported more than twice as many empty containers as those filled with U.S. goods, Seroka said. He blamed the trend on the U.S.-China trade war, which spurred Beijing to impose more tariffs on U.S. products, as well as the strength of the U.S. dollar, which makes U.S. goods more expensive overseas.
Despite the shipping disruptions, some companies that have kept their production in China throughout Trump’s trade wars are now feeling vindicated.
Foreman said he considered moving some operations to Vietnam or India, like many toymakers did amid the trade wars last year, but “staying in China ended up to be the best move.”
“China still has the best production supply chain of anybody in the world, and as it turned out, they were able to tackle the pandemic faster and more efficiently than anybody else,” he said. “China certainly has tested the boundaries and proven that they can weather the storm, as great as a storm as we’ve seen in a hundred years.”